Vallette v Meneghello Law Pty Ltd
[2024] FedCFamC2G 571
•27 June 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Vallette v Meneghello Law Pty Ltd [2024] FedCFamC2G 571
File number(s): BRG 134 of 2023 Judgment of: JUDGE EGAN Date of judgment: 27 June 2024 Catchwords: FAIR WORK – COSTS – Where the applicant filed an interlocutory application for summary judgement – where the hearing of the application was adjourned for a second time on the same basis as for the adjournment of the hearing on the first occasion, namely by reason of the unpreparedness of the respondents to present their arguments at the interlocutory hearing – where the failure of the respondents to again properly prepare for the hearing warranted an indemnity costs order. Legislation: Fair Work Act2009 (Cth) ss. 44, 45, 323, 545(2), 550(1) and 570(2)
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss. 190 and 191
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021, r. 22.02 Superannuation Guarantee (Administration) Act 1992 (Cth) s. 31
Cases cited: Gray v Richards (No. 2) (2014) 89 ALJR 113
Re McJannett; Ex parte Australian Workers Union of Employees, Queensland (No. 2) (1997) 189 CLR 654
Re Wilcox, Ex parte Venture Industries Pty Ltd (1996) 72 FCR 151
Sabapathy v Jetstar Airways (No. 2) [2021] FCAFC 68
Umoona Tjutagku Health Service Aboriginal Corporation v Walsh [2019] FCAFC 32
Division: Division 2 General Federal Law Number of paragraphs: 20 Date of last submission/s: 26 June 2024 Date of hearing: 26 June 2024 Place: Brisbane Counsel for the Applicant: Mr S. Mackie Solicitor for the Applicant: Recover Legal Solicitor for the Respondents: Mr D. Meneghello ORDERS
BRG 134 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: HAYLEY MARIE VALLETTE
Applicant
AND: MENEGHELLO LAW PTY LTD
First Respondent
DANIEL OSVALDO MENEGHELLO
Second Respondent
CHARLENE MENEGHELLO
Third Respondent
ORDER MADE BY:
JUDGE EGAN
DATE OF ORDER:
27 JUNE 2024
THE COURT ORDERS THAT:
1.The respondents pay the applicant’s costs of and incidental to the adjournment of the hearing on 26 June 2024, and the costs of today, on the indemnity basis, as agreed, or failing agreement, as assessed pursuant to the provisions of Rule 22.02(2)(b) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE EGAN
INTRODUCTION
On 19 December 2023, the applicant filed an Amended Application in a proceeding seeking, inter alia, summary judgment in respect of the applicants claims for relief.
The hearing of that application was first listed on 4 March 2024. On that date, the applicant was represented by Counsel and an instructing solicitor. The Second Respondent (Meneghello), who was a solicitor by profession, appeared on his own behalf, and also on behalf of the First and Third Respondents.
At the hearing on 4 March 2024, Meneghello was not in a position to proceed in resisting the summary judgement application, because no affidavits had been filed on behalf of the respondents in response to the material filed on behalf of the applicant. Meneghello, who had been suffering from a medical condition which was in some respects physically debilitating, asked for an adjournment of the interlocutory hearing. The Court indicated to Meneghello that it was prepared to grant an adjournment in the circumstances, but it was made clear to him that he would have to closely consider the application that was before the Court, and thereafter address the issues raised in such application. It was indicated to him that if he did not feel that he was able to do that, then he should consider engaging Counsel.
Meneghello replied that he had spoken to Fleming KC and Moon of Counsel, and that an appearance would be made by them if he was unable to attend a foreshadowed, and later listed hearing date, on 26 June 2024.
As it transpired, Fleming KC passed away shortly after March 2024, and Moon of Counsel did not accept Meneghello’s invitation to appear on behalf of the respondents. Meneghello appeared on behalf of the respondents on 26 June 2024.
Notwithstanding that Meneghello has had more than three (3) months to engage alternative Counsel, and otherwise prepare himself for the hearing on 26 June 2024, Meneghello was clearly underprepared, on 26 June 2024, to effectively resist the applicant’s interlocutory application. When asked, he said that he did not have hard copies of affidavits before him. When pressed about that, Meneghello seemed to be able to refer to documents contained in an application book which had been forwarded to him by the lawyers for the applicant on the morning of 26 June 2024. However, when asked by the Court to identify those paragraphs of the affidavits where the bases on which the application was sought to be resisted were, Meneghello was unable to do so. He said he needed time to do that. Such a state of unpreparedness was inexcusable, not only considering the fact that an earlier hearing date for the interlocutory application had been adjourned because of Meneghello’s unpreparedness, but also because of the fact that Meneghello had had more than three (3) months to properly prepare for the hearing. There was otherwise no medical evidence before the Court which indicated that Meneghello’s medical condition was such that it had prevented him from preparing his case in a diligent and cogent way. Submissions to that effect were made by Counsel for the applicant.
Notwithstanding the dilatory manner by which Meneghello had approached the hearing of the interlocutory application, the Court was nonetheless prepared to adjourn the hearing, on its own motion, so that Meneghello could engage the services of Sydney Counsel who he had indicated he had spoken to. That course was solely caused by the lack of diligence and attention on the part of Meneghello.
Counsel for the applicant sought an order that the respondents pay the applicant’s costs thrown away as a result of the adjournment of the interlocutory hearing, and that any such order be on the indemnity basis.
Meneghello opposed the making of any costs order against the respondents. He submitted that the provisions of Section 570(2) of the Fair Work Act2009 (Cth) (‘FWA’) only permitted a Court to make a costs order if there was a finding that the defence filed on behalf of the respondents was found to have been vexatious. Meneghello also submitted that costs ought not to be ordered against the respondents because the applicant’s claim was itself vexatious. Neither such submission was either appropriate or meritorious. Section 570 of the FWA relevantly provided as follows:
FAIR WORK ACT 2009 - SECT 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.
First, as to the power of the Court to make costs orders, the respondents were clearly parties to a proceeding in this Court “ … in relation to a matter arising under … ” the FWA. The applicant had sought relief in her Statement of Claim pursuant to the provisions of ss. 44, 45, 323, 545(2) and 550(1) of the FWA, as well as relief pursuant to the provisions of s. 31 of the Superannuation Guarantee (Administration) Act 1992 (Cth). The applicant’s claims arose out of her employment by the first respondent, and that employment was governed by the provisions of the FWA. [1]
[1] Re McJannett; Ex parte Australian Workers Union of Employees, Queensland (No. 2) (1997) 189 CLR
Second, by reason of that relevant connection between the respondents, and the claims made against them pursuant to provisions of the FWA, the Court is empowered to make an adverse costs order against the respondents should any of the circumstances falling under s. 570(2) of the FWA be satisfied. [2]
[2] Sabapathy v Jetstar Airways (No. 2) [2021] FCAFC 68 at [4] – [7] per Logan, Flick and Katzmann JJ
It was submitted by Counsel for the applicant that the respondents’ conduct fell within the provisions of s. 570(2)(b) of the FWA, namely that the respondents had failed to properly prepare for the 26 June 2024 hearing such that the consequential adjournment had caused the applicant to unnecessarily incur costs. In that regard, it is of note that at the hearing on 26 June 2024, Meneghello apologised to the Court, and to the applicant, for not having engaged legal representation in a timely way.
The Court accepts the submissions made on behalf of the applicant. The hearing on 26 June 2024 was the second occasion on which the respondents had not properly prepared for an interlocutory hearing. The omission on the part of the respondents to properly prepare for the hearing was glaring. The applicant has been put to the expense and inconvenience of properly preparing for a hearing which was unable to proceed.
The Court has a wide discretion to make an order for costs pursuant to Rule 22.02 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021. The Court respectfully adopts what was said by the High Court in Gray v Richards (No. 2) (2014) 89 ALJR 113 at [2], which was as follows:
‘[2] The disposition of costs is within the general discretion of the Court. Ordinarily, that discretion will be exercised so that costs are awarded to the successful party, but other factors may have a significant claim on the discretion of the Court. The disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires.’
In Umoona Tjutagku Health Service Aboriginal Corporation v Walsh [2019] FCAFC 32 at [46], it was said:
‘[46] The interests of justice include considerations of the cost-effectiveness of litigation. Thus a court may conclude that a departure from the general rule is warranted where substantial issues are raised by the successful party which unduly extend the time and expense of litigation: A, DC v Prince Alfred College Inc (No 2) [2016] SASCFC 27 at [6]-[11] (the Court). As counsel for Ms Walsh pointed out, the relevance of such considerations is highlighted by the obligation imposed upon a party and a party’s lawyer by subss 37N(1) and (2) respectively of the FCA Act to conduct proceedings in a way that is consistent with the overarching purpose in s 37M, namely, to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.’
As to the conduct of proceedings in this Court consistent with the overarching purpose of the governing legislation, ss. 190 and 191 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (‘the Act’) relevantly provide as follows:
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA ACT 2021 - SECT 190
Overarching purpose of civil practice and procedure provisions
(1)The overarching purpose of the civil practice and procedure provisions, in relation to the Federal Circuit and Family Court of Australia (Division 2), is to facilitate the just resolution of disputes: according to law; and as quickly, inexpensively and efficiently as possible
Note 1: For civil practice and procedure provisions , in relation to the Federal Circuit and Family Court of Australia (Division 2), see subsection (4).
Note 2: The Federal Circuit and Family Court of Australia (Division 2) must give effect to principles in the Family Law Act 1975 when exercising jurisdiction in relation to proceedings under that Act.
(1)Without limiting subsection (1), the overarching purpose includes the following objectives:
(a) the just determination of all proceedings before the Federal Circuit and Family Court of Australia (Division 2);
(b) the efficient use of the judicial and administrative resources available for the purposes of the Court
(c) the efficient disposal of the Court's overall caseload;
(d) the disposal of all proceedings in a timely manner;
(e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
(2)The civil practice and procedure provisions, in relation to the Federal Circuit and Family Court of Australia (Division 2), must be interpreted and applied, and any power conferred or duty imposed by them (including the power to make Rules of Court) must be exercised or carried out, in the way that best promotes the overarching purpose.
(3)The civil practice and procedure provisions , in relation to the Federal Circuit and Family Court of Australia (Division 2), are the following, so far as they apply in relation to civil proceedings:
(a) the Rules of Court;
(b)any other provision made by or under this Act or any other Act with respect to the practice and procedure of the Federal Circuit and Family Court of Australia (Division 2).
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA ACT 2021 - SECT 191
Parties to act consistently with the overarching purpose
(1)The parties to a civil proceeding before the Federal Circuit and Family Court of Australia (Division 2) must conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose.
(2)A party's lawyer must, in the conduct of such a proceeding before the Federal Circuit and Family Court of Australia (Division 2) (including negotiations for settlement) on the party's behalf:
(a) take account of the duty imposed on the party by subsection (1); and
(b) assist the party to comply with the duty.
(3) The Federal Circuit and Family Court of Australia (Division 2) or a Judge may, for the purpose of enabling a party to comply with the duty imposed by subsection (1), require the party's lawyer to give the party an estimate of:
(a) the likely duration of the proceeding or part of the proceeding; and
(b) the likely amount of costs that the party will have to pay in connection with the proceeding or part of the proceeding, including:
(i) the costs that the lawyer will charge to the party; and
(ii) any other costs that the party will have to pay in the event that the party is unsuccessful in the proceeding or part of the proceeding.
Note: Paragraph (b)--in relation to a family law or child support proceeding, the Federal Circuit and Family Court of Australia (Division 2) may make an order as to costs under section 149 of the Family Law Act 1975 if the Court is of the opinion that there are circumstances that justify it in doing so.
(4)In exercising the discretion to award costs in a civil proceeding, the Federal Circuit and Family Court of Australia (Division 2) or a Judge must take account of any failure to comply with the duty imposed by subsection (1) or (2).
(5)Without limiting the exercise of that discretion, the Federal Circuit and Family Court of Australia (Division 2) or a Judge may order a party's lawyer to bear costs personally.
(6)If the Federal Circuit and Family Court of Australia (Division 2) or a Judge orders a lawyer to bear costs personally because of a failure to comply with the duty imposed by subsection (2), the lawyer must not recover the costs from the lawyer's client.
On the question of whether indemnity costs are appropriate, or not, the Court has had regard to the joint judgement of Cooper and Merkel JJ in Re Wilcox, Ex parte Venture Industries Pty Ltd (1996) 72 FCR 151 at [156] – [157] and at [158] where it was said:
[156] – [157]
The issue whether costs should be ordered on a party and party basis or on an indemnity basis has acquired increasingly greater significance as the gap between two bases appears to have grown.
The gap has highlighted the conflict between two seemingly irreconcilable objectives. The first is protecting access to justice by only exposing an unsuccessful litigant in the usual course to an order for scale costs on a party and party basis. The second is relieving a successful litigant from the burden of costs which that litigant should not have been required to incur. These and other policy factors have been considered by the courts over a very long period in order to arrive at the principles which govern the undoubted discretion of courts to depart from ordering costs on a party and party basis and ordering costs on an indemnity basis. The principles were stated by Shepphard J in Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225.
The recent decision of Einfeld J in Marks v GIO Australia Holdings Ltd (No 2) (1996) 66 FCR 128 has cast doubt on these principles. In Marks, after discussing s 43 of the Federal Court of Australia Act 1986 (Cth) (FCA) and a number of policy considerations in relation to costs, Einfeld J concluded (at 133):
The matter of the interaction of ‘the usual rule’, particularly as affects indemnity costs, with the statutory regime of the Federal Court Act is one which in my most respectful opinion requires fresh attention. An interpretation which I believe to be more in keeping with such a statutory provision is that the court is to start with no ‘usual rule’ or preconceptions as to the costs issue. Rather, the question of costs, like other aspects of the case, will fall to be determined on its merits. This means that the applicant for indemnity costs must put forward all of the circumstances which suggest that the most rigorous order should be made."
In the light of that conclusion it is desirable that we set out our views on the manner in which the court's jurisdiction to award indemnity costs ought to be exercised.
Until Marks the principles enunciated in Colgate-Palmolive and generally applied in the Court were:
1. Section 43 of the FCA confers an absolute and unfettered discretion on the Court to make orders as to costs but the discretion must be exercised judicially.
2. In order to exercise the discretion judicially the following principles have been accepted by the Court as applicable:
(a) the Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the Court in departing from the usual course;
(b) the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the Court in departing from the usual course;
(c) whilst the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis.
[158]
As was pointed out by Sheppard J in Colgate-Palmolive, the costs for which these rules provide are costs on a party and party basis. The rules do not deal with the award of costs on any other basis. Although the gap between actual costs and the scale rate used in determining party and party costs may be increasing, it is relevant to note that the criterion in r 19 in respect of the items for which costs may be recovered allows recovery of all such costs, charges and expenses as appear to the taxing officer:"to have been necessary or proper for the attainment of justice or for maintaining or defending the rights of a party…”
…
The rules apply unless otherwise ordered. The very fact and terms of the relevant rules suggest to us that, unless the justice of the particular case requires or some special or unusual feature arises, the rules should not be departed from by the making of some other order for costs in exercise of the jurisdiction conferred under s 43 [of the Federal Court Act]. The generality of the criteria for departing from the usual rule ensures that the discretion to depart from the rule can be exercised whenever the Court is of the view that after applying the criteria to the facts of the particular case, it is just to do _so. Such an approach is consistent with the requirement that the discretion to award costs is to be exercised judicially.
The Court is of the view that the conduct of the respondents so departed from the overarching purpose requirements under the Act, as to justify the making of an indemnity costs order. The conduct by omission on the part of Mr Meneghello brought the facts of this matter within the “ … special or unusual feature … ” category of case so as to warrant a departure from the usual rule that costs ought to be awarded on a party/party basis. The Court is also mindful of the fact that due to the adjournment of the hearing on 26 June 2024, the Court has been deprived of the opportunity to hear other deserving parties in a different dispute.
The order which the Court intends to make allows for the parties to reach agreement as to the quantum of costs payable, but in the absence of agreement, provides for the quantum of such indemnity costs to be assessed.
The trial of this matter is listed for five (5) days commencing on 5 August 2024. The applicant will have leave to reagitate this interlocutory application on the first day of the trial if so advised.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Egan. Associate:
Dated: 27 June 2024
654 at 656 per Brennan CJ, McHugh and Gummow JJ
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