Fair Work Act 2009

s.365 - Application to deal with contravention involving dismissal

Application for costs under ss.375B and 611 of the Fair Work Act 2009 - threshold under s.611 not met - threshold under s.375B met - discretion to award costs against the Costs Respondent enlivened - costs order made.

• [1] On 23 July 2025, Mr Damien Fitzgerald (Costs Applicant/Respondent) filed an application for an order for costs (Costs Application) with the Fair Work Commission (Commission) against Mr Jakub Drazdik (Costs Respondent/Applicant) under s.375B and s.611 of the Fair Work Act 2009 (Act).[1]

• [2] I conducted a hearing on 11 September 2025 in respect of the Costs Application. At this hearing, Mr Miles Foran, of Counsel, instructed by Mr Fito Pando Molina, Practice Lead, Harris Gomez Group lawyers, appeared (with permission) for the Costs Applicant, and Mr Matthew Lynch, Managing Partner, Gorval Lynch lawyers, appeared (with permission) for the Costs Respondent.

• [3] The power to award costs under s 611 of the Act is limited. It reads:

(1) A person must bear the person's own costs in relation to a matter before the FWC.

(2) However, the FWC may order a person (the first person) to bear some or all of the costs of another person in relation to an application to the FWC if:

(a) the FWC is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or

(b) the FWC is satisfied that it should have been reasonably apparent to the first person that the first person's application, or the first person's response to the application, had no reasonable prospect of success.

Note: The FWC can also order costs under sections 376, 400A, 401 and 780.

(3) A person to whom an order for costs applies must not contravene a term of the order.

Note: This subsection is a civil remedy provision (see Part 4-1)."

• [4] Section 375B of the Act reads:

(1) The FWC may make an order for costs against a party (the first party ) to a dispute for costs incurred by the other party to the dispute if:

(a) an application for the FWC to deal with the dispute has been made under section 365; and

(b) the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the dispute.

(2) The FWC may make an order under subsection (1) only if the other party to the dispute has applied for it in accordance with section 377.

(3) This section does not limit the FWC's power to order costs under section 611."

s.611

• [5] In Church v Eastern Health t/as Eastern Health Great Health and Wellbeing[2] (Church), the Full Bench clearly articulated the relevant legislative provisions of the Act;

"[26] Section 611 sets out a general rule - that a person must bear their own costs in relation to a matter before the Commission (s.611(1)) - and then provides an exception to that general rule in certain limited circumstances. The Explanatory Memorandum confirms this interpretation of the section, it is in the following terms:

2353. Subclause 611(1) provides that generally a person must bear their own costs in relation to a matter before FWA.

2354. However, subclause 611(2) provides an exception to this general rule in certain limited circumstances. FWA may order a person to bear some or all of the costs of another person where FWA is satisfied that the person made an application vexatiously or without reasonable cause or the application or response to an application had no reasonable prospects of success.

2355. A note following subclause (2) alerts the reader that FWA also has the power to order costs against lawyers and paid agents under clauses 376, 401 and 780 which deal with termination and unfair dismissal matters.

2356. Subclause 611(3) provides that a person to whom a costs order applies must not contravene a term of the order.

[27] In the context of s.570 and its legislative antecedents, courts have observed that an applicant who has the benefit of the protection of a provision such as s.570(1), (i.e. the general rule that parties bear their own costs), will only rarely be ordered to pay costs and that the power should be exercised with caution and only in a clear case. In our view a similarly cautious approach is to be taken to the exercise of the Commissions powers in s.611 of the FW Act."[3]

• [6] In Hansen v Calvary Health Care Adelaide Limited[4] a Full Bench of the Commission said in relation to s.611 generally:

"[15] It is trite to observe that the statutory and policy imperative underpinning a costs application under the Act, is that a person in a matter before the Commission must bear their own costs. So much is plainly obvious by the precise and unambiguous language of s 611(1).

[16] However, the statutory scheme sets out the relatively circumscribed circumstances in which an order for costs might be found by the Commission to be appropriate in a particular case. It includes the exercise of discretionary power where the Commission is satisfied that one, or more of the circumstances set out in s 611(2), has been established. If such circumstances are established, the Commission, in the broad exercise of its discretion, may make an order that a person/s bear some, or all of the costs of another person, in relation to the application, including on an indemnity basis, or decline to make any order at all."

• [7] In Mitford Investments Pty Ltd ATF The JJG Trust T/A Integro Private Wealth v Rick Adaszko,[5] Deputy President Beaumont crucially noted that:

"The starting point in relation to costs of proceedings before the Commission is that each person involved in a matter must bear their own costs. This statutory imperative is said to have derived from the policy purpose that a person is entitled to make or defend an application made under the Act, without the risk that a costs order may be made against them."

"Section 611 contains no indication of the considerations which the Commission must take into account in deciding how to exercise its discretion. The discretion conferred is expressed in general, unqualified, terms."[6]

• [8] The relevant principles concerning the interpretation and application of s.611(2)(a) of the Act were comprehensively stated in Church, and can be summarised as follows:

1. An application is made vexatiously when the predominant motive or purpose of the applicant is to harass or embarrass the other party or to gain a collateral advantage.

1. An application is not made without reasonable cause simply because the application did not succeed.

1. Whether an application is made without reasonable cause may be tested by asking, on the facts apparent to the applicant at the time the application was made, whether there was no substantial prospect of success.

1. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to characterise the application as having been made without reasonable cause.

1. In relation to an appeal, the question becomes whether the appeal has no substantial prospect of success. The prospect of success must be evaluated in the light of the facts of the case, the judgment appealed from and the points taken in the notice of appeal. If there is a not insubstantial prospect of the appeal achieving some success, it cannot fairly be described as having been made without reasonable cause.

1. An application will have been made without reasonable cause if it can be characterised as so obviously untenable that it cannot possibly succeed, is manifestly groundless or discloses a case where the tribunal is satisfied it cannot succeed.[7]

• [9] In relation to s.611(2)(b), the principles were summarised by the Full Bench in Baker v Salva Resources Pty Ltd[8] (footnotes omitted):

"[10] The concepts within s.611(2)(b) 'should have been reasonably apparent' and 'had no reasonable prospect of success' have been well traversed:

• 'should have been reasonably apparent' must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis, rather than a subjective test; and

• A conclusion that an application 'had no reasonable prospect of success' should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable."[9]

• [10] In Keep v Performance Automobiles Pty Ltd[10] (Keep) a Full Bench further stated:

"As to s.611(2)(b), the FWC may make a costs order against a person if satisfied that 'it should have been reasonably apparent' to that person that their application had 'no reasonable prospect of success'. The expression 'should have been reasonably apparent' in s.611(2)(b) imports an objective test, directed to a belief formed on an objective basis as opposed to the applicant's subjective belief.

There is Full Bench authority for the proposition that the Commission should exercise caution before arriving at the conclusion that an application had 'no reasonable prospects of success'. In Deane v Paper Australia Pty Ltd a Full Bench made the following observation about this expression in the context of enlivening a power to award costs under s.170CJ(1) of the Workplace Relations Act 1996:

'unless upon the facts apparent to the applicant at the time of instituting the [application], the proceeding in question was manifestly untenable or groundless, the relevant requirement in s.170CJ(1) is not fulfilled and the discretion to make an order for costs is not available'."[11]

• [11] In Qantas Airways Limited v Mr Paul Carter,[12] the Full Bench stated that it was clear from the terms of s.611 that the point at which the Commission must determine whether or not an application was vexatious, without reasonable cause or had no reasonable prospect of success, was when the application was made.[13]

• [12] It is also appropriate to refer to the decision of Justice Snaden of the Federal Court in Macushla Pty Ltd (Trading as Sunnytop Bakery Ciabatta Della Nonna) v El Souki[14]:

"In Baker v Patrick Projects Pty Ltd (No 2) [2014] FCAFC 166; (2014) 145 ALD 548 (Dowsett, Tracey and Katzmann JJ), a Full Court of this Court endorsed (at [9]) what was said about the application of s 570(2)(a) of the FW Act in Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351 (Pagone J). There, Pagone J, at [8], said that:

'...[t]o exercise the discretion conferred by [s 570(2)(a) of the 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] HCA 51; (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] FCAFC 199; (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] FCA 539; (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.'"[15]

• [13] The Full Bench in Keep provided this context for consideration of applications under the provisions within s.375B:

"[11] Section 375B was inserted into the FW Act by the Fair Work Amendment Act 2013 (Cth). The new provision came into effect on 1 January 2014 and applies to dismissals which took effect from that date.

[12] The Supplementary Explanatory Memorandum to the Fair Work Amendment Bill 2013 (Cth) states as follows:

"New section 375B allows the FWC to order costs against a party to a general protections dismissal dispute (the first party) if it is satisfied that the first party caused the other party to the dispute to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the dispute. New section 375B is similar to the costs orders that are available against parties in relation to unfair dismissal matters (see section 400A).

57. This power to award costs is in relation to the dispute before the FWC and does not include costs associated with a general protections court application.

58. The power to award costs under new section 375B is not intended to prevent a party from robustly pursuing or defending a general protections dispute before the FWC. Rather, the power is intended to address the small proportion of litigants who pursue or defend disputes in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.

59. The FWC's power to award costs under subsection 375B(1) is discretionary and is only exercisable where the first party (whether the applicant or respondent) causes the other party to incur costs because of an unreasonable act or omission.

60. However, the power to award costs is only available if the FWC is satisfied that the act or omission by the first party was unreasonable. What is an unreasonable act or omission will depend on the particular circumstances but it is intended that the power only be exercised where there is clear evidence of unreasonable conduct by the first party.

61. New subsection 375B(2) provides that the power to award costs against one party in these circumstances is only exercisable if the other party to the dispute makes an application in accordance with section 377. New subsection 375B(3) makes it clear that the new power to award costs under subsection 375B(1) operates in addition to subsection 611(2), which enables the FWC to make costs orders against a person in certain circumstances, such as where an application is made vexatiously or without reasonable cause."

[13] It is apparent from the Supplementary Explanatory Memorandum that the legislature intended that the power to order costs provided by s.375B only be exercised where there is clear evidence of unreasonable conduct. Such an approach is entirely consistent with the jurisprudence relating to the other costs provisions in the FW Act (such as s.611)."[16]

• [14] Section 375B of the Act allows for costs orders to be made if the Commission is satisfied that costs were incurred because of an unreasonable act or omission of a party in connection to the conduct of the case. An unreasonable act or omission includes one which was either deliberate or reckless. A failure to consider the possible settlement of a matter may be unreasonable, but is not necessarily so, as may be unreasonably failing to discontinue an unfair dismissal application. A "warning" provided to a party about the prospects of their case may be relevant to the assessment of whether the continuation of a matter was reasonable.[17]

• [15] The Costs Applicant is a quadriplegic. The Costs Respondent was engaged (as a contractor) directly by the Costs Applicant as one of a number of Disability Support Carers (DSCs) to provide high levels of support to maintain the Costs Applicant's independence, and his day to day (24/7) health, well-being, and caring needs. The rosters for DSCs are managed by a Care Support Manager (who is also engaged by the Costs Applicant). There is no dispute that the only parties to the written subcontracting agreement (titled "Service Agreement") are the Costs Applicant and the Costs Respondent.

• [16] The Costs Respondent resigned (or purported to resign) in writing on 1 May 2025 without notice. He then filed a Form F8 and alleged that he was dismissed (forced to resign) in breach of the general protections provisions of the Act (First F8).[18] In the First F8, filed 5 May 2025, the Costs Respondent named the Care Support Manager as the only Respondent (and employer). The Applicant then withdrew the First F8, and filed a fresh Form F8, this time naming only the Costs Applicant as the Respondent (employer) (Second F8).[19] The Second F8 was filed out of time on 28 May 2025. After being allocated to my Chambers, the matter was programmed to deal with the Costs Respondent's request for an extension of time, with a hearing set down for 10 July 2025.

• [17] I am not satisfied that the Costs Applicant's claim for costs for the whole of the proceedings meets any of the requirements under s.611 of the Act. In short, I do not accept that the First F8 or the Second F8 were (objectively) instituted vexatiously, or without reasonable cause, or that it would have been reasonably apparent to the Costs Respondent that the First F8, or the Second F8, had no reasonable prospects of success (at the time they were filed). In my view, the Applicant's request for an extension of time was not without merit,[20] and his assertions that he was an employee and not an independent contractor were also not without merit. As to the First F8 naming the Care Support Manager as the employer Respondent, the decision of the Full Bench in Civmec Construction & Engineering Pty Ltd v Joel Minchin [2025] FWCFB 2 determined that the question in respect of a dismissal (including a forced resignation) in a s.365 application concerns a question of fact, untethered to the identity of a (wrongly) 'named' employer respondent.[21]

• [18] In relation to the costs claim under s.375B of the Act, I accept, by reference to the evidence filed in these proceedings, the following chronology:

(a) On 17 June 2025, the Commission made directions timetabling the Costs Respondent's out-of-time application. In direction 2 of those directions, the Commission ordered that the Costs Respondent either advise the Associate of Deputy President Boyce by email that the Costs Respondent discontinues the matter or file evidence and submissions in support.

(b) On or around 23 June 2025, the Costs Respondent chose not to discontinue and filed evidence and submissions.

(c) On 29 June 2025 at 1:22 pm the Costs Applicant sent a written offer of $10,000 (not designated as general damages) to resolve the proceedings, open for acceptance until Monday 30 June 2025.

(d) On 30 June 2025 at 10:31 am the Costs Respondent provided a written counter-offer of $16,000 (as general damages) to resolve the proceedings, open for acceptance until 12pm on 2 July 2025.

(e) On 30 June 2025 at 11:41 am the Costs Applicant rejected the counteroffer of $16,000 in writing, and advised that he wished to continue opposing the out of time application.

(f) On 30 June 2025 at 2:26 pm the Costs Applicant made a further written offer of $12,000 (not designated as general damages), open for acceptance until 30 June 2025 at 5:00 pm.

(g) On 30 June 2025 at around 2:36pm, the Costs Respondent made a verbal counter-offer through his solicitors of $13,000. The Costs Applicant never accepted the offer of $13,000.

(h) The position, as at 5:01pm on 30 June 2025, was that the Costs Respondent had:

• extinguished the Costs Applicant's offer of $12,000 with a counter-offer of $13,000 (on conventional contractual principles); and

• not communicated acceptance of the $12,000 offer from the Costs Applicant, meaning that offer was not capable of being accepted even if it hadn't been extinguished.

(i) On 1 July 2025 at 6:12 pm the Costs Respondent wrote to the Costs Applicant alleging that settlement had been reached.

(j) On 2 July 2025 at 7:57 am the Costs Applicant wrote to the Costs Respondent disputing that settlement has been reached.

(k) On 2 July 2025 at 1:04 pm the Costs Applicant filed evidence and submissions in response to the Applicant's evidence and submissions.

(l) On 9 July 2025 at 10:06 am the Costs Respondent confirmed appearances for the hearing.

(m) At no stage prior to 10 July 2025 did the Costs Respondent tell the FWC that his position was that the matter had settled. Nor did he file a notice of discontinuance on the basis that settlement has been reached.

• [19] The Costs Applicant relies upon the following submissions:

"At the [out of time] hearing on 10 July 2025, the [Costs Respondent] immediately requested time to stand the matter down to [hold] settlement discussions. His solicitor then expressed on the record that the [Costs Respondent's] position was that the matter had settled and the Commission did not have jurisdiction to deal with the jurisdictional objection. As is clear from the correspondence above, this is the same position he had taken in email correspondence on 1 July 2025 at 6:12 pm.

Rather than discontinuing the matter on 1 July 2015 at a point where the [Costs Applicant] had not yet incurred the majority of his costs the [Costs Respondent] let the [Costs Applicant] continue to incur costs. Indeed, [the Costs Respondent] confirmed appearances for the hearing on 9 July 2025 without ever disclosing his position to the Commission that the matter had settled.

The Commission can infer from the timeline above that the [Costs Respondent] kept the dispute going (beyond the point at which he considered it had settled) as a strategy to force the [Costs Applicant] into incurring costs in increase the chance of settlement.

The [Costs Respondent] caused costs to be incurred by the [Costs Applicant] due to his:

(a) unreasonable act of continuing the dispute past 1 July 2025 in circumstances where he had taken the position that the matter had settled;

(b) unreasonable omission of not filing a notice of discontinuance on 1 or 2 July 2025, or at any time before the day of the hearing on 10 July 2025.

For the avoidance of doubt, the [Costs Applicant] disputes that the matter had settled. On ordinary contractual principles, there was no offer capable of acceptance on 1 July 2025. Either it was extinguished by a counter-offer or it was never accepted by the time it was open for acceptance.

For these reasons, the [Costs Applicant's] alternative claim for costs is costs incurred since 1 July 2025 [under s.375B of the Act]."

"The Costs Applicant submits that the discontinuance should have been filed at the point where the Costs Respondent had communicated the view that the matter had settled, as it had on 1 July 2025. It was unreasonable to cause the Costs Applicant to incur costs after that date.

To this end, the Commission should consider the words of Ms Zou's (lawyer for the Costs Respondent) communication on that date [1 July 2025] which concluded, relevantly:

"It is our view that our client's acceptance of your client's final offer gave rise to a binding agreement consistent with the principles set out in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353. Your client's attempt to retrospectively withdraw the offer after learning of its acceptance, is without legal foundation and undermines the integrity of settlement negotiations.

Should your client maintain that no binding agreement was reached, we will raise this with the Commission with regards to your client's unreasonable act, on the basis that a binding agreement was reached between the parties. We will rely on this correspondence on the question of costs and we will be seeking costs on an indemnity basis.

It is clear from the terms of this communication that the Applicant was sufficiently firm in the view that the matter had settled that he threatened to (a) raise this with the Commission and (b) use it to support an application for indemnity costs."

• [20] I am satisfied (for the purposes of s.375B of the Act) that the Costs Respondent caused costs to be incurred by the Costs Applicant (after 2 July 2025) because of an unreasonable act or omission in connection with the conduct or continuation of the matter, i.e. via the Costs Respondent's failure to notify the Commission that it considered the proceedings to have settled. The appropriate course for the Costs Respondent, being of the view that the proceedings had settled, was to advise the Commission of the settlement, and seek that the hearing on 10 July 2025 be vacated.

• [21] Accordingly, I will exercise my discretion to make an Order for costs in favour of the Costs Applicant, being costs limited to the dates of 9 and 10 July 2025, in the total amount of $3,107.50 (i.e. $2,825 plus GST).[22] In settling on this costs amount, the following sets out my reasoning and calculations:

(a) As a matter of discretion, I do not consider that in the circumstances of this case costs incurred by the Costs Applicant on 1 and 2 July 2025 (the day of, and the day after, the purported settlement) ought be awarded.

(b) In respect of the costs on 9 and 10 July 2025, the Costs Respondent had ample time between 3 and 9 July 2025 to advise the Commission of the settlement, and seek that the hearing on 10 July 2025 be vacated. It did not do so. The Costs Applicant's legal costs of preparing for (on 9 July 2025) and attending upon (on 10 July 2025) the hearing (for it to be vacated at the hearing commencement at the request of the Costs Respondent) ought not have been incurred. There are no schedule of costs prescribed under the Fair Work Regulations 2009 for costs to be awarded under s.375B of the Act (cf. s.377A of the Act).[23] I consider the amounts sought by the Costs Applicant for solicitor's costs on 9 and 10 July 2025 are reasonable (including in respect of Counsel's attendance fee on 10 July 2025).

• [22] For completeness, I do not accept that there is any basis to award costs of this costs application, as sought by the Costs Applicant.

• [23] An Order [PR792601] to this effect will be issued contemporaneously with this decision.

Mr Miles Foran, of Counsel, instructed by Mr Fito Pando Molina, Practice Lead, Harris Gomez Group lawyers, appeared (with permission) for Mr Damien Fitzgerald (Costs Applicant/Respondent)

Mr Matthew Lynch, Managing Partner, Gorval Lynch lawyers, appeared (with permission) for Mr Jakub Drazdik (Costs Respondent/Applicant).

[1] Email from Fito Pando Molina to Chambers, 23 July 2025, 12:52pm.

[2] [2014] FWCFB 810, 240 IR 377.

[4] [2016] FWCFB 8162.

[5] [ [2021] FWC 4632.

[7] [2014] FWCFB 810, 240 IR 377, at [23]-[33].

[8] [2011] FWAFB 4014, 211 IR 374.

[10] [2015] FWCFB 1956.

[12] [2013] FWCFB 1811, at [20].

[13] See also Mitford Investments Pty Ltd ATF The JJG Trust T/A Integro Private Wealth v Rick Adaszko [2021] FWC 4632, at [39], and Oz & Kosaroglu v Amity College Australia Limited [2021] FWC 5041, at [37]-[38].

[14] [2019] FCA 643.

[16] [2015] FWCFB 1956.

[17] Goffett v Recruitment National Pty Ltd [2009] AIRCFB 626, at [47]; Roy Morgan Research Ltd v K Baker [2014] FWCFB 1175, at [12], and [21]-[23] (with reference to Brazilian Butterfly Pty Ltd v Charalambous (2006) 155 IR 36, at [39] - [45]); Kube v Dominelli Group Pty Ltd T/A Rockdale Nissan [2016] FWC 8933, at [15].

[20] See Applicant's (Cost Respondent's) Outline of Submissions Jurisdictional Objection (undated), filed 26 June 2025 (Exhibit A4), and accompanying Witness Statement of Jacob Drazdik signed 23 June 2025 (Exhibit A3).

[21] See also Joel Minchin v Civmec Construction & Engineering Pty Ltd [2024] FWC 2204 and Joel Minchin v Civmec Construction & Engineering Pty Ltd [2025] FWC 424.

[22] Adding the amounts of $520, $1,105, and $1,200 = $2,825 (excluding GST).

[23] Compare Regs 3.04(1), 3.08(1), 3A.04(1), and 6.06(1) of the Fair Work Regulations 2009.

Printed by authority of the Commonwealth Government Printer