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Stuke v Rost Capital Group Pty Ltd & Ors [2011] FMCA 79 (15 February 2011)

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Stuke v Rost Capital Group Pty Ltd & Ors [2011] FMCA 79 (15 February 2011)

Last Updated: 16 February 2011

FEDERAL MAGISTRATES COURT OF AUSTRALIA

STUKE v ROST CAPITAL GROUP PTY LTD & ORS

INDUSTRIAL LAW – Whether the restriction on award of costs under s.570 of the Fair Work Act 2009 (Cth) is applicable to costs in relation to an interlocutory application based on the accrued or associated jurisdiction of the court.


Federal Magistrates Court Rules, s.4.03

Australian and International Pilots Association v Qantas Airways Ltd (No.3) (2007) 162 FCR 392; [2007] FCA 879
Australian Broadcasting Corporation v Lenah Game Meats Pty Limited (2001) 208 CLR 199; [2001] HCA 63
Bognar v Merck Sharp & Dohme (Australia) Pty Ltd (No.2) [2008] FMCA 749
Commonwealth of Australia v Construction, Forestry, Mining and Energy Union (2003) 129 FCR 271; [2003] FCAFC 115
Construction, Forestry, Mining and Energy Union and Others v Clarke (2008) 170 FCR 574; [2008] FCAFC 143
Goldman Sachs JBWere Services Pty Ltd v Nikolich (2007) 163 FCR 62; [2007] FCAFC 120
Hughes v Mainrange Corporation Pty Ltd (No.2) (2009) 190 IR 351; [2009] FMCA 1044
Philip Morris Incorporated and Another v Adam P. Brown Male Fashions Proprietary Limited (1981) 148 CLR 457; [1981] HCA 7
Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6
Rentuza v Westside Auto Wholesale (2009) 190 IR 207; [2009] FMCA 1022
Tristar Steering and Suspension Australia Ltd and Another v Industrial Relations Commission of New South Wales and Another (No.2) (2007) 159 FCR 274; [2007] FCAFC 95
Welsh v Allblend Holdings Pty Ltd [2010] FMCA 281

Applicant:
ALEXANDER STUKE

First Respondent:
ROST CAPITAL GROUP PTY LTD
(ACN 132 992 280)

Second Respondent:
CROWN 2 PTY LTD
(ACN 100 162 329)

Third Respondent:
GRIGORY ROZENTSVET

Fourth Respondent:
SERGE ROZENTSVET

File Number:
SYG 1805 of 2010

Judgment of:
Barnes FM

Hearing dates:
21 October 2010, 26 October 2010

Delivered at:
Sydney

Delivered on:
15 February 2011

REPRESENTATION

Counsel for the Applicant:
Mr J Darams

Solicitors for the Applicant:
Clayton Utz

Solicitors for the First Respondent:
Piper Alderman

ORDERS

(1) There be no order as to costs in relation to the application in a case filed on 8 September 2010.
FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 1805 of 2010

ALEXANDER STUKE

Applicant


And


ROST CAPITAL GROUP PTY LTD
(ACN 132 992 280)

First Respondent

CROWN 2 PTY LTD
(ACN 100 162 329)

Second Respondent


GRIGORY ROZENTSVET

Third Respondent


SERGE ROZENTSVET

Fourth Respondent


REASONS FOR JUDGMENT

Background

  1. These are competing costs applications in relation to an application in a case filed by the first respondent Rost Capital Group Pty Ltd (Rost) on 8 September 2010.
  2. The background to this matter is that on 18 August 2010 Mr Stuke commenced proceedings against four respondents, including Rost, alleging a contravention of the Fair Work Act 2009 (Cth) in relation to unpaid salary and annual leave and seeking orders for compensation and pecuniary penalties in relation to each of the respondents. In addition, it was contended that Rost and the second respondent Crown 2 Pty Ltd (Crown), had breached express and implied terms in contracts of employment with Mr Stuke relating to his termination and salary, superannuation and annual leave entitlements. Mr Stuke seeks to recover his loss and damages by reason of such alleged breaches of contract.
  3. On 8 September 2010 Rost filed the application in a case in relation to which costs are now sought (referred to for convenience as the interlocutory application). Rost sought that Mr Stuke deliver up to it a diary, a copy of which appeared as an exhibit to the affidavit of Mr Le Blond (the “diary order”); that Mr Stuke file and serve an affidavit in relation to his access to and use of certain confidential information since 21 June 2010 (the “affidavit order”); and that, subject to the usual undertaking as to damages, Mr Stuke be restrained until further order from making use of the alleged confidential information or divulging it to any person or entity, except for the purposes of the proceedings (the “interlocutory injunction”). Rost also sought costs of the interlocutory application, including costs on an indemnity basis in relation to the diary order.
  4. The interlocutory application was before the court on a number of occasions. On 14 September 2010 directions were made in both the substantive proceedings and the interlocutory proceedings. Mr Stuke was ordered to provide further and better particulars in relation to his substantive application by 28 September 2010. At the request of their solicitor, Rost and Crown were given until 9 November 2010 to file responses, defences and any cross-claim. Orders were also made for the filing and service of evidence in relation to the interlocutory application by 17 September 2010. The interlocutory application was listed for hearing at 2.15 pm on 20 September 2010. In the meantime, without admission and upon Rost giving the usual undertaking as to damages, Mr Stuke agreed to an order restraining him from making use of the “confidential information”.
  5. The parties did not file evidence by 17 September 2010. Rost filed an affidavit sworn by Marina Bassin (the administrator and bookkeeper of Rost) on 20 September 2010 and Mr Stuke filed an affidavit in court on 20 September 2010.
  6. At the hearing on 20 September 2010 Rost’s solicitor advised the court that agreement had been reached in relation to delivery of the diary. The diary was delivered to Rost’s solicitor. Rost sought its costs in relation to that issue and maintained its application for the other orders. In submissions the solicitor for Rost detailed requests made to Mr Stuke and his solicitors for the return of the diary, which was said to contain primarily work-related information and also made submissions in relation to the other orders sought.
  7. The hearing was adjourned part-heard until 28 September 2010. In the interim Mr Stuke agreed, without admission, to a continuation of the undertaking given to the court on 14 September 2010 until after the adjourned hearing date.
  8. At the start of the resumed hearing on 28 September 2010 Rost’s solicitor sought leave to reopen its case and/or to file a response in the substantive proceedings (a copy of which had been served on Mr Stuke) together with a further affidavit of Mr S Rozentsvet (the fourth respondent) responding to Mr Stuke’s affidavit of 20 September 2010. Leave was granted to Rost to file the foreshadowed response and any affidavit evidence by 29 September 2010. The hearing was adjourned to 2.15 pm on 21 October 2010 with orders made for the filing of further affidavits. Counsel for Mr Stuke indicated that he intended to seek costs thrown away by reason of the adjournment. Mr Stuke agreed, without admission, to a continuation of the undertaking.
  9. On 21 October 2010 the parties advised the court that agreement had been reached in relation to the interlocutory application, subject to costs. Orders were made by consent, and without admission by Mr Stuke, that upon Rost giving the usual undertaking as to damages and until further order Mr Stuke be restrained from making use of specified confidential information or divulging it to any person or entity except for the purposes of the proceedings.
  10. The costs applications were both heard on 21 October 2010 and 26 October 2010.

The scope of the costs applications

  1. Rost seeks that Mr Stuke pay its costs of the interlocutory application as follows:
    1. insofar as the application related to the diary (which was delivered unconditionally on 20 September 2010) on an indemnity basis and taxable forthwith (including the costs of attending the office of Mr Stuke’s solicitors on 6 September 2010 and obtaining copies of the diary); and
    2. otherwise on “the ordinary basis” in reliance on the fact that Rost had been successful and costs should follow the event.
  2. Mr Stuke seeks that Rost pay his costs of the interlocutory application for the period 8 September 2010 to 29 September 2010 inclusive and that there be no order as to the costs of the interlocutory application from 29 September 2010 (apart from the costs of and incidental to the costs application).

The law

  1. The court has power to award costs under s.79 of the Federal Magistrates Act 1999 (Cth). The award of costs is in the discretion of the court, “[e]xcept as provided by the Rules of Court or any other Act” (see s.79(3)).
  2. It is appropriate to consider first whether s.570 of the Fair Work Act is applicable to the competing costs applications, having regard to the fact that while the substantive proceedings were brought under that Act, the interlocutory application related to matters which, it is not disputed for present purposes, are within the court’s accrued and/or associated jurisdiction (see ss.10, 14 and 18 of the Federal Magistrates Act).
  3. Section 570 of the Fair Work Act is as follows:
(2) The party may be ordered to pay the costs only if:
  1. Sections 569 and 569A are not of relevance in these proceedings.

Section 570(1) of the Fair Work Act

  1. Rost did not address the application of s.570 of the Fair Work Act in its written submissions which proceeded on the basis that the court had unfettered power to award costs in relation to the interlocutory application. Counsel for Mr Stuke did address the issue briefly in written submissions, on the basis that one issue for the court was whether s.570 applied. It was submitted that if it did the court could nonetheless order that Rost pay Mr Stuke’s costs up to 28 September 2010 “in the circumstances”. Reference was made to Rentuza v Westside Auto Wholesale (2009) 190 IR 207; [2009] FMCA 1022 and Hughes v Mainrange Corporation Pty Ltd (No.2) (2009) 190 IR 351; [2009] FMCA 1044 in which costs orders were made under s.570(2) of the Fair Work Act on the basis that an unreasonable act of the applicant in each case had caused the respondent to incur costs in circumstances where the court did not have jurisdiction under the Fair Work Act. These cases do not concern the issue of whether s.570(1) of the Fair Work Act is applicable in relation to an interlocutory application which relies on the court’s accrued or associated jurisdiction.
  2. In oral submissions counsel for Mr Stuke pointed to the fact s.570 of the FWA was not in the same terms as its predecessor, s.824 of the Workplace Relations Act 1996 (Cth), which provided:
  3. It was submitted generally that it could be said that the interlocutory application was not an application in which the court was “exercising jurisdiction” under the Fair Work Act such as to bring the restrictions in s.570(1) of that Act into effect. On that basis costs would be a matter for the general discretion of the court. Counsel for Mr Stuke did not refer to any authority relevant to this issue. In the alternative, he submitted that the circumstances of this case were within s.570(2) of the Fair Work Act, consistent with the approach taken in Hughes and Rentuza.
  4. In reply, the solicitor for Rost characterised the submission for Mr Stuke as an acceptance that the interlocutory application was not a Fair Work Act matter and stated that he adopted that approach.
  5. However the fact that Rost agrees with the Stuke submission insofar as it is not in dispute that the interlocutory application was not brought in reliance on any of the provisions in the Fair Work Act (but rather was said to be based on the accrued or associated jurisdiction of the court) does not dispose of the question of the application of s.570(1) of the Act.
  6. As stated in Welsh v Allblend Holdings Pty Ltd [2010] FMCA 281 (which was referred to and impliedly acknowledged in counsel for Mr Stuke’s submissions in relation to the scope of the court’s associated jurisdiction) the limitation in s.824 of the Workplace Relations Act applied not only to claims brought in reliance on the Workplace Relations Act “but also in respect of other claims joined in the same proceeding, including claims in the accrued jurisdiction of the Court” (Welsh v Allblend at [66] per Lucev FM and see Bognar v Merck Sharp & Dohme (Australia) Pty Ltd (No.2) [2008] FMCA 749 at [12] – [18] per O’Sullivan FM). A similar approach was taken to s.666 of the Workplace Relations Act which imposed a limitation on costs incurred by a party to “a proceeding under” a particular section of the Workplace Relations Act. That provision applied not only in respect of that part of a claim brought in reliance on the Act “but also in respect of other claims joined in the same proceeding, including common law claims in the accrued jurisdiction of the Court” (see Goldman Sachs JBWere Services Pty Ltd v Nikolich (2007) 163 FCR 62; [2007] FCAFC 120 at [86] per Black CJ).
  7. The parties did not address in any detail the effect, if any, of the different language in s.570 of the FWA. Interestingly, the Explanatory Memorandum to the Fair Work Bill 2009 suggests (at paragraph 2229) that this change reflected a concern to avoid the limitation on costs orders applying to matters arising under the Act that did not involve the exercise of jurisdiction under the Act, as had been argued (unsuccessfully) in Tristar Steering and Suspension Australia Ltd and Another v Industrial Relations Commission of New South Wales and Another (No.2) (2007) 159 FCR 274; [2007] FCAFC 95.
  8. In Tristar the matter before the court in relation to which costs were sought concerned the validity of an inquiry by the Industrial Relations Commission of New South Wales in circumstances where there was an inconsistency between the Industrial Relations Act 1996 (NSW) and the Workplace Relations Act 1996 (Cth). In that case s.824 of the Workplace Relations Act was held not to apply to the costs application. Buchanan J (with whom Gyles J agreed) stated at [16]:
  9. The circumstances in this case are not comparable. The accrued or associated jurisdiction of this court is dependent on there being jurisdiction under the Fair Work Act (see ss.10, 14 and 18 of the Federal Magistrates Act).
  10. On the limited submissions of the parties it has not been established that s.570(1) of the Fair Work Act does not apply to claims in an interlocutory application based on the accrued or associated jurisdiction of the court where the substantive proceedings involve the exercise of jurisdiction under the Fair Work Act. These are proceedings in which an order is sought that one party to proceedings in which the court is exercising jurisdiction under the Fair Work Act pay costs incurred by another party. Were it not for the Fair Work Act jurisdiction, the Court would have no accrued or associated jurisdiction in relation to the matters the subject of the interlocutory application (see Philip Morris Incorporated and Another v Adam P. Brown Male Fashions Proprietary Limited (1981) 148 CLR 457; [1981] HCA 7). Such an approach to the costs of interlocutory applications is consistent with the approach taken to the predecessors to s.570(1) (see in particular Commonwealth of Australia v Construction, Forestry, Mining and Energy Union (2003) 129 FCR 271; [2003] FCAFC 115 at [11] and Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392; [2007] FCA 879 at [14]) and also with the wide approach to s.570(1) of the FWA taken in Hughes and Rentuza. It was not suggested that these decisions were clearly wrong and should not be followed.
  11. Hence neither party may be ordered to pay the costs sought unless I am satisfied that the circumstances are within s.570(2) of the Fair Work Act.

Section 570(2) of the FWA

  1. As Lucev FM pointed out in Rentuza at [26] – [28] and Hughes at [19] – [21]:
  2. Rost’s submissions were not expressed in terms of or in relation to the requirements of s.570(2). It is, however, clear that s.570(2)(a) and (c) are not applicable. A costs order could be made against Mr Stuke in favour of Rost under s.571(2) only if the court was satisfied that Mr Stuke’s unreasonable act or omission caused Rost to incur costs within s.570(2)(b) of the Act.
  3. Mr Stuke contended that in relation to the period of 8 September 2010 to 29 September 2010 Rost’s unreasonable act or omission caused him to incur costs and hence that such costs were recoverable within s.570(2)(b) of the Fair Work Act.
  4. It is convenient to consider Rost’s costs application first.

Rost’s costs of obtaining the diary from Mr Stuke

  1. Rost seeks its costs of obtaining the diary on an indemnity basis, to be taxed and paid forthwith. I was not addressed on the availability of costs on an indemnity basis under s.570(2) of the Fair Work Act.
  2. Such costs are sought on the basis that after what was said to be almost three months of “resisting production” of the diary, Mr Stuke had unconditionally delivered it up on 20 September 2010. The solicitor for Rost submitted that the conduct of Mr Stuke in this respect was unreasonable and that he was not diligent.
  3. In his affidavit of 8 September 2010 Mr Le Blond, Rost’s solicitor, attested to requests having been made to Mr Stuke by Rost, Serge Rozentsvet (Rost’s company secretary) and Grigory Rozentsvet (Rost’s director) for the return of certain property, including an item described as “a work diary” on the basis that it was company property, at or about the time Mr Stuke’s employment was said to have been terminated by Rost in June 2010. However, it was not until after Mr Stuke commenced the substantive proceedings against Rost and the other respondents (on 18 August 2010), that the solicitors for Rost wrote to the solicitors for Mr Stuke on 26 August 2010 seeking return of the work diary. It was sought on the basis that it was “part of the books and records of ROST.” Rost’s solicitors advised that if the diary was not returned Rost would issue a notice for its production and would seek costs on an indemnity basis in relation to the notice to produce.
  4. It is apparent from the subsequent correspondence between the solicitors for the parties that there was a dispute as to whether or not the document in question (which is also referred to as a “notebook”) was in fact a “work” diary. Consistent with the form of order that was sought, I refer to it, for convenience, as a diary.
  5. In a letter of 27 August 2010 the solicitors for Mr Stuke advised that the diary (described as a notebook) had been delivered to their offices and would be kept securely and that Rost could inspect it on notice, although any irrelevant text would be redacted. It was pointed out that a notice to produce would not entitle Rost to possession of the diary, but rather to inspect relevant portions, which the solicitors stated they were willing to facilitate.
  6. By emailed letter of 1 September 2010, the solicitors for Rost disputed Mr Stuke’s contention that the diary was a “personal notebook”, reiterated that it was a work diary containing confidential information “kept and maintained for the benefit of ROST” and a “book of the company” and sought that it “be returned as a matter of urgency”. That letter continued that if this was not done by close of business on 2 September 2010, the solicitors were instructed to commence proceedings seeking delivery of the diary and that they would seek indemnity costs. In addition, Rost sought undertakings in relation to use of information in the diary for any purpose other than in connection with the substantive proceedings.
  7. By letter of 2 September 2010, the solicitors for Mr Stuke reiterated the assertion that it was “far from clear” that the work diary was an asset of Rost, suggested that any application for an order seeking delivery would be “unnecessary” and advised that Mr Stuke would seek costs against Rost.
  8. By further letter of 2 September 2010, the solicitors for Rost asked Mr Stuke’s solicitors to make the diary available for inspection at their offices on 6 September 2010. This was arranged and it is not in dispute that an inspection occurred on 6 September 2010 and that a photocopy was made for Rost.
  9. There was no subsequent notification to the solicitors for Mr Stuke that Rost maintained its claim for possession of the notebook until the application in a case was filed and served. While the solicitors for Rost did foreshadow the possibility of litigation in their letter of 1 September 2010, thereafter they sought and took the opportunity to inspect and obtain a copy of the diary on 6 September 2010.
  10. On 8 September 2010 the solicitors for Mr Stuke wrote to the solicitors for Rost, referring (inter alia) to the fact that no response or defence had been filed in the substantive proceedings, notwithstanding that r.4.03(2) of the Federal Magistrates Court Rules requires this to occur within 14 days of service. The solicitors asked whether it was intended to file a response or defence, in default of which Mr Stuke would move for summary judgment. On the same day (and it is not apparent from the material before the Court which occurred first), Rost filed and served the application in a case in relation to which costs are now sought, seeking, among other things, an order for return of the work diary.
  11. According to a letter to Rost’s solicitors of 14 September 2010, the interlocutory proceedings were not brought to the attention of the relevant solicitor for Mr Stuke until 14 September 2010. Stuke’s solicitor advised that he was “on a commercial basis only” prepared to settle the dispute in relation to the diary, on the basis that the original be delivered to Rost, that an undertaking would be given not to use information relating to the respondents contained in the diary except for the purposes of the proceedings and that one copy of the diary would be retained by Mr Stuke’s solicitors for use in the proceedings. The solicitors advised that they had been instructed that Mr Stuke had kept the diary in a box in his house in the period following the termination of his employment until the request made in the letter of 26 August 2010. Mr Stuke’s affidavit evidence of 20 September 2010 is also to this effect. He took issue with Rost’s contentions in relation to the nature and content of the notebook.
  12. By letter of 15 September 2010, the solicitors for Rost accepted the offer to deliver up the diary, but indicated that in their view Mr Stuke’s conduct had been “patently unreasonable”, that there was “no basis to assert the diary [was] anything other than a book of ROST” and that their client considered it would be entitled to costs on an indemnity basis. Rost agreed that Mr Stuke’s solicitor should retain one copy of the diary for use only in the proceedings, but took issue with the form of undertaking proposed. There was subsequent correspondence between the parties (including a letter from Mr Stuke’s solicitors of 15 September 2010 referring to “a dispute about ownership of a notebook” and taking issue with whether costs have been unnecessarily incurred). The diary was delivered to Rost on 20 September 2010.
  13. In issue is whether Mr Stuke’s actions in relation to the diary constituted an unreasonable act or omission that caused Rost to incur costs in connection with the proceedings. In assessing whether there was an unreasonable act or omission, it is necessary to engage in an objective analysis of the particular circumstances of the case (Australian and International Pilots Association v Qantas Airways Ltd (No.3) at 402). However there has not been a trial on the merits of the interlocutory application in this or any other respect. The court has not been required to determine the nature or ownership of the diary or notebook. I have borne in mind that it would rarely, if ever, be appropriate for the Court to endeavour to determine the outcome of a hypothetical trial, at least where there are matters in dispute.
  14. I accept that, as Mr Stuke maintains, there was (and is) a dispute about the nature of the diary and Rost’s entitlement to it. It is apparent from the correspondence between the solicitors for the parties that there was a dispute about its ownership. Notwithstanding the submissions made by the solicitor for Rost, I am of the view that it is not appropriate to determine the issue of ownership of the diary in proceedings of this nature or that the circumstances are sufficiently clear that there could be no dispute whatsoever about Rost’s entitlement to it. That is so notwithstanding that Mr Stuke did deliver it to Rost (on what was said, to be “a commercial basis”) on 20 September 2010. In any event, as Tracey J stated in Qantas at [36]:
  15. As stated in Rentuza and Hughes, the exercise of the discretion in s.570(2)(b) of the Fair Work Act is not necessarily engaged because a party may have acted in a different or timelier fashion or because a party has adopted a genuine but misguided approach or even if a concession is made late. In the particular circumstances of this case it has not been established that Mr Stuke engaged in an unreasonable act or omission by failing to give the diary to Rost before 20 September 2010.
  16. It cannot be said on the material before the Court that Mr Stuke must have known from June 2010 that Rost was entitled to the diary or that his failure to hand the diary over earlier was unreasonable in the sense considered in Rentuza and Hughes. While there is some evidence that requests were made for return of the diary in June 2010, it appears that solicitors first became involved (and the requests resumed) after Mr Stuke himself commenced the substantive proceedings against Rost and associated respondents. However, when the solicitors for Rost first sought return of the diary they did so in the context of indicating that were it not to be returned they would issue a notice to produce. In response, the solicitors for Mr Stuke in effect offered Rost what would have happened had Rost proceeded unopposed with a notice to produce, that is, inspection (and indeed provision of a copy) of the diary.
  17. In relation to what occurred after the commencement of the interlocutory proceedings, as considered by the Full Court of the Federal Court in Construction, Forestry, Mining and Energy Union and Others v Clarke (2008) 170 FCR 574; [2008] FCAFC 143, even if any concession was made late, the delivery does not necessitate the exercise of the discretion in s.570(2)(b) of the Fair Work Act even if the lateness of the concession may have put the other party to extra costs. Having regard to the correspondence between the parties and the existence of a dispute as to ownership, Mr Stuke’s failure to hand the diary over before he did so has not been shown to be unreasonable.
  18. This is not a case in which it has been established that Mr Stuke has acted or failed to act unreasonably so that an adverse order for costs is appropriate regardless of the merits of the legal arguments relied on by the parties (which were not determined by the court). While the litigation has been relatively active and there has clearly been quite a lot of correspondence between the parties, it cannot be said that there has been a complete lack of cooperation or that Mr Stuke’s conduct has otherwise been such as to warrant a costs order against him in favour of Rost in relation to the “diary order” within s.570(2) of the Fair Work Act. Hence it is not necessary to consider the availability of indemnity costs under s.570(2) of the Act. Rost’s application for costs in this respect is not made out.

Rost’s costs in relation to matters other than the diary

  1. Rost’s submissions and the material before the court in relation to the costs of obtaining the injunction sought in the interlocutory application restraining Mr Stuke from using or divulging confidential information (which Mr Stuke agreed to on a without admission basis) and of obtaining an affidavit from Mr Stuke in relation to his use of the confidential information do not assert or establish that any unreasonable act or omission on the part of Mr Stuke caused Rost to incur these costs. The “normal” principle that costs should follow the event relied on by Rost is displaced by the operation of s.570(1) of the Fair Work Act. No order for costs should be made in favour of Rost.

Mr Stuke’s costs for the period 8 September 2010 to 29 September 2010

  1. Insofar as Mr Stuke sought that there be no order as to costs from 29 September 2010 this is appropriate, albeit not for the reasons suggested, but rather because the circumstances do not come within s.570(2) of the Fair Work Act.
  2. In effect, Mr Stuke’s contention is that there are special circumstances applicable up to 29 September 2010 that constitute an unreasonable act or omission on the part of Rost or are such that Rost can be said to have instituted the interlocutory proceedings without reasonable cause (see s.570(2)(a) and (b)). It was submitted that as there was no suggestion that the matters raised in the interlocutory application were matters within the express jurisdiction conferred on the Court under the Fair Work Act or by any other federal legislation until Rost filed a response in the substantive proceedings, it was not possible for the court to be satisfied that it had jurisdiction in relation to the matters raised in the interlocutory application by virtue of its associated jurisdiction until Rost filed its response or cross-claim which it did on 29 September 2010.
  3. Mr Stuke submitted that until Rost filed its response and cross-claim, there was no reasonable prospect that it could succeed on the interlocutory application because it was not seriously arguable that the court was seized of jurisdiction to make the orders sought (Rentuza at [29]). Rost’s failure to file a response and/or cross-claim was said to be unreasonable and to have caused Mr Stuke to incur costs within s.570(2) of the Fair Work Act.
  4. Counsel for Mr Stuke conceded that as there had been no hearing on the merits of Rost’s interlocutory application, the court was deprived of the factor which usually determined whether or how it would make a costs order (see Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6). It was, however, submitted that this was a case where, notwithstanding that general principle, the court could determine this issue.
  5. Mr Stuke’s argument is not that the court does not have jurisdiction, but rather that the court could not determine whether it had jurisdiction in the absence of a response or cross-claim having been filed by Rost in the substantive proceedings. What is in issue is whether it has been established that Rost commenced the interlocutory proceedings without reasonable cause or whether it acted unreasonably in failing to file a response and/or cross-claim in the substantive proceedings before it commenced the interlocutory proceedings. Rentuza and Hughes are distinguishable. In Rentuza the court found that the substantive proceedings should be dismissed for want of jurisdiction. In Hughes it was conceded that the Court did not have jurisdiction and the application was dismissed on that basis.
  6. The filing of a response and cross-claim in the substantive proceedings would have been a conventional way to demonstrate a claim for final relief such as to warrant a claim for interlocutory relief. The solicitor for Rost suggested however that the basis for the court’s jurisdiction was sufficiently identified in the material before the court and that it was relevant to have regard to what was said in Australian Broadcasting Corporation v Lenah Game Meats Pty Limited (2001) 208 CLR 199; [2001] HCA 63 at [156] – [160] per Kirby J rejecting the view that the establishment of a cause of action was, as a matter of law, a universal fixed requirement for the grant of an interlocutory injunction at the time such injunction issued.
  7. This court is intended to operate as informally as possible. In the context of interlocutory proceedings, a relevant claim for final relief may be identified not only by strict pleadings but also in other ways. I accept that, as Mr Ivantsoff for Rost submitted, in this case there was adequate identification of the basis for Rost’s claim against Stuke in the application in a case and affidavit which set out the facts relied upon sufficiently for the court to be able to identify the issues and form a view as to whether it had jurisdiction or not and also to enable the opposing party to identify the issues and respond to them. It was not unreasonable for Rost to proceed on that basis in all the circumstances of this case albeit it may have been preferable to have filed a response identifying the cross-claim.
  8. Having regard to particular circumstances of this case, it had not been established that Rost instituted the proceedings without reasonable cause such as to warrant an award of costs under s.570(2)(a).
  9. During the course of the proceedings Rost’s response and cross-claim were served and subsequently filed. Insofar as this action involved any concession about any difficulties in ascertaining jurisdiction, as discussed above, the fact of a late concession or that a party may have acted in a different or timelier fashion, or did not conduct the litigation effectively or has adopted a genuine but misguided approach, is not necessarily such as to constitute an unreasonable act or omission warranting the award of costs within s.570(2)(b) of the Fair Work Act. Having regard to the particular circumstances of this case and the material relied on in support of the application in a case, such action (even if seen as in the nature of a concession) is not such as to satisfy me that Rost’s earlier failure to file a response and/or cross-claim to permit identification of the jurisdictional basis for the court to consider or make the orders sought in the interlocutory application constituted an unreasonable act or omission. It cannot be said that there was prosecution of an incompetent, hopeless or misconceived case. Even if the manner in which Rost proceeded was not the most efficient way to conduct the litigation, that does not mean that there was an unreasonable act or omission (see Clarke).
  10. I am not satisfied that Rost should pay the applicant’s costs for the period 8 September 2010 to 29 September 2010.
  11. In the result neither party has been successful in its costs application. In these circumstances, the appropriate order is that there be no order as to costs.

I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of Barnes FM


Date: 15 February 2011

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