Coghill v Indochine Resources Pty Ltd [2015] FCA 1131 | Case summary

REASONS FOR JUDGMENT 1 On 17 September 2015 I published my reasons for decision in this matter, reserving four questions, pending further submissions: Coghill v Indochine Resources Pty Ltd (No 2) [2015] FCA 1030 ("Coghill No 2"). Those questions were: (1) In what amount should interest be awarded? (2) Should declaratory relief be ordered? (3) If so, what form should the declarations take? (4) What, if any, costs order can and should be made? 2 After all the evidence had been filed, the solicitors for the respondent, Indochine Resources, filed a notice of ceasing to act. No other solicitors stepped into their place and no person sought leave to appear for the company. Consequently, the hearing proceeded in its absence and submissions on the remaining questions were invited from Mr Coghill only. 3 With those submissions, questions 2 and 3 fell away. The claim for declaratory relief was no longer pressed. The two remaining questions concern the amount of interest and costs. 4 In Coghill No 2 I determined that damages should be awarded to Mr Coghill in the sum of USD 2,648,112 and AUD 6,425 together with pre-judgment interest on half those sums at half the rates provided for in Practice Note CM 16. Counsel undertook the task of making the necessary calculations, claiming interest from 1 July 2010 to 15 September 2015. Those calculations totalled USD 514,450.93 and AUD 1,256.76. With one minor exception, I accept them. The exception relates to the calculation of the interest on the Australian dollar component for the period 1 January 2011 to 31 December 2011, where counsel was out by a mere $8.75. Rounding off the figures, I find that pre-judgment interest on damages should be awarded in the sums of USD 514,451 and AUD 1,248. 5 The question of costs is more complex. Mr Coghill asked for an order that Indochine Resources pay his costs. In the circumstances of this case, however, the Court has no power to make such an order. 6 The jurisdiction to award costs in proceedings before the Court is subject, relevantly, to s 570 of the Fair Work Act 2009 (Cth) ("FW Act"): Federal Court of Australia Act 1976 (Cth), s 43 ("FCA Act"). 7 Section 570 of the FW Act relevantly provides: (1) A party to proceedings … in a court … 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 568 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 [Fair Work Commission]; (ii) the matter arose from the same facts as the proceedings. (Emphasis added.) 8 Sections 568 and 569A are irrelevant for present purposes. 9 Mr Coghill submits (and I accept) that the proceedings were not brought vexatiously or without reasonable cause. That, however, is not the question. I accept that none of the paragraphs of subs (2) is engaged. The question is whether s 570 applies where relief is sought under the FW Act and at common law, even if the relief sought under the FW Act is in the alternative to the relief sought at common law. The answer to that question depends on whether Mr Coghill is "[a] party to proceedings … in relation to a matter arising under the Act". 10 The complicating feature here is that there were two elements to Mr Coghill's claim as pleaded, both arising from the circumstances in which Indochine Resources terminated his employment. The first was based on allegations that Indochine Resources had contravened the FW Act, the second was the common law claim for breach of contract. In his originating application Mr Coghill sought declarations that Indochine Resources had acted in breach of s 90(2) of the FW Act by failing to pay him his outstanding annual leave and in breach of s 117 of the Act by failing to give him written notice of termination or payment in lieu. 11 At the hearing, Mr Coghill accepted that if he succeeded on his contract claim (as indeed he did) he could not have both. He submitted that the FW Act claims were made in the alternative to his principal claim, which was in contract, although he did not apply to amend the pleading. 12 It is the FW Act that gave this Court jurisdiction. Section 19(1) of the FCA Act provides that the Court has such original jurisdiction as is vested in it by laws made by the Parliament. Section 562 of the FW Act states: Jurisdiction is conferred on the Federal Court in relation to any matter (whether civil or criminal) arising under this Act. 13 Section 563 provides that this jurisdiction is to be exercised in the Fair Work Division of the Court if, amongst other things, (a) an application is made to the Court under the Act; or (c) a declaration is sought under s 21 of the FCA Act in relation to a matter arising under the FW Act. 14 In other words, this Court has no jurisdiction unless the proceedings were in relation to a matter arising under the FW Act. The Court had jurisdiction to hear the contract claim only because it was associated with the FW Act claim: see FCA Act s 32. 15 Mr Coghill need not have invoked the jurisdiction of this Court. He could have sued for damages in the Supreme Court. Had he done so, however, he would have left himself vulnerable to an adverse costs order had he lost. At the time he began his proceeding there was no guarantee that he would succeed. His allegations about the circumstances in which his employment were terminated were hotly disputed. Several witness statements had been filed by Indochine Resources calling into question his honesty. Doubtless, this was a consideration behind his solicitors' decision to proceed in this Court where he could avail himself of the protection of s 570(1) of the FW Act, should he fail. At any time his solicitors could have asked the Court to remove the proceedings from the Fair Work Division. No such application was made, even when Indochine Resources' solicitors filed their notice of ceasing to act. 16 None of this matters, however, if the proceedings were not in relation to a matter arising under the FW Act. 17 In support of the proposition that they were not, Mr Coghill submitted that: (1) although he sought relief under the FW Act to enforce the minimum standards prescribed by Pt 2-2 of the Act, those claims were "subsidiary" to his claim for breach of the employment contract; (2) his claim for breach of the employment contract was not a matter arising under the FW Act, but is founded on private rights brought into existence by the parties upon execution of the contract; (3) it was strictly unnecessary for the Court to consider the FW Act claims; (4) the Full Court's decision in Tristar Steering and Suspension Australia Ltd v Industrial Relations Commission of New South Wales (No 2) (2007) 159 FCR 274 ("Tristar No 2") supports the proposition that costs may be awarded in such a case; and (5) while Tristar No 2 was concerned with the scope of s 824 of the Workplace Relations Act 1996 (Cth) ("WR Act"), not s 570, the terms of the two sections are relevantly identical. 18 These submissions must be rejected. 19 First, the Court was exercising the jurisdiction conferred by the FW Act and its associated or accrued jurisdiction. Contrary to Mr Coghill's submission, it was not only necessary to exercise jurisdiction under the FW Act, it was obligatory to do so: Fencott v Muller (1983) 152 CLR 570 at 604 citing Barwick CJ in Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 475. 20 Second, the authorities are against Mr Coghill. The bifurcation of the proceeding which underlies his submissions is not permissible. 21 Third, Tristar No 2 is distinguishable. 22 It is convenient to deal with Tristar No 2 first. In Tristar Steering and Suspension Australia Ltd v Industrial Relations Commission of New South Wales (2007) 158 FCR 104 (Tristar No 1) Tristar Steering and Suspension Australia Ltd, with Cheng Hong, applied for orders in the nature of prohibition or injunctions against the Industrial Relations Commission of New South Wales to prevent the continuation of an inquiry being conducted by the Commission pursuant to a reference given to it by the NSW Minister for Industrial Relations under the Industrial Relations Act 1996 (NSW). The inquiry concerned matters "in respect of the relations of employees and employers" which, in the case of constitutional corporations, at least, was a field in which the Commonwealth had entered with the enactment of the WR Act. The application was successful, the Court finding that there was an inconsistency between the NSW Act and the Commonwealth Act. The intention was that the Commonwealth Act cover the field, and the Commission did not have jurisdiction or power under the NSW Act to inquire into and report on the matters referred to it by the Minister. A declaration and a restraining order were made. 23 Costs orders had been made by two single judges of the Court in interlocutory proceedings and, in the mistaken belief that the applicants had applied for costs in the principal proceedings, the Court also ordered that the Minister pay the applicants' costs. It was, however, only after the publication of judgment that the applicants applied for an order for costs. Tristar No 2 was concerned with that application. In Tristar No 2 the Minister, who was the second and only active respondent in the proceedings, opposed the application, relying on s 824 of the WR Act. The Full Court was unanimously of the opinion that the section did not apply and that, in the light of their success, the applicants were entitled to an order for costs against the Minister and therefore that the order made in Tristar No 1 should not be set aside. For the same reasons the Court refused to disturb the earlier costs orders. 24 Mr Coghill relied on a passage in the judgment of Buchanan J, with whom Kiefel J agreed, at [16] where his Honour said: In my view, it cannot correctly be maintained that the relief which was granted by the orders earlier made in the present matter was a vindication of a right or duty conferred or created by the WR Act. Rather the right or duty (if that is the correct way to regard the absence of jurisdiction in the IRC) arose from the operation of s 109 of the Constitution. The proceedings were brought to enforce the duty upon the IRC not to act outside its jurisdiction, in circumstances where the IRC had made plain its intention to do so. The fact that s 109 of the Constitution was engaged by reason of the terms of the WR Act does not signify, in my view, that the proceedings were "in a matter arising under" the WR Act within the meaning of s 824 of the WR Act. In my view the Court has power to make an order for costs in the proceedings. 25 I accept that s 570 is in similar terms to s 824 of the WR Act but there is an important difference. Section 570 prevents a court from making an order that a party to "proceedings … in relation to a matter arising under this Act" pay the costs of another party to the proceeding unless the proceeding was instituted vexatiously or without reasonable cause or the court is satisfied that a party to the proceeding has, by an unreasonable act or omission, caused another party to incur costs in connection with the proceeding (emphasis added). Section 824 did not include the words "in relation to". It relevantly provided: (1) A party to a proceeding … in a matter arising under this Act … must not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause. (2) Despite subsection (1), if a court hearing a proceeding … in a matter arising under this Act … is satisfied that a party to the proceeding has, by an unreasonable act or omission, caused another party to the proceeding to incur costs in connection with the proceeding, the court may order the first-mentioned party to pay some or all of those costs. … (Emphasis added.) 26 When the FW Act was enacted, s 570 took a different form. The limits on a court's power to award costs applied to "proceedings … in a court … exercising jurisdiction under [the] Act". On 1 January 2013 s 570 was amended to its current form. In so doing, the Parliament did not see fit merely to re-enact the language of s 824 of the WR Act, but to adopt a new form of words "proceedings … in a court … in relation to a matter arising under [the] Act". 27 In Stanley v Service to Youth Council Inc (No 3) (2014) 225 FCR 357 ("Stanley"), White J reviewed the legislative history in some detail. At [24] his Honour noted that effect should be given to every word in s 570(1), citing Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [71]. In other words, s 570(1) is not to be construed as though it referred - like s 824 of the WR Act - to "proceedings in a court in a matter arising under [the] Act". The addition of the new phrase "in relation to" pointed to a broader reach for the limitation on a court's power to award costs. 28 The authorities on s 824 of the WR Act and, its predecessor, s 347 of the Industrial Relations Act 1988 (Cth), hold that the question of whether a matter arises under the Act for the purposes of those sections is to be determined by a similar test to that applied in deciding whether a matter is one "arising under" a law of the Commonwealth, for the purposes of s 76(ii) of the Constitution. That is, whether "… the right or duty in question in the matter owes its existence to [the Act] or depends upon [the Act] for its enforcement …" (R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154 (Latham CJ). See Re Polites; Ex parte Hoyts Corp Pty Ltd (No 2) (1991) 173 CLR 78 at 93 (Brennan, Gaudron and McHugh JJ)); Poulos v Waltons Stores (Interstate) Ltd (1986) 68 ALR 537 at 543 (Gray J, Keely J agreeing at 541); and Tristar No 2 at [1] (Kiefel J). 29 The authorities also hold that the word "matter" should be construed as it was construed by the High Court in Fencott v Muller at 603, that is, "as a justiciable controversy, identifiable independently of the proceedings which are brought for its determination and encompassing all claims made within the scope of the controversy": cf Poulos v Waltons Stores (Interstate) Ltd at 542-543, Thompson v Hodder (1989) 21 FCR 467 at 469 (Keely, Gray and Ryan JJ); Bostik (Australia) Pty Ltd v Gorgevski (No 2) (1992) 36 FCR 439 ("Bostik"); Byrne v Australian Airlines Ltd (1994) 47 FCR 300 ("Byrne") at 350-351 (Beaumont and Heerey JJ, Keely J agreeing at 319), 367-368 (Gray J, Black CJ agreeing at 313). As Brennan, Gaudron and McHugh JJ put it in Re Polites; Ex parte Hoyts Corp Pty Ltd (at 93-94), a case in which the High Court granted the prosecutor a writ of mandamus directing Deputy President Polites, as a member of the Full Bench of the Australian Industrial Relations Commission, to hear and determine certain matters pending before the Commission: The jurisdiction of this Court conferred by s. 75(v) of the Constitution was invoked to determine that matter. It follows that the proceeding in this Court was itself a proceeding in a matter under the Act. It follows that s. 347(1) of the Act is applicable to the proceeding in this Court, albeit the jurisdiction of this Court invoked in that proceeding is conferred by s. 75(v) of the Constitution. 30 The same principles should be applied to the construction of the same words in s 570(1) of the FW Act: see Australasian Meat Industry Employees' Union v Fair Work Australia (No 2) (2012) 203 FCR 430. 31 Mr Coghill did not refer to the difference in the statutory language. He also overlooked what Buchanan J said in Tristar No 2 at [15], namely, that the Court's power to order costs depended on "the correct characterisation of the nature of the proceedings". Correctly characterised, the Tristar proceedings were not proceedings in relation to a matter arising under the WR Act. For this reason, Tristar No 2 is plainly distinguishable. 32 As Kiefel J put it at [2]: The first respondent was not exercising jurisdiction under the WRA, but purported to do so under the Industrial Relations Act 1996 (NSW) ("the State Act"). It was its lack of jurisdiction which was the basis for the injunctions sought and ordered. It lacked jurisdiction because an inconsistency arose between the WRA and the State Act and because the WRA disclosed an intention to cover the field of employer-employee relations. The matter has a connexion with the WRA, but does not involve a right arising under it and the duty of the first respondent not to proceed, which was enforced, arose because of the operation of s 109 of the Constitution of the Commonwealth and the resultant effect upon the State Act. 33 There is a long line of authority in this Court under the WR Act and its predecessor - the Industrial Relations Act 1988 (Cth) - which tells against the approach Mr Coghill urged on the Court: see, for example: Bostik; Byrne; Goldman Sachs JBWere Services Pty Ltd v Nikolich (2007) 163 FCR 62; and, more recently, Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (No 2) (2013) 209 FCR 464. I was taken to none of these authorities, nor to the following two authorities which are directly in point. 34 In Stanley, White J reviewed a number of these authorities and concluded that the limitation imposed by s 570 of the FW Act on a court's powers with respect to costs applies to any proceedings in which a claim is made under the Act regardless of whether a claim is also made in the accrued jurisdiction or under other federal legislation. At [26]-[28] his Honour said: 26 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. 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. 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. 35 In Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; 317 ALR 665 a five-member bench of the Full Court followed White J in Stanley. Melbourne Stadiums v Sautner was a case, very much like Mr Coghill's, in which an employee, Mr Sautner, who had been summarily dismissed, sued at common law for breach of his contract of employment and also for relief under the FW Act - Tracey, Gilmour, Jagot and Beach JJ, with whom White J agreed at [173], held at [157]: There was a single proceeding which was commenced and prosecuted to judgment in the County Court. Mr Sautner made claims under the Fair Work Act and at common law. The claims under the Fair Work Act were "matters" within the meaning of s 570(1) of the Fair Work Act. The proceeding was, as a result, a proceeding in relation to a matter arising under that Act. Section 570(1) operated to preclude the court from ordering MSL ("another party to the proceedings") to pay any costs incurred by Mr Sautner in prosecuting his claims unless he could satisfy the court that one of the exceptions, provided for in s 570(2), applied. 36 And so it is here. I am bound to follow the Full Court's decision. 37 In summary, then, even if it be correct in the circumstances to describe the FW Act claims as "subsidiary" or alternatives to Mr Coghill's common law claim for breach of his employment contract, the proceedings were nonetheless "proceedings … in a court … in relation to a matter arising under [the FW] Act". In this case, as in Stanley, "[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" (Stanley at [33]). 38 I am therefore of the opinion that the Court is precluded by s 570(1) from making an order for costs in Mr Coghill's favour as this is a proceeding in a matter arising under the FW Act and none of the exceptions applies. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katzmann.

Coghill v Indochine Resources Pty Ltd

At a glance

Court

Decision date

Before

Source

Judgment (5 paragraphs)

Parties

Legislation Cited (7)

Cases Cited (19)