FEDERAL COURT OF AUSTRALIA

Romero v Farstad Shipping (Indian Pacific) Pty Ltd (No 2) [2015] FCAFC 26

THE COURT ORDERS THAT:

1.    Paragraph 3(b) of the orders of the Court made on 22 December 2014 be varied to read as follows:

(b)    the costs of the hearing before the primary judge be reserved to the judge to whom the further hearing of the proceeding below is remitted.

2.    Each party bear its own costs in relation to this application.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT

1    On 22 December 2014 the Court made the following orders:

1.    The appeal be allowed.

2.    The cross-appeal be dismissed.

3.    The orders made by the Court dated 6 May and 22 May 2014 be set aside and in partial replacement thereof:

(a)    the Court declares that the respondent breached its employment contract with the applicant;

(b)    the respondent pay to the applicant the costs of the hearing.

4.    The question of repudiation and any associated questions such as affirmation or election and the question of damages be remitted to a judge of the Court for rehearing.

5.    The respondent pay the applicant’s costs of the appeal and cross-appeal.

2    By interlocutory application dated 22 January 2015, Farstad Shipping (Indian Pacific) Pty Ltd sought to amend those orders pursuant to r 39.04 of the Federal Court Rules 2011 (Cth), so that order 3(b) of the orders would read as follows:

… the costs of the hearing before the primary judge be reserved to the judge to whom the further hearing of the proceeding below is remitted.

3    Farstad made an offer to compromise on 24 September 2013 pursuant to r 25.01 of the Federal Court Rules. The effect of the variation would simply be to preserve Farstad’s potential opportunity to contend that it should have indemnity costs after the service of the offer should the outcome of the hearing be less favourable than the terms of its offer.

4    Ms Romero, who was successful on the appeal, opposes any variation of the orders on the two principal bases.

5    The first is on the grounds of delay. In that regard, Ms Romero complains that Farstad made no submissions, written or oral, as to why the costs of the appeal should not follow the event as is the ordinary course. Ms Romero presses the argument that in those circumstances, permitting the variation sought would offend the public interest principle of finality to litigation.

6    The second basis is that the variation would be futile as Farstad’s reliance on the offer to compromise is doomed to fail. This argument is put in various ways. Ms Romero stresses that the offer would be significantly inadequate as her own solicitor/client costs alone at the time the offer was made greatly exceeded the offer. Ms Romero argues that Farstad could not possibly establish that Ms Romero acted unreasonably in rejecting the Farstad offer. Despite the force of this argument, to accept it now would inappropriately pre-empt the outcome of the remitted hearing.

CONSIDERATION

7    The notice of appeal sought two orders as follows:

(1)    “[Farstad] is liable to [Ms Romero] for breach of the employment contract for damages to be assessed.

(2)    The order of His Honour as to costs is vacated and in lieu thereof [Farstad] pay [Ms Romero’s] costs of the hearing at first instance and the appeal.”

8    Unfortunately, Farstad raised no argument against order 2. Order 2 would be the normal costs order. Order 2 was made. Nonetheless, it does appear that there was some expectation on the part of Farstad that it would have an opportunity to make submissions on costs when the outcome of the appeal was known. There were more than two possible outcomes.

9    The central consideration is the interests of justice. The variation of the order which Farstad seeks would do no more than preserve the right to rely on the offer pursuant to r 25.14 of the Federal Court Rules. Delay (if it be so regarded) in seeking preservation of that right has not in itself caused prejudice to Ms Romero. All arguments she presently advances as to the inadequacy of the offer will continue to be available if Farstad makes an application.

10    It would be wrong for this Court to pre-empt the outcome of the further hearing by ordering the costs of the first trial when there is a theoretical chance, at least, of a judgment in favour of Ms Romero which is in less favourable terms than Farstad’s offer.

11    As to the argument for Ms Romero that the principle of finality in litigation would be offended by varying the order, there is no finality in the present litigation by virtue of Ms Romero’s successful appeal. Unless the parties can resolve the matter, it will be necessary for the Court to do so.

12    It is therefore appropriate to allow the application to amend, having regard to the principles discussed in Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 per Mason CJ (at 302) and Brennan J (at 308) and Austin Nichols & Company Inc v Lodestar Anstalt (No 2) (2012) 202 FCR 506 per Jacobson, Yates and Katzmann JJ (at [6]-[7]).

13    The following orders are made:

1.    Paragraph 3(b) of the orders of the Court made on 22 December 2014 be varied to read as follows:

(b)    the costs of the hearing before the primary judge be reserved to the judge to whom the further hearing of the proceeding below is remitted.

2.    Each party bear its own costs in relation to this application.

Associate:

Dated:    6 March 2015