Swaminathan v Techfront Australia Pty Ltd
[2018] FCCA 700
•28 March 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SWAMINATHAN v TECHFRONT AUSTRALIA PTY LTD | [2018] FCCA 700 |
| Catchwords: COSTS – Applicant’s application for costs of directions hearing – respondent made application for costs incurred as a result of the applicant’s further amendments to the Points of Claim – applicant abandoned claims under the Australian Consumer Law – whether abandoning the claims was an unreasonable act – the applicant should get costs for attendance at the directions hearing. |
| Legislation: Fair Work Act 2009, s.570 Federal Circuit Court of Australia Act 1999 (Cth), s.79 |
| Cases cited: Ruddock & Ors v Vadarlis & Others (No.2) [2001] FCA 1865; (2001) 115 FCR 229 Saxena v PPF Asset Management Ltd [2011] FCA 395 |
| Applicant: | SATHYAMOORTHY SWAMINATHAN |
| Respondent: | TECHFRONT AUSTRALIA PTY LTD |
| File Number: | SYG 2343 of 2016 |
| Judgment of: | Judge Nicholls |
| Hearing date: | Matter decided on the papers |
| Date of Last Submission: | 21 July 2017 |
| Delivered at: | Sydney |
| Delivered on: | 28 March 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr B Rauf |
| Solicitors for the Applicant: | AI Strategic Lawyers |
| Counsel for the Respondent: | Mr I Latham |
| Solicitors for the Respondent: | Mills Oakley Lawyers |
ORDERS
The respondent’s application for costs is dismissed.
The respondent pay the applicant’s costs for the directions hearing on 12 July 2017.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2343 of 2016
| SATHYAMOORTHY SWAMINATHAN |
Applicant
And
| TECHFRONT AUSTRALIA PTY LTD |
Respondent
REASONS FOR JUDGMENT
This judgment is concerned with two costs applications. One costs application was made by the applicant (Mr Swaminathan), and the other was made by the respondent (Techfront Australia Pty Ltd (“Techfront”)). The relevant background to the applications is as follows.
On 30 August 2016, Mr Swaminathan made an application to this Court pursuant to the Fair Work Act 2009 (Cth) (“the FWA”). That application arose out of the termination of Mr Swaminathan’s contract of employment with Techfront. The application also sought damages for what Mr Swaminathan alleged were Techfront’s breaches of the Australian Consumer Law (“ACL”) (Schedule 2 to the Competition and Consumer Act 2010 (Cth)). That application was accompanied by a document titled “Points of Claim” (“POC”).
The progress of the case before the Court is as follows [I note that any action not directly relevant to the costs applications has not been included].
a)Orders were made by consent on 12 October 2016. The applicant was given leave to file an amended Statement of Claim (“SOC” or similarly described above as a “POC”). The respondent was to file a Defence and any Counter-Claim (the matter was also referred to mediation, which was unsuccessful).
b)The applicant filed an amended POC on 2 November 2016.
c)The respondent filed a Defence on 30 January 2017.
d)The applicant filed a Reply on 16 March 2017.
e)The matter was listed for a directions hearing on 12 July 2017.
Techfront filed its written submissions in Court on 12 July 2017. Mr Swaminathan filed his written submissions on 21 July 2017 (and see further below at [11]).
Techfront seeks costs for what it says was Mr Swaminathan’s “abandonment” of his case “under the Consumer law” ([1] of Techfront’s written submissions). However, Mr Swaminathan seeks costs for attendance at the directions hearing on 12 July 2017. Mr Swaminathan asserts that it was not necessary to attend that directions hearing, but that the parties’ attendance was compelled by the unreasonable conduct of Techfront ([3] – [4] of Mr Swaminathan’s written submissions).
The Court’s discretion to award costs derives from s.79 of the Federal Circuit Court of Australia Act 1999 (Cth). Generally, the power to award costs is unfettered, subject to the need for the discretion to award costs to be exercised judicially (Ruddock & Ors v Vadarlis & Others (No.2) [2001] FCA 1865; (2001) 115 FCR 229 at [9] per Black CJ and French J (as he then was) and Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [66] per McHugh J and see also Noble v Baldwin & Anor (No.2) [2011] FMCA 700 at [9], Lee v Proctor and Gamble Australia Pty Ltd & Anor (No.2) [2012] FMCA 1075 and SZRTP v Minister for Immigration & Anor (No.2) [2013] FCCA 711; (2013) 277 FLR 469).
However, in the current case, the exercise of the discretion is confined, or qualified, by s.570 of the FWA. That section is in the following terms:
“Section 570
Costs only if proceedings instituted vexatiously etc.
(1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A.
(2) The party may be ordered to pay the costs only if:
(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b) the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or
(c) the court is satisfied of both of the following:
(i) the party unreasonably refused to participate in a matter before the FWC;
(ii) the matter arose from the same facts as the proceedings.”
While the Court’s discretion remains, any costs order can only be made if the Court is satisfied as to any of the matter set out at s.570(2) of the FWA (s.570(1) of the FWA and see [6] of Mr Swaminathan’s written submissions and [2] of Techfront’s written submissions) (or in accordance with ss.569 or 569A of the FWA but these sections are not relevant to the current case).
I also note that the discretion to award costs must be exercised cautiously (see also Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6] per Bromberg J).
I pause to note that demonstrably a claim arising from the ACL is not a claim under the FWA. There was no dispute between the parties that the ACL claim, in the circumstances, nonetheless remained subject to s.570 of the FWA (Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; (2015) 229 FCR 221 (“Melbourne Stadiums”)).
Both parties have provided written submissions in this matter. As mentioned above, while Techfront’s submissions were provided in Court on 12 July 2017 (at a directions hearing), Techfront was also given the opportunity to provide further written submissions in reply. It elected not to do so. The parties agreed that the Court’s consideration of the two applications for costs should proceed on the basis of the written submissions, and the material on the Court’s file. It is to be noted that this matter has not yet proceeded to a final hearing, which is scheduled for later this year.
Techfront’s argument proceeds from the proposition that Mr Swaminathan acted unreasonably in pursuing, in part, proceedings under the ACL, and then abandoning this claim “without reason being given” ([6] of Techfront’s written submissions).
Techfront relies on Orrcon Operations Pty Ltd v Capital Steel & Pipe Pty Ltd (No.2) [2008] FCA 24 (“Orrcon”) for the principles as to how the Court should exercise its discretion to award costs in the current circumstances (see [9] – [10] of Techfront’s written submissions).
As Mr Swaminathan submits, correctly in my view, the judgment in Orrcon was not concerned with, or given in the context of, s.570 of the FWA ([20] – [21] of Mr Swaminathan’s written submissions). Techfront’s submissions do not explain why, for current purposes, Orrcon is relied upon in light of a number of other authorities which specifically focus on s.570 of the FWA. In particular, authorities regarding the qualification to the exercise of the Court’s discretion in relation to costs under the FWA.
In this light, the authorities relied on by Mr Swaminathan, which all deal with s.570 of the FWA, with respect, are of far more direct relevance to the current consideration (see Melbourne Stadiums at [155] – [157] and Ryan v Primesafe [2015] FCA 8; (2015) 323 ALR 107 at [60] – [66] and see also [7] – [10] of Mr Swaminathan’s written submissions).
In the current case, given Techfront’s submission as to the basis of its claim to costs, attention is directed to the phrase an “unreasonable act or omission” as it appears at s.570(2)(b) of the FWA.
Although the explanation of Techfront’s application is brief, it would appear that there are two interrelated elements as to the assertion that Mr Swaminathan’s act was “unreasonable”, thus leading to Techfront’s incurring costs that it should recover pursuant to s.570(2) of the FWA.
One, that it was unreasonable of Mr Swaminathan once having pleaded, or at least in part initiated proceedings involving the ACL, to have then “abandoned” this aspect of the proceedings without reason. Two, this conduct caused Techfront to incur costs in relation to the proceedings.
Techfront’s submissions do not directly explain why Mr Swaminathan’s conduct was unreasonable. Nor do they identify what specific costs were incurred by Techfront in relation to the proceedings as a result of Mr Swaminathan’s unreasonable act. In my view, that alone is sufficient to refuse Techfront’s application for costs. In this light, as was made clear in Ryan (at [64]):
“…The policy behind section 570 is to ensure that the spectre of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular, in my opinion) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings…”
By contrast, Mr Swaminathan’s submissions provide various and strong arguments against the making of the costs order sought by Techfront.
First, there is no indication that Mr Swaminathan’s making of the ACL claim in these proceedings was unreasonable. As is clear from Mr Swaminathan’s POC (filed on 30 August 2016), the matter that is said to give rise to the ACL claim arose from representations said to have been made to Mr Swaminathan by Techfront which were part of the claimed factual matrix for the FWA claim (see the POC at [55] – [57]. I note for clarity that the reference is to the original POC, not the amended or further amended POC).
Techfront’s claim to costs, arising from what is said to be Mr Swaminathan’s “abandonment” of the ACL claim, must be rejected. Prior to the final hearing of the matter, and indeed coincidental with the final hearing date being given, Mr Swaminathan made an election not press a part of his original claims.
Of itself, I cannot see how this, in the circumstances, can be described as an unreasonable act or omission in the sense required by s.570(2) of the FWA (see Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143; (2008) 170 FCR 574). I note in this context also that in Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No.2) [2014] FCA 351 Justice Pagone refused to award costs against a party for abandoning claims on the second day of the hearing.
Third, even at its highest, Techfront’s contention in written submissions that the bringing of the ACL claim and its subsequent abandonment was unreasonable, makes no reference to the merits, or otherwise, of the ACL claim. Therefore, it cannot be said that Mr Swaminathan’s motive in not subsequently pursuing the ACL claim was because of some subsequent view that it was unmeritorious.
To the contrary, Mr Swaminathan, through his counsel, raised the issue of filing a further amended POC on 26 April 2016, following the unsuccessful mediation between the parties, in order to “focus the claims”. Subsequently Mr Swaminathan, through his counsel, explained at a directions hearing on 12 July 2017, that the decision not to proceed to press the ACL claim was to allow the focus of what were said to be “key issues”, and Mr Swaminathan’s financial circumstances. There is no reason not to accept this. Far from being an unreasonable act, the election not to pursue the ACL claim, in the circumstances explained, is reasonable.
Fourth, and importantly, Techfront has not indicated, let alone explained, what “additional” costs were incurred by it arising from the impugned conduct of Mr Swaminathan.
In the current case, Techfront was required to provide a Defence to all of Mr Swaminathan’s amended POCs. It did so. In relation to the parts of the amended POC dealing with the ACL, Techfront did no more than deny Mr Swaminathan’s claim, or reply to it with reference to the Points of the Defence otherwise relevant to the FWA claim (see in particular [56] – [64] of the Points of Defence filed on 30 January 2017).
In all, the application for costs by Techfront is therefore refused.
Mr Swaminathan also seeks costs for attendance at Court for the directions hearing on 12 July 2017. Mr Swaminathan’s written submissions, in my view, simply and accurately set out the following background ([26] of Mr Swaminathan’s written submissions):
“As to its costs application, the Applicant relies on the following matters
a. The matter was listed for a Directions hearing on 26 April 2017. On that occasion, the Applicant presented a proposed short minutes of order seeking to progress the matter;
b. At the Directions Hearing on 26 April 2017, the Applicant further sought leave of the Court to file a Further Amended Points of Claim for reasons including to refine and clarify the existing claims by removing certain matters and that, in effect, the Applicant was motivated to take this step to confine the issues and thereby promote a more efficient and quicker determination of the claims. This course was not opposed by the Respondent;
c. The Respondent opposed the above course, other than that a Further Amended Points of Claim be filed. The Respondent expressed that it wished to see the Further Amended Points of Claim prior to filing any Defence in case it wished to make a strike out application. In response, the Court properly informed the Respondent that there would be ample opportunity to consider any interlocutory steps since the matter would be listed for a hearing in late 2018 and the parties would have liberty to apply on short notice;
d. However, given the position of the Respondent, the matter was listed for a [Further] Directions Hearing on 12 July 2017; and
e. On 12 July 2017, the orders which had been sought by the Applicant on 26 April 2017 relating to the filing of materials (albeit with different dates) were sought and made with the consent of the Respondent.”
As mentioned above, the orders sought by Mr Swaminathan on 26 April 2017 were as follows:
“1. The Applicant be granted leave to file and serve a Further Amended Statement of Claim by 5 May 2017.
2. The Respondent be granted leave to file and serve an Amended Defence by 19 May 2017.
3. The Applicant be granted leave to file and serve an Amended Reply by 2 June 2017.
4. The Applicant to file and serve the affidavits and other documents upon which it intends to rely and an Outline of Submissions by [no date provided].
5. The Respondent to file and serve the affidavits and other documents upon which it intends to rely and an Outline of Submissions by [no date provided].
6. The Applicant [to] file and serve the affidavits and other documents upon which it to rely in reply by [no date provided].
7. The matter to be listed for hearing for two days on a date to be fixed by the Court.
8. The parties have liberty to apply on 3 days’ notice.”
Despite the opportunity provided by the Court’s orders on 12 July 2017, Techfront has not filed any written submissions in reply to Mr Swaminathan’s submissions in support of his application for costs.
I understood Mr Swaminathan to also rely on s.570(2)(b) of the FWA. The assertion is that Techfront acted unreasonably in opposing the making of the orders sought by Mr Swaminathan on 26 April 2017 for the progress of the matter.
It is the case, as was pointed out to Techfront on 26 April 2017, that there was an alternative course to its opposition to the making of the proposed orders. That is, the orders for the conduct of the case as proposed by Mr Swaminathan, could have been made without prejudice to Techfront’s opportunity to subsequently respond to the further amended POC. By opposing the proposed action, Techfront necessitated the further directions hearing on 12 July 2017.
Then on the occasion of the further directions hearing on 12 July 2017, Techfront gave consent to making, in essence, the same orders, or similar orders, as had been sought by Mr Swaminathan on the previous occasion (the directions hearing on 26 April 2017).
The question is whether it was unreasonable of Techfront to have opposed the making of the orders on the previous occasion (that is, on 26 April 2017).
In the circumstances, Techfront’s act in opposing the orders sought by Mr Swaminathan (on 26 April 2017), and more importantly, its reasons for this conduct, remain without satisfactory explanation.
In my view, Techfront’s conduct was unreasonable. The only reason given by Techfront for opposing Mr Swaminathan’s proposed timetable (which necessitated a further directions hearing on 12 July 2017), was that it wanted to “see” the further amended POC before filing its (second) Defence (or Points of Defence), because it wanted to consider whether to make a “strikeout” application.
In the circumstances, Techfront would not have been prevented from making any such “strikeout” application if the orders sought by Mr Swaminathan had been made on 26 April 2017. Techfront would not have been at any disadvantage. What would have been avoided would have been the necessity for a further directions hearing.
Techfront subsequently did not oppose the making of the order for the further amended POC. What it opposed was the making of the order that it file its (second) Defence. I note that the proposed orders would still have permitted Techfront to file that (second) Defence after seeing the further amended POC.
In the circumstances, the directions hearing on 12 July 2017 would have been unnecessary had Techfront initially agreed to Mr Swaminathan’s proposed course.
In my view, Techfront’s action was unreasonable as it caused Mr Swaminathan to incur unnecessary additional cost. Unnecessary cost, because the cost would have been avoided without prejudice to Techfront’s ability to pursue its defence, or specifically its consideration of whether to make any strikeout application.
Mr Swaminathan should have his costs for the directions on 12 July 2017. I will make that order.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of Judge Nicholls
Associate:
Date: 28 March 2018
Key Legal Topics
Areas of Law
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Employment Law
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Contract Law
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Commercial Law
Legal Concepts
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Breach
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Costs
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Remedies
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Statutory Construction
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