FEDERAL COURT OF AUSTRALIA

Umoona Tjutagku Health Service Aboriginal Corporation v Walsh [2019] FCAFC 32

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed in part.

2.    The orders made by the primary judge on 9 October 2017 be set aside, and in their place, that there be no order as to costs.

3.    Costs of the appeal are reserved.

4.    If any party wishes to contend for an order as to costs in her or its favour, that party is, within seven days, to file and serve a written submission (not exceeding three pages) in support of the application and any submission in response (not exceeding three pages) is to be filed and served within a further seven days.

5.    Unless the Court otherwise orders, the issue of costs will be determined on the papers and without oral argument.

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

REASONS FOR JUDGMENT

THE COURT:

1.    INTRODUCTION

1    The respondent, Alexandra Walsh, is a former employee and officeholder of the first appellant, the Umoona Tjutagku Health Service Aboriginal Corporation (UTHSAC or the Corporation). The Corporation operates a publicly funded health service in the remote South Australian town of Coober Pedy. The second appellant, Priscilla Larkins, was at all relevant times, including for the duration of the trial and at the time of the hearing of the appeal, the Chief Executive Officer of the Corporation.

2    By a decision delivered on 28 July 2017, the primary judge dismissed the claim by Ms Walsh against the Corporation on the ground that it was barred by statute: Walsh v Umoona Tjutagku Health Service Aboriginal Corporation (No 2) [2017] FCA 852 (Walsh (Trial)). However her Honour upheld a claim by Ms Walsh against Mrs Larkins for damages for victimisation because Ms Walsh made protected disclosures of information under Part 10-5 of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act), and awarded $5000.00 compensation plus interest. There is no appeal against this judgment.

3    This is an appeal against the primary judge’s orders as to costs which were determined in Walsh v Umoona Tjutagku Health Service Aboriginal Corporation (No 3) [2017] FCA 1203 (Walsh (Costs)) delivered on 9 October 2017. Her Honour relevantly ordered that:

(1)    Ms Walsh is to pay 20% of the Corporation’s costs, as agreed or taxed;

(2)    the Corporation’s costs are to be quantified on the basis that the costs incurred jointly by the appellants are attributable to them in equal parts;

(3)    the Corporation is to pay 20% of Ms Walsh’s costs as agreed or taxed; and

(4)    Mrs Larkins is to pay 40% of Ms Walsh’s costs as agreed or taxed.

4    In addition, her Honour ordered that:

6. The execution of any order for costs against [Ms Walsh] in these proceedings is stayed pending:

(a)    satisfaction of any costs payable to her by the [appellants] or any one of them in accordance with these orders or any other order; and

(b)     satisfaction of the order for damages against [Mrs Larkins] made on 28 July 2017.

5    For the reasons set out below, we consider, with respect, that her Honour erred in the exercise of her discretion in making the costs orders set out above, including order 6, and that the appropriate order is that there be no order as to the costs of the trial.

2.    BACKGROUND

2.1    The decision in Walsh (Trial)

6    The acts of victimisation alleged by Ms Walsh at trial included the termination of her employment by the Corporation and subsequent acts of intimidation and harassment by Mrs Larkins personally or through members of her family with her knowledge and authority. Ms Walsh alleged that the Corporation and Mrs Larkins contravened s 469-5 of the CATSI Act and claimed compensation from both of them. While Ms Walsh did not plead the quantum of compensation claimed, at trial she formulated a claim for $545,000 in damages including a component of $50,000 for exemplary damages: Walsh (Costs) at [8]-[9].

7    With respect to the substantive claims, the primary judge first dismissed the claim against the Corporation on the ground that it was barred by s 725 of the Fair Work Act 2009 (Cth) (FW Act) because Ms Walsh had already made an unfair dismissal application under s 394(1) of the FW Act for which she had been awarded compensation: (Walsh (Trial) at [16] and [25]).

8    Secondly, the primary judge found that only one of the six acts of victimisation alleged against Mrs Larkins had been established: namely, that Mrs Larkins approached Ms Walsh at a roadhouse in Cooper Pedy “at close quarters” and said, while laughing, “I’m going to get your husband killed in jail”: (Walsh (Trial) at [11]). As counsel for Ms Walsh submitted, “[t]his was not an insignificant threat particularly as [Ms Walsh’s] husband was arrested in Coober Pedy on charges subsequently withdrawn … and [Mrs Larkins’] husband was an officer in the Coober Pedy Police”: Walsh (Trial) at [187], [188], and [190].

9    Thirdly, the primary judge held that the medical evidence did not establish a causal connection between the relevant conditions of their symptoms and the act of victimisation established on the evidence: Walsh (Trial) at [243]. Furthermore, even assuming an impact on Ms Walsh’s capacity to earn an income, her Honour held that the evidence did not establish that that impact persisted beyond the period in which Ms Walsh received compensation under the FW Act or the workers compensation regime: Walsh (Trial) at [243]. As a consequence, the primary judge held that the claim for compensation founded in personal injury and related economic loss was not made out: Walsh (Trial) at [245]. The claim for exemplary damages was also misconceived as they could not be awarded under the Act: Walsh (Trial) at [247]; see also Walsh (Costs) at [22]. In all the circumstances, the primary judge assessed damages at $5000 plus pre-judgment interest in the amount of $1583.22 against Mrs Larkins personally, holding that the act of victimisation proved against Mrs Larkins was not alleged to be an act for which the Corporation might be liable to compensate Ms Walsh whether by virtue of vicarious liability or otherwise: Walsh (Trial) at [246]-[249].

2.2    The primary judge’s reasons in Walsh (Costs)

10    The primary judge summarised the applications for costs below at [3] of Walsh (Costs) as follows:

(1)    UTHSAC seeks an order that Ms Walsh pay the whole of its costs on an indemnity basis in reliance upon the outcome of the trial and offers of settlement it made to Ms Walsh;

(2)    Mrs Larkins seeks an order that there be no order as to costs of the proceedings until such point that Ms Walsh pay Mrs Larkins’ costs on and from:

(a)    5 September 2015, being the date of an unsuccessful mediation of the matter;

(b)    3 December 2015, being the date on which a first formal offer of compromise was made;

(c)    27 January 2016, being the date on which a second offer of settlement was made;

(d)    10 May 2016, being the date on which a third offer of settlement was made;

(e)    6 June 2016, being the date on which the fourth offer of settlement was made; and

(3)    Ms Walsh seeks an order that the [appellants] jointly pay her costs.

2.2.1    The conduct of the litigation below

11    The primary judge began by identifying some of the “salient features of the litigation”. Save where indicated, these were not challenged on the appeal and may be summarised as follows.

12    First, Ms Walsh was represented by solicitors when she filed her originating application on 15 April 2015. Nonetheless, no particulars of the quantum of damages sought against either appellant were given in the statement of claim. Nor did the pleading delineate between losses said to be attributable to each of the Corporation and Mrs Larkins respectively. The primary judge found that “by about August 2015, Ms Walsh’s solicitors had foreshadowed to the [appellants] that Ms Walsh would seek damages in the amount of $545,000.00, which included a component of $50,000.00 for exemplary damages (which are not available under the CATSI Act)”: Walsh (Costs) at [8]. The Primary Judge found that the delay in particularising the quantum of alleged damages until some months after the action was commenced did not have any substantive bearing on the prospects of the matter settling (Walsh (Costs) at [52]).

13    Ms Walsh terminated the services of her solicitors in January 2016 and was thereafter self-represented for the remainder of the proceedings. The trial commenced on 27 June 2016 and proceeded over 10 days.

14    Secondly, the Corporation relied on the statutory bar erected by s 725 of the FW Act which was a complete answer to the claim against it and “turned upon very few facts (none of which were ever in dispute) …” (Walsh (Costs) at [11]). Submissions on this aspect of the Corporation’s defence were made in closing submissions and consumed approximately two hours of the total hearing time. The Corporation did not apply for this issue to be tried and determined separately or for summary judgment against Ms Walsh.

15    Thirdly, while it was ultimately unnecessary to determine whether the Corporation’s termination of Ms Walsh’s employment constituted an act of victimisation because it succeeded on the statutory bar, the primary judge explained that this was not the only defence relied upon by the Corporation. Rather, the primary judge found that:

14. … Together with Ms Larkins, UTHSAC adopted a position at trial whereby it put Ms Walsh to proof on her allegation that she had made protected disclosures under the CATSI Act so as to qualify for protection from acts of victimisation. The [appellants] together ran a case to the effect that (without being exhaustive) Ms Walsh did not have the requisite reasonable suspicion that breaches of the CATSI Act had occurred and that, if disclosures had been made at all, Ms Walsh had not acted in good faith in making them.

15. The allegation that Ms Walsh had not acted in good faith was founded in part on a positive allegation as to certain events that had occurred in 2011 which, it was said, evidenced a malign intent on Ms Walsh’s part. In the course of the cross-examination of Ms Walsh and in their written and oral submissions the [appellants] asserted, wrongly, that Ms Walsh had paranoid tendencies and that she had illegitimately sought to interfere with the affairs of Mrs Larkins.

(emphasis added)

16    Thus the primary judge pointed out that while the Corporation was correct to warn Ms Walsh about the strength of its case on the statutory bar, the Corporation did not confine its case and therefore its expenditure to that issue but rather “together with Mrs Larkins [the Corporation] put Ms Walsh to proof on nearly every aspect of her case” (Walsh (Costs) at [52]). However, as the primary judge found, save for one minor exception, all of these particular aspects of the appellants’ jointly run defence were unsuccessful and “[t]he allegation of bad faith, in particular, was rejected on the basis that the events that Mrs Larkins said in her evidence happened in 2011 did not happen”: Walsh (Costs) at [16]. In this regard, the primary judge emphasised that:

17. In many important respects, UTHSAC placed its faith in the testimony of its CEO Mrs Larkins and aligned its interests with hers in the proceedings. Its decision to do so weighs heavily in the Court’s discretion as to the costs of these significant parts of the action.

17    In the fourth place, the primary judge explained that the single act of victimisation proven against Mrs Larkins involved a contest of oral testimony in which the primary judge ultimately accepted Ms Walsh’s version of events (Walsh (Costs) at [18]). However, while Ms Walsh adduced evidence on the question of whether she had suffered economic loss by reason of the appellants’ conduct, she had failed to establish that any such loss was caused by the single act of victimisation ultimately upheld. The claim for economic loss involved the examination and cross-examination of two medical experts, consuming about half a day of the trial (Walsh (Costs) at [21]). That said, while noting that the act of victimisation found against Mrs Larkins had sounded in a small award of compensation for hurt and distress, the primary judge also observed that:

22. … The amount of the award does not reflect the seriousness of the conduct found against Mrs Larkins. Rather, it reflects the failure of Ms Walsh to establish that she was entitled to compensation for economic loss as a result of the victimisation and the circumstance that the award is compensatory in nature and not punitive. … the CATSI Act makes no provision for an award of exemplary damages and the Court is to proceed on the basis that Ms Walsh must be taken to have borne that in mind when considering whether to accept the offers of settlement made by the [appellants]. In addition, it ought reasonably to have been in Ms Walsh’s contemplation that should UTHSAC successfully rely upon the statutory bar, the damages to which she might be entitled in the proceedings would be significantly reduced.

2.2.2    The first offer of settlement by the Corporation

18    The primary judge then turned to consider the offers of settlement upon which the Corporation relied. Three offers of settlement were made before the start of the trial by the Corporation, which made a further offer after the trial had commenced.

19    The first offer was made in writing on 2 December 2015 on behalf of the appellants jointly (the first offer) and purported to be an offer to compromise under rule 25.01 of the Federal Court Rules 2011 (Cth) (FCR) which creates a rebuttable presumption in favour of an order for indemnity costs in accordance with its terms: Walsh (Costs) at [25], citing Specsavers Pty Ltd v The Optical Superstore Pty Ltd (No 4) [2012] FCA 652 at [10]. The first offer was for the sum of $95,000 inclusive of costs, interest, and any applicable GST, but was expressed to be “conditional on the entry by [Ms Walsh] into an appropriate deed of release and discharge in favour of the First [Appellant], Second [Appellant] and the directors, officers and employees of the First [Appellant] (both current and past) in relation to the subject matter of the proceeding.” No further details were given at this time as to the terms of the proposed deed of settlement and release (Walsh (Costs) at [27]). Ms Walsh by her solicitors communicated her “acceptance” of the first offer on 14 December 2015 and the proposed deed was provided to Ms Walsh’s solicitors on 7 January 2016. This contained a clause, as the primary judge held, to the effect that Ms Walsh grant a release from liability to persons other than the appellants. Specifically, proposed clauses 3.2 and 3.3 provided:

3.2    Without limiting the generality of the release and discharge referred to in clause 4 hereof, Walsh will make no further claim upon:

3.2.1    UTHSAC;

3.2.2    Larkins;

3.2.3    Patrick Larkins;

3.2.4    any former or current employees, board members, representatives and/or agents of UTHSAC and Larkins;

3.2.5    any of the abovementioned persons’ legal representatives,

in respect of any matter that is directly or indirectly related to the Action, Claims or Disputes.

3.3    Without limiting clause 3.2, above Walsh, will not directly nor indirectly lodge or make any complaint, or present any information or allegations against or involving any of the persons set out in clause 3.2, to any tribunal, commission or commissioner, ombudsman, regulatory, governmental or quasi-governmental body, such as, but not limited to, the Australian Securities and Investment Commission, the Office of the Registrar of Indigenous Corporations, the Independent Commissioner Against Corruption, the Australian Competition and Consumer Commission, South Australia Police or the Fair Work Commission, regarding any acts, conduct, practices, or policies of, or in relation to the persons those persons, and whether directly, anonymously or pseudonymously, or on an alleged “whistleblower” basis.

20    The proposed deed also contained terms to the effect that no party was to disparage the other.

21    After reading the proposed terms, Ms Walsh terminated the services of her solicitors and on 19 January 2016, notified the appellants’ solicitor that she acted for herself in the proceedings.

22    The primary judge found at [32] that Ms Walsh subjectively believed the draft deed to contain terms that were unreasonable for at least three reasons: first, the recital misstated her actual allegations in a material respect (Walsh (Costs) at [33]); secondly, Ms Walsh feared that allegations of breach of the disparagement clause would too readily be levelled against her by the appellants in relation to disparaging remarks that might be made by other persons with whom she was associated (Walsh (Costs) at [34]); and thirdly, Ms Walsh considered that the proposed clause 3.3 wrongly sought to prohibit her from bringing to the attention of regulatory authorities, the information forming the subject matter of her disclosures or any other information bearing upon the proper governance of the Corporation or the Coober Pedy police (Walsh (Costs) at [35]). As a result, Ms Walsh did not agree to the terms of the proposed deed on which the offer of settlement was conditioned (Walsh (Costs) at [36]). In so doing, the primary judge rejected the appellants’ submission that Ms Walsh had “reversed her position” in relation to this offer because she had originally accepted it in December (Walsh (Costs) at [41]). Rather the primary judge considered that the offer was illusory when made on 2 December 2015 because the conditions attached were not known and that it was not rejected by Ms Walsh because of the amount of the settlement sum but due to the terms attaching to its payment (ibid). In so finding, the primary judge emphasised that:

42. It is to be borne in mind that Ms Walsh had in fact been the subject of an act of victimisation by Mrs Larkins closely connected with the activities of the South Australia Police in Coober Pedy, of which Mr Larkins was a member. Having regard to the nature of the proceedings, it was not unreasonable for Ms Walsh to reject an offer that would have prevented her from making disclosures or complaints to regulatory authorities in respect of the widely defined subject matter set out in the proposed clause. It is difficult to identify how the legitimate interests of UTHSAC or Mrs Larkins, or Mr Larkins, or, for that matter, the public, could be advanced by the inclusion of such a term. At the very least, the term is inconsistent with the objectives of the CATSI Act and the public interest in suspected wrongdoing in relation to UTHSAC being reported to appropriate authorities for investigation.

2.2.3    The second, third and fourth offers of settlement

23    The second offer was made verbally on behalf of both appellants in the course of the informal without prejudice discussions on 27 January 2016 between the appellants’ solicitor and Ms Walsh and her husband. Ms Walsh rejected the offer of settlement in the sum of $105,000 on the basis of her objection to the proposed deed, at least insofar as it contained proposed clause 3.3.

24    The third offer was made in a letter from the appellants’ solicitors dated 10 May 2016 and was said to have been made in accordance with the principles stated in Calderbank v Calderbank [1975] 3 All ER 333. The letter expressed an offer of payment of $95,000 to be paid within 14 days of the execution of “an appropriate deed of settlement and release” but did not set out the proposed terms of the deed. The primary judge found that it appeared that the offer was rejected by Ms Walsh in a telephone conversation on the same day (Walsh (Costs) at [39]).

25    The fourth offer of settlement was made by email on 6 July 2016 after the commencement of the trial. It proposed that the matter settle on the basis that each party bear their own costs (Walsh (Costs) at [40]).

26    The primary judge found that Ms Walsh did not act unreasonably in assuming that the second, third and fourth offers were made conditional upon a deed to include the same terms as those which conditioned the first offer, given that the subsequent monetary offers failed to specify the terms attaching to the proposed payment and from at least 27 January 2016 the appellants were aware that at least clause 3.3 of the proposed deed was highly objectionable to Ms Walsh (Walsh (Costs) at [43]).

27    Furthermore, the primary judge found that it was not imprudent for Ms Walsh to have rejected the fourth offer given that it was made when the trial was on foot and Ms Walsh was a self-represented litigant, and that Ms Walsh ultimately obtained a result against Mrs Larkins that was better than the fourth offer in any event (Walsh (Costs) at [44]).

28    The primary judge also rejected the appellants’ submission that it should be inferred that Ms Walsh was not genuinely concerned with the terms of the proposed deed because she made a counteroffer of $2.6 million about 10 days before the trial commenced which, the primary judge accepted, bore no rational relation to her pleaded case (Walsh (Costs) at [45]). Among other things, the primary judge found that Ms Walsh had demonstrated in December 2015 that she was in fact prepared to accept a payment in the amount of $95,000 subject to appropriate terms and that she had a legitimate subject matter for trial (Walsh (Costs) at [46]-[47]).

29    Nor did the primary judge accept that Ms Walsh should pay the appellants’ costs on an indemnity basis on the ground that she had chosen to “capriciously terminate” a Court ordered mediation on 5 September 2015 given that the appellants made no previous complaint that Ms Walsh had not participated in the mediation in good faith (Walsh (Costs) at [49]).

2.2.4    Other factors taken into account by the primary judge

30    The primary judge also took into account a number of other factors.

31    First, the primary judge found that the requirements of the Civil Dispute Resolution Act 2011 (Cth) (CDR Act) did not weigh heavily in the balance in the circumstances of this case (Walsh (Costs) at [51]). In reaching this view, the primary judge took into account that Ms Walsh had not acted unreasonably in refusing the various offers of settlement made by the appellants or in failing to make a counter offer given the Corporation’s position with respect to the inclusion of a clause which the primary judge found was unacceptable to Ms Walsh and quite possibly unlawful (Walsh (Costs) at [51]-[53]).

32    The primary judge also rejected the suggestion that the action would more suitably have been brought in the small claims jurisdiction of the Magistrates Court of South Australia (the Magistrates Court), given the amount of damages ultimately awarded, where costs would allegedly have been greatly reduced because no party would have been entitled to legal representation as of right (Walsh (Costs) at [55]-[56]). While accepting that the damages awarded to Ms Walsh were significantly less than the amount claimed, the primary judge rejected the appellants’ submission for the following reasons:

56    … That result is explained in large part by the failure of Ms Walsh to show a causal connection between the proven act of victimisation and any personal injury or consequent economic loss, together with the circumstance that UTHSAC succeeded in its defence founded on s 725 of the FW Act. It does not follow, however, that the proceeding could more suitably have been brought in another court or tribunal. I particularly reject the [appellants’] claim that the action was one more properly tried in the small claims division of the Magistrates Court of South Australia. The [appellants] presumably seek to have their costs assessed on the basis that the matter was fit for senior counsel and, having regard to the nature and number of matters disputed by the [appellants], I reject the hypothesis that the matter would have proceeded in the Magistrates Court without the parties applying for leave to be represented by senior counsel, as they were in this Court.

57    Whilst it is true that Ms Walsh obtained an award of damages far below the amount of $100,000, I do not consider this to be a proper case for the reduction of any costs that might be payable to Ms Walsh by either [appellant]. A good proportion of the costs to be awarded to Ms Walsh are attributable to the circumstance that she was put to proof on her allegation that she made protected disclosures. There should be no reduction in the costs payable to her in respect of that issue merely because she did not ultimately achieve a significant damages award.

2.2.5    The primary judge’s conclusion on the issue of costs

33    The primary judge concluded with respect to the issue of costs that “it is preferable to adopt a pragmatic approach so that the parties’ respective cost liabilities broadly reflect the conduct of the trial and the varying outcomes of the issues determined in the proceedings” and set out at [58] the following “non-exhaustive” list of matters on which the orders as to costs set out above at [3]-[4] were based:

(1)    Costs should be quantified on a party-party basis and my references below to “total” costs should be so understood.

(2)    The orders will reflect an assumption that the costs of the two jointly-represented [appellants] are to be apportioned in equal amounts between them. Similarly Ms Walsh’s total costs are attributable to her case against each [appellant] in equal parts.

(3)    It may fairly be assumed that the proportions of the parties’ total costs of preparing for trial in respect of a particular issue is the same as the proportion of time devoted to the issue at trial.

(4)    It is not to be assumed that Mrs Larkins has any entitlement to be indemnified by UTHSAC in respect of her costs liabilities. The basis of the claim against Mrs Larkins is not one that could readily be identified as giving rise to any right of indemnity on Mrs Larkins’ part vis a vis UTHSAC in respect of her liability to pay Ms Walsh’s damages or costs. Accordingly, orders that the first and second [appellants] be jointly liable for any portion of Ms Walsh’s costs will not be made.

(5)    Ms Walsh should pay UTHSAC’s costs attributable to it establishing the legal propositions upon which the statutory bar depended.

(6)    Ms Walsh should pay the [appellants’] costs in respect of her claim to have suffered economic loss occasioned by personal injury, including her costs of adducing expert evidence.

(7)    Ms Walsh and UTHSAC should bear their own costs of that part of the proceedings attributable to the undecided question of whether the termination of Ms Walsh’s employment was an act of victimisation.

(8)    UTHSAC should bear its own costs of joining in a defence to the effect that the disclosures were not reasonably made and were otherwise made in bad faith. That issue consumed a considerable portion of the trial time. UTHSAC and Mrs Larkins should compensate Ms Walsh for her costs attributable to that part of the trial.

(9)    Mrs Larkins should pay Ms Walsh’s costs attributable to the claim against her with a moderate reduction to reflect those parts of the claim that did not succeed.

(10)    As Ms Walsh was a self-represented litigant for a large part of the history of the action, it cannot be assumed that her actual costs equate to those of the [appellants]. Accordingly, there will be no offsetting of a kind that might ordinarily be made where the parties overall costs may be fairly assumed to be the same.

34    Finally, the primary judge held at [62] that it was appropriate that the enforcement of any order for costs against Ms Walsh to the benefit of either appellant be stayed pending the payment of any costs owing to her by either of them, and pending the payment of the award of damages specified in Walsh (Trial) at [248] on the basis that:

62. … In light of the findings that have been made in the action, the Court is not confident that UTHSAC would act independently of the instructions or urgings of Mrs Larkins insofar as the enforcement of orders is concerned. Accordingly, it should not have the benefit of any costs order until Mrs Larkins has discharged her own liabilities to Ms Walsh.

3.    CONSIDERATION

3.1    The issues

35    The first appellant contends that the primary judge erred in the exercise of her discretion in making the orders as to costs in a number of respects.

(1)    Ground 1, notice of appeal: The exercise of discretion was unreasonable and plainly unjust in that the Corporation can recover only 10% of the combined costs of the appellants and must pay 20% of Ms Walsh’s costs in circumstances where the Corporation:

(a)    was entirely successful at trial;

(b)    was awarded its costs only in respect of confined issues in respect of which its success ultimately depended (Walsh (Costs) at [58](5) and (6)); and

(c)    was ordered to bear its own costs of those parts of the action where no findings were ultimately made (Walsh (Costs) at [58](7)) in circumstances where such findings were only not required because of the Corporation’s success in establishing a statutory bar to the action.

(2)    Ground 2, notice of appeal: the primary judge erred in approaching the question of the Corporation’s costs by reference to a calculation of the likely costs attributable to the grounds upon which it succeeded (Walsh (Costs) at [58]), rather than by assessing the extent of its costs (if any) that it should be deprived of by reason of disentitling conduct.

(3)    Ground 3, notice of appeal: The primary judge erred in approaching the significance of the statutory bar imposed by s 725 of the FW Act by reference to the availability of procedural alternatives to the Corporation (Walsh (Costs) at [11]) and should instead have proceeded on the basis that Ms Walsh was responsible for proceeding with a claim precluded by a statutory bar.

(4)    Ground 4, notice of appeal: the primary judge erred in the exercise of discretion under rule 40.08 of the FCR in that her Honour:

(a)    ought to have found that Ms Walsh should have been deprived of any costs in circumstances where the award of damages was far below the sum of $100,000;

(b)    rejected the contention that the proceeding could more suitably have been brought in a lower court or tribunal (Walsh (Costs) at [56]) without providing any reason for so holding;

(c)    failed to take into account that Ms Walsh pursued and failed in respect of monetary claims that were disproportionate and included exemplary damages (which are not available under the CATSI Act) (Walsh (Costs) at [8]).

(5)    Ground 5, notice of appeal: the primary judge erred in failing to find that Ms Walsh acted imprudently in rejecting the appellants’ offers of settlement in circumstances where:

(a)    Ms Walsh “by her solicitors communicated in respect of the draft deed of settlement referred to [in Walsh (Costs)] at [28], and confirmed that the deed was acceptable save for uncontroversial amendments”; and

(b)    “the bases for the subjective concerns of [Ms Walsh] referred to [in Walsh (Costs)] at [33] to [35] were uncommunicated.”

36    The relief sought by the appellants is that the costs orders be set aside, and in lieu thereof this Court exercise its discretion to make orders that Ms Walsh pay the Corporation’s costs on an indemnity basis and Mrs Larkins’ costs on and from 3 December 2015 when the first formal offer of compromise was made or alternatively from dates when the second, third or fourth offers of settlement were made.

37    We note that the claim for indemnity costs relied upon the appellants or one of them succeeding on ground 5 of the notice of appeal. However, the claim for indemnity costs was but faintly pressed by the appellants at the hearing of the appeal. Rather, at the hearing the appellants relied upon the offers of settlement primarily in support of their submission as to the unreasonableness of the costs order made by the primary judge and as raising considerations which ought to be taken into account if this Court is persuaded that it should re-exercise the discretion as to costs.

38    Ms Walsh agreed that if the costs orders were set aside, this Court should re-exercise the discretion for itself. However, Ms Walsh contended that the appellants had failed to establish any error in the primary judge’s exercise of discretion, submitting that:

(1)    s 43(3)(c) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) expressly entitles the Court to order the parties to bear costs in specified proportions, as occurred here;

(2)    the Corporation did not have a prima facie entitlement to its costs in circumstances where the Corporation and Mrs Larkins together ran a case which, with one minor exception, was unsuccessful as the primary judge held; and

(3)    the primary judge was entitled to have regard to the fact that the successful party could have significantly reduced the costs of the action by taking a step available to it which it did not take, particularly given the obligations in s 37N of the FCA Act, and the fact that the cost of litigation today is often large and disproportionate to the amount in issue.

39    Ms Walsh also contends that no order for indemnity costs should be made in circumstances where the terms on which the offers of compromise were made were objectively unreasonable as they went beyond those matters in issue in the litigation, were arguably contrary to the criminal law, and could not have been the subject of an order by the primary judge (relying upon Australian Medical Innovations Pty Ltd v Go Medical Industries Pty Ltd (Unreported, Supreme Court of Western Australia, Wallwork J, 22 April 1996)).

3.2    Relevant principles

40    It was not in issue that it is incumbent upon the appellants to establish an error of the nature identified in House v The King (1936) 55 CLR 499 (House v R) in the exercise of the discretion as to costs by the primary judge. As Dixon, Evatt and McTiernan JJ held in House v R at 504-505:

It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance.

41    The Court has a broad discretion under s 43(2) of the FCA Act when determining appropriate costs orders which must be exercised judicially, that is, not arbitrarily, capriciously, or so as to frustrate the legislative intent: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 (Oshlack) at [22] (Gaudron and Gummow JJ); Hughes v Western Australian Cricket Association (Inc) [1986] FCA 382; [1986] ATPR 40-748 at 48,136 (Toohey J). In other words, the discretion has “escaped arterial hardening” (applying the words of Gaudron and Gummow JJ in Oshlack at [38] by analogy).

42    Thus, while the ordinary rule is that the successful party will receive her or his costs, that is not an absolute rule: Oshlack at [40] (Gaudron and Gummow JJ); Ruddock v Vadarlis (No 2) [2001] FCA 1865; (2001) 115 FCR 229 (Ruddock) at 234-235 (Black CJ and French J). As the Full Court explained in Queensland North Australia Pty Ltd v Takeovers Panel (No 2) [2015] FCAFC 128; (2015) 236 FCR 370 at [11], after referring to the decisions in Ruddock and Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 with approval:

11. These decisions treat the success or failure of the relevant party as being the starting point in consideration of the question of costs. However they contemplate at least three distinct categories of situation in which a successful party might be deprived of costs, or even ordered to pay the costs of the other side. One such category is where the applicant has been only partially successful in that it has not obtained all of the relief sought. The second category is where a party has succeeded in obtaining the relief sought, but has not succeeded on all bases (factual or legal) upon which it sought such relief. Of course, it is possible that a particular outcome will fall into both categories. A third category involves consideration of the successful party’s conduct of the case.

43    As this passage explains, in determining whether to apply the ordinary rule, the Court may have regard not merely to the extent of success vis a vis different causes of action, but also to the extent of success vis a vis different factual and legal issues. The appellants’ submission to the contrary must therefore be rejected.

44    To put it another way, it is correct to say that what amounts to success is not always revealed merely by reading the orders of the court. As the Western Australian Court of Appeal explained in Frigger v Professional Services of Australia Pty Ltd (No 2) [2011] WASCA 103 (S) (Frigger):

12. … Where an appellant has been successful in obtaining what is, in effect, a variation in their favour of orders below, there may remain valid reasons to not award costs in favour of the appellant where the appellant has not been successful in the underlying, real contest: Laws v Australian Broadcasting Tribunal (1989) ALD 522; (1989) 85 ALR 659, 677. Where appellants have only won a nominal victory then the court may not award costs. Success in proceedings is to be determined by the “reality” of the circumstances involved: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [70] (McHugh J); Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394, 401.

45    The breadth of the discretion as to costs is reflected among other things in s 43(3)(c) and (e) of the FCA Act which respectively permit the Court to make orders that the parties bear costs in specified proportions and to award costs in favour of or against a party irrespective of whether the party is successful in the proceeding: see also Oshlack at [40]. Thus, as the High Court held in Gray v Richards (No 2) [2014] HCA 47; (2014) 89 ALJR 113:

2. The disposition of costs is within the general discretion of the Court. Ordinarily, that discretion will be exercised so that costs are awarded to the successful party, but other factors may have a significant claim on the discretion of the Court. The disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires.

(emphasis added; citations omitted)

46    The interests of justice include considerations of the cost-effectiveness of litigation. Thus a court may conclude that a departure from the general rule is warranted where substantial issues are raised by the successful party which unduly extend the time and expense of litigation: A, DC v Prince Alfred College Inc (No 2) [2016] SASCFC 27 at [6]-[11] (the Court). As counsel for Ms Walsh pointed out, the relevance of such considerations is highlighted by the obligation imposed upon a party and a party’s lawyer by subss 37N(1) and (2) respectively of the FCA Act to conduct proceedings in a way that is consistent with the overarching purpose in s 37M, namely, to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.

3.3    Did the primary judge err in the exercise of discretion as to costs?

3.3.1    Alleged errors based upon the offers of settlement (Ground 5)

47    It is convenient first to consider ground 5 of the notice of appeal.

48    It has long been established that the Court may, in the exercise of the discretion under s 43 of the FCA Act, award costs on a solicitor/client or indemnity basis where the particular circumstances of the case warrant the Court departing from the ordinary practice of awarding costs on a party and party basis. As Sheppard J explained in Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 (Colgate Palmolive) at 233, there should be some special or unusual feature in the case to justify the Court departing from the ordinary practice. Examples of circumstances identified by Sheppard J which may justify an order for indemnity costs include “an imprudent refusal of an offer to compromise”: Colgate Palmolive at 233 [5]. This includes, but is not necessarily limited to, the refusal of a so-called “Calderbank offer”. The applicable principles were conveniently explained by Goldberg J in Szencorp Pty Ltd v Clean Energy Council Limited (No 2) [2009] FCA 196 (Szencorp) as follows:

6. The appellation “Calderbank offer” has its origin in the decision of the English Court of Appeal in Calderbank v Calderbank [1976] Fam 93 at 106. In essence, a Calderbank offer is one which is made in a proceeding before judgment on the basis of it being without prejudice save as to costs and in which an offer for settlement or resolution of the proceeding is made. The right is reserved to refer to the offer if any issue arises as to costs once judgment is delivered. A court can take the offer into account in determining what costs order should be made notwithstanding that the payment into court procedure provided in the court’s rules has not been followed. If the party to whom the offer is made does not obtain a more favourable result than the offer made and it is established that in the circumstances of the case that party ought to have accepted the offer, then costs will be awarded on the same basis as if there had been a payment into Court prior to judgment and judgment for a lesser amount had been obtained.

7. The refusal or rejection of a Calderbank offer, of itself, does not automatically mean, or give rise to a presumption, that the Court should make an order for costs on either a party/party basis or (depending on the circumstances) an indemnity basis where the result is less favourable to the offeree than the offer. It must be established that it was unreasonable in all the circumstances for the offeree to reject the offer: Jacomb v Australian Municipal, Administrative, Clerical & Services Union [2004] FCA 1600 at [6]; Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435 at 440.

49    The starting point in any event is the threshold issue of whether the offers were genuine offers of compromise: Szencorp at [14].

50    At the hearing of the appeal, Senior Counsel for the appellants properly accepted that it was not objectively unreasonable for Ms Walsh to have refused a deed of settlement which involved her giving releases with respect to strangers to the litigation, that the proposed deed contained provisions which were unreasonable, and that until an agreement was concluded it was open to any party to withdraw or revise their position. Ultimately, therefore, the appellants’ submissions went no higher than to say that the only matter that was outstanding in the negotiations was the monetary sum to be agreed and that in those circumstances, in continuing to refuse to accept the offers, Ms Walsh’s conduct led unreasonably to the prolongation of the proceedings or to the inability to reach an ultimate resolution. Specifically, the appellants contend as follows.

(1)    After Ms Walsh “accepted” the first offer on 14 December 2015 and the draft deed was supplied to her solicitors on 7 January 2016, Ms Walsh’s solicitors sent an email on 13 January 2016 suggesting only minor changes to clauses 4.3 and 4.4 of the draft deed: exhibit PLG20 to the affidavit of Paul Lee Gordon, solicitor for the appellants, affirmed on 4 September 2017.

(2)    When Ms Walsh terminated her solicitor’s involvement, she did not communicate any further difficulties with the draft deed.

(3)    The primary judge found that Ms Walsh “subjectively” believed that the draft deed contained unreasonable terms. However, Ms Walsh’s conduct “in communicating only inconsequential changes (through her solicitors), and then failing to communicate the nature of these ‘subjective’ concerns was objectively unreasonable.” That conduct implied that the draft deed was acceptable.

(4)    Ms Walsh’s counteroffer in the sum of $2,360,150, following various offers by the appellants in sums far greater than any award of damages which she might have obtained, further conveyed that the monetary offer was the impediment to settlement rather than the terms of the draft deed.

51    These submissions must be rejected. As we have earlier mentioned, the primary judge found that from at least 27 January 2016 when without prejudice negotiations were held between Ms Walsh, her husband and the solicitors for the appellants, the appellants were aware at the least that clause 3.3 was highly objectionable to Ms Walsh (Walsh (Costs) at [43]). This was based upon her Honour’s finding at [38] that:

Ms Walsh (or Mr Naumovic on her behalf) persisted with her objection to the proposed deed, at least insofar as it contained the proposed term at cl 3.3 restricting her ability to make a wide range of complaints or disclosures to certain regulatory authorities. Ms Walsh (or Mr Naumovic on her behalf) told the [appellants’] solicitor that they would be providing a copy of the proposed deed “to the authorities” on the basis that the proffering of such a term amounted to corrupt behaviour.

52    That finding is not (directly at least) challenged by the appellants. Given that finding and the earlier concessions properly made to which we have referred, no error can be found in her Honour’s finding that Ms Walsh did not act unreasonably in assuming that the second, third and fourth offers were made conditional upon a deed in the same terms as the earlier draft. Despite being aware of Ms Walsh’s objections to clause 3.3 of the draft deed, her Honour found that the appellants did not advise her that a term to the same effect would not be included: Walsh (Costs) at [43]. In this regard, we note that the phrase in her Honour’s reasons at [43] “… yet they did state that a term to the same effect would not attach to the payment of the subsequent settlement sums offered” is plainly missing the word “not” after the words “yet they”. Ground 5 must therefore be dismissed.

3.3.2    Alleged error in applying rule 40.08 (Ground 4)

53    Turning then to ground 4 of the notice of appeal, rule 40.08 of the FCR provides that:

A party other than in a proceeding under the Admiralty Act 1988 may apply to the Court for an order that any costs and disbursements payable to another party in the proceeding be reduced by an amount to be specified by the Court if:

(a)    the applicant has claimed a money sum or damages and has been awarded a sum of less than $100 000; or

(b)    the proceeding (including a cross-claim) could more suitably have been brought in another court or tribunal.

54    The appellants relied upon rule 40.08 of the FCR to submit that Ms Walsh should have been deprived of any costs order in her favour because the amount awarded was substantially below $100,000 and the matter would more appropriately have been dealt with in the small claims division of the Magistrates Court. It was not in issue that parties may have legal representation in the small claims division of the Magistrates Court only with leave of the Court.

55    The appellants accepted that there was a tension between their submissions based upon rule 40.08, on the one hand, and as to the need for the Corporation to defend itself against very serious allegations at a factual level on which they relied in support of their argument as to the reasonableness of the Corporation’s conduct in running the alternative defences, on the other hand. However, the appellants submitted that it could be inferred that while the Corporation would still have taken the allegations seriously, the extent of the legal costs incurred in a court of summary jurisdiction would still have been lower than those incurred in the Federal Court. As such, the appellants contended that the primary judge erred at [56] and [57] of her reasons in failing to take that consideration into account, given that the purpose of rule 40.08 is to ensure that small claims can be dealt with in a cost efficient manner. The appellants also submitted that Ms Walsh had acted unreasonably in that her claims could never have sounded in any material award given that she had already received two and a half years of compensation for the loss of employment (as the primary judge found in Walsh (Costs) at [20]), which would need to be taken into account in calculating compensation and that her claim for exemplary damages was misconceived.

56    Contrary to the appellants’ submissions, we do not consider that the primary judge erred in not applying rule 40.08.

57    First, rule 40.08 enlivens a discretion in the Court (Kassem v Commissioner of Taxation (No 2) [2012] FCA 293 at [21] (Nicholas J)) and does not establish a prima facie rule that a specified reduction should be made where the damages are less than $100,000. In this regard, it may be contrasted with its predecessor, O 62 r 36A(1) of the Federal Court Rules 1979 (Cth). Order 62 r 36A(1) and (2) provided for a one-third reduction in costs where damages were less than $100,000 unless the Court or a Judge otherwise ordered or where the Court considered the claim could more suitably have been brought in another court. Nonetheless, Perram and Besanko JJ observed in Loyola v Cryeng Pty Ltd (No 2) [2012] FCAFC 98 that:

15. Plainly, the purpose of the two costs rules is to penalise parties who, through oversight or incompetence, bring and continue proceedings in an inappropriate Court in the judicial hierarchy. The qualifying factor for the operation of the rules is the decision to bring and maintain a case in a particular Court.

58    Secondly, the issues at trial were factually complex involving serious allegations against a corporation providing publicly funded services where credibility was very much in issue and the trial spanned some ten days. Indeed, as the primary judge pointed out at Walsh (Costs) at [56], the appellants regarded the case as sufficiently serious to engage senior counsel. Furthermore, the appellants did not cavil with the primary judge’s finding at [57] that a substantial proportion of the costs were incurred because Ms Walsh was put to proof on factual issues on which the appellants’ witnesses were not believed and they were unsuccessful.

59    Thirdly, a policy underlying r 40.08 is to dissuade the bringing of proceedings in the Federal Court that may more appropriately be brought elsewhere: Magenta Nominees Pty Ltd v Richard Ellis (Western Australia) Pty Ltd [1994] FCA 302 at [10] (Carr J). The particular expertise of a Court in the subject-matter of a dispute may be one reason why it might be said that it is appropriate for a matter to be instituted elsewhere, as is illustrated by the exclusion of proceedings under the Admiralty Act 1988 (Cth) from the scope of rule 40.08: see also e.g. Kismet International Pty Ltd v Guano Fertilizer Sales Pty Ltd (No 2) [2013] FCA 705 at [33] (Murphy J). Relevantly in this case, there is considerable expertise and experience in the Federal Court with the management and determination of cases involving the CATSI Act, given in particular that the CATSI Act governs prescribed bodies corporate which perform functions pursuant to the Native Title Act 1993 (Cth) (NTA). In this regard, the Federal Court is, of course, vested with jurisdiction to hear and determine applications “relating to native title” which is exclusive of all other courts, save for the High Court (s 81, NTA).

60    In these circumstances, we do not consider that it is apparent that the matter could more suitably have been dealt with in the small claims division of the Magistrates Court or other lower State court; nor do we consider that this is a case where the amount ultimately recovered against Mrs Larkins should otherwise be a factor calling for a reduction under rule 40.08. As such, the appellants have not established that the primary judge erred in not applying rule 40.08 of the FCR.

3.3.3    Did the primary judge otherwise err in the exercise of discretion (Grounds 1-3)?

61    Nonetheless the Corporation has established on other grounds that the primary judge erred in the exercise of the discretion as to costs in a manner relevant to the principles articulated in House v R.

62    Despite the Corporation having been wholly successful in the outcome and the claim against it having been untenable, the primary judge adopted the starting point that the Corporation ought to be entitled to recover only the costs of establishing the discrete ground upon which it ultimately succeeded, being the statutory bar under s 725 of the FW Act (Walsh (Costs) at [58](5), (6) and (7)) and required the Corporation to pay part of Ms Walsh’s costs in Walsh (Costs) at [58](8). Her Honour’s approach in both of these respects stems from her finding that the Corporation could have saved considerable costs if it had applied for summary judgment or for the question of whether s 725 applied to bar the claims against the Corporation to be determined as a separate issue (Walsh (Costs) at [11]-[13]). Thus, the primary’s judge’s finding that the Corporation was entitled to recover only 20% of its costs was calculated by reference to those costs attributable to establishing that the statutory bar applied, as well as Ms Walsh’s claim that she suffered economic loss occasioned by personal injury (Walsh (Costs) at [58](5) and (6)). Conversely, the primary judge held that the Corporation was to bear its own costs of questions which remained undecided because the statutory bar rendered it unnecessary to decide them (Walsh (Costs) at [12] and [58](7)).

63    However, the primary judge does not appear to have taken into account that it was equally open to Ms Walsh to have applied for the question of the statutory bar to be determined separately from, and before, the trial of the remaining issues or, perhaps more pertinently, to have abandoned the manifestly untenable claim against the Corporation. In this regard, it is no answer to say that Ms Walsh did not have legal representation from January 2016. She cannot by reason of that fact be placed in a better position in relation to the issue of costs. Further, as earlier observed, the obligation lies upon parties, as well as their lawyers, to conduct litigation in as cost-effective and efficient a manner as possible under s 37N(1) of the FCA Act. In any event, the Corporation had raised s 725 as a bar at [63] of the first iteration of its defence filed on 31 July 2015 (Walsh (Costs) at [11]) and referred to it again in the covering email to the appellants’ first offer to compromise the litigation on 2 December 2015. As such, Ms Walsh was on notice of the statutory bar within two and a half months of having instituted the proceedings and at a time when she had legal representation. Yet she elected nonetheless to continue to pursue untenable claims against the Corporation.

64    Furthermore, while the primary judge reasoned that the Corporation “could have confined its case to its reliance on s 725 of the FW Act but it did not”, it is not apparent that that would have significantly reduced the issues at trial and thereby reduced the length of the trial, being a matter which the primary judge also appears not to have considered. The claims against Mrs Larkins were not subject to the statutory bar and there was significant overlap in terms of the factual issues raised by the claims against both appellants who ran a joint defence represented by the same legal representatives.

65    In the end result, we consider therefore that the primary judge erred in her approach to the exercise of her discretion as to costs. It flows from the errors with respect to the orders as to costs vis a vis the Corporation that the costs orders as a whole must be set aside, including those affecting Mrs Larkins. This is because the primary judge’s orders were based upon the express assumption that the costs of the two jointly-represented appellants were to be apportioned in equal amounts between them and that Ms Walsh’s total costs are attributable to her case against each appellant in equal parts (Walsh (Costs) at [58](2)). As such an essential “plank” of the structure of the costs order as a whole has been removed by the error with respect to the costs orders against the Corporation.

66    Finally, with respect, we note that it is generally undesirable for costs orders to be drafted with the complexity of the orders made by the primary judge. In the absence of agreement, the orders made would have required that not only the costs of one party be assessed, but the costs of each of the parties. There was accordingly potential for there to be three separate taxations. Given that this was a 10 day trial involving factual issues of complexity which were hotly contested, the orders made by the primary judge would have potentially imposed a significant burden upon the parties and the Court. It is arguable that this factor may itself have rendered the costs orders relevantly unreasonable, particularly in light of ss 37M and 37N of the FCA Act. However, it is not necessary to determine this as the appellants did not raise this as a ground of appeal.

3.4    The re-exercise of the discretion as to costs

67    Having found error in the exercise of discretion, we accept that it is appropriate, as the parties submitted, for this Court to the exercise the discretion afresh.

68    In this case, the many competing considerations require the Court to undertake a broad evaluative judgment of what justice requires, in line with the High Court’s approach in Gray v Richards (No 2) [2014] HCA 47; (2014) 89 ALJR 113.

69    First, for the reasons earlier given, we do not consider that Ms Walsh acted unreasonably in rejecting the offers of settlement made by the appellants or that this is a case otherwise warranting an order for indemnity costs. Nor do we consider that rule 40.08 offers assistance for the reasons we have already explained. Furthermore, the failure by either party to apply for the question of the statutory bar to the claim against the Corporation as a separate issue prior to trial of the other issues is at best a neutral factor, as it was equally open to Ms Walsh and the Corporation to have sought a separate determination of that issue prior to trial: see further above at [63]. These matters may therefore be put to one side in the exercise of discretion.

70    Secondly, in all of the circumstances, the consideration of costs should proceed on the basis that a distinction ought not to be drawn between the two appellants. As counsel for Ms Walsh submitted, “[t]he first appellant chose to join itself, figuratively speaking, at the hip of the second appellant”: see also Walsh (Costs) at [14]-[17]. Thus while the Corporation relied upon the statutory bar, from the outset when it filed a joint defence with Mrs Larkins, it also defended the proceedings by putting Ms Walsh to proof on almost all aspects of her case, including that she lacked the requisite reasonable suspicion necessary to establish a breach of the CATSI Act, and contended that even if the protected disclosures were made, Ms Walsh had not acted in good faith. Consistently with the extent to which the Corporation aligned its interests with Mrs Larkins, the Corporation and Mrs Larkins were represented by the same legal team. Further, Senior Counsel for the appellants also accepted in the course of argument on appeal that, at the very least, Mrs Larkins was in a position to influence the Corporation’s decisions with respect to the litigation as she was the CEO from the commencement of the proceedings and throughout the trial.

71    Thirdly, it follows from this premise that the starting point is that Ms Walsh was successful, albeit on only one of her claims and, therefore, is prima facie entitled to an order for costs in her favour.

72    In the fourth place, it is necessary to take into account a number of disentitling considerations pointing to the need for a reduction in the costs which Ms Walsh ought to be permitted to recover and which take into account the reality of the degree of success achieved as follows.

(1)    Ms Walsh succeeded in only one of her seven causes of action.

(2)    Ms Walsh persisted with the claim against the Corporation despite being alerted to the statutory bar under s 725 of the FW Act to that claim at a very early stage of the proceeding.

(3)    Ms Walsh failed to establish economic loss and a causal link between the act of victimisation and alleged medical condition/symptoms and, as a consequence, recovered only a small award of compensation for hurt and distress for the proven contravention, albeit that the primary judge found that the amount of the award did not reflect the seriousness of the conduct (Walsh (Costs) at [22]).

(4)    Ms Walsh’s claim for exemplary damages was untenable as the CATSI Act makes no provision for an award of exemplary damages.

(5)    As the primary judge found in Walsh (Costs) at [22], “it ought reasonably to have been in Ms Walsh’s contemplation that should [the Corporation] successfully rely upon the statutory bar, the damages to which she might be entitled in the proceedings would be significantly reduced.”

(6)    Ms Walsh made no attempt to engage in any meaningful sense in pre-trial negotiations for settlement and had not complied with the genuine steps requirement. That said, only limited weight can be given to this consideration as there was no challenge to the primary judge’s findings that Ms Walsh’s failure to comply with the Civil Dispute Resolution Act 2011 (Cth) did not have any significant consequences: Walsh (Costs) at [50]-[53].

73    Fifthly, there are a number of countervailing factors to be taken into account with respect to the appellants.

(1)    With respect to the appellants’ defence: the appellants were comprehensively disbelieved on their positive case that Ms Walsh lacked the requisite reasonable suspicion and had not acted in good faith; the disclosures which the primary judge found to have been made by Ms Walsh were, with one exception, held to be protected disclosures contrary to the appellants’ case; and the claim of victimisation which was upheld involved a contest of oral testimony with Ms Walsh’s account being accepted (see above at [15]-[17]).

(2)    The evidence in respect of the factual disputes on which the appellants were unsuccessful occupied a substantial proportion of the 10 day trial and therefore can be said to have significantly prolonged the trial. In this regard we note that primary judge found that the Corporation’s submissions on the statutory bar took approximately two hours, and the evidence on Ms Walsh’s unsuccessful claim for economic loss took about half a day.

(3)    Senior Counsel for the appellants correctly accepted on the appeal that the first offer was illusory as the terms of the proposed deed of settlement were not proffered to Ms Walsh until later.

(4)    No subsequent offer was objectively reasonable, given in particular that clause 3.3 of the draft deed, which was never resiled from, purported to impose obligations vis a vis third parties and was not therefore a valid offer of compromise, quite apart from the other difficulties from which the proposed clause suffered: see Rapuano v Karydis-Frisan [2013] SASCFC 93 at [46]-[51] (Peek J (with whose reasons Vanstone and David JJ agreed)) (citing among other authorities New South Wales v Dueeasy Pty Ltd (Unreported, Supreme Court of New South Wales, Giles J, 28 February 1992) and Australian Medical Innovations v Go Medical Industries Pty Ltd (Unreported, Supreme Court of Western Australia, Wallwork J, 22 April 1996) 4-5) with approval).

74    When these competing factors are weighed against each other, we consider that the justice of the case requires that there be no order as to costs.

4.    CONCLUSION

75    For these reasons the appeal should be allowed in part and in lieu of the costs orders made by primary judge, there should be no order as to costs. In the circumstance that the Court has set aside the orders of the primary judge but has not otherwise granted the relief sought by the appellants, our preliminary view is that there should be no order as to the costs of the appeal. If any party wishes to contend to the contrary, that party is, within seven days, to file and serve a short written submission in support of the application with any submission in response to be filed and served within a further seven days. Unless the Court otherwise orders, it will then determine the issue of costs on the papers.

Associate:

Dated:    27 February 2019