Descon Group Australia Pty Ltd v Rodd

MCELWAINE J: 1 For reasons published on 29 November 2023, I dismissed the amended application of Descon Group Australia Pty Ltd for leave to appeal costs orders made by the Federal Circuit and Family Court of Australia (Division 2) (FCFCOA) but allowed the separate application made by Irish Bentley Lawyers, upheld its appeal and set aside the costs orders made against it: Descon Group Australia Pty Ltd v Rodd [2023] FCA 1494. I made orders for the determination of consequential applications on the papers. I have received submissions from the respondent and a minute of consent orders as between Irish Bentley and the respondent. Descon has not made any submission. There is an amount of $40,000 held in trust by the solicitors for the respondent as security for the costs of the leave applications, paid jointly by Descon and Irish Bentley pursuant to consent orders made on 7 July 2023. 2 Irish Bentley and the respondent have agreed to the making of certain orders as follows: 1. The Second Applicant's amended application for leave to appeal filed on 23 June 2023 is allowed. 2. The Second Applicant's appeal is allowed. 3. The Respondent is authorised to pay to the Second Applicant the sum of $20,000 from the funds held in trust by the Respondent's solicitors which were paid pursuant to the Order of this Court on 7 July 2023. 4. No order as to costs in the Second Applicant's amended application for leave to appeal. 3 Proposed orders 1 and 2 are unnecessary as they replicate orders that I made on 29 November 2023. As to the balance, those orders are appropriate, but they do not deal with the costs order made by the FCFCOA which requires Descon and Irish Bentley to each pay one half of the respondent's costs on an indemnity basis. The intent of the order appears to impose the liability severally. The result of my judgment is that order cannot stand. The respondent submits that the FCFCOA order should be varied pursuant to s 25(2B) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) to provide that Descon must pay the respondent's costs of the proceeding on an indemnity basis. That section does not apply, though s 28(1)(a) and or (b) do. 4 The difficulty is that the respondent's submissions assume that if the several liability for costs is set aside, it must follow that the just result is that Descon should bear the entirety of the costs burden. The silence of Descon in that circumstance is regrettable. The reasons given by the FCFCOA reveal that was not how the discretion to make the indemnity costs order pursuant to s 570 of the Fair Work Act 2009 (Cth) (FWA) was exercised in that the proportionate division was arrived at by a process of speculative reasoning that, because Descon and Irish Bentley had acted together to prosecute the cross-claim without a proper basis and in the absence of submissions or any evidence, the primary judge concluded that was the proper outcome. As I explained in my reasons, that approach was wrong: at [75]-[83]. 5 The respondent submits that the basis identified by the FCFCOA for the indemnity costs order made against Descon was its refusal to accept several Calderbank proposals, culminating in open correspondence of 14 June 2021, which addressed in detail the allegations made in the cross-claim and explained the lack of merit therein. Descon failed in its application for leave to appeal to undermine that reasoning. 6 There is nothing in the reasons of the primary judge which suggests that the exercise of the discretion to make the costs orders against Descon turned on the involvement of Irish Bentley as its solicitor. The identification of the special circumstances by the primary judge to make a costs order pursuant to s 570 of the FWA (and to do so on an indemnity basis), in my view justifies the order sought by the respondent, in part because Descon's arguments failed on the application for leave to appeal and where it has been on notice of the proposed form of order since 20 December 2023, but has not responded. I will therefore make an order that varies the costs order made in the FCFCOA as submitted by the respondent. 7 That leaves for determination the separate application of the respondent, framed pursuant to s 43 of the FCA Act, that he should have his costs of the application for leave to appeal by Descon on the usual basis. No submissions were addressed about the effect of the words in parentheses (including an appeal) and the effect of the amendments made with effect from 1 January 2013 to insert the words "matter arising" before the words "under this Act" at s 570(1) of the FWA. The amendment was made in response to the decision in Construction, Forestry, Mining and Energy Union v CSBP Ltd [2012] FCA 64; 202 FCR 149 (Keane CJ, Siopis and Rares JJ) as explained by Wigney J in Drummond v Canberra Institute of Technology (No 2) [2023] FCA 422. 8 No submissions were advanced as to why I should conclude that the discretion to make a costs order at s 570(2) of the FWA is enlivened. As such, conformably with s 570(1), there will be no order as to the costs of the application for leave to appeal by Descon. Consequentially I will not make the orders proposed for repayment of the security for costs of the leave application to be paid to the respondent. The balance of $20,000 is to be paid to the solicitor for Descon. 9 I order as follows:

1. The First Applicant shall pay the Respondent's costs of and incidental to matter no. MLG3698 of 2020 on an indemnity basis from the date the cross-claim was instituted.
2. The Respondent is authorised to pay from the funds held in trust by the Respondent's solicitors which were paid pursuant to the Order of this Court on 7 July 2023: (a) to the first applicant the sum of $20,000; and (b) to the second applicant the sum of $20,000.
3. There be no order as to costs for the applications for leave to appeal and appeal. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McElwaine.