Roohizadegan v TechnologyOne Limited

KERR J: 1 In these proceedings, the Applicant seeks an order for costs. 2 The Applicant accepts that by reason of the provisions of s 570 of the Fair Work Act 2009 (Cth) (Fair Work Act) such an entitlement is generally unavailable in relation to a matter of this nature arising under that Act notwithstanding a party's success in such a proceeding. As is material to this application, under s 570(2)(b) the Respondents can be ordered to pay costs "only if … the court is satisfied that [the Respondents'] unreasonable act or omission caused [the Applicant] to incur the costs". 3 Mr Roohizadegan, the successful Applicant in this case (for the reasons I gave in Roohizadegan v TechnologyOne Limited (No 2) [2020] FCA 1407 in conjunction with which these reasons should be read), acknowledges that constraint. He submits however that seven unreasonable acts or omissions by the Respondents were severally responsible for his incurring costs, and thus each provide a foundation for his entitlement to an order for costs in his favour. 4 The Respondents have filed written submissions contesting the propositions the Applicant advances in those regards. 5 The parties have supported their respective submissions by filing affidavits sworn by solicitors of the firms that represented them: the Applicant by that of Jacob William White affirmed 13 November 2020, and the Respondents by that of Belinda Ann Winter affirmed 27 November 2020. I have had regard to the contents of those affidavits. I am persuaded that nothing of substance is relevantly contentious. In my view, nothing in the parties' submissions or the affidavits filed in support arises as would require the Court to proceed otherwise than on the papers: as it foreshadowed in the orders it made on 2 October 2020. I note that neither party sought an oral hearing. 6 It is convenient to address this application in the sequence advanced by the Applicant.

Asserted unreasonable defence of the proceedings 7 The Applicant submits that the most significant unreasonable act or omission of the Respondents upon which he is entitled to rely is what he submits to have been their unreasonable defence of the proceeding. The Applicant submits that it is well established that filing a defence containing denials for which there is no arguable foundation in fact or law is generally considered to be an unreasonable act for the purposes of s 570(2)(b). His submissions point to a number of what are asserted to be damning findings the Court has made against the Second Respondent and officers and employees of the First Respondent whose conduct is to be attributed to it. 8 That must be accepted. The Respondents counter however, and I accept, that there is a degree of hindsight wisdom necessarily involved in reasoning from those specific findings to the proposition that their filing a defence to Mr Roohizadegan's application was of itself an unreasonable act. 9 I would reject the Applicant's submission, for three reasons. 10 First, my findings were that the Second Respondent (Mr Di Marco) was the sole decision maker with respect to the Applicant's termination. The Applicant is correct that in reaching that conclusion I made findings that Mr Di Marco (who I concluded had been the controlling mind of the First Respondent) was a "highly unimpressive witness and not one whose evidence I am entitled to accept in preference to that given by Mr Roohizadegan unless corroborated by contemporaneous documents or by other evidence which the Court accepts". However, I had preceded that statement with the observation that it was "unnecessary for the Court to record a finding that Mr Di Marco was not a witness of the truth. Human recall is imperfect, and Mr Di Marco may have come to believe that the relevant events must have been as he gave evidence in this proceeding: when in fact they were not". 11 Thus, although I concluded that Mr Di Marco did not terminate Mr Roohizadegan for the reasons of which he had given evidence and further that he had not held the views that TechnologyOne pleaded as its reasons for dismissing Mr Roohizadegan on 18 May 2016, it does not necessarily follow that Mr Di Marco did not believe that to have been the truth by the time these proceedings were brought by the Applicant: three months later on 19 August 2016. 12 My reasons are pregnant with the possibility that human circumstances might explain why that could have been so. Mr Di Marco's evidence was that in the past he had both viewed Mr Roohizadegan as a "real hunter" and been genuinely fond of him. His evidence in those regards was plausibly corroborated, and I proceeded on the basis that I was entitled to accept it. Despite Mr Di Marco's prior fondness however, I concluded that having come to a decision to dismiss Mr Roohizadegan Mr Di Marco acted to implement that decision with complete ruthlessness. That is not proof against, and might even be thought to be consistent with, the possibility (which I do not discount) that once his former closeness to Mr Roohizadegan had been sacrificed Mr Di Marco became subject to the very ordinary human need to believe that his ruthless behaviour must have been taken for sound reasons: rather than for the reasons than Mr Roohizadegan (with the benefit of the statutory presumption in his favour) ultimately established. In that regard I also do not discount the possibility that others within the employ of the First Respondent would have supported him in that view. 13 The filing of defences by the Respondents on the basis of what I accept that Mr Di Marco may have come to believe to have been the truth cannot, having regard to the onus borne by Applicant to establish a basis for the award of costs, be described as an unreasonable act. 14 Second, there was a plausible basis for the Respondents to have been sceptical of the overall case Mr Roohizadegan was advancing. Mr Roohizadegan alleged that he had suffered a mental injury in consequence of his dismissal for a prohibited reason as had prevented him undertaking any future remunerative employment. The Respondents however had been entirely unaware, at least until after Mr Roohizadegan had been dismissed, that he had earlier suffered and had continued to suffer a significant depressive disorder that had been precipitated some years earlier by the medical problems of his daughter. Putting Mr Roohizadegan to proof that the mental illness he suffered following his dismissal was the cause of his loss and was attributable to a new condition or a recognisable and diagnosable aggravation of his existing condition flowing from the Respondents' conduct was not only not unreasonable; it would have been surprising had the Respondents, at least initially, taken a different position. 15 Third, in addition to the seven instances of complaints made by Mr Roohizadegan my reasons specifically address the circumstance that he had advanced a significant number of non-dismissal claims under the Fair Work Act. His counsel abandoned reliance on those further claims only at the stage of final submissions. Those were not inconsequential matters, involving claims for civil penalties. I made no findings as to the circumstances of those claims. However, there is no basis on which I am entitled to accept that it was unreasonable for them to have been defended. 16 Having regard to the above reasoning, I am unpersuaded that I am entitled to find that the Respondents' filing of defences in these proceedings were unreasonable acts for the purposes of s 570(2)(b).

Asserted unreasonable refusal of, failure to accept and/or failure to make reasonable settlement offers 17 Second, the Applicant relies on what he asserts was the Respondents' unreasonable refusal of and failure to accept reasonable settlement offers. 18 The Respondents accept that a failure to accept a reasonable offer of compromise may, depending on the circumstances, constitute an unreasonable act for the purposes of s 570(2)(b). I proceed on that basis. 19 As to pre-trial events, the Applicant relies on evidence given in the affidavit of Mr White. The Applicant submits that a week before the trial commenced he made a written Calderbank (Calderbank v Calderbank [1975] 3 All ER 333) offer to resolve the proceeding for the total sum of $4,800,000.00. The Respondents rejected that offer. They responded by making a counter-offer of $1,500,000.00, which was open only for a very short time. I need not discuss those circumstances in detail. That is because I am not satisfied that any act or omission by the Respondents in those regards was relevantly unreasonable within the terms of s 570(2)(b) of the Fair Work Act. 20 As at that point of time, Mr Di Marco was yet to be subjected to cross-examination as might have alerted the Respondents to the implausibility of the defences they were maintaining. Further, and significantly, Dr White had yet to join with medical experts Dr King and Associate Professor Phillips in the note they prepared after their conclave (filed on 21 October 2019) in which they stated their shared expert opinion as to the injury Mr Roohizadegan claimed to have suffered. Until that point of time, the Respondents had had at least a not implausible basis for proceeding on the premise that any damages Mr Roohizadegan might be awarded could be significantly less than those which were in fact ultimately awarded. 21 However, the position with respect to the parties' various subsequent offers as were made from 30 October 2019 onwards can be distinguished. That date was the final day of what had been a long and vigorously contested trial. I am satisfied that I am entitled to proceed on the basis that the parties, as at that time, should have had a near comprehensive understanding of the potential strengths and weaknesses of their respective positions. 22 In circumstances where the trial had yet to conclude and was still occupying counsels' attention, I accept the Respondents' position that I should not conclude it to have been unreasonable that they did not respond to an offer made by the Applicant on 30 October 2019 which was open only until 9.00am the next day. 23 I am however satisfied that the Respondents' rejection of an offer of $3,400,000.00 that the Applicant made subsequently on 1 November 2019 and which was open to 5:00pm that day stands in a different position. The trial had then concluded, save for final submissions. I am entitled to infer that the Respondents' counter-offer made on 1 November 2019 of $1,750,000.00 reflected their then considered apprehension of the strength of the parties' respective cases. In that regard, I note specifically that it must have been apparent that nothing in the evidence supported the Respondents' position with respect to the Applicant's associated claim in contract which the parties had agreed was worth $1.6m. Further, it ought to have been clear that the medical evidence as had been finally adduced was wholly consistent with the Applicant's case. It also ought to have been clear that the joint expert evidence of the forensic accountants pointed to a very substantial award being made, assuming liability was made out. In that regard it ought further to have been clear not only that Mr Di Marco's evidence was improbable of acceptance, but also that Mr Roohizadegan had the benefit of the statutory presumption provided for in s 361 of the Fair Work Act. 24 I reject the Respondents' contention that the time for expiry of that offer was insufficient for them to adequately consider it. They had time to make a derisory counter-offer. I am satisfied that the Respondents' judgment and conduct in refusing the Applicant's offer of $3,400,000.00 as at that time was relevantly unreasonable. 25 I would note in that regard that I reject the Respondents' submission that the terms of that offer were so uncertain that it was incapable of acceptance. They submit that: 30. … the offers were uncertain and incapable of acceptance (see Masters v Cameron (1954) 91 CLR 353) as they were conditioned by both the uncertain (and lawfully open to criticism) requirement that money be paid in a tax effective way (presumably meaning how, and to whom, the money would be paid). Additionally, the offers were uncertain and incapable of acceptance because they required the parties to reach future agreement in relation to a joint public statement. It would have been open for the Applicant, in making the offers, to propose broad wording for the statement, but he declined to do so. Given the parties have had diametrically opposed views in relation to the proceeding for some time, it is highly questionable whether the parties would have reached a mutually agreeable public statement. These are independently reasons why the failure of the Respondents to accept the Applicant's offers were not unreasonable. (Footnote omitted). 26 It is true that had the Applicant's offer been accepted some subsidiary matters would have remained to be settled. That however does not appear to the Court to be the point insofar as the provisions of s 570(2)(b) are concerned. To the extent that objections were advanced as to the terms of the offer, that could have been addressed by making a plausible counter-offer. The Respondents did not do so. 27 I am satisfied that the Respondents' rejection of the Applicant's offer of 1 November 2019 and its failure to advance a plausible counter-offer were an unreasonable act and omission respectively within the meaning of s 570(2)(b) of the Fair Work Act. Mr Roohizadegan's offer involved him accepting amounts of compensation and damages at a discount of approximately $2m less than the Court ultimately awarded. 28 I am therefore satisfied that the Applicant is entitled to his costs beyond that point. 29 I reject that those costs are to be paid on an indemnity basis. That is because, notwithstanding my conclusion above at [28], I am persuaded by the Respondents' submission that by reason of some uncertainties the relevant offer did not strictly meet the standard required of a Calderbank offer: the refusal of which should sound in that obligation. 30 On that premise, the only significant costs that are subject to my conclusion that s 570(2)(b) became engaged for those reasons are those relating to the need to prepare and deliver final submissions as had been put over to 4 November 2019: to be agreed or in default of agreement assessed on a party-party basis.

Asserted unreasonable refusal to fully participate in mediation 31 Third, the Applicant submits that Mr Di Marco's failure to participate in a joint session of a mediation conducted by Registrar Burns on 22 May 2018 was an unreasonable act or omission in relation to which the Applicant should be awarded costs thrown away. Those circumstances arose as follows. The parties had appeared before Bromberg J (then the docket judge) on 10 April 2018, when the prospects of further mediation were raised. The relevant extracts of the transcript are as follows: His Honour: All right. What do you say, Dr Spry, about the appearance of the second respondent and Mr Chung at a mediation? Dr Spry: The second respondent will certainly be at the mediation, but Mr Chung, we - we say there's no necessary - it's not necessary for Mr Chung to be at the mediation. We have instructions. We provided very - and further to that, we have provided very, very detailed financial information by way of affidavit and by way of supplementary affidavit from Mr Chung. It may well be that the applicant doesn't accept that - accept that, but - but we say that's - that's not a matter for the mediation. If - if there are any issues or any questions, we can discuss those and we can try and reach a settlement at the mediation, but it's not necessary, and indeed, it's simply imposing further costs on the respondent to have Mr Chung present particularly in circumstances where the second respondent will be present at the mediation. His Honour: Will the second respondent be in a position to settle the matter if the matter is able to be settled, or would he need to revert to Mr Chung? Dr Spry: The second respondent will be able to give instructions to settle the matter, yes, your Honour. 32 His Honour ordered that the parties participate in the mediation, which was conducted by Registrar Burns. It is uncontentious that although Mr Roohizadegan attended that mediation, Mr Di Marco did not. In my opinion, his omission to have done so was an unreasonable omission within the meaning of s 570(2)(b) of the Fair Work Act. 33 I reject the Respondents' submission that I should refrain from drawing that conclusion because there had been no direction or order from the Court requiring Mr Di Marco to personally participate. I have no doubt that such an order would likely have been made had Dr Spry not made the commitment he did on behalf of Mr Di Marco and the First Respondent. On the balance of probabilities I am satisfied that it would have been made. 34 I also reject that the fact that Mr Di Marco was subsequently made subject to a significantly lesser potential personal liability for compensation, penalties and damages than the First Respondent entitles me to proceed on the basis that his absence at the mediation was immaterial. The First Respondent's case was that Mr Di Marco had been its directing mind. His reasons had been its reasons. His participation was therefore critical. Finally, I reject that I should refrain from drawing the conclusion that it was an unreasonable act or omission on Mr Di Marco's part not to have participated because - as Ms Winter's affidavit establishes - after he had failed to attend the mediation the Applicant's then counsel had agreed to have a joint session as between the parties' legal representatives. 35 In my opinion, having regard to the objective circumstances Mr Di Marco's absence had rendered the mediation ordered by Bromberg J inutile. Whatever the lawyers might have discussed, the matter would not be settled. His absence compelled the other side to incur wasted costs. While minor in the scale of things, I am therefore satisfied that Mr Roohizadegan should have his costs thrown away on a party-party basis in respect of those events.

Asserted unreasonable reliance on character evidence 36 Fourth, the Applicant asserts that the Respondents acted unreasonably in filing certain evidence as referred to in paragraph [32] of Mr White's affidavit. Subject to one exception, I do not accept that the filing of that evidence is open to be viewed as an unreasonable act. 37 Too narrow a view should not, in retrospect, be placed on those filings. A central issue in these proceedings from the outset was whether Mr Roohizadegan had been dismissed by the Respondents because of a report that he had bullied his staff, as had been conveyed by Ms Gibbons to Ms Carr and later transmitted to the Executive Team including Mr Di Marco. 38 At the point of time at which the relevant evidence was filed, the Applicant's case was that the whole of the Executive Team (and perhaps more) had made the decision to dismiss him. In those circumstances, what others beyond Mr Di Marco who might have shared the responsibility for decision making might have believed as to Mr Roohizadegan's alleged racism and misogyny was potentially relevant. In that regard I do not think it open for me to conclude that, without an apprehension of the way in which such material might be adduced at trial, it self-evidently was only peripherally relevant: notwithstanding that in the event much of it turned out to be so. 39 The limited qualification I make to those observations is that there were two references in that material as might have suggested that TechnologyOne and Mr Di Marco were advancing a case that Mr Roohizadegan had been overtly anti-Semitic. 40 At trial, Mr Roohizadegan called at least one witness in rebuttal of any such suggestion. After the Respondents had opened their case and Mr Di Marco had given evidence that he was the sole decision maker, in the course of which he had not made reference to his having had any regard to Mr Roohizadegan's supposed anti-Semitism, I took it upon myself to draw the Respondents' counsel's attention to the consequences of the Respondents pressing but failing to make good such a serious allegation. Dr Spry subsequently advised that the relevant evidence would not be led. However, that does not make good the premise that the earlier filing of those witness statements was an unreasonable act. It is to record simply that that evidence had been responded to by witnesses called by Mr Roohizadegan, and that the suggestion the Respondents may still have been relying upon evidence that Mr Roohizadegan had manifested anti-Semitic views was formally abandoned by Dr Spry after Mr Di Marco's evidence had made it clear that his decision had not been based upon that premise.

Asserted unreasonable prosecution of interlocutory application for discovery 41 Fifth, the Applicant submits that the First Respondent made an unreasonable interlocutory application for discovery. In that regard I have been referred to the transcript of the proceedings before Wheelahan J in whose docket the matter then was, and to his Honour's reasons in Roohizadegan v TechnologyOne Limited [2019] FCA 1145. In that decision his Honour reserved the question of costs. Without traversing those circumstances of the interlocutory hearing and that decision in detail, in my view it takes too narrow a view of the questions there resolved to conclude that the Applicant was wholly successful. I accept that the circumstances were as Ms Winter set out in her affidavit at paragraphs [14]-[21]. They include that at paragraph [66] of his Honour's reasons Wheelahan J had stated that he was not satisfied that Mr Roohizadegan had - as he claimed - given a work laptop to his wife who had donated it to the Salvation Army, and made orders reflecting that finding. Those circumstances make it impossible for me to be satisfied that the application was improperly brought. I am therefore myself unsatisfied that the Applicant makes good a case that his ultimate success on the question as had been narrowed and identified in the course of contentions and submissions about discovery in a matter plainly to be hard fought warrants a conclusion that the Respondents pressing their ultimately unsuccessful position was relevantly an unreasonable act.

Asserted unreasonable prosecution of interlocutory stay application 42 Sixth, the Applicant submits that the Respondents unreasonably pressed an application for a temporary stay of Orders 1-8 of the Court's orders of 2 October 2020. Having regard to my published reasons in Roohizadegan v TechnologyOne Limited (No 3) [2020] FCA 1571, I accept that that application was pressed without any reasonable basis having been established. In that regard, I draw specific attention to what I stated at [9] of my reasons: Established authority, as I understand it, is that if a primary judge is asked to stay the operation of its orders they may do so. In doing so however the primary judge should have regard to the principles established in a series of cases, including principally the frequently cited decision of Maxwell J of the New South Wales Supreme Court in Andrews v John Fairfax & Sons Ltd [1979] 2 NSWLR 184 (Andrews) and the decision of Heerey J in Henderson v Amadio Pty Ltd (No 2) (1996) 65 FCR 66 (Henderson). When this matter first came before the Court, Mr Wood sought to distinguish those cases on the basis that they were not decisions of judges at first instance. Rather, they were decisions made in the exercise of the jurisdiction of appeal courts. Reading those decisions reveals that, self-evidently, that is not the case. 43 I accept the Applicant's submission that to have pressed the Respondents' application in the absence of any relevant basis having been identified was an unreasonable act within the meaning of s 570(2)(b) of the Fair Work Act. The Applicant should therefore have his costs in respect of that application, as agreed or in default of agreement as assessed. In that regard it is of no consequence that a commercial arrangement was subsequently reached between the parties as avoided further disputation.

Asserted unreasonable refusal to participate in a matter before the Fair Work Commission 44 Seventh, the Applicant urges that I should regard as relevant what is asserted to have been the Second Respondent's unreasonable refusal to have participated in a matter before the Fair Work Commission: being the Applicant's general protections application under s 365 of the Fair Work Act. 45 In my opinion Mr Di Marco's refusal to so participate, whilst open to be viewed in retrospect as a missed opportunity, was not an unreasonable act for the purposes of s 570(2)(b) of the Fair Work Act. As I observed in Martin v Norton Rose Fulbright Australia (No 11) [2020] FCA 1641, the provisions of the Fair Work Act serve as a gateway to the entitlement of a party to access the judicial power of the Commonwealth. They provide, in a no-costs environment, an opportunity to avoid that necessity. If however a party resists settlement, any decision of the Commission that all reasonable attempts to resolve the dispute (other than by arbitration) have been and are unlikely to be successful is not thereby evidence of an unreasonable act. It is simply evidence that one or both parties have lawfully insisted that their dispute be resolved by this Court. I also repeat and rely on as equally applicable what I have said with respect to the filing of a defence, as set out at [10]-[16] above.

Conclusion 46 For the reasons I have given, I am satisfied that the Applicant's application for costs succeeds only insofar as I have indicated above. I will make orders accordingly. Given that neither the Applicant nor the Respondents have been wholly successful and the provisions of s 570(2)(b) of the Fair Work Act I will order that, subject to either party applying for a contrary order within 7 days of the publication of these reasons, there be no order as to the costs of this application. Any application for a contrary order should be accompanied by written submissions of no more than 2 pages in length, and the opposing party or parties may file responsive submissions likewise limited in length within 7 days of service upon it or them of such an application. The Court will determine any such application on the papers. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Kerr.