Patial v Kailash Lawyers Pty Ltd trading as Kailash Lawyers and Consultants

INTRODUCTION 1 On 9 June 2022, I made an order striking out the Statement of Claim filed by the applicant in this proceeding, together with orders allowing the applicant an opportunity to seek leave to propound a further Statement of Claim limited to discrete topics: Patial v Kailash Lawyers Pty Ltd trading as Kailash Lawyers and Consultants [2022] FCA 662 (Patial (No 1)). I also made orders allowing the respondents to apply for an order for costs. 2 The respondents seek an order requiring the applicant to pay their costs and to do so on an indemnity basis and forthwith.

BACKGROUND 3 On 4 September 2020, the applicant filed an application pursuant to s 394 of the Fair Work Act 2009 (Cth) (FW Act) in the Fair Work Commission. The first respondent was the only respondent to that application. 4 On 9 and 30 March, 20 April and 20 May 2021, Commissioner McKenna of the Commission heard the application and, on 6 August 2021, she dismissed it: Prateek Patial v Kailash Lawyers Pty Ltd T/A Kailash Lawyers and Consultants [2021] FWC 4167. 5 On 22 August 2021, the applicant wrote to the first respondent's then legal representative demanding that the first respondent withdraw its costs application and pay his "outstanding wages", failing which the applicant would commence a proceeding in this Court. That correspondence also threatened to bring proceedings against the first respondent's then solicitor and his firm. 6 On 26 August 2021, the applicant wrote directly to the first respondent offering to withdraw his appeal and to not commence a proceeding in this Court if the first respondent withdrew its application for costs in the Commission. 7 On 27 August 2021, the applicant sought leave to appeal the Commissioner's decision. 8 On 29 September 2021, the applicant commenced this proceeding by filing an Originating Application and Statement of Claim. 9 On 8 October 2021, a Full Bench of the Commission heard the applicant's application for leave to appeal. 10 On 8 November 2021, the then solicitor for the respondents wrote to the applicant in the following terms: 9. We have reviewed the Statement of Claim and find it [to] be a clear and substantial abuse of the process of the Court. 10. Firstly, as part of your Statement of Claim, you are alleging you were an employee of the First Respondent. However, this same issue has already been determined by Commissioner McKenna who found that you were not in fact an employee of the First Respondent. Consequently, you are attempting to re-litigate the same issues which have previously been raised and addressed in the Unfair Dismissal Application and which currently remain the subject of an appeal before the Commission. The bringing of concurrent proceedings in different courts relating to the same subject-matter is an abuse of the process of the Court (Moore v Inglis (1976) 50 ALJR 589 and Commonwealth of Australia v Cockatoo Dockyard Pty Ltd [2003] NSWCA 192). Further, proceedings instituted in a second forum where there is a pending proceeding in another forum would be an abuse of the process of the first forum (Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [90]). 11. Secondly, the Statement of Claim filed by you in these proceedings is for a collateral purpose. On 22 August 2021 you sent us a letter, threatening to commence legal proceedings should we not withdraw the Cost Application. The commencing of proceedings for an improper purpose including to induce a favourable settlement of other proceedings is a clear abuse of process and would form the basis of a strike out application (Williams v Spautz (1992) 174 CLR 509 and Packer v Meagher (1984) 3 NSWLR 486). … Demand to discontinue Federal Court Proceedings 13. We confirm this matter was listed for a first case management hearing at 9am on 12 November 2021 before Justice Bromwich. This case management hearing has now been cancelled as the matter is due to be re allocated to a new judge at which point the matter will be re-listed for another case management hearing. If you wish to avoid the costs consequences associated with this matter proceeding any further, we demand that you discontinue the abovementioned proceedings within the next 24 hours and no later than 12.00pm Tuesday 9 November 2021. 14. If you do not discontinue the Federal Court Proceedings, we will be seeking to make an application to strike out the Statement of Claim at the upcoming case management hearing. Costs, including on an indemnity basis, will be sought as the decision to file and serve the Statement of Claim and the refusal to discontinue the proceedings is an unreasonable act or omission by you which has caused and will further cause the Respondents to incur costs (section 570(2)(b) of the Act). … 11 On 9 November 2021, the then solicitors for the respondents wrote again to the applicant: 1. We refer to the matter above and our previous correspondence dated 8 November 2021. 2. In our correspondence we requested you discontinue the above proceedings on the basis that the Statement of Claim filed by you is a clear abuse of the process of the Court in the exercise of its inherent power. 3. As you have failed to respond to our correspondence and you have refused to discontinue the proceedings, we will be seeking to make an application to strike out the Statement of Claim at the next scheduled case management hearing. … 6. We also put you on notice that, should we be unsuccessful in our application to strike out the Statement of Claim, we will be making an application to the Court for an order for security of costs in this matter. … 12 On 24 November 2021, the Full Bench of the Commission dismissed the applicant's application for leave to appeal: see Prateek Patial v Kailash Lawyers Pty Ltd T/as Kailash Lawyers and Consultants [2021] FWCFB 6055. 13 On 6 December 2021, the solicitors for the respondents sent a third letter to the applicant: 1. We refer to the matter above and our previous correspondence dated 8 and 9 November 2021. 2. In our correspondence we requested you discontinue the above proceedings on the basis that the Statement of Claim filed by you is a clear abuse of the process of the Court in the exercise of its inherent power. To date, you have failed to discontinue the proceedings. 3. We again demand that you discontinue this matter on the basis that these proceedings are incompetent and deficient. We refer to our letter dated 8 November 2021 and reiterate our position that your commencement of these proceedings is an attempt to re-litigate the same issues which have previously been determined by Commissioner McKenna and now the Full Bench of the Fair Work Commission. The bringing of concurrent proceedings in different courts relating to the same subject-matter is an abuse of the process of the Court (Moore v Inglis (1976) 50 ALJR 589 and Commonwealth of Australia v Cockatoo Dockyard Pty Ltd [2003] NSWCA 192). Further, proceedings instituted in a second forum where there is a pending proceeding in another forum would be an abuse of the process of the first forum (Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [90]). 4. Further, the Statement of Claim filed by you in these proceedings is for a collateral purpose. On 22 August 2021 you sent us a letter, threatening to commence legal proceedings should we not withdraw the Cost Application. The commencing of proceedings for an improper purpose including to induce a favourable settlement of other proceedings is a clear abuse of process and would form the basis of a strike out application (Williams v Spautz (1992) 174 CLR 509 and Packer v Meagher (1984) 3 NSWLR 486). 5. Should you not withdraw the proceedings we will be making an application at the upcoming case management hearing on 9 December 2021 to have the matter summarily dismissed. We put you on notice that we will also be making an application for security of costs. … 8. We put you on notice that costs, including on an indemnity basis, will be sought as the decision to file and serve the Statement of Claim and your ongoing refusal to discontinue the proceedings is an unreasonable act or omission by the Applicant which has caused and will further cause the Respondents to incur costs (section 570(2)(b) of the Fair Work Act 2009 (Cth) (Act)). 14 On 23 December 2021, an interlocutory application was filed seeking the dismissal of the proceeding or the striking out of the Statement of Claim. The applicant contends that this application was filed and prosecuted only by the second respondent, whilst the respondents contend that it was an application by all the respondents. For the reasons set out at [37] below, the applicant's contention is rejected and the respondents' contention is accepted. 15 On 18 March 2021, I heard the interlocutory application and as noted above on 9 June 2022 I made an order striking out the applicant's Statement of Claim.

The costs discretion generally 16 Section 43 of the Federal Court of Australia Act 1976 (Cth) provides the Court with a broad discretion as to costs. It must be exercised judicially, in accordance with established principle and factors directly connected with the proceeding: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 96 [65] (McHugh J); Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v Mukiza [2022] FCAFC 105 at [4] (Markovic, Thawley and Cheeseman JJ). 17 The present application gives rise to the following questions: (1) should there be a costs order? (2) if yes to (1), then: (a) which respondents are entitled to a costs order? (b) should costs be ordered on an indemnity basis?; and (c) should costs be assessed and payable forthwith? 18 These questions are considered, in turn, below.

Should there be a costs order? 19 Section 570 of the FW Act provides in so far is presently relevant: 570 Costs only if proceedings instituted vexatiously etc. (1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A. (2) The party may be ordered to pay the costs only if: (a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or (b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or … 20 Sections 569 and 569A of the FW Act are not engaged. The respondents rely upon s 570(2) as enlivening the discretion in s 570(1) to order the applicant to pay the respondents' costs. I am persuaded for the following reasons that both s 570(2)(a) and (b) are satisfied in that the applicant instituted the proceeding without reasonable cause, and acted unreasonably from the commencement of the proceeding on 29 September 2021. 21 First, as is recorded in Patial (No 1), the bulk of the Statement of Claim was struck out because it was an abuse of process as it sought to re-agitate the issue determined by the Commission as to whether the applicant had been employed by the first respondent. As I noted in Patial (No 1) at [41]-[42]: 41. The above issues all depend upon the proposition that the applicant was employed by the first respondent. As noted above, that very issue was considered in detail and determined by the Commissioner adversely to the applicant. 42. If the applicant were allowed to re-litigate this issue, the first respondent would be vexed and oppressed in having to litigate again an issue already determined in the Commission. The re-litigation of the issue would run contrary to principle of finality, would create the possibility of inconsistent judgments on the same issue and be an inefficient use of the Court's resources. All of these matters would tend to bring the administration of justice into disrepute. I am comfortably satisfied that the pursuit in this Court of a case based upon the proposition that the applicant was an employee of the respondent in circumstances where that proposition was found to be false by the Commission is an abuse of process. 22 Secondly, the applicant behaved unreasonably in pursuing his claim against the first respondent based upon the proposition that he had been an employee of the first respondent and was put squarely on notice in the correspondence set out at [10], [11] and [13] above that: the respondents contended that the pursuit of the Statement of Claim was an abuse of process and the detailed basis for that contention; that the respondents would deploy that contention in support of an application to dismiss the proceeding or strike out the Statement of Claim if the applicant did not withdraw the Statement of Claim and if the respondents succeeded with their foreshadowed application they would seek an order for the payment of costs on an indemnity basis. Despite being squarely on notice of these matters, the applicant persisted. 23 Thus, the discretion to award costs is enlivened. It is unnecessary to decide whether the applicant commenced the proceeding for a collateral purpose (see [5] and [6] above). 24 In my view, the same factors which enliven the discretion in this case also provide a substantial basis for an order that the applicant pay the respondents' costs of and incidental to the respondents' interlocutory application. 25 The applicant made the following submissions as to why there should not be a costs order. 26 First, because most of the respondents' submissions on this costs application are manifestly irrelevant to the question of costs. I disagree. The respondents' submissions are all directly relevant to the question of costs. In contrast, and as discussed at [33] - [35] below, it is the applicant who has made some submissions which are manifestly irrelevant to the costs issue presently before the Court. 27 Secondly, because the applicant's claim was not vexatious. This submission was not developed. As noted above, I have concluded that the discretion is enlivened by the applicant's unreasonable actions in commencing and continuing the proceeding and it is not necessary to decide whether the applicant acted vexatiously. 28 Thirdly, because leave has been given to file a further Statement of Claim against the second and third respondents. This is not an accurate description of the orders in Patial (No 1), the effect of which was to allow the applicant an opportunity to apply for leave to file a further, limited, Statement of Claim in circumstances where the previous Statement of Claim did not disclose a viable cause of action against the second and third respondents. It does not follow from the grant of such leave that there should not be an award of costs. The Statement of Claim was struck out in its entirety; and the grant of leave is an indulgence. 29 Fourthly, because of alleged misconduct of legal representatives for the respondents. This includes grave allegations that: (1) Mr Pall and Mr Misra (counsel for the respondents): "intentionally provided the incorrect information to the Court" concerning the relationship between the applicant on the one hand and the second and third respondents on the other; and submissions that they: "should be punished to the full extent of the law for wasting the Court's precious time and resources"; and (2) the signature of a solicitor which appears on two affidavits of Mr Pall (as evidence of that solicitor having witnessed Mr Pall's making of those affidavits) may have been forged. In this regard the applicant submitted that "I submit [the solicitor] is the restricted practitioner working under the supervision of Mr Pall. There are Thirty-One (31) signatures of [the solicitor] as a witness on Mr Pall's affidavit filed at the court dated 23 December 2021 and 30 June 2022. All Thirty-One (31) signatures are different. I seek that the Court investigates whether these are [the solicitor's] genuine signature or if someone has forged [the solicitor's] signature". In circumstances where the signature is that of a witness to Mr Pall's affidavits this is a thinly veiled suggestion that Mr Pall either forged the solicitor's signature or was party to such a forgery by someone else. 30 The applicant also submitted that: I submit that the court should take strict measures to save the integrity of the Federal Court of Australia by punishing Mr Pall and Mr Misra for intentionally providing incorrect information to the Court at the hearings and submissions concerning the Second or Third Respondent's relationship with the Applicant ... Their false statements have stretched the proceedings and put additional pressure on the Applicant and the legal system. 31 I accept that the conduct of representatives of a party during a proceeding may, in some circumstances, inform the exercise of the discretion to award costs. However, the evidence before the Court does not even remotely approach the level of evidence required for the Court to be satisfied that allegations of such gravity have been proven: see s 140 of the Evidence Act 1995 (Cth); Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170 at 170-171 (Mason CJ, Brennan, Deane and Gaudron JJ). Regrettably, the suggestion in Patial (No 1) at [62] (albeit in the context of pleading) that the applicant pay heed to rr 21 and 32 of the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW) appears to have been ignored. 32 Fifthly, because the Commission decision is contrary to law. There is no basis for this submission. That decision stands. The applicant's application for leave to appeal from that decision was rejected: see [12] above. In any event, the costs discretion under exercise assumes necessarily the correctness of Patial (No 1) and that decision was in turn premised upon the Commission's decision being correct. 33 Sixthly, because the applicant has a valid cause of action concerning remuneration for work done, harassment and workplace discrimination and other matters. These are matters of no relevance to the question of costs, particularly when no such action was properly pleaded, and appear to cavil with the primary decision to the extent (and the precise extent is not clear) this claim is based upon an alleged employment relationship between the applicant and the first respondent. 34 Finally, because of various species of conduct of the respondents or Mr Pall prior to the commencement of the proceeding, such as: (1) promises allegedly made by Mr Pall to the applicant; (2) alleged conduct of Mr Pall in the Commission proceedings; and (3) alleged representations by Mr Pall to the Law Society of New South Wales and others. 35 This alleged conduct is also irrelevant to the costs discretion being exercised. In view of the irrelevance of these allegations to the exercise of the discretion, it is not necessary to consider their veracity. 36 For the above reasons, there should be a costs order against the applicant.

Which respondents are entitled to a costs order? 37 The next question is the identification of the respondents entitled to the costs order. This question arises because the applicant submits that the interlocutory application filed on 23 December 2021 is an application of the second respondent only. That submission is based upon a screenshot of the Commonwealth Courts portal taken by the applicant which records in the "Filed By" column the name of the second respondent only against the interlocutory application dated 23 December 2021. The submission is rejected: that screenshot shows only a portion of the "Filed By" entry; the full entry records that the interlocutory application was filed by all of the respondents; the interlocutory application is expressed on its face to be on behalf of all of the respondents; and the interlocutory application was conducted and determined on the basis that it was prosecuted by all of the respondents.

Should costs be payable on an indemnity basis? 38 The next question is whether the costs should be payable on an indemnity basis. The respondents addressed this issue in their submissions. The applicant did not. 39 Section 43(3)(g) of the Act provides that costs may be awarded on an indemnity basis. The usual position is that costs are payable on a party and party basis. One basis for departure from the usual position is where there has been a relevant delinquency on the part of the unsuccessful party. 40 In Oshlack, Gaudron and Gummow JJ explained at 89 [44]: It may be true in a general sense that costs orders are not made to punish an unsuccessful party. However, in the particular circumstance of a case involving some relevant delinquency on the part of the unsuccessful party, an order is made not for party and party costs but for costs on a "solicitor and client" basis or on an indemnity basis. The result is more fully or adequately to compensate the successful party to the disadvantage of what otherwise would have been the position of the unsuccessful party in the absence of such delinquency on its part. (emphasis added) 41 In Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225, Sheppard J explained at 232-234: It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred: 1. The problem arises in adversary litigation, ie litigation as between parties at arm's length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg a government agency or statutory authority. 2. The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. In this Court the provisions of 0 62, rr 12 and 19, and the Second Schedule to the Rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity. 3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin U in Berry v British Transport Commission (supra) and Handley JA in Cachia v Hanes (supra) on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to. 4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (supra) at 141 said the Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require". Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston (supra) at 637; namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at p 8) in Tetijo, "The categories in which the discretion may be exercised are not closed". Davies J expressed (at p 6) similar views in Ragata (supra). 5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in I-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise ( eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis. (emphasis added) 42 In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1998) 81 ALR 397, Woodward J stated at 401: … I believe that it is appropriate to consider awarding "solicitor and client" or "indemnity" costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion. … 43 I am satisfied that costs should be payable on an indemnity basis. The applicant, who is a legal practitioner, should have been aware, from the commencement of the proceeding on 29 September 2021 that he was engaging in an abuse of process. Despite the position being clearly spelt out for him by the solicitor for the respondents in the correspondence extracted at [10], [11] and [13] above, he persisted.

Should the costs be assessed and payable forthwith? 44 The final question is whether the Court should exercise its discretion so as to order that costs should be assessed and payable forthwith. The respondents addressed this issue in their submissions. The applicant did not. 45 The prima facie position is that the costs of an interlocutory application are not payable until the conclusion of the proceeding: r 40.13 of the Federal Court Rules 2011 (Cth). That prima facie position may be displaced: see rr 1.34 and 1.35. The relevant considerations are conveniently summarised in Richmond v Ora Gold Limited [2020] FCA 70 at [28]-[34] (Colvin J) and Watson v Kriticos (Costs Payable Forthwith) [2022] FCA 4 at [6]-[7] (Perram J). 46 The applicant should pay the respondents' costs forthwith for the following reasons. First, the Statement of Claim, which should never have been filed in that form, has been struck out. This involved the resolution of a discrete issue in the proceeding. Secondly, the applicant has indicated that he wishes to seek leave to file a further Statement of Claim not limited in the manner envisaged by the orders made on 9 June 2022. On the assumption most favourable to the applicant, namely that such leave is granted, this will to a large extent be in substance a new proceeding and it is likely that it will be some time before the proceeding is concluded.

CONCLUSION 47 For the reasons set out above, the applicant should pay the respondents' costs of the application on an indemnity basis and forthwith. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Goodman.