Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission and Anor

Federal Court of Australia (Full Court)|2006-12-22|Before: Black CJ, Mansfield JJ

THE COURT 1 The plaintiff, Council of Kangan Batman Institute of Technical and Further Education, applied to the High Court for the issue of writs of certiorari and mandamus directed to the Australian Industrial Relations Commission in respect of part of a decision made by the Full Bench of the Commission on 13 May 2005. In that part of the decision, the Full Bench refused the plaintiff leave to appeal from a decision of Deputy President Leary made on 8 February 2005 dismissing an application for an order for costs against the second defendant, Ann Hart. The plaintiff also sought relief, in the alternative, against the decision of Deputy President Leary. 2 The plaintiff's application to Deputy President Leary was made under s 170CJ(2) of the Workplace Relations Act 1996 (Cth) ('the Act') which provided, at the time of the application, as follows: (2) If the Commission is satisfied that a party (first party) to a proceeding relating to an application under s 170CE has acted unreasonably in failing: (a) to discontinue the proceeding; or (b) to agree to terms of settlement that could lead to the discontinuance of the application; the Commission may, on an application under this section by the other party to the proceeding, make an order for costs against the first party. 3 On 21 February 2006 the High Court remitted the proceeding for hearing by this Court. A central issue is whether the Deputy President applied the proper test to the determination of the application under s 170CJ(2). To address that issue it is necessary to understand the factual setting against which the application arose.

The decision of the deputy president 17 The heading of the Deputy President's decision relating to s 170CJ(2), identifies the question that she set out to answer. It reads: "Was Ms Hart acting unreasonably in failing to discontinue proceedings or agree to terms of settlement?" 18 The Deputy President commenced by setting out the test that the plaintiff contended should be applied at [24], namely: … "'whether a reasonable person in the position of the party against whom a costs application is made would reasonably have regarded the offer in question as insufficient to justify agreeing to terms of settlement that could lead to the discontinuance of the application' as was found by His Honour Vice President Lawler in James Abbey v Daycare Management Pty Ltd t/as Blinky Bill Early Childhood Centre. (Abbey)" 19 The Deputy President then recorded the essential factual background upon which the application for costs was based. She explained that on 20 November 2003, prior to the hearing of the application, an offer was made by the plaintiff to pay Ms Hart $7,500, with a denial of liability. The offer was rejected and Ms Hart's legal representative responded that her claim was likely to succeed and that she had a reasonable prospect of reinstatement, as well as an award of compensation equal to six months salary. 20 A counter offer was made by Ms Hart on 28 November 2003. She sought an amount equal to five and a half months salary, withdrawal of the letter of termination, provision of an opportunity for her to resign, a statement of services indicating that she had performed competently, an agreed contact person for prospective employers, a letter of apology, a letter to the funding body of the plaintiff to address the harm done to her by the earlier report by the plaintiff of the allegations against her, and a limited release. 21 A second offer was made by the plaintiff on 17 December 2003. By then, the hearing had proceeded for four days, most of which had been taken up with Ms Hart's evidence. The Deputy President described the second offer thus, at [31]: "The second offer, made 'without prejudice save as to costs' and 'strictly with a denial of liability', was in the following terms: '1. Our client will make a payment of $20,000 gross. 2. Our client will provide Ms Hart with a Statement of Service which would identify Mr Geoff Mackay as the contact person and he will agree to confirm its contents but not make any further comments. 3. Our client will write to Patricia Neden of OTTE advising that the issues in dispute between the Institute and Ms Hart have been resolved and request Ms Hart's name be removed from the record in connection with the Institute's letter of 15 July 2003'." 22 To induce Ms Hart to accept this offer, the plaintiff referred to concessions that she made in cross-examination which the plaintiff considered would not assist her application. The plaintiff also contended that the Commission would be unlikely to order reinstatement in view of Ms Hart's evidence that it would be impracticable for her to return to the Administrative Studies Department. 23 On 6 January 2004, in response to the second offer, Ms Hart made a counter offer, described by the Deputy President as follows at [33]: "On behalf of Ms Hart and in response to the second offer, by letter dated 6 January, 2003, her solicitors indicated that she was 'prepared to settle her unfair dismissal claim on the following basis: 1. Your client acknowledge that our client did not engage in serious misconduct and that her dismissal was unwarranted. 2. Your client pay our client an amount equivalent to 5 and 1/2 months salary, payable as a contribution towards legal costs and/or compensation for pain and suffering. 3. Your client withdraw its letter of termination and allow our client to resign. 4. Your client provide our client with a letter of apology regarding the handling of her initial complaint, the conduct of its investigation and the dismissal of our client. 5. Your client provide our client with a statement of service, setting out her position, period of service, duties, and stating that her duties were performed competently. 6. That there be an agreed contact person for prospective employers of our client. 7. That there be mutual non-disparagement obligations. 8. Your client write a letter to OTTE to the effect that further investigations have revealed that our client did not behave inappropriately; and 9. Our client will release your client from these proceedings only'." 24 On 8 January 2004, the plaintiff rejected the counter offer and the hearing proceeded for a further five days. 25 Having set out the factual background of the application, the Deputy President then referred to contentions put by the plaintiff, which may be summarised as follows: · The reasonableness of Ms Hart's actions must be assessed by reference to the stage which the proceedings had reached. · Even if Ms Hart had a genuine belief that her dismissal was the result of her making complaints of harassment and bullying, the matter must be judged objectively. Thus, her belief was irrelevant. The first panel and the Commission had both found that the dismissal did not result from the complaints which Ms Hart had made against Mr McNamara. · Ms Hart had conceded in her evidence that the allegations of file administration were factually correct. · The s 170CE application was determined on the facts conceded by Ms Hart and not on either a question of law, or on a preference of some evidence over other evidence. The Deputy President commenced her assessment of whether Ms Hart had acted unreasonably by addressing the submission that she had conceded the case in her evidence. The Deputy President said at [42]: "There is no question that Ms Hart did concede a number of the complaints alleged about her administration of the files, however she did not concede them all; as well she was still, in her view, pursuing an acceptable outcome to her harassment and bullying complaints. It seemed that she had the view that a successful outcome in her s 170CE application would vindicate her allegations against Mr McNamara. This was a view she expounded despite the findings of the investigation panel that there was no relationship between those events and her termination." The Deputy President continued the analysis of the way in which Ms Hart viewed the proceedings at [43] as follows: "It is indicative of how Ms Hart viewed the proceedings when in cross examination the issue of reinstatement was discussed. Her medical adviser had commented that a 'return to this particular workplace is now irretrievable' however Ms Hart considered that prognosis related to resolution of her complaints of harassment and bullying. …" Then followed an extract from the transcript of the hearing which supported the conclusion expressed by the Deputy President. 26 The Deputy President referred to the Commission's decision in Geoffrey Purser v Commonwealth Attorney General's Department P941610 (Purser) which she regarded as similar to the case before her. In that matter it was held that where one version of the facts is preferred by the Commission, costs do not necessarily follow that preference. The Commission in that case also concluded that, until all the evidence is given in great detail, the full case against an applicant is not revealed. The Deputy President then cited the following passage from Purser at [47]: "The applicant was seeking the remedy of reinstatement from the Commission. Reinstatement is the primary remedy available in relation to a section 170CE application. I am unable to be satisfied that the applicant was acting unreasonably in refusing to settle the matter by accepting a settlement, which did not include reinstatement or an opportunity to resign. Clearly he held the view that the penalty which had been imposed upon him was more severe than his behaviour warranted, in light of all the circumstances of his situation. That this view was not accepted by the Commission does not necessarily result in a conclusion that his refusal to discontinue the application or agree to lesser terms of settlement was unreasonable in the light of the facts of the matter as he saw them at the relevant time." The Deputy President continued at [48] and [49]: "I have no doubt that the evidence of Ms Hart was truthful and accurate as to the events that transpired, that evidence however revealed that she had a very different view as to the seriousness of the matters in dispute. In response to one of the errors alleged against her Ms Hart said: 'In the overall scheme of things, that obviously is a concern but everybody does make mistakes and I don't consider that any more serious than anybody else making the same mistake.' She maintained that view even though it was contrary to the view of Kangan and, as the determination found, the view of the Commission. Nevertheless her view of the matters raised by Kangan and relied on for her termination never changed despite her making certain concessions. There were also issues of complaint raised in proceedings that had not been put to Ms Hart prior to her termination or in the exchange of documents prior to the hearing; for example the complaint about underloading. The following comment in Purser is relevant and addresses a similar circumstance: 'Until all the evidence was given, in great detail, the full case against the applicant was not revealed'." 27 At [50], the Deputy President referred to the judgment of Moore J in Blagojevch v Australian Industrial Relations Commission (2000) 98 FCR 45at 22 concerning the meaning of "acted unreasonably in failing to agree". His Honour expressed the view that a failure to make a counter offer may, in certain circumstances, amount to an unreasonable refusal to agree to terms of settlement: "… A 'failure to agree' comprehends not only the rejection of an offer of settlement but probably more. The section does not say 'refusal to agree to terms of settlement'. The expression 'failing to agree' describes a wider range of conduct than 'refusing to agree'. An offer was made in this case and no counter offer made. However, the rejection of an offer can be absolute or qualified. By that I mean an offer can be rejected and no counter offer made or, on the other hand, an offer can be rejected but a counter offer made. If an offer is made which, as to monetary amount, is in the upper range of what might be an appropriate figure to settle on, and is rejected but no counter offer is made then that may, in my opinion, constitute conduct which was acting 'unreasonably in failing to agree to terms of settlement' in some circumstances. Those circumstances might arise if the only real dispute between the parties is the amount for which the matter might be settled. Ordinarily, of course, the amount for which any proceeding (claiming, inter alia, a monetary amount), might reasonably be settled will depend on the actual and perceived strengths and weaknesses of the cases of the parties. However, in a situation where an offer was made which was not fanciful and no counter offer was made by the opposing party to bring the negotiations into the range the opposing party thought was reasonable, the failure to make any counter-offer could, depending on the circumstances, constitute acting unreasonably in failing to agree to terms of settlement." 28 Against this background, the Deputy President considered Ms Hart's insistence on withdrawal of the letter of termination and her insistence on being given the opportunity to resign. The Deputy President said at [51] and [52]: "In this matter Ms Hart rejected the offers of settlement as they did not include a withdrawal of the letter of termination so that she be allowed to resign. On behalf of Ms Hart it was submitted that the parties were close to settlement, Kangan submitted that the response to the second offer sought 'complete and utter vindication' for Ms Hart. Certainly the proposed settlement put on behalf of Ms Hart did seek to clear her name of any allegations as well as an apology and acknowledgment that there was no basis for the dismissal. It was said that Ms Hart was "essentially seeking the best possible case scenario." That would not have been an unexpected approach to any settlement. In fact Ms Hart's claim that her dismissal be treated as a resignation aligns with her argument that the conduct of which she was accused did not warrant termination. It was her evidence in the substantive proceedings that the allegations made against her were about issues and conduct of little importance or seriousness on her view of those issues." 29 After observing that the letter dated 28 November 2004 from Ms Hart's lawyers to the plaintiff's lawyers, stating their view that her application had a reasonable prospect of resulting in reinstatement and an award of compensation, would not have encouraged Ms Hart to withdraw, the Deputy President continued at [54] and [55]: "Although a number of the conditions of settlement were capable of resolution Ms Hart's requirement that she be able to resign instead of her records showing dismissal was not met. This condition was of some importance to her. Likewise her evidence that a finding in her favour in respect to the unfair dismissal claim would vindicate her allegations of bullying and harassment against Mr McNamara was misconceived but genuinely held." 30 Then, she concluded, at [59] and [60]: "In respect to the application pursuant to s 170CJ(2) I am not satisfied that in the circumstances of this matter that Ms Hart acted unreasonably in failing to agree to the terms of settlement offered and discontinue her application. The primary objective for Ms Hart in any settlement was that she be able to resign and, although misconceived, her view that her s 170CE application would resolve the 'issues' surrounding her complaint of bullying and harassment. Resolution was not dependent on the quantum of money proposed in any offer made." 31 Previously, at [56], the Deputy President had expressed the same conclusion by the application of the test which had been proposed by the plaintiff and was set out at [18] of these reasons.

The Decision of the full bench 32 The plaintiff argued before the Full Bench that the Deputy President had erred in adopting a subjective approach to the application under s 170CJ(2) of the Act. The plaintiff relied on the specific passages in [42], [48], [49], [56] and [60] of the decision of the Deputy President. Most of these passages have been reproduced earlier in these reasons for judgment and the specific sentences relied on by the plaintiff are set out in the next section. 33 The Full Bench said at [60]: "The test that her Honour was required to apply was whether she was satisfied that the Respondent was unreasonable in failing to agree to offers of settlement, at the stage at which they were made. In these proceedings the 'first offer' was made prior to the commencement of arbitration, and the 'second offer' prior to the calling and cross-examination of the Appellant's witnesses." 34 The Full Bench reasoned as follows at [62] to [65]: "The fact that the Deputy President referred to the Respondent's 'view' or 'different view' is unsurprising and is not a basis for finding appealable error. As observed by Moore J in Blagojevch (and cited at paragraph 50 of Deputy President Leary's decision): 'Ordinarily … the amount for which any proceeding (claiming, inter alia, a monetary amount), might reasonably be settled will depend on the actual and perceived strengths and weaknesses of the cases of the parties.' Further, as Marshall and Lehane JJ said in the same case: '… it is not unreasonable to respond to an offer in light of the offeree's genuine perception or recollection of events. …' In the extracts from the Deputy President's decision relied on by the Appellant as evidencing appealable error the Deputy President was, in our view, doing no more than correctly identifying the actual and perceived strengths of the Respondent's case. In context it is clear that Ms Hart's views were not the only matters considered by the Deputy President. The Deputy President's decision not to award costs was made because she was "not satisfied that in the circumstances of this matter that Ms Hart acted unreasonably in failing to agree to the terms of settlement offered and discontinue her application" (see paragraph 59) having regard to a range of considerations. The approach adopted by the Deputy President is consistent with the decision of Marshall and Lehane JJ in Blagojevch that: 'It is inappropriate … to take a confined or technical approach to a consideration of which matters are relevant to the question whether a party has acted unreasonably in failing to do either of the things with which s 170CJ(2) is concerned'." 35 The Full Bench concluded at [69]: "The Appellant has failed to establish that an arguable case exists in support of the proposition that the Deputy President made an error warranting correction on appeal. Nor are there any other considerations that would warrant the granting of leave to appeal. We have decided to refuse leave to appeal in respect of the application made pursuant to s 170CJ(2)."

The test under s 170CJ(2) - Submissions of the plaintiff 36 The plaintiff argued that the test to be used to determine whether a person acted unreasonably under s 170CJ(2) of the Act is to ask whether a reasonable person in the position of the person to whom the offer is made and with the knowledge of the facts that were known or ought reasonably to have been known by that party would have failed to agree to the settlement offer. The determination of whether a party acted unreasonably does not, it was contended, turn on whether or not the party has a subjective view that those facts give rise to an entitlement under s 170CE or the party's subjective view of the prospects of success. It was argued that the key considerations taken into account by the Deputy President in refusing to make a costs order against Ms Hart related to her subjective perceptions and views in relation to the proceedings. The instances relied upon by the plaintiff were set out in the plaintiff's written submissions as follows: "At [42], Deputy President Leary referred to the fact that Ms Hart 'was still, in her view, pursuing an acceptable outcome to her harassment and bullying complaints', and that 'it seemed she had the view that a successful outcome in her s 170CE application would vindicate her allegations against Mr McNamara'. … Her Honour noted that '[t]his was a view she expounded despite the findings of the investigation panel that there was no relationship between those events and her termination'. But, for the purposes of determining the application for costs under s 170CJ(2), Her Honour took into account ([55] and [60]) that Ms Hart's view 'was misconceived but genuinely held'." At [48], Deputy President Leary stated that 'evidence revealed that [Ms Hart] had a very different view as to the seriousness of the matters in dispute' … At [49], Her Honour noted that she maintained that view even though it was contrary to the view of Kangan and the view ultimately reached by the Commission … At [51] [sic], Deputy President Leary noted that Ms Hart's claim that her dismissal be treated as a resignation 'aligns with her argument that the conduct of which she was accused did not warrant termination' and her evidence that the allegations made against her 'were about issues and conduct of little importance or seriousness on her view of the issues' …" 37 The plaintiff also relied on passages from [56] and [58] of the Deputy President's decision, but these paragraphs do not relate to the issues under consideration. Paragraph [56] relates to the application of an alternative test as proposed by the plaintiff, and [58] relates to the application under s 170CJ(1), which was rejected and is not the subject of challenge. 38 In Blagojevch, the Full Court held that the Commission erred in refusing a costs order against an employer by failing to take into account that, when the offer of settlement was made, the employer knew that its defence was based on false evidence. Moore J said at [22]: …"Ordinarily … the amount for which any proceeding (claiming, inter alia, a monetary amount), might reasonably be settled will depend on the actual and perceived strengths and weaknesses of the cases of the parties."… Marshall and Lehane JJ said at [36]: "… it is not unreasonable to respond to an offer in light of the offeree's genuine perception or recollection of events. …" 39 The plaintiff argued that the Deputy President and the Full Bench wrongly relied on these statements to justify taking into account the subjective views of Ms Hart. These judgments, it was contended, required an objective assessment of the chances of success of the application. 40 Finally, the plaintiff contended that by misconstruing or misapplying the test under s 170CJ(2) of the Act the Deputy President identified a wrong issue or asked the wrong question and thereby committed jurisdictional error. Alternatively, the Deputy President relied on irrelevant material relating to the subjective views and perceptions of Ms Hart concerning the proceedings, in a way that affected the exercise of power conferred by s 170CJ(2).

Consideration of s 170CJ(2) 41 The words of s 170CJ(2)(b) of the Act give a clear guide to the task to be performed by the Commission. The discretion to award costs is only available if the Commission is satisfied that the party in question acted unreasonably in failing to agree to terms of settlement. 42 The requirement that the Commission be satisfied means that the Commission must make an assessment of the actions of the party in question. In undertaking this assessment it acts objectively, that is to say, it brings its own opinion to the circumstances which resulted in the failure to agree to the terms of settlement. 43 Because the Commission must make its own judgment about whether the party acted unreasonably, the views of that party about the chances of success of the case cannot be determinative. 44 But that is not to say that the views of that party on various issues relevant to the decision not to agree to the terms of settlement are necessarily irrelevant or cannot be taken into account. Indeed, as the Commission is investigating the action of that party, an obvious starting place for the investigation is to enquire why that party did not settle. A natural process of reasoning under the section would start by determining why the party failed to enter into the terms of settlement. The next step would be to assess whether that action was unreasonable. In other words, the views and motivations of the party will be the usual basis from which an assessment of reasonableness will be made. 45 The statements in Blagojevch were not necessary for the decision in that appeal but, nevertheless, they are consistent with our view of the proper construction of s 170CJ(2) of the Act. The Deputy President and the Full Bench were entitled to rely upon them in the way in which they did. 46 This is the approach adopted by the Deputy President generally in her decision and, in particular, in the passages that were the subject of specific criticism by the plaintiff. The Deputy President was concerned to determine why Ms Hart did not enter into the settlement proposed. The Deputy President found that she did not settle because: · She had a genuine but misconceived view that a successful outcome of s 170CE application would vindicate her harassment claim. · She had a genuine belief that the matters in dispute were not serious matters. · It was important to her to be able to resign rather than be dismissed. 47 It would have been wrong for the Deputy President to decide that Ms Hart did not act unreasonably merely because she genuinely held these views. That would have been to apply a subjective test. But that is not what the Deputy President did. She evaluated Ms Hart's views and motivations and was satisfied that these views and motivations were not unreasonable: see at [30] above. That was to apply an objective approach to the question as required by s 170CJ(2) of the Act. Furthermore, contrary to the plaintiff's contention, the Deputy President did not restrict herself to a consideration of Ms Hart's views and motivations. She brought into account general factors relevant to the reasonableness of Ms Hart's actions. For instance, the Deputy President clearly regarded the stage at which the proceedings had reached as a particularly important consideration. She relied on the fact that the full scope of the case against Ms Hart was not revealed to her at the time at which the second offer was made. 48 It follows that the Deputy President did not misapply the test under s 170CJ(2), and the Full Bench correctly concluded that the Deputy President had not erred.

Jurisdictional error - Submissions of the parties 49 Ms Hart contended that the plaintiff was bound to fail before this Court even if, contrary to our view just expressed, the Deputy President made a jurisdictional error. It was contended that the decision of the Deputy President, in effect, merged with the decision of the Full Bench so that, provided that the decision of the Full Bench was not itself infected by jurisdictional error, relief would not be granted in respect of the Deputy President's decision once the Full Bench decision was made. Then, it was argued, the Full Bench made no jurisdictional error itself so as to attract the issue of writs of mandamus or certiorari. The jurisdiction of the Full Bench was to determine an application for leave to appeal from the decision of the Deputy President. The Full Bench recognised and applied the correct test. If it did come to the wrong conclusion about the correctness of the decision of the Deputy President, this was an error within jurisdiction and, hence, could not justify the issue of writs of mandamus or certiorari. 50 The plaintiff's argument, on the other hand, rested on the proposition that the Commission does not have power to determine conclusively its own jurisdiction. If the Deputy President had made a jurisdictional error, and the Full Bench did not so hold on the application for leave to appeal (and grant leave to enable the error to be corrected), then the Full Bench would have conclusively determined the jurisdiction of the Commission. Such a conclusion would itself, it was said, involve a jurisdictional error. That is to say, the failure of the Full Bench to recognise that the Deputy President had made a jurisdictional error necessarily involved a jurisdictional error on the part of the Full Bench and would justify the issue of writs of certiorari and mandamus against the Full Bench in respect of its decision. 51 The Full Bench stated its task as follows at [19]: "An appeal may only be brought with the leave of the Full Bench. The principles relevant to the granting of leave to appeal are well established. The conventional considerations for the granting of leave apply, including whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being considered by the Full Bench, or whether substantial injustice would result if leave were refused. In addition, s 45(2) of the WR Act provides a further and obligatory basis for the granting of leave if the Full Bench forms the opinion that the matter is of such importance that, in the public interest, leave to appeal should be granted." 52 In accordance with this approach, the Full Bench concluded that the Deputy President had not erred, and that there were no other grounds for the grant of leave to appeal. 53 There is much to be said in favour of Ms Hart's argument. It developed along the following lines. Let it be assumed that the Full Bench was wrong in its conclusion that the Deputy President had not made a jurisdictional error. Nonetheless, the Full Bench did not misconceive its function. It stated and applied the correct test for the determination of the application for leave to appeal. If, on the assumption stated, the Full Bench came to a wrong conclusion, it was a conclusion reached in the course of exercising its jurisdiction. In Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission and Others (2000) 203 CLR 194 ('Coal and Allied'), Gleeson CJ, Gaudron and Hayne JJ observed that such an error was made by the Full Bench within jurisdiction and would not attract relief by way of the issue of constitutional writs. They said at [32]: "… the Full Bench could intervene only if there was error on the part of Boulton J. In this his Honour was correct. Giudice J held that there was error on the part of Boulton J. If he was wrong in that view (a matter upon which it is unnecessary to express an opinion), that was an error within jurisdiction not an error as to the nature of the jurisdiction which the Full Bench was required to exercise under s 45 of the Act. Accordingly, it was not an error in respect of which relief could be granted by way of prohibition or mandamus under s 75(v) of the Constitution." 54 The plaintiff argued that, in the present case, such an approach could not be applicable since it would leave in place a primary decision infected by jurisdictional error. In its submission, the observations of Gleeson CJ, Gaudron and Hayne JJ in Coal and Allied were not apposite because that case was not concerned with a first instance decision infected with jurisdictional error. The plaintiff contended that the difference was critical and that, were leave to appeal to be refused by the Full Bench from a decision infected with jurisdictional error, the effect would be to allow the Full Bench to determine conclusively the jurisdiction of the Commission. This was said to be the consequence of allowing a first instance decision, infected with jurisdictional error, to stand despite that error.

Has jurisdictional error been established? 55 We do not need to resolve this issue. That is because, in the present matter, the issue can only now be relevant to the question of the costs of these proceedings in view of our conclusion that the Deputy President correctly understood and applied s 170CJ(2) of the Act. 56 We note, however, that the refusal of leave to appeal by a Full Bench would not, of itself, prevent a successful challenge to the decision of a Deputy President under s 75(v) of the Constitution. Whilst the rights of a plaintiff under s 75(v) might prove unfruitful in the particular case, whether for discretionary reasons or for procedural reasons (such as delay), those rights would not and could not be excluded.

costs 57 Counsel for Ms Hart submitted that if the plaintiff was unsuccessful it should be ordered to pay her costs. They argued that since the applications were for the issue of constitutional writs and, in such applications, costs usually follow the event, that should be the result here. Counsel recognised that s 347 of the Act might be relevant but argued that it did not apply in the present case. Section 347 provides: (1) A party to a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 170CP) shall not be ordered to pay costs incurred by another party to the proceeding unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause. It was said that the section did not prevent the making of an order for costs against the plaintiff because the application was not a matter "arising under [the] Act". Alternatively, it was said that even if there was such a matter, the proceeding was instituted by the plaintiff vexatiously or without reasonable cause. Counsel for the plaintiff challenged both these contentions. 58 In Construction Forestry Mining and Energy Union v Australian Industrial Relations Commission (2001) 203 CLR 645, the High Court explained the circumstances in which a matter can be said to arise under the Act at [42]-[43] as follows: "Where the right or duty in issue in proceedings is one that owes its existence to an enactment of the Parliament, the matter is properly described as a matter arising under that enactment: See R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154 per Latham CJ; LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 at 581; Re Polites; Ex parte Hoyts Corporation Pty Ltd (1991) 173 CLR 78 at 93. Thus in Re Polites; Ex parte Hoyts Corporation Pty Ltd, an application for mandamus to compel compliance with a duty imposed on the Industrial Relations Commission by the IR Act was held to constitute a matter arising under that Act. That was because the duty in question owed its existence to the IR Act. However, it does not follow that all applications under s 75(v) of the Constitution with respect to the powers and duties of the Commission involve matters arising under the legislation by which its powers are duties are governed. It was pointed out in Re McJannet; Ex parte Australian Workers' Union of Employees (Q) [No2] (1997) 189 CLR 654 at 657 that relief by way of prohibition is not relief for the enforcement of a right or duty created or conferred by statute. Rather, the right in issue when relief is sought by way of prohibition is the right conferred by s 75(v) of the Constitution to compel an officer of the Commonwealth to observe the limits of that officer's power or jurisdiction. The corresponding duty to observe those limits also derives from s 75(v). And that is so even if the asserted limits derive from statute. Accordingly, it was correctly held in McJannet that s 347(1) of the IR Act has no application to a proceeding for the issue of prohibition under s 75(v) of the Constitution: (1997) 189 CLR 654 at 657." 59 In the present case, prohibition was not sought. The issue of writs of certiorari and mandamus was sought to compel the Deputy President to decide the application under s 170CJ(2) of the Act according to law, and to compel the Full Bench to determine the application under s 45 of the Act according to law. The duties sought to be enforced owed their existence to the Act. Consequently, s 347 applied. 60 The question therefore arises whether, as contended by counsel for Ms Hart, the plaintiff instituted the proceeding vexatiously or without reasonable cause. A party does not institute proceedings without reasonable cause merely because that party fails in the argument put to the Court: R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 per Gibbs J at 473. The section reflects a policy of protecting a party instituting proceedings from liability for costs, but that protection may be lost. Although costs will rarely be awarded under the section and exceptional circumstances are required to justify the making of such an order (see Heidt v Chrysler Australia Ltd. (1976) 26 FLR 257 per Northrop J), a proceeding will be instituted without reasonable cause if it has no real prospects of success, or was doomed to failure: see Kanan v APTU (1992) 43 IR 257 per Wilcox J; see also Bostik (Aust) P/L v Gorgevski (No 2) (1992) 36 FCR 439; and Nilsen v Loyal Orange Trust (1997) 76 IR 180. 61 The plaintiff submitted that the case raised legal issues concerning the proper test to be applied under s 170CJ(2), but both parties accepted that the section required the Commission to assess the reasonableness of Ms Hart's actions objectively. As explained earlier in these reasons, when making an objective assessment, the Commission was entitled to take into account Ms Hart's perception of the circumstances which faced her at the time the offer was made. Further, the very decision relied on by the plaintiff expressly so provided. It will be recalled that the plaintiff relied on the test propounded by Lawler VP in Abbey and expressed in [18] of these reasons. After that passage the following appears: "… A distinction must be drawn between facts which were reasonably susceptible to objective specification and facts which turn on matters of impression or interpretation. In relation to facts that were reasonably capable of objective specification, a costs application will be determined by reference to the facts as found. In the case of facts that turn on matters of impression or interpretation, the Commission ought proceed on the basis of the facts as reasonably perceived by the party against whom the application is made." 62 We consider that, properly understood, the plaintiff's case did not raise a legal question about the nature of the proper test to be applied under s 170CJ(2) but, rather, whether the Deputy President correctly applied a test that was not truly in contention between the parties. However, the reasoning leading to this conclusion required a careful reading of the reasons for decision of the Deputy President and ascribing to the critical passages relied on by the plaintiff an interpretation or focus about which there could be a legitimate difference of opinion. Our conclusion about the approach of the Deputy President, based upon our consideration of those passages and of her reasons as a whole, does not necessarily lead to the conclusion that the plaintiff's contentions to the contrary had no real prospect of success so that the proceeding itself was brought without reasonable cause. 63 It is a matter of judgment, sometimes of fine judgment, in all the circumstances of a particular case whether a proceeding is brought without reasonable cause. Having regard to the contentions of the plaintiff as to the proper construction of s 170CJ(2), and about whether the reasons of the Deputy President exposed that she did not apply s 170CJ(2) as properly construed, even though we have firmly rejected the plaintiff's contentions we are not persuaded that its case was brought vexatiously or without reasonable cause. 64 We are therefore of the view that, subject to consideration of Ms Hart's contention that, in any event, there could be no jurisdictional error on the part of the Full Bench in the circumstances, the proceeding has not been brought vexatiously or without reasonable cause. 65 The plaintiff had an answer to the submission that, since the Full Bench plainly applied the correct test for determining whether leave to appeal should be granted, any error it made was an error within its jurisdiction. The answer contended for was, as we have pointed out, that the Full Bench could not conclusively determine the jurisdiction of the Commission by leaving in place a decision that, in the plaintiff's submission, was infected with jurisdictional error. This, it was said, was the consequence of Ms Hart's submission, and accordingly its flaw. The point we have noted at [56] above may be a powerful reply but Ms Hart's submissions about jurisdictional error are not so clearly correct as to persuade us that the plaintiff should lose the protection of s 347 of the Act. 66 The orders of the Court therefore should be that the application be dismissed with no order as to costs. I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Counsel for the Plaintiff: Mr H Borenstein SC with Mr C Horan

Counsel for the Second Defendant: Mr C Gunst SC with Ms S Jones

Solicitor for the Second Defendant: Holding Redlich

Date of Judgment: 22 December 2006

Workplace Relations Act 1996(Cth)s 170CJ(2), 347

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Judgment (13 paragraphs)

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Cases Cited (12)