(ACN 111 210 023) v Cargill

REASONS FOR JUDGMENT 1 In Harbour City Real Estate Pty Ltd t/as Re/Max Harbour City Real Estate (ACN 111 210 023) v Cargill [2008] FCA 1382 (Harbour City Real Estate No 1), I ordered that the judgment sum awarded in the Industrial Magistrates Court of Western Australia (Jane Christine Cargill v Re/Max Harbour City Real Estate Pty Ltd and Cecily Robertson [2008] WAIRComm 354 and Jane Christine Cargill v Re/Max Harbour City Real Estate Pty Ltd and Cecily Robertson [2008] WAIRComm355) be paid into either a joint trust account or into the Federal Court of Australia Litigants' Fund. That order operated as a conditional stay of execution of the judgment. The parties have agreed on payment of the judgment sum into a joint interest bearing account. 2 Prior to the stay application, the solicitors for the respondent had offered a compromise which accorded with that outcome. That offer (also repeated shortly prior to the primary stay application being heard) was rejected. On the arguing of the primary stay application, the principal position taken by the respondent was that she was entitled to the fruits of her victory and there should be no stay. However the respondent was also willing to accept the payment into a joint trust account solution. For reasons expressed in Harbour City Real Estate No 1 at [15], I was of the view that the appropriate disposition was for the funds to be paid into an interest bearing account. The respondent seeks costs on an indemnity basis by reason of the rejection of her offers. The rejection is said to have been unreasonable. 3 By virtue of that offer being made and not accepted, I would ordinarily have considered that the respondent should have the costs of the motion. 4 However, that is not the end of the matter. The circumstances that have arisen are addressed by s 824 of the Workplace Relations Act 1996 (Cth) (the WR Act) which provides as follows: 824 Costs only where proceeding instituted vexatiously etc. (1) A party to a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) must not be ordered to pay costs incurred by any other party to the proceeding unless the first mentioned party instituted the proceeding vexatiously or without reasonable cause. (2) Despite subsection (1), if a court hearing a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) is satisfied that a party to the proceeding has, by an unreasonable act or omission, caused another party to the proceeding to incur costs in connection with the proceeding, the court may order the first mentioned party to pay some or all of those costs. (3) In subsections (1) and (2): costs includes all legal and professional costs and disbursements and expenses of witnesses. 5 It seems clear from Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143 that the section has application to this interlocutory proceeding as much as it would to substantive proceedings. 6 Parliament has made clear that in proceedings under the WR Act, costs should be awarded only when costs have been incurred as a result of an unreasonable act or omission. 7 As the Full Court observed in Clarke [2008] FCAFC 143 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 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. 8 The appellants contend therefore that the respondent is not entitled to costs at all, let alone on an indemnity basis. The appellants argue that the appropriate order is either that the parties each bear their own costs (or there be no order as to costs) or that the costs be in the cause. 9 However it seems to me that to make an order for costs to be in the cause may also constitute a contravention of s 824. 10 In my view the appropriate disposition is that there be no order as to costs. I cannot say that rejection of the offer was unreasonable within the meaning of s 824. Nor was the application for the stay incompetent or unsupportable. There were good reasons for the stay application to be brought and I have touched on those in Harbour City Real Estate No 1 at [13] and [14]. While there would, in circumstances to which s 824(2) applies, be scope for an award of indemnity costs, the mere fact alone that an offer is made and rejected is not of itself generally regarded as being sufficient to justify an award of indemnity costs. Rather, the rejection of the offer must be unreasonable or imprudent: see Black v Lipovac (1998) 217 ALR 386; Seven Network Ltd v News Ltd (2007) 244 ALR 374 at [59]-[62], University of Western Australia v Gray (No 21) [2008] FCA 1056 at [36] and MGICA v Kenny (1996) 70 FCR 236. 11 For the foregoing reasons I will order that: 1. There be no order as to costs in relation to the orders of 9 September 2008 made in Harbour City Real Estate Pty Ltd t/as Re/Max Harbour City Real Estate (ACN 111 210 023) v Cargill [2008] FCA 1382. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.