BSA Limited v Bradshaw, in the matter of BSA Limited

Federal Court of Australia|2022-10-07|Before: Mr J, Goodman J

There be no order as to costs of this proceeding. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

INTRODUCTION 1 In proceeding VID488 of 2020 in this Court (representative proceeding) the applicants, Mr Paul Bradshaw and Mr Scott Uren, sought various forms of relief under the Fair Work Act 2009 (Cth) (FW Act) against the respondent, BSA Limited, on behalf of themselves and group members. 2 On 30 March 2022, a Deed of Settlement was entered into for the settlement of the representative proceeding. 3 On 1 June 2022, BSA commenced the present proceeding against Mr Bradshaw and Mr Uren and other parties to the Deed. The relief sought concerned the proper construction of the Deed. The present proceeding was dealt with expeditiously because a hearing in the representative proceeding for the approval of the proposed settlement had been scheduled for 8 July 2022. 4 On 29 June 2022, following a hearing on 23 June 2022, I published my reasons in BSA Limited v Bradshaw, in the matter of BSA Limited [2022] FCA 747. On 4 July 2022, I made orders giving effect to those reasons; providing a timetable for the provision of submissions concerning the costs of the proceeding; and for the question of costs to be determined on the papers. The submissions received raise the following issues for resolution: (1) does s 570(1) of the FW Act operate so as to preclude the making of an order for costs?; and (2) if not, then (a) is BSA entitled to payment of any part of its costs on an indemnity basis?; and (b) which respondents should be liable for BSA's costs? 5 For the reasons set out below, s 570(1) operates so as to preclude the making of an order for costs and it is thus unnecessary to consider the remaining issues.

Consideration 6 The Court's broad discretion as to costs - conferred by s 43 of the Federal Court of Australia Act 1976 (Cth) - is expressly limited by s 570 of the FW Act: s 43(1)(a); Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; (2015) 229 FCR 221 at 252 [140] (Tracey, Gilmour, Jagot and Beach JJ; White J agreeing). Section 570 of the FW Act 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. (emphasis added) 7 It is common ground that the claims made in the representative proceeding were matters arising under the FW Act, and that ss 570(2), 569 and 569A do not require consideration. Thus, the issue for determination is whether the present proceeding is a proceeding "in relation to" the claims made in the representative proceeding under the FW Act. 8 The width of the operation of the expression - "in relation to" - was explained by the Full Court (Logan, Katzmann and Snaden JJ) in Joseph v Parnell Corporate Services Pty Ltd [2021] FCAFC 67; (2021) 284 FCR 546 at 566-571 ([90] to [115]): 90 In Stanley v Service to Youth Council Inc (No 3) (2014) 225 FCR 357 (Stanley), White J held that the limitation on the Court's power to award costs applies to any proceedings in which a claim is made under the FW Act regardless of whether a claim is also made in the accrued jurisdiction or under other federal legislation. His Honour explained at [28]: The limitation on courts' powers with respect to costs operates in respect of any "party to proceedings", provided that those proceedings relate to a "matter" arising under the FW Act. On its face, the limitation operates whenever those considerations are satisfied, whether or not the proceedings also include claims under other federal legislation or in the accrued jurisdiction. The FW Act does not define the word "proceedings", but generally it is used to refer to the action or means by which a party moves a court to grant the desired relief, rather than to individual claims or causes of action in the action. Thus, in Braeside Bearings Pty Ltd v HJ Brignell & Associates (Boronia) [1996] 1 VR 17 at 20, Tadgell JA said of the word "proceeding" in s 3 of the Supreme Court Act 1986 (Vic): [It] is used as a generic expression to embrace what was formerly comprehended individually and respectively by the expressions "action", "cause" and "matter". The expression "matter in the court" in the definition of "proceeding" in s 3 refers on that assumption to a proceeding in the sense of a vehicle by which the jurisdiction of the Court is invoked and not to the subject matter of a justiciable dispute. 91 Stanley was followed by a five-member bench (Tracey, Gilmour, Jagot, White and Beach JJ) in Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221 (Sautner). 92 While the FW Act claims may have "assumed only passing reference during the course of the proceeding", as the primary judge put it, that did not mean that the proceeding was not "in relation to a matter arising under the Act". As White J observed in Stanley at [33], "[t]he possibility that a matter arising under the FW Act may be so minor as to be insignificant in comparison with other causes of action does not require consideration". What matters is that Mr Joseph applied for relief for contraventions of the FW Act. The source of the Court's jurisdiction was the FW Act. See Energy Australia Yallourn Pty Ltd v Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union (2018) 264 FCR 342 (Energy Australia) at [99]-[103] (Rares and Barker JJ), with which Flick J relevantly agreed at [139]. In Energy Australia, their Honours considered that "the critical fact" for the purposes of s 570(1) was that the applicant claimed relief under the FW Act. That is so, the majority held, even if the Court finds it lacks jurisdiction to hear and determine the claim. The Court relied on Re McJannet; Ex parte Australian Workers' Union of Employees (Qld) (No 2) (1997) 189 CLR 654 at 656, in which Brennan CJ, McHugh and Gummow JJ said of an analogue of s 570(1) that the test for determining "whether a proceeding is in a matter arising under the Act … is whether the right or the duty that is sought to be enforced owes its existence to a provision of the Act". … 106 … The phrase "in a matter arising under [the] Act" is narrower than the phrase "in relation to a matter arising under [the] Act" in s 570(1) of the FW Act and, as Stanley and Sautner establish, proceedings are in relation to a matter arising under the Act even if claims are pursued under other statutes or, for that matter, at common law. 107 When the FW Act was enacted, s 570(1) did not include either phrase. It relevantly provided a general protection from the burden of a costs order to "a party to a proceeding in a court exercising jurisdiction under this Act". 108 The Explanatory Memorandum to the Fair Work Bill 2008 (Cth) explained at [2228]-[2229]: The ability of the courts to award costs in workplace relations matters has been limited since 1904 and is part of the policy of discouraging legalism in proceedings before industrial courts. However, this clause departs from section 824 of the WR Act, in that it is limited to proceedings in which a court is exercising jurisdiction under the Bill rather than in any matter arising under the Bill. A similar change was made to clause 565 (see above). As noted above, the "matters arising" language has been interpreted broadly. A proceeding not brought under the WR Act could still arise under the WR Act. The broad application of the costs provision has given rise to technical arguments that the provision does not apply in a range of proceedings not involving exercise of jurisdiction under the WR Act and its predecessors (see, e.g., Tristar Steering and Suspension v Industrial Relations Commission (NSW) (No. 2) [2007] FCAFC 95; 159 FCR 274). Given the nature and complexity of "matters arising" that are determined before State Supreme Courts, the Federal Court and the High Court, it is not appropriate that the limitation on costs orders apply to matters arising under the Bill which do not involve the exercise of jurisdiction under the Bill. 109 In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd (No 2) (2015) 235 FCR 366 at [12] Dowsett, Tracey and Katzmann JJ discussed the context of the phrase in its present form and the drafting history: Section 570(1), in its present form, commenced operation on 1 January 2013. The words "in relation to a matter arising under this Act" replaced the words "exercising jurisdiction under this Act". The explanatory memorandum for the amending bill said that the "amendment confirms that the FW Act is generally a 'no costs' jurisdiction (including in appeal proceedings)." This change broadened the limitation on the Court's power to award costs in proceedings under the FW Act … 110 The phrase "in relation to" is one of "wide and general import": Energy Australia at [98] (Rares and Barker JJ), citing Fountain v Alexander (1982) 150 CLR 615 at 629 (Mason J). 111 In O'Grady v Northern Queensland Co. Ltd (1990) 169 CLR 356 at 376, McHugh J observed that: The prepositional phrase "in relation to" is indefinite. But, subject to any contrary indication derived from its context or drafting history, it requires no more than a relationship, whether direct or indirect, between two subject matters. 112 In Stanley at [26], White J said: The phrase "in relation to" is usually taken to indicate some relationship or connection between two subject matters: Smith v Federal Commissioner of Taxation (1987) 164 CLR 513 at 533. The degree or closeness of the contemplated connection is to be determined by the statutory context: Joye v Beach Petroleum NL (1996) 67 FCR 275 at 285. 113 Neither the context nor the drafting history suggests that the relationship should be a narrow one. … 115 On any view, s 570 is remedial and beneficial and should therefore be interpreted beneficially. That means that it should be given "a fair, large and liberal" interpretation: IW v City of Perth (1977) 191 CLR 1 at 11 (McHugh J). (emphasis added) 9 In Joseph, the principal claim sought relief under the FW Act. There was also a cross-claim which did not seek such relief (568 [95]). Section 570(1) of the FW Act clearly applied to the principal claim (567 [93]), but it was necessary to consider whether it applied also to the cross-claim (567 [94], 569 [105]). The Full Court at 571-572 ([116] to [121]) held that it did. 10 Of particular relevance to the present proceeding is that in Joseph, s 570(1) was held to apply to the cross-claim in circumstances where it was treated as a separate proceeding (569 [103]) and it sought no relief under the FW Act (568 [95]). As a later Full Court (Logan, Flick and Katzmann JJ) noted in Sabapathy v Jetstar Airways (No 2) [2021] FCAFC 68 at [6]: … In any case, the connection required by s 570(1) is broad enough to capture a proceeding which has a relationship to another proceeding in which relief is sought under the FW Act but which does not itself seek relief under the FW Act, as the recent judgment of the Full Court in Joseph v Parnell Corporate Services Pty Ltd [2021] FCAFC 67 (Logan, Katzmann and Snaden JJ) at [105]-[115] demonstrates. 11 As noted above, the present proceeding concerned the construction of the Deed. The Deed provided for the settlement of the claims made under the FW Act in the representative proceeding. There is a clear relationship between the present proceeding and the claims under the FW Act made in the representative proceeding. In light of the width of the expression - "in relation to" - as explained in Joseph, I am comfortably satisfied that the present proceeding is a proceeding in relation to the matters raised under the FW Act in the representative proceeding. 12 BSA submitted that the present proceeding lacked a sufficiently close connection or relevant relationship to a matter arising under the FW Act for a number of reasons. 13 BSA's first submission was that the absence of a claim under the FW Act in the present proceeding means that the proceeding is not one "in relation to" such a claim. In support of this submission, BSA cited Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd (No 2) [2015] FCAFC 166; (2015) 235 FCR 366 at 369 [16], where the Full Court (Dowsett, Tracey and Katzmann JJ) stated: Even if an applicant makes claims in a proceeding which are founded on common law or other statutory causes of action, the proceeding remains one in relation to a matter arising under the FW Act provided that at least one of its claims arises under that Act: see Sautner at 252-254. … 14 The effect of the submission is that it is necessary for a proceeding to be "in relation to" a matter arising under the FW Act that the proceeding include a claim under that Act. I do not accept that submission. It is inconsistent with Joseph, where a proceeding with no claim under the FW Act was held to be a proceeding in relation to such a claim in another proceeding. The Full Court in ALS Industrial was dealing with a proceeding in which some but not all claims were made under the FW Act. Understood in that context, the effect of the passage extracted above is that the presence in a proceeding of a claim under the FW Act is sufficient to enliven s 570(1) even if non FW Act claims are included. 15 In support of its first submission, BSA also relied upon the following passage in ALS Industrial at 368 [10]: In the context of s 570(1) of the FW Act it has been held that the word "matter" refers to claims or causes of action or the underlying controversies which are raised in a proceeding: see Melbourne Stadiums Limited v Sautner (2015) 229 FCR 221 at 253-254. … and contended that the present proceeding does not involve any "claim or determination of any right, duty or cause of action under the Act, any controversy under the Act, the construction or operation of the Act, or any defence claimed under the Act (in contrast to cases where s 570 has been held to apply)". 16 So much may be accepted. However, for this submission to have any force for BSA it requires the additional premise that the matter must be part of the proceeding. That premise is false for the reasons discussed above. 17 BSA also relied upon the following sentence from the judgment of White J in Stanley v Service to Youth Council Incorporated (No 3) [2014] FCA 716; (2014) 225 FCR 357 at 363 [27]: Ordinarily, the requisite degree of connection in the context of s 570 will be satisfied when an applicant seeks to enforce an entitlement for which the FW Act provides. 18 This sentence does not assist BSA. As Kyrou, McLeish and Sifris JJA held in Tucker v State of Victoria [2021] VSCA 120 at [394], White J was doing no more in that sentence than making the obvious point that the usual way in which a proceeding can be said to be "in relation to" a matter arising under the FW Act is when a party seeks to enforce a right provided for by the FW Act. In other words, it is a statement of what is ordinarily sufficient, not a statement of what is necessary, to establish the requisite relationship. 19 BSA's second submission is that the asserted insufficiency of any connection between the present proceeding and the representative proceeding is underscored by the presence in the former, but not the latter, of additional parties with a commercial interest unrelated to any aspect of the FW Act. BSA did not elaborate on how the presence of additional parties was relevant. BSA also did not identify the commercial interest of the additional parties. The most obvious commercial interest is the interest in having the proposed settlement approved and as part of that, the proper construction of the Deed. Contrary to BSA's submission, there is a connection between the approval of the proposed settlement and the underlying claims for relief under the FW Act - the settlement, if approved, is the resolution of those claims. In any event, I do not regard the presence of additional parties (regardless of the nature of their commercial interests) as relevant to the determination of whether the present proceeding is a proceeding "in relation to" a matter arising under the FW Act. 20 BSA's third submission is that: (1) the rationale that underpins s 570 is as explained by Judge Brown of the then Federal Circuit Court of Australia in Adamczak v Alsco Pty Ltd (No 4) [2019] FCCA 7; (2019) 284 IR 337 at 349 ([70] to [71]): Section 570 is a piece of beneficial legislation, which recognises there may be, in the context of litigation arising from workplace disputes, a great disparity between the financial resources of any employer and employee concerned. The former may be a large publicly listed company generating a large economic return with a payroll of thousands with ready access to highly skilled legal advice. The latter may be either a modest salary earner or someone between positions, who necessarily has extremely limited financial resources and so limited access to legal advice and for whom any order for costs may be financially crippling. For such a person, the prospect of being made liable for costs is likely to be a powerful disincentive to bring proceedings, in the industrial law context, although otherwise the claim mooted is one of moment for the individual concerned. (2) there is no relevant disparity between the resources of BSA on the one hand and the litigation funder and the respondents' lawyers on the other; and (3) thus, BSA's submission is not inconsistent with the statutory objective of s 570. 21 To the extent that this submission is limited to a submission that BSA's earlier submissions are not inconsistent with the statutory objective identified by Judge Brown, this may be accepted. However, to the extent that this submission invites the Court to conclude, because there is no financial disparity between the parties, that s 570(1) does not apply, I reject the submission. There is no evidence before the Court as to the relative financial position of the parties. More fundamentally, the submission impermissibly adds a gloss to s 570(1) by requiring as a condition of its application that there be a financial disparity between the parties.

Conclusion 22 As s 570(1) of the FW Act is engaged, and ss 570(2), 569 and 569A are not, no costs order may be made. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Goodman.

SCHEDULE OF PARTIES NSD 417 of 2022 Respondents Fourth Respondent: ESCOM COMMUNICATIONS PTY LTD Fifth Respondent: MARCOMM COMMUNICATIONS PTY LTD Sixth Respondent: LLS FUND SERVICES PTY LTD AS TRUSTEE FOR LITIGATION LENDING FUND 1 Seventh Respondent: SHINE JUSTICE LTD Eighth Respondent: SHINE LAWYERS PTY LTD

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