FEDERAL COURT OF AUSTRALIA

Rangi v Kmart Australia Ltd (No 2) [2019] FCA 2083

ORDERS

THE COURT ORDERS THAT:

1.    The applicant pay the respondent’s costs of proceedings VID949/2018 and VID1618/2018, fixed in the sum of $15,000.

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

REASONS FOR JUDGMENT

STEWARD J:

1    On 1 November 2019, I delivered judgment in both proceedings in Rangi v. Kmart Australia Ltd [2019] FCA 1778. I ordered that Mr Rangi’s applications for leave to appeal from two decisions of Judge Hartnett be dismissed. One of those decisions summarily dismissed Mr Rangi’s claims under the Fair Work Act 2009 (Cth) (the “FW Act”); the other awarded costs against Mr Rangi in the sum of $13,192. As the applications were in relation to a matter arising under the FW Act, I invited the parties to file written submissions concerning the application of s 570 of the FW Act. In what follows I adopt the terminology from my first judgment.

Applicable Legislation and Principles

2    Section 570 of the FW Act relevantly provides:

Costs only if proceeding instituted vexatiously etc.

(1)    A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.

Note:    The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A.

 (2)    The party may be ordered to pay the costs only if:

(a)    the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or

(b)    the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or

   (c)    the court is satisfied of both of the following:

(i)    the party unreasonably refused to participate in a matter before the [Fair Work Commission];

    (ii)    the matter arose from the same facts as the proceedings.

3    In applying s 570(2)(a), the following principles are relevant:

(a)    it is well established that a party cannot be said to have instituted a proceeding “without reasonable cause” merely because that party is unsuccessful in their claim: R v. Moore; ex parte Federated Miscellaneous Workers’ Union of Australia (1978) 140 CLR 470 at 473 per Gibbs J. (as his Honour then was);

(b)    a “proceeding will be instituted without reasonable cause if it has no real prospects of success, or was doomed to failure”: Council of Kangan Batman Institute of Technology and Further Education v. Australian Industrial Relations Commission (2006) 156 FCR 275 at 289 [60] per Black C.J., North and Mansfield JJ.; and

(c)    one way of testing whether a proceeding was instituted “without reasonable cause” when applied to the institution of an appeal or judicial review proceeding is to ask whether, upon the facts apparent to the appellant at the time of instituting the proceeding, there was no “substantial prospect of success”. In evaluating such prospects, a Court may have regard to the reasons for judgment or decision under appeal or review, as the case may be, and the grounds relied on to challenge the judgment or decision: Baker v. Patrick Projects Pty Ltd (No 2) (2014) 145 ALD 548 at 550 [10] per Dowsett, Tracey and Katzmann JJ.; Kanan v. Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264 per Wilcox J.

The Federal Circuit Court’s Order Concerning Costs

4    Below, Judge Hartnett determined that Mr Rangi had instituted his proceedings without “reasonable cause” because his case lacked a legal or factual foundation. Her Honour also determined that his failure to withdraw the proceedings following receipt of a letter from Kmart was an “unreasonable act or omission”. Accordingly, her Honour ordered Mr Rangi to pay costs in the sum of $13,192 pursuant to s 570 of the FW Act.

5    In dismissing his application for leave to appeal, amongst other things, I said at [52(4)]:

… Mr Rangi has not demonstrated that the primary judge’s exercise of the discretion conferred by s 570(2) is attended by sufficient doubt to warrant reconsideration. No error of law of the kind described in House v The King (1936) 55 CLR 499 was identified by Mr Rangi in the exercise of that discretion. I respectfully reject his contentions that her Honour: (i) failed to address how the institution of the proceeding or its non-withdrawal was unreasonable; (ii) failed to recognise that s 570 is an access to justice provision; and (iii) erred in calculating the quantum of costs. This is because: (i) her Honour did address how the conditions in s 570(2)(a) and (b) were satisfied as I have described above; (ii) her Honour recognised the exceptional nature of the costs order, but determined that “[i]n all the circumstances a costs order [was] the appropriate sanction” given the way the proceeding had been conducted. I infer that her Honour formed the view that Mr Rangi, despite being a legal practitioner, did not act in manner that was consistent with the requirements for proceedings to be conducted reasonably, fairly and efficiently; and (iii) Mr Rangi did not adequately expose the errors said to have been made in relation to the calculation of the costs. His contention rose no higher than mere assertion.

The Contentions of the Parties

6    Kmart seeks an award of costs against Mr Rangi in the sum of $91,676.50.

7    Mr Rangi submitted that his first application for leave to appeal was not instituted “without reasonable cause” for the purposes of s 570(2)(a) of the FW Act. He submitted that it had raised an important and complex question of law concerning whether item 1(c) of s 342(1) of the FW Act should be limited to “positive actions by the employer”. The proceedings, he submitted, also raised complex questions of law concerning, amongst other things, the legal source of a “right to seek promotion” and whether the “before and after test” (as referred to by Gyles J. in Unsworth v. Tristar Steering and Suspension Australia Ltd (2008) 216 FCR 122) was to be considered “solely in terms of legal rights and entitlements”.

8    Mr Rangi submitted that he took reasonable steps to have his pleadings settled by an employment law specialist barrister and that he had relied on “favourable legal advice”. It should not follow, it was said, from the fact that this “advice” has now been found to be “wrong legal advice”, that Mr Rangi had acted without reasonable cause. He said he had also been advised that the defects in his pleading were curable, and that his “worst case scenario” was that his pleading would be struck out. This advice was not in evidence before me.

9    Mr Rangi, who is a practising solicitor, submitted that his “real motive” in bringing his proceedings was to seek promotion to the position of manager at Kmart. He apologised for the costs and inconvenience to Kmart. However, if required to pay Kmart $91,676.50, he would be forced into bankruptcy “thereby finishing his career as a solicitor”. There was no evidence before me of Mr Rangi’s income, assets or liabilities.

10    Finally, Mr Rangi submitted that, even if it is found that he had acted without reasonable cause in bringing his applications for leave, this Court still retained its discretion to refrain from ordering costs in any event. He referred to Australian Workers’ Union v. Leighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428.

11    I respectfully do not agree with Mr Rangi’s contention that he had instituted his leave proceedings with reasonable cause. I rely upon the decision of Judge Hartnett concerning the issue of costs and to my finding to decline to grant leave to appeal that decision because it lacked sufficient prospects of success. I do not think that Mr Rangi’s reliance on unidentified “advice”, not tendered in evidence, or his assertion that he would be bankrupted, made without evidence of his financial position, compels any different conclusion. I also do not think that the asserted importance of the legal issues makes any difference. The legal issues lacked any sufficient factual basis.

12    However, I am concerned about the quantum of the costs sought. Kmart submitted:

The Respondent has calculated its costs in relation to the 2 applications for leave to appeal up to and not including the conferral and preparation of these costs submissions on a party/party basis to be $91,676.50. This has been calculated on the basis of “Costs Allowable for Work Done & Services Performed” under Federal Court Rules 2011– Schedule 3 and the ‘National Guide to Counsel Fees” effective from 1 July 2013 and in accordance with Part 40 of the Federal Court Rules 2011 and are costs fairly and reasonably incurred by the Respondent.

(Errors in original.)

13    No breakdown of these fees was supplied to the Court. However, I have no reason to suspect that the figures supplied are not accurate or that legal work giving rise to a bill of $91,676.50 had not been undertaken. Nevertheless, in my view the quantum is excessive having regard to the nature of the applications for leave. This matter involved only a few interlocutory steps. It required the filing of written submissions by Kmart which were 19 pages long. The hearing before me took only 1 ½ hours. The issues were not difficult. Mr Rangi represented himself. The costs in the Federal Circuit Court were only $13,192.

14    Pursuant to s 43(2) of the Federal Court of Australia Act 1976 (Cth) the award of costs is in my discretion. For that purpose I can award costs “in a specified sum”: s 43(3)(d). See generally Innes v. AAL Aviation Limited (No 2) [2018] FCAFC 130 per Tracey, Bromberg and White JJ.; Kumar v. Secretary, Department of Social Services [2019] FCA 735 per Logan J.; Bechara v. Bates (No 2) [2018] FCA 583 per Perry J. In my view, this is a case where I should exercise my discretion to award Kmart a specified sum by way of costs. In my opinion, having regard to the matters set out above concerning the nature of the applications for leave to appeal, those costs should be set at a quantum which is much less than the amount sought by Kmart. In my view, they should be fixed at $15,000, being a figure similar to that determined by Judge Hartnett. I shall make orders to give effect to that conclusion.

Associate:

Dated:    11 December 2019