Cugura v Frankston City Council (No.2) [2011] FMCA 259 (15 April 2011)

Federal Magistrates Court of Australia

[Index] [Search] [Download] [Help]

---

Cugura v Frankston City Council (No.2) [2011] FMCA 259 (15 April 2011)

Last Updated: 15 April 2011

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CUGURA v FRANKSTON CITY COUNCIL (No.2)

[2011] FMCA 259

INDUSTRIAL LAW – Application for costs – whether unreasonable act or omission – application dismissed.

Fair Work Act 2009 (Cth), ss.570, 570(2)(b) Workplace Relations Act 1996 (Cth), ss.666, 666(1)(b), 824 Federal Magistrates Court Rules 2001 (Cth), Sch 1

Cugura v Frankston City Council (No.1) [2011] FMCA 195 Jonsson v Theodore Hotels Co-operative Association Ltd [2007] FMCA 1199 Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879 Rentuza v Westside Auto Wholesale [2009] FMCA 1022 Hughes v Mainrange Corporation Pty Ltd (No.2) [2009] FMCA 1044 Construction Forestry Mining and Energy Union v Clarke [2008] FCAFC 143 Bahonko v Sterjov [2008] FCAFC 30

Applicant:

LUDWIG LEWIS CUGURA

Respondent:

FRANKSTON CITY COUNCIL

File Number:

MLG 1724 of 2010

Judgment of:

O'Sullivan FM

Hearing date:

On the papers

Date of Last Submission:

8 April 2011

Delivered at:

Melbourne by telephone link

Delivered on:

15 April 2011

REPRESENTATION

Counsel for the Applicant:

Mr D. C. Langmead (Pro bono)

Counsel for the Respondent:

Ms S. Bingham

Solicitors for the Respondent:

Macpherson & Kelley Lawyers

ORDERS

(1) There be no order as to costs.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE

MLG 1724 of 2010

LUDWIG LEWIS CUGURA

Applicant

And

FRANKSTON CITY COUNCIL

Respondent

REASONS FOR JUDGMENT

1. On 25 March 2011 the Court published reasons and made orders dismissing an application filed by Ludwig Lewis Cugura (“the applicant”) seeking orders against Frankston City Council (“the Respondent”) for breaches of the Fair Work Act 2009 (Cth) (“the Fair Work Act”).[1]
2. The background to the proceedings is set out in Cugura v Frankston City Council (No.1) [2011] FMCA 195 and for the purposes of these reasons it is unnecessary to repeat it.[2]
3. The respondent has now sought that the applicant pay its costs under s.570(2)(b) of the Fair Work Act. The parties agreed the Court would decide this application on their written submissions.[3]

Application for costs

4. The respondent relied on the orders sought in the application in a case filed 7 February 2011, the affidavits of Michelle Dawson including that sworn 6 April 2011 and its submissions. In the application in a case filed on 7 February 2011 the respondent sought the following:
   • “2. The Applicant pay the Respondent’s costs of the Application under Section 570(2)(b) of the Fair Work Act 2009 (Cth).”
5. The applicant opposed the respondent’s application for costs.[4]

The legislation

6. Section 570 of the Fair Work Act so far as is relevant for present purposes is as follows:
   • “(1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) exercising jurisdiction 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.
   • (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
     • ...”
7. Sections 569 and 569A are not relevant to these proceedings.
8. As is clear from the above the respondent’s costs application is brought on the basis of s.570(2)(b) of the Fair Work Act.

Submissions

9. In its submissions filed on 18 February 2011 the respondent’s position on the issue of costs was:
   • “13. On 21 January 2011, the respondent’s solicitors wrote to the applicant to bring his attention to the prohibitions in sections 725, 727, 728 and 732 and invited the applicant to discontinue these proceedings. (see Exhibit MJD-9).
   • 14. In accordance with directions this application was filed on 3 February 2011.
   • 15. The issue of costs under the FW Act is governed by section 570.
   • 16. It is submitted that the Court should order that the applicant pay the respondent’s costs of and incidental to this application pursuant to section 570(2)(a) or alternatively (b) on the grounds that the applicant:
     • (a) instituted the proceedings without reasonable cause; further or alternatively;
     • (b) unreasonably failed to discontinue the application when invited to by the respondent’s solicitors.”
10. Counsel for the respondent did not seek to elaborate on those submissions at the hearing on 10 March 2011. The orders of 25 March 2011 provided the opportunity for further submissions as to costs to be filed by the respondent.
11. On 8 April 2011 the respondent filed submissions which refined the basis upon which it sought an order for costs to reliance on s.570(2)(b). Those submissions were:
    • “2. The Respondent’s seek costs against the Applicant pursuant to section 570(2)(b) of the Fair Work Act 2009 (the FW Act) of an incidental (sic) the Application in a Case made by it on 7 February 2011. The Respondent was successful in being granted the primary relief it sought in that Application namely that the Applicant’s substantive Application be dismissed.
    • 3. The Respondents rely upon the affidavits of Ms Dawson sworn 3 February 2011 (the First Affidavit) and 6 April 2011 (the Second Affidavit) filed in this proceeding.
    • 4. The Respondent also relies upon the findings of His Honour at paragraphs [32]-[35] of his decision of 25 March 2011 regarding the Applicant’s conduct.
    • 5. Exhibit MJD-9 to the First Affidavit is a letter dated
      21 January 2011 from the solicitors for the Respondent to the Applicant. This correspondence afforded the applicant an opportunity to withdraw his substantive Application, it also sets out the grounds as to why such a withdrawal was appropriate namely a want of jurisdiction.
    • 6. On 1 March 2011, after the Respondent’s outline of argument had been filed, the solicitors for the Respondent again wrote to the Applicant inviting him to withdraw his substantive application. (Second Affidavit exhibit MJD-10).
    • 7. It is submitted that the Applicant cannot hide behind the veil of being self-represented to avoid the imposition of a costs order. As the Full Court of the Federal Court in Bahonko v Sterjov [2008] FCAFC 30; (2008) 166 FCR 415 at paragraph [6] stated being an unrepresented litigant “brings no special privileges and cannot justify lack of proper attention to the interests of the other parties.” Further [the] applicant was provided with pro bono representation by the Court for the purpose of preparing and (sic) outline of submission and appearing on the return of the Respondent’s Application in a case.
    • 8. Justices Logan and Flick in Dowling v Fairfax [2010] FCAFC 28 at paragraphs [136] set out the relevant principles associated with awards of costs under section 824 of the Workplace Relations Act 1996 (the WR Act). Section 570 of the FW Act is in substantially the same terms as section 824 of the WR Act. There are two elements to a court exercising its discretion to award costs pursuant to section 570(2)(b), firstly that:
      • (a) the court must be satisfied that the in party against whom costs are sought engaged in an unreasonable act or omission; and
      • (b) the unreasonable act or omission caused the other party to incur costs.
    • 9. It is clear that the Applicant was given at least two opportunities by the respondent to withdraw his substantive application (Exhibits MJD-9 and MJD-10), he did not provide any objective evidence of withdrawing the VEOHRC Complaint (see finding of the court at paragraphs [32]-[34]), he knew by reason of the correspondence from the VEOHRC that his complaint remained on foot until terminated on 14 January 2011 (see finding of the court at paragraph [35]). The Applicant did not take up the opportunity to withdraw his substantive application and he resisted the Respondent’s Application in a Case.
    • 10. It is submitted that objectively, the conduct of the Applicant, constituted unreasonable acts or omissions in the circumstances of this case. Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879; (2007) 162 FCR 392 at [33] and CFMEU v Clarke [2008] 170 FCR 574 at [28].
      • 11. Further it is submitted that, in light of the findings in paragraphs [32] – [35] this was not a case of the Applicant pursuing a ‘contentious but ultimately unsuccessful argument” (Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879; (2007) 162 FCR 392 at [36]).
      • 12. By reason of the applicant refusal to withdraw the substantive application and the resisting of the Respondent’s Application in a case, the Respondent incurred costs. The Respondent costs, on a party/party basis, of and incidental to its application including these submissions, are $13,307.59. (Second Affidavit exhibit MJD-11).
    • 13. It is submitted that in the whole of the circumstances the court should exercise its discretion and order that the Applicant pay the Respondent’s costs of and incidental to this application in the amount of $13,307.59.”
12. After the orders made on 25 March 2011 the Court received:
    1. a facsimile from the applicant dated 6 April 2011wherein he:
       • “propose[d] that the Court make no order as to costs due to the initial ambiguity of jurisdiction from both parties in these proceedings”; and
    2. submissions on costs filed 8 April 2011 from Counsel who appeared for him pro bono at the hearing on 10 March 2011.
13. In the submissions referred to at paragraph 12(b) above the applicant’s position was:
    • “3. The discretion to order costs under s570 of the Fair Work Act 2009 is only exercisable if the Court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause, or that a party’s unreasonable act or omission caused the other party to incur costs.
      • 4. It is not understood that it is alleged that Mr Cugera instituted proceedings vexatiously.
      • 5. In Re Joseph Michael Kanan v Australian Postal and Telecommunications Union [1992] FCA 366 at [29] Wilcox J formulated a test as follows:
        • “It seems to me that one way of testing whether a proceeding is instituted “without reasonable cause” is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being “without reasonable cause”. But where it appears that, on the applicant’s own version of the facts, it is clear that the proceeding lacks a reasonable cause.”
      • 6. This has been applied by the Courts on a number of occasions. In Jonsson v Theodore Hotel Co-Operative Associate Ltd [2007] FMCA 1199 Burnett FM applied Kanan and said at [31]:
        • “...in order to determine whether the proceeding was commenced without reasonable cause it is necessary to consider whether or not on the Applicant’s material alone a proper basis for the proceeding can be made out.”
      • 7. The Court should have regard to the [f]act that Mr Cugera was unrepresented when he initiated proceedings in Fair Work Australia and this Court.
      • 8. On the facts as attested to in the Applicant’s materials he had a proper basis for the application, namely that the VEOHRC application had been withdrawn.
      • 9. In relation to any suggestion that Mr Cugera should not have pursued his application in the face of the Respondent’s case that s725 applied to prevent his application, Mr Cugera had a reasonable argument that he had withdrawn his VEOHRC application. As was said by the Full Court of the Federal Court in Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143 at [29]:
        • “There is a distinction between a party who pursues arguments which are ultimately .....rejected by the Court and a party who commences a proceeding which his misconceived in the sense of being incompetent or unsupportable...”
      • 10. The distinction between the pursuit of an argument which does not succeed and the institution of a proceeding which is misconceived in the sense of being incompetent may assist in determine whether an act is unreasonable. The pursuit of a contentious, and ultimately unsuccessful, argument is not an unreasonable act Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879 at [36].
      • 11. The Court cannot be satisfied that the relevant provisions of s570 have been made out and the Court should make no order for costs.”
14. In those submissions the applicant referred to the decision in Jonsson v Theodore Hotels Co-operative Association Ltd [2007] FMCA 1199 (“Jonsson”). In that decision FM Burnett considered inter alia the provisions of s.666 of the Workplace Relations Act 1996, and in particular s.666(1)(b) which is similar but not the same as s.570(2)(b).
15. In Jonsson the applicant was ordered to pay costs but only for the costs thrown away of a hearing that was aborted due to the applicant’s non compliance with directions.[5] As such that part of His Honour’s decision referred to in submissions which dealt with s.666(1)(a) is not on point to the arguments in this case.[6]

Consideration

16. Whilst the decision was not referred to in submissions, in Rentuza v Westside Auto Wholesale [2009] FMCA 1022 (“Rentuza”) Lucev FM considered the issue of whether an unreasonable act or omission had caused a party to incur costs for the purposes of s.570(2)(b) of the Fair Work Act.
17. At paragraphs 26 to 28 in Rentuza His Honour said:
    • “26. For the purposes of s.570(2)(b) two criteria must be fulfilled. They are:
      • a) that a party must have engaged in an unreasonable act or omission; and
      • b) that the unreasonable act or omission must have caused another party to incur costs in connection with the proceeding.
    • 27. Whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case.
    • 28. The exercise of the discretion in s.570(2)(b) is not necessarily engaged because:
      • a) a party does not conduct litigation efficiently;
      • b) a concession is made late;
      • c) a party may have acted in a different or timelier fashion;
      • d) a party has adopted a genuine but misguided approach.” [Footnotes from original omitted]
18. In submissions both parties referred to the decision in Australian and International Pilots Association v Ltd (No.3) [2007] FCA 879 where Tracey J said:
    • “36. In dealing with an application for costs under s 347(1) of the Act, in Standish v University of Tasmania [1989] FCA 166; (1989) 28 IR 129, Lockhart J was called on to decide whether the proceeding had been instituted “without reasonable cause”. His Honour drew a distinction between the pursuit of an argument which does not succeed and the institution of a proceeding which is misconceived in the sense of being incompetent: see at 138–9. This distinction may, in my view, assist in determining whether conduct is unreasonable for the purposes of s 824(2). The prosecution of any incompetent or hopeless case can be regarded as “an unreasonable act” within the meaning of s 824(2). Conversely, in my opinion, the pursuit of a contentious, and ultimately unsuccessful, argument is not an unreasonable act. In my view the applicant’s defence of its pleadings in the first strike-out application falls into the latter category...”
19. In Rentuza the applicant was ordered to pay costs as the Court was satisfied the relevant provisions of the Fair Work Act had either not been read or that if they have been read they appeared to have been disregarded.[7]
20. Whilst the respondent referred to the decision in Bahonko v Sterjov [2008] FCAFC 30 what went on in this proceeding in no way approximates the conduct sanctioned in that matter. Indeed, in considering the submissions made on behalf of the respondent that the applicant caused the respondent to incur costs, there is some force in the submissions made on behalf of the applicant that:
    • “9. In relation to any suggestion that Mr Cugera should not have pursued his application in the face of the Respondent’s case that s.725 applied to prevent his application, Mr Cugera had a reasonable argument that he had withdrawn his VEOHRC application. As was said by the Full Court of the Federal Court in Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143 at [29]:
      • “There is a distinction between a party who pursues arguments which are ultimately...rejected by the Court and a party who commences a proceeding which is misconceived in the sense of being incompetent or unstoppable...”
    • 10. The distinction between the pursuit of an argument which does not succeed and the institution of a proceeding which is misconceived in the sense of being incompetent may assist in determining whether an act is unreasonable. The pursuit of a contentious, and ultimately unsuccessful, argument is not an unreasonable act Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879 at [36].”
21. In Rentuza referred to at paragraphs 16 and 17 above His Honour cited the principles referred to in Qantas and Clarke.[8] Adopting the principles referred to by His Honour, and mindful the respondent sought to rely on findings made at paragraphs 32 – 35 of the decision in Cugura v Frankston City Council (No.1) [2011] FMCA 195, the Court is nonetheless not satisfied the conduct of the applicant was unreasonable despite the contentious argument he ultimately pursued being unsuccessful.[9] In my view the contentious argument pursued by the applicant in this case, even with notice of the respondent’s position, was not so plainly unreasonable or misconceived as to warrant sanction by way of an order for costs.
22. Mindful of the principles set out in the decisions of the Federal Court referred to earlier[10] and the provisions of s.570 of the Fair Work Act the Court is not satisfied unreasonable acts or omissions by the applicant caused the respondent to incur costs.
23. Given this, it is unnecessary to consider further whether there should be an order for the costs the respondent contended were calculated as per the provisions of Schedule 1 of the Federal Magistrates Court Rules 2001.

Conclusion

24. For the reasons set out above the appropriate order is that there be no order as to costs.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of O'Sullivan FM

Date: 15 April 2011

---

[1] see Cugura v Frankston City Council (No.1) [2011] FMCA 195
[2] see paras 1-15
[3] see orders 25 March 2011
[4] see submissions filed 8 April 2011
[5] see para 52 in Jonsson
[6] see paras 5 – 6 of submissions filed 8 April 2011
[7] see para 29 in Rentuza
[8] see para 20 above
[9] see Qantas per Tracey J at 36
[10] ibid