SBP Employment Solutions Pty Ltd v Smith (No 2)

• Jurisdiction: Australia Federal only
• Judgment Date: 13 August 2021
• Neutral Citation: [2021] FCA 937
• Court: Federal Court
• Date: 13 August 2021

Federal Court of Australia

SBP Employment Solutions Pty Ltd v Smith (No 2) [2021] FCA 937

Appeal from:	Smith v SBP Employment Solutions Pty Ltd & Ors (No 2) [2019] FCCA 3318 Smith v SBP Employment Solutions Pty Ltd & Ors (No 3) [2019] FCCA 3516 Smith v SBP Employment Solutions Pty Ltd & Ors (No 4) [2020] FCCA 61
File number:	QUD 775 of 2019QUD 45 of 2020
Judgment of:	RANGIAH J
Date of judgment:	13 August 2021
Catchwords:	COSTS – Federal Court of Australia Act 1976 (Cth) s 43 – application for costs in matter arising under the Fair Work Act 2009 (Cth) – where the respondent rejected a Calderbank offer to settle before the trial – where a single offer was made on behalf of all the appellants but their individual liability differed – where the offer was greater than the ultimate award – whether the unreasonable act or omission of the respondent caused the appellants to incur costs – no order as to costs
Legislation:	Fair Work Act 2009 (Cth) ss 44, 340 and 570 Federal Court of Australia Act 1976 (Cth) s 43
Cases cited:	Calderbank v Calderbank [1975] 3 All ER 333 Cugara v Frankston City Council [2012] FCA 1299 Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 3) [2017] FCA 810 Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221 SBP Employment Solutions Pty Ltd v Smith [2021] FCA 601 Shea v EnergyAustralia Services Pty Ltd (No 2) [2015] FCAFC 14
Division:	Fair Work Division
Registry:	Queensland
National Practice Area:	Employment and Industrial Relations
Number of paragraphs:	25
Date of last submissions:	3 August 2021 (Appellants) 3 August 2021 (Respondent)
Date of hearing:	Determined on the papers
Counsel for the Appellants:	Mr C Murdoch QC with Mr S Mackie
Solicitor for the Appellants:	Carter Newell Lawyers
Counsel for the Respondent:	The respondent appeared in person.

ORDERS

		QUD 775 of 2019 QUD 45 of 2020
BETWEEN:	SBP EMPLOYMENT SOLUTIONS PTY LTD First Appellant ; SBP AUSTRALIA PTY LTD Second Appellant ; MAX BURNS (and others named in the Schedule) Third Appellant
AND:	NICHOLAS SMITH Respondent

order made by:	RANGIAH J
DATE OF ORDER:	13 AUGUST 2021

THE COURT ORDERS THAT:

1. There be no order as to the costs of the appeal.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

RANGIAH J:

1. On 8 June 2021, in SBP Employment Solutions Pty Ltd v Smith [2021] FCA 601, I determined the appellants’ appeal from three judgments of the Federal Circuit Court of Australia. On 7 July 2021, I made final orders except as to the costs of the appeal.

2. The parties have now exchanged affidavits and submissions as to costs. These reasons determine the costs of the appeal.

3. The orders of the Federal Circuit Court included declarations that the appellants had contravened ss 44 and 340 of the Fair Work Act 2009 (Cth) (the FWA); orders imposing pecuniary penalties; and orders for the payment of compensation of $589,439.43 and interest of $13,925.16.

4. The appellants also sought leave to appeal from orders that they pay 60% of the respondent’s costs on a party-and-party basis.

5. I made orders allowing the appeals in part. I set aside some of the pecuniary penalty orders and reduced the quantum of the remaining penalties. I ordered that the amount of compensation awarded to the respondent be reduced to $115,478.75 and that interest be reduced to $9,982.25. I granted leave to appeal from the primary judge’s costs orders and ordered that there be no order as to the costs of the proceedings before the Federal Circuit Court.

6. The appellants now seek an order that the respondent pay their costs of the appeal. The appellants rely upon a collective offer they made to the respondent on 5 March 2020 (the Offer) to settle the proceedings for $260,100.

7. The Offer was made after the appeal had been commenced, and was expressed to be made pursuant to the principles in Calderbank v Calderbank [1975] 3 All ER 333. On 19 March 2020, the respondent rejected the Offer. The Offer proved to be over $66,000 more than the total amount the respondent was ultimately awarded.

8. The power of the Court under s 43 of the Federal Court of Australia Act 1976 (Cth) (the FCA Act) to award costs is limited by s 570 of the FWA. That section provides:

570 Costs only if proceedings instituted vexatiously etc.

(1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.

…

(2) The party may be ordered to pay the costs only if:

(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or

(b) the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or

(c) the court is satisfied of both of the following:

(i) the party unreasonably refused to participate in a matter before the FWC;

(ii) the matter arose from the same facts as the proceedings.

9. The appellants rely upon s 570(2)(b) of the FWA. The appellants submit that the respondent’s rejection of the Offer was an unreasonable act that ought to result in an order that the respondent pay the appellants’ costs on a party-and-party basis from 19 March 2020 onwards.

10. In Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 3) [2017] FCA 810, Katzmann J held at [25] that s 570(2)(b) of the FWA requires the Court to be satisfied that:

1. one party, by its act or omission, behaved unreasonably - that question to be determined objectively; and

2. the party’s unreasonable act or omission caused the other party to incur costs.

11. Justice Katzmann further held at [26]:

Importantly, the touchstone for the exercise of the power is unreasonableness, not negligence or inefficiency. That said, once the power is enlivened and the Court is considering whether or not to exercise its discretion to make an order, the Court is bound to exercise that discretion in the way that best promotes the overarching purpose of any statutory provision on a matter of practice and procedure referred to in s 37M of the FCA Act: s 37M(3). At this point questions of inefficiency are very relevant, for the overarching purpose of the civil practice and procedure provisions includes the efficient resolution of disputes.

12. In Shea v EnergyAustralia Services Pty Ltd (No 2) [2015] FCAFC 14, the Full Federal Court held at [11]:

[T]he power to order costs, once a criterion in s 570(2) has been satisfied, is discretionary and should be exercised, not so as to impose a penalty or punishment on the losing party but to provide an appropriate means of compensating the successful party having regard to all of the circumstances…

13. In Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221, White J observed at [166]:

It is well established that a failure to accept a reasonable offer of compromise may constitute an unreasonable act for the purposes of s 570(2) and its predecessors…

14. In Cugara v Frankston City Council [2012] FCA 1299, Tracey J held at [31]:

A deliberate decision to refuse a reasonable offer of settlement is a factor which would normally weigh more heavily in favour of a finding of unreasonable action than would a mere failure to respond by an unrepresented litigant.

15. The respondent was legally represented during the appeal, including at the time the Offer was made and rejected, but was...