The Director of the Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No.6)
[2013] FCCA 477
•17 June 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| THE DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE v LINKHILL PTY LTD (No.6) | [2013] FCCA 477 |
| Catch words: INDUSTRIAL LAW – Proceedings for civil penalty for alleged breach of WR and FW Act – allegations of sham contracting – interlocutory and oral applications by respondent for issue of subpoena and direction for mediation – applications dismissed – application for costs – whether unreasonable act or omission. |
| Legislation: Fair Work Act 2009 (Cth) ss. 570(2),(b) |
| Cases cited: Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879 Genovese v BGC Construction Pty Ltd (No.2) [2007] FMCA 601 |
| Applicant: | THE DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE |
| Respondent: | LINKHILL PTY LTD |
| File Number: | (P)MLG 1514 of 2011 |
| Judgment of: | Judge O’Sullivan |
| Hearing date: | On the papers |
| Date of Last Submission: | 22 May 2013 |
| Delivered at: | Melbourne |
| Delivered on: | 17 June 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr S. Moore |
| Solicitors for the Applicant: | Clayton Utz |
| Counsel for the Respondent: | Ms S. Bingham |
| Solicitors for the Respondent: | At Work Law |
ORDERS
The respondent pay the applicant’s costs for the hearing on 14 May 2013 fixed in accordance with Schedule 1 of the Federal Circuit Court Rules 2001 in the amount of $1,495.50 within 7 days.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
(P)MLG 1514 of 2011
| THE DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE |
Applicant
And
| LINKHILL PTY LTD |
Respondent
REASONS FOR JUDGMENT
These reasons for decision concern the question of costs arising from two oral applications made during the substantive hearing of the proceedings. The parties in the proceedings are the Director of the Fair Work Building Industry Inspectorate (“the applicant”) and Linkhill Pty Ltd (“the respondent”). The background to this application is set out in The Director of the Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No.5) [2013] FCCA 476.[1]
[1] see also The Director of the Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No.1) [2013] FMCA 163; The Director of the Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No.2) [2013] FMCA 164; The Director of the Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No.3) [2013] FMCA 165; The Director of the Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No.4) [2013] FMCA 182.
The application for costs by the applicant followed the dismissal of the application in a case filed 15 April 2013 and the two oral applications made on 14 May 2013 by the respondent (the latter which overtook the former). The applicant sought that the Court make an order for costs under the Fair Work Act 2009 (Cth) (“the Fair Work Act”) against the respondent. The applicant relied on s 570(2)(b) of the Fair Work Act to ground its application for costs.
On 14 May 2013 and for the reasons set out in The Director of the Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No.5) [2013] FCCA 476 the following orders were made:
“1.The respondent’s application in a case filed on 15 April 2013 and two oral applications made this day be dismissed.
2.The applicant file and serve any application for costs, material and submissions in support by 17 May 2013.
3.The respondent file and serve any response to the application for costs, material and submissions in reply by 22 May 2013.
4.Unless otherwise requested, the application for costs be considered on the papers.
5.The matter be adjourned to 17 June 2013 at 10:00 am (estimated to take 2 days) for hearing at the Federal Circuit Court of Australia at Melbourne.”
Submissions
The applicant filed submissions on 17 May 2013. The applicant submitted:[2]
[2] Applicant’s costs submissions filed on 17 May 2013
“1.The Applicant seeks an order pursuant to s570(2)(b) of the Fair Work Act 2009 (FW Act) that the Respondent pay its costs thrown away on an indemnity basis as a result of the following applications made by the Respondent:
(a) an Application in a Case filed 15 April 2013 requesting leave to issue 3 additional subpoenas, as amended orally on 14 May 2013 to include a request for the issuing of 5 other subpoenas (Subpoena Application); and
(b) an oral application made on 13 May 2013 that the Court refer the matter to mediation (Mediation Application).
Both applications were dismissed by the Court on 14 May 2013.
2.In order to obtain an award of costs against another party under s 570(2)(b) of the FW Act, that party must have engaged in an unreasonable act or omission which causes another party to incur costs in connection with the proceeding.[3] Whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case.[4]
[3] Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143 at para 28 per Tamberlin, Gyles and Gilmour JJ;
[4] Australian International Pilots Association v Qantas Airways (No. 3) (2007) 162 FCR 392 at 402 per Tracey J; [2007] FCA 879 at para 32 per Tracey J; McAleer v University of Western Australia (No. 2) (2007) 161 IR 151; [2007] FCA 247.
3.The Respondent’s unreasonable act or omission in relation to the Subpoena Application is its failure to make that application at a much earlier time in accordance with previous Orders of the Court, or the making of that application at such a late stage of the proceeding (day 8). The unreasonableness of that act or omission is exacerbated by:
(a) the failure of the Respondent to comply, without any acceptable explanation, with the Orders made on 13 March 2013 requiring any further interim application by the Respondent to be made by 9 April 2013;
(b) the failure of the Respondent, without explanation, to issue the original 5 subpoenas during the period 13 March 2013 and 13 May 2013 as foreshadowed by the Respondent on 13 March 2013;
(c) the fact that the Respondent was in possession of the Applicant's evidence since September 2012 and had had the opportunity to issue subpoenas in respect of the tax returns but did not;
(d) the failure of the Respondent to comply with the specific order made on 6 December 2012 requiring any subpoenas to be issued at least 7 days prior to the hearing;
(e) the fact that the Respondent was at all times represented by the same solicitor; and
(f) the overall lack of merit in the Respondent's application.
4.In relation to the Mediation Application, the unreasonable act or omission is constituted by the making of that application at such a late stage of the proceeding (day 7) or the failure to make that application at an earlier time. The unreasonableness of the Respondent’s act or omission is exacerbated by:
(a) the Respondent's failure to raise the prospect of a mediation with the Applicant at an earlier date;
(b) the fact that two Court ordered mediations have already taken place in the proceeding;
(c) the Respondent's own admission that it did not take the matter seriously and/or realise the significance of the matter until the commencement of the hearing on 25 February 2013, notwithstanding that the Respondent had been represented by the same legal representative throughout;
(d) the lack of merit in the application in circumstances where resolution was highly unlikely, the narrowing of issues in dispute can occur by way of submissions and direct discussions can in any event occur between the parties.
5.The hearing and determination of the applications occupied a brief part of the morning on 13 March 2013 and the first half of the day on 14 March 2013. As a result, the Applicant incurred the expense of Counsel preparing submissions in opposition to the Subpoena Application (approximately half a day), Counsel's fee for the half day at the hearing and the time in attendance of the instructing solicitor.
6.In the circumstances, it is appropriate that the Applicant be compensated by a costs order in its favour with such costs to be awarded on an indemnity basis or, in the alternative, on a party-party basis. “Special or unusual circumstances” exist which warrant the award of costs on an indemnity basis.[5] Those circumstances are the extent and nature of the Respondent’s unreasonable acts or omissions as outlined above and the fact that that conduct caused a loss of time to the Court and to other parties.[6]
7.By reasons of the matters set out above, the Applicant seeks an order for its costs thrown away as a result of the Subpoena Application and the Mediation Application on an indemnity basis as follows:
(a) an amount of $2,664.00 being Counsel's fees for approximately half a day preparation and half a day at the hearing; and
[5] See Cann v Commonwealth Bank of Australia (No.6) [2011] FMCA 912 at [13], per Lucev FM.
[6] Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 at para 7 per Harper J.
(b) an amount of $1,966.80 being instructing solicitors fees for half a day at the hearing.”
The respondent in submissions filed 22 May 2013 submitted:
“1.These submissions are made in accordance with the directions of his Honour Judge O’Sullivan made 14 May 2013 and in response to submissions of the applicant dated 17 May 2013. It is noted that a formal application seeking costs together with a supporting affidavit has not been filed by the applicant.[7]
[7] Transcript P-23 TT43 – TT45
2.The applicant seeks costs against the respondent pursuant to s 570(2)(b) of the Fair Work Act 2009 (the FW Act) by reason of the fact that the respondent made two unsuccessful applications in the above proceedings. Cost do not follow the event in FW Act proceedings.
3.Section 570(1) provides as follows:
“A party to proceedings (including an appeal) in a Court (including a Court of a State or Territory) exercising jurisdiction 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 s 569 of s569A.”
4.As such the primary position with respect to costs in proceedings under the FW Act is that it is ostensibly a “no cost” jurisdiction. The limitation on the award of costs is “part of a policy of discouraging legalism in proceedings before industrial courts” which has existed since 1904.[8] This underpinning concept is consistent with the cautionary word used by the Full Court in Construction Forestry Mining and Energy Union and Others –v- Clarke:
[8] Explanatory Memorandum Fair Work Bill [2228]
‘they (the courts) should also be careful not to exercise the discretion with too much haste, given that such haste may discourage parties, for fear of an adverse costs order, from pursuing litigation under the WR Act in the manner they deem best.”[9]
[9] (2008) 170 FCR 574 [29]
5.The hearing of the respondent’s application pertaining to the issuing of subpoenas was listed for hearing on 16 April 2013 together with the applicant’s application for costs on 16 April 2013.
6.The date for hearing of both applications was vacated at the request of the Court and with the consent of both parties both applications were listed for 13 May 2013 the date listed for the matter to return for substantive hearing.
7.On 29 April 2013 Justice Murphy delivered the decision in Linkhill –v- Director Fair Work Building Industry Inspectorate[10]. The respondent formed a view that by reason on the Federal Court’s findings at {47] and [49] of that decision that the parameters of the case put against it had somewhat changed.
8.On 10 May 2013 the respondent, on its own motion, sought to resolve the application for costs made by the applicant upon terms which were eventually accepted by the applicant. At no point were there attempts by the applicant to seek to limit or resolve the issues that arose from the respondent’s application regarding the issuing of subpoenas.
9.It is submitted that the applicant suffered no disadvantage with respect to the late filing of the material by reason of the abandonment of the hearing date and the consent relisting of both applications for hearing on 13 May 2013.
10.By reason of the decision of Justice Murphy handed down on 29 April 2013 the respondent on Friday 10 May 2013 attempted to engage with the applicant regarding resolving these proceedings either on a full or partial basis. The applicant was resistant to the respondent’s overtures as such the respondent reasonably sought assistance from the court pursuant to the Rules and the Act to compel a resistant party to embrace alternative dispute resolution. The respondent at no time sought an adjournment of the proceedings for the purpose of court assisted alternative dispute resolution.[11]
11.Further on 13 May 2013 the respondent sought to have, with the consent of the applicant its application “parked” to allow the remaining two witnesses for the applicant to be called and cross-examined.
12.In all the circumstances it is submitted that the conduct of the respondent did not cross the “threshold of being an unreasonable act or omission”.[12]
13.It is submitted that the applicant does not set out by way of a supporting affidavit the manner upon which the alleged costs were incurred, the nature of the work performed the hours taken to perform the said work. There is no retainer produced or evidence of the practitioners’ OLSR authorised rate, there are mere assertion made by way of submission. It is submitted that the applicant fails to make out the second limb of section 570(2)(b) namely that it incurred the costs alleged and as such the application must fail and the applicant’s present application must be dismissed.
14.Further it is submitted that should the Court exercise its discretion to award costs it should only do so on the event based scale set out in the Schedule 1 of the Federal Circuit Court Rules.[13] It is submitted that circumstances do not warrant an order for indemnity costs.[14]”
[10] [2013] FCA 389
[11] Transcript P-7 TT28 – P-8 TT5
[12] Construction Forestry Mining and Energy Union and Others –v- Clarke (2008) 170 FCR 574 [29]
[13] Pierson’s Pro-Health Pty Ltd & Ors –v- Silvex Nominees Pty Ltd & Anor (No.3) 2010 FMCA 250 [43]
[14] Genovese –v- BGC Construction Pty Ltd No.2 [2007] FMCA 601 [47]
Approach to costs
The application for costs falls to be determined by reference to the provisions of s.570 of the Fair Work Act. So far as is relevant for present purposes s.570(2) of the Fair Work Act provides:
“(2) The party may be ordered to pay the costs only if:
(a) …
(b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or
…
The Court may order a party to pay costs if the Court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs. As the applicant’s submissions set out earlier make clear this was the basis on which costs were sought.
In Rentuza v Westside Auto Wholesale [2009] FMCA 1022 (“Rentuza”) Lucev J considered the issue of whether an unreasonable act or omission had caused a party to incur costs for the purposes of s.570(2)(b) of the Fair Work Act.
At paragraphs 26 to 28 in Rentuza His Honour said:
“26.For the purposes of s.570(2)(b) 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.
27.Whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case.
28.The exercise of the discretion in s.570(2)(b) is not necessarily engaged because:
(a) a party does not conduct litigation efficiently;
(b) a concession is made late;
(c) a party may have acted in a different or timelier fashion;
(d) a party has adopted a genuine but misguided approach.” [Footnotes from original omitted]
For the purposes of s.570(2)(b) of the Fair Work Act, the Court must be satisfied that two criteria have been fulfilled, as set out in Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574, 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 proceedings.”
As was noted by Lucev J in Rentuza (supra) the exercise of the discretion of s.570(2) is not necessarily engaged just because:
a)a party does not conduct litigation efficiently;[15]
b)a concession is made late;[16]
c)a party may have acted in a different or timelier fashion;[17] and
d)a party has adopted a genuine but misguided approach.[18]
[15] see Clarke FCR at 582 per Tamberlin, Gyles and Gilmour JJ
[16] see Clarke FCR at 582 per Tamberlin, Gyles and Gilmour JJ
[17] see Clarke FCR at 582-583 per Tamberlin, Gyles and Gilmour JJ
[18] see for example, the approach in Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879 at para 39 per Tracey J
Whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case. See Australian and International Pilots Association v Qantas Airways Ltd(No.3) [2007] FCA 879.
Consideration
As is clear from the submissions made by the respondent there was an issue raised as to whether the applicant needed to file and serve an application for costs and any material in support. This point was taken by the respondent in the face of order 2 of the orders made 14 May 2013.
However the application for costs was made by Counsel for the applicant in Court on 14 May 2013. It was agreed for the purposes of expediency that the parties would file submissions on the issue of costs which would be deal with on the papers unless requested otherwise.[19]
[19] see Transcript 14 May 2013 pg 23 lines 20-33
Given this, and the slip in order 2 of the orders of 14 May 2013, the issue raised by the respondent does not provide a barrier to the application for costs.
In light of the submissions and given the orders and direction made by the Court earlier in the proceedings the failure by the respondent to comply with those orders,[20] which inter alia contributed to the need for Counsel to make the two oral applications referred to in The Director of the Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No.5) [2013] FCCA 476 does in my view amount to an unreasonable act or omission.[21]
[20] see for eg: pages 3-5 of applicant’s submissions
[21] see The Director of the Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No.5) [2013] FCCA 476
That conduct caused the applicant to incur costs at least in relation to the hearing on 14 May 2013 and it is on this basis that the Court is satisfied there should be an order for costs.
Quantification of costs
Given the conclusion reached above the issue of what costs order should be made arises. Each of the parties had the opportunity to make submissions on costs under Schedule 1 of Federal Circuit Court Rules 2001 (the Rules). These are set out earlier. Despite the applicant’s submission I am not satisfied there are grounds warranting an order for indemnity costs.[22]
[22] see grounds in Genovese v BGC Construction Pty Ltd (No.2) [2007] FMCA 601
Schedule 1 of the Rules is an event based costs scale under which a party receives a fixed sum in respect of specified events is appropriate in the context of this matter.[23] Such a sum may be varied by the Court in the exercise of its discretion.[24] It is open to the Court to set the amount of the costs under rule 21.02(2)(a) as well as to set a time for the payment of costs.[25]
[23] see Pierson’s Pro-Health Pty Ltd & Ors v Silvex Nominees Pty Ltd & Anor (No.3) [2010] FMCA 250
[24] see s.79(3) of the Federal Circuit Court Act 1999
[25] see rule 21.02(2)(a) of the Federal Circuit Court Rules 2001
The costs for a solicitor attending the hearing are covered by the daily hearing fee and counsel’s fee is provided for in the advocacy loading.
I have considered whether it is important to award a separate amount referrable to the stages set out in the Rules. However in particular the circumstances of the matter and given the way the hearing on 14 May 2013 proceeded I don’t believe it is appropriate to do so.There were no submissions made in relation to time for the payment of any costs order. However in the particular circumstances of this matter I will allow 7 days. The respondent should pay the applicant’s costs calculated as follows:
Daily hearing fee –1/2 day
$997.00
Advocacy loading
$498.50
Total
$1,495.50
For the reasons set out above there will be orders as set out at the beginning of these reasons for decision.
I certify that the preceding twenty two (22) paragraphs are a true copy of the reasons for judgment of Judge O’Sullivan
Date: 17 June 2013
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