Sivwright v St Ives Group Pty Ltd

JACKSON J: 1 In this proceeding, the applicant seeks leave under s 46PO(3A) of the Australian Human Rights Commission Act 1986 (Cth) (AHRC Act) to make an application alleging breaches of the Sex Discrimination Act 1984 (Cth) and the Disability Discrimination Act 1992 (Cth) by the respondents. Among the affidavits she has filed in support of the application are two affidavits of Dr Lawrence Blumberg, a psychiatrist, each of which annexes a report he has prepared. In one of those reports, which was dated 14 July 2021 (July Report), Dr Blumberg referred to another report, dated 14 June 2021, which he had given to the applicant's solicitors, Bailiwick Legal (June Report). 2 The June Report was not annexed to any affidavit. The first respondent, the applicant's former employer, St Ives Group Pty Ltd, sought a copy of the report and on 9 September 2021 made an application to compel the applicant to produce it. The applicant resisted production until two days before the hearing of that application, when the report was produced to the respondents. 3 The June Report referred to three further documents which I will describe below and will call the Further Documents. The first respondent sought production of those documents, which the applicant, again, resisted. On 3 November 2021, the first respondent amended its interlocutory application to seek the production of those documents. That amended application was due to be heard on 20 January 2021. On the afternoon of the day before that hearing, the applicant once again abandoned her opposition, and produced the three documents to the respondents. 4 The respondents now seek their costs of both the original interlocutory application of 9 September 2021 seeking production of the June Report, and the amended application seeking production of the three Further Documents.

The basis on which costs are sought 5 It is common ground that the discretion to award costs in this proceeding is governed by s 570 of the Fair Work Act 2009 (Cth) (FWA). That is because the applicant has filed a draft statement of claim which, along with the claims of breaches of the Sex Discrimination Act and Disability Discrimination Act, includes allegations that the first respondent breached the FWA in various ways. The respondents correctly accept that these claims are part of the same matter, in the sense of controversy between the parties, as the discrimination claims that are the subject of the leave application. This means that, although no relief under the FWA is presently sought in the leave application, it is a proceeding in relation to a matter arising under the FWA, and so s 570 applies: see Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; (2015) 229 FCR 221 at [152]-[157] (Tracey, Gilmour, Jagot and Beach JJ). As such, the Court's discretion to award costs will only be enlivened in this proceeding if, relevantly, the Court is satisfied that the applicant's unreasonable act or omission caused the respondents to incur the costs: FWA s 570(2)(b). 6 The first respondent relies on its written submissions in support of the interlocutory applications to submit that there was no reasonable basis for the applicant's refusal to provide the documents when requested or to oppose the interlocutory applications. The first respondent says that this is demonstrated by the fact that on each occasion, the applicant capitulated just in time to avoid a contested hearing. Her resistance to production up to those times has caused the first respondent to incur the costs of making the application and amended application and preparing to argue them. 7 The second to fifth respondents join in these submissions. They say that although they did not file affidavits or submissions in support of the application and amended application, they had an interest in the outcome of the applications and incurred costs in preparing for them. The second to fifth respondents say that the first respondent's submissions on the applications show that the applicant's position was untenable.

Principles 8 These contentions require the Court to rule on the costs of applications that have not been determined on their merits. I respectfully adopt the statement of the principles to be applied in such situations given by Halley J in FCA US LLC v Mahindra Automotive Australia Pty Ltd [2021] FCA 1091 at [31]-[35]. In so far as they are relevant to these reasons, the principles can be summarised as follows: 'In the usual course, the Court will not make an order for costs in circumstances where there has been no hearing on the merits': at [32]. Nevertheless, the Court may make an order for costs 'in circumstances where one party has had a substantial victory and the other a substantial loss, or there has been a marked difference in the reasonableness of the actions taken by the parties': at [33]. The Court may also make such an order if it is satisfied that one party effectively surrendered or capitulated to the other: at [35]. An 'assessment of the degree to which the outcome achieves the relief sought is a threshold issue of significant weight' in determining whether surrender or capitulation have occurred: at [35(d)]. Generally it is not the function of the Court to make a prediction as to the outcome of a hypothetical case where there has been no determination of the merits, but in some cases the Court can have regard to the likelihood of success if it is possible to identify a likely 'clear winner': at [35(e)-(f)]. 9 Care must be taken, however, in applying these general principles when s 570 of the FWA is engaged. The preconditions to the exercise of the discretion to award costs, in this case under s 570(2)(b), must be established. They are, first, that one party has engaged in an 'unreasonable act or omission', and secondly that the unreasonable act or omission 'caused the other party to incur the costs'. Whether a party has conducted itself in such a way as to cross the threshold of unreasonableness will depend on the particular circumstances of the case: Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143; (2008) 170 FCR 574 (CFMEU v Clarke) at [28] (a decision under a similar provision in predecessor legislation of the FWA). In Mutch v ISG Management Pty Ltd (No 2) [2020] FCA 954 at [7]-[8] Bromberg J said (citations omitted): The term 'unreasonable' in s 570(2)(b) is unsurprisingly not defined. It is a term not conducive to precise definition. The word 'unreasonable' is used in s 570(2)(b) to control the extent of the limitation on the making of a costs order sought to be imposed by s 570. The term takes much of its meaning from the underlying reason for that limitation. It is well settled that the limitation imposed by s 570 seeks to provide access to justice by ensuring that the fear of an adverse costs order does not discourage litigants from pursuing good claims. As Lee J stated in Bywater v Appco Group Australia Pty Ltd [2019] FCA 799 at [7] that the Fair Work jurisdiction should be primarily a 'no costs' jurisdiction reflects 'a long standing, underlying legislative intention to ensure access to justice in relation to Fair Work-type matters'. With this in mind, the occasions upon which costs will be awarded under s 570 are likely to be exceptional. The fact that a party has conducted litigation inefficiently, made late concessions, or adopted a misguided approach will be relevant to, but not conclusive of, the party having acted unreasonably in a sense relevant to s 570(2)(b). 10 Even if the conduct of a party is sufficiently unreasonable to enliven the discretion, the discretion should then be exercised bearing in mind the policy of the provision as Bromberg J outlined. In CFMEU v Clarke the Full Court said (at [29]) that: while courts should use the discretion … to ensure that parties to litigation … do not engage in unreasonable acts and omissions which put the other party to undue expense, they should also be careful not to exercise the discretion with too much haste, given that such haste may discourage parties, for fear of an adverse costs order, from pursuing litigation … in the manner which they deem best. 11 In order to defend her apparent last minute abandonment of her resistance to produce the documents sought, the applicant relies on the following statement in PIA Mortgage Services Pty Ltd v King (No 2) [2020] FCAFC 53 at [14]: 'By itself, the withdrawal of an otherwise live contention cannot amount to unreasonableness of the sort to which s 570(2)(b) of the FW Act refers, no matter when it occurs'. But this is quoted out of context; the Court went on to say at [15]: Unreasonableness may, however, arise by reason of the nature of the contention that is withdrawn or the circumstances in which that withdrawal occurs (or both). A litigant who fails until the proverbial eleventh hour to withdraw a speculative contention might more readily be thought to have committed an unreasonable omission for the purposes of s 570(2)(b) of the FW Act than would a litigant who withdraws an arguable contention at the same point or earlier. Similarly, the failure to withdraw a contention before the eleventh hour might more readily qualify as an unreasonable omission if there is reason to think that the party withdrawing it could, with proper care, have withdrawn it more promptly. In combination, the timing of the withdrawal, the quality of the withdrawn contention and the circumstances in which the withdrawal was effected inform whether a particular withdrawal trespasses into the realm of unreasonableness. It is, in that sense, that unreasonableness is a question of impression and degree, to be assessed by reference to the particular circumstances of a given case: Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574, 582 [28] (Tamberlin, Gyles and Gilmour JJ). 12 In that case, the Full Court was dealing with the abandonment of some contentions made in a proceeding, rather than the abandonment of resistance to entire applications, albeit interlocutory ones. So these considerations may fall to be applied in a different way here. Each case depends on its particular circumstances.

The course of the interlocutory applications 13 Against that background of principle I will turn to consider the circumstances of the present applications (it is convenient to refer to the original application and the amended application as separate applications). They were prompted when the applicant filed an affidavit of Dr Blumberg dated 4 August 2021 in support of her application for leave under s 46PO(3A) of AHRC Act. This annexed the July Report, which asked that it be read in conjunction with his previous psychiatric reports dated 7 January 2021 and 14 June 2021, that is, the June Report. In broad terms, the report of 7 January 2021 addressed whether the incidents of sexual harassment and discrimination that the applicant claims to have occurred had caused her to suffer from depression, anxiety, post-traumatic stress disorder and other disorders. The July Report answered a number of detailed follow-up questions from the applicant's solicitors that went to those issues. 14 The first respondent's solicitors, Minter Ellison, asked for a copy of the June Report by email dated 3 September 2021. When it had not been received, and after Minter Ellison followed the request up, the firm emailed Bailiwick Legal on 9 September 2021 saying that their client would apply for an order to compel production. Bailiwick Legal responded on the same day saying that their client would not consent to releasing the report. They did not give reasons. Minter Ellison asked for those reasons. Bailiwick Legal did not reply. The interlocutory application was lodged on the afternoon of the same day. 15 Pursuant to programming orders, affidavits were filed and an outline of written submissions was filed by the first respondent but not by the applicant. The reasons for the applicant's opposition to production of the June Report to the first respondent appeared from an affidavit of 28 September 2021 sworn by her solicitor, Philip Brunner. Mr Brunner claimed privilege over the June Report and asserted his view that it did not influence the contents of the other two disclosed reports and was not required to understand the contents of those reports. 16 The application was listed for hearing on 4 November 2021. But on 2 November 2021, Bailiwick Legal produced the June Report to Minter Ellison. No explanation was given for why it had been withheld up to that time and why it was being provided then. However, the content of the report may provide an explanation. It is not necessary to go into detail as to its contents. It is enough to say that it does not directly address the same issues as the other two reports that had been disclosed. Its immediate subjects are, rather, the applicant's capacity to instruct solicitors to conduct the proceeding, and the likely consequences for her mental health as the proceeding continues and if it results in an adverse outcome. 17 Whether those subjects are in issue in the proceeding is open to argument, so arguably, despite Dr Blumberg's reference to the June Report in the July Report, the June Report was not relevant and not necessary to understand the July Report. While Bailiwick Legal did not put that argument clearly, it may have been inherent in Mr Brunner's expressed view that, despite Dr Blumberg's request in the July Report that it be read in conjunction with the June Report, in fact the June Report did not bear on the later report. 18 The June Report said that Dr Blumberg had 'had access to and [had] perused' the following three documents, being the Further Documents: • Letter requesting an updated report authored by Mr Jason Raftos, Consultant, Bailiwick Legal • Your [that is, Bailiwick Legal's] file notes dated 1 June 2021 • Email from Ms Sivwright dated 31 May 2021 19 The June Report not only lists the Further Documents in this way, but proceeds to quote from them and to describe their contents. This is done as part of the factual basis for Dr Blumberg's answers to Bailiwick Legal's questions and in a way suggesting that there was more to the Further Documents than appeared in the June Report. 20 Along with the June Report, Bailiwick Legal sent the other parties a minute of orders to vacate the hearing of the interlocutory application on 2 November 2021. On 2 November 2021, Minter Ellison asked Bailiwick Legal by email to urgently provide copies of the Further Documents so that it could take instructions on the minute. Bailiwick Legal replied noting the request for the documents, saying that it would be addressed 'in due course' and disputing that there was any need to provide them for Minter Ellison to take instructions on the minute. On 3 November 2021 Minter Ellison replied, relying on para 5.3 of the Federal Court's Expert Evidence Practice Note and saying that because the June Report refers to the three documents, the applicant was obliged to provide them. Minter Ellison said that if they were not provided, its client would apply at the hearing on 4 November 2021 for the interlocutory application to be adjourned and the application amended to seek production of the documents. The email said that the first respondent would seek its costs. 21 Bailiwick Legal replied saying: Your demand falls squarely into the same conundrum that has led to your client's current interlocutory application. Our client has waived privilege on the report of Dr Blumberg dated 14 June 2021. On an assessment of the identification of the documents as referred to in the report, in our view it ought be reasonably open to conclude that each document would attract at least legal professional privilege. A secondary issue will be relevance. A question of proportionality is also likely to arise. It seems therefore that, unless your client is prepared to accept that these documents are covered by privilege and or are not relevant, that we will need to consider your proposed orders. 22 The parties agreed to orders providing for the amendment of the interlocutory application and programming the application to a hearing. In the course of reaching that agreement, Mr Brunner of Bailiwick Legal sent Minter Ellison another email (dated 4 November 2021) which asserted that his client was agreeing to the programming orders as 'the path of least resistance' in the following circumstances: 1. It is apparent to us that even if the current interlocutory application was to be finalised (including as to costs), your client would continue to seek the 3 identified documents, creating further costs to our client and taking further time; 2. Where we have advised your client that the documents are, in our view, covered by legal professional privilege and or irrelevant; 3. That the documents are likely covered by legal professional privilege and or irrelevant is evident by the description of the documents within Dr Blumberg's report; 4. Where, in our view, your client's pursuit of these further documents offends the principle of proportionality. In all of the circumstances, we are of the view that your client's conduct is unreasonable and is exposing our client to further and unnecessary costs. In the event that our client is successful in her objection to the disclosure of these documents, our client will seek an order that your client pay her costs, and reserves the right to seek an indemnity costs order and an order that you and or Ms McKenzie, are liable for those costs. 23 The first respondent and the applicant each filed affidavits and outlines of written submissions in support of their respective positions on the amended interlocutory application, which was listed for hearing on 20 January 2022. The first respondent's submissions relied on well-established principles that the production of an expert report can result in waiver of privilege over documents referred to in it: see e.g. Australian Securities and Investments Commission v Southcorp Limited [2003] FCA 804 at [21(4)] and the cases there cited; Evidence Act 1995 (Cth) s 126. As stated in Towney v Minister for Land and Water Conservation (NSW) (1997) 76 FCR 401 at 414, these can apply, for the purposes of s 126, when: a privileged document is voluntarily disclosed for forensic purposes, and a thorough apprehension or appreciation of the character, significance or implications of that document requires disclosure of source documents, otherwise protected by client legal privilege … 24 The applicant's submissions in response of 16 December 2021 relied on legal professional privilege attaching to the Further Documents, but the issue of course was whether that privilege had been waived when the June Report was produced. In that regard, her submission was that privilege had not been waived because Dr Blumberg's opinion was based on his personal observations of the applicant and not on the contents of the documents. The submissions also asserted that the first respondent's pursuit of the documents was an abuse of process as 'it seeks to create further costs and delays to the Applicant' and that the documents were not relevant to the issues in the proceeding. 25 In a written submission as to the present dispute about costs, the applicant does not make any attempt to explain her last minute changes of position in respect of the interlocutory application or amended interlocutory application by reference to matters such as the merits of the applications or any supervening events. Instead, she relies on a further report of Dr Blumberg dated 1 February 2022, apparently commissioned for the purpose of the costs dispute, the effect of which is that the stress of involvement in court proceedings is likely to overwhelm her and cause her to experience unspecified 'difficulties with decision making' and 'cognitive difficulties'.

The late provision of the June Report 26 In my view, the applicant's conduct in relation to the interlocutory application as it originally stood, seeking production of the June Report, was not so unreasonable as to engage the discretion under s 570(2)(b) of the FWA. Alternatively, if that is wrong, the applicant's conduct was not so unreasonable as to warrant the exercise of the discretion so as to award costs against the applicant in respect of the original interlocutory application. 27 Except in clear cases, it is not appropriate in a costs application to rule on the underlying merits of a dispute which has not, in the end, been determined. It is enough to say that, as I have already explained, in view of the content of the June Report, the applicant had a reasonable argument that it was not relevant to the proceeding. Contrary to the submission of the first respondent, that argument was available despite Dr Blumberg's reference to the June Report in his July Report. While it was entirely reasonable for the first respondent to seek a copy of the June Report, given what Dr Blumberg said about it in the July Report, it does not follow that it was actually relevant or that it was necessary for an understanding of the later report. A mere reference to a privileged source document does not necessarily result in the loss of privilege: see Towney at 414. In the often cited summary of principle in Southcorp, Lindgren J did not put it in such unqualified terms, rather his Honour said (at [21(4)], emphasis added and citations omitted): Ordinarily disclosure of the expert's report for the purpose of reliance on it in the litigation will result in an implied waiver of the privilege in respect of the brief or instructions or documents … at least if the appropriate inference to be drawn is that they were used in a way that could be said to influence the content of the report, because, in these circumstances, it would be unfair for the client to rely on the report without disclosure of the brief, instructions or documents. 28 Of course, none of this is to say that the June Report is not relevant to the issues in this proceeding, or that it does not bear on the July Report. Those questions may be in issue at the final hearing of this proceeding. It is merely to observe that there is enough uncertainty that the applicant meets the undemanding standard that her conduct in relation to the disclosure of the June Report was not unreasonable for the purposes of s 570(2)(b) of the FWA. 29 The first respondent also relied on para 5.3 of the Federal Court's Expert Evidence Practice Note as requiring production of documents referred to in an expert's report. But that paragraph refers to documents of a technical or supporting nature. So it does not apply to the reference in the July Report to the June Report. 30 It is also relevant to note that the subject matter of June Report, being the applicant's capacity to give instructions to her lawyers in this proceeding, is one of considerable personal sensitivity. It would therefore not be unreasonable for her to seek to withhold production of the report, given that it was arguably irrelevant. 31 It is true that none of this was well articulated by her solicitors. It is also true that the last minute change of position before the originally listed hearing of 4 November 2021 is unexplained. But it is open to the Court to infer that a desire to avoid further costs and to avoid public dispute about the contents of the June Report overcame her previous reluctance as the hearing approached. Whether that is the true explanation or not, its availability means that in all the circumstances the respondents have not established that it was a complete capitulation in the sense of recognition of the inevitability of a loss, such that it rises to the level of unreasonableness that will engage the discretion under s 570 of the FWA. I will make no order as to the costs of the interlocutory application up until the time the June Report was produced to the respondents.

Late disclosure of the Further Documents 32 The position in relation to the amended interlocutory application seeking production of the Further Documents is different. That was a clear case for production. Once privilege over the June Report was waived, it was inevitable that, given the nature of the Further Documents, privilege over those was waived too. One of those documents was the very instruction from the solicitors that resulted in the June Report. The June report quotes excerpts from the letter of instruction, the email of 31 May 2021 and the file note in a manner that indicates reliance on them and that suggests that there were other contents of the documents that are not quoted in the report that are potentially relevant to it. So the assertion in the applicant's submission on the amended interlocutory application that the June report is based entirely on Dr Blumberg's personal observations of her is wrong. Also wrong is the submission that the first respondent produced no evidence of the relevance of the Further Documents; their relevance appears on the face of the 14 June Report and the first respondent relied on the passages in question in its written submissions seeking production of the documents. The Further Documents were, at least, required for a thorough appreciation of the character and significance of the June Report. The file note, for example, records a statement about the veracity of the applicant's allegations which could form the basis for cross-examination of Dr Blumberg. 33 The weakness of the applicant's submission to the contrary indicates that with proper thought, the opposition to production of the Further Documents could have been withdrawn earlier, or not mounted at all. I consider that the decision to produce the documents, notified the afternoon before the hearing of the amended interlocutory application, and giving the first respondent what it set out to achieve in the amended interlocutory application, can be characterised as a late capitulation, and so unreasonable. 34 Dr Blumberg's further report of 1 February 2022 provides no reason to alter that characterisation. It speaks of possible difficulties the applicant may have with decision making or cognitive difficulties at a high level of generality and there has been no attempt to link such difficulties with the specific decisions to withhold and then produce the Further Documents. Even if there had, it may be doubted that such explanations would establish that the decisions and conduct were reasonable, as that is an objective standard. 35 The submissions by the applicant that the first respondent's pursuit of production of the Further Documents are an abuse of process are without merit. Far from being an abuse of process, the reason why the first respondent would wish to seek production of the documents is obvious, and its case for production was clear. Once privilege over the June Report had been waived, production of documents not only mentioned but partially quoted and referred to in it was inevitable. The applicant's submissions complained that the first respondent's conduct lacked proportionality but any disproportion between the issue of the production of the further documents and the costs incurred and time spent seeking to compel that production was caused by the applicant's decision not to take the simple step of releasing the Further Documents at the outset, rather than at the eleventh hour. 36 There is no basis in the evidence for the submission that the first respondent sought to create further costs and delays for the applicant. When asked at the costs hearing what basis there was for it, Mr Brunner could only refer to what he said was the lack of any good reason to seek production of the Further Documents. In truth, it is a mere assertion, and one that should not have been made. As I have indicated, that there was good reason to seek production of the Further Documents is evident on the face of the materials. 37 It was even more extravagant for Mr Brunner to go further in his email of 4 November 2021 to threaten indemnity costs orders against the first respondent's solicitors personally. When asked at the hearing of the present costs dispute what basis there was for making that threat, Mr Brunner was unable to articulate one. He referred to the power under the FWA to make costs orders against solicitors. He appears to have had s 401 in mind, but that only relates to unfair dismissal claims and only confers the power on the Fair Work Commission. And even if there is a power for the Court to make an order of that kind, that does not justify making threats without any proper basis. In truth, Mr Brunner was threatening to seek indemnity costs personally from the first respondent's solicitors for seeking production of documents that it was unreasonable for the applicant to withhold. 38 The fact that those representing the applicant have made these unfounded allegations of abuse of process and unfounded threats to seek indemnity costs are contextually relevant to an assessment of the reasonableness of the applicant's conduct of the amended interlocutory application as a whole. They exacerbate the unreasonableness of that conduct. In circumstances where the first respondent has had a substantial victory, there is a marked difference between the reasonableness of its conduct and that of the applicant. 39 I consider that in all these circumstances the applicant's conduct of the amended interlocutory application has been so unreasonable as to engage s 570(2)(b) of the FWA. Her act in resisting production of the documents was an unreasonable one. The resistance lacked any legal merit but was prolonged until just before the hearing, when it can be inferred the applicant bowed to the inevitable. 40 It is plain that the further criterion, that the unreasonable act or omission caused the first respondent to incur costs, is satisfied. The first respondent was required to prepare and file an affidavit and submissions and no doubt its counsel spent time preparing for the hearing. 41 While parties in FWA matters must not be discouraged by the threat of costs orders from conducting those matters as they see fit, they should be discouraged from baseless opposition to inevitable orders that prolongs the proceeding and increases expense for other parties. I will exercise the discretion in s 570 of the FWA to make a costs order in the first respondent's favour, in respect of the amended interlocutory application only.

Costs of the second to fifth respondents 42 The second to fifth respondents also seek their costs of the interlocutory application. In relation to the application for production of the June Report, the second to fifth respondents' position falls with that of the first respondent. In relation to the pursuit of the further documents, the second to fifth respondents assert that they 'joined with the First Respondent' in the amended interlocutory application and point out that the amended application sought production to all the respondents. 43 But the second to fifth respondents filed no submissions or affidavits in respect of the application. The first respondent was actively pursuing it and its counsel was no doubt prepared to make oral submissions in relation to it, but there is no basis to think that the solicitor appearing for the second to fifth respondents had spent any time preparing for it. The proposition that the second to fifth respondents incurred costs is unsupported by any description or evidence of the costs in question. I am not satisfied, as required by s 570(2)(b), that the applicant's unreasonable act or omission has caused the second to fifth respondents to incur any costs. There will be no order for costs in their favour.

Costs of this application for costs 44 Like her allegations of abuse of process in pursuit of the further documents, the applicant's claim at the costs hearing that it is an abuse of process for the first respondent to seek its costs of the interlocutory application is devoid of merit. The applicant, and those representing her, must not make such serious allegations in future unless the evidence discloses a proper basis for doing so. 45 Since the parties have had mixed success on the application for costs, there will be no order as to the costs of that aspect of the matter. The appearances at the interlocutory hearing on 20 January 2022 which remained listed despite the production of the further documents the afternoon before were a necessary incident of the applicant's unreasonable conduct, so the costs that were reserved on that occasion will be included in the order for costs. Mr Brunner sought to suggest that it was somehow vexatious of counsel for the first respondent to resist the application of s 570 of the FWA at the hearing of 20 January 2022. But she had no advance notice of that point and, after reviewing the applicable authorities, the concession was properly made. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackson.