Patrick Stevedores Holdings Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union

Solicitor for the Applicants in NSD 596 of 2017 and NSD 1594 of 2017: Seyfarth Shaw Australia

Counsel for the Respondents in NSD 596 of 2017 and NSD 1594 of 2017: Mr R Reitano

Solicitor for the Respondents in NSD 596 of 2017 and NSD 1594 of 2017: Slater & Gordon Lawyers

BETWEEN: PATRICK STEVEDORES HOLDINGS PTY LIMITED ABN 63 060 462 919 First Applicant

PATRICK STEVEDORES OPERATIONS PTY LTD Second Applicant

AND: CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION First Respondent

order made by: LEE J DATE OF ORDER: 23 DECEMBER 2021

1. Judgment for the second applicant against the first respondent in the sum of $427,559.88, comprising statutory compensation under s 545 of the Fair Work Act 2009 (Cth) (FWA) of $364,725 and interest of $62,834.88, which judgment carries interest 60 days from the date of this order at the rate prescribed in r 39.06(a) and (b) of the Federal Court Rules 2011 (Cth).
2. A pecuniary penalty of $15,000 is imposed on the first respondent pursuant to s 546 of the FWA.
3. A pecuniary penalty of $3,750 is imposed on the second respondent pursuant to s 546 of the FWA.
4. A pecuniary penalty of $2,500 is imposed on the third respondent pursuant to s 546 of the FWA.
5. The first respondent pay 50% of the pecuniary penalty in order 2 to the first applicant, and 50% to the second applicant, within 28 days of the date of this order.
6. The second respondent pay 50% of the pecuniary penalty in order 3 to the first applicant, and 50% to the second applicant, within 28 days of the date of this order.
7. The third respondent pay 50% of the pecuniary penalty in order 4 to the first applicant, and 50% to the second applicant, within 28 days of the date of this order.
8. There be no order as to costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BETWEEN: QUBE LOGISTICS (NSW) PTY LTD ACN 123 022 588 First Applicant

QUBE LOGISTICS (SB) PTY LTD ACN 003 307 310 Second Applicant

QUBE LOGISTICS (RAIL) PTY LTD ACN 082 313 415 Third Applicant

AND: CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION First Respondent

order made by: LEE J DATE OF ORDER: 23 DECEMBER 2021

1. Judgment for the applicants against the first respondent in the sum of $2,169,555, comprising statutory compensation pursuant to s 545(1) of the Fair Work Act 2009 (Cth) (FWA) of $1,850,020 and interest of $319,535, which judgment carries interest 60 days from the date of this order at the rate prescribed in r 39.06(a) and (b) of the Federal Court Rules 2011 (Cth).
2. A pecuniary penalty of $15,000 is imposed on the first respondent pursuant to s 546 of the FWA.
3. A pecuniary penalty of $3,750 is imposed on the second respondent pursuant to s 546 of the FWA.
4. A pecuniary penalty of $2,500 is imposed on the third respondent pursuant to s 546 of the FWA.
5. The respondents pay the pecuniary penalties in orders 2, 3 and 4 to the applicants within 28 days of the date of this order.
6. There be no order as to costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

(Delivered ex tempore, revised from the transcript)

LEE J: 1 On 29 November 2021, I delivered judgment on the issues of statutory compensation and penalties in this proceeding and ordered that the parties provide agreed or competing minutes of order to reflect my reasons: see Patrick Stevedores Holdings Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union (No 4) [2021] FCA 1481. Those orders are agreed to a large extent, with only two outstanding issues that remain. One relates to interest and one relates to costs. 2 The first issue is whether I should award pre-judgment interest pursuant to s 547 of the Fair Work Act 2009 (Cth) (FWA) or s 51A of the Federal Court of Australia Act 1976 (Cth) (Act). Section 547 of the FWA relevantly provides: 547 Interest up to judgment (1) This section applies to an order (other than a pecuniary penalty order) under this Division in relation to an amount that a person was required to pay to, or on behalf of, another person under this Act or a fair work instrument. (2) In making the order the court must, on application, include an amount of interest in the sum ordered, unless good cause is shown to the contrary. (3) Without limiting subsection (2), in determining the amount of interest, the court must take into account the period between the day the relevant cause of action arose and the day the order is made. 3 There can be no contest that the compensation orders to be made by the Court fall within the operation of s 547(1) of the FWA, and that in accordance with the terms of the statute, I should award an amount pre-judgment interest. But what should that amount be? While I am cognisant of the fact that Qube and Patricks have been kept out of their money for a considerable period of time, and that this is an important factor justifying the payment of interest (see Qube Logistics (Rail) Pty Ltd v Australian Rail, Tram and Bus Industry Union [2021] FCAFC 83; (2021) 308 IR 39 (at 50 [62] per Bromberg, Katzmann and O'Callaghan JJ)), there are other discretionary considerations at play. 4 Most importantly, pursuant to s 37M(3) of the Act, I am required to exercise a power to award costs and interest in the way that best promotes the overarching purpose, including promoting the notion that disputes such as the present should be resolved as quickly, inexpensively and efficiently as possible. This has not happened in this case. The reasons why this state of affairs has come about are manifold, but include the desultory approach to litigation adopted by Patricks and Qube. This is by far the longest running case in my docket. In my view, these cases could have been resolved much earlier with a more vigorous approach being taken by both applicants to proposed case management directions and, in all the circumstances, I propose to make an award of interest for only 75 per cent of the amount claimed in the Qube proceeding from 4 May 2017 and in the Patricks proceeding from 20 April 2017. 5 The second issue is whether a costs order should be made against the Union. The primary contention advanced by Patricks and Qube in support of an adverse costs order is that offers of compromise were made to the Union in October 2019 in the amounts of $450,000 (plus civil penalties) in the Patricks proceeding and $1.6 million in the Qube proceeding, and that in not accepting those offers, the Union acted unreasonably. 6 The relevant principles are not in doubt and can be summarised as follows: (1) The power of the Court to order costs in a proceeding of this type is set out in section 570 of the FWA. Section 570(1) of the FWA relevantly provides: 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) Subsection 570(2)(b) of the FWA relevantly provides that a "party may be ordered to pay the costs only if … the Court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs". (3) The Court has adopted the following principles in connexion with this provision: (a) a failure to accept a reasonable offer of compromise is capable of constituting an unreasonable act or omission for the purposes of s 570(2) and its predecessors: see Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; (2015) 317 ALR 665 (at 697 [166] per Tracey, Gilmour, Jagot and Beach JJ); (b) "unreasonable" does not equate to "exceptional": Australian Workers Union v Leighton Contractors Pty Limited (No 2) [2013] FCAFC 23; (2013) 232 FCR 428 (at 430 [7] per Dowsett, McKerracher and Katzmann JJ); and (c) whether an act is "unreasonable" is informed by its context and requires an evaluative assessment of all the circumstances: Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222; (2017) 256 FCR 306 (at 342 [164] per Bromberg J, and at 344 [171] per Charlesworth J). (4) In considering whether it is unreasonable for a settlement offer to be rejected, the following matters are should ordinarily be considered: (a) the stage of the proceeding when the offer was made; (b) the time afforded to the offeree to consider the offer; (c) the extent of compromise involved; (d) the offeree's prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; and (f) whether the offer foreshadowed an application for indemnity costs in the event of refusal, Veda Advantage Ltd v Malouf Group Enterprises Pty Ltd (No 2) [2016] FCA 470; (2016) 118 IPR 156 (at [31] per Katzmann J). (5) There is a need to scrutinise the manner in which proceedings under the FWA are conducted to ensure that costs are not unreasonably incurred and that the public interest in the orderly and cost-effective administration of justice is not too readily placed to one side: Tomvald v Toll Transport Pty Ltd [2017] FCA 1208 (at [315] per Flick J). (6) A lack of compliance with the overarching purpose provisions set out in ss 37M and 37N of the Act inform the assessment of whether one of the pre-conditions for the exercise of the costs discretion mandated by s 570 of the FWA exists: Bywater v Appco Group Australia Pty Ltd [2019] FCA 799 (at [8]-[10] per Lee J). (7) In Ryan v Primesafe [2015] FCA 8; (2015) 323 ALR 107, Mortimer J also referred to the intersection between s 570 of the FWA and ss 37M and 37N of the Act. Her Honour there observed (at 123 [66]): Section 570, and the conditions it imposes on the Court's general costs discretion under s 43 of the [Act], is not a licence to parties to ignore the requirements of s 37M of the [Act], nor the Court's power to order costs against parties who fail to comply with their obligations under s 37N. The content of ss 37M and 37N, and parties' obligations to assist the Court in achieving the objectives set out in s 37M, must be reconciled with access to justice provisions such as s 570(1). That reconciliation occurs through a focus on the reasonableness of parties' conduct, the appropriateness of the Court processes undertaken by them, the timeliness of their compliance with Court orders or steps in the proceeding, and the existence of a substantive legal and factual basis for the claims made and arguments put. 7 In respect of both proceedings, I accept that the amounts that were ultimately offered, taken as a whole, differ from the amounts that will be recoverable pursuant to the judgment, but this is not by an overly significant amount (although I accept it is more significant in the Qube proceeding). I also accept that further costs were expended after the offers were made. 8 Further, one must recall what I stated in Patrick Stevedores Holdings Pty Ltd v Construction, Forestry, Maritime, Mining and Energy [2019] FCA 451; (2019) 286 IR 52 (at 115 [237]): … the protection against adverse costs orders in s 570 of the FW Act, while an important safeguard promoting access to justice, can, in some cases, encourage continued disputation in cases which should resolve: Avenia v Railway & Transport Health Fund Ltd (2017) 272 IR 151 at [280]. It also means some points which might otherwise be abandoned in other types of litigation, are run to the death. 9 But these factors must be balanced with others militating against an adverse costs order being made. First, the statutory intention behind s 570 of the FWA means that costs are only to be paid in identified circumstances. Secondly, the statutory compensation claims in these proceedings were not ones that were entirely straightforward. This is illustrated by the fact that an experienced industrial relations barrister acting as a referee came to an entirely different determination than the Court (although I considered the referee misapplied the relevant principles). Thirdly, the submissions of the Union reveal that the Union did have information, including that of an expert forensic accountant, which gave them some confidence, on the material it then had, that the estimates of compensation where lower than the applicants' offers. 10 I am acutely aware that, at least in my experience, a number of Fair Work proceedings that have proceeded to judgment would likely have settled with the discipline of an adverse costs regime. But this does not mean that I should not give full credit to the terms of s 570 and the policy behind the provision. 11 In the end, the ultimate focus is on whether or not it was unreasonable for the offers to have not been accepted. I have taken into account the detailed submissions made by both applicants, but given the state of the proceedings at the time the offers were made and the ultimate prospects of success, although it would have been better for the matters to have been resolved and a counteroffer made, I do not consider that the failure to accept the offers constitutes an unreasonable act for the purposes of s 570. Ultimately, I have a broad discretion, and in all the circumstances, I am not persuaded that this is a case where I should award costs. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee.