Walsh v Umoona Tjutagku Health Service Aboriginal Corporation

1. The applicant is to pay 20% of the first respondent's costs, such costs to be agreed or taxed.
2. For the purposes of the order in paragraph 1, the first respondent's costs are to be quantified on the basis that the total costs incurred jointly by the first and second respondents are attributable to them in equal parts.
3. The first respondent is to pay 20% of the applicant's costs, such costs to be agreed or taxed.
4. The second respondent is to pay 40% of the applicant's costs, such costs to be agreed or taxed.
5. The order for costs made in paragraph 3 on 15 June 2016 is varied so as to substitute the words "respondents' costs" with "the second respondent's costs".
6. The execution of any order for costs against the applicant in these proceedings is stayed pending: (a) satisfaction of any costs payable to her by the respondents or any one of them in accordance with these orders or any other order; and (b) satisfaction of the order for damages against the second respondent made on 28 July 2017. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

CHARLESWORTH J: 1 The applicant (Alexandra Walsh) joined two respondents on a claim for compensation for victimisation under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act). Ms Walsh was unsuccessful in her claim against the first respondent (UTHSAC) and successful in part in her claim against the second respondent (Priscilla Larkins): Walsh v Umoona Tjutagku Health Service Aboriginal Corporation (ICN 7460) (No 2) [2017] FCA 852. 2 Ms Walsh was found to have made protected disclosures of information which she reasonably suspected indicated that Mrs Larkins may have breached the CATSI Act: Walsh at [6]. Mrs Larkins victimised Ms Walsh by reason of her making the disclosures, specifically by threatening to have Ms Walsh's husband killed in gaol: see Walsh at [218]. For that act of victimisation, Mrs Larkins was ordered to pay Ms Walsh compensation in the amount of $6,583.22 including prejudgment interest: Walsh at [248]. 3 The parties now make applications for costs as follows: (1) UTHSAC seeks an order that Ms Walsh pay the whole of its costs on an indemnity basis in reliance upon the outcome of the trial and offers of settlement it made to Ms Walsh; (2) Mrs Larkins seeks an order that there be no order as to costs of the proceedings until such point that Ms Walsh pay Mrs Larkins' costs on and from: (a) 5 September 2015, being the date of an unsuccessful mediation of the matter; (b) 3 December 2015, being the date on which a first formal offer of compromise was made; (c) 27 January 2016, being the date on which a second offer of settlement was made; (d) 10 May 2016, being the date on which a third offer of settlement was made; (e) 6 June 2016, being the date on which the fourth offer of settlement was made; and (3) Ms Walsh seeks an order that the respondents jointly pay her costs. 4 Costs are in the discretion of the Court: Federal Court of Australia Act 1976 (Cth) (FCA Act), s 43. The discretion is to be exercised in a manner that best promotes the overarching purpose of the case management principles stated in s 37M of the FCA Act: see s 37M(2). 5 The Court may, among other things, make different awards of costs in relation to different parts of the proceeding (s 43(3)(b)), order the parties to bear costs in specified portions (s 43(3)(c)), or award costs in a specified sum (s 43(3)(d)). Costs are to be awarded for compensatory and not punitive purposes: Hockey v Fairfax Media Publications Pty Ltd (No 2) (2015) 237 FCR 127 at [37] (White J). 6 The "usual rule" is that a successful party is entitled to its costs: Qantas Airways Ltd v Lustig (No 2) [2015] FCA 782 at [2] (Perry J); Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 232 (Sheppard J). For the reasons that follow, I consider this to be an appropriate case in which to depart from the usual rule. 7 It is convenient to comment on some salient features of the litigation before turning to consider the settlement offers upon which the respondents rely. 8 Ms Walsh was represented by solicitors when she filed her originating application on 15 April 2015. The statement of claim did not give particulars of the quantum of damages sought by Ms Walsh against either respondent, nor did the pleading delineate between losses said to be attributable to the conduct of UTHSAC and losses said to be attributable to the conduct of Mrs Larkins. However, the pleading clearly delineated the act of victimisation for which the first respondent was liable (namely the suspension and termination of Ms Walsh's employment) and the various acts of victimisation for which the second respondent was said to be liable. I am satisfied that by about August 2015, Ms Walsh's solicitors had foreshadowed to the respondents that Ms Walsh would seek damages in the amount of $545,000.00, which included a component of $50,000.00 for exemplary damages (which are not available under the CATSI Act). 9 Ms Walsh terminated the services of her solicitors in January 2016 and was thereafter self-represented in the proceedings, including for the whole of the trial. The circumstance that Ms Walsh is a litigant in person does not relieve her of the obligation to pay costs if an order for costs is otherwise justified: Kennedy v Secretary, Department of Industry (No 2) [2015] FCA 884 at [12] (Buchanan J). 10 The trial commenced on 27 June 2016 and proceeded over 10 days. 11 In its defence, UTHSAC successfully relied upon a statutory bar erected by s 725 of the Fair Work Act 2009 (Cth) (FW Act). The statutory bar was a complete answer to the claim against it. The bar was pleaded from the first iteration of UTHSAC's pleading. It turned upon very few facts (none of which were ever in dispute) and the question of whether the bar arose did not otherwise depend on the outcome of any other disputed question. Submissions in relation to this aspect of UTHSAC's pleaded defence were made in the course of closing submissions at the trial and consumed, on the Court's estimation, no more than two hours of the total hearing time. 12 UTHSAC made no application for the issue arising under this aspect of its defence to be tried and determined separately on its merits, nor did it apply for summary judgment against Ms Walsh by reference to it. The success of this aspect of UTHSAC's defence ultimately rendered it unnecessary to determine whether UTHSAC's termination of Ms Walsh's employment constituted an act of victimisation. Both UTHSAC and Ms Walsh ought fairly to have contemplated that the costs of that aspect of the proceedings might be wasted if UTHSAC's reliance on the statutory bar was successful. 13 Considerable costs could have been saved had UTHSAC applied to have the statutory bar determined as a separate issue. It claims not to have done so because it sensed discouragement from another court at a directions hearing where it was said that UTHSAC should consider the utility in making a foreshadowed summary judgment application. The Court's remarks do not amount to discouragement. The utility in making such an application was obvious, at least insofar as questions of efficiency and overall expense were concerned: s 37M(1)(B) FCA Act. 14 In any event, the statutory bar was not the only defence relied upon by UTHSAC. It could have confined its case to its reliance on s 725 of the FW Act but it did not. Together with Mrs Larkins, UTHSAC adopted a position at trial whereby it put Ms Walsh to proof on her allegation that she had made protected disclosures under the CATSI Act so as to qualify for protection from acts of victimisation. The respondents together ran a case to the effect that (without being exhaustive) Ms Walsh did not have the requisite reasonable suspicion that breaches of the CATSI Act had occurred and that, if disclosures had been made at all, Ms Walsh had not acted in good faith in making them. 15 The allegation that Ms Walsh had not acted in good faith was founded in part on a positive allegation as to certain events that had occurred in 2011 which, it was said, evidenced a malign intent on Ms Walsh's part. In the course of the cross-examination of Ms Walsh and in their written and oral submissions the respondents asserted, wrongly, that Ms Walsh had paranoid tendencies and that she had illegitimately sought to interfere with the affairs of Mrs Larkins. 16 With one minor exception, all of these particular aspects of the respondents' jointly run defence were unsuccessful. The allegation of bad faith, in particular, was rejected on the basis that the events that Mrs Larkins said in her evidence happened in 2011 did not happen. Not only were the disclosures made by Ms Walsh found (with one exception) to be protected disclosures, they were disclosures which UTHSAC had not investigated thoroughly and independently of the involvement of Mrs Larkins herself. 17 In many important respects, UTHSAC placed its faith in the testimony of its CEO Mrs Larkins and aligned its interests with hers in the proceedings. Its decision to do so weighs heavily in the Court's discretion as to the costs of these significant parts of the action. 18 The act of victimisation proven against Mrs Larkins was one of a number of victimising acts alleged to have been committed by Mrs Larkins, or for which Mrs Larkins was said to be responsible. Three of the alleged acts were not made out because Ms Walsh failed to prove that the actions of others, assuming they occurred, were actions instigated or authorised by Mrs Larkins. The single act of victimisation proven against Mrs Larkins involved a contest of oral testimony. Ultimately, I have accepted Ms Walsh's version of events in respect of the incident. The incident involved Mrs Larkins making a threat to have Ms Walsh's husband killed in gaol. Although the arrest of Ms Walsh's husband was not found to be an act of victimisation in its own right for which Mrs Larkins was responsible, the act of the Coober Pedy police in taking Ms Walsh's husband into custody was a necessary contextual topic for evidence bearing on the later threat to have him killed while in custody. 19 Although Ms Walsh adduced evidence going to the question of whether the acts of the respondents had caused her to suffer economic loss, Ms Walsh failed to establish that any such loss was caused by the single act of victimisation ultimately proven in the proceedings. 20 As Ms Walsh properly acknowledged, any award of damages founded upon the termination of her employment was to be reduced having regard to awards of compensation she had already received in the nature of workers compensation payments and an award of damages made in earlier unfair dismissal proceedings. Accordingly, it was necessary in this action for Ms Walsh to establish significant economic loss in order for this claim to sound in an additional significant monetary award for economic loss. 21 Ms Walsh's claim for economic loss involved the examination and cross-examination of two medical experts, consuming about half a day of the trial time. 22 The act of victimisation found against Mrs Larkins sounded in a small award of compensation for hurt and distress. The amount of the award does not reflect the seriousness of the conduct found against Mrs Larkins. Rather, it reflects the failure of Ms Walsh to establish that she was entitled to compensation for economic loss as a result of the victimisation and the circumstance that the award is compensatory in nature and not punitive. As I have mentioned, the CATSI Act makes no provision for an award of exemplary damages and the Court is to proceed on the basis that Ms Walsh must be taken to have borne that in mind when considering whether to accept the offers of settlement made by the respondents. In addition, it ought reasonably to have been in Ms Walsh's contemplation that should UTHSAC successfully rely upon the statutory bar, the damages to which she might be entitled in the proceedings would be significantly reduced.