FEDERAL COURT OF AUSTRALIA

Qantas Airways Limited v Lustig (No 2) [2015] FCA 782

THE COURT ORDERS THAT:

1.    The first and second respondents are to pay the applicant’s costs as agreed or assessed.

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

REASONS FOR JUDGMENT

1.    INTRODUCTION

1    These reasons consider the question of costs consequential upon my decision in Qantas Airways Limited v Lustig [2015] FCA 253; (2015) 228 FCR 148 (Lustig (No. 1)). In that decision, I substantially upheld Qantas’ claim for relief.

2    For the reasons given below, I consider that the ordinary rule that the successful party is entitled to its costs should apply and therefore that the first and second respondents, Peter Lustig and Giuseppe De Simone, should pay Qantas’ costs of the proceeding. I reject the submissions of Messrs Lustig and De Simone that there should be no order as to costs or that Qantas should receive a discounted award of costs.

2.    BACKGROUND

3    Messrs Lustig and De Simone appeared unrepresented throughout the proceedings.

4    In Lustig (No 1), I upheld the application by Qantas Airways Limited (Qantas) for a declaration that the Victorian Civil and Administrative Tribunal (VCAT) lacked jurisdiction to entertain proceedings instituted by Messrs Lustig and De Simone. In so holding, I accepted Qantas’ submission that VCAT lacked jurisdiction because Qantas had raised a federal defence to all of the claims which was not colourable, being relevantly a defence under the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) (Carriers’ Liability Act). In this regard, my conclusion departed from that reached by VCAT when it dismissed Qantas’ applications for summary dismissal on jurisdictional grounds of the claims by Messrs Lustig and De Simone.

5    Further, contrary to the submissions by Messrs Lustig and De Simone and the Attorney General of Victoria (intervening), I held that VCAT has no power to transfer the proceedings to a court under s 77 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act). I therefore considered it appropriate to issue a writ of prohibition as sought by Qantas directing that VCAT take no further step in the proceedings other than making orders for dismissal of the proceedings.

6    I reserved, however, the question of costs. Submissions on costs were subsequently filed and served by Mr Lustig and Qantas substantially in accordance with the orders made when judgment was delivered. Those orders were varied on 28 April 2015 and again on 12 June 2015 without objection in order to extend the time within which Mr De Simone was to file and serve any submissions on costs, together with any affidavit evidence in support, due to illness and other personal circumstances albeit that no evidence as to those circumstances was filed by Mr De Simone. Ultimately, while Mr De Simone did not file submissions or any affidavit evidence, he sent emails to the Court on 11 and 22 June 2015 explaining his position on costs and setting out his arguments. In those circumstances, the parties were agreeable to the Court treating the emails as Mr De Simone’s submissions on costs. The documents attached to the email dated 22 June 2015 were not however, annexed to any affidavit. As such, no evidence was filed by Mr De Simone in accordance with the orders and I have not had regard to the documents annexed to the email in determining the question of costs, aside from an email from Mr De Simone to the solicitors for Qantas on 22 September 2012 which was in evidence in the substantive proceedings. In that email, among other things, Mr De Simone denied any federal law was involved in the claim, claimed Qantas was estopped from denying that Frequent Flyer points have no monetary value and alleged in the alternative that the VCAT claim was limited to a claim for compensation below $10,000.

3.    CONSIDERATION

3.1    The discretion to award costs

7    While the question of costs is a matter for the Court’s discretion, no issue was rightly taken with the general rule that a successful party is entitled to its costs: Ruddock v Vadarlis (No 2) [2001] FCA 1865; (2001) 115 FCR 229 at 234-235 [11] (Black CJ and French J); Scott v Secretary, Department of Social Security (No 2) [2000] FCA 1450 at [2] (Beaumont and French JJ). As the High Court held in Gray v Richards (No 2) [2014] HCA 47; (2014) 89 ALJR 113 at 113-114 [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.

3.2    The extent to which Qantas was successful

8    Qantas was successful on all grounds save for the injunctive relief sought against Messrs Lustig and De Simone which I considered unnecessary in view of the writ of prohibition issued against VCAT. That was not an issue that occupied much time in written or oral argument and concerned the relief to be granted, rather than the substantive issues. As such, I do not consider that it suggests any need to apportion costs: cf e.g. Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [5]-[6] (Finkelstein and Gordon JJ).

3.3    Matters raised by the first and second respondents

9    Nor do I consider that the matters raised by Messrs Lustig and De Simone establish grounds for departing from the general rule as to costs.

10    First, the fact that under cl 4I(1) of Sch 1 to the VCAT Act costs are not awarded in VCAT in small claims matters, being a claim of a relevant kind for an amount not exceeding $10,000, does not affect this Court’s power to award costs even assuming that the claim in VCAT is properly characterised as a “small claim”. The short point is that Messrs Lustig and De Simone failed on issues that they elected to contest in this Court and did so notwithstanding that this Court is not a “no costs” jurisdiction.

11    Secondly, Mr Lustig submits that “the Applicant has deliberately chosen a venue in which to agitate its appeal in which cost-minimisation is neither an automatic nor a probable feature of the venue. The Respondents are now being asked to bear the costs of the Applicant’s choice of venue.” The submission is misconceived in a number of respects. This Court has jurisdiction over the matter, and was properly and appropriately seized of the matter. The submission also overlooks the overarching purpose in s 37M of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act) that proceedings be conducted, relevantly, “as quickly, inexpensively and efficiently as possible”, together with its associated obligations upon the parties and their legal representatives under s 37N of the Federal Court Act. Nor is there anything to suggest that Qantas engaged in conduct in the course of this litigation which resulted in costs being unnecessarily incurred by any party. Finally, the stated assumption underpinning the submission - that the Supreme Court of Victoria may have approached the issue of costs differently - is speculative. No reasons are given in support of this assertion.

12    Thirdly, the fact that the substantive application in this Court concerned VCAT’s jurisdiction to entertain the claim instituted there by Messrs Lustig and De Simone, rather than a ruling on the merits of the case which they sought to litigate in VCAT, is irrelevant to the question of whether the successful party in this proceeding should be awarded its costs. Equally, the fact that the first and second respondents are now said to be statute barred from pursuing any claim against Qantas is irrelevant. The events in question took place on 6 April 2006 when Messrs Lustig and De Simone sought to board a Qantas aircraft and shortly thereafter were placed on a “no-fly” list (Lustig (No 1) at 153 [10]-[15]). Irrespective of the reasons, it was Messrs Lustig and De Simone’s decision not to institute proceedings until almost six years later on 23 March 2012 in a State tribunal and to do so despite being on notice of Qantas’ defence under a federal law (the Carriers’ Liability Act) by letter dated 18 July 2011 from Qantas’ legal representatives (Lustig (No 1) at 154-155 [16] and 170-171 [94]).

13    Fourthly, Mr Lustig contends that the decision in Lustig (No 1) will confer “a very substantial commercial advantage” on Qantas in future litigation with other persons and was litigated “in the manner of a ‘test case’”. However, as Qantas submits, Messrs Lustig and De Simone procured a ruling by VCAT on the issue of jurisdiction which Qantas contended was wrong and Qantas was entitled to challenge that decision in this Court. There is no evidence suggesting the existence of other like cases pending against Qantas or otherwise in support of the proposition that this was a “test case”. Furthermore, as Qantas also effectively submits, the decision relates only to VCAT proceedings and says nothing about the ability of State courts to entertain proceedings against Qantas in State courts.

14    Nor, contrary to the assumption in Mr Lustig’s submissions, is it relevant that Qantas did not limit its evidence in this proceeding to that relied upon by it before VCAT on the issue of jurisdiction, and instead led further evidence, namely, the affidavit of Lara Elizabeth Dopson sworn 30 August 2013 and the affidavit of Jessica Clare Werro sworn 16 December 2013. The proposition that, if this evidence had been led in the VCAT proceedings, this may have led to a different outcome in that forum is speculative and fails to have regard to the substance of the evidence in question. The additional evidence comprised, in the case of Ms Dopson’s evidence, a list of VCAT members and their status within the Tribunal and was relied upon in support of the proposition that VCAT is not a Court. That proposition was conceded by the first and second respondents. In the case of Ms Werro’s evidence, the additional evidence was sought to be relied upon by Qantas in support of the proposition that Sydney Kingsford Smith Airport is a Commonwealth place. That proposition was also conceded by Messrs Lustig and De Simone, although they initially objected to the receipt of Ms Werro’s evidence insofar as it was relied upon to establish that the land was acquired for a public purpose which they did not concede. However, they did not ultimately contest the point despite the ruling which overruled their objection, expressly leaving open the question of whether Messrs Lustig and De Simone may wish to lead further evidence or make further submissions if the issue should assume significance in the case.

15    Mr Lustig also wrongly characterises the Notice of a Constitutional Matter issued in this proceeding as evidence, submitting that this also was not adduced or relied upon in VCAT. That notice was simply a procedural step required to be taken under s 78B of the Judiciary Act 1903 (Cth).

16    Mr Lustig further submits that certain authorities were relied upon by Qantas which had not been cited before VCAT. The point is again irrelevant. The substance of the arguments against jurisdiction were put by Qantas in its application to VCAT to strike out the claims by Messrs Lustig and De Simone, and indeed had been foreshadowed in correspondence before the VCAT proceedings were commenced.

3.4    Adequacy of steps taken by Qantas to resolve the matter

17    Both respondents also challenge the adequacy of the steps taken by Qantas and suggest that Qantas failed to take genuine steps in satisfaction of its obligations under the Civil Dispute Resolution Act 2011 (Cth) (CDR Act). They therefore suggest that this should have a costs consequence for Qantas.

18    Mr De Simone also submits that Qantas failed to comply with its obligation under s 37N to conduct proceedings in a manner that is consistent with the overarching purpose set out in s 37M(2)(e) of the Federal Court Act because it did not conduct any negotiations for settlement despite being invited by Mr De Simone to do so. As such, Mr De Simone submits that costs must be proportionate as an aspect of the overarching purpose and should be limited to $10,000, being the alleged value of his claim. I note that the value of each of the claims by Messrs Lustig and De Simone was in issue before VCAT and not conceded before me. However, in the circumstances it is unnecessary for me to reach a conclusion as to the value of the claims even if the evidence were available for me to do so and it was procedurally fair. Rather, given my conclusion for the reasons set out below that Qantas has discharged its obligation to take genuine steps in compliance with its obligations under the CDR Act, it follows in my view that the further submission by Mr De Simone under s 37N of the Federal Court Act must fail.

19    Finally, contrary to the assumption underlying Mr De Simone’s further submission that Qantas’ alleged refusal to engage in any form of alternative dispute resolution breached the Civil Procedure Act 2010 (Vic), s 4(3) of that Act provides that it does not apply to any proceedings in VCAT. Nor does that Act apply to proceedings in this Court.

3.4.1    The requirements of the Civil Dispute Resolution Act 2011 (Cth)

20    Section 6 of the CDR Act requires an applicant to file a genuine steps statement at the time of filing the application. That statement must specify the steps taken to try to resolve the issues in dispute or the reasons why no such steps were taken. Section 7, in turn, requires a respondent who is given a genuine steps statement by an applicant to file a genuine steps statement before the hearing date stating either that the respondent agrees with the applicant’s genuine steps statement or specifying the respects in which, and the reasons why, the respondent disagrees. Under s 11 of the CDR Act, the Federal Court may take into account in exercising powers in relation to civil proceedings, whether a genuine steps statement was filed by a person required to file such a statement and whether the person took genuine steps to resolve the dispute. Those matters may also be taken into account in exercising the discretion to award costs by virtue of s 12 of the CDR Act.

21    The CDR Act does not, however, prescribe any specific steps which the parties must take in order to satisfy the obligation to take genuine steps or impose a proscriptive pre-action protocol. Rather, s 4(1A) provides that “a person takes genuine steps to resolve a dispute if the steps taken by the person in relation to the dispute constitute a sincere and genuine attempt to resolve the dispute, having regard to the person’s circumstances and the nature and circumstances of the dispute” (emphasis in the original). Examples of such steps are given in s 4(1) as including:

(a)    notifying the other person of the issues that are, or may be, in dispute, and offering to discuss them, with a view to resolving the dispute;

(b)    responding appropriately to any such notification;

(c)    providing relevant information and documents to the other person to enable the other person to understand the issues involved and how the dispute might be resolved;

(d)    considering whether the dispute could be resolved by a process facilitated by another person, including an alternative dispute resolution process;

(e)    if such a process is agreed to:

(i)    agreeing on a particular person to facilitate the process; and

(ii)    attending the process;

(f)    if such a process is conducted but does not result in resolution of the dispute—considering a different process;

(g)    attempting to negotiate with the other person, with a view to resolving some or all the issues in dispute, or authorising a representative to do so.

22    That list does not limit the steps that may constitute genuine steps (s 4(2), CDR Act).

23    No such statement need be filed, however, in relation to proceedings that are “wholly excluded proceedings”. “Excluded proceedings” are defined in s 15 of the CDR Act as including proceedings that relate to a decision of the Administrative Appeals Tribunal, Australian Competition Tribunal, Copyright Tribunal Australia, Migration Review Tribunal and other specified Commonwealth administrative tribunals, and proceedings in the appellate jurisdiction of an eligible court.

3.4.2    Should Qantas be deprived of all or part of its costs because of a failure to comply with the statutory obligation to take genuine steps to resolve the dispute?

24    Mr Lustig correctly points out that Qantas did not file a genuine steps statement on 30 July 2013 when these proceedings were instituted. However, Qantas did file such a statement on 4 September 2013. In its genuine steps statement, Qantas explained as follows:

(1)    Before proceedings commenced in VCAT, Qantas contended that the Carriers’ Liability Act applied to the exclusion of any other right of action arising out of the incident on 6 April 2006, in response to a letter dated 1 June 2011 from the first and second respondents’ solicitors.

(2)    The VCAT proceedings were commenced in March and April 2012 without further communication.

(3)    After proceedings commenced, Qantas provided written submissions on 29 May 2012 setting out the basis of its contentions that the Carriers’ Liability Act excluded liability for the first and second respondents’ claims and that the application of that Act gave rise to a federal matter involving the exercise of federal jurisdiction which VCAT was not entitled to exercise as it was not a court of the State.

(4)    Those grounds were further developed in oral and written submissions on 25 July 2012 and 25 January 2013 respectively.

(5)    In September 2012, Mr De Simone made an offer to settle the VCAT proceeding commenced by him. Qantas gave that offer genuine consideration and later that month made a counteroffer which was not accepted.

(6)    Mr Lustig made an offer in December 2012 to settle the VCAT proceeding commenced by him. Qantas gave that offer genuine consideration and determined neither to accept the offer nor to make any counteroffer.

(7)    On 20 June 2013 VCAT erroneously determined to exercise jurisdiction in the VCAT proceedings instituted by the first and second respondents.

(8)    Despite the existence of this proceeding challenging VCAT’s jurisdiction, Mr Lustig sought to press ahead with the VCAT proceeding when it was listed for directions on 2 August 2013 and sought discovery.

(9)    No steps were taken after VCAT’s decision on 20 June 2013 rejecting Qantas’ application to strike out the claims for the following reasons.

(a)    There was a serious question involving VCAT’s jurisdiction and Qantas should not be compelled to submit to that jurisdiction without a determination by a court of whether VCAT was entitled to exercise it.

(b)    Before a determination of that question by a court, Qantas should not be compelled to incur further costs in relation to the claims by Messrs Lustig and De Simone in a tribunal of limited jurisdiction and involving trivial amounts of alleged monetary loss, but in which they sought benefits to the value of between $100,000 and $500,000 (this being a reference to the alleged value of the Qantas Frequent Flyer points claimed in the VCAT proceedings which is disputed by Messrs Lustig and De Simone).

(c)    In the circumstances, the question of VCAT’s jurisdiction should be determined by the Court at the earliest opportunity and without any further steps to resolve the underlying dispute between the parties.

25    No genuine steps statement was filed, however, at any time by either Mr Lustig or Mr De Simone. As such neither respondent took issue with Qantas’ genuine steps statement until they were unsuccessful and the question arose as to costs. In those circumstances, I consider that little weight can be given to the first and second respondents’ complaints with respect to the steps identified by Qantas in its genuine steps statement in resolving the issue of costs. Furthermore, the assumption underlying Mr Lustig’s submissions that the Court should focus on the making of offers in determining whether genuine steps were taken by Qantas to resolve the dispute, cannot be sustained given the width of the definition of “genuine steps” and the examples of genuine steps given in s 4(1) of the CDR Act: see at [21] above.

26    That being so, Qantas advised of the issues that may be in dispute before any proceeding was instituted and these were further developed in the course of the VCAT proceedings. Offers were made by both the first and second respondents after instituting the VCAT proceedings and there is nothing to suggest that they were not given genuine consideration by Qantas. Qantas also made a counter offer to Mr De Simone. Those attempts to resolve the dispute underlying the VCAT proceedings by negotiation having been unsuccessful, no criticism can be made in my view of Qantas then seeking an authoritative determination in the courts of the question of whether VCAT had jurisdiction in the first instance. It must also be borne in mind that if jurisdiction had existed, then the issue of resolving the substantive dispute would have arisen more acutely and the processes enacted by the VCAT Act to facilitate alternative dispute resolution would have been available: see in particular, ss 83-84 (power to require parties to attend a compulsory conference) and ss 88-89 (power to refer a matter to mediation).

4.    CONCLUSION

27    For these reasons, I consider that the ordinary rule that Qantas should be awarded its costs should apply. I note, however, that whether Qantas ultimately enforces its entitlement to costs against the first and second respondents is a matter for it to determine.

Associate:

Dated:    31 July 2015