Costs Below
65 In the court below, Skycity made an application for costs as a sequel to the dismissal of Ms Celand's claim. That application was heard in September 2016. Regrettably, it remained undetermined at the time when Ms Celand's appeal against the order of dismissal was heard by this Court and judgment reserved. That meant that the fate of the costs controversy which emerged was not able to be the subject of submissions at the time when the substantive appeal was heard by the Full Court to which that appeal had been allocated. It is to be hoped that this will be an infrequent occurrence. Where an appeal has been listed and there is an extant original jurisdiction costs controversy, the fact of that listing needs to be drawn to the attention of the court below by the parties. Every endeavour should then be made for the judgment resolving, in the court below, that costs controversy to be delivered before the date appointed for the hearing of the appeal. As it was, provision had to be made, after the reservation of the judgment on the appeal, for an exchange of written submissions. Sometimes, such provision may not be sufficient, resulting in a need to reassemble the Full Court for oral argument with all of the disruption that can occasion to the orderly management of appellate jurisdiction and other duties.
66 In respect of the costs application, judgment was not delivered until 2 March 2017: Skycity Adelaide Pty Ltd v Celand [2017] FCCA 196 (costs judgment). Ms Celand was ordered to pay Skycity's costs, fixed in the amount of $30,711.00. The operation of that order was stayed, pending the determination of the already extant appeal. The primary judge delivered elaborate reasons for the making of these orders.
67 In our view, the costs order is interlocutory, not final in character. That is because it is not an order which finally disposes of the substantive rights of the parties: Sanofi v Parke Davis Pty Ltd (1982) 149 CLR 147 at 153. That has the consequence that leave to appeal is required: s 24(1A), Federal Court of Australia Act 1976 (Cth). The application made by Ms Celand was not for leave to appeal but rather for leave under r 36.10 of the Federal Court Rules 2011 (Cth) to amend the notice of appeal. That was not apt for a case where leave to appeal was required. Skycity approached the interlocutory application on the basis that it should be treated as an application for leave to appeal with any resultant appeal being heard and determined instanter on the basis of the submissions already made. That was a commendably fair approach, which accords with how, in the interests of justice, I consider I should deal with that application. It was made within the 14 day period within which an application for leave to appeal must be filed, so no question of an extension of time additionally arises.
68 In the context of whether to grant leave to appeal against a costs order, the Full Court observed in Rickus v Motor Trades Association of Australia Superannuation Fund Pty Ltd (2010) 265 ALR 112 at [113]:
There is no doubt that appellate courts are loathe to overturn discretionary costs orders made by single judges. This reluctance reflects a history of caution expressed by appellate courts when asked to overturn discretionary judgments generally.
69 The use of "loathe" and "caution" in the passage quoted is but a way of emphasising that a discretionary value judgment is not to be overturned on appeal merely because those exercising the appellate jurisdiction might, if called to make that value judgment in the original jurisdiction, have reached a different decision. Instead, what must be demonstrated is an error of the kind summarised in House v The King (1936) 55 CLR 499 at 505 (House v The King). It was common ground between the parties that such an error needed to be demonstrated.
70 It is not just House v The King which is pertinent. In a case such as the present, the costs discretion was not at large. The power to award costs was governed by s 570 of the FWA, which 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.
Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 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.
71 Both the primary judge and, in their submissions to us, the parties, took as their starting point the explanation as to the meaning and effect of s 570 of the FWA offered by the Full Court in Australian Workers Union v Leighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428 at [7] (Australian Workers Union v Leighton Contractors (No 2)) :
In our view the authorities establish the following principles:
(1) The purpose or policy of the section is to free parties from the risk of having to pay their opponents' costs in matters arising under the Act, while at the same time protecting those parties who are forced to defend proceedings that have been instituted vexatiously or without reasonable cause.
(2) It follows from the protection offered by s 570(2) that a person will rarely be ordered to pay the costs of a proceeding. But it is not necessary to prove that there are exceptional circumstances warranting the making of an order: Spotless Services Australia Ltd v Senior Deputy President Jeanette Marsh [2004] FCAFC 155 (Spotless) at [12]-[13] (to the extent that the Full Court in Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275 (Kangan) held otherwise, we would respectfully disagree).
(3) The relevant question is whether the proceeding had reasonable prospects of success at the time it was instituted, not whether it ultimately failed: R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 at 473 per Gibbs J; Kangan at [60]. In Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264-5 (approved in Kangan) Wilcox J said:
If success depends on the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding, as being "without reasonable cause". But where, on the applicant's own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.
Obviously enough, the focus of the third of these observations is on s 570(2)(a) of the FWA.
72 In substance, s 570 of the FWA provides for like restrictions on the power to award costs to those found in its predecessor, s 824 of the now repealed Workplace Relations Act 1996 (Cth). Of that predecessor provision, the Full Court observed in Construction, Forestry, Mining and Energy Union and Others v Clark (2008) 170 FCR 574 at [29]:
Indeed, while courts should use the discretion in section 824(2) to ensure that parties to litigation arising from the WR Act do not engage in unreasonable acts and omissions which put the other party to undue expense, they should also be careful not to exercise the discretion with too much haste, given that such haste may discourage parties, for fear of an adverse costs order, from pursuing litigation under the WR Act in the manner which they deem best.
73 Referring to those observations, Bromberg J, in Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6], remarked of that provision that, "The limited discretion conferred on the Court by that subsection ought not become the basis for arguments about costs in relation to any and every transgression in the conduct of a case."
74 Any exposition in respect of the meaning and effect of a statutory provision can be fraught with the possibility, unintended though it may be, of placing a gloss on the language employed by Parliament. So I respectfully agree with the statement made by the Full Court in Australian Workers Union v Leighton Contractors (No 2) that it is not necessary to establish "exceptional circumstances" in order to award costs in a matter arising under the FWA. What it is necessary to do is to engender satisfaction that a pre-condition for the enlivening of the costs power exists and, even then, the exercise of a judicial discretion is required; there is no as of right entitlement to costs. Each of the pre-conditions for which s 570 of the FWA provides entails the reaching of satisfaction as to a pejorative. Materially in this case, that is satisfaction as to an unreasonable act by Ms Celand causing another party, Skycity to incur costs. As to its proof, satisfaction of this type is but a species in a class to which s 140(2) of the Evidence Act 1995 (Cth) has application. And what must be engendered is not just satisfaction as to an unreasonable act but also that it had a causative sequel. As a norm in our public and private law, unreasonableness in act or decision is not confined to the bizarre or irrational but entails rather more than a supervisor of that act or decision substituting his own view for that of the actor or decision-maker: Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at [65] to [73] per Hayne, Kiefel and Bell JJ.
75 Elaborate though the reasons of the primary judge are, I do not, with respect, see any displayed understanding as to what is entailed in a conclusion of unreasonableness of action but rather an expression of his Honour's own view as to what ought to have been the sequel to an offer of compromise put to Ms Celand's solicitors by those acting for Skycity. That is encapsulated in the following paragraph of his Honour's reasons for judgment in respect of the costs issue:
112. I also appreciate that there are dangers in assessing such offers with the benefit of hindsight. However, in my view, the prescience of Mr Holland's letter is a significant factor, when contrasted with Ms Celand's silence in respect of it. I am satisfied that Ms Celand's implied rejection of the offer in question does amount to an unreasonable act or omission on her part. To conclude otherwise would reduce the import of the Calderbank offer, made by Skycity, to nought.
76 The letter in question was authored dated 20 April 2015. It was authored by Mr Holland of Skycity's solicitors. It was expressed to be written without prejudice save as to costs, obviously enough with Calderbank v Calderbank [1975] 3 All ER 333 in mind.
77 The primary judge accurately summarised (costs judgment at [56]) the features of what was put to Ms Celand by this letter as follows:
56. The letter asserted that Ms Celand would have great difficulty in establishing the following elements of her case:
she had any statutorily based workplace right to be a support person or to give evidence in proceedings;
• Skycity had taken adverse action against her because:
➢ she had in fact been promoted;
➢ she had not suffered any adverse consequences as a result of being a health and safety inspector;
➢ she had in fact been given access to her personnel file;
➢ she had not been excluded from overtime unlawfully, rather management had properly determined that for Ms Celand to work overtime would constitute a breach of its obligations under the relevant workplace agreement;
It was asserted in the letter that Skycity had documented evidence to support its assertion that Ms Celand had resigned from her employment rather than been dismissed. On what was said to be a purely "commercial basis" Ms Celand was offered $2,500 in respect of damages and $4,500 in respect of costs, in all $7,000. The time for acceptance was fixed as 14 days.
78 At the time when the letter was sent and received, Ms Celand had filed and served her evidence in chief (which consisted of her affidavit evidence alone) and Skycity had filed and served what proved to be the whole of its evidence in chief. Ms Celand had yet to communicate to Skycity her decision to call, under subpoena, Ms Rosevear, Mr May and Ms Hurcombe. That decision was notified to Skycity on 15 June 2015.
79 Contrary to the conclusion of the primary judge (costs judgment at [67]), the offer was not made at an early stage of the proceedings. It was made not just after the close of pleadings but only after all of the affidavit evidence in chief had been prepared, filed and served.
80 Ms Celand's point was and is that the amount of the offer even in total "clearly" would not have covered her costs as at 20 April 2015. In the original jurisdiction, the primary judge (at [69]) observed, "Although, I accept that $7,000.00 cannot be regarded as a significant sum of money, in the light of the ultimate outcome of the case, it cannot be dismissed as being trivial, particularly when weighed against the costs incurred by both parties." But the focus of that observation is on the ultimate expenditure as to costs, not, as with respect it ought to have been in context, on the likely costs incurred by Ms Celand up to 20 April and making allowance for advice about the offer. Viewed from the correct perspective, the point made by Ms Celand was not hyperbole but inherently likely to be accurate, given the steps which had by then been taken in the proceedings. It was correctly to be classed as a "walk away" offer.
81 To be classed as anything other than this the amount would have had to have been substantially greater. For example, in the circumstances of the present case, an offer of the order perhaps of three and certainly of four or more times the amount made, accompanied by the same reasoning, would have raised very different considerations for Ms Celand about the risks of continued litigation. It is possible to be penny wise and pound foolish with offers of compromise.
82 It was conceded by Skycity before the primary judge that s 570(2)(a) of the FWA was not applicable. That was not, as the primary judge understood it (costs judgment at [52]) a concession that she had not "commenced these proceedings for any vexatious or improper purpose". That is not the language of s 570(2)(a) of the FWA. Materially, what was entailed was a concession that the proceedings had not been instituted by Ms Celand without reasonable cause. There was always an inherent tension, appreciated neither by the primary judge nor by Skycity in its submissions before his Honour and in respect of leave to appeal between what necessarily followed from this concession (the presence of reasonable cause for the institution of proceedings) and Skycity's assertion that it was an unreasonable act to allow the offer made by the letter just to lapse. It is to be remembered, too, that Mr Devine, who held an influential managerial position, was apprehended as having referred to Ms Celand as a "trouble maker" and a "union person". There was a basis for that apprehension even though, as noted above, his Honour came not to be satisfied that he had used such terminology about her.
83 Viewing matters in prospect, and that is the relevant perspective, it is possible to see how, as the events affecting her unfolded in November and December 2013 and January 2014 Ms Celand might, when viewing them against a background of experience of Skycity extending back to 2010 have perceived them to constitute not coincidence but an endeavour to make her continued employment untenable. The analysis put to her by the letter really amounted to an assertion that Skycity's evidentiary case would be accepted and, if accepted, would demonstrate that she could not in any way at all prove the elements of an adverse action cause of action. As it happened, that proved to be so after the witnesses concerned had been presented for cross-examination and after the primary judge had the benefit of hearing and observing them and then measuring the whole of their evidence against contemporaneous documents.
84 It was submitted for Ms Celand that, at the time the offer was made and ever thereafter Skycity introduced no evidence from either Mr Webster or Ms Small.
85 I have, in disposing of the appeal, expressed agreement with the primary judge that no Jones v Dunkel point arose from any failure to call either such person, because they were functionaries not managerial decision-makers. Contrary to Ms Celand's submission, the primary judge did take their absence into account when examining the state of the evidence for the purposes of deciding the costs application (costs judgment at [83] to [85]). Nonetheless, in prospect, they were for Ms Celand a personification of Skycity in terms of communicated decisions. The findings of fact which the primary judge was later able comfortably to make about managerial decisions were, again, able to be made after he had heard from the relevant managerial decision-makers.
86 As for Ms Rosevear, Mr May and Ms Hurcombe, his Honour had before him evidence from Ms Mack, given at an interlocutory stage, as to an apprehension Ms Rosevear and Mr May each felt about security of employment as a reason why they had not provided affidavits. With all respect to his Honour, it is not hard to see why, in an adverse action case, other employees might willingly attend and give truthful oral evidence to the best of their recollection and yet be reluctant to give in advance an affidavit. The importance of a job and related income security for a worker is very real for most, as is the disparity in economic power between most individual workers and a large corporation. It is true, as Skycity submits, that none of these persons was a key managerial decision-maker but they did have subordinate managerial roles; they were not just gaming room employees. And, as his Honour did appreciate, it was only after representations from Ms Rosevear and Ms Hurcombe that a key decision-maker Mr Devine, who may well have mentally, though not vocally, categorised Ms Celand as a "union person" and "troublemaker", came to change his mind and to offer her promotion. That was a noteworthy part of a cumulative picture which Ms Celand was trying to paint, if only to the end of demonstrating that, constructively, she had been dismissed. Their inability to assist in the painting of that picture has a clarity in hindsight which it did not, with respect, necessarily have in prospect. And that clarity emerged after each had given oral evidence and when that evidence was measured against the whole of the other evidence, not as at the time when the offer was made. Further, and this point is well made by Ms Celand, she did not, contrary to the view of the primary judge (costs judgment at [102]), have a "vain hope that "something [would] turn up"" from them. The nature of Ms Celand's interactions with each of them was apparent from her own affidavit and there was no reason to suspect that any of them would do other than corroborate that (which, as it transpired, each did). She did indeed have an understanding as to what each would say if required.
87 It was also put that the primary judge had proceeded on a misunderstanding with the true fact being a decision in January 2014 that Ms Celand was to have no overtime. That is, as Skycity correctly points out, contrary to the finding which was, permissibly made in the dismissal judgment. More relevantly though for present purposes is that this finding was only made after the trial when all of the evidence was in.
88 Though his Honour nominally eschewed the wisdom of hindsight, in truth what occurred here was that, based on a misunderstanding as to what is entailed in a conclusion of unreasonableness, a failure to appreciate the inherent tension between an implicit concession that there was reasonable cause to institute the proceeding and a submission that the refusal of what was in substance a derisory offer was unreasonable an applicant in a proceeding under the FWA has been ordered to pay costs. Further that order was made in circumstances where a respondent's case depended on the acceptance at trial of its evidence. There was no occasion here for the making of a costs order against Ms Celand.
89 None of this is to say that an unreasonable refusal of an offer of compromise can never engage s 570(2)(b) of the FWA such that it is reasonable to make an order for costs. Trite though the observation may be, whether there exists occasion to make such an order must turn on the circumstances of a given case.
90 The interlocutory application made by Ms Celand should be deemed to be an application for leave to appeal against the order for costs of 2 March 2017 and for any resultant appeal to be heard and determined instanter. That leave should be granted, the appeal allowed and the costs order of 2 March 2017 set aside. In lieu thereof, Skycity's application for costs should be dismissed.
I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.