Seyer v Gatwood Management Pty Ltd (No 3)
[2023] FedCFamC2G 511
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Seyer v Gatwood Management Pty Ltd (No 3) [2023] FedCFamC2G 511
File number(s): SYG 515 of 2022 Judgment of: JUDGE D HUMPHREYS Date of judgment: 16 June 2023 Catchwords: PRACTICE AND PROCEDURE – COSTS – application for costs – failure to comply with Court orders – whether conduct of second respondent unreasonable. Legislation: Fair Work Act 2009 (Cth) s 361, 570
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law Rules 2021 (Cth) r 1.04, 13.02, 22.02, 22.03
Cases cited: Australian and International Pilots Association v Qantas Airways (No 3) [2007] FCA 879
Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23
Baker v Patrick Projects Pty Ltd (No2) [2014] FCAFC 166
Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143
Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351
Cross v Harbour City Ferries Pty Ltd (T/A Harbour City Ferries) (No 2) [2017] FCCA 1713
Health Services Union v Jackson (No 5) [2015] FCA 1467
McLoughlin v Randstad Pty Ltd (No 2) [2021] FCAFC 117
Melbourne Stadiums v Sautner [2015] FCAFC 20
Shea v EnergyAustralia Services Pty Ltd (No 2) [2015] FCAFC 14
Torpia v Zarfati [2009] FCMA 166
Trustee for the MTGI Trust v Johnson (No 2) [2016] FCAFC 190
Veda Advantage Limited v Malouf Group Enterprises Pty Ltd (No 2) [2016] FCA 470
Division: Division 2 General Federal Law Number of paragraphs: 44 Date of last submission/s: 9 June 2023 Date of hearing: 9 June 2023 Place: Parramatta Counsel for the Applicant: Ms Doust Solicitor for the Applicant: AEN Legal Counsel for the Respondents: There being no appearance by or on behalf of the Respondents ORDERS
SYG 515 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: KARL SEYER
Applicant
AND: GATWOOD MANAGEMENT PTY LTD ABN 59 147 501 835
First Respondent
RABI MALASS
Second Respondent
order made by:
JUDGE D HUMPHREYS
DATE OF ORDER:
16 June 2023
THE COURT ORDERS THAT:
1.The Second Respondent is to pay the Applicant’s costs fixed in the sum of $6,802.00.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE D HUMPHREYS
INTRODUCTION
This judgement concerns an application by Mr Seyer that Mr Malass, the second respondent, pay costs pursuant to s 570 of the Act following the liability and penalty judgements in the matter: Seyer v Gatwood Management Pty Ltd [2023] FedCFamC2G 345; Seyer v Gatwood Management Pty Ltd (No 2) [2023] FedCFamC2G 484
.On behalf of Mr Seyer, it was submitted that the conduct of Mr Malass triggered the exception to the ordinary rule that costs are not payable in Fair Work matters. It was submitted the conduct of Mr Malass was unreasonable within the context of s 570(2)(b) of the Act.
The issue of costs only was listed for hearing on 5 June 2023. Mr Malass did not appear. No submissions or other material was filed on his behalf. As the applicant had prepared additional written submissions that Mr Malass had not had the opportunity to respond to, orders were made that those submissions be served on Mr Malass and he be given 7 days to file any material he may wish to rely upon. No material has been received from Mr Malass and the Court has determined to consider the issue of costs based on the material currently before it.
THE APPLICANT’S SUBMISSIONS
In support of the application, it was noted that the respondents had failed to comply with orders of the Court made on 29 April 2022 to file and serve a Defence on or before 13 May 2022.
The respondents also failed to appear at a directions hearing listed for 20 May 2022. Further, Mr Malass instructed his previous solicitors to agree to consent directions with the solicitors of the applicant on 16 May 2022 (prior to a directions hearing of 17 June 2022) before instructing new solicitors in the afternoon of 16 June 2022 to seek different directions than those that had previously been agreed.
It was further submitted that respondents failed to comply with orders of the Court made 14 October 2022 to file and serve a Defence and they did not take any steps to seek a variation of the order prior to the time for compliance.
The respondent also instructed his solicitors to appear before the Court and indicated that an objection had been lodged to inspection of documents produced in answer to a subpoena issued by the applicant (when no such objection had been lodged), then causing the applicant to incur costs in dealing with the objection which was subsequently filed before failing to appear before the Court. The applicant further failed to comply with orders made 28 November 2022 to file and serve his evidence in the proceedings.
It was conceded that the Court had already made limited costs orders against Mr Malass on 10 March 2023 and also cautioned Mr Malass personally about the need to comply with orders of the Court including his unreasonable continued conduct.
It was further contended that the actions of Mr Malass in seeking to have the proceedings adjourned by reason of alleged medical issues caused significant costs together with other issues in relation to Affidavit evidence which, although filed, apparently was not going to be relied upon.
The Court was advised that on a scale basis, the total costs allowable including disbursements associated with Court fees and other incidentals, were $53,294.44. They are as follows:
Date Event Item Amount 6-Apr-22 Initiating an application up to the First Court Date 1 $3,147.00 29-Apr-22 First Court Date (9)(a) $321.00 20-May-22 Directions Hearing (9)(a) $321.00 17-Jun-22 Directions Hearing 9(a) $321.00 1-Aug-22 Mediation 4 $3,300.00 14-Oct-22 Directions Hearing 1(9)(a) $321.00 28-Nov-22 Directions Hearing 1(9)(a) $321.00 21-Dec-22 Return of Subpoena 1(9)(a) $321.00 16-Jan-23 Return of Subpoena (Objection Lodged by R) 3 $1,964.00 8-Feb-23 Dealing with Objection filed by Respondents 3 $1,964.00 8-Feb-23 Hearing Fee on Subpoena Objection 9(b) $1,178.00 8-Feb-23 Advocacy Loading for Subpoena Objection 10 $589.00 17-Apr-23 Application to Adjourn Proceedings 3 $1,964.00 17-Apr-23 Hearing Fee (Solicitor) 10(b) $2,357.00 17-Apr-23 Hearing Fee (Counsel) 10(b) $2,357.00 17-Apr-23 Hearing Loading (Counsel) 10 $1,193.50 19-Apr-23 Preparation for Final Hearing (Solicitor) 2 day 6 $10,634.00 19-Apr-23 Preparation for Final Hearing (Counsel) 2 day 6 $10,634.00 20-Apr-23 Final Hearing (Solicitor) 9 $2,357.00 20-Apr-23 Final Hearing (Counsel) 9 $2,357.00 20-Apr-23 Hearing Loading (Counsel) 10 $1,193.50 5-May-23 Attendance to take Judgment 8 $321.00 5-May-23 Daily Hearing Fee for Judgment 9(a) $321.00 Total $49,757.00 Disbursements 06-Apr-22 Filing Fee (Court) $700.00 13-Apr-22 Ausserve Process Servers (Service on Mr Malass) $211.00 29-Jun-22 Mediation Fee (Court) $550.00 25-Nov-22 Ausserve Process Servers (Service of subpoena) $209.10 24-Nov-22 Subpoena Fee (Court) x 2 $170.00 31-Mar-23 Hearing Fee (Court) $875.00 14-Apr-23 Court Book Copying (338 pages x0.81) 3 copies $821.34 Total $3,536.44 Grand total $53,293.44
On an indemnity basis, the costs will be considerably more. In supplemental written submissions, Counsel for the applicant relied upon Australian and International Pilots Association v Qantas Ltd (No 3) (2007) 162 FCR 392 at [36] where Tracey J drew a distinction between the pursuit of an argument that is incompetent or hopeless, and on the other hand the pursuit of an argument which is contentious, but ultimately unsuccessful. It was submitted the respondents’ case fell into the former category.
The applicant submits that the Mr Malass pursued an untenable defence to the allegation that there was a failure to give written notice and give or pay the minimum period of notice. The first Defence relied upon denied the factual allegation that the applicant was terminated and claimed he verbally resigned. Mr Malass claims in his Affidavit of 15 March 2023 that he attempted to call the applicant throughout the day on 24 September 2021, but the applicant was not answering.
In a second Amended Defence filed 4 July 2022, the respondent again claimed the applicant resigned but gave no particulars of the time and date of the resignation.
In an Amended Statement of Claim filed 2 November 2022, the applicant set out the details of the conduct said to constitute the termination, including abusive language of Mr Malass, the statement that the applicant could stay at home and not come to work and a text message that he should return his work motor vehicle. These allegations were denied in the Amended Defence filed 22 November 2022.
Particulars were sought as to the claims the applicant resigned. In a letter dated 30 November 2022, Mr Malass’ solicitors alleged the applicant conveyed his resignation orally to Mr Malass on 25 September 2021 via telephone at approximately 8:04am and the termination was for serious misconduct.
Nothing in the evidence provided by Mr Malass supported the contention that the applicant resigned and there was no material in support of a termination for serious misconduct.
Instead of the matter being conceded on pleadings at an early stage, it had to be programmed for a contested hearing as to liability. It was submitted that there were no considerations that were against making a costs order. In any event, if the Court was not persuaded that costs of the entire matter should be ordered, it was submitted that Mr Malass should pay a proportion of the costs.
THE LAW IN RELATION TO COSTS UNDER THE ACT
Section 570 of the Act is as follows:
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) in relation to a matter arising 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 the FWC;
II.the matter arose from the same facts as the proceedings.
The Court operates under rules contained within Federal Circuit and Family Court of Australia (Division2) (General Federal Law) Rules 2021 (Cth) (“the Rules”). Rule 1.04 states as follows:
Overarching Purpose
1.The overarching purpose of these Rules, as provided in section 190 of the Act, is to facilitate the just resolution of disputes according to law and as quickly, inexpensively (my emphasis) and efficiently as possible.
2.To assist the Court, the parties must:
a)Avoid undue delay, expense and technicality; and
b) Consider options for primary dispute as early as possible
Rule 13.02(1) of the Rules reads as follows:
(1)If a party discontinues an application, or part of an action, another party in the proceeding may apply for costs.
Rule 13.01(2) of the (“Rules”) provides that the Court that a party may apply to the Court for an order for costs where the other party discontinues an application. Rule 22.02 reads as follows:
Order for costs
(1)An application for an order for costs may be made:
a)at any stage in a proceeding; or
b)within 28 days after a final decree or order is made; or
c)within any further time allowed by the Court.
(2)In making an order for costs in a proceeding, the Court may:
a)set the amount of the costs; or
b)set the method by which the costs are to be calculated; or
c)refer the costs for taxation under Part 40 of the Federal Court Rules; or
d)set a time for payment of the costs, which may be before the proceeding is concluded.
Rule 22.03 of the Rules reads as follows:
Determination of maximum costs
(1)The Court may specify the maximum costs that may be recovered on a party and party basis:
a)by order at the first court date; and
b)on its own initiative or on the application of a party.
(2)However, an amount specified must not include an amount that a party is ordered to pay because the party:
a)has failed to comply with, or has sought an extension of time for complying with, an order or any of these Rules; or
b)has sought leave to amend a document; or
c)has otherwise caused another party to incur costs that were not necessary for the economic and efficient progress of the proceeding or hearing of the proceeding.
(3)The Court may vary the maximum costs specified if, in the Court’s opinion, there are special reasons and it is in the interests of justice to do so.
It is common ground between the parties that where an order is made for the payment of costs, the manner in which the amount of those costs may be set is a discretionary matter for the Court. In this case, three methods are available. The first being an amount fixed by reference to the relevant Scales of Costs contained within the Rules. The second method would be to refer to matter for as assessment/taxation of costs on a party-party basis. The third method, and that preferred by the respondent, would be to allow costs on an indemnity basis.
The discretion to award costs pursuant to s 570 of the Act should be exercised with some caution. In Trustee for the MTGI Trust v Johnson (No 2) [2016] FCAFC 190 at [8] the following was said:
Section 570 of the FW Act confers jurisdiction on the Court to order costs in Fair Work matters where the proceedings are instituted vexatiously or without reasonable cause. Not only must this discretion be exercised judicially according to the terms defining it, it must be exercised with caution because of the exceptional nature of the power on an otherwise no-costs jurisdiction. The case for its exercise should be clearly demonstrated: Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6].
The relevant principles were summarised in Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23 at [7]:
1. The purpose or policy of the section is to free parties from the risk of having to pay their opponents’ costs in matters arising under the Act, while at the same time protecting those parties who are forced to defend proceedings that have been instituted vexatiously or without reasonable cause.
2. It follows from the protection offered by s 570(2) that a person will rarely be ordered to pay the costs of a proceeding. But it is not necessary to prove that there are exceptional circumstances warranting the making of an order.
3. The relevant question is whether the proceeding had reasonable prospects of success at the time it was instituted, not whether it ultimately failed
These principles can be tested by asking whether the party bringing the action, on the facts apparent to the party and its’ lawyers, properly advised, should have known the claim had no reasonable prospects of success: Baker v Patrick Projects Pty Ltd (No2) [2014] FCAFC 166 at [9]-[10].
In relation to s 570(2)(b) of the Act, whether a party engaged in an ‘unreasonable act or omission’ will depend upon the particular circumstances of the case. In Australian and International Pilots Association v Qantas Airways (No 3) [2007] FCA 879 (“Qantas”) at [36] it was held that “prosecution of any incompetent or hopeless case can be regarded as ‘an unreasonable act’ … Conversely… the pursuit of a contentious, and ultimately unsuccessful argument is not an unreasonable act”.
In Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143 at [29] the following was said:
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
In Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351 (“Corinthian”), Pagone J refused to award costs against a union for bringing unsuccessful adverse action claims where the claims were abandoned at the trial after witnesses evidence, in circumstances where s 361 of the Act imposed a reverse onus on the respondent. At [6] the following was said:
[6] It was not until the second day of the hearing, and after the conclusion of the witness evidence, that the Union informed the Court that it had decided not to press the Union membership claim or the allegation that Corinthian had contravened the Fair Work Act 2009 (Cth) in relation to the Canning Vale and Regency Park strikers. Concessions of that kind are generally to be encouraged for the efficient and prompt determination of disputes, to promote the efficient use of court time and to reduce costs and unnecessary inconvenience to other parties…
[11] Corinthian also relied upon s 570(2)(b) to seek its costs in respect of the claim in relation to the Canning Vale and Regency Park employees, contending that after discovery on 31 January 2014 the Union unreasonably acted or omitted to act by not abandoning the claim promptly after discovery… The late abandonment of a claim does not establish that it was unreasonable to have maintained it until then: see Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574, [29]. What the Union came to know after discovery did not necessarily exclude that a reason the striking employees did not receive a gift card was that they had gone on strike. Furthermore, the evidence concerning Corinthian’s employees at Canning Vale and Regency Park was relevant to Corinthian’s decision about rewarding its employees who continued to work during the strike. The relevant decision by Corinthian which was challenged by the Union was not that made by the general managers at those sites, but had been made by Mr Bruce in consultation with, amongst others, Messrs Grundy and Webster. That emerged from the oral testimony at trial and, until then, it was not clear who had been the relevant decision maker.
In McLoughlin v Randstad Pty Ltd (No 2) [2021] FCAFC 117 at [4] the Full Federal Court cited with approval the above adding:
Importantly, the Court went on to emphasise that such circumstances enlivened the jurisdiction and that: '[e]ven if the Court has jurisdiction to make a costs order, it retains the discretion to refrain from exercising it in an appropriate case'
In Melbourne Stadiums v Sautner [2015] FCAFC 20 (“Melbourne Stadiums”), the Full Federal Court stated at [166] that:
It is well established that a failure to accept a reasonable offer of compromise may constitute an unreasonable act for the purposes of s 570(2) and its predecessors: see, for example, McDonald v Parnell Laboratories (Aust) (No 2) (2007) 164 FCR 591 at 598-9 (Buchanan J)
In relation to offers of compromise, the reasonableness of the refusal or non-acceptance must be determined the light of the circumstances that existed at the time that the rejection or failure to accept occurred and the offer or seeking a costs order bears the onus of establishing that the offeree’s refusal was unreasonable: Health Services Union v Jackson (No 5) [2015] FCA 1467 at [46].
In Cross v Harbour City Ferries Pty Ltd (T/A Harbour City Ferries) (No 2) [2017] FCCA 1713, Smith J adopted the reasoning of Katzmann J in Veda Advantage Limited v Malouf Group Enterprises Pty Ltd (No 2) [2016] FCA 470 (“Veda”) in holding that in deciding whether it is unreasonable for an offer to be rejected, the following matters should ordinarily be considered:
a. The stage of proceeding when the offer was made;
b. the time afforded to the offeree to consider the offer;
c. the extent of the compromise involved;
d. the offeree’s prospects of success, assessed as at the date of the offer;
e. the clarity with which the terms of the offer were expressed; and
f. whether the offer foreshadowed an application for indemnity costs in the event of refusal.
Once the power to award costs is enlivened under s 570(2) of the Act, the Court can make an order for costs to be paid on an indemnity basis, as it could, and often would, in litigation with the general law principles as to the award of such costs applied: Shea v EnergyAustralia Services Pty Ltd (No 2) [2015] FCAFC 14 at [10]. In Torpia v Zarfati [2009] FCMA 166, Barnes FM noted at [14] that:
There is also authority … that indemnity costs should not be ordered in the absence of a presumption that the action was commenced for some ulterior motive or because of a wilful (as distinct from inadvertent) disregarded known facts or established law.
The test as to whether indemnity costs should be awarded is whether the justice of the case might so require or whether there exists some special or unusual feature of the case to justice for the Court in departing from the ordinary practice: Qantas.
CONSIDERATION
This matter revolves around whether or not the conduct of Mr Malass, pursuant to s 570(2)(b) of the Act, has been unreasonable and caused the applicant to incur costs. The starting point however, is that costs are not generally payable in Fair Work matters.
The Court is satisfied that the conduct of Mr Malass has been less than ideal and he has failed on a number of occasions to comply with Court orders. Those failures have already been addressed partly by way of costs that were ordered to be paid for that non-compliance in relation to a Directions Hearing held on 3 March 2023 and a hearing on 10 March 2023
.A direction was also made that an Affidavit be filed explaining the failure of the first respondent and second respondents to appear at a Directions hearing on 20 May 2022, the first respondent to appear at a hearing before a Registrar as to objections to subpoenas on 8 February 2023, a failure to file Notices of a Change of Address for Service following the withdrawal of Gilchrist Connell as solicitors for the respondents, the failure to file any Affidavits upon which the respondents relied on or before 24 February 2023 and a failure of the first and second respondents to appear at a directions hearing listed on 3 March 2023. No Affidavit has been filed in accordance with that order.
The Court also notes that through the failure of Mr Malass to appear at the substantive liability and penalty hearings, this has enabled the matter to be finalised in a more expeditious manner.
The discretion to award costs should be exercised cautiously and when the case for its exercise is clear: Melbourne Stadiums at [166]. Further, the Court still retains a discretion not to award costs even when the preconditions for an award are met.
In all the circumstances, noting the very high bar required for the award of costs in the Fair Work jurisdiction, and noting that some of the matters relied upon by way of non-compliance with Court orders have already been addressed by way of a costs order that was agreed to by consent between the parties, the Court is of the view that it is not appropriate to make a costs order for the balance of the proceedings against Mr Malass.
The Court is satisfied, however, that the conduct of Mr Malass in the failure to repeatedly comply with Court orders, other than those already addressed, was unreasonable such that the precondition of s 570(b) of the Act has been met.
The Court proposes to allow the following costs as set out in the table set out above:
Failure to appear at the Directions hearing of 20 May 2022 $321.00
Return of Subpoena Objection lodged by Respondent $1964.00
Dealing with objections lodged by Respondent $1964.00
Failure to appear at a Registrar’s hearing on 8 February 2023 $1964.00
Advocacy loading for 8 February 2023 $589.00
Total $6,802.00This amount is to be paid within 14 days of the date of the orders of the Court.
I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of Judge D Humphreys. Deputy Associate:
Dated: 16 June 2023
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