Australian Laboratory Services Pty Ltd v Tangi (Costs) [2023] FCA 1281

Federal Court of Australia

Australian Laboratory Services Pty Ltd v Tangi (Costs) [2023] FCA 1281 File number(s): VID 179 of 2022

Judgment of: HESPE J

Date of judgment: 24 October 2023

Catchwords: COSTS – whether defendant is entitled to indemnity costs

Legislation: Federal Court Rules 2011 (Cth) r 26.12

Division: Fair Work Division

Registry: Victoria

National Practice Area: Employment and Industrial Relations

Number of paragraphs: 13

Date of last submission/s: 22 September 2023 (Eurofins Environment Testing Australia Pty Ltd (ACN 005 085 521)) 3 October 2023 (Plaintiff)

Date of hearing: Determined on the papers

Counsel for the Plaintiff Ms R W Sweet KC Ms L Frederico

Solicitors for the Plaintiff Baker McKenzie

Counsel for the Defendant Mr D Mahendra

Solicitors for the Defendant Gadens Lawyers

ORDERS VID 179 of 2022

BETWEEN: AUSTRALIAN LABORATORY SERVICES PTY LTD (ACN 009 936 029) Plaintiff

AND: KAYLA-BRENDA TANGI Defendant

order made by: HESPE J DATE OF ORDER: 24 October 2023

THE COURT ORDERS THAT:

1. Except to the extent that costs have been ordered to be paid on an indemnity basis in respect of the interlocutory application made on 24 June 2022, the plaintiff pay Eurofins Environment Testing Australia Pty Ltd's (ACN 005 085 521) costs on a party-party basis, to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

HESPE J: 1 By an originating application filed on 11 April 2022, the plaintiff commenced proceedings against Ms Tangi (the first defendant) and Eurofins Environment Testing Australia Pty Ltd (ACN 005 085 521). The plaintiff sought damages as against Eurofins and damages, declarations, injunctions and penalties against the first defendant. The plaintiff also sought an interlocutory injunction restraining the first defendant from, amongst other things, being engaged or employed by Eurofins. 2 By a further amended statement of claim filed on 15 August 2023, the plaintiff ceased to make claims against Eurofins. On 18 September 2023, the plaintiff was granted leave to discontinue proceedings against Eurofins. 3 Rule 26.12(7) of the Federal Court Rules 2011 (Cth) provides: Unless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim, or part of the claim, that is discontinued. 4 Eurofins has sought an alternative costs order. 5 On its primary submission, Eurofins seeks costs on an indemnity basis rather than on a party-party basis. Eurofins submits that it was "abundantly clear" that proceedings should never have been commenced against Eurofins, in particular the plaintiff did not at any stage properly articulate any cause of action or claim for damages or account of profits against Eurofins. Further, Eurofins submits that as early as October 2022 it had stated in correspondence with the plaintiff that no reasonable cause of action had been disclosed. On Eurofins' submission, it consistently invited the plaintiff to discontinue proceedings in its correspondence to no avail. 6 In the alternative, Eurofins seeks costs: (a) on the ordinary basis provided for in r 26.12 up to 8 September 2022 and thereafter on an indemnity basis; alternatively; (b) on the ordinary basis up to 27 October 2022 and thereafter on an indemnity basis; alternatively; (c) on the ordinary basis up to 31 January 2023, and thereafter on an indemnity basis; alternatively; (d) on the ordinary basis. 7 The plaintiff disputes that there is a "special or unusual feature" that warrants a departure from the usual costs order in the circumstances of this case. The plaintiff instead seeks orders that: (a) Eurofins pay the plaintiff's costs up to and including 14 April 2022 on a party-party basis, or alternatively, there be no order as to costs for this period; and (b) the plaintiff pay Eurofins' costs on and from 15 April 2022 on a party-party basis. 8 The plaintiff submits these orders are appropriate given that the plaintiff obtained certain undertakings from Eurofins following an interlocutory hearing on 14 April 2022 and these undertakings were materially different from undertakings contained within Eurofins' earlier "without prejudice save as to costs" offer. In considering whether the plaintiff should have discontinued proceedings against Eurofins earlier than it did, the plaintiff submits that it pursued an inferential case against Eurofins in circumstances where it has (unchallenged) expert evidence that the first defendant has retained its confidential information following her cessation of employment with the plaintiff whilst employed at Eurofins and notes that it did not have the benefit of Eurofins' defence until May 2023. The plaintiff also submits that it was reasonable for it not to have accepted Eurofins "invitations" to discontinue proceedings in circumstances where the defendants were asking for proceedings to be discontinued in their entirety and not just against Eurofins. 9 I am not satisfied that a different costs order from that provided for in r 26.12(7) ought to be made in the circumstances of this case. 10 The offers relied upon by Eurofins to justify an order for indemnity of costs were largely offers to discontinue the proceedings in their entirety. In circumstances where the proceedings against the first defendant remain on foot and are yet to be the subject of hearing, it is premature to conclude that a refusal of those offers was unreasonable. The only correspondence from the defendants which did not invite the discontinuance of proceedings against both Eurofins and the first defendant was the letter of 26 October 2022. That letter made no offer of settlement. 11 The plaintiff discontinued the proceeding against Eurofins following the determination of the defendants' interlocutory application of 22 May 2023. By that application the defendants had sought to strike out parts of the plaintiff's pleadings and, inter alia, an order that in the event that the proceedings against Eurofins were dismissed, the plaintiff pay Eurofins' costs of the proceedings. That interlocutory application was determined on the basis that the plaintiff be granted leave to replead (rather than dismissing the application against Eurofins), and no order for indemnity costs was sought by Eurofins in that interlocutory application. 12 I am not satisfied that the plaintiff is entitled to an order for its costs in relation to the interlocutory hearing of 14 April 2022 which was dismissed by consent, including consent orders that costs be reserved. The costs of that application are ordered to be paid on the same basis as the costs of the application for substantive and final relief. 13 There will be an order that except to the extent that costs have been ordered to be paid on an indemnity basis in respect of an interlocutory application made on 24 June 2022, the plaintiff is to pay Eurofins' costs on a party-party basis, to be taxed if not agreed. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hespe.