Vourloumis v Allied Express Transport Pty Ltd

CASES CITED: Lane v the Commonwealth Bank of Australia [2001] NSWIRComm 57 Vourloumis v Allied Express Transport Pty Ltd [2006] NSWIRComm 399

APPLICANT Mr A Britt of counsel Solicitors: McGrath, Dicembre & Company LEGAL REPRESENTATIVES: Mr A Dicembre

RESPONDENT: Solicitors: Hassett Dixon Solicitors and Attorneys Mr J Hassett

Application under s 106 of the Industrial Relations Act 1996

1 On 15 December 2006, I delivered judgment (Vourloumis v Allied Express Transport Pty Ltd [2006] NSWIRComm 399) in the substantive proceedings by which the applicant, Suearne Vourloumis, claimed certain relief against the respondent, Allied Transport Pty Ltd, pursuant to s 106 of the Industrial Relations Act 1996 ("the Act"). I found that the applicant's contract of employment with the respondent was unfair in certain respects. She claimed that pursuant to her employment as a sales executive she was entitled to be paid commission at the rate of 5%. The respondent had argued that the applicant's commission rate was 1% and that, in any event, no commission was payable unless the applicant met a certain budgetary hurdle, which she had not achieved. The applicant succeeded in the substantive proceedings in terms of these assertions. Furthermore, there was a dispute about whether the applicant should have been paid monies in lieu of notice of termination and as to the quantum of the commission payments payable to her. These matters were also strongly contested in the proceedings. The applicant succeeded in achieving four months' pay in lieu of notice, although she had claimed in the proceedings that 12 months' pay was appropriate. The applicant succeeded in obtaining an order for the payment of monetary compensation referrable to commission which, after negotiations between the parties and after further clarification by the Court, resulted in a payment to her of $58,173.67. This is to be contrasted with the amount claimed by the applicant in the substantive proceedings, which was of the order of $300,000. I should add for completeness that the applicant asserts that interest is payable on the amount of compensation ordered in the sum of $35,101.81. That amount is yet to be accepted by the respondent as representing an accurate calculation of interest. 2 Finally, with respect to costs, I note that an offer of compromise was made by the applicant pursuant to Part 23 of the Rules of this Court on 16 November 2006. The applicant offered to settle the proceedings upon payment of the sum of $65,000 inclusive of interest together with costs. 3 The applicant sought an order that the respondent pay the applicant's costs of the proceedings in an amount assessed under the Legal Profession Act 2004 in default of agreement, such costs to be paid on a party-party basis up to and including 16 November 2006 and thereafter on an indemnity basis by reason of the offer of compromise, which offer was not accepted by the respondent. 4 The applicant submitted that in general terms she was entitled to a costs order in her favour on the basis asserted because she had succeeded overall in the proceedings and that costs should therefore follow the event. 5 The authorities in this area are well known. Costs are discretionary but the discretion must be exercised appropriately. 6 The relevant principles were discussed succinctly by Schmidt J in this Court in Lane v the Commonwealth Bank of Australia [2001] NSWIRComm 57, albeit in considering the circumstances where the usual orders as to costs should be departed from. That discussion encompasses a description of the usual principles with respect to the awarding of costs. I set out hereunder [11] to [15] of her Honour's judgment and respectfully adopt all that there is therein contained as representing the appropriate basis for dealing with the costs application made by the applicant. "11 There have been a number of cases in this Court in which the usual order as to costs has been departed from in particular circumstances. Such circumstances include, as here, where a party has been successful only as to part of the claim advanced. Other Courts have similar discretions as to costs. It is convenient therefore to refer to the law as to when such a departure is appropriate. In Oshlack v Richmond River Council (1998) 193 CLR 72, the High Court was dealing with costs orders made by the Land and Environment Court. Gaudron and Gummow JJ said at 81: "The provisions of s 69 of the Court Act which confer upon the Court the discretion exercised by the primary judge attract the application of a general proposition that it is inappropriate to read a provision conferring jurisdiction or granting powers to a court by making conditions or imposing limitations which are not found in the words used ...

The terms of s 69(2) contain no positive indication of the considerations upon which the Court is to determine by whom and to what extent costs are to be paid. The power conferred by the section is to be exercised judicially, that is to say not arbitrarily, capriciously or so as to frustrate the legislative intent. However, subject to such considerations, the discretion conferred is, to adapt the words of Dixon J, unconfined except in so far as 'the subject matter and the scope and purpose' of the legislation may enable an appellate court to pronounce the reasons given by the primary judge to be 'definitely extraneous to any objects the legislature could have had in view' ( Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505)."

12 McHugh J (while in dissent as to the outcome), dealt with the principles upon which the ordinary rule would be departed from. Those principles have been applied in other cases (See Mannix v Loumbos [2000] NSWCA 32; Arian v Nguyen [2001] NSWCA 5; Hayle Holdings Pty Ltd v Australian Technology Group Ltd [2000] FCA 1699.) McHugh J said at 97: "The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874, Devlin J formulated the relevant principle as follows:

'No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.'

'Misconduct' in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute.

Apart from anomalous examples in the equity jurisdiction, there are very few, if any, exceptions to the usual order as to costs outside the area of disentitling conduct. The Court may award costs in favour of a defendant where the plaintiff has obtained only nominal damages. However, this practice can be justified on the basis that, in reality, the successful party lost the litigation and the unsuccessful party won."

13 These approaches are consistent with the approach of the Court of Appeal in England, where in Re Elgindata Ltd (No2) [1993] 1 ALL ER 232, Nourse LJ, with whom Stocker LJ agreed, discussed the principles to be applied at 237: "In order to show that the judge erred I must state the principles which ought to have been applied. They are mainly recognised or provided for (it matters not which) by s51 of the Supreme Court Act 1981 and the relevant provisions of RSC Ord 62, in this case rr2(4), 3(3) and 10. They do not in their entirety depend on the express recognition or provision of the rules. In part they depend upon established practice or implication from the rules. The principles are these. (1) Costs are in the discretion of the court. (2) They should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made. (3) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where there has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs. (4) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but order him to pay the whole or a part of the unsuccessful party's costs. Of these principles the first, second and fourth are expressly recognised or provided for by rr2(4), (3(3) and 10 respectively. The third depends on well-established practice. Moreover, the fourth implies that a successful party who neither improperly or unreasonably raises issued or make allegations on which he fails ought not to be ordered to pay any part of the unsuccessful party's costs. It was because of his disregard of that principle that the judged erred in this case."

14 In Hughes v Western Australian Cricket Association (Inc) & Ors (1986) ATPR 40-748 Toohey J applied the observations of Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 12: "But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues."

15 Toohey J also noted at 48,136: "It is relevant, but not conclusive, to consider how much time of the hearing was taken up with evidence and submissions relating to those issues on which the applicant failed. This is not an easy task because much of the evidence bore upon more than one cause of action. Counsel for the applicant did offer some dissection of time spent, by reference to the evidence of particular witnesses and to addresses and noted what he contended was the relatively little time taken up in addresses on those issues on which the applicant failed."" 7 Likewise, there is no controversy with respect to the provisions of Rule 216 of the Rules of this Court dealing with the costs consequences of the failure to accept an offer of compromise. Rule 216 is in the following terms. 216 Offer of compromise

(1) Upon the making of an order under Rule 168 (9), a party entitled to costs may, unless the Commission otherwise orders, have those costs assessed up to and including the day the offer was accepted. (2) If a notice of offer contains a term which purports to negative or limit the entitlement to costs, that term shall, unless the Commission otherwise orders, be of no effect for any purpose under Part 23 or this Rule. (3) Subrules (4)-(7) apply to an offer which has not been accepted at the time prescribed by Rule 168 (8). (4) Where an offer is made by an applicant and not accepted by the respondent, and the applicant obtains an order on the claim to which the offer relates no less favourable than the terms of the offer, then, unless the Commission otherwise orders, the applicant shall be entitled to an order against the respondent for costs in respect of the claim from the day on which the offer was made, assessed on an indemnity basis in addition to costs incurred before and on that day, assessed on a party and party basis. (5) For the purpose of subrule (4), where the offer was made on the first or a later day of the hearing of the proceedings, then, unless the Commission otherwise orders, the applicant shall be entitled to costs in respect of the claim from 11 am. on the day following the day on which the offer was made, assessed on an indemnity basis, in addition to costs incurred before that time, assessed on a party and party basis. (6) Where an offer is made by a respondent and not accepted by the applicant, and the applicant obtains an order on the claim to which the offer relates not more favourable than the terms of the offer, then, unless the Commission otherwise orders, the applicant shall be entitled to an order against the respondent for costs in respect of the claim up to and including the day the offer was made, assessed on a party and party basis, and the respondent shall be entitled to an order against the applicant for costs in respect of the claim thereafter, assessed on a party and party basis. (7) For the purpose of subrule (6), where the offer was made on the first or a later day of the hearing of the proceedings, then, unless the Commission otherwise orders, the applicant shall be entitled to costs in respect of the claim up to 11 am on the day following the day on which the offer was made, assessed on a party and party basis, and the respondent shall be entitled to costs in respect of the claim thereafter, assessed on a party and party basis. (8) Where an applicant obtains an order for the payment of a remuneration, compensation or damages and: (a) the amount payable under the order includes interest or damages in the nature of interest, or (b) by or under any Act the Commission awards the applicant interest or damages in the nature of interest in respect of the amount, then, for the purpose of determining the consequences as to costs referred to in subrules (4) and (6), the Commission shall disregard so much of the interest as relates to the period after the day the offer was made. (9) For the purpose only of subrule (8), the Commission may be informed of the fact that the offer was made, and of the date on which it was made, but shall not be informed of its terms. (10) Subrules (4) and (6) shall not apply unless the Commission is satisfied by the party making the offer that the party was at all material times willing and able to carry out what the party offered. 8 The respondent submitted that the applicant should receive only some portion of her costs. This was because the applicant claimed in her summons some $300,000 for commission and $65,000 for payment in lieu of notice. It was said that the quantum of these claims precluded the parties, despite efforts made by their respective legal practitioners, from reaching some appropriate settlement. Furthermore, the respondent criticised the applicant's solicitors in and about their insistence on discovering and inspecting records in hard copy form in circumstances where those records were in electronic form and should have been inspected in that form on the respondent's premises. However, the factual circumstances surrounding this particular matter were vehemently disputed by the applicant. 9 The Court was informed during the course of submissions that the costs claimed by the applicant were of the order of $250,000 and that the respondent's costs were of a similar order. That is, the parties in the aggregate expended some $500,000 by way of legal costs and disbursements in litigating a claim which initially was for an amount of about that order but which, exclusive of interest, resulted in an order in the applicant's favour of about $58,000. 10 While these circumstances may highlight the inappropriateness of court litigation as a cost effective and efficient means of resolving disputation in some cases, the respondent's concerns need to be assessed in light of well-established principles for the assessment of costs, which I am bound to follow. In a general sense, the applicant succeeded overall in terms of a number of assertions that she made as to the unfairness of her contract of employment and the consequences thereof. All of these matters were strenuously defended by the respondent during the course of the proceedings who raised also a jurisdictional point. Although the applicant succeeded in obtaining an order for monetary compensation that was significantly less than that which she had sought in the proceedings, she has nevertheless succeeded overall in the context of hard fought proceedings where every conceivable point was taken by the respondent. There is no evidence of the respondent having filed any notice of comprise or otherwise having made any offer that might found a basis which would deny the applicant her costs overall. 11 The respondent bears the burden of proof in establishing that there was any conduct on the part of the applicant or the applicant's legal practitioners that would justify a departure from the ordinary rule. None has been established. Any concerns of a particular kind that were ventilated during the course of submissions might arguably be dealt with by a costs assessor or otherwise considered in the course of dealing with the quantum of costs. None of these submissions would, however, disentitle the applicant to a costs order in her favour. 12 In the same way, the applicant having succeeded in obtaining an order for monetary compensation considerably in excess of that which was the subject of her offer of compromise made under the Rules of the Court, she is therefore entitled to indemnity costs as claimed.

Orders 13 I make the following orders. 1) The respondent is to pay the applicant's costs as assessed under the Legal Profession Act 2004 , in default of agreement, up to and including 16 November 2006 and thereafter assessed, in default of agreement, on an indemnity basis. 2) The respondent is to pay the applicant's costs of the proceedings before the Court on 7 December 2007, assessed in default of agreement. In order to remove any doubt, these costs are not to be the subject of an order for indemnity costs.

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