Industrial Court of New South Wales CITATION: Toll Transport Pty Ltd v Transport Workers' Union of New South Wales (No 2) [2010] NSWIRComm 97 Toll Transport Pty Ltd (First Appellant) PARTIES: Toll Holdings Pty Ltd (Second Appellant) Transport Workers' Union of New South Wales (Respondent) FILE NUMBER(S): IRC 801 of 2009 CORAM: Boland J President; Walton J Vice-President; Kavanagh J CATCHWORDS: COSTS - mixed outcome of proceedings - use of discretion of court - appellants success on one ground of five grounds pressed on appeal - special circumstance allow for an apportionment of costs on appeal LEGISLATION CITED: Industrial Relations Act 1996 Cretney v Director General, New South Wales Department of Education and Training (No 4) [2010] NSWIRComm 17 Dodds Family Investments Pty Limited (Formerly Solar Tint Pty Limited) v Lane Industries Pty Limited [1993] FCA 259; (1993) 26 IPR 261 Elite Protection Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 Green v Brown [2002] NSWIRComm 177; (2002) 116 IR 21 CASES CITED: Hughes v Western Australian Cricket Association Inc [1986] FCA 382; (1986) ATPR 40-748 Oraka Pty Ltd v Pilgrim [2004] NSWIRComm 39; (2004) 136 IR 271 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Sydney Water Corporation Ltd v Industrial Relations Commission [2004] NSWCA 436; (2004) 61 NSWLR 661 Toll Transport Pty Ltd v Transport Workers' Union of New South Wales [2010] NSWIRComm 58 Westfield Holdings v Adams [2001] NSWIRComm 293; (2001) 114 IR 241 HEARING DATES: On the papers. Final Submission received 18 June 2010 DATE OF JUDGMENT: 30 July 2010 Mr A R Moses SC with Mr Y Shariff of counsel (Appellants) Clayton Utz Lawyers LEGAL REPRESENTATIVES: Mr A A Hatcher of counsel with Mr D Nagle of counsel (Respondent) Maurice Blackburn Pty Ltd JUDGMENT: - 2 - INDUSTRIAL COURT OF NEW SOUTH WALES FULL BENCH CORAM: BOLAND J, President WALTON J, Vice-President KAVANAGH J Friday 30 July 2010 Matter No IRC 801 of 2009 TOLL TRANSPORT PTY LTD AND ANOTHER v TRANSPORT WORKERS' UNION OF NEW SOUTH WALES Application by Toll Transport Pty Ltd and another for leave to appeal and appeal against orders and judgment of Staff J given on 31 March 2009 and 8 May 2009 in Matter No IRC 2522 of 2005 JUDGMENT OF THE COURT (As to costs) [2010] NSWIRComm 97 1 In Toll Transport Pty Ltd and another v Transport Workers' Union of New South Wales [2010] NSWIRComm 58 (delivered 13 May 2010), the Full Bench of the Industrial Court of New South Wales considered an appeal by Toll Transport Pty Ltd ('Toll') and Toll Holdings Pty Ltd in respect of a claim brought under s 106 of the Industrial Relations Act 1996 by the Transport Workers Union of New South Wales ('TWU') on behalf of nine owner/drivers who contended their contracts of employment became unfair following the refusal by Toll, a successor company, to allow the sale of their trucks with work. Staff J at first instance had found the contacts unfair and granted the nine drivers compensation and interest. 2 Toll, on appeal, challenged his Honour's judgment, identifying, generally, what were contended to be the following errors by the Court at first instance: · the determination that cl 11 of an agreement between the lorry owner/drivers and Toll's predecessor, which provided for sale of trucks with work, was not a term of the contracts between the first appellant and the owner/drivers (the contract issue); · the failure to dismiss the application on jurisdictional grounds (Sydney Water Corporation Ltd v Industrial Relations Commission & Anor [2004] NSWCA 436; (2004) 61 NSWLR 661) (the jurisdictional issue); · there was insufficient evidence on which to base the finding of fact (the jurisdictional fact issue); · the making of compensation orders and the failure to give reasons for the compensation orders (the compensation issue); · the orders as to interest. 3 In upholding the appeal, the Court made the following orders: 1. Leave to appeal is granted. 2. The appeal is upheld and the decision and orders of Staff J are quashed. 3. The question of whether the relevant contracts are unfair is remitted for hearing before a judge allocated by the President to be dealt with in accordance with this decision and upon a direction made pursuant to s 191 of the Industrial Relations Act, that the record of the proceedings before Staff J in Matter No IRC 2522 of 2005 shall form the record of the proceedings subject to, upon leave, additional evidence being admitted and/or adduced in the proceedings. Provided that it shall be a matter for the judge to whom the question is remitted to determine what part of the record before Staff J relating to compensation and interest is relevant, if at all, to a reconsideration of compensation and interest issues and whether leave should be granted in this respect to admit further evidence. 4. As to the costs of the appeal, the appellants are to file and serve written submissions within 14 days and the respondent has 14 days to file and serve its response, with a further seven days for the appellants to reply if it is considered necessary. The question of costs will be determined on the papers unless a party requires to be heard orally. 4 The appellants made application for costs on the appeal. The appellants submitted they were entitled to their costs as they succeeded in obtaining leave to appeal and in having the orders of the trial judge set aside. 5 The appellants further submitted the costs of the trial before Staff J should be costs in the cause. 6 The respondent contended this was not a case where the successful party should be given the 'usual' order for costs. In challenging the appellants' application for its costs on appeal, the respondent relied upon the fact that in the hearing at first instance the appellants had pleaded and conducted their case on the ground cl 11 was not in the contracts and it was only after evidence from its own witnesses, against interest, that counsel for the appellants conceded that the Court could find cl 11 was part of the contracts. Therefore, the trial judge had evidence from both parties supporting the proposition cl 11 was in the contracts. Any error, therefore, made by the trial judge was contributed to by the appellants, the respondent contended. 7 The respondent also relied upon a further number of matters to submit a 'special' order for costs, not the 'usual' order, is not only appropriate in the circumstance, but the Court should further order the respondent receive a portion of its costs on appeal. Applicable law 8 The applicable law when there is an application to vary the usual order for costs to the successful party was given consideration by the Industrial Relations Commission of New South Wales in Cretney v Director General, New South Wales Department of Education and Training (No 4) [2010] NSWIRComm 17 at [8]-[9] where it was held: The principles that apply to the awarding of costs in this jurisdiction, as they are relevant to these proceedings, may be summarised in the following fashion: (a) costs are in the discretion of the Industrial Court which has power to determine by whom and to what extent costs are to be paid: s 181(1) of the Industrial Relations Act. (b) the powers and discretions of the Court under s 181(1) are to be exercised in accordance with Pt 27 of the Industrial Relations Commission Rules 1996. (c) the discretion must be exercised judicially: Cretazzo v Lombardi [1975] 13 SASR 4; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 96-98 per McHugh J. (d) Costs are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings. The order is not made to punish the unsuccessful party: (authorities omitted). (e) The 'usual approach', the 'general position' or 'ordinary' approach is that costs will follow the event: (authorities omitted). (f) A successful litigant is, prima facie, entitled to an award of costs, unless there are special circumstances warranting a departure from the rule . . . [T]he making of an order that a successful party pay his or her opponent's costs requires strong justification and exceptional circumstances must exist before a party will ... be ... required to pay part of the opponent's costs': (authorities omitted). (g) Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: (authorities omitted). (h) Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed . . . However, in Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 Finkelstein and Gordon JJ stated that: Costs are in the court's discretion. Fairness should dictate how that discretion is to be exercised. So, if an issue by issue approach will produce a result that is fairer than the traditional rule, it should be applied. (i) A separable issue can relate to 'any disputed question of fact or law' before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: (authorities omitted). (j) It may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: (authorities omitted). (k) If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: (authorities omitted). (l) Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: (authorities omitted). (m) A successful party may, in appropriate circumstances, be ordered to pay the costs of an unsuccessful party where the Court finds disentitling conduct, or misconduct, on the part of the successful party such as to warrant a costs order against it: (authorities omitted). (n) In determining whether the successful party is guilty of misconduct (or disentitling conduct), the conduct must relate either or both to the litigation and/or the circumstances leading up to the litigation: (authorities omitted). ... 9 It is of note there are new Industrial Relations Commission Rules related to costs from February 2010 but the above principles are still relevant. 10 In Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, the High Court gave consideration to a court's exercise of its discretion to not award costs. McHugh J relevantly reasoned, while in the minority, at [69]-[70]: [69] The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874] , Devlin J formulated the relevant principle as follows: "No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct." "Misconduct" in this context means misconduct relating to the litigation ( King & Co v Gillard & Co [1905] 2 Ch 7; Donald Campbell & Co Ltd v Pollak [1927] AC 732 at 812), or the circumstances leading up to the litigation ( Bostock v Ramsey Urban District Council [1900] 2 QB 616). Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation ( Jones v McKie [1964] 1 WLR 960; [1964] 2 All ER 842; Bostock [1900] 2 QB 616 at 622, 625, 627); unnecessarily protracts the proceedings ( Forbes v Samuel [1913] 3 KB 706); succeeds on a point not argued before a lower court ( Armstrong v Boulton [1990] VR 215 at 223); prosecutes the matter solely for the purpose of increasing the costs recoverable ( Hobbs v Marlowe [1978] AC 16); or obtains relief which the unsuccessful party had already offered in settlement of the dispute ( Jenkins v Hope [1896] 1 Ch 278). [70] Apart from anomalous examples in the equity jurisdiction (These anomalies typically feature a trust fund or property which will readily satisfy benevolent costs orders. Such examples were recognised by O 55 of the 1875 Rules which, after stating that costs shall be in the discretion of the Court, declared that "nothing herein contained shall deprive a trustee, mortgagee, or other person of any right to costs out of a particular estate or fund to which he would be entitled according to the rules hitherto acted upon in Courts of Equity"), there are very few, if any, exceptions to the usual order as to costs outside the area of disentitling conduct. . . . Gaudron and Gummow JJ (in the majority) reasoned at [40]: There is no absolute rule with respect to the exercise of the power conferred by a provision such as s 69 of the Court Act that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. Nor is there any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party. Kirby J further reasoned at [143]: . . . Once it is appreciated that compensation to the successful party is the reason why that party will ordinarily have a reasonable expectation of recovering its proper costs, the limits of the principle are clear. It says nothing about exceptional or special circumstances which warrant a departure from the general rule. Such departures have quite often arisen in the past. . . . 11 Therefore, in considering the applications for costs the Court must determine whether the circumstances reveal any 'special' circumstances and whether it could be held there was any 'disentitling conduct' by the appellants such as to attract a variation to the usual order for costs to be awarded to the successful party. 12 The appellants, in the judgment of the Full Court on appeal, succeeded in their first ground of appeal (cl 11 was found to be a term of the employment contracts), but failed on the second and third grounds of appeal to establish the Industrial Court had no jurisdiction, in law or in fact, to hear the claims. Because of the remitter order, appeal grounds four and five were not given consideration by the majority (Boland J, President and Walton J, Vice-President). The appellants on appeal had pleaded the application be dismissed on its substantial ground of appeal, namely, the Industrial Court had no jurisdiction to hear the claim. It was only as an alternative pleading, if jurisdiction was found, that a remitter of the matter was sought. 13 As to the circumstance leading to the appellants' success on the first ground of appeal, the respondent contended there was 'disentitling conduct' by the appellants, which would attract the Full Court's use of its discretionary power to vary the usual order. 14 While caution is to be used in the exercise of a judicial discretion and such discretion must be exercised judicially, we are of the view the appeal litigation warrants a departure from the usual order that costs follow the event. 15 The single ground upon which the appellants succeeded in the appeal was not one which was contended by them (as distinct from their counsel) in the first instance proceedings before Staff J. Therefore, although the appellants contended, successfully, in the appeal, that cl 11 formed part of the contracts, that was not the position they had pressed in the first instance hearing or at any time prior. Toll, in both its submissions and pleadings, had contended cl 11 was not a contractual provision in the agreement between Toll and the owner drivers; had pleaded and submitted the drivers could sell their trucks without goodwill; had repeated the above propositions not only in the hearing at first instance, but in prior dispute proceedings; and had led evidence at first instance of the belief of its managers to this effect. 16 Counsel for the appellants, having considered the evidence as a whole, against his clients' view clearly decided, and properly so, that a submission to the effect that cl 11 was not in the contracts, was not sustainable. Accordingly, counsel chose a different tack by accepting cl 11 was in the contracts and contending that the Court had no jurisdiction to deal with the respondent's claim because it was, in reality, a claim for breach of contract: Sydney Water. 17 On appeal, Boland J, President commented at [9]: Similarly, the appellants embarked on a case theory that propounded cl 11's exclusion from the contracts. Counsel, however, quite properly, on a consideration of the evidence, changed his position to cl 11 being in the contracts. 18 Kavanagh J similarly characterised the conduct of the appellants' case at first instance at [113]-[117] and as one where the appellants (as did the respondent) continually approbated and reprobated. 19 It is reasonable to conclude the way in which both parties conducted their case at first instance was significant in its effect on the trial judge's approach to the terms of the contracts. It contributed to his Honour's erroneous conclusion that cl 11 was not in the contracts and, therefore, that there was no need to consider the jurisdictional issue. 20 The appellants' contribution in that respect was considerable. Initially, as we have pointed out, the case put by the appellants at first instance based on evidence called by them, including the evidence of their managers, was that cl 11 was not in the contracts. Proceedings reached a point where counsel for the appellants, in effect, disavowed that evidence and pursued a different line of attack on the claim. The trial judge was left in the position of having a substantial amount of evidence that cl 11 was not in the contracts, the respondent contending in the alternative (albeit faintly) that cl 11 was not in the contracts and counsel for the appellants, contrary to the appellants' evidence, contending cl 11 was in the contracts. 21 The decision by the trial judge that cl 11 was not in the contracts meant that his Honour was not required to deal with the Sydney Water point, that being that if cl 11 was in the contracts, the claim was properly to be regarded as one that the appellants had breached the contracts by not observing the terms of cl 11 and, therefore, the claim was beyond the Court's jurisdiction. 22 The manner in which the proceedings were conducted at first instance added to the complexity of the appeal proceedings and the prolongation, overall, of the proceedings. This conclusion is reinforced by the necessity to remit the unfairness question and whether there should be orders for any compensation (and interest) (grounds four and five of the appeal) for further hearing by a single judge. 23 Further, the appellants spent a significant period of time on appeal in contending its second ground of appeal, namely, in the application of the principle enunciated in Sydney Water, the Industrial Court had no jurisdiction to hear the claim (see observations of Toohey J in Hughes v Western Australian Cricket Association (Inc) [1986] FCA 382; (1986) ATPR 40-748). They did not succeed on this ground. 24 In considering a circumstance where there can be an apportionment of costs, the Court of Appeal held in Elite Protection Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [7]-[8]: [7] . . . In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 (at [24]). A similar approach is adopted in the Court of Appeal. If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 (at [27]). [8] Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 (at [18]) per Hislop J (with whom Beazley JA and Tobias JJA agreed). 25 Given the appellants only succeeded on the first ground of five appeal points and in a circumstance where the consideration of the second ground of appeal took up considerable time on appeal and failed, and where further grounds of appeal required a remitter order, we are of the view the appellants' costs application falls into the category of cases where the court may exercise its discretion to apportion costs. As was said in Dodds Family Investments Pty Limited (Formerly Solar Tint Pty Limited) v Lane Industries Pty Limited [1993] FCA 259; (1993) 26 IPR 261 by Gummow, French and Hill JJ: 29. Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation. . . . 26 In this matter, the appellants have had only a limited measure of success, it only being established that cl 11 was an element of the contracts (see Westfield Holdings v Adams [2001] NSWIRComm 293; (2001) 114 IR 241 at [208]; Oraka Pty Limited v Pilgrim [2004] NSWIRComm 39; (2004) 136 IR 271 at [129]; Green v Brown [2002] NSWIRComm 177; (2002) 116 IR 21 at [163]). Accordingly, in the exercise of the Court's discretion, we determine the appellants shall have 50 per cent of their costs of the appeal. There shall be no other order for the costs of the appellants on appeal. 27 The respondent's application for a proportion of its costs on appeal is rejected. There are no grounds for a determination that the circumstance placed the respondent in the 'special' case category. 28 Neither party pressed for an order for the costs of the hearing before Staff J. The costs at first instance shall be costs in the cause. ORDERS 1. The respondent shall pay to the appellants 50 per cent of their costs of the appeal. 2. Costs of the hearing before Staff J shall be costs in the cause. _______________________________________ 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.