FEDERAL COURT OF AUSTRALIA King v Jetstar Airways Pty Ltd [2012] FCA 413 Citation: King v Jetstar Airways Pty Ltd [2012] FCA 413 Appeal from: King v Jetstar Airways Pty Ltd (No 2) [2012] FCA 8 Parties: SHEILA KING v JETSTAR AIRWAYS PTY LTD File number: NSD 165 of 2012 Judge: PERRAM J Date of judgment: 24 April 2012 Catchwords: PRACTICE AND PROCEDURE – Appeals – application for order under r 40.51 limiting appellant's costs – relevant principles where application made in appeal proceedings Legislation: Disability Discrimination Act 1992 (Cth) s 24 Federal Court Rules 1979 O 62A Federal Court Rules 2011 r 40.51 Uniform Civil Procedure Rules (NSW) r 42.4 Cases cited: Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864 Delta Electricity v Blue Mountains Conservation Society Inc (2010) 176 LGERA 424; [2010] NSWCA 263 Farrell v Royal King's Park Tennis Club (Inc) [2007] WASCA 173 King v Jetstar Airways Pty Ltd (No 2) [2012] FCA 8 Lukas v Yorke (1983) 50 ALR 228 Date of hearing: 4 April 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 21 Counsel for the Applicant: Mr A Ahmad Solicitor for the Applicant: DLA Piper Counsel for the Respondent: Ms K Eastman Solicitor for the Respondent: Minter Elison IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 165 of 2012 BETWEEN: SHEILA KING Applicant AND: JETSTAR AIRWAYS PTY LTD Respondent JUDGE: PERRAM J DATE OF ORDER: 24 APRIL 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Pursuant to r 40.51 of the Federal Court Rules 2011, the parties' recoverable costs in this matter be capped at $10,000. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 165 of 2012 BETWEEN: SHEILA KING Applicant AND: JETSTAR AIRWAYS PTY LTD Respondent JUDGE: PERRAM J DATE: 24 APRIL 2012 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicant is a 78 year-old woman who relies on a wheelchair for mobility. She attempted to secure a booking on one of the respondent's scheduled services from Adelaide to Brisbane on 23 September 2008. The flight was known as JQ769. She was told that she could not take the flight as there were two other passengers requiring wheelchair assistance who had already booked on it so that the limit for such passengers had been reached. 2 In the trial proceedings before this Court, Mrs King sought to show that Jetstar had infringed s 24 of the Disability Discrimination Act 1992 (Cth) ('the Act') by unlawfully discriminating against her on the grounds of her disability. Jetstar, on the other hand, argued that it was entitled to the benefit of an exception to s 24 which arose if making the service available would impose 'unjustifiable hardship'. Following a five day trial, Robertson J concluded that it was established that Mrs King had suffered the discrimination she alleged, but that Jetstar was entitled to succeed on its unjustifiable hardship argument. Consequently, he dismissed the proceedings: King v Jetstar Airways Pty Ltd (No 2) [2012] FCA 8. 3 Mrs King has now appealed from that dismissal. Pending that appeal she seeks a protective costs order the effect of which will be, if made, to limit the liability of any party to costs to $10,000. Rule 40.51 of the Federal Court Rules 2011 provides: 40.51 Maximum costs in a proceeding (1) A party may apply to the Court for an order specifying the maximum costs as between party and party that may be recovered for the proceeding. (2) An order made under subrule (1) will not include an amount that a party is ordered to pay because the party: (a) has failed to comply with an order or with these Rules; or (b) has sought leave to amend pleadings or particulars; or (c) has sought an extension of time for complying with an order or with any of these Rules; or (d) has not conducted the proceeding in a manner to facilitate a just resolution as quickly, inexpensively and efficiently as possible, and another party has been caused to incur costs as a result. 4 Mrs King's contentions are that her litigation against Jetstar raises an important question of public interest about the extent to which a low-cost airline may point to its costing structures as constituting unjustifiable hardship within the meaning of s 24; that, apart from the declaration she seeks, she stands to make no personal gain from the proceedings; that her financial position is such that a costs order against her would be 'disastrous'; that she has already incurred a $20,000 liability to Jetstar for costs in respect of the of the proceedings below; that she is in receipt of a grant of legal aid from the New South Wales Legal Aid Commission; and, perhaps compendiously, that she will be unable to pursue the appeal unless a protective costs order is made. 5 Jetstar sees the matter somewhat differently; it submits that the appeal has little in the way of prospects; that its costs against Mrs King in the trial were capped at $20,000 and that the manner in which the trial was conducted on her behalf resulted in considerable waste – in particular, the pursuit of an expensive ground at trial no longer pursued on appeal; that it been completely successful at trial and that the public interest claims made by Mrs King had to be seen in a context which included the fact that a judge of this Court had rejected them after a full hearing on the merits. Another set of submissions related to Mrs King's failure to disclose certain matters on the present application: the true nature of her legal representation (here the submission was that it had not been explained how she came to be represented at trial by three counsel, including senior counsel, instructed by a well-known commercial law firm); the nature of the grant of legal aid which she had received; and the existence of two other proceedings brought by her against Virgin Airways which have been docketed to Foster J and which, by coincidence, were listed for directions on the same day the present application was heard. 6 All of these contentions, if accepted, would be properly germane to the exercise of the discretion conferred by r 40.51, whose breadth is well established: see, for example, Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864 at [6]-[13] per Bennett J; see also, in relation to the equivalent rule in the Uniform Civil Procedure Rules (r 42.4), the New South Wales Court of Appeal's decision in Delta Electricity v Blue Mountains Conservation Society Inc (2010) 176 LGERA 424; [2010] NSWCA 263. 7 To these considerations, I would add just two additional matters that are presented by this case. The first is that I accept that issues of non-disclosure are potentially relevant, although it is unlikely that they will have the same kind of potency that they can do in ex parte proceedings. Once the matter alleged not to have been disclosed becomes known on an application under r 40.51, its non-disclosure's relevance is probably largely vestigial. On the other hand, a failure to put before the Court the arrangements upon which practitioners were or are retained can be relevant because it may strike at the fairness of the proposed order. 8 The second matter concerns the operation of r 40.51 in appellate proceedings. There is no reason to apprehend that different principles obtain in such proceedings, but the fact that a full trial has already taken place and its outcome is known are matters that are also relevant. The extent of their actual relevance will fluctuate from case to case, just as the nature of curial defeat also varies: not every loss is total and some victories are pyrrhic. The relevance of what has occurred at trial when interlocutory applications are made on appeal is established, at least in relation to security for costs: cf. Lukas v Yorke (1983) 50 ALR 228 at 229 per Brennan J; Farrell v Royal King's Park Tennis Club (Inc) [2007] WASCA 173 at [32] per Buss JA. I can see no reason why a different approach might be taken to r 40.51. 9 What then of this case? I accept that the litigation does raise a matter of public interest – it is apparent that at the heart of Jetstar's victory before Robertson J was his Honour's acceptance that the tight margins of its business model could not sustain – or ought not sustain – the exigencies brought about by having more than two passengers on any one flight needing the assistance of a wheelchair. The proposition ultimately will be that low cost operators ought not to be achieving their margins at the expense of disabled persons. Whether that proposition is correct is a different question but it is properly characterised as one concerning the public interest. I do not accept that this characterisation is affected by the fact that the Act is no longer in the same form as it was at the time giving rise to the present proceedings. The basic question about the balance to be struck between the rights of the disabled and the business models of airlines remains the same, albeit the procedural prism through which it is to be seen has changed. Further, the public interest nature of the case is reinforced by the fact, which I accept, that Mrs King stands to gain nothing by way of private benefit from the proceedings. 10 In saying that, I accept Jetstar's submission that Mrs King's proposed challenge to the trial judge's fact-finding is problematic, and that Jetstar has the advantage of having had its case examined and found to be correct by the trial judge. But, as I apprehend, the substantive question on the appeal will be whether the difficulties for Jetstar which the trial judge found to exist constituted an 'unjustifiable hardship'; that is a legal question of characterisation and, at least in that domain, it is one in respect of which Mrs King's public policy point is capable of resonating. Further, I would not be prepared to say that the appeal was without merit and this is so even giving due weight, as one ought, to Jetstar's victory at trial. 11 Regardless of whether the order is made or not, one party is going to be seriously prejudiced. I accept that an unfettered costs order against Mrs King would be likely to have the most serious consequences for her financial position and that this is likely to stifle the appeal; on the other hand, I accept that Jetstar has itself been deleteriously affected by the original $20,000 cost-capping order. Should any further cost-capping order be made and should Jeststar succeed again on appeal, yet more prejudice of the same kind will be caused to it. Mrs King and Jetstar's potential difficulties are, in sense, incommensurable but nevertheless a comparison between them needs must be made. Having regard to the non-frivolous nature of the appeal and the human cost inuring to Mrs King directly, I incline to the view that hers is the more serious, although Jestar's is far from trivial. 12 I reject Jetstar's complaints about Mrs King's alleged non-disclosures. Contrary to its submissions, the terms of the grant of legal aid are before the Court. The Commission has agreed to pay the filing fees for the appeal in the sum of $3,000, the fees of counsel at two different rates and unitemised disbursements to a limit of $250 or $350 (the grant documentation is ambiguous). The grant is capped at $7,686 or $7,786. 13 Insofar as the non-disclosure of the Virgin proceedings is concerned, the fact is that by the time of the present hearing they had become known and, assuming in Jetstar's favour that there was an obligation to bring them to the attention of the Court, any failure in that regard is now spent. 14 Further, although I am inclined to accept that Mrs King has not directly established the basis upon which she was represented by three counsel at the trial, I do note that her solicitor, Mr Patrick, is the pro bono partner of DLA Piper, from which I infer that his firm's costs are unlikely to have been directly acquitted by Mrs King. I draw that conclusion all the more comfortably in light of the grant of legal aid (not often extended to those who can afford the services of three counsel and a large law firm). Although Jetstar made much of the failure of Mrs King to explain precisely the basis upon which she had been represented at trial and although her evidence in that regard could have been more fulsome, I conclude that she was represented by counsel and solicitors acting either pro bono publico or on the basis that they would only be paid out of any costs actually recovered. Contrary to the submissions of Jetstar, I fail to apprehend anything especially sinister in Mrs King's failure to explain this topic in more detail. 15 That said I am, in principle, sympathetic to Jetstar's complaints about the manner in which the trial was conducted. Here the point was that Mrs King had pursued an indirect discrimination case (that is, a case that she had been discriminated against because Jetstar treated her the same as every other passenger when she was, relevantly, different). She sought to prove this by identifying a condition that applied to all passengers but which, in its practical operation, discriminated against her. The condition identified was that she not use a wheelchair and that she not require wheelchair assistance in boarding and disembarking from the plane. Unsurprisingly, with respect, the trial judge was unpersuaded that there was any such condition imposed by Jetstar (at [233]-[241]). It was submitted by Jetstar in this Court that the running of this part of the case, together with the effect of an order made at an earlier stage of the proceedings by Moore J that Jetstar's evidence be put on in advance of Mrs King's, had resulted in Jetstar being put to a great deal of trouble and expense. It is not difficult to see that this might well be so. 16 The existence of a cost-capping order could, in a vacuum, mean that wasteful behaviour in litigation could have a significant and unfair adverse effect on an opposing party. It is no doubt for that reason that r 40.51(2) (quoted above), and before it O 62A r 2, have specifically excluded from the scope of a cost-capping order any amount of costs caused, generally speaking, by inefficient litigation conduct (the present r 40.51(2)(d) excludes costs where it can be said that a party 'has not conducted the proceedings in a manner to facilitate a just resolution as quickly, inexpensively and efficiently as possible'; the former O 62A, under which the cost-capping order below was made, excluded costs 'that were not necessary for the economic and efficient…hearing of the action'). 17 Here, r 40.51(2) creates a problem for Jetstar. If one were to accept that Mrs King's conduct of the indirect discrimination case at trial was, in some sense, sufficiently unreasonable to warrant her being denied a cost-capping order on appeal, then it is difficult to see how, as a matter of logic, that conduct would not also fall within r 40.51(2)(d). If it were to fall within that rule, then the original cost-capping order would not have generated the prejudice identified by Jetstar. On that view of affairs, the correct procedure would be for it now to seek a costs order from the trial judge for the costs that it says have been unreasonably imposed upon it by the manner in which Mrs King's representatives conducted the trial. That procedure would have a number of virtues, not the least of which would be the trial judge's distinct advantage in assessing the correctness or otherwise of allegations made by one party about the unreasonableness of the other party's trial tactics. 18 In this case, no such application has yet been made by Jetstar (although such an application was made by Jetstar in relation to a distinct discovery issue). In the circumstances, I propose to take into account the apparent difficulties which Mrs King's pursuit of an indirect discrimination case appears to have engendered but, at the same time, also to take into account the fact that Jetstar has not asked the trial judge, who is better placed than I am, to do anything about this. The consequence is that I regard this as a largely neutral matter. 19 Of course, even without a cost-capping order at first instance, prejudice might still accrue to Jetstar by wasteful behaviour on Mrs King's behalf: for example, its cost recovery on a party-party basis would be well short of complete and, in any event, it is likely that Mrs King has little capacity to meet any such order. Viewed from that perspective, the prejudice which might be suffered by Jetstar can be seen as having nothing to do with the cost-capping order made at first instance but instead to be an independent form of prejudice sufficient in its own right to warrant a refusal to make any further cost-capping order on appeal. I am not sure that this submission was advanced but, even if it were, I would not be inclined to accept it. Too little is known of that prejudice or its extent to provide a secure foundation for assessing its correctness. 20 What is presented therefore is a finely balanced discretionary debate. One cannot help but feel that the public interest aspects of Mrs King's claim warrant some protection so that her appeal may be pursued and, in that regard, the existence of a grant of legal aid lends strength to the argument. So too, the harm to Mrs King seems greater to her if the order is not made than it is to Jetstar if it is. On the other hand, it is true that the making of such an order can operate with unfairness on the opposing party. Nevertheless, that is an unfairness, in part, that r 40.51 is premised upon. Further, neither wasteful behaviour in the past nor any in the future are protected by a costs-capping order because the effect of r 40.51(2) is to remove protection from the costs consequences of such behaviour. 21 Not without some hesitation I have come to the view that a costs-capping order should be made. Mrs King sought that costs should be set at $10,000. Mrs King's solicitor has estimated that the costs of the appeal should not exceed $40,000, leaving to one side GST. On the other hand, Jetstar's estimate of its costs for the appeal lie between $100,000 - $180,000. It is easy to think of such an estimate as being on the high side, however, it must not be overlooked that the issue in this litigation is of considerable commercial significance to Jetstar and it is entitled to defend itself as best it can. In a sense, this evidence shows the potential extent of Jetstar's prejudice. I do not think the $40,000 estimate, in a case such as the present, is necessarily realistic. I would expect Jetstar's costs for the entire appeal to exceed $100,000. Allowing that to be so, however, the point of this cost-capping order is to avoid the stifling of what is potentially an important appeal. Having decided that such an order is appropriate, it is that end which must drive the metric by which it is to be measured. In those circumstances, I propose to limit the costs to $10,000. I do this principally because of Mrs King's financial position; I do it also because it bears a relativity to the costs-capping order made at first instance of $20,000, that is 50%. There should be no order as to the costs of this application. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate: Dated: 24 April 2012