Bowker & Anor v Software Engineers

THIRD RESPONDENT: Prophecy Technologies (Southern Region) Australia (NSW) Pty Ltd (ACN 087 222 419)

FOURTH RESPONDENT: ACN 087 222 357 Pty Ltd

FIFTH RESPONDENT: Prophecy People Pty Ltd (ACN 007 248 286) FILE NUMBER: IRC 291 of 1999 CORAM: Schmidt J CATCHWORDS : Costs - reasons for orders made - Court's power to make the costs orders sought - proper construction of section 181 of the Industrial Relations Act 1996 and Part 27 of the Court's Rules - indemnity costs orders - assessment undertaken by Court - consideration of offers of settlement - conduct which unnecessarily lengthened proceedings - failure to produce documents - basis of amounts claimed - orders made Bankruptcy Act 1996 (Cth) Industrial Relations Act 1996 LEGISLATION CITED : Industrial Relations Commission Rules Legal Profession Act 1987 Supreme Court Rules Bowker & Anor v Software Engineers Australia (NSW) Pty Ltd & Ors [2004] 104 CASES CITED : Bowker & Anor v Software Engineers Australia (NSW) Pty Ltd & Ors [2004] 138 Knight v FP Special Assets Ltd (1992) 174 CLR 178 WorkCover Authority of New South Wales (Inspector Dawson) v Plastachem Pty Limited & Ors (2001) 110 IR 351 HEARING DATES: 05/27/2004 DATE OF JUDGMENT: 06/24/2004

APPLICANTS: Mr D Knoll of counsel SOLICITORS: Haywards

FIRST RESPONDENT: Mr J Phillips SC LEGAL REPRESENTATIVES: SOLICITORS: Bolden Lawyers

CONTROLLING TRUSTEE: Mr AA Loel, solicitor SOLICITORS: Toomey Pegg Drevikovsky

JUDGMENT: - 24 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Schmidt J

GEOFFREY BOWKER & ANOR v SOFTWARE ENGINEERS AUSTRALIA (NSW) PTY LTD & ORS Application under s106 of the Industrial Relations Act 1996 REASONS FOR JUDGMENT

1 Judgment in this matter was given in favour of the applicants on 23 April 2004 (see Bowker & Anor v Software Engineers Australia (NSW) Pty Ltd & Ors [2004] NSWIRComm 104). At [198] I observed: The usual order as to costs would be that the respondents bear the applicants' costs, as agreed or assessed. There are also questions of costs outstanding in relation to various interlocutory judgments. The usual order would be that costs would follow the event. In the absence of agreement on the terms of the order as to costs, the parties have liberty to approach. That liberty should be exercised within 28 days of the date of this judgment.

2 An application for a costs order in the sum of $383,784.07, on an indemnity basis, was made by the applicants by notice of motion filed on 14 May. The Court was also asked to issue minutes of various other orders. Orders were made at an adjourned hearing on 27 May. These are the reasons for the orders then made.

3 The application came on for hearing on 24 May, in circumstances where the second respondent, Mr Arundell, had acted to have a trustee appointed pursuant to Part X of the Bankruptcy Act 1996 (Cth). A meeting of creditors had been called for Friday, 28 May. It was, in those circumstances, important to the applicants to have the amount of their costs, as well as the amounts flowing to them from the orders made in the earlier judgment quantified, prior to the creditors' meeting. The making of the orders sought was opposed by the first respondent, Mr Bowker's former employer.

4 There was no appearance for Mr Arundell at the hearing, but Mr Loel, solicitor, appeared without objection, it was put, as amicus curiae for the controller of the trustee of the property of the second respondent. The first respondent, represented by Mr Phillips SC on 24 May, opposed the making of the costs orders sought, essentially on three bases. Firstly, the Court's power to make the orders sought under the Act and the Rules; secondly whether any indemnity costs orders should be made and thirdly, the amount of the costs sought.

5 The hearing on 24 May adjourned until 27 May, in order that production of certain documents which had been sought by the first respondent and which was dealt with in an interlocutory judgment given on 24 May (see Bowker & Anor v Software Engineers Australia (NSW) Pty Ltd & Ors [2004] NSWIRComm 138). , could be given. The adjournment was also pressed by the controlling trustee.

6 By the time the hearing resumed on Thursday, 27 May, voluntary administrators had been appointed to the first respondent. Mr Phillips did not appear at the further hearing, his instructions having been withdrawn. Mr Loel continued his appearance and also entered an appearance for the administrators, to inform the Court of their appointment.

7 In those circumstances, the applicants did not further press costs orders against the first respondent, but sought and were granted liberty to later apply further in that respect. A similar liberty was granted in respect of the third, fourth and fifth respondents, which are all in liquidation.

8 Ms Costigan, the applicants' solicitor, who had sworn various affidavits in evidence, was due to be cross examined at the resumed hearing. This did not occur, given the intervening events. Nevertheless, Ms Costigan was called to give evidence about various matters raised in an affidavit of Mr Bolden, the first respondent's solicitor, which was in evidence and which had been relied upon by the first respondent at the earlier hearing, as well as various questions which I asked about the matters so raised.

9 Ms Costigan's evidence explained the basis upon which costs had been incurred by the applicants; how various calculations which she had undertaken had been made, what certain attendances related to and how she had dealt with costs incurred by the applicants in proceedings brought by the first respondent in the Federal Court, in relation to the contracts declared void in these proceedings. Those proceedings had been stayed by the Federal Court, pending the determination of this application.

10 Ms Costigan also explained her assessment of the costs incurred by the applicants, in relation to the amendment of the summons, after the interlocutory judgment joining the fourth and fifth respondents. Her assessment was that the applicant's costs associated with the amended summons pursued after the joinder of the fourth and fifth respondents amounted to $20,000. It was, I however note, argued for the applicants that account of this had already properly been taken in the orders which they sought, calculated as 90% of their actual costs, for the relevant period.

11 It is also convenient to observe that the recalculation of the costs on the basis which I later ordered, were provided at the adjourned hearing. At the conclusion of that hearing, I announced that I would make a costs order later in the day. The adjournment also permitted a discussion between the legal representatives as to the calculation of the money sums flowing from the earlier judgment, about which no agreement was, however reached. As to that, I concluded that the calculation advanced for the applicants accorded with the terms of the earlier judgment.

12 I will deal separately with the various points which arose for consideration at the hearing.

13 The question raised as to the power to make the orders sought, depends upon the proper construction of s181 of the Industrial Relations Act 1996 ('the Act') and the provisions of Part 27 of the Court's Rules, as made pursuant to s185 of the Act. Sections 181 and 185 of the Act provide: 181 Costs (1) Subject to the rules of the Commission and any other Act or law: (a) the Commission may award costs, and (b) costs are in the discretion of the Commission, and (c) the Commission may determine by whom and to what extent costs are to be paid, and (d) the Commission may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on any other basis. (2) However, the Commission when it is not in Court Session may award costs only in the following cases: (a) the Commission may award costs against an applicant if it considers that the application to it was frivolous or vexatious, or (b) the Commission may award costs against a party to proceedings who, in the opinion of the Commission, instituted proceedings without reasonable cause, or (c) the Commission may award costs against a party to proceedings under Part 6 of Chapter 2 (Unfair dismissals) who, in the opinion of the Commission, unreasonably failed to agree to a settlement of the claim or whose application was frivolous or vexatious, or (c1) the Commission may award costs against an industrial agent representing an applicant or employer in proceedings under Part 6 of Chapter 2 if: (i) the industrial agent fails to file a certificate as required by section 90A, or (ii) the Commission finds that the industrial agent has filed a certificate under that section certifying that the agent has reasonable grounds for believing, on the basis of provable facts, that the applicant's claim or employer's response to the claim had reasonable prospects of success when the agent did not have reasonable grounds for believing, on the basis of provable facts, that it had reasonable prospects of success, or (d) the Commission may award costs in proceedings for a breach of an industrial instrument or the recovery of money under Chapter 7, as provided by sections 357 and 373. (3) The Commission in Court Session may not award costs in proceedings for a contravention of a dispute order or in proceedings under Division 2 of Part 4 of Chapter 5 (Rules of industrial organisations). (4) In this section, costs includes: (a) costs of or incidental to proceedings in the Commission, and (b) in the case of an appeal to the Commission, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal. 185 Rules of Commission (1) Rules of the Commission may be made for or with respect to any matter that by this or any other Act is required or permitted to be prescribed by rules of the Commission or that is necessary or convenient to be prescribed in relation to the practice and procedure of the Commission under this or any other Act. (2) Without affecting the generality of subsection (1), rules of the Commission may be made for or with respect to: (a) the initiation of proceedings in the Commission, or (b) the practice and procedure to be followed in, or for the purposes of, proceedings before the Commission, or (c) the means for, and the practice and procedure to be followed in, the enforcement and execution of decisions of the Commission, or (d) the functions of the Industrial Registrar or other officers under this Act, including functions in relation to proceedings instituted before the Commission, or (e) any matter that may be the subject of rules under the Supreme Court Act 1970. (3) This section extends to the making of rules relating to the practice and procedure of (and other matters relating to) an Industrial Committee.

14 Part 27 Costs of the Rules provide: 202 Application

(1) Subject to the Act and to subrule (2), in this Part Commission means the Commission in Court Session, the Commission generally and any other tribunal which has the power to award costs under the Act. (2) Rules 213 to 217 apply only to the Commission in Court Session.

(1) The Commission may in any proceedings exercise its powers and discretions as to costs at any stage of the proceedings or after the conclusion of the proceedings. (2) Where the Commission makes an order in any proceedings for the payment of costs the Commission may require that the costs be paid forthwith notwithstanding that the proceedings are not concluded.

Where by or under these Rules or by any order of the Commission under section 181 (1) (d) costs are to be assessed, the costs are to dealt with in accordance with the Regulations and the Rules made in respect of the Legal Profession Act 1987.

Subject to this Part, where by or under these Rules or any order of the Commission costs are to be paid to any person, that person shall be entitled to assessed costs.

Subject to this Part or to the effect of any agreement between the parties, a party to a proceeding in the Commission shall not be entitled to recover any costs of and incidental to the proceedings from any other party to the proceeding except under an order of the Commission.

Where in a proceeding transferred to or removed into the Commission or in a proceeding on an appeal to the Commission, the Commission makes an order as to the costs of a proceeding before any other court or tribunal, the Commission may: (a) specify the amount of the costs to be allowed, or (b) order that the costs be assessed in accordance with this Part, or (c) make orders for the ascertainment of the costs by assessment or otherwise in that other court or tribunal or in such other manner as the Commission may direct.

Where a party appears upon a proceeding before the Commission or before the Registrar, in which that party is not interested or upon which, according to the practice of the Commission, that party ought not to appear, that party shall not be allowed any costs of appearance unless the Commission or Registrar expressly directs the costs to be allowed.

209 Barrister or solicitor or agent to repay costs due to delay, misconduct etc (1) Where costs are incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default, and it appears to the Commission that a barrister, solicitor or agent is responsible, the Commission may, after giving the barrister, solicitor or agent a reasonable opportunity to be heard: (a) disallow the costs as between the solicitor or agent and the solicitor's or the agent's client, (b) disallow the costs as between the barrister and that barrister's instructing solicitor or as between the barrister and the client, (c) direct the barrister, solicitor or agent to repay to the client costs which the client has been ordered to pay to any other party, (d) direct the barrister, solicitor or agent to indemnify any party other than the client against costs payable by the party indemnified. (2) Without limiting the generality of subrule (1), a barrister, solicitor or agent is responsible for default for the purposes of that subrule where any proceedings cannot conveniently proceed, or fail or are adjourned without useful progress being made, because of the failure of the barrister, solicitor or agent: (a) to attend in person or by a proper representative, (b) to file any document which ought to have been filed, (c) to deliver any document which ought to have been delivered for the use of the Commission, (d) to be prepared with any proper evidence or account, or (e) otherwise to proceed. (3) The Commission may, before making an order under subrule (1), refer the matter to the Registrar for enquiry and report. (4) The Commission may order that notice of any proceedings or order under this Rule must be given to the client in such manner as may be specified in the order under this subrule. (5) The term solicitor in this Rule includes the solicitor's agent.

Where the costs of a motion under Rule 68 are reserved by the Commission, the costs so reserved shall, unless the Commission otherwise orders, be included in the final order for costs.

211 Costs of application or step within proceedings

Subject to this Part, the costs of any application or other step in any proceedings shall, unless the Commission otherwise orders, be deemed to be part of the costs of the cause of the party in whose favour the application or other step is determined and shall be paid and otherwise dealt with in accordance with the provisions of this Part.

212 Costs of application or step within proceedings where stood over to hearing

When a motion, application or other proceeding is ordered to stand over to the hearing and no order is made at the hearing as to the costs of the motion, application or proceeding, the costs of both parties of the motion, application or proceeding shall be deemed to be part of their costs of the cause.

A party applying for an extension of time shall, unless the Commission otherwise orders, pay the costs of and occasioned by the application or any order made on or in consequence of the application.

Where a party to any proceeding serves a notice disputing a fact under Rule 154 and afterwards that fact is proved in the proceeding, the party shall, unless the Commission otherwise orders, pay the costs of proof.

Where pursuant to Part 19 a party to any proceeding discontinues the proceeding without leave as to whole or any part of the relief claimed against any other party, the discontinuing party shall, unless the Commission otherwise orders, pay the costs of the party against whom the discontinued claim was made incurred before service of notice of the discontinuance and the latter party may request the Commission or the Registrar to make an order accordingly.

216 Offer of compromise (1) Upon the making of an order under Rule 168 (9), a party entitled to costs may, unless the Commission otherwise orders, have those costs assessed up to and including the day the offer was accepted. (2) If a notice of offer contains a term which purports to negative or limit the entitlement to costs, that term shall, unless the Commission otherwise orders, be of no effect for any purpose under Part 23 or this Rule. (3) Subrules (4)-(7) apply to an offer which has not been accepted at the time prescribed by Rule 168 (8). (4) Where an offer is made by an applicant and not accepted by the respondent, and the applicant obtains an order on the claim to which the offer relates no less favourable than the terms of the offer, then, unless the Commission otherwise orders, the applicant shall be entitled to an order against the respondent for costs in respect of the claim from the day on which the offer was made, assessed on an indemnity basis in addition to costs incurred before and on that day, assessed on a party and party basis. (5) For the purpose of subrule (4), where the offer was made on the first or a later day of the hearing of the proceedings, then, unless the Commission otherwise orders, the applicant shall be entitled to costs in respect of the claim from 11 am. on the day following the day on which the offer was made, assessed on an indemnity basis, in addition to costs incurred before that time, assessed on a party and party basis. (6) Where an offer is made by a respondent and not accepted by the applicant, and the applicant obtains an order on the claim to which the offer relates not more favourable than the terms of the offer, then, unless the Commission otherwise orders, the applicant shall be entitled to an order against the respondent for costs in respect of the claim up to and including the day the offer was made, assessed on a party and party basis, and the respondent shall be entitled to an order against the applicant for costs in respect of the claim thereafter, assessed on a party and party basis. (7) For the purpose of subrule (6), where the offer was made on the first or a later day of the hearing of the proceedings, then, unless the Commission otherwise orders, the applicant shall be entitled to costs in respect of the claim up to 11 am on the day following the day on which the offer was made, assessed on a party and party basis, and the respondent shall be entitled to costs in respect of the claim thereafter, assessed on a party and party basis. (8) Where an applicant obtains an order for the payment of a remuneration, compensation or damages and: (a) the amount payable under the order includes interest or damages in the nature of interest, or (b) by or under any Act the Commission awards the applicant interest or damages in the nature of interest in respect of the amount, then, for the purpose of determining the consequences as to costs referred to in subrules (4) and (6), the Commission shall disregard so much of the interest as relates to the period after the day the offer was made. (9) For the purpose only of subrule (8), the Commission may be informed of the fact that the offer was made, and of the date on which it was made, but shall not be informed of its terms. (10) Subrules (4) and (6) shall not apply unless the Commission is satisfied by the party making the offer that the party was at all material times willing and able to carry out what the party offered.

Where the Commission grants an interlocutory injunction and afterwards grants a further interlocutory injunction continuing the first injunction with or without modification, an order as to costs of the further injunction shall, unless the Commission otherwise orders, include the costs of the first injunction.

15 It was the case advanced for the first respondent by Mr Phillips that consistently with Rule 205, the only costs order which the Court was empowered to make was one for assessed costs, not indemnity costs, in accordance with Rule 204. Support for this submission was sought in the provision made for indemnity costs in the Supreme Court Rules - PT 52A Rule 6. The case put for the applicants by Mr Knoll of counsel was that any Rules made under s185 of the Act, could not amend or restrict the powers provided by the Act, but could only regulate the Court's practice and procedure, as to how a power it was granted was to be exercised. Section 181 gave the Court the power to order costs on a basis other than that provided in the Legal Profession Act 1987. That discretion could not be removed by the Rules. If the Rules made were not interpreted accordingly, they would be struck down as invalid.

16 I am satisfied that the proper approach to the construction of the Rules is that contended for by the applicants. The Rules cannot properly be construed as attempting to confine the discretion conferred upon the Court by s181 of the Act. Such Rules would be inconsistent with the Rule making power provided in s185 and would inevitably lead to the conclusion that the Rules were invalid.

17 As observed by the Full Court in WorkCover Authority of New South Wales (Inspector Dawson) v Plastachem Pty Limited & Ors (2001) 110 IR 351 at [31]: Adopting the approach outlined above, the first matter to be considered concerns the source of the Court's power to award costs in summary criminal proceedings under the OH&S Act. A general discretion to award costs is conferred on the Commission in Court Session by s181 of the IR Act. That section provides that costs are in the discretion of the Court and it may determine by whom and to what extent costs are to be paid. Whilst costs, if they are to be ordered, may be made on various bases, it is clear from s181(1) of the IR Act that any award of costs is within the discretion of the Court and that the discretion is to be exercised judicially.

18 The Rules cannot have the result that some of the bases upon which a costs order might be made under s181, are thereby entirely removed. As discussed by Pearce and Geddes in Statutory Interpretation in Australia, 5th Edition at [3.38], in the case of conflict between a provision of an Act and a Regulation, the Regulation must give way, if the conflict is irreconcilable. The same conclusion must be reached in relation to Rules such as those here in question.

19 Here, of course, the introductory words of s181, 'Subject to the Rules of the Commission', must be given effect. Those words must inevitably, however, lead to a consideration of s185, which permits Rules to be made "... for or with respect to any matter that by this or any other Act is required or permitted to be prescribed by rules of the Commission or that is necessary or convenient to be prescribed in relation to the practice and procedure of the Commission ... ". A removal entirely of some parts of a wide discretion given the Commission by the Legislature to order costs, in accordance with s181, cannot properly be regarded as making provision for the Commission's practice and procedure in relation to making such costs orders. Nor can it be a rule made with respect to any matter 'required or permitted' to be prescribed by the Rules.

20 The Court's powers under s181 may also be seen as granting parties the right to seek a costs order, on a basis other than costs assessed under the Legal Profession Act. I am well satisfied that the Court's Rules may not remove such a right. This conclusion is supported by the discussion of delegated legislation, which seeks to limit or oust the jurisdiction of a Court in Pearce and Argument Delegated Legislation in Australia, 2nd Edition at [19.11] and [19.12].

21 I also note that this approach to the construction of s181 accords with the observations of Gaudron J in Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 205: It is contrary to long-established principle and wholly inappropriate that the grant of power to a court (including the conferral of jurisdiction) should be construed as subject to a limitation not appearing in the words of that grant (See Hyman v. Rose, [1912] A.C. 623, at p.631; F.A.I General Insurance Co. Ltd. v. Southern Cross Exploration N.L. (1988) 165 C.L.R 268, at p.290). Save for a qualification which I shall later mention, a grant of power should be construed in accordance with ordinary principles and, thus, the words used should be given their full meaning unless there is something to indicate to the contrary. Powers conferred on a court are powers which must be exercised judicially and in accordance with legal principle. This consideration leads to the qualification to which I earlier referred. The necessity for the power to be exercised judicially tends in favour of the most liberal construction, for it denies the validity of considerations which might limit a grant of power to some different body, including, for example, that the power might be exercised arbitrarily or capriciously or to work oppression or abuse.

22 It was further argued for the applicants that a proper consideration of the various Rules and their interaction, would also lead to the conclusion that the Rules did not intend to have the result contended for by the first respondent. It is unnecessary to further consider that analysis, given the conclusion which I have otherwise reached, although I observe that the words 'assessed costs' used in Rule 205 are themselves wide enough to encompass assessment by the Court itself. I merely observe that some attention could conveniently be given to the current Rules, to make their intention clearer, consistently with the provisions of s181 of the Act.

23 On the material before the Court, I was satisfied that this is a case where the Court should itself assess the costs order. This followed of necessity, having regard to the conduct of the litigation by the parties and their legal representatives, as well as the fact that all but one of the corporate respondents was in liquidation; the remaining corporation was in administration and the only personal respondent had acted to appoint a trustee under the Bankruptcy Act.

24 Assessment of costs is undoubtedly a time consuming and expensive exercise, as the authorities make clear. That would be an entirely pointless exercise in these proceedings. Mr Loel, who explained that the controlling trustee needed to look after the best interests of the creditors who are shown to exist, argued and I accepted, that in deciding whether or not to make such an order, a balance must be struck between the potential injustice for the applicants, if the order was not made, given the impending creditors' meeting and the potential injustice for other creditors of the second respondent, if an order was made.

25 In the circumstances here before the Court, I was satisfied that justice required the making of the order. This flowed not only from the impending creditors' meeting, but also from a consideration of the cost, time and further expense involved in any pursuit of an assessment process and whether, in reality, funds to conduct such an exercise was available, or should be so utilised. The reality was that it could only further deprive creditors of what little money was otherwise available to them.

26 The applicants quantified the orders made in the earlier judgment as $48,787.07, including $22,000 for the unliquidated claim. The liquidated claim upon which the applicants succeeded was $24,317.64. Deducted from that amount was the sum paid by the respondents on 23 August 2001, without admission, $9,062.03. With interest, a sum of $21,520.22 resulted. With further interest to the date of judgment, a sum of $26,787.07 resulted. The calculations made by Mr Bolden and Mr Loel differed slightly, however, as I earlier noted, I did not accept their calculations.

27 The applicants sought an order for costs in their favour up to 6 September 2000, on a party/party basis and thereafter on an indemnity basis. On 6 September 2000, an offer of compromise under the Rules was made by the applicants, for the sum of $50,000 plus costs. Reliance was also placed upon a verbal offer made by Mr Knoll to Mr Phillips at a directions hearing on 1 December 2000, for the sum of $30,000 plus costs, shortly prior to the commencement of the trial on 4 December 2000.

28 It was also argued for the applicants that the findings made against the respondents in the earlier judgment also warranted an indemnity costs order in favour of the applicants. It was submitted that Mr Arundell had engaged in contemptuous and inappropriate conduct, including withholding evidence and moving assets, in breach of an undertaking to the Court. This conduct was persisted with at trial, without foundation, as the judgment of 23 April revealed.

29 The applicants should not be prejudiced further in relation to the costs incurred, as a result of this behaviour. Regard should also be paid to the position of the first respondent. It was a company which had disposed of its assets and did not trade, yet still opposed the costs orders properly pursued by the applicants, in an endeavour to further disadvantage the applicants' ability to vote in the Part X arrangement put forward by Mr Arundell. It was also submitted to be relevant that as soon as the question of insolvent trading arose at the hearing on 24 May, an administrator was appointed to the first respondent.

30 It was further submitted that the evidence showed the applicants' willingness to compromise both the liquidated and unliquidated aspects of their claims. The respondents made no valid offers of their own. The vindictiveness of the respondents' conduct was argued to be further reflected by the timing of the Part X arrangement, namely immediately upon advice that judgment was to be given.

31 The first respondent's case, supported by the trustee, was that the applicants' first offer of compromise did not fall within Rule 216, because the applicants had not later obtained orders in their favour 'no less favourable' than the terms of the offer. In any event, the facts were not as simple as the applicants portrayed them. They were rather as outlined in Mr Bolden's affidavit.

32 That affidavit not only dealt with factual matters, but also took the form of a detailed submission. In the circumstances, I have had regard to the matters so raised. Complaint was made as to the conduct of the litigation on the applicants' behalf, including on 25 May 1999, with the service of an affidavit sworn by Ms Costigan, which had not previously been served and of which no notice had been given. The result had been the necessity for Marks J to adjourn the hearing until 2pm that day. The applicants should bear the first respondent's costs of that adjournment.

33 The first respondent also sought costs for 13 August, when Marks J declined to grant a mareva injunction, after the joinder of the third respondent had been consented to and Mr Goot, then of counsel, had announced for Mr Arundell that there was no intention to deal with the assets of the third respondent, other than in the normal course of business.

34 In September 2000, after the second unsuccessful s109 conciliation, a third amended summons was served, but not filed. The respondents did not consent to the applicants proceeding on that summons. The hearing proceeded on 4, 5 and 6 December and 13, 14, 15 and 16 August 2001. On 23 August the respondents paid an amount of $9,062.03 to the applicants, without admission, in order to reduce what was in dispute. The hearing continued on 4, 11 and 25 March and 2 April 2002, when joinder of further respondents was sought. The joinder application was granted on 11 June 2002.

35 Thereafter, numerous disputes were pursed by the parties as to whether or not the further amended summonses filed by the applicants reflected the joinder judgment. This led to Marks J making costs orders against the applicants in relation to further proceedings before him in August and September 2002. The controversy was pursued, with an interlocutory judgment given on 10 July 2003, after hearings on 29 April and 23 June. Further disputes continued in relation to the further amended summons filed by the applicants. On 19 September, a further interlocutory judgment was given, after the filing and consideration of written submissions.

36 The first respondents sought that the applicants pay their costs in relation to the applicants' motion of 29 November 2002, the mentions on 4 and 11 December, the hearings on 29 April 2003 and 29 June, the giving of judgment on 10 July and the proceedings of 3 and 19 September 2003.

37 It was also argued that the applicants had unnecessarily pursued numerous summonses for production, after having closed their case on 13 August 2001. The first respondent sought an order for its costs to be paid, of and incidental to the conduct of the proceedings, between 11 June 2002 and 23 September 2003.

38 It was also noted that Marks J had made costs orders in favour of the first respondent, which must be taken into account, as must costs orders which I had earlier made against the fourth and fifth respondents, that they bear the applicants' and first and second respondents' costs thrown away as the result of the adjournment application granted on 15 October 2003.

39 It was argued that no costs order should be made against the first respondent in relation to the joinder of the fourth and fifth respondents, who eventually went into liquidation and who, as put in Mr Bolden's affidavit, 'served no further useful part in these proceedings' [55].

40 There was also no agreement by the first respondent that the applicants had made an offer of settlement of $30,000 in December 2000. In her evidence Ms Costigan clarified that it had been made at a directions hearing on the Friday prior to the first day of the hearing. Ms Costigan's evidence was finally not challenged at the hearing. Mr Bolden's affidavit asserted that neither Mr Phillips nor the respondents' then solicitor, Mr Gardner, recalled the offer. Mr Phillips, when he appeared, however did not deny that it had been made. Rather, it was explained that it was not admitted. Neither Mr Phillips nor Mr Gardner were called to give evidence about the matter. Mr Knoll, while not giving evidence, supported, in his submissions, Ms Costigan's evidence that he had made the offer.

41 It was also asserted by Mr Bolden that the first respondent had made an offer of $30,000 plus $10,000 costs on 26 November 1999. There was no evidence of such an offer and it was denied by the applicants.

42 Mr Bolden's evidence was that further offers were made by the respondents of $17,500 inclusive of costs and $80,000 inclusive of costs in November 2000; $50,000 in August 2001; $65,000 inclusive of costs in September 2002; $80,000 inclusive of costs and interest in August 2003. The first respondent calculated that to November 2000 the money orders and interest amounted to $50,529.59, with party/party costs of less than $30,000. It followed that the applicants should pay the first respondents' indemnity costs from 15 November 2000. I note at this point that Ms Costigan also provided a schedule of offers, to somewhat different effect.

43 Complaint was also made by the first respondent as to the lack of information provided by the applicants in their bills of costs, which were not in taxable form. Work carried out prior to the commencement of the proceedings was argued not to be recoverable and account had not been taken of costs orders made against the applicants. Charges for work done in connection with Federal Court proceedings were argued also to be included in the claim advanced. The $17,696.63 allocated by Ms Costigan to those proceedings was argued to have been plainly inadequate. Similar complaints were made in relation to counsel's fees. It was also argued that the first respondent's success in relation to the rent claim advanced in these proceedings, should be reflected in any costs order.

44 For the applicants, it was argued that considerable efforts had been made in without prejudice discussions to resolve issues in relation to the amended joinder summons, which had necessitated a number of drafts being prepared. There was also confusion in Mr Bolden's affidavit between the evidence led against the first, second and third respondents and the fourth and fifth respondents. In any event, it was relevant that if the applicants' offers had been accepted, none of this effort would have been necessary. It followed that a costs order should flow in favour of the applicants.

45 Having considered the competing submissions, I was satisfied that a costs order should be made in favour of the applicants, on an indemnity basis, after the offer of 1 December, other than in relation to that part of the proceedings in which the various versions of the amended summons, to give effect to the joinder of the fourth and fifth respondents was pursued. While I was of the view that the applicants and their legal advisers were not entirely responsible for the costs incurred in that period, I determined that as a matter of justice, an allowance should be made for those costs. Undoubtedly, part of the costs were also incurred, as the result of the way in which the various respondents approached the litigation. They should not be entirely shielded from the consequences of that conduct.

46 This conclusion was reinforced by the fact that by that time, had the respondents accepted the offer made on 1 December 2000, as undoubtedly they should have, given that the offer was unarguably a reasonable one, none of these costs would have been incurred. The applicants were plainly more successful than that offer. There was no suggestion that the offer was not understood, or that there had been too little time given to the respondents to consider it. The litigation should thereupon have been brought to an end.

47 No doubt the respondents' pursuit of the Federal Court proceedings, which they had initiated had a role to play in the approach which the parties respectively took to those proceedings. Nevertheless, the question of costs must be determined in these proceedings, having regard to how the parties respectively conducted themselves.

48 Accordingly, I concluded that while in all of these circumstances, an allowance in respect of the costs of the pursuit of the amended summons should be made, no order should be made against the applicants, in favour of the respondents, as to that part of the proceedings. I was satisfied that this reflected an appropriate balance between the parties, as a matter of justice, having regard to all of the matters I have mentioned.

49 I was also fortified in my conclusion that an indemnity costs order should flow in favour of the applicants after the December offer, by the respondents' conduct in the proceedings, which of itself, could provide a proper basis for an indemnity costs order again them. The authorities for making indemnity costs orders are well settled and do not require repetition. I also do not repeat what is amply set out in the earlier judgment in respect of the respondents' conduct in these proceedings. These matters of themselves would warrant a costs order in favour of the applicants. The conduct of the second respondent, undoubtedly, grossly prolonged the litigation, leading to costs far beyond what should have been incurred in pursuit of genuine issues. The failure to produce documents provided a further basis for those conclusions.

50 This is a case which has made woefully plain the desirability of parties settling their differences on reasonable terms. Nevertheless, I was satisfied that the applicants' first offer did not bring them within the terms of Rule 216, so as thereby to entitle them to an indemnity costs order from that time. The applicants did not obtain an order no less favourable than that offer. Even though part of the claim related to an unliquidated sum, that conclusion was in my view unavoidable, given the amount of the offer and the amount of the orders later made.

51 It followed that the applicants must have an order in their favour, on a party/party basis up 1 December 2000 and thereafter on an indemnity basis, with the exception of the work done in connection with the amended summons joining the fourth and fifth respondents, in respect of which I made an allowance of $20,000.

52 In adopting this approach, I was conscious that the result was that the orders already made against the applicants by Marks J and the orders already made against the fourth and fifth respondents for the October 2003 adjournment were thereby revisited. I was, nevertheless, satisfied that this was a just outcome in the circumstances here before the Court, particularly when consideration was given to the respondents' conduct of the proceedings, in addition to the refusal of the December 2000 offer.

53 Nevertheless, I was also satisfied that even when indemnity costs orders are made, attention must be paid to what in fact was done in the proceedings by the successful party and why. I was well satisfied that the way in which the amendment of the summons after the joinder application was dealt with, could not, as a matter of justice, lead entirely to an indemnity costs order against the respondents. Whether the applicants should bear their own costs, is a matter to be determined between them and their legal advisers.

54 The applicants sought an order calculated as 70% of the actual costs they incurred for the party/party costs and 90% for the indemnity costs. On the material, I was satisfied that those were appropriate percentages in the circumstances of this case.

55 In considering the amounts claimed, I noted the various complaints and claims advanced in Mr Bolden's affidavit, including, for example, in relation to the Federal Court proceedings. I was satisfied that there was no difficulty at all in this respect in relation to counsel's fees. As to the applicants' solicitor's costs, I accepted Ms Costigan's evidence as to her analysis of the outstanding fees and the dissection of the costs in relation to the Federal Court proceedings.

56 I was also otherwise satisfied as to her explanation of how the costs were arrived at. I do not accept that as a matter of justice, the orders should be approached in the way advanced by Mr Bolden. In coming to this conclusion, I have exercised the discretion given by s181, having regard also to the requirement of s106(5), that orders be made which are just in the circumstances of the case. I would have been inclined to make a final money order, without more, but for the difficulty which flowed from an identification of the costs associated with the pursuit of the amended summons. Ms Costigan's estimate of $20,000, was, as she conceded, not undertaken on any scientific basis. It followed in those circumstances, that the alternative order proposed by the applicants, should be adopted.

57 This part of the order would permit the assessment of the costs, if the parties were not content with the orders made. The risk for them, of course, will be that the cost of the assessment will have to be borne by the moving party and they will have to accept the outcome of the assessment process, whether higher or lower than the orders which I have made. I am well satisfied that this achieved an appropriate and just balance of the position of the various parties, in the circumstances as they emerged in these proceedings.

58 The final orders made were: The Commission in Court Session: 1. Declares that the March 1998, June 1998, and December 1998 Employment Agreements and the December 1998 Deed of Release, and the Deed of Consultancy, whereby the Applicants performed work in an industry are unfair contracts within the meaning of Section 105 of the Industrial Relations Act (NSW), and are declared void, ab initio, except as to money sums paid thereunder. 2. Orders that the First Applicant's contract of employment is varied ab initio, by prohibiting the First and Second Respondents from engaging in conduct, whether during or at any time after the term of the contract, that damages, or is calculated, or likely, to damage the personal, business and professional reputation of either of the Applicants and their prospects of further employment, and that causes them anxiety, distress and embarrassment. 3. Orders the Second Respondent to pay to the Applicants within 28 days: 3.1. the sum of $48,787.07 being the judgment debt including interest; and 3.2. the sum of $356,906.95 being costs due to the Applicants. 4. All previous costs orders in these proceedings are vacated. 5. The Second Respondent is given liberty for 90 days to seek an assessment of the Applicants' costs on the basis set out in these orders, if and only if: 5.1. The Respondent applies to the Industrial Registrar to appoint a costs assessor from the Supreme Court List of Assessors. 5.2. The Registrar makes that appointment; 5.3. That costs assessor estimates the costs of assessment after review of the Applicants' solicitor's files; 5.4. The Respondent pays to the costs assessor the amount estimated, and undertake to pay any further amount reasonably charged by the assessor, supported by an appropriate bank guarantee, to the extent required by the costs assessor; and 5.5. If the assessor arrives at a figure different to the gross sum ordered by the Commission, whether higher or lower than the gross sum ordered by the Commission, the substituted amount shall be the costs payable by the Respondent to the Applicants effective the date of the assessment by the Assessor. 6. The Applicants have liberty to apply for orders that the First, Third, Fourth and Fifth Respondents and any of their directors (as that term is defined in the Corporations Act 2001) pay the Applicants' costs, including with out limitation on the same basis as set out in these orders. 7. The Court notes that the Second Respondent has sought to enter into an arrangement under Part X of the Bankruptcy Act 1966, and grants permission to the Applicants' solicitors to submit, in the lawful course of enforcement of the sums due pursuant to order 3, evidence and subpoenaed documents in these proceedings. 8. Liberty is granted to Haywards, Solicitors to uplift documents produced to the Commission in Court Session in May 2004. 9. Copies of all documents produced to the Commission in Court Session in May 2004 be returned to the Commission forthwith. 10. The Registrar is directed to enter these order forthwith by 4pm 27 May 2004, and to provide an original of them to the Applicants' solicitors. ------------------------

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