Rispoli v Merck Sharpe and Dohme and Ors (No.2) - [2003] FMCA 516

FEDERAL MAGISTRATES COURT OF AUSTRALIA

RISPOLI v MERCK SHARPE & DOHME & ORS (No.2)

[2003] FMCA 516

PRACTICE AND PROCEDURE – Whether costs should follow the event – consideration of settlement offers made by both parties – whether the second and third respondents should receive an order for costs – consideration of dismissal of the application against those applicants on a jurisdictional ground.

Federal Court Rules

Federal Magistrates Court Rules 2001 (Cth)

Escobar v Rainbow Printing Pty Limited (No 3) [2002] FMCA 160
Rispoli v Merck Sharpe & Dohme & Ors [2003] FMCA 160

Applicant:

FRANCES RISPOLI

First Respondent:

Second Respondent:

Third Respondent:

MERCK SHARPE & DOHME (AUSTRALIA) PTY LTD

BERNARD KORNFELD

PAUL SATCHELL

File No:

SZ327 of 2002

Delivered on:

12 November 2003

Delivered at:

Sydney

Hearing Dates:

12 November 2003

Judgment of:

Driver FM

REPRESENTATION

Counsel for the Applicant:

Ms L Byrne

Solicitors for the Applicant:

Craddock Murray Newman Solicitors

Counsel for the Respondent:

Mr R Moore

Solicitors for the Respondent:

Cropper Parkhill

ORDERS

The first respondent is to pay the applicant’s costs and disbursements of and incidental to the application, fixed in the sum of $31,500, inclusive of today’s proceedings.
There is to be no order as to costs in respect of the application against the second and third respondents.
Pursuant to Order 52 rule 15(1)(a)(iii) of the Federal Court Rules the time for an appeal be extended until the expiration of 21 days after today’s date.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ327 of 2002

FRANCES RISPOLI

Applicant

And

MERCK SHARPE & DOHME (AUSTRALIA) PTY LTD

First Respondent

PAUL SATCHELL

Second Respondent

BERNARD KORNFELD

Third Respondent

REASONS FOR JUDGMENT

I have before me competing applications for costs arising out of my decision in these proceedings reported as Rispoli v Merck Sharpe & Dohme & Ors [2003] FMCA 160.
The outcome of the proceedings was that the Court made a declaration of discrimination against the first respondent, a company which formerly employed the applicant, and ordered the first respondent to pay damages in the sum of $10,000 for non economic loss plus interest and to provide an apology. Proceedings against the second and third respondents, who are natural persons employed by the first respondent, were dismissed on an issue of jurisdiction.
The matter was a complex one in the context of the generality of proceedings before this Court. It was heard over five days. Substantial evidence was led and very substantial submissions were made both orally and in writing. To that extent the case was out of the ordinary of the cases that come before the Court.
The applicant seeks her costs consistent with the general principle that costs follow the event. That is of course only a general principle, not an inflexible rule and in particular circumstances it may be appropriate not to grant costs in favour of a successful party or indeed in some circumstances to make an order for costs against a successful party. There are, in this matter, no issues of public interest that would indicate a departure from the general principle that costs follow the event. Neither, in my view, has the conduct of the applicant disentitled her to an order for costs.
Mr Moore, in his submissions, put to me that I should at least reduce any order of costs in favour of the applicant bearing in mind that she was only partially successful. The applicant asserted that she had been constructively dismissed from her employment but I found against her on that point. If she had succeeded on that point she would have obtained substantial damages for economic loss. In the event, because I found that she was not constructively dismissed she recovered only damages for non economic loss, bearing in mind that she had not suffered any economic detriment during the course of her employment with the first respondent. Nevertheless, the applicant succeeded generally in her claim in that I found that there had been unlawful discrimination which had not been remedied by the applicant during the course of the employment. An order for damages for non economic loss was made plus an order for interest and an apology.
The applicant was not successful in obtaining the financial outcome that she probably anticipated if she had been able to demonstrate a constructive dismissal. However, that outcome, in my view, does not call for a reduced order as to costs for that reason alone. It needs to be considered in the context of discussions between the parties and any offers between the parties during the course of the litigation. Those discussions and offers are detailed in the affidavit of Suzana Gorgievska, filed on 11 November 2003. I admitted that affidavit and its annexures as evidence over the objections of Ms Byrne, for the applicant, in respect of the last two annexures H and I.
I considered that the affidavit and annexures in its entirety were admissible for the purposes of consideration of the Court's exercise of its general discretion on costs, not limited to the question of Calderbank offers. There were a number of offers made between the parties, both formal and informal. The best offer that was made by the respondent was an offer of $30,000 inclusive of costs, referred to in paragraph 5 of Ms Gorgievska's affidavit. As is noted by Ms Gorgievska in paragraph 6 of her affidavit, that offer was rejected.
For her part, the applicant was willing to settle the proceedings for $65,000 plus costs and the applicant offered to settle the issue of costs in the sum of $30,000. That offer is also detailed in Ms Gorgievska’s affidavit and annexures.
The outcome of the proceedings was a damages award of $10,000 plus interest. In the ordinary course, the fixed event-based scale in schedule 1 of the Federal Magistrates Court Rules 2001 (Cth) (“the Federal Magistrates Court Rules”) would apply. In this case, the application of the scale of costs would produce a costs outcome of $29,103 plus disbursements. On that basis, the applicant would achieve a better outcome than was offered by the respondent, but not as good an outcome as the applicant herself was prepared to accept.
There is a public policy underlying the consideration of offers, especially Calderbank offers, by the courts. That public policy is that parties should be encouraged to realistically consider their claims prior to incurring substantial expense in litigation and attempt to settle proceedings on a realistic basis. Bearing that public policy in mind, where a party does not do as well as an offer made to the party during the course of the litigation, it is common for courts either to deny that party costs or even to make a costs order against the party.
In this matter, I have formed the view that the decision of the applicant to pursue her claim through to a final hearing was neither improper or unrealistic. She did not persuade me that she had been constructively dismissed, but on factual issues I accepted her as a reliable witness. The claim of constructive dismissal was always reasonably arguable although ultimately unsuccessful. The applicant should, in my view, receive an order for costs consistent with the general principle that costs follow the event.
I see no reason to depart from the costs scale applicable ordinarily in proceedings in this Court in human rights matters. On that basis, the applicant has achieved an outcome better than the best offer made to her by the first respondent. There should be no reduction in the award of costs made, neither should there be any increase in the award of costs made to the applicant, bearing in mind that she has done less well than her best offer.
Taking into account likely disbursements incurred by the applicant in the proceedings, a final costs outcome in the order of $31,000 would be highly likely. Rather than leave the matter for resolution between the parties with the possibility that the matter might have to be brought back to Court for final resolution, bearing in mind that there is no taxation of costs in this Court on the court scale, I will fix costs and disbursements in favour of the applicant in the sum of $31,000, with an additional allowance of $500 for this costs hearing.
The other issue is what, if any, order should be made in respect of the second and third respondents. It was pressed upon me by Mr Moore that the second and third respondents were entitled to an order for costs in their favour, bearing in mind that the applicant was unsuccessful against them. I dismissed the application against the second and third respondents on a question of jurisdiction. I found that the complaint terminated by the Human Rights and Equal Opportunity Commission was limited to the first respondent. However, I also found that the complaint made to the Human Rights and Equal Opportunity Commission included the second and third respondents.
There is nothing before me to indicate that the applicant had any control over the terms in which the termination notice was prepared by the Human Rights and Equal Opportunity Commission. It appeared to me, in my principal judgment, to be a defect in the notice and it was not apparent to me how that defect had come about. In the circumstances, I made orders which give the applicant the opportunity to seek to cure that defect and pursue proceedings against the second and third respondents should she be disposed to do so.
In addition, Ms Byrne pointed out to me that interlocutory orders I made in July 2002, in particular order 5, provided the respondents with the opportunity to dispose of the action against the second and third respondents at an early stage. Annexure I to Ms Gorgievska’s affidavit establishes that the respondents were contemplating taking that opportunity, but in the event the matter was left for resolution at the final hearing and my judgment.
The second and third respondents are employees of the first respondent and would have been necessary witnesses in the proceedings whether or not they were parties. I think it unlikely that the respondents’ overall costs in the proceedings were increased in any significant degree by the inclusion of the second and third respondents as parties.
Taking all of these considerations into account, I have decided that there should be no order as to costs in respect of the second and third respondents. I will order that the first respondent pay the applicant's costs and disbursements of and incidental to the application, which I fix in the sum of $31,500 and that there be no order as to costs in relation to the application against the second and third respondents.
The other matter which was raised by way of written application filed on 24 October 2003 by the respondents was that I should extend time for the filing of any appeal to the Federal Court against my decisions in this matter, bearing in mind the time taken to resolve the issue of costs. It is certainly desirable that if there is to be an appeal to the Federal Court that it should be a single appeal and not two.
Mr Moore pointed out to me that in the matter of Escobar v Rainbow Printing Pty Limited (No 3) [2002] FMCA 160 at paragraph 10 of that decision I extended time for an appeal in similar circumstances pursuant to Order 52 rule 15(1)(a)(iii) of the Federal Court Rules. I accept that the same order should be made in this matter. I will, therefore, order that pursuant to Order 52 rule 15(1)(a)(iii) of the Federal Court Rules, the time for an appeal be extended until the exploration of 21 days after today's date.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Driver FM

Associate:

Date: 17 November 2003