Employer wins costs order against worker in unfair dismissal dispute

OUTCOME: Dismissed

FEDERAL COURT OF AUSTRALIA

[APPELLANT] v [COMPANY] (No 2) [2018] FCA 992 File number: NSD 2190 of 2016

Judge: BROMWICH J

Date of judgment: 29 June 2018

Catchwords: INDUSTRIAL LAW – costs – summary dismissal of application for judicial review – whether proceedings instituted without reasonable cause in accordance with s 570(1) of the [NAME] 2009 (Cth) – whether costs should be paid by the applicant's [APPELLANT] representatives

Legislation: [NAME] 2009 (Cth), ss 400, 570 Federal Court Rules 2011 (Cth), r 40.02(b)

Cases cited: Baker v [COMPANY] (No 2) [2014] FCAFC 166; 145 ALD 548 [APPELLANT] v [NAME] [COMPANY] [2017] FCA 1585 [COMPANY] v [NAME] [COMPANY] [2014] FCA 346 Beach Petroleum NL v Johnson (1995) 57 FCR 119 [NAME] v [COMPANY] & 2 Ors [2005] NSWCA 153; 63 NSWLR 300 [NAME] v [NAME] of Taxation [2000] FCA 674; 102 FCR 155 [RESPONDENT] v Barnden [2014] FCA 918 Myers v Elman [1940] AC 282 [NAME] v [NAME] Board [1987] QB 565 Ridehalgh v Horsefield [1994] Ch 205 [NAME] v Australian Fisheries Management Authority (No 3) [2008] FCA 2018

Date of hearing: Determined on the papers

Date of last submissions 27 February 2018

Registry: New South Wales

National Practice Area: [NAME]: Employment and Industrial Relations

Category: Catchwords

Number of paragraphs: 27

[NAME]: [APPELLANT]

[NAME]: [APPELLANT]

[NAME]: [RESPONDENT]

[NAME]: [RESPONDENT]

[NAME] The [NAME] Respondent filed a submitting notice save as to costs

ORDERS NSD 2190 of 2016

BETWEEN: [APPELLANT] Applicant AND: [COMPANY] First Respondent [NAME] COMMISSION [NAME] Respondent

JUDGE: BROMWICH J DATE OF ORDER: 29 June 2018

THE COURT ORDERS THAT:

1. The first respondent's costs of and incidental to these proceedings, including the costs ordered to be paid on 8 June 2017, be paid by the applicant on an indemnity basis, fixed in the sum of $71,000. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

BROMWICH J: 1 On 21 December 2017, the Court granted an application for summary dismissal of the applicant's claim in these proceedings: [APPELLANT] v [NAME] [COMPANY] [2017] FCA 1585. The issues that remain concern costs. 2 In [APPELLANT], I was satisfied that the applicant, Ms [APPELLANT], did not have reasonable prospects of success in advancing her claim for judicial review of a decision of the [NAME] of the [NAME] Commission. The [NAME] had refused Ms [APPELLANT] permission to appeal from a decision of a Commissioner of the [NAME] Commission and dismissed her appeal. That outcome was compelled by s 400 of the [NAME] 2009 (Cth), as the [NAME] was not satisfied that it was in the public interest to grant Ms [APPELLANT] permission to appeal. 3 Put simply, the problem with the applicant's case for judicial review was that it did not allege any jurisdictional error in the discretionary assessment of the public interest that was carried out by the [NAME]. As such, there could be no basis for this Court to interfere with the [NAME]'s decision. On the application of the first respondent, [RESPONDENT], the application for review was therefore summarily dismissed. 4 By way of submissions and an affidavit filed with leave following my primary decision, [APPELLANT] applies for an order that the applicant pay its costs on an indemnity basis, which it asks to be fixed in a lump sum by the Court. [NAME] also seeks an order that its costs be paid personally by the applicant's solicitor, Mr [COUNSEL], and the applicant's counsel, Mr [NAME] [APPELLANT]. In any event, this Court must be satisfied that it has jurisdiction to make an order for costs, given the constraints imposed by s 570 of the [NAME] in matters arising under that Act. 5 The applicant was given an opportunity to provide any submissions or evidence she wished to rely upon in response to [NAME]'s costs application. No such material was filed or otherwise provided. Nor was any opportunity sought by [NAME] or Mr [APPELLANT] to respond to the application for costs against them personally. The parties were advised that this determination would therefore be carried out on the papers.

[ADDRESS]'s power to award costs 6 As noted above, the Court's power to award costs in this proceeding is constrained by s 570 of the [NAME]. That provision is in the following terms: 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 FWC; (ii) the matter arose from the same facts as the proceedings. 7 Section 570(2) provides that the Court's jurisdiction to award costs against a party may only be enlivened in certain limited circumstances. The first is where the Court is satisfied that the party instituted proceedings vexatiously or without reasonable cause (s 570(2)(a)). The [NAME] is where the Court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs (s 570(2)(b)). The third circumstance (s 570(2)(c)) is not presently relevant. 8 As to the meaning of "without reasonable cause" in s 570(2)(a), the relevant principles were considered by the [ADDRESS] in Baker v [COMPANY] (No 2) [2014] FCAFC 166; 145 ALD 548 at [9]-[10], with minor modification for application to the institution of an appeal or judicial review proceeding. Those principles may be summarised as follows: (1) To exercise the discretion conferred by s 570(2)(a) of the [NAME], the Court must be satisfied that the relevant claims were instituted without reasonable cause. (2) An absence of reasonable cause will not be established merely because a party fails in the claims. (3) An application for judicial review will be instituted without reasonable cause if, having regard to the facts apparent to the applicant at the time of commencing the proceeding, there were no reasonable prospects of success. (4) In evaluating the prospects of success, regard may be had to the decision under review and the grounds relied upon to challenge that decision.

Costs against the applicant 9 [APPELLANT] primary position is that it is entitled to a costs order on an indemnity basis from 19 January 2017 (the application for review having been filed on 19 December 2016 and served on 18 January 2017). This is on the basis that the proceedings were instituted without reasonable cause in the sense required by s 570(2)(a) of the [NAME]. 10 [NAME] alternative position is that it should be awarded its costs on an indemnity basis from 31 January 2017, being the date of expiry of a Calderbank offer that had been sent to the applicant on 25 January 2017. [APPELLANT] submits that the refusal to accept that offer constitutes an unreasonable act or omission for the purposes of s 570(2)(b) of the [NAME]. 11 [NAME] primary position should be accepted. The absence of merit in the applicant's case for review should have been apparent to her at the time of instituting proceedings, given that she was represented by both a solicitor and counsel. Of course, if the advice she received suggested any proper foundation for bringing the proceedings, the applicant may have a remedy against her representatives for professional negligence. The deficiencies in the applicant's case have been explained in the primary judgment, and do not bear repeating in full. It suffices for present purposes to note the findings that: (1) the grounds of review were convoluted, repetitive and confused (at [12]); (2) the grounds of review mostly attacked the decision of the Commissioner without making it clear how that decision infected the decision of the [NAME], which was the only decision against which relief was being sought (at [12]); and (3) no error was asserted in the decision of the [NAME] that could be amenable to judicial review by this Court (at [12], [29]-[30]). 12 As is pointed out by [NAME], each of these was a factor that should have been apparent to the applicant at the time the proceedings were instituted. This was not a case in which the viability of the arguments depended upon unresolved issues of fact. I note also that the applicant was given the opportunity to file an amended originating application and a statement of claim, and the merit of her case was ultimately considered on the basis of the more fulsome articulation of her grounds that emerged from that process. As is clear from the outcome of the proceedings, the benefit of that opportunity did not result in the further identification of any tenable case for review. Nor was there any suggestion that this could be addressed by further amendment. 13 I am therefore satisfied that the proceedings were instituted without reasonable cause and I see no reason why [NAME] should not be entitled to its costs on an indemnity basis from the outset.

Costs against the applicant's [APPELLANT] representatives 14 [APPELLANT] also seeks an order for costs to be made personally against Ms [APPELLANT]'s solicitor, Mr [COUNSEL], and her counsel, Mr [APPELLANT]. [ADDRESS]'s jurisdiction to make such an order is similarly constrained by s 570 of the [NAME]. 15 A lawyer against whom a claim for costs is made must have full and sufficient notice of the complaint and full and sufficient opportunity of answering it: Myers v Elman [1940] AC 282 at 318; [NAME] v [NAME] Board [1987] QB 565 at 572; Ridehalgh v Horsefield [1994] Ch 205; [NAME] v [COMPANY] & 2 Ors [2005] NSWCA 153; 63 NSWLR 300. In the present case, I am satisfied that this notice has been given, [NAME]'s material having been filed and served by 23 February 2018 pursuant to the Court's orders of 21 December 2017 and 2 January 2018. [ADDRESS]'s power under s 43 of the Federal Court of Australia Act 1976 (Cth) to make a costs order against a lawyer is well established: [NAME] v [NAME] of Taxation [2000] FCA 674; 102 FCR 155. It is a power that must be exercised with care and discretion and only in a clear case: see [RESPONDENT] v Barnden [2014] FCA 918 at [39], and the authorities there cited. 17 The relevant principles were helpfully summarised by [NAME] in [RESPONDENT] at [44] as follows:

1. Instituting or maintaining a proceeding on behalf of a client which has no, or substantially no, prospect of success will not, without more, invoke the jurisdiction to make a costs order against a lawyer.

2. Something which involves "unreasonable conduct" is required.

3. What constitutes unreasonable conduct will depend on the circumstances of the particular case.

4. The element of acting unreasonably involves some deliberate or conscious decision taken by reference to circumstances unrelated to the prospects of success, with either a recognition that there is no chance of success, or an intention to use the proceeding for an ulterior purpose, or to abuse the processes of the court, or with a disregard of any proper consideration of the prospects of success.

5. The circumstances must involve or result in a serious dereliction of duty owed to the court, or serious misconduct in promoting the course of, and the proper administration of, justice.

6. An ulterior purpose or an abuse of process cannot be assumed simply because the case is hopeless.

7. The reason that the mere pursuit of an unmeritorious case is not so sufficient to invoke the jurisdiction to make a costs order against a lawyer is that a party is entitled to have a practitioner act for him or her in an unmeritorious case. The court is concerned to avoid the risks of a practice developing whereby [RESPONDENT] endeavour to browbeat their opponents into abandoning clients, or particular issues or arguments, for fear of personal costs orders being made against them. 18 In the present case, the point is made against [NAME] and Mr [APPELLANT] that the application for judicial review was found to be confused, repetitive, convoluted and devoid of merit. It is submitted that the applicant's [APPELLANT] representatives failed to address the substantive [APPELLANT] arguments raised by [APPELLANT] in its application for summary dismissal, failed to identify the [APPELLANT] basis of the claim necessary to obtain the relief sought, and relied on new oral arguments on the day of the hearing. That submission is correct. [NAME] also points in its evidence to a general and systematic unresponsiveness by the applicant's [APPELLANT] representatives in correspondence between the parties about the matter. These failures, [APPELLANT] submits, must land squarely at the feet of the [APPELLANT] representatives. 19 There is considerable force in the criticisms made by [NAME] of the manner in which the proceedings were conducted by Mr [APPELLANT] and especially Mr [APPELLANT]. Each of these criticisms echoes observations made in the primary judgment. I am nonetheless reluctant to make the very serious finding that the conduct by the applicant's [APPELLANT] representatives was "unreasonable" in the sense that it involved a serious dereliction of their duty to the Court. The particular problem the Court faces is that it cannot be concluded with sufficient certainty that responsibility for the decisions made about the conduct of the proceedings must lie with the [APPELLANT] representatives, rather than with the applicant. 20 As is explained in the authorities, there is a need for caution in making orders against a practitioner because it will often be difficult for a court to know the circumstances of his or her instructions. This difficulty is particularly material where a distinction must be drawn between the cases where a client, perhaps forcefully, wishes for an unmeritorious case to be advanced, and the cases that involve some failure by the practitioner to properly consider the merits of what is being advanced. Here, whatever the inadequacies of the case advanced on Ms [APPELLANT]'s behalf and whatever suspicion may be entertained that the practitioners were heedless of the merits of the case, whether as a matter of stubbornness or incompetence, the absence of certainty as to the full circumstances of Mr [APPELLANT] and [NAME]'s instructions must, at least in this case, be fatal to the application for a personal costs order.

Quantum of the lump sum 21 [NAME] seeks an order for fixed lump sum costs of: (1) $67,164.50 (excluding GST and including disbursements), representing costs on an indemnity basis from 19 January 2017; and (2) $9,950.00 (excluding GST and including disbursements), representing the costs of the costs application. 22 The application is supported by an affidavit of [NAME]'s solicitor, Ms [COUNSEL], which was affirmed on 2 February 2018. That affidavit gives an explanation of the costs claimed and annexes the relevant invoices rendered by [NAME]'s solicitors and counsel. 23 An application for lump sum costs is expressly permitted by r 40.02(b) of the Federal Court Rules 2011 (Cth). [ADDRESS]'s power to make such an order is discretionary. It is not confined and may be exercised whenever the circumstances warrant it: [NAME] v Australian Fisheries Management Authority (No 3) [2008] FCA 2018 at [1]. It should be noted that the Court is not required to engage in a line by line analysis of the costs sought, and may take a "broad brush approach", which is one of estimation or assessment and not of arithmetic: [COMPANY] v [NAME] [COMPANY] [2014] FCA 346 at [17] per Foster J. 24 In the present case, I am satisfied that it is appropriate to fix costs in a lump sum given the expedience of avoiding the delay, expense and aggravation arising out of taxation: Beach Petroleum NL v Johnson (1995) 57 FCR 119 at 120 per Von Doussa J. 25 As to questions of quantum, the onus lies on the applicant to show that the costs claimed are unreasonable. She has not attempted to do so. In any event, I have considered Ms [NAME] affidavit and the basis given for the costs assessed to determine whether the order should be made in the amount sought. With one main exception, Ms [NAME] approach appears to be fair, logical, rational and reasonable. The exception is that I do not accept the full amount of costs claimed in relation to costs application, as discussed below. That aspect aside, I accept the reasons given for the need to brief senior and junior counsel, and that there was apparently only very limited overlap in the work they performed. I accept that the rates charged generally appear reasonable and proportionate to the work undertaken, noting that no complaint has been made about them. I also accept that the manner in which the proceeding has been conducted by the applicant through her representatives has resulted in increased costs by [NAME]. 26 As to the costs of the costs application, I do not accept that the full amount of $9,950 is reasonable. I note, without being critical, that no particulars or invoices were provided for this amount. In any event, having regard to the rates charged by those acting for [COUNSEL], the inference available from the amount claimed is that a fairly significant amount of time was spent preparing the costs application, somewhere in the vicinity of 15 to 33 hours. In my view, that appears to be plainly excessive. I would allow approximately 50% of this aspect of the claim. 27 The sum sought by [NAME] includes the costs of a case management hearing, in respect of which a prior order for costs was made.

Accordingly, the order of the Court will be: The first respondent's costs of and incidental to these proceedings, including the costs ordered to be paid on 8 June 2017, be paid by the applicant on an indemnity basis, fixed in the sum of $71,000. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromwich.

Associate: Dated: 29 June 2018