Rossetti v Aus Gold Mining Group Pty Limited

BURLEY J: 1 This is an application brought by the applicant, seeking costs on an indemnity basis of preparing for and attending a mediation held before Registrar Ng on 17 September 2018. In support of the application is an affidavit of Ethan Mitchell Brawn, the solicitor for the applicant, affirmed on 27 September 2017. The respondents rely on an affidavit affirmed by Sha Zou, the second respondent, on 10 October 2018. 2 The main proceedings are brought pursuant to provisions of the Fair Work Act 2009 (Cth) (Fair Work Act) and the Australian Consumer Law set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth). In broad summary, the applicant claims that he was employed by the first respondent or, alternatively, the second respondent, or otherwise engaged by one or other of those parties. The statement of claim identifies several conversations between the applicant and the second respondent as containing representations which are relevant to the allegations of breach, including a breach of contract, breach of s 323 of the Fair Work Act, breach of s 90 of the Fair Work Act and breach of the Australian Consumer Law. 3 On 4 May 2018, orders were made by consent for the conduct of the proceeding, including that "the parties attend a court appointed mediation by 13 July 2018". As it transpires, the parties could not organise a mediation within that time, and that date was extended by later order. 4 Ultimately, a mediation was scheduled to take place on 17 September 2018. Prior to the commencement of the mediation, on 10 August 2018, a representative of the Registrar Mediator wrote to the parties confirming the time, date and place of the mediation and saying as follows: Parties and practitioners should be aware that the mediation conference is expected to continue (if necessary, beyond business hours) until the mediation has concluded either by settlement or until it is clear the mediation has run its course. If there are likely to be time restrictions (in order to meet flights or other commitments) this must be made clear to the Registrar Mediator and the other participants as early as possible and no later than before the mediation conference begins. Purpose of the Mediation The principal purpose of the mediation is to provide a structured forum in which the Registrar Mediator will enable the parties to directly and comprehensively discuss and exchange perspectives on the issues raised in the proceedings, to identify and assess options that may resolve the dispute, and to facilitate the negotiation of a mutually acceptable agreement that will conclude the dispute the subject of the proceedings without the need to proceed to bring to proceed a final hearing. In order to maximise the prospect of the parties making a shared decision to resolve the dispute without a trial on the (legal) merits, the parties, and their legal advisors, must primarily focus their attention on their underlying interests and needs rather than on formal legal rights, positions or claims. If the parties are unable to agree upon a satisfactory consensual resolution, the mediation can be used as a forum to clarify or narrow the real issues in dispute and to identify the steps which should be taken to resolve them as quickly, efficiently or inexpensively as possible by trial or otherwise. Authority to Negotiate and Settle To optimise the possibility of a successful mediation, the parties' commitment to exploring and finding solutions that are mutually acceptable is critical. With this objective in mind, the parties, or those who represent the parties at the mediation conference, are required to have full and sufficient authority to settle the dispute and reach agreement concluding the proceedings. 5 A little later, the letter says: Indeed, parties will be encouraged by the Registrar Mediator to participate in the mediation directly, to focus on their commercial and underlying personal and practical interests and to negotiate constructively with each other on the issues that arise in the proceedings. It is accordingly essential that all parties or those representing parties at the mediation conference have sufficient knowledge of the dispute and the issues in controversy. 6 Prior to the mediation, on 13 September 2018, the respondents communicated with the registrar and the applicant via its solicitor and confirmed that the attendees at the mediation would be James Lee of counsel, Jonathan Lu, solicitor, and Sally Zou. Sally Zou is also known as Sha Zou, and is the second respondent and the sole director of the first respondent. The mediation was convened by Registrar Ng on 17 September 2018. In anticipation of the mediation, the applicant, who resides in Broken Hill, made arrangements to travel to Sydney. Despite the content of the letter of 13 September 2018, Ms Zou did not attend the mediation and did not provide the applicant with any notice that she was not going to do so, nor did she supply any reason in advance for not attending. 7 According to the affidavit of Mr Brawn, the person who attended the mediation on behalf of the respondents was Mr Louis Liu. Mr Brawn gives evidence that he is instructed that Mr Liu is an administrative assistant employed by the first respondent. 8 Ms Zou gives evidence that she initially instructed her solicitors that she would be available to attend the mediation on 17 September. On 16 September, she realised that she would be likely to be unable to attend the mediation, though she indicates that she was hopeful until the morning of the mediation that she would be able to attend. In anticipation that she would be unlikely to attend, she used an authority that she had previously used and signed it in preparation for this eventuality. That authority, which she annexes to her affidavit, is dated 16 September and confirms that she will not be attending the mediation, and that her assistant, Mr Liu, would be attending on behalf of the first respondent. It states that Mr Liu has express authority to deal and settle with the matter on behalf of the first respondent. On its face, the authority does not confer authority on the second respondent to attend or participate in the mediation. 9 Ms Zou explains that she was not able to attend the mediation because she was detained by involvement in litigation involving another company, which was listed for hearing in the Supreme Court of South Australia on 21 September 2018. In paragraph 11 of her affidavit, she states that she was dealing with the collation of financial documents and reports with her accountant, as well as providing instructions to solicitors in relation to two matters concerning another company. 10 Without repeating the detail of the affidavit, in my view it provides scant explanation for her inability to attend the mediation on 17 September 2018. It does not explain how her presence was necessary for the collation of financial documents, especially having regard to the fact that the listing on 21 September would no doubt have been notified some time in advance. 11 Section 43 of the Federal Court of Australia Act1976 (Cth) (FCA Act) provides a broad discretion for the court to order costs. Section 43(1) of the FCA Act provides as follows: (1) The Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which this or any other Act provides that costs must not be awarded. This is subject to: (a) subsection (1A); and (b) section 570 of the Fair Work Act 2009; and (c) section 18 of the Public Interest Disclosure Act 2013. 12 The proceedings before the court involve causes of action which include claims under the Fair Work Act. Section 570 of the Fair Work Act relevantly provides: 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: … (b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs. 13 My attention was drawn to two decisions that have a bearing on the intersection between s 570(2)(b) of the Fair Work Act and s 43 of the FCA Act. One is Ryan v Primesafe [2015] FCA 8, in which Mortimer J noted at [5] that the court's discretionary power under s 43 to award costs is conditioned by the terms of s 570. At [61] of the decision, her Honour refers to a different approach taken by Foster J in El Debel v Secretary, Department of Immigration and Border Protection [2014] FCA 474. It was unnecessary for her Honour to resolve any issue arising from that, although she expressed an inclination to agree with the approach expressed by White J in Stanley v Service to Youth Council Incorporated (No. 3) [2014] FCA 716 at [25] - [36], where his Honour found that the terms of s 570 were more broadly expressed than s 824 of the Workplace Relations Act 1996 (Cth), and where claims were made in one proceeding under more than one piece of federal legislation, including the Fair Work Act, s 570 applied to the costs of the whole proceeding. The application of those matters would lead to the conclusion that the requirement of s 570(2)(b) must be met before a costs order could be made against a party. 14 In the present case, it is also unnecessary for me to resolve the difference between the two, because I am satisfied that as a result of the respondents' unreasonable act or omission, the applicant was caused to incur costs. More particularly, I observe that by the order of 4 May 2018, the parties were ordered to attend a court appointed mediation. On no view did that take place, because of the failure of Ms Zou to attend. At its highest, Mr Liu attended with an apparent authorisation to attend on behalf of the first respondent, but not the second respondent. 15 In In the Matter of Staway Pty Limited (In Liquidation) (Receivers Appointed) [2017] NSWSC 485 (Staway), McDougall J considered a similar but not identical situation. His Honour observed as follows: 2. The court ordered the parties to mediate. The time for completion of mediation was initially fixed at 9 December 2016. That time was extended to 17 February 2017. … 4. The starting point is that the order was directed specifically to "the parties": "The parties are to attend and mediate at mediation …" 5. The next point is that no order from the court was sought varying that order save (as I understand it) in respect of the date by which the mediation must be completed. … 15. The starting point is that this is not a matter where the parties were free to make their own decision. They were compelled by an order of the court to attend and complete the mediation. Mr Lazarus submitted that the individual plaintiffs could well have been available be telephone. That may be so. However, to proceed with the mediation on the basis that the parties who would make the decision would not be present and could not, therefore, be subjected to the usual range of tactics employed by mediators means that what might have been proceeded would have been a very empty shell of a mediation, almost self evidently doomed to failure. 16. The plaintiffs did not seek to be dispensed from their obligation to attend the mediation. Nor did they trouble to inform the lenders that they would not be attending. Accordingly, the lenders incurred significant expense in flying up from Melbourne. That expense, together with their share of the mediator's fees, has been entirely wasted. 16 As I have noted, Staway is not identical to the present case in the sense that a person did attend, ostensibly on behalf of the first respondent, that person being Mr Liu (Ms Zou's assistant). Furthermore, Ms Zou was speaking to Mr Lu, the solicitor for the respondents, on the telephone during the course of the mediation. In her affidavit she reports that she and Mr Lu had numerous conversations using the application "WeChat". She also reports that she became extremely irritated in what she perceived to be the unreasonableness of the offer made by the applicant. However, it is quite apparent that Ms Zou did not engage with the mediator or with the applicant during the course of the mediation, instead confining her conversations to Mr Lu, the solicitor representing the respondents. 17 The respondents submitted that they were adequately represented during the course of the mediation and that there was no unreasonable act or omission which would activate an award of costs pursuant to s 570 of the Fair Work Act. The respondents further submit that there is a public policy basis for not forcing a party to disclose the strategies and thinking which they had in relation to the mediation. The respondents submit that the present application had such a consequence for Ms Zou. 18 However, in circumstances where there is a court order made that the parties attend a mediation, and that that order was the subject of consent and, furthermore, that there was further correspondence indicating that Ms Zou would attend as a representative of the respondents, I can see no public policy basis for not considering the behaviour to be unreasonable. Nor do I consider the explanation provided by Ms Zou to be a reasonable explanation in itself. Accordingly, it is my view that the costs incurred by the applicants in preparing for and attending the mediation ought to be paid by the respondents. 19 Mr Lee, who represented the respondents, challenged the quantum sought in the affidavit of Mr Brawn. He pointed out that the mediation fee was not necessarily an expense incurred in the event of a failed mediation. I agree with that submission. Furthermore, in my view, whilst the costs of the mediation ought to be borne by the respondents, I consider that a fixed fee ought to be awarded which includes a discount to the actual costs incurred by the solicitors. In all of the circumstances, I consider it appropriate to assess the amount of costs that the respondents should pay as two thirds of $9000, being $6000. In my view, the mediation itself is a sufficiently discrete issue to the balance of the proceedings to warrant an order that those costs be payable forthwith. 20 Further, I am satisfied that even having regard for the unresolved overlap between s 570 of the Fair Work Act and s 43 of the FCA Act, the circumstances are such that the respondents should pay the applicant's costs of the interlocutory application. 21 Accordingly, I order that: (1) the respondents pay the applicant's costs of attending the mediation, thrown away by reason of the respondents' failure to attend the mediation, assessed in the amount of $6000; (2) the respondents pay the applicant's costs of the interlocutory application; and (3) that those costs be paid within 14 days. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Burley.