Sutton v BE Australia WD Pty Ltd

Settlement with the Second Defendant

The plaintiff made the following submissions in this respect: [4] The plaintiff addressed the settlement as against the second defendant at paragraphs 71 to 73 of her submissions dated 24 February 2017 and paragraph 9 to 16 of her submissions dated 29 June 2017. In Sutton No 4, the Court indicated (at [50]) that it considered it was appropriate to take into account the settlement with the second defendant in relation to the assessment of the monetary orders. [5] That finding was subject to two matters referred to in paragraph [51] of Sutton No 4 being: (1) account is to be taken of the costs incurred in pursuing the claim against the second defendant in the amount of $230,000 meaning a deduction of the full amount would be $120,000; and (2) that the settlement against the second defendant should be approached on the basis that the contribution of the first defendant to the unfairness found was greater than that of the second defendant. It is necessary for the plaintiff to briefly address the second issue. [6] The proportion of any reduction in the deduction is, of course, a matter for the Court to be assessed on the basis of the relative contribution of the parties to the unfairness found and is not susceptible to precise mathematical calculation. It is submitted that, in the circumstances, it is appropriate for any deduction to be reduced to reflect the fact that the unfairness found by the Court primarily resulted from the actions of the first defendant. Any deduction can only reflect the degree to which there is overlap in the contribution of the first and second defendant to the unfairness found. [7] In Sutton No 3, the Court found (at [102]-[103] and [111]-[112]) the arrangement whereby the plaintiff performed work was unfair as a result the failure of the arrangement to provide adequate protection against arbitrary termination or provide a fair period of notice and by failing to contain adequate protection from bullying and harassment. The monetary orders contemplated in Sutton No 4 are attributable to a greater degree to the unfairness arising from the termination ground rather than the bullying and harassment ground. [8] The arrangement was put in place by the first defendant and it is not clear that the second defendant played any role in determining the terms of the arrangement itself. The second defendant did contribute to the arrangement becoming unfair as a result of the plaintiff experiencing conduct amounting to bullying and harassment. The first defendant also bears responsibility for that unfairness as a result of establishing the arrangement and by reason of failing to address the behaviour of the second defendant. [9] In those circumstances, the deduction which should be made as a result of the settlement against the second defendant must reflect the fact that the unfairness attributable to the second defendant was a small part of the unfairness found. It is submitted that a deduction of say 10%-15% would be appropriate to reflect the contribution of the second defendant. If the Court would otherwise make a deduction of $120,000 to the money order on account of the settlement against the second defendant, it should rather apply a deduction of $12,000-$18,000 from the monetary order that would otherwise be made. [10] Another way of approaching the question would be to make no deduction with respect to the payment of $58,333 attributable to the termination ground and a reduction of say 50% of the payment of $20,000 attributable to the bullying and harassment ground or $10,000. On either approach, a reduction in the monetary order the Court would otherwise make in the range of $10,000 to $20,000 is appropriate having regard to the settlement against the second defendant to reflect the overlapping elements of the findings of unfairness by the Court.
I consider the defendant's submissions, in this respect, are reasonable although submitting the second defendant played only a "small part" in the unfairness may be, to some degree, overstated.
Overall, I consider an appropriate deduction for the settlement against the second defendant should be $20,000.

Costs

In the light of the judgment of this Court in Sutton No 3 and Sutton No 4, and the substantial success of the plaintiff, an order should be made that the defendant pay the plaintiff's costs of the proceedings: see r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR").
The plaintiff seeks, however, that an order should be made that the defendant pay the plaintiff's costs on an indemnity basis as a result of an offer of settlement made on 1 November 2006.
This contention is based upon the fact that the plaintiff made an offer of settlement addressed to the first defendant on that date in the amount of $40,000 plus costs. The offer was not accepted by the first defendant.
That submission was developed as follows: [12] The offer was made pursuant to what was then Part 23 of the Industrial Relations Rules 1996. Rule 216(4) of the Rules provided that, if an offer was not accepted and the applicant obtained an order on the claim to which the offer related which was no less favourable than the terms of the offer, the applicant was entitled to an order for costs assessed on an indemnity basis. Rule 42.14(2)(b) of the [Uniform] Civil Procedure Rules 2005 now provides, to the same effect, that a plaintiff is entitled to an order for indemnity costs if the plaintiff obtains an order or judgment on the claim no less favourable than the terms of the offer. [13] In assessing whether the order or judgment obtained by the plaintiff is no less favourable than the offer, the effect of any deduction made having regard to the settlement with the second defendant must be disregarded. The settlement against the second defendant is proposed to be taken into account as a result of the overlap in the relief sought against both defendants. In those circumstances, the effective outcome of the [sic] any order made on the claim is the total of the order against the first defendant and the amount of the settlement received from the second defendant attributable to the claim. On that approach, the monetary order the Court will make is, on any view, no less favourable than the offer made on 1 November 2006.
Having regard to my earlier decision as to money orders against the first defendant and my observations as to an award of costs above, the monetary order made by the Court in the matter is, in my view, no less favourable than the offer made on 1 November 2006, even if the settlement with the second defendant is excluded.
It follows that, pursuant to r 42.14(2)(b) of the UCPR (and having regard to the Industrial Relations Commission Rules 1996 (NSW)), the Court should make an order for costs on an indemnity basis.
Finally, the plaintiff sought a gross sum order under s 98(4) of the Civil Procedure Act 2005 (NSW). After referring to Hamod v New South Wales [2011] NSWCA 375 at [816]-[819], the plaintiff submitted, it was appropriate for the Court to make a gross sum costs order for the following reasons: 1. The proceedings have involved extraordinary delays in concluding the proceedings which arose through no fault on the part of the plaintiff and resulted in very considerable costs being incurred in bringing the proceedings to their conclusion; 2. The delays in resolving the proceedings arose primarily as a result of the first defendant being placed into voluntary administration which frustrated the hearing of the proceeding in 2009 and the fact other parties litigated interlocutory points to the Court of Appeal and High Court; 3. From the middle of 2015, the first defendant ceased instructing solicitors and has not participated in the proceedings and, if a gross costs order is not made, it is inevitable that the plaintiff will be forced to incur significant additional costs in having the costs assessed; 4. The evidence as to the costs incurred in the proceedings demonstrate a lack of proportion between the costs incurred in the proceedings and the issues at stake in the proceedings and the costs should not, in the circumstances, be further increased by a costs assessment; and 5. There is material before the Court which would enable the Court to make an appropriate assessment of the costs incurred by the plaintiff in prosecuting the proceedings.
The plaintiff further submitted: [16] In assessing the amount of a gross sum costs order, the Court is not required to be involved in the same kind of detailed examination that would be appropriate on taxation or formal costs assessment: Harrison v Schipp (2002) 54 NSWLR 738 at [22]. The rule contemplates a much broader brush approach than would be applied on taxation: Hadid v Lenfest Communications Inc [2000] FCA 628 at [35]; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7].
In my view, a gross sum costs order should not be made in the present matter for the following reasons: 1. The material before the Court to make an assessment as to costs at an appropriate sum which is fair to the respective parties is, in my view, insufficient, even if the kind of detailed examination that would be appropriate on taxation or a formal assessment of costs is not required: Harrison v Schipp (2003) 54 NSWLR 738 at [22]. 2. It is true that the first defendant ceased to participate in the proceedings from mid-2015, but there is insufficient evidence to suggest that any assessment process would be unduly protracted or result in significant unrecoverable costs. Nor do I consider experience should dictate that a conclusion of that kind should be made. 3. Further, there is no submission made that the plaintiff would be disadvantaged because of a potential inability of the plaintiff to pay the costs. 4. It is unclear what the plaintiff means by the submission that there is a lack of proportion between the costs incurred in the proceedings and the issues at stake in the proceedings. Just how such measurement or assessment might be undertaken was not specified in the plaintiff's submissions. It might be noted that the conduct of the ex parte proceedings was, by its nature, a product of the case was advanced for the plaintiff. 5. I accept the submission that there has been lengthy delays in the proceedings which this Court has earlier commented do not lie at the feet of the plaintiff. Whilst I am sympathetic to the plaintiff's difficulties, in that respect, I do not consider the weight of that factor may overcome the difficulties occasioned by an inadequate basis upon which to assess the gross sum costs order.
Accordingly, costs will be as agreed or, in default of agreement, as assessed in either case on an indemnity basis.

At a glance

Court

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Before

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Judgment (9 paragraphs)

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Legislation Cited (4)

Cases Cited (9)