FEDERAL COURT OF AUSTRALIA

William Robert Jacomb v The Australian Municipal, Administrative, Clerical & Services Union [2004] FCA 1600

ADMINISTRATIVE APPEAL - costs

Federal Court of Australia Act 1976 (Cth)

Sex Discrimination Act 1984 (Cth) s 7

Federal Court Rules O 62 rr 12,19 and 31

Alpine Hardwood (Aust) Pty Ltd v Hardys Pty Ltd (No 2) [2002] FCA 220; (2002) 190 ALR 21

Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd (No. 2) [2002] FCA 192; (2002) 201 ALR 618

Black v Tomislav Lipovac BHNF Maria Lipovac & Ors [1998] FCA 699

Calderbank v Calderbank (1975) 3 ALL ER 333

Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602

Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225

Fresh Express Australia Pty Ltd v Larridren Pty Ltd [2002] FCA 1640

Fyna Foods Australia Pty Ltd v Cobannah Holdings Pty Ltd (No 2) [2004] FCA 1212

Ruddock v Vadarlis (2001) 115 FCR 229

Vasram v AMP Life Ltd [2002] FCA 1286

WILLIAM ROBERT JACOMB V THE AUSTRALIAN MUNICIPAL, ADMINISTRATIVE, CLERICAL AND SERVICES UNION

V 477 OF 2003

CRENNAN J

8 DECEMBER 2004

MELBOURNE

THE COURT ORDERS THAT:

1.         The applicant pay seventy-five per centum (75%) of the respondent’s costs, including reserved costs, to be assessed and taxed in default of agreement on a party and party basis.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     On 29 September 2004, I delivered reasons for judgment in this matter.  I ordered that the application be dismissed and when I indicated I would order the applicant pay the respondents costs, counsel for the applicant sought leave to file submissions in relation to costs.  I then gave directions for the filing and serving of written submissions in relation to costs.

The Parties’ Submissions

2                     The applicant claimed that each party should bear their own costs and filed a somewhat unsatisfactory affidavit as to his means.  In support of this claim, the applicant submitted, inter alia, that:

·                   the case was in the nature of a “test case” in that the application was not brought for commercial gain and the propositions considered by the judgment, namely the ‘question of discrimination between genders’ were matters of great importance to the community at large and public bodies such as unions;

·                   the proceeding before this court was the first occasion when all the relevant evidence was considered; and

·                   the ‘principles applying to “Calderbank” letters in non commercial litigation are subject to the same limitations … as to the general questions of costs.’  This was a reference to Calderbank v Calderbank (1975) 3 ALL ER 333 (“Calderbank”).  There was also a submission made on behalf of the applicant, which I reject, that partial success was achieved in the proceeding. 

3                     The respondent submitted that the applicant should pay the respondent’s costs on a solicitor/client or indemnity basis (or, in the alternative, that the applicant be ordered to pay the respondent’s costs on a party/party basis) bearing in mind, inter alia;

·                   the respondent’s success in the proceedings;

·                   the applicant has been on notice in relation to the issue of costs since very early in the proceedings and rejected the respondent’s offer to compromise by way of an alleged “Calderbank” letter;

·                   this is not a case brought in the “public interest”; and

·                   the applicant has already had a number of interlocutory proceedings arising directly from the applicant’s conduct of this matter determined against him.

Consideration

4                     The general rule is that the award of costs is at the discretion of the Court: see ss 43(1) and (2) of the Federal Court of Australia Act 1976 (Cth) (“the Act”).  Ordinarily costs follow the event in the absence of special circumstances justifying some other order.  The principle behind an award of costs to a successful party is one of compensatory or restorative justice: see Ruddock v Vadarlis (2001) 115 FCR 229 at [12].  The Federal Court Rules provide that ordinarily costs will be recovered on a party and party basis: see O 62, rr 12, 19 and 31.  Consistent with the discretion conferred on this Court by the Act, the Court may award solicitor and client costs in appropriate cases where the particular circumstances of the case warrant the Court departing from the usual course of ordering costs on a party and party basis: Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 230; Alpine Hardwood (Aust) Pty Ltd v Hardys Pty Ltd (No 2) [2002] FCA 224; (2002) 190 ALR 121 at [11]; Fyna Foods Australia Pty Ltd v Cobannah Holdings Pty Ltd (No 2) [2004] FCA 1212 at [4]-[5](“Fyna Foods”). 

5                     The respondent seeks to rely on the fact that the applicant refused the respondent’s offer to settle the proceedings by way of a “Calderbank” letter.  The letter dated 1 August 2004, was marked “Without prejudice save as to Costs” and made the following offer:

“1.       That the Applicant discontinue the application by 9.30 a.m. on Monday 11 August 2003 with no order as to costs.

2.         Each party bear its own legal costs associated with these proceedings.”

The offer was expressed to be in accordance with the principles in Calderbank.  The applicant refused the respondent’s offer to settle by return letter dated 11 August 2004 (three days after the time for acceptance prescribed by the offer). 

6                     The principles governing Calderbank offers have been the subject of a number of decisions of this Court: see for example Black v Tomislav Lipovac BHNF Maria Lipovac  & Ors [1998] FCA 699; Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 (“Dr Martens”).  As a general rule, the mere refusal of the Calderbank offer does not automatically mean that the Court should make an order for costs on an indemnity basis, even where the result, following refusal of the offer, is less favourable to the offeree than that contained in the offer.  Rather, the offer to settle must be a genuine offer to compromise, and there must be some element of unreasonableness in the offeree’s refusal to accept the offer: see Fresh Express Australia Pty Ltd v Larridren Pty Ltd [2002] FCA 1640; Dr Martens.

7                     It is doubtful that the abovementioned offer amounted to a genuine offer of compromise, consistent with the principles in Calderbank, as the offer appeared to be merely an invitation to discontinue the proceedings, a circumstance which a number of courts have found to be insufficient for the purposes of applying the principles applicable to Calderbank offers; Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd (No. 2) [2002] FCA 192; Vasram v AMP Life Ltd [2002] FCA 1286; Fyna Foods.  Even if the offer were in the nature of a genuine Calderbank offer, that is but one factor to be taken into account in the Court’s exercise of discretion: Fyna Foods at [10]. 

8                     Further, the applicant claims that the case is a “test case” and that different principles apply in the award of costs in cases brought in the “public interest”.  The term “public interest” is not judicially defined.  However, this Court may consider all the circumstances of the case before it in determining whether there is sufficient “public interest” to influence the exercise of the Court’s discretion as to costs: Ruddock v Vadarlis (2001) 115 FCR 229 (“Ruddock”) at [18] and [23].

9                     The applicant submitted that the following factors demonstrate that this case was brought in the “public interest”:

·                   Counsel provided their services to the Applicant on a declined fee basis;

·                   the decision of the Commissioner for the Human Rights and Equal Opportunity Commission to seek leave and to appear as amicus curiae; and

·                   this was the first judicial consideration of s 7 of the Sex Discrimination Act 1984 (Cth) (“Sex Discrimination Act”) and that it establishes an ‘important guide to public bodies trying to balance a gender bias in their membership and government’.

The provision of pro bono legal services is important in providing quality representation in a case giving rise to a novel legal argument or point of statutory construction not previously determined.  The respondent submitted that the ‘case submitted by the Applicant at trial was confined to his own interests as a member of his division’ and was not brought in any ‘representative capacity’.  The respondent also sought to rely on the High Court’s decision in Ruddock as to the criteria to be used in ascertaining “public interest”. 

10                  There is no set formula for determining whether a case is brought in the public interest.  The decision made in the present proceedings may act as a useful guide for other unions, whose rules are affected by the operation of s 7 of the Sex Discrimination Act and, to this extent, there is a degree of public interest in having the dispute judicially determined.  However, the applicant stood to benefit personally from the decision and, in this regard, I could not be satisfied that the applicant brought the proceeding entirely in the public interest.  The public interest was subservient to, although coincided with, his own interests.  However, it is important to note in this context, that in the absence of any judicial determination of the question of statutory construction, to which the facts gave rise, the applicant was not acting unreasonably in seeking a determination.  While it remains undisturbed, the determination is one which will have the effect of governing the position of persons who find themselves in a similar position to the applicant.  In that sense the case can be genuinely described as a test case with some element of public interest.  It may be of assistance to the respondent in respect of future rules and may be of assistance to similar bodies in similar circumstances.

11                  The issue litigated had been dealt with before on two occasions, although the question of statutory construction, to which the facts gave rise, had not been determined before in any Federal Court.

12                  Bearing in mind all the circumstances of this case, and accepting that I have an overall discretion in the matter, this is not an appropriate case to award indemnity costs.  In all the circumstances, the applicant was not acting unreasonably, in refusing the offer to compromise, when the question of statutory construction had not been determined by the Federal Court on any prior occasion.  Bearing in mind that the proceeding had consequences going beyond the individual applicant, and bearing in mind the various other considerations urged by the applicant and the respondent in their written submissions, I propose to order that the applicant pay seventy‑five per centum (75%) of the respondent’s costs.

Associate:

Dated:              8 December 2004