Yatras and another v Moraitis Administration

CATCHWORDS: Costs - Final orders - Departure from usual costs orders considered - Orders made

LEGISLATION CITED: Industrial Relations Act 1996

Australian Mutual Provident Society & Anor v Avis & Anor (1997) 111 IR 1 Aveling v UBS Capital Markets Australia Holdings Ltd [2004] NSWIRComm 261 Bankstown City Council v Paris (1999) 93 IR 209 Boner v Anderson (No 2) (1993) 50 IR 406 Bowker & Anor v Software Engineers Australia (NSW) Pty Ltd & Ors [2003] NSWIRComm 213 Kennedy v Contract Transport Solutions Pty Ltd [2003] NSWIRComm 158 CASES CITED: Geoffrey Bruce Mullins v Peoplebank Australia Pty Ltd (2003) 134 IR 1 Larsen v Ondeo Nalco Australia Pty Ltd [2004] NSWIRComm 123 Moama Bowling Club Limited v Armstrong (No 2) (1995) 64 IR 264 Yatras and another v Moraitis Administration (NSW) Pty Ltd and others [2004] NSWIRComm 391 Youry Dawidar v One Steel Wire Pty Ltd and another [2004] NSWIRComm 372

APPLICANTS Mr S Prince of counsel Solicitor: Mr W Szekely Szekely & Associates LEGAL REPRESENTATIVES:

RESPONDENTS Mr P Newall of counsel Solicitor: Mr R Camerson Hicksons

• 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

DIANNE AND ANTHONY YATRAS v MORAITIS ADMINISTRATION (NSW) PTY LIMITED AND OTHERS

Application under s 106 of the Industrial Relations Act 1996

1 On 16 December 2004 judgment was given in this matter dismissing the summons for relief filed by the applicants: Yatras and another v Moraitis Administration (NSW) Pty Ltd and others [2004] NSWIRComm 391. 2 Costs were reserved with liberty given to apply if no agreement could be reached in relation to costs. This judgment deals with the issue of costs. Background 3 The background to this matter is set out in paragraphs 2 and 3 of my earlier judgment as follows: 2. The respondents, by notice of motion filed on 2 June 2004 contend that s 108B of the Act prevents the Commission from making the orders sought in the summons on the basis that: The application was made later than 12 months after the termination of the contracts (s 108B(1)); and

The Commission does not have jurisdiction to extend time for making any such application or to accept an application made out of time (s 108B(2)). 3. It was common ground, for the purposes of dealing with the notice of motion that: a) the applicants' employment was terminated by the respondent on 24 August 2001 and 10 September 2001 respectively;

b) it was appropriate to determine the matter raised in the notice of motion as a preliminary matter: Nagle (T/as W D & J L Nagle & Sons) v Tilburg & Anor (1993) 51 IR 8; Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd & Ors (1991) 28 NSWLR 443; 39 IR 169; Virtue v New South Wales Department of Education and Training (1999) 92 IR 428;

c) section 108B was inserted into the Act with operation on and from 24 June 2002;

d) the summons for relief under s 106 of the Act was filed on 19 December 2003. Statutory Provision

4 Section 108B of the Industrial Relations Act 1996 ("the Act") is in the following terms:

(1) An application for an order under this Division in relation to a contract that has been terminated must be made not later than 12 months after the termination of the contract.

(2) The Commission does not have jurisdiction to extend the time for making any such application or to accept an application made after the time prescribed by subsection (1). 5 It was common ground, for the purposes of dealing with the application for costs that:

(a) on 1 December 2003, the solicitors for the applicants wrote to the solicitors for the respondents advising that an application pursuant to s 106 of the Act was contemplated;

(b) on 5 December 2003, the solicitors for the respondents advised in writing that any application pursuant to s 106 of the Act would be statute barred pursuant to s 108B, stating that if proceedings were instituted, their client would seek orders that the proceedings be struck out and that indemnity costs would be sought;

(c) on 19 December 2003, the applicants filed a summons for relief pursuant to s 106 of the Act;

(d) on 20 May 2004, Marks J delivered judgment in Larsen v Ondeo Nalco Australia Pty Ltd [2004] NSWIRComm 123. His Honour found that an application for an order made after 24 June 2002 under s 106 in relation to a contract that had been terminated must be made not later than 12 months after the termination of the contract and that in relation to such application, s 108B applies in respect of the contract termination both prior to and after 24 June 2002;

(e) on 2 June 2004, the respondents filed their notice of motion;

(f) on 15 September 2004, the Full Bench of the Commission delivered judgment in Aveling v UBS Capital Markets Australia Holdings Ltd [2004] NSWIRComm 261. This judgment considered the meaning of s 108A, stating at [33]: ... The terms of s 108A starkly show that it was intended to bring about significant changes and limits to the Court's jurisdiction pursuant to s 106 from a particular time; the particular time being the date of s 108A's operation. Parties Submissions 6 The respondents submitted that they should have their costs paid on an indemnity basis in respect of the whole of the proceedings, or, in the alternative, on a party-party basis until 15 May 2004 (sic), the date of Larsen (I note the decision in Larsen was delivered on 20 May 2004 and I propose to treat this date as being the relevant date in respect of this part of the respondents' application), and on an indemnity basis thereafter, or, again in the alternative, on a party-party basis to 15 September 2004, the date of Aveling, and on an indemnity basis thereafter. 7 The applicants did not oppose the payment of costs on a party-party basis. 8 The case put on behalf of the respondents by Mr P Newall of counsel was that, on a generous view, the applicants from the beginning of the proceedings took a gamble against the clear and unambiguous wording of the statute. At the very least, it was submitted, the gamble taken at the outset became doomed on and from the date of the decision in Larsen, or, if not from that date, then with utter certainty from the date of Aveling. 9 Mr S Prince of counsel, for the applicants, contended that in order to properly determine this application, it was necessary to examine how the proceedings were initiated and not how they were maintained. Mr Prince submitted that there were conflicting approaches by single Members of the Court regarding the proper construction of s 108B. Counsel referred to the decision of Peterson J in Kennedy v Contract Transport Solutions Pty Ltd [2003] NSWIRComm 158 and the decision of Marks J in Larsen. 10 Mr Prince observed that there was no issue of any offer of compromise being made and notwithstanding the notice of motion filed on 2 June 2004, the matter went to conciliation on 24 August 2004. 11 It was further contended that a decision of Boland J in Youry Dawidar v One Steel Wire Pty Ltd and another [2004] NSWIRComm 372 which considered the construction of s 108B and came to the same conclusion as Marks J in Larsen was delivered after I had reserved the decision in this matter. Relevant Principles 12 In Australian Mutual Provident Society & Anor v Avis & Anor (1997) 111 IR 1 at 42 - 46, the Full Bench (Bauer, Peterson, Marks JJ) reviewed the authorities dealing with the awarding of indemnity costs and the principles to be applied in considering such an application. 13 Their Honours said at 45:

Despite certain decisions (referred to by Hill J in Boner v Anderson (No 2) to the effect that there should be an increased tendency towards the awarding of indemnity costs, we consider that there is still in existence and operation a general approach to the effect that costs will be normally awarded on a party-party basis with indemnity costs to be awarded in the more exceptional case where conduct of a party justifies it. Hill J referred to those matters this way: "... a case in which there are special or unusual features of an unmeritorious or improper nature surrounding the case of one party (usually the loser) which make it unreasonable and unfair that the successful party should be out of pocket as a result of the proceedings." 14 Hill J in Boner v Anderson (No 2) (1993) 50 IR 406 at 475, provided examples of special or unusual circumstances which manifested themselves in improper or unmeritorious conduct by the unsuccessful party as, for example, cases involving the maintenance of a vexatious claim or defence, the institution and/or maintenance of an action or defence which, while not vexatious or involving an ulterior or collateral purpose, may, on a rational basis, be described as untenable or doomed to failure and cases where a party has conducted its case in wilful disregard of known facts or clearly established law. His Honour went on to observe that even where there are special or unusual circumstances attaching to a particular case, it does not follow as of course that indemnity costs will be awarded. Consideration 15 The issue for determination in this matter is whether there are "special or unusual features that justify a departure from the ordinary rules that costs follow the event" and that the usual "regular and judicial exercise of the discretion is that a costs order will be made giving the successful party its costs": Bankstown City Council v Paris (1999) 93 IR 209 at 224; Moama Bowling Club Limited v Armstrong (No 2) (1995) 64 IR 264 at 267. 16 As set out earlier in this judgment, the respondent seeks that costs be paid on an indemnity basis in respect of the whole proceedings, or, from 15 May 2004, or, from 15 September 2004. 17 On 19 May 2003, Peterson J in Kennedy determined that an application was not time barred under s 108B if in fact 12 months had elapsed since the termination of employment. On 10 July 2003 Schmidt J in Bowker & Anor v Software Engineers Australia (NSW) Pty Ltd & Ors [2003] NSWIRComm 213 concurred with the judgment of Peterson J in Kennedy. On 12 December 2003, Haylen J in Geoffrey Bruce Mullins v Peoplebank Australia Pty Ltd (2003) 134 IR 1 at [19] - [20] adopted a contrary approach to that determined by Peterson J. Marks J's decision in Larsen was delivered on 20 May 2004 . 18 The applicants commenced proceedings by way of summons on 19 December 2003. The view of the solicitors for the respondents, as set out in their letter of 5 December 2003 to the applicants was that any application pursuant to s 106 of the Act was statute barred by s 108B. At the time, this contention was contrary to the decisions of Peterson J and Schmidt J. 19 The respondents' claim that they ought to have their costs paid on an indemnity basis, on and from 15 May 2004, which they believed was the date that Marks J delivered his judgment in Larsen. 20 In my view, the delivery of this judgment, together with earlier judgments referred to, and the applicants' decision to continue with their application, does not give rise to special or unusual features of an unmeritorious or improper nature surrounding the case of the applicants. Furthermore, Marks J's decision was the subject of an appeal. As at 20 May 2004, there were conflicting decisions of single Members of the Court in respect of the proper construction of s 108B. The claim for payment of the respondents' costs on an indemnity basis from 20 May 2004 is rejected. 21 The respondents' further claim is for costs to be paid on an indemnity basis on and from 15 September 2004, this being the date that judgment was delivered by the Full Bench in Aveling. The judgment in Aveling considered the construction of s 108A. The Court did not discuss in any binding or authoritative manner the time limitation that arises in respect of s 108B and which had been considered by single Members of the Court as referred to above. However, the Full Court did specifically overrule Peterson J's decision in Kennedy. 22 Mr Newall submitted that if the applicants' case was not doomed, prior to the decision in Larsen, it was with utter certainty from the date of the judgment in Aveling. The relevance of the decision in Aveling was not considered by a single Member of the Commission in respect of s 108B until Boland J's decision in Youry Dawidar, a decision delivered on 10 December 2004, after I had reserved my decision in this matter. The reasoning in Aveling was one of four reasons his Honour gave in reaching his conclusion. 23 Similarly, the Full Bench's reasoning in Aveling in respect of s 108A was applied by me in respect of the construction of s 108B in this matter. It should be noted that the Full Bench's reasoning in Aveling is the subject of a challenge in the New South Wales Court of Appeal. 24 Mr Newall also pointed to a letter from the solicitors for the respondents dated 21 October 2004, inviting the applicants to consent to the motion being granted with an order for costs in favour of the respondents. It was not contended that this letter represented a Calderbank offer. 25 It therefore does not seem to me that there are special or unusual features of an unmeritorious or improper nature surrounding the manner in which the applicants conducted their case from 15 September 2004. 26 It follows that the respondent's claim that costs be paid on an indemnity basis for the whole of the proceedings must fail. I am not persuaded that there are special or unusual features of an unmeritorious or improper nature surrounding the case of the applicants which would justify the awarding of costs on an indemnity basis for any part of the proceedings. Furthermore, it cannot be said that the applicants have conducted their case in wilful disregard of clearly established law in respect of s 108B of the Act. 27 Having weighed all of the circumstances, I am satisfied that a just exercise of my discretion as to costs should result in no departure from the usual costs order, namely, that the applicants should bear the respondents' costs of the proceedings with the exception of the costs for the hearing on 5 April 2005 where each party should bear its own costs. ORDERS For the reasons given, I make the following orders:

1. The applicants are to be bear the respondents' costs of the proceedings on a party-party basis.
2. In respect of the hearing on 5 April 2005, each party is to bear their own costs.

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