Energy Australia Yallourn Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union

BROMBERG J: 1 The Court delivered judgment in this proceeding on 23 October 2017 and published its reasons for judgment (Energy Australia Yallourn Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2017] FCA 1245). At [180] of the reasons I stated that if any party sought its costs of the proceeding, I would determine the issue on the papers following the exchange of submissions. The respondents ("the Unions") seek an order for costs of the proceeding including the costs of the Unions' interlocutory application dated 11 April 2017 by which the Unions succeeded in setting aside the Originating Application of the applicant ("Energy Australia"). 2 These reasons deal with that application for costs. The reasons should be read with my earlier reasons. Abbreviations there used are here continued. 3 It is convenient to set out the questions raised by the Unions' interlocutory application by repeating the broad summary given in my earlier reasons as to the competing contentions of the parties: 1 By its Originating Application, the applicant ("Energy Australia") seeks a declaration that, on its proper construction, cl 5.3 of the EnergyAustralia Yallourn Enterprise Agreement 2013 ("the EA") has the effect that a casual employee who works overtime "is to be paid per hour two thirty-sixths of the weekly rate prescribed for the classification of work performed (double time) exclusive of any casual loading". … 4 The two questions raised by the Unions' interlocutory application are: (a) whether or not this Court has jurisdiction to hear and determine the Originating Application; and (b) whether or not the proceeding is an abuse of the Court's processes. 5 The competing contentions of the parties may be broadly expressed by way of introduction. Both parties accept that for the Court to have jurisdiction there must be a "matter" (s 562) arising under the Fair Work Act 2009 (Cth) ("FW Act"), and that the existence of a "matter" depends, in this case, on the existence of a justiciable controversy between the parties about the meaning and application of cl 5.3 of the EA. They also accept that an arbitration validly conducted under cl 28 of the EBA is properly to be characterised as a private arbitration and that the arbitrator's determination has the effect of extinguishing the dispute or controversy the subject of the determination, at least insofar as the controversy relates to the parties to the arbitration. 6 The Unions contended that there is no justiciable controversy in relation to the meaning and application of cl 5.3 of the EA because, although such a dispute existed, it was resolved by an arbitration conducted under cl 28 of the EA by the Full Bench of the Fair Work Commission ("FWC"), the outcome of which binds each of the parties to this proceeding. In the absence of a justiciable controversy, the Unions say there is no "matter" and thus this Court lacks jurisdiction. Conversely, Energy Australia denies that the controversy was extinguished by the determination of the Full Bench of the FWC because it contends that the FWC itself lacked jurisdiction to determine the dispute that its determination purported to resolve. That contention relies principally on a submission that, properly construed, cl 28 of the EA only permits an arbitration between Energy Australia and one or more of its employees and not, as Energy Australia contends happened here, between Energy Australia and one or more of the Unions. In response, the Unions deny that cl 28 is restricted to the arbitration of disputes between employees and Energy Australia and that the arbitral process provided by cl 28 was validly engaged by the AMWU. Alternatively, if so restricted, the Unions say there was here a dispute between Energy Australia and its employees the existence of which Energy Australia is estopped from denying. 7 As a secondary contention, Energy Australia contended that, if the FWC had jurisdiction in relation to the arbitration it conducted, only the controversy between it and the AMWU has been extinguished as, of the Unions, only the AMWU was a party to the private arbitration. To that, the Unions say that by its terms, cl 28 operates to bind each of the Unions whether they participated in the arbitration or not and accordingly any controversy as to the meaning of cl 5.2 between Energy Australia and the Unions has been extinguished. 8 Lastly, the Unions contend that even if the Court has jurisdiction, the proceeding is an attempt by Energy Australia to re-litigate the meaning of cl 5.2 of the EA and is an abuse of process and for that reason should be permanently stayed. 4 At [60] of my earlier reasons I stated that two conditions needed to be satisfied for the Court to have jurisdiction pursuant to s 562 of FW Act. The first, is that there must be a "matter" and the second, that the matter must "arise under the FW Act". As I there stated, what was at issue was the first condition, the existence of a "matter". If there was a "matter", it would have arisen under the FW Act because as I said at [57] (citations omitted): A genuine dispute as to the meaning and effect of a term of an enterprise agreement that confers rights or imposes obligations is a matter which may properly be said to arise under the FW Act. That is because the right or duty in question "owes its existence to [the FW Act] or depends upon [the FW Act] for its enforcement". 5 I concluded at [179] that: … there is no "matter" arising under the FW Act and that as a consequence this proceeding is incompetent. It follows that the Originating Application must be set aside. 6 That holding was based on the conclusion earlier expressed at [106] that the private arbitration by the FWC extinguished the justiciable controversy between Energy Australia and the Unions with the result that the Court lacked the jurisdiction to entertain Energy Australia's Originating Application. 7 In support of their application for costs, the Unions contended that s 570 of the FW Act does not apply and consequently there is no limitation imposed on the Court ordering costs. In the absence of any such limitation, the ordinary rule is that costs should follow the event. Energy Australia resisted any adverse cost order on the basis that s 570 of the FW Act applies and, as none of the circumstances in s 570(2) exist, no order as to costs may be made. That is the only basis upon which Energy Australia resists an adverse costs order. The question then is whether s 570(1) of the FW Act applies. 8 The relevant terms of s 570 of the FW Act are as follows: 570 Costs only if proceeding instituted vexatiously etc. (1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A. Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A. (2) … 9 In support of their submission that s 570(1) has no application, the Unions contended that the necessary corollary of the Court's holding that Energy Australia's Originating Application gave rise to no "matter" at all is that there is no "matter arising under the [FW Act]" for the purposes of s 570(1). It follows that there is no occasion for s 570(1) to apply because the proceeding is not "in relation to a matter arising under" the FW Act. 10 Energy Australia contended that the proceeding raised by its Originating Application was within the scope of s 570(1) of the FW Act, in that it was a proceeding "in relation to a matter arising under the Act". Energy Australia contended that that was so notwithstanding the Court's holding that the Court lacked jurisdiction. For that contention, Energy Australia sought to rely on Re McJannet; Ex parte Australian Workers' Union of Employees Queensland (No 2) (1997) 189 CLR 654 ("McJannet"). McJannet dealt with an application for costs. In the principal proceeding before the High Court (Re McJannet; Ex parte Minister for Employment, Training and Industrial Relations (Qld) (1995) 184 CLR 620), the High Court issued writs of prohibition against the judges of the Federal Court in relation to a proceeding said by the High Court to have been outside the jurisdiction of the Federal Court and, in particular, outside the scope of the Federal Court's jurisdiction arising either under s 253X or s 253ZC of the Industrial Relations Act 1988 (Cth) ("IR Act"). The High Court held that the Federal Court had wrongly assumed jurisdiction because, in the factual circumstances of the case, the conditions made necessary by ss 253X or 253ZC of the IR Act to found the Federal Court's jurisdiction did not exist: at 643-644 (Brennan CJ, Deane and Dawson JJ): 657-659 (Toohey, McHugh and Gummow JJ). 11 Energy Australia principally relied upon the observation made by the High Court at 657 (Brennan CJ, McHugh and Gummow JJ) of McJannet that: [T]he proceeding before the Federal Court was in a matter arising under the Act because the respondents were claiming a right under the Act against the prosecutors. No order for costs could be made in respect of the proceeding in the Federal Court. 12 The limitation on the making of an order for costs to which that observation referred was contained in s 347(1) of the IR Act which provided as follows: 347 Costs only where proceeding instituted vexatiously etc. (1) A party to a proceeding (including an appeal) in a matter arising under this Act shall 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 excuse. 13 Energy Australia contended that notwithstanding that the Federal Court was ultimately found to have no jurisdiction under the IR Act (a situation similar to that in the present case), the High Court observed at 657 of McJannet that s 347(1) of the IR Act did apply to the Federal Court proceeding. Energy Australia contended that the same result must follow in relation to s 570(1) of the FW Act, especially because, by the inclusion of the words "in relation to", s 570(1) was broader in its scope than was its predecessor.

Consideration 14 In McJannet the existence of a "matter" either before the Federal Court or before the High Court was not in issue. The only question the Court was concerned to resolve was whether the matter arose under the IR Act. The phrase that the Court was called upon to construe was "arising under the Act". The Court did that by reference to the long-standing test set out at 656: The test for determining whether a proceeding is in a matter arising under the Act for the purposes of s 347(1) is whether the right or the duty that is sought to be enforced owes its existence to a provision of the Act. 15 At 657, in the sentence relied upon by Energy Australia (set out at [11] above), the Court was doing no more than confirming that the "matter" (the existence of which was uncontroversial) arose under the IR Act because the applicants in the Federal Court were claiming a right arising under that Act. The High Court was not saying that for the purposes of s 347(1) of the IR Act a "matter" existed simply because a claim made pursuant to the IR Act existed. 16 Here, by its Originating Application, Energy Australia claimed a right under the FW Act. It was not in contest that if there had been a "matter" it would have arisen under the FW Act. However, where this case materially differs from the position considered in McJannet is that, in this case, the Court has held that there is no "matter". 17 It is clear on the authority of McJannet that where a "matter" exists, the matter can arise under the FW Act despite the Federal Court having no jurisdiction to determine the proceeding before it. That is because whether the matter "arises under this Act" does not depend upon the Court having jurisdiction to determine the claim made in the proceeding but depends upon whether "the right or duty which is sought to be enforced [in the proceeding] owes its existence to a provision of the Act". On the authority of McJannet, the absence of jurisdiction would not, of itself, preclude s 570(1) being attracted to prohibit an award of costs unless s 570(2) applied. But here there is more than an absence of jurisdiction. The Court has also determined that there is no "matter". It is the absence of a "matter" that has the result that s 570(1) is not engaged. That is because a condition of the engagement of s 570(1) is that there be "proceedings … in a court … in relation to a matter". If there is no "matter" then there cannot be proceedings which relate to it. 18 I accept Energy Australia's submission that the limitation on the Court's power to award costs is now broader than it was under s 347 of the IR Act. But the broadening of the limitation from "a proceeding … in a matter" to a "proceeding … in relation to a matter" does not remove the necessity for there to be a nexus with a "matter". The absence of a "matter" denies the requisite nexus in each case. 19 Energy Australia's resistance to an adverse cost order is not assisted by McJannet or the other authorities upon which it relied: Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd (No 2) (2015) 235 FCR 366 at [11]-[12] (Dowsett, Tracey and Katzmann JJ); Endeavour Energy v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (2016) 244 FCR 178 (North, Jessup and Reeves JJ); Linfox Australia Pty Ltd v Transport Workers Union of Australia (2013) 213 FCR 479 (Rares J). Of those cases, any limitation on the capacity of the Court to make an order for costs was considered only in ALS, and was addressed on the basis that a "matter" existed. 20 Energy Australia put (in a sentence) an alternative but undeveloped submission that "in any event, the justiciable controversy included the scope and effect of cl 28 of the Enterprise Agreement". It was said that for that reason also, the proceedings were "in relation to a matter arising under the Act". 21 Clause 28 is a term of an enterprise agreement which is given force by the FW Act. However, the proceeding which arises from Energy Australia's Originating Application does not seek to enforce, or even assert, any right or duty which owes its existence to cl 28. The meaning of cl 28 of the EA was only relevant to the issue of whether this Court had jurisdiction to determine the Originating Application, as raised by the interlocutory application of the Unions contesting the Court's jurisdiction. 22 To the extent that Energy Australia sought to contend that the interlocutory application of the Unions may engage s 570(1) in circumstances where the substantive proceeding did not, I reject that contention. I will, in addressing the contention, presume in favour of Energy Australia that an interlocutory application is captured by the term "proceedings" in s 570(1) of the FW Act, such that not only the principal action but also an interlocutory application made in the principal action may be considered separate proceedings for the purposes of s 570(1). That presumption is consistent with the approach taken to s 347(1) of the IR Act in Shackley v Australian Croatian Club Ltd (1996) 141 ALR 736 at 745 (Wilcox CJ, with whom von Doussa J agreed) and endorsed in Commonwealth of Australia v Construction, Forestry, Mining and Energy Union (2003) 129 FCR 271 at [8] (Black CJ, Tamberlin and Sundberg JJ). I respectfully agree with White J, who said in Stanley v Service to Youth Council Inc (No 3) (2014) 225 FCR 357 at [33] that the same approach was appropriate in relation to s 570(1) of the FW Act. 23 In McJannet the High Court concluded (at 657) that the application for prohibition, being the proceeding before it, was "not for the enforcement of any right or duty created or conferred by the [IR] Act". That was so despite the fact that to determine the proceeding before it, it was necessary for the Court to consider the terms of the IR Act. As the Court explained at 657, in the proceeding before it the prosecutors asserted the absence of jurisdiction in the Federal Court and "[t]he duty which was sought to be enforced was the duty not to assume a jurisdiction which the Federal Court did not have". 24 By analogy with McJannet, the Unions' interlocutory application also asserted an absence of jurisdiction. Whilst the determination of that application required consideration of cl 28 of the EA to decide the jurisdictional challenge, so too had a consideration of the terms of the IR Act been necessary to determine the jurisdictional challenge raised in McJannet. As in McJannet, in the Unions' interlocutory application the duty that was sought to be enforced "was a duty not to assume a jurisdiction which the Federal Court did not have" and accordingly the proceeding was not a proceeding "for the enforcement of any right or duty created or conferred by the [FW Act]". 25 For those reasons it follows that a condition of engagement of s 570(1) does not exist and that the provision is not engaged. Having answered that question against Energy Australia and there being no other basis suggested as to why the ordinary rule that costs should follow the event should not apply, I will make an order requiring Energy Australia to pay the Unions' costs of the proceeding, including the costs of the Unions' interlocutory application. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromberg.

SCHEDULE OF PARTIES VID 201 of 2017 Respondents Fourth Respondent: AUSTRALIAN MUNICIPAL, ADMINISTRATIVE, CLERICAL AND SERVICES UNION (ASU) Fifth Respondent: AUSTRALIAN WORKERS' UNION (AWU)