Industrial Court of New South Wales CITATION: Patricia Cretney v State of New South Wales [2008] NSWIRComm 181 Applicant: PARTIES: Patricia Cretney Respondent: State of New South Wales FILE NUMBER(S): IRC7430 of 2003 CORAM: Kavanagh J CATCHWORDS: Notice of Motion of respondent - indemnity costs - s106 proceedings - applicant's applications dismissed - principles applicable for consideration - failure to establish grounds - costs ordered on a party/party basis LEGISLATION CITED: Industrial Relations Act 1996 s181(1), r 216(4) Cretney v State of New South Wales [2008] NSWIRComm 131 Leichhardt Municipal Council v Green [2004] NSWCA 341 CASES CITED: Mahenthirarasa v State Rail Authority of New South Wales (No 2) [2008] NSWCA 201 SMEC Testing Services Pty Ltd v Campbelltown City Council [2002] NSWCA 323 Tuholi Pty Limited v Caltex Australia Petroleum Pty Limited [2001] 103 IR 329 HEARING DATES: 30/09/08 EXTEMPORE JUDGMENT DATE: 30 September 2008 Applicant: Ms C.M. Howell of counsel Solicitors: Ms M. Walsh Turner Freeman LEGAL REPRESENTATIVES: Respondent: Ms K.T. Nomchong of counsel Solicitors: Mr R. Horton Hicksons JUDGMENT: - 8 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Kavanagh J Tuesday 30 September 2008 Matter No IRC 7430 of 2003 PATRICIA CRETNEY v STATE OF NSW Application under s106 of the Industrial Relations Act 1996 EX TEMPORE JUDGMENT (As to Costs) [2008] NSWIRComm 181 1 On 6 August 2008, this Court delivered judgment in a s106 claim for Unfair Contract filed by Patricia Cretney (see Cretney v State of New South Wales [2008] NSWIRComm 131). 2 The applicant's Summons for Relief was dismissed by the Court. 3 The respondent in the proceedings above, represented by Ms K.T. Nomchong, of counsel, by Notice of Motion, moves that: 1. The Applicant pay the Respondent's costs of and incidental to the proceedings (including this costs application): (a) on a party/party basis up to 15 July 2004 as agreed or assessed; (b) from 16 July 2004, or from such date as the Court orders, on an indemnity basis. 2. That the Applicant pay the Respondent's costs of the privilege argument in respect of which costs were reserved by His Honour Marks J on 23 November 2005. 3. Any other order that the Court deems fit. 4 The Court has power to award costs pursuant to s181(1) of the Industrial Relations Act 1996. It relevantly reads: 181 Costs (1) Subject to the rules of the Commission and any other Act or law: (a) the Commission may award costs, and (b) costs are in the discretion of the Commission, and (c) the Commission may determine by whom and to what extent costs are to be paid. (d) … The respondent to the Notice of Motion, represented by Ms C.M. Howell, of Counsel (the applicant in the proceedings), also relies upon r 216(6): Rule 216 (6) Where an offer is made by a respondent and not accepted by the applicant, and the applicant obtains an order on the claim to which the offer relates not more favourable than the terms of the offer, then, unless the Commission otherwise orders, the applicant shall be entitled to an order against the respondent for costs in respect of the claim up to and including the day the offer was made, assessed on a party and party basis, and the respondent shall be entitled to an order against the applicant for costs in respect of the claim thereafter, assessed on a party and party basis. 5 The mover of the motion (the respondent to the proceedings and hereinafter referred to as "the respondent") contends this is a matter in which it is appropriate that an order for indemnity costs be made against the applicant in the proceedings (hereinafter referred to as the "the applicant"). Such indemnity costs, it asserts, should run as and from the date the first offer of settlement was made, that is, 15 July 2004, or, in the alternative, from one of the other dates on which offers were made to the applicant. The dates and content of each of those offers are set out in the affidavit of Peter Johnson, a Senior Legal Officer with the respondent, in the proceedings. Offers of settlement were made by the respondent to the applicant on 15 July 2004, 28 July 2004, 25 August 2004, 9 November 2004, 10 February 2006 and 5 April 2006. There were no formal Offers of Compromise filed in Court. 6 In support of its application for indemnity costs, the respondent contends this litigation had special and unusual features (Tuholi Pty Limited v Caltex Australia Petroleum Pty Limited [2001] 103 IR 329). Those features include the following: the applicant sought to achieve a restoration of her reputation where no disciplinary charges were laid; the applicant continued to be employed by the respondent and remained in that employment until a resignation, after which she was re-employed by the respondent; the applicant made no claim for economic loss; and the detrimental treatment which the applicant alleged was limited in scope and minor. 7 Further, the respondent submits the Court held multiple conciliations to encourage settlement. In the failure to resolve the litigation, after the respondent made such genuine attempts, the respondent occurred ongoing and significant costs. The applicant's failure to act reasonably, given the offers of settlement, which were genuine and included the publication of a letter of regret and meeting the applicant's legal costs (at least in part), is a matter to be considered by the Court in determining indemnity costs. 8 The applicant, in reply to the respondent's submissions in support of its application for indemnity costs, contends that until 10 February 2006 the respondent made no offer to the applicant in accordance with the Rules of Court which Rules encourage a particular timeframe for any consideration of offers and that timeframe of 28 days is fair and reasonable. The applicant submits the spirit of the Rules should have been addressed in relation to the respondent's offers of settlement. 9 The applicant further submits, notwithstanding there were multiple conciliation conferences which were conducted by senior members of the Court, such a fact is a neutral consideration as to a court's determination to award indemnity costs. 10 The applicant, in opposing the Notice of Motion, asserts Ms Cretney consistently sought to have the respondent acknowledge the material about her, as contained in two Reports and published to the local community (which recited allegations that had not been put to her), should not have been published. The respondent, for its part, the applicant asserts, never offered any financial compensation to Ms Cretney, nor did it ever offer an apology or any acknowledgement the Management Review procedures went astray. 11 Further, the applicant contends it did not see the respondent's evidentiary case in full until February 2008 when the respondent, without explanation, filed the evidence of the two officers who conducted the inquiry, Mr Chalmers and Mr Ashford. These were filed 13 months after the respondent was due to have filed all its evidence and in breach of the Court's Directions. Further, another vital document, tendered in the hearing by the respondent (which document had been a matter of submission before Marks J as to its legal privilege as claimed by the respondent) and to which the applicant had not been given full access and which was vital to the respondent's success also put the applicant at a disadvantage. These matters, the applicant contends, are in support of a proposition that the respondent was not a model litigant, as the State is required to be. The way its evidence was presented caused considerable cost to the applicant as well as causing significant delay in the time taken in the hearing. 12 The applicant contends the respondent conducted the case in a manner that generated substantial and unnecessary costs. In pursuing jurisdictional objections including reliance on s82(1)(a) of the Act, which arguments failed, the conduct by the respondent in the litigation gave rise to substantial legal costs to be expended by the applicant in meeting them. Further, the respondent: · in the conduct of the case refused to admit facts contained in its own documents; · also failed to rely upon affidavit evidence in the hearing which it had filed yet that evidence had to be met by the applicant at a cost; and · the respondent also refused to accept an amendment proposed by the applicant at the beginning of her case which amendment would have narrowed the issues before the Court. All such conduct, the applicant asserts, added to the costs in the case. 13 The applicant asserts, given the above factors as to the way in which the respondent conducted the litigation, such conduct should mitigate both against an order for indemnity costs and, the applicant submits, any Costs Order should be in favour of the applicant. As to the respondent's submission that this was a special and unusual case, the applicant submits by focusing solely on the consequential money orders sought rather than the underlying issues of fairness and the proposed variations to the contract with which the litigation was fundamentally concerned was not, nor can it be, grounds to support this was a special and unusual case. The case was a usual s 106 claim which relied upon the unfair conduct of a Management Review to establish the contract was unfair and as such should attract consequential relief, the applicant contends. The Law 14 The principles to be applied in an application for indemnity costs have been canvassed by Wright J, former President, in Tuholi. The former President at [29] to [37] canvassed the various authorities. Both parties also relied upon such propositions as contained in the reasoning in Leichhardt Municipal Council v Green [2004] NSWCA 341 and SMEC Testing Services Pty Ltd v Campbelltown City Council [2002] NSWCA 323. 15 In Tuholi, the former President concluded at [40]: 40 I consider that it is possible to deduce the following propositions for the present matter from the more general authorities earlier referred to: 1. It is only in exceptional cases where a court would make a costs order other than on the usual party/party basis. 2. The grant of indemnity costs is to be seen as an unusual and exceptional course and would only occur where there is some special or unusual feature of the case to justify the Court in departing from the usual practice. 3. Nevertheless, the grant of indemnity costs is, as with any exercise of judicial discretion, one to be exercised in all the circumstances of the case and, provided regard is had to the "exceptional" nature of such an order, the primary consideration with all such discretionary orders is that it will occur "as and when the justice of the case might so require". 4. Although most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of facts which would be capable, if they existed, of warranting a departure from the usual rule, nevertheless "the categories in which the discretion may be exercised are not closed". 5. Further, a too rigid or narrow approach may lead to error in the exercise of discretion. 6. Although there are a number of recent judgments to the effect that there should be an increased tendency towards the awarding of indemnity costs, such statements should be applied with great caution in the light of the existence and operation of the general approach as to the usual way in which costs orders will be made. 7. It is also important to ensure that considerations such as mere "fierce opposition to the claim" or the conduct of a respondent which might justify the grant of the substantive application are not matters which, in themselves, would lead to the grant the costs on an indemnity basis. Consideration 16 I take into account the principles applicable to a consideration to award indemnity costs as stated in the above authorities and the proposition as outlined from those authorities as referred to in (1) to (7) above by Wright J former President. 17 In the proper application of the above principles the result, in the very particular circumstances in this case, is a refusal to grant the respondent its claim for indemnity costs. This determination arises from a number of considerations. 18 While the respondent, the State of New South Wales (Department of Education and Training), is to be perceived as a model litigant in accordance with the principles recited in Mahenthirarasa v State Rail Authority of New South Wales (No 2) [2008] NSWCA 201 at [22], such a litigant must deal with claims promptly, not cause unnecessary delay, endeavour to avoid litigation wherever possible, not resist relief which it believes to be appropriate and not decline to provide appropriate assistance to the Court whether expressly sought or not. 19 While I do not accept the proposition posed by the applicant that I should make a finding that the State of New South Wales in this litigation was not a model litigant I, nonetheless, do find that in filing the two substantial and vital affidavits of the officers who conducted the Management Review in February 2008, some 13 months after the close of the timetable for the filing of its evidence, in accordance with the directions of the Court, the respondent failed to meet the standard required of a model litigant. Also in the tender of a document on which it formerly had claimed privilege, towards the end of the hearing, there was conduct which caused the applicant extra costs and extended the litigation and could have affected the applicant's consideration of the offers in the pre-trial negotiations. It is relevant that, after the serving of the affidavits in February 2008, no further offers were forthcoming from the respondent. 20 I further reject the respondent's submission that this litigation had any special and unusual feature. Many of the applications brought under s 106 are similar in that they are matters related to unfair conduct which conduct establishes the employment contract was unfair in the particular circumstances. 21 The applicant asserted the fact that there were multiple conciliations before the Court is a neutral argument and a fact not relevant to the consideration of the Cost Orders of the court. In relation to the Rules of the Court, the applicant contends the Rules of the Court do not provide that where a respondent makes an offer and an applicant is ultimately unsuccessful the respondent is entitled to indemnity costs for any part of the proceedings (for example, r 216(6) and accordingly, the prima facie position is that indemnity cost orders would not be made against an unsuccessful applicant, regardless of the content of offers made by the respondent. However, this proposition was addressed by the former President, Wright J at [38] and [39] in Tuholi. There is a purposeful construction for the Rules of Court to ensure there be the speedy disposition of proceedings. Rules are relied upon to ensure substantial legal costs, prior to conciliation, by this Court are not expended and there is no delay to the disposition of a case. Given the significant offers by the respondent to settle the litigation and, not withstanding they were not Offers of Compromise filed in Court, I take those offers into account in determining what type of Costs Order the Court determines. 22 I accept the respondent made genuine attempts to resolve the litigation through some of its offers of settlement, particularly the latter offers which addressed both a published statement and legal costs (but made before the filing of the above affidavits after which no offers were maintained). I also accept the applicant's submission that in the conduct of the litigation the respondent, through its jurisdictional argument and refusal to allow the amendment proffered to purposefully limit the issues for litigation, added substantially to the costs incurred. I also accept, with the late service of the affidavits and in the tender of a prior legally protected document, the applicant was at a disadvantage in the preparation of her case, though she had opportunity to rebut the respondent's case at the hearing. 23 The respondent, nonetheless, has succeeded in obtaining the Judgment of the Court. Costs generally follow the event. I reject the respondent's application for indemnity costs but I order the applicant to pay the respondent's costs on a party/party basis. 24 There shall be no order for costs to either party of the proceedings before Marks J in February 2005. 25 Both parties make application for costs of today's hearing on the Notice of Motion. While the applicant has been partly successful in defending the Notice of Motion brought by the respondent to the proceedings which motion pressed for indemnity costs, the respondent has achieved an order for party/party costs. In the circumstances, I do not order the applicant to pay the respondent's costs of today's proceedings. There, will be no order for costs on the Notice of Motion to either party. Orders 26 The applicant is to pay the respondent's costs of the proceedings on a party/party basis as agreed or assessed. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.