Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2015] FCAFC 97 | Case summary

the court: 1 On 6 March 2015 this Court allowed the appeal by the Construction, Forestry, Mining and Energy Union ("CFMEU") and set aside the declarations and orders made against CFMEU on 2 December 2013 and 11 March 2014: see Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2015] FCAFC 25 ("the principal judgment"). At that time, we noted that s 570 of the Fair Work Act 2009 (Cth) ("FW Act") limited the circumstances in which the Court could make an order for costs. We then made directions against the contingency that, notwithstanding this limitation, the CFMEU might be disposed to seek costs. We also indicated that, unless the Court otherwise directed, any such application would be dealt with on the papers, that is to say, upon a consideration of the written submissions and supporting affidavits, if any, filed in accordance with the Court's directions. 2 In the result, the CFMEU decided to make an application for costs, not only in respect of the appeal, but also in respect of the proceedings before the primary judge. The respondent, BHP Coal Pty Ltd ("BHP"), submitted that no such order for costs ought to be made. 3 Having considered the written submissions made by the parties, we regard the costs application as one which may aptly be determined on the papers. 4 The application made by BHP in the original jurisdiction and the appeal against the orders which came to be made are separate proceedings, albeit in the same "matter": in Re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265-266. Often, where a qualification such as that found in s 570 of the FW Act is not present, success in an appeal will expose a flaw in the proceedings below such that, in the usual exercise of a costs discretion, costs will be ordered in favour of the appellant both on the appeal and with respect to the proceeding in the original jurisdiction. However, even in the absence of a qualifying provision such as s 570, this does not necessarily follow. The discretionary power conferred by s 43 of the Federal Court of Australia Act 1976 (Cth) ("FCA") to award costs is not just qualified by s 570 of the FW Act but must also be exercised in the circumstances of the particular case. We have approached the question of whether to award costs accordingly. 5 The CFMEU conceded, correctly, that since the Fair Work Amendment Act 2012 (Cth) ("Amendment Act") (s 3 and Sch 10, Pt 1) came into force the Court's power to award costs, both on appeal and in relation to the proceeding before the primary judge, is qualified by s 570. 6 Section 570 now relevantly provides: (1) A party to proceedings (including an appeal) in a court … [in relation to the 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) … 7 As to the appeal, BHP did not institute that proceeding, so s 570(2)(a) is inapplicable. We reject the CFMEU's submission that the reference to "proceedings" in s 570(2)(a) is a reference to the "proceedings (including an appeal)" in s 570(1). The parenthetical inclusion of an appeal in s 570(1) is to make it clear that s 570 applies both to original or, as the case may be, appellate proceedings falling within the class it describes. It serves no other purpose. 8 The fate of the CFMEU's various contentions in the appeal is, of course, apparent from the principal judgment. While the following is not intended as a substitute for the reasoning in that judgment, it is convenient to summarise in a cursory way those contentions and their fate in tabular form: Issue in appeal Conclusion and outcome (1) whether the primary judge erroneously characterised the manner of the contraventions (ground 2 of the notice of appeal). Inference can be drawn that CFMEU understood at the time that BHP's case was the case it put in its submissions, even if that was contrary to statement of claim ie that the union parties had promulgated the overtime policy by distributing a number of documents, not just one. "The case the primary judge decided was the case BHP ran" at [77]. Ground 2 dismissed. (2) whether it was necessary for the primary judge to identify the time of contraventions and, if so, whether it was identified (ground 1). BHP submitted that: • it was sufficient for the primary judge to have made a finding that the contravening conduct occurred after the commencement of the FW Act on 1 July 2009, ie a specific time was not necessary and open for primary judge to find that the contravening conduct occurred after that day; and • its statement of claim did identify the dates of the alleged contraventions. Full Court rejected BHP's submission that the contravention took place in May 2011. "… existence of the policy on and after 1 July 2009 was not itself sufficient to constitute a contravention" - at [88]. "In the case of the alleged contravention of ss 345 and 349, it was necessary for BHP to have established that the policy was communicated to employees at a particular time on or after 1 July 2009" - [89]. Ground 1 allowed. (3) whether a Jones v Dunkel inference should have been drawn against the CFMEU based on its failure to call evidence and the consequence of such an inference for the imputation of liability (ground 5). On a fair reading of the reasons the primary judge did not draw a Jones v Dunkel inference - drew inferences from evidence that was given by BHP, not from failure by CFMEU to give evidence - at [166]. Ground 5 dismissed. (4) whether the finding that there was industrial action within the meaning of the FW Act was wrong (grounds 6-8). Grounds 6 and 7 dismissed. Ground 8 upheld "… to the extent that it challenged the primary judge's finding that the CFMEU organised or engaged in industrial action in the absence of evidence that any employee had taken industrial action after 1 July 2009" - at [174]. (5) whether the finding that BHP had a workplace right within the meaning of the FW Act to require reasonable unrostered overtime was wrong (ground 9). "There is nothing in either the text of the FW Act or the extrinsic material to warrant reading down the plain words of s 341(1)(a) so as to exclude employers" - at [179]. Ground 9 dismissed. (6) whether, even if BHP had such a workplace right, the primary judge erred in finding that industrial action was taken because of that workplace right (ground 10). Presumed under FW Act that the action was taken for a reason that included BHP's right to require its employees to work unrostered overtime in accordance with the agreement unless the CFMEU proved otherwise - at [183]. Ground 10 dismissed. (7) whether the finding that the CFMEU had knowingly or recklessly made false or misleading representations was wrong (grounds 11-14). "The fact that a representation may be inconsistent with a workplace right does not make it a representation about a workplace right. BHP did not point to any authority to suggest otherwise" - at [156]. "The documents did not say anything about clause 19.3 or its effect. Consequently, they were not false as to the terms of clause 19.3 of the 2007 Agreement. Nor were they misleading." - at [157]-[158]. Documents carried the CFMEU logo so were prima facie authorised but to make out allegation BHP needed to show documents distributed after FW Act came into effect - at [161]. Findings of contraventions of ss 345 and 349 of the FW Act should be set aside. (8) whether the penalty judgment contained various errors (grounds 15-17). Penalty judgment set aside (9) whether the penalty was manifestly excessive (grounds 18-19). Penalty judgment set aside (10) whether the primary judgment erred in ordering the CFMEU to issue a written statement signed by the current Lodge Executive (ground 20). Penalty judgment set aside

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.

Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd

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