BRENDAN RYAN v PRIMESAFE (ABN 39 877 327 401), BRENDAN TATHAM and DEREK HUMPHERY-SMITH
File number:
VID 287 of 2014
Judge:
MORTIMER J
Date of judgment:
21 January 2015
Catchwords:
PRACTICE AND PROCEDURE – Costs – application for costs in proceeding instituted under the Fair Work Act 2009 (Cth) pursuant to s 570(2), where applicant has discontinued proceedings against all respondents – relationship between discretion conferred on Court by s 43 of the Federal Court of Australia Act 1976 (Cth) and s 570(2) – whether costs should be awarded against applicant’s solicitor – whether indemnity costs should be awarded – applicant’s solicitor to bear costs personally on party–party basis
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Ryan v Primesafe [2015] FCA 8
Case
[2015] FCA 8
Decision Date
CaseChat Overview and Summary
In Ryan v Primesafe, the court addressed a claim for costs by Mr Humphery-Smith against Mr McDonald, who had initiated proceedings against him under the Fair Work Act 2009. The dispute centred on whether the court should award costs against Mr McDonald for the proceedings against Mr Humphery-Smith, which were ultimately discontinued. The court had to determine whether the proceedings against Mr Humphery-Smith were instituted without reasonable cause and whether the unreasonable conduct led to costs being incurred by Mr Humphery-Smith.
The legal issues revolved around the interpretation and application of section 570(2) of the Fair Work Act, which limits the court's discretion to order costs in proceedings under the Act. The court also had to consider the interaction between this section and the general costs discretion provided by section 43 of the Federal Court of Australia Act 1976. Furthermore, the court examined whether indemnity costs should be awarded and who should bear the costs personally, Mr McDonald or the firm he worked for.
The court found that the proceedings against Mr Humphery-Smith were indeed instituted without reasonable cause and that the unreasonable conduct led to costs being incurred by him. However, the court was not satisfied that the conduct involved a level of blameworthiness that warranted an order for indemnity costs. Instead, the court held that Mr McDonald should bear the costs personally on a party-and-party basis. This decision was based on the evidence presented, which did not indicate a deliberate disregard for the norms of litigation. The court ordered that Mr McDonald was to bear the legal costs incurred by Mr Humphery-Smith up to 30 July 2014, excluding any costs related to proceedings in the Fair Work Commission. Additionally, Mr McDonald was to bear the disbursements incurred by Mr Humphery-Smith in bringing the costs application, including counsel’s fees.
Orders
Orders of the court
1. Subject to paragraph 3 of these orders, Alan McDonald is to bear personally the legal costs of the third respondent incurred in this proceeding, up to 30 July 2014 and excluding any legal costs attributable to any proceedings in the Fair Work Commission.
2. The legal costs referred to in paragraph 1 of these orders are to be paid on a party and party basis, and to be taxed in default of agreement.
3. Alan McDonald is to bear personally the disbursements incurred by the third respondent in bringing this application for costs, including counsel’s fees.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
I accept there has been considerable inconvenience caused to Mr Humphery-Smith by the allegations in this proceeding. His own time has been wasted in having to respond as a party to these proceedings when there does not on the evidence appear to have been any proper basis for that to occur. He was precluded from acting for a client in circumstances where he was the partner responsible for that client’s matters within his firm. The proceedings in this Court were conducted over a relatively short period of time, and there was a discontinuance after matters were brought to a head by the order for particulars. I have found on the evidence before the Court that, for the purposes of ss 570(2)(a) and (b) of the Fair Work Act, the proceedings against Mr Humphery-Smith were instituted without reasonable cause and the unreasonable conduct in joining Mr Humphery-Smith caused him to incur costs. Without more, those factors do not justify what would be, in substance, a second departure from the underlying policy evidenced in s 570 by a costs order at the level of indemnity costs. One theme which might be said to run through the factors listed by Harper J in Ugly Tribe, and by Sheppard J in Colgate-Palmolive 46 FCR 225, is a level of blameworthiness which involves conscious or deliberate choices to flout the norms by which litigation is usually conducted, and courts expect it to be conducted. I cannot be satisfied on the evidence before me that Mr McDonald’s conduct is attended by that level of disregard. His choice to name Mr Humphery-Smith was unusual. He failed to articulate a proper factual and legal basis for it in his pleading, or in particular when sought. Whether he did so with some ulterior motive or purpose, or wilfully closing his eyes to his professional obligations, are not conclusions I am prepared positively to reach on the evidence before me.CONCLUSION The preconditions in ss 570(2)(a) and (b) having been met, Mr Humphery-Smith is entitled to be compensated for the legal costs he incurred in relation to this proceeding, during the period he was obliged to retain Hall & Wilcox to represent him, excluding any costs attributable to the application in the Fair Work Commission. Mr McDonald should bear those costs personally. Costs are payable on a party and party basis. There is no evidence before me that Mr Humphery-Smith incurred any legal costs after 30 July 2014, when Mr Riekert recommenced acting for him. Accordingly, subject to the matter I refer to in [117] below, the costs will be limited to those incurred by Mr Humphery-Smith when he was represented by Hall & Wilcox in relation to the proceeding in this Court. As I have noted above, there was a proper concession that the letter of demand of 24 July 2014 was too widely expressed when it sought to incorporate the costs in the Fair Work Commission. This application was contested by both the applicant and Mr McDonald. Mr Humphery-Smith is entitled to be compensated for any disbursements he has incurred in bringing the costs application, including counsel’s fees. As I have noted, there is no evidence of any fee agreement or arrangements within Lander & Rogers such as would found an order for solicitors’ costs on this application.
Ratio Decidendi
Legal Principle Established
She submitted there was no lack of compliance with the duties in s 37N of the Federal Court Act, given the proceeding was issued in May 2014, and the discontinuance was filed on 30 July 2014. The discontinuance was filed shortly after the settlement between the applicant and Primesafe and the second respondent, and after there had been only one directions hearing.CONSIDERATIONSection 570: applicable principles There is no need to rehearse the principles about the width of the general costs discretion in s 43 of the Federal Court Act. Costs orders against legal practitioners attract more confined principles and I deal with these at [89]-[90] below. In the present proceeding, the application of these principles is, however, conditioned by the terms of s 570 of the Fair Work Act. In this proceeding, the applicant made claims under the Australian Consumer Law. Some consideration has been given in this Court to whether s 570 (and its predecessor provision s 824 of the Workplace Relations Act 1996 (Cth)) applies to all, or only part, of a proceeding in which the jurisdiction of the Court arises under the Fair Work Act (or the Workplace Relations Act) and another piece of Commonwealth legislation. In relation to s 824, a Full Court of this Court has held that in such circumstances, the constraints in s 824 applied only to that part of the proceeding concerned with claims under the Workplace Relations Act: see Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (No 2) (2013) 209 FCR 464; [2013] FCAFC 25 at [64]-[65] per North, Robertson and Logan JJ. This approach was applied to s 570 by Foster J in El-Debel v Secretary, Department of Immigration and Border Protection [2014] FCA 474, apparently on the basis of a submission by both parties that this was the correct approach. However in Stanley v Service to Youth Council Inc (No 3) [2014] FCA 716, especially at [25]-[36], White J found that the terms of s 570 of the Fair Work Act were more broadly expressed than s 824 of the Workplace Relations Act and, where claims were made in one proceeding under more than one piece of federal legislation, including the Fair Work Act, s 570 applied to the costs of the whole proceeding. If it were necessary to decide the point, I would be inclined, with respect to Foster J, to agree with the approach taken by White J in Stanley. However, in this case the issue is a moot one, because the early discontinuance of this proceeding means it could not possibly be said that there were any particular costs attributable to the consumer law claim which were not constrained by the terms of s 570. Accordingly, I proceed on the basis (favourable to the interests of the applicant and Mr McDonald) that s 570 constrains the Court’s discretion to order costs as to the whole of this proceeding. Mr Humphery-Smith sought to rely on ss 570(2)(a) and (b) for a costs order to be made in relation to a matter arising under the Fair Work Act on the following bases: first, that there was no reasonable cause for Mr Humphery-Smith to be named as a respondent in this proceeding and the proceeding against him was vexatious (s 570(2)(a)) and, second, that the unreasonable acts or omissions of the applicant, alternatively, Mr McDonald, caused Mr Humphery-Smith to incur costs (s 570(2)(b)).