Nandini Fonseka v Epic Hotels Pty Limited and Anor [2008] NSWIRComm 79 (24 April 2008)

New South Wales Industrial Relations Commission

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Nandini Fonseka v Epic Hotels Pty Limited and Anor [2008] NSWIRComm 79 (24 April 2008)

Last Updated: 30 May 2008

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION :
Nandini Fonseka v Epic Hotels Pty Limited and Anor [2008] NSWIRComm 79



FILE NUMBER(S):
IRC 1367

HEARING DATE(S):
28 March 2008

DATE OF JUDGMENT:
24 April 2008

PARTIES:
APPLICANT (Respondent on first motion/Applicant on second motion):
Nandini Fonseka

FIRST RESPONDENT (Applicant on first motion/Respondent on second motion):
Epic Hotels Pty Limited

SECOND RESPONDENT (Applicant on first motion/Respondent on second motion):
Swiss Garden International Limited

CORAM:
Boland J President


CATCHWORDS: Unfair contract - Interlocutory proceedings - Application by respondents seeking dismissal of proceedings for want of prosecution - In the alternative application by respondents seeking stay of proceedings until outstanding costs orders are met - In the further alternative application by respondents seeking security for costs - Notice of motion by applicant seeking creation of fund by respondents to provide security - Whether s 824 of Workplace Relations Act 1996 (Cth) precludes a costs order being made against the applicant - Respondents' application for stay granted - Applicant's application for creation of fund refused - Section 824 of Workplace Relations Act no bar to costs order - Costs reserved.

Stay of proceedings - Unfair contract - Interlocutory proceedings - Application by respondents seeking dismissal of proceedings for want of prosecution - In the alternative, application by respondents seeking stay of proceedings until outstanding costs orders are met - Respondents' application for stay granted.

Costs - Unfair contract - Interlocutory proceedings - application by respondents seeking stay of proceedings until outstanding costs orders are met - In the further alternative application by respondents seeking security for costs - Whether s 824 of Workplace Relations Act 1996 (Cth) precludes a costs order being made against the applicant - Respondents' application for stay granted - Section 824 of Workplace Relations Act no bar to costs order - Costs reserved.


LEGAL REPRESENTATIVES
APPLICANT:
Mr I C Latham of Counsel
Solicitors:
Mr G H Healy
G H Healy & Co Solicitors
FIRST & SECOND RESPONDENTS:
Mr A T Britt of Counsel
Solicitors:
Mr J P Dawson
Carneys Lawyers

CASES CITED:
Australian Authorised Investments Ltd v Nclue Investments Pty Ltd (2002) 122 IR 242
Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd and Others (1987) 16 FCR 497
Enn Vilo v John Fairfax & Sons Limited & Anor (Unreported, Supreme Court of New South Wales, Sperling J, 17 November 1995)
Everitt v Cuscal Shared Services Pty Ltd and anor [2005] NSWIRComm 319
Goldman Sachs J B Were Services Pty Limited v Nikolich [2007] FCAFC 120
Hakim and Hakcom Investments Pty Ltd & anor [2004] NSWIRComm 405
Hansen Yuncken Pty Ltd v Costopoulos [2004] NSWIRComm 249; (2004) 136 IR 61
Idoport Pty Limited v National Australia Bank Limited & 8 Ors [2001] NSWSC 744
Johnson v Lake Macquarie City Council and McCloys Pty Ltd (1995) 87 LGERA 22
Knott v Signature Security Group Pty Limited (2001) 104 IR 84
Koprivnjak and Others v Body Corporate Services (NSW) Pty Limited (1999) 87 IR 49
KP Cable Investments Pty Ltd v Meltglow Pty Ltd and Others (1995) FCR 189
M A Productions Pty Ltd v Austarama Television Pty Ltd & Anor (1982) 7 ACLR 97
National Union of Workers and Another v Davids Distribution Pty Ltd [1999] FCA 1109; (1999) 91 FCR 513
Nutshack Franchise Pty Ltd and others v Smith and Another (1999) 90 IR 355
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Piriz v AAPT Limited [2005] NSWIRComm 374
Rajski and Another v Computer Manufacture & Design Pty Ltd and Others [1982] 2 NSWLR 443
Raymond Hoser v Christopher Hartcher [1999] NSWSC 527
Razvan v Berechet (Unreported, New South Wales Court of Appeal, Kirby P, Samuels JA, Meagher JA, 23 February 1990)
Stollznow v Calvert (1980) 2 NSWLR 749
Surfing Hardware International Holdings Pty Limited and Ors v William McCausland and Anor (No 6) [2007] NSWIRComm 285
Syddeck Pty Ltd v Transport Workers' Union of New South Wales [2005] 145 IR 160
Tristar Steering and Suspension Australia Limited v Industrial Relations Commission of New South Wales (No. 2) [2007] FCAFC 95
Williamson v Service Corporation International (Australia) Pty Limited [2003] 130 IR 247

LEGISLATION CITED:
Industrial Relations Act 1996 ss 105, 106, 181,181(1)
Industrial Relations Commission Rules 1996 r 146
Interpretation Act 1987 ss 65, 67(2)
Judiciary Act 1903 (Cth) s 78B
The Constitution s 109
Workplace Relations Act 1996 (Cth) s 824


TEXTS CITED:




JUDGMENT:

INDUSTRIAL COURT OF NEW SOUTH WALES

CORAM: BOLAND J, President

24 April 2008

Matter No IRC 1367 of 2003

FONSEKA v EPIC HOTELS PTY LIMITED AND ANOTHER

Application by Nandini Fonseka under s 106 of the Industrial Relations Act 1996

INTERLOCUTORY JUDGMENT

[2008] NSWIRComm 79

1 Nandini Fonseka ('the applicant') has sought relief under s 106 of the Industrial Relations Act 1996 in respect of contracts (as defined by s 105 of the Act) under which she performed work for Epic Hotels Pty Ltd ('first respondent') and Swiss Gardens International Limited ('second respondent') in the hospitality industry. Ms Fonseka alleged that the contracts were unfair, harsh and unconscionable and contrary to the public interest.

2 By any measure the applicant has failed to prosecute her case in a timely way. The applicant's summons for relief was filed on 12 March 2003. The delay has led to a notice of motion being filed by the respondents seeking that the proceedings be dismissed for want of prosecution or, in the alternative, stayed. In the further alternative, security for costs is sought. The orders sought by the respondents are that:

1. The proceedings are dismissed for want of prosecution.

2. The Applicant pays the Respondents’ costs as agreed or as assessed.

3. Further and in the alternative to orders 1 and 2, the matter be stayed until the Applicant complies with the orders of Her Honour Justice Backman of 21 September 2006 and the NSW Supreme Court in proceedings 11824/2007.

4. Further and in the alternative to orders 1, 2 and 3, the hearing of the proceeding is adjourned until after the Applicant files and serves her evidence in Reply.

5. Further and in the alternative to orders 1, 2 and 3, the Applicant provides security of costs in the amount of $50,000.00 by 5 February 2007 (sic).

6. In the alternative to order 5, that the Applicant provide security of costs in the amount ordered by the Court by the date ordered by the Court.

7. The proceedings are stayed in the event security of costs is not paid by the required date.

8. Costs.

3 The applicant responded to the respondents' motion by filing her own motion, which seeks the following orders:

1. The Respondents create a fund of money of no less than $250,000.00 in proceedings 1367 of 2003 secured to the satisfaction of the Court.

2. With respect to the fund of money of no less than $250,000.00 the Respondents Solicitors Carneys have access in respect to payment to the Applicant should there be Orders for payment in favour of the Applicant.

3. In relation to the Respondents earlier Cost Orders against the Applicant, pending Hearing of proceedings 1367 of 2003 the Applicant to pay a monthly sum of $3,009.00 to the Respondents.

4. The within proceedings be adjourned for a period of no less than four (4) months.

5. Costs.

4 This interlocutory judgment deals with the two motions.

Dismissal for want of prosecution

5 In support of their motion to dismiss for want of prosecution the respondents relied on the unchallenged affidavit of John Philip Dawson, solicitor for the respondents, sworn on 23 January 2008. Mr Dawson relevantly deposed as follows:

5. The summons for relief was filed on 12 March 2003 by the Applicant.

6. Since that time, there has been a history of non-compliance by the Applicant with orders and/or directions of the Court which has led considerable delay in the matter reaching a final hearing. It has now been almost 5 years since this matter commenced.

...

8. At a directions hearing on 17 August 2006 Her Honour Justice Backman granted leave to the Applicant, amongst other things, to file a further amended summons and further affidavit material.

9. On 21 January 2008, I caused a registration clerk employed by Carney's Lawyers to attend the registry of the industrial relations commission to check the Court file. To the best of my knowledge and belief, a further amended summons has not been filed by the Applicant in accordance with Her Honour's orders.

10. The hearing date set down in August 2006 was vacated on the Respondent's application due to the late service of material by the Applicant.

11. The costs order made against the Applicant, which was payable immediately after agreement or assessment, reflected the failure of the Applicant to comply with orders made by the Court. The orders made by Her Honour were as follows:

1. The applicant is to pay the respondent's costs on a party/party basis, as agreed or assessed, in respect of the applicant's notice of motion filed on 7 August 2006.

2. The applicant is to pay the respondent's costs on an indemnity basis, as agreed or assessed, thrown away by reason of;

2.1 The further amended summons for relief;

2.2 The late filing of affidavit evidence;

2.3 The vacation of the hearing dates of 28 August 2006 to 30 August 2006, inclusive.

3. The applicant is to pay the costs referred to in the preceding orders within 28 days of the costs being agreed or assessed.

...

12. The Respondents had those costs assessed.

13 The Respondents served the Applicant with a sealed copy of an Application for Assessment of Costs filed in the Supreme Court of NSW (Proceedings Number 246 of 2007) on 19 February 2007.

14. The Costs Assessor in proceedings 246 of 2007 issued Certificates of Determination of Costs of Costs Assessment together with a Statement of Reasons on 5 April 2007.

...

16. The Certificates of Determination were registered as a judgment in Supreme Court Proceedings 11824 / 2007.

17. The Applicant has not satisfied the costs order made against her by the Court.

18. The Respondents have received $352.45 out of a total of $16,861.98 due to them as a result of judgement obtained in respect of the costs order made by the Court. Judgment for the amount of $16,861.98 was obtained in Supreme Court proceedings 11824 / 2007, of which $16,509.53 remains outstanding....

19. On 6 February 2007 His Honour Justice Boland made orders in Chambers that:

1. That the orders made on 6 November 2006 be vacated.

2. That the Respondents file and serve evidence on or before 7 March 2007.

3. That the Applicant file any evidence in reply by the 28 March 2007.

4. That the matter be listed for further directions on 6 April 2007 at 9:30.

20. The Respondent filed and served its evidence on or about 7 March 2007.

21. The Applicant did not file her evidence in reply.

22. On 16 May 2007 His Honour Justice Boland made orders that

1. That the Applicant’s affidavit to be filed and served by 4pm on 10 September 2007.

2. That the Respondent to file and serve affidavits by 4pm on 22 October 2007.

3. Hearing dates tentatively set for 5, 6 and 7 December.

23. Despite these orders the Applicant has not filed her evidence (sic) her evidence/evidence in reply as required by orders of the Court.

24. As at the date of swearing this affidavit, the Respondents have incurred approximately $72,174.00 in legal costs. I estimate that there will be a further $27,000.00 in costs should the matter proceed to a final hearing. This further estimate includes Counsel’s estimate of $12,000.00.

...

6 The respondents contended that the evidence in the proceedings demonstrated that:

(a) the respondents had taken steps before Boland J to secure progress in the proceedings and to activate an apparently inactive applicant;

(b) there was delay between the date the cause of action allegedly arose (the applicant was terminated on 14 March 2002) and the commencement of the proceedings (12 March 2003);

(c) the applicant had demonstrated a history of delay in the proceedings;

(d) there was a risk that the delay had led to the fading of recollections of the respondents’ witnesses;

(e) the applicant had limited or little prospects of success for the following reasons:

(i) the applicant was covered by a federal award since she was employed by a member of the Australian Hotels Association. As such the applicant’s employer was at all relevant times a respondent to a range of federal awards. This means her employment was covered by either the Hotel Managerial Staff (Federal) Award 1974 or the Hospitality Industry - Accommodation, Hotels Resorts and Gaming Award 1995. In these circumstances the Court had no jurisdiction to determine the applicant’s claims and her matter should be dismissed (see Hansen Yuncken Pty Ltd v Andreas Costopoulos [2004] NSWIRComm 249 and Everitt v Cuscal Shared Services Pty Ltd and anor [2005] NSWIRComm 319);

(ii) the applicant was paid a fair notice and redundancy benefit;

(iii) there was little or no evidence to support much of the applicant’s claims; and

(iv) the applicant now wished to have her proceedings determined in either this Court or the Chief Industrial Magistrate’s Court but no such power existed to transfer s 106 proceedings to that Court. Further, the application would appear to be an underpayment claim and as such the Court has no jurisdiction to determine those claims under s 106 (see Huskisson RSL Sub-Branch Club Ltd v Sullivan (1990) 20 NSWLR 332; Hearne v Rusanow T/as Newton Taxi Management Pty Ltd [1997] NSWIRComm 26; O'Brien v Australian Native Landscapes Pty Ltd [2001] NSWIRComm 145; and Maestrale & Anor v Australian National Security Pty Ltd t/as All Night Security & Ors [2005] NSWIRComm 441).

(f) the applicant’s failure to provide further evidence was based upon her concern that she did not wish to put other persons' employment at risk. In respect of this reason, the respondents submitted:

(i) the alleged witness were unnamed;

(ii) the alleged witness may have already ceased employment with the respondents some time earlier;

(iii) such persons cannot now be employed by the respondents since 3 December 2007 (the hotel and the business of the hotel was sold. Settlement took place on 3 December 2007);

(iv) the identity of these alleged witnesses were so secret they had not even been provided to the applicant's solicitor, Mr G H Healy, by way of instructions; and

(v) the respondents gave the Court certain undertakings (counsel for the respondents assured the court that no employee would have his or her employment jeopardised by giving evidence in these proceedings).

7 In the circumstances, the respondents submitted, the Court should strike out the applicant’s summons for want of prosecution.

8 Whilst it was not disputed that the applicant was in breach of directions and orders of the Commission, the applicant opposed the motion to dismiss. It was submitted the breaches could be dealt with by the alternative orders sought by the respondents. Those orders were not opposed by the applicant.

9 Counsel for the applicant submitted that the strongest argument in favour of the respondents' dismissal motion was that the applicant had little prospects of success. That argument, it was noted, was put on the basis that a federal award covered the applicant's employment. Counsel submitted there was no evidence of the award, of the proof of respondency or of the alleged level of inconsistency. It was submitted that the Court should not dismiss a summons on such a basis.

10 Counsel for the applicant further submitted that the respondents' "secondary arguments as to the claim being essentially one for underpayment is a much weaker submission." It was contended there were a number of aspects of the summons that did not go to the question of underpayment and it would, therefore, be unfair to the applicant to have those claims denied without a hearing.

11 The power of the Court to dismiss for want of prosecution arises from r 146 of the Industrial Relations Commission Rules 1996. Rule 146 provides:

146 Want of prosecution

Where any party has not done any act required to be done by or under the Act or any other Act or otherwise has not pursued the proceedings with due diligence, a tribunal may:

(a) order that the application be dismissed for want of prosecution, or

(b) fix a definite time for the doing of the act and at the same time order that upon non-compliance the application shall stand dismissed for want of prosecution or subsequently, in the event of non-compliance, order that it be dismissed, or

(c) make such further or other order as in the circumstances may seem just.

12 In applying r 146 the Court has applied the principles developed in the Supreme Court (see Koprivnjak and Others v Body Corporate Services (NSW) Pty Limited (1999) 87 IR 49; Piriz v AAPT Limited [2005] NSWIRComm 374 and Hakim and Hakcom Investments Pty Ltd & anor [2004] NSWIRComm 405). These principles were summarised by Simpson J in Raymond Hoser v Christopher Hartcher [1999] NSWSC 527, which are set out in the judgment of Staff J in Hakim at [24].

13 As Simpson J noted in Hoser, the ultimate question is whether, on balancing the prejudice to the respective parties by making or not making an order, justice demands that the action be dismissed: Stollznow v Calvert (1980) 2 NSWLR 749 at 751 (Court of Appeal); Razvan v Berechet (Unreported, New South Wales Court of Appeal, Kirby P, Samuels JA, Meagher JA, 23 February 1990); Enn Vilo v John Fairfax & Sons Limited & Anor (Unreported, Supreme Court of New South Wales, Sperling J, 17 November 1995). And as Kirby P noted in Razvan, the discretion to strike out for want of prosecution should be exercised only in a clear case where it is manifestly warranted.

14 In my opinion, this is a case that comes very close to warranting dismissal. The claim was initiated in 2003. It is now 2008. There has been such a degree of procrastination and delay on the part of the applicant that, despite attempts by the respondents to progress the proceedings, one may be forgiven for believing the applicant simply could not make a decision about whether she wished to press her case for relief. The applicant has also breached the Court's orders and directions.

15 Despite the strength of the respondents' case for dismissal, I do not propose to deny the applicant the opportunity of pursuing her claims. I am not in a position to determine with any degree of certainty what are the applicant's prospects of success. However, the claim appears to be regular on its face and discloses a cause of action, and so I should proceed on the basis that the claim is bona fide with a reasonable prospect of success: Idoport Pty Limited v National Australia Bank Limited & 8 Ors [2001] NSWSC 744 at [49] referring to KP Cable Investments Pty Ltd v Meltglow Pty Limited and Others (1995) 56 FCR 189 at [39]; M A Productions Pty Ltd v Austarama Television Pty Ltd & Anor (1982) 7 ACLR 97 at 100; and Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd and Others (1987) 16 FCR 497 at 514.

Stay of proceedings

16 The respondents seek, in the alternative, an order to the effect that the matter be stayed until the applicant complies with the orders of her Honour Justice Backman of 21 September 2006 and the NSW Supreme Court in proceedings 11824/2007. Reliance was placed on Nutshack Franchise Pty Ltd and others v Smith and Another (1999) 90 IR 355 at 360-361; Australian Authorised Investments Ltd v Nclue Investments Pty Ltd (2002) 122 IR 242 at 245; and Syddeck Pty Ltd v Transport Workers' Union of New South Wales [2005] 145 IR 160 at [14].

17 On 21 September 2006 Backman J ordered the applicant to pay the respondents their legal costs as agreed or assessed within 28 days. Those costs were assessed. Subsequently a judgment for those costs was obtained from the Supreme Court. The respondents have received $352.45 out of a total of $16,861.98 due to them as a result of judgment obtained in respect of the costs order made by the Court.

18 I propose to make an order in the terms sought in order 3 of the respondents' motion. I note the applicant does not oppose such an order, nor in my view, could it reasonably do so in the light of Nutshack, Nclue and Syddeck. This necessarily means that order 4 in the applicant's motion will be refused.

Security for costs

19 The respondents seek an order for security for costs in the amount of $50,000. In the alternative, that the applicant provides security for costs in the amount ordered by the Court by the date ordered by the Court and that the proceedings are stayed in the event security for costs is not paid by the required date.

20 There was no issue regarding the Court's power to make orders in relation to security for costs. The respondents relied on the Court's inherent jurisdiction (see Williamson v Service Corporation International (Australia) Pty Limited [2003] 130 IR 247 at [36]-[46]) and the applicant took no issue with that submission.

21 The parties accepted that the decision of Wright J, President in Knott v Signature Security Group Pty Limited (2001) 104 IR 84 at [24] correctly sets out the law relating to security for costs where the order for security for costs is sought to be obtained against a natural person. That is to say, only in exceptional circumstances would a court order natural persons who are plaintiffs to provide security for costs - for instance, where the natural person is, "...a foreign or merely nominal plaintiff".

22 The respondents contended, however, this was not the only exceptional circumstance in which security would be ordered. Another such circumstance included outstanding costs orders (see Rajski and Another v Computer Manufacture & Design Pty Ltd and Others [1982] 2 NSWLR 443 and Johnson v Lake Macquarie City Council and McCloys Pty Ltd (1995) 87 LGERA 22).

23 The respondents referred to the decision of Einstein J in Idoport in which his Honour identified the general nature of the discretion to make security for costs orders and factors to be taken into account in the exercise of that discretion. The following principles were stated by his Honour:

(i) the discretion to award security for costs requires to take into account all of the relevant facts matters and circumstances and is a judicial discretion to be exercised following the adducing of all evidence by each party to an application seeking to have such an award made (at [47]),

(ii) the inability of the plaintiff to meet the costs of the successful defendant, being the occasion for invoking the exercise of the discretion, is likely to play an important if not decisive role (at [47] referring to the decision of Giles J in Rosenfield Nominees Pty Ltd v Bain and Co (1988) 14 ACLR 467 at 470),

(iii) Because the discretion to be exercised by the Court is a wide one which should remain unfettered, the circumstances in which the discretion should be exercised in favour of making the order cannot and should not be stated exhaustively: Spiel v Commodity Brokers Australia Pty Ltd at 415 (at [48]),

(iv) Beazley J in KP Cable Investments set out 7 guidelines [three of which are relevant] which the Court is said to typically take into account when determining such an application:

1. That such applications should be brought promptly...

2. That regard is to be had to the strength and bona fides of the applicant's case are relevant considerations: see M A Productions Pty Ltd v Austarama Television Pty Ltd and Anor (1982) 7 ACLR 97 at 100; Bryan E. Fencott Pty Ltd at 514. As a general rule, where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with a reasonable prospect of success. (Bryan E. Fencott at 514).

3. Whether the applicant's impecuniosity was caused by the respondent's conduct subject of the claim: see M A Productions Pty Ltd v Austarama Television Pty Ltd at 100.

...

(v) the possibility of stultification is a “powerful” factor to be taken into account by the Court in exercising its discretion as to whether an order is appropriate: Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542. However, Clarke J in Yandil observed that the fact that a plaintiff is financially unable to provide security does not lead to the inevitable conclusion that the making of the order will stultify the plaintiff’s claim nor does it lead to the automatic refusal of an order (at [50]).

24 In considering the foregoing principles, I note from the evidence that the applicant has not complied with orders of the Court in relation to costs and it appears the reason for this is because the applicant simply does not have the financial resources to do so other than by payment by instalments. Further, a property search by the respondents could not identify any real property held by the applicant within the jurisdiction.

25 In relation to the application for security having been brought promptly, it was not. The costs order was made in April 2007 and was effective in May 2007. The respondents conceded there was delay in bringing the application. However, I do not consider much turns on the question of delay.

26 There was no evidence that the applicant's apparently strained financial circumstances were caused by the respondents' conduct which is the subject of the claim and no evidence that the respondents' application for security is oppressive, in the sense that it is being used merely to deny the applicant a right to litigate.

27 As matters presently stand the applicant's claim is, prima facie, regular on its face and discloses a cause of action. As it was said in Idoport, in the absence of evidence to the contrary, the Court should proceed on the basis that the claim is bona fide with a reasonable prospect of success.

28 There is a distinct possibility that the applicant's claim will be stultified if an order for security is made. This is a powerful factor to be taken into account by the Court in exercising its discretion. On the other hand, McHugh J has warned in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97 that to the extent it can be avoided, the court should not permit a situation to arise where a party’s success is pyrrhic.

29 Nonetheless, the mere fact that the plaintiff is impecunious does not provide a gateway into security for costs: Idoport at [53]. And given the requirement for exceptional circumstances where an order is sought against a natural person, which are not present here, the balance falls in favour of not granting the respondents' order. I note counsel for the respondents' reliance on Johnson and Rajski. In Johnson, although part of the rationale in that case for granting an order for security of costs was that there were outstanding costs orders, it was also the case that the plaintiff was receiving financial assistance from "a syndicate of people". In Rajski, the corporate plaintiff was and had been managed by the personal plaintiff so as to be denuded of all assets before the litigation commenced and where Holland J considered that an order for security of costs was not likely to stultify the proceedings. The two cases are, therefore, distinguishable. I do not propose to make orders against the applicant for security for costs.

Creation of a fund

30 I turn to the applicant's motion. The applicant seeks orders for the creation of a fund of money. The applicant made no submissions in support of her claim regarding the creation of a fund and consequently there was no explanation of the basis upon which the Court could or would make orders of the nature sought. Moreover, there was no evidence that the respondents would be unable to meet any order of the Court in these proceedings. I intend to refuse orders 1 and 2 sought in the applicant's notice of motion.

Payment of outstanding costs

31 The applicant next sought orders enabling her to pay the outstanding costs orders by instalments at the rate of $3,009.00 per month. This Court does not have jurisdiction to vary the orders of the Supreme Court nor to act, in effect, as an appellate court in respect of the orders made by Backman J or the Supreme Court. Order 3 in the applicant's notice of motion will be refused.

Costs

32 The last matter for determination is the question of costs. The respondents seek their costs of the motion. The applicant contended that given the respondents had raised as a defence the issue of whether the applicant's employment was subject to federal award coverage, costs may not be ordered except in the circumstances that arise in s 824 of the Workplace Relations Act 1996 (Cth). Reliance was placed on Goldman Sachs J B Were Services Pty Limited v Nikolich [2007] FCAFC 120 per Black CJ at [86].

33 Section 824 of the Workplace Relations Act provides:

824 Costs only where proceeding instituted vexatiously etc.

(1) A party to a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) must not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause.

(2) Despite subsection (1), if a court hearing a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) is satisfied that a party to the proceeding has, by an unreasonable act or omission, caused another party to the proceeding to incur costs in connection with the proceeding, the court may order the first-mentioned party to pay some or all of those costs.

(3) In subsections (1) and (2):

Costs includes all legal and professional costs and disbursements and expenses of witnesses.

34 As Kiefel J observed in Tristar Steering and Suspension Australia Limited v Industrial Relations Commission of New South Wales (No. 2) [2007] FCAFC 95 in relation to s 824:

The test for determining whether a proceeding is a matter arising under the Act, for the purposes of the section, is ‘whether the right or duty that is sought to be enforced owes its existence to a provision of the Act’: Re McJannet; Ex parte Australian Workers’ Union of Employees (Q) [No 2] [1997] HCA 40; (1997) 189 CLR 654 at 656.

35 This Court's power to award costs is governed by s 181 of the Industrial Relations Act and the relevant Rules: see Pt 27 of the Industrial Relations Commission Rules 1996. Section 181(1) of that Act provides:

(1) Subject to the rules of the Commission and any other Act or law:

(a) the Commission may award costs, and

(b) costs are in the discretion of the Commission, and

(c) the Commission may determine by whom and to what extent costs are to be paid, and

(d) the Commission may order costs to be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis.

36 The term “Act or law” is to be interpreted to mean a State Act or law and not a Commonwealth Act (see s 65 and s 67(2) of the Interpretation Act 1987 (NSW)). It would seem, however (notwithstanding that notices under s 78B of the Judiciary Act 1903 (Cth) had not been issued), that the applicant contends there is an inconsistency between s 824 of the Workplace Relations Act and s 181 of the Industrial Relations Act and that by virtue of s 109 of the Constitution, s 824 prevails to the extent of the inconsistency.

37 The respondents' answer to this is that they are not relying upon a defence or a matter arising under the Workplace Relations Act (see National Union of Workers and Another v Davids Distribution Pty Ltd [1999] FCA 1109; (1999) 91 FCR 513 at [20]- [21], which was relied upon by the applicant) but rather s 109 of the Constitution. Consequently, it was submitted, s 824 of the Workplace Relations Act does not prevent an order of costs being made in circumstances where the defence is based upon s 109 of the Constitution concerning the Commission’s lack of jurisdiction: see Tristar Steering and Suspension Australia Limited v Industrial Relations Commission of New South Wales (No. 2) [2007] FCAFC 95 Kiefel J at [2]; Gyles J at [4] and Buchanan J at [7-16].

38 The respondents' contention in the substantive proceedings is to be that the applicant's employment was subject to the coverage of a federal award (either the Hotel Managerial Staff (Federal) Award 1974 or the Hospitality Industry - Accommodation, Hotels Resorts and Gaming Award 1995) and, therefore, by virtue of s 109 of the Constitution, the Court has no jurisdiction to determine the applicant's claims: Hansen Yuncken Pty Ltd v Costopoulos [2004] NSWIRComm 249; (2004) 136 IR 61 and Everitt v Cuscal Shared Services Pty Ltd and anor [2005] NSWIRComm 319.

39 In Tristar (No 2), Buchanan J observed at [16]:

[16] In my view, it cannot correctly be maintained that the relief which was granted by the orders earlier made in the present matter was a vindication of a right or duty conferred or created by the WR Act. Rather the right or duty (if that is the correct way to regard the absence of jurisdiction in the IRC) arose from the operation of s 109 of the Constitution. The proceedings were brought to enforce the duty upon the IRC not to act outside its jurisdiction, in circumstances where the IRC had made plain its intention to do so. The fact that s109 of the Constitution was engaged by reason of the terms of the WR Act does not signify, in my view, that the proceedings were ‘in a matter arising under’ the WR Act within the meaning of s 824 of the WR Act. In my view the Court has power to make an order for costs in the proceedings.

40 In the present case, the respondents are engaging s 109 by reason of the terms of the Workplace Relations Act, which provides for the making of federal awards, such federal awards prevailing over any inconsistent State law by virtue of s 109 of the Constitution. The respondents' defence, based as it is on the existence of a federal award, does not arise under the Workplace Relations Act but rather as a consequence of the Constitution. Accordingly, the Court has power to make an order for costs in the proceedings.

41 The Court may exercise its power as to costs “at any stage of the proceedings or after the conclusion of the proceedings” (r 203(1) of the Industrial Relations Commission Rules) and may require that the costs the subject of an order for costs be “paid forthwith notwithstanding that the proceedings are not concluded”: r 203(2) of the Rules. The circumstances in which a cost order may be made prior to the final order for costs were considered by the Full Bench in Surfing Hardware International Holdings Pty Limited and Ors v William McCausland and Anor (No 6) [2007] NSWIRComm 285 particularly at [50] - [51]. As it was noted at [50], one circumstance in which a cost order may be made prior to the final order for costs is where a question in the proceedings has been separately determined, no issue in the trial of the balance of the proceedings overlaps with the question in the separate determination and no issue in the trial of the balance of the proceedings can cast doubt on the correctness of an order for costs. It was further noted, however, at [51] that a guiding factor is whether the “demands of justice” (or the “interests of justice”) support the making of costs order prior to the final order for costs.

42 It is apparent on the evidence in the proceedings that the applicant is finding it difficult to comply with the already outstanding costs orders that have been made against her. Additional costs orders at this stage would most likely prolong the period of the stay I propose to grant. Given that it is open to the Court to reserve the costs of the motions and for any costs to be included in the final order for costs unless the Court “otherwise orders” (r 210), in my discretion that is what I propose to do in this case.

Orders

43 The Court makes the following orders:

(1) In relation to the applicant's motion:

(a) Orders 1, 2, 3, 4 and 5 are refused.

(b) Costs are reserved.

(2) In relation to the respondents' motion:

(a) Orders 1, 2, 4, 5, 6, 7 and 8 are refused.

(b) The proceedings are stayed until the applicant complies with the orders of Backman J of 21 September 2006 and the New South Wales Supreme Court in proceedings 11824/2007.

(c) Costs are reserved.

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LAST UPDATED:
16 May 2008