Ashby v Slipper

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 22 of 2013

JUDGES: MANSFIELD, SIOPIS AND GILMOUR JJ DATE: 10 June 2014 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 The Court on 27 February 2014 by majority granted Mr Ashby leave to appeal, allowed the appeal and made the following costs orders including a corrigendum dated 5 March 2014 in his favour: Ashby v Slipper [2014] FCAFC 15. 1. …... 2. …... 3. The respondent pay the applicant's costs of the application for leave to appeal and of the appeal. 4. The orders made [in the primary judgment] be set aside and in lieu thereof there be orders that: 4.1 the respondent's interlocutory application dated 8 June 2012 be refused. 4.2 the respondent pay the applicant's costs. 2 The respondent, Mr Slipper, by an interlocutory application filed on 31 March 2014 pursuant to r 39.04 of the Federal Court Rules 2011 (Cth) (FCR) seeks to reopen the judgment of the Full Court for the purpose of vacating the costs orders made in orders 3 and 4.2. 3 The orders have not yet been entered. 4 The application concerns the jurisdiction of the Court to order costs where s 570 of the Fair Work Act 2009 (Cth) (FWA) applies and its intersection with the discretionary relief sought under r 39.04 FCR.

Section 570 5 When the FWA was enacted, and throughout the period when the primary proceedings were instituted and Mr Slipper's interlocutory application was heard and determined, s 570 of the FWA was relevantly in the following terms: (1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) exercising jurisdiction 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)… (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…

Costs in the primary judgment 6 As to costs the primary judge proceeded on the basis that the Court was then exercising jurisdiction under the FWA within the meaning of s 570(1): Ashby v Commonwealth (No 4) (2012) 209 FCR 65 at [200]-[202]. No challenge was made to the correctness of this approach. 7 The primary judge at [200] correctly held that: Ordinarily, s 570(1) of the Fair Work Act limits the powers of a Court exercising jurisdiction under that Act to order a party to pay costs. However, the Court can make such an order where it is satisfied that the party instituted the proceedings vexatiously or without reasonable cause (s 570(2)(a)) or that the party's unreasonable act or omission caused the other party to incur the costs (s 570(2)(b)). and at [202] that: The power to make an order for costs is in the discretion of the Court once the factors in s 570(2)(a) or s 570(2)(b) have been satisfied. 8 The Fair Work Amendment Act 2012 (Cth) (Amending Act), item 1 of Sch 10 provided for an amendment to s 570(1) of the FWA omitting "exercising jurisdiction under this Act" and substituting "in relation to a matter arising under this Act". 9 In Sch 3 of the FWA, incorporated into the FWA by Sch 11 of the Amending Act, cl 31 provides that Pt 1 of Sch 10 to the Amending Act (which contains the amendment to s 570 of the FWA) applies to proceedings commenced after the commencement date. Section 2 of the Amending Act provides that Sch 10 commences on a date to be proclaimed. The date of proclamation of the commencement of Sch 10 was 1 January 2013. Since that date s 570(1) of the FWA applies to appeals to the Full Federal Court from a single judge of the Court. 10 Mr Ashby's application for leave to appeal from the primary judgment was filed on 11 January 2013. 11 Accordingly, s 570(1) applied to this appeal in its amended form.

Rule 39.04 12 Rule 39.04 provides that the Court "may vary or set aside a judgment or order before it has been entered." The power is discretionary. 13 The exercise of the discretion to vary or set aside orders, including under r 39.04 FCR, is a power to be used only sparingly, with great caution and rarely, having regard to the public interest in the finality of litigation: Autodesk Inc. v Dyason [No 2] (1993) 176 CLR 300 at 302; Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 at [772]; and see generally Wenkart v Pantzer (No 3) [2013] FCAFC 162. 14 The discretion is exercised to cure injustice, particularly where it would otherwise be irremediable: see, e.g., De L v Director-General, New South Wales Department of Community Services (1997) 190 CLR 207 at 215. Grounds upon which a variation can be made are varied: see, e.g., Maritime Union of Australia v Geraldton Port Authority (2001) 111 FCR 434 at [20]. They include error, oversight, a misapprehension of the law, or a decision given in ignorance or forgetfulness of a statutory provision. 15 As Kenny J stated in Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 at [24]: "[i]n every case the overriding principle to be applied is whether the interests of justice are better served by allowing or rejecting the application for leave to re-open": see also The Silver Fox Company Pty Ltd as Trustee for the Baker Family Trust v Lenard's Pty Ltd (No 2) [2004] FCA 1310 at [22] per Mansfield J; Blank v Commissioner of Taxation (No 2) [2014] FCA 517 per Edmonds J. 16 The applicant, Mr Ashby, submits that the following discretionary considerations weigh against allowing the present application. For reasons which we will shortly explain we do not consider that these individually or in any combination provide sufficient reason for refusing the application. This is because we have concluded that in this case the Court had no jurisdiction to order such costs. The considerations relied upon by Mr Ashby cannot cure this. Nonetheless we will deal with those considerations in turn.

Delay 17 Judgment in the appeal was handed down on 27 February 2014. The respondent's interlocutory application was filed 32 days later, on 31 March 2014, after the time to seek special leave to appeal had expired. 18 We do not regard the delay in the circumstances to be inordinate: cf Austin Nichols & Company Inc v Lodestar Anstalt (No 2) (2012) 202 FCR 506 at [1]. Nor, as we will explain, do we consider the failure by Mr Slipper to apply for special leave to be of any weight. 19 It is of significance that whilst the time taken to make the application was 32 days after judgment, and 26 days after the costs orders were made in their final form, nonetheless the orders had still not been entered when the application was made, such that r 39.04 was available to be invoked according to its terms. Further, no party has acted to their prejudice in reliance on the orders.

Failure to appeal 20 The applicant submits that, in circumstances where the respondent has made an unexplained forensic decision not to pursue a possible appeal, any alleged irreparable "injustice" which he asks the Court to remedy is one of his own making. The applicant calls in aid Smith v New South Wales Bar Association (1992) 176 CLR 256 at 265; Wentworth v Rogers (No 9) (1987) 8 NSWLR 388 at 394-395. 21 We consider, given that the orders in the appeal have not been entered, it was reasonable for Mr Slipper, consistent with ss 37M and 37N(1) of the Federal Court of Australia Act 1976 (Cth) (FCA), to pursue a remedy in relation to the costs orders pursuant to r 39.04 rather than to have sought special leave to appeal to the High Court. 22 In Smith at 265, the plurality did no more than observe that in exercising the discretion of the kind involved in the present case there may be more or less reluctance to exercise the power depending on whether there is an avenue of appeal. The Court cited Wentworth v Rogers. In that case the applicant wanted the Court of Appeal to set aside its own order dismissing the appeal. The Court found, in effect, that the power should not be exercised in respect to a challenge to the order of the Court disposing of the substantive merits of the appeal but rather that an application for special leave to the High Court should have been made. This is not such a case. It is similar to the relevant success of the application brought before a Full Court of this Court in Lodestar Anstalt.

Communication with the Court about the costs orders 23 On 3 March 2014, Mr Ashby's then solicitors wrote to the Court indicating that he wished to make an application under r 39.05(h) to vary the form of orders made by the Court on 27 February 2014. The letter included the statement that: The respondent's [Mr Slipper] solicitor is aware we are writing to you but doesn't have instructions to consent to the proposed variation of the orders made. 24 It is the case that no objection was made to what was proposed by Mr Ashby and that as a result of this communication the Court issued the corrigendum dated 5 March 2014. However, it is by no means clear that Mr Slipper personally knew about the application. We also note that the solicitors of record for Mr Slipper upon the present application are not the same as the solicitors of record acting for him in the appeal. We do not regard the failure to object as fatal in relation to this application.

Opportunity to be heard 25 Mr Ashby submits that even if there had been no delay, the reopening sought is not one upon which it can be said that Mr Slipper has not had the opportunity to be heard or is not at fault because he was expressly on notice of Mr Ashby's application for costs. 26 It is the case that costs, both of the primary proceedings and the appeal, were sought in the draft notice of appeal. However, Mr Ashby's written submissions of 3 April 2013 did not develop the application for costs, stating only that he wished to be heard "on the question of the appropriate costs order to be made in relation to both of the application for leave, the appeal and the costs below": para [104]. His written submissions did not mention or address s 570 of the FWA. During the hearing of the appeal, his senior counsel said nothing about the question of costs, and did not mention s 570 of the FWA. 27 By contrast, in Mr Harmer's application for leave to appeal (NSD 31 of 2013) counsel for Mr Harmer submitted that his client should have his costs if his application was successful, although even then s 570 of the FWA was not mentioned. Senior counsel for Mr Slipper responded to this submission by saying "… may I remind your Honours that this is a matter to which the Fair Work Act applied … and section 570 of that Act comes into play and that would require separate and detailed consideration on the question of costs". No response was made to this submission, other than to acknowledge it. This was the only mention of s 570 of the FWA by either party in written or oral submissions throughout the hearing of the appeal. 28 Mr Ashby carried the burden in relation to s 570(2) of the FWA. He advanced no submission of substance beyond an unparticularised application for costs. We accept that at the conclusion of the hearing of the appeal, Mr Slipper was entitled to assume that he was not at immediate risk of orders for costs against him, in that Mr Ashby's application for costs would not be pursued at all, or would only be pursued at a later stage of the proceedings. 29 We consider that, in substance, Mr Slipper has not been heard in relation to the costs awarded against him, both of the primary proceedings and of the appeal: Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684; Autodesk at 302. 30 The applicant submits that the respondent must demonstrate that the Court proceeded according to some misapprehension of the facts or the relevant law. The applicant relies on Grimaldi at [773]; De L at 215; Geraldton Port Authority at [20].

Misapprehension of the law 31 The majority, by oversight, did misapprehend the law. 32 The applicant submits that the majority's reasons for judgment indicated that the requirements of s 570 of the FWA were satisfied, it being well established that a proceeding will be considered to have been instituted without reasonable cause where the case was misconceived at its inception (relying on Dowling v Fairfax Media Publications Pty Ltd (2009) 182 IR 28 at [53] and Standish v University of Tasmania (1989) 28 IR 129 at 138-139) or if there were no substantial prospects of success on the facts apparent to the applicant at the time of instituting the proceeding (citing Reeve v Ramsay Health Care Australia Pty Ltd (No 2) [2012] FCA 1322 at [10]). 33 The applicant points to the conclusion of the majority that it was not open on the evidence for the primary judge to have made the very grave findings which his Honour did: that the core factual findings made by primary judge were no more than mere "conjecture" (at [92], [106]) and that there was insufficient evidence for many of the other adverse inferences made by the primary judge (e.g. at [119], [124]-[127]). 34 However, the state of satisfaction required under s 570(2)(a) or (b) was neither considered nor reached by the majority. The reasons do not mention it because it was not the subject of substantive submissions by Mr Ashby or consideration by the majority. The arguments advanced by Mr Ashby might well have been advanced had he argued his applications for costs during the hearing of the appeal. They cannot be advanced for the first time now, after the costs orders have been made.

Should the costs order be vacated? 35 Section 570 of the FWA "reflects a policy of protecting a party instituting proceedings from liability for costs" and "costs will rarely be awarded under the section and exceptional circumstances are required to justify the making of such an order": Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275 at [60]. Whilst Kangan was decided before the introduction of the FWA and concerns the former s 347(1) of the Workplace Relations Act 1996 (Cth) (WRA), s 347(1) of the WRA was similar in terms to s 570(2)(a) of the FWA. Moreover "[a] party cannot be said to have commenced a proceeding 'without reasonable cause'…simply because his argument proves unsuccessful", and costs will not be awarded against a party whose unsuccessful argument was "not unworthy of consideration": R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 at 473. Only a case that has "no real prospects of success, or was doomed to failure" will meet the tests set out in s 570(2)(a) of the FWA: Kangan at [60]. Each of these matters is a question of fact. They were neither entertained nor determined by the Court. 36 The applicant's reliance on Construction, Forestry, Mining and Energy Union v Gittany [2014] FCA 164 at [55] does not assist him. In Gittany, the primary judge explicitly found that the proceedings had been commenced without reasonable cause, such that the condition of the power to make a costs order that is identified in s 570(2)(a) existed: see Gittany at [2], and Construction, Forestry, Mining & Energy Union v Hume Highway Constructions Pty Ltd (No 2) [2013] FCCA 215. The passage from Gittany at [55] relates only to the second stage of the process leading to an award of costs, namely the exercise of the discretion that arises once the statutory condition of jurisdiction exists. 37 As we foreshadowed earlier we accept the submission put on behalf of Mr Slipper that none of the discretionary considerations on which Mr Ashby relies overcome the fact that the Court does not have jurisdiction to award costs against Mr Slipper. The Court's jurisdiction to award costs has its source in s 43 of the FCA. Section 43(1) provides that: Subject to subsection (1A) and section 570 of the Fair Work Act 2009, the Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which this or any other Act provides that costs shall not be awarded. (Emphasis added.) 38 Section 43(1) thus conditions the Court's jurisdiction to award costs in any proceeding to which s 570 of the FWA applies. Section 570 applies to both the proceedings below and this appeal. Section 570(1) permits the Court to award costs only in accordance with s 570(2) which requires that the Court be satisfied as to one of the matters set out under s 570(2)(a), (b) or (c). 39 On appeal, no finding was sought or made against Mr Slipper in terms of s 570(2)(a) or (b) of the FWA in respect either of the costs of the primary proceedings or the application for leave to appeal or the appeal. Section 570 in these circumstances operates to preclude the making of any order to the effect of orders 3 and 4.2 absent either of those jurisdictional facts being established. 40 Accordingly, the Court had no jurisdiction under s 43(1) of the FCA to award costs against Mr Slipper in relation to the primary proceedings or this appeal.

Conclusion 41 For all these reasons, the orders made on 27 February 2014 (including corrigendum dated 5 March 2014) will be varied so as to vacate orders 3 and 4.2. To not do so would result, in our opinion, in a serious injustice to Mr Slipper. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Mansfield, Siopis & Gilmour.