FEDERAL COURT OF AUSTRALIA

Maletic v Comcare [2016] FCA 1111

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application filed on 3 May 2016 be dismissed.

2.    The costs of and incidental to the interlocutory application filed on 3 May 2016 be costs in the cause.

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

REASONS FOR JUDGMENT

COLLIER J:

1    Ms Maletic has applied to the Federal Court in its original jurisdiction to appeal the decision and reasons of the Administrative Appeals Tribunal (the Tribunal) in [2016] AATA 210. The application is listed to be heard by a Full Court of this Court in November. In the meantime, Ms Maletic has made an interlocutory application pursuant to r 40.51 of the Federal Court Rules 2011 (Cth) seeking an order that the maximum costs that may be recovered in this proceeding by one party against another on a party and party basis be capped at $5,000. She also seeks an order that each party bear its own costs of the interlocutory application. I heard this interlocutory application yesterday.

Background

2    At material times Ms Maletic worked as a leasing officer with Defence Housing Australia (DHA), in Townsville. It is not in dispute that Ms Maletic suffers from anxiety and experiences difficulty in crowded places, and that she informed her manager of this by email dated 16 January 2014. During 2014 the office of DHA was being refurbished. Ms Maletic and other employees with special needs informed the manager of those needs, and requested consideration in respect of seating arrangements during the refurbishment.

3    Ms Maletic was a member of one team in the office. Another, larger, team was headed by Ms Jeanette Clifforth. The acting business manager responsible for the seating allocation process from May 2014 was Ms Shane Humphreys.

4    It appears that Ms Humphreys allocated certain seating for Ms Maletic’s team, however while Ms Humphreys was in Canberra on business during the week of 26 May 2014 Ms Maletic occupied “desk 9”, a desk reserved for Ms Clifforth’s team. It appears that Ms Maletic had been uncomfortable with her seating arrangements organised by Ms Humphreys. Ms Clifforth informed Ms Humphreys of the situation involving desk 9. On her return from Canberra on 2 June 2014 Ms Humphreys spoke with Ms Maletic about the seating arrangements, and in particular Ms Maletic’s occupation of desk 9 which had been reserved for others in the office. At this point the evidence before the Tribunal diverged – evidence of Ms Maletic was that Ms Humphreys was aggressive and rude in speaking with her about her actions, whereas Ms Humphreys said that she was aware Ms Maletic suffered from anxiety and approached her carefully, terminating the conversation after it became clear that Ms Maletic was becoming agitated.

5    In the Tribunal Ms Maletic claimed that she developed (or aggravated) a psychiatric condition as a consequence of an interaction with Ms Humphreys. Ms Maletic claimed compensation for this injury pursuant to s 14 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the Act). Comcare denied liability on the basis of the exclusionary provision in s 5A of the Act, which materially provides:

Definition of injury

(1)    In this Act:

“injury” means:

(a)    …

(b)    an injury (other than a disease) suffered by an employee, that is a physical or mental injury arising out of, or in the course of, the employee’s employment; or

(c)    an aggravation of a physical or mental injury (other than a disease) suffered by an employee (whether or not that injury arose out of, or in the course of, the employee’s employment), that is an aggravation that arose out of, or in the course of, that employment;

but does not include a disease, injury or aggravation suffered as a result of reasonable administrative action taken in a reasonable manner in respect of the employee’s employment.

(2)    For the purposes of subsection (1) and without limiting that subsection, reasonable administrative action is taken to include the following:

(a)    a reasonable appraisal of the employee’s performance;

(b)    a reasonable counselling action (whether formal or informal) taken in respect of the employee’s employment;

(c)    a reasonable suspension action in respect of the employee’s employment;

(d)    a reasonable disciplinary action (whether formal or informal) taken in respect of the employee’s employment;

(e)    anything reasonable done in connection with an action mentioned in paragraph (a), (b), (c) or (d);

(f)    anything reasonable done in connection with the employee’s failure to obtain a promotion, reclassification, transfer or benefit, or to retain a benefit, in connection with his or her employment.

6    The Tribunal noted that the outcome of the case turned on whether the employer was engaged in “reasonable administrative action” when Ms Humphreys interacted with Ms Maletic on 2 June 2014.

7    For reasons given at [20] the Tribunal accepted the evidence of Ms Humphreys, and found that her behaviour on the morning of 2 June 2014 had been reasonable. The Tribunal examined the question whether the conduct also fell within the rubric of “administrative action” for the purposes of s 5A of the Act. The Tribunal found that the interaction between Ms Humphreys’ direction to Ms Maletic was administrative action, because it involved conditions in which Ms Maletic worked as explained by Rares and Tracey JJ in Commonwealth Bank of Australia v Reeve (2012) 199 FCR 463 at [60].

8    Accordingly the Tribunal affirmed Comcare’s decision to deny liability under s 14 of the Act.

Appeal to Federal Court

9    The applicant filed a notice of appeal on 3 May 2016, seeking orders including that the Tribunal’s decision be set aside. The notice of appeal raised two questions of law, namely:

1.    Was the action which contributed to the Applicant’s psychiatric condition capable of falling within the statutory concept of “administrative action taken … in respect of the employee’s employment” in s5A(1) of the Safety, Rehabilitation and Compensation Act 1988, having regard to the facts found by the Tribunal; including that:

(a)    The Applicant was a “leasing officer” working in the Townsville office of Defence Housing Australia (Tribunal’s decision, para 5).

(b)    The office was being refurbished, and there was a plan for moving and accommodating staff in the building while the renovation work went on (Tribunal’s decision, para 5).

(c)    On 2 June 2014, the Applicant was seated at “desk 9”. A manager “asked her to move back to one of the allocated seats” (Tribunal’s decision, para 23) by giving her a “clear direction” (Tribunal’s decision, para 17) to do so.

(d)    The manager’s decision about “seating allocations” was a “business decision” (Tribunal’s decision, para 29).

2.    Did the Tribunal misconstrue or misapply s5A(1) of the Safety, Rehabilitation and Compensation Act 1988 by:

(a)    Asking only whether “the manager’s behaviour is properly characterised as administrative action” (Tribunal’s decision, para 2) instead of asking whether it was “administrative action taken … in respect of the employee’s employment as required by s5A(1); or

(b)    Applying a principle that action concerned with the conditions in which the employee works, as opposed to the terms or conditions of employment, is necessarily “administrative action” for the purposes of s5A(1) (Tribunal’s decision, para 31).

10    The applicant relied on two grounds, in summary:

1.    The “action” taken by the manager to direct Ms Maletic to move back to one of the allocated seats was not capable of falling within the phrase “administrative action taken … in respect of the employee’s employment” in s 5A(1); and

2.    The Tribunal failed to address the correct test in s 5A(1) in that it only asked whether Ms Humphreys’ action was “administrative action” without addressing whether it was “administrative action taken … in respect of the employee’s employment”, and applied a principle that action concerned with the conditions in which the employee works is necessarily “administrative action”.

11    On 13 June 2016 Comcare filed a notice of objection to competency of the notice of appeal on the grounds that the two questions set out in the notice of appeal:

1.    Do not properly articulate and/or particularise questions of law; and

2.    Further or alternatively, do not raise questions of law in substance having regard to the Tribunal’s Reasons.

12    Further, on 4 July 2016 Comcare filed a notice of contention that the decision of the Tribunal be affirmed on grounds other than those relied on by the Tribunal, namely:

1.    The Tribunal should have found that the Applicant’s claimed psychological condition was suffered as a result of something reasonable done in connection with her failure to obtain, or to retain, a benefit in connection with her employment.

2.    The Tribunal should have found that the interaction with Ms Shane Humphreys on 2 June 2014:

2.1    took the Applicant’s employment as a factum and operated in respect of whatever its duties, incidents, nature and tasks were;

2.2    did not amount to “operational action” to the extent that such phraseology permits the drawing of a distinction between “administrative action taken … in respect of [an]employee’s employment, on the one hand, and “employment” per se, on the other hand.

2.3    did not amount to defining, delimiting or supervising the employment, job or task entrusted to the Applicant to perform, or the giving of directions as to how and when she was to perform it;

2.4    otherwise qualified as “administrative action” taken in respect of the Applicant’s employment for the purposes of the exclusionary provision in s5A of the Safety, Rehabilitation and Compensation Act 1988 (Cth).

Rule 40.51 Federal Court Rules

13    Rule 40.51 provides:

(1)    A party may apply to the Court for an order specifying the maximum costs as between party and party that may be recovered for the proceeding.

Note:    Costs as between party and party is defined in the Dictionary.

(2)    An order made under subrule (1) will not include an amount that a party is ordered to pay because the party:

(a)    has failed to comply with an order or with these Rules; or

(b)    has sought leave to amend pleadings or particulars; or

(c)    has sought an extension of time for complying with an order or with any of these Rules; or

(d)    has not conducted the proceeding in a manner to facilitate a just resolution as quickly, inexpensively and efficiently as possible, and another party has been caused to incur costs as a result.

14    There is no exhaustive list of factors determining the exercise of the Court’s discretion under r 40.51. The power of the Court to make costs orders is broad, as is clear from such provisions as s 43 of the Federal Court of Australia Act 1976 (Cth), and must be exercised judicially having regard to all relevant circumstances: King v Jetstar Airways Pty Ltd [2012] FCA 413 at [6]; King v Virgin Australia Airlines Pty Ltd [2014] FCA 36 at [16]; Shurat Hadin, Israel Law Centre v Lynch (No 2) [2014] FCA 413 at [9]. However principles relevant to a consideration of whether costs in a matter should be capped pursuant to r 40.51 (or equivalent rules) have been examined in a number of cases. In Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864 at [6]-[7] for example Bennett J identified a number of factors relevant to the exercise of the discretion under the earlier rule, O 62A r 1 of the Federal Court Rules 1979 (Cth), including:

    the timing of the application;

    the complexity of the factual or legal issues raised in the proceeding;

    the amount of damages the applicant seeks to recover;

    whether the applicant’s claims are arguable and not frivolous or vexatious;

    the undesirability of forcing the applicant to abandon the proceedings;

    whether there is a public interest element to the case;

    the costs likely to be incurred by the parties in the preparation for, and hearing of, the matter; and

    whether the party opposing the making of the order has been uncooperative and/or has delayed the proceedings.

Submissions of the parties

15    Both Ms Maletic and Comcare were represented by Counsel, and helpful oral and written submissions were provided to the Court.

16    In summary, the case of Ms Maletic in support of her interlocutory application was:

    the Act is beneficial legislation;

    Perrett v Commissioner for Superannuation (1991) 23 ALD 257 is authority for the proposition that, in these circumstances, the Court would not necessarily order costs against Ms Maletic even were she unsuccessful in her appeal;

    the proceedings raise a point of general importance;

    Ms Maletic’s grounds are arguable;

    Ms Maletic is likely to discontinue the case if no order is made;

    the proceedings is brought to obtain only a limited monetary compensation order, in light of the fact that Ms Maletic was absent from work for approximately seven months;

    a capping order would also limit the respondent’s exposure to an adverse costs order.

17    In turn Comcare argued:

    Perrett v Commissioner for Superannuation (1991) 23 ALD 257 is not authority for the proposition argued by Ms Maletic;

    the proceedings raise no point of general importance, much less one which would justify an order capping costs;

    there are relatively recent Full Court authorities interpreting s 5A of the Act namely: Reeve and Drenth v Comcare [2012] FCAFC 86;

    the primary motivation of Ms Maletic is to seek compensation on her own behalf;

    Ms Maletic’s evidence of her financial circumstances is vague and unsatisfactory.

Consideration

18    In her affidavit affirmed 22 May 2016 Ms Maletic deposed that if the Court did not make a protective costs order pursuant to r 40.51 it would be “inconceivable” for her to proceed with the substantive application in this Court.

19    The prospect that these proceedings may perforce be discontinued if the Court refuses Ms Maletic’s application is of serious concern. As a general proposition, Courts abhor circumstances which deprive applicants of the opportunity to prosecute their legitimate grievances.

20    In this case, however, after weighing the arguments and consideration of the material before me, I consider the appropriate order is to refuse Ms Maletic’s interlocutory application.

21    I have formed this view for the following reasons.

22    First, Mr Black for Ms Maletic submitted Perrett supports the proposition that it is not an absolute rule that costs follow the event, and further that this principle is relevant in the present circumstances where under s 67 of the Act an employee in the Tribunal can recover costs but, conversely, cannot be ordered by the Tribunal to pay Comcare’s costs.

23    I am not persuaded that the decision of the Full Court in Perrett supports that proposition. In Perrett the Full Court considered an application by way of appeal from a decision of the Tribunal affirming a decision of the Commissioner for Superannuation concerning the interpretation and operation of s 66(2) of the Superannuation Act 1976 (Cth) (the Superannuation Act) and the level of benefits to which the applicant in that case was entitled under that legislation. The proceedings were complicated by an earlier decision of Jenkinson J as well as the decision of the Tribunal the subject of the application. After determining that the appeal should be dismissed, their Honours continued at 268-269:

When the previous appeal was determined by Jenkinson J apparently no order was made in respect of costs. We propose to make no costs order in the present case. The Tribunal has no power to make orders for costs in relation to cases of this nature and it seems to us to be undesirable that persons who unsuccessfully challenge a decision of the Tribunal should automatically be visited with a costs order in this court. The court should consider the matter of costs, bearing in mind the result of the appeal but also taking into account the reasonableness of the applicant in bringing that appeal and the general importance of the clarification of the law for such an authority as the respondent. We think that this appeal was reasonably brought. As is evident from the number of occasions upon which s 66(2)(c) has been considered by full courts, the paragraph presents difficulties of interpretation. In the present case, involving as it does two physical conditions about which much remains to be learned, it also presents difficulties of application.

24    It is clear from the decision in Perrett, and in particular the paragraph I have just set out, that the Full Court was satisfied that no costs order should be made in light of the specific facts of the case, where provisions of the Superannuation Act were in dispute, and where there had been conflicting authorities which that litigation helped to resolve. Perrett is an example of the Court properly exercising its discretion to make a costs order appropriate to the circumstances of the individual case. I consider that Ms Maletic draws something of a long bow to suggest that the purely hypothetical prospect that the Full Court in her case might take a similar view, and order no costs against her should she be unsuccessful in this application, are factors to which I should have regard in considering the appropriateness of an order under r 40.51.

25    Second, I am not persuaded that this application raises a point of general importance to warrant the capping order sought. The substantive application involved a claim under the Act in relation to an alleged psychological injury or aggravation of an injury, arising from seating arrangements in an office under refurbishment. Comcare claimed that it was entitled to the benefit of the proviso under s 5A of the Act that the injury or aggravation was suffered as a result of reasonable administrative action taken in a reasonable manner in respect of Ms Maletic’s employment. Reeve and Drenth v Comcare are Full Court authorities decided within recent years which have considered, in detail, s 5A of the Act. Neither Ms Maletic nor Comcare have asked the Court to revisit principles decided in those cases.

26    Mr Black referred me to the opinion of Gray J in Reeve at [31] that:

… an instruction to perform work at a particular location … would not be regarded as “administrative” action …

27    I respectfully note the comment of his Honour, however consider its relevance in this context to be only that Ms Maletic has an arguable case by reference to that comment, and not that it creates a novel point of law of general importance in Ms Maletic’s case.

28    In this regard I also note the submission of Mr Black that “the very ordinariness” of the facts of the case makes it important. However as Mr del Villar for Comcare submitted – in my view correctly – one could say the same about almost any sort of employment situation in which administrative action arose as an issue. The better approach is that the ordinariness of the facts in this case points to an absence of any important legal issue warranting a capping order.

29    Third, I am not satisfied that there is a public interest element to this case. Ms Maletic seeks compensation in pursuit of her own private interests. She is perfectly entitled to do so. Indeed the view has been expressed in at least one case that public interest provides an elusive principle to apply in matters of costs (Shurat Hadin, Israel Law Centre v Lynch (No 2) at [14]).

30    While the concept of public interest may be elusive, I am not persuaded that it is unidentifiable in appropriate cases, or irrelevant in this context. In this respect I note other cases where Courts have made capping orders in light of perceived issues of public interest, such as Haraksin v Murrays Australia Ltd (accessibility of disabled persons in wheelchairs to interstate bus transport), King v Jetstar Airways Pty Ltd (imposed limits to the number of passengers requiring wheelchair assistance on domestic flights), and Corcoran v Virgin Blue Airlines Pty Ltd (independent travel criteria and passengers in wheelchairs on domestic flights). In my view the public interest elements arising in these cases are identifiable, and distinguishable from the absence of public interest in the case currently before the Court.

31    I note that the Community and Public Sector Union (of which I understand Ms Maletic is a member) has agreed to contribute $5,000 towards the costs of the appeal. However this is suggestive only of union support and interest, not an element of public interest.

32    In my view the absence of a demonstrable public interest element militates against an order capping costs for which Ms Maletic could ultimately be liable should she be unsuccessful in her application.

33    Fourth, the amount at which Ms Maletic seeks costs capped, namely $5,000, is low for an application to the Full Court. Comcare relies on an affidavit of Ms Fiona Dempsey, a lawyer with the Australian Government Solicitor, sworn 7 September 2016, in which Ms Dempsey deposes, materially, that if Comcare is successful in the proceeding and an award for costs were made in its favour, Comcare would be entitled to recover no less than $27,938.95 (comprised of two-thirds of identified costs and all identified disbursements). This sum was not challenged by Ms Maletic.

34    Ms Maletic seeks an order for costs to be capped in an amount representing approximately 20% of an amount Comcare claims would be recoverable by it should Ms Maletic be unsuccessful in these proceedings. There is authority that the ratio of the amount being the proposed cap on costs, to the amount actually recoverable by the respondent, is a relevant consideration: King v Jetstar Airways Pty Ltd; Haraksin v Murrays Australia Ltd [2010] FCA 1133. Notwithstanding this, I note that in King v Jetstar Airways Pty Ltd Perram J ordered that costs be capped at $10,000, even though the predicted costs of the respondent were likely to exceed $100,000. His Honour did so:

[21]    … to avoid the stifling of what is potentially an important appeal. Having decided that such an order is appropriate, it is that end which must drive the metric by which it is to be measured.

35    However as I have already observed, I do not consider that Ms Maletic’s application before the Court raises novel issues of law. In this respect it is not comparable with the proceedings in King v Jetstar Airways Pty Ltd and could not be described as “potentially an important appeal”.

36    Finally, as Mr del Villar properly submitted, evidence is scant supporting Ms Maletic’s claim in her affidavit of 22 May 2016 that she is in considerable debt and would be subjected to a devastating financial impact should she be required to pay Comcare’s costs of the appeal in full. It may be that she will be obliged to discontinue the proceedings should the Court refuse to make the order she has sought, however in light of the lack of evidence before me I cannot be satisfied that the effect of such a refusal would have the stifling effect on the litigation which Ms Maletic claims.

Conclusion

37    While Comcare has filed a notice of objection to the competency of the substantive application, in the context of the interlocutory application currently before the Court it did not contend that Ms Maletic’s claims were frivolous or vexatious. In my view this was a proper concession.

38    Further, there is no suggestion of any delay by Ms Maletic in the filing of her interlocutory application. The interlocutory application was filed on the same day as the notice of appeal.

39    However in circumstances where I am satisfied that there is no merit to Ms Maletic’s submissions concerning the Perrett case, no public interest element in her application, no novel point of law for decision, no relativity (intended or consequential) between the proposed capped amount and any amount potentially recoverable by Comcare, and negligible evidence supporting Ms Maletic’s claim of financial hardship, I consider the proper order is to dismiss Ms Maletic’s interlocutory application.

40    Ms Maletic sought an order that each party bear its own costs of the interlocutory application. At the hearing yesterday no submissions were made as to such costs. It may be that this omission was an oversight, and I will invite submissions from Counsel in this respect.

Associate:

Dated:    9 September 2016