FEDERAL COURT OF AUSTRALIA

Finch v The Heat Group Pty Ltd (No 3) [2016] FCA 102

ORDERS

THE COURT ORDERS THAT:

1.    Leave is granted to amend the application dated 4 November 2015 in the form of the draft Amended Interlocutory Application dated 18 December 2015.

2.    The application is dismissed.

3.    The Applicant pay the Respondents’ costs of the application.

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

REASONS FOR JUDGMENT

MURPHY J:

INTRODUCTION

1    By an amended interlocutory application dated 18 December 2015 the applicant, Jo-Anne Finch seeks orders:

(a)    to set aside or vary the costs order made in this proceeding on 5 May 2015 (“costs order”);

(b)    to set aside or vary (what the application characterises as) “orders” of the Deputy Registrar to tax costs;

(c)    a stay of the taxation of costs pending hearing and determination of the substantive proceeding; and

(d)    costs of the application.

2    For the reasons I set out below the application must be dismissed.

THE PROCEDURAL HISTORY

3    In the substantive proceeding (No. VID 704/2012) Ms Finch alleges various causes of action against the respondents which arise out of her employment with the first respondent, The Heat Group Pty Ltd. On 5 February 2015 Jessup J made interlocutory orders in the proceeding which, in summary, stayed the proceeding but allowed Ms Finch to apply to lift the stay by filing a medical report stating that she was able, without risk to her mental health, to instruct lawyers or represent herself in the proceeding. Should the stay not be lifted the proceeding stood dismissed “subject to further order made on proper cause demonstrated” (Finch v The Heat Group Pty Ltd (No 2) 2015 FCA 88).

4    On 19 February 2015 Ms Finch sought leave to appeal from those orders, and sought a stay. As the application sought the exercise of appellate jurisdiction it was a new proceeding (No. VID 73/2015). On 5 March 2015 I granted a stay of the orders on condition that Ms Finch obtain and file an up-to-date medical report from her treating doctor, Dr Rigby, and provide the report to the chambers of Jessup J (Finch v The Heat Group Pty Ltd [2015] FCA 182). Ms Finch obtained a report from Dr Rigby. The thrust of the report was that, although Ms Finch suffered from a serious psychiatric condition, she was able to represent herself and participate in Court proceedings without risk to her health.

5    Unfortunately, for reasons which are not clear, Ms Finch declined to allow Jessup J to decide whether Dr Rigby’s report satisfied his Honour’s orders of 5 February 2015. The application for leave to appeal therefore came before me for hearing. On 5 May 2015 I dismissed the application and ordered Ms Finch to pay the respondents’ costs of the application (Finch v The Heat Group Pty Ltd (No 2) [2015] FCA 416). The orders were entered that day.

6    Then, Ms Finch applied to Jessup J for reinstatement of the substantive proceeding. His Honour heard the application on 18 August 2015 and on 9 October 2015 his Honour allowed reinstatement (Finch v The Heat Group Pty Ltd (No 3) [2015] FCA 1084).

7    On 1 September 2015 the respondents filed a bill of costs in the appeal proceeding in relation to the costs of the application for leave to appeal, doing so under rule 40.17 of the Federal Court Rules 2011 (“the Rules”). On 14 October 2015 Deputy District Registrar Ryan wrote to the parties and provided an estimate of costs of $31,100, doing so under r 40.20 of the Rules. Ms Finch did not file a notice of objection to the estimate.

8    For the reasons explained below I have dismissed the application and ordered Ms Finch to pay the respondents’ costs of the application.

THE RECUSAL APPLICATION

9    In her reply submissions Ms Finch requests that the Court “consider the referral of the Applicant’s application to an alternate justice of the Court” and submits that “a fair/reasonable observer may form a view that there might be a reasonable apprehension of bias, and thus not determine the application impartially”. I shall treat this as an application for recusal.

10    The reply submissions set out the following grounds for recusal:

(a)    the Respondents have relied upon Justice Murphy making adverse findings against the Applicant via reasons for the orders given on 5 May 2015, via their Outline of Submissions at p22(b);

(b)    the events/matters raised via the application, including the ones above, extensively involve Justice Murphy previously making decisions/mentions in the matter and of [sic] which may be deemed contentious;

(c)     Justice Murphy via email sought the Respondents legal representatives prepare and file an affidavit and exhibit certain evidence, which then was relied upon adversely against the Applicant; and

(d)     Justice Murphy via email whilst reminding the Respondents legal representatives of the date for filing their response, advising if they desire they may challenge whether leave should be granted to the Applicant to amend her application.

(Footnotes omitted.)

11    The test to be applied in an application for recusal for apprehended bias is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide: Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [31] (Gummow ACJ, Hayne, Crennan and Bell JJ).

12    In relation to ground (a), I cannot see how the fact that the respondents have relied upon my previous decisions in the application for leave to appeal means that a fair-minded lay observer might reasonably apprehend that I might not bring an open mind to the present application.

13    There is no rule that provides that a judge who has earlier found against a party should no longer hear any matter involving that party. I provided detailed reasons for refusing to grant leave to appeal which set out a principled basis for the decision and which do not disclose any adverse findings as to Ms Finch’s credit. It appears that Ms Finch relies on the refusal to grant leave simpliciter and, without more, that decision does not suggest that a fair-minded lay observer might reasonably apprehend that I might not bring an open mind to the present application.

14    In relation to ground (b), I am not sure exactly what Ms Finch means in describing my previous decision(s) as “contentious” but I treat it as a submission that I have made a decision with which Ms Finch disagrees and/or which is wrong in fact or in law. First, it was open to Ms Finch to appeal the decision to refuse leave to appeal if it was wrong in fact or law as she appears to contend, but she did not. Second, she has advanced no cogent argument as to why that decision is wrong, and more importantly, how it might give rise to an apprehension of bias. I do not accept that my refusal to grant leave to appeal means that a fair-minded lay observer might reasonably apprehend that I might not bring an open mind to the present application.

15    Ground (c) appears to refer to a request that I made in the course of a directions hearing in which I asked the parties to file an affidavit annexing the emails between the parties and Chambers upon which they had relied. In my view it was appropriate that the emails be properly adduced into evidence. Ms Finch’s brief description of this request does not, in terms, suggest apprehended bias. Again, I do not accept that a request or direction to the parties to file an affidavit annexing emails upon which the parties relied means that a fair-minded lay observer might reasonably apprehend I might not bring an open mind to the present application.

16    Ground (d) appears to refer to an email from my Chambers to the parties on 23 December 2015. The application was filed on 4 November 2015 and I set a timetable for the filing of submissions. When Ms Finch filed her submissions on 18 December 2015 they were accompanied by a request for leave to amend the application in the form of the attached proposed amended application. My Chambers sent an email to the parties in the following terms:

…I note that the parties have agreed to his Honour dealing with this matter on the papers, and the applicant has filed a supplementary affidavit and an outline of submissions.

The respondents are due to file any material and submissions by 6 January 2016.

Would the respondents please provide submissions that respond to the Amended Interlocutory Application in the form filed in the Court on 18 December 2015, and if they desire, in relation to whether leave should be granted to amend the application.

A request that the respondents indicate their attitude to an application for leave to amend was a straightforward and appropriate step in properly case managing the application. I do not accept that a fair-minded lay observer might reasonably apprehend from this that I might not bring an open mind to the present application.

17    Considering the grounds in combination, there is no substance to the recusal application. The application for recusal is refused.

THE APPLICATION FOR LEAVE TO AMEND

18    The application for leave to amend the application is opposed by the respondents, but they did not point to any real prejudice or any principled basis upon which the application should be refused. The respondents had sufficient time to put on submissions to meet the Amended Application and I will allow the amendment.

THE AMENDED APPLICATION

19    The amended application is supported by an affidavit of Ms Finch sworn 5 November 2015, a supplementary affidavit of Ms Finch sworn 18 December 2015 and her written submissions dated 18 December 2015 and 22 January 2016.

20    The amended application states:

Interlocutory Orders Sought

1.    The orders given by Justice Murphy on 5 May 2015, be varied/set aside/disposed of, pursuant to rules 1.31, 1.32, 1.41, 39.05 of the Federal Court Rules 2011, and

(a)    costs are reversed in favour of the Applicant; or in the alternative

(b)    costs against the Applicant are disposed of; or in the alternative

(c)    costs are costs in the proceedings.

And/Or in the alternative:

2.    The orders of the Deputy Registrar to tax the costs dated 1 September 2015, be set aside/varied/disposed of, pursuant to rules 39.04 or 39.05, and 1.31, 1.32, 1.41 of the Federal Court Rules 2011.

Or in the alternative:

3.     There be a stay of taxation pursuant to rule 40.35, and 1.31, 1.32, 1.41 of the Federal Court Rules 2011, pending:

(a)    the determination of the substantive hearing of the proceeding; or in the alternative

(b)    the Applicant filing an application and it being heard and determined, including the seeking of costs against the Respondents.

4.    Costs of the application be awarded to the Applicant.

Or in the alternative:

5.    Costs are costs in the proceeding.

6.    Any other order the Honourable Court deems fit.

CONSIDERATION

Proposed Order 1

21    Under proposed Order 1 Ms Finch seeks orders to vary, set aside or otherwise dispose of the costs order in her unsuccessful application for leave to appeal.

Rule 39.05

22    Ms Finch submits that the costs order should be set aside for one of the reasons listed in r 39.05, and she focusses on the “slip rule”. There is a preliminary question as to whether r 39.05 applies in the Court’s exercise of appellate jurisdiction: see Mulholland v Australian Electoral Commission (No 2) [2014] FCA 917 (Mortimer J) at [23]. I have not heard argument on the issue and I will assume, without deciding, that as a matter of construction r 39.05 confers power exercisable in the Court’s appellate jurisdiction.

23    Rule 39.05 provides:

Varying or setting aside judgment or order after it has been entered

The Court may vary or set aside a judgment or order after it has been entered if:

(a)    it was made in the absence of a party; or

(b)    it was obtained by fraud; or

(c)    it is interlocutory; or

(d)    it is an injunction or for the appointment of a receiver; or

(e)    it does not reflect the intention of the Court; or

(f)    the party in whose favour it was made consents; or

(g)    there is a clerical mistake in a judgment or order; or

(h)    there is an error arising in a judgment or order from an accidental slip or omission.

24    Although Ms Finch refers to several authorities regarding the “slip rule” there is nothing in the materials to show that the costs order was made in the absence of a party, does not reflect the intention of the Court, contains a clerical mistake, or contains an error from an accidental slip or omission. None of those grounds apply in the present case.

25    Instead, Ms Finch submits that “the variation of the orders is sought as a consequence of the respondents misleading the trial judge, as well as the appeal judge, that they would not contest the reinstatement of the proceeding”. I take the references to “trial judge” and “appeal judge” as references to Jessup J and me.

26    This ground of the application is misconceived. First, in written submissions Ms Finch sets out the alleged misleading conduct as follows:

…the Respondents advised his Honour Justice Murphy it would simply be a case of going before Justice Jessup to determine whether or not the medical certificate did, or did not, meet [the requirements of the order of 15 February 2015], and thus no significant injustice would be caused, and therefore seeking an order as to costs.

With this misrepresentation the Honourable Justice Murphy saw no immediate injustice in refusing the appeal pursuant to the persuasion of Respondent counsel and hence arguing that costs of the appeal were deserved. This misrepresentation was taken by the Court in awarding costs, however as noted below this was not to be the case as the Respondents fought tirelessly to have the case thrown out.

27    Contrary to this submission I provided detailed reasons for the decision to refuse leave to appeal and the change (if any) in the respondents’ approach to reinstatement of the substantive proceeding was not material to my decision. Nor was it material to the costs order, which followed the result in the application for leave to appeal.

28    Second, whether or not the respondents initially adopted one position before Jessup J and later changed their position has no logical connection to whether the costs order of 5 May 2015 is affected by an error remediable under r 39.05. Amongst other things, the costs order was made in a separate proceeding in respect of a different application.

29    Third, although Ms Finch alleges misleading conduct she does not allege fraud as required under r 39.05(b). To the extent that such an allegation might be found in the contention that the respondents misled the Court she put on no cogent evidence to support an allegation of fraud.

30    Fourth, Ms Finch omits to mention that it was she who objected to Jessup J considering Dr Rigby’s report in dealing with the application for reinstatement. It was this refusal which meant that the Court heard her application for leave to appeal on 20 April 2015. The costs order followed from the failure of the application.

31    There is no proper basis to vary or set aside the costs order pursuant to r 39.05.

Rule 1.32

32    Ms Finch also relies on r 1.32 and contends that it is in the interests of justice to vary or set aside the costs order. Essentially, Ms Finch submits that:

(a)    the costs order arose from the respondents’ misleading conduct. I have already dealt with this submission and I need not do so again;

(b)    in the substantive proceeding the respondents made repeated unsuccessful interlocutory applications for which costs were not awarded to Ms Finch;

(c)    in the substantive proceeding the respondents failed to file a Defence in a timely way and were in default of orders in that regard from 2012;

(d)    the costs in question are substantial and Ms Finch is not able to pay the costs;

(e)    the application for leave to appeal was worthwhile because the orders of Jessup J required amendment, as they were in fact “amended” by the orders allowing a stay. The result of the appeal was an outcome that gave Ms Finch a chance to salvage her case;

(f)    the costs should not be payable forthwith because of the general rule in relation to costs in interlocutory applications; and

(g)    it would constitute a breach of natural justice and a denial of access to justice to allow the costs order to remain on foot.

33    I do not accept these submissions and I have not exercised the discretion to vary or set aside the costs order. Amongst other things:

(a)    while it is open to the Court to dispense with compliance with the Rules (r 1.35), and the Court must always be guided by the interests of justice, the overarching principle of finality of litigation means that the Court should be cautious before varying or setting aside an order which has been entered. It is for this reason that the scope of the power under r 39.05 is limited to “truly exceptional” circumstances: Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 4) [2013] FCA 318 at [6]; Construction, Forestry, Mining and Energy Union v Mammoet Australia Pty Ltd (No 2) (2012) 209 FCR 123; [2012] FCA 1404;

(b)    if Ms Finch considered the costs order was contrary to the interests of justice it was open to her to appeal the order. She did not do so;

(c)    whether or not the respondents’ failed interlocutory applications and failure to file a Defence (as alleged) should have resulted in costs orders in Ms Finch’s favour were matters for Jessup J. The materials reveal little about the parties’ submissions or his Honour’s reasons in relation to costs concerning those matters. The submissions do not even reveal whether Ms Finch sought costs. In the circumstances I do not take these matters into account in the present application;

(d)    to a limited extent it is correct to say that Dr Rigby’s report was obtained as a result of the stay that I allowed, and it uncontentious that his report underpinned Ms Finch’s successful application for reinstatement of the substantive proceeding. However, at the relevant time, Ms Finch objected to Jessup J relying on Dr Rigby’s report in relation to reinstatement. When she did agree to his Honour considering Dr Rigby’s report the proceeding was reinstated. Her submission that the application for leave to appeal was worthwhile is an overstatement;

(e)    the costs are substantial and I accept that it is likely that Ms Finch will have difficulty meeting them. However, the respondents have the benefit of the cost order and have taken steps to tax the costs preparatory to enforcing the order. In all the circumstances, Ms Finch’s financial difficulties are insufficient to justify varying or setting aside a costs order entered over nine months ago, particularly when a bill of costs has been prepared and provided to the Registrar, a costs estimate has been made and no objection filed; and

(f)    I cannot see how allowing the costs order to remain on foot means that Ms Finch is denied natural justice or access to justice. Although she did not obtain the result which she sought in the application for leave to appeal she was fully heard on the application.

34    Finally, I can see no merit in Ms Finch’s contention that the costs should not be payable immediately because of the general rule in relation to costs in interlocutory applications. For this argument Ms Finch called in aid r 40.13, which provides:

40.13 Taxation of costs awarded on an interlocutory application

If an order for costs is made on an interlocutory application, the party in whose favour the order is made must not tax those costs until the proceeding in which the order is made is finished.

Ms Finch submits that the Court should exercise its discretion under r 1.35 to make an order that is inconsistent with the Rules, and effectively treat the application for leave to appeal as though it were an interlocutory application in the substantive proceeding.

35    Against this, the Respondents submits that it is well-established that r 40.13 does not apply to prevent costs being taxed in an appeal where the proceeding from which the appeal was made is not yet finished. In broad terms I accept the respondents’ submission.

36    “Interlocutory application” is defined in the Rules to mean “an application, other than a cross-claim, in a proceeding already started”. An appeal (or an application for leave to appeal) which exercises different jurisdiction, is properly seen as a separate proceeding: Director, Office of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) (2013) 209 FCR 297; [2013] FCAFC 34 (Besanko, Perram and Bromberg JJ) (“FWBII v CFMEU (No 2)”) at [13]-[14].

37    In FWBII v CFMEU (No 2) the Full Court exercised its discretion to make an order inconsistent with the Rules, and effectively treated r 40.13 as applicable to the costs of the appeal. The Court ordered that costs of the appeal not be taxed until the final determination of the trial, which was in that case a new trial. Their Honours reasoned that it was desirable to avoid multiple taxations.

38    In Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2007] FCAFC 119 at [19] the Full Court took a similar approach. Their Honours said:

As for the timing of the taxation of the costs, it is desirable to avoid multiple taxations, so is appropriate to order that neither party be entitled to have a bill of costs taxed until the principal proceeding is concluded or further order of the trial judge. This is not because we treat the appeal as an “interlocutory application”, but as an aspect of the exercise of the Court’s discretion as to the ordering of costs and to avoid unnecessary taxations.

39    The essential reasoning in these decisions does not obtain in the present case. The certificate of taxation will issue (or perhaps has issued) for the amount of the cost estimate and that will be the end of the taxation process in respect of the costs order. In the present case there is no requirement to avoid “unnecessary taxations”. The necessary work has been done and no further legal costs need be expended by the respondents in that regard. I note also that Ms Finch has not objected to the quantum of the cost estimate. While she opposes the recovery of costs prior to final determination of the substantive proceeding, the avoidance of multiple taxations is not central to that opposition.

40    In Donald Fuller v Minister for Primary Industries & Energy, National Registration Authority [1998] FCA 377 French J (as he then was) noted in relation to the predecessor provision to r 40.20 that:

The purpose of the rules under which the Registrar may make an estimate of the approximate total of the costs to be taxed is to provide a mechanism for the efficient and inexpensive disposition of cost assessments.

The relevant rules are intended to provide for efficient disposition of costs disputes and to now vary or set aside the costs order would seriously undercut the efficiency of the process.

41    Further, in my view once Dr Rigby had provided his report there was no real point to the application for leave to appeal. I can see no compelling reason why the respondents should not have their costs for that pointless application now, rather than having to wait.

42    In all the circumstances I am not satisfied that it is in the interests of justice to vary or set aside a costs order made in favour of the respondents over nine months ago where the respondents have effectively completed the taxation process.

Proposed Order 2

43    Under proposed Order 2 Ms Finch seeks orders to vary, set aside or otherwise dispose of what she describes as “orders of the Deputy Registrar to tax the costs dated 1 September 2015”. She relies on rr 39.04, 39.05, 1.31, 1.32 and 1.41.

44    However, the Deputy Registrar made no order to tax the costs. What transpired is as follows:

(a)    Ms Finch applied for leave to appeal (in proceeding No 73/2015) from the orders of Jessup J of 5 February 2015;

(b)    on 5 May 2015 I dismissed the application and made the costs order;

(c)    on 1 September 2015 the Respondents filed a bill of costs pursuant to the costs order in the amount of $35,192.79;

(d)    by letter to the parties on 14 October 2014 pursuant to r 40.20 of the Rules (“the costs estimate”) Deputy District Registrar Ryan:

(i)    notified the parties that his estimate of the approximate total for which a certificate of taxation would be likely to issue if the bill were taxed was $31,100; and

(ii)    stated that unless an interested party objected within 21 days of the date of the letter (per r 40.21), the respondents should file a draft certificate of taxation in the approved form; and

(iii)    noted that an objecting party was required by r 40.21(1)(b) to pay into the Litigants’ Fund an amount of $2,000 as security for the costs of any taxation, that a fee was payable for any taxation, and that r 40.33 would apply in respect of the costs of the taxation process.

45    As I have said, r 39.05 provides a limited power to vary or set aside an order after it has been entered. Rule 39.04 provides a less circumscribed power to vary or set aside a judgment or order before it has been entered. The other rules upon which Ms Finch relies appear to be a reference to the Court’s power to make any order that the Court considers appropriate in the interests of justice, including by making an order which is inconsistent with the Rules: r 1.35).

46    Rule 40.20 sets out the process under which a party may object to an estimate of costs and pursue taxation. It provides:

40.20 Estimate of costs

(1)    Before a bill is taxed, a taxing officer is to make an estimate of the approximate total for which, if the bill were taxed, the certificate of taxation would be likely to issue.

(2)    The estimate in subrule (1) is to be made in the absence of the parties and without making any determination on the individual items in the bill.

(3)    The taxing officer will give notice, in writing, to each party interested in the bill, of the estimate made under subrule (1) (the notice of estimate).

(4)    Unless a party interested in the bill objects to the estimate in accordance with rule 40.21, the amount of the estimate is the amount for which the certificate of taxation will be issued.

47    Rule 40.21 provides that if a party wishes to object to a cost estimate the party must within 21 days file a notice of objection and pay $2,000 into the Litigants’ Fund as security for the costs of the taxation. It is uncontentious that Ms Finch did not do so.

48    Proposed order 2 is misconceived because the costs estimate made by Deputy District Registrar Ryan is not a “judgment or order” open to be varied or set aside under rr 39.04 or 39.05. “Order” is defined in Schedule 1 to the Rules to relevantly include a final or an interlocutory order. “Judgment” is defined in the Federal Court of Australia Act 1976 (Cth) to include “a judgment, decree or order, whether final or interlocutory”. The costs estimate made by the Deputy District Registrar does not meet the definition of “judgment or order” and there is no order to vary, set aside or otherwise dispose of.

49    If Ms Finch wished to object to the cost estimate, the process she was required to follow is that set out in r 40.21. Although she deposes that she misunderstood the time limit for objection due to a public holiday, she does not say that she is prepared to file a notice of objection or to pay money into the Litigants’ Fund and she does not seek an extension of time within which to file an objection. Nor does she set out detailed objections to the quantum of the costs estimate. Instead, Ms Finch deposes that “any attempt to tax such costs is unmerited and I should not be subjected to adhere to Rule 40.21”. In the circumstances, including that Ms Finch does not seek such an order, I will not extend the time for compliance with the costs estimate under r 40.21.

50    In considering the interests of justice, for essentially for the reasons out at [33]-[42], I am not prepared to make an order which interferes with the costs estimate made.

Proposed Order 3

51    Proposed Order 3 is misconceived. Ms Finch seeks an order for a stay of taxation of costs but there is to be no taxation. Rule 40.20 provides that “[u]nless a party interested in the bill objects to the estimate in accordance with rule 40.21, the amount of the estimate is the amount for which the certificate of taxation will be issued.”

52    In any event, for the same reasons as above, it is not in the interests of justice to make an order which operates to stop the issue of a certificate of taxation.

Proposed Orders 4 and 5

53    Under proposed Order 4 Ms Finch seeks costs of the application and under proposed Order 5 she seeks that costs be in the cause.

54    Ms Finch was unsuccessful in the application and there is no basis for a costs order in her favour. Nor can I discern any proper basis for an order for costs in the cause. The application lacks any real merit and the respondents should have their costs of opposing it.

CONCLUSION

55    I have made orders dismissing the amended application and requiring the applicant to pay the respondents’ costs.

Associate:

Dated:    17 February 2016

SCHEDULE OF PARTIES