Tsilibakis v Transfield Services

Federal Court of Australia|2015-09-23|Before: White J

REASONS FOR JUDGMENT 1 This judgment concerns an application for costs to which s 570 of the Fair Work Act 2009 (Cth) (the FW Act) applies. 2 On 21 July 2015, I dismissed the applicant's claim that the respondent, Transfield, had engaged in adverse action in contravention of s 340(1) of the FW Act, in its termination of his employment on 9 August 2013 and in its subsequent refusal to re-employ him in an alternative position. 3 I also dismissed the applicant's claims for damages in respect of breaches of his employment contract he alleged Transfield had committed in relation to the termination. 4 My reasons are set out in Tsilibakis v Transfield Services (Australia) Pty Ltd [2015] FCA 740. It is unnecessary to repeat them but they should be read in conjunction with these reasons. 5 The general discretion with respect to costs vested in the Court by s 43 of the Federal Court Act 1976 (Cth) is subject, in the circumstances of this case, to s 570 of the FW Act. Section 570 provides (relevantly): (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; or ... 6 Transfield contends that three separate acts or omissions of the applicant were unreasonable and caused it to incur costs, and that the discretion with respect to costs is enlivened and should be exercised in its favour. 7 It is not necessary to canvass in detail the authorities bearing upon the application of s 570. The relevant principles are well established. Section 570 and its predecessors are to be understood as reflecting a legislative policy of protecting parties to proceedings under the FW Act from orders for costs so that parties with a genuine grievance will not be discouraged from pursuing a remedy to which they may be entitled, or from pursuing litigation in the manner which they deem best, for fear of an adverse costs order: Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143, (2008) 170 FCR 574 at [29]; Ashby v Slipper (No 2) [2014] FCAFC 67, (2014) 314 ALR 84 at [35]. The occasions upon which costs will be awarded under s 570 are likely to be exceptional: Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission [2006] FCAFC 199; (2006) 156 FCR 275 at [60]. 8 The questions of whether a party's act or omission was unreasonable and whether such an act or omission has caused the other party to incur costs are to be determined having regard to the particular circumstances of each case: Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879; (2007) 162 FCR 392 at [27]-[28]. The fact that a party has conducted the litigation inefficiently, has made concessions relatively late, may have acted in a different or more timely fashion, or has adopted a genuine but misguided approach will be relevant to, but are not conclusive of, the party having acted unreasonably in the relevant sense: Clarke at [29]-[30]. A party's failure to comply with the duties imposed by s 37N of the Federal Court Act is also a relevant consideration: Specsavers Pty Ltd v The Optical Superstore Pty Ltd [2012] FCAFC 183; (2012) 208 FCR 78 at [57]-[58]. 9 Against that background, I turn to the grounds on which Transfield relies for its application.

Delay in amendment 10 Transfield's first ground is that the applicant had delayed unreasonably in addressing deficiencies in his statement of claim. The relevant period of delay is said to be between 18 February and 19 March 2014. 11 The applicant commenced his proceedings on 17 September 2013 and filed a statement of claim on 18 October 2013. Transfield filed its defence on 8 November 2013. A mediation on 11 December 2013 did not achieve settlement. 12 At a directions hearing on 18 December 2013, the Court fixed the trial to commence on 2 June 2014, with five days set aside, and made programming directions. 13 On 20 December 2013, Transfield's solicitors (CCW) wrote to the applicant's solicitors (NWL) pointing to a number of deficiencies which they perceived in the statement of claim, inviting the applicant to amend his statement of claim, and indicating that a strike-out application may be brought in the event that he did not do so. By letter dated 7 January 2014, NWL responded, denying that the statement of claim contained the alleged deficiencies but providing some further particulars relating to the matters identified by CCW. 14 By letter dated 17 February 2014 to NWL, CCW maintained their claim that the statement of claim was defective and attached a draft of a strike-out application which they said they were instructed to file. This letter was expressed to be a Calderbank letter. NWL responded on 21 February 2014 saying: I left a message for you this morning to call me. This was to advise we will amend the breach of contract aspect. I will call on Monday to talk about the timetable. 15 It is not clear whether there were further communications but, on 4 March 2014, NWL sent to CCW a proposed amended statement of claim. Transfield took the view that the proposed amended statement of claim was still deficient and filed its strike-out application on 7 March 2014. That application came on for hearing on 19 March 2014. However, Transfield did not press the application as the applicant conceded at the outset that there were deficiencies in the form of the proposed amended statement of claim and sought leave to file and serve an amended statement of claim. That leave was granted. The applicant filed his amended statement of claim on 26 March 2014. 16 For the purposes of the present ground, Transfield relies on the applicant's omission to address the deficiencies in the statement of claim in the period from 18 February 2014 (the day after CCW's letter to NWL of 17 February 2014) to 19 March 2014 (the date of the interlocutory hearing). It contends that in the light of its earlier communications and its strike out application, the applicant should have recognised much sooner than 19 March 2014 that both the original and the proposed amended statement of claim were deficient. Transfield did not however, rely on the principles in Calderbank v Calderbank (1975) 3 All ER 333. 17 In my opinion, there were some deficiencies in the statement of claim as originally filed and the applicant should, at least shortly after receipt of CCW's letter of 20 December 2013, have recognised that that was so. It is not necessary to record the deficiencies presently. The fact that the applicant accepted on 21 February and again on 19 March 2014 that there were deficiencies in his original and proposed amended statements of claim respectively is sufficient to indicate that Transfield's criticisms had some merit. 18 However, I do not regard the whole of the time which elapsed between 18 February 2014 and 19 March 2014 as indicating unreasonable conduct by the applicant. That is because he did respond reasonably promptly to CCW's letter of 17 February 2014. It was only four days later that NWL informed CCW that an amended statement of claim would be filed. The applicant attempted to do so reasonably promptly, providing the form of the proposed amendment on 4 March 2014. That being so, Transfield's complaint really relates to the period between 4 March 2014 and 19 March 2014, but the period from 18 February is relevant to a consideration of the reasonableness of the applicant's conduct in this shorter period. 19 In my opinion, the applicant should have recognised earlier that the proposed amended statement of claim still contained deficiencies. Had he done so, Transfield's interlocutory application and the hearing on 19 March 2014 may have been unnecessary. At the costs hearing, the applicant's counsel acknowledged that he could have appreciated the existence of the deficiencies earlier. I accept however, his explanation that it was not until he heard the critique by the respondent's counsel that he appreciated the nature and extent of the shortcomings in the pleading. 20 However, I am not willing to characterise the applicant's conduct as being the kind of unreasonableness to which s 570(2)(b) refers. In my opinion, the Court should be circumspect before doing so. It commonly occurs that applicants have difficulties in pleading appropriately an adverse action claim and an associated breach of contract claim. Experience also indicates that, despite inadequate pleadings, a matter can often proceed to trial without undue embarrassment to the opposing party. A somewhat robust approach to pleadings is often appropriate in actions of the present kind, and not that adopted in substantial commercial litigation between sophisticated and experienced litigants. There are some indications that Transfield may initially have taken this view in the present case, because on 18 December 2013, it allowed the matter to be listed for trial without raising any issue as to the adequacy for the applicant's statement of claim. It is difficult for the Court to determine in retrospect the effect of inadequacies in a pleading on the opposing parties' ability to proceed to trial. 21 These considerations suggest that the Court should be circumspect before allowing claims for costs under s 570 to descend into analyses of the adequacy or otherwise of a pleading and of the extent to which established shortcomings have had on the opposing party's preparation. As I have said, criticisms of a party's pleading are commonplace. Defects in a pleading are an ordinary incident in litigation. 22 In my opinion, this is an example of an applicant's conduct which, while inadequate, should not be characterised as having the quality of unreasonableness warranting an order under s 570.

Delay in withdrawing claims of breach of contract 23 The original statement of claim filed on 18 October 2013 included a claim for damages for breach of contract. It was to the effect that the conduct alleged by the applicant to constitute the pleaded adverse action was also a breach of his employment contract. It is fair to say that the original statement of claim provided only minimal particularisation of this claim. 24 In the amended statement of claim filed on 26 March 2014, the applicant enlarged his claim of breach of contract. He pleaded that his contract of employment contained four obligations each of which had been breached by Transfield: (a) That there be mutual trust and confidence; (b) That Transfield would provide the applicant a safe workplace; (c) That Transfield would at all times comply with its "policies and procedures in relation to workplace safety, bullying and harassment and performance management"; (d) That Transfield would comply with its Termination/Redundancy and Resignation Procedure (the Redundancy Procedure) and the Construction and Maintenance Services Contract Number 93686414189 Human Resources Management Plan HRMP (the HRM Plan). 25 At the commencement of the trial on 2 June 2014, the applicant announced that he no longer pursued the first three of his breach of contract claims. It seems that Transfield was given notice of that circumstance only earlier the same day. The effect was that the only breach of contract claim which the applicant pursued was that Transfield had not, in relation to its termination of the applicant, complied with the Redundancy Procedure and the HRM Plan. 26 Transfield submits, correctly, that most of the matters which were no longer pursued were matters which had been added to the applicant's statement of claim in the amended version filed on 26 March 2014. 27 Transfield had filed a further application on 3 April 2014 seeking the striking out of the amended statement of claim. However, with a view to minimising interlocutory activity and associated costs, I listed that application for hearing at the commencement of the trial. In the light of the applicant's withdrawal of the parts of the breach of contract claim identified above, Transfield did not then press its strike out application. 28 Transfield submits that it had had to incur costs in preparing to meet the withdrawn claims; that the applicant's withdrawal of them represented a recognition by him that they could not succeed; and that by failing to withdraw them earlier, the applicant had acted unreasonably and had caused it to incur costs, such that the discretion with respect to costs under s 570(2)(b) was thereby enlivened. 29 Again, there is some force in this submission, but in my opinion it should not succeed. 30 First, the applicant's articulation of claims as a breach of contract seems very much to have been in the nature of an alternative legal characterisation of the matters on which he relied for his adverse action claims. There is of course, not a complete coincidence in the causes of action as Transfield had to consider whether the applicant's contract of employment contained the terms which he alleged and the manner in which it was said that they had been breached. However, by reason of the applicant's adverse action claims, Transfield had to address most of the underlying factual matters upon which the applicant relied for his breach of contract claims, in any event. Accordingly, it is inappropriate to regard the breach of contract claims as a separate and discrete element in the proceedings. Further still, the applicant did pursue at trial his breach of contract claim with respect to the Redundancy Procedure and the HRM Plan claim. Because of that, much of Transfield's preparation work in relation to the alleged breaches of contract was necessary in any event. 31 Secondly, I accept the applicant's submission that defaults by Transfield itself contributed materially to his inability to assess the viability of the withdrawn claims earlier than he did. This has the consequence that the applicant's conduct should not be regarded as unreasonable. 32 Transfield was late in making discovery. On 18 December 2013, the Court had made an order for standard discovery to be made by 14 February and inspection completed by 21 February 2014. Transfield made discovery of some documents by an unsigned list provided on 21 February 2014. It made further discovery by a much more substantial list on 28 April 2014, 10 days after the extended time for doing so fixed by an order made on 19 March 2014. Some, but not all, of this further discovery was necessitated by the applicant's amendment of his statement of claim. Transfield made still further discovery during May 2014. 33 Transfield had initially been directed to file and serve the affidavits of its witnesses by 24 April 2014, but on 19 March 2014, this was extended to 14 May 2014. However, Transfield did not deliver the affidavits of its five witnesses until 21 May 2014. Even then, two of the affidavits were unsworn. 34 I accept that Transfield's defaults had an adverse effect on the ability of the applicant to prepare for the trial and to assess in advance of the trial the viability of his claims. This circumstance arose, amongst other things, from the absence of the applicant's counsel on leave during part of May 2014. Counsel had intended to prepare for the trial before embarking on his leave but Transfield's dilatoriness inhibited his ability to do so, as he did not have access to all the material. I accept the submission of counsel for the applicant that it was upon his making an assessment of the content of the documents discovered by Transfield and of its witness affidavits that he was able to give advice to the applicant as to his prospects of establishing his claim, and that that advice led to the withdrawal of the claims. 35 It would of course be inappropriate for an applicant to advance what are, in effect, ambit claims with no proper basis, with a view to making an assessment of the prospects of making out any one claim on considering the respondent's material. However, it was not suggested that the applicant's conduct in the present case should be characterised in that way. 36 For the reasons given above, I am not satisfied that the applicant's conduct should be regarded as unreasonable and I reject this part of Transfield's costs claim.

Delay in withdrawing claims relating to the third "complaint" 37 As noted in the principal judgment, the applicant's amended statement of claim alleged that he had exercised a "workplace right" on 29 July 2013 by making a complaint to Mr Vigus. He pleaded that the complaint (described as the "third complaint") raised his dissatisfaction with the investigation conducted by Mr Vigus and its outcome. The applicant abandoned reliance on the "third complaint" during the course of his counsel's opening on 2 June 2014. 38 Transfield contends that the applicant's pursuit of the claim regarding the "third complaint" was unreasonable and that it should have the costs associated with the preparation of its defence to that claim. 39 The terms of the "third complaint" are set out at [56] in the principal judgment. 40 I made findings concerning the "third complaint" in the principal judgment at [66]-[77]. I concluded that the applicant's letter of 29 July 2013 could not reasonably be regarded as a complaint, and that it had not called for any additional investigation by Mr Vigus or others. I described the applicant's pleaded case that Transfield had "either refused to, or failed to, investigate" the "third complaint" as being untenable and regarded the circumstance that the applicant had maintained his pleading about it until the opening of the trial as reflecting adversely on his credit. I also noted (at [69]) that it appeared that the applicant had raised the concerns in his letter of 29 July 2013 for spiteful reasons. 41 In its letter to NWL on 17 February 2014, CCW had pointed out the difficulties which it perceived in the pleading concerning the "third complaint". The merit of the matters raised by CCW in that letter has been borne out by the findings concerning the letter of 29 July 2013 in the principal judgment. 42 Again, I consider that there is some merit in Transfield's submission concerning the third complaint but that ultimately it should not be accepted. I consider that it would have been necessary for Transfield to lead the evidence at trial which it did concerning the applicant's letter of 29 July 2013, as it formed part of the course of events relating to the applicant's first complaint which culminated in the termination of his employment 11 days later. That is to say, I consider that the applicant's claim that his letter of 29 July 2013 amounted to an exercise of a workplace right was an attempt to give a legal characterisation to facts and circumstances which it would have been necessary for the Court to consider in any event in relation to the adverse action claim. That being so, I am not satisfied that it amounted to a separate and discrete claim, such that it can be said that its inclusion caused Transfield to incur costs which would otherwise have been unnecessary.

Other discretionary matters 43 Even had I been satisfied that the discretion under s 570(2) was enlivened in relation to any one of Transfield's grounds, I would not have exercised that discretion in favour of Transfield. There would be an incongruity in doing so given that Transfield's own non-compliance with the pre-trial programming orders caused expense and inconvenience to the applicant, but in respect of which the applicant has not made any claim. 44 In the circumstances, it is not necessary to express any view about the quantum of the costs claimed by Transfield.

Conclusion 45 For these reasons, I dismiss Transfield's application for costs. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.

Federal Court Act 1976(Cth)ss 37N, 43

Fair Work Act 2009(Cth)ss 340(1), 570

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