Suda Ltd v Sims (No. 3)
[2014] FCCA 2127
•19 September 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SUDA LTD v SIMS (No.3) | [2014] FCCA 2127 |
| Catchwords: COSTS – Whether costs payable on an indemnity basis – whether unreasonable act or omission. |
| Legislation: Crimes Act 1900, s.124 |
| Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 Butorac v Win Corporation Pty Ltd [2009] FCA 1503 Colgate-Palmolive Company & Anor v Cussons Pty Limited (1993) 46 FCR 225 Ejueyitsi v Bond University [2012] FMCA 872 Genovese v BGC Construction Pty Ltd (No.2) [2007] FMCA 601 |
| JD Heydon, Cross on Evidence, 8th Australian Edition (Chatswood: LexisNexis Butterworths, 2010) |
| Applicant: | SUDA LTD |
| Respondent: | DOUGLAS ARTHUR SIMS |
| File Number: | PEG 251 of 2013 |
| Judgment of: | Judge Antoni Lucev |
| Hearing date: | 21 February 2014 |
| Date of Last Submission: | 21 February 2014 |
| Delivered at: | Perth |
| Delivered on: | 19 September 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr JR Ludlow |
| Solicitors for the Applicant: | HWL Ebsworth Lawyers |
| For the Respondent: | In person |
ORDERS (As amended at the handing down of the Reasons for Judgment)
That paragraphs 2, 3, 6.1, 6.6, 6.7, 8(a), (b), (c), (d) and (e), 9, 10, 11, 12 and 13 of, and paragraphs 2 to 16 inclusive of the relief pleaded in, the Repleaded Reply and Counterclaim be struck out, with no leave to replead.
The proceedings be stayed pending further order of the Court.
The Respondent to pay the Applicant’s costs in the sum of $8050 by 3 October 2014.
There be liberty to apply in respect of order (2).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 251 of 2013
| SUDA LTD |
Applicant
And
| DOUGLAS ARTHUR SIMS |
Respondent
REASONS FOR JUDGMENT
Introduction
The Application
The applicant Suda Ltd[1] seeks orders that:
a)the respondent Mr Sims’ Repleaded Reply and Counterclaim be dismissed;
b)alternatively, judgment be entered for Suda on the Repleaded Reply and Counterclaim; and
c)Suda’s costs of the Repleaded Reply and Counterclaim be paid by Mr Sims on an indemnity basis.
[1] “Suda”.
The basis for the orders sought by Suda is that the Repleaded Reply and Counterclaim:
a)has no reasonable prospects of success;
b)is frivolous or vexatious in nature; or
c)is otherwise an abuse of process.
The orders sought by Suda are supported by an affidavit of Keith Roy Thomas affirmed 29 January 2014.[2] The content of Mr Thomas’ Affidavit is evident from material set out below.
[2] “Mr Thomas’ Affidavit”.
In opposition to the orders sought by Suda Mr Sims filed an affidavit affirmed 27 November 2013,[3] a further affidavit affirmed 5 February 2014[4] and a minute of proposed orders. Again, the content, where it is relevant, is evident from material set out below.
[3] “Mr Sims’ 2013 Affidavit”.
[4] “Mr Sims’ 2014 Affidavit”.
Background
On 15 November 2013, the Court, in Suda Ltd v Sims[5] held that Mr Sims’s Counterclaim should be struck out, but that Mr Sims ought to have leave to replead a counterclaim, as part of an amended Response, having regard to the nature of what the Court described as the Indemnity and Motor Vehicle Claims. In Suda (No.1) the Court made clear that it was not making any observations as to the merits of the Indemnity and Motor Vehicle Claims.[6] At the time of the judgment in Suda (No.1) the Court had not been made aware of the full extent of certain proceedings in the District Court of Western Australia[7] and the Supreme Court of Western Australia[8] which are dealt with below, and which, in large part, form the basis for the orders sought by Suda.
[5] [2013] FCCA 1833 (“Suda (No. 1)”).
[6] Suda (No.1) at para.72 per Judge Lucev.
[7] “District Court”.
[8] “Supreme Court”.
The Repleaded Reply and Counterclaim
The Repleaded Reply and Counterclaim makes the following claims:[9]
[9] “Claims”.
a)a claim for an indemnity from Suda, under Mr Sims’s contract of employment with Suda,[10] against:
… legal costs arising from any breach by the [applicant] of its obligations under [the contract].[11]
b)a claim based upon an alleged failure by Suda to comply with an alleged contractual obligation under the Employment Contract to supply Mr Sims a fully serviced car to the value of $65,000.00;[12]
c)a claim based upon an allegation by Mr Sims that he was forced to terminate his employment under the Employment Contract on 9 June 2009;[13]
d)a claim based upon an allegation that Suda has breached an alleged agreement entered into on or about 12 November 2007 to compensate Mr Sims for certain intellectual property developed by Mr Sims;[14] and
e)a claim based upon an allegation that Suda has breached an alleged agreement to give Mr Sims share options:
… in recognition of his dedicated services to the Company ...[15]
[10] “Employment Contract”.
[11] “Indemnity Claim”.
[12] “Motor Vehicle Claim”.
[13] “Forced Termination Claim”.
[14] “Inventions Claim”.
[15] “Options Claim”.
Suda alleges that claims relevantly very similar to the first four of these Claims had already been made in other proceedings between Suda and Mr Sims, namely a claim very similar to the:
a)Indemnity Claim made in the District Court in proceedings[16] which at the time of hearing were still pending;[17]
b)Motor Vehicle Claim made in the District Court in proceedings,[18] in which judgment was expected to be delivered on 5 February 2014;[19]
c)Forced Termination Claim made in the 2168 District Court Proceedings;[20] and
d)Inventions Claim made in the Supreme Court in proceedings[21] which at the time of hearing were still pending.[22]
[16] “3938 District Court Proceedings”.
[17] Mr Thomas’ Affidavit, paras.8-14.
[18] “2168 District Court Proceedings”.
[19] Mr Thomas’ Affidavit, paras.15-20.
[20] Mr Thomas’ Affidavit, paras.21-22.
[21] “1535 Supreme Court Proceedings”.
[22] Mr Thomas’ Affidavit, paras.23-28.
In the case of two of the Claims, namely the Motor Vehicle Claim and the Forced Termination Claim, the claim similar to the relevant Claim has since been determined adversely to Mr Sims by the District Court in the judgment in the 2168 District Court Proceedings.[23]
[23] Sims v Suda Ltd [2014] WADC 7 (“Sims – District Court”).
Suda’s submissions
Suda’s submissions with respect to each of the Claims are as set out hereunder.
The Indemnity Claim
Suda submits that:
a)the Indemnity Claim is very similar to a claim Mr Sims has made in the 3938 District Court Proceedings, which were commenced some time ago and at the time of hearing were still pending;[24]
[24] Mr Thomas’ Affidavit, paras.8-14
b)the Indemnity Claim should be regarded as an abuse of process, because where proceedings are instituted against a party in a second forum when there are proceedings against that party pending in another, the continuance of the second proceedings may be an abuse of process;[25]
[25] Citing Michael Wilson & Partners Limited v Nicholls & Ors (2011) 244 CLR 427 at 452 per Gummow A-CJ, Hayne, Crennan and Bell JJ; [2011] HCA 48 at para.90 per Gummow A-CJ, Hayne, Crennan and Bell JJ (“Michael Wilson & Partners”).
c)the fact that the same transactions and events are the subject of two separate proceedings in different forums may raise a question about abuse of process, but it does not lead inexorably to a conclusion that there is an abuse. In such a case, the continuance of the second proceedings would be an abuse if it would be unjustifiably oppressive to the party that is named as defendant in both forums;[26]
[26] Citing Michael Wilson & Partners CLR at 452 per Gummow A-CJ, Hayne, Crennan and Bell JJ and 459 per Heydon J; HCA at para.90 per Gummow A-CJ, Hayne, Crennan and Bell JJ and para.110 per Heydon J.
d)one matter relevant to the question whether such continuance would be an abuse of process is whether the claim that has been brought twice is the only claim being made in the second proceedings. If it is not, then the existence of the other claims in the second proceedings is normally a factor against the conclusion that the continuance of the second proceedings would be an abuse;[27]
[27] Citing Michael Wilson & Partners CLR at 456-457 per Gummow A-CJ, Hayne, Crennan and Bell JJ; HCA at para.104 per Gummow A-CJ, Hayne, Crennan and Bell JJ.
e)in the present case:
i)the Motor Vehicle Claim and the Forced Termination Claim should both be struck out on the basis that they are very similar to claims that have already been determined adversely to Mr Sims in the 2168 District Court Proceedings;
ii)the Options Claim should be struck out on the basis that there is no plea of any valid consideration for the alleged agreement on which it is based; and
iii)the Inventions Claim should be struck out on the basis that it is very similar to a claim Mr Sims has made in the 1535 Supreme Court Proceedings that were still pending at the time of hearing;
f)the Court should therefore deal with Suda’s contentions in the following way:
i)the Court should consider whether the Motor Vehicle Claim, the Forced Termination Claim and the Options Claim should be struck out on the bases for which Suda contends; and
ii)if the Court concludes that the Motor Vehicle Claim, the Forced Termination Claim and the Options Claim should be struck out, then the Court should proceed to consider whether the Indemnity Claim and the Inventions Claim should both be struck out on the basis that they are the only remaining Claims in the Counterclaim, and have each been instituted in a second forum (this Court) in circumstances where there are proceedings against Suda pending in another forum (either the Supreme Court or the District Court) in which Mr Sims is making a claim very similar to the relevant Claim, and the continuance of each of those claims, viewed in isolation, would be unjustifiably oppressive to Suda.
Assuming that the Court deals with Suda’s contentions in the above way, Suda further submits, in relation to the Indemnity Claim, as follows:
a)Suda’s claim in these proceedings is a very simple claim for enforcement of a costs order for less than $5,000.00 made by Fair Work Australia. Suda is making that claim only because the making of the claim is a necessary step in the enforcement of a costs order that has already been made;
b)by contrast, the Indemnity Claim is a much more complex claim requiring consideration of the Employment Contract, which is a substantial written contract. In making the Indemnity Claim, in circumstances where Mr Sims has already made, and is pursuing, a very similar claim in the 3938 District Court Proceedings, Mr Sims is effectively asking Suda to defend substantially the same claim twice, in two different courts exercising jurisdiction in the same country and applying the same law to the determination of the claim. Additionally, Mr Sims is asking this Court to determine the second proceedings even though this court is a specialist court set up to determine specialist disputes, and not more general disputes such as the dispute raised by the Indemnity Claim; and
c)against that background, the Court should conclude that the Indemnity Claim is unjustifiably oppressive to Suda.
The Motor Vehicle Claim
Suda submits that:
a)on 5 February 2014, the District Court determined adversely to Mr Sims his claim in the 2168 District Court Proceedings that was very similar to the Motor Vehicle Claim;[28]
b)in the 2168 District Court Proceedings, Mr Sims based his similar claim, and in the present proceedings, he bases the Motor Vehicle Claim, upon an alleged breach of clause 7.5 of the Employment Contract;[29]
c)where a claim has been brought on the basis of a particular cause of action, and the proceedings in which the claim is made has passed into judgment, so that the cause of action is merged and has no longer any independent existence, the rule of res judicata applies, with the consequence that no other proceedings can thereafter be maintained on the same cause of action;[30] and
d)it follows that Mr Sims cannot maintain the Motor Vehicle Claim in the present proceedings, and that the Motor Vehicle Claim must therefore be struck out.
[28] See Sims – District Court at paras.33(b), 155(e) and 159-161 per Stone DCJ.
[29] See Mr Thomas’ Affidavit, paras.19 and 20, and pages 23 and 25; Sims - District Court at paras.33(b), 155(e) and 159-161 per Stone DCJ, and the Repleaded Reply and Counterclaim, para.6.6.
[30] Citing Blair v Curran (1939) 62 CLR 464 at 532 per Dixon J (“Blair”); Jackson v Goldsmith (1950) 81 CLR 446 at 466 per Fullagar J (“Jackson”); Port of Melbourne Authority v Anshun Proprietary Ltd (1981) 147 CLR 589 at 597 per Gibbs CJ, Mason and Aickin JJ (“Anshun”).
The Forced Termination Claim
Suda submits that:
a)on 5 February 2014, the District Court similarly determined adversely to Mr Sims his claim in the 2168 District Court Proceedings that was very similar to the Forced Termination Claim;[31]
b)in the 2168 District Court Proceedings, Mr Sims based his similar claim, and in the present proceedings, he bases the Forced Termination Claim, upon an alleged breach of the Employment Contract, although in the present proceedings he relies upon different conduct by Suda leading to the alleged breach;[32]
c)although Mr Sims is now making different allegations of fact, the cause of action upon which he is relying, namely breach of the Employment Contract, is the same. It follows that Mr Sims cannot maintain the Forced Termination Claim in the present proceedings, and that the Forced Termination Claim must therefore be struck out;
d)alternatively, a litigant who makes claims against the same defendant in consecutive proceedings, the first of which have been determined, will be estopped, upon application of the principle of Anshun estoppel, from pursuing the second proceedings, where the matter the litigant is relying upon is so relevant to the subject matter of the first proceedings that it would have been unreasonable for the litigant not to rely upon it. Generally speaking, it would be unreasonable to make a claim on a particular basis in the second proceedings if, having regard to the nature of that claim, and its subject matter, it would be expected that the litigant would raise the matter and thereby enable the relevant issues to be determined in the one proceeding;[33]
e)upon application of the above principle to the facts of, and the alleged facts giving rise to, the 2168 District Court Proceedings, and the Forced Termination Claim in the present proceedings, Mr Sims is estopped from maintaining the Forced Termination Claim, as it was unreasonable for Mr Sims not to rely, in the alternative, upon his different allegations of fact in the present proceedings in support of what is a claim of the same general nature, namely a claim for breach of the Employment Contract flowing from alleged conduct by Suda leading to a cessation of the relevant employment relationship; and
f)it follows that Mr Sims cannot maintain the Forced Termination Claim in the present proceedings, and that the Forced Termination Claim must therefore be struck out.
[31] See Sims – District Court at paras.33(a), 155-156 and 177-186 per Stone DCJ.
[32] Mr Thomas’ Affidavit, paras.21 and 22, and pages 26 to 28; Sims – District Court at paras.33(a), 155-156 and 177-186 per Stone DCJ, and the Counterclaim, par 11.
[33] Citing Anshun at 602-603 per Gibbs CJ, Mason and Aickin JJ.
The Inventions Claim
Suda submits that:
a)this Claim is very similar to a claim Mr Sims has made in the 1535 Supreme Court Proceedings, which were still pending at the time of hearing;[34] and
b)subject to one qualification, the submissions made above about the Indemnity Claim apply equally to the Inventions Claim. The qualification is that the Inventions Claim appears to be a significantly more complex claim than the Indemnity Claim, with the consequence that the Inventions Claim appears to be even more oppressive to Suda than the Indemnity Claim.
[34] Mr Thomas’ Affidavit, paras.23 to 28.
The Options Claim
Suda submits that:
a)the Options Claim is based upon an alleged agreement by which Suda allegedly agreed to give Mr Sims share options “in recognition of his dedicated services to the Company …”;[35]
[35] Repleaded Reply and Counterclaim, para.9.
b)as at the time of the alleged agreement in March 2008, Mr Sims was an employee of Suda, and he had previously been engaged by Suda in various capacities,[36] and the Court may infer that Mr Sims had been so engaged and employed on the basis that, amongst other things, Suda had agreed to pay for his work. The Options Claim should therefore be taken to be a claim for payment under an agreement that Mr Sims be paid for work for which he:
i)was already contractually entitled to be paid; or
ii)had been already paid;
c)it follows that the Options Claim should be taken to be a claim based upon an agreement supported by past consideration. In Pao On v Lau Yiu Long[37] it was said that:
An act done before the giving of a promise to make a payment or to confer some other benefit can sometimes be consideration for the promise. The act must have been done at the promisors' request: the parties must have understood that the act was to be remunerated either by a payment or the conferment of some other benefit: and payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance.[38]
d)the plea in the Repleaded Reply and Counterclaim relating to the Options Claim does not include any plea in respect of any of the three matters mentioned in Pao On. In the absence of a plea of at least the first two matters, the Options Claim cannot succeed, and should therefore be struck out as frivolous and vexatious.
[36] Citing Sims - District Court at paras.1-7 per Stone DCJ.
[37] [1980] AC 614 (“Pao On”).
[38] Pao On at 629 per Lord Scarman.
Mr Sims’ submissions
Mr Sims did not file formal submissions, but parts of Mr Sims’ 2013 Affidavit and 2014 Affidavit were as much submissions as they were fact, and the Court, doing the best it can in circumstances where what Mr Sims put is not entirely clear, considers those matters in Mr Sims’ 2013 Affidavit and 2014 Affidavit in considering whether to dismiss the Repleaded Reply and Counterclaim. Mr Sims says that his Counterclaim should not be dismissed because:
a)on 20 April 2009 the board of Suda accepted two directives of Suda’s Independent Audit Committee in relation to the Short Term Prospectus;
b)within the directive the board members were required to submit a questionnaire and declaration to the board for ratification and approval to that committee;
c)on 26 May 2009 the board of Suda ratified Mr Sims’ questionnaire and declaration which questionnaire and declaration ratified:
i)debts and loan owed to Mr Sims;
ii)Mr Sims’ Employment Contract and the implied terms, which implied terms included, amongst other things, an indemnity for all and any legal costs, and the supply of a motor vehicle to Mr Sims, despite Mr Sims purchasing the motor vehicle;[39] and
[39] What Mr Sims describes as implied terms appear in fact to be express terms, with the issue being what, on a proper interpretation, those terms actually mean.
iii)a reward contract which gives rise to the Inventions Claim;[40]
[40] See Transcript, 21 February 2014, page 5.
d)the judgment in the 2168 District Court Proceedings does not affect the obligation of Suda to Mr Sims in regard to the Inventions Claim;
e)Suda has misappropriated Mr Sims’ property under s.124 of the Crimes Act 1900 by entering and ratifying an agreement with the intention of not performing that agreement and as such has stolen Mr Sims’ property;
f)the 2168 District Court Proceedings are under appeal, and new evidence adduced since trial will result in a new trial, and charges being laid against various parties involved in these matters;
g)the judgment in the 2168 District Court Proceedings is a miscarriage of justice and a dishonest act as the District Court Judge was conflicted, which conflict gave rise to bias in that the District Court Judge preferred to believe his friend Mr Jooste rather than Mr Sims;
h)the District Court Judge ignored:
i)the key factor that the board ratified the Employment Contract which entitles Mr Sims to recover his legal expenses including the $6,400 awarded against him on 12 February 2014; and
ii)the Inventions Claim; and
i)Mr Sims seeks an order for Suda to reimburse all and any legal fees in accordance with the implied terms of Mr Sims’ Employment Contract dated 2 October 2007, and for his motor vehicle as ratified on 26 May 2009 by the board of Suda.
Consideration – Repleaded Reply and Counterclaim
In considering the issues raised in these proceedings the Court must have regard to s.17A of the Federal Circuit Court of Australia Act 1999 (Cth)[41] and r.13.10 of the Federal Circuit Court Rules 2001 (Cth),[42] which are set out hereunder and the principles established in relation to those provisions.
[41] “FCCA Act”.
[42] “FCC Rules”.
Section 17A of the FCCA Act provides that:
(2) The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
Rule 13.10 of the FCC Rules provides that:
The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:
a) the party prosecuting the proceeding or claim for relief has no reasonable prospects of successfully prosecuting the proceeding or claim; or
b) the proceeding or claim for relief is frivolous or vexatious; or
c) the proceeding or claim for relief is an abuse of the process of the Court.
The power to give summary judgment under s.17A of the FCCA Act can probably be exercised on wider grounds than the power under r.13.10 of the FCC Rules, since the latter is not qualified by the statement that a proceeding need not be hopeless or bound to fail for it to have no reasonable prospect of success.[43] It has been suggested that s.17A of the FCCA Act provides for judgment or nothing, and is not brought into play by mere deficiencies in pleadings.[44]
[43] Rowe v Emmanuel College [2013] FCA 939 at para.12 per Rangiah J.
[44] Fortron Automotive Treatments Pty Ltd v Jones (No. 2) [2006] FCA 1401 at para.21 per French J (“Fortron (No. 2)”); Butorac v Win Corporation Pty Ltd [2009] FCA 1503 at para.9 per Buchanan J (“Butorac”).
The words of s.17A of the FCCA Act mean what they say and there is little point in attempting to formulate other phrases to encapsulate their meaning.[45] The Court must embark upon a “practical judgment … as to whether the applicant has more than a ‘fanciful’ prospect of success”.[46] The task was described in Spencer as follows:
… The … Court may exercise power … if, and only if, satisfied that there is “no reasonable prospect” of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to “no reasonable prospect” can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase “just and equitable” when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.[47]
The High Court’s observations in Spencer can be applied to the “no reasonable prospect” provisions in r.13.10(a) of the FCC Rules.
[45] Spencer v The Commonwealthof Australia (2010) 241 CLR 118 at 141 per Hayne, Crennan, Kiefel and Bell J; [2010] HCA 28 at paras.58-59 per Hayne, Crennan, Kiefel and Bell JJ (“Spencer”); Ejueyitsi v Bond University [2012] FMCA 872 at para.25 per Jarrett FM.
[46] Spencer CLR at 132 per French CJ and Gummow J; HCA at para.25 per French CJ and Gummow J.
[47] Spencer CLR at 141 per Hayne, Crennan, Kiefel and Bell JJ; HCA at para.60 per Hayne, Crennan, Kiefel and Bell JJ.
The requirements for res judicata to apply have been summarised as follows:
a)there must have been a final judgment, based on the establishment or failure to establish a cause of action;
b)the later proceeding must raise the same cause of action; and
c)except where the prior judgment was in rem, the parties to the proceedings must be the same.[48]
[48] Wong v Minister for Immigration & Multicultural & Indigenous Affairs (2004) 204 ALR 722 at 736 per Lindgren J; [2004] FCA 51 at para.43 per Lindgren J (“Wong”). An appeal from Wong was dismissed in Wong v Minister for Immigration & Multicultural & Indigenous Affairs (2004) 146 FCR 10; [2004] FCAFC 242 (“Wong Appeal”).
The Anshun estoppel principle was explained as follows by the High Court in Anshun:
In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it.[49]
[49] Anshun at 602 per Gibbs CJ, Mason and Aickin JJ.
In terms of the application of that principle the Federal Court in Spalla v St George Motor Finance Ltd (No. 6)[50] said that it “requires the evaluative judgment whether it would have been ‘reasonable’ to have raised in the first proceedings the matter now raised in the second”,[51] or whether, as the Full Federal Court observed in Bryant v Commonwealth Bank of Australia,[52] it was unreasonable for the party asserting the cause of action in the second proceeding to refrain from raising it in the earlier proceeding against the same opponent.[53]
[50] [2004] FCA 1699 (“Spalla”).
[51] Spalla at para.65 per French J.
[52] (1995) 57 FCR 287 (“Bryant”).
[53] Bryant at 295 per Beaumont, Wilcox and Moore JJ.
For the purposes of determining the unreasonableness required for the principle of Anshun estoppel to operate, the possibility of conflicting judgments has been said to be strongly indicative of unreasonableness.[54] However, the mere close relationship between two sets of proceedings is insufficient to give rise to Anshun estoppel.[55]
[54] Egglishaw v Australian Crime Commission (2007) 164 FCR 224 at 233 per Finn, Kenny and Edmonds JJ; [2007] FCAFC 183 at para.32 per Finn, Kenny and Edmonds JJ (“Egglishaw”).
[55] Egglishaw FCR at 232 per Finn, Kenny and Edmonds JJ; FCAFC at para.28 per Finn, Kenny and Edmonds JJ.
Where the Anshun estoppel test is met, the Court still has a discretion to allow the later proceeding to continue if “special circumstances” exist.[56]
[56] Wong ALR at 737 per Lindgren J; FCA at para.49 per Lindgren J.
The learned author of the 8th Australian Edition of Cross on Evidence,[57] has written of the Anshun estoppel principle that it:
a)has been applied with great caution;
b)may not prevent a party from litigating a claim which it might, or even should, have brought by counterclaim in an earlier proceeding; and
c)can apply if the parties in the second proceedings are different.[58]
[57] JD Heydon, Cross on Evidence, 8th Australian Edition (Chatswood: LexisNexis Butterworths, 2010) (“Cross on Evidence”).
[58] Cross on Evidence, page 262 [para.5170].
It would therefore appear that it is, at least, possible for Anshun estoppel to apply in respect of a counterclaim or cross-claim, but that a cautious approach needs to be adopted to the application of the Anshun estoppel principle in these circumstances.
The proper identification of Anshun estoppel is not that it is “based on the doctrine of res judicata and issue estoppel”, but rather, as the Federal Court explained in Spalla the Anshun principle “is allied to, but no co-extensive with, res judicata and issue estoppel”.[59]
[59] Bryant at 295 per Beaumont, Wilcox and Moore JJ; Spalla at para.65 per French J. See also Wong Appeal FCR at 17 per Emmett, Conti and Selway JJ; FCAFC at paras.36-37 per Emmett, Conti and Selway JJ.
In Spalla the Federal Court was dealing with the extent of re-litigation as an abuse of process, and observed that abuse of process subsumed the separate doctrines of res judicata, issue estoppel and Anshun estoppel, in a sense that those doctrines are not exhaustive of the circumstances which might amount to an abuse of process.[60]
[60] Spalla at paras.60 and 66 per French J.
In Michael Wilson & Partners the High Court observed that:
One recognised class of abuse of process is where proceedings are instituted against a party in a second forum when there are proceedings against that party pending in another and the continuance of the second would be an abuse of the process of the first. In such a case, the continuance of the second proceedings would be an abuse if it would be unjustifiably oppressive to the party who is named as defendant in both forums.[61]
[61] Michael Wilson & Partners CLR at 452 per Gummow ACJ, Hayne, Crennan and Bell JJ; HCA at para.90 per Gummow ACJ, Hayne, Crennan and Bell JJ.
In determining whether Mr Sims Repleaded Reply and Counterclaim is an abuse of process the Court ought also have regard to considerations of comity, which proceedings were instituted first, and the jurisdiction of the respective courts concerned.
Comity between Federal and State courts is an important consideration. Generally, the courts:
a)ought not be seen to be competing for litigation business; and
b)should not be hearing the same matters, or matters which are substantially similar, at or about the same time.
Comity is therefore a matter to which appropriate weight must be given in determining where the litigation is to be conducted, having regard to the overall practicalities of the interests of the administration of justice.[62]
[62] Pegasus Leasing Limited v Cadoroll Pty Limited & Ors (1996) 59 FCR 152 at 157 per Lee and Tamberlin JJ (“Pegasus Leasing”).
Federal – State court comity is one aspect of the public interest which must be considered when determining whether or not the institution of proceedings in this Court constitutes an abuse of process having regard to the previously instituted District Court Proceedings.[63]
[63] Pegasus Leasing at 158 per Lee and Tamberlin JJ.
It is not appropriate to simply determine the issue on the basis of which proceedings were instituted first in time,[64] but it is nevertheless a factor which warrants some consideration and weighing in the balance.
[64] Pegasus Leasing at 160 per Lee and Tamberlin JJ; Westpac Banking Corporation & Ors v Eltran Pty Ltd & Ors (1987) 14 FCR 541 at 548 per Fox and Burchett JJ (“Eltran”).
Jurisdiction, and in particular exclusivity of jurisdiction, is an important consideration because of the implications that it has for the choice to be made as to which court is appropriate to hear a matter.[65]
[65] Eltran at 548 per Fox and Burchett JJ; Pegasus Leasing at 157-158 per Lee and Tamberlin JJ.
There is no dispute that the Claims are within the jurisdiction of the District Court and Supreme Court as made in those courts and, although this is a matter brought within this Court’s jurisdiction by Suda under the provisions of the FW Act, the Claims are within the jurisdiction of this Court in its ancillary jurisdiction and are consistent with the invocation in s.14 of the FCCA Act for this Court to determine matters completely and finally, assuming, as that section does, that there is no estoppel or abuse of process bar to it doing so.
Motor Vehicle Claim
In the Repleaded Reply and Counterclaim Mr Sims asserts that Suda contracted to supply him with a fully serviced car to the value of $65,000 and failed to do so pursuant to clause 7.5 of the Employment Contract. He claims $65,000 plus interest, or $36,000 car expenses and depreciation on his own car.
In the 2168 District Court Proceedings Mr Sims also claimed for a motor vehicle and associated expenses pursuant to clause 7.5 of the Employment Contract. In Sims – District Court the District Court held that the claim must fail, observing as follows:
159.The claim for a motor vehicle was brought pursuant to clause 7.5 of the Employment Contract. Mr Sims conceded in cross-examination that he had not made a demand for a motor vehicle other than at the time the Employment Contract was entered into in 2007 when he asked the CEO, Mr Patterson for a motor vehicle. Mr Sims’ evidence was that Mr Patterson replied that he (Mr Patterson) had not received a motor vehicle but [Suda] was paying his expenses and would do the same for Mr Sims. Mr Sims then agreed with that proposal.
160.On a proper construction of clause 7.5 the obligation to provide a motor vehicle on termination of Mr Sims’ employment would only relate to the motor vehicle that had been supplied as at the time of termination. In circumstances where Mr Sims waived the requirement of [Suda] to supply a motor vehicle, there was no reasonable basis for insisting that on or after his termination of employment, [Suda] purchase a motor vehicle to thereafter transfer to him. Accordingly, the claim for failure to provide a motor vehicle must fail.
161.The claim for motor vehicle expenses was a subsidiary claim by Mr Sims relating to the motor vehicle. Mr Sims asserted that he was entitled to motor vehicle expenses and maintenance costs pursuant to cl 7.5 of the Employment Contract. Mr Sims failed to provide any evidence of his motor vehicle expenses and costs. Mr Sims expressly abandoned the claim during the course of trial. Further, I do not accept the contention in Mr Sims’ written closing submissions that he abandoned the claim because the Court required that he ‘produce evidence of each expense which would have required [him] to bring to court numerous credit card statements’. Accordingly, the claim for motor vehicle expenses must fail.
Based as it is on clause 7.5 of the Employment Contract the Motor Vehicle Claim in these proceedings, is a claim which is res judicata, having already been dealt with and determined in the 2168 District Court Proceedings and the subsequent decision in Sims – District Court. The Motor Vehicle Claim being res judicata it cannot again be adjudicated in these proceedings as to do so would be an abuse of process.[66]
[66] Wong ALR at 736 per Lindgren J; FCA at para.43 per Lindgren J. See also Blair at 532 per Dixon J and Jackson at 466 per Fullagar J.
The Court also observes that federal – State court comity would, in a case such as this, where the Motor Vehicle Claim has already been determined by a State court, require that a federal court not determine the issue a second time.
Mr Sims made various allegations concerning the conduct of the District Court Judge, the adducing of new evidence, an appeal and a new trial. Although the allegations concerning the District Court Judge appear to be no more than scandalous assertions, the further assertions that there is new evidence to be led, and a new trial likely to arise from an appeal, simply reinforces this Court’s conclusion that it would be an abuse of process for the Motor Vehicle Claim to proceed in this Court if there were to be an appeal on foot from Sims – District Court, and the possibility of a new trial in the event that the appeal were successful.
For all of the above reasons, this Court considers that the Motor Vehicle Claim ought to be dismissed or struck out.
Forced Termination Claim
In the Repleaded Reply and Counterclaim Mr Sims alleges that he was forced to terminate his employment with Suda on 9 June 2009 arising out of an allegation that he had directed shares away from Suda in September 2008, which allegation he says was untrue.
In Sims – District Court the District Court dealt with a claim that Mr Sims’ resignation was not of his own volition and that he was constructively dismissed. The District Court found that Mr Sims resigned of his own volition and that the claim, for six months’ salary in lieu of notice, must fail.[67] In these proceedings Mr Sims seeks to establish a cause of action, namely a forced termination or constructive dismissal giving rise to damages (although it is unclear precisely what relief is sought) in relation to the alleged forced termination. Once again, the claim is res judicata because the judgment in Sims – District Court has dealt with and made a final judgment on the cause of action now raised between the same parties.[68] Furthermore, and in any event, even if, as appears here, different factual issues arise in respect of the alleged forced termination those are matters which ought to have been the subject of a claim in the 2168 District Court Proceedings, and therefore give rise to an Anshun estoppel.
[67] Sims – District Court at para.176 per Stone DCJ. See also paras.177-185 per Stone DCJ.
[68] Wong ALR at 736 per Lindgren J; FCA at para.43 per Lindgren J. See also Blair at 532 per Dixon J and Jackson at 466 per Fullagar J.
For essentially the same reasons as are set out above in relation to the Motor Vehicle Claim this federal court ought not deal with a claim which ought to have been made in the District Court at the same time as the Forced Termination Claim made in the 2168 District Court Proceedings.
The Court also adopts what it has said above in relation to the Motor Vehicle Claim in respect of Mr Sims’ allegations concerning the conduct of the District Court Judge, and the prospects of success on appeal, and a new trial and new evidence being led.
For all of the above reasons, it follows that the Forced Termination Claim should be dismissed or struck out as an abuse of process.
Options Claim
As pleaded the Options Claim is one of an offer based upon past consideration. It is trite law that past consideration is not good consideration.[69] The passage cited from Pao On in Suda’s submissions on the Options Claim sets out the elements required for an act done before the giving of a promise to make a payment or to confer some other benefit to be consideration for the promise. In this case, the plea fails to show that, at the least, there was an understanding that the act (here the dedicated services alleged by Mr Sims) was to be remunerated either by payment or the conferment of some other benefit, other than the benefit to which Mr Sims was already entitled as an employee pursuant to the Employment Contract. In those circumstances the claim amounts to no more than a claim for a benefit based upon past consideration, which is not good consideration, because the elements set out in Pao On are not met. In those circumstances, the Options Claim must be dismissed.
[69] Roscorla v Thomas (1842) 114 ER 496.
Inventions Claim
In these proceedings Mr Sims alleges that he was not paid “for his Inventions”.[70]
[70] Repleaded Reply and Counterclaim, para.10.
The particulars to the pleaded alleged failure to pay Mr Sims for his inventions assert that during the course of negotiations concerning the Employment Contract the issue of reward for Mr Sims’ “inventive steps”[71] arose, and that a proposal submitted by Mr Sims on 11 October 2007 was accepted by Suda on 12 November 2007, in that Suda “Undertook and pledged to pay ... (Mr Sims) in the near future”.[72] Subsequently on 15 February 2009 Mr Sims says that following confirmation of a positive result in relation to a malaria treatment, he issued an invoice for 245,000 shares in HC Berlin Pharma AG[73] as part performance of the Inventions Claim, and that on 22 February 2009 Suda signed a share transfer for those shares in favour of Mr Sims.[74] The particulars then assert that Suda failed to honour its undertaking and pledge.
[71] Repleaded Reply and Counterclaim, para.10(a).
[72] Repleaded Reply and Counterclaim, para.10(d).
[73] “Berlin Pharma”.
[74] Repleaded Reply and Counterclaim, para.10(e) and (f).
In the 1535 Supreme Court Proceedings the Mr Sims’ Minute of Proposed Substituted Statement of Claim, as ordered by a Registrar of the Supreme Court on 10 January 2014 sets out the details of the offer and acceptance alleged above with respect to the transfer of the 245,000 Berlin Dharma shares,[75] and asserts that Suda has breached a contractual promise and seeks damages. It is plain that the 1535 Supreme Court Proceedings were commenced in 2011, and the Minute of Proposed Substituted Statement of Claim is the sixth version of the Statement of Claim in those proceedings.[76]
[75] 1535 Supreme Court Proceedings Statement of Claim, paras.20-23.
[76] See Sims v Suda Ltd [2014] WASC 3 at para.5 per Registrar Boyle (“Sims – Registrar”).
In circumstances where Mr Sims has made a claim, as plaintiff, in a State superior court of record, and some two years later, by way of counterclaim, seeks to make exactly the same claim in this Court, which is a federal inferior court of record, the claim in this Court is an abuse of process. In the Supreme Court the Inventions Claim is a primary claim which the Supreme Court has jurisdiction to hear, and which Mr Sims seeks to have heard in the Supreme Court. Considerations of comity between State and federal courts militate against the same claim being heard twice by different courts, and by the claim being heard by an inferior court as opposed to a superior court. It follows that the Inventions Claim in these proceedings must be dismissed or struck out.
Indemnity Claim
In these proceedings Mr Sims’ Repleaded Reply and Counterclaim claims an indemnity under cll.14.1 and 14.2 of the Employment Contract in relation to matters seemingly including the costs awarded to Suda against Mr Sims in earlier proceedings before Fair Work Australia,[77] which Suda seeks to enforce in these proceedings. Mr Sims’ argument is that if the indemnity under the Employment Contract applies to the FWA Costs he is not liable for them, and they cannot therefore be enforced in these proceedings.
[77] “FWA Costs” and “FWA” respectively.
In the 3938 District Court Proceedings Mr Sims has claimed the same indemnity under the same provisions of the Employment Contract in a Repleaded Statement of Claim filed 26 July 2013. In the 3938 District Court Proceedings the indemnity is however claimed in relation to the costs of earlier, seemingly settled proceedings, in the Federal Court of Australia. Suda’s Defence in the 3938 District Court Proceedings denies that the claimed indemnity applies either after the resignation of Mr Sims from his employment with Suda or in relation to conduct outside the scope of that employment, or beyond Mr Sims’ capacity as an officer in that employment.
The bringing of proceedings in this Court in relation to an issue which is already the subject of litigation in another court with jurisdiction to determine that issue, would be an abuse of process if the issue to be determined related to the same factual matters. The factual matrix is not however the same in both matters, and were the District Court to determine that Mr Sims was entitled to the benefit of the indemnity it might be arguable that he is similarly entitled to the benefit of the indemnity in relation to the factual matters the subject of these proceedings, that is the FWA Costs. In the above context it would not be appropriate for different courts to be simultaneously litigating the primary legal issue, namely the extent, if any, of the application of the indemnity, lest there be different outcomes which would then be likely to give rise to further litigation on that primary legal issue. In the present circumstances it is not in the interests of comity, or the interests of the administration of justice or the public interest that two courts be simultaneously considering that primary legal issue. In the circumstances, where the 3938 District Court Proceedings were first in time, and where the indemnity is the primary issue in dispute in that litigation and has been fully pleaded to by the parties, this Court does not consider that it should separately determine that issue or engage the parties in further time and expense by having Suda plead to that issue by way of a Reply to Counterclaim until such time as the issue of the indemnity has been determined by the District Court. Furthermore, if the District Court were to determine that Mr Sims was entitled to an indemnity it would result in an injustice to Mr Sims if this Court were to dismiss the Indemnity Claim at this stage, because the indemnity issue is being litigated in the District Court.
The Indemnity Claim cannot be dismissed in the above circumstances. That raises the issue as to what ought to be done in relation to the Indemnity Claim.
In the circumstances, the Court considers that the proper course is to stay the proceedings with respect to the Indemnity Claim, which are all that remains of the Repleaded Reply and Counterclaim, until such time as the primary legal issue in relation to the Indemnity Claim has been determined by the District Court, and any subsequent appeals resolved. It would not be appropriate for the Court to proceed to hear the substantive application in these proceedings with respect to the FWA Costs because if Mr Sims is correct in relation to the Indemnity Claim he is indemnified in relation to those costs, and there is no good purpose served by this Court dealing with the substantive application in advance of a determination by the District Court as to the extent of the indemnity in the Employment Contract.
Further consideration of the Claims
Because the Court has found that the Indemnity Claim should not be dismissed or struck out judgment for Suda on the Repleaded Reply and Counterclaim cannot be entered under s.17A of the FCCA Act.[78] However, because the Court has found that each of the Motor Vehicle Claim, the Forced Termination Claim, the Options Claim and the Inventions Claim ought be dismissed or struck out the Court can and will order that each of those Claims be struck out. Thus, paragraphs 2, 3, 6.1, 6.6, 6.7, 8(a), (b), (c), (d) and (e), 9, 10, 11, 12 and 13 of, and paragraphs 2 to 16 inclusive of the relief pleaded in, the Repleaded Reply and Counterclaim will be struck out. As to the Indemnity Claim that will be stayed pending judgment by the District Court in the 3938 District Court Proceedings and the determination of any subsequent appeals, with the order being that the proceedings be stayed until further order of the Court.
[78] Fortron (No. 2) at para.21 per French J; Butorac at para.19 per Buchanan J.
The Court considers that, the Options Claim aside, there is no basis upon which these matters could be Repleaded without there being an abuse of process, given the existence of the 2168 District Court Proceedings, the 3938 District Court Proceedings and the 1535 Supreme Court Proceedings. As to the Options Claim the Court notes that this is the second attempt by Mr Sims to plead a counterclaim, that he has elsewhere failed to properly plead the giving of good consideration for a contract arising from his relationship with Suda,[79] that each of the 2168 District Court Proceedings, the 3938 District Court Proceedings and the 1535 Supreme Court have been the subject of multiple attempts to properly plead the Statement of Claim in each of them, and that it has been observed by both this Court and the Supreme Court that if Mr Sims has genuine causes of action it appears he needs the assistance of a lawyer to properly plead those causes of action.[80] Having regard to that history, to the objects of the FCCA Act[81] and to general principles of case management,[82] the Court has determined that it will not grant Mr Sims leave to replead the paragraphs which have been struck out.
Indemnity costs
[79] See Sims - Registrar at paras.11-42 per Registrar Boyle.
[80] Sims v Jooste QC [2013] WASCA 245 at para.19 per Pullin and Newnes JJA (“Jooste QC”); Suda (No 1) at para.73 per Judge Lucev.
[81] FCCA Act, s.3.
[82] Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 at 192 per French CJ and 213-215 per Gummow, Hayne Crennan, Kiefel and Bell JJ; [2009] HCA 27 at paras.[30] per French CJ and [97-105] per Gummow, Hayne Crennan, Kiefel and Bell JJ.
Suda’s submissions
Suda, pursuant to r.21.02 of the FCC Rules, seeks an order that Mr Sims pay Suda’s costs of the Application on an indemnity basis.
Suda submits that the Repleaded Reply and Counterclaim in its revised form is fundamentally flawed, because:
a)Suda’s claim is a very simple claim for a modest amount;
b)the Indemnity Claim is a complex claim that has already been made in other proceedings that are currently pending;
c)the Motor Vehicle Claim is essentially identical to a claim that, by the time the Counterclaim was filed, had been made in other proceedings in which judgment was reserved, and in which that claim has since been dismissed;
d)the Forced Termination Claim is similar to a claim that:
i)had similarly been made in those other proceedings in which judgment was reserved, and
ii)has similarly since been dismissed;
and it was unreasonable for Mr Sims, in those other proceedings, not to rely, in the alternative, upon the different allegations of fact on which Mr Sims bases the Forced Termination Claim;
e)the Inventions Claim is a claim even more complex than the Indemnity Claim that has similarly already been made in other proceedings that are currently pending;
f)a simple inquiry with any competent lawyer or any free legal service before the filing of the Repleaded Reply and Counterclaim would have put Mr Sims in a position to know that the Repleaded Reply and Counterclaim was destined to be struck out;
g)it is clear, from the District Court’s judgment in Sims – District Court, that by the time the 2168 District Court Proceedings were heard in October 2013, Mr Sims, although unrepresented, had at least some familiarity with the principles of Anshun estoppel, which is, Suda submits, the most complex of the doctrines to be applied in determining whether the Repleaded Reply and Counterclaim should be struck out;[83]
h)it is also clear, from the Supreme Court's interlocutory judgment in Sims - Registrar that the Supreme Court has told Mr Sims that a litigated claim based upon an agreement supported by past consideration must be properly pleaded, or it will be struck out; and
i)the Court should order that Mr Sims pay, on an indemnity basis, Suda’s costs of responding to the Counterclaim.
[83] Sims – District Court at paras.9-31 per Stone DCJ.
Mr Sims’ submissions
Mr Sims did not make any substantive submissions with respect to indemnity costs.
Consideration – indemnity costs
The Court has the jurisdiction to grant indemnity costs,[84] including indemnity costs in proceedings under the Fair Work Act 2009 (Cth).[85] 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)[86] this Court observed that the principles applicable to such orders are found in Colgate-Palmolive Company & Anor v Cussons Pty Limited.[87] 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:
[84] Genovese v BGC Construction Pty Ltd (No.2) [2007] FMCA 601 at paras.38-46 per Lucev FM (“Genovese (No.2)”).
[85] “FW Act”; Australian and International Pilots Association v Qantas Airways Ltd (No. 3) (2007) 162 FCR 392 at 403 per Tracey J; [2007] FCA 879 at para.39 per Tracey J (“International Pilots (No. 3)”).
[86] [2013] FCCA 744 (“Barnden (No.2)”).
[87] (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)consideration of the objects of:
i)encouraging savings of private costs and the 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.[88]
[88] 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 determining whether or not this might ordinarily be an appropriate case in which to award costs (and setting aside, momentarily the provisions of s.570(2) of the FW Act) the Court has had regard to a number of matters. Firstly, that at this stage, because the Indemnity Claim remains to be determined, Mr Sims has not been wholly unsuccessful, and if the Indemnity Claim is determined in Mr Sims favour he may not be liable for the FWA Costs sought to be enforced by Suda’s substantive application. Secondly, the failure to properly plead the Options Claim is an example of poor or inept pleading, and might not of itself ordinarily warrant an award of indemnity costs. In this case, however, it arises against the background of the observations by the Supreme Court and this Court of the need for Mr Sims to obtain the assistance of a lawyer in the drafting of his pleadings.[89] Thirdly, that each of the Motor Vehicle Claim, the Forced Termination Claim and the Inventions Claim were already the subject of other proceedings brought by Mr Sims in the Supreme Court and District Court, and were, for reasons set out above an abuse of process, and were brought by Mr Sims who is an experienced self-represented litigant[90] who ought to have realised or ascertained that those Claims were an abuse of process through his own exertions, or by making a straight forward, and in the circumstances inexpensive enquiry, of an experienced litigation lawyer.
[89] Jooste QC at para.19 per Pullin and Newnes JJ; Suda (No.1) at para.73 per Judge Lucev.
[90] Suda (No.2) at para.24 per Judge Lucev.
In the circumstances it is clear that three of the five Claims ought not to have been made at all, and a fourth (the Options Claim) ought not to have been made in the form it was made. The Court considers that in all the circumstances indemnity costs orders would ordinarily be appropriate in respect of those four Claims.
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.[91]
[91] 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.
Given that the prosecution of an incompetent or hopeless cause can be regarded as an unreasonable act,[92]and a pleading which is an abuse of process must be so, the precondition in s.570(2)(a) of the FW Act and the first of the criteria in s.570(2)(b) of the FW Act are 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.
[92] International Pilots (No. 3) FCR at 402-403 per Tracey J; FCA at para.36 per Tracey J; 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;[93]
b)a concession is made late;[94]
c)a party may have acted in a different or timelier fashion;[95] or
d)a party has adopted a genuine but misguided approach.[96]
[93] Clarke FCR at 582 per Tamberlin, Gyles and Gilmour JJ; FCAFC at para.29 per Tamberlin, Gyles and Gilmour JJ.
[94] Clarke FCR at 582 per Tamberlin, Gyles and Gilmour JJ; FCAFC at para.29 per Tamberlin, Gyles and Gilmour JJ.
[95] Clarke FCR at 582-583 per Tamberlin, Gyles and Gilmour JJ; FCAFC at para.30 per Tamberlin, Gyles and Gilmour JJ.
[96] 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[97] “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).
[97] 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 the FWA Costs from Mr Sims that were awarded to Suda by the Fair Work Commission,[98] which was met by a now struck out 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. That Counterclaim has now been repleaded as the Repleaded Reply and Counterclaim, and of five Claims, three ought not to have been made at all. In respect of those three Claims the Court, in the exercise of its broad discretion, considers it appropriate to award indemnity costs. In respect of the fourth struck out Claim, the Options Claim, the Court likewise is of the view that it should never have been made in the form that it was, and that it also ought to attract an award of indemnity costs.
[98] See Suda (No.1) at para.12(g) and (h) per Judge Lucev for details of the costs awarded by the Fair Work Commission.
In the circumstances, Mr Sims will be ordered to pay eighty per cent of the costs of the proceedings on 12 and 21 February 2014 with the actual amount to be assessed by a Registrar.
Section 124 of the Crimes Act 1900 (NSW)[99]
[99] “Crimes Act NSW”.
The Court has not dealt with the claim concerning the alleged contravention of s.124 of the NSW Crimes Act as the Court has no jurisdiction to deal with any contravention of s.124 of the NSW Crimes Act. In any event, the matter is not pleaded in the Repleaded Reply and Counterclaim.
Conclusions and orders
The Court has concluded that:
a)each of the Motor Vehicle Claim, the Forced Termination Claim, the Options Claim and the Inventions Claim should be struck out without leave to proceed, and therefore paragraphs 2, 3, 6.1, 6.6, 6.7, 8(a), (b), (c), (d) and (e), 9, 10, 11, 12 and 13 of, and paragraphs 2 to 16 inclusive of the relief pleaded in, the Repleaded Reply and Counterclaim will be struck out;
b)the Indemnity Claim will not be struck out at this stage;
c)the proceedings be stayed pending further order of the Court, to be made following judgment by the District Court in the 3938 District Court Proceedings and any subsequent appeals; and
d)Mr Sims is to pay eighty per cent of Suda’s costs of the proceedings on 12 and 21 February 2014 on an indemnity basis, with the actual quantum to be assessed by a Registrar of this Court,
and there will be orders accordingly.
I certify that the preceding seventy-seven (77) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev
Associate:
Date: 19 September 2014
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