Knight v F.P. Special Assets Ltd

Mason CJ and Deane J, at 193 per Dawson J, at 208 per McHugh J. The Court, like the Federal Court, is a court created by statute and has no inherent powers though it possesses powers similar to such powers: see Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 623-624 per Deane J. Both Courts have the powers that are expressly conferred by statute, impliedly conferred by statute or incidental and necessary to the exercise of the jurisdiction so conferred: see Parsons v Martin (1984) 5 FCR 235 at 241; Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 630; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 561. The Act does not expressly and in plain terms confer upon the Court a general power to award costs and it is therefore necessary to ascertain whether the Act does so impliedly. The matter of costs between parties (and, quaere, third parties: see Knight supra and Da Sousa v Minister for Immigration, Local Government and Ethnic Affairs (1993) 114 ALR 708) is relevantly referred to in the Act in ss347, 466 and 486 and also in ss342, 346, 357 and in Division 6 of PtXIV. Section 347 deals with the question of costs in proceedings generally under the Act and provides: "347.(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 cause. (2) In subsection (1): "costs" includes all legal and professional costs and disbursements and expenses of witnesses." The legislative predecessor of this provision, s197A of the Conciliation and Arbitration Act 1904, has been described by Northrop J in Bourke v Mapstone (1984) 55 ALR 311 at 313 in the following way: "The section imposes a limitation on the power of the specified courts to make orders as to costs against parties to proceedings under the Conciliation and Arbitration act. The section does not confer power to make an order for costs. The section imposes a limitation on power. The power to make an order for costs normally must be found in other statutory provisions." Section 197A was in the following terms: "197A A party to - (a)a proceeding before the Commission or the Registrar; (b)a proceeding, including an appeal, before the Court, or before a court of a State or Territory, in a matter arising under this Act; or (c)a proceeding before the High Court - (i) .... (ii) .... shall not be ordered to pay any costs incurred by any other party to that proceeding except where the party against whom the order is made instituted the proceeding vexatiously or without reasonable cause." In an appeal against his Honour's judgment and orders, the Full Court comprising Smithers ACJ, Keely and Morling JJ said in Brophy v Mapstone (1984) 3 FCR 227 at 239: "As the matter before us is an appeal in a matter arising under the Conciliation and Arbitration Act 1904 it is clear that the power of the Federal Court of Australian under s43 of the Federal Court of Australia Act to award costs extends to those proceedings but subject to the provisions of s197A." These remarks are consistent with the approach of Northrop J that s197A is not a source of power to award costs but rather is a limitation on the power arising elsewhere. The observations of Northrop J were made in a judgment in which his Honour concluded that s197A had no application, in the circumstances detailed by his Honour, to the Federal Court when exercising the power to award costs though that conclusion was not accepted as correct by the Full Court which expressed the contrary view. However that difference of opinion does not, in my view, lessen the force of his Honour's observations about the character of s197A. In my opinion s347 should be viewed in the same way as s197A was viewed, namely as imposing a limit on a power to award costs that might arise elsewhere. Indeed the terms of s347 more clearly sustain that construction. Unlike s197A no reference is made in s347 to courts generally nor to specific courts whether they be the Federal Court, the High Court of Australia or the Court (or any other court that might exercise jurisdiction under the Act (see ss177A, 178, 179, 179C or 179D). Section 197A referred to various courts and tribunals and limited the circumstances in which they might order a party to pay costs. Unlike s347, it thus suggested, in relation to named courts and tribunals, the existence of a power to order costs. Section 466 of the Act deals with the power to delegate powers of the Court to a Registrar and provides: "466.(1)Subject to subsection (2), the following powers of the Court may, if the Court or a Judge so directs, be exercised by a Registrar: (a) ... (f) the power to make an order as to costs; (g) ... (2) A Registrar must not exercise the powers referred to in paragraph (1)(f) except in relation to costs of or in connection with an application heard by a Registrar." Section 466 clearly assumes the existence of a power of the Court to award costs. It does so in unambiguous terms, identifying "the power to make an order as to costs" as one of "the ... powers of the Court". Section 486 deals with the power of the Judges of the Court to make rules of Court and provides: "486.(1) The Judges of the Court, or a majority of them, may make Rules of Court, not inconsistent with this Act, making provision for or in relation to the practice and procedure to be followed in the Court (including the practice and procedure to be followed in Registries of the Court) and for or in relation to all matters and things incidental to such practice or procedure, or necessary or convenient to be prescribed for the conduct of any business of the Court. (2) In particular, the Rules of Court may make provision for or in relation to: (a) ... (o) the costs of proceedings in the Court; and (p) ... (t) the fees to be charged by practitioners practising in the Court for the work done by them in relation to proceedings in the Court and the taxation of their bill of costs, either as between party and party or as between solicitor and client; and ..." Again s486 assumes the existence of the power to award costs unless s486(2)(o) is intended to empower the Court to make rules conferring that power. It is undesirable for me to express a concluded view about the scope of s486 as it was not the subject of submissions in these proceedings, is an important question and it is not essential to the conclusion I reach about the Court's power to award costs. However the respondent in these proceedings relies upon O22 r3 as constituting a source of power to award costs, and it is appropriate I say something about the rule and s486. The rule provides: "3. Notwithstanding the filing of a notice of discontinuance pursuant to rule 2, application may be made to the Court on motion for an order for payment of costs pursuant to section 347 of the Act and the Court may determine the application and make such order as it considers appropriate." Two things can be said about this rule. The first is that it identifies the source of power to make an order for payment of costs as s347 and it is unlikely that the rule itself is intended to create a power to award costs. If, however the rule is intended to confer a power to award costs, questions arise about the scope of s486(1) and s486(2)(o). If the power to award costs is a matter of practice or procedure or is otherwise comprehended by s486(1) then it may be that s486(2)(o) authorises the making of a rule which invests the Court with power to make a costs order. However I doubt whether s486 is intended to confer such a power. But as I earlier indicated, it is unnecessary for me to express a concluded view on the effect of s486 or O22 r3 (or its validity) in view of the conclusion I reach about the effect of s361 which I come to shortly. I should also mention other sections of the Act that refer to costs. Sections 342 and 346, which are found in Division 1 of PtXII, refer to costs as part of a legislative scheme designed to provide financial assistance to litigants in the circumstances identified in that Division. That Division is not directly concerned with orders requiring a party to pay the costs of another party though s346 provides: "Nothing in this Division limits the power of the Court to make an order as to the costs of the proceedings before the Court." This section is of the same character as s347 but to the opposite effect. It is intended to ensure that the provisions of Division 1 of PtIX do not operate so as to limit or fetter any power to award costs arising elsewhere. It also assumes that the Court has such a power. Section 357 concerns the means by which the payment of a penalty and any costs order can be secured but sheds no light on the issue of whether the Court has power to award costs. The section not only applies to courts other than the Court but also operates after the exercise of a power to award costs. It is not a source of power to award costs nor does it plainly assume the existence of that power in relation to the Court. Sections 443(a), 446(3), 447, 452(5) and 463 appear in Division 6 of PtXIV which concerns representative actions in the Court. Of these provisions ss443(a), 446(3), 447 and 463 concern costs between parties but assume the existence of a power to award costs. However 452(5) provides that a representative party may withdraw as a representative party but "subject to such conditions as to costs as the Court considers just". This provision is not, in terms, limited to costs between the representative party and those that party represents and given the width of the language, is likely to extend to costs between the representative party and all other parties to the proceedings. However, it is not a bare power to order the payment of costs, but permits the imposition of a condition that might require their payment. I turn now to consider s361 of the Act. If ss466, and most likely 486, and a number of other provisions to which I have referred assume the existence of the power to make an order as to costs, the obvious question is whether the Court has that power and if so how does it arise. In Queensland Fish Board v Bunney; Ex parte Queensland Fish Board (1979) QdR 301 the Full Court of the Supreme Court of Queensland considered the power of a stipendiary magistrate to award costs in exercise of statutory powers, the details of which are not presently relevant. Connolly J gave the leading judgment and Wanstall CJ and Lucas J agreed with his Honour's reasons which included the following at 303: "Some of the older decisions suggest that the power to award costs must be conferred in express terms. See e.g. Service v Flateau (1900) 16 WN (NSW) 248; Victorian Phillip-Stephan Photo-Litho Co. v Davis (1890) 11 LRNSW 257 but the better view would seem to be that the power can be conferred expressly or by necessary implication; Spicer v Carmody 48 SR (NSW) 348 at p.350. Having regard to this principle however, the power must at least clearly appear." My own review of those authorities leads me to the same general conclusion (see also Crowe v Bennett; ex parte Crowe (1992) 59 A Crim R 416, R v Mosely (1992) 28 NSWLR 735, R v Scott (1993) 116 ALR 703, Hage v Chilman, Supreme Court of South Australia, Debelle J, 14 May 1991 unreported). Section 361 is directed to the creation of the Court and provides: "(1)This Act creates a federal court to be known as the Industrial Relations Court of Australia. (2) The Court is a superior court of record and is a court of law and equity. (3) ..." In my view the combined effect of ss361, 466 and those other provisions which assume the existence of a power to award costs is to imply a power to award costs. A provision in the same terms as s361 is found in s5(2) of the Federal Court Act. While the Federal Court is a court of limited jurisdiction the creation of that Court as one of law and equity invests it with the powers of the modern courts of equity in respect of matters otherwise within jurisdiction: see Scarel Pty Ltd v City Loan and Credit Corporation Pty Ltd (1988) 17 FCR 344 at 349 per Gummow J. For example the Federal Court has the power exercised by courts of equity to issue commissions, appoint examiners and issue letters of request for the purpose of examining witnesses. The way in which this arises is explained by Gummow J in Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (1987) 14 FCR 461 at 466 in the following passage which, though lengthy, I should set out in full: "Thus, this Court has such jurisdiction as is invested in it by statute and such powers attendant upon that jurisdiction are expressly or by implication conferred by the legislation that governs it. The effect of the reasoning Parsons v Marin (1984) 5 FCR 235, is to deny the generality of the assertion by Professor Wigmore (made in par 214a of his treatise Evidence in Trials at Common Law) that it should not be doubted that "any domestic court has inherent power at common law to issue ... letters rogatory". In truth, that statement was never true of the English superior courts exercising common law jurisdiction, and was true only of equity courts. I turn to consider the position of this Court in the light of the legislation in which its powers have their source. This Court is created as a court of law and equity and as superior court of record: Federal Court of Australia 1976 (Cth), s5(2). It has (ss20, 21, 22) what might be described as the general judicature system powers and obligations: Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 161; Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 489-490. In Hardie Rubber Co Pty Ltd v General Tire & Rubber Co (1972) 129 CLR 521, the High Court issued a letter of request to a foreign tribunal to examine witnesses. Reliance was placed upon the High Court Rules for the necessary power (see at 527). In Pearce v Button (1985) 8 FCR 40, Pincus J held he had power of the same description, referring to o24 r1(b) of the Rules of this Court and to the history of this power in the English superior courts. At the time of this decision, Pt IIIB had not yet appeared in the Evidence Act 1905. It appears that whilst statute was needed to empower the English common law courts to issue commissions and to appoint special examiners for the examination of witnesses outside the British dominions, Chancery (and the Court of Exchequer on its equity side) claimed and exercised an inherent power to issue such commissions and to appoint examiners, both in aid of suits in the exclusive jurisdiction and in aid of actions at law: Moodalay v Morton (1785) 1 Br C 469; 28 ER 1245; Lord Belmore v Anderson (1792) 2 Cox 288; 30 ER 134; Thorpe v Macauley (1820) 5 Madd 218; 56 ER 877; Devis v Turnbull (1822) 6 Madd 232; 56 ER 1080; WE Hume-Williams and AR Macklin, Taking Evidence on Commission (2nd ed, 1903), ch 1; JN Pomeroy, Equity Jurisprudence (3rd ed, 1907), s213, 214. The commissions issued in equity appear to have been limited to examination upon written interrogatories, in accordance with the general Chancery procedure of not allowing witnesses viva voce except by special order: see J Fonblanque, A Treatise of Equity (5th ed, 1820) vol II, book VI, ch 1, p 2: H Maddock, Principles and Practice of the High Court of Chancery (3rd ed, 1837), vol 2, pp 405-415. As the nineteenth century progressed, objections were made by various foreign governments to examination of witnesses on their territory by British-appointed examiners, and the earlier procedures largely were replaced by the issue of letters of request to foreign courts either to take the evidence or to appoint some person to take it: E R Daniell, Practice of the High Court of Chancery, (7th ed, 1901), vol 1, pp 549-552. Section 7v(1) of the Evidence Act 1905, which I have earlier set out, contains the modern representatives of these procedures, namely the issue of commissions, appointments of examiners and the issue of letters of request. Order 24, r1, of the Rules of this Court, also does so by provising: "The Court may, for the purpose of proceedings in the Court, make orders - (a)for the examination of any person on oath before a Judge or before such other person as the Court may appoint as examiner at any place whether in or out of Australia; or (b)for the sending of a letter of request to the judicial authorities of another country to take, or cause to be taken, the evidence of any person." One consequence of the judicature system was to empower the Supreme Court of Judicature to provide for the taking of evidence abroad both on interrogatory and viva voce: Hume-Williams and Macklin (supra) pp7-21. It follows from the developments I have outlined that a result of the legislation which established this Court as a court of equity and a superior court of record with "judicature" powers, was the bringing to the Court of powers of the kind expressed in o24 of the Rules of this Court." The power of the Federal Court to secure evidence in this way exists apart from the Federal Court Rules and despite the fact that historically English common law courts did not have that power, unless conferred by statute. A similar approach to the effect of s5(2) is to be found in MacIntyre v Parkes (1990) 92 ALR 577 at 586 per Gummow and von Doussa JJ and Smith Kline and French Laboratories (Australia) Ltd v Secretary, Department of Community Services and Health (1990) 95 ALR 87 at 98 per Gummow J. The powers that Gummow J describes in Elna, supra as "the general judicature system powers and obligations" exist, in relation to the Industrial Relations Court of Australia, in the same terms as the Federal Court (see ss417 and 418 of the Act). As the power to award costs was an inherent power of courts of equity: see Knight supra, s361 may have been intended to confer on the Court a power to award costs. Such a construction of s361 accords with the approach of the Federal Court to the scope of s5(2) though whether the terms of s361, viewed in isolation, should bear that construction is, in my opinion, by no means clear. But the recognition in s466 in unambiguous terms of an existing power in the Court to make an order as to costs and the other provisions that assume its existence, favour the construction of s361 that would treat it as conferring a power to award costs. However parliament, in establishing the Court, has not given it a power to award costs in the same explicit way it has given that power to the Federal Court and a number of the provisions in the Act which assume the existence of the power of the Court to award costs applied to the Federal Court when they were enacted in 1988. Further, when the Court was conferred with the jurisdiction the Federal Court formerly had under the Act, the express power of the Federal Court to award costs was not repeated in PtXIV which established the Court. This was not done even though parliament appears to have adopted the text of relevant parts of the Federal Court Act when creating the structure and jurisdiction of the Court. In this context the following remarks of Stephen J in Marshall v Watson (1972) 124 CLR 640 at 649 are apt: "Granted that there may seem to be lacking in the legislation powers which it might be thought the Legislature would have done well to include, it is no power of the judicial function to fill gaps disclosed in legislation; as Lord Simonds said in Major and St. Mellons R.D.C. v Newport Corporation, "If a gap is disclosed, the remedy lies in an amending Act" and not in a "usurpation of the legislative function under the thin disguise of interpretation."" However I am satisfied that the various provisions in the Act that assume a power to award costs, and in particular s466, indicate that the power of the Court to award costs impliedly arises from the provisions of s361. It is unlikely parliament intended to invest the Court, in the clear terms found in s466, with power to delegate a power the Court did not have. I mentioned earlier that s452(5) empowers the Court to make an order requiring the payment of costs in certain circumstances in a proceeding involving a representative party. However I do not consider that the reference in s466 to the power of the Court to award costs is a reference to the power in s452(5) to impose conditions on the withdrawal of a representative party. The power of the Court arising under s452 concerning costs is only exercised in conjunction with the power to grant leave to the representative party to withdraw which is not a power that is identified in s466(1)(a) to (g) as a delegable power. It is thus unlikely that the power to award costs in those circumstances is what is referred to in s466(1)(f). In my opinion the Court has power to make an order as to costs though the exercise of that power is limited by s347 in so far as it concerns a matter arising under the Act. I should add that I have looked at material that might be relevant having regard to s15AB of the Acts Interpretation Act 1901 (Cth) though the parties did not, themselves, refer to it. I could find no mention in the various parliamentary speeches or explanatory memoranda, a reference to the power of the Court to award costs that might indicate that it was intended it would have the power (though subject to s347) or, unlike the Federal Court, would not have the power at all. However my examination of this material may not have been exhaustive, as I may have overlooked some material that emerged during the rather complex passage of the relevant amending legislation through Parliament. Having concluded that the Court has power to award costs, it is necessary to address the question of whether s347 precludes me making of an order for costs in this matter. The respondent submits that the proceedings were instituted without reasonable cause and therefore satisfied one of the statutory exceptions to the general rule imposed by s347. This submission was founded on the contention that the applicant was not an employee and s170EA gave the applicant no right to maintain the application. I will assume, for present purposes, that the expression "employee" in s170EA is intended to comprehend, and is limited to, the common law notion of what is an employee, though having regard to s170CB, which provides that expressions in the relevant Division have the same meaning as the Termination of Employment Convention 1982 (see s4 and Schedule 10 of the Act), it is not an assumption that should be made at least without more detailed consideration. However the submissions of the parties in this matter proceeded on the basis that the common law conception of what was an employee was to be applied, and I will deal with this issue on that basis. The applicant was a dentist. He worked with other dentists in what was described in a written agreement between them as an association. The agreement contained features that indicate that it was their common intention that none was to be the employee of any other. However it is also clear that one of the members of the association Mr Taylor assumed a prominent role in it. The name of the association was "Phillip Taylor and Associates". The agreement provided that, while each party to the agreement could devote as much time to their own practice as they agreed, Mr Taylor reserved the right to direct the other members of the association as to the amount of time they devoted to their practice, in the absence of agreement. To similar effect, the agreement provided that each of the members of the association could charge the fees that were agreed but, in the absence of agreement, it reserved the right to Mr Taylor to direct the others to charge amounts decided by him. The approach I consider I should adopt in determining whether the proceedings were instituted without reasonable cause is that discussed by Wilcox J in Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264: "It seems to me that one ways of testing whether a proceeding is instituted 'without reasonable cause' is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon 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 reasonable cause." In my view, the status of the applicant in the association is by no means obvious. While he was, in many respects, intended to be a free agent, he was potentially the subject of direction in two important respects. That power of direction concerned two fairly fundamental matters, the time he was to work and the fees he would charge. While ultimately the Court might conclude the applicant was not an employee, the authority of Mr Taylor in relation to these two matters might arguably be "ultimate authority", as that expression appears in the well known passage of Dixon J in Humberstone v Northern Timber Mills (1949) 79 CLR 389 at 404: "The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions ..." It is thus arguable that the applicant was an employee and it is therefore not clear that the application would fail, at least on the grounds of its competence. Likely failure on other grounds was not raised by the respondent. In my view the proceedings were not instituted without reasonable cause and accordingly I am precluded by s347 from making any order as to costs. I make no order as to costs and note that otherwise, the matter is now discontinued.