National Road Transport Association (NatRoad) – application to register as an employer organisation (No. 2) [2017] NSWIRComm 1072

The legislative framework

1. Section 181 of the Act relevantly provides as follows: 181 Costs (1) Subject to the rules of the Commission and any other Act or law: (a) the Commission may award costs, and (b) costs are in the discretion of the Commission, and (c) the Commission may determine by whom and to what extent costs are to be paid, and (d) the Commission may order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014 ) or on any other basis. (2) However, the Commission may award costs only in the following cases: (a) the Commission may award costs against an applicant if it considers that the application to it was frivolous or vexatious, or (b) the Commission may award costs against a party to proceedings who, in the opinion of the Commission, instituted proceedings without reasonable cause,

Approach of the Commission to applications for costs orders

1. In Re Operational Ambulance Officers (State) Award (No 2) ([2011] NSWIRComm 85) a Full Bench of the Commission (Boland J, President, Walton J, Vice-President, Grayson DP) considered an application for a costs order by a registered organisation of employees, HSU-East, which had successfully opposed a notice of motion filed by 13 individual ambulance officers ("the applicants") seeking to set aside a judgement and orders of Staff J in which his Honour made a new award known as the Operational Ambulance Officers (State) Award. After setting out section 181 as it then appeared in the Act, the Full Bench stated: 27 Thus, in relation to the present proceedings, the Commission's discretion to award costs is limited by s 181(2)(a) and (b), namely, costs may be awarded against an applicant if the Commission considers that the application to it was frivolous or vexatious, or against a party to proceedings who, in the opinion of the Commission, instituted proceedings without reasonable cause. 28 The exercise of the Commission's discretion to award costs involves a two stage process: see Bankstown City Council v Paris [1999] NSWIRComm 585; (1999) 93 IR 209 and Four Sons Pty Ltd v Sakchai Limsiripothong (No 2) [2000] NSWIRComm 131; (2000) 100 IR 400. The first stage requires a determination as to whether s 181(2) of the Act is enlivened. The second stage of the process requires the Commission to exercise its discretion whether to award costs under s 181(1) of the Act. 29 The parties referred the Full Bench to a number of authorities dealing with what is frivolous or vexatious and what is to be regarded as without reasonable cause: Burton v Shire of Bairnsdale [1908] HCA 57; (1908) 7 CLR 76 at 92 per O'Connor J; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 per Barwick CJ; Attorney-General v Wentworth (1988) 14 NSWLR 481 at 491 per Roden J; R v Moore; Ex Parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 at 473 per Gibbs J; Kanan v Australian Postal & Telecommunications Union (1992) 43 IR 257 at 264-265 per Wilcox J; Standish v University of Tasmania [1989] FCA 166; (1989) 28 IR 129 at 139 per Lockhart J. 30 In Attorney-General v Wentworth , Roden J set out the following tests as to whether proceedings might be regarded as vexatious: 1. Proceedings are vexatious if they are instituted with the intention of annoying or embarrassing the person against whom they are brought. 2. They are vexatious if they are brought for collateral purposes, and not for the purpose of having the court adjudicate on the issues to which they give rise. 3. They are also properly to be regarded as vexatious if, irrespective of the motive of the litigant, they are so obviously untenable or manifestly groundless as to be utterly hopeless. 31 In Kanan, Wilcox J said in respect of "without reasonable cause": It seems to me that one way 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 proceedings, 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 it appears that, on the applicant's own version of the facts, it is clear that the proceedings must fail, it may properly be said that the proceedings lacks a reasonable cause. 32 We adopt, with respect, the tests in Wentworth and Kanan. Those tests are consistent with the other authorities we cited above. 33 As to whether the proceedings were frivolous, we do not consider they were brought thoughtlessly or flippantly or that the applicants' intention in bringing the proceedings was not serious. The fact they were unsuccessful in their contention that, as individuals, they could be made party to the Award, does not translate into a frivolous application. 34 As to whether the proceedings were vexatious, we do not consider the first test enunciated in Wentworth applies. The applicants did not set out to annoy or embarrass and there does not appear to be any suggestion that they did. It does seem to have been suggested, however, that the second test applies in that the applicants brought the proceedings for a collateral purpose, namely, that by making the application the 13 individuals were acting as a "stalking horse" for EMSPA, which was attempting to establish itself as an industrial rival organisation to HSU-East, as evidenced by a protracted campaign by EMSPA to gain support amongst paramedics in New South Wales. 35 We must say we have some concern that in bringing the application there may have been the collateral purpose of which HSU-East complains. EMPSA was strident, almost offensively so, in its attack on HSU-East, the Ambulance Service, and indeed, this Commission in what did appear to be part of a campaign to establish itself as an alternative representative body for paramedics. Moreover, EMSPA was an applicant in the proceedings filed by Ffrench Legal in January 2011. In those proceedings Ffrench legal sought to have Staff J apply the slip rule or, alternatively, set aside the orders made on 24 December 2010 and permit its clients to be heard in relation to the making of the Award. EMSPA was not an applicant on the motion heard by the Full Bench. 36 However, we are satisfied the primary purpose of the application before the Full Bench was a genuinely motivated but wrong headed attempt to secure the right of the applicants to be advised of and involved in any award negotiations affecting them. 37 That leaves the third test in Wentworth of whether the proceedings were so "obviously untenable or manifestly groundless as to be utterly hopeless." Again we have reservations about aspects of the applicant's case, in particular the reliance on the slip rule where the Full Bench found there was no evidence or suggestion that Staff J committed a "clerical mistake". Nor was there any evidence or indication of an "error" arising from an "accidental slip or omission", or a "mistake" arising from an "accidental slip or omission" that was required to be corrected in the Award. 38 Nevertheless, having regard to the applicants' case overall we do not consider the proceedings were "obviously untenable or manifestly groundless as to be utterly hopeless." The matter was obviously considered sufficiently important for the President to constitute a Full Bench to hear it and the Full Bench considered it necessary to go to considerable lengths in its decision to address each of the applicants' contentions. It was not open, as the decision demonstrates, to simply dismiss the application out of hand, which may well have been the case if the proceedings were "obviously untenable". 39 The test enunciated in Kanan as to whether proceedings were brought "without reasonable cause" is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceedings, there was no substantial prospect of success. As the applicant submitted, the Commission has never before considered the proper construction and operation of s 209 of the Act. The applicants' submissions in the substantive proceedings were not simply based upon a construction of ss 11 and 12 of the Act, but advanced arguments about the proper construction of those provisions having regard to s 209 of the Act. Whilst it should have been apparent to the applicants that they could face considerable difficulty in achieving success with their arguments, it could not be said the matter was without any substance.
2. In the present proceedings both parties sought to rely upon the decision of Backman J in Transport Workers' Union of New South Wales (on behalf of Darren Roger Bargwanna) and Robar Enterprises Pty Ltd (ACN 108 640 517) (No 2) ([2014] NSWIRComm 9). In that decision, her Honour set out the legal principles governing subsection 181(2)(b) of the Act in the following terms: 8 In Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264 to 265 Wilcox J made the following observations about the meaning and application of the expression "a proceeding (is) instituted without reasonable cause": It seems to me that one way 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 a reasonable cause. ... 9 The expression "institutes proceedings without reasonable cause", appearing in s 181(2)(b) focusses on the institution of proceedings. The parties did not address the meaning or scope of the words "institution of proceedings" however both the applicant and the respondent appeared to adopt in submissions a narrow construction of the words which is consistent with the commencement of proceedings or, at the time of commencing the proceedings. This approach appears to conform to the observations of Ryan J in Imogen Pty Ltd v Sangwin (1996) 70 IR 254 at 261 where his Honour, in commenting on a provision similar to s 181(2)(b) said: The existence of "reasonable cause" within the meaning of s 347 falls to be determined at the time when the relevant proceedings were instituted. The fact that the party instituting the proceedings later discontinues them is therefore not a matter to be taken directly into account in the application of the section. 10 Remarks to similar effect were made by Gray J in Geneff v Peterson & Ors (1986) 19 IR 40 in discussing s 197A of the Conciliation and Arbitration Act 1904 (Cth). Section 197A provided that costs may not be awarded, "except where the party against whom the order is made initiated the proceedings vexatiously or without reasonable cause". At [88] his Honour observed, in relation to the provisions: ... the focus of the section is on the institution of the proceedings, and the court should not allow itself to be influenced unduly by the actual result. 11 Also of relevance are the observations on s 197A by Northrop J, sitting in the Australian Industrial Court in Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 at 274: Section 197A is to be considered when proceedings in the court have been completed and dismissed. The principles set out above are to be applied at an early stage of the course of the proceedings. In my opinion, similar principles are to be applied when considering the matters raised by s 197A. Great care must be exercised to ensure that in finding that a party has instituted proceedings vexatiously or without reasonable cause, that party is not improperly deprived of his freedom from liability to pay costs to an opposing party. The test is a substantial one. In considering this matter the court must have regard to all the material properly before it. The test is not subjective to the party instituting the proceedings as at the time of the institution of the proceedings. The conduct of the opposing party prior to the institution of the proceedings may be relevant in deciding whether the proceedings were instituted vexatiously or without reasonable cause. The conduct of the opposing party both prior and subsequent to the institution of proceedings may be relevant to the discretion remaining in the court. It may be difficult to satisfy the test where disputed questions of fact arise and the proceedings eventually are dismissed because the court finds facts adverse to the party instituting the proceedings. Where the test is satisfied, having regard to the general policy of the section, the court may, nevertheless, in the exercise of its discretion, make no order as to costs. 12 A similar approach is required when the Commission considers an application under s 181(2) of the IR Act. The approach has been referred to in the authorities as a "two stage process" which relies upon the inter-relationship between s 181(1) and s 181(2) in proceedings of this kind. The provisions operate together when the Commission is exercising its jurisdiction not in Court Session. If the Commission is satisfied that one or more of the paragraphs in s 181(2) are made out in the respondent's favour, the provisions of s 181(1) become operative and the Commission may exercise its discretion to award costs under that provision: see Tapia v Emibarb Pty Limited trading as Lagoon Seafood Restaurant [2005] NSWIRComm 232 at [95]; and, Re Operational Ambulance Officers (State) Award (No 2) (2011) 207 IR 303 at [28]. 13 The requirement that the Commission be satisfied that the proceedings were instituted without reasonable cause poses a high threshold or as Northrop J in Heidt v Chrysler Australia observed, "The test is a substantial one" (at 274). Observations to that effect were made by the Full Federal Court (Black CJ, North and Mansfield JJ) in Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission and Another (2006) 156 FCR 275 at [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; 13 ALR 365 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 Australian Postal and Telecommunications Union (1992) 43 IR 257 per Wilcox J; see also Bostik (Australia) Pty Ltd v Gorgevski (No 2) (1992) 36 FCR 439; and Nilsen v Loyal Orange Trust (1997) 76 IR 180. 14 It has been held that an assessment of whether proceedings were instituted "vexatiously or without reasonable cause" is similar to that applied in the exercise of a summary power to stay or strike out proceedings: Heidt v Chrysler Australia Ltd at 272 to 273; Hatchett v Bowater Tutt Industries Pty Ltd [No. 2] 28 FLR 324 at 327. In that latter mentioned decision von Doussa J referred to expressions such as "so obviously untenable that it cannot succeed", "manifestly groundless" and "bad beyond argument" as illustrations of a proceeding instituted, "vexatiously without reasonable cause". Marshall J, in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Nestle Australia Ltd (2005) 146 IR 379 at [4] to [7], who was dealing with an application that the proceedings were instituted without reasonable cause, referred to a number of authorities which had considered the expression and observed: As a Full Court said in Spotless Services Australia Ltd v Marsh SDP [2004] FCAFC 155 at [13]: "Whether a proceeding has been commenced without reasonable cause is relevantly established as a matter of objective fact." In Spotless the Full Court considered that the application for prerogative relief was bound to fail. It ordered costs against the unsuccessful applicant. The expression "bound to fail" is similar to expressions such as "so obviously untenable that it cannot possibly succeed", "manifestly groundless" and "bad beyond argument" as referred to by von Doussa J in Hatchett v Bowater Tutt Industries Pty Ltd (No 2) (1991) 28 FCR 324 at 327; 39 IR 31 at 34. Earlier (at FCR 327; IR 34) von Doussa J said: "The test imposed by the expression 'vexatiously or without reasonable cause' is similar to the one applied by a court on an application for the exercise of summary power to stay or strike out proceedings: see Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 at 272-273 and Geneff v Peterson (1986) 19 IR 40 at 87-88." As Gibbs J said in R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 at 473, in respect of a predecessor provision to s 347(1): "In my opinion a party cannot be said to have commenced a proceeding 'without reasonable cause', within the meaning of that section, simply because his argument proves unsuccessful." Further, as Gray J said in Geneff v Peterson (1986) 19 IR 40 at 88: " ... the focus of the section is on the institution of the proceedings, and the court should not allow itself to be influenced unduly by the actual result."

NatRoad's unsuccessful application for registration

1. As stated above, these proceedings arose out of NatRoad's unsuccessful application for registration as an organisation of employers. Evidence in support of that application was given by Mr Warren Clark, Chief Executive Officer and Company Secretary of NatRoad. It became apparent during Mr Clark's cross-examination that he had little, if any, idea of what it was hoped would be achieved by NatRoad becoming a registered organisation of employers under the Act, as the following exchange demonstrated: BARONI Q. So what is it that you think your organisation can do by achieving registration in this tribunal as an employer - as an organisation - as an association of - I withdraw that - as an organisation of employers? What can you do for your membership? A. I think what we can do, because we have a large membership, is actually be present at the table negotiating this stuff which affects their livelihood, industry and also work out a suitable outcome that's amenable to everyone. Q. So the evidence you gave me before that you didn't know what you could actually do about different proceedings in this tribunal is not quite true. So your understanding is that you can appear at the table in these proceedings? A. Once we become a registered organisation. Q. What proceedings precisely-- A. I don't know. Q. --do you think-- A. I don't know. Q. Well, give me an example? Because you must have something in your head. A. Perhaps something like the GCCD. Perhaps we're talking about varying rates and awards. I mean, it could be anything, honestly. Q. So the advice that then your board got, because you were part of this decision-making process-- A. Yep. Q. --was it quite precise in relation to why you should seek registration or was it just a good idea? A. Well, perhaps you might want to ask Alison because she was the one-- Q. I'm asking you, because you're giving the evidence. A. I thought it was quite concise and-- Q. And what was said to you about-- A. I can't remember. Q. --the reasons - A. That's months ago. Q. You can't, but the minutes would disclose that? A. No, they won't disclose that. Q. They won't disclose that? A. Minutes are not designed to capture conversations. Q. So your evidence is that, notwithstanding you had a special board resolution to decide whether you should seek registration in this tribunal-- A. Mmm. Q. --you have no recollection of the advice that was given to you or what merit you would gain from seeking that registration? A. I think-- Q. And before you answer that, can I just make this proposition, and please correct me if I'm confusing you. The fact that you called a special resolution - I withdraw that - a special meeting to discuss this one matter, which was your evidence earlier, it must follow that this is a very important issue for the organisation. Is that correct? A. It's an important issue. Q. Yes. So then getting back to my question, notwithstanding that it's such an important issue that you had to call a special meeting-- A. Yep. Q. --to get this passed, you're not sure what benefits you're going to get out of this registration. You can't recall the advice that was given to you to-- A. Not-- Q. --sustain the argument? A. Not off the top of my head, no. Q. All right. A. All I know is that it's very important for us to have a seat at the table to be party so that we get a pretty solid-- Q. But you're not sure-- A. --understanding. Q. --what seat at what table? A. Well, we're a recognisable registered organisation, recognised organisation.
2. Mr Clark's reference to the "GCCD" was a reference to the Transport Industry - General Carriers Interim Contract Determination, an instrument made pursuant to the provisions of Chapter 6 of the Act which affects the relationship between owner-drivers and principal contractors. Registration of NatRoad as an organisation of employers pursuant to the provisions of Chapter 5 of the Act would not have gained NatRoad a seat at the Chapter 6 table.
3. Further, to the extent that NatRoad may have had an interest in representing its employer members who operate in the private sector in award proceedings, those matters come within the jurisdiction of the Fair Work Commission, not this Commission. Registration under the Act as an organisation of employers would not have gained NatRoad a seat at that table either.
4. NatRoad's application for registration under the Act as an organisation of employers was, to say the least, misconceived or, to borrow from the Full Bench in Re Operational Ambulance Officers (State) Award (No 2), was "wrong headed". However, it does not necessarily follow that its application was "frivolous" or "vexatious" or was instituted "without reasonable cause".

ARTIO's application for a costs order

1. I am unable to find that NatRoad's application for registration was frivolous. It was not "brought thoughtlessly or flippantly". I do not consider that NatRoad's "intention in bringing the proceedings was not serious" (Re Operational Ambulance Officers (State) Award (No 2) at [33]).
2. Similarly, I am unable to find that NatRoad's application was vexatious. It was not "instituted with the intention of annoying or embarrassing" any party. It was not "brought for collateral purposes" nor was it "so obviously untenable or manifestly groundless as to be utterly hopeless" (Re Operational Ambulance Officers (State) Award (No 2) at [30] citing Roden J in Attorney-General v Wentworth).
3. As a consequence, ARTIO's application for a costs order cannot succeed pursuant subsection 181(2)(a) of the Act.
4. The question then arises as to whether, in making its application for registration, NatRoad instituted proceedings without reasonable cause.
5. In its written submissions opposing ARTIO's application for a costs order, NatRoad put the following: Institution of Proceedings 75. As a first point, NatRoad contends that it did not initiate any proceedings in relation to its registration application. 76. NatRoad made an application, which if not contested by the First and Second Objectors, would not have resulted in any proceedings. 77. NatRoad has the right, in the interests of its members to seek registration as an industrial organisation under Chapter 5 of the NSWIR Act (and also as an association of employing contractors and an association of contract carriers under Chapter 6). 78. NatRoad contends that proceedings were initiated, in the first instance, by the TWU through its objection to NatRoad's registration application, and not by NatRoad. 79. NatRoad submits that it was ARTIO's choice to object to, and to participate in proceedings. Had neither the TWU nor ARTIO objected to the registration application, there would have been no proceedings initiated.
6. Whilst this submission has some superficial attraction to it, I find it unnecessary to decide this point in these proceedings. This is because I have formed the view that, regardless of whether or not in making its application for registration, NatRoad "instituted proceedings", its application for registration as an organisation of employers, whilst unsuccessful, was not made "without reasonable cause".
7. I am unable to find that, upon the facts apparent to NatRoad at the time of making its application for registration, there was no substantial prospect of success. It is not disputed that NatRoad does have as members a number of employers engaged in the transport industry in New South Wales. It did not appear, on NatRoad's own version of the facts, that, at the time it made its application for registration, it was clear that the proceedings must fail (Re Operational Ambulance Officers (State) Award (No 2) at [31] and [39] citing Wilcox J in Kanan). I have formed this view even though NatRoad's application ultimately failed to meet the statutory tests for registration as an organisation of employers under the Act.
8. As a consequence, ARTIO's application for a costs order cannot succeed pursuant to subsection 181(2)(b) of the Act and must be refused.
9. I so order. Commissioner John Murphy

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