Dahdah v Platinum Distributors Australia Pty Ltd

BURLEY J: 1 James Dahdah, who was the only active respondent in the proceedings (respondent), seeks his costs arising from orders made dismissing the application: Dahdah v Platinum Distributors Australia Pty Ltd (No 2) [2022] FCA 416 (judgment). These reasons assume familiarity with the judgment and adopt the abbreviations in it. 2 In the judgment, I found that the applicant failed in his claims that the respondent was involved in various contraventions of the Fair Work Act 2009 (Cth) (FW Act) for unpaid wages under his contract of employment, annual leave and superannuation contributions giving rise to various contraventions of the FW Act. The applicant also failed in his claims that the respondent engaged in misleading or deceptive conduct under Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL). 3 The respondent contends that he is entitled to orders that the applicant pay his costs under s 570(2)(a) or s 570(2)(b) of the FW Act or alternatively under s 43(1)(b) of the Federal Court of Australia Act 1976 (Cth) (FCA Act). 4 Section 570 of the FW Act provides: 570 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) 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. 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 the FWC; (ii) the matter arose from the same facts as the proceedings. 5 Section 43(1) of the FCA Act provides: The Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which this or any other Act provides that costs must not be awarded. This is subject to: (a) subsection (1A); and (b) section 570 of the Fair Work Act 2009; and (c) section 18 of the Public Interest Disclosure Act 2013. 6 The respondent filed written submissions in support of his application and relies on an affidavit affirmed by his solicitor, which annexes correspondence between the parties in which various offers of settlement were communicated. The applicant did not respond to the application for costs and has filed no submissions. This application has been considered on the papers. 7 In his submissions, the respondent contends that s 570 of the FW Act may apply in respect of the applicant's claims under that Act, and that s 43(1)(b) of the FCA Act may apply in respect of the applicant's claims under the ACL. He contends that either way, as a result of the conduct of the applicant in the proceedings he is entitled to a costs order in his favour. He points to the following matters in support of his claim: (1) The factual foundation for the applicant's claims was severely lacking. Based on the evidence, it must have been apparent to the applicant and his legal advisors that his claims suffered from significant difficulties and that his credibility was severely lacking; (2) This was supported by the judgment, where the Court found that significant aspects of the applicant's evidence were "unsatisfactory"; (3) The applicant must have known that his claims were based on fabricated or unreliable evidence, that his account of events was unlikely to be accepted and that he had no reasonable prospects of success; (4) The applicant rejected reasonable offers to settle the case in letters sent to him by the respondent on 27 August 2020, when the first day of the hearing was scheduled for 28 September 2020, and on 19 November 2020, when the hearing was scheduled to resume on 20 November 2020. 8 It is convenient first to consider the position under s 570 of the FW Act. 9 The policy behind s 570 reflects a choice on the part of the legislature that costs should not ordinarily follow the event, but rather that they should ordinarily be borne by the party incurring them: Commonwealth of Australia v Construction, Forestry, Mining and Energy Union [2003] FCAFC 115; 129 FCR 271 at [10] (Black CJ, Tamberlin and Sundberg JJ); Augusta Ventures Ltd v Mt Arthur Coal Pty Ltd [2020] FCAFC 194 at [102] (White J, with whom Middleton J agreed at [89]). It has been said that the policy ensures that the spectre of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings: Ryan v Primesafe [2015] FCA 8; 323 ALR 107 at [64] (Mortimer J); Trustee for The MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8] (Siopis, Collier and Katzmann JJ). The discretion must be exercised with caution because of the exceptional nature of the power in an otherwise no-costs jurisdiction, and a case for its exercise should be clearly demonstrated: Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6] (Bromberg J). That is because, absent caution, there is a potential to discourage parties in the complete and robust pursuit of claims for contravention of the FW Act. Accordingly, a person will rarely be ordered to pay the costs of the proceedings. However, it is not necessary to prove that there are exceptional circumstances warranting the making of an order: Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222; 256 FCR 306 at [74] (Logan J, Bromberg J agreeing at [161], Charlesworth J in dissent on the question of costs); Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23; 232 FCR 428 at [7] (Dowsett, McKerracher and Katzmann JJ). 10 The discretion must be exercised judicially according to the terms defining it. Section 570(2)(a) confers discretion on the Court to order costs in proceedings arising under the FW Act where it is satisfied that the party instituted the proceedings vexatiously or without reasonable cause. 11 In the present case, I am satisfied that it is appropriate to order that the applicant pay the respondent's costs of the proceedings under s 570(2)(a) of the FW Act for the following reasons. 12 In [10]-[14] of the judgment I introduced the main factual matters in dispute as follows: 10 Several hotly contested factual disputes require resolution before the legal issues between the parties can be addressed. 11 The first concerns the duration of the applicant's employment with Platinum. The applicant contends that he remained an employee from 17 February 2015 until October 2017 but that for a period from about June 2015 to October 2016 the respondent instructed him to work on secondment with Veejay, the company owned by the respondent's father, John. After the applicant had a falling out with John, he was prepared to continue to work at Platinum and claims that he attended at the premises or contacted the respondent every day to work, but the respondent gave him no instructions and in October 2017 he accepted that he had been dismissed and sought work elsewhere. 12 This version of events gives rise to four disputed areas of fact. First, the respondent contends that the applicant resigned from Platinum or abandoned his employment there on 26 June 2015 because he wished to leave to buy a truck and start his own business. Secondly, the respondent denies that the applicant worked for Platinum on secondment at Veejay. Rather, he submits that the applicant left his employment at Platinum in order to work at Veejay as a labourer. Thirdly, the respondent denies that after the applicant ceased to work at Veejay he returned to Platinum, made himself available to work on a daily basis or contacted him regularly asking him for work. Fourthly, the respondent contends that the evidence supports a finding that from August 2016 the applicant was engaged in work for himself or third parties, which is inconsistent with his story that he had remained working at Platinum. 13 One additional factual dispute warrants introduction. It concerns two documents upon which the applicant relies to support his case. They are the 2016 and 2017 group certificates issued by the Australian Taxation Office (ATO) in respect of the employment of the applicant by Platinum. The applicant contends that they provide strong corroboration for his claim to have worked for Platinum until October 2017. The respondent claims that he falsely procured them to be prepared for Platinum because the applicant had threatened to kill him if he did not assist him to obtain a permanent residency visa. 14 I consider the conflicting evidence in relation to these disputes in section 7 below before turning to consideration of the ultimate issues between the parties. 13 I found that the applicant's contention that he remained an employee from 17 February 2015 until October 2017 to be false. I found that he voluntarily left his employment with Platinum on about 26 June 2015 and that thereafter he went to work elsewhere, including Veejay, during the period that he claimed to have been continuing to work for Platinum. I rejected as false the contention advanced by the applicant that he made himself available to work for Platinum after ceasing with Veejay. 14 I made a number of credit findings that were adverse to the applicant. In section 5.2 of the judgment I refer to several unsatisfactory aspects of his evidence, which led me to form the view at [100] that his evidence included a number of significant discrepancies that indicated a preparedness on his part to tell different stories about the same events, suggesting that he either did not have a clear recollection of those events or that the version given was fabricated. 15 In section 7.3 I rejected as false aspects of the applicant's evidence concerning a central claim in his case, namely whether he had continued to work for Platinum having been on secondment to Veejay and then, after a falling out with John, after October 2016. I also rejected his evidence as to how he supported himself in that period of time. 16 Whilst there are legal technicalities concerning whether a person may be considered to be an "employee", the factual matters that the applicant advanced were straightforward and, as I have found, in many significant respects, false. The applicant must have been aware that this was so from the outset. 17 One way to test whether a proceedings was instituted "without a reasonable cause" is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no 'substantial prospect of success': Kanan v Australian Postal and Telecommunications Union [1992] FCA 539; 43 IR 257 (Wilcox J), cited with approval by the Full Court in Baker v Patrick Projects Pty Ltd (No 2) [2014] FCAFC 166. It must have been known to the applicant at the time that he instituted the proceedings that, had he told the truth about the events that happened, he would not have succeeded in his action. 18 Accordingly, I am satisfied that the discretion to order costs under s 570 of the FW Act is enlivened and that it is appropriate to order that the applicant pay the respondent's costs of the FW Act aspect of the proceedings. 19 Having reached this conclusion, it is unnecessary for me to consider whether, for the ACL aspect of the claim, s 570(2)(a) of the FW Act applies, or whether it is appropriate to order that the applicant pay the respondent's costs under s 43(1)(b) of the FCA Act. In relation to the latter, the respondent in his submissions points out that there is divided authority as to whether or not the terms of s 570 of the FW Act should be applied to the whole of the proceeding, even where the claim has an ACL aspect to it. However, having regard to my conclusion in relation to the application of s 570(2)(a) of the FW Act, it is unnecessary to consider that question. In section 8.3 of the judgment I explain that the ACL claim must be dismissed because, like the claim under the FW Act, it was premised on the contention advanced by the applicant that he remained in the employment of Platinum for a two-year period. Having regard to my factual findings, at the time the applicant instituted his claim he must have known that the premise was false and that the proceedings had no substantial prospect of success. Accordingly, on the assumption that the higher threshold test under s 570(2)(a) FW Act applies to the ACL claim, I in any event conclude that costs should be awarded in favour of the respondent. 20 In the circumstances, it is not also necessary to consider the effect of the offers of compromise advanced by the respondent at various stages of the proceeding. The respondent does not seek orders that the applicant pay costs on an indemnity basis, and the conclusion that I have reached is sufficient to warrant an order that the applicant pay the respondent's costs on an ordinary basis. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Burley.