1 On 4 November 2009, the Court made orders following an ex parte hearing that the contract of employment between the applicant and the respondent was unfair under s 106 of the Industrial Relations Act 1996: Ricardo Riskalla v The Consulate General of Portugal in Sydney trading as AICEP Portugal (formerly known as ICEP Portugal) [2009] NSWIRComm 185. The present judgment deals with an application for costs made by the applicant.
2 The ordinary rule is that costs follow the event. No reasons have been forthcoming as to why the Court should depart from the rule. The applicant, however, also applied for his indemnity costs. Four grounds were advanced in support of the application. These were:
"(i) The applicant's colleague, who had been employed by the respondent for a shorter period of time and in a position of less responsibility than the applicant, was paid redundancy or severance payment upon the termination of her employment and the applicant was not. Rather, the applicant was required to commence and conduct legal proceedings in order to seek his entitlements.
(ii) The applicant submits that the respondent's conduct throughout these proceedings as outlined above is indicative of the respondent's complete and casual disregard for the legal process. The applicant submits that the respondent has acted improperly and unreasonably throughout the matter and has sought only to protect its own interests by instructing a solicitor to attend Court on each relevant occasion but at the same time providing no instructions to either resolve or progress the matter. In the applicant's submission such an attitude must count in the favour of the applicant in evoking the Court's discretion to grant costs in the applicant's favour.
(iii) The applicant herein has incurred significant costs in seeking to assert his rights and entitlements and submits that indemnity costs are entirely appropriate in these circumstances in order to compensate him for this significant loss and expense.
(iv) The respondent in this matter breached Practice Direction 14 by failing to have available at the Conciliation a person with the authority to discuss the settlement of the matter. No explanation has been provided by the respondent for this action. As a result, the Conciliation was essentially futile and the opportunity to explore an alternative resolution of this matter was not available to the applicant."
3 The first ground relied upon a passage in Cornell v Titley [2002] NSWIRComm 326 where his Honour Justice Haylen said at [14]:
The applicant also sought indemnity costs. In relation to the issue of indemnity costs (and more generally), counsel for the applicant submitted that employers who try to circumvent the statutory superannuation regime are clearly acting against the public interest. They were abusing a position of trust and prejudicing vulnerable persons who stand in a weaker position. Information is withheld from the employee allowing the loss to arise through gross neglect or equitable fraud. The facts at the very least must amount to an unjust enrichment by conscious act. In the context of the present case, indemnity costs were the only basis that any approximation of fair and reasonable justice could be achieved between the parties. Two employees performing the same labour upon the same terms ought to be placed in the same position. One of those employees ought not suffer a loss because of his employer's unfairness and breach of trust, contract and statutory obligation. An employee who has been denied his rights should be put in exactly the same position as an employee has been accorded his rights.
4 The passage sets out, in summary form, the submissions made on behalf of the applicant. It does not purport to contain his Honour's findings on the issue. Cornell v Titley concerned a single claim for the recovery of unpaid superannuation contributions said to have been deliberately withheld by Mr Titley in the context of representations made to the applicant that the contributions would be paid. An aggravating feature was the conduct of the respondent in recovering from the applicant his motor vehicle on the pretext that it would be sold to cover his superannuation contributions. Haylen J ultimately found that an order for indemnity costs was warranted on a different basis from that asserted on the applicant's behalf, namely that Mr Titley had failed to appear at the conciliation hearing after extensive steps had been taken to notify him of the hearing date and of the nature of the claims against him. In that regard, his Honour observed that the capacity to quickly and relatively inexpensively resolve the issue of unpaid superannuation in conciliation proceedings had been lost because of Mr Titley's conduct. Another matter which his Honour found persuasive was that Mr Titley had made no contact with the applicant to explain his non-appearance (at [17]).
5 In the present matter, the respondent had legal representation at the conciliation proceedings but the consular officer who attended on behalf of the respondent had no authority to negotiate a settlement. The matter was therefore unable to be resolved at that stage. Thereafter, the respondent filed some documents although it was in breach of a timetable for the filing and serving of evidence. The respondent continued to be legally represented at all directions hearings, and indeed, at the ex parte hearing, but on each of those occasions, the Court was informed that the representative had no instructions to act on behalf of the respondent. Attempts on behalf of the applicant to communicate with the respondent with regard to the progress of the proceedings elicited no response.
6 These circumstances set out in brief some history of the proceedings. Based on that history, the applicant has advanced his four grounds. The history largely confirms the content of those grounds. In my opinion, it demonstrates that the respondent did act out of disregard for the Court's processes by failing to send one of its officers to the conciliation with the requisite authority to negotiate and resolve the proceedings at that preliminary stage and by token attendances at the Court's directions hearings. At one stage, the applicant attempted to force the issue by filing a Notice of Motion seeking an order that the matter be heard ex parte. The ground, accepted by the presiding judge, his Honour Justice Marks, in granting the order, was that the applicant had been unable to obtain any information or instruction from the respondent about the progress of the matter.
7 As a result of the respondent's conduct, the applicant incurred significant costs in legitimately asserting his rights and entitlements.
8 Costs on an indemnity basis, it should be borne in mind, constitute an exception to the general rule. In Boner and Ors v Anderson and Ors (No 2) (1993) 50 IR 470 at 475, Hill J referred to a number of criteria upon which a court may exercise its discretion to award costs on an indemnity basis. His Honour said:
It is fair to say that generally speaking an order for costs on an indemnity basis is justified in a case in which there are special or unusual features of an unmeritorious or improper nature surrounding the case of one party (usually the loser) which make it unreasonable and unfair that the successful party should be out of pocket as a result of the proceedings.
It is unnecessary to traverse the cases in any detail; they demonstrate in one form or another special or unusual circumstances which manifest themselves in improper or unmeritorious conduct by the unsuccessful party, as for example, in cases involving the maintenance of a vexatious claim or defence, the institution and/or maintenance of an action or defence which, while not vexatious or involving an ulterior or collateral purpose, may, on a rational basis, be described as untenable or doomed to failure and cases where a party has conducted its case in wilful disregard of known facts or clearly established law. However, even where there are special or unusual circumstances attaching to a particular case it does not follow as of course that indemnity costs will be awarded. But it may be observed, and the authorities demonstrate, that the categories of special or unusual circumstances justifying indemnity costs are not closed; a too rigid or narrow approach can lead to error in the exercise of the discretion.
9 In Oshlack v Richmond River Council (1998) 193 CLR 72, Gaudron and Gummow JJ (in the majority) made the following observations on indemnity costs (at [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.
10 An award of indemnity costs should also be limited to those costs which are reasonably incurred in the proceedings: Lolomanaia v Roads and Traffic Authority [2000] NSWSC 780 at [22] per Greg James J.
11 Taking into account the history of the proceedings and the respondent's conduct during the course of those proceedings, and guided by the principles referred to above, I consider that the applicant is entitled to an order for his indemnity costs, reasonably incurred.