Federal Court Denies Employer's Application for Costs in Employment Claims Case

FEDERAL COURT OF AUSTRALIA

[NAME] v Service to Youth Council Incorporated (No 2) [2014] FCA 721 Citation: [NAME] v Service to Youth Council Incorporated (No 2) [2014] FCA 721

Parties: [NAME] v SERVICE TO YOUTH COUNCIL INCORPORATED

File number: SAD 65 of 2013

Judge: WHITE J

Date of judgment: 4 July 2014

Date of hearing: 25 June 2014

Place: Adelaide

Division: GENERAL DIVISION

Category: No Catchwords

Number of paragraphs: 28

Counsel for the Applicant: [redacted]

Solicitor for the Applicant: [redacted]

Counsel for the Respondent: [redacted]

Solicitor for the Respondent: [redacted]

IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION SAD 65 of 2013

BETWEEN: [NAME]

Applicant

AND: SERVICE TO YOUTH COUNCIL INCORPORATED

Respondent

JUDGE: WHITE J DATE OF ORDER: 4 july 2014 WHERE MADE: ADELAIDE

THE COURT ORDERS THAT:

1. The applications for costs be refused. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BETWEEN: [NAME]

Applicant

AND: SERVICE TO YOUTH COUNCIL INCORPORATED

Respondent

JUDGE: WHITE J DATE: 4 july 2014 PLACE: ADELAIDE

REASONS FOR

JUDGMENT 1 On 20 June 2014, I dismissed claims which the applicant brought against the respondent ([NAME]) under the Sex Discrimination Act 1984 (Cth) (the SD Act) and upheld only one of three claims which she had brought under the Fair Work Act 2009 (Cth) (the FW Act): [NAME] v Service to Youth Council Incorporated [2014] FCA 656. 2 [NAME] has applied for costs orders in its favour, namely, 50% of the costs of the action; 100% of the costs of directions hearings held on 19 July and 6 November 2013; and 100% of the costs it incurred in relation to claims of sexual harassment which the applicant brought against [NAME] (its Chief Executive Officer) and [NAME] (its Chief Operating Officer), and which she had abandoned only shortly before the trial commenced. The applicant resists these applications. She indicated, however, that if her submissions with respect to the effect of s 570 of the FW Act failed, then she sought an order against [NAME] in respect of her claim under s 65 of the FW Act, on which she had succeeded. 3 The submissions concerning costs in this matter were made immediately after the submissions concerning the costs of [NAME]'s claim against [NAME], which are the subject of my reasons in [NAME] v Service to Youth Council Incorporated (No 3) [2014] FCA 716 ([NAME] (No 3)). These reasons should be read in conjunction with those reasons.

[NAME]'s claim for the costs of the whole action 4 [NAME] sought an order that it be paid 50% of the costs of the whole action. It accepted that it was not entitled to costs in respect of the applicant's claims under the FW Act, but contended that it was entitled to the costs of the applicant's claims under the SD Act on which the applicant had failed. 5 This claim of [NAME] depended on its submission that s 570 of the FW Act limited the Court's powers concerning costs only in respect of matters arising under the FW Act. For the reasons given in [NAME] (No 3), I reject that submission. 6 It follows that [NAME]'s claims for 50% of its costs of the whole action must fail.

The hearing on 19 July 2013 7 The circumstances described in [NAME] (No 3) relating to the hearing on 19 July 2013 also pertain to the applicant's case. There was but one hearing on 19 July in relation to both actions. Both parties were represented by the same solicitors and counsel. 8 [NAME], the applicant had commenced her proceedings on 2 April 2013 naming [NAME] as the sole respondent. However, her statement of claim filed on 24 May 2013 included [NAME] and [NAME] as respondents, and made allegations against them. Subsequently, on 21 June 2013, the applicant filed an interlocutory application seeking leave to join the individual respondents to the proceedings and to amend her originating application. That interlocutory application was listed for hearing on 19 July. However, at the hearing, counsel announced that the application was not pursued. 9 Mansfield J, who conducted that directions hearing, reserved the question of costs of the application to the trial judge. [NAME] articulated its claim for costs as a claim in respect of the whole hearing on 19 July, I proceed on the basis that it seeks costs only in respect of the interlocutory application of 21 June, as the directions hearing on 19 July 2013 would have been held in any event. 10 [NAME] contended that the very bringing of the interlocutory application of 21 June 2013 was unreasonable because the individual respondents could not, as a matter of law, be joined to the proceedings in this Court. It contended that that was so because the individuals had not been named as respondents to the applicant's complaint in the Australian Human Rights Commission ([NAME]), and s 46PO of the Australian Human Rights Commission Act 1986 (Cth) authorises proceedings in this Court only in respect of persons who had been respondents to proceedings in the [NAME]. [NAME] also contended that the bringing of the application only to abandon it one month later on the stated ground that it was not necessary for the individual respondents to be joined was unreasonable. 11 For the reasons which I have given in [NAME] (No 3), I consider that it is not desirable for the Court presently to determine the question of competence of the application solely for the purposes of resolving the costs issues. That would involve the Court having to determine a substantive issue, after giving the parties the opportunity to make submissions concerning it. [NAME] may well be correct in its submission as to the effect of s 46PO, but that is a conclusion which could be reached only after a construction of that provision, an evaluation of the circumstances which occurred in relation to the applicant's complaint to the [NAME], and consideration of this Court's powers with respect to joinder of parties. In making this observation, I am not to be taken as expressing any view as to the correctness of [NAME]'s submission. 12 As in the case of [NAME] (No 3), I consider that there is some force in [NAME]'s criticism of the applicant's conduct. The decision announced to the Court on 19 July that the applicant did not consider it necessary for the individual respondents to be joined in order that she be granted the claimed relief was a decision which could have been made and communicated earlier and thereby have saved the incurring of costs on both sides. 13 Nevertheless, for the reasons which I gave in [NAME] (No 3), I am not satisfied that the conduct of the applicant in bringing and then abandoning the application of 21 June 2013 should be characterised as unreasonable for the purposes of s 570(2)(b).

The hearing on 6 November 2013 14 On 4 September 2013 I listed the trial of the action to commence on 25 November 2013 and made directions for an exchange of witness statements. 15 On 28 October 2013, the applicant filed an interlocutory application seeking leave to amend her statement of claim, by deleting certain of her existing causes of action, but adding five new causes of action. By two of the proposed new causes of action, the applicant sought the imposition of civil penalties in respect of alleged conduct of [NAME] said to contravene s 340(1)(a) of the FW Act. This was its alleged conduct in disabling the applicant's means of obtaining remote access to her work email and to [NAME]'s intranet, and in re-allocating her duties to others while she was on parental leave. 16 Next, the applicant wished to add two common law causes of action, of which one was said to be the breach of a term implied into her contract of employment concerning mutual trust and confidence, and the other an alleged failure to give her reasonable notice of the termination of her employment. The last of the proposed additional causes of action was an allegation that [NAME] had breached the terms of an award alleged to be applicable to the applicant's employment by failing to consult with her concerning the introduction of change. 17 The interlocutory application was brought by the applicant after the parties had exchanged witness statements as contemplated by the Court's orders on 4 September 2013. Had the amendments been allowed, [NAME] would have had to revise the statements of its witnesses and, possibly, to have called evidence from additional witnesses. In making the application, the applicant indicated that she did not wish the trial date of 25 November 2013 to be vacated. [NAME] opposed the grant of leave to amend. 18 I refused the application for leave to amend having regard, in particular, to the prejudice to [NAME] if the leave was granted, deficiencies in the form of the proposed pleading which, it seemed, would inevitably give rise to further interlocutory activity, and the absence of any proposal by the applicant to meet the prejudice to [NAME], including costs thrown away, which would be occasioned if the amendments were allowed. [NAME] then applied for an order that it be paid its costs of the interlocutory application, but I reserved that question. 19 [NAME]'s application for the costs of the interlocutory application was made on a two-fold basis. It submits that the applicant acted unreasonably in bringing the application to amend so late, while at the same time seeking to maintain the trial date, and without offering to pay its costs thrown away. [NAME] also referred to the applicant's indication that she would abandon some of her existing causes of action only if she was given leave to amend. It submitted that the applicant had thereby attempted to bargain with the Court. 20 On one view, the manner in which the submissions of the applicant were made on 6 November does provide a reasonable basis for this latter submission. However, it is also plausible that the applicant considered her proposed additional causes of action to be stronger than those which she contemplated abandoning, but wished to maintain those claims in the event that she was not given the opportunity to pursue the stronger claims. That view of the matter is also open and I am willing to accept that it was that consideration which underpinned the applicant's attitude to the abandonment of her existing causes of action as at 6 November 2013. 21 I consider that the other matters to which [NAME] referred are of an ordinary kind in late applications to amend pleadings. It is regrettable that the applicant made her application so late and that the form of the proposed amended pleading was deficient. It is also unfortunate that the applicant did not indicate willingness to address the prejudice to [NAME] occasioned by the lateness of the application. However, as I have said, these are not matters which are out of the ordinary on late applications to amend. They are the circumstances which led the application to fail but they do not, by themselves, warrant the characterisation of the applicant's conduct as unreasonable for the purposes of s 570(2)(b).

Accordingly, this application fails.

The abandoned claims of sexual harassment 22 In her amended statement of claim filed on 8 August 2013, the applicant alleged that conduct of each of [NAME] and [NAME] amounted to sexual harassment in contravention of s 28B of the SD Act. I referred to the conduct alleged against [NAME] in [15], [66] and [89] of the principal judgment, and to the conducted alleged against [NAME] in [22] and [81]-[89] of the principal judgment. Although I was willing to accept that each of [NAME] and [NAME] may have made some of the statements which the applicant attributed to them, I concluded that they were of a benign and well-intentioned nature, would have been understood by the applicant as such, and could not reasonably be characterised as sexual harassment as defined in s 28A of the SD Act. It seemed to me, therefore, that these claims were made without a reasonable basis. 23 For this reason, I am satisfied that [NAME] has established an unreasonable act of a relevant kind for the purposes of s 570(2)(b) of the FW Act. 24 However, [NAME] must establish that the unreasonable act has also caused it to incur identifiable costs such that an order for costs in its favour should be made. The difficulty in that respect is that even in the absence of the applicant's characterisation of the alleged conduct as sexual harassment, [NAME] would still have had to address her evidence concerning those matters. That is because the applicant relied upon that conduct as part of the evidence of the targeting of her for termination which she had alleged. It is difficult to see that the evidence in response to those elements of the alleged targeting would have been any different even if the applicant had not also characterised the conduct of [NAME] and [NAME] as sexual harassment. 25 I accept that [NAME] may, in addition, have had to spend some time preparing submissions directed to s 28B of the SD Act. However, in the overall context of this litigation, I consider that such time would not have been significant and would, in any event, be difficult to disentangle from the costs which [NAME] incurred in meeting the applicant's claims more generally. 26 I am not overlooking that the claims of sexual harassment had to be taken seriously by [NAME] and were no doubt hurtful to [NAME] and [NAME] (as they said in their evidence). However, I am not satisfied that [NAME] has shown that it was caused to incur additional costs of a kind which could be made the subject of an order under s 570(2)(b).

Conclusion 27 For these reasons, I consider that [NAME]'s claims for costs fail. 28 In that circumstance, it is not necessary to address the applicant's alternative claim. Having regard to s 570 of the FW Act, this Court does not have power to make an order for costs in these proceedings. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.

Associate: Dated: 4 July 2014