Baker v Patrick Projects Pty Ltd

The power to award costs 3 It was common ground that the Court's power to award costs in a proceeding such as the present is constrained by the provisions of s 570 of the Fair Work Act 2009 (Cth) ("the Act"): see Australasian Meat Industry Employees' Union v Fair Work Australia (No 2) (2012) 203 FCR 430 at 436; and s 43 of the Federal Court of Australia Act 1976 (Cth). 4 Relevantly, s 570 provides that: "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) … (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) …" 5 Patrick's principal contention was that Mr Baker should be ordered to pay its costs on a party-party basis pursuant to s 570(2)(a) of the Act. Alternatively, it sought orders for the payment of its costs on a similar basis under s 570(2)(b). 6 Patrick's primary contention was that Mr Baker's application had been pursued "without reasonable cause" and that, accordingly, s 570(2)(a) was engaged. As a result it was open to the Court, in its discretion, to make the award of costs which it sought.

The proceeding 7 As originally framed Mr Baker's application relied on four grounds and sought various forms of relief, some of which the Court could not have granted, even had one or more of the grounds been made out. At the hearing only two of the grounds were pressed in support of an order quashing the Full Bench's decision. 8 The two grounds which were relied on were related. Mr Baker submitted that his dismissal by Patrick's was precluded by provisions of the Workers' Compensation and Injury Management Act 1981 (WA) ("the Workers' Compensation Act") and that the legal issues to which this submission gave rise effectively required the Full Bench to find that it was in the public interest to grant permission to appeal from the primary decision. Mr Baker conceded that no error of law appeared on the face of the record of the Full Bench's decision and that he could not succeed unless he established that the decision was attended by jurisdictional error.

"Without reasonable cause" 9 The meaning and application of the phrase "without reasonable cause" in s 570 and its predecessors has been considered in many cases. The effect of these authorities was recently summarised by Pagone J in Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351. His Honour said (at [8]) that: "To exercise the discretion conferred by [s 570(2)(a) of the FW Act] the Court must be satisfied that the claims were, relevantly, instituted without reasonable cause. That is not established merely because a party fails in the claims: R v Moore; ex parte Federated Miscellaneous Workers Union of Australia [1978] HCA 51; (1978) 140 CLR 470, 473. The relevant provisions reflect 'a policy of protecting a party instituting proceedings from liability for costs' and costs will rarely be awarded unless justified by exceptional circumstances: see Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275 at [60]. In Kangan Batman Institute it was said by the Full Court at [60] that 'a proceeding will be instituted without reasonable cause if it has no real prospects of success, or was doomed to failure'. In Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 Wilcox J indicated at 264 that one way of testing whether a proceeding was instituted 'without reasonable cause' was to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no 'substantial prospect of success'. His Honour went on to say that a proceeding lacks a reasonable cause where it is clear that it must fail on the applicant's own version of the facts." 10 This test requires some minor modification when applied to the institution of an appeal or judicial review proceedings. In such proceedings the focus changes to whether, having regard to the facts apparent to the appellant at the time of instituting the appeal or the application for judicial review, there were no reasonable prospects of success. In evaluating these prospects regard may be had to the reasons for judgment or decision under appeal or review, as the case may be, and the grounds relied on to challenge the judgment or decision: see Imogen Pty Ltd v Sangwin (1996) 70 IR 254 at 257 (Wilcox CJ).

Mr Baker's arguments 11 Mr Baker contended that his arguments relating to the construction of the Workers' Compensation Act and its interaction with the Commonwealth Act raised a distinct point of law on which there was no binding authority. He said there was "a vacuum" in the legal framework which meant that "the relevant test of proving jurisdictional error [became] extremely difficult." He submitted that at all times he had tried to conduct the case in a cost effective and efficient way, pointing to the fact that he abandoned some grounds prior to the hearing, thereby narrowing the issues in dispute. He also submitted that it was not the intention of the Parliament to punish a party in the event that his application fails.

Patrick should have its costs 12 None of these arguments is persuasive. 13 At the time at which he commenced his proceeding in this Court, Mr Baker had access to the Full Bench's reasons for decision. Those reasons explained why the Full Bench had formed the view that it should not grant him permission to appeal. This was because it considered that it was not in the public interest to do so. As Mr Baker acknowledged, this involved a discretionary value judgment of a kind to which it is generally difficult to attribute jurisdictional error. As we held in rejecting the application, the opinion of the Full Bench relating to the public interest was not a jurisdictional fact and, at best for Mr Baker, its construction of the provisions of the Workers' Compensation Act could only have constituted an error of law within jurisdiction. Thus, the two grounds which were pressed were manifestly untenable. That Mr Baker abandoned the other grounds is to his credit, but it provides no answer to Patrick's application. 14 One purpose of s 570 is to enable parties to bring viable cases without being deterred by the prospect of an adverse costs order, particularly employees with limited means. Another is to deter parties from bringing or pursuing cases which have no reasonable prospects of success. While making due allowance for the wisdom of hindsight, this was such a case. This application had no reasonable prospects of success. Mr Baker has advanced no discretionary consideration which tend against the making of the orders sought by Patrick. 15 In the circumstances, we consider that an order for costs is not precluded by s 570(1) of the Act because the proceeding was instituted without reasonable cause. Mr Baker should pay Patrick's costs of and incidental to the proceeding. It is unnecessary to deal with the alternative argument. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Dowsett, Tracey and Katzmann.