Suda Ltd v Sims (No.2)
[2014] FCCA 190
•12 February 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SUDA LTD v SIMS (NO.2) | [2014] FCCA 190 |
| Catchwords: |
| INDUSTRIAL LAW – Costs – whether unreasonable act or omission – whether unreasonable act or omission caused costs to be incurred – whether proper case for indemnity costs to be awarded. |
| Legislation: Federal Circuit Court of Australia Act 1999 (Cth), ss.79(2) and (3) |
| Australian and International Pilots Association v Qantas Airways Ltd (No. 3) (2007) 162 FCR 392; [2007] FCA 879 Barnden v Tadrosse (No.2) [2013] FCCA 744 Colgate-Palmolive Company & Anor v Cussons Pty Limited (1993) 46 FCR 225 Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574; [2008] FCAFC 143 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd & Ors (1988) 81 ALR 397 Genovese v BGC Construction Pty Ltd (No.2) [2007] FMCA 601 Hughes v Mainrange Corporation Pty Ltd (No.2) (2009) 190 IR 351; [2009] FMCA 1044 Klages (WA) Pty Ltd v Walker (No.2) [2007] FMCA 2138 Rana v Libraries Board of Australia (No.2) [2008] FMCA 1037 Rentuza v Westside Auto Wholesale (2009) 236 FLR 231; [2009] FMCA 1022 Rothnie v St John of God Hospital (Subiaco) [2014] FCCA 159 Roy Galvin & Co Pty Ltd v Ives [2013] FCCA 1645 Suda Ltd v Sims [2013] FCCA 1833 |
| Applicant: | SUDA LTD |
| Respondent: | DOUGLAS ARTHUR SIMS |
| File Number: | PEG 251 of 2013 |
| Judgment of: | Judge Antoni Lucev |
| Hearing date: | 3 and 12 February 2014 |
| Date of Last Submission: | 3 and 12 February 2014 |
| Delivered at: | Perth |
| Delivered on: | 12 February 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Ludlow (on 3 February 2014) and Mr K Thomas (on 12 February 2014) |
| Solicitors for the Applicant: | HWL Ebsworth Lawyers |
| For the Respondent: | No appearance (on 3 February 2014) and in person (on 12 February 2014) |
ORDERS
The:
(a)Respondent’s Minute of Proposed Orders in Respect of the Dismissal of the Applicant’s Application dated 3 February 2014; and
(b)the Respondent’s Affidavit affirmed 5 February 2014,
be taken to have been filed, in Court, today.
Pursuant to s.570(2)(a) and (b) of the Fair Work Act 2009 (Cth), s.79(2) and (3) of the Federal Circuit Court of Australia Act 1999 (Cth) and r.21.02(2) of the Federal Circuit Court Rules 2001 (Cth), the respondent is to pay the applicant’s costs of the applicant’s oral interim application of 9 October 2013 in the sum of $6400 by 26 February 2014.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 251 of 2013
| SUDA LTD |
Applicant
And
| DOUGLAS ARTHUR SIMS |
Respondent
REASONS FOR JUDGMENT
Introduction
Pursuant to r.21.02 of the Federal Circuit Court Rules 2001 (Cth)[1], the applicant, Suda Ltd,[2] seeks an order that the respondent, Mr Sims, pay Suda’s costs of Suda’s oral interim application of 9 October 2013[3] on an indemnity basis.[4]
[1] “FCC Rules”.
[2] “Suda”.
[3] “Interim Application”.
[4] “Costs Application”.
Rule 21.02 of the FCC Rules provides for the making of a costs application to the Court,[5] and that:
…
(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 under Chapter 19 of the Family Law Rules; or
(d) set a time for payment of the costs, which may be before the proceeding is concluded.[6]
[5] FCC Rules, r.21.02(1).
[6] FCC Rules, r.21.02(2). See also s.79(2) and (3) of the Federal Circuit Court of Australia Act 1999 (Cth) which provides for the Court to award costs.
Previous judgment
In Suda Ltd v Sims[7] the Court dealt with the Interim Application by Suda Ltd for a Counterclaim by Mr Sims, alleging a breach of s.678 of the Fair Work Act 2009 (Cth),[8] to be struck out.
[7] [2013] FCCA 1833 (“Suda (No. 1)”).
[8] “FW Act”.
Section 678(1) of the FW Act provides as follows:
(1) a person (the witness) commits an offence if:
(a) the witness gives sworn or affirmed evidence; and
(b) the witness gives the evidence as a witness; and
(i) in a matter before FWA; or
(ii) before a person taking evidence on behalf of FWA for use in a matter that the witness will start by application to FWA; and
(c) the evidence is false or misleading.
Penalty: Imprisonment for 12 months.
In Suda (No.1) the Court found that s.678(1) of the FW Act did not give rise to a private right of action by any party or individual in civil proceedings, and that Mr Sims had no standing to bring the Counterclaim based on an alleged breach of s.678(1) of the FW Act, and, therefore, the Counterclaim was “hopeless and bound to fail”.[9] The Court also found that even if a private right of action had been held to arise, the elements of the alleged breach of s.678(1) of the FW Act had not been made out, and therefore any private right of action could never have succeeded.[10] The Court also concluded that the Counterclaim was vexatious and an abuse of process in that it:
… lacked reasonable grounds, and caused unjustifiable trouble or harassment because litigation which ought not to have been pursued, on any reasonable view, was pursued by Mr Sims, and pursued in the face of the rejection of similar claims by other courts, and specific observations of a Registrar of the Supreme Court of Western Australia that there was no private right of action in relation to the alleged breach of s.678(1) of the FW Act.[11]
[9] Suda (No.1) at para.57 per Judge Lucev.
[10] Suda (No.1) at para.66 per Judge Lucev.
[11] Suda (No.1) at para.68 per Judge Lucev.
The Court struck out the Counterclaim, but granted leave to re-plead on the basis of two other matters (an indemnity claim and an alleged entitlement to the supply of a motor vehicle and its transfer to Mr Sims upon termination of employment) which the Court identified in the course of the proceedings, but which had not been pleaded by Mr Sims.[12]
[12] Suda (No.1) at paras.71-74 per Judge Lucev.
Issues arising
Because this is a matter brought under the provisions of the FW Act the claim for indemnity costs cannot be considered in isolation, and there are in fact two issues which arise, namely:
a)is Suda entitled to costs at all given the provisions of s.570(2) of the FW Act; and
b)if Suda is entitled to costs, ought costs be awarded on an indemnity basis?
Submissions
Suda’s submissions
Suda relies on the following matters in support of a costs order, and in particular an indemnity costs order:
a)the inherent hopelessness of the Counterclaim;
b)that Mr Sims has previously unsuccessfully sought relief under s.678 of the FW Act in a number of other civil proceedings; and
c)Mr Sims was clearly informed by a Registrar of the Supreme Court of Western Australia that s.678(1) of the FW Act does not give an individual a right to institute civil proceedings in relation to any allegation regarding false or misleading evidence; and
d)Mr Sims has been referred to agencies such as the Commonwealth Director of Public Prosecutions[13] and the Australian Federal Police[14] as being the appropriate avenues to pursue the complaint the subject of the Interim Application.
[13] “Commonwealth DPP”.
[14] “AFP”.
Mr Sims’ submissions
Mr Sims did not appear at the initial hearing of the Costs Application on 3 February 2014. Mr Sims did make a written submission, but its terms are indicative of the difficulties that he has had in framing pleadings and submissions in an appropriate form and with appropriate content. Mr Sims’ submission on costs was as follows:
The granting of Costs of the Applicant represents a Report for a Criminal Offence and as such the Respondent seeks relief from the Order and damages as the Court sees fit.[15]
[15] Respondent’s Submissions in Response to the Applicant’s Application for Strike-out of the Respondent’s Counterclaim, filed 21 October 2013, para.16.
After judgment had been reserved at the hearing on 3 February 2014 the Registry, on 5 February 2014, apparently refused to accept for filing documents marked “Respondent’s Minute of Proposed Orders in Respect of the Dismissal of the Applicant’s Application dated 3 February 2014”[16] and an affidavit of Mr Sims affirmed 5 February 2014.[17] The Respondent’s Minute and Mr Sims’ Affidavit were, however, stamped “Received” in the Registry and brought to the Court’s attention, notwithstanding that the Respondent’s Minute and Mr Sims’ Affidavit had not been formally accepted for filing, judgment had been reserved on 3 February 2014, and that there were no orders of the Court granting any party leave to file further documents or evidence in the case. In the circumstances, the Court listed a further hearing of the matter to ensure that there was no denial of procedural fairness in relation to Mr Sims.
[16] “Respondent’s Minute”.
[17] “Mr Sims Affidavit”.
Mr Sims’ Respondent’s Minute appears to incorrectly assert that the applicant’s Interim Application was dismissed on 3 February 2014, which is not the case. But, in any event, the Respondent’s Minute is irrelevant as it sets out proposed orders in respect of the substantive application, and in particular Mr Sims’ re-pleaded “Counterclaim”. Likewise, Mr Sims’ Affidavit is of no assistance to the Court on the Costs Application. It is difficult to accept that Mr Sims “was not aware”[18] of the Court hearing on 3 February 2014, given that it was the subject of orders orally pronounced at the handing down of the judgment in Suda (No.1) (which was attended by Mr Sims), and which orders were reduced to writing, both in the judgment in Suda (No.1) and in the formal order of the Court, the former being given to Mr Sims in Court, and the latter sent by email to him by the Court at his address for service. It matters not however, given that he has had the further opportunity earlier today to address the Court on the Costs Application.
[18] Mr Sims’ Affidavit, para.1.
As for the “new evidence” referred to in Mr Sims’ Affidavit,[19] it is somewhat vague in content, but seemingly relates to events which allegedly occurred on the hearing of a violence restraining order by Suda’s Chairman against Mr Sims heard in the Magistrates Court of Western Australia at Manjimup on an unspecified date. None of the “new evidence” in Mr Sims’ Affidavit is relevant to the Costs Application.
[19] Mr Sims’ Affidavit, paras.4-8.
Having regard to the fact that the Court has now considered the Respondent’s Minute and Mr Sims’ Affidavit, there will be orders directing that they be treated as having been filed in Court today, as separate documents, in the proceedings. The Respondent’s Minute will be taken as indicative of the orders now sought, or additionally sought, in the substantive proceedings. The new evidence referred to in Mr Sims’ Affidavit will no doubt be the subject of objection by Suda on the basis of relevance and hearsay, but that is an argument for another day.
Given the opportunity earlier today to make submissions in relation to costs, including indemnity costs, Mr Sims made no submissions of any substance, and went so far as to indicate that he did not have anything to say given the Reasons for Judgment in Suda (No.1).
Consideration
Costs under the FW Act
Section 570 of the FW Act relevantly provides as follows:
(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.
(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) ...
For the purposes of s.570(2)(a) of the FW Act the Court must be satisfied that the proceedings were instituted vexatiously or without reasonable cause.
For the purposes of s.570(2)(b) of the FW Act two criteria must be fulfilled. They are:
a)that a party must have engaged in an unreasonable act or omission; and
b)that the unreasonable act or omission must have caused another party to incur costs in connection with the proceeding.[20]
[20] Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574 at 582 per Tamberlin, Gyles and Gilmour JJ; [2008] FCAFC 143 at para.28 per Tamberlin, Gyles and Gilmour JJ (“Clarke”); Rothnie v St John of God Hospital (Subiaco) [2014] FCCA 159 at para.29 per Judge Lucev.
Because the Court has found that this proceeding was vexatious, particularly that it ought not to have been pursued because it lacked reasonable grounds, the precondition in s.570(2)(a) of the FW Act is met, and it is open to the Court to order costs. Given that the prosecution of an incompetent or hopeless cause can be regarded as an unreasonable act,[21] the first of the criteria in s.570(2)(b) of the FW Act is also met in this case. The second criteria in s.570(2)(b) of the FW Act is also met as Suda has clearly been caused to incur costs by the unreasonable act.
[21] Australian and International Pilots Association v Qantas Airways Ltd (No.3) (2007) 162 FCR 392 at 402-403 per Tracey J; [2007] FCA 879 at para.36 per Tracey J (“Australian and International Pilots Association (No. 3)”); Clarke (2008) FCR at 582 per Tamberlin, Gyles and Gilmour JJ; FCAFC at para.29 per Tamberlin, Gyles and Gilmour JJ.
The exercise of the discretion in s.570(2)(b) is not necessarily engaged because:
a)a party does not conduct litigation efficiently;[22]
b)a concession is made late;[23]
c)a party may have acted in a different or timelier fashion;[24] or
d)a party has adopted a genuine but misguided approach.[25]
[22] Clarke FCR at 582 per Tamberlin, Gyles and Gilmour JJ; FCAFC at para.29 per Tamberlin, Gyles and Gilmour JJ.
[23] Clarke FCR at 582 per Tamberlin, Gyles and Gilmour JJ; FCAFC at para.29 per Tamberlin, Gyles and Gilmour JJ.
[24] Clarke FCR at 582-583 per Tamberlin, Gyles and Gilmour JJ; FCAFC at para.30 per Tamberlin, Gyles and Gilmour JJ.
[25] Australian and International Pilots Association (No.3) FCR at 403 per Tracey J; FCA at para. 39 per Tracey J.
The Court is also cognisant of the view expressed by the Full Court of the Federal Court in Clarke that courts ought not exercise the discretion to award costs under s.570(2) of the FW Act[26] “with too much haste”. Given the policy reasons behind s.570(2) of the FW Act providing for no costs in litigation under the FW Act, save for limited carve-outs, that observation is, with respect, consonant with the intention of the FW Act (and its predecessors).
[26] In Clarke, s.824(2) of the Workplace Relations Act 1996 (Cth).
This case is not, however, the usual adverse action, unlawful termination or penalty case under the FW Act. Rather, this is an application to recover costs from Mr Sims that were awarded to Suda by the Fair Work Commission,[27] which was met by a Counterclaim alleging breach of a criminal offence provision in the FW Act, s.678, which the Court found was hopeless and bound to fail, vexatious and an abuse of process. Furthermore, when one considers that Mr Sims had previously endeavoured, unsuccessfully, to seek relief based on s.678(1) of the FW Act on the three occasions (one in the District Court of Western Australia and twice in the Supreme Court of Western Australia), and that a Registrar of the Supreme Court of Western Australia had observed that there was no arguable basis for an allegation that a private right of action arose in respect of s.678 of the FW Act,[28] the Court, having taken time for consideration, is of the view that this is an appropriate case for it to exercise discretion to make an order under s.570(2)(a) and (b) of the FW Act in respect of the Costs Application.
[27] See Suda (No.1) at para.12(g) and (h) per Judge Lucev for details of the costs awarded by the Fair Work Commission.
[28] See Suda (No.1) at para.67(a) and (b) per Judge Lucev.
Indemnity costs
The Court has the jurisdiction to grant indemnity costs,[29] including indemnity costs in proceedings under the FW Act.[30] The law as to when it is appropriate for the Court to award costs on an indemnity basis is well established. In Barnden v Tadrosse (No.2)[31] this Court observed that the principles applicable to such orders are found in Colgate-Palmolive Company & Anor v Cussons Pty Limited.[32] In determining whether to award indemnity costs the Court has a very wide discretion, to be exercised judicially. What is an appropriate costs or indemnity costs order depends on the circumstances of the case. The normal practice, not to be lightly departed from, is to provide for costs to be on a party – party basis. Nevertheless, there are certain issues to which the Court will give consideration, and have to weigh, when determining whether to make, and the extent of, an indemnity costs order, which should only be made where the issues establish special or unusual circumstances warranting an indemnity costs order. Those issues include:
[29] Genovese v BGC Construction Pty Ltd (No.2) [2007] FMCA 601 at paras.38-46 per Lucev FM (“Genovese (No.2)”).
[30] Australian and International Pilots Association (No. 3) FCR at 403 per Tracey J; FCA at para.39 per Tracey J.
[31] [2013] FCCA 744 (“Barnden (No. 2)”).
[32] (1993) 46 FCR 225 (“Colgate-Palmolive”).
a)whether a party should have known that there was no prospect of success in the case;
b)where a party alleges fraud or forgery, knowing the accusation to be false, or irrelevant to the issues;
c)where a party precipitately punctuates proceedings by resiling from a previously adhered to view;
d)where a party acts in a high handed manner;
e)whether the party against whom indemnity costs is sought is a self-represented litigant, and whether the self-represented litigant ought escape the consequences of indemnity costs;
f)where a party proceeds “vexatiously” that is “without sufficient grounds for the purpose of causing trouble or annoyance”;
g)where a party proceeds for no good purpose at all due to inertia and carelessness;
h)where a party persists in the making of allegations which ought not have been made, or in undue prolongation of groundless contentions;
i)where a party’s conduct causes loss of time to the Court, and to other parties;
j)where a party imprudently refuses an offer to compromise;
k)whether the award of indemnity costs is sought against a contemnor;
l)having regard to the objects of:
i)encouraging savings of private costs and avoidance of inherent risks, delays and uncertainties of litigation;
ii)saving public cost necessarily incurred in litigation which events demonstrate to have been unnecessary; and
iii)indemnifying one party where the real cause and occasion of the litigation is the attitude adopted by the other party; and
m)the discretion is not so circumscribed that an indemnity costs order may only be made against an ethically or morally delinquent party. The discretionary categories are not closed, and other elements of litigious misconduct may be relevant.[33]
[33] Genovese (No.2) at paras.47-48 per Lucev FM, where the well-known authorities on indemnity costs Colgate-Palmolive and Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd & Ors (1988) 81 ALR 397 were cited, amongst others. Genovese (No. 2) has been applied in subsequent cases including Rana v Libraries Board of Australia (No. 2) [2008] FMCA 1037, Klages (WA) Pty Ltd v Walker (No.2) [2007] FMCA 2138 and Roy Galvin & Co Pty Ltd v Ives [2013] FCCA 1645 at paras.59-60 per Judge Lucev.
In Hughes v Mainrange Corporation Pty Ltd (No.2)[34] the Federal Magistrates Court of Australia held that where a jurisdictional objection in relation to an application is so fundamental that a simple inquiry with any competent lawyer or any of the many free legal advice services would have put the applicant in a position to concede the objection well before the hearing of the proceeding, the failure to so concede the objection, if it caused the other party to incur costs in connection with the proceeding, warranted an order, under s.570(2)(b) of the FW Act that the applicant pay the other party’s costs of the proceeding on the basis that the failure to make those inquiries constituted an unreasonable act.[35] Likewise, in Rentuza v Westside Auto Wholesale[36] the Federal Magistrates Court of Australia held that proceedings instituted without the Court having jurisdiction constituted an unreasonable act for the purposes of s.570(2)(b) of the FW Act.
[34] (2009) 190 IR 351; [2009] FMCA 1044 (“Mainrange Corporation (No.2)”).
[35] Mainrange Corporation(No.2) IR at 356 per Lucev FM; FMCA at paras.23-24 per Lucev FM.
[36] (2009) 236 FLR 231; [2009] FMCA 1022 (“Rentuza”).
In this case:
a)the Court has disregarded the referral of Mr Sims to agencies such the Commonwealth DPP and the AFP because, as the Court observed in Suda (No.1), such referrals do not assist in determining whether a court process is an abuse of process, or frivolous or vexatious, because those bodies exercise independent discretions, and the reasons for proceeding may depend on evidentiary or administrative issues, as much as they do upon an assessment of the validity of a cause of action;[37]
[37] Suda(No. 1) at para.69 per Judge Lucev.
b)the Court has held that the Counterclaim made by Mr Sims had no reasonable prospects of success, was vexatious in nature and an abuse of process. This is a case where Mr Sims “… should have known he had no chance of success”;[38]
[38] Barnden (No. 2) [2013] FCCA 744 at para.36 per Judge Altobelli.
c)Mr Sims ought to have known that there was no prospect of success in relation to the application alleging breach of s.678(1) of the FW Act, on the basis of:
i)his prior unsuccessful attempts to litigate the alleged breach in the Western Australian courts;
ii)the observations of a Registrar in the Supreme Court of Western Australia;[39] and
[39] Suda(No. 1) at para.67(a) and (b) per Judge Lucev.
iii)an examination of the terms of s.678(1) of the FW Act itself which, in the circumstances, were plainly not met, because the factual allegations said to give rise to the breach lacked substance;[40]
d)whilst the specific allegation in relation to s.678(1) of the FW Act did not involve an allegation of fraud or forgery, it did involve an alleged criminal offence of giving false or misleading evidence, which was not an offence in respect of which Mr Sims had a right to bring an action, and in respect of which the factual allegations made were not capable of making out the alleged offence;[41]
e)although Mr Sims is a self-represented litigant, he ought not escape the consequences of indemnity costs. That is because:
i)he should have been aware that there was no prospect of success for the reasons referred to in Suda (No.1) and set out above; and
ii)he is an experienced self-represented litigant, having previously appeared on his own behalf before the Supreme Court of Western Australia, both at first instance and in the Court of Appeal, the District Court of Western Australia, and the Fair Work Commission both at first instances and before a Full Bench on appeal, in litigation similar or subject matter related to the current proceedings;[42]
f)for reasons otherwise set out above Mr Sims’ application as filed in these proceedings was vexatious; and
g)Mr Sims has persisted in these proceedings with a case which is groundless, and which he ought to have known was groundless, given, in particular, the comments of a Registrar of the Supreme Court of Western Australia.
[40] Suda(No. 1) at paras.58-66 per Judge Lucev.
[41] Suda(No. 1) at paras.26-57 (as to the lack of a private right to bring an action for beach of s.678(1) of the FW Act) and paras.58-66 (as to the lack of substance to the factual allegations in relation to the alleged breach of s.678(1) of the FW Act) per Judge Lucev.
[42] See Suda (No.1) generally for references to the cases.
In all of the above circumstances, the Court, having taken time for consideration, determines that this is a proper case for the grant of indemnity costs. There will therefore be an indemnity costs order in the Costs Application.
Quantum of indemnity costs
Suda claimed indemnity costs in the sum of $6400 having regard to the relative complexity and novelty of the issues which arose on the Interim Application. Mr Sims did not dispute that amount. In the Court’s view that amount is appropriate as an amount of indemnity costs in this case having regard to the nature and complexity, including the novelty of, the issues which arose in Suda (No.1), it appearing to be the first time that a particular provision of the FW Act has been given consideration, and certainly the first time it has been given consideration in the context of an application to strike out a Counterclaim alleging breach of s.678 of the FW Act. There will, therefore, be an order for costs in the sum of $6400 payable by 26 February 2014.
Conclusions and orders
The Court has concluded that:
a)Mr Sims must pay Suda’s costs of the Interim Application on an indemnity basis in the sum of $6400 by 26 February 2014; and
b)the:
i)Respondent’s Minute of Proposed Orders in Respect of the Dismissal of the Applicant’s Application dated 3 February 2014; and
ii)the Respondent’s Affidavit affirmed 5 February 2014,
be taken to have been filed, in Court, today.
I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev
Associate:
Date: 12 February 2014
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