The application that the first respondent contribute to the legal costs of the applicant of this proceeding is dismissed.
[2]
In February of this year, after a contested hearing, I found a complaint of sexual harassment made by the applicant against each respondent proven. I ordered that the respondents jointly pay the sum of $130,000 to the applicant by way of pain and suffering damages and that the second respondent pay aggravated damages in the sum of $20,000.
The applicant has now sought her costs of that hearing against both the first and second respondents. I have dealt with that application in chambers after considering written submissions on behalf of the applicant and first respondent. The second respondent has not filed any submissions on the costs issue. I have also received two affidavits sworn by the solicitor for the applicant, Michael Jorgensen, dated 1 April 2019 and 16 May 2019.
The applicant's actual legal costs of the seven day hearing total $67,633.50 and her disbursements are approximately $80,000.
Unless I make an order for costs this will mean that she will effectively be denied the benefit of the award of compensation, as the award will be completely taken up in legal costs.
Section 109 of the VCAT Act provides the starting point. This section provides that each party is to bear their own costs in a proceeding before the Tribunal, subject to any order being otherwise made.
This is a very important principle. The Tribunal is established as a forum which is easy for ordinary people to access. One of the distinctions between this Tribunal and the courts is that a litigant can seek justice from the Tribunal without fear of being made liable for costs if the claim is not successful. This is one of the barriers to access to justice in the courts and it is one of the significant reasons justifying the establishment of the Tribunal.
Section 109 however recognises that there are some circumstances in which that general and very important rule should make way.
The section gives power to the Tribunal to make an order for costs, but only if it is satisfied that it is fair to do so.
In deciding whether an award of costs is fair, the Tribunal's discretion is very broad. The concept of fairness will depend upon the nature of the proceeding, the conduct of the proceeding and the relative position of the litigants in the proceeding.
The Tribunal is particularly required to have regard to a number of factors in subsection 109(3). They are - whether a party has conducted the proceeding in a way that unnecessarily disadvantaged another party to the proceeding, whether the party has been responsible for prolonging unreasonably the time taken to complete the proceeding, the relative strengths of the claim made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, the nature and complexity of the proceeding, and any other matter that the Tribunal considers relevant.
The applicant has submitted that both the first and second respondents have conducted the proceeding in a way that unnecessarily disadvantaged the applicant.
In support of that proposition I received two affidavits sworn by Michael Jorgensen, the solicitor for the applicant.
In the first affidavit the solicitor complains that the first respondent was tardy in responding to requests for documents and information.
He also complains that the second respondent sought separate hearings on liability and quantum, and that this application for a split hearing incurred costs. The application was opposed by the applicant and orders were made by a Senior Member of the Tribunal rejecting that application.
Lastly the applicant complains that the second respondent, as I recounted in my judgment, had filed a reasonable precautions defence under section 110 of the Equal Opportunity Act 2010, and also had claimed that the conduct complained of by the first respondent was outside the scope of the first respondent's employment.
At the start of the hearing these defences were withdrawn.
The applicant claims to have incurred unnecessary costs because of the initial reliance on these defence and the withdrawing of the defences.
I am not persuaded that the conduct set out above unnecessarily disadvantaged the applicant or unreasonably prolonged the time taken to complete the proceeding.
I take into account that for a significant period of this litigation both respondents were unrepresented. It is often the case that there is delay in providing discovery, even when parties are represented. I do not see the delays set out in Mr Jorgensen's affidavit as being of such a serious nature that they should justify the award of costs in what should be predominantly a no costs jurisdiction.
Further, I do not see the application for a split hearing as justifying an award of costs. This application is sometimes made both at the Tribunal and in the courts. Such a device sometimes significantly reduces costs. The fact that the application was not successful does not justify an award of costs.
Lastly, I do not see the second respondent's lack of reliance on any statutory defences as having unreasonably prolonged the time taken for this hearing or unnecessarily disadvantaged the applicant. Rather, in taking this course it could be argued that the second respondent shortened the hearing.
Were those the only matters relied upon in this application for costs, I would have no hesitation in dismissing the application.
The applicant however relied upon two further matters of substance in this application for costs.
[3]
The first was the conduct of the respondents during the hearing.
The applicant complained that the second defendant had, despite abandoning the statutory defences available to it, embarked on a trenchant defence of the first respondent, suggesting that the applicant was a liar when the second respondent had failed to make any credible investigation of the allegations made by the applicant and would not be in a position to know one way or the other whether those allegations were true.
In particular, the applicant pointed out that a director of the second respondent cross-examined the applicant over three days. Much of this cross-examination was intensely personal and much of it lacked any evidentiary foundation at all. A lot of the propositions put in cross-examination were inconsistent with the evidence of the second respondents own witnesses.
The applicant also complains that it is clear from the findings made in my judgement that each respondent participated in contaminating the evidence of the witnesses they called and attempted to mislead the Tribunal in the manner which I have previously detailed in my judgement.
The applicant also complained about the filing of a very large number of witness statements where those witness statements did not materially add to the matters in dispute.
The applicant finally relies upon the contents of the 51 page written submission filed by the second respondent at the conclusion of the trial which contained scandalous accusations not borne out by the evidence.
The applicant says that this manner of conduct of the hearing was vexatious in the sense of being seriously and unfairly burdensome to the applicant.
I do agree that the second respondent's conduct of its defence at the hearing was extraordinary and ill-advised. On several occasions I suggested to the directors of the second respondent that they needed to obtain legal advice as to particular propositions that they were putting, or as to the conduct of the hearing generally. Each one of these suggestions was repulsed. All I was told was that they were in communication with a solicitor who was giving them some advice about some of the matters that I raised. I agree that the way in which the defence was conducted necessarily required the applicant to undertake unnecessary costs in attempting to make sense of, and rebut, an extraordinary range of assertions, misstatements of the evidence, and irrelevant material.
I agree that the applicant should be compensated by way of an award of costs to the extent that this behaviour occurred.
[4]
The second submission by the applicant was that a settlement offer had been made well before the hearing date in an amount significantly lower than the compensation that was ultimately awarded.
On 15 September 2016 the applicant offered to resolve this claim as against the second respondent for the sum of $30,000.
At a much later stage of the proceeding on 1 December 2017, the applicant made another offer. She offered to settle her claim against both respondents for the sum of $80,000.
This offer was also rejected out of hand.
I agree that in considering making an award of costs, the fact that these settlement offers had been rejected is a significant matter to be weighed against the respondents, even though neither offer appears to have been put in accordance with the Calderbank guidelines.
[5]
The application for costs against the second respondent
[6]
This is a case in which it is very difficult to weigh up the obligation to ensure that the Tribunal remains accessible to litigants without fear of a significant award of costs if their application is unsuccessful, against the need to give to a successful applicant the real fruits of her judgement, rather than to see the judgement amount being swallowed up by the costs of obtaining that judgement.
Doing the best I can to apply both principles, I have taken the view that the applicant should be recompensed by way of an award of costs to the extent that the award reflects the wasted hearing days brought about by the second respondent's insistence on chasing every rabbit down every burrow, in complete disregard of the evidence called by the applicant, and the evidence called by the second respondent. The applicant should also be recompensed by way of an award of costs to the extent that the award reflects the need to proceed to trial because of the respondents' rejection of two quite modest settlement offers.
I accept that given that the first respondent was not represented, it was unlikely that this matter would have settled before trial. I do not intend to penalise either respondent simply because the matter went to trial. The allegations against the first respondent were very serious and he was entitled to defend them.
In my view this hearing should reasonably have taken two days. I therefore determine that the second respondent should pay the applicant's costs of five of the seven actual hearing days. The order will be that the second respondent pay the applicant's costs of the hearing on the third, fourth, fifth, eighth, and ninth of October 2018, the award being comprised of solicitors costs, and instructions to brief, relating to those days, together with counsels fees relating to those days.
I have been advised that the disbursements charged to the applicant in this proceeding total approximately $80,000. I have no breakdown as to how those disbursements are made up.
It is my view that given that the second respondent did not produce any evidence at all challenging the medical material relied upon by the applicant, and yet required that all of the medical witnesses be available for attendance at the hearing, the order for costs should extend to payment of the fees of the medical witnesses in relation to preparing their reports and being available if required at the hearing. I propose to make such an order.
I will also order that the second respondent pay one half of the costs of preparation for the hearing-that is $3300 for Counsel.
To reflect the fact that the two settlement offers were rejected, and precipitated two compulsory conferences, I will order that the second respondent also pay the applicant's costs on an indemnity basis of the second compulsory conference which took place on 13 November 2017, including solicitors instructions to brief and counsels fees for that compulsory conference.
[7]
The application for costs against the first respondent.
[8]
The first respondent filed submissions opposing this costs application. The first respondent submitted that it was not fair to make an order against him because he did not in effect take any active part in the proceedings. His role was limited to giving evidence at the hearing and he did not cross-examine any witness. It was the second defendant that actively defended the proceeding and consumed a significant amount of the Tribunal's time.
The first respondent also alleged that the settlement offers made had been addressed only to the second respondent and that the second settlement offer was made in circumstances where the Tribunal can be satisfied that the first respondent had no legal advice. This suggestion was challenged by material filed by the applicant.
I have determined not to make an order for costs against the first respondent. I accept that it was the second respondent who caused the prolongation of this proceeding. My observation was that the first respondent appeared at times to be quite bewildered by the proceeding. He did not take an active part in the proceeding, and simply seemed to be following instructions given to him by the second respondent as his employer as to how the proceeding should be approached. It is true that he had some legal advice at some stages of the proceeding, and I have received two affidavits on behalf of the applicant setting out the contact with a solicitor for the first respondent in the negotiations preceding the final hearing. I am not persuaded from those affidavits that the first respondent actively participated in the negotiations or in the pre-trial settlement offer process.
Given all of those circumstances, I do not propose to make an order for costs against the first respondent.
Parties
Applicant/Plaintiff:
Kerkofs
Respondent/Defendant:
Abdallah
Legislation Cited (2)
Civil and Administrative Tribunal Act 1998
Opportunity Act 2010
Cases Cited (1)
Kerkofs v Abdallah (Human Rights) (Costs) [2019] VCAT 753 (23 May 2019)