Skycity Adelaide Pty Ltd v Celand
[2017] FCCA 196
•2 March 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SKYCITY ADELAIDE PTY LTD v CELAND | [2017] FCCA 196 |
| Catchwords: INDUSTRIAL LAW – Application for costs following dismissal of proceedings alleging adverse action in employment – failure to accept Calderbank offer – whether refusal to accept offer amounts to an unreasonable act or omission – whether applicant’s conduct of the proceedings was unreasonable – witnesses subpoenaed to give evidence – matters to be considered. |
| Legislation: Fair Work Act 2009, ss.520(1)(a), 570(1), 570(2) Federal Circuit Court Rules, rr.21.02(2), 21.10, 21.15 |
| Cases cited: Board of Bendigo Regional Institute of Technology and Further Education v Barclay [No1] (2012) 248 CLR 500 General Motors Holden Pty Ltd v Bowling (1976) 12 ALR 605 |
| Applicant: | SKYCITY ADELAIDE PTY LTD |
| Respondent: | JENNIFER CELAND |
| File Number: | ADG 394 of 2014 |
| Judgment of: | Judge Brown |
| Hearing date: | 13 September 2016 |
| Date of Last Submission: | 13 September 2016 |
| Delivered at: | Adelaide |
| Delivered on: | 2 March 2017 |
REPRESENTATION
| Counsel for the Applicant: | Ms Stewart |
| Solicitors for the Applicant: | Sparke Helmore |
| Counsel for the Respondent: | Mr Heywood-Smith QC |
| Solicitors for the Respondent: | Hamdan Lawyers |
ORDERS
The respondent pay the applicant’s costs fixed in the amount of $30,711.00.
Order (1) hereof be stayed pending the outcome of the appeal.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 394 of 2014
| SKYCITY ADELAIDE PTY LTD |
Applicant
And
| JENNIFER CELAND |
Respondent
REASONS FOR JUDGMENT
Introduction
On 27 August 2014, the applicant, Ms Celand commenced proceedings, in this court, pursuant to the provisions of the Fair Work Act 2009 (Cth)[1] against her former employee, Skycity Adelaide Pty Ltd “Skycity”.
[1] Hereinafter referred to as the FWA or the Act.
Ms Celand alleged that she had been the subject of adverse action, during her employment with Skycity, in contravention of a number of general protections provided to her by the Act. On 29 February 2016, I dismissed each aspect of Ms Celand’s application, following a hearing, which occupied five hearing days and in which each party retained senior counsel.[2]
[2] See Celand v Skycity Pty Ltd [2016] FCCA 399
On 24 March 2016, Skycity filed an application, in which it seeks its costs in accordance with schedule 1 of the Federal Circuit Court Rules 2001. In addition, Skycity seeks a certification, from the court, that it was reasonable for it to engage counsel for the hearing before the court.
In her response, filed on 14 April 2016, Ms Celand seeks that the application for costs be dismissed. These reasons for judgment are directed towards resolving the issue of costs and, in particular, determining whether Ms Celand’s unreasonable actions have caused Skycity to incur costs.
The legal principles applicable
Proceedings pursuant to the Act are not ones in which costs generally follow the event. Pursuant to section 570(1) of the FWA, the court has a discretion to order the payments of a party’s costs, in respect of proceedings under the Act, but only if satisfied of the matters contained in section 570(2), which reads as follows:
“(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.”
In the context of the current proceedings, Skycity rely on the provisions contained in section 570(2)(b). In summary, Skycity submits that Ms Celand unreasonably rejected an offer to settle the proceedings, which was made at a fairly early stage of proceedings, before either party had incurred significant costs, and her conduct in the case thereafter caused the proceedings to be unreasonably protracted. As a consequence of these considerations, either individually or in tandem, the respondent submits that it is entitled to an award of costs.
In Brown v DS & MJ Batten (No 2) Raphael FM summarised the application of the section 570(2) in the following terms, particularly noting the temporal distinction arising from the section as follows:
“The court accepts that the purpose of section 570 is to make the court’s jurisdiction under the Fair Work Act a no costs jurisdiction except in special circumstances. These circumstances can have temporal differences so that those falling under sub-section2(a) are limited to the institution of the proceedings and those falling under sub-section2(b) can continue through the proceedings so that whilst a party may not have instituted the proceedings without reasonable cause it may become clear during the course of those proceedings that the action was untenable so that by not withdrawing the whole of part of the proceedings the party acted or omitted to act unreasonably thus causing the other party to incur costs.” [3]
[3] Brown v DS & MJ Batten (No 2) [2012] FMCA 436 at [3]
In support of the application, Skycity relies on an affidavit of its solicitor, Luke Holland.[4] Mr Holland has calculated Skycity’s costs to total $34,281.080[5] pursuant to the applicable scale of fixed event costs delineated in the schedule to the court’s rules. Skycity no longer seeks an order for indemnity costs.
[4] See affidavit of Luke Dominic Paul Holland filed 24 March 2016
[5] See supplementary affidavit of Mr Holland filed 7 September 2016
The court has a wide discretion as to the calculation of costs. Pursuant to Rule 21.02(2) of the Federal Circuit Court Rules:
In making an order for costs in a proceeding, the Court may:
a) set the amount in 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 under Chapter 19 of the Family Law Rules; or
d) set a time for payment of costs, which maybe before the proceeding is concluded.
However, pursuant to Rule 21.10:
Unless the Court otherwise orders, a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to:
a) Costs in accordance to Parts 1 and 2 of schedule 1; and
b) Disbursements properly incurred.
Pursuant to Rule 21.15:
The Court or a Registrar may certify that it was reasonable to employ an advocate, or more than 1 advocate, to appear for a party in a proceeding.
Rule 21.10 creates a scale of costs by reference to the occurrence of fixed events. This scale has been described as the primary source used for fixing costs in general federal law proceedings. [6] Mr Holland has calculated Skycity’s costs according to this scale.
[6] See Piersons Pro-Health Pty Ltd & Ors v Silvex Nominees Pty Ltd & Anor (No 3) [2010] FMCA 250 at [43]
In CFMEU v Clarke[7] the Full Court of the Federal Court held that two criteria must be satisfied to engage section 570(2)(b). They are:
·a party must have engaged in an unreasonable act or omission;
·the unreasonable act or omission must have caused another party to incur costs in connection with the proceedings.
[7] See CFMEU v Clarke (2008) 170 FCR 574 at 582
In Rentuza v Westside Auto Wholesale[8] Lucev FM (as His Honour then was) said as follows:
“Whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case.”
[8] Rentuza v Westside Auto Wholesale [2009] FMCA 1022 citing Australian & International Pilot’s Association v Qantas Airways Limited (No3) (2007) 162 FCR 392 at 402 per Tracey J at [32]
In CFMEU v Clarke the Full Court outlined circumstances, in litigation, which might not amount to an unreasonable act or omission. They include the following:
·a party, who does not conduct litigation efficiently;
·A party, who makes an appropriate concession late;
·The party concerned might have acted in a different or timelier fashion.
In the case the Full Court said as follows:
… 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 proceedings which is misconceived in the sense of being incompetent or unsupportable … simply because a party does not conduct its litigation in the most efficient way does not mean that the court should not exercise its discretion … to make a costs order. … Although it is arguable that the lateness of the concession may have put the appellants to some extra cost, we are of the view that it cannot be characterised as ‘unreasonable’ … Indeed, whilst courts should use the discretion … to ensure that parties to litigation arising from the … 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 … Act in the manner in which they deem best.”[9]
[9] CFMEU v Clarke (supra) at 582 [29]
This passage was subject to comment by Bromberg J in Saxena v PPF Asset Management Ltd [10] in which His Honour said as follows:
“With great respect to the observations made in CFMEU v Clark, I wholeheartedly agree that this Court ought be very careful indeed to exercise the discretion provided by section 570(2) and should not do so other than in a clear case. The limited discretion conferred on the Court by that subsection ought not become the basis for arguments about costs in relation to any and every transgression in the conduct of a case.”
[10] Saxena v PPF Asset Management Ltd [2011] FCA 395at [6]
This is the gist of Ms Celand’s position. It is her case that a balance must be struck between the interests of litigants in being untrammelled in their capacity to bring proceedings pursuant to the Fair Work legislation and pursue them thereafter and the need to protect the respondents to such proceedings from unreasonable proceedings, both in terms of such proceedings being instituted in the first place and thereafter in how they are conducted. It is her case that, in all the circumstances of this case, the policy behind the section tips in her favour and it would be unwarranted for an order for costs to be made against her.
It is the submission of senior counsel for Ms Celand that, in this particular case, it cannot be said that his client acted in an unreasonable fashion, in either bringing the proceedings in the first place or rejecting an offer to compromise them, although she was ultimately unsuccessful, at first instance.
It is further his contention that there was nothing unreasonable in how his client conducted the proceedings to judgment. He argues that, given the complexity of this particular case, the balance favours his client and that no order for costs should be made.
In particular, Mr Heywood-Smith relies on the following passage from the Full Court decision of Australian Workers Union v Leighton Contractors Pty Ltd & Ors (No2)[11]:
[11] See Australian Workers Union v Leighton Contractors Pty Ltd & Ors(No2) [2013] FCAFC 23 at [7]-[8]
“… in our view the authorities establish the following principles:
1. The purpose or policy of the sections to free parties from the risk of having to pay their opponent’s 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 course.
2. It follows from the protection offered by section 570(2) that a person will rarely be ordered to pay the costs of a proceedings 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 …
We would emphasise however, that these principles relate to the question of whether the jurisdiction to award costs is enlivened. Even if the court has jurisdiction to make a costs order, it retains the discretion to refrain from exercising it in an appropriate case.”
In the case, the Full Court approved the following passage of Wilcox J in Kanan v Australian Postal & Telecommunications Union[12]:
“If success depends on the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceedings, as being ‘without reasonable cause’. But where, on the applicant’s own version of the facts, it is clear that the proceedings must fail, it may properly be said that the proceedings lack a reasonable course.”
[12] See Kanan v Australian Postal & Telecommunications Union [1992] FCA 539
It is Ms Celand’s submission that it cannot be said that, when she commenced her proceedings, it was destined to fail or could otherwise be characterised as vexatious and this state of affairs continued throughout the hearing until judgment was delivered. As a consequence, from the perspective of both parties, it must be the case that there could be no certainty what view of the entire body of evidence the court would take, until the decision was handed down.
It is also Ms Celand’s position that her failure to accept the offer to settle cannot be characterised as being unreasonable, when all the circumstances which prevailed when it was made are considered. In essence the court needs to guard against any consideration of the reasonableness of the offer with the benefit of hindsight. As such, it is Mr Heywood-Smith’s submission that the rarely used discretion, provided by section 570(2), is not enlivened in the current matter.
Other relevant matters
In the principle judgment, I attempted to detail, as carefully as I could, the evidence surrounding Ms Celand’s employment at the Adelaide Casino, which was and is operated by Skycity. This employment encompassed a period in excess of thirteen years.
In the latter part of this period, it was apparent to me that Ms Celand was deeply upset with her position and formed the view that she was no longer welcome as an employee of the Adelaide Casino. As a consequence, she formed the conclusion that the Casino management was intent on forcing her out come what may.
Ms Celand contended that she had been subjected to a concerted process of prejudicial conduct by Casino management, which included being singled out to be denied promotion; being denied overtime on which she relied; and being subjected to other examples of petty administrative bastardry, including being denied access to her personnel file and criticised for her attitude at an in-house training session.
For obvious reasons, the major witness in support of Ms Celand’s position was Ms Celand herself. It was her position that the Casino had been a deeply unhappy place, for several of its employees, including herself, for a significant period of time, as a consequence of its cavalier and arbitrary style of management, which had led to many serious breaches of the respondent’s obligations to its staff.
She further asserted that, when she had stood up for some of her fellow staff members, she had been singled out as a union trouble maker, which led her to being subject to the various examples of adverse actions, which ultimately made her on-going employment at the Casino untenable.
The respondent denied these allegations. As a consequence, it was necessary for it to call various decision-makers, within its managerial chain of command, to give evidence, as to why particular decisions had been made in respect of Ms Celand and particularly to refute the suggestion that they had been made on the basis of any protected attribute referrable to Ms Celand.
In this context, one of many issues, which the court was called upon to determine, was whether Ms Celand was constructively dismissed from her position, as a croupier at the Adelaide Casino, in mid-2014. In part, the determination of this issue turned on correspondence which passed between Ms Celand and Mr Tannock, the Human Resources Manager of the Adelaide Casino.
In July 2014, Ms Celand sent Mr Tannock a letter in which she indicated that she wished to negotiate the terms of her resignation from Skycity. She further indicated that she was willing to accept the sum of $50,000.00 by way of compensation for the loss of her career and stress, otherwise she would lodge a workplace bullying claim.
Mr Tannock responded indicating that Skycity did not generally negotiate the resignation of its employees but offered her eight weeks’ pay in lieu of notice. Ms Celand rejected this offer and instructed her current lawyers, who indicated that they would commence adverse action proceedings on her behalf. The principle proceedings were commenced on 20 October 2014.
The application first came before the court on 1 December 2014. At this stage the respondent was directed to file a defence on or before 19 January 2015; with the applicant to file any reply on or before 2 February 2015. Directions were also made in respect of each party filing affidavits of evidence – in the applicant’s case by the end of February; in the respondent’s case by mid-March. The case was then listed for final hearing, for three days, commencing on 15 June 2015 subject to the availability of the Court.
On 20 April 2015, the respondent’s solicitor wrote to the applicant’s solicitor offering to resolve the action. By this stage, Ms Celand had filed her principle affidavit for trial; whilst Skycity had filed affidavits from the relevant employees, who had been engaged in making managerial decisions in respect of Ms Celand or who had otherwise been involved with her during her employment.
The tenor of those affidavits was that the respondent did not accept that it had taken any adverse action, against Ms Celand, in contravention of any of the provisions of the relevant legislation. Skycity did not file any further affidavit evidence prior to the trial of the action taking place. As such, its substantive case was provided to Ms Celand and those advising her prior to the offer of settlement.
The letter of 20 April 2015 offered to resolve the proceedings for a gross sum of $7,000.00, comprising $2,500.00 for damages and $4,500.00 for costs, in exchange for the applicant discontinuing the proceedings against it. The letter further stated that:
·it was without prejudice save as to costs;
·stated the view of the respondent that Ms Celand would be unable to establish that it had taken any adverse action against her in contravention of any workplace right pertaining to her or that she would be able to establish any adverse consequences;
·denied that Ms Celand had been illegally refused access to overtime by Skycity;
·the offer to settle was said to be made on a purely commercial basis and made in reliance on the principles contained in the decision of Calderbank;
·the offer was expressed to be open for a period of fourteen days.
The case of Calderbank v Calderbank[13] instituted the procedure known as a Calderbank letter or offer, which has general application within Australia. This procedure was described in Cross on Evidence as follows:
“This procedure, known as the Calderbank letter or offer, was first used in matrimonial cases, but is now recognised to be of general application. The consequence of marking an offer “without prejudice save as to costs” is that the document and its contents are treated as being without prejudice for the determination of the substantial issues between the parties – they are privileged. But they may be used after these issues are determined, for the purpose of deciding the incidence of costs. Where the payment into court procedure is available, it is prudent that it be used.”[14]
[13] Calderbank v Calderbank [1975] 2 All ER 333
[14] Cross on Evidence (1996 Australian Edition) at paragraph 25,360
The issue of costs, in the context of a Calderbank letter is often related to the issue of whether indemnity costs should be awarded, in addition to any costs which follow the event. As previously indicated Skycity no longer seek an award of indemnity costs and it is clear to me that the Fair Work jurisdiction is not one in which costs automatically follow the successful prosecution of a case.
In Carey v Freehills[15], Kenny J reviewed authority in relation to Calderbank offers and said
[15] Carey v Freehills [2013] FCA 1258 at [16] – [17]
“Mere refusal of a Calderbank offer followed by a result more favourable to the offeror than that represented by the offer does not of itself warrant an order for indemnity costs. To justify an order for indemnity costs in favour of the party who made the Calderbank offer, the offeror must show that the refusal to accept it was unreasonable in all the circumstances and the authorities there cited. The reasonableness of the conduct of the offeree is to be viewed in the light of all the circumstances as they existed when the offer was rejected. The fact that the offeree ultimately failed to make out its case does not of itself mean that it acted unreasonably in rejecting an offer:
As Griffiths J said in Specsavers Pty Ltd v Luxottica Retail Australia Pty Ltd (No 2)[16]
[A] helpful but non-exhaustive list of circumstances which may be relevant in determining whether the rejection of a Calderbank offer is reasonable or not is set out in Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority(No 2)[17]and includes:
[16] Specsavers Pty Ltd v Luxottica Retail Australia Pty Ltd (No 2) [2013] FCA 807 at [10]
[17] Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435 at [25]
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(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 an indemnity costs in the event of the offeree’s rejection of it.”
No response was received from Ms Celand to the letter of 20 April 2015. The trial scheduled for 15 June 2015 did not proceed. On 24 April 2015, the court wrote to the parties in the following terms:
“Two cases have been listed on the same dates and due to judicial availability it will not be possible for your matter to be heard. You were offered an earlier date but understand counsel was not available.
Accordingly, it will be necessary to re-list your case at a later date. In the meantime the matter remains listed for directions on 15 June at 10.00 am, but will now be for directions only.”
On 15 June, the trial was re-fixed for hearing on 30 November 2015, with a revised hearing time of five days. The reason for the additional hearing time was as a result of counsel for the applicant indicating to the court and the respondent, Ms Celand’s intention to call an additional four witnesses (Ms Rosevear; Ms Hurcombe; Mr May; and Mr Cowen). It was further indicated that none of these individuals had as yet filed affidavits nor were three of them anticipated to do so as each was unwilling to do so as they were current employees of the respondent.
On 30 June 2015, Ms Celand’s solicitors issued subpoenae ad testificandum, directed towards Ms Rosevear; Ms Hurcombe; and Mr May; which required them to attend, at court, on 30 November 2015 to give evidence, as required. Each of these persons was an employee of Skycity, at relevant times and each gave evidence at the final hearing, without providing a formal affidavit of evidence.
On 1 July 2015, an affidavit of Mr Cowen was filed on behalf of the applicant. Mr Cowen was previously an industrial officer employed by United Voice, the industrial organisation responsible for industrial relations at the Adelaide Casino in respect of croupiers, of which Ms Celand had been one.
On 28 July 2015, at a further directions hearing, I ordered the applicant to file an affidavit setting out why the subpoenaed witnesses were unable to provide affidavits of their evidence or otherwise provide proofs to the respondent.
It was further directed that the applicant’s solicitor was to provide details as to which aspects of the applicant’s statement of claim the subpoenaed witnesses would give evidence and whether it was proposed to be by evidence in chief. In addition it was directed that the parties each respond to the other’s formal objections to evidence. These steps were to be completed by 2 September 2015.
On 7 September 2015, an affidavit was filed, on the applicant’s behalf, by Ms Heather Mack, who deposed to being a locum solicitor in Ms Hamdan’s office between late July and 3 September 2015. She deposed to having contacted Mr May and Ms Rosevear, who informed her that they remained employed by Skycity and feared recriminations if they gave evidence in a case in which their employer was a party.
In the principle judgement, I wrote as follows:
“Those acting for Ms Celand indicated that Ms Rosevear, Ms Hurcombe and Mr May were unwilling to provide formal affidavits because of concerns that each might be subject to some form of retaliatory conduct because of it. In addition, I was told that no proofs had been obtained of their testimony. No attempt was made to clarify these issues in oral evidence. In my estimation, each of them gave their evidence freely and without any degree of reluctance.” [18]
[18] See Celand v Skycity Pty Ltd (supra) at [42]
Mr Holland complains that the respondent complied with the direction of 28 July late and in an incomplete manner. He also complains that Ms Celand did not respond to his letter of 20 April, in which he proposed a compromise of the proceedings. In these circumstances, it is Skycity’s contention that Ms Celand did not take all reasonable steps to minimise the length of time required for trial, particularly in respect of clarifying issues in relation to the evidence of Ms Rosevear; Ms Hurcombe; and Mr May. As a consequence it incurred additional costs.
The transcript of proceedings indicates that the evidence of the subpoenaed witnesses took the majority of the third day of the five days occupied by the hearing. Ms Celand’s testimony took the bulk of the first two days; whilst the respondent’s four witnesses occupied day four and a small part of day five. Closing submissions were also made on the final day of the hearing. Accordingly, the parties kept to the time allocated for the matter.
More significantly, it is Skycity’s submission that Ms Celand’s failure to accept its offer of compromise also constituted an unreasonable act for the purposes of section 570(2) of the Act. In McDonald v Parnell Laboratories (Aust) (No 2)[19] Buchanan J considered that the refusal of a reasonable offer of settlement could constitute “an unreasonable act or omission, [which] caused another party to the proceedings to incur costs in connection with the proceedings” and so attract an order for costs.
[19] McDonald v Parnell Laboratories (Aust) (No 2) [2007] FCA 2086 at [30]
In Aitken v Virgin Australia Airlines and Vandeven v Virgin Australian Airlines (No 2)[20] Judge Burnett, formerly of this court, summarised the potential application of section 570(2)(b) to circumstances in which a without prejudice offer to settle proceedings had been made as follows:
“Costs can be awarded against a party for refusing a reasonable offer of settlement on the basis it constituted an “unreasonable act or omission, [which] caused another party to the proceeding to incur costs in connection with the proceeding”; and
It is open to the Court to consider without prejudice exchanges to determine whether rejection of a settlement offer amounts to an unreasonable act or omission by which a party caused another party to incur costs for the purposes of s.570 of the FW Act.”[21]
[20] Aitken v Virgin Australia Airlines and Vandeven v Virgin Australian Airlines (No 2) [2013] FCCA 2031 at [31]
[21] Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (No 2) [2011] FCA 394 at [29]
On 24 November 2015, shortly prior to the commencement of the trial, Ms Celand’s solicitors wrote to the solicitors for Skycity offering to compromise the matter for the sum of $250,000.00 plus costs. Skycity formally responded on 26 November 2015 reiterating its offer of 20 April 2015.
Consideration
Skycity does not assert that it can be established that Ms Celand commenced these proceedings for any vexatious or improper purpose. Accordingly, it accepts that section 520(1)(a) does not apply. Rather it must establish, in order to secure the exercise of the costs discretion in its favour, that an unreasonable act or omission, attributable to Ms Celand, which arose during the course of the proceedings, caused it to incur costs.
This issue is to be determined by a careful and objective analysis of the particular circumstances of the case concerned. Skycity asserts that there are two salient acts, which trigger the exercise of the discretion in its favour, in this particular case.
Firstly, Ms Celand’s failure to accept the offer of compromise contained in its letter of 20 April 2015; and secondly, Ms Celand’s decision to call Ms Rosevear, Mr May and Ms Hurcombe, which decision was conveyed to Skycity on 15 June 2015 and resulted in the extension of the hearing from three days to five, causing the respondent to incur greater costs.
In respect of the first ground, Skycity points to the fact that the offer to settle was made after each party had filed its substantive case in affidavit form and after the close of pleadings. From its perspective, Skycity did not call any further evidence. As such, it is contended that Ms Celand and those advising her were fully aware of the case Ms Celand would have to meet and the evidence said to support it.
The letter asserted that Ms Celand would have great difficulty in establishing the following elements of her case:
·she had any statutorily based workplace right to be a support person or to give evidence in proceedings;
·Skycity had taken adverse action against her because:
Øshe had in fact been promoted;
Øshe had not suffered any adverse consequences as a result of being a health and safety inspector;
Øshe had in fact been given access to her personnel file;
·she had not been excluded from overtime unlawfully, rather management had properly determined that for Ms Celand to work overtime would constitute a breach of its obligations under the relevant workplace agreement;
·it was asserted that Skycity had documented evidence to support its assertion that Ms Celand had resigned from her employment rather than been dismissed.
As matters transpired and the case proceeded to judgment, this summary of the case proved to be correct and each such assertion of Skycity was ultimately accepted by the court. As such, Skycity categorises the offer as a reasonable one and by necessary implication Ms Celand’s non acceptance of it as being unreasonable. In its letter, Skycity indicated that the offer was “made on a purely commercial basis taking into account the current state of the law in this jurisdiction”.
Ms Celand did not formally respond to the letter of offer of 20 April, which expired some fourteen days later. The only time she raised the issue of settlement was in November of 2015, when she proposed a settlement, which was promptly rejected and which, in light of the ultimate decision, cannot be considered to be well calibrated.
In these circumstances, Skycity contends that Ms Celand’s refusal to accept or even respond to its offer of 20 April was an unreasonable omission, which caused it to incur further costs in connection with the proceedings. In this context, it points to the fact that, until the offer lapsed, the costs on both sides were likely to be relatively modest and its offer made allowance for some of Ms Celand’s costs, up to that stage, to be recouped.
Mr Heywood-Smith submits that the question of whether Ms Celand acted unreasonably or otherwise, in the context of her rejection of the offer to settle, is not to be judged on the basis that “the offer was bettered by the applying party”. I agree. The authorities indicate that the question of whether the action of one party to litigation, which results in the other incurring costs, is or is not reasonable, depends on the objective analysis of the particular circumstances of the case, not merely arithmetic.
In this context, Mr Heywood-Smith relies on a decision of the District Court of South Australia, Stone v Moore (No 2)[22]. The principle case dealt with a claim for damages for defamation. The relevant legislation provided a defence of qualified privilege, which was accepted in the case. Thereafter the defendant sought costs on an indemnity basis as a consequence of having made an offer to compromise the proceedings. Applicable legislation provided that indemnity costs must be awarded, if an offer to settle was unreasonably refused.
[22] Stone v Moore (No 2) [2015] SADC 169
Auxiliary Judge Clayton did not consider it unreasonable for the offer to be refused because he accepted that “at the date at which both of those offers were made, on the information which was then available to the plaintiff, I consider that the plaintiff had a proper basis to expect that he had reasonable prospects of success in the claim of defamation brought by him.”
It is Mr Heywood-Smith’s submission that this proposition is apposite to the situation, which faced his client, when she received the offer of 20 April 2015. By necessary implication, he contends that his client could not have been in a position to make a full appraisal of the case to be mounted by her opposition against her and so take an educated view of the offer.
In my view, the difficulty with this submission is that I do not know precisely why Ms Celand rejected the offer, as she did not formally respond to it or indicate any basis on which she did not accept the contentions associated with it. I appreciate that she was not bound to accept Skycity’s assessment, proffered to her in April 2015, that she faced extreme difficulty in making out her pleaded case. However, in my view, the prescience of Skycity’s assessment of the case must be a significant factor, as is the stage at which it was proffered, namely prior to the significant costs of trial being incurred.
In my view, Skycity’s assessment of the case was entirely vindicated by the judgment subsequently made in its favour. The offer to settle cannot be regarded as a cynical one in the sense that it rested on any attempt to intimidate Ms Celand, into settling, by dint of its superior financial resources. Rather, an attempt was made, by Skycity, to analyse the various strands of Ms Celand’s case, string by string and refute each of them.
In my view, in these circumstances, it was a brave thing for Ms Celand to reject this analysis out of hand. Her only response to it was to offer, at a significantly later date, to settle for a vastly greater sum than that proposed to her, without explanation as to how the sum sought was calculated and on what basis. This obviously demonstrates that the parties were, to all intents and purposes, operating in separate universes, so far as the likely outcome of the case was concerned. However, as matters transpired, the court accepted each proposition advanced by Skycity, in its letter of 20 April 2015.
In terms of the non-exhaustive list, accepted by Griffiths J in Specsavers, I accept that the offer to settle was made at an early stage but after each party had formulated its case and provided its substantive evidence. Ms Celand was given fourteen days to consider it. Skycity put its position succinctly and with precision. Its letter contained a clear warning in respect of costs.
Skycity submits that its offer cannot be considered to be a cynical one or one which can be characterised as a lacking in bona fides, notwithstanding the modest quantum of the sum offered. In Carey v Freehills Kenny J said as follows:
“Whether or not a “walk away” offer involves “a real and genuine element of compromise” will depend on the circumstances in which it was given.”[23]
[23] Carey v Freehills [2013] FCA 1258 at [35]
Ms Celand did not attempt to engage, in any meaningful way, with the settlement process initiated by Skycity, which I accept it did so in good faith. Although, I accept that $7,000.00 cannot be regarded as a significant sum of money, in the light of the ultimate outcome of the case, it cannot be dismissed as being trivial, particularly when weighed against the costs incurred by both parties. In my view, therefore, the response of Ms Celand to the settlement process was not a reasonable one. It also clearly led to Skycity incurring costs.
The one element of the case, which was not apparently known to Ms Celand was what would be the evidence of Ms Hurcombe, Ms Rosevear and Mr May. However, what she did know of these individuals is that they were not in significant managerial positions, at Skycity, and therefore were not crucial decision-makers, in the sense envisaged in cases such as Bendigo Regional Institute of Technology and Further Education v Barclay & Anor[24] and General Motors Holden Pty Ltd v Bowling.[25] The evidence provided by Skycity, up to that stage, was from the ostensible decision-makers, at the Casino, and indicated why they purported to do what they did, so far as Ms Celand was concerned.
[24] Board of Bendigo Regional Institute of Technology and Further Education v Barclay [No1] (2012) 248 CLR 500
[25] General Motors Holden Pty Ltd v Bowling (1976) 12 ALR 605
Essentially none of these individuals mooted by Ms Celand was in a position to make any decision, which could actually result in an adverse outcome for her. At best, they could potentially refute or undermine what the actual decision-makers said they did and why they did it vis-à-vis Ms Celand.
In these circumstances, I would expect that, at the very least, Ms Celand would have had some general understanding of what was the forensic purpose of these witnesses being called on her behalf and could provide some detail in respect of them.
It was only a few days prior to the aborted hearing of 30 June 2015 that both the court and Skycity were advised of Ms Celand’s desire to call Ms Rosevear, Ms Hurcombe and Mr May. No explanation was provided, at that stage, as to their forensic purpose in the case.
In these circumstances, on the forceful submission of Skycity, at the directions hearing of 28 July 2015, Ms Celand was ordered to provide details in respect of why the subpoenaed witnesses were unable to provide affidavits of their evidence or otherwise provide proofs to the respondent.
In this context, the evidence of Ms Mack is important. She does not disclose any information about the overall forensic purpose of the evidence of these witnesses, from Ms Celand’s perspective, in even a general way or indicate how it might relate to any issue which Ms Celand was asserting in her cause of action.
Rather Ms Mack asserts that she was told by Ms Rosevear that she was concerned for her position at Skycity, which she was not prepared to risk. Mr May told her of his concerns for his young family and his need for the security of employment provided to him by Skycity, which caused him to be “worried about my corroboration (sic) and the negative impact that it would have on [his] position with [Skycity]. Ms Mack did not contact Mr Hurcombe at all, given the responses she received from Ms Rosevear and Mr May.
These are significant allegations of potential impropriety against Skycity. Indirectly they have the consequence, by a process of innuendo, of suggesting that Skycity remained capable of doing what it had allegedly done to Ms Celand – that is of targeting its employees for providing evidence adverse to its interests. The implication possibly arising being that there is no smoke without fire.
However, regardless of this suggestion, each answered the subpoena directed to him or her and was not questioned, during their evidence in chief, if they had been threatened or suborned in any way prior to giving their evidence. There was no suggestion that any of them remained unwilling to give evidence.
Ms Hurcombe and Ms Rosevear’s evidence was relevant to the issue of Ms Celand’s promotion. In this context, there was no controversy that Ms Celand was initially not promoted but this decision was changed, in part as a consequence of representations made by Ms Hurcombe and Ms Rosevear to the relevant decision maker, Mr Devine.
The initial decision was countermanded expeditiously. Accordingly, the evidence of Ms Hurcombe and Ms Rosevear was not contrary to the assertion, in the settlement letter of 20 April 2015, that no adverse action had been taken against Ms Celand, on the basis of any exercise by her of a workplace right, as she had, in fact, been promoted.
Mr May’s evidence was relevant to the issue of Ms Celand working overtime. He was a scheduler of gaming staff, at the Casino, at relevant times. However, he did not make any policy decisions regarding how and why individual members of staff were to be scheduled. His duties were to implement such decisions. Again, in this context, his evidence was not contrary to the assertion contained in the settlement letter of 20 April 2015 that:
“Skycity can demonstrate that the decision to reduce your client’s overtime was as a result of Skycity’s enterprise agreement regarding the maximum number of consecutive shifts that can be worked by an employee. The breach came to Skycity’s knowledge by way of your client informing Cameron Tannock, Human Resources Manager, that she was scheduled to work 17 consecutive days.”
Accordingly, in my view, it is difficult to see that the absence of sworn evidence from any of Ms Rosevear, Ms Hurcombe or Mr May was likely to be influential in informing Ms Celand’s decision to reject impliedly the offer to settle of 20 April 2015.
In support of his submissions that it was not unreasonable for Ms Celand to reject the settlement offer, Mr Heywood-Smith asserts that Ms Celand had an entitlement to expect Mr Webster and Ms Small to be called by the respondent and to have their inability to give evidence explained.
Mr Webster was also a scheduler. It was he who advised Ms Celand, by telephone, that she could not work on her RDO’s. It was common ground that he was not a relevant decision maker. Ms Celand conceded this in her evidence. Ms Small was an administrator in the scheduling department. Evidence was provided of emails she had prepared, at the direction of her superiors, regarding scheduling decisions.
Mr Heywood-Smith does not elaborate on the forensic potential of their evidence. As with Ms Rosevear, Ms Hurcombe and Mr May, it was open to Ms Celand to subpoena Mr Webster and Ms Small but she chose not to. In these circumstances, I do not consider that Skycity was under any obligation to call either of them, particularly given how it had put its case regarding who of its managerial team had made operative decisions regarding Ms Celand. At best, as with Ms Rosevear, Ms Hurcombe and Mr May, Mr Webster and Ms Small were in a position to critique the management techniques of Skycity but neither of them was an actual decision-maker.
The evidence of Ms Rosevear, Ms Hurcombe and Mr May did not unduly extend the proceedings. At the most a day was added to the length of the case. Ms Eastman was not unduly perturbed by their evidence, which was not unduly controversial. In large part, their evidence supported Ms Celand’s contention that she was not the only individual employee at Skycity who had been disgruntled by how the Casino had managed its staff from time to time.
However, as I pointed out in the original decision, the case was not a general inquiry into what sort of an employer Skycity was. My task was a closely confined one, a fact, which had tacit recognition in the settlement letter of 20 April 2015. I said as follows in the principle decision:
“It must also be borne in mind that the issue, in an adverse action claim, arising under section 340 of the Act, is not whether the employee concerned was unfairly dismissed or otherwise unreasonably or poorly treated. The task is to determine, if it is found that adverse action has been taken against the person concerned, what is the reason for that action and whether it was for a proscribed reason.
…
Nor is an application under section 340 of the FWA an opportunity for an applicant to raise any type of grievance, arising from his/her employment. Accordingly these proceedings are not a broad inquiry as to whether Ms Celand has been “subject to a procedurally fair or substantially unfair outcome.”[26]
[26] See Celand v Skycity Pty Ltd (supra) at [25] – [26]
In my view these statements cannot be regarded as anything other than well settled propositions in proceedings such as the current one. They reinforce my view that, notwithstanding the evidence of her various fellow employees in the case, it was not prudent for Ms Celand to ignore the offer of settlement, no matter how derisorily meagre it appeared to her to be, without at least some formal response to Skycity.
However, I am not persuaded that Ms Celand’s decision to call the three witnesses concerned can be considered to be per se an unreasonable act or omission given that it did not cause the proceedings to be greatly protracted. The more difficult issue is Ms Celand’s implied rejection of the offer to settle, which was subject to the unequivocal admonition that it would have relevance to the issue of costs.
Mr Heywood-Smith places significant weight by the analysis provided by Flick J in Wroughton v Catholic Education Office Diocese of Parramatta[27] in support of his contention that it would not be reasonable to make an order for costs against his client in the terms proposed by Skycity.
[27] Wroughton v Catholic Education Office Diocese of Parramatta [2015] FCA 1236
The case bears many similarities to the current one. The applicant concerned worked in the Employment Relations Team of the respondent, which was a reasonably large enterprise. From her perspective, the workplace was an unhappy one and she had difficulties with several of her superiors. She complained of being bullied and harassed at work. Others complained of the applicant’s conduct there towards them.
An independent investigation was held, which was critical of the applicant’s conduct at work and substantiated a number of complaints made about her conduct. Ultimately she was dismissed by the respondent. The applicant claimed she had been dismissed because she had complained about the conduct of one of her managers; and because she had suffered a mental illness, which had led to her being absent from work.
Later, she complained she had been subject to sexual harassment and the respondent had breached a general protection, pertaining to her, by not providing her with a safe workplace. As a consequence of these matters, the applicant commenced proceedings in the Federal Court alleged breaches of the general protection provisions of the FWA and unlawful discrimination on the basis of her sex. It was undoubtedly the case that the applicant had many grievances regarding how she had been treated by the respondent, whilst in its employ.
In this context, Flick J concluded as follows under a heading which read as follows “The Reasons for Termination – ‘Because’”:
“No matter how individual aspects of her claims to relief may have been resolved, the principal basis upon which it has been concluded that Ms Wroughton’s claims should fail is because the decisions taken in respect to her employment were taken for reasons not including any exercise by Ms Wroughton of any “workplace right”.[28]
[28] Ibid at [90]
As with the current case, the issue of causation between why adverse action was taken and an alleged protective attribute was crucial. Ms Wroughton failed in respect of each such allegation. It was accepted by the court that she had been terminated for the reasons provided to her by the management of the respondent. As a consequence of this failure, costs were sought against Ms Wroughton, pursuant to the provisions of section 570.
Flick J, after citing the passage from Australian Workers Union v Leighton Contractors Pty Ltd (No (2) mentioned above,[29] declined to do so. He said as follows:
“Notwithstanding the conclusion that the principal basis upon which Ms Wroughton’s claims must fail was because she had failed to establish any “improper” reason in the action taken against her, it is not considered that the institution of her claims can properly be characterised as vexatious or without reasonable cause.
The present proceeding is not one in which the discretion conferred by s 570 is enlivened.”
[29] See supra at [19] – [20]
Although there are many similarities between Ms Wroughton’s case and that of Ms Celand, in my view, there is one significant distinction, which is the existence of the Calderbank letter of 20 April. In Ms Celand’s case, through the medium of Skycity’s letter of 20 April 2015, she was presented with an analysis of her case and the respondent’s view of it, which I regard as carefully considered and calibrated. I do not consider that it was merely a walk away offer.
In the letter, she was advised that Skycity considered that she was destined to fail in her action because she would be unable to demonstrate any adverse action against her as a consequence of any workplace right attributable to her. This assessment was made after all relevant evidence had been filed and prior to the actual hearing commencing.
In this regard, the subsequent judgment entirely vindicated the respondent’s analysis. In my view, Ms Celand cannot contend that the case turned on the resolution of one or more points of law in her favour, which remained opaque to her, at that stage, because of the absence of evidence from Mr May, Ms Rosevear or Ms Hurcombe or indeed from Mr Webster or Ms Small.
Ms Celand was on notice that Skycity considered her case to be untenable, given the applicable provisions of the FWA and she was advised that she was at risk of costs as a consequence. This was no idle bluff, on Skycity’s part, or an exercise in gamesmanship or intimidation by it. At the very least, it should have caused Ms Celand to give close consideration to the security of her position.
It cannot be said that the tenor of the case, from Skycity’s perspective, changed as it unfolded before the court. Each of its witnesses maintained their evidence as set forth in their respective affidavits and was unshaken in cross-examination. As such, the judgment of the court was a vindication of Skycity’s assessment of the case as provided to Ms Celand in its letter of 20 April.
I do not accept that the absence of affidavit evidence from any of the witnesses nominated by Ms Celand, whom she wished to call, changed this situation in any way. In my view, they were called by her in what proved to be the vain hope that “something [would] turn up” from their evidence, which would favour Ms Celand’s case or support her assertion that there was something amiss in the management of Skycity. In my view, this did not turn out to be the case and their evidence did not advance this aspect of Ms Celand’s case.
In Wroughton the issue of costs seems to have related to section 570(2)(a) of the Act, namely whether the institution of the proceedings themselves constituted a vexatious or unreasonable act. The judgment of Flick J does not seem to raise any specific issues regarding how Ms Wroughton chose to conduct the litigation in question, after its institution.
Skycity does not call into question the bona fides of Ms Celand’s decision to commence proceedings against it. Rather its criticism of her is that she continued the case after it had attempted to advise her that it perceived her case to be fatally flawed, as she would be unable to establish any breach of the FWA by it. Following Ms Celand’s silence in respect of its offer it undoubtedly incurred significant costs and was compelled to run the matter to judgment.
The authorities make it plain that the Fair Work jurisdiction is primarily a no costs jurisdiction. The import of Mr Heywood-Smith’s reliance on Wroughton is that no costs were awarded, in that matter, notwithstanding the total failure of the application in the case, at trial, to find any nexus between the behaviour complained of any protected attribute of the applicant. In terms of its total failure, the case is analogous to the current matter.
In Clarke the Full Court indicated that the discretion, arising under section 570(2), was to be exercised carefully and not invoked merely because a party had not conducted its litigation efficiently or made an inevitable concession late. Bromberg J, in Saxena, indicated the discretion was a limited one to be exercised very carefully and, as such, was not one to be engaged in each and every case involving some transgression by a party.
I bear these considerations in mind, particularly the risk that individuals, including unrepresented ones, such as Ms Wroughton, may be deterred from bringing proceedings to protect their workplace rights, if there is a perception that the fair work area is only nominally a no costs jurisdiction, as the court will penalise, through an order for costs, each and every transgression committed by a litigant, even in the case of those who are unwary or ill-informed about the application of the jurisdiction to their situation (as was apparently Ms Wroughton).
In the current matter, Ms Celand made no concessions whatsoever in respect of the Calderbank offer. The offer itself was closely calibrated and considered. The timing of its making was also strategically informed. The offer was constructed to give Ms Celand and those advising her cause to pause and consider. As such, Skycity attempted to inform Ms Celand in respect of what it considered were the irredeemable and fatal defects in her case.
The mechanism of the Calderbank offer is a long standing one. It is informed by matters of public policy, which encourage settlement of litigation consensually without recourse to adjudication, if at all possible. In those circumstances, in my view, the court must also be careful to avoid reducing such offers to mere shibboleths, including in the Fair Work jurisdiction.
I appreciate, however, it does not follow, that merely because a litigant fails to better an offer, made to him or her prior to trial, costs must ensue. It is a question of determining what was reasonable, by reference to all the circumstances prevailing, at the time the offer was made and rejected.
No doubt and by necessary implication, when she received the offer, Ms Celand was sanguine about her prospects of success in the case. She was under no formal obligation to respond to the application and was entitled to keep her silence about it. In these circumstances, I am not in a position to evaluate why she did not respond to the offer.
I also appreciate that there are dangers in assessing such offers with the benefit of hindsight. However, in my view, the prescience of Mr Holland’s letter is a significant factor, when contrasted with Ms Celand’s silence in respect of it. I am satisfied that Ms Celand’s implied rejection of the offer in question does amount to an unreasonable act or omission on her part. To conclude otherwise would reduce the import of the Calderbank offer, made by Skycity, to nought.
In all the circumstances, I am persuaded that exceptional circumstances exist, which justify the making of an award of costs against Ms Celand pursuant to the provisions of section 570(2)(b) of the Act.
A further difficult aspect of the case is calculating the quantum of costs which should be awarded. I accept that the applicable scale, provided by the schedule represents a useful yardstick in this regard. Mr Holland, at an earlier stage of the proceedings, sought indemnity costs in an amount in excess of $104,000.00.
The amount now sought, pursuant to the applicable schedule, is significantly less, totalling $34,245.80. In lieu of counsel’s fees, he seeks application of the advocacy loading of 50%, which attaches to the daily hearing fee. This hearing fee, applying to the five day hearing is the most significant aspect of the costs sought, amounting to $30,711.00.
The litigation in question was lengthy and bitterly contested. Both parties engaged senior counsel. In my view, the amount of costs sought by Skycity is appropriate and I propose to make an order to this effect.
The principle decision is subject to appeal. I will stay the operation of the costs order pending the outcome of the appeal.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and eighteen (118) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 2 March 2017
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