Diver v Object Oriented Pty Ltd and Anor

Industrial Relations Commission (NSW)|2003-06-26|Before: Peterson J, Mr P, Schmidt J

Industrial Relations Commission of New South Wales in Court Session

CITATION : Diver v Object Oriented Pty Ltd and Anor [2003] NSWIRComm 254 APPLICANT Michael Diver

PARTIES : FIRST RESPONDENT Object Oriented Pty Limited

APPLICANT Mr P C Coleman of counsel

SOLICITOR Carroll & Associates SYDNEY. LEGAL REPRESENTATIVES: RESPONDENT Mr C T Magee of counsel

SOLICITOR Cowley Hearne NORTH SYDNEY.

JUDGMENT: - 7 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

MICHAEL DIVER v OBJECT ORIENTED PTY LIMITED AND ANOTHER

Application under s.106 of the Industrial Relations Act 1996 JUDGMENT RE COSTS ON NOTICE OF MOTION

1 On 20 June 2002 I gave interlocutory judgment in a motion, brought by the applicant in s106 proceedings, for a declaration that the substantive proceedings had been settled in conciliation on 27 August 2001. That motion was dismissed and costs on the motion were reserved. This judgment deals with that costs issue.

2 Subsequent to the interlocutory judgment, the substantive proceedings were heard and determined by Schmidt J [2003] NSWIRComm 202, 26 June 2003, unreported. The orders made by her Honour were as follows: 88 I declare the applicant's contract of employment with Object unfair and make the following orders:

The contract is varied ab initio to require the giving of 5 months notice of the termination of employment and 3 months redundancy pay, in the event of termination arising in circumstances of redundancy.

The respondents are to pay the applicant: (a) 4 months base salary and 5 months superannuation, in respect of notice, less the salary earned by the applicant in his new employment in that period, plus

(b) 3 months base salary, in respect of redundancy, plus

(c) bonus calculated as a portion of $40,000 represented by the period of Mr Diver's employment between 30 June 2000 and the termination of his employment, and

(d) interest thereupon, from the date of termination to the date of judgment. 89 The usual order as to costs would be that the respondents pay the applicant's costs, as agreed or assessed. In the event that the parties are unable to agree on a costs order, they have leave to have the matter restored to the list. That leave should be exercised within 28 days of the date of this judgment.

3 Both sides of the litigation seek a costs order on the motion in their own favour. The applicant's position is that costs of the motion should be costs in the cause. I was informed that the parties had agreed that the respondent would pay the applicant's costs in the substantive proceedings on a party-party basis. The submissions were advanced on the following basis: 1. The Commission ought be guided by the prima facie position expressed in r210 of the Commission's rules. The respondent bears an onus to persuade the Court to a contrary position.

Conciliation is a compulsory and important stage of the proceedings.

The respondents agree there was a settlement arrangement entered into at the conciliation stage. 4. The respondents sought to extract themselves alleging a misrepresentation by the applicant but, when that argument fell over, the respondents would not proceed to settlement. 5. The issues raised by the notice of motion involved a complex area of the law, as the interlocutory judgment indicates. The issues were fairly arguable.

4 The argument advanced for the respondents was that: 1. The applicant had caused costs to be incurred in relation to the motion where he was unsuccessful. There is no reason not to exercise discretion in the respondents' favour in those circumstances.

The Commission ought apply the general principles referred to by it in Gambotto v John Fairfax Publications Pty Ltd (2001) 108 IR 469. 5 In reply the applicant referred to the Full Bench judgment Adams v Westfield Holdings Limited (2002) 114 IR 241 concerning the need to consider mitigation principles. That judgment was given after the conciliation stage and prior to the ultimate hearing. It resulted in but a modest win for the applicant.

Conclusions 6 There is no issue between the parties that the Commission has the power to award costs in its discretion (s181 of the Industrial Relations Act 1996).

7 The relevant rules to which the parties have referred are as follows: 210 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 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.

8 Mr Coleman referred me to the judgment of Lee J in Woods v Walsh and Ors (1989) 22 FCR 204 which dealt with issues of costs arising under the Federal Court rules 1979 (Cth). Those rules provided relevantly: 15. "Where the costs of a motion, application or other proceeding are reserved by the Court or a Judge, the costs so reserved shall follow the event unless the Court or a Judge otherwise orders." . . . . 29. "Subject to this Order, the cost of any application or other step in any proceedings shall, unless the Court 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 Order."

9 It will be seen that r29 is relevantly identical to r211 of this court's rules. Rule 15 follows similar form to r210 save for the variation between "shall follow the event" and "shall . . . be included in the final order for costs". In both rules the court is reserved discretion by the phrase "unless the Commission/court or a judge otherwise orders".

10 In Woods v Walsh the respondents had failed in a motion to strike out an application on the ground that no reasonable basis for it was disclosed. Subsequently, the principal proceedings were dismissed and the applicant was ordered to pay the costs of the respondents.

11 Lee J discussed rr15 and 29 of the Federal Court rules this way:

Rule 15 differs from r29 in that it refrains from deeming the reserved costs to be part of the costs of the cause of the party in whose favour the interlocutory proceedings has been determined.

The rule has not provided for reserved costs to be payable without an order. It requires the costs to follow "the event". "The event" to which the rule refers is the outcome of the principal proceedings: see Field v The Great Northern Railway Co (1878) 3 Ex D 261; Creen v Wright (1877) 2 CPD 354.

The outcome of the principal proceedings would be the outcome relating to any order for costs of the proceedings: see Brotherton v Metropolitan District Railway Joint Committee [1894] 1 QB 666. Although the words "follow the event" may mean "according to who wins", (see Davies v Eli Lilly & Co [1987] 1 WLR 1136; [1987] 3 All ER 94, per Donaldson MR (at 1143; 99), per Lloyd LJ (at 1144; 100-101), per Balcombe LJ (at 1146; 102) unless an order is made in respect of costs there would be no event in respect of which the provisions of r15 could operate. If no order for the payment of costs is made on disposal of the cause or matter, or an order is made that no costs be paid, no foundation for the taxation of the reserved costs would be provided by r 15. The effect of the rule, therefore, is to make reserved costs of interlocutory proceedings costs in the cause of the successful party in the principal proceedings unless some other order is made in respect of them.

12 After discussing the historical position with respect to interlocutory costs orders Lee J continued: Pursuant to O62, r15 of the Federal Court Rules , the Court or judge may make a specific order in respect of reserved costs upon determination of the principal proceedings, but if no such order is made the rule will operate to allow such costs to be taxed pursuant to the order reflecting the result of the proceedings in respect of costs.

If his Honour had made no order as to costs upon determining the interlocutory proceedings, O62, r29 would have applied and the second and third respondents would not have been entitled to tax their costs in respect of those proceedings, such costs being part of the costs of the cause of the applicant only.

However, his Honour did make an order with respect to the costs by reserving them, thereby attracting the provisions of O62, r15 subject to any further order his Honour may have made upon determination of the principal proceedings. Eventually, his Honour ordered the applicant to pay the costs of the second and third respondents to be taxed and that order became "the event" to which O62, r15 refers. The second and third respondents thereupon became entitled to tax their costs in respect of the costs reserved.

13 I raised with counsel the distinction between the wording of r15 of the Federal Court Rules and r210 of this court's rules and the likelihood that the different form adopted here would have flowed from the rules of the Supreme Court of New South Wales. However, no such rule appears in the rules of the Supreme Court which, with respect to interlocutory applications, provide in Part 52A, Costs, r16 as follows: 16. Subject to this Part the costs of any application or other step in any proceedings shall, unless the Court otherwise orders, be paid and otherwise dealt with in accordance with the provisions of this Part or the provisions of any order relating to the general costs of the proceedings.

14 Equally, r210 did not appear in any form in Part 25, Costs, of the rules adopted as the Industrial Court's Interim Rules 1992 under the Industrial Relations Act 1991.

15 The source, then, of r210 would seem to have been r15 of the Federal Court Rules but with a variation in language to which I have referred.

16 While the words "included in the final order" might be thought to be concerned merely with the point at which the costs issue is dealt with, such a construction would give what seems to be a pointless result. I am inclined to think that r210 represents not an attempt to divert away from the effect of language such as that contained in r15 of the Federal Court Rules but to express the same intention in different language.

17 Applying that view, and adopting the approach of Lee J in Woods v Walsh, it follows that in the absence of a contrary order the applicant, despite having failed in the motion, would be entitled prima facie to an order for costs of the motion because of his success in the substantive proceedings. There is nothing in the matter which persuades me that that would be a just result.

18 While the applicant seeks to argue that the respondents' withdrawal from the proposed agreement at the conciliation stage involved conduct for which it, in effect, ought be criticised, the fact of the matter is that no final or concluded agreement was then reached as the interlocutory judgment found. The respondents did not withdraw from an agreement but decided, in circumstances which seem to me to have been partially vindicated by the application of mitigation principles in the ultimate judgment, to refrain from completing an agreement the parties were well advanced upon. It is impossible to conclude that the respondents' conduct in relation to the conciliation stage was in any way reprehensible. On the other hand, the applicant did succeed in the substantive proceedings.

19 I consider in all of the circumstances that an appropriate order necessary to do justice between the parties would be that each party pay its own costs on the motion. I so order.

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Judgment (43 paragraphs)

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