Federal Court of Australia Robinson v BMF Pty Ltd (in liq) (No 3) [2022] FCA 1519 File number: VID 798 of 2020 Judgment of: MORTIMER J Date of judgment: 15 December 2022 Catchwords: COSTS – second respondent's application for costs of applicant's unsuccessful interlocutory application – wider costs application by second respondent– where Calderbank offer was made – Fair Work Act 2009 (Cth) s 570(2) – applicant must pay costs of interlocutory application – no wider costs orders made Legislation: Fair Work Act 2009 (Cth) ss 570, 570(1), 570(2)(b) Federal Court of Australia Act 1976 (Cth) s 37M Cases cited: Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143; 170 FCR 574 Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; 317 ALR 665 Robinson v BMF Pty Ltd (in liq) (No 2) [2022] FCA 1191 Division: Fair Work Division Registry: Victoria National Practice Area: Employment and Industrial Relations Number of paragraphs: 36 Date of last submission: 2 November 2022 Date of hearing: Determined on the papers Solicitor for the Applicant: Mr G Bartlett of Bartlett Workplace Lawyers Counsel for the Second Respondent: Mr R A Millar Solicitor for the Second Respondent: HWL Ebsworth ORDERS VID 798 of 2020 BETWEEN: JEFFREY ROBINSON Applicant AND: B.M.F. PTY LTD (ACN 005 112 103) First Respondent IAN WRIGHT Second Respondent order made by: MORTIMER J DATE OF ORDER: 15 December 2022 THE COURT ORDERS THAT: 1. The applicant pay the second respondent's costs of the interlocutory application made on 4 May 2022, to be fixed by way of a lump sum. 2. On or before 4.00 pm on 12 January 2022 the parties file any proposed consent orders in relation to the lump sum to be fixed for the costs of the second respondent. 3. In the absence of any proposed consent orders being fixed pursuant to order 2, the question of an appropriate lump sum for the second respondent's costs of the 4 May 2022 interlocutory application be referred to a Registrar for hearing and determination. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT MORTIMER J: 1 The Court delivered judgment in this proceeding on 7 October 2022: Robinson v BMF Pty Ltd (in liq) (No 2) [2022] FCA 1191. In that judgment, the Court dismissed Mr Robinson's application. The orders provided that the parties bear their own costs of the proceeding, save in relation to Mr Robinson's unsuccessful interlocutory application dated 4 May 2022. As to the interlocutory application, directions were given for the filing of submissions on the costs of that interlocutory application. 2 The second respondent, Mr Wright, now seeks his costs of that application. He also makes a wider costs application; namely, that Mr Robinson pay his costs of the proceeding from 28 April 2022. For the wider costs application, Mr Wright relies on a Calderbank offer made by him, in a letter exhibited to an affidavit of his solicitor, Jonathan Nguyen, dated 21 October 2022. The Calderbank offer comprised an offer of settlement for payment of the gross sum of $100,000 by way of general damages. 3 I will deal separately with the wider application below. 4 The background to the interlocutory application is set out in Robinson at [10]-[11]: After the hearing, and closing of the evidence, and ahead of a scheduled subsequent oral hearing for final submissions, Mr Robinson filed an application for leave to amend his statement of claim, principally to deal with the issue of the identity of his employer. That application was made on 4 May 2022, almost two months after the trial. Mr Wright resisted this application. The proceeding was listed for a case management hearing on 12 May 2022. Mr Bartlett explained that the proposed amendments made allegations about further representations said to have been made by Mr Wright and BMF, allegations that Mr Wright was Mr Robinson's employer or joint employer, an allegation that Mr Wright had induced BMF to breach a contract with Mr Robinson, and other allegations advanced in the alternative that the Court were to find Brandmet to have been Mr Robinson's employer. On 13 May 2022, the Court ordered that the application to amend the statement of claim be dismissed, with reasons to be given in the Court's final decision about liability. The proceeding continued to a hearing of final submissions about liability on 24 May 2022, with supplementary written submissions being finalised on 3 June 2022. 5 For the reasons set out below, I consider there should be a limited costs order in favour of Mr Wright in relation to the interlocutory application. His wider costs application should be dismissed, and order 5 of the Court's orders made in Robinson should not be varied or amended. Each party should bear their own costs of the proceeding as a whole. 6 Unless otherwise specified, in these reasons I adopt the same abbreviations as I did in Robinson. Costs with respect to the interlocutory application 7 In addition to the background set out in Robinson at [10]-[11], extracted at [4] above, Mr Wright relies on the events set out in the following table, contained at [3] of his written submissions: Date Event 8 February 2021 The Court orders that [Court Book page 49]: On or before 4pm on 22 February 2021 the applicant file and service any Amended Originating Application, including joinder, removal or substitution of any respondents, and any Amended Statement of Claim. The Applicant does not amend his Statement of Claim. 2 March 2021 The Court orders that [Court Book page 51]: The date in order 1 of the orders dated 8 February 2021 be extended to 9 April 2021. The Applicant does not amend his Statement of Claim. 9 April 2021 The Court orders that [Court Book page 53]: Order 1 of the orders of Justice Mortimer dated 8 February 2021 and extended on 2 March 2021 be extended to 12 April 2021. The Applicant does not amend his Statement of Claim. 20 April 2021 The Court orders that [Court Book page 55]: Order 1 of the orders dated 8 February 2021 and extended on 2 March 2021 and extended on 9 April 2021 be vacated. The Applicant does not amend his Statement of Claim. 2 June 2021 The Court orders that [Court Book page 57]: By 4pm on 8 June 2021 the parties file any proposed orders in relation to the relief sought in proceeding VID281/2021, including any leave to proceed against BMF Pty Ltd, any joinder of additional parties, and any amended originating process and statement of claim in VID798/2020. The Applicant does not amend his Statement of Claim. 9 March 2022 Hearing. In Applicant's opening, prospective claim of joint employment mentioned, but it is acknowledged to be not currently pleaded. [Transcript page 7 lines 19 to 21]. The Court notes that 'at the moment it's not pleaded, so there would have to be an application to amend the pleadings' [Transcript page 14, lines 3 and 4]. No application to amend is made 10 March 2022 Hearing. Completion of evidence. No application to amend is made. 4 May 2022 Application to amend Statement of Claim 12 May 2022 Case management hearing on application to amend. Applicant and Second Respondent file further material. 13 May 2022 Order dismissing application to amend (Original emphasis.) 8 Mr Wright contends that Mr Robinson has been given "ample opportunity" to amend his statement of claim before trial, submitting that: (a) Mr Robinson's opening submissions on 9 March 2022 included the prospective amendment of his statement of claim; (b) such amendments should have already been before the Court by that time, or at least should have been before the Court by the second day of trial on 10 March 2022, but were not produced until around eight weeks later on 4 May 2022; and (c) the amendments in the interlocutory application went beyond those foreshadowed in Mr Robinson's opening submissions. 9 The second respondent also submits that the way in which Mr Robinson sought these amendments necessitated a case management hearing on 12 May 2022, and the further filing of documents that day by both parties. Relying on s 570(2)(b) of the Fair Work Act 2009 (Cth), Mr Wright contends the making of the interlocutory application four weeks after the trial was an "unreasonable act or omission" by Mr Robinson that caused Mr Wright to incur costs. The second respondent submits that both the timing and content of the interlocutory application mean it should be characterised this way, and that in making the interlocutory application Mr Robinson "crossed the threshold" in the manner of the conduct of the litigation such as to constitute unreasonableness: citing Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143; 170 FCR 574 at [28]. 10 Mr Robinson contends that the "earlier opportunities" referred to by Mr Wright (extracted at [7] above), and particularly the orders referred to by Mr Wright, went to the question of "joinder, removal or substitution of any respondents". He submits that the interlocutory application was instead directed to amendments regarding the personal liability of Mr Wright, and that (at [5]): The Applicant's view was that Brandmet Pty Ltd had nothing more than a bank account, was insolvent, did not have a business up until 1 May 2020, and did not operate BMF Construction which was the business he was General Manager of. Accordingly, adding Brandmet Pty Ltd early in the proceedings would have been futile, would have increased the length and costs of the proceedings including evidence from Mr Fung. 11 Mr Robinson's submissions also provide a list of factors that he contends the Court should take into account in considering any potential costs order. It should be observed that some of the matters go well beyond submissions and purport to be allegations of fact, although not the subject of any affidavit evidence. The list includes: (a) the substantive nature of the dispute and Mr Robinson's claimed compensation and entitlement; (b) the information available at various times to Mr Robinson regarding various entities; (c) alleged non-compliance by Mr Wright with discovery orders; (d) the lead up to trial, including Mr Robinson's application on 4 March 2022 for the trial to be adjourned, and the legal representation of Mr Robinson at trial; and (e) the engaging by Mr Robinson of new counsel, who assisted with the drafting of closing submissions and amendments to the statement of claim. 12 Mr Robinson contends the delay in the making of the interlocutory application is explained by the above sequence of events and, in any event, the costs of the interlocutory application would have been the same whether the interlocutory application had been brought in March or May 2022. Therefore, any delay, even if unreasonable (which he does not concede), did not cause Mr Wright to incur any additional costs. 13 Mr Robinson contends that there was no relevant "unreasonable act or omission" by him for the purposes of s 570(2)(b) of the FWA. He submits that the interlocutory application was properly brought, and was brought in accordance with "the Court's invitation". By this, Mr Robinson refers to an exchange between the Court and Mr Wright's counsel at trial, which, on Mr Robinson's submission, indicated that the Court had "effectively invited" an application with regard to "identity of employer". The exchange relied on by Mr Robinson is as follows (transcript at p 13, l 38 – p 14, l 20): MR MILLAR: Yes, your Honour. The identity of the employer is closely tied up with the causes of action that are asserted, particularly under the Fair Work Act. Less so under the ACL claim, but the Fair Work Act claim would be hard to properly consider without a finding being made on the nature of the employment relationship. The suggestion that has been made from the bar table this morning that Mr Wright should be found to be an employer – the employer in his own capacity, in my submission, is certainly not the pleaded case. The pleaded case rests solely upon BMF being the employer. There's a - - - HER HONOUR: Well, it's not the pleaded case, Mr Millar, but as I understand it, Mr Bartlett is saying that that's a matter that the evidence may support, and I think he accepts at the moment it's not pleaded, so there would have to be an application to amend the pleadings. But he has opened on it. So – and I assume it might be explored, and in the circumstances in which this case is proceeding, the – my approach will be to ensure there's fairness done to both parties, but – and there will have to be an application and I will have to hear your argument and consider it - - - MR MILLAR: Yes. HER HONOUR: - - - if there's to be an amendment, but - - - MR MILLAR: Yes. HER HONOUR: But I don't, at the moment, consider it can simply be put to one side on the basis it's not pleaded, given the way this case has - - - MR MILLAR: I understand that, your Honour. HER HONOUR: - - - come to today. (Emphasis added.) Resolution 14 I reject Mr Robinson's characterisation of the statements at [13] above as an "invitation" from the Court to Mr Robinson. The Court did not "invite" anything. These remarks were not addressed to Mr Robinson, but to counsel for Mr Wright, in the context of a trial where the Court had refused Mr Robinson's late application for an adjournment. The Court was doing no more than putting Mr Wright and his legal representatives on notice that, since Mr Bartlett had opened Mr Robinson's case in a way which contended that in the alternative Mr Robinson would contend that BMF was his employer, they may need to be ready to deal with that if an application to amend the pleadings was made, which the Court would entertain because of the somewhat unusual circumstances in which Mr Bartlett found himself. 15 It should have been, but apparently was not, obvious to Mr Robinson and his legal representatives that such an application needed to be made during the course of the trial. Instead, the application was not made until four weeks later. And when it was made, it was, as Mr Wright submitted at the time and on this costs application, much broader than amendments simply to address the identity of Mr Robinson's employer. 16 Mr Robinson's reliance on the suggestion that the Court "invited" him to conduct his case in the way he did is rejected. Section 570 of the Fair Work Act 17 Section 570 of the FWA provides: 570 Costs only if proceedings instituted vexatiously etc. (1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A. Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A. (2) The party may be ordered to pay the costs only if: (a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or (b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or (c) the court is satisfied of both of the following: (i) the party unreasonably refused to participate in a matter before the FWC; (ii) the matter arose from the same facts as the proceedings. 18 Both parties accept that s 570 applies to the proceeding as a whole. That is well established. In Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; 317 ALR 665 at [155]-[158], the Full Court said: Section 570, in its present form, came into force on 1 January 2013. Unlike s 824 which applied "to a proceeding … in a matter arising under this Act" it applied to a proceeding 'in relation to' a matter arising under this Act" (emphasis added). The word "proceeding" is not defined in the Fair Work Act. In the context of s 570 it bears a different meaning from the word "matter". "Matters", in the sense of claims or causes of action or their underlying controversies, are raised in the "proceeding" or "proceedings" which is or are prosecuted in the court: compare Shea v Energy Australia Services Pty Ltd (No 7) [2014] FCA 1091 at [22] per Jessup J. As Gray J said in Geneff v Peterson (1986) 19 IR 40 at 90, in dealing with the construction of s 197A of the Conciliation and Arbitration Act 1904 (Cth) (a predecessor of s 570): [T]he section operates in relation to a 'proceeding'. There is only one proceeding before the Court, although that proceeding involves a number of separate claims, each of which might have been the subject of a separate proceeding … In my view, it is impossible to split the claims within a proceeding for the purpose of the application of s 197A. See also Qantas Airways Ltd v Transport Workers' Union of Australia (No 2) (2011) 211 IR 119 at 182; [2011] FCA 816 per Moore J; Grout v Gunnedah Shire Council (No 3) (1995) 129 ALR 372 at 385; 59 IR 248 at 260–1 per Moore J; Goldman Sachs JBWere Services Pty Ltd v Nikolich (2007) 163 FCR 62 at 65 and 69; [2007] FCAFC 120. There was a single proceeding which was commenced and prosecuted to judgment in the County Court. Mr Sautner made claims under the Fair Work Act and at common law. The claims under the Fair Work Act were "matters" within the meaning of s 570(1) of the Fair Work Act. The proceeding was, as a result, a proceeding in relation to a matter arising under that Act. Section 570(1) operated to preclude the court from ordering MSL ("another party to the proceedings") to pay any costs incurred by Mr Sautner in prosecuting his claims unless he could satisfy the court that one of the exceptions, provided for in s 570(2), applied. As White J has demonstrated in Stanley v Service to Youth Council Inc (No 3) (2014) 225 FCR 357; [2014] FCA 716 at [16]–[25], the legislative history and the relevant explanatory memoranda support the construction which we have placed on s 570(1). (Original emphasis.) 19 Mr Wright's contentions are based on s 570(2)(b), not (a), so there is no occasion to consider (a). 20 Mr Wright is correct to identify the making of the interlocutory application to amend the statement of claim on 4 May 2022 as the putative unreasonable act on Mr Robinson's part. 21 Of course, an application to amend a statement of claim, even close to trial, is not inherently unreasonable. All depends on the facts and circumstances. It is apparent from my observations during the hearing, extracted above, that in the particular circumstances of this case, and the circumstances in which Mr Bartlett found himself, the Court was not unsympathetic to an amendment application being made during the course of the liability hearing. However, that did not occur. Instead, four further weeks passed before the application was made. It is that timing of the interlocutory application which raises the spectre of unreasonableness. 22 I do not accept all of the characterisations of Mr Robinson's circumstances at the time of trial as they are described in his costs submissions. I refer to and adopt the reasons given in my ruling on the adjournment application, which were published to the parties on the afternoon of 6 March 2022. As far as the Court understood, new counsel for Mr Robinson had been retained. That turned out to be incorrect, but the Court was not informed of this until after its ruling. 23 The Court's ruling involved a postponement of the hearing, gave the parties some extra time to prepare, vacated orders about the filing of material ahead of the trial, split the hearing into two parts and referred the parties to further mediation, all in an attempt to secure resolution in accordance with s 37M of the Federal Court of Australia Act 1976 (Cth). 24 It had been patent since the defence was filed on behalf of Mr Wright what the alternative case might be in terms of who was Mr Robinson's employer. An amendment to make that allegation, in the alternative to Mr Robinson's principal case, was a straightforward matter. It could and should have been done well before trial, since Mr Wright squarely put the matter in issue in his defence. Mr Robinson had ample opportunities to do so, as the table above demonstrates, in conjunction with the matters at [10]-[11] in Robinson. This had always been the core issue in the proceeding. There was, I consider, something of a stubborn refusal on Mr Robinson's part to adopt this course. Contrary to Mr Robinson's submissions, the Court's case management orders amply provided for such an amendment, which would have resulted in the joinder of Brandmet, and perhaps Mr Fung (although that would have been a forensic decision for Mr Robinson). In any event, as the way he ultimately went about the amendment demonstrated, Mr Robinson did not require an order or permission in advance to apply to amend his pleadings. 25 However, if this had been addressed as a matter of case management, I am prepared to infer that Mr Wright would have been unlikely to oppose the application especially since it arose from his defence. His opposition arose, justifiably in my opinion, because of the timing of the application. If the application to amend had been made in an appropriate and timely way prior to trial, there would, I infer, have been no need for a contested hearing and the costs associated with it. 26 That is the first basis on which Mr Robinson's conduct in making the 4 May 2022 interlocutory application can be described as unreasonable, and I consider that is the correct description. 27 Making the application after the liability trial had concluded, and the evidence was closed, was almost guaranteed to provoke opposition from Mr Wright. If the application had been allowed, Brandmet would have needed to be joined (but was by this time in liquidation), and the position of Mr Fung would need to be addressed. Mr Robinson's submissions seek to diminish the importance of these matters but they are fundamental. Inevitably, further evidence would need to be called. The whole character of the case might change, and forensic decisions already made could not then be revisited. The prejudice to Mr Wright was obvious and significant. All the more so because the amendments not only related to adding an allegation that BMF was Mr Robinson's employer, but sought to add new causes of action. 28 Therefore, the timing of the application, a month after trial and after the evidence on liability had closed, as opposed to an application made during trial, as well as the content of that application when it was made, are also properly described as unreasonable. 29 Both these aspects of Mr Robinson's conduct caused Mr Wright to incur additional costs. He was denied the ability to consent to an application made at the appropriate time. In order to advance his defence in the proceeding, it was necessary for him to oppose the application, with all the costs consequences that involved. His opposition was successful. He should be compensated for the costs incurred by Mr Robinson's unreasonable conduct. 30 A failure to accept a reasonable offer of compromise may constitute an unreasonable act for the purposes of s 570(2): Melbourne Stadiums at [166]. As such, I accept this is a factor which is capable of being taken into account in deciding whether a costs order should be made in respect of the 4 May 2022 interlocutory application. 31 The Calderbank offer was made on 28 April 2022, after the trial had concluded but well before final submissions were scheduled on 24 May 2022. It was made two days after Mr Robinson had filed his closing written submissions. It was also made before the interlocutory application to amend was filed. It was on one view a late offer, but it was certainly a substantive one, irrespective of Mr Robinson's reaction to it. However, as Mr Bartlett's response to the Calderbank offer pointed out, there had been earlier offers made on behalf of Mr Robinson, and they had received no responses. The times at which those offers were made were at least slightly more appropriate – before trial, and most recently on 4 March 2022, the trial being scheduled to start the following week. The primary issues at trial were not complex, but Mr Robinson's allegations had their complexities because of the way they were framed. The Court's reasons in Robinson make it clear that Mr Wright was not an impressive witness in some respects, but that there was also some lack of perspective on Mr Robinson's part. These matters were, I consider, objectively apparent during the trial. In that sense, neither party could have been particularly assured about what the outcome of the trial might be. In those circumstances, I do not consider it was unreasonable for Mr Robinson to refuse the settlement offer made by Mr Wright after the evidence on liability had closed but prior to final oral submissions. This is not a factor to which I have given any weight in my consideration of whether Mr Wright has established that s 570(2)(b) is made out. The wider costs application 32 At [271] in Robinson, the Court said: Mr Wright did not submit that he wished to be heard on the question of costs of the proceeding generally, aside from a submissions made about Mr Robinson's late interlocutory application for leave to amend. 33 In his submissions on costs, Mr Wright did not suggest this statement was inaccurate. While the Calderbank offer did foreshadow a general application for costs if Mr Robinson's case failed, Mr Wright's legal representatives did not reserve Mr Wright's positon on costs or otherwise suggest he wished to be heard on costs. That could have been done without disclosing the Calderbank offer. It was not. 34 Further, even if such a reservation had been made, and the wider costs application had been made pursuant to it, I would not have made a wider costs order against Mr Robinson. Primarily that is because, as I have explained, I do not consider it was unreasonable in the circumstances for Mr Robinson to refuse the settlement offer made on 28 April 2022. 35 Further, provisions such as s 570(1) are very important substantive provisions in a legislative scheme such as the FWA. They avoid the chilling effect of the prospect of costs orders for an unsuccessful party. Generally, although not always, the moving party in a FWA proceeding will be an employee or putative employee, and the responding party will be an employer or putative employer. There may be often be a disparity of resources, and certainly a disparity, as this case has shown, of options, such as the ability to place a corporation into liquidation. The Court should be astute to apply the terms of s 570(2), and especially 570(2)(b), in a way which does not, by indirect means, have the very chilling effect the primary provision is designed to avoid. The circumstances of the parties in this proceeding, and the conduct of Mr Robinson, could not on any view have justified a wholesale costs order against Mr Robinson. Conclusion 36 There will a costs order in favour of Mr Wright in respect of the 4 May 2022 interlocutory application. At this juncture, it is to be hoped the parties can sensibly agree on an appropriate lump sum. In the absence of agreement, the fixing of a lump sum will be referred to a Registrar. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Mortimer. Associate: Dated: 15 December 2022