RUTHERFORD v RIVERSIDE TEXTILES PTY LTD
[2012] FMCA 591
•6 July 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RUTHERFORD v RIVERSIDE TEXTILES PTY LTD | [2012] FMCA 591 |
| INDUSTRIAL LAW – Application under Fair Work Act 2009 – costs. |
| Fair Work Act 2009, ss. 369, 570 Federal Magistrates Court Rules 2011, r. 7.03 Workplace Relations Act 1996, s.824(2) |
| Australian and International Pilots Association v Qantas Airways Limited (No. 3) [2007] FCA 879; (2007) 162 FCR 392; (2007) 165 IR 464 Construction, Forestry, Mining and Engineering Union v Clarke [2008] FCAFC 143; (2008) 176 IR 245; (2008) 170 FCR 574 Dowling v Fairfax Media Publications Pty Ltd [2009] FCA 339; (2009) 182 IR 28 McAleer v University of Western Australia (No. 2) [2007] FCA 247; [2008] 1 FCR 641; (2007) 161 IR 151 Paras v Public Service Body Head of the Department of Infrastructure (No. 3) [2006] FCA 745; (2006) 152 FCR 534 Rutherford v Hausner [2011] FMCA 1033 |
| Applicant: | BELINDA RUTHERFORD |
| Respondent: | RIVERSIDE TEXTILES PTY LTD |
| File Number: | MLG 1301 of 2011 |
| Judgment of: | Riethmuller FM |
| Hearing date: | 23 December 2011 |
| Date of Last Submission: | 31 May 2012 |
| Delivered at: | Melbourne |
| Delivered on: | 6 July 2012 |
REPRESENTATION
| Counsel for the Applicant: | Ms Fisken of Counsel |
| Solicitors for the Applicant: | Wightons Lawyers |
| Counsel for the Respondent: | Mr C. Hartigan |
| Solicitors for the Respondent: | Herbert Geer |
ORDERS
There be no order as to costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1301 of 2011
| BELINDA RUTHERFORD |
Applicant
And
| RIVERSIDE TEXTILES PTY LTD |
Respondent
REASONS FOR JUDGMENT
The applicant seeks orders that Peter Hausner pay the applicant’s costs of the directions hearing in this matter on 24 October 2011 and that the respondent pay the applicant’s costs associated with her application in the case on 2 November 2011.
The substantive issue that arose in these proceedings to which the costs application relates is set out in my judgment of 23 December 2011: see Rutherford v Hausner [2011] FMCA 1033. The applicant had brought proceedings against Peter Hausner and sought leave to amend her application to change the name of the respondent from “Peter Hausner (Godfrey Hurst)” to “Riverside Textiles Pty Ltd (ACN 068 232 673)”. Unfortunately, the certificate under the Fair Work Act was not in the correct name of the employer, nor were the proceedings brought in the correct name of the employer.
In support of this application, the applicant also filed an affidavit setting out some correspondence between the solicitors with respect to the issue. The solicitors for Mr Hausner wrote to the solicitors for the applicant on 20 October 2011 advising that the applicant had not been served upon their client and that the proceedings before Fair Work Australia had been with respect to “Godfrey Hirst trading as Riverside Textiles” and not their client specifically. It included a copy of the employment agreement showing Riverside Textiles Pty Ltd as the employer and advising that a dismissal of the application would be sought if it were not withdrawn.
The solicitors for the applicant wrote back on 20 October acknowledging that an error was made with respect to the respondent seeking an adjournment so as to enable them to file an amended application under r.7.03 of the Federal Magistrates Court Rules 2011. The solicitors for Mr Hausner wrote back refusing to consent to an adjournment, pointing out that there was no certificate naming Mr Hausner and that an application ought never have been brought against him. The solicitors (who also act for the employer) proceeded to set out their view that there was no basis for an amendment.
I should record that the solicitors involved now were not acting for the applicant at the time the application was filed, and therefore not the authors of the error that has lead to the issues set out in my earlier judgment.
It was clear by the end of the correspondence that there was a serious issue between the parties about whether or not the provisions of the Fair Work Act prevented the applicant being able to pursue the claim against the employer.
At the directions hearing in October, orders were made to provide the parties with an opportunity to put relevant material before the court and to apply for leave to amend, which was subsequently successful for the reasons set out in the previous judgment.
As a result, the applicant argues that the costs incurred at the directions hearing should be paid by Mr Hausner on the basis that they offered to adjourn the directions hearing for a sufficient time to allow a further application to be made to amend, and thus those costs could have been avoided.
With respect to the costs claimed by the applicant against the present respondents, it is based upon the failure of the present respondents to consent to the amendment of the application saying that this was unreasonable conduct in the circumstances of the case as:
(a) various names had been used, including by the Respondent, to describe the legal entity which had employed the Applicant [see Rutherford v Hausner [2011] FMCA 1033 at paragraph [9]];
(b) the Respondent’s representatives had been involved in the proceedings before the FWA including participating in a conciliation conference with the Applicant [see Rutherford v Hausner [2011] FMCA 1033 at paragraphs [10], [11], [15] and [19];
(c) it had at all times been clear that the dispute in question concerned “the employment relationship between the applicant and employer which forms part of the corporate group described or named in the proceedings” [see Rutherford v Hausner [2011] FMCA 1033 at paragraph [10]];
(d) the “practical purpose” of the certificate required by the Fair Work Act had been fulfilled [see Rutherford v Hausner [2011] FMCA 1033 at paragraph [18]];
(e) there was no prejudice to the employer and the Applicant’s error had been explained [see Rutherford v Hausner [2011] FMCA 1033 at paragraph [30]]; and
(f) “There was never any real doubt on the part of the respondent as to who was the proper respondent” [see Rutherford v Hausner [2011] FMCA 1033 at paragraph [34]].
(See the applicant’s submissions on costs filed on 27 January 2012, paragraph [27])
The respondent argues that even the certificate from Fair Work Australia under s.369 of the Fair Work Act named “Godfrey Hurst Riverside Textiles Pty Ltd” as the respondent and that as a result there was never any basis for nominating Mr Hausner as the respondent in the proceedings.
On the material filed, Mr Hausner was not involved in the termination of the applicant’s employment, nor was he served. Mr Hausner seeks an order for his costs on the basis that the proceedings could never be properly brought against him and that he ought never to have been named as a party. The solicitors for the respondents point out that the applicant was required to seek an indulgence of the court in order to delete Mr Hausner’s name and replace it with the name of her former employer, and therefore the applicant ought to the pay the costs of the application to amend.
This is a case that involved the misnomer of a respondent. The nature of the proceedings, the events that took place at Fair Work Australia, and the service of the proceedings upon the employer, all go to show that there was no doubt as to the substance of who it was that should have been parties to the proceedings. The employer, taking a firm line on the litigation, had lawyers rightly seeking that the proceedings be discontinued on the basis that Mr Hausner was not a proper respondent. The lawyers for the applicant have declined to discontinue against Mr Hausner while they sought to bring an application to correct the name of the respondent in the proceedings.
The reality of the case is that Mr Hausner ought never to have been named, and on first notice of issue being taken as to the name of the respondent, the lawyers for the applicant ought to have advised that they did not intend to pursue any claim against Mr Hausner but would be bringing an application to amend the name, failing which the proceedings would be discontinued. This is what the lawyers for the applicant did. At the first directions hearing it was not established that there were facts and circumstances sufficient to justify an immediate dismissal of the proceedings (even though they described the respondent as Mr Hausner) and therefore he was unsuccessful in his insistence upon immediate dismissal of the proceedings. By this stage, however, it was apparent that the respondent was misnamed in the proceedings and that no substantive claim was in fact being brought against Mr Hausner.
At the subsequent hearing the applicant was successful in obtaining the indulgence of the court to amend the misnomer. The respondent’s opposition to this was not spurious, in that there were real arguments of significance as to the operation of the Fair Work provisions and the applicant had not in fact utilised even the name contained in the certificate as the name of the respondent in the proceedings.
On ordinary costs principles the applicant would have to meet the costs of Mr Hausner who was never properly a party and against whom the applicant never succeeded and the costs of the respondent with respect to the misnomer issue as the applicant required the indulgence of the court for the amendment. To the extent that the opposition to the amendment has increased the costs beyond a situation where the respondent neither consented nor opposed the amendment, or indeed even consented to the amendment, I would have been inclined, in this case (given that the additional costs were not disproportionate to the issue) to conclude that the applicant should meet the respondent’s costs in this regard, as the applicant required the indulgence of the Court to correct their error. On the existing cases it was not clear that the applicant was entitled to such an indulgence. The applicant could have made formal offers to settle that may have altered such an outcome.
In proceedings under the Fair Work Act, costs are governed by section 570 which provides as follows:
570 [Costs only if proceedings instituted vexatiously etc.]
(1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) exercising jurisdiction under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A.
(2) The party may be ordered to pay the costs only if:
(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or
(c) the court is satisfied of both of the following:
(i) the party unreasonably refused to participate in a matter before FWA;
(ii) the matter arose from the same facts as the proceedings.
In McAleer v University of Western Australia (No. 2) [2007] FCA 247; [2008] 1 FCR 641; (2007) 161 IR 151 Siopis J (in interpreting s.824(2) of the Workplace Relations Act 1996 approached the case on the basis that the claim there was not one that was “so devoid of merit that the advancement of it constituted an ‘unreasonable act’ under section 428(2)” (see paragraph [5]). Even in the context of a case where offers had been made, his Honour had made no order as to costs as a result of the legislative provision.
Tracey J in Australian and International Pilots Association v Qantas Airways Limited (No. 3) [2007] FCA 879; (2007) 162 FCR 392; (2007) 165 IR 464 at 36 noted that the prosecution of a hopeless case can be regarded as an unreasonable act under equivalent legislation.
In Dowling v Fairfax Media Publications Pty Ltd [2009] FCA 339; (2009) 182 IR 28 Moore J, when reviewing authorities, said:
[53] In considering whether a proceeding was instituted vexatiously or without reasonable cause for the purpose of s 824(1) it is necessary to distinguish between the situation where an applicant has merely been unsuccessful on the case he or she has sought to propound and the situation where the applicant's case was entirely misconceived. In relation to the former category, an application is not commenced without reasonable cause simply because the applicant's arguments are rejected by the Court: R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia [1978] HCA 51; (1978) 140 CLR 470 at 473 per Gibbs J. However, in relation to the latter category it is likely that it can be said that the proceeding was instituted without reasonable cause such that a costs award is appropriate: Standish v University of Tasmania (1989) 28 IR 129 at 139 per Lockhart J. The comments of Wilcox J in Kanan v Australian Postal & Telecommunications Union (1992) 43 IR 257 at 264-265 are also useful in ascertaining whether a proceeding was instituted without reasonable cause. As his Honour said:
It seems to me that one way of testing whether a proceeding is instituted "without reasonable cause" is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being "without reasonable cause". But where, on the applicant's own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.
In Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 at 274-275 Northrop J said the following in respect of s 197A of the then Conciliation and Arbitration Act 1904-1975 (Cth), which was substantially in the same terms as s 824(1) of the WR Act:
In considering this matter the court must have regard to all the material properly before it. The test is not subjective to the party instituting the proceedings as at the time of the institution of the proceedings. The conduct of the opposing party prior to the institution of the proceedings may be relevant in deciding whether the proceedings were instituted vexatiously or without reasonable cause. The conduct of the opposing party both prior and subsequent to the institution of proceedings may be relevant to the discretion remaining in the court. It may be difficult to satisfy the test where disputed questions of fact arise and the proceedings eventually are dismissed because the court finds facts adverse to the party instituting the proceedings. Where the test is satisfied, having regard to the general policy of the section, the court may, nevertheless, in the exercise of its discretion, make no order as to costs.
Of course, the discretion can be exercised irrespective of the outcome of the particular application in question or of the proceedings in its entirety: see Paras v Public Service Body Head of the Department of Infrastructure (No. 3) [2006] FCA 745; (2006) 152 FCR 534 at 16 per Young J.
In the Construction, Forestry, Mining and Engineering Union v Clarke [2008] FCAFC 143; (2008) 176 IR 245; (2008) 170 FCR 574, the Full Court (Tamberlin, Gyles and Gilmour JJ) made clear that:
[29] In our view, the respondent has not engaged in "an unreasonable act or omission". As the authorities indicate, there is a distinction between a party who pursues arguments which are ultimately abandoned or rejected by the Court and a party who commences a proceeding which is misconceived in the sense of being incompetent or unsupportable: Australian and International Pilots Association 162 FCR at 402; Standish v University of Tasmania (1989) 28 IR 129 at 138-139. Simply because a party does not conduct its litigation in the most efficient way does not mean that the Court should exercise its discretion in s 824(2) of the WR Act to make a costs order. In our view, neither the late abandonment of some of its defence, nor the use of a notice of contention to advance a previously minor and ultimately unsuccessful argument, crosses the threshold of being "an unreasonable act or omission" for the purposes of s 824(2). True it is that the concession ultimately given by the respondent that it regarded the decision of Nicholson J as erroneous could have been given earlier. However, it was a concession which was, in light of the decision of this Court on the substantive appeal, properly made and beneficial to the appellants. Although it is arguable that the lateness of the concession may have put the appellants to some extra costs, we are of the view that it cannot be characterised as "unreasonable" in the circumstances of this case. Indeed, while courts should use the discretion in s 824(2) to ensure that parties to litigation arising from the WR Act do not engage in unreasonable acts and omissions which put the other party to undue expense, they should also be careful not to exercise the discretion with too much haste, given that such haste may discourage parties, for fear of an adverse costs order, from pursuing litigation under the WR Act in the manner which they deem best
In this case I am not persuaded that I should exercise the discretion as set out in s.570 in the applicant’s favour as the position of Mr Hausner in seeking to be released from the litigation as soon as possible, was certainly not unrealistic given that the litigation did not relate to him and he would never be a proper party. Nor does it appear to me that the opposition to the amendment by the respondent (although ultimately unsuccessful) could be said to have been unreasonable. The respondent had an arguable point, upon which reasonable minds would have differed until judgment was handed down. The respondent did not conduct that argument in a way that caused any unnecessary costs or delayed the proceedings. The argument was available as a result of the conduct of the applicant and the indulgence that the applicant required to place her proceedings in order.
With respect to the application for costs by the respondent, it is true that the applicant required an indulgence to put the proceedings in order. It is also true, however, that there was no real doubt that the substantive claim was brought by the applicant against her employer, and that the parties had been engaged in dispute resolution processes in this regard. Not every slip or error in the course of litigation should be regarded as unreasonable conduct: even lawyers are human and at times make mistakes. In the context of this case, the error that was made was not such as to cause any real confusion as to the claim that was being brought, but may well have been a slip that resulted in a technical knock out to the applicant, an opportunity the respondent did not decline to take up had it been open. In the circumstances I am not persuaded that the applicant’s conduct has been such that costs should be awarded under the section.
The final matter relates to the costs claim of Mr Hausner. In this case he was not served personally, but the employer was served. He was a manager or officer of the respondent corporate group. It was clear that he was not being pursued personally, and that the applicant was seeking to amend. In the unusual circumstances of this case I am not persuaded that a costs order is appropriate, particularly given the terms of the letter by the applicant’s solicitors stating their intention to attempt to amend and, if unsuccessful, discontinue against Mr Hausner.
I therefore make no order as to costs with respect to this matter.
I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Riethmuller FM.
Date: 6 July 2012
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