Salama v Sydney Trains (No 2)

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FEDERAL COURT OF AUSTRALIA

Salama v Sydney Trains (No 2) [2021] FCA 1200

File number(s): NSD 1977 of 2017
Judgment of: BURLEY J
Date of judgment: 6 October 2021
Catchwords: COSTS – application for costs order under s 570 of the Fair Work Act 2009 (Cth) – where respondents made numerous Calderbank offers – whether applicant acted unreasonably – whether costs should be awarded on party/party or indemnity basis – costs awarded on party/party basis
Legislation:

Fair Work Act 2009 (Cth) ss 361 and 570

Federal Court Rules 2011 (Cth) r 1.37

Cases cited:

Augusta Ventures Ltd v Mt Arthur Coal Pty Ltd [2020] FCAFC 194

Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (No 5) [2021] FCA 246

Australian workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23; 232 FCR 428

Brosnan v Katke [2016] FCAFC 156

Calderbank v Calderbank [1975] 2 All ER 333

Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222; 256 FCR 306

Commonwealth of Australia v Construction, Forestry, Mining and Energy Union [2003] FCAFC 115; 129 FCR 271

Perkins v Grace Worldwide (AUST) Pty Ltd [1997] IRCA 15; 72 IR 186

Ryan v Primesafe [2015] FCA 8; 323 ALR 107

Sabapathy v Jetstar Airways (No 2) [2021] FCAFC 68

Salama v Sydney Trains [2021] FCA 251

Saxena v PPF Asset Management Ltd [2011] FCA 395

Shea v TRUenergy Services Pty Ltd (No 6) [2014] FCA 271; 242 IR 1

Stratton Finance Pty Ltd v Webb [2014] FCAFC 110; 314 ALR 166

Trustee for The MTGI Trust v Johnston (No 2) [2016] FCAFC 190

Western Union Business Solutions (Australia) Pty Ltd v Robinson [2019] FCAFC 181; 272 FCR 547
Division: Fair Work Division
Registry: New South Wales
National Practice Area: Employment and Industrial Relations
Number of paragraphs: 44
Date of last submission: 21 June 2021
Date of hearing: Determined on the papers
Counsel for the Applicant: The Applicant appeared in person
Solicitor for the Respondents: Ms A Sharp of McCullough Robertson

ORDERS

NSD 1977 of 2017
BETWEEN:

JOSEPH SALAMA

Applicant
AND:

SYDNEY TRAINS

First Respondent

CHRIS WALSH

Second Respondent

ORDER MADE BY:

BURLEY J

DATE OF ORDER:

6 OCTOBER 2021

THE COURT ORDERS THAT:

1.The Applicant pay the Respondents’ costs incurred from 14 September 2019 on a party/party basis, to be assessed on a lump sum basis in an amount to be determined by a Registrar of the Court.

2.The Applicant pay the Respondents’ costs pursuant to order 2 of the orders dated 28 June 2019 on a party/party basis, to be assessed on a lump sum basis in an amount to be determined by a Registrar of the Court.

3.The Registrar be directed pursuant to r 1.37 of the Federal Court Rules 2011 (Cth) to determine the quantum of the lump sum for costs payable pursuant to orders 1 and 2 above in such manner as he or she deems fit including, if thought appropriate, on the papers.

4.The Registrar be directed…

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Details
Case
[2021] FCA 1200
Decision Date

CaseChat Overview and Summary

Salama v Sydney Trains (No 2) involved Mr Salama, an applicant, filing a general protections application in the Fair Work Commission against Sydney Trains. The applicant sought either reinstatement and damages or a higher amount in damages. The dispute centred on whether Mr Salama had unreasonably refused to participate in further conciliation and whether costs should be awarded on a party/party or indemnity basis. The legal issues were whether Mr Salama acted unreasonably in rejecting settlement offers made by Sydney Trains and whether the refusal constituted an unreasonable act under section 570(2)(b) of the Fair Work Act 2009 (Cth).

The court examined the timeline of settlement offers and Mr Salama's responses. Sydney Trains made multiple offers, including a $10,000 payment on 4 October 2017, which was rejected. The court noted that Mr Salama was not aware of a further conciliation offer and that the case was factually complex, involving assumptions about Sydney Trains' motivation for terminating Mr Salama's employment. The court considered that Mr Salama's refusal of offers made before February 2019 should not be heavily factored into the consideration of his conduct under section 570(2)(b), especially since the offers did not include reinstatement and were for less than his annual wage. However, after Sydney Trains served its evidence in February 2019, realistic and reasonable settlement offers were made, including an offer of $100,000 on 16 August 2019. Mr Salama did not respond to this offer, which led to the conclusion that his refusal was unreasonable.

The court concluded that Mr Salama had ample opportunity to consider the offers in light of the evidence and advice from his solicitors. Given the realistic nature of the offers and the evidence available, Mr Salama's refusal to accept the settlement offers was deemed unreasonable. The court awarded costs on a party/party basis, directing that the applicant pay the respondents' costs incurred from 14 September 2019 and previously ordered costs, to be assessed in a lump sum by a Registrar of the Court. The Registrar was also directed to determine the quantum of the lump sum and to order the applicant to pay the quantified sum within 28 days from the date of the Registrar’s order.

Orders

Orders of the court

1. The Applicant pay the Respondents’ costs incurred from 14 September 2019 on a party/party basis, to be assessed on a lump sum basis in an amount to be determined by a Registrar of the Court.

2. The Applicant pay the Respondents’ costs pursuant to order 2 of the orders dated 28 June 2019 on a party/party basis, to be assessed on a lump sum basis in an amount to be determined by a Registrar of the Court.

3. The Registrar be directed pursuant to r 1.37 of the Federal Court Rules 2011 (Cth) to determine the quantum of the lump sum for costs payable pursuant to orders 1 and 2 above in such manner as he or she deems fit including, if thought appropriate, on the papers.

4. The Registrar be directed pursuant to r 1.37 of the Federal Court Rules 2011 (Cth), at the conclusion of the quantification process, to order that the Applicant is to pay whatever sum has been quantified pursuant to order 3 above within 28 days from the date of the Registrar’s order.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

In Stratton Finance Pty Ltd v Webb [2014] FCAFC 110; 314 ALR 166 the Full Court said at [80] (Allsop CJ, Siopis and Flick JJ):Caution should be exercised as to how a Calderbank offer, even a generous one, is viewed in such circumstances. Calderbank letters presuppose what might be a called a “costs jurisdiction”, in contrast to the usual rule in FW Act claims. To group together contractual and FW Act claims in an offer may permit the conclusion that the refusal of the offer was unwise, even unreasonable, but it does not follow that such is an unreasonable act or omission, for the purposes of s 570(2).3. THE EVIDENCE Mr Salama filed a general protections application in the Fair Work Commission on 23 August 2017. On 4 October 2017 the parties attended a conciliation in the Fair Work Commission. Sydney Trains made an offer to pay Mr Salama $10,000 in damages, which was rejected. Mr Salama sought either: (a) reinstatement and the payment of $200,000 in damages; or (b) $500,000 in damages. Sydney Trains contends that Mr Salama unreasonably refused to participate in a further conciliation a short while later. Mr Salama gives evidence that he was not made aware of an offer for a further conciliation by his then solicitors. He was not challenged on that evidence in cross-examination and no documents were produced to gainsay it. In those circumstances, I am not prepared to find that Mr Salama was aware of the proposal for a further conciliation. The annexure to these reasons is a summary of the offers made in the proceedings as identified in, or exhibited to, the affidavit of Ms Sharp. It will be seen that on 2 May 2018, 14 August 2018, 17 September 2018, 12 October 2018 and 14 December 2018, Sydney Trains made various offers to resolve part or the whole of the proceedings. However, it was not until 20 February 2019 that Sydney Trains had filed and served its evidence in response to the statement of claim (Sydney Trains later filed and served further evidence following the amendment of Mr Salama’s statement of claim). In particular, the significant affidavits of Ms Francisco, Mr New, Mr Walsh and Mr Kable had not been served before then. The broad effect of those affidavits is summarised in the judgment in section 2.2. The judgment demonstrates that the case advanced by Mr Salama was factually complex and necessarily involved assumptions on the part of Mr Salama as to the motivation of Sydney Trains in terminating his employment, which assumptions could not be considered in their entirety until the weight of the evidence brought to bear on the issue by Sydney Trains was made available. I do not consider that Mr Salama’s refusal of offers received prior to the service of these affidavits should factor heavily in the consideration of his conduct for the purposes of s 570(2)(b), even assuming that his solicitors communicated Sydney Trains’ offers to him. I make this observation particularly in circumstances where the offers made were for the payment to Mr Salama of substantially less than his annual wage and included no offer of reinstatement.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Ms Sharp deposes that towards the end of the second day of the hearing on 3 March 2020, the solicitor for Mr Salama conveyed an oral offer to her to settle the proceeding. The terms of the offer were that a verdict be entered for Sydney Trains and that each party walk away bearing their own costs. She exhibits an email from Mr Salama’s solicitor the following day, advising that the offer had been withdrawn. 4. CONSIDERATION In the result, all of Mr Salama’s claims against Sydney Trains were dismissed. Mr Salama would have fared better had he accepted any of the offers made by Sydney Trains from the commencement of the litigation. However, as I have noted in section 2 above, not every failure to accept a settlement offer will constitute an unreasonable act for the purposes of s 570(2)(b) of the FW Act. The factual matrix of the case advanced by Mr Salama was complicated and there was a possibility that Mr Salama may have succeeded in establishing that the adverse action pleaded was taken for a prohibited reason, particularly having regard to the reverse-onus under s 361 of the FW Act. I do not consider that it was unreasonable in the sense required under s 570(2)(b) for Mr Salama to refuse the offers made prior to the service of the Sydney Trains evidence in February 2019. However, after that evidence was served, it must have become apparent that there was a real prospect that Mr Salama would not be reinstated, regardless of the outcome of the proceedings overall. Furthermore, from 22 May 2019, Sydney Trains commenced making offers that were, in my view, very realistic and reasonable offers to settle the proceedings even on the premise that Mr Salama might have succeeded in some or all of his claims. He had by then had an opportunity to consider the evidence and conclude that there was indeed a basis upon which he might not succeed in his claim. Indeed, it is difficult to contemplate how Mr Salama could have done much better than the offer made on 22 May 2019. By the date of the mediation on 5 August 2019, Sydney Trains had increased that offer yet further to $100,000 and that offer was repeated in a Calderbank letter served on 16 August 2019, which Mr Salama did not respond to, and let lapse on 14 September 2019, after he made his counter offer on 13 September 2019. Mr Salama had ample time by then to consider his position and reflect on the offer in the light of the evidence served. Mr Salama was at that point in time, no doubt, the recipient of advice from solicitors and experienced counsel. A person in the position of Mr Salama could not reasonably have considered that he would achieve an outcome in the litigation that would improve upon these offers. Indeed, subsequent events indicate that he harboured a completely unrealistic expectation that the outcome of the proceedings would involve the repayment of the legal fees that he had incurred in circumstances where, given the provisions of s 570 of the FW Act and the way in which Sydney Trains conducted itself in the proceedings, such a result would be unlikely.