Rothnie v St John of God Hospital (Subiaco)
[2014] FCCA 159
•6 February 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ROTHNIE v ST JOHN OF GOD HOSPITAL (SUBIACO) | [2014] FCCA 159 |
| Catchwords: COSTS – Whether applicant’s non-payment of costs orders in interlocutory proceedings warrants summary dismissal of application – factors for consideration. |
| Legislation: Fair Work Act 2009 (Cth), s.570(2) |
| Australian and International Pilots Association v Qantas Airways Ltd (No. 3) (2007) 162 FCR 392; [2007] FCA 879 Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission & Ors (2000) 203 CLR 194; [2000] HCA 47 Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574; [2008] FCAFC 143 Cox v Journeaux (No. 2) (1935) 52 CLR 713 Exell v Exell [1984] VR 1 Gao v Zhang (2005) 14 VR 380; [2005] VSCA 200 Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 Matthews v Hargreaves (No.3) [2011] FMCA 254 Suh & Ors v Minister for Immigration & Citizenship & Anor (2009) 175 FCR 515; [2009] FCAFC 42 Torpia v Zarfati (2009) 178 IR 325; [2009] FMCA 166 University of New South Wales v Huang & Anor [2012] FCA 308 Welsh v Digilin Pty Ltd (ACN 078 278 449) [2007] FCA 2064 Welsh v Digilin Pty Ltd (ACN 078 278 449) & Ors (2008) 250 ALR 13; [2008] FCAFC 149 Wintle v RUC Cementation Mining Contractors Pty Ltd [2012] FMCA 140 |
| Applicant: | IAN DAVID ROTHNIE |
| Respondent: | ST JOHN OF GOD HOSPITAL (SUBIACO) |
| File Number: | PEG 80 of 2013 |
| Judgment of: | Judge Antoni Lucev |
| Hearing date: | 5 February 2014 |
| Date of Last Submission: | 5 February 2014 |
| Delivered at: | Perth |
| Delivered on: | 6 February 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr T Galic |
| Solicitors for the Applicant: | Galic & Co |
| Counsel for the Respondent: | Ms S E Richards |
| Solicitors for the Respondent: | Clyde & Co Australia |
ORDERS
That the respondent’s application in a case filed 28 January 2014 be dismissed, with Reasons for Judgment to be published from Chambers at a later time.
That there be no orders as to the costs of the respondent’s application in a case.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 80 of 2013
| IAN DAVID ROTHNIE |
Applicant
And
| ST JOHN OF GOD HOSPITAL (SUBIACO) |
Respondent
REASONS FOR JUDGMENT
Application in a Case
This is a judgment on an application in a case by the respondent, St John of God Hospital (Subiaco), filed 28 January 2014, and heard yesterday, for orders as follows:
1.The proceedings be dismissed pursuant to Reg 13.03B(1).
2.In the alternative to paragraph 1, unless within 7 days of the date of this order the Applicant complies with Order 6 made on 5 September 2013 and Order 2 made on 9 November 2013, the proceedings be dismissed pursuant to Reg 13.03B(1).
3.Any further order the Court thinks fit.
4.The Applicant pay the Respondent’s costs of this application.
Counsel for the respondent confirmed at hearing that “Reg 13.03B(1)” was intended to be a reference to r.13.03B(1) of the Federal Circuit Court Rules 2001 (Cth) (“FCC Rules”).
The respondent’s application in a case is supported by the affidavit of Sarah Ellen Richards, a legal practitioner, employed by the respondent’s lawyers, sworn on 22 January 2014 and filed on 28 January 2014 (“Ms Richards’ Affidavit”).
Relevant history of the mater
Ms Richards’ Affidavit sets out the relevant history of the matter, as follows:
a)on 5 September 2013 the Court made an order (order 6 of those orders) (“5 September 2013 Costs Order”) that the applicant pay the respondent’s costs in the sum of $1923 by 26 September 2013: Ms Richards’ Affidavit, para.6 and annexure SER-1;
b)the applicant did not comply with the 5 September 2013 Costs Order: Ms Richards’ Affidavit, para.7;
c)on 12 November 2013 the respondent’s lawyers sent by email a letter (“12 November 2013 Letter”) to the applicant’s lawyers requesting the applicant to comply with the 5 September 2013 Costs Order: Ms Richards’ Affidavit, para.8 and annexure SER-2;
d)no response was received by the respondent’s lawyers to the 12 November 2013 Letter, and as at 28 November 2013 the applicant had not satisfied the 5 September 2013 Costs Order: Ms Richards’ Affidavit, para.9;
e)on 28 November 2013 Ms Richards received a telephone call from the applicant’s lawyer, Mr Galic, during the course of which Ms Richards made reference to the 12 November 2013 Letter, and asked whether the applicant intended to comply with the 5 September 2013 Costs Order. Ms Richards informed Mr Galic that the respondent’s lawyers had instructions to proceed with an application to compel compliance if the costs were not paid, to which Mr Galic responded that that should not be an issue, and that he would “be in touch”: Ms Richards’ Affidavit, para.10;
f)by 5 December 2013 the respondent’s lawyers had not received any further communication from the applicant’s lawyers, and the applicant remained in default of the 5 September 2013 Costs Order: Ms Richards’ Affidavit, para.11;
g)on 5 December 2013 the respondent’s lawyers wrote to the applicant’s lawyers referring to the 12 November 2013 Letter and the applicant’s failure to comply with the 5 September 2013 Costs Order, and noting that no written response had been received to the 12 November 2013 Letter. It was further noted that Mr Galic had indicated to Ms Richards that he would be in contact in relation to the 5 September 2013 Costs Order, but that the respondent’s lawyers had not heard anything further from the applicant’s lawyers, and that the applicant remained in default of the 5 September 2013 Costs Order. There followed a demand for payment of the costs, plus interest within 7 days, failing which the respondent would proceed without further notice to apply for orders under r.13.03B(1) of the FCC Rules: Ms Richards’ Affidavit, annexure SER-3;
h)shortly prior to the 9 December 2013 directions hearing the applicant’s lawyers sent an email to the respondent’s lawyers advising that the “… costs will be paid or deducted from … proceeds of settlement which we expect to have shortly.”: Ms Richards’ Affidavit, annexure SER-4;
i)a directions hearing was held on 9 December 2013 at which there was no appearance by the applicant, and the Court made an order (being order 2 of those orders) that the applicant pay the respondent’s costs of the directions hearing in the sum of $271 by 24 December 2013 (“9 December 2013 Costs Order”);
j)as at the date of the swearing of Ms Richards’ Affidavit (22 January 2014) the applicant had not complied with the 9 December 2013 Costs Order: Ms Richards’ Affidavit, para.14; and
k)as at 22 January 2014 the respondent’s lawyers had not received any further communication from the applicant’s lawyers in relation to the applicant’s compliance with the 5 September 2013 Costs Order or the 9 December 2013 Costs Order, and no payment of the costs under either of the above orders had been made, either to the respondent’s lawyers, or directly to the respondent: Ms Richards’ Affidavit, paras.15-16.
At the outset of the hearing Mr Galic, who appeared for the applicant, indicated to the Court that the outstanding costs had been paid, immediately prior to the hearing, by a “firm cheque”, that is a cheque from Mr Galic’s law firm, payable to the respondent. After a short adjournment to consider the respondent’s position, Ms Richards, who appeared for the respondent, indicated that the respondent wished to proceed with the application in a case, and to seek its costs of the application in a case, in any event.
The legislation
An applicant is in default if an applicant fails to comply with an order of the Court in a proceeding: FCC Rules, r.13.03A(1)(a). If an applicant is in default of compliance with an order of the Court in a proceeding the Court may order under r.13.03B(1) of the FCC Rules that:
(a)the proceeding be stayed or dismissed as to the whole or any part of the relief claimed by the applicant; or
(b)a step in the proceeding be taken within the time limited in the order; or
(c)if the applicant does not take a step in the time mentioned in paragraph (b) – the proceeding be stayed or dismissed, as to the whole or any part of the relief claimed by the applicant.
The law
The traditional view of the law concerning an application for an order which seeks to enforce payment of costs arising out of an interlocutory application, and which would have the effect of interfering with, delaying or stopping the progress of the litigation, was expressed by the Full Court of the Supreme Court of Victoria in Exell v Exell [1984] VR 1 at 6-7 per Crockett, Kaye and Gray JJ (“Exell”), as follows:
Enforcement of an order for payment of costs is not a proper use of the order for directions procedure under O.30. This is so because, generally speaking, a plaintiff's failure to pay costs of an interlocutory application brought by the opposite party is unlikely to interfere with or delay the progress of the litigation. Other remedies, including execution by a writ of fi. fa., afford appropriate remedies for the recovery of costs. Thus, mere non-payment of the costs of interlocutory proceedings which a plaintiff has been ordered to pay is not a ground for an order staying the action until the costs have been paid. To justify an order staying the action for non-payment of costs of an interlocutory application, it must be shown either that the action is vexatious or that the plaintiff's conduct of the action is oppressive or unreasonable … the mere failure of a plaintiff to pay the costs of interlocutory proceedings, in our opinion, is not a ground for dismissing an action under a self-executing order, and such an order cannot properly form part of an order for directions.
In Welsh v Digilin Pty Ltd (ACN 078 278 449) [2007] FCA 2064 (“Digilin 2007”) the Federal Court of Australia was dealing with proceedings in which there had been numerous amendments to the statement of claim and consequent vacation of trial dates, resulting in various costs orders against the applicant: Digilin 2007 at paras.1-3 per Dowsett J. In view of the history of the matter, the Federal Court ordered that the proceedings be stayed pending payment by the applicant of $20,000 on account of costs, with liberty to the respondents to apply to increase the amount to be paid as costs when assessed or taxed. Assessment and taxation of costs resulted in a total costs figure of $68,609.41. The amount of $20,000 not having been paid, nor any other part of the costs having been paid, the respondent moved to strike out the action for want of prosecution: Digilin 2007 at para.4 per Dowsett J.
The Federal Court considered the applicant’s explanation, including a plea of impecuniosity, and a claim that the “parlous state” of the litigation was as a consequence of Counsel’s conduct, and the applicant’s indication that a litigation funder would be able to provide the amount of $20,000 referred to in the Federal Court’s earlier orders, but not for some two months. The Federal Court remained of the view that the applicant should not be allowed to continue to prosecute the proceedings against the respondent until the costs orders had been met: Digilin 2007 at paras.5-6 per Dowsett J. The Federal Court considered a plea from the applicant that he ought not be prevented from prosecuting his claim merely because of an inability to pay orders for costs, referring to the Victorian Court of Appeal decision in Gao v Zhang (2005) 14 VR 380; [2005] VSCA 200 (“Gao”). In Gao the Victorian Court of Appeal said that powers to halt litigation ought not be exercised unless the defaulting conduct called for “condemnation to the extent of making so draconian an order.”: Gao VR at 386 per Ormiston JA; VSCA at para.17 per Ormiston JA, cited in Digilin 2007 at paras.7-8 per Dowsett J. The Federal Court held that it will, in general, be inappropriate to prevent a party from litigating a claim to resolution because of impecuniosity, but that fairness as between parties must be the primary consideration, and that conduct of a party may lead to an order which effectively prevents the continuation of proceedings: Digilin 2007 at para.9 per Dowsett J. In the case at hand the Federal Court noted that there had been serious difficulties in formulating the claim, the sum of money was considerable, and that the history of the matter offered no cause for optimism as to it being quickly resolved, even if the stay was lifted. In those circumstances, together with the applicant’s failure to pay the specified sum, it was appropriate that steps be taken to ensure that, as far as possible, the respondent was “not out of pocket”: Digilin 2007 at para.10 per Dowsett J. Orders were therefore made for the applicant to pay the sum of the assessed costs by a certain date, save which the proceedings would stand dismissed: Digilin 2007 at para.11 per Dowsett J.
In Welsh v Digilin Pty Ltd & Ors (ACN 078 278 449) & Ors (2008) 250 ALR 13; [2008] FCAFC 149 (“Digilin Appeal”) the Full Court of the Federal Court unanimously dismissed the appeal from Digilin 2007, and held that the primary Judge had properly exercised the discretion to make an order dismissing the proceedings in the event of the non-payment of taxed interlocutory costs. The Full Court of the Federal Court found that the grounds of appeal gave rise to three key issues for determination, as follows:
a)the nature of the power conferred by O.35A r.3(1) of the Federal Court Rules (“FC Rules”, being the 1976 FC Rules) to stay or dismiss proceedings for failure to take steps previously ordered by the Federal Court;
b)issues a Judge may properly take into consideration in deciding whether to make an order pursuant to O.35A r.3(1) of the FC Rules; and
c)whether pursuant to O.35A r.3(1) the Federal Court may order that proceedings be stayed or dismissed in the event of non-payment of costs previously ordered in interlocutory proceedings in the same matter, where the evidence before the Court demonstrates possible impecuniosity of the party in default.
Digilin Appeal ALR at 18 per Tamberlin, Greenwood and Collier JJ; FCAFC at para.9 per Tamberlin, Greenwood and Collier JJ.
Order 35A r.3(1) of the FC Rules was at the time of Digilin Appeal in identical terms to the current r.13.03B(1) of the FCC Rules.
An order under O.35A r.3(1) of the FC Rules that in default of payment the proceedings were to stand dismissed was said to be in the nature of a guillotine order falling squarely within O.35A r.3(1)(c) of the FC Rules, and conferring a discretionary power to make such an order. That discretionary power was described in Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 (“Lenijamar”), as quoted in Digilin Appeal ALR at 18-19 per Tamberlin, Greenwood and Collier JJ; FCAFC at paras.12-13 per Tamberlin, Greenwood and Collier JJ, in the following terms
… the power given by the rule is conditional on one circumstance only: the failure of a party to comply with an order of the Court directing that party to take a step in the proceeding. There is no requirement of intentional default or contumelious conduct, although the attitude of the applicant to the default and the Court’s judgment as to whether or not the applicant genuinely wishes the matter to go to trial within a reasonable period will usually be important factors in weighing the proper exercise of the discretion. There is no requirement of “inordinate and inexcusable delay” on the part of the applicant or the matter. There is no requirement of prejudice to the respondent, although the existence of prejudice is also likely to be significant. (Lenijamar Pty Ltd v AGC (Advances) Ltd [1990] FCA 520; (1990) 27 FCR 388 at 395-396)
….
The discretion...is unconfined, except for the condition of non-compliance with a direction... (T)wo situations are obvious candidates for the exercise of the power: cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to co-operate with the Court and the other party or parties in having the matter ready for trial within an acceptable period and cases - whatever the applicant’s state of mind or resources - in which the non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the respondent. (Lenijamar (1990) 27 FCR at 396)
As to the exercise of the discretion and the issues relevant to the exercise of the discretion the Full Court of the Federal Court held that each case under O.35 r.3(1) of the FC Rules must be considered on its merits: Digilin Appeal ALR at 20 per Tamberlin, Greenwood and Collier JJ; FCAFC at para.19 per Tamberlin, Greenwood and Collier JJ. In regard to the factors considered at first instance by the Federal Court in Digilin 2007 the Full Court of the Federal Court held that:
a)there was no compelling evidence that the applicant was impecunious, but that even if he was, the orders made did not preclude him from conducting the litigation, which it was noted had already been stayed for 12 months because of the non-payment of the $20,000 previously ordered: Digilin Appeal ALR at 20 per Tamberlin, Greenwood and Collier JJ; FCAFC at para.20 per Tamberlin, Greenwood and Collier JJ;
b)the applicant had had difficulty in formulating his claim, and pointed to the three significant amendments to the statement of claim resulting in the vacation of three separate trial dates during the previous 12 months, and the making of 12 orders, including multiple orders for payment of costs: Digilin Appeal ALR at 20 per Tamberlin, Greenwood and Collier JJ; FCAFC at para.21 per Tamberlin, Greenwood and Collier JJ;
c)the failure of the applicant to pay the costs, and the improbability of his being able to pay further costs awarded if the difficulty in formulating his claim continued, were factors relevant to the making of the order at first instance: Digilin Appeal ALR at 20-21 per Tamberlin, Greenwood and Collier JJ; FCAFC at para.23 per Tamberlin, Greenwood and Collier JJ;
d)because the applicant had been found to have experienced difficulty in formulating his claim, it was open to the Federal Court at first instance to find that confidence in the merits of the claim was not encouraged, but also to acknowledge that that did not exclude the possibility that it was a meritorious claim, as had been noted by the Federal Court at first instance: Digilin Appeal ALR at 21 per Tamberlin, Greenwood and Collier JJ; FCAFC at para.24 per Tamberlin, Greenwood and Collier JJ; see also Digilin 2007 at para.10 per Dowsett J;
e)the prejudice suffered by the respondent by reason of the incurring of considerable costs, the failure of the applicant to pay the costs which had been ordered, and the likelihood that the appellant would not be able to pay additional costs incurred if the respondent was successful at trial, were relevant factors to be considered: Digilin Appeal ALR at 21 per Tamberlin, Greenwood and Collier JJ; FCAFC at para.26 per Tamberlin, Greenwood and Collier JJ; and
f)consideration of whether there was cause for hope that the matter would be quickly resolved, and the question of whether the matter would proceed to a final hearing within a reasonable time were relevant considerations in the circumstances of the case: Digilin Appeal ALR at 21 per Tamberlin, Greenwood and Collier JJ; FCAFC at paras.27-28 per Tamberlin, Greenwood and Collier JJ.
The Full Court of the Federal Court took no issue with the issues considered to be relevant by the Federal Court at first instance, and found that the exercise of the discretion with respect to those issues had not miscarried: Digilin Appeal ALR at 20-21 per Tamberlin, Greenwood and Collier JJ; FCAFC at para.20-28 per Tamberlin, Greenwood and Collier JJ.
Finally, the Full Court of the Federal Court dealt with the judgment of the Victorian Court of Appeal in Gao where the Victorian Court of Appeal had stressed the need for conduct on the party of the default being required to be such as to call for “condemnation”: Gao VR at 386 per Ormiston JA; VSCA at para.17 per Ormiston JA, cited in Digilin 2007 at para.8 per Dowsett J.
The Full Court of the Federal Court in Digilin Appeal ALR at 23 per Tamberlin, Greenwood and Collier JJ; FCAFC at para.31 per Tamberlin, Greenwood and Collier JJ, distinguished the approach to be adopted in cases involving O.35A r.3(1) of the FC Rules observing that:
While the traditional approach of the courts to this issue is helpful, it is important not to lose sight of the fact that the judicial discretion vested by O 35A r 3(1) is unconditional. It is not the role of the appeal court to intervene in discretion properly exercised or without legal error. The analysis in Gao, while both learned and helpful in considering the issues before this court, does not in our view prescribe a standard of conduct which must be satisfied by a defaulting litigant before the primary judge can consider whether to make an order pursuant to O 35A r 3(1). There is no need for the defaulting litigant to have engaged in contumelious conduct in the nature of harassment or unfair dealing before the discretion of the judge conferred by O 35A r 3(1) is enlivened.
In Digilin Appeal the Full Court of the Federal Court went on to observe that:
a)the paramount principle was that “the claim honestly made by a suitor for judicial relief must be investigated and decided in the manner appointed”, which was a “principle [which] also recognises that it may be appropriate to bring such proceedings to a close when they would amount to an abuse of jurisdiction, or more relevantly in this case, they would clearly inflict unnecessary injustice upon the opposite party”: Digilin Appeal ALR at 23 per Tamberlin, Greenwood and Collier JJ; FCAFC at para.32 per Tamberlin, Greenwood and Collier JJ, citing Cox v Journeaux (No. 2) (1935) 52 CLR 713 at 720 per Dixon J;
b)it endorsed the view of the Victorian Court of Appeal in Gao “that an order of this kind because of failure to pay interlocutory costs is not to be treated as an everyday occurrence”: Digilin Appeal ALR at 23 per Tamberlin, Greenwood and Collier JJ; FCAFC at para.33 per Tamberlin, Greenwood and Collier JJ, citing Gao VR at 385 per Ormiston JA; VSCA at para.14 per Ormiston JA; and
c)in this case the primary Judge considered that the interests of justice favoured the making of such an order, and that there were no errors identifiable in the manner in which the primary Judge reached that decision: Digilin Appeal ALR at 23 per Tamberlin, Greenwood and Collier JJ; FCAFC at para.33 per Tamberlin, Greenwood and Collier JJ.
In University of New South Wales v Huang & Anor [2012] FCA 308 (“Huang”) the Federal Court observed that the use of the word “may” in r.13.03B(1) of the then Federal Magistrates Court Rules 2001 (Cth), now the FCC Rules, showed that it was a discretionary provision: Huang at para.21 per Reeves J, and was one relating to matters of practice and procedure: Huang at para.22 per Reeves J. The Federal Court then identified: Huang at para.23 per Reeves J, the content of the discretion involved as being that identified by the High Court in Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission & Ors (2000) 203 CLR 194 at 204-205 per Gleeson CJ, Gaudron and Hayne JJ; [2000] HCA 47 at para.19 per Gleeson CJ, Gaudron and Hayne JJ as follows:
“Discretion” is a notion that “signifies a number of different legal concepts”. In general terms, it refers to a decision-making process in which “no one [consideration] and no combination of [considerations] is necessarily determinative of the result”. Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made. The latitude may be considerable as, for example, where the relevant considerations are confined only by the subject matter and object of the legislation which confers the discretion.
The principles established in Digilin Appeal and Digilin 2007, as well as Huang, are binding on this Court as a court inferior in the federal judicial hierarchy to the Federal Court: Suh & Ors v Minister for Immigration & Citizenship & Anor (2009) 175 FCR 515; [2009] FCAFC 42.
Rule 13.03B(1) of the FCC Rules therefore gives the Court a discretionary power to make an order of the type therein prescribed. It is default in compliance with an order of the Court alone that triggers the exercise of the discretionary power in r.13.03B(1) of the FCC Rules, and a range of factors dependant on the facts of each case may then influence how the discretion is exercised. The exercise of the discretion is not, however, commonplace: Gao VR at 385 per Ormiston JA; VSCA at para.14 per Ormiston JA, approved in Digilin Appeal ALR at 23 per Tamberlin, Greenwood and Collier JJ; FCAFC at para.33 per Tamberlin, Greenwood and Collier JJ.
Consideration
There is no question in this case that the applicant was in default in relation to the payment of costs under the 5 September 2013 Costs Order and the 9 December 2013 Costs Order. The question is whether that default warrants the making of a default order in the exercise of the Court’s discretion, and, if so, what order. In that regard the Court notes that the respondent has sought two separate orders, in the alternative, one for dismissal, and one for a springing order giving rise to dismissal. The third type of order in r.13.03B(1)(c) of the FCC Rules referring to a stay of the proceedings has not been sought by the respondent. The third type of order would now be otiose given the payment of costs shortly before the hearing of the application in a case.
The costs orders in this case arise from two orders, three months apart, for a modest sum in total, being $2194 (excluding any interest which has accrued). The smaller the amount of costs outstanding, the less likely it is that the party with the benefit of the costs order or orders will be denied a fair opportunity to present its case, although the circumstances of each case will vary, and must be taken into account: Gao VR at 386 per Ormiston JA; VSCA at para.16 per Ormiston JA.
This matter is in an entirely different factual class from that which was under consideration in Digilin 2007 and Digilin Appeal. There, there had been at least a dozen interlocutory orders of the Federal Court over a period of approximately two years and the quantum of costs which had been ordered to be paid was, ultimately, quite considerable ($68,609.41). Even on an interim basis in Digilin 2007 the amount which resulted in the initial stay of proceedings ($20,000) is almost ten times as much as the quantum of the costs orders in this case.
There has been considerable progress in the proceedings in this matter. The applicant has filed one reasonably substantial affidavit, being an affidavit to be relied upon at hearing: see order 1 of the Court’s orders of 10 June 2013, and the respondent has filed five affidavits, three of which are quite substantial, which affidavits are to be relied upon at hearing: see order 2 of the Court’s orders of 10 June 2013 and order 1 of the Court’s orders of 5 September 2013. The applicant has filed no affidavit in reply to be relied upon at hearing, but the terms of the relevant order which require the applicant to “file and serve any affidavits in reply to be relied upon at hearing”: see order 3 of the Court’s orders of 10 June 2013 and order 2 of the Court’s orders of 5 September 2013, are not orders which require the applicant to file an affidavit in reply, and the failure to do so, is not a non-compliance with such an order. An order in these terms is “technically … not an absolute order requiring the filing of a further affidavit”: Wintle v RUC Cementation Mining Contractors Pty Ltd [2012] FMCA 140 at para.20 per Lucev FM; Matthews v Hargreaves (No.3) [2011] FMCA 254 at paras.3-4 per Lucev FM. The parties have engaged in mediation, but the mediation was not successful in resolving this matter, and was therefore terminated. Bearing in mind that the application was filed in late April 2013, there cannot be said to have been any unreasonable delay in the proceedings overall. In the circumstances, it appears that further programming orders could be made which would see the matter progress to a hearing of the substantive application.
There is no evidence that the applicant is impecunious, and cannot afford to litigate the proceedings, or is otherwise seeking to delay the proceedings. Although Mr Galic told the Court that the applicant was suffering financial hardship, it is not such as to preclude his lawyers from continuing to act for him. There is no reason to suppose that further costs orders might not be able to be met. In any event, a significant factor in this case is that because the substantive action is a matter brought under the Fair Work Act 2009 (Cth) (“FW Act”) in the Fair Work Division of the Court the usual rule is that such proceedings are no costs proceedings, subject to limited costs carve-outs: FW Act, s.570(2), Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574 at 582 per Tamberlin, Gyles and Gilmour JJ; [2008] FCAFC 143 at para.28 per Tamberlin, Gyles and Gilmour JJ. Thus, in the ordinary course of events a hearing of a matter such as this would give rise to no further costs orders.
The applicant’s history of non-compliance in relation to the 5 September 2013 Costs Order and the 9 December 2013 Costs Order is not such as to indicate an unwillingness or inability to make proper preparations for hearing, or to otherwise co-operate with the Court in bringing the matter to a hearing: Lenijamar at 396 per Wilcox and Gummow JJ.
Save for the non-payment of the small amount of costs there is no evidence of any particular prejudice to the respondent. Further the non-payment of the costs is probably not a significant prejudice to an organisation such as the respondent.
In circumstances where:
a)the defaults, albeit not unimportant, are simple ones;
b)the amount of the costs in issue is extremely modest, and the matter is unlikely to give rise to any further costs orders;
c)the matter is well advanced, and with appropriate programming directions, can be listed for hearing; and
d)there is a lack of, or very limited, prejudice to the respondent,
an order dismissing the application is a remedy which goes beyond what justice ultimately requires for the proper disposition of these proceedings. To make such an order in these proceedings would run the risk of making commonplace what ought to be exceptional orders, and that is not what the law presently prescribes. Further, because the costs have now been paid, no injustice is done by refusing to dismiss the application.
The respondent also sought the costs of this application in a case, on the basis that it was the conduct of the applicant in failing to comply with the 5 September 2013 Costs Order and the 9 December 2013 Costs Order that necessitated the making of the respondent’s application in a case. There is no doubt that the failure to comply with an order of a court can constitute an unreasonable act or omission for the purposes of s.570(2)(b) of the FW Act: Australian and International Pilots Association v Qantas Airways Ltd (No. 3) (2007) 162 FCR 392 at 403 per Tracey J (“Australian and International Pilots Association (No. 3)”); [2007] FCA 879 at para.37 per Tracey J; Torpia v Zarfati (2009) 178 IR 325 at 326-327 per Barnes FM; [2009] FMCA 166 at para.6 per Barnes FM. But s.570(2)(b) of the FW Act also requires the unreasonable act or omission to have caused the other party to incur costs, in this case the costs of the respondent’s application in a case. In the Court’s view, it was not the failure to comply with the costs orders referred to above that caused the respondent’s to incur the costs of the respondent’s application in a case. That is because any lawyer seeking to make such an application in a case would, if the matter had been researched with any diligence for a short period of time, have realised that it had no reasonable prospect of success, and ought not to have been made. Thus, the making of the respondent’s application in a case was itself an unreasonable act, because on any reasonable view of the circumstances, its prosecution was an incompetent or hopeless case: Australian and International Pilots Association (No. 3) FCR at 402-403 per Tracey J; FCA at para.36 per Tracey J, and the respondent unnecessarily incurred costs as a consequence of its own unreasonable act. In those circumstances, the Court considers that it is not appropriate to exercise its discretion to make an order for costs in favour of the respondent in relation to the respondent’s application in a case.
Conclusions and orders
In the exercise of the broad discretion entrusted to the Court under r.13.03B(1) of the FCC Rules, the Court concluded that the respondent’s application in a case filed 28 January 2014 must be dismissed, and that there be no order as to the costs of that application in a case. Orders to that effect were made yesterday at the conclusion of the hearing of the respondent’s application in a case.
I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev
Associate:
Date: 6 February 2014
16
17
5