Resolution
34 As is evident from the foregoing, the unfortunate history reveals that Mr Dorsch would have achieved a substantially better outcome, had he accepted either of the offers made by HEAD Oceania after the commencement of the litigation. However, the benefit of hindsight, has no place in the assessment of the objective circumstances: Not every failure to accept a reasonable settlement offer will comprise an unreasonable act for the purpose of s 570(2)(b).
35 For the reasons which follow, I conclude that HEAD Oceania has established that Mr Dorsch should pay the costs incurred by HEAD Oceania from 14 June 2023 (the expiry of the first offer) on a party/party basis (save for any costs incurred a result of the claim for penalty) and that those costs should be assessed by a Registrar of the Court on a lump sum basis. I do not consider that the circumstances of the second offer amplify the unreasonableness such that an order of indemnity costs should be made from the expiry of that second offer.
36 Critically, both offers were made after all of the evidence had been filed in the proceedings and the parties had exchanged their opening submissions. It is worthwhile considering in some detail the nature of the filed evidence and those submissions within the orientation of Mr Dorsch's claims.
37 Mr Dorsch contended that he had been dismissed unlawfully on prohibited bases (arising from rights and assertions of those rights under the FW Act) or without a warranted contractual basis. Accordingly, central to the veracity of these claims was the evidence leading up to his termination of his employment. HEAD Oceania asserted in its pleadings, submissions and evidence (that was before Mr Dorsch at the time of the offers) that Mr Skrobanek had terminated his employment on the basis of his 'unacceptable conduct in the workplace' which included but was not limited to him "acting in an aggressive manner and swearing at [his] work colleagues" (as articulated in the letter of termination): LJ[161]. As at the time of the offers, Mr Dorsch had received the evidence from the following seven subordinate employees who had either experienced or witnessed his aggressive behaviour including swearing, Ms Borden, Mr Bramich, Ms Andersen, Ms Hawkes, Mr Butler, Mr Montgomery and Ms Fookes. Mr Dorsch denied the majority of the alleged offending conduct. Accordingly, contrary to the submission of Mr Dorsch, this was not a case where the majority of the evidence was not disputed. Whilst it may be agreed that much of the evidence of Mr Dorsch in which he asserts to have made complaints or inquiries was not disputed, critical evidence as to his abhorrent behaviour was alleged repeatedly, and consistently, by a number of employees, for which he denied or sought to recast in a sanitised way. As observed in the liability judgment, Mr Dorsch's evidence responsive to the claims of numerous employees regarding his conduct was perplexing and could not be accepted.
38 Accordingly, Mr Dorsch, was in a different position, to a party at the commencement of or early in proceedings, where little is known about the evidentiary and legal case against it. Furthermore, whilst the existence of the reverse onus is a factor to be taken into account, when considering adverse action claims, I do not consider, in the circumstances of this case, given what Mr Dorsch knew at the time of the offers, as to what was an insurmountable challenge for him, from a credit perspective, and also in the face of the strong evidence against him, that the success of any challenge concerning his dismissal would be remote. Furthermore, to the extent that Mr Dorsch challenged Mr Skrobanek's authority, I do not think, within the broad range of considerations contained in these reasons, that Mr Dorsch can avoid a finding of unreasonableness.
39 Mr Dorsch made multifarious claims of alleged non-dismissal adverse action, involving action taken by Mr Michl regarding Mr Dorsch's asserted claims to annual leave, purported unfair scrutiny and false allegations and the receipt of what he perceived to be low salary increases. The claims associated with his purported annual leave entitlements required an acceptance of his assertions of the same. Mr Dorsch was the most senior employee in Australia. Mr Dorsch's own evidence revealed that he had a great level of autonomy regarding the taking of leave. Mr Mr Dorsch's own evidence revealed that he was not a reliable historian, even at the time he made the first allegations regarding his annual leave balances. As noted in the liability judgment, (at LJ[283]), Mr Dorsch's own evidence (from the email exchanges as between himself and Mr Michl between April and June 2018) revealed that he grossly inflated his claim, initially stating he was entitled to 87 days' leave, then suggesting 53 days' leave but based on assumption not contemporaneous recording and then ultimately suggested a lower amount. As at the time of the offers, the filed evidence of Mr Skrobanek also revealed that Mr Dorsch had significant autonomy as to his work hours and his leave. Accordingly, Mr Dorsch must have appreciated at the time that the offers were made that there was significant risk that these claims would fail, even if there was a dispute regarding whether the alleged conduct was taken by Mr Michl as agent or employee for HEAD Oceania. This is because Mr Dorsch was aware of the fact that he was not relying on contemporaneous evidence supportive of his claims of leave and he had made inflated claims in the past about leave and there were serious challenges to his credit from all of the respondents' witnesses. Therefore, regardless of legal argument, there were significant problems with the factual premises underpinning his claims. In any event, the quantum of this claim was low and comprised a fraction of what HEAD Oceania had offered. Furthermore, the claims regarding the alleged scrutiny and the low offers, at best, would not yield, any significant award of damage or penalty.
40 As to the statutory and contractual claims regarding the alleged long hours he worked, again Mr Dorsch was on notice, at the time of the offers, that he had put on no contemporary evidence to substantiate his baldly asserted claim that HEAD Oceania had "imposed" a workload in excess of 38 hours per week, and where he "regularly worked around 70 or 80 hours per week": LJ[332]. Mr Dorsch would have known that at the point the offers were made he had put on no evidence of who within HEAD Oceania, had "imposed" the unidentified workload nor had he put on any contemporaneous evidence over the asserted four year period proving the same. Further, he was aware of the evidence of Mr Skrobanek, and the submission that would be made in this regard, as to his level of (undisputed) seniority in the Australian business and the allegation of his level of autonomy regarding the setting of his hours. Despite his solicitors answering requests for particulars regarding these broad, ambiguous claims, as noted in the liability judgment, no evidence was ever filed as to the precise dates or periods over which Mr Dorsch asserted he was required and did in fact work those purported spans of hours: LJ[347]. Even if this were not required, Mr Dorsch was on notice that it was his word that would need to be accepted, in the face of the respondents' evidence. Furthermore, prior to the offers, as part of the discovery process, HEAD Oceania had provided Mr Dorsch with copies of the calendar invitations in 2020 for scheduled meetings Mr Dorsch had attended, which revealed, a pattern well below that asserted by Mr Dorsch or Ms Terry: LJ[351]. Furthermore, at the time of the offers, HEAD Oceania had the filed evidence of numerous employees that he often stared work later and left work early: LJ[354]. As a consequence, Mr Dorsch had to have been on notice that any chance of him proving the requisite underlying factual substratum necessary to succeed in either these statutory or contractual claims was remote. Accordingly, to extent that Mr Dorsch sought to assert his conduct was not unreasonable by reason of there being limited jurisprudence regarding the operation of s 62 of the FW Act, is not accepted. Mr Dorsch was again, on notice, of the extent of the challenge and his own limited evidence regarding the foundational factual substratum.
41 I do not accept that by reason of Mr Dorsch bringing a myriad of unsuccessful claims, this created such smoke, that the fire of his unreasonableness could not be detected. I do not accept that Mr Dorsch is able to avoid a finding of unreasonableness by asserting factual and legal complexity as a way to avoid the reality of the circumstances: Mr Dorsch advanced a number of claims without a proper evidentiary foundation and where he was aware, at the time that the offers were made, of the significant broad-ranging factual challenges to his evidence from a number of the respondents' witnesses. I do not accept that, it was only after the hearing, that pivotal factual determinations which affected multiple causes of action were truly exposed. However, even if there is an acceptance of this submission to some extent, the extent of the offer, being a substantial one, illustrates the unreasonableness.
42 The offer of $80,000 was a substantial one. It comprised almost the equivalent of one year's annual income with HEAD Oceania, in circumstances where he had mitigated his loss and obtained employment on a substantially higher basis, ten months after his termination.
43 A person in Mr Dorsch's position would have had to have considered that his primary adverse action claim (for which general damages and future losses would flow) being that of dismissal was a difficult claim in the light of the evidence, not only of Mr Skrobanek, but of all the other witnesses. Whilst, such damages may arise in the case of the other forms of adverse action, it was clear, based on the lack of differentiation in the expert evidence, that the primary trigger for those damages, arose from the termination itself. Mr Dorsch must have known that the offer was substantial and would have represented an amount equivalent to him succeeding on more than one of his claims.
44 One aspect which could possibly tell against the award, was the reach of the compromise, to a non-party, Mr Dorsch's other former concurrent employer, Mares AP. However, this case was peculiar. The parties had always accepted he was concurrently employed by both entities. Mr Dorsch had made a conscious choice to sue only HEAD Oceania, despite being on notice from, at least the point of HEAD Oceania's defence, that HEAD Oceania would claim that the alleged non-dismissal adverse action was action taken by Mares AP not HEAD Oceania. The same was reiterated in HEAD Oceania's evidence and its opening submissions.
45 I do not accept that the breadth of the deed or the time in which Mr Dorsch was called on to answer it warrants against finding that the non-acceptance of the first offer was unreasonable. Mr Dorsch was represented by solicitors and Counsel. Mr Dorsch did not seek further time to consider the offers and indeed, made his own counteroffer.
46 The question is then whether the circumstances changed and there was subsequent unreasonableness by Mr Dorsch by failing to accept HEAD Oceania's second offer, after he was cross-examined and the admissions he made. The admissions concerned the remuneration he had received from HEAD Oceania and Mares AP and his failure to declare the entirety of his income in three financial years in Australia for income he had received from Mares AP and the entirety of the income he received from HEAD Oceania. HEAD Oceania submitted that by the time of the second offer Mr Dorsch had made material admissions against his case, including admissions which he must have understood would lead the Court to have very serious reservations about his credit as a witness.
47 It is my view that, whilst Mr Dorsch made significant admissions under cross-examination with respect to his tax affairs, they did not materially change the circumstances such that there was an accentuation of his unreasonableness.
48 The question is then whether the costs ought to be awarded on an indemnity basis. The authorities recognise that there is a discretion to award indemnity costs under the s 570 regime: Sabapathy v Jetstar Airways (No 2) [2021] FCAFC 68 at [15]. The relevant principles giving rise to the making of such orders were neatly summarised by Wigney J in Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (No 5) [2021] FCA 246; 151 ACSR 26 at [6]-[10].
49 In addition, as observed by Burley J in Salama (No 2) at [13]-[14], attention must be given to the intersection between this particular statutory regime and those developed by reference to Calderbank v Calderbank [1976] Fam 93; [1975] 2 All ER 333. His Honour refers to the existing jurisprudence that the rejection of a Calderbank offer does not per se warrant an order for indemnity costs, there remains the need to consider the unreasonableness of the rejection of the offer, and cites with approval Bromberg J's obiter remarks in Celand at [163]-[165] and the recognised caution in Stratton Finance. In that case, the Full Court counselled: "Caution should be exercised as to how a Calderbank offer, even a generous one, is viewed" in circumstances where an applicant has brought claims under the FW Act and for breach of contract on the basis that Calderbank letters "presuppose" a "costs jurisdiction" (at [80]; see also Sautner at [168] (White J)) but did not disturb the primary judge's finding that the appellant employer had engaged in unreasonable conduct in satisfaction of s 570(2)(b).
50 I am not persuaded, that the circumstances here, are of the kind that would fall within the recognised circumstances identified by Wigney J in Colgate-Palmolive at [10], and by having regard to the statutory context and all the circumstances of this case.
51 Accordingly, I find and will make orders that Mr Dorsch must pay HEAD Oceania's costs of the proceedings on a party/party basis from 14 June 2023 (save for any costs associated with the penalty aspect of the proceedings) and where those costs should be assessed by a Registrar of the Court on a lump sum basis in accordance with the Court's Costs Practice Note (GPN-COSTS). The making of such an order on a lump sum basis is the Court's preference, wherever practicable and appropriate to do so and where no formal application is required.
I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Raper.