Wu v Enterprise CRM Solutions (Holdings) Pty Ltd (No 3)

[2023] FedCFamC2G 133

Federal Circuit and Family Court of Australia

(DIVISION 2)

Wu v Enterprise CRM Solutions (Holdings) Pty Ltd (No 3) [2023] FedCFamC2G 133

File number(s):

SYG 255 of 2022

Judgment of:

JUDGE MANOUSARIDIS

Date of judgment:

23 February 2023

Catchwords:

INDUSTRIAL LAW – Costs – application for order for costs under s 570(2)(b) of the Fair Work Act 2009 (Cth) – whether respondents acted unreasonably by not accepting an offer of compromise – whether respondents acted unreasonably in not complying with order for specific performance of an agreement made at the conclusion of a mediation – respondents ordered to pay the applicant’s costs as from one day after the respondents ought to have accepted the applicant’s offer of compromise.

Legislation:

Fair Work Act 2009 (Cth) s 570

Federal Court Rules 2011 (Cth) Pt 40

Cases cited:

Cultural Office of the Embassy of the State of Kuwait v Soliman [2022] FCA 692

Kelly v Atanaskovic Hartnell Corporate Services Pty Ltd (No 3) [2023] FedCFamC2G 1

Wu v Enterprise CRM Solutions (Holdings) Pty Ltd (No 2) [2022] FedCFamC2G 922

Wu v Enterprise CRM Solutions (Holdings) Pty Ltd [2022] FedCFamC2G 731

Division:

Fair Work

Number of paragraphs:

15

Date of last submission/s:

24 November 2022

Date of hearing:

Decided on the papers

Place:

Sydney

ORDERS

SYG 255 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

HAIBIN (RAY) WU

Applicant

AND:

ENTERPRISE CRM SOLUTIONS (HOLDINGS) PTY LTD (ACN 632 007 866)

First Respondent

BENJAMIN HORIN

Second Respondent

order made by:	JUDGE MANOUSARIDIS
DATE OF ORDER:	23 FEBRUARY 2023

THE COURT ORDERS THAT:

1.Pursuant to s 570(2)(b) of the Fair Work Act 2009 (Cth) the respondents pay the applicant’s costs from, and including, 13 May 2022.

2.The applicant’s costs be referred for taxation under Part 40 of the Federal Court Rules 2011 (Cth).

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

introduction

1. On 2 September 2022, on the basis of reasons for judgment I published on that day,[1] I made a declaration that, at the conclusion of a mediation on 22 April 2022, the applicant and respondents agreed to settle the claims the applicant made on the terms of the agreement stated in the declaration (Agreement). I ordered that the matter be listed for directions at 9.30 am on 23 September 2022. I did so to give the parties an opportunity to perform the terms of the Agreement. The Agreement required the applicant to provide to the respondents an executed deed, and the Agreement required the respondents to execute the deed.

   [1] Wu v Enterprise CRM Solutions (Holdings) Pty Ltd [2022] FedCFamC2G 731

2. The applicant executed a deed, which he provided to the respondents. The respondents, however, did not execute the deed; and they did not contend the deed did not reflect the terms provided for by the Agreement. On 23 September 2022, therefore, I set the matter down at 9.30 am on 26 October 2022 (later changed to 27 October 2022) for hearing on the question of final relief.

3. I heard submissions on the question of final relief on 27 October 2022 and, on that day, on the basis of the reasons for judgment I delivered orally,[2] I ordered that the respondents specifically perform the Agreement, and I further ordered the Registrar of this Court execute, on behalf of the respondents, the deed the applicant had executed if the respondents were to fail to execute the deed. I also ordered that the parties file and serve short written submissions on costs and that, unless by 17 November 2022 any party were to request an oral hearing on the question of costs, I would be at liberty to determine the question of costs without any further hearing.

   [2] Wu v Enterprise CRM Solutions (Holdings) Pty Ltd (No 2) [2022] FedCFamC2G 922

4. The applicant filed submissions on costs on 3 November 2022. The respondents have not filed any submissions on costs; and no party has requested an oral hearing on the question of costs. In these reasons for judgment, therefore, I consider whether I should make an order for costs against the respondents.

   statutory provisions and principles

5. The Court’s power to award costs in relation to a matter arising under the FW Act is regulated by s 570 of the FW Act, which relevantly provides as follows:

   (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; . . .

   (c)the court is satisfied of both of the following:

6. In Kelly v Atanaskovic Hartnell Corporate Services Pty Ltd (No 3) Judge Given summarised some of the principles governing the exercise of the power conferred by s 570 of the FW Act:[3]

   Section 570 operates as an express limitation on the broad discretion to award costs which is conferred on this Court by s 214 of the Court Act: see Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221 at [140] per Tracey, Gilmour, Jagot, White and Beach JJ. Section 214 of the Court Act includes a discretion to order costs on an indemnity basis: see Naudi v Baig [2022] FedCFamC2G 14 per Judge Brown at [121] to [122] and Owners - Strata Plan No 77992 v Arouchanov [2021] FedCFamC2G 20 per Judge Baird at [16].

   Even if the Court is satisfied of a s 570(2) precondition, it retains a discretion not to order costs: Construction, Forestry, Mining and Energy Union v Corinthian Industries (Aust) Pty Ltd (No 2) [2014] FCA 351 per Pagone J at [12].

   The Court’s power to make cost orders pursuant to s 570(2) of the Act must be exercised cautiously for public interest reasons: see Australian Workers Union vLeighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428 per Dowsett, McKerracher and Katzmann JJ at [8]. The question of whether a party has acted unreasonably for the purposes of s 570 turns on the facts and circumstances of the case at hand: see Sivwright v St Ives Group [2022] FCA 136 per Jackson J at [9].

   . . . .

   Costs orders made pursuant to s 570(2) of the Act do not arise to punish litigants for undertaking an unreasonable course of action, but rather are made on the basis that a measure of reimbursement should be conferred upon another party for the costs incurred in the conduct of, or need to respond to, unreasonably instituted proceedings: Kanan (supra) at 265.  However, as Gilmour J observed in R v Patrick Projects Pty Ltd (No 2) [2017] FCA 388 at [10]:

   That a party has a “self-evidently weak case” is not enough to warrant a costs order. There must be “a higher level of criticism or disapprobation”: Clarke v Dixie Cummings Enterprises Pty Ltd [2013] FCA 987 at [14]. Indeed, costs were not awarded against the FWO in Fair Work Ombudsman v Valuair Limited (No 3) [2014] FCA 1182 even though elements of the FWO’s case were “artificial and unsatisfactory” and “potentially bizarre”: at [12]–[17] cross-referencing to the liability decision - Fair Work Ombudsman v Valuair Ltd (No 2) (2014) 224 FCR 415.

   [3] Kelly v Atanaskovic Hartnell Corporate Services Pty Ltd (No 3) [2023] FedCFamC2G 1, at [174]-[177], [182]

7. An unreasonable rejection of, or failure to accept, an offer of compromise may constitute an unreasonable act or omission for the purposes of 570(2)(b).[4] Whether an act or omission is “unreasonable” is “informed by context and requires an evaluative assessment of all the circumstances”.[5] Whether a rejection of, or failure to accept, an offer of compromise involves an “unreasonable” act of omission within the meaning of s 570(2)(b):[6]

   depends upon all of the particular circumstances, including the obviousness of the likely result of the proceedings. For example, the rejection of a Calderbank offer that explains clearly and in detail the reasons why a position cannot succeed is more likely to be unreasonable than the rejection of a Calderbank offer that merely asserts the likely result.  Other factors include the length of time for which the offer remains open; the stage of proceedings at which the offer was made; the extent of the compromise offered, including as assessed against the objectively assessed strength of the parties’ respective positions; and the context in which the offer was made.

   [4] Cultural Office of the Embassy of the State of Kuwait v Soliman [2022] FCA 692, at [42]

   [5] Cultural Office of the Embassy of the State of Kuwait v Soliman [2022] FCA 692, at [42]

   [6] Cultural Office of the Embassy of the State of Kuwait v Soliman [2022] FCA 692, at [43]

   Applicant’s submissions

8. The applicant submits the respondents have engaged in four classes of unreasonable acts or omissions that caused the applicant to incur costs:

   (a)The second respondent, Mr Horin, sent inflammatory correspondence to the applicant’s lawyers, threatening legal action against the applicant and his legal representatives.

   (b)The respondents advanced an untenable argument in support of their contention that the parties did not, at the conclusion of the mediation, enter into a binding agreement to settle the applicant’s claims.

   (c)The respondents did not accept an offer the applicant made that he would be willing to remove from the draft deed any reference to the exclusion of claims under the workers compensation legislation. The offer was first made in the applicant’s lawyer’s email sent on 5 May 2022, where the applicant’s lawyer stated: “we are willing to have the Deed remain silent on workers compensation”, and that cl 4.2 of the deed that had been previously provided was amended accordingly.[7] The applicant’s lawyer repeated the offer to the respondents’ lawyer by email sent on 29 June 2022.[8]

   (d)The respondent did not comply with the order for specific performance I made on 27 October 2022.

   [7] Affidavit of Ella Rowe 03.11.2022, annexure ER-05

   [8] Affidavit of Ella Rowe 03.11.2022, annexure ER-06

   determination

9. There is evidence that Mr Horin sent emails to the applicant’s lawyers that may be characterised as inflammatory, and that the applicant’s lawyers responded to them.[9] The emails that are in evidence, however, were sent before the applicant commenced the proceeding; so any legal costs the applicant incurred by his lawyers sending those emails do not relate to work that was performed in relation to the proceeding.

   [9] Affidavit of Ella Rowe 03.11.2022, annexures ER-02, ER-03

10. I am not satisfied that the ground on which the respondents relied for contending the parties did not enter into a binding agreement at the mediation was untenable. The reasons for judgment I published on 2 September 2022 reveal there was some merit in the ground on which the respondents relied.[10]

    [10] Wu v Enterprise CRM Solutions (Holdings) Pty Ltd [2022] FedCFamC2G 731

11. I am satisfied, however, that the respondents acted unreasonably in not accepting the offer the applicant’s lawyer first made in her email of 5 May 2022. The ground on which the respondents relied for contending the parties did not reach a binding agreement was that it was no part of the agreement that the release the applicant would give under the deed would exclude claims he might have under workers compensation legislation. The applicant’s lawyers’ offer to remove from the deed the reference to claims under the workers compensation legislation, if the respondents’ accepted it, would have removed the ground on which the respondents contended that the parties had not reached a binding agreement at the mediation.

12. It was unreasonable, therefore, for the respondents to persist with their contention that the parties did not conclude a binding agreement on the ground that the respondents did not agree to the applicant’s release to exclude claims he might have under workers compensation legislation. The respondents’ failure to accept the applicant’s offer is rendered more unreasonable given the relatively small amount for which the applicant agreed to settle his claims.

13. I am also satisfied the respondents acted unreasonably in not complying with the order for specific performance I made on 27 October 2022. The respondents have offered no explanation for their failure to comply with the orders of the Court. The necessitated the applicant to incur costs in arranging for the Registrar to execute the deed on behalf of the respondents.

14. The respondents ought reasonably to have accepted the applicant’s offer made in his lawyer’s email of 5 May 2022 by no later than 12 May 2022. I am therefore satisfied that the costs the applicant incurred after 12 May 2022 were caused by the respondent’s unreasonable conduct in not accepting that offer; and the costs the applicant incurred after 27 October 2022 were caused by a combination of the respondents’ failure to accept the applicant’s offer made by his lawyer on 5 May 2022, and the respondents’ failure to comply with the orders I made on 27 October 2022. The respondents, therefore, ought to pay the costs of the applicant.

    disposition

15. I propose to order that the respondents pay the applicant’s costs as from 13 May 2022, and to refer those costs for taxation under Part 40 of the Federal Court Rules 2011 (Cth).

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis.

Associate:

Dated: 23 February 2023