Sutton v BE Australia WD Pty Ltd (No 5)

1. [1]

   HIS HONOUR: By a second further amended summons Mary Sutton (“the plaintiff”) sought declaratory relief and monetary payments, pursuant to s 106(1) and (5) of the Industrial Relations Act 1996 (NSW) (hereafter referred to as “the Act”), against BE Australia WD Pty Ltd (“the first defendant”) and Phillip James Davidson (“the second defendant”) regarding work performed by the plaintiff for the first defendant. The proceedings against the second defendant were dismissed upon the basis of consent orders, without admission of liability, for the payment of a sum of $350,000 inclusive of costs.

2. [2]

   The balance of the matter concerning the first defendant proceeded before the Court, ex parte.

RELIEF SOUGHT

1. [3]

   The plaintiff sought the following relief:

   1. (1)

      An order declaring void (except for monies already paid) the arrangement between the plaintiff and the first defendant whereby [the plaintiff] performed work in the taxation consulting industry for [the first defendant] (“the contract”).

   2. (2)

      An order declaring that the contract or arrangement was unfair, harsh or unconscionable or against the public interest.

   3. (3)

      An order that the contract be varied from its commencement in the terms set out in Schedule A.

   4. (4)

      An order that [the first defendant] pay [the plaintiff] such sum of money in connection with the contract or arrangement as the Court considers just in the circumstances of the case.

   5. (5)

      An order that the [first defendant] pay [the plaintiff’s] interest on the sums of money ordered to be paid by the Court, from 7 October 2005 being the date of the termination of the contract at the rates set by the Uniform Civil Procedure Rules 2005 (NSW).

   6. (6)

      An order that the [first defendant] pay the costs of the proceedings.

2. [4]

   On 1 June 2017, the Court delivered judgment with respect to the second further amended summons: Sutton v BE Australia WD Pty Ltd (No 3) [2017] NSWSC 689 (“Sutton No 3”).

3. [5]

   In Sutton No 3, the Court made various findings as to the merits of the application which are summarised in the further judgment of the Court Sutton v BE Australia WD Pty Ltd (No 4) [2017] NSWSC 1123 (“Sutton No 4”) at [7]-[10]:

4. [6]

   Arising from the judgment in Sutton No 3, the Court made declarations in the following terms on 22 June 2017:

5. [7]

   In Sutton No 4, the Court made determinations as to the appropriate money orders. Those findings are adequately summarised by the extraction of [30], [31], [48]-[50] and [52]:

6. [8]

   The Court thereupon made the following directions:

   1. (1)

      The plaintiff shall file in the form of short minutes of order or a schedule reflecting the following:

   2. (2)

      The plaintiff has liberty to file any final submissions as to the implications of the settlement with the second defendant. Those submissions shall be limited to the question of any deduction arising from the settlement with the second defendant and may address the issue of apportionment between the first the second defendants (after the deduction of costs referable to the proceedings against the second defendant).

   3. (3)

      The plaintiff shall file any application as to costs against the first defendant and any submissions in support thereof.

7. [9]

   In accordance with those directions, the plaintiff filed written submissions on 22 September 2017; a “plaintiff’s schedule of compensation and interest” (“the Schedule”) and an affidavit of Andrew Attilio Floro affirmed 21 September 2017.

8. [10]

   It follows that the judgment concerns:

   1. (1)

      The quantification of compensation and interest.

   2. (2)

      The resolution of the proportion of settlement with the second defendant to be deducted from the money orders made (noting the qualifications in [51] of Sutton No 4).

   3. (3)

      Costs.

9. [11]

   I shall deal with each issue in turn.

Quantification of Compensation and Interest

1. [12]

   The plaintiff made the following submissions in this respect:

2. [13]

   Having regard to the formula and calculations used in the Schedule, I accept this submission.

Settlement with the Second Defendant

1. [14]

   The plaintiff made the following submissions in this respect:

2. [15]

   I consider the defendant’s submissions, in this respect, are reasonable although submitting the second defendant played only a “small part” in the unfairness may be, to some degree, overstated.

3. [16]

   Overall, I consider an appropriate deduction for the settlement against the second defendant should be $20,000.

Costs

1. [17]

   In the light of the judgment of this Court in Sutton No 3 and Sutton No 4, and the substantial success of the plaintiff, an order should be made that the defendant pay the plaintiff’s costs of the proceedings: see r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”).

2. [18]

   The plaintiff seeks, however, that an order should be made that the defendant pay the plaintiff’s costs on an indemnity basis as a result of an offer of settlement made on 1 November 2006.

3. [19]

   This contention is based upon the fact that the plaintiff made an offer of settlement addressed to the first defendant on that date in the amount of $40,000 plus costs. The offer was not accepted by the first defendant.

4. [20]

   That submission was developed as follows:

5. [21]

   Having regard to my earlier decision as to money orders against the first defendant and my observations as to an award of costs above, the monetary order made by the Court in the matter is, in my view, no less favourable than the offer made on 1 November 2006, even if the settlement with the second defendant is excluded.

6. [22]

   It follows that, pursuant to r 42.14(2)(b) of the UCPR (and having regard to the Industrial Relations Commission Rules 1996 (NSW)), the Court should make an order for costs on an indemnity basis.

7. [23]

   Finally, the plaintiff sought a gross sum order under s 98(4) of the Civil Procedure Act 2005 (NSW). After referring to Hamod v New South Wales [2011] NSWCA 375 at [816]-[819], the plaintiff submitted, it was appropriate for the Court to make a gross sum costs order for the following reasons:

   1. (1)

      The proceedings have involved extraordinary delays in concluding the proceedings which arose through no fault on the part of the plaintiff and resulted in very considerable costs being incurred in bringing the proceedings to their conclusion;

   2. (2)

      The delays in resolving the proceedings arose primarily as a result of the first defendant being placed into voluntary administration which frustrated the hearing of the proceeding in 2009 and the fact other parties litigated interlocutory points to the Court of Appeal and High Court;

   3. (3)

      From the middle of 2015, the first defendant ceased instructing solicitors and has not participated in the proceedings and, if a gross costs order is not made, it is inevitable that the plaintiff will be forced to incur significant additional costs in having the costs assessed;

   4. (4)

      The evidence as to the costs incurred in the proceedings demonstrate a lack of proportion between the costs incurred in the proceedings and the issues at stake in the proceedings and the costs should not, in the circumstances, be further increased by a costs assessment; and

   5. (5)

      There is material before the Court which would enable the Court to make an appropriate assessment of the costs incurred by the plaintiff in prosecuting the proceedings.

8. [24]

   The plaintiff further submitted:

9. [25]

   In my view, a gross sum costs order should not be made in the present matter for the following reasons:

   1. (1)

      The material before the Court to make an assessment as to costs at an appropriate sum which is fair to the respective parties is, in my view, insufficient, even if the kind of detailed examination that would be appropriate on taxation or a formal assessment of costs is not required: Harrison v Schipp (2003) 54 NSWLR 738 at [22].

   2. (2)

      It is true that the first defendant ceased to participate in the proceedings from mid-2015, but there is insufficient evidence to suggest that any assessment process would be unduly protracted or result in significant unrecoverable costs. Nor do I consider experience should dictate that a conclusion of that kind should be made.

   3. (3)

      Further, there is no submission made that the plaintiff would be disadvantaged because of a potential inability of the plaintiff to pay the costs.

   4. (4)

      It is unclear what the plaintiff means by the submission that there is a lack of proportion between the costs incurred in the proceedings and the issues at stake in the proceedings. Just how such measurement or assessment might be undertaken was not specified in the plaintiff’s submissions. It might be noted that the conduct of the ex parte proceedings was, by its nature, a product of the case was advanced for the plaintiff.

   5. (5)

      I accept the submission that there has been lengthy delays in the proceedings which this Court has earlier commented do not lie at the feet of the plaintiff. Whilst I am sympathetic to the plaintiff’s difficulties, in that respect, I do not consider the weight of that factor may overcome the difficulties occasioned by an inadequate basis upon which to assess the gross sum costs order.

10. [26]

    Accordingly, costs will be as agreed or, in default of agreement, as assessed in either case on an indemnity basis.

CONCLUSION

1. [27]

   The making of orders in conformity with this judgment, in conjunction with earlier orders made by the Court, will dispose of the remaining issues arising out of the second further amended summons brought by the plaintiff.

DIRECTIONS

1. [28]

   The plaintiff shall file within 7 days of the publication of this judgment short minutes of order reflecting this judgment which shall be dealt with administratively in Chambers by the Court.