Avetmiss Easy Pty Ltd v Australian Skills Qualifications Authority

INTRODUCTION 1 On 4 April 2014, I ordered that the respondent's objection to the competency of this appeal from a decision of the Administrative Appeals Tribunal be upheld, and consequently that the appeal be dismissed. I gave directions that the parties file and serve written submissions as to costs: Avetmiss Easy Pty Ltd v Australian Skills Qualifications Authority [2014] FCA 314. 2 On 11 April 2014, the respondent filed written submissions in compliance with those orders, accompanied by an affidavit of Mr Karst Hinderik Maat, sworn 11 April 2014, for which leave to file was sought from the Court. Leave was granted to both parties to file further affidavit material with respect to costs and, on 16 April 2014, the applicant filed an affidavit of Mr Simon Joseph Smith, sworn on that day. The applicant did not file any written submissions, although Mr Smith's affidavit contained argumentative material. Where they were relevant, I have treated those aspects of the affidavit as submissions on the question of costs.

THE PARTIES' SUBMISSIONS ON COSTS 3 The respondent seeks costs as the successful party in the proceeding, and applies for a lump sum costs order, pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth) (the Rules). In his affidavit, Mr Maat deposes that the costs incurred by the respondent's solicitors to date are $52,863.70. He deposes to his experience in the conduct of litigation in this Court, and other federal courts, and to his work with costs consultants and costs recovery in respect of that litigation. Based on that experience, his evidence is that if the respondent's costs were assessed on a party-party basis, which he estimates for this purpose at 65% of the total costs, the costs to be met by the applicant could be $34,361.45. Further, he estimates there would be approximately $3000-$5000 in additional costs for preparation of an itemised bill of costs for taxation purposes. 4 To avoid these additional expenses, and to bring finality to the proceeding, the respondent seeks an order that the applicant pay the respondent's costs of this proceeding, to be fixed in the sum of $15,000. 5 The respondent also relies on evidence set out in the affidavit of Karst Hinderik Maat sworn on 5 February 2014. That evidence was admitted as part of the respondent's resistance to the application for dispensation from compliance with r 4.01(2) of the Rules, which application was granted for a limited period of time: see Avetmiss Easy Pty Ltd v Australian Skills Qualifications Authority [2014] FCA 46. 6 That evidence sets out, from the respondent's perspective, some of the conduct of Mr Smith, on behalf of the applicant, in this proceeding. Mr Smith is the sole director and shareholder of the applicant. He has conducted this proceeding on behalf of the applicant since it was issued. Belatedly, he sought dispensation from the requirement in r 4.01(2) of the Rules that a company must be represented by a lawyer. I granted dispensation for a limited time, until the hearing and determination of the respondent's objection to competency of the appeal: Avetmiss Easy Pty Ltd v Australian Skills Qualifications Authority [2014] FCA 46. 7 The respondent submits that it has suffered prejudice by the conduct of the applicant, through Mr Smith. Both before and after the hearing on competency, Mr Smith sent numerous emails and made interlocutory applications to the Court, which included repetitive, serious allegations against the respondent, its officers and its legal representatives. Mr Maat deposes: On each occasion where Mr Smith has correspondence with the Court and/or me, or sought orders or made allegations against the Respondent, as outlined in the preceding paragraphs, I have been required to inform the Respondent of these matters, and advise the Respondent as to its position. In addition I have had to consult counsel briefed on behalf of the Respondent in respect of some of the issues raised. The Respondent is incurring substantial legal costs as a result of these communications. 8 Further, the respondent contends that the Court should take into account s 37N of the Federal Court of Australia Act 1976 (Cth) (the Act), which requires parties to conduct proceedings consistently with the overarching purpose set out in s 37M(1): to "facilitate the just resolution of disputes … as quickly, inexpensively and efficiently as possible". In particular, the respondent points to s 37N(4), which, relevantly, requires the Court, in exercising its discretion on costs, to "take account of any failure to comply with the duty imposed by subsection (1)". 9 A further factor relied on by the respondent is a previous offer made to the applicant, through Mr Smith, on 2 December 2013. That letter was sent shortly after the proceedings in this Court were issued by the applicant. The letter draws Mr Smith's attention to the need for compliance with r 4.01(2), and also puts forward in clear terms the respondent's arguments as to why the appeal was not competent. The letter enclosed the respondent's notice of objection to competency and made clear the respondent's intention to ask the Court to deal with that objection as early as possible. The letter then put Mr Smith, and the applicant, on notice that the respondent would seek its costs of the proceeding if the appeal was unsuccessful. It noted, correctly, that the most likely outcome even if the appeal were successful is that the matter would be remitted to the Tribunal and the applicant was not assured of a different outcome. 10 The letter then invited the applicant to discontinue the appeal within a period of two weeks from the date of the letter, and on that basis proffered the respondent's agreement not to pursue costs if that occurred. 11 Mr Maat deposes (and Mr Smith's most recent affidavit confirms) that this offer was rejected by Mr Smith on behalf of the applicant on the same day: namely, 2 December 2013. 12 As I have noted, the applicant did not file any submissions as such. Despite Mr Smith's affidavit being sworn some five days after the date of the respondent's submissions, the affidavit does not deal with the question whether a lump sum costs order is appropriate. Indeed, save for reference to the applicant's own "Calderbank offer", the affidavit does not engage with the matters set out by way of submission by the respondent. 13 Instead, Mr Smith's affidavit states that the applicant is seeking costs from the respondent. He challenges the decision and reasons of this Court in upholding the respondent's objection to competency and dismissing the applicant's appeal, and seeks orders in the applicant's favour for its alleged losses, including application fees to the Court; lost income for time spent on the proceeding (which Mr Smith estimates at $2000 per day), "punitive damages of pain and suffering under the abuse of process provisions" in the amount of $100,000; legal fees before the Tribunal, in the amount of $40,000; "monetary loss of losing the 5 year registration [of the applicant as an RTO] in the estimated amount of $7,500,000"; and "costs to enter the false original appeal, the costs in attending those false hearings and the registration fees associated". In his affidavit, Mr Smith also seeks "review of the evidence in the proceeding" by the Chief Justice of this Court. 14 Annexed to Mr Smith's affidavit is some email correspondence between the parties concerning the offer made by the respondent on 2 December 2013, and to a counter offer made by Mr Smith on behalf of the applicant. The counter offer is contained in a letter on the letterhead of the applicant, dated 10 February 2014. That date is three days after the Court's decision to grant limited dispensation to the applicant from the operation of r 4.01(2) of the Rules. In that letter, Mr Smith offered to settle the appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) on the basis of the respondent paying "half my costs", which I take to be a reference to Mr Smith's costs, rather than the applicant's. The letter also then refers to what appears to be the second component to the offer: namely, the respondent agreeing to have "the real decision" remitted "back to the tribunal without opposition to the unnecessary objection to the extension of time, as that time was caused through no fault of our own, and with no force to answer any questions or attempt of accepting admissions prior to that hearing." Later on, the letter refers to "2 declarations". 15 This offer seeks to have the respondent pay $20,000 as "half my costs", and then states that the figure does not include: (a) Any damages in the event the court finds that it was an error of law to be forced into this jurisdiction unnecessarily; (b) Any interest; (c) Any special or punitive damages for health or stress incurred (which can be verified by medical reports) as a result of such (d) Any regard to general costs at this point, despite being dispensation, and mirroring the work of a lawyer and barrister at my own risk and expense; (e) Any sundry costs (transcriptions etc); (f) Any damage or precedent affecting the public interest to ASQA and the industry in general. 16 In referring to this annexure, having set out his claims as to loss and damage, Mr Smith's affidavit states that: I provided a much much more favourable solution under the Calderbank vs Calderbank law submitted in Annexure CVC and denied for no reason but to abuse the process of the court, when no money could have been spent on their behalf whatsoever. 17 It is unclear on the evidence before the Court exactly what Mr Smith is referring to in this letter of offer. Perhaps the respondent was in a better position to understand the meaning of the letter by reason of previous correspondence not before the Court, or discussions with Mr Smith which are not in evidence. That is a matter of some speculation. I set out below why this "offer" from Mr Smith does not affect the way I consider it is appropriate to exercise the costs discretion in this case.