Virag v Eastern Victoria GP Training Ltd
[2023] FedCFamC2G 788
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Virag v Eastern Victoria GP Training Ltd [2023] FedCFamC2G 788
File number: MLG 529 of 2019 Judgment of: HER HONOUR JUDGE C.E. KIRTON KC Date of judgment: 31 August 2023 Catchwords: INDUSTRIAL LAW – Costs – where 6 offers made to Applicant to resolve matter – where offers rejected – final hearing held over 3 days and adjourned part heard – Applicant subsequently sought 12 month adjournment of part heard hearing - Applicant discontinued application – Respondent applied for indemnity costs – application vexatiously instituted or instituted without reasonable cause – Applicant’s unreasonable acts and omissions caused the Respondent to incur costs - indemnity costs ordered Legislation: Fair Work Act 2009 (Cth) s 570
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 1.04 and 22.10
Cases cited: Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23
Baker v Patrick Projects Pty Ltd (No 2) [2014] FCAFC 166
Bahonko v Sterjov [2008] FCAFC 30
Council of Kangan Batman Institute of Technical and Further Education v Australian Industrial Relations Commission [2006] FCAFC 199
Kanan v Australian Postal and Telecommunications Union [1992] FCA 539
King v Patrick Projects Pty Ltd (No 2) [2017] FCA 388
Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 2) [2017] FCAFC 116
Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20
Rambaldi (Trustee) v Meletsis (No 3) [2022] FCA 807
Ryan v Primesafe [2015] FCA 8
Division: Division 2 General Federal Law Number of paragraphs: 79 Date of last submission: 18 October 2022 Date of hearing: 24, 25, 26 May 2021 and 25 October 2021 Place: Melbourne The Applicant: Appeared in person Counsel for the Respondent: Ms S Bingham Solicitor for the Respondent: Hall & Wilcox ORDERS
MLG 529 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: JUDITH VIRAG
Applicant
AND: EASTERN VICTORIA GP TRAINING LTD (ACN 606 903 306)
Respondent
ORDER MADE BY:
HER HONOUR JUDGE C.E. KIRTON KC
DATE OF ORDER:
31 AUGUST 2023
THE COURT ORDERS THAT:
1.Pursuant to s 570(2)(a) and (b) of the Fair Work Act 2009 (Cth), Judith Virag (Applicant) is liable for the payment to Eastern Victoria GP Training Ltd (ACN 606 903 306) (Respondent) on an indemnity basis for:
(a)The Respondent’s costs of and incidental to the proceeding MLG 529 of 2019, as and from 27 February 2019 to 28 February 2022; and
(b)The Respondent’s costs of and incidental to the Application in a Proceeding filed by the Respondent on 30 March 2022.
2.The Applicant pay the Respondent’s costs in Order 1 to be agreed, or failing agreement, to be taxed pursuant to the provisions of r 22.10 of the Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021 (Cth).
3.Subject to Orders 1 and 2, the Application in a Proceeding filed by the Respondent on 30 March 2022 is dismissed.
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
HER HONOUR JUDGE C.E. KIRTON KC:
INTRODUCTION
These Reasons for Judgement are in respect of an application by Eastern Victoria GP Training Ltd (ACN 606 903 306) (Respondent) for indemnity costs or alternatively party and party costs against Dr Judith Virag (Applicant), filed 30 March 2022 (Costs Application).
On 28 February 2022, the Applicant filed a Notice of Discontinuance (Notice of Discontinuance), discontinuing her application against the Respondent for breaches of the Fair Work Act 2009 (Cth) (FW Act), filed on 27 February 2019 and amended a number of times thereafter (Substantive Application).
The Costs Application is brought by the Respondent in accordance with ss 570(2)(a) and (b) of the FW Act on the basis that the Applicant instituted the proceedings vexatiously or without reasonable cause, or caused the Respondent to incur costs in the proceedings by way of her unreasonable acts or omissions.
The Substantive Application, in respect of liability of the Respondent, was listed for a hearing before me on 24, 25 and 26 May 2021 (First Part Hearing) and 25 October 2021 (Second Part Hearing). Judgment in relation to the Costs Application was reserved on 14 October 2022 and these are the Reasons for Judgment in relation to that reserved judgment.
ISSUES IN DISPUTE
The following issues are in dispute:
(a)Whether the Applicant instituted proceedings vexatiously or without reasonable cause;
(b)Whether the Applicant’s unreasonable acts or omissions caused the Respondent to incur costs; and
(c)In the event that the Court is satisfied as to the matters in either of sub-paragraphs (a) or (b), whether an order for the Applicant to pay the Respondent’s indemnity costs or party and party costs is appropriate in the circumstances.
SYNOPSIS
I have determined that:
(a)The Applicant instituted proceedings vexatiously and without reasonable cause; and
(b)The Applicant’s unreasonable acts and omissions caused the Respondent to incur costs; and
(c)The Applicant should pay the Respondent’s indemnity costs from:
(i)The commencement of the proceeding on 27 February 2019 until the date of the filing of the Notice of Discontinuance on 28 February 2022; and
(ii)The Respondent’s costs of and incidental to the Application in a Proceeding filed by the Respondent on 30 March 2022.
BACKGROUND
The Substantive Application related to the Applicant’s employment with the Respondent in the position of a ‘Medical Educator – External Clinical Teacher and Training Advisor’.[1] The Applicant was employed by the Respondent part-time for the period from January 2016 to December 2018 (Employment Period).[2]
[1] Court Book (CB) 250.
[2] CB 250.
During the Employment Period, the Applicant’s contract was amended a number of times, these being: 1 January 2017,[3] 1 January 2018,[4] 5 February 2018,[5] 6 August 2018,[6] and 13 August 2018.[7]
[3] CB 261-266.
[4] CB 267.
[5] CB 268.
[6] CB 269-273.
[7] CB 274.
During the Employment Period, the Applicant claimed that a number of incidents occurred which led to her initially raising a concern on 16 and 17 July 2018 through her Annual Performance Review.[8] The Applicant on 12 and 13 August 2018 subsequently requested that the Chief Executive Officer of the Respondent at the time, Mr Glasson, commence an investigation addressing her concerns.[9]
[8] CB 284.
[9] CB 300-307.
Upon the completion of an investigation, Mr Glasson provided the Applicant and other relevant individuals with a “CEO Outcomes Paper” on 24 August 2018. The “CEO Outcomes Paper”, was informed by members of the Applicant’s team and made some recommendations in general terms.[10] The Applicant was unsatisfied with this outcome and ultimately escalated her grievances to the Board of the Respondent on 15 October 2018.[11]
[10] CB 317-320.
[11] CB 328-329, 335-341.
On 2 November 2018, the Applicant filed a ‘Form F72 – Application for an order to stop bullying’ with the Fair Work Commission in relation to a colleague.[12] This application was later abandoned by the Applicant upon advice by the Fair Work Commission that a hearing of the application could not be arranged before the expiration of her contract with the Respondent.[13]
[12] CB 369-380.
[13] CB 5-13, Applicant’s Statement of Claim, filed 4 October 2019, [34].
On 9 and 15 November 2018, the Applicant sent ‘all staff’ emails to all employees of the Respondent, referring to her grievances within her team and dismay at Mr Glasson’s handling of her concerns.[14] Although the first of these emails was claimed by the Applicant to have been sent to all staff inadvertently, the Applicant did not confirm this with Mr Glasson at the time when given an opportunity to do so.[15]
[14] CB 382 and 414.
[15] CB 381, 386 and 410.
On 23 November 2018, the Applicant was advised that her employment with the Respondent would cease at the end of her contract, on 31 December 2018.[16]
PROCEEDINGS BEFORE THE COURT
[16] CB 422.
Prior to discontinuance of the Substantive Proceeding
On 27 February 2019, the Applicant filed the Substantive Application with the Court, together with a Statement of Claim. At the time the Substantive Application was filed, the Applicant was legally represented. However three (3) months later, the Applicant filed a Notice of Address for Service on 28 May 2019 indicating she was self-represented. Significantly, the Court notes that the Applicant was self-represented at the First Part Hearing and on 25 October 2021 when the Second Part Hearing was listed to commence.
The Applicant relevantly filed the following documents in this matter:
(a)On 10 May 2019, an Amended Statement of Claim pursuant to Orders of Judge McNab (as his Honour then was) made on 29 April 2019;
(b)On 2 July 2019, a further Amended Statement of Claim in the absence of any Court orders empowering her to do so. This further Amended Statement of Claim was later removed from the Court file by Order of Judge McNab on 17 September 2019;
(c)On 4 October 2019, a further Amended Statement of Claim pursuant to Orders made by Judge McNab on 17 September 2019 and 26 September 2019. Pursuant to the Orders made on 26 September 2019 this further Amended Statement of Claim was to stand alone as the Applicant’s Statement of Claim. The Orders made on 17 September 2019 by Judge McNab also included an Order that the Applicant pay the Respondent’s costs thrown away in respect of the defence filed by the Respondent on 24 April 2019, fixed in the sum of $3,152;[17] and
(d)On 21 May 2021, a Case Outline pursuant to Orders of the Court made on 17 May 2021. In the Case Outline, the Applicant stated, for the first time, that she sought ‘reinstatement of her employment’ with the Respondent.
[17] Orders made by Judge McNab on 17 September 2019, Order 8.
The First Part Hearing was held in person over three (3) days, being 24, 25 and 26 May 2021. During the First Part Hearing, the Applicant: opened her case; gave evidence; was cross-examined by Counsel for the Respondent; called a witness; and cross-examined the Respondent’s principal witness. On the third day of the First Part Hearing, the Applicant informed the Court that she felt ‘unfit to cross-examine’ the Respondent’s second witness.[18] The First Part Hearing was therefore adjourned part-heard to 25 October 2021 for the purpose of concluding the evidence in chief, cross-examination of the Respondent’s remaining witnesses and for final submissions.[19]
[18] Transcript P231:L11-46.
[19] Transcript P231-233.
On 13 October 2021, the Applicant filed an Application in a Proceeding requesting an adjournment of the Second Part Hearing. On 13 October 2021 the Applicant also filed an Affidavit (Applicant’s 13 October 2021 Affidavit), wherein the Applicant sought an adjournment of the Second Part Hearing for a period of 12 months. Annexed to the Applicant’s 13 October 2021 Affidavit was a brief letter from the Applicant’s treating general practitioner Dr Judith Kirwood, dated 28 September 2021. Dr Kirwood’s letter was addressed “To whom it may concern”. The letter stated that Dr Kirwood had advised the Applicant to seek a deferral of the Second Part Hearing “for a 12 month period on mental health grounds”. There then followed two (2) sentences briefly summarising the Applicant’s mental health condition.
The Second Part Hearing commenced on 25 October 2022 via video conference. The Applicant sought an adjournment of the Second Part Hearing for a 12 month period and provided further information to the Court concerning the state of her mental health.[20] The Respondent’s Counsel advised the Court that the Respondent did not oppose the adjournment application but submitted that given the “woefully inadequate” medical evidence produced to the Court by the Applicant, an adjournment of 12 months was excessive.[21] The Court agreed with Counsel for the Respondent that the requested 12 month adjournment was excessive, particularly as the supporting medical evidence produced by the Applicant was manifestly inadequate to justify such a request.
[20] Transcript 25.10.22 P2:L17-P3:L10.
[21] Transcript 25.10.22 P3:L15-21; P4:L11-32.
On 25 October 2021 the Court made Orders (25 October 2021 Orders) which may be summarised as follows:
(a)The proceeding was listed for mention on 4 February 2022;
(b)Prior to the mention the Applicant was to file and serve an affidavit annexing a medical report from her treating psychiatrist explaining the Applicant’s medical condition;
(c)The Second Part Hearing was listed on 8 April 2022; and
(d)The Respondent’s costs of and incidental to the hearing on 25 October 2021 were reserved.
The 25 October 2021 Orders included the following Notations:
A. The Respondent’s solicitors may write to the Applicant with guidance regarding the content of the medical report referred to in Order 2 of these Orders.
B. The Applicant is at liberty to apply to have the final day of the part-heard Hearing of this matter conducted remotely, via Microsoft Teams.
On 20 January 2022 Jewell Hancock Employment Lawyers filed a Notice of Address for Service indicating that they were acting for the Applicant (Applicant’s Solicitors).
On 3 February 2022 the Applicant’s Solicitors filed an Affidavit of Andrew Cameron Guy Jewell, Solicitor (3 February 2022 Jewell Affidavit). In the 3 February 2022 Jewell Affidavit, Mr Jewell deposed at [5] that he had received instructions from the Applicant to prepare a Second Further Amended Statement of Claim and produced a copy as Annexure “ACGJ-1” (Second Further Amended Statement of Claim). Mr Jewell sought leave for the Applicant to rely on the Second Further Amended Statement of Claim. Mr Jewell further deposed at [7] that on 2 February 2022 the Respondent’s Solicitors sent a letter to the Applicant’s Solicitors and produced the letter as Annexure “ACGJ-3”. This letter opposed the amended pleading and stated that the Second Further Amended Statement of Claim was the fifth statement of claim that the Applicant sought to rely on in the proceeding. The letter also noted that the Applicant had been represented on three (3) separate occasions during the proceeding and previously had multiple opportunities to properly plead her case.
On 3 February 2022 the Respondent’s Solicitors filed an Affidavit of Declan McAleese, Solicitor (3 February 2022 McAleese Affidavit). In the 3 February 2022 McAleese Affidavit, Mr McAleese deposed; at [8] that the Respondent objected to the Second Further Amended Statement of Claim; and at [9] that the Respondent had not been served with an affidavit annexing the medical report that the Applicant was ordered to provide pursuant to the 25 October 2021 Orders.
At the Mention on 4 February 2022, both the Applicant and the Respondent were represented by Counsel. Counsel for the Applicant sought leave for the Applicant to file and serve the Second Further Amended Statement of Claim. Counsel for the Respondent opposed this application. The Court refused the application for the Applicant to file the Second Further Amended Statement of Claim. The Court ordered that the matter remain listed for Final Hearing (Part Heard) on 8 April 2022.
Discontinuance and Costs Application
On 28 February 2022, the Applicant filed the Notice of Discontinuance.
On 30 March 2022, the Respondent filed the Costs Application, together with an Affidavit of Declan McAleese, sworn 25 March 2022 (30 March 2022 McAleese Affidavit). The Costs Application provided as follows, in ‘Part D – The orders you are seeking’:
Final orders sought by the Applicant
1.In accordance with the supporting affidavit of Declan McAleese, Eastern Victoria GP Training Limited (EVGPT) seeks:
(a) an order for indemnity costs against the Respondent, Dr Judith Virag (Dr Virag), in respect of proceeding MLG529/2019 in the Federal Circuit Court of Australia (Substantive Proceedings);
(b) if an order for indemnity costs is deemed inappropriate by the Court, an order for party-party costs in accordance with Schedule 2 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2001 (Cth); and/or
(c) an order that Dr Virag pay EVGPT’s costs of incidental to this application.
Grounds of Application
2.As per the supporting affidavit of Declan McAleese, this application is brought on the basis that Dr Virag:
(a) instituted the Substantive Proceedings vexatiously or without reasonable cause; or
(b) caused EVGPT to incur costs in the Substantive Proceedings by way of her unreasonable acts and/or omissions,
in accordance with section 570(2) of the Fair Work Act 2009 (Cth)
[…]
(Without alteration)
On 4 August 2022, Judge Blake made Orders by Consent for a timeline for the filing of evidence and submissions with respect to the Costs Application. These Orders also confirmed that the Costs Application was to be determined by the Court on the papers.[22]
[22] Orders of Judge Blake made on 4 August 2022, Order 2.
On 29 August 2022, the Applicant filed an Affidavit, affirmed 29 August 2022 (Applicant’s Affidavit) in respect of the Costs Application.
On 4 October 2022, the Respondent filed Submissions on Costs (Respondent’s Submissions).
On 18 October 2022, the Applicant filed Submissions on Costs (Applicant’s Submissions).
EVIDENCE AND SUBMISSIONS OF THE PARTIES
The Respondent and Applicant each provided affidavit evidence and submissions with respect to the Costs Application.
Respondent’s Evidence
Together with, and in support of, the Costs Application, the Respondent filed the 30 March 2022 McAleese Affidavit. Mr McAleese was the solicitor with the care and conduct of the proceeding for the Respondent between approximately May 2019 and 28 February 2022.[23]
[23] Affidavit of Declan McAleese sworn 25 March 2022 filed 30 March 2022 (30 March 2022 McAleese Affidavit), [1] and [2].
The 30 March 2022 McAleese Affidavit provides information (amongst other matters) about the Applicant’s conduct during the proceedings which resulted in the Respondent incurring ‘significant legal costs’.[24] Specifically, the 30 March 2022 McAleese Affidavit sets out the offers to resolve the matter made by the Respondent to the Applicant on six (6) occasions and annexes the communication of these offers to the Applicant and the Applicant’s responses. The Court summarises the correspondence as follows (Emphasis added):
[24] 30 March 2022 McAleese Affidavit, [29]-[31].
Date and time Party and annexure Description of offer/ response 16 August 2019, 6:01pm
Respondent
“DM-1”Recommended the Applicant obtain legal advice.
The Respondent considers the Application to be misconceived and has no reasonable prospects of success.
The Applicant’s intention to file a further amended Statement of Claim is opposed.
In the unlikely event compensation was ordered to be paid to the Applicant, any amount would be minimal.
Offered the Respondent pay the Applicant $20,000 less applicable taxation.
If the offer is not accepted, the Respondent will ‘vigorously defend’ the Application and may make an application for costs.16 August 2019, 6:44pm Applicant
“DM-2”Thanked the Respondent for the ‘detailed advice’
Rejected offer on the basis that it is ‘of no interest’.19 September 2019, 4:38pm
Respondent
“DM-3”At the directions hearing on 17 September 2019, Judge McNab was critical of the Applicant’s conduct and noted the ‘significant challenges’ for the Applicant to be successful in this matter (a view which the Respondent endorsed).
Maintained the view that the Application is misconceived and has no reasonable prospects of success.
In the unlikely event compensation was ordered to be paid to the Applicant, any amount would be minimal.
Offered the Respondent pay the Applicant $20,000 less applicable taxation (which it described as ‘exceptionally generous’).
If the offer is not accepted, the Respondent will not make any further offers and will ‘vigorously defend’ the Applicant and may make an application for costs.19 September 2019, 6:00pm
Applicant
“DM-4”The Applicant understands the Respondent’s position and thanked them for the advice.
Did not accept the offer.24 January 2020, 5:15pm
Respondent
“DM-5”Recommended the Applicant obtain legal advice.
Maintained the view that the Application is misconceived and has no reasonable prospects of success.
Invited the Applicant to respond to its offer of 19 September 2019 with a reasonable counter-offer.
Confident that the Respondent will successfully defend the Application and if it does, it may seek a further costs order against the Applicant ‘on the basis that it should have been reasonably apparent to you that your application had no prospects of success’.24 January 2020, 8:04pm Applicant
“DM-6”Requested that the Respondent not convey any further offers, which she characterised as ‘basically hush money’. 1 December 2020, 6:20pm
Respondent
“DM-7”Maintained the view that the Application is misconceived and has no reasonable prospects of success.
Reiterated the offer for the Respondent pay the Applicant $20,000 less applicable taxation.
Noted that ‘[i]f the offer is unreasonably rejected and you proceed with the application and [the Respondent] incurs legal costs unnecessarily, this letter will be relied upon in any application for costs under section 570 of the [FW Act]’.
If the offer is not accepted, requested the Applicant make a reasonable counter-offer.2 December 2020, 10:57am Applicant
“DM-8”Noted that she had ‘carefully considered [her] position and options before taking legal action against [the Respondent]’.
Stated that she was surprised at the Respondent’s offers.
Confirmed that the Application against the Respondent was not motivated by potential financial gain.
Requested that the Respondent not convey any further offers.
Confirmed that she was having difficulty obtaining legal representation.9 June 2021, 5:52pm Respondent
“DM-9”Maintained the view that the Application is misconceived and has no reasonable prospects of success, a fact which the Applicant has been on notice of for a period of nearly two (2) years.
Set out the ‘fundamental issues’ of the Applicant’s case.
Noted that the Respondent had gone to significant time and expense to defend the Application.
Confirmed instructions to seek costs from the Applicant on an indemnity basis, if the Respondent is successful, which may be up to $100,000.
Offered the Applicant to pay the Respondent $30,000.9 June 2021, 7:18pm Applicant
“DM-10”Expressed willingness to sign a ‘non-disparagement and confidentiality agreement on a walk-away basis’. 17 February 2022, 5:14pm Respondent
“DM-11”Maintained the view that the Application is lacking in substance and is bound to fail, a fact of which the Applicant was ‘well aware’.
Noted that the Applicant has rejected all previous offers made to her.
Rejected the Applicant’s offer, made through counsel, on 9 February 2022.
Offered that the Applicant to pay the Respondent $40,000.
Noted that if the Applicant proceeds with the matter, she is at ‘significant risk of being unsuccessful and facing a costs order’.28 February 2022, 11:43pm Applicant
“DM-12”Challenged the Respondent’s assertion that the Applicant was aware that the Application lacked substance and is bound to fail, stating that it is only since the final hearing that she considers her claim will not succeed.
Stating that the Applicant was not acting unreasonable when rejecting the Respondent’s offer, particularly as she was self-represented at time during the proceeding.
Her representatives had advised her that discontinuing the Application was the most efficient course of action.
Rejected the Respondent’s offer of 17 February 2022.
As is referred to in the table above, the 30 March 2022 McAleese Affidavit also deposed that on 9 February 2022, Counsel for the Applicant verbally restated to Counsel for the Respondent the Applicant’s offer of 9 June 2021.
The 30 March 2022 McAleese Affidavit finally deposed at [31], as evidence of the Applicant causing the Respondent to incur costs by way of her unreasonable acts and/or omissions, the following:
31. In reviewing the various iterations of [the Applicant’s] filed statements of claim, including the case outline in which [the Applicant] amended the remedy she was seeking in the Substantive Proceedings, in seeking further instructions, preparing a new defence, and reviewing the proposed second further amended statement of claim of 31 January 2022, [the Respondent] incurred significant legal costs.[25]
[25] 30 March 2022 McAleese Affidavit, [31].
Respondent’s Submissions
The Respondent seeks costs against the Applicant on an indemnity basis, or alternatively on a party and party basis. In the Respondent’s Submissions, the Respondent sought to rely on ss 570(2)(a) and 570(2)(b) of the FW Act, namely, that the Applicant instituted the proceedings vexatiously or without reasonable cause, or further and alternatively that the Applicant engaged in unreasonable acts or omissions causing the Respondent to incur costs.[26]
[26] Respondent’s Submissions on Costs, filed 4 October 2022 (Respondent’s Submissions), [10].
The Respondent’s Submissions outline the orders sought as follows:
62. It is submitted that in the circumstances, the Respondent seeks an order that the Applicant pay its costs on an indemnity basis or alternatively a party/party basis from:
(a) 27 February 2019 on the basis that the proceeding was issued vexatiously and without reasonable cause; or
(b) each date on which the Applicant rejected the Respondent’s offer of settlement, with such rejection in the circumstances constituting an act or omission by the Applicant that caused the Respondent to incur costs, being:
(i)16 August 2019, or in the alternative;
(ii)19 September 2019, or in the alternative;
(iii)24 January 2020, or in the alternative;
(iv)1 December 2020, or in the alternative;
(v)9 June 2021, or in the alternative;
(vi)28 February 2022.[27]
[27] Respondent’s Submissions, [62].
In support of the argument that the proceedings were instituted by the Applicant vexatiously or without reasonable cause, the Respondent submitted as follows:
(a)The Applicant provided evidence that prior to issuing the proceeding the Applicant instructed her then legal advisers that the outcome that she sought was that she was re-employed by the Respondent and that the workplace was made safe for her without further risk of bullying.[28]
[28] Respondent’s Submissions, [14(a)].
(b)The Applicant provided evidence that prior to instituting the proceeding, the Applicant instructed her then legal advisers that even if the Court would not order re-employment or the payment of monetary compensation, she nevertheless wished to proceed with an application to the Court because she would be happy with an outcome if it was a public denunciation of the Respondent and its key personnel as individuals.[29]
[29] Respondent’s Submissions, [14(b)].
(c)The Applicant provided evidence that prior to instituting the proceeding, the Applicant instructed her then legal advisers that she would not agree to a monetary settlement or to other elements of a possible settlement such as an apology.[30]
[30] Respondent’s Submissions [14(c) and (d)].
(d)The Applicant provided evidence that prior to instituting the proceeding, the Applicant received written legal advice that:
(i)Re-employment to her position with the Respondent was unlikely;[31]
[31] Respondent’s Submissions, [15(a)].
(ii)The Court would not make a monetary compensation order for economic loss as it appeared that she had not suffered any;[32]
(iii)She would not receive a large amount of compensation for distress;[33]
(iv)Public denunciation by the Court of the conduct of the Respondent and its key personnel may not be the outcome of the proceeding;[34]
(v)Any penalty if awarded, would not be for a significant sum;[35] and
(vi)It was unlikely that she would be able to withdraw her case without paying costs to the Respondent.[36]
(e)Within six (6) days of issuing the proceeding the Applicant received written advice from Elizabeth Tueno of Counsel that Counsel considered that “this would be a very difficult proceeding for [the Applicant] to win”.[37]
(f)In November 2019 Counsel assessed the Applicant’s case as “weak”.[38]
(g)It is apparent that the Applicant’s primary purpose in instituting proceedings was to embarrass the Respondent and key members of its staff, as opposed to seeking an available remedy under the FW Act.[39]
(h)The Applicant instructed her then legal adviser to institute proceedings despite ‘overwhelming’ legal advice that she should not do so and continued to prosecute the proceeding.[40]
[32] Respondent’s Submissions, [15(b)].
[33] Respondent’s Submissions, [15(c)].
[34] Respondent’s Submissions, [15(d)].
[35] Respondent’s Submissions, [15(e)].
[36] Respondent’s Submissions, [15(g)].
[37] Respondent’s Submissions, [17].
[38] Respondent’s Submissions, [19].
[39] Respondent’s Submissions, [18].
[40] Respondent’s Submissions, [16] and [19].
In support of the submission that the Respondent incurred legal costs as a result of the Applicant’s unreasonable acts or omissions, the Respondent relied on the six (6) offers of compromise in the 30 March 2022 McAleese Affidavit.[41]
[41] Respondent’s Submissions, [24].
The Respondent’s Submissions set out each of the six (6) offers made to the Applicant and the Applicant’s responses.[42] The Respondent then submitted that at the time each offer was made, the Applicant knew that the proceedings were unlikely to be successful and that she was at risk of having a costs order against her if the matter proceeded.[43] This knowledge held by the Applicant was submitted to be derived from the legal advice given to her on a number of occasions, which the Respondent submits the Applicant ‘either ignored or refused to accept’.[44]
[42] Respondent’s Submissions, [26]-[46].
[43] Respondent’s Submissions, [48].
[44] Respondent’s Submissions, [49].
With respect to the Court’s power to make an order for indemnity costs, the Respondent submitted that the present case falls into the category of special circumstances where the Court may make such an order, pursuant to the Full Court of the Federal Court’s decision in Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 2) [2017] FCAFC 116 at [4]-[5], as quoted by Justice O’Callaghan in Rambaldi (Trustee) v Meletsis (No 3) [2022] FCA 807 at [79].[45]
[45] Respondent’s Submissions, [55]-[57].
The Respondent finally submitted that the Applicant’s status as a self-represented litigant cannot be used to bring her ‘special privileges’ nor excuse the manner in which she conducted the proceedings: Bahonko v Sterjov [2008] FCAFC 30 at [6].[46]
[46] Respondent’s Submissions, [59]-[61].
Applicant’s Evidence
The Applicant’s Affidavit annexed 22 annexures, with most being records of correspondence between the Applicant and the Respondent’s Solicitors or the Applicant and the Applicant’s legal advisers.
The Applicant deposed that she was entitled, under her insurance policy, to limited assistance for certain claims.[47] The Applicant’s insurance provider referred the Applicant to a number of law firms both before and after proceedings were instituted in this Court, however the Applicant ceased seeking their assistance from approximately July 2019.[48]
[47] Affidavit of the Applicant, affirmed and filed 29 August 2022 (Applicant’s Affidavit), [7].
[48] Applicant’s Affidavit, [60].
The Applicant deposed that she had received the following legal advice before and throughout the proceedings:
(a)In January 2019, that there were grounds to make a general protections application in the Fair Work Commission seeking reinstatement of her employment;[49]
(b)On 25 February 2019, that was likely the Respondent will be able to defend the case, reinstatement was unlikely, and that it was open for the Court to make adverse costs findings against her;[50]
(c)On 27 February 2019, that she ‘cannot claim reinstatement’ as a remedy in her Application;[51]
(d)On 18 March 2019 from Ms Tueno of Counsel, that her case would be a ‘difficult case to win’ and that it would be in her best interest to reach a settlement and not proceed to trial;[52]
(e)In April 2019, recommending that she urgently obtain alternative legal representation following the filing of a Notice of Intention to Withdraw from her lawyers at the time;[53]
(f)In June 2019, that her case ‘could not succeed against the Respondent’s legal team, regardless of its merit’;[54] and
(g)On 4 November 2019 from Mark Champion of Counsel (as his Honour then was), retained for the Applicant that: her case was ‘weak’; and that “She should consider whether to bring the action to an end probably on a walkaway basis to protect herself against a costs order and to protect her reputation”.[55]
[49] Applicant’s Affidavit, [10].
[50] Applicant’s Affidavit, [13] and Annexure JV-3.
[51] Applicant’s Affidavit, [15(b)].
[52] Applicant’s Affidavit, [26] and Annexure JV-4.
[53] Applicant’s Affidavit, [30].
[54] Applicant’s Affidavit, [51].
[55] Applicant’s Affidavit, [68] and Annexure JV-12.
In respect of the legal advice of Counsel on the occasions referred to at [45(d) and (g)], the Applicant did not agree with Counsels’ advice and preferred earlier and alternative advice that indicated she had a valid basis for her claim and there was a “low likelihood of a costs order”.[56]
[56] Applicant’s Affidavit, [27] and [69].
The Applicant deposed that she had significant difficulty maintaining and obtaining representation, stating that she was ‘left unrepresented’ after the withdrawal of her lawyers in May 2019,[57] and thereafter sought help from the Australian Medical Association.[58] From November 2019, the Applicant continued seeking legal representation, had some consultations with firms that were ultimately unwilling to act for her,[59] and by the First Part Hearing in May 2021 remained self-represented.[60]
[57] Applicant’s Affidavit, [46].
[58] Applicant’s Affidavit, [64].
[59] Applicant’s Affidavit, [71].
[60] Applicant’s Affidavit, [85].
The Applicant also deposed that she was self-represented at the time of receiving the Respondent’s offers of settlement,[61] which she confirmed she did not obtain legal advice in relation to.[62] The Applicant deposed that she perceived the Respondent’s offers of settlement to be the Respondent attempting to ‘avoid accountability’,[63] as opposed to genuine attempts to resolve the matter. Further, the Applicant repeatedly confirmed that she was at no point motivated by financial settlement,[64] and up until the First Part Hearing, believed that her case could succeed.[65]
[61] Applicant’s Affidavit, [74] and [103(b)].
[62] Applicant’s Affidavit, [62].
[63] Applicant’s Affidavit, [76].
[64] Applicant’s Affidavit, [20], [27], [62], [74]-[75], [83], [96], Annexure JV-14, Annexure JV-17 and Annexure JV-20.
[65] Applicant’s Affidavit, [88] and [102].
Finally, in the Applicant’s Affidavit the Applicant deposed that she did not institute proceedings vexatiously or without reasonable cause,[66] and that her actions or omissions during the course of proceedings were ‘done in good faith’.[67]
[66] Applicant’s Affidavit, [17] and [22].
[67] Applicant’s Affidavit, [107].
Applicant’s Submissions
The Applicant’s Submissions were filed with the Court on 18 October 2022. When reviewing the Applicant’s Submissions it is significant to note that it is apparent that the Applicant did not provide instructions to the Applicant’s Solicitors to obtain a copy of the transcript of the First Part Hearing or the hearing on 25 October 2021. The Court views the Applicant’s Submissions in relation to the events occurring at the First Part Hearing and the hearing on 25 October 2021 in the context that the Applicant’s legal advisers have relied entirely upon the account provided to them by the Applicant.
Primarily, the Applicant’s Submissions oppose the Costs Application and submit that no costs order should be made against the Applicant.[68] In the alternative, it is submitted that if the Court is minded to make a costs order against the Applicant, it should be on a party and party basis and not an indemnity basis.[69]
[68] Applicant’s Submissions on Costs filed 18 October 2022 (Applicant’s Submissions), [1].
[69] Applicant’s Submissions, [25].
The Applicant submitted that the Court’s discretion to award costs under s 570(2) of the FW Act is confined, rare and ‘should be exercised cautiously’,[70] citing Ryan v Primesafe [2015] FCA 8 at [64] and Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23 at [7].
[70] Applicant’s Submissions, [5].
With respect to the allegation that the Applicant instituted the proceedings vexatiously or without reasonable cause pursuant to s 570(2)(a) of the FW Act, the Applicant’s Submissions stated that this was not the case for the following reasons:
(a)There is no evidence to suggest that the Applicant’s primary purpose in instituting proceedings was to harass or embarrass the Respondent, and indeed her objective in instituting proceedings was ‘to right a wrong’;[71]
(b)This matter was the Applicant’s ‘first court matter’;[72]
(c)The Substantive Application was in respect of an ‘archetypal general protections claim commonly brought’ before the Court, within which there is necessarily an evidentiary gap that is addressed by proceedings of this type;[73] and
(d)The Applicant’s lawyers at the time attested to the Substantive Application having a proper basis and that the Applicant had received legal advice of same.[74]
[71] Applicant’s Submissions, [10]-[12].
[72] Applicant’s Submissions, [12].
[73] Applicant’s Submissions, [15]-[16] and [17(a)].
[74] Applicant’s Submissions, [17(c) and (d)].
As for the exception contained within s 570(2)(b) of the FW Act, that the unreasonable acts and/or omissions of the Applicant in failing to accept the offers of the Respondent caused the Respondent to incur costs, the Applicant submitted as follows:
(a)It was accepted that a failure to accept a reasonable offer of compromise may constitute an unreasonable act in some circumstances;[75]
[75] Applicant’s Submissions, [19], citing Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20.
(b)It was not unreasonable to reject the offers of $20,000 by the Respondent in circumstances that:
(i)Were the Applicant successful at hearing, she could reasonably have expected a sum larger than $20,000 in damages and/or penalties;[76]
(ii)The Applicant was not was not motivated by financial compensation but sought ‘legitimate redress’, including acceptance and accountability by the Respondent of their conduct, and appropriate denunciation of such conduct;[77] and
(iii)The Applicant had not yet had the benefit of receiving written submissions of the Respondent, filed on 8 February 2021.[78]
(c)It was not unreasonable to reject the offers made by the Respondent subsequent to the First Part Hearing because:
(i)The Respondent’s insistence on a payment from the Applicant was not consistent with the operation of s 570 of the FW Act;
(ii)The Applicant was distressed at the time and could not afford to pay the amounts proposed; and
(iii)The Applicant made a reasonable counter-offer, namely to withdraw the proceedings on a walk-away basis.[79]
[76] Applicant’s Submissions, [21] and [22(b)].
[77] Applicant’s Submissions, [22(a)].
[78] Applicant’s Submissions, [22(d)].
[79] Applicant’s Submissions, [23].
The Applicant’s Submissions further contended that the Court’s discretion to award costs under s 570 of the FW Act ought not to be exercised against the Applicant. It was submitted that:
(e) following the difficult experience of the part-hearing, [the Applicant] recognised that her case had collapsed and was no longer able to succeed because of its ineffective presentation at the part-hearing […] Within days, [the Applicant] sought to settle the proceeding on a walk away basis which the Respondent rejected. Further, it was not until [the Applicant] was legally represented again on 20 January 2022, that she appreciated she was able to apply to unilaterally discontinue the proceedings […][80]
(Citations omitted, otherwise without alteration)
[80] Applicant’s Submissions, [24](e).
RELEVANT LEGISLATION AND LEGAL PRINCIPLES
It is well accepted that proceedings under the FW Act are generally no costs proceedings, and indeed there is an ‘express limitation’ in s 570 of the FW Act on the discretion of the Court to award costs: Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20 at [140].
Section 570 provides as follows:
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.
(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.
The Court notes that, even where the statutory preconditions in s 570 of the FW Act have been satisfied, costs do not automatically follow. Rather, the awarding of costs is a discretionary decision based upon the particular conduct of the parties and circumstances of the case.
Reference should also be made to the purpose of s 570, which the Full Court of the Federal Court in Baker v Patrick Projects Pty Ltd (No 2) [2014] FCAFC 166, at [14], stated includes enabling parties to bring viable cases without being deterred by the prospect of an adverse costs order, particularly for employees with limited means, and to deter parties from bringing or pursuing cases with no reasonable prospects of success.
The overarching purpose of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (2021 Rules), is to ‘facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible’: r 1.04(1) of the 2021 Rules. To assist the Court in achieving this purpose, r 1.04 of the 2021 Rules provides:
1.04 Overarching purpose
(1) […]
(2) To assist the Court, the parties must:
a) avoid undue delay, expense and technicality; and
b) consider options for primary dispute resolution as early as possible.
In respect of costs orders made in the Fair Work jurisdiction, it has been established that their purpose is not to punish litigants for undertaking an unreasonable course of action but rather, particularly for costs ordered on an indemnity basis, should follow where costs have been incurred in responding to ‘unreasonably instituted proceedings’: King v Patrick Projects Pty Ltd (No 2) [2017] FCA 388 at [10], citing Kanan v Australian Postal and Telecommunications Union [1992] FCA 539 at 265.
CONSIDERATION
Did the Applicant institute proceedings vexatiously or without reasonable cause?
At the time the Application was filed Court, the Applicant was represented by Kennedys (Australasia) Pty Ltd (Kennedys), a law firm she had been referred to by her insurer. Prior to commencing the proceedings, the Applicant received a letter from Kennedys, dated 25 February 2019 (Kennedys Letter), advising her (amongst other matters) that the remedy she sought, reinstatement, was unlikely to be ordered by the Court and as such she was not seeking any ‘substantial remedy’.[81] I do not agree with the Applicant’s Submissions at [9] that this letter was “a typical letter from a legal representative to their client setting out various litigation risks and other matters ahead of legal proceedings”.[82] The Kennedys Letter contained tailored advice to the Applicant following a conference with a partner of Kennedys and the Applicant on 21 February 2019. The Kennedys Letter contains some serious and sound advice to the Applicant and needs to be read in full. This should have been the first ‘red flag’ to the Applicant that pursuit of her claim was likely to be unsuccessful and it should have caused the Applicant to pause and reflect upon the path that she was intending to embark upon.[83]
[81] Applicant’s Affidavit, [13] and Annexure “JV-3”.
[82] Applicant’s Submissions, [9].
[83] Applicant’s Affidavit, [14].
A further email was received by the Applicant from an Associate at Kennedys on 27 February 2019 informing the Applicant that Counsel had advised that reinstatement was not a remedy available to the Applicant.[84] This should have been a second ‘red flag’ to the Applicant that instituting proceedings was unlikely to be successful.
[84] Applicant’s Affidavit, [15].
The Applicant nevertheless instructed Kennedys on 27 February 2019 to institute the proceedings in this Court.[85]
[85] Applicant’s Affidavit, [14].
I pause to note that on 24 May 2021, at the commencement of the first day of the First Part Hearing, the Applicant persisted with her application to be re-instated with her employment with the Respondent and expressed the view that this had been her desire ever since her application to the Fair Work Commission.
The Applicant has repeatedly deposed that she was not motivated by financial compensation in instituting the proceedings, but instead sought redress from the Respondent for the wrongs committed against her during her employment. The fact that there was no identifiable remedy or outcome sought from the proceedings by the Applicant, save for reinstatement which was, as above, advised as highly unlikely, effectively demonstrate that the Applicant had no proper reason to bring the Application.
The Applicant also received legal advice on a number of occasions after instituting proceedings, including from Ms Tueno of Counsel on 18 March 2019 and Mr Champion of Counsel on 4 November 2019 that she was unlikely to succeed and ought not to proceed to trial at the risk of a costs order being made against her. This advice should certainly have rung ‘alarm bells’ for the Applicant about the prospects of success of the Substantive Application. This advice was received by the Applicant prior to the First Part Hearing and makes plain that the Applicant was on notice that her case was weak and there was a real risk in continuing.
The Applicant nevertheless disregarded this advice in favour of earlier and narrower advice that she had a basis for her claims.
I have concluded from the Applicant’s Affidavit:
(a)Up until the First Part Hearing, the Applicant considered her case to be meritorious;
(b)At the First Part Hearing, which the Applicant described as ‘overwhelming and distressing’, she realised her case could not succeed, regardless of its merits, which she attributed to be due to the mistakes of former legal advisers and the resources of the Respondent;[86]
(c)Had the Applicant known it was an option available to her, the Applicant would have discontinued the Substantive Application at the conclusion of the First Part Hearing;[87] and
(d)From the time she engaged her current representatives in January 2022, she no longer believed that her Substantive Application had merits or reasonable prospects of success.[88]
[86] Applicant’s Affidavit, [88].
[87] Applicant’s Affidavit, [102].
[88] Applicant’s Affidavit, [106].
I consider that, in circumstances where the Applicant was properly advised by Kennedys, that she wilfully chose to disregard the advice provided to her and insisted on proceeding to lodge and pursue the Substantive Application.
It is also apparent from the evidence that the Applicant instituted the proceedings without reasonable cause, as the advice provided to her plainly indicated that she had low prospects of success and that the remedies she sought from the Court were not achievable. Further, the fact that the Substantive Application did not identify a substantial remedy under the FW Act and therefore the end result of the Substantive Proceeding was entirely unknown, including to the Applicant, demonstrated that the proceeding had no real prospects of success, or was doomed to fail, at the time it was instituted.[89]
[89] Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23 at [7], citing R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia (1978) at 473; Council of Kangan Batman Institute of Technical and Further Education v Australian Industrial Relations Commission [2006] FCAFC 199 at [60].
Did the Applicant’s unreasonable act or omission cause the Respondent to incur costs?
I determine that the Applicant’s unreasonable acts or omissions caused the Respondent to incur costs. Six (6) offers were made to the Applicant to settle the proceeding, with four (4) of these being made prior to the First Part Hearing. Each of these offers must be considered within the context that they were made and not simply by reference to the provisions of the FW Act as contended in the Applicant’s Submissions.
In my view, each of the six (6) offers made by the Respondent were sensible offers. They were also made in accordance with r 1.04 of the 2021 Rules. The Applicant’s dismissive response to these offers was not in accordance with 1.04 of the Rules. The fact that the Applicant chose not to seek legal advice in relation to these offers before rejecting them was a matter entirely for the Applicant.
In my view the Applicant was driven by her own individual perspective about the prospects of success of the Substantive Proceeding. It was highly unreasonable for the Applicant to continue pursuing the proceedings in light of the legal advice she persistently received, and the Applicant ultimately caused the Respondent to incur significant costs as a result.
The Applicant’s wilful disregard of the legal advice provided to her may also be classified as unreasonable acts made by her in the course of these proceedings. This may also be said of the expansion of the Applicant’s case throughout the proceedings, by her amended statements of claim and outlines, which necessarily required considerable work to be undertaken by the Respondent in response.
Are indemnity costs appropriate?
As I have considered in the preceding sections, I am satisfied that an order for costs is not precluded by s 570(1) of the FW Act because the proceedings were instituted vexatiously and without reasonable cause and also that the Applicant by her own unreasonable acts and omissions caused the Respondent to incur costs.
I am satisfied that the Applicant should be ordered to pay costs to the Respondent on an indemnity basis by reason of the matters discussed above.
CONCLUSION
I determine that: the Applicant instituted proceedings vexatiously and without reasonable cause; that the Applicant’s unreasonable acts and omissions caused the Respondent to incur costs; that the Applicant should pay the Respondent’s indemnity costs from the commencement of the proceeding on 27 February 2019 until the date of the filing of the Notice of Discontinuance on 28 February 2022; and that the Applicant should pay the Respondent’s indemnity costs of and incidental to the Cost Application.
Orders will be made accordingly.
I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment of Her Honour Judge C.E. Kirton KC. Associate:
Dated: 31 August 2023
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