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Dubow v Fitness First Australia Pty Ltd [2010] FMCA 56 (8 February 2010)

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Dubow v Fitness First Australia Pty Ltd [2010] FMCA 56 (8 February 2010)

Last Updated: 9 February 2010

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DUBOW v FITNESS FIRST AUSTRALIA PTY LTD

PRACTICE & PROCEDURE – Costs order made in absence of party – application to set aside – relevant considerations – inadequate explanation for absence from costs hearing – lump sum costs order made – different approach to costs assessment likely – outcome uncertain – applicant did not see detailed bill of legal costs – order set aside in the interests of justice – matter adjourned for further hearing on costs.


Adams v Kennick Trading (International) Ltd (1986) 4 NSWLR 503
Allesch v Maunz (2000) 203 CLR 172
Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 403
Cuttle v Brandt (1974) 64 WN(NSW) 96
Dubow v Fitness First Australia [2006] FMCA 120
Dubow v Fitness First & Anor (No 2) [2006] FMCA 502
Dubow v Fitness First Australia Pty Ltd [2006] FMCA 1959
Hinchcliffe v University of Sydney (No.2) [2004] FMCA 640
Hoskins v Van Den-Braak (1998) 43 NSWLR 290
Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
SZAYF v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 489
Taylor v Taylor [1979] HCA 38; (1979) 143 CLR 1 at 3

Applicant:
YOLANDE VICTORIA FRANCES DUBOW

Respondent:
FITNESS FIRST AUSTRALIA PTY LTD

File Number:
SYG 2624 of 2009

Judgment of:
Smith FM

Hearing date:
19 January 2010

Delivered at:
Sydney

Delivered on:
8 February 2010

REPRESENTATION

Counsel for the Applicant:
In Person

Counsel for the Respondent:
Mr T Orlizki

Solicitors for the Respondent:
Kent Attorneys

ORDERS

(1) Order 2 made on 10 March 2006 in File No.SYG1510 of 2005 is set aside under r.16.05(2)(a).
(2) The respondent’s application in relation to costs filed in those proceedings on 23 February 2006, and all costs applications by either of the parties in relation to the present proceedings, are listed for hearing on 12 April 2010 at 10.15am.
(3) Each party must file and serve all additional affidavits they rely upon, together with a short written outline of their submissions and list of authorities, no later than 9 March 2010.
(4) Any affidavit or written submission in reply must be filed no later than 6 April 2010.
(5) No further material will be received after those dates, without leave.
FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 2624 of 2009

YOLANDE VICTORIA FRANCES DUBOW

Applicant


And


FITNESS FIRST AUSTRALIA PTY LTD

Respondent


REASONS FOR JUDGMENT

  1. Ms Dubow filed an application on 26 October 2009 which essentially is an application under Federal Magistrates Court Rule 16.05(2)(a) to set aside an order I made on 10 March 2006 in proceeding SYG1510 of 2005 in favour of Fitness First Australia Pty Ltd, upon the ground that “the order is made in the absence of a party”. The existence of the ground is uncontroversial, but the power is discretionary and its exercise is contested by Fitness First.
  2. It is well established that, since the Rules provide no constraints on the discretion, it should be exercised upon consideration of all the circumstances in which the applicant’s default occurred and in which the application to set aside is made. The Court considers whether the setting aside of the default order is desirable in the interests of justice. Two considerations have been identified as usually being of particular or “critical” relevance, being: “(1) that an explanation, reasonable to the circumstances, is provided for the party's absence or other default; and (2) that the party in default has a material argument which, if heard and decided on its merits, might reasonably affect the determination of the rights and duties of the parties in a way different from that in the impugned order” (see Kirby J in Allesch v Maunz (2000) 203 CLR 172 at [48]). However, it is established that satisfaction as to each of these considerations is not necessarily required, and that, for example, the absence of an adequate explanation for the failure to attend the hearing or for delay in applying to the court “must be considered in the light of all the circumstances” (see Adams v Kennick Trading (International) Ltd (1986) 4 NSWLR 503 at 506 and 510, citing Cuttle v Brandt (1974) 64 WN(NSW) 96, cited by Sackville J in SZAYF v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 489 at [6]).
  3. In the present case, the relevant circumstances are complex and are only partly illuminated by the evidence now before me. My 2006 default order imposed on Ms Dubow a liability for costs quantified in the amount of $18,000, after she filed a notice of discontinuance not long before her claims against Fitness First were listed for a three day trial. I was at that time, and remain, satisfied that Fitness First’s application for costs was served on Ms Dubow in accordance with the Rules. Before the listing, she filed an affidavit in response to Fitness First’s application for costs, although she now has no recollection of doing this. She has not satisfied me, on the balance of probabilities, that she has an adequate explanation for her absence on the date for hearing, since the appointment was marked on the application. Whether she was actually aware of the appointment, and the true reasons for her absence, are obscure and difficult to reconstruct with hindsight. Giving her the benefit of substantial doubts, I conclude that it is possible that she overlooked the listing as a result of confusion on her part, to which Fitness First did not contribute. While such a conclusion does not satisfy the first consideration, it is less significant than a finding that she deliberately absented herself from the costs hearing.
  4. My costs order attempted to preclude further controversy and expenses to the parties, in a proceeding previously marked by acrimony at every stage, and in circumstances where it appeared that Ms Dubow had decided to waive her right to appear on the costs application. Although I remain unpersuaded that she has a good prospect of emerging with a lesser liability for Fitness First’s costs – including its costs of obtaining and quantifying a costs order – it is likely that I would have taken a different approach to my costs order, if she had appeared and taken the points which she now presents. There is a real possibility that other approaches would have produced a different quantification of costs. At least, a federal magistrate or a taxing officer would have been required to adjudicate upon the points now made by Ms Dubow in response to the bill of costs presented to the Court by Fitness First. I am therefore satisfied as to the second of the critical considerations.
  5. Ms Dubow’s delay in applying to set aside the order is very substantial, but Fitness First has not asserted any particular prejudice as a result. It took no steps to notify Ms Dubow of the costs order, nor of its intentions in relation to enforcement, before serving her with a bankruptcy notice on 16 October 2009. In all the circumstances, I am persuaded that the interests of justice would be served if Ms Dubow were allowed the opportunity to contest her liability to costs, and the manner and quantum in which they should be determined.
  6. To explain this summary of my conclusions more fully, it is necessary for me to outline the relevant events shown in the two files which are before me.
  7. Ms Dubow commenced proceedings under s.46PO of the Human Rights and Equal Opportunity Commission Act 1986 (Cth) (as it was formerly titled) in the Federal Court on 19 April 2005. Fitness First was named as first respondent. A second respondent was named as “Les Mills Body Training Systems” and was subsequently renamed “Garnama Pty Ltd”. In discursive documents filed with her application, Ms Dubow made complaints of sex discrimination and victimisation over several years, arising from her attendances at exercise sessions at Fitness First establishments. She referred to having commenced proceedings in the CTTT of NSW against Fitness First for breach of contract in relation to its termination of her membership of its fitness clubs, and she tendered a number of witness statements prepared in the course of those proceedings. She said she had withdrawn the CTTT proceedings, but there is evidence now on the file showing that protracted litigation ensued in the Supreme Court in relation to costs issues, which was still on foot in March 2006. Ms Dubow’s application to the Federal Court also included claims under the Trade Practices Act for misrepresentation and unconscionable conduct, and she made claims for compensation exceeding $100,000.
  8. Ms Dubow at all times was not represented by a solicitor in the proceedings in the Federal Court and this Court, and she gave an address at Berala as her address for service.
  9. The two respondents were, it seems, unrelated corporations, and they instructed separate legal representatives to present their opposition to the application. They were separately represented at all the listings, and, as I shall explain, the proceedings took different courses in relation to each of them.
  10. Ms Dubow’s application was listed before Moore J on 31 May 2005, and was then transferred to this Court. He ordered that the parties’ costs in the Federal Court should be costs in the proceedings in this Court.
  11. On 4 October 2005, the solicitors for Garnama filed an application for summary dismissal of the proceedings against it. The affidavit in support pointed out that Ms Dubow’s complaint to HREOC did not disclose how Garnama was alleged to have discriminated against her, and that it was not named as a respondent in the notice of termination. The affidavit noted that directions listings for 8 and 29 July 2005 had been vacated at Ms Dubow’s request, and that the next directions listing was for 5 October 2005.
  12. A substantial directions hearing occurred on 11 October 2005 before Barnes FM. All parties appeared on that occasion. It lasted 25 minutes, and her Honour made directions for Ms Dubow to file and serve points of claim and affidavits, for Garnama’s summary dismissal application to be prepared and listed on 8 December 2005, and that “the matter be listed for hearing as a three day matter” before Raphael FM on 8 March 2006.
  13. Ms Dubow filed a six page ‘points of claim’ document on 21 November 2005. It maintained her claims of breach of contract and breaches of the Trade Practices Act in relation to Ms Dubow’s membership of Fitness First Health Clubs between 2002 and 2004, harassment “regularly” by one of its employees, and victimisation after Ms Dubow complained to HREOC. It claimed damages of $22,053 as “the difference between gym membership fees of equivalent facilities for 25 years”, $10,000 by way of “inconvenience, humiliation, anxiety and distress”, and interest and costs.
  14. Ms Dubow filed another affidavit with numerous annexures, and written submissions were exchanged in relation to Garnama’s application for summary dismissal. The hearing of that application occurred on 8 December 2005 before Raphael FM. The listing report shows that it lasted about one hour, and concluded with orders being made by Raphael FM that “proceedings against the second respondent be discontinued” and “parties have liberty to approach the court in the event that costs are not agreed”. These orders do not seem to have been opposed by Ms Dubow, and no judgment was published by Raphael FM.
  15. The proceedings continued against Fitness First, and it filed points of defence on 27 January 2006.
  16. On 30 January 2006, Ms Dubow filed an application seeking summary judgment against Fitness First, by way of an apology for sexual harassment and compensation in the amount of $26,533 plus interest, or “alternatively” in the amount of $50,000. The application relied upon non-compliance with a direction of Barnes FM that Fitness First file its defence and affidavits on or before 23 January 2006. Ms Dubow’s application also unclearly contended:
  17. Ms Dubow’s application for summary judgment was not marked with a date for hearing, but, by arrangement with the Associate of Raphael FM, was listed for hearing on 30 January 2006. A transcript is not on file, but the listing report records that it proceeding for about one hour. His Honour made orders:
  18. Raphael FM gave ex tempore reasons for his orders, which were published as Dubow v Fitness First Australia [2006] FMCA 120. He did not consider that Ms Dubow had been prejudiced by the short delay in the filing of Fitness First’s evidence. He said, as to the future listings:
  19. Raphael FM also referred to Ms Dubow’s application that he should “excuse (sic: recuse) himself” on the ground of a remark which she had found “deeply offensive”. He doubted whether a ground of apprehended bias existed, but thought it appropriate that he should “step down and have the matter placed before the Registrar for assignment to another Federal Magistrate on the panel”. For that reason, the proceedings were moved into my docket.
  20. On 3 February 2006, Fitness First filed three substantial affidavits sworn by two of its employees and its solicitor. These recounted its dealings with Ms Dubow, including in the CTTT, and answered her complaints in the Federal Court proceedings. On the same day, its solicitor wrote to her, indicating that it proposed to rely upon 14 witness statements previously filed and served in the CTTT, and enclosing the three additional affidavits. The letter also advised Ms Dubow that two further witness affidavits were being prepared, and would be filed and served after their deponents returned from overseas the following week.
  21. By letter dated 5 February 2006 to Fitness First’s solicitor, Ms Dubow required copies of the CTTT statutory declarations referred to in its letter, and indicated that she would not be able to file objections according to Raphael FM’s directions. She also said:
  22. On 13 February 2006, Ms Dubow filed a notice of discontinuance of her principal application in relation to all of the orders she had applied for. The hearing listed for April before me was, as a consequence, vacated. It seems likely that the listing before me on 8 March 2006 was also vacated by the Registry at this time.
  23. On 23 February 2006, Fitness First filed an application and supporting affidavit, seeking the following orders:
  24. The application was annotated by the Registry in the relevant box on the top of the form, showing that it was listed for hearing on 10 March 2006.
  25. The supporting affidavit was that of Fitness First’s solicitor, Mr Kent, dated 23 February 2006. It referred to the above history of the matter, and attached some correspondence with Ms Dubow during 2005, concluding with a letter of 16 November 2005 warning her that if she continued to prosecute the proceedings, Fitness First would seek an order for indemnity costs on the ground that the proceedings were without merit. The affidavit did not quantify Fitness First’s legal costs, and said only:
  26. I am satisfied that Fitness First’s costs application and the supporting affidavit were served on Ms Dubow on or about 27 February 2006 in accordance with the then provisions of the Federal Magistrates Court Rules. In my opinion, the costs application was made in “current proceedings for which there is a notice of address for service for the person to be served” within r.6.06, and service was sufficiently effected by delivering or sending the documents by pre-paid post to Ms Dubow’s address for service (see r.6.11(1)(a) and (b)). Service was taken to have been effected by post on the day when it would be delivered in the ordinary course of the post (see r.6.12).
  27. Mr Kent has now given sworn evidence, confirming evidence he gave informally to me on 10 March 2006, that he posted the documents to Ms Dubow’s Berala address under cover of a letter dated 27 February 2006. He also gave evidence, and I accept, that he personally placed a copy of the documents in her letter box on his way home. I was not persuaded by Ms Dubow’s cross-examination of Mr Kent to disbelieve his evidence about these matters. Nor do I accept her submission that he was under an obligation under the Rules to have filed an affidavit of service, and I accept his explanation for not doing this. This was that it appeared to him, as it appeared to me then and now, that Ms Dubow had implicitly acknowledged her receipt of the documents in an affidavit she swore and filed on 7 March 2006, and that he therefore expected her to appear at the costs listing.
  28. A costs application by Garnama was also before the Court at around the same time. On 27 February 2006 two affidavits were filed by the solicitors for Garnama, attaching a letter to Ms Dubow sent on 13 February 2006, informing her that an application for its costs had been listed before Raphael FM at 9.30am on 28 February 2006. No formal application to this effect is on the file, and the listing appears to have been arranged with Raphael FM’s associate. An affidavit also attached correspondence with Ms Dubow during January 2006, which unsuccessfully attempted to reach agreement in relation to Garnama’s costs.
  29. The listing of Garnama’s costs application before Raphael FM was adjourned on 28 February 2006, apparently at the request of Ms Dubow. A file note on the Court file records that she “rang & notified court she has glandular fever”, and the file contains an email sent to Raphael FM’s associate on that day at 8.51am attaching an illegible medical certificate. Raphael FM’s associate wrote to Ms Dubow and the solicitors for Garnama on 7 March 2006, advising them “that the hearing of the costs application in this matter has been listed for Tuesday 21 March 2006 at 9.30am”. This letter is addressed to Ms Dubow’s address for service, i.e. her postal address at Berala.
  30. On 7 March 2006, which was a Tuesday, Ms Dubow filed an affidavit sworn on the same day. Paragraph 2 stated: “I oppose a costs order being made in favour of the costs applicant on the basis of their failure to comply with directions of the Court, limited input and delay”. This suggests, as does the timing of the affidavit, that it was prepared in response only to Fitness First’s costs application. Such a purpose also appears implicit in paragraphs 8 to 14, which referred to events and correspondence concerning Fitness First’s involvement in the proceedings. These paragraphs implied that Fitness First should be denied costs because of its delay in filing its substantive evidence, and because it had not accepted her offer to compromise. Paragraph 12 of the affidavit explicitly referred to Mr Kent’s affidavit in support of Fitness First’s costs application, thereby clearly disproving Ms Dubow’s current assertion that she never saw the affidavit which accompanied that application.
  31. Ms Dubow now submits that her affidavit of 7 March 2006 was prepared and filed solely in relation to Garnama’s pending costs application. However, I do not accept this argument, in view of its predominant contents being clearly intended to answer Mr Kent’s affidavit and Fitness First’s costs application. It is correct that paragraphs 4 to 7 referred to Garnarma’s involvement in the proceedings, and attached correspondence between Ms Dubow and Garnarma’s solicitor concerning its costs. It is possible that this part of her affidavit was intended to be relied upon by her in relation to Garnama’s pending costs application. However, this is unclear, since the affidavit gives no acknowledgement that Ms Dubow was aware of Garnarma’s application, and the contrary might appear to arise from paragraph 6, where she referred to Raphael FM’s orders of 8 December 2005, and stated: “Parties have liberty to approach if costs not agreed upon. No costs order was made at that date, or any date yet.”
  32. I find confidently that Ms Dubow’s 7 March 2006 affidavit establishes that in fact she had actual notice of Fitness First’s application for costs before the application was listed on 10 March 2006, that the application was probably marked with that date for the hearing, and that she therefore received a reasonable opportunity to appear on that occasion to present her case in relation to the making and quantification of a costs order against her. I consider it probable that she actually received the application document, as well as Mr Kent’s affidavit, since the evidence points to no other way in which she would have received the affidavit except through Mr Kent’s service of both documents concurrently. I do not accept Ms Dubow’s suggestion that she might have obtained only Mr Kent’s affidavit from the solicitors who were concurrently acting for her in Supreme Court proceedings arising from the CTTT proceedings, particularly since those solicitors deny acting for her in this Court and deny having any documents concerning the matter in this Court.
  33. If Ms Dubow actually received the costs application, it is difficult not to conclude that she probably also read the hearing appointment recorded on its front page by the Registry. Particularly, since in 2006 she had many years experience as a legal practitioner, and had worked in the Supreme Court Registry. The filing of her affidavit two days before the 2006 listing, and her subsequent absence from the hearing, might tend to suggest that she was aware of the hearing, that she decided not to attend, and that she intended her affidavit to be read in her absence.
  34. However, there is no clear evidence disproving Ms Dubow’s current claims that she was actually unaware of the listing prior to her being served with a bankruptcy notice in 2009. Considering all the circumstances now shown on the file and in the evidence before me, I would not conclude on the balance of probabilities that she consciously absented herself from the 10 March 2006 hearing. The surrounding circumstances relating to the concurrent listing and informal adjournment of Garnama’s costs application before Raphael FM leave open the possibility that she had become confused about the listing of both costs applications, and had overlooked the Registry annotation on the Fitness First application. The subsequent delays might sufficiently explain the imperfections in her present recollection of events. On balance, I am prepared to give Ms Dubow the benefit of doubt, and I find that confusion about the listing, rather than a deliberate waiver of her right to appear, might best explain her absence from the listing on 10 March 2006. Such oversight would not, in my opinion, provide a reasonable, or acceptable, explanation for her overlooking the Registry appointment marked on the application she received. However, it would carry less weight countervailing against considerations which point in favour of now setting aside my costs order.
  35. On 10 March 2006, Mr Kent swore a second affidavit in support of Fitness First’s costs application, and I allowed this to be read at the hearing on 10 March 2006, notwithstanding that it had not been served on Ms Dubow. It replied to her affidavit of 7 March, by attaching more of the correspondence between the parties. It also attached an itemised account of Fitness First’s solicitor/client costs, which totalled $30,629.92. This included $27,336 by way of professional fees, charged in six minute units by reference to an hourly rate of $370.
  36. The proceedings before me on 10 March 2006 were published in the Court’s lists, were held in open court, and were recorded. The full transcript has been available to the parties since that time. The transcript is now in evidence, and I shall not recount all of my exchanges with Mr Kent. The transcript shows that I satisfied myself that Ms Dubow had notice of the application, that I was unpersuaded by Mr Kent’s submissions seeking indemnity costs, that I satisfied myself that Fitness First had incurred costs separately from Garnama, that I considered whether it was claiming duplicated costs recovered in relation to the CTTT proceedings, that I accepted Mr Kent’s submissions that Sch.1 would provide an inappropriate guide to costs in the circumstances, that I was at first inclined to refer Fitness First’s costs for taxation by a registrar, and that I then explored with him whether this process could be avoided if I could arrive at a proportion of Fitness First’s legal expenses which would fairly provide a reasonable party and party costs order determined on a lump sum basis. I decided to follow that course, and gave short ex tempore reasons (see Dubow v Fitness First Australia Pty Ltd [2006] FMCA 1959). The giving of my reasons is recorded on the transcript, but no request for their publication was ever received, and my written judgment was not published until after Ms Dubow filed her present application. My order was entered at the conclusion of the hearing, and at all subsequent times it has been available to the parties on the Court’s file and through its ‘e-search’ internet facility. Contrary to suggestions in some of Ms Dubow’s recent documents, the proceedings were, therefore, far from secretly conducted.
  37. The order made on 10 March 2006 stated:

Order 2’s reference to r.21.02(a) makes an obvious slip, and r.21.02(2)(a) was intended.

  1. After I had disposed of Fitness First’s costs application, Garnarma’s costs application was listed before Raphael FM. An affidavit by the solicitor for Garnama Pty Ltd filed on 28 March 2006, attached a letter from him to Ms Dubow dated 21 March 2006. The letter stated:

We advise that the costs application has be re-listed for hearing before Federal Magistrate Raphael at 9.30 am on 3 April 2006.

  1. On 3 April 2006, there was no appearance by Ms Dubow before Raphael FM. A transcript of the proceedings is on the file. His Honour was satisfied that Ms Dubow was on notice of the listing, and proceeded in her absence. He considered Garnama’s evidence and submissions, in support of a calculation of its costs which attempted to follow the scale of costs in Sch.1 to the Rules, arriving at a total of $9867.61, excluding disbursements which included counsel’s fees of $3,567. He later received further evidence verifying its disbursements. He published reasons for ordering Ms Dubow to pay Garnama’s costs assessed in the sum of $6,154.25 (see Dubow v Fitness First & Anor (No 2) [2006] FMCA 502). The evidence before me is obscure as to subsequent events in relation to enforcement of the costs order in favour of Garnama.
  2. Ms Dubow’s affidavits in support of her present application were sworn on 22 October 2009, 11 November 2009, and 15 January 2010. A number of criticisms of Fitness First and of the Court are made in these, and in her application and written submissions, which no longer appear to be pressed. In particular, Ms Dubow now concedes “that at some point I must have seen (Mr Kent’s affidavit sworn 23 February 2006) prior to the date of my affidavit (of 7 March 2006)”. I have made findings to this effect above, and also that, contrary to her speculations to the contrary, it is probable that she had received both that affidavit and Fitness First’s costs application in the post box at her Berala home. The present case is not, therefore, a case in which an applicant has a right ex debito justitiae to have a default order set aside on the ground that a judgment was improperly obtained without any notice (cf. Taylor v Taylor [1979] HCA 38; (1979) 143 CLR 1 at 3, and Hoskins v Van Den-Braak (1998) 43 NSWLR 290 at 293-294).
  3. Fitness First has not filed any evidence in opposition to Ms Dubow’s application to set aside the costs order. In particular, it did not challenge Ms Dubow’s evidence that she was not notified after 10 March 2006 of the making of the order, and that she received no communications from Fitness First referring to her indebtedness arising under its terms until she was served with a bankruptcy notice on 16 October 2009. This inactivity of Fitness First seems surprising. It also seems surprising that Ms Dubow would have taken no step in the intervening years to discover the outcome of a costs application of which she was aware. Perhaps, although neither of the parties gives evidence of this, both she and Fitness First were distracted over the subsequent period by the litigation in the Supreme Court concerning the CTTT costs orders. Whatever the explanation, in the absence of any cross-examination of Ms Dubow on this issue, and in the absence of any contrary evidence, I accept Ms Dubow’s claim of ignorance as to the costs order in favour of Fitness First which was made in her absence. She has, therefore, in my opinion, explained her delay in applying to set aside the order.
  4. As I have noted above, Fitness First does not claim that it suffers any particular prejudice arising from Ms Dubow’s delay in seeking to set aside the costs order. Its solicitor with the carriage of the matter in 2006, Mr Kent, remains available as a witness, and appears still to have an excellent recollection of the matter. His bill of costs was drawn up in 2006, and it was not submitted that his file and notes upon which it was based are unavailable. I would therefore approach the setting aside of the 10 March 2006 order upon the basis that any hardship to Fitness First could be sufficiently addressed by an award of costs in its favour in relation to the hearing on 10 March 2006 and Ms Dubow’s present application.
  5. Turning to the merits of Ms Dubow’s grounds of opposition to Fitness First’s costs application, the prospects of Ms Dubow totally avoiding an adverse costs order appear to me to be remote, though arguable. I have difficulty identifying anything in the 2005 and 2006 correspondence which would assist her to avoid a costs award entirely, or even in part. She has also failed to persuade me that it is inconceivable that she could be found liable for a costs order in a substantial amount.
  6. Contrary to Ms Dubow’s submissions, an applicant in a proceeding under s.46PO of the Human Rights and Equal Opportunity Commission Act is not protected from adverse costs orders by any provision of legislation, nor by any rules of court or practice in the Federal Court or this Court, even overlooking the fact that Ms Dubow’s substantive application included Trade Practices claims. Undoubtedly, the filing by Ms Dubow of a non-consensual notice of discontinuance represented an unconditional success for Fitness First in the proceedings. In such circumstances, costs normally follow that event. I also have difficulty seeing any arguable basis for departing from the implication that the usual order for costs should be made and quantified, “to indemnify the successful party” against its professional fees and out-of-pocket expenses at a level appropriate to a ‘party and party’ assessment of costs in civil litigation (cf. Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 403 at 410-416, Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 at 543, 557, 563, and 566-7, Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [35], [40], [60]-[70], [85], and [134.4]).
  7. The fact that no costs were awarded in the preceding administrative proceedings, nor were usually awarded under previous legislation when rights to compensation for discrimination were determined by an administrative tribunal, is, in my opinion, irrelevant. I do not consider that costs applications in discrimination proceedings should be addressed in any manner different to those made in any other of this Court’s jurisdictions to which its general power to award costs applies, accepting that the power is discretionary and is to be exercised by reference to the circumstances of the case. If observations of Driver FM in Hinchcliffe v University of Sydney (No.2) [2004] FMCA 640 at [10] imply otherwise, then I would respectfully disagree.
  8. I also see little prospect of success in Ms Dubow’s contentions that the powers of the Court were confined in relation to awarding costs against her after she filed a notice of discontinuance. In this respect, s.79 of the Federal Magistrates Act provides:

(1) This section does not apply to family law or child support proceedings.

Note: See section 117 of the Family Law Act 1975 in relation to family law or child support proceedings.
(2) The Federal Magistrates Court or a Federal Magistrate has jurisdiction to award costs in all proceedings before the Federal Magistrates Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs must not be awarded.
(3) Except as provided by the Rules of Court or any other Act, the award of costs is in the discretion of the Federal Magistrates Court or Federal Magistrate.

47. Rule 13.02 provides:

13.02 Costs

48. Rule 21.02 provides:

21.02 Order for costs

49. Ms Dubow argues that the options under r.21.02(2) are unavailable after the filing of a notice of discontinuance, because the award of costs in such a situation would not occur ‘at any stage in a proceedings’ within r.21.02(1)(a). She did not cite any authority for this proposition, which appears contrary to the language and intent of the Act and Rules. I consider that this argument has little prospect of success in opposition to Fitness First’s costs application, were I to set aside my previous order applying r.21.02(2)(a).

  1. The Rules contain in Sch.1 an ‘event based costs scale’, apparently designed to assist lump-sum costs awards in normal or routine proceedings in the Court. The scale applies ‘unless the Court otherwise orders’ in relation to costs for which a party is automatically entitled under the Rules (see r.21.10). However, its presence does not, in my opinion, carry any implication confining the breadth of discretion expressly conferred by r.21.02(2) in relation to alternative methods for quantifying or taxing costs when exercising the Court’s s.79 discretionary power.
  2. Some of my colleagues have no difficulty detecting how Sch.1 should be applied in proceedings which have not followed a ‘normal’ path to a final order. Other federal magistrates, including myself, find difficulty applying its terms so as to arrive at a party and party costs award which would serve the normal purposes of such an award. The Federal Court registrars, upon whose services the Federal Magistrates must rely, disclaim any capacity to apply Sch.1 under their delegated powers, notwithstanding that they are expert taxing officers. I do not myself have expertise in the assessment of solicitor’s costs, since my professional life omitted experience in relation to the preparation and taxation of solicitor’s bills of costs on normal party and party principles. In this situation, it has been my own usual practice to fall back on the provisions of O.62 of the Federal Court Rules, sometimes with a 20% discounting of its scales of professional costs, where I have concluded that a taxation process by an experienced costs assessor would be warranted. At other times, I have determined a lump sum at a heavily discounted level, if I am confident it would not exceed the costs recoverable on taxation.
  3. Ms Dubow contended that she has a prospect of suffering a lower costs award if Sch.1 were applied in the present case, rather than under the broad approach I took on 10 March 2006 to discounting Mr Kent’s bill of costs. She pointed to Raphael FM’s subsequent award of costs to Garnarma, and suggested that it illustrated disproportionality arising from his application of Sch.1. However, as the history of the proceedings against both respondents explains, it is likely that Fitness First’s allowable costs will substantially exceed the award to Garnama, whatever approach to assessment were followed. After Garnama escaped from Ms Dubow’s proceedings, Fitness First was required to meet Ms Dubow’s application for summary judgment, and then to prepare all its evidence in chief for an imminent hearing set down for a three day trial.
  4. Moreover, it is by no means apparent to me that an application of Sch.1 in such circumstances would provide an appropriate measure of a costs award in its favour. Even in relation to the relatively clearer position of Garnama’s costs, Raphael FM acknowledged that Sch.1 was “not always easy to understand” and that preparation costs “are not very well covered by the schedule” (see paragraphs [1] and [4] of his judgment cited above). I find it impossible to predict that Ms Dubow has good prospects of suffering a liability less than the amount previously ordered by me, if a different approach to assessment is taken in a rehearing of Fitness First’s costs application.
  5. However, it is undoubted that a significant factor in my mind when adopting the option of assessing costs as a lump sum amount, was that Ms Dubow’s absence from the hearing suggested that she had lost interest in engaging in a detailed contest over Fitness First’s costs award, and was content to allow the Court to exercise its costs discretions in her absence. She has now established that I was mistaken in thinking that this was her position. I am satisfied that it is more likely that I would not take the same broad-brush approach to costs, were Fitness First’s costs application to be re-litigated with her participation. The most likely outcome appears to me that I would award costs to be assessed by a registrar under O.62, with a 20% discounting of the Federal Court scales of professional costs to reflect the nature of the proceedings in this Court. The outcome of such an exercise is necessarily obscure at present.
  6. Neither party has, in the present application or previously, put any calculations or other material before me to allow me to conclude whether such an approach would produce an outcome greater or less than $18,000, including the costs of the taxation. Nor, have either of the parties presented calculations based on Sch.1 of the Federal Magistrates Court Rules, to show the likely outcome of that approach.
  7. I am not positively persuaded by the contention of Fitness First that Ms Dubow has no prospect of a better outcome, if she were heard in relation to the assessment of its costs to be awarded against her. It remains possible in my mind that Ms Dubow may achieve a reduction in the costs previously ordered, if the costs application were re-considered.
  8. Ms Dubow has therefore established a probability that a different approach would be taken to a costs award, if I set aside the previous costs order. That approach would involve a more detailed examination of the bill of costs of Fitness First’s solicitor, and would also afford Ms Dubow an opportunity to present her various general arguments against an award of costs. I consider that she has sufficiently established the second of the ‘critical’ considerations supporting the setting aside of a default order.
  9. Of particular weight in my mind in favour of setting aside the previous order, are that it was broadly based upon a consideration of a bill of costs of which she was given no notice prior to the listing on 10 March 2006, and that it took a lump-sum approach upon an assumption that Ms Dubow had deliberately declined to contest the costs application.
  10. Weighing up all of the considerations and circumstances which I have discussed above, I have decided that it is desirable in the interests of justice that Ms Dubow should be allowed the opportunity she now desires: fully to contest Fitness First’s application for costs at a hearing and in any costs assessment process. I therefore would exercise the power to set aside the order I made on 10 March 2006.
  11. On my above findings, the making of that order, and the necessity for Ms Dubow’s present application to set it aside, arose from Ms Dubow’s oversight in relation to the listing, and not from any fault of Fitness First for which it should be penalised. I am therefore inclined to think that Fitness First should have an award of costs for the hearing on 10 March 2006, and that its costs in the setting aside application should be its costs in its costs application. However, if the parties are unable to agree upon this, I shall consider any additional submissions the parties wish to make in relation to these costs, including their quantification, in the course of a re-hearing of Fitness First’s 2006 costs application.
  12. I note that Ms Dubow’s application filed on 26 October 2009 sought a number of orders additional to the setting aside of the 10 March 2006 order. I do not consider that any of these orders should now be made.
  13. In relation to order 2, Ms Dubow disclaimed any objection to my continuing as docket judge in the proceedings involving Fitness First’s costs application, and I see no reason to transfer them back to Raphael FM, as she now seeks.
  14. In relation to order 3, it is not at present appropriate for me to decide definitely whether or not Sch.1 should be applied when deciding Fitness First’s costs application, although I have expressed tentative views above in the hope that this might assist the parties. I certainly shall not be applying Sch.1 without a very clear tabulation from the parties as to how it might be applied in the present case.
  15. In relation to order 4, a stay on enforcement of the order made on 10 March 2006 is not necessary, since I am setting aside the order under r.16.05(2). The consequences of this for pending bankruptcy proceedings, is a matter for the parties to consider and, if they wish, to dispute in those proceedings. The bankruptcy proceedings are not listed before me.

I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of Smith FM


Associate: Michael Abood


Date: 8 February 2010

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