Kennett and Anor v Mayrana Pty Ltd and Ors and Myong Ho Pak v Mayrana Pty Ltd and Ors

KF KENNETT NOMINEES PTY LTD (ACN 007 739 568) Second Appellant

MAYRANA PTY LTD (ACN 101 363 688) First Respondent

GARRATS LIMITED (ACN 000 003 725) Second Respondent

CHRISTOPHER CAMPBELL Third Respondent

MIKE TRAYNOR PARTIES: Fourth Respondent

Matter Number IRC 2429 of 2005 ______________________________

MAYRANA PTY LTD (ACN 101 363 688) First Respondent

GARRATS LIMITED (ACN 000 003 725) Second Respondent

CHRISTOPHER CAMPBELL Third Respondent

MIKE TRAYNOR Fourth Respondent

FILE NUMBER(S): IRC 2428 and IRC 2429 of 2005

CORAM: Walton J Vice-President; Schmidt J; Staff J

CATCHWORDS: Appeal - application for leave to appeal and appeal - orders for costs against applicants at interlocutory stage of proceedings - discretionary decision - no error shown - public interest test not satisfied - leave to appeal refused - appeal dismissed - costs

House v The King (1936) 55 CLR 499 Jay v Colonial Services Pty Ltd (2002) 113 IR 47 Kennett and anor v Mayrana Pty Ltd and Ors & Myong Ho Pak v Mayrana Pty Ltd and Ors [2005] NSWIRComm 134 CASES CITED: Knowles v Anglican Church Property Trust (No 2) (1999) 95 IR 38 Perrott v Xcellenet Australia Ltd and Ors (1998) 84 IR 255

APPELLANTS: Dr J Berwick of counsel SOLICITORS: GH Healey & Co LEGAL REPRESENTATIVES:

RESPONDENTS: Mr AJ Bulley of counsel SOLICITORS: Gordon & Johnstone

• 8 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

CORAM: Walton J, Vice-President Schmidt J Staff J

KEITH FRANKLIN KENNETT AND ANOTHER v MAYRANA PTY LTD AND OTHERS

Application by Keith Franklin Kennett and another to appeal an extempore judgment of Justice Marks given on 21 April 2005 in Matter Number IRC 3679 of 2003

Application by Myong Ho Pak to appeal an extempore judgment of Justice Marks given on 21 April 2005 in Matter Number IRC 3680 of 2003

JUDGMENT OF THE COURT EX-TEMPORE [2005] NSWIRComm 367

1 These matters concern applications for leave to appeal and if granted, appeal from a decision given by his Honour Justice Marks on 21 April 2005 (see Kennett and anor v Mayrana Pty Ltd and ors & Myong Ho Pak v Mayrana Pty Ltd and Ors [2005] NSWIRComm 134), that the applicants bear the respondents' costs, as agreed or assessed, in relation to interlocutory matters arising during the course of case management procedures. The cost orders were payable forthwith. 2 The grounds of appeal were:

His Honour Justice Marks erred in taking into account matters in the conduct of the proceedings prior to the conclusion of conciliation in December 2004, after objection to such material was taken by counsel and His Honour indicated that such material would not be taken into account.

His Honour Justice Marks erred in not taking into account the complexity of the matter as a reason for delay in filing the Amended Summons.

His Honour erred in finding that the matters had been the subject of gross delay. The material properly before His Honour did not support such a finding.

His Honour erred finding that an award of costs against the Applicants could be founded on the basis that he did not know who was at fault.

His Honour erred in finding that the Respondent did not need to put in a submitting appearance on 21 April 2005.

3 Marks J gave ex-tempore reasons on 21 April for his decision. He referred to 'gross delay' by the applicants in prosecuting their claims. The proceedings were commenced in July 2003. His Honour said at [1]:

These matters have been the subject of gross delay on the part of the applicants in prosecuting their claims. The summonses were originally issued in July 2003 and there has been a considerable delay since in the applicants determining whether the proceedings are to be amended. The material before the court indicates prevarication in this regard over a long period of time and the involvement of solicitors and counsel in determining the nature and extent of any amendment, and indeed as to whether any amendment to the proceedings was to be made. 4 His Honour noted the name of the solicitor on the record, from whom there had been no evidence or explanation of what had transpired. The proceedings were before the Court on 24 March, as the result of steps taken by the respondents; on 6 April, when the applicants were to show cause why the proceedings should not be dismissed and costs ordered against them; and on 21 April, to enable the Court to determine whether there should be a reference to the Legal Services Commission "of the circumstances in which both applicants have clearly failed to comply with orders of the court directing that amended summonses be filed by a particular date" [6]. His Honour also noted that some explanation for what had transpired had been tendered to the Court. The respondents sought an order for costs on an indemnity basis, for the proceedings on 21 April and the two previous occasions . 5 At [9] his Honour concluded that the applicants should pay the costs of the three interlocutory appearances, but declined to order indemnity costs. His Honour reserved the question of whether orders should be made against the applicants or their legal advisers and noted at [9] that:

It will be a matter for Ms Tan or Mr Healey or Ms Munc to explain to the applicants that the court has power in appropriate circumstances to call upon legal practitioners to show cause why costs should not be met by them. Whether and to what extent this is an appropriate course in these proceedings I am unable to say, and I shall therefore take no action to summons any legal practitioner to show cause, accordingly. 6 Marks J had before him affidavit evidence filed by both parties. The applicant's solicitor with carriage of the matter attested that the matter had been conciliated by her Honour Justice Kavanagh in December 2004. Kavanagh J gave directions for the preparation of the matter for hearing, including that an amended summons be filed by 14 January. The direction was not complied with, but attempts were made to reach agreement with the respondents, as to an amended timetable. No agreement was reached and the applicants failed to have the matter relisted for directions, as the respondents invited. An amended summons was not filed until 6 April, although steps had been taken to prepare the summons and supporting affidavit material in the meantime. The Court had not been approached by the applicants for a new timetable. The matter had been pursued by the respondents. 7 The personal applicants, Mr Kenneth and Ms Myong Ho Pak, each swore an affidavit which explained steps taken to prepare the matter for hearing. Another solicitor involved in the conduct of the matter, also swore an affidavit, which explained steps taken to prepare the matter, before and after the conciliation proceedings before Kavanagh J. Objection was taken to any complaint being advanced in relation to the applicants' conduct of the case before the December 2004 conciliation proceedings. A misunderstanding as to the necessity to approach the Court, when the directions made could not be complied with, was acknowledged by the applicants' solicitors and an apology proffered. A reference to the Legal Services Commissioner was opposed. 8 The respondents' solicitor also swore an affidavit which recounted the history of the matter from its commencement, with the applicants' repeated failures to comply with the Court's directions being outlined. He explained the steps taken by the respondents to have the matter relisted in March 2005. On 24 March the matter came before Marks J, who made directions which required the applicants to file certain material for a show cause hearing on 6 April. The material was not filed in accordance with the directions. The parties' cases

9 The appellants argued that in making the costs order, his Honour had erred in having regard to what had occurred in the proceedings prior to the conciliation in December 2004. This was apparent from his Honour's reference to gross delay by the applicants and the transcript of the proceedings. This made it clear that Marks J improperly took into account steps taken prior to conciliation proceedings, circumstances in where objections were advanced for the appellants in relation to the relevance of what had occurred in 2004. A failure to relist a matter when directions were not complied with in the circumstances could not amount to gross delay. It was also submitted not to be a proper basis for a referral to the Legal Services Commissioner, or the costs order made. Leave to appeal should accordingly be granted and the appeal upheld. 10 The respondents argued in their written outline of submissions that leave should not be granted because the public interest test in s 188(2) of the Industrial Relations Act 1996 ('the Act') could not be satisfied. Nor was any error in the exercise of the discretion to make a costs order demonstrated. The power to make the order flowed from s 181 of the Act. An error such as that discussed in House v The King (1936) 55 CLR 499 at 504-5 could not be demonstrated. 11 The complaint advanced was that the Marks J had taken into account the whole history of the matter, in making costs orders in relation to three appearances before the Court after the December conciliation proceedings. No such error occurred. His Honour had noted:

That leaves outstanding my consideration of the particular issue, namely, the failure on one view of it of the legal practitioners to approach the court in a timely fashion or take some other action in circumstances where it was clear that the applicants were both in breach of orders of the court and in dealing with that on the basis the affidavit material tendered and the submissions made by you. 12 The purpose of a costs order was to reimburse expenses incurred by a party through no fault of their own. The order made accorded with applicable principle - Jay v Colonial Services Pty Ltd (2002) 113 IR 47. Consideration 13 Having heard the parties as to both leave to appeal and appeal we are satisfied that leave to appeal must be refused in this case. There was no issue that the order made was within the discretion granted by s 181 of the Act, which provides: 181 Costs (1) Subject to the rules of the Commission and any other Act or law: (a) the Commission may award costs, and (b) costs are in the discretion of the Commission, and (c) the Commission may determine by whom and to what extent costs are to be paid, and (d) the Commission may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on any other basis. (2) However, the Commission when it is not in Court Session may award costs only in the following cases: (a) the Commission may award costs against an applicant if it considers that the application to it was frivolous or vexatious, or (b) the Commission may award costs against a party to proceedings who, in the opinion of the Commission, instituted proceedings without reasonable cause, or (c) the Commission may award costs against a party to proceedings under Part 6 of Chapter 2 (Unfair dismissals) who, in the opinion of the Commission, unreasonably failed to agree to a settlement of the claim or whose application was frivolous or vexatious, or (c1) the Commission may award costs against an industrial agent representing an applicant or employer in proceedings under Part 6 of Chapter 2 if:

(i) the industrial agent fails to file a certificate as required by section 90A, or (ii) the Commission finds that the industrial agent has filed a certificate under that section certifying that the agent has reasonable grounds for believing, on the basis of provable facts, that the applicant's claim or employer's response to the claim had reasonable prospects of success when the agent did not have reasonable grounds for believing, on the basis of provable facts, that it had reasonable prospects of success, or (d) the Commission may award costs in proceedings for a breach of an industrial instrument or the recovery of money under Chapter 7, as provided by sections 357 and 373. (3) The Commission in Court Session may not award costs in proceedings for a contravention of a dispute order or in proceedings under Division 2 of Part 4 of Chapter 5 (Rules of industrial organisations). (4) In this section, costs includes: (a) costs of or incidental to proceedings in the Commission, and (b) in the case of an appeal to the Commission, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal. 14 The issues raised by the appeal do not go to questions of principle. They concern alleged errors in Marks J's exercise of the discretion to award costs, at an interlocutory stage of the proceedings, against a party in default of directions given by the Court as to the preparation of the matter for hearing. His Honour concluded in his decision that this had resulted in repeated appearances before him, which would have been unnecessary had the Court's directions been complied with. The transcript referred to by the appellant confirms that his Honour was directing his enquiries to what had occurred since the conciliation in December 2004. We are satisfied that the public interest test in s 188 is not satisfied by the matters raised and the arguments advanced. (See Knowles v Anglican Church Property Trust (No 2) (1999) 95 IR 380). Section 188 provides: 188 Appeals to Full Bench by leave only (1) An appeal to a Full Bench of the Commission under this Part may be made only with the leave of the Full Bench. (2) The Full Bench is to grant leave to appeal if, in its opinion, the matter is of such importance that, in the public interest, leave should be granted. (3) The Full Bench may deal with an application for leave to appeal separately and without conducting a hearing into the merits of the appeal. (4) This section does not apply to an appeal made by the Minister. 15 As has oft been observed, leave to appeal will not lightly or automatically be granted. (See Perrott v Xcellenet Australia Ltd and Ors (1998) 84 IR 255.) The matters were before Marks J for case management. There will be occasions when it is appropriate for the Court to make orders against a party in default of directions given in the case management process. His Honour concluded that this was such a case. Nothing advanced has convinced us that his Honour's decision involves appellable error, or that it meets the public interest test. [Hearing as to Costs] Orders

16 For all of the reasons given, leave to appeal is refused and the appeal dismissed. The appellants are ordered to bear the respondents' costs of the appeal, as agreed or assessed. We are satisfied that costs should follow the event. We so order.

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