Murdock v Virgin Australia Airlines Pty Ltd [2024] FCA 227 | Case summary

BURLEY J: 1 In Murdock v Virgin Australia Airlines Pty Ltd (No 2) [2023] FCA 569 (judgment) I addressed several interlocutory applications filed in proceedings NSD 349 of 2022 (Murdock action) and NSD 506 of 2022 (Clayton action) which challenged the adequacy of the statement of claim as a pleading. The respondents in both actions now seek orders that the applicants pay their costs. For the reasons that follow, I refuse that application. These reasons assume knowledge of the judgment and adopt the definitions used in it. 2 The Court has a general discretion to order costs pursuant to s 43 of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act), which is constrained by the terms of s 570 of the Fair Work Act 2009 (Cth) (FW Act), which provides: 570 Costs only if proceedings 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. (2) The party may be ordered to pay the costs only if: (a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or (b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or (c) the court is satisfied of both of the following: (i) the party unreasonably refused to participate in a matter before the FWC; (ii) the matter arose from the same facts as the proceedings. 3 The policy behind s 570 reflects a choice on the part of the legislature that costs should not ordinarily follow the event, but rather that they should ordinarily be borne by the party incurring them: Commonwealth of Australia v Construction, Forestry, Mining and Energy Union [2003] FCAFC 115; (2003) 129 FCR 271 at [10] (Black CJ, Tamberlin and Sundberg JJ); Augusta Ventures Ltd v Mt Arthur Coal Pty Ltd [2020] FCAFC 194; (2020) 283 FCR 123 at [102] (White J, with whom Middleton J agreed at [89]). It has been said that the policy ensures that the spectre of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings: Ryan v Primesafe [2015] FCA 8; (2015) 323 ALR 107 at [64] (Mortimer J); Trustee for The MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8] (Siopis, Collier and Katzmann JJ). The discretion must be exercised with caution because of the exceptional nature of the power in an otherwise no-costs jurisdiction, and a case for its exercise should be clearly demonstrated: Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6] (Bromberg J). That is because, absent caution, there is a potential to discourage parties in the complete and robust pursuit of claims for contravention of the FW Act. Accordingly, a person will rarely be ordered to pay the costs of the proceedings. However, it is not necessary to prove that there are exceptional circumstances warranting the making of an order: Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222; (2017) 256 FCR 306 at [74] (Logan J, Bromberg J agreeing at [161], Charlesworth J in dissent on the question of costs); Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23; (2013) 232 FCR 428 at [7] (Dowsett, McKerracher and Katzmann JJ). 4 The discretion must be exercised judicially according to the terms defining it. 5 The respondents rely on s 570(2)(b) of the FW Act, contending that the applicants' unreasonable act or omission in pursuing a cause of action that had no substantial prospect of success is sufficient to enliven the discretion in their favour, citing Enkel v We R Finance Pty Ltd [2020] FCA 1668 at [82] (Jackson J). In particular, they submit that in correspondence prior to the hearing of the interlocutory applications they had alerted the applicants to the deficiencies in their pleadings, yet the applicants unreasonably resisted making amendments. They submit that they were substantially vindicated in their applications, with the disability and no extra claims paragraphs being summarily dismissed and, in the case of the Murdock claim, the pursuit of an extension of time under s 370 of the FW Act was also an unreasonable act in light of the absence, as found in the judgment at [146] of any cogent explanation for the relevant delay. 6 The applicants contend that disputes about pleadings are commonplace in the present type of proceeding and the Court should be slow to conclude that a dispute about pleadings falls within the ambit of s 570, having regard to its policy and purpose, citing Tsilibakis v Transfield Services (Australia) Pty Ltd (No 2) [2015] FCA 1048 at [20] - [22] (White J). In the present case, the respondents had only mixed success in their attempt to strike out parts of the pleading without liberty to re-plead. The applicants submit that the pre-hearing correspondence did not raise the points made during the hearing of the interlocutory application sufficiently to warrant the criticism of their conduct as unreasonable. The mere fact that they disagreed with the respondents' characterisation of their claims does not mean that they refused constructively to engage with the respondents in the conduct of the dispute. 7 It is the case that the conclusions expressed in the judgment were substantially in favour of the respondents. The causes of action defined in the judgment by reference to the descriptions "adverse action by discrimination" (at [67] - [80]) and "no extra claims" (at [87] - [92]) were dismissed with no liberty to re-plead. However, the respondents failed in their attempt to dismiss pursuant to s 31A of the Federal Court Act the action described as "adverse action by coercion" (at [81] - [84]). Many points were made by the respondents that were critical of the manner in which the statements of claim were pleaded and sought orders that they be struck out. Not all succeeded. A number of the points made were raised for the first time during the course of argument. The applicants defended some, and during the course of argument, agreed that they should amend the statement of claim in respect of others. Ultimately, they were ordered to replead the whole of the statement of claim. 8 By s 570 of the FW Act, the respondents bear the onus of establishing that the applicants unreasonably caused them to incur costs. Clearly enough, this takes the action beyond the normal rule that a successful party in litigation is entitled to an award of costs in its favour in order to indemnify it in respect of those costs; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [37], (Gaudron and Gummow JJ); [67] (McHugh J). More is required. 9 In Tsilibakis, White J said of a similar application: [19] In my opinion, the applicant should have recognised earlier that the proposed amended statement of claim still contained deficiencies. Had he done so, Transfield's interlocutory application and the hearing on 19 March 2014 may have been unnecessary. At the costs hearing, the applicant's counsel acknowledged that he could have appreciated the existence of the deficiencies earlier. I accept however, his explanation that it was not until he heard the critique by the respondent's counsel that he appreciated the nature and extent of the shortcomings in the pleading. [20] However, I am not willing to characterise the applicant's conduct as being the kind of unreasonableness to which s 570(2)(b) refers. In my opinion, the Court should be circumspect before doing so. It commonly occurs that applicants have difficulties in pleading appropriately an adverse action claim and an associated breach of contract claim. Experience also indicates that, despite inadequate pleadings, a matter can often proceed to trial without undue embarrassment to the opposing party. A somewhat robust approach to pleadings is often appropriate in actions of the present kind, and not that adopted in substantial commercial litigation between sophisticated and experienced litigants… 10 In the present case I accept that there are aspects of the applicants' pleadings that were manifestly inadequate. In the normal course, such inadequacies would have occasioned a costs order in favour of the respondents. However, for reasons analogous to those considered persuasive in Tsilibakis, I do not consider that the conduct of the applicants in defending the strike out application was unreasonable such that the discretion under s 570 of the FW Act is enlivened. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Burley.

Murdock v Virgin Australia Airlines Pty Ltd

At a glance

Court

Decision date

Before

Source

Judgment (15 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (17)

Cited By (1)