Tuholi Pty Ltd v Caltex Australia Petroleum Pty Limited [2001] NSWIRComm 7 (1 February 2001)

Last Updated: 20 March 2001

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION : Tuholi Pty Ltd v Caltex Australia Petroleum Pty Limited [2001] NSWIRComm 7

FILE NUMBER(S): IRC 5004, 5008, 5030

HEARING DATE(S): 01/02/2001

EX TEMPORE DATE: 01/02/2001

PARTIES:

APPLICANT

Tuholi Pty Ltd and another

RESPONDENT

Caltex Australia Petroleum Pty Limited

APPLICANT

Yanterilla Pty Ltd and another

RESPONDENT

Caltex Australia Petroleum Pty Limited

APPLICANT

Kaldon Pty Ltd and another

RESPONDENT

Caltex Australia Petroleum Pty Limited

JUDGMENT OF: Wright J President

LEGAL REPRESENTATIVES

APPLICANTS

Mr S J Boatswain, Solicitor

Harmer Workplace Lawyers

RESPONDENT

Mr G J Hatcher of counsel

Solicitor: Mr M J Davis

Middletons Moore & Bevins

CASES CITED: Australian Mutual Provident Society v Avis (unreported, Full Bench, 18 December 1997)

Cultus Petroleum v OMV Australia [1999] NSWSC 435

Huntsman Chemical Company (Australia) Ltd v International Pools Australia Pty Limited (1995) 36 NSWLR 242

Lolomanaia v Roads & Traffic Authority [2000] NSWSC 780

Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721

Rouse v Shepherd [No 2] (1994) 35 NSWLR 277

Taudevin v Egis Consulting (Australia) Pty Ltd (2000) 97 IR 165

LEGISLATION CITED: Industrial Relations Act 1996 s 106

Industrial Relations Commission Rules 1996 r 18A

JUDGMENT:

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

IN COURT SESSION

CORAM: WRIGHT J, President

Thursday, 1 February 2001

Matter No IRC 5004 of 2000

TUHOLI PTY LTD AND ANOTHER v CALTEX AUSTRALIA PETROLEUM PTY LTD

Application under s 106 of the Industrial Relations Act 1996.

Matter No IRC 5008 of 2000

YANTERILLA PTY LTD AND ANOTHER v CALTEX AUSTRALIA PETROLEUM PTY LTD

Application under s 106 of the Industrial Relations Act 1996.

Matter No IRC 5030 of 2000

KALDON PTY LTD AND ANOTHER v CALTEX AUSTRALIA PETROLEUM PTY LTD

Application under s 106 of the Industrial Relations Act 1996.

JUDGMENT

(Extempore)

[2001] NSWIRComm 7

1    The proceedings today relate to an application by the applicants in the proceedings (who are also the applicants in the relevant notices of motion) for indemnity costs, an issue which was not resolved when the motions were substantially dealt with on 6 December 2000 and, in respect of which, liberty was reserved to the parties to make submissions should the application be pressed.

2    The applicants are the moving parties in various proceedings commenced under s 106 of the Industrial Relations Act 1996 (the Act). All the proceedings have the same respondent. The relevant notices of motion were filed on 1 December 2000 and as well as seeking costs on an indemnity basis, sought, in the alternative, either:

1. An order that the Notice of Appearance filed on 23 October 2000 be struck out.

2. An order pursuant to Rule 18A(3) of the Industrial Relations Commission Rules 1996 that this matter be determined in the absence of the Respondent.

Or, in the alternative:

3. An order that the Respondent file (and serve) a Reply according to Form 12B of the Rules and Verifying Affidavit by 8 December 2000.

4. An order that the Applicant file and serve a Response, if any, within fourteen (14) days of the receipt of the Reply.

An order was also sought in these terms:

5. An order referring the matter to a Judge of this Honourable Commission forthwith for the purpose of listing the matter for conciliation with priority.

3    The application for costs on an indemnity basis was the sixth order sought in the motion. It is clear that the intention of the applicants was that either orders 1 and 2 or orders 3 and 4 be made and that order 5 and the costs order were sought as separate matters which could, subject to a proper case being made out, be applicable if either set of orders was granted by the Court. In the event, orders 3 and 4 were made by consent and the position of the parties was reserved as to order 5 as was the issue of indemnity costs. It is appropriate to set out the circumstances of these matters so far as is relevant to the application for indemnity costs. This involves reference to correspondence which is largely set out in the affidavit of the solicitor for the applicants, Mr Boatswain, sworn 30 November 2000 and in documents annexed to that affidavit.

4    However, before coming to those matters, it is to be noted that the substantive proceedings under s 106 were filed on 12 October 2000. In accordance with the usual practice now adopted in the Industrial Registry subsequent to the introduction of r 18A, notations were included in the files indicating that the dates relevant to the applications, calculated by reference to the date of filing and the time periods set out in r 18A, were as follows:

(a) 19 October 2000 as the date by which the applicants were required to serve the respondent with the initiating process.

(b) 9 November 2000 as the date by which the respondent was to file its reply; and

(c) 23 November 2000 as the date by which the applicants was to file their responses.

5    There were also file notations that a nominal call-over date of 25 January 2001 was given to the various matters. The call-over date was nominal in that it would not have been relevant if the time requirements of r 18A had been complied with or substantially met. Indeed, the file reveals that in accordance with the usual practice each summons filed had annexed to it a two page document prepared by the Registry - which is, as a matter of practice, attached to all applications filed - setting out the effect of r 18A and reference to an appointment for hearing on the call-over date referred to.

6    The two page document includes the following paragraph:

If the above matters have been attended to prior to the date that this matter has been listed for callover, the matter will be referred for conciliation under s 109 and there will be no need for the parties to attend the Commission on the date indicated.

7    Returning then to the material attached to Mr Boatswain's affidavit, the first document is a letter dated 23 October 2000 to the corporate solicitor of the respondent drawing his attention to the failure of the respondent to file notices of appearance by the relevant time and advising that should appearances not be served by 25 October 2000, the Commission will be moved for default judgment. The letter also includes the following paragraph:

In addition, we have put you on notice that we will insist on strict compliance with the time-table set out in the Rules. Should you fail to comply with your obligations, we intend to seek peremptory orders and will rely on this correspondence in relation to such orders and on the issue of indemnity costs.

8    The file then reveals - and it is assumed the first numbered file is representative of all the files - that on 23 October 2000 documents whose marginal title was "Notice of Appearance" were filed. However, the body of the document indicates that the respondent "Appears conditionally". The applicants and the respondent have proceeded on the basis that the documents filed were conditional appearances. It appears from the correspondence that although the solicitors for the respondent forwarded copies of the conditional appearances by letter dated 23 October 2000, such correspondence was not received by the solicitors for the applicants until 30 October. This led to the solicitors for the applicants forwarding a letter by facsimile to the solicitors for the respondent on 31 October 2000 which, after referring to the last-mentioned matter, continued:

There is no provision in the Commission's Rules for the filing of a conditional appearance. We draw your attention to the decision of Toudevin (sic) v Egis Consulting Australia Pty Ltd & Anor [2000] NSWIRComm 63 (13 April 2000). This was a decision of the President on 13 April 2000, and in particular we refer you to paragraphs 15, 16 and 17 of the decision.

Accordingly, the conditional notices of appearance you have filed are invalid and do not comply with the requirements of the Commission's rules. You are required to file and serve Appearances in the appropriate form as a matter of urgency. Given the Respondent's previous non-compliance with the Commission's rules, we require that you file and serve appearances in the appropriate form in each of these matters within 24 hours of the transmission of this correspondence otherwise we will move the Commission to determine the applications in the absence of the Respondent.

Should such an application become necessary we will rely upon this correspondence in support of our application, and on the issue of costs.

9    The solicitors for the respondent replied by letter dated 1 November 2000, (also sent by facsimile) in the following terms:

We refer to your facsimile of earlier today in relation to the above matters.

We are aware of the decision to which you refer.

The conditional Appearance was filed to provide us with an opportunity to obtain instructions regarding the entity nominated as the Respondent by your client in the proceedings. Those instructions have now been obtained and accordingly fresh Appearances have been forwarded to the Registry for filing.

Any motion filed by your clients in relation to Appearances will be resisted and a copy of this correspondence will be tended (sic) on the question of costs should your clients be minded to engage in such senseless and petty interlocutory process. We would have thought that the only parties to be financially disadvantaged by such action would be your clients. Our client will match the tone which you choose to adopt.

You should note that is the writer's preference to proceed on a professional and courteous basis whenever possible. We leave it to you to adopt a different posture if you wish.

A sealed copy of the Notices of Appearance will be forwarded to you in due course.

10    It is relevant to refer to a number of aspects of that letter. First, the second paragraph where it is said that the solicitors for the respondent were aware of the decision in Taudevin v Egis Consulting Australia Pty Ltd. Counsel for the respondent at one point in his submissions urged the Court to interpret that sentence in a different way. I do not consider it is appropriate or open to the Court to interpret that sentence in any way other than in terms of its plain meaning. That is, as meaning that, notwithstanding the solicitors' knowledge of that decision and what was said in it about conditional appearances, it was decided to, nevertheless, file conditional appearances in these matters.

11    The third paragraph makes clear that the reason why the conditional appearances were filed was to provide to the respondent "an opportunity to obtain instructions regarding the entity nominated as the respondent by" the applicants. A great deal has been submitted on behalf of the respondents in these proceedings as to why it has not complied with r 18A. That has included reference to settlement attempts and similar matters. It is relevant that no such reference is made in this letter, notwithstanding that it was forwarded to the solicitors for the applicants some weeks after the proceedings were commenced.

12    Although not a great deal may turn upon it, it is, nevertheless, relevant to note the terms of the fourth and fifth paragraphs in the above letter. It seems to be suggested that the applicants' solicitors were proceeding in some way that was not professional and courteous. I cannot see any basis for this comment to be made or why this correspondence strikes the tone that it does. It is regrettable that it seems to be suggested by this correspondence that it was inappropriate for the solicitors for the applicants to remind the solicitors for the respondent of the terms of the Rules or a recent decision of the Court as to conditional appearances.

13    Subsequently, on 3 November 2000, the solicitors for the applicants again wrote to the solicitors for the respondent. Their letter included the following passage:

We are somewhat surprised by your assertion that you were aware of the decision to which we referred, and yet still filed conditional appearances in the face of such a decision, in order to give you time to obtain instructions. Equally, we do not believe that your view that processes designed to ensure compliance with the Commission's Rules are mindless and petty would be shared by the Commission. However, we note that your preference is to proceed on a professional and courteous basis whenever possible, and are therefore pleased to hear that fresh appearances have been filed. We look forward to receiving those appearances in due course and receiving your Reply in each matter on 10 November 2000. We have no intention of commencing interlocutory process while you continue to comply with the rules and directions of the Industrial Relations Commission. The need to commence interlocutory process only arose in response to your client's apparent decision to ignore our client's legitimate claims. Accordingly, the tone of the litigation will continue to be determined by the position(s) adopted by your client.

14    Mr Boatswain's affidavit records that his firm had not been served with an unconditional notice of appearance by 10 November 2000. He then caused enquiries to be made of the Registry which revealed that unqualified notices of appearance had been filed on 31 October. Mr Boatswain then wrote again by facsimile on that date seeking confirmation that appropriate notices of appearance had been filed.

15    There then was an exchange of correspondence apparently in relation to a settlement proposal, the details of which are, understandably, not before the Court although some reference will be made to that aspect subsequently. Mr Boatswain then forwarded another facsimile communication to the respondent's solicitors on 23 November 2000, the respondent having served the appropriate notices of appearance on 15 November. This communication included the following:

We refer to our letter dated 17 November 2000. We note that you have so far not filed a Notice in Reply as required by the Commission's Rules, and we refer you to the Notice attached by the Commission to the filed Summons. As previously advised, we are instructed to ensure strict compliance with the mandatory procedural requirements established by rule 18A of the Commission Rules. Should we not receive a verified reply by 12 noon on Monday 27 November 2000 or your advice regarding when the Reply will be served, we will obtain peremptory orders (including costs) by way of motion.

Mr Boatswain's affidavit relevantly concludes by deposing that at the time of swearing of his affidavit on 30 November, no reply as required by r 18A had been filed or served in the proceedings.

16    Reference should now be made to the evidence read or tendered by the respondent. This largely took the form of an affidavit sworn by Ms Bonner, a solicitor in the employ of the respondent's solicitors. Included in her affidavit is paragraph 4 in these terms:

On 7 November 2000 a letter was sent to the Applicants' solicitors containing an offer of settlement in these proceedings. No response to this offer was received until 17 November 2000.

17    Ms Bonner then deposes that in response to the applicants' solicitors' letter of 23 November, the respondent's solicitors forwarded a letter of 27 November 2000 which was marked "Without Prejudice Save As To Costs" which relevantly provided:

We refer your letter of 23 November 2000.

We do not expect to file and serve a Reply to Summons for Relief in each of these matters until 8 December 2000. If you wish to waste costs by approaching the Commission prior to this date, there is nothing we can do to prevent it. However, given that our client had been seeking to settle the matters at an early stage and delayed its responses accordingly, we see little utility in such an approach.

Furthermore given that these matters are not due to come before the Commission until 25 January 2001, we fail to see the prejudice to your clients. We will rely on this correspondence on the question of costs in the event that you approach the Commission.

18    The first substantive paragraph of that letter was the subject of a submission by counsel for the respondent in these terms:

By letter dated 27 November 2000 to the applicants' solicitors the respondent's solicitors indicated that a Reply to the Summons for Relief in each of these matters would be filed and served on 8 December 2000

The submission also refers to the fact that the replies were in fact filed and served on that date. However, I do not accept the submission otherwise. It is not correct to say that the respondent indicated that the relevant process would be filed and served by 8 December. It is clear the relevant part of this letter was carefully framed and did not give any assurance or undertaking as to the relevant documentation being dealt with by that date, although it did raise the possibility or even perhaps the likelihood that that would occur. In those circumstances, it is a little difficult to assess the significance for the respondent of the reference to costs which seems to have been the point of their letter of 27 November.

19    Returning to Ms Bonner's affidavit, she deposes that no further communication was received from the applicants' solicitors until the receipt of the notice of motion and that:

8. I have had difficulty in obtaining instructions in this matter. Prior to filing the Respondent's Reply to Summons, I had sought to obtain instructions from a crucial witness in this matter, who had detailed knowledge of the conduct complained of by the Applicants. I am informed by Mr Greg Ochs, Corporate Solicitor for the Respondent, and verily believe that he was informed by the NSW Police, that this witness was murdered shortly after the events which form the basis of the Applicants' claim.

20    The other evidence relied upon by the respondent is a letter from the applicants' solicitors to the respondent's solicitors dated 4 December 2000. It also was forwarded "Without Prejudice Save As To Costs" and included the following paragraph:

We refer to the Notices of Motion in the above matters filed and served on you on 1 December 2000. The Notices of Motion are now listed for hearing before the President of the NSW Industrial Commission on 6 December 2000, at 10.30am.

Given the circumstances of this matter and your previous non-compliance with rule 18A of the Industrial Commission Rules, could you obtain instructions regarding whether your client will consent to either alternative sets of orders sought in the Motion.

21    Again, reference may be made to the significance of that letter. Although eventually at the hearing on 6 December there was consent with some hesitation by the respondent to the making of orders in terms of paragraphs 3 and 4 of the motion, it is common ground that no notice was given to the applicants of that degree of consent or that the respondent consented otherwise until during the hearing before the Court on 6 December, although, I should interpolate, that it is also common ground that the letter of 4 December was not forwarded by facsimile to the respondent until the morning of 5 December.

22    Submissions were also made on behalf of the respondent as to why no response of any positive kind was made to that correspondence. These included reference to the consideration that both alternatives in the notice of motion, as referred to in that letter, included "costs on an indemnity basis". I do not consider that represents a fair reading of this correspondence. In my opinion it was capable of being responded to in terms of one or other of the substantive alternative sets of orders, that is, either orders 1 and 2 or orders 3 and 4. It was not necessary, in terms of any positive response to that correspondence, for the respondent to include any acceptance of costs on an indemnity basis or of costs on any basis.

23    The last factual matter arises from paragraph 8 of Ms Bonner's affidavit which has earlier been set out. It is not necessary to go in any detail to the other factual matters set out in the various documents filed as to that aspect. It is, however, relevant to note that there are some factual circumstances associated with the proceedings which are, to say the least, unusual. The reference to a murder in that paragraph is sufficient to demonstrate that. There are also references in some of the material filed to certain allegations as to criminal conduct by an applicant in one of the applications. Such matters may be of great significance to any future substantive hearing or conciliation in this matter. However, notwithstanding certain unusual aspects of the matter which might have led to, for example, the respondent making substantive applications for the proceedings to be dealt with in other than the usual way under r 18A, no such application was made and there is, to put the matter in the best light from the respondent's view, only minimal reference to such matters in the various correspondence and other evidence as to the steps that were being taken or omitted at times relevant to the operation of r 18A.

24    I therefore conclude that although there are some unusual features of these proceedings, such unusual features can only be seen, in the absence of a substantive application by the respondent, as having limited relevance to the issues of the notices of motion filed by the applicants and to the question of indemnity costs with which this judgment is concerned.

25    There is another submission which was emphasised by counsel for the respondent which raises, on one view of it, certain factual matters. It is, therefore, appropriate to set out in full that submission which was included in the written submissions filed. It was in these terms:

11. A review of matters proceeding before the Registrar would readily establish that the Respondent's delay, such as it was, in this matter was less than the usual or regular delay in complying with timetables by respondents in this jurisdiction. The Applicants have not pointed to any prejudice and the Respondent submits that there is/was none.

26    That factual assertion was not supported by any evidence, although there was some anecdotal reference in counsel's submissions to other matters before other judges of the Commission which were said to support it. However, neither of these matters referred to related to issues or circumstances the subject of these proceedings or seemed relevant to the above submission. I consider the references to other proceedings are entirely irrelevant to the proposition put. I will return to it subsequently.

27    There is another factual matter which should have been referred to earlier. It is convenient to deal with now. It is the reference to the settlement in paragraph [16] above. In a written submission filed by the applicants there was reference to other aspects of this settlement. When the Court enquired of counsel for the respondent as to whether there was objection to such material coming before the Court in that way, it was indicated that instructions were not available on this matter and therefore an objection was taken to it. When the solicitor for the applicants sought to tender certain further material counsel for the respondent indicated that if that material was admitted it would lead to an application for further evidence to be adduced. The tender was then withdrawn. In those circumstances, the Court has very limited material as to this aspect. It must therefore make a judgment on that limited material and not by reference to what happened otherwise in relation to it.

28    The only conclusion that is open to the Court on that aspect is that there was not such a pursuit on the part of the respondent of settlement such as would explain or justify its failure to adhere to its obligations under the Rules of the Court.

29    I now turn to the relevant principles as to indemnity costs. Both the solicitor for the applicants and counsel for the respondent helpfully took the Court to a wide range of authorities on the issue of indemnity costs. It is not feasible to survey all those authorities and therefore an attempt will be made to provide an overview of authority in the area. A useful starting point, albeit in a case where the issues were quite different to those presently before the Court, is the judgment of Badgery-Parker J in Rouse v Shepherd (No 2) (1994) 35 NSWLR 277. I refer to his Honour's judgment because the judgment usefully synthesises a number of relevant authorities on the issue. See, for example, the following passages extracted from pages 279 - 281:

The tendency of the courts has been to avoid unduly widening the cases in which indemnity costs will be awarded.

In Colgate-Palmolive Pty Ltd v Cussons (1993) 46 FCR 225 at 233 - 234: 118 ALR 248 at 256, Sheppard J reviewed the relevant common law principles:

4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (1887) 39 Ch D 133 at 141 said the Court had a general and discretionary power to award costs as between solicitor and client 'as and when the justice of the case might so require'. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston ([1981] 3 WLR 619) at 637 namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at p 8) in Tetijo, 'The categories in which the discretion may be exercised are not closed'. Davies J expressed (at p 6) similar views in Ragata.

5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152); evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (1993) 46 IR 301); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise: eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 49744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records [1983] Ch 59). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis." (Emphasis added.)

The plaintiff suggested that the facts of the case were such that liability was so clear as to be virtually unarguable so that it was unnecessary and unreasonable for the defendants to press the liability issue and refuse the tender of the depositions from the coronial inquiry.

...

However, a judge's exercise of discretion can be swayed by a consideration of the surrounding circumstances. In Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, Kirby P (Hope JA and Samuels J, concurring) held that indemnity costs should not be awarded to a respondent forced to resist an unmeritorious claim on numerous occasions after taking account of the fact that the applicant had been unrepresented and the applicable law was unfamiliar and not uncomplicated. Hunt J made an order for indemnity costs in favour of the plaintiff in Blackburn v State of New South Wales (Hunt J, 9 August 1991, unreported) in respect of a cross-claim which the defendant had pursued despite warnings from the plaintiff, views expressed by the judge and the fact that the defendant himself/herself should have known it had no chance of success.

...

In Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721, the Court of Appeal considered the objects of the rules of court as to indemnity costs and described them (at 724 - 725) as follows:

· Encourage savings of private costs and avoidance of the inherent risks, delays and uncertainties of litigation.

· To save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary.

· To indemnify the plaintiff where notionally the real cause and occasion of the litigation is the attitude adopted by the defendant.

Although the above objectives were discussed in relation to the offer of compromise rule (Pt 52, r 17) they would apply to any instance in which indemnity costs are awarded (such as those listed by Sheppard J in Colgate-Palmolive Pty Ltd v Cussons Pty Ltd).

30    Another judgment which also synthesises relevant authority in this area, albeit with somewhat different emphases to that of the judgment of Badgery-Parker J in Rouse v Shepherd (No 2) and which does so by reference to the other important Full Bench judgment in this jurisdiction is the judgment of the Full Bench of the Court Session (Bauer, Peterson and Marks JJ) in Australian Mutual Provident Society v Avis (unreported, Matter Nos IRC96/5473 and IRC96/5941, 18 December 1997). Their Honours' consideration included the following:

A number of observations have been made about the circumstances in which costs may be ordered on an indemnity basis in decided cases.

In Boner v Anderson (No 2) (1993) 50 IR 406 Hill J said (at 475):

There is little doubt that orders for costs on an indemnity basis still constitute exceptions to the general rule. While costs are, under the Act and the Rules, within the absolute discretion of the Court, nevertheless the Court must exercise its discretion judicially. Many of the criteria upon which such discretion is exercised in cases involving indemnity costs are to be found in the cases to which Mr Shaw referred and in a number of other cases dealing with the matter. It is fair to say that generally speaking an order for costs on an indemnity basis is justified in a case in which there are special or unusual features of an unmeritorious or improper nature surrounding the case of one party (usually the loser) which make it unreasonable and unfair that the successful party should be out of pocket as a result of the proceedings.

It is unnecessary to traverse the cases in any detail; they demonstrate in one form or another special or unusual circumstances which manifest themselves in improper or unmeritorious conduct by the unsuccessful party as, for example, in cases involving the maintenance of a vexatious claim or defence, the institution and/or maintenance of an action or defence which, while not vexatious or involving an ulterior or collateral purpose, may, on a rational basis, be described as untenable or doomed to failure and cases where a party has conducted its case in wilful disregard of known facts or clearly established law. However, even where there are special or unusual circumstances attaching to a particular case it does not follow as of course that indemnity costs will be awarded. But it may be observed, and the authorities demonstrate, that the categories of special or unusual circumstances justifying indemnity costs are not closed; a too rigid or narrow approach can lead to error in the exercise of the discretion. (See generally on indemnity costs Singleton v Macquarie Broadcasting Holdings Ltd and Qantas Airways Ltd v Dillington (unreported, Supreme Court, 14 May 1987) and Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 at 33 - 35, per Kirby P, Gleeson CJ concurring.

These observations were approved by the Full Court of the Industrial Court of New South Wales in Anderson v Boner (1993) 52 IR 114.

...

The New South Wales Court of Appeal considered the appropriateness of making an order for the payment of indemnity costs on appeal in Huntsman Chemical Co (Australia) Ltd v International Pools (Australia) Ltd (1995) 36 NSWLR 242. The judgments of Kirby P and Mahoney JA (as they then were) suggest that a cautious approach should be adopted to the awarding of indemnity costs, especially on appeal. This is consistent with the approach taken by Kirby P in Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 (at 32 - 4).

Despite certain decisions (referred to by Hill J in Boner v Anderson (No 2)) to the effect that there should be an increased tendency towards the awarding of indemnity costs, we consider that there is still in existence and operation a general approach to the effect that costs will be normally awarded on a party-party basis with indemnity costs to be awarded in the more exceptional case where conduct of a party justifies it. Hill J referred to those matters this way:

... a case in which there are special or unusual features of an unmeritorious or improper nature surrounding the case of one party (usually the loser) which make it unreasonable and unfair that the successful party should be out of pocket as a result of the proceedings.

The view of Morling J in Tobacco Industry Case, consistently with our thinking, was that fierce opposition to the claim was insufficient to ground indemnity costs; something more is needed. It seems to us that findings that the applicant should succeed under s 106 with respect to conduct which is unfair, harsh or unconscionable would be insufficient to meet that test. Further, the fact that the respondent has acted in a way which justifies the application of the section would equally be insufficient.

31    Lastly, on the question of general principles, I should refer to a passage relied upon by the applicants in the recent judgment of Greg James J in Lolomanaia v Roads and Traffic Authority [2000] NSWSC 780 at [22]. Although his Honour was dealing with a slightly different matter, that is, the question of the extent of indemnity provided by indemnity costs, his Honour did, however, make an important observation in these terms:

It is clear that costs on an indemnity basis have increasingly more frequently become available and that, although generally costs should not be seen as a punishment of an unsuccessful party, either when they are awarded or in the extent to which they [are] awarded, regard must be had to the principle that costs operate by way of compensation to the successful party for what has had to be incurred in successfully asserting that party's rights in court. It must be noted that indemnity costs are limited to those costs which are reasonably incurred in prosecuting the proceedings to a successful conclusion. Costs on an indemnity basis merely restore fully the successful party's position.

32    In applying the relevant authorities, care must be taken because each of the statements of principle is to be seen in the context of its particular application. Nevertheless, the statements of principle, in my view, are useful provided it is kept in mind that the present application is not made in the context of final proceedings, but in relation to a motion on a particular aspect so that, for example, when one considers the observations of James J, one would have regard to the different stage of the proceedings where that application was being dealt with.

33    Counsel for the respondent in a detailed submission strenuously submitted that the application should not be granted. It was, however, conceded that the Court in dealing with an application for indemnity costs possessed a wide discretion. Reliance was placed on the general proposition that costs will normally follow the event on the usual party/party basis; and that solicitor/client costs or indemnity costs are very much the exception.

34    Reference was made to the limited circumstances in which costs have been awarded other than on the usual basis even in contempt proceedings. A comparison was made between proceedings of the present kind and contempt proceedings to found the submission that in the light of the usual approach in contempt proceedings it would be inappropriate to make indemnity costs orders in proceedings of the present kind.

35    Emphasis was also placed on the consideration to which reference has earlier been made. That is, what was said to be the "usual or regular delay" and that it would be inappropriate to, as it were, in these proceedings "draw a line in the sand". That, counsel submitted, would be unfair to his client. If the Court was going to, as he submitted, change its practice, then it was not appropriate to do in a particular case, but some other (unspecified) approach should be adopted.

36    If counsel's submission is correct that what happened in this case is in some way usual or regular, that is a very unfortunate situation. In the absence of evidence to that effect, however, I do not accept that what is shown by the evidence is the usual or regular situation. I do not consider that the evidence that has been placed before the Court as to this matter represents anything other than an exceptional situation. By the very nature of the judicial process it is not open to the Court to deal with procedural approaches by parties other than in particular cases, particularly where what is relied upon here is not a matter which could be dealt with by an alteration to the Rules or by a practice direction. After all, what is raised here is non-compliance with the Rules. It is plainly not feasible to make a rule that the Rules are to be complied with. That would be a nonsense. Similarly, it is not feasible to promulgate a practice direction to similar effect. The Court will approach this matter in the way that the courts always do. That is, on a case by case basis, attempting to do justice in the particular case in terms of the material before it and in terms of the relevant authorities.

37    Counsel for the respondent also submitted that if indemnity costs were awarded against his client it would be, in effect, making an example of his client and again that would be unfair. I do not intend to approach this matter on the basis of making an example of anyone but there are authorities which do refer to the appropriateness of courts making decisions as to indemnity costs, in circumstances where it may be appropriate. For example as Kirby P, when his Honour was President of the Court of Appeal, said in Huntsman Chemical Co (Australia) Ltd v International Pools Australia Pty Limited (1995) 36 NSWLR 242 at 246:

The Court is entitled, in modern circumstances of enlarged attention to the efficient administration of justice, to keep in mind the consequences of an indemnity cost order not only for the particular parties before it but for the signal which it sends about the due administration of justice in like cases.

See also per Santow J in Cultus Petroleum v OMV Australia [1999] NSWSC 435 at [15]. However, I do not approach the present proceedings with the intention of sending a signal to other parties. If, however, the judgment in this matter has a desirable effect on the conduct of other parties in other proceedings, that may be a beneficial but unintended consequence of the decision I reach.

38    Before I come to the application of the principles to the present case, I should refer briefly to the purpose of the Rules in issue. That is, the recent amendment to the Rules which led to r 18A being inserted in them. The submissions of the solicitor for the applicants included, by reference to an article by Mr Peter Punch, solicitor, in the CCH Labour Law Reporter Volume 4, the following:

The purpose of Rule 18A is to set down a case management procedure to assist in the speedy disposition of unfair contract proceedings, particularly in relation to the conciliation of applications. A primary objective of Rule 18A was to remedy the situation which existed before the introduction of Rule 18A whereby the substantial legal costs incurred prior to conciliation and the delays associated with the existing procedure were perceived to be significant impediments to the effective disposition of claims at conciliation.

39    I am prepared, without seeking to lay down in any final way the purposive construction of r 18A, to accept that description as being, for the present proceedings, a reasonable description of at least some of the purposes of the Rule. It is interesting to note that in one of the extracts from the judgment of Badgery-Parker J referred to above, his Honour adopted certain statements in the Court of Appeal judgment in Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 which were to similar effect.

40    I consider that it is possible to deduce the following propositions for the present matter from the more general authorities earlier referred to:

1. It is only in exceptional cases where a court would make a costs order other than on the usual party/party basis.

2. The grant of indemnity costs is to be seen as an unusual and exceptional course and would only occur where there is some special or unusual feature of the case to justify the Court in departing from the usual practice.

3. Nevertheless, the grant of indemnity costs is, as with any exercise of judicial discretion, one to be exercised in all the circumstances of the case and, provided regard is had to the "exceptional" nature of such an order, the primary consideration with all such discretionary orders is that it will occur "as and when the justice of the case might so require".

4. Although most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of facts which would be capable, if they existed, of warranting a departure from the usual rule, nevertheless "the categories in which the discretion may be exercised are not closed".

5. Further, a too rigid or narrow approach may lead to error in the exercise of discretion.

6. Although there are a number of recent judgments to the effect that there should be an increased tendency towards the awarding of indemnity costs, such statements should be applied with great caution in the light of the existence and operation of the general approach as to the usual way in which costs orders will be made.

7. It is also important to ensure that considerations such as mere "fierce opposition to the claim" or the conduct of a respondent which might justify the grant of the substantive application are not matters which, in themselves, would lead to the grant the costs on an indemnity basis.

41    I consider that the proper application of the above principles would result, in the very particular circumstances of this case, in the grant of the applicants' claim that indemnity costs should be granted to them in relation to the motion. This arises from the pattern of approach adopted by the respondent which was a consistent unwillingness to have regard to or comply with its obligations under the Rules and to resist any request or attempt by the applicants to comply with the Rules or to otherwise regularise the proceedings to the extent that might have then been possible.

42    An examination of the factual circumstances makes clear that there was not only disregard of its obligations under the Rules by the respondent, but a continuing unpreparedness to have regard to those obligations and an unwillingness to comply with any reasonable request made on behalf of the applicants to bring the proceedings into any measure of conformity with the appropriate process required by the Rules. Such pattern of conduct, I conclude, is not the usual course in proceedings before the Commission, either under s 106 or otherwise; nor would I expect it to be.

43    I should refer to two aspects which exemplify the pattern which I find is established on the evidence but, by referring to these matters, I am not to be taken as saying that these matters are the only matters which establish the pattern. I emphasise that the pattern is established by a consideration of all the evidence before the Court. The two matters are, firstly, the filing of conditional appearances, notwithstanding the clear statement by the Court in Taudevin v Egis Consulting (Australia) Pty Ltd (1999) 97 IR 165. It is relevant to note that there was no submission made in the proceedings that the observations in that case as to the inappropriateness of filing conditional appearances were incorrect.

44    The second matter is the refusal, even after the motion was filed and notwithstanding an almost plaintive attempt made by the applicants' solicitors to see if any measure of consent could be obtained from the respondent, to provide any positive response.

45    Before leaving that last aspect I should also refer to a submission made by the respondent. It was suggested that it was entirely inappropriate for the applicants to move the Commission in the light of the developments that had occurred to that point. I do not accept that submission. As the solicitors for the applicants submitted, at that point in the proceedings and at that stage of the year the applicants were very much in the position, to use the colloquialism proffered on their behalf, "damned if they did and damned if they didn't." Although the Court would certainly have attempted to assist the parties if a motion was filed in the last week of term or during law vacation, legal practitioners are, understandably, reticent about taking such a step and certainly have no assurance that the Court would necessarily be in a position to provide such assistance. It cannot, therefore, be a valid criticism of the applicants and their solicitors that they commenced the proceedings by way of notice of motion at the time particularly in light of the pattern of conduct of the respondent vis-a-vis the Rules of the Commission and its continued reticence in giving any useful assurance as to the way in which it would conduct the proceedings.

46    In referring to those matters I do so merely to indicate by way of example the rejection of the various matters of detail raised by the respondent in its defence of its position in the present application. I do not consider that any of those matters raised has any effect in rebutting the application which I consider should be granted. I have taken the view that this matter has gone on as long as it should and although on one view it may have been appropriate to reserve this judgment, on balance the more appropriate course was to give judgment today.

47    It remains to make the formal order, subject to any matters of detail which either solicitor wishes to raise. The Court makes the following order in relation to the costs as to the various notices of motion filed by the applicants on 1 December:

1. That the respondent in each matter shall pay on an indemnity basis the costs of the applicants in each matter of and incidental to the notices of motion filed by the applicants on 1 December 2000.

(The parties then addressed the Court)

48    The Court makes the following further direction:

2. That the parties are directed to confer as to establishing a list of mutually convenient dates for the purposes of conciliation and any further matters relevant to that issue and to provide a list of those dates by facsimile to the Registry. The parties have liberty to apply as to that issue if there is any problem in that regard.

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LAST UPDATED: 02/03/2001