Gilmore v Allied Express Transport Pty Ltd

LEGISLATION CITED: Industrial Relations Act 1996

Gilmore v Allied Express Transport Pty Ltd [2006] NSWIRComm 16 CASES CITED: Lane v The Commonwealth Bank of Australia [2001] NSWIRComm 57 Oshlack v Richmond River Council (1998) 193 CLR 72

APPLICANT: Ms M Stubbs of counsel SOLICITORS: Hunt & Hunt LEGAL REPRESENTATIVES: RESPONDENT: Mr P Newall of counsel SOLICITORS: Baker & McKenzie

Application under section 106 of the Industrial Relations Act 1996

1 Judgment was given in this matter on 7 February (Gilmore v Allied Express Transport Pty Ltd [2006] NSWIRComm 16) and the parties given leave to approach on the question of costs. The parties were unable to agree. The applicant sought the usual costs order. The respondent's position was that no order as to costs should be made in this case. 2 In the February judgment, the parties' contract was found unfair and was varied, in a number of respects. Money orders were also sought, but were declined, for reasons explained in the judgment. The orders made were: 1. The contract is declared to be an unfair contract, as that term is defined in s 105 of the Act

2. The contract is varied to require: (a) the respondent to promptly and fully inform Ms Gilmore of any matters of concern which could impact upon her continued employment; (b) the respondent to give Ms Gilmore a proper opportunity to consider and respond to such concerns; (c) the respondent to properly consider her response; (d) that if concerns persist, Ms Gilmore be provided with a period of not less than three months in which to improve her performance in respect to matters clearly identified to her in writing, before any action be taken to terminate her employment, for reasons associated with any such concerns. (e) the respondent to give Ms Gilmore four months' notice of the termination of her employment, in circumstances where such a period of three months improvement is not provided; and (f) to ensure that during her employment, Ms Gilmore is not the subject of intimidation, victimisation and harassment by other more senior members of staff, or by the respondent's officers, directors or shareholders; and if such conduct occurs, to take active steps to ensure that it ceases and is not repeated. 3 The discretion to make money orders in favour of the successful applicant under s106(5) of the Act, which permits the making of such orders 'just in the circumstances of the case', was refused, for reasons outlined at [177] to [187] of the judgment. 4 For the applicant it was argued by Ms Stubbs of counsel that the usual order as to costs would, nevertheless, here be made in favour of the applicant. The applicant had resisted the jurisdictional arguments raised by the respondent; her version of the way in which the employment had come to be terminated by the respondent had been made out and she had demonstrated the unfairness of the contract, in the various ways alleged. In those circumstances, there ought in fairness to be no departure from the usual costs order. 5 The circumstances in which the Court had here declined to exercise the discretion to make a money order in the applicant's favour, did not amount to 'misconduct' of the kind discussed by the High Court in Oshlack v Richmond River Council (1998) 193 CLR 72. 6 The Court had been called upon to deal with a case where serious credit issues had arisen, both in relation to the applicant's evidence and that given by a witness for the respondent, Mr McDowell. While conclusions adverse to the applicant had resulted in money orders being declined, conclusions adverse to the respondent and Mr McDowell had also been arrived at, which could not be overlooked if justice was to be done. 7 It was relevant that but for the conclusions reached about the applicant's evidence as to two matters, which had led to a refusal to make a money order, a money order would have been made in her favour, on terms more generous than the basis upon which applicant would have been prepared to settle her claim. In those circumstances, the applicant would have been entitled to an indemnity costs order. 8 It followed that the just course in all the circumstances was for the usual costs order to be made in the applicant's favour. 9 For the respondent it was argued by Mr Newall of counsel, that the usual costs order would not be made, because costs should follow the event. The applicant had not had a money order made in her favour, so no costs order could follow, she not having succeeded on the event. 10 Furthermore, neither the applicant nor the respondent had appealed the February judgment, each accepting the findings made against them. As a matter of justice the judgment sought to strike a particular balance as between the parties, given the conclusions reached. While the respondent sought no order for costs in its favour in those circumstances, to make the order sought in favour of the applicant, would be to destroy the balance which had been achieved by the February judgment. 11 Given that no money orders had been made, it followed that the offers of settlement which the parties had exchanged were irrelevant to the question now before the Court. 12 It was also submitted that the applicant's conduct in the proceedings, which had led to money orders being refused, did amount to misconduct of the kind discussed in Oshlack. This was a further reason for the refusal of any favourable costs order. 13 In reply Ms Stubbs submitted that 'the event' in proceedings such as this was not the making of money orders, but the finding that the contract was unfair, so as to require orders of avoidance or variation. As to the balance which the February judgment had achieved as between the parties, it could not be overlooked that the judgment was concerned with what was then before the Court. No consideration had yet been given to costs. Consideration

14 It is well settled that costs orders are within the discretion of the Court under the Act; they are not made to punish the unsuccessful party or to reward the successful party, they are concerned with a partial reimbursement of costs incurred in the litigation and in the usual case, will be made in favour of the successful party, for an agreed amount or failing agreement, as assessed. 15 I discussed the approach to be adopted when a departure from the usual costs order is sought in Lane v The Commonwealth Bank of Australia [2001] NSWIRComm 57 at [11] to [15}:

11 There have been a number of cases in this Court in which the usual order as to costs has been departed from in particular circumstances. Such circumstances include, as here, where a party has been successful only as to part of the claim advanced. Other Courts have similar discretions as to costs. It is convenient therefore to refer to the law as to when such a departure is appropriate. In Oshlack v Richmond River Council (1998) 193 CLR 72, the High Court was dealing with costs orders made by the Land and Environment Court. Gaudron and Gummow JJ said at 81: "The provisions of s 69 of the Court Act which confer upon the Court the discretion exercised by the primary judge attract the application of a general proposition that it is inappropriate to read a provision conferring jurisdiction or granting powers to a court by making conditions or imposing limitations which are not found in the words used ...

The terms of s 69(2) contain no positive indication of the considerations upon which the Court is to determine by whom and to what extent costs are to be paid. The power conferred by the section is to be exercised judicially, that is to say not arbitrarily, capriciously or so as to frustrate the legislative intent. However, subject to such considerations, the discretion conferred is, to adapt the words of Dixon J, unconfined except in so far as 'the subject matter and the scope and purpose' of the legislation may enable an appellate court to pronounce the reasons given by the primary judge to be 'definitely extraneous to any objects the legislature could have had in view' ( Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505)."

12 McHugh J (while in dissent as to the outcome), dealt with the principles upon which the ordinary rule would be departed from. Those principles have been applied in other cases (See Mannix v Loumbos [2000] NSWCA 32; Arian v Nguyen [2001] NSWCA 5; Hayle Holdings Pty Ltd v Australian Technology Group Ltd [2000] FCA 1699.) McHugh J said at 97: "The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874, Devlin J formulated the relevant principle as follows: 'No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.' 'Misconduct' in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute.

Apart from anomalous examples in the equity jurisdiction, there are very few, if any, exceptions to the usual order as to costs outside the area of disentitling conduct. The Court may award costs in favour of a defendant where the plaintiff has obtained only nominal damages. However, this practice can be justified on the basis that, in reality, the successful party lost the litigation and the unsuccessful party won." 13 These approaches are consistent with the approach of the Court of Appeal in England, where in Re Elgindata Ltd (No2) [1993] 1 ALL ER 232, Nourse LJ, with whom Stocker LJ agreed, discussed the principles to be applied at 237: 'In order to show that the judge erred I must state the principles which ought to have been applied. They are mainly recognised or provided for (it matters not which) by s51 of the Supreme Court Act 1981 and the relevant provisions of RSC Ord 62, in this case rr2(4), 3(3) and 10. They do not in their entirety depend on the express recognition or provision of the rules. In part they depend upon established practice or implication from the rules. The principles are these. (1) Costs are in the discretion of the court. (2) They should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made. (3) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where there has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs. (4) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but order him to pay the whole or a part of the unsuccessful party's costs. Of these principles the first, second and fourth are expressly recognised or provided for by rr2(4), (3(3) and 10 respectively. The third depends on well-established practice. Moreover, the fourth implies that a successful party who neither improperly or unreasonably raises issued or make allegations on which he fails ought not to be ordered to pay any part of the unsuccessful party's costs. It was because of his disregard of that principle that the judged erred in this case.' 14 In Hughes v Western Australian Cricket Association (Inc) & Ors (1986) ATPR 40-748 Toohey J applied the observations of Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 12: 'But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.' 15 Toohey J also noted at 48,136: 'It is relevant, but not conclusive, to consider how much time of the hearing was taken up with evidence and submissions relating to those issues on which the applicant failed. This is not an easy task because much of the evidence bore upon more than one cause of action. Counsel for the applicant did offer some dissection of time spent, by reference to the evidence of particular witnesses and to addresses and noted what he contended was the relatively little time taken up in addresses on those issues on which the applicant failed.'

16 It follows that in considering the question of the proper costs order here to be made, attention must be paid to the unusual situation which arose for consideration in these proceedings and whether, as discussed by the High Court in Oshlack, the applicant has engaged in relevant misconduct. 17 It cannot here be overlooked that even though there were no money orders made in favour of the applicant, the applicant otherwise succeeded in the proceedings, on the matters in issue between the parties. At [4] in the February judgment, it was noted that:

The parties were not agreed as to the issues which required determination in the proceedings. It was common ground that the question of who brought the contract to an end and if it was the respondent, whether the contractual notice provision was fair, required determination. The issues raised by the applicant, which the respondent disputed as being in issue and within jurisdiction, were:

(b) What were the concerns the Respondent had in relation to the Applicant's performance of her work duties, whether those concerns had any substance, whether those concerns were raised with the Applicant, the form in which those concerns were conveyed to the Applicant, the opportunity afforded to the applicant to address any such concerns. Relevant to the issue of performance, and in dispute between the parties, are the duties which were required to be performed by the Applicant, and the nature of those duties.

(e) Whether Mr McDowell, a principle officer of the Respondent, conducted himself in a manner which destroyed or seriously impaired and/or damaged and/or rendered dysfunctional and/or unworkable the relationship of trust and confidence between the Applicant and the Respondent.

(f) Whether the Respondent unilaterally varied the Applicant's duties. 18 It was the conclusions reached in favour of the case which the applicant advanced as to these matters, which led to the finding that the contract was unfair and the orders of variation made. In that situation, it cannot be concluded, as the respondent argued, that a costs order made in favour of the applicant, would not be an order which follows the event in these proceedings. 19 The applicant successfully resisted the respondent's jurisdictional challenges, as well as defeating an attempt to orchestrate a scenario where the Court would be led to conclude that the applicant had resigned (at [186]). The applicant made out the serious complaints advanced as to the way in which she was treated during the course of the employment. This led not only to the finding that the contract was unfair and the variation to the notice provision of the contract, but also to the insertion of a range of positive obligations imposed on the respondent, to ensure that such treatment not occur and if it does, that the respondent take steps to deal with it. 20 The applicant also largely succeeded on what she had advanced in her evidence. The difficulty with her case flowed not from a rejection of her affidavit evidence, but from admittedly untruthful evidence which she gave in cross examination, in two respects. Firstly, while initially denying that she had ever discussed 'setting up' the applicant for litigation such as this, she conceded that she had done so, when shown the relevant correspondence. Secondly, while initially denying that she had ever 'gone slow' on the work which the respondent had directed her to do while working out her notice, that work being required in order that the general counsel engaged to replace her could be briefed, she again conceded that she had suggested this to her lawyers, when shown the relevant correspondence. 21 As to the first matter, it is relevant to note that I concluded that what the applicant had said about setting up the respondent, had to be understood in a context where there was, at the time, a dispute as to whether the respondent had dismissed her from her employment, or she had resigned. I accepted the applicant's version of the steps which the respondent had earlier taken to bring her employment to an end, because in large part her evidence was corroborated by evidence given by Mr McDowell in cross examination. That evidence directly contradicted his earlier affidavit evidence, as the February judgment explains. I did not, however, conclude that the applicant had falsely set up the respondent for the claims she advanced in the proceedings, as the respondent was suggesting in its case. 22 The difficulty with the applicant's evidence, which led to the refusal to make money orders, was that the applicant, an officer of the court, had not given truthful evidence about these two matters in cross examination, until confronted with her own documents. While being of entirely peripheral relevance to the question of whether or not the parties' contract was unfair, in the ways alleged in the applicant's case and whether the Court had jurisdiction to deal with those complaints, that evidence was extremely pertinent to the question of whether the Court could exercise any discretion in favour of the applicant in these proceedings. 23 In coming to a conclusion on those questions, the Court was also confronted with another problem. Section 106(2) of the Industrial Relations Act 1996 requires the Court to have regard to the parties' respective conduct. Not only was Mr McDowell's affidavit evidence shown to be inaccurate in a number of important respects, given his own evidence in cross examination, that evidence also revealed that the applicant's evidence was truthful, other than in relation to the two matters I have mentioned. Mr McDowell's evidence also revealed that the respondent had embarked on an entirely inappropriate course of conduct in the proceedings in relation to the question of whether or not it had acted to bring the applicant's employment to an end. 24 It was in those circumstances that I reached the conclusion that while justice required the declaration that the contract was relevantly unfair, with orders of variation following, no consequential money orders could be made in favour of the applicant. 25 Had the applicant not been a legal practitioner, employed as the respondent's general counsel and complaining about unfair treatment in that employment pursuant to an unfair contract, given particularly her obligations as an officer of the court, it is unlikely that such a conclusion would have been available. 26 The applicant's failures in the witness box, had to be contrasted with the overall approach adopted by the respondent in persisting with a case that it was the applicant who had resigned the employment. The evidence which Mr McDowell gave in cross examination, demonstrated that it was known to the respondent that this was not what had occurred, as well as showing that his affidavit evidence was not truthful in a number of important respects, relevantly to the question of the fairness of the contract. 27 It is in that context, that the question of costs must be considered. I am satisfied that there was here misconduct by both parties. While it is not of a class expressly discussed by the High Court in Oshlack, given what I have outlined, that conclusion cannot be avoided. 28 I am satisfied that in those circumstances, there ought to be some departure from the usual costs order. I am not satisfied, however, that it can be on the basis argued for the respondent. The applicant's misconduct was not of such a kind that in justice, the applicant can be completely deprived of a costs order. Such an approach would necessitate the respondent's own misconduct being entirely ignored. Justice could not permit such an outcome, given the undoubted unnecessary prolongation of the case, which resulted from the Court being called on to determine issues which the respondent ought never to have put in issue. 29 The two matters about which the applicant gave inaccurate evidence took up a relatively small part of the trial, even though the conclusions reached about that evidence had a dramatic consequence for the applicant, because it led to a refusal to make money orders in her favour. Justice could not also accommodate a complete refusal of a costs order in the applicant's favour, on this account. Had the applicant given truthful evidence about these two matters from the outset, there would have been no different outcome in these proceedings, other than as to the money order. There would then have been no basis upon which it could have been refused. 30 I am satisfied that in order for justice to be done between these parties on the question of costs, in the difficult circumstances here presenting, that the proper order is that the respondent should bear eighty five per cent of the applicant's costs. In my conclusion, that pays proper attention to the nature of the misconduct; the time that was involved in the proceedings in dealing with that matter, as well as the respondent's own conduct in the proceedings. 31 It is unnecessary, on my approach, to consider the differing offers of settlement which the parties advanced to each other at different times, in determining the appropriate costs order. Suffice it to observe that the outcome of this case must have demonstrated to all of those individuals involved, that the better course would have been for the parties to have promptly resolved their differences on sensible terms, at an early point. Orders For the reasons given, I order the respondent to bear eighty-five per cent of the applicant's costs, as agreed or assessed.

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