The respondents' submissions
15 The respondents emphasise that while this is "primarily a 'no costs' jurisdiction, unless a statutory threshold of unreasonable litigious conduct is demonstrated", the necessary statutory precondition is not determinative because the Court retains a discretion, quoting Lee J in Bywater v Appco Group Australia Pty Ltd [2019] FCA 799 at [7] and citing [11].
16 In relation to the filing aspect of Mr Tran's application brought only against Kodari Securities as the cross-claimant, the respondents rely upon following further principles:
(1) costs are only ordered to be paid under the exception in s 570(2) in rare and exceptional circumstances, citing Australian Workers' Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23; 232 FCR 428 (AWU) at [7]-[16], in turn citing Spotless Services Australia Ltd v The Honourable Senior Deputy President Jeanette Marsh [2004] FCAFC 155 at [12]-[13];
(2) "a proceeding will be instituted without reasonable cause if it has no real prospects of success, or was doomed to failure", quoting Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission [2006] FCAFC 199; 156 FCR 275 at [60], accepting that this could be made out if it was clear that the case brought had to fail on Kodari Securities' own version of the facts, a point that is strenuously denied;
(3) the time for assessment of the reasonableness or otherwise of the conduct is the time at which the proceedings were instituted rather than the time of their ultimate outcome: AWU at [7], citing R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 at 473;
(4) the manner in which a proceeding is prosecuted, including any later withdrawal of claim, is not a valid consideration for the purposes of a s 570(2)(a) assessment, citing Morris v McConaghy Australia Pty Ltd [2018] FCA 2099 at [5]-[6].
17 In response to Mr Tran's assertion that the allegations summarised above were instituted without reasonable cause because "even on the cross-claimants facts" each of those allegations was doomed to fail, Kodari Securities submits that those allegations were supported by evidence in the respondents' possession at the time the cross-claim was filed. They provide references to that evidence, being an affidavit of Mr Michael Kodari and another affidavit, in a detailed table.
18 Kodari Securities submits that Mr Tran's assertion that the decision not to press the allegations was made because they were instituted without reasonable cause is not properly available. That submission is made because of the evidence contained in an affidavit of Mr Michael Kodari dated 26 June 2018 (including exhibited documents obtained from unrelated service providers and the like) relied upon as the evidentiary foundation for the assertions of fact pleaded in the cross-claim. Kodari Securities submits that it was not unreasonable for them to bring the cross-claim based on that evidence. Further, Kodari Securities submits that the evidence of Mr Tran in response was not known to the respondents at the time the cross-claim was filed. To the extent that the evidence filed by Mr Tran allowed Kodari Securities to make a forensic decision about the desirability of maintaining a proceeding for each of the allegations, that was a course was taken long after the proceeding by way of cross-claim had been instituted. This was a course that was at all times open to them, particularly in circumstances where the defence to the cross-claim mostly consisted of bare denials which implicitly did not allow the prospects of success to be as critically considered. Kodari Securities therefore contends that it has not been established that it was not reasonable for them to have commenced the proceeding by way of cross-claim.
19 In relation to the evidence aspect of the costs application, concerning the evidence filed by Kodari Securities in support of its cross-claim, the arguments above are also pressed. Additionally, Kodari Securities submits that it was required to carry out the ordinary procedural tasks associated with bringing a claim, including preparing and filing evidence. It therefore submits that filing the evidence by which it sought to prove the allegations in the cross-claim could not be seen to constitute an unreasonable act (per s 570(2)(b) of the Fair Work Act). Nor, it submits, could it be seen as any failure to comply with the duty imposed by s 37N(1) or (2) of the Federal Court of Australia Act to conduct proceedings in a way that is consistent with the overarching purpose described in s 37M(1) and (2) (a mandatory consideration in exercising the discretion to award costs per s 37N(4) of that Act). The manner of pleading the relief sought was not such as to change that conclusion.
20 Kodari Securities relies upon Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143; 170 FCR 574 dealing with an analogous provision in s 824 of the Workplace Relations Act 1996 (Cth), in which it was observed (at [29]):
In our view, the respondent has not engaged in "an unreasonable act or omission". As the authorities indicate, there is a distinction between a party who pursues arguments which are ultimately abandoned or rejected by the Court and a party who commences a proceeding which is misconceived in the sense of being incompetent or unsupportable: Australian and International Pilots Association 162 FCR at 402; Standish v University of Tasmania (1989) 28 IR 129 at 138-139. Simply because a party does not conduct its litigation in the most efficient way does not mean that the Court should exercise its discretion in s 824(2) of the [Workplace Relations Act (WR Act)] to make a costs order. In our view, neither the late abandonment of some of its defence, nor the use of a notice of contention to advance a previously minor and ultimately unsuccessful argument, crosses the threshold of being "an unreasonable act or omission" for the purposes of s 824(2). True it is that the concession ultimately given by the respondent that it regarded the decision of Nicholson J as erroneous could have been given earlier. However, it was a concession which was, in light of the decision of this Court on the substantive appeal, properly made and beneficial to the appellants. Although it is arguable that the lateness of the concession may have put the appellants to some extra costs, we are of the view that it cannot be characterised as "unreasonable" in the circumstances of this case. Indeed, while courts should use the discretion in s 824(2) to ensure that parties to litigation arising from the WR Act 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 under the WR Act in the manner which they deem best.
21 In light of Clarke, Kodari Securities characterises its decision not to press the additional grounds in the cross-claim (that do not form part of the arguments advanced in support of this costs application) as being beneficial to Mr Tran. It submits that even though some costs may have been incurred, those costs should not be considered to be unreasonable in circumstances in which there was no suggestion of delay, non-appearance, non-compliance, nor any other indication of unreasonableness of the kind identified in the cases on this topic.
22 Mr Tran submits in reply that it is no answer to his submissions concerning the asserted lack of evidentiary basis upon which the cross-claimant would be able to obtain an order for loss or damage to say that the respondents possessed enough evidence at the time of filing to establish breach. In support of this submission, the applicant draws the Court's attention Actrol Parts Pty Ltd v Coppi (No 3) [2015] VSC 758; 49 VR 573 at [63]-[64], [92]-[103], and [104]-[112]. In that decision, Bell J concluded that the applicant had breached the overarching purpose provision of Victorian civil procedure legislation (analogous to s 37M of the Federal Court of Australia Act) because it had commenced and maintained a case to final judgment for nominal damages on principle, and to advance a commercial objective, thereby causing costs disproportional to that outcome to be incurred. I address the material differences between Actrol Parts and this case below.
23 Finally, Kodari Securities' submissions turn to Mr Tran's offer of compromise, by which he seeks costs, including on an indemnity basis, from all three respondents. On that issue, Kodari Securities submits that while failure to accept a reasonable offer may constitute an unreasonable act for the purposes of s 570(2)(b), the non-acceptance of the offer is required to be determined in light of the circumstances that existed at the time, relying upon the statement to that effect by Tracey J in Health Services Union v Jackson (No 5) [2015] FCA 1467 at [46]. I note that his Honour in the preceding paragraph provided a pithy summary of some of the principles to be applied in assessing an offer of compromise.
24 In relation to Mr Tran's offer of compromise, the respondents submit that it did not disclose any genuine basis upon which he asserted that the cross-claim would not succeed, nor any legal reason why that offer should be considered, simply asserting that it was genuine and reasonable, and stating, incorrectly, that nothing had been provided to substantiate the claims made, in circumstances in which affidavit evidence had been filed.