Industrial Court New South Wales Medium Neutral Citation: Rail Corporation of New South Wales v Elleray (No 2) [2015] NSWIC 12 Hearing dates: 25 June 2015 and 10 July 2015 (written submissions) Date of orders: 16 September 2015 Decision date: 16 September 2015 Before: Kite AJ Decision: The respondent shall pay the applicant's costs. Catchwords: COSTS – costs for the whole of the proceedings – applicant wholly successful – no reason to displace usual rules – court's discretion in exercising power to award costs – principles to be applied – no circumstances to warrant a departure from the ordinary rule that costs follow the event – respondent shall pay the applicant's costs. Legislation Cited: Industrial Relations Act 1996 s 181 Cases Cited: Gough & Gilmour Holdings Pty Ltd v Caterpillar of Australia Ltd (No 18) [2011] NSWIRComm 87 Milne v Attorney-General (Tas) (1956) 95 CLR 460 Nash v Glennies Creek Coal Management Pty Ltd (No 8) [2015] NSWIC 2 Oshlack v Richmond River Council (1998) 198 CLR 72 Rail Corporation of New South Wales v Elleray [2015] NSWIC 6 Category: Costs Parties: Rail Corporation of New South Wales (Applicant) David John Elleray (Respondent) Representation: Counsel: N L Sharp of counsel (Applicant) Solicitors: Marque Lawyers (Applicant) John Stonham & Co Lawyers (Respondent) File Number(s): IRC 177 of 2014 Judgment 1. In Rail Corporation of New South Wales v Elleray [2015] NSWIC 6 the Court ordered that matter IRC 177 of 2014 be referred to the Industrial Registrar for the commencement of proceedings under s 180 of the Industrial Relations Act 1996 (NSW) ("IR Act") for punishment of the respondent's alleged contempt of the Commission. Reasons for judgment were handed down on 21 May 2015 2. On 9 June 2015, the Court received, by email, correspondence from the respondent noting that, in the course of the proceedings, the applicant had made applications in relation to costs and drawing attention to the fact that the question of costs had not been dealt with in the published reasons. Consent orders were proposed, and subsequently made, for the filing of submissions in relation to costs. Those submissions were duly received, and the question of costs was to be dealt with on the papers. This judgment deals with that question. Legislative Framework 1. The Court has the power to award costs, at its discretion, pursuant to s 181 of the IR Act. Section 181 relevant provides: 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, and (d) the Commission may order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014 ) or on any other basis. … (4) In this section, "costs" includes: (a) costs of or incidental to proceedings in the Commission, and (b) in the case of an appeal to the Commission, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal. Applicant's submissions 1. The applicant seeks an order that the respondent pay its costs for the whole of the proceedings. In the alternative the respondent applied for costs of a directions hearing conducted on 20 March 2015 on the basis that it was an unnecessary directions hearing, caused only because the respondent's solicitor could not be contacted. 2. Ms N L Sharp, counsel for the applicant, noted the Court's discretion to award costs should be exercised judicially and according to the usual rule that costs follow the event. It was submitted: That usual rule gives rise to the proposition that a successful party should not be deprived of its costs unless there is material to justify a contrary order being made. Counsel cited: Milne v Attorney-General (Tas) (1956) 95 CLR 460 at 477; Oshlack v Richmond River Council (1998) 198 CLR 72 at [35] per Gaudron and Gummow JJ, at [40] and [134] per Kirby J. 1. The applicant submitted there is no reason to displace the usual rule in this case. RailCorp was wholly successful and should have its costs. 2. The applicant further submitted: [T]he Court should take into account the fact that Mr Elleray's conduct of the proceedings unnecessarily prolonged them. In particular, the hearing was originally set down for 18 February 2015 and could have been finally disposed of that day. The hearing proceeded that day and Ms Sharp made oral closing submissions. Mr Stonham, who appeared for Mr Elleray, also made submissions but then requested the opportunity to provide further submissions. RailCorp consented to that request. Thereafter, Mr Elleray filed and served written submissions and requested a further hearing date in order to speak to those submissions. This was an indulgence to Mr Elleray and prolonged the hearing. Respondent's submissions 1. The respondent conceded the applicant should be awarded its costs with respect to the directions hearing on 20 March 2015 but otherwise opposed any general costs orders being made against Mr Elleray. 2. The respondent submitted: The respondent's financial and personal circumstances, as set out in Affidavits dated 9 April 2014 and 17 February 2015 are material which should be taken into account by the Court in exercising its discretion to award Costs as sought by the Applicant. 1. The respondent further submitted that: 1. these proceedings were agitated by the applicant in circumstances where alternatives to these contempt proceedings were available to the applicant; and 2. the Court, in exercising its discretion, should take into account the original proceedings from which the applicant seeks an order for costs arise from a breach of previous orders of the court for the respondent to repay monies to the applicant. Consideration 1. Section 181 of the IR Act provides a wide discretion to the Court in exercising its power to award costs. 2. In Gough & Gilmour Holdings Pty Ltd v Caterpillar of Australia Ltd (No 18) [2011] NSWIRComm 87 at [71] Boland J, President, provided a useful summary of the principles governing the awarding of costs by the Industrial Court: [71] The principles I draw from the foregoing discussion of the authorities, which are relevant to these proceedings, and which I propose to apply, may be summarised as follows: (1) the Court has a wide discretion under s 181 of the IR Act to award costs and may determine by whom and to what extent costs are to be paid ; (2) rule 42.1 of the UCPR places a limited proscription on the wide discretion to award costs in that the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs; (3) rule 42.1 of the UCPR reflects the general law position that a successful party has a "reasonable expectation" of being awarded costs against the unsuccessful party. Thus, the presumption is that costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs. The qualification, however, means there is no absolute or automatic rule that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party; (4) the purpose of an order for costs is to compensate the person in whose favour it is made and not to punish the person against whom the order is made; (5) the discretion to award costs must be exercised judicially. The discretion cannot be exercised arbitrarily or capriciously and it cannot be exercised on grounds unconnected with the litigation or the circumstances leading to the litigation; (6) although the ordinary rule is that costs follow the event, the "event" extends to any disputed question of fact or law and is not limited to "issues" in the technical sense; (7) it is not necessary to first find in terms or to the effect that it is a most exceptional case, or a strong or exceptional case, before ordering a successful party to pay costs of an unsuccessful party, but there must be a proper basis to do so consistent with r 42.1 of the UCPR ; (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; (9) 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; (10) 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; (11) it may be appropriate, where each party has had substantial success, to order that there be no order as to costs; (12) the exercise of the discretion to award costs is underpinned by notions of fairness; 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 usual rule, it should be applied; (13) 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; (14) 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; (15) 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; (16) the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute; (17) 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; and (18) disentitling conduct does not necessarily need to amount to misconduct. 1. In this matter the applicant was wholly successful in its claim and there is in my view no reason to displace the ordinary rule. 2. The respondent's submissions as to the respondent's financial and personal circumstances and the alternative options that were available to the applicant do not provide circumstances warranting a departure from the ordinary rule that costs follow the event. It was submitted that these factors should be taken into consideration, presumably, in the exercise of the Court's discretion to determine that no costs should be ordered. 3. In my earlier reasons I summarised, at [34], the respondent's evidence as to his financial and personal circumstances. My findings at [66] in relation to the financial and personal considerations do not allow a conclusion that the respondent lacks financial capacity to meet a costs order. 4. Nor does the fact that the applicant may have had alternative processes of enforcement available to it, constitute a reason to decline or modify the application for costs. The alternative processes would themselves have required costs to be incurred. Nothing has been said as to whether such costs would have been more or less. Equally, as I concluded in my earlier reasons, the respondent had options open to him to avoid enforcement proceedings of any kind. He declined to consider or to undertake them. 5. Accordingly, the Court orders: 1. The respondent shall pay the applicant's costs. ********** 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. Decision last updated: 16 September 2015