Federal Court of Australia

Virag v Eastern Victoria GP Training Ltd [2024] FCA 1283

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellant pay the respondent’s costs of and incidental to the appeal, such costs to be agreed or, in default of agreement, to be fixed by a Registrar of the Court.

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

REASONS FOR JUDGMENT

ANDERSON J:

introduction

1    Dr Judith Virag (appellant) was employed by the respondent (EVGPT) as a part-time medical educator on a fixed term contract that expired on 31 December 2018.

2    On 27 February 2019, the appellant filed a general protections application alleging breaches of the Fair Work Act 2009 (Cth) (FW Act) against EVGPT (application).

3    The application was listed for hearing before the primary judge on 24-26 May 2021. However, on the third day of the hearing (during which the appellant was self-represented), the appellant requested an adjournment. The matter was adjourned part-heard to 25 October 2021. The appellant subsequently requested a further adjournment, with the matter then being listed for hearing on 8 April 2022. However, following a further case management hearing on 4 February 2022, the appellant ultimately filed a notice of discontinuance on 28 February 2022.

4    On 30 March 2022, EVGPT applied for a costs order under s 570 of the FW Act, seeking for indemnity costs or alternatively party and party costs against the appellant.

5    On 31 August 2023, the primary judge determined that the appellant instituted the proceedings vexatiously and without reasonable cause, and that her unreasonable acts caused the respondent to incur costs. The primary judge ordered that the respondent’s costs be paid on an indemnity basis (the costs judgment).

6    The appellant appeals from the entirety of the costs judgment. The appellant’s appeal relies upon five grounds of appeal which are summarised below:

(1)    The primary judge erred in finding that the appellant instituted the proceedings vexatiously or without reasonable cause;

(2)    The primary judge erred in finding that the appellant’s continuation of the proceedings was an unreasonable act or omission. Alternatively, the primary judge erred by failing to consider that:

(a)    had the appellant’s claims succeeded, the appellant would have likely received a monetary remedy above the highest offer made to her by EVGPT ($20,000) and the Court would likely have imposed civil penalties entailing the public denunciation of EVGPT’s conduct; and

(b)    EVGPT’s offers to settle for $20,000 were each made before the appellant had received EVGPT’s written submissions filed on 8 February 2021 and which set out the basis of EVGPT's case;

(3)    The primary judge erred in finding that the appellant wilfully disregarded the legal advice provided to her, or alternatively, the primary judge erred in finding that this constituted an unreasonable act or that the appellant’s continuation of the proceeding in light of the legal advice she received was “highly unreasonable”. The appellant also claims that this was not a matter raised by EVGPT, and therefore, the appellant was not provided a fair hearing due to the primary judge making an adverse finding on the matter without it being raised with the appellant;

(4)    The primary judge erred in finding that the appellant expanded her case “throughout the proceedings” by her amended statements of claim and outlines, and this caused “considerable work” to be undertaken by EVGPT. Alternatively, it is argued that given the appellant was self-represented, the primary judge erred in concluding it might also be an unreasonable act for the purposes of s 570 of the FW Act. The appellant also raises the same procedural fairness issue in respect of this finding as raised in relation to ground three above;

(5)    The primary judge erred in finding that it was appropriate to order that the appellant pay the respondent’s costs at all, or, in the alternative, on an indemnity basis rather than on a party/party basis.

background

7    The background to this matter, alongside the evidence and submissions made before the primary judge in relation to costs, are set out in detail in [7]-[55] of the costs judgment.

8    These matters will not be restated in these reasons. It suffices to summarise the key points as follows:

(a)    at various points prior to and during the application, the appellant received legal advice which noted the risk of an adverse costs order being made against her. The most relevant of these advices include:

(i)    a letter from Kennedys dated 25 February 2019. The letter from Kennedys relevantly stated:

We consider that there are sufficient objective facts to make the claim, but it is entirely possible, depending on the evidence, that EVGPT will be able to defend the case, with the result that you will be unsuccessful…

You have instructed us that your ideal outcome would be that you are re-employed by EVGPT… We have advised you that in our opinion it is most unlikely that the Court would order your re-employment…

[I]n our opinion if you were to succeed in satisfying that Court that the reasons for which your contract was not renewed included a prohibited reason, the Court would not make a monetary compensation for economic loss as it appears that you have not suffered any…

The Court has a discretion to impose monetary penalties for breach of civil penalty provisions. We do not believe that it is likely that any penalty imposed if you were successful in this matter would be for a significant sum…

It is of concern to us that having regard to the above factors, it seems clear that apart from the possible imposition of penalties and a possible small amount of compensation for distress, there is no additional remedy such as a large amount of money… You have instructed us that you will not agree to a monetary settlement, because you are not interested in the money… If there is no settlement, then the case will proceed to verdict. It is unlikely that you will be able to withdraw your case without paying the costs of the other side.

(ii)    an email from Mr Rod Felmingham on 27 February 2019, Senior Associate at Kennedys;

(iii)    advice from Ms Tueno of counsel on 18 March 2019, which relevantly concluded:

Accordingly, at present based on the material to hand, I consider this to be a case that will be difficult for Dr Virag to win. It would be in Dr Virag’s best interest to reach a settlement and not proceed to trial in this matter.

(iv)    advice from Mark Champion of counsel (as his Honour then was) on 4 November 2019 which stated:

[O]n the material to hand I regard Dr Virag’s case as unlikely to be successful. Without wishing to be pejorative, I regard her case as weak…

She should consider whether to bring the action to an end probably on a walkaway basis to protect herself against a costs order notwithstanding s. 570 and to safeguard her reputation.

(b)    between 16 November 2019 and 17 February 2022, EVGPT made six offers of settlement to the appellant, all of which the appellant rejected. The appellant variously stated that she rejected the offers on the basis that the offers “were of no interest”, and that she was “not motivated by potential financial gain”.

9    At the time the notice of appeal regarding the costs judgment was lodged, being 28 September 2023, the appellant continued to be legally represented by Jewell Hancock Employment Lawyers who represented the appellant in relation to EVGPT’s costs application.

10    Submissions on behalf of the appellant were filed by Jewell Hancock Employment Lawyers on 9 September 2024. However, on 23 September 2023, a notice of acting was filed by the appellant which stated that she would be acting in person.

11    Subsequently, the appellant personally filed submissions in reply to EVGPT’s submissions, and filed two further affidavits. Although an interlocutory process was filed by the appellant seeking for the additional affidavits to be allowed in the appeal, at the hearing before me, the parties were content to proceed on the basis that the material would be treated as submissions rather than evidence, which appropriately reflected the manner in which the material read.

12    The appellant represented herself at the hearing before me on 8 October 2024.

13    In the material filed by the appellant personally, and in oral submissions before me, the appellant raised a number of points not previously raised. Although covering a broad range of topics, the appellant’s submissions emphasised the following points:

(a)    The appellant stressed that at no time did she doubt the grounds or merit of her application. Instead, her view was that she was unable to continue her application due to key evidence and submissions not being accepted by the Court;

(b)    In the appellant’s view, the legal advice she received was conflicting, which she says she found very confusing. The appellant submits that she did not disregard the legal advice;

(c)    The appellant’s view is that each of her solicitors and barristers omitted reference to several allegations regarding EVGPT’s conduct which formed part of the appellant’s concerns. The appellant argues that as her claim referred only to her non-renewal of employment, it did not reflect the entirety of the appellant’s position, and resulted in the Court not hearing several parts of her evidence. The appellant claims that the primary judge failed to consider these broader issues when determining that the appellant’s application was instituted without reasonable cause;

(d)    The appellant also sought to challenge the primary judge’s findings that the settlement offers were sensible, claiming that her dispute was “not financial in nature”, and that the settlements were subject to a confidentiality clause which reflected an additional hurdle to being acceptable.

relevant principles

14    An appeal instigated under Division 2 of Part 3 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) is an appeal by way of rehearing. The question for the Court is whether or not the decision of the Court below is affected by some factual or other legal error.

15    Section 570 of the FW Act operates as an express limitation on the broad discretion to award costs that is conferred on the Court by s 43 of the FCA Act: Melbourne Stadiums Ltd v Sautner (2015) 317 ALR 665; FCAFC 20 at [140] (Tracey, Gilmour, Jagot and Beach JJ).

16    The discretion in s 570(1) of the FW Act to award costs in favour of a party to a proceeding is enlivened in accordance with s 570(2) of the FW Act, sections 569 and 569A not being relevant to these proceedings. The effect of s 570(2) of the FW Act is to provide that a party may be ordered to pay costs only if the Court is satisfied if one of the preconditions set out at s 570(2) of the FW Act. Section 570(2) of the FW Act states:

(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

…

17    Once the Court is satisfied that one or more of the factors at s 570(2) apply, then the discretion to award costs under s 570(1) of the FW Act is enlivened.

18    The Courts have exercised restraint in intervening in decisions characterised as involving the exercise of a discretion: House v The King (1936) 55 CLR 499 at 504-505. Where, as in this case, with s 570 of the FW Act, the relevant statutory test turns on whether or not the Court is “satisfied” of a matter involving a broad evaluative judgment, then the degree of restraint which an appellate court should manifest is of the same order as that applicable to a discretion, in the strict sense of the word: Vines v Australian Securities and Investments Commission (2007) 63 ACSR 505; NSWCA 126 (Vines) at [8] (Spigelman CJ), citing Norbis v Norbis (1986) 161 CLR 513 at 517–518, Singer v Berghouse (No 2) (1994) 181 CLR 201 at CLR 210–12, Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194; HCA 47 at [19], [27], [32], Russo v Aiello (2003) 215 CLR 643; HCA 53 at [27]; Director of Public Prosecutions v El Mawas (2006) 66 NSWLR 93; NSWCA 154 at [3]–[4] and [64]–[70].

19    A statutory provision that sets a requirement that the Court be “satisfied” of a relevant matter is appropriately described as “a very wide discretion”: Vines at [8], citing Buck v Bavone (1967) 135 CLR 110 at 119.

20    Accordingly, to be successful in this appeal, the Appellant must demonstrate an error of the House v King kind.

Appeal ground 1 – open to primary judge to find proceedings instituted vexatiously and without reasonable cause

21    The primary judge found that the appellant instituted the proceeding vexatiously and without reasonable cause: costs judgment at [6a], [70]-[71] and [78].

22    The appellant submits that the primary judge’s decision does not indicate at all on which basis it was concluded that the appellant instituted the proceedings vexatiously, and that such a finding is inconsistent with the primary judge’s finding that the appellant considered her case meritorious up until 26 May 2021. The appellant submits that there was no evidence before the Court capable of establishing that the appellant’s predominant purpose of instituting the proceeding was to harass or embarrass the respondent or to gain a collateral advantage. The appellant contends that the primary judge erred in concluding that the proceeding was instituted vexatiously.

No error in finding that proceedings were instituted vexatiously

23    In this case, the appellant believed that she was right and would hold the respondent accountable. That does not mean, however, that she did not still institute the proceeding for a purpose that was also an abuse of the Court’s processes, sought to harass, annoy or cause detriment to EVGPT and, as such, was vexatious.

24    The appellant attested that she instigated the proceedings to “hold the respondent accountable” and not to prosecute per se the exercise of her workplace rights and to obtain remedies available under the FW Act. I accept EVGPT’s submissions that this suggests that the appellant was motivated by a desire to harass or embarrass EVGPT.

25    The reasons for why the primary judge determined that the application was instituted vexatiously are set out at paragraphs [62]-[66] and [70] of the costs judgment. The reasoning notes that the appellant was advised that the remedy she sought, being reinstatement, was unlikely to be ordered by the Court and as such, she was not seeking any “substantial remedy”. Despite this, the appellant nevertheless proceeded to institute the proceedings. At paragraph [70] the primary judge concluded:

I consider that, in circumstances where the applicant was properly advised by Kennedys, that she wilfully chose to disregard the advice provided to her and insisted on proceeding to lodge and pursue the Substantive Application.

26    The conclusion expressed by the primary judge was open on the evidence and I detect no error in that finding. I reject the appellant’s submission that the primary judge’s reasons are inadequate. The costs judgment at paragraphs [62]-[66] and [70] clearly sets out the primary judge’s path of reasoning and provides a logical and cogent rationale for finding that the proceeding was instituted vexatiously.

No error in finding that the proceedings were instituted without reasonable cause

27    The appellant submits that the primary judge was wrong to find that the proceedings were instituted without reasonable cause as the appellant’s case depended on the Court drawing inferences favourable to her and the Court’s assessment of EVGPT’s positive case in rebutting the presumption contained in s 361 of the FW Act. The appellant submits that she was entitled to hope that the Court would draw inferences favourable to her. As it transpired, the Court never reached the point of determining these matters. Notwithstanding, the appellant submits that it cannot be said the case was “hopeless”, even if the primary judge was correct to describe it as “weak”: costs judgment at [67]

28    The appellant further submits that the primary judge erred in reaching her conclusion that the proceedings were instigated without reasonable cause by taking into account irrelevant considerations including the legal advice the appellant received prior to, and after, instigating proceedings, and the appellant’s assumed attitude towards remedy: see costs judgment at [66]. The appellant also contends that the primary judge made various factual errors. In particular, the appellant emphasised that the appellant’s claim explicitly sought compensation and pecuniary penalties to denunciate EVGPT’s alleged contravention.

29    At paragraph [71] of the Decision the primary judge concluded that the appellant’s case was instituted without reasonable cause because:

… the advice provided to her plainly indicated that she had low prospects of success and that the remedies she sought from the Court were not achievable. Further, the fact that the Substantive Application did not identify a substantial remedy under the FW Act and therefore the end result of the Substantive Proceeding was entirely unknown, including to the Applicant, demonstrated that the proceeding had no real prospects of success, or was doomed to fail, at the time it was instituted.

30    The finding at [71] of the Decision that the appellant’s case was instituted without reasonable cause was open to the primary judge. I detect no error in the path of reasoning of the primary judge and agree with the primary judge’s conclusion.

31    For the reasons given, Ground 1 must be rejected.

Grounds 2, 3 and 4 – primary judge entitled to find that the appellant’s acts or omissions were unreasonable

32    The test under s 570(2)(b) of the FW Act has two limbs:

(a)    first, did the party against who costs orders are sought by its actions or omissions behave unreasonably? That is a question that is determined objectively: Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 3) [2017] FCA 810 at [25] (Katzmann J), citing Australian and International Pilots Associations v Qantas Airways Ltd (No 3) (2007) 162 FCR 392 at 402; FCA 879 at [32] (Tracey J); and

(b)    second, did those unreasonable acts or omissions cause the other party to incur costs?

No error in finding that the appellant’s rejection of settlement offers was unreasonable

33    The failure to accept a reasonable offer of compromise may constitute an unreasonable act for the purposes of s 570(2)(b) of the FW Act: Melbourne Stadiums at [166] (Tracey, Gilmour, Jagot and Beach JJ). The appellant rejected what the primary judge found to be six reasonable offers of compromise.

34    The appellant submits that the primary judge failed to assess each of the settlement offers individually, and instead, reached her conclusion solely based on the appellant’s continuation of the proceedings despite the legal advice she received through this period. The appellant submits that merely continuing the proceeding was not in itself inherently unreasonable in some way.

35    I reject the appellant’s submission that the primary judge erred because she did not assess any of the offers individually. It is apparent from the primary judge’s decision that the primary judge considered each and all of the offers as detailed in the costs judgment at [33], where the primary judge included a table setting out the relevant content of each offer and the appellant’s response to it. The primary judge also expressly noted at [71]-[72] the following:

Each of these offers must be considered within the context that they were made and not simply by reference to the provisions of the FW Act…

In my view, each of the six offers made by the Respondent were sensible offers.

36    On the basis that the appellant rejected what the primary judge found to be six reasonable offers of compromise, the first limb of s 570(2)(b) of the FW Act is made out.

37    The appellant’s refusal to accept what the primary judge found to be reasonable offers of settlement resulted in the continuation of the proceedings which caused EVGPT to incur costs. On this basis, the second limb of s 570(2)(b) of the FW Act is made out.

38    The primary judge’s decision discloses no error in the reasoning to the conclusion that the appellant acted unreasonably by rejecting the six settlement offers.

No error in finding other unreasonable acts

39    The primary judge also made reference, at [75] of the costs judgment, that the appellant’s wilful disregard for the legal advice provided, as well as the expansion of her case throughout the proceedings, could be classified as unreasonable acts.

40    The primary judge determined at [74]-[75] of the costs judgment:

In my view the Applicant was driven by her own individual perspective about the prospects of success of the Substantive Proceeding. It was highly unreasonable for the Applicant to continue pursuing the proceedings in light of the legal advice she persistently received, and the Applicant ultimately caused the Respondent to incur significant costs as a result.

The Applicant’s wilful disregard of the legal advice provided to her may also be classified as unreasonable acts made by her in the course of these proceedings. This may also be said of the expansion of the applicant’s case throughout the proceedings, by her amended statements of claim and outlines, which necessarily required considerable work to be undertaken by the Respondent in response.

(Emphasis added)

41    I accept EVGPT’s submission that these findings of the primary judge were open and available on the appellant’s own evidence.

42    The primary judge was correct to find that the appellant’s belief that her case had merit was unreasonable in light of the legal advice which she obtained, some of which has already been noted above. This includes advice from:

(a)    Kennedys between January and May 2019;

(b)    Ms Elizabeth Tueno of Counsel in February 2019;

(c)    Scanlon Carroll Lawyers between May and June 2019;

(d)    Rigby Cooke Lawyers between September and November 2019;

(e)    Mr Mark Champion of Counsel in November 2019; and ultimately,

(f)    Jewell Hancock Lawyers from January 2022.

43    As extracted above, that legal advice included that it would be a “difficult case to win”, that it was in the applicant’s “best interests to reach a settlement and not proceed to trial”, that her case was “weak”, and that she should “walk away” to “protect herself against a costs order”.

44    Notwithstanding the advice she received, the appellant persisted.

45    I detect no error in the primary judge’s reasoning and in the conclusion that the appellant’s continuation of the proceedings was an unreasonable act or omission and that the appellant’s wilful disregard of the legal advice she received was an unreasonable act or omission. These were conclusions which the primary judge was entitled to reach.

46    It was also open to the primary judge to conclude that the expansion of the appellant’s case throughout the proceedings, by her amended statements of claim and outlines, was also an unreasonable act or omission and caused EVGPT to undertake considerable work in response. It should also be noted that the primary judge’s conclusion followed considerable detail regarding the procedural history of the matter, which the primary judge outlined at the outset of the costs judgment.

47    I detect no error in the findings made by the primary judge that are the subject of grounds 3 and 4 of the appeal. In any case, it is noted that given my rejection of ground 2 of the notice of appeal, the primary judge’s findings that are the subject of grounds 3 and 4 do no more than provide additional or alternative bases for the making of a costs order under s 570 of the FW Act.

48    I detect no error in the primary judge’s reasoning which would justify disturbing the decision in respect of s 570(2)(b) that the appellant acted unreasonably by rejecting the six settlement offers, wilfully disregarding legal advice or amending her statement of claim.

49    For the reasons given, grounds 2, 3 and 4 must be rejected.

Ground 5 – exercise of discretion under section 570 was appropriate

50    The primary judge found that her discretion to award costs under s 570(1) was enlivened by the satisfaction of both ss 570(2)(a) and (b) of the FW Act. In particular, the primary judge determined (at [76] of the costs judgment) that:

(a)    the Appellant instigated the proceedings vexatiously and without reasonable cause; and

(b)    the Appellant’s unreasonable acts and omissions caused EVGPT to incur costs.

51    Even when the Court has the jurisdiction to make a costs order, it is still a matter for the Court’s discretion whether one should be made.

52    Having reached the conclusion that the discretion to make a costs order was enlivened, the primary judge ordered that the appellant should pay EVGPT’s costs on an indemnity basis from the commencement of the proceedings on 27 February 2019 until the date of filing of the notice of discontinuance on 28 February 2022.

53    Under ground 5, the appellant challenges: firstly, that costs should be ordered, secondly that costs should be ordered on an indemnity basis, and thirdly that costs should be ordered from the commencement of the proceedings. The appellant primarily argues that the primary judge failed to exercise the degree of caution required in the context of s 570 of the FW Act

54    It is not in contest between the parties that the discretion to award costs must be exercised with caution because of the exceptional nature of the power in an otherwise no-costs jurisdiction, and a case for its exercise should be clearly demonstrated: Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6] (Bromberg J).

55    Ordinarily, costs would be awarded on a party/party basis. To warrant the awarding of indemnity costs the party seeking the order must point to a special or unusual circumstance: Rambaldi (Trustee) v Meletsis, in the matter of the bankrupt estate of Karas (No 3) [2022] FCA 807 at [79] (O’Callaghan J), citing Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116 at [4]-[5] (Jagot, Yates and Murphy JJ).

56    It is apparent from the costs judgment that the primary judge’s decision to grant indemnity costs arose out of:

(a)    consideration of the relevant evidence: costs judgment at [31]-[49];

(b)    consideration of relevant legal principles: costs judgment at [56]-[61];

(c)    a determination that the preconditions set out in s 570(2)(a) and (b) were met such that her discretion to award costs was enlivened: costs judgment at [62]-[75];

(d)    having regard to the circumstances of the case, the primary judge was of the view that it was appropriate to exercise the discretion to order the appellant to pay EVGPT’s costs, on an indemnity basis, from the commencement of the proceeding: costs judgment at [76]-[77]

57    I detect no error in the path of reasoning of the primary judge to award costs on an indemnity basis and I agree that such an award of costs is, in the circumstances of this case, appropriate. It follows, for the reasons given, that Ground 5 must be rejected.

Disposition

58    The appeal is dismissed. The appellant will pay the respondent’s costs of and incidental to the appeal. Such costs to be agreed or, in default of agreement, to be fixed by a Registrar of the Court.

Associate:

Dated:    7 November 2024