Weeks v Commissioner of Taxation
[2012] FMCA 1059
•25 September 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WEEKS v COMMISSIONER OF TAXATION | [2012] FMCA 1059 |
| PRACTICE AND PROCEDURE – Cost – Federal Magistrates Court – refusal of settlement offer – whether the refusal was unreasonable – whether the applicant’s case was objectively weak – whether the proceeding was vexatious or instituted without reasonable cause – lawyer acting on own behalf – unreasonable attitude not evident – refusal to accept offer amounted to an omission – application of Federal Magistrates Court Rules 2001 (Cth) – costs awarded in part. |
| Fair Work Act 2009 (Cth), ss.50, 570 Federal Magistrates Court Rules 2001 (Cth) Workplace Relations Act 1996 (Cth), s.824 |
| Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392 Construction, Forestry, Mining and Energy Union and Others v Clarke (2008) 170 FCR 574 McDonald v Parnell Laboratories (Aust) (No 2) (2007) 164 FCR 591 |
| Applicant: | CHERYL WEEKS |
| Respondent: | COMMISSIONER OF TAXATION |
| File Number: | BRG 889 of 2010 |
| Judgment of: | Burnett FM |
| Hearing date: | 19 September 2012 |
| Date of Last Submission: | 19 September 2012 |
| Delivered at: | Brisbane |
| Delivered on: | 25 September 2012 |
REPRESENTATION
| The Applicant appeared on her own behalf |
| Counsel for the Respondent: | Mr C. Murdoch |
| Solicitors for the Respondent: | Australian Government Solicitor |
ORDERS
That the applicant pay the respondent’s costs fixed in the sum of $936.00.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 889 of 2010
| CHERYL WEEKS |
Applicant
And
| COMMISSIONER OF TAXATION |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
In this matter the originating application was dismissed following trial in April 2012. The respondent seeks costs. Those costs are being limited to costs from and including 24 March 2012 to 12 April 2012, and costs of and incidental to an application in a case heard on 5 August 2011. In the application itself, the applicant sought compensation and the imposition of pecuniary penalties for contravention of s.50 of the Fair Work Act 2009 (Cth) (FW Act), based upon alleged breaches of an enterprise agreement.
Initially, the application was commenced by the applicant as a small claim, with the applicant seeking relief under the relevant provisions of the Act. She subsequently amended her application, seeking relief including the imposition of pecuniary penalties, following disclosure. It appears that in the course of disclosure, a document was disclosed, causing her considerable personal angst and distress. That document inflamed her emotions, possibly to a point where, it appeared to me at least, she lost some sense of objectivity, an issue that was amplified by the fact that the applicant is and was employed as a lawyer.
The respondent claims costs in respect of the first period, that is, from 28 March 2012 to 12 April 2012, on the basis that the applicant unreasonably refused to accept an offer made by it to her to settle the application by way of a payment of $30,000.00. That offer was made in a letter dated 15 March 2012.
The respondent contends that the circumstances of refusal to settle demonstrate unreasonableness on the part of the applicant: Firstly, the respondent has made an offer of compromise to settle the proceeding, which was rejected by the applicant; Secondly, in the circumstances of the case on any view of the facts, by mid to late December 2009 the respondent was conscientiously seeking to progress the redundancy that she had doggedly pursued, and accordingly it was always inherently unlikely in those circumstances, that even in the event of any alleged breaches of the agency agreement being established no penalties of any great moment would be imposed; Thirdly, the respondent contends the applicant’s case in respect of both the breach of the dispute provisions and the APS Code of Conduct was objectively weak.
It is from those three factors that the respondent contends the court can infer that the applicant has taken an unreasonable approach in respect of this litigation, and that she had been blinkered by an entirely unrealistic view of her prospects. Subsequent to those particular matters being advanced, the respondent also contended in the supplementary submissions that the fact that the applicant herself is a lawyer is also a factor that will be factored into the consideration.
The respondents also seek costs of and incidental to the application in a case filed on 2 August 2011 and heard on 5 August 2011, on the basis that they were largely successful in the strike-out application, with reference to the fact part of the statement of claim was ultimately struck out and/or accepted by the applicant to be untenable.
Applications for costs in this jurisdiction are governed principally by s.570(1) of the FW Act, which is in these terms:
“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) exercising jurisdiction under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or 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 FWA;
(ii) the matter arose from the same facts as the proceedings.”
Provisions of that kind have been the subject of judicial consideration by the Full Court in Construction, Forestry, Mining and Energy Union and Others v Clarke,[1] where, at [28], the Full Court, considering the predecessor provision provided for in s.824(2) of the Workplace Relations Act 1996 (Cth) (WR Act), had this to say:
“We turn now to s.824(2) of the WR Act. This provision carves out another exception to the usual rule in s.824(1) that costs orders are not to be made in respect of proceedings in a matter arising under the WR Act. The exception applies when two criteria are satisfied. The first criterion is that one party must have engaged in “an unreasonable act or omission.” As the reasoning of Tracey J in Australian and International Pilots Assn v Qantas Airways Ltd (No 3) (2007) 162 FCR 392 and Siopis J in McAleer v The University of Western Australia (No 2) (2007) 161 IR 151 demonstrates, whether a party has conducted itself or its litigation in such a way as to cross this threshold will depend on the particular circumstances of the case. The second criterion is that the act or omission of one party must have “caused another party to the proceeding to incur costs in connection with the proceeding.” Once both criteria are satisfied, then the Court “may” in its discretion order the party which has engaged in the unreasonable act or omission to pay some or all of the costs of the other party.
[29] In our view, the respondent has not engaged in “an unreasonable act or omission.” As the authorities indicate, there is a distinction between a party who pursues arguments which are ultimately abandoned or rejected by the Court and a party who commences a proceeding which is misconceived in the sense of being incompetent or unsupportable: Australian and International Pilots Assn 162 FCR at 402; Standish v University of Tasmania (1989) 28 IR 129 at 138–139. Simply because a party does not conduct its litigation in the most efficient way does not mean that the Court should exercise its discretion in s.824(2) of the WR Act to make a costs order. In our view, neither the late abandonment of some of its defence, nor the use of a notice of contention to advance a previously minor and ultimately unsuccessful argument, crosses the threshold of being “an unreasonable act or omission” for the purposes of s.824(2) …”
[1] (2008) 170 FCR 574.
I should note that the observations at [29] do, in my view, have some relevance to the application presently before me. As I have noted, the observations of Tracey J in Australian and International Pilots Association v Qantas Airways Ltd (No 3)[2] were cited with approval by the Full Court. Relevantly, in terms of general principle, his Honour noted at [36]:
“In dealing with an application for costs under s.347(1) of the Act, in Standish v University of Tasmania (1989) 28 IR 129, Lockhart J was called on to decide whether the proceeding had been instituted “without reasonable cause.” His Honour drew a distinction between the pursuit of an argument which does not succeed and the institution of a proceeding which is misconceived in the sense of being incompetent: see at 138–9. This distinction may, in my view, assist in determining whether conduct is unreasonable for the purposes of s.824(2). The prosecution of any incompetent or hopeless case can be regarded as “an unreasonable act” within the meaning of s.824(2). Conversely, in my opinion, the pursuit of a contentious, and ultimately unsuccessful, argument is not an unreasonable act …”
[2] (2007) 162 FCR 392.
This is a matter which has some moment in the context of the application which I am asked to consider now.
I will now address the issues that were advanced, confining matters to the first part of the costs application. The issue in contention concerned damages that the applicant claimed to be entitled to because of delay in the administration of her redundancy package. In part, her case is premised upon a belief that she would have continued in employment. She was, in my finding, wrong.
For reasons expressed in my judgment, I consider that she agreed to continue on a leave without pay basis, rather than return to work. She seems to have thought otherwise, or, at least, there can be no other reasonable explanation for the pursuit of her claim against that background of my findings. Ultimately, the matter was one of fact, and was never going to be resolved without judicial intervention, particularly because of the sense of betrayal that the applicant felt following the respondent’s comments in its business case prepared for her redundancy.
It did not matter that the redundancy was, itself, the desired outcome. The applicant was aggrieved by the remarks in the redundancy submissions and, in my view, plainly distracted by them. Her consequent loss of faith in those that she had previously dealt with meant that it was inevitable that the differences between them could only be resolved by some independent adjudication. She may have lost, but that, in my view, did not render the application in respect of that matter incompetent or hopeless, in the sense that was encountered in Qantas. In addition, submissions were made by the respondent that, in any event, the application included that which ought not to have been prosecuted.
However, as was observed by the court in McDonald v Parnell Laboratories (Aust) (No 2) (2007) 164 FCR 591, a case which included multiple claims. Relevantly, at [27], it was said:
“…
Consideration of all the claims, statutory and common law, required reference to the same substratum of facts. Accordingly, in my view, all the claims, federal and non-federal, should be regarded as arising in the one matter. Prior to the date of abandonment of the claims under the WR Act it was not possible to distinguish proceedings relating to the WR Act claims from proceedings concerning the others. For the reasons given by Nicholson J in Geraldton Port Authority it follows that s 824 of the WR Act was, prima facie, engaged with respect to the whole of the proceedings …”
That principle, in my mind, is equally applicable to the circumstances of this case. It follows that I am not satisfied that it could be intended that her attitude toward the prosecution of the application, notwithstanding the fact that it was distracted by a number of matters, was unreasonable.
The second matter concerns the applicant as a lawyer. It is accepted that she was a lawyer, and there is no contest concerning her qualifications. She is not a litigation lawyer, although I note that her title at one stage included “Director of Litigation” in the relevant section of the Australian Tax Office.
It was plain to me, given her highly emotional response to the circumstances following the disclosure of the business case, that this is a case where there is a great deal of truth in the adage often applied to lawyers engaged in litigation that ‘those who act for themselves have a fool for a client.’ In my view, her role as a lawyer only served to highlight the need for some objective assistance and input. However, generally poor legal judgement in respect of matters which required objective input, not legal input, is not, in my view, a matter which necessarily engages the rules in this case.
I have already determined, as I have noted earlier, that I thought that there was a justiciable basis for litigation. Her poor judgement, inflamed by her self-representation, is not a matter which bore upon the strength or weakness of the case, merely her judgement in relation to the matter, which I will come to now, which concerns the offer.
On 15 March, an offer was made to settle. It is unfortunate that the applicant refused the offer and pursued the litigation. The offer proved to be exceedingly generous in the circumstances, for it afforded her $30,000.00 to settle the claim. She refused and consequently received nothing.
The offer was made about two weeks before the trial. By that time, most of the costs would have been incurred, including the costs of counsel, who I note remained constant throughout the proceeding. I will address the costs more specifically in a moment, but it seems to me plain that little would have been saved by her accepting the offer as I expect Counsel’s costs, or liability for them would already have been incurred. Certainly, having regard to the primary issue, which is whether or not she was unreasonable, it seems apparent, having regard to the matter which has to be addressed by reference to s.570(2)(b), that she was unreasonable in refusing to accept the offer. No doubt her emotions and lack of objectivity affected that matter.
In any event, it seems, having regard to the offer and its terms that, at least from that time, her conduct by refusing to accept the offer constituted an omission which plainly caused the other party to incur some costs. I have already noted that I think the costs are limited, given that the offer was made very late in the proceeding. However, it seems that at least the costs of having a solicitor attend a trial to instruct would have been incurred, and it follows, in my view, that the applicant should pay those costs, which I will assess in a moment.
Concerning the second part of the costs application, the costs in respect of the application of 2 August, I have earlier addressed the relevant principles. This situation calls for a consideration of whether or not the court is satisfied in terms of s.570(2)(a), that is, that the court is satisfied that the party instituted the proceedings vexatiously or without a reasonable cause. To a large part I have addressed that, I think, in my earlier discussion. I do not think it could be said, having regard to the multiple facts that were incorporated in the initial application, that the applicant instituted the proceedings vexatiously or without reasonable cause.
The question then arises as to whether or not her conduct in the application itself thereby gave rise to an unreasonable act or omission, causing the other party to incur costs. Plainly, it can be seen by the concessions made by the applicant in relation to the respondent’s application of 2 August that she accepted that there were defects in the statement of claim. However, that is not the end of it. The issue in the statement of claim concerned whether or not she had a cause of action, based upon the submissions contended for by her that the APS Code of Conduct formed part of the enterprise agreement. For reasons that I have earlier provided, I formed the view that it did.
It follows that, notwithstanding the fact that there may have been some issues in relation to the pleading (which concessions were made in respect of), the real issue that was agitated was one which was ultimately determined in her favour. On balance, notwithstanding the fact that the pleading itself had suffered defects and required rectification, I am satisfied that there was a reasonable approach taken in relation to those defects, and in any event, any costs that may have been associated with those matters merged into the costs in respect of the application on the more substantive issue, in respect of which the applicant was successful.
On balance, I am of the view that there should be no order as to costs in relation to the interlocutory application. Coming back to the question of costs, the Federal Magistrates Court Rules 2001 (Cth) provide in Schedule 1 for the final hearing costs for a solicitor, which is a daily hearing fee. That sum is $936.00 for a half day, or $1,873.00 for a full day. Given that, in this case, counsel was engaged, the solicitor’s attendance was purely formal, from my observation. I think it is appropriate that a lesser fee be imposed, and I will direct that the applicant pay the respondent a sum of $936.00 by way of costs.
I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Burnett FM
Date: 15 November 2012
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