9 As can be seen, putting to one side the grounds of appeal relating to penalty, the CFMEU failed in respect of most of its grounds of appeal. BHP noted this in its submissions but, responsibly, did not submit that, because of this, costs of the appeal should be awarded in its favour, for example on the basis that s 570(2)(b) applied not to its conduct in respect of the appeal but to that of the CFMEU. Neither did BHP submit that there ought to be some apportionment, if the occasion were one for the awarding of any costs to the CFMEU in respect of the appeal.
10 One might have hoped for greater forensic discrimination by the CFMEU in the grounds of appeal it chose to press but absence of such discrimination is not to be equated with unreasonableness. Sometimes, an unreasonable pleading of, or adherence to particular grounds of appeal might, have adverse costs consequences. It is not necessary to explore that subject in this case, as BHP did not invite us to make any order in its favour or to apportion.
11 So far as BHP's conduct in respect of the appeal is concerned, there was no unreasonable act or omission on its part which caused the CFMEU to incur costs. To the contrary, its conduct both in respect of the interlocutory and hearing phases of the appeal contributed to its efficient disposal, including with respect to the many unsuccessful grounds of appeal. In respect of the appeal, there is no occasion for the awarding of costs to the CFMEU.
12 We turn then to the subject of costs in respect of the proceeding in the original jurisdiction instituted by BHP.
13 In Baker v Patrick Projects Pty Ltd (No 2) [2014] FCAFC 166 at [9] (Baker), a Full Court of this Court approved a summary given by Pagone J in Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351 at [8] (Corinthian), as follows:
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) 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.
14 The Baker/Corinthian approach has been relied upon in number of cases since including in Shea v Energy Australia Services Pty Ltd (No 2) [2015] FCAFC 14 at [9] (Rares, Flick and Jagot JJ), and Fair Work Ombudsman v Devine Marine Group Pty Ltd [2015] FCA 370 at [43] (White J). White J went on to observe (at [44]) that some assistance can be derived from asking whether the proceedings could have been dismissed summarily (noting the care that must be taken with analogy). A different Full Court (comprising Dowsett, McKerracher and Katzmann JJ) in Australian Workers Union v Leighton Contractors Pty Limited (No 2) [2013] FCAFC 23 (Leighton) summarised the principles thus (at [7]):
(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 Limited v The Hon Senior Deputy President Jeanette Marsh [2004] FCAFC 155 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.
15 That approach has been followed in Sunbuild Pty Ltd v Ramsay (No 2) [2014] FCA 712 at [6] (Mansfield J). The Baker/Corinthian approach and the Leighton approach are expressed substantially in the same way. But, in Baker/Corinthian the language of "exceptional circumstances" from Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275 (Kangan) was used whereas in Leighton the Court said that it was not necessary to prove "exceptional circumstances" and disapproved of Kangan to the extent it held differently. In Ashby v Slipper (No 2) [2014] FCAFC 67, another differently-constituted Full Court (Mansfield, Siopis and Gilmour JJ) also used the language of "exceptional circumstances," referring to Kangan (at [35]). On its face, there appears to be a distinction between the approaches. In truth, though, we think there is not. In Kangan at [60], the Court said this: "Although costs will rarely be awarded and exceptional circumstances are required to justify the making of such an order …," citing Northrop J in Heidt v Chrysler Australia Ltd (1976) 26 FLR 257. But Northrop J did not use the phrase "exceptional circumstances". His Honour observed (at 272) that principles applicable to summary judgment were "of assistance", and set out at (at 273 in particular) extracts from Barwick CJ's judgment in General Steel Industries Inc v Commissioner of Railways (NSW) (1969) 112 CLR 125 (General Steel). Barwick CJ said (at 128) that the "test to be applied [had] been variously expressed" and gave examples, including "so obviously untenable that it cannot possibly succeed", "so manifestly faulty that it does not admit of argument", and "under no possibility can there be a good cause of action", and then went on to say, "… the need for exceptional caution in exercising the power whether it be inherent or under statutory rules is the same".
16 We think that the Court in Kangan was really saying that the circumstances identified by Northrop J (by reference to General Steel) as being required for the making of a costs order would only be met - as a matter of fact, rather than in the application of a test - in exceptional cases. That is a reflection upon the proceedings in the court at the time, rather than the establishment of a test. We think that is also what underpins the judgment of Wilcox, Marshall and Jacobson JJ in Spotless Services Australia Ltd v The Honourable Senior Deputy President Jeanette Marsh [2004] FCAFC 155, which was relied upon in Leighton:
[13] The usual course is that, in matters arising under the Act, there will be no order as to costs. To that extent a costs order is an exceptional order. However, there is no warrant for applying "an exceptional circumstances test" to consider whether a proceeding has been commenced without reasonable cause. Whether a proceeding has been commenced without reasonable cause is relevantly established as a matter of objective fact.
17 While the principle was expressed differently as between Baker/Corinthian and Leighton, we think that in all cases the approach set out above (with which, respectfully, we agree) is the approach that has been adopted. Indeed, a short way of arriving at the same conclusion is to observe that in all cases the Court looked to whether the proceeding had been instituted without reasonable cause, and did not look to whether it was an exceptional case.
18 BHP asserted in its submissions that it could hardly be concluded that the original jurisdiction proceedings were instituted "without reasonable cause" when the primary judge had found in its favour. We agree that success in the original jurisdiction, even if not sustained on appeal, is relevant, but it is not decisive and should not divert attention from the circumstances in which a proceeding was instituted and prosecuted and why, ultimately, it came to fail. Sometimes, for example, a conclusion that an applicant ought to succeed in the original jurisdiction might, itself, be unreasonable.
19 The genesis for the institution of the proceedings in the original jurisdiction was fairly put by BHP in its submissions. It was the discovery of a CFMEU document in a crib room at its mine. Viewed in prospect, it was not unreasonable for BHP to view that document as one which indicated that it was a policy of the CFMEU that employees were limited in the amount of overtime which they could work. As it happened, the conclusion reached on the appeal was that an inference that the policy had been promulgated by the CFMEU after 1 July 2009, the relevant commencement date for the FW Act, could not be sustained to the applicable standard, having regard to the penal character of the proceeding. We do not consider that conclusion to be so obvious in prospect that it was unreasonable to have commenced the proceeding. Nor was it so obvious as to admit of a conclusion that the further prosecution of the proceeding, once instituted, was unreasonable, even taking into account the no case submission the CFMEU made. The same may be said of the conclusion reached on the appeal that the documents upon which BHP relied in respect of allegedly contravening statements by the CFMEU were neither false nor misleading. It is in the nature of an exercise of judicial power that an outcome has a clarity in hindsight that it may not have in prospect. Neither s 570(2)(a) nor s 570(2)(b) is engaged.
20 The application for costs in respect of the appeal and the trial should be dismissed.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Logan, Bromberg and Katzmann.