Ting v Superstop Auto Parts Pty Ltd
[2020] FCCA 963
•28 April 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TING v SUPERSTOP AUTO PARTS PTY LTD & ORS | [2020] FCCA 963 |
| Catchwords: INDUSTRIAL LAW – COSTS – Fair Work – application in a case seeking costs – where the substantive proceedings have been discontinued – where costs had been ordered but not quantified in respect of a previous interlocutory application – whether indemnity costs be ordered – whether costs be ordered against the applicant’s former solicitor – costs awarded against the applicant in accordance with the scale – costs not ordered against former solicitor. |
| Legislation: Fair Work Act 2009 (Cth), ss.570 |
| Cases cited: Kappel v Carlsson (No 2) [2018] FCCA 2973 Rangi v Kmart Australia Ltd(No 2) [2019] FCA 2083 Ryan v Primesafe [2015] FCA 8 |
| Applicant: | KRIS LYNN TING |
| First Respondent: | SUPERSTOP AUTO PARTS PTY LTD |
| Second Respondent: | STEVEN PAUL KRETI |
| Third Respondent: | VICTOR MAKRIEVSKI |
| Fourth Respondent: | VIVIENNE LEE MAKRIEVSKI |
| File Number: | MLG 1611 of 2019 |
| Judgment of: | Judge Blake |
| Hearing date: | 13 February 2020 |
| Date of Last Submission: | 13 February 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 28 April 2020 |
REPRESENTATION
| Counsel for the Applicant: | No appearance |
| Solicitors for the Applicant: | None |
| Counsel for the Respondents: | Mr Heath |
| Solicitors for the Respondents: | Carter Newell Lawyers |
ORDERS
The Applicant pay the Respondents’ costs of and incidental to the strikeout application heard on 12 December 2019 fixed in the sum of $7,646 within 60 days of the date of this Order.
The Applicant pay the Respondents’ costs of the present application, fixed in the amount of $3,304.50 within 60 days of the date of this Order.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1611 of 2019
| KRIS LYNN TING |
Applicant
And
| SUPERSTOP AUTO PARTS PTY LTD |
First Respondent
| STEVEN PAUL KRETI |
Second Respondent
| VICTOR MAKRIEVSKI |
Third Respondent
| VIVIENNE LEE MAKRIEVSKI |
Fourth Respondent
REASONS FOR JUDGMENT
Introduction
Before me is an Application in a Case filed by the Respondents on 3 February 2020, in which the Respondents seek:
a)that their costs, in respect of a costs order made in their favour on 12 December 2019, be fixed in the sum of $9,513 payable by the Applicant;
b)that, in light of the Applicant discontinuing the substantive proceedings, the Applicant pay the Respondents’ costs of and incidental to the proceeding on an indemnity basis fixed in the sum of $40,000;
c)their costs in connection with the Application in a Case for costs presently before the Court; and
d)that, to the extent the Court considers it appropriate to make one or more of the orders above, the Court give consideration to making a costs order not only against the Applicant, but also against her former solicitor.
For the reasons that follow I have decided that:
a)the Applicant should pay the Respondents’ costs of and incidental to the strikeout application heard on 12 December 2019 fixed in the sum of $7,646;
b)the Respondents ought not be awarded costs of and incidental to the substantive proceeding;
c)the Applicant pay the Respondents’ costs of the present application, fixed in the amount of $3,304.50; and
d)a costs order ought not be made against the Applicant’s former solicitor.
Background
The Applicant commenced the proceedings in this Court on 23 May 2019. The proceeding was commenced by the Applicant filing, among other things, a Statement of Claim.
The matter was initially listed for a directions hearing on 23 July 2019.
Prior to a directions hearing, the Respondents, on 19 July 2019, filed an Application in a Case seeking to strike out the Applicant’s Statement of Claim.
The application to strike out the Statement of Claim was never listed for hearing. At the directions hearing on 23 July 2019, the Applicant was given leave to file and serve an Amended Statement of Claim following an exchange between the Bench and the Bar.
An Amended Statement of Claim was subsequently filed by the Applicant on 15 August 2019.
On 22 August 2019, the matter came before me for a further directions hearing. The Respondents indicated that another application would be filed seeking to strike out the Amended Statement of Claim. I subsequently made orders programming the matter to be heard, and listed the forthcoming application to strike out the Amended Statement of Claim to 12 December 2019.
On 12 December 2019, I heard the application to strike out the Amended Statement of Claim. I delivered ex tempore reasons for judgment. Among other things, I ordered that the Amended Statement of Claim be struck out in its entirety, that the Applicant have leave to file and serve a further amended Statement of Claim by 16 January 2020, and that the Applicant pay the Respondents’ costs of the day and costs in connection with the bringing of the strike out application.
Following my decision, two things happened. First, the Applicant ceased to be represented by her solicitor. Second, the Applicant subsequently elected to discontinue the proceeding.
The parties then exchanged correspondence in relation to costs claimed by the Respondents in an endeavour to resolve the costs claims. Those discussions were not successful. That led to the filing of the present application before me.
Both parties filed material and submissions prior to my hearing of this application. The Applicant ultimately did not appear at the hearing despite being called. The hearing therefore proceeded in the absence of the Applicant.
Fixing the Costs of the application to strike out the Amended Statement of Claim
As noted above, I made an order for costs in favour of the Respondents at the conclusion of the hearing of the Respondents’ application to strike out the Amended Statement of Claim on 12 December 2019. There has been some discussion between the parties to try and reach agreement as to what those costs should be. The parties have been unable to reach agreement. I am now asked to fix the costs for that event.
The Respondents claim costs by reference to Schedule One of the scale of costs (‘Scale’) set out in the Federal Circuit Rules 2001 (‘Rules’), in the amount of $9,513. I have considered the Respondents’ position. I am not prepared to permit Scale costs for an interim or summary hearing in relation to the first application to strike out the Amended Statement of Claim on 23 July 2019. The first application to strike out the Amended Statement of Claim was never listed by the Court for hearing, or determined. The only thing that occurred on 23 July 2019 was a directions hearing that proceeded via telephone. Orders were made including that the Applicant have leave to file a further amended statement of claim. Apart from that matter, I accept the claim for costs on Scale as submitted by the Respondents.
Taking these matters into account, I fix costs payable by the Applicant to the Respondents in respect of the order I made on 12 December 2019 at $7,646 based on the following events:
a)$305 in respect of Item 13(a) of the Scale, being the daily hearing fee of the Directions hearing (short mention) conducted on 23 July 2019;
b)$152.50 in respect of Item 12 of the Scale and Rule 21.14 of the Rules, being advocacy loading for the appearance of a solicitor at the hearing on 23 July 2019;
c)$4,108 in respect of Item 3 of the Scale, being the interlocutory application to strike out the Statement of Claim ($1,867) and the daily hearing fee for a full day of hearing on 12 December 2019 ($2,241);
d)
$1,120.50 in respect of Item 12 of the Scale, being the advocacy loading for the appearance of Counsel at the hearing on
12 December 2019; and
e)$1,960 in respect of the filing fees payable for each interlocutory application, as filed by the Respondents on 19 July 2019 and 29 August 2019 (comprised of the two filing fees in the amount of $980 each).
The Application for Indemnity Costs of and incidental to the proceeding
Relevant Principles
The proceeding concerns an application for relief under the Fair Work Act 2009 (‘Act’). Accordingly, the Court is required to consider the application for costs having regard to section 570 of the Act.
The operation of section 570 of the Act and the principles relating to its application were recently summarised by Steward J of the Federal Court of Australia in Rangi v Kmart Australia Ltd(No 2) [2019] FCA 2083. I respectfully adopt the observations and reasoning of Steward J at [2] and [3] of his Honour’s decision. To those comments I would add the observation that an applicant for costs in a proceeding faces, under the Act, a high threshold to recover costs having regard to the operation of section 570 of the Act.
Consideration
There are three aspects to this part of the application for costs. The first is whether I should award costs of and incidental to the proceeding (including costs in respect of the present application) given my earlier costs order and the operation of section 570 of the Act. Second, if I am inclined to award costs, whether those costs should be awarded on an indemnity basis. Third, whether any costs ordered should be paid by the Applicant’s former solicitor.
The basis of the claim for indemnity costs of and incidental to the proceeding is set out in the Respondents’ written outline of submissions filed with Court on 12 February 2020. In summary, the Respondents point to the fact that the Court struck out the Amended Statement of Claim in its entirety, that the Court identified various claims of the Applicant as being hopeless and that, generally speaking, the matter had been prosecuted with ineptitude by the Applicant and her solicitor.
While the Applicant did not appear at the hearing, she did file a Response (entitled ‘Reply’), an affidavit and an outline of submissions opposing the orders sought by the Respondents. The Applicant opposes the order for costs on the basis that, among other things, her claim has a proper basis in fact and law, she had offered to pay an amount towards costs but negotiations broke down, and the Respondents sought to impose unreasonable terms upon her when attempting to resolve what costs she was prepared to pay.
The Applicant’s submission that her claim has a proper basis in both fact and law cannot be sustained. Her entire claim was struck out by the Court on 12 December 2019. She was given leave to re-plead. She elected not to avail herself of the opportunity to re-plead and instead discontinued the proceeding. There therefore exists a basis for making a costs order under section 570(2)(a) of the Act.
In my view, the relevant question before the Court is whether the Court should exercise its discretion now to award costs over and above those that have already been awarded in relation to the application to strike out the Amended Statement of Claim. The Respondents urged me to make such an order. Their submission was that, in effect, much more work had been done on the matter than just the strike out application, the Applicant and her solicitor had prosecuted the case poorly, and that they were now entitled to recover those costs in circumstances where the Applicant, having been granted leave to re-plead, had instead chosen to discontinue the proceeding.
It can be readily accepted that much work has gone into the proceeding and that the Respondents have been put to cost and expense that may have been avoided had the Applicant discontinued the proceeding sooner.
There is, however, another side to this issue. It is this. The Applicant commenced a claim under the Act. In doing so, she had the benefit of what is set out in section 570 of the Act. Her claim was subsequently struck out in its entirety, in part because her claim did not comply with the Federal Court Rules2011 relating to pleadings. Having considered that outcome, she subsequently elected not to continue the proceeding. By doing so, she took a step that means neither the Court nor the Respondents have to spend any more time, money or effort dealing with the matter.
In Ryan v Primesafe [2015] FCA 8 (‘Ryan’), Mortimer J reviewed the authorities relating to the exercise of discretion under section 570(2) of the Act. At paragraph [64], Mortimer J stated as follows:
‘…the discretion conferred by the confined terms of s 570(2) should be exercised cautiously, and the case for its exercise should be clear: see Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6] per Bromberg J. The reason for caution is the potential for discouraging parties’ pursuit in a complete and robust way of the claims for contravention which they seek to make under the Fair Work Act, or the defence of such claims. The policy behind s 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. It is an access to justice provision. Insofar as it operates to the benefit of respondents, it is designed to ensure respondents feel free to pursue arguable legal and factual responses to the claims made against them. There is an almost identical provision in s 611 of the Fair Work Act, giving the Fair Work Commission a similar costs power, conditioned by similarly-worded considerations. The predecessor provisions, and the conscious broadening of the statutory terms used in s 570, are traced by the Full Court in Australasian Meat Industry Employees’ Union v Fair Work Australia (No 2)(2012) 203 FCR 430; [2012] FCAFC 103 at [3]–[4] per Jessup and Tracey JJ.’
When all of these matters are considered, I am of the view that I should not award costs to the Respondents of and incidental to the substantive proceeding that arose prior to 12 December 2019. The Applicant commenced her case having the benefit of section 570 of the Act. While the Court ultimately struck out that claim, that of itself is not a reason for awarding costs, particularly as the Applicant was given leave to re-plead. Moreover, in striking out the Statement of Claim, it appeared to the Court that a not insignificant reason for the success of the strike out application was the failure of the Applicant’s solicitor to comply with the rules of pleading. The Court ought to be cautious about exercising its discretion to award costs in circumstances where what it may in fact be doing is visiting the errors or misjudgements of a legal representative upon a litigant.
A further reason for not exercising the discretion to award such costs is the impact that this could have on encouraging unnecessary litigation. In this matter, the Respondents brought an application to strike out the pleading, succeeded in that application and received their costs of that application. Ordering costs now, simply because the Applicant discontinued the proceeding as a whole following the strike out, may well have the effect of encouraging other applicants in this Court not to discontinue proceedings that seem hopeless because they come to fear they will be subject to a costs order over and above that already awarded. This is an outcome that should be avoided.
There is then the question of whether the Respondents should receive costs of this hearing, on 13 February 2020. I have reviewed the affidavit material filed by the Respondents. That affidavit material discloses real and genuine attempts by the Respondents to try to resolve the issue of costs without coming back before the Court. The material also discloses the issues that the Respondents faced in attempting to come to an agreement with the Applicant. Without retracing the entire history of the matter, it appears that negotiations broke down when the Applicant refused to accept a particular clause in proposed terms of settlement to resolve all matters. From the material before me, it appears that the Applicant misconstrued or misunderstood what was being asked of her. That course led to the present application before the Court.
I accept that the Applicant, without the benefit of legal representation, may have misunderstood what was being put to her during the settlement discussions. It is plainly evident, however, from the material before me that the Respondents tried valiantly to correct the Applicant’s misunderstanding and offered to compromise its own claim for costs to secure an outcome without coming to Court.
In my view, the material discloses a basis for the making of a costs order in respect of the application before me under section 570(2)(b) of the Act.
A question arises as to whether these costs should be awarded on an indemnity basis. The Respondents relied upon the judgments of Wilson J in Kappel v Carlsson (No 2) [2018] FCCA 2973 (‘Kappel’), and Mortimer J in Ryan. These decisions are said to contain not only a succinct statement of the principles regarding whether indemnity costs should be awarded, but also examples as to the circumstances where a Court may choose to award indemnity costs.
While each of the decisions above summarise the relevant legal principles requiring consideration, I am not convinced that either of them shed any particular guidance on the circumstances that are presently before me. Kappel was a decision made pursuant to the Family Law Act 1975. In that case, Wilson J was considering a situation where the entire proceeding had been substantively dealt with. That is manifestly different to the present situation.
The circumstances in Ryan also do not assist in shedding light on the present circumstances. That decision was unusual. It concerned a costs application brought by a solicitor for a party (who was also a party to the litigation) against another solicitor in circumstances where the substantive application was ultimately discontinued by the applicant in the case. The Court there awarded the third respondent’s solicitor in the proceeding his costs, but not on an indemnity basis.
In this case, this application for costs arose because of a failure by the Applicant to properly comprehend the terms of settlement that were being offered to her. It is apparent from the course of negotiations that ultimately, there was agreement reached in relation to the amount of costs between the parties. These are not circumstances that, in my view, warrant an order for indemnity costs.
I will therefore order costs in accordance with the Scale in the amount of $3,304.50 comprised of the following:
a)$2,172 in respect of Item 3 of the Scale, being the Application in a Case for costs brought by the Respondents ($1,867) and the daily hearing fee for a short mention on 13 February 2020 ($305);
b)$152.50 in respect of Item 12 of the Scale and Rule 21.14 of the Rules, being advocacy loading for the appearance of a solicitor at the hearing on 13 February 2020; and
c)$980, being the filing fee for the interlocutory application for costs filed on 3 February 2020.
Accordingly, the total quantum of costs to be paid by the Applicant to the Respondents is $10,950.50, being $7,646 with respect to the costs ordered on 12 December 2019 and $3,304.50 with respect to the Respondents’ costs of the current application before the Court. I will order that these costs payable to the Respondents be paid by the Applicant within 60 days of the date of this order.
Finally, there is a question as to whether any part of the costs so ordered are to be paid by the Applicant’s former solicitor. In its reasons for striking out the Amended Statement of Claim, the Court averted to apparent failings on the part of the Applicant’s former solicitor. On its face, therefore, there may well have been a basis for pursuing a costs order against the Applicant’s former solicitor.
Ultimately, however, I will not order costs against the Applicant’s former solicitor. He was only served with the present Application in a Case for costs one week ago. He did not benefit from the orders I made which required the parties to file and serve material in relation to the costs application. In such circumstances, he has not been afforded procedural fairness. I therefore decline to make any order against him.
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judge Blake
Associate:
Date: 28 April 2020
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