Downe v Sydney West Area Health Service [2008] NSWSC 1039 | Case summary

JUDGMENT 1 HIS HONOUR: On 3 July 2008, this Court published its reasons in the substantive proceedings: Downe v Sydney West Area Health Service (No 2) [2008] NSWSC 159 ("the substantive proceedings"). I granted liberty to apply for any further or consequential order including any orders for costs. This judgment deals with the applications for costs. 2 The substantive judgment issued orders of a declaratory nature and injunctions relating to employment directions issued by the defendants as employer. Further orders were originally sought, but the Court considered them unnecessary at that time, especially in circumstances where the defendants, representing the Crown, gave undertakings that rendered detailed orders otiose. 3 The plaintiff seeks costs on an indemnity basis, and, alternatively, on the "ordinary basis". The defendants do not oppose costs on the ordinary basis except in relation to the claim under s 51AA of the Trade Practices Act 1974 (Cth) for which the defendants seek costs. I will deal with these two claims in reverse order. Costs on the Trade Practices Claim 4 The ordinary principle is that costs follow the event. The plaintiff succeeded in obtaining the orders she sought. The plaintiff was successful on the causes of action in contract and based on the provisions of s 106 of the Industrial Relations Act 1996 ("the s 106 proceedings"). 5 The plaintiff was unsuccessful on the cause of action based on the Trade Practices Act. She was unsuccessful both as to jurisdiction and merit. 6 The Trade Practices Act claim was commenced in the Federal Court of Australia and cross-vested into this Court. It was joined with the contract proceedings in this Court and the s 106 proceedings. 7 The inconvenience of some aspects of the exercise of judicial power by disparate jurisdictions in this State, and as between the exercise of State and Federal judicial power, sometimes requires formal steps for the purpose of ensuring everyone's convenience. 8 No remedy was available in the Trade Practices Act claim that was not available in the s 106 proceedings. Moreover, each claim is based on unconscionability. In the Trade Practices Act "unconscionability" is defined (or applied) less broadly than it is applied in the Industrial Relations Act (assuming for that purpose that the comparison is with the composite expression "unfair, harsh or unconscionable"). 9 Thus, except in one respect, the Trade Practices Act claim (and the Federal Court proceedings) were wholly unnecessary and utterly unsuccessful. 10 Nevertheless, without the Federal Court proceedings, this Court could not have dealt with all of the issues between the parties. Further, without the claim under the Trade Practices Act, there could have been no Federal Court proceedings. 11 Because of restrictions arising from the operation of the Constitution of Australia, the Federal Court cannot hear and determine the s 106 proceedings. The Federal Court could, to the extent that the claim arises from the same substratum of facts, hear and determine the contract claim. 12 The Industrial Court of New South Wales (or its predecessor) could have heard and determined only the s 106 proceedings. 13 Because of the absence of enabling legislation, while this Court could, in its original jurisdiction, hear and determine both the contract claim and the claim under the Trade Practices Act, it could not, in the absence of Federal Court proceedings, have heard the s 106 proceedings. It did so because the Jurisdiction Of Courts (Cross-Vesting) Act 1987 allows this Court to hear and determine a proceeding in another State court or tribunal, for the purpose of hearing it together with proceedings transferred from the Federal Court: see s 8 of the Jurisdiction Of Courts (Cross-Vesting) Act. 14 Thus, the commencement and processing of the Trade Practices Act claim in the Federal Court, other than colourably, was the only basis upon which the parties could have all matters between them heard and determined together. 15 The Civil Procedure Act 2005 requires, in the exercise of discretion by the Court, for such discretion to be exercised as best facilitates the quick, just and cheap resolution of the real issues between the parties. 16 If the plaintiff were not to have commenced the Federal Court proceedings, the parties would have faced the cost and inconvenience of a minimum of two sets of proceedings and the possibility of differing findings of fact. Further the issues raised could not (and should not) have been dealt with fully in two different proceedings. I use one example. The "unfairness" in the s 106 proceedings relied on the capacity under the contract to suspend indefinitely. Therefore, resolution of s 106 proceedings depended on the construction of the contract. But, once the effect of the contract was determined by this Court, s 106 proceedings were precluded: Tszyu v Fightvision Pty Ltd [2001] NSWCA 103. 17 It is beyond argument that the overwhelming convenience was to have one hearing to deal with all issues. The conduct of the parties attests to that convenience. Once the plaintiff filed in the Federal Court, there was no opposition to the cross-vesting orders in relation to both those proceedings and the proceedings before the Industrial Court. 18 The filing of the Federal Court application and the cross-vesting application was reasonable, was not colourable and ultimately saved all parties significant costs. I leave aside the convenience in the time of the respective judicial officers that would otherwise have been required. 19 The conduct of the plaintiff in commencing action in the Federal Court was not only reasonable, it was consistent with the duty imposed upon her and her legal team by the Civil Procedure Act. 20 The above analysis depends upon the finding that I make that the Trade Practices claim was not "colourable" in the jurisdictional sense. 21 Further, while the proceedings were initially discrete, much of the "merit", if not all of it, was identical to that which the plaintiff raised in the other claims and similar to material that was necessary to answer some discretionary material advanced by the defendants. 22 Even if I be wrong on the commencement of the Federal Court proceedings, I would not order the plaintiff to pay the costs of the Trade Practices claim because that which could be severed, if anything, was such an insignificant aspect of the totality of the proceedings. 23 I reject the defendants' claim for costs of and incidental to the Federal Court proceedings, the transfer of the proceedings and the Trade Practices claim in this Court. Further, I consider those costs should follow the event, being the outcome of the proceedings as a whole. Indemnity Costs for the Plaintiff 24 The plaintiff's claim for indemnity costs is based essentially on the role of the defendants as "model litigants": Scott v Handley (1999) 58 ALD 373 at [43]; Priest v State of New South Wales [2007] NSWSC 41 at [34], [35] and [42]; Melbourne Steamship Co Ltd v Moorehead [1912] HCA 69; (1912) 15 CLR 333 at 342 per Griffith CJ. 25 The plaintiff does not rely on any conduct in the proceedings. Rather, she relies on the conduct of the defendants prior to the proceedings: Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 at 196; see also Commonwealth of Australia v Smith [2007] NSWCA 168 at [124]. 26 It is unnecessary for me to determine whether the principle applies to pre-litigation conduct of the kind for which the plaintiff here contends. 27 I have determined that the contract, if it contained a right "to suspend" indefinitely (or more accurately "a right to direct not to work") was unfair. Further, I have determined, to the extent relevant, that the conduct in so directing was unlawful (i.e. in breach of contract) and unfair. 28 Nevertheless, the defendants had an understanding of the law that such a direction was lawful. Such an understanding was reasonable and not without support. 29 Further, the defendants acted upon a finding of an independent investigator. That the finding was outside the terms of reference and was based on a more restricted process than a hearing in the Court does not necessarily disclose the kind of unfairness to which Finn J referred in Hughes, supra. 30 That the independent investigation, and the conduct of the defendants, may have been less fair as a result of the conduct of a senior employee is a factor that requires consideration. 31 The policy of the defendants was fair. The defendants relied upon information provided by the senior employee which information (or the lack of all facts) caused the policy not to be given effect in the manner that the policy contemplates. 32 In the circumstances, I do not consider that the defendants, as public bodies, have adopted a course, prior to the litigation, that was inconsistent with their duty (if any) as model litigants or inconsistent with their obligation (if any) to serve the public interest. 33 I reject the plaintiff's claim for indemnity costs. I make the following orders:

Downe v Sydney West Area Health Service

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