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[Extract from Queensland Government Industrial Gazette,
dated 4 February, 2005, Vol. 178, No.5, pages 118-126]
QUEENSLAND INDUSTRIAL RELATIONS COMMISSION
Industrial Relations Act 1999 – s. 335 – application for costs
Lester Marriage AND Devine Limited (No. B904 of 2003)
Bob Bugden AND Devine Limited (No. B905 of 2003)
Jon Titeica AND Devine Limited (No. B906 of 2003)
John Tetlow AND Devine Limited (No. B907 of 2003)
Warren Walsh AND Devine Limited (No. B908 of 2003)
COMMISSIONER ASBURY 25 January 2005
Application for costs – Industrial Relations Act 1999 s. 335 – Case law – Considerations in determining whether application made vexatiously or without reasonable cause – Considerations in determining whether there were unreasonable acts or omissions connected with the conduct of the application – Applications sought relief in an amount beyond the jurisdiction of the Commission to award – Failure of applicants to bring applications within the provisions of Chapter 3 of the Act – Finding that prima facie there were grounds for holding that the applications were made vexatiously or without reasonable cause – Finding that applicants made unreasonable and excessive demands for compensation – Finding that applicants made unreasonable and excessive offers of settlement – Finding that failure of respondent to accede to demands or to settle applications was not unreasonable given quantum of demands – Finding that Commission is able to consider acts prior to filing of unfair dismissal applications in deciding whether there were unreasonable acts or omissions connected with conduct of applications – Finding that Commission is able to consider offers of settlement made after conclusion of conciliation under s. 75 in deciding whether there were unreasonable acts or omissions connected with the conduct of applications – Finding that applicants engaged in unreasonable acts or omissions in connection with conduct of applications – Discretion to award costs enlivened – Decision to exercise discretion to award costs – Consideration of appropriate scale for assessment of costs – Finding that in the circumstances of lengthy and complex proceedings District Court scale was appropriate reference point for assessment of costs – Finding that one applicant contributed to a greater degree to costs incurred – Higher proportion of costs ordered to be paid by one applicant – Remaining applicants ordered to pay residual of amount determined and made jointly and severally liable for such payment.
DECISION
1. BACKGROUND
By a decision issued on 6 August 2004, published at 176 QGIG 724, applications under s. 74 of the Industrial Relations Act 1999 brought against Devine Limited (the respondent) by Lester Marriage, Bob Bugden, Jon Titeica, John Tetlow and Warren Walsh (the applicants) were dismissed. The respondent now seeks an order pursuant to s. 335(1) of the Act that the applicants pay its costs and expenses of the proceedings, including costs on the costs application. The application is made by the respondent on grounds that the applications were brought unreasonably and/or without reasonable cause (s. 335(1)(a)) and/or the applicants caused the respondent to incur costs because of unreasonable acts or omissions connected with the conduct of the applications (s. 335(1)(a)).
2. EVIDENCE AND SUBMISSIONS FOR THE RESPONDENT (THE APPLICANT FOR COSTS)
Affidavits from the following persons were filed on behalf of the respondent (the applicant for costs) in support of the costs application:
· Stephen James Dickens, Partner of the firm Nicol Robinson Halletts, solicitors for the respondent (Exhibit A1 and A4);
· Helena Emily Kolenbert, Articled Clerk in the employ of Nicol Robinson Halletts (Exhibit A2);
· Paul David Garrett, Legal Costs Assessor and Solicitor practicing in the area of legal costs in association with Messrs Hickey and Garrett (Exhibit A3);
· John – Anthony Hodgens, Senior Associate of Nicol Robinson Halletts (Exhibit A4).
The applicants’ representative indicated that none of the above deponents was required for cross-examination.
It was contended for the respondent that the manner in which the applicants prosecuted their claim, made the litigation sufficiently abnormal as to justify the awarding of costs. In particular, the respondent relied upon the following matters:
· an excessive demand for compensation on the part of the applicants of $4,227,980.00 reflected in a solicitor’s letter dated 1 April 2003 (SJD2 to Exhibit A1) and $852,736.00 (less $90,000.00 paid to the applicants on termination of their employment) set out in a facsimile headed “without prejudice save as to costs” dated 27 November 2003, received by the respondent’s solicitors immediately prior to the commencement of the hearing into the applications (SJD 24 to Exhibit A1);
· failure on the part of the applicants and their agent to recognise the need to account for income received subsequent to termination of employment;
· failure to reduce claims where reasonable attempts to find alternative employment had not been made by the applicants;
· failure on the part of the applicants and their agent to have regard to the cap on any entitlement to compensation imposed by s. 79(2) of the Act;
· unreasonable responses to settlement offers made by the respondent, particularly in circumstances where the Commission had found that option adopted by the respondent for calculating payments to the applicants on termination of employment had provided the highest outcome in terms of minimum legal entitlements;
· unreasonable acts or omissions in the applicants’ conduct of the proceeding including:
o failure to comply with directions orders;
o failure to properly formulate or particularise statements of material facts or statements of evidence, with four of the applicants simply adopting the statements of Mr Marriage.
It was contended that on no view of the lawful entitlements of the applicants, under contracts, award or statute, could their entitlements have ever approached anything like the amount of $852,736.00. During the hearing of the applications, the applicants’ representative had not quantified their claim for compensation, but had identified the principles which the Commission should apply in determining any award of compensation. If those principles were followed the total award of compensation sought by the applicants during the hearing, based on the applicants’ cases taken at their best, was in the order of $345,000.00. This amount did not allow for mitigation, or failure to mitigate, and the amount totalling $90,000.00 paid to the applicants on termination. The applicants had not explained how they could reasonably have claimed $4.2 million in April 2003 or $850,000.00 in November 2003. It was submitted that there was a fair inference from the correspondence and the manner in which the applicants had run their cases, that their objective throughout was to obtain a huge payout. As a result the case was contended to fall within the class discussed in Barry v the Irish Bar and Restaurant Company Limited (1998) 159 QGIG 210 at 211, where litigation could be seen with hindsight to have been conducted through to a hearing and decision, principally because one party had made unreasonable demands, which the other party had reasonably responded to by electing to fight the case.
There had been delays in proceedings caused by failure of the applicants to comply with directions orders and to properly disclose all relevant documents. Further, the fact that all of the applicants had effectively adopted the witness statements and the statement of material facts of Mr Marriage, complicated and prolonged proceedings, given that all of the applicants had different recollections of relevant events.
It was further submitted that if the Commission was minded to order that the respondent’s costs be paid by the applicants, the assessment should be conducted by reference to the scales of the Supreme Court and the Federal Court. This submission was made on the basis that the proceedings had borne very little resemblance to anything in the Magistrates Court, and awarding costs on that basis would not do justice to the litigation. The claims had involved a large monetary amount, beyond that which the Magistrates Court would have jurisdiction to award. Complex questions of law and fact of a magnitude akin to that of Supreme Court or Federal Court litigation had been considered. The complexity of the litigation was evidenced by the extensive witness statements; cross-examination; nine days of hearing and the length and complexity of the reasons for the Commission’s decision. The respondent accepted that the costs associated with its unsuccessful strike out application heard on 30 June 2003 should be deducted for the assessment.
The submissions for the respondent in this regard were supported by the affidavit of Mr Garrett (Exhibit A3), a solicitor and experienced legal costs assessor, who had expressed the view that, having regard to the issues involved in the litigation, he believed that it was appropriate for either the Federal Court or Supreme Court scale be applied for the purpose of recovery of party and party costs. Mr Garrett’s calculations indicated that based on the Supreme Court Scale the respondent’s costs would be assessed at $139,277.91 and on the Federal Court scale $160,169.01. It was submitted that it would be appropriate for the Commission to award costs based on the mid point between these two amounts – $149,724.00. In respect of the costs application the respondent submitted that its costs should be assessed by reference to the Supreme Court Scale, in the amount of $18,331.30 (refer affidavit of John-Anthony Hodgens Exhibit A5).
It was also submitted that an order for costs should be made against the applicants jointly and severally, so that if any one of the applicants paid more than 1/5 of the amount, he would have an entitlement to contribution from the others: Henderson v Amadio Pty Ltd and Ors (BC9600947 VC 260 of 1993) per Heery J.
3. EVIDENCE AND SUBMISSIONS FOR THE APPLICANTS (THE RESPONDENTS IN THE COSTS APPLICATION)
Written submissions for the applicants (the respondents in the costs application) were provided in the form of an affidavit and counter proposal deposed to by their agent Mr Bryce. In opposing an order for payment of the respondent’s costs, it was submitted for the applicants that their case was not vexatious or without cause. The applicants had advice from three independent sources – an industry association, an experienced industrial advocate and a firm of lawyers – indicating that their case involved matters of significance and was deserving of consideration and a decision of the Commission. That the applicants’ case had not been untenable from the outset was apparent from the decision of the Commission as presently constituted in Devine Limited v Bugden and Others (2003) 173 QGIG 1349. In that case, the Commission had rejected the respondent’s applications seeking that the matters now subject of the costs application be dismissed, and had found that it had not been demonstrated that the applications were groundless and so obviously untenable, that they could not succeed if allowed to proceed to a formal hearing. The refusal of the Commission to cease dealing with the applications as sought by the respondent, was said to have been an affirmation by the Commission that the applications warranted consideration. It was also submitted that the applicants had been entitled to believe on the basis of this decision of the Commission refusing to strike out their applications, that they were not acting vexatiously and had reasonable cases.
It was submitted that the conflict of evidence between the parties involving an oral arrangement about redundancy payments had been critical to the outcome of the applications. That the Commission had ultimately held in favour of the respondent’s evidence on this issue, did not give rise to a finding that their case was untenable from the outset. The applicants could not be said to have run what Chief Commissioner Hall (as he then was) referred to as proceedings pursued in circumstances where the applicant or those who advised him, knew or must have known, that the proceedings could not succeed: Townsville City Council v Peter Brennan (1998) 157 QGIG 92.
It was further submitted that the respondent had at no time had made a genuine offer to settle. This was said to be an important issue in the consideration of the application for costs. Mr Bryce said in his affidavit that: “The applicants were not availed of such offers to settle and those offers to settle made by the applicants were ignored by the respondent”. As a result, the respondent in failing to make reasonable offers to settle or respond to the offers to settle made by the applicants, must shoulder responsibility for costs which it now seeks to recover from the applicants.
In support of the submission that the applicants had not caused costs to be incurred by the respondent due to unreasonable acts or omissions, the following points were made:
· at all times the applicants had dealt with a massive response from the respondents as expeditiously as possible, and any delay could be reasonably explained given the sheer volume of the task and were part and parcel of the running of a large matter;
· a significant portion of the resources allocated by the respondent to defending the applications could be attributed to its unsuccessful attempt to have them dismissed.
Further, it was contended that:
“The applicants at all times chose to be represented by their union and a lay advocate, which is appropriate for this jurisdiction. The respondent, however, saw fit to attack these modest resources with a team of lawyers instructing a Senior Counsel. That massive response, including the threshold matters brought by the respondent, caused the proceedings to grow more than anything the applicants did. That the respondents threw every available resource they could at the applicants is not a factor that should disadvantage the applicants in the matter of costs. Some delays in proceedings are inevitable, particularly when several matters are joined as was the case here. Section 335 of the Act requires the Commission to find that a party caused costs to be incurred by unreasonable acts or omissions. Given the very active role the respondent has played in escalating what can easily be termed a “David and Goliath” battle, the delays experienced were entirely reasonable and to be expected. The respondent played a leading role in the escalation of these matters and the accompanying costs of doing so. The enormity of materials filed in this application for costs is itself evidence of this approach. Now the respondent seeks to recover from the applicants the excessive costs associated with the course they chose to take in meeting the claims made. This should be rejected.”