Pal v Commonwealth of Australia

Introduction 1 On 19 October 2020, this Court ordered that the Applicant's Originating Application and Statement of Claim be summarily dismissed under s 31A of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act): Pal v Commonwealth of Australia [2020] FCA 1483 (Primary Judgment). 2 The Orders made on 19 October 2020 gave leave to the First Respondent (Commonwealth) to make an application for costs within 28 days of 19 October 2020, or such further time as may be allowed, by way of written submissions of no more than five pages in length, together with any supporting affidavit. The Applicant was to respond to any application for costs within 21 days of service of the Commonwealth's written submissions. The Applicant was to respond by way of written submissions of no more than five pages in length and any supporting affidavit. It was ordered that any application for costs be determined on the papers, unless it was decided that an oral hearing was required. 3 Pursuant to Order 2 made by the Court on 19 October 2020, the Commonwealth now applies by way of written submissions for an order that its costs be paid by the Applicant. The Applicant did not provide any submissions in response to the Commonwealth's written submissions or this application for costs. 4 The Commonwealth submits that the proceedings instituted by the Applicant were without reasonable cause within the meaning of s 570(2)(a) of the Fair Work Act 2009 (Cth) (Fair Work Act). In those circumstances, the Commonwealth submits that the Court's discretion to award costs under s 570(1) of the Fair Work Act is properly enlivened, and, the Commonwealth submits, should be exercised in its favour. The Commonwealth seeks that its costs be fixed in a lump sum of $3,720.98. 5 For the reasons that follow, there will be an Order that the Commonwealth will have its costs fixed in that amount.

Relevant law 6 Section 570 of the Fair Work Act 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. 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) 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. 7 There can be no doubt that this proceeding was a proceeding "in a court … in relation to a matter arising under" the Fair Work Act: Fair Work Act, s 570(1). Under s 570(1), the Applicant, being a party to the proceeding, "may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with s 570 or section 569 or 569A" of the Fair Work Act: Fair Work Act, s 570(1). Relevantly, s 570(2)(a) of the Fair Work Act provides that "[t]he party" (such as the Applicant) "may be ordered to pay the costs … if …the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause". 8 In Reeve v Ramsay Health Care Australia Pty Ltd (No 2) [2012] FCA 1322, Barker J stated at [8]-[10]: Section 570(2)(a) empowers the Court to order costs if it is satisfied that the party instituted the proceedings "vexatiously or without reasonable cause". Here, the first respondent does not press a claim that the proceedings were instituted vexatiously, but does submit they were instituted "without reasonable cause". The expression "without reasonable cause" is not defined in the Act. While I have found in the course of dealing with the summary judgment application that the applicant had no reasonable prospect of succeeding on the action, as that compendious phrase utilised in s 31A(2) of the Federal Court of Australia Act 1976 (Cth) is to be understood, the expression "without reasonable cause" as it is used in s 570(2)(a) is not identical with it. Nonetheless, there is commonality between the issues that would go to satisfying each expression. It is now well accepted that one way of testing whether a proceeding is instituted "without reasonable cause", for the purpose of a provision such as s 570, is to ask whether upon the facts apparent to the applicant at the time of instituting the proceeding, there were no substantial prospects of success. If success depends upon resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to say that the proceeding was instituted "without reasonable cause". But where on the applicant's own version of the facts it is clear the proceeding must fail, it may be said that it lacks a reasonable cause: see Kanan v Australian Postal and Telecommunications Union [1992] FCA 539; (1992) 43 IR 257 (Kanan) at 264‑265 (Wilcox J). In Khiani v Australian Bureau of Statistics [2011] FCAFC 109 at [51], the Court (Gray, Cowdroy & Reeves JJ) endorsed the dicta of Wilcox J in Kanan. Accordingly, a proceeding will not be considered to have been instituted "without reasonable cause" simply because an argument in the end proves unsuccessful: The Queen v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 at 473; Cavar v Nursing Australia [2012] FCA 338 at [22] (Flick J). 9 Similar observations were made in Fair Work Ombudsman v Devine Marine Group Pty Ltd [2015] FCA 370; 234 FCR 122 at [44] (White J), and in Menzies v Fair Work Commission [2020] FCA 36; 293 IR 301 at [82] (Katzman J) (Menzies) (citing Australian Workers Union v Leighton Contractors Pty Limited (No 2) [2013] FCAFC 23; 232 FCR 428 (Leighton Contractors (No 2)). 10 In Leighton Contractors (No 2), Dowsett, McKerracher and Katzmann JJ stated at [7]-[8]: In our view the authorities establish the following principles: (1) The purpose or policy of the section is to free parties from the risk of having to pay their opponents' costs in matters arising under the Act, while at the same time protecting those parties who are forced to defend proceedings that have been instituted vexatiously or without reasonable cause. (2) It follows from the protection offered by s 570(2) that a person will rarely be ordered to pay the costs of a proceeding. But it is not necessary to prove that there are exceptional circumstances warranting the making of an order: Spotless Services Australia Limited v The Hon Senior Deputy President Jeanette Marsh [2004] FCAFC 155 ("Spotless") at [12]-[13] (to the extent that the Full Court in Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275 ("Kangan") held otherwise, we would respectfully disagree). (3) The relevant question is whether the proceeding had reasonable prospects of success at the time it was instituted, not whether it ultimately failed: R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 at 473 per Gibbs J; Kangan at [60]. In Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264-5 (approved in Kangan) Wilcox J said[:] If success depends on 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. We would emphasise, however, that these principles relate to the question of whether the jurisdiction to award costs is enlivened. Even if the Court has jurisdiction to make a costs order, it retains the discretion to refrain from exercising it in an appropriate case. 11 In Leighton Contractors (No 2), Dowsett, McKerracher and& Katzmann JJ concluded at [13]: In our view, the proceedings did not enjoy reasonable prospects of success when they were instituted. For any one of the various reasons given in the principal judgment they were bound to fail. Consequently, the Court has jurisdiction to make the orders sought. Nevertheless, we have concluded that this is a case in which the jurisdiction should not be exercised. We have come to this conclusion because of the parties' joint submission that, save in one respect, the case raised important questions about the making of enterprise agreements under the Act and the Court would be interpreting some provisions of the Act for the first time. A case that is bound to fail is hardly of sufficient importance to justify the giving of a direction that it be referred to a Full Court. That the respondents joined with the AWU to submit that a Full Court should hear the case does indicate, as the AWU argues, that they were not of the opinion that the case was hopeless. While that makes no difference to whether the Court has the power to make a costs order, we think it is relevant to whether the power should be exercised. In these circumstances we are not disposed to do so. 12 In Barkhazen v Conair Australia Pty Ltd (No 2) [2018] FCA 992 (Barkhazen (No 2)), Bromwich J stated at [11]-[13]: The absence of merit in the applicant's case for review should have been apparent to her at the time of instituting proceedings, given that she was represented by both a solicitor and counsel. Of course, if the advice she received suggested any proper foundation for bringing the proceedings, the applicant may have a remedy against her representatives for professional negligence. The deficiencies in the applicant's case have been explained in the primary judgment, and do not bear repeating in full. It suffices for present purposes to note the findings that: (1) the grounds of review were convoluted, repetitive and confused …; (2) the grounds of review mostly attacked the decision of the Commissioner without making it clear how that decision infected the decision of the Full Bench, which was the only decision against which relief was being sought …; and (3) no error was asserted in the decision of the Full Bench that could be amenable to judicial review by this Court[.] As is pointed out by Conair, each of these was a factor that should have been apparent to the applicant at the time the proceedings were instituted. This was not a case in which the viability of the arguments depended upon unresolved issues of fact. I note also that the applicant was given the opportunity to file an amended originating application and a statement of claim, and the merit of her case was ultimately considered on the basis of the more fulsome articulation of her grounds that emerged from that process. As is clear from the outcome of the proceedings, the benefit of that opportunity did not result in the further identification of any tenable case for review. Nor was there any suggestion that this could be addressed by further amendment. I am therefore satisfied that the proceedings were instituted without reasonable cause and I see no reason why Conair should not be entitled to its costs on an indemnity basis from the outset. (Citations omitted.) 13 In Whitby v ZG Operations Australia Pty Ltd (No 2) [2019] FCA 201 at [10], Thawley J stated: The evident policy behind s 570(2)(a) is that, generally, parties are not at risk of having to pay costs; however, that protection should not apply where proceedings have been instituted vexatiously or without reasonable cause. What might constitute "reasonable cause" must be assessed by reference to the nature of the particular proceedings instituted … 14 In Menzies, Katzmann J cited the principles in Leighton Contractors (No 2) and concluded at [83]: The success of Mr Menzies' application did not depend on the determination of disputed facts or the resolution of one or more arguable points of law. It depended on the identification of a jurisdictional error. Since none of the grounds of the application raised an arguable case of jurisdictional error, the proceeding had no reasonable prospects of success at the time it was instituted. It follows that I am satisfied that the proceeding was commenced without reasonable cause and that the Court has the power to order that Mr Menzies pay Lindsay's costs.

EXERCISING THE DISCRETION 15 This Court has made dispositive findings on the Commonwealth's summary judgment application (see eg Primary Judgment at [66]-[68], [75], [76], [84], [88], [90], [92], [94]-[96]). At [101]-[102] of the Primary Judgment, the following was recorded: To the extent the Applicant's claims have an identifiable basis, I have assumed (in the Applicant's favour) that the Applicant would establish those bases at trial. Even on that assumption, as demonstrated by the assessment of the Applicant's Statement of Claim above, whether taking the Applicant's Statement of Claim as a whole or taking each claim in it individually, I am satisfied that the Applicant has no reasonable prospect of successfully prosecuting the proceeding. The Applicant's Statement of Claim does not logically relate to the reasoning of the Full Bench or indeed the Fair Work Commission, much less demonstrate a jurisdictional error or error of law on the face of the record. The written and oral submissions of the Applicant did not engage with the arguments advanced on behalf of the Commonwealth, nor with the authority upon which they were based. The Applicant's Statement of Claim purports to seek judicial review of the Full Bench's decision, but fails to engage with the statutory task which the Full Bench was required to undertake. The following statement of Bromwich J in Barkhazen v Conair Australia Pty Ltd [2017] FCA 1585 at [30] is equally applicable to the Applicant's claims: In all the circumstances, [the Commonwealth]'s case for summary dismissal is unassailable. This Court has no business - as well as no authority - to second-guess the Full Bench's state of satisfaction that it was not in the public interest to grant [the Applicant] permission to appeal, at least in the absence of alleging and being in a position to mount a case of jurisdictional error in reaching that conclusion. The case sought to be brought for judicial review in this Court is devoid of merit and has no prospect of success. In those circumstances, summary dismissal is inevitable, with the tests for summary dismissal authoritatively stated by the High Court in Spencer v Commonwealth of Australia [2010] HCA 28; 241 CLR 118, especially at [24]-[25], being easily met. 16 In these circumstances, it is clear that the proceedings brought by the Applicant failed to properly identify an arguable case of jurisdictional error. In those circumstances, and analogously to Menzies and Barkhazen (No 2), the proceedings were instituted without reasonable cause for the purposes of s 570(2)(a). The Court's discretion to order costs under s 570(1) of the Fair Work Act is therefore properly enlivened. 17 The Commonwealth submits, and I agree, that the discretion should be exercised in its favour. An exercise of the discretion as to costs in the Commonwealth's favour is appropriate, in particular, having regard to the following matters: (1) The Applicant's self-representation and ability to pay any order for costs are not matters which generally properly bear on the Court's exercise of discretion: see eg Menzies at [86]. There is no evidence before the Court concerning the Applicant's ability to pay any costs order. (2) On 22 June 2020, the Applicant was informed in correspondence from the Commonwealth's solicitors that the Commonwealth was of the view that the Applicant's Originating Application and Statement of Claim did not have any reasonable prospect of success. The Commonwealth's correspondence briefly explained why that was so (broadly, that the Applicant had failed to identify any jurisdictional error). (3) On 9 July 2020, by the Commonwealth's filing and service of extensive written submissions, the Applicant was put on notice as to the specific and detailed reasons why his Originating Application and Statement of Claim did not have any reasonable prospects of success, and that, if the Court accepted this conclusion, the Commonwealth would apply for costs under s 570 of the Fair Work Act: see Commonwealth's Written Submissions of 9 July 2020 at [44]. The Applicant nonetheless elected to proceed to a hearing before the Court on 8 October 2020. (4) Following the hearing on 8 October 2020, and despite the existence of timetabling orders for the Applicant to file written submissions in response to the Commonwealth's written submissions by 23 July 2020, the Applicant sought to put forward further written submissions after the conclusion of the hearing on 8 October 2020. The Commonwealth was put to the additional expense of briefly responding to those written submissions in further written submissions dated 15 October 2020. Several matters raised by the Applicant were extraneous to the issues for the Court's determination: see Commonwealth's Submissions of 15 October 2020 at [9]-[11]. 18 In these circumstances, the Commonwealth submits that this Court should be satisfied that its discretion to award costs under s 570(1) should be exercised in the Commonwealth's favour. I agree.

Lump sum order 19 The Commonwealth submits that it is appropriate that a lump-sum costs order be made in the circumstances. The Commonwealth seeks such an order under r 40.02(b) of the Federal Court Rules 2011 (Cth) (Rules). This position is consistent with this Court's Costs Practice Note which provides (at [4.1]) that "[t]he Court's preference, wherever it is practicable and appropriate to do so, is for the making of a lump-sum costs order". 20 The Commonwealth relies upon the matters set out in the Affidavit of Mr Peter Murray McNulty sworn on 16 November 2020, which it submits properly address the matters required to be addressed in [4.10]-[4.12] of this Court's Costs Practice Note (including Part B of Annexure A of the Court's Costs Practice Note). In this respect, the lump-sum amount sought by the Commonwealth reflects a discount to what the Commonwealth might otherwise reasonably expect to obtain should it seek to proceed to taxation, having regard to the fact that, for the purpose of seeking a lump sum order, the Commonwealth: (1) only seeks its costs from after 9 July 2020, being the date on which the Applicant was apprised of the Commonwealth's detailed reasons as to why it considered that the claim had no reasonable prospect of success and that the Commonwealth would apply for costs pursuant to section 570 of the Fair Work Act if its interlocutory application was successful; and (2) has applied a discount of 32.5% to those costs. 21 The Commonwealth otherwise generally submits that it is practical and expedient for this Court to make such an order in order to avoid the wasting of further time and cost which would be involved in a taxation or other formal assessment of the Commonwealth's costs: see Barkhazen (No 2) at [24] (Bromwich J); Thomas v University of Melbourne (No 5) [2020] FCA 534 at [36] (Wheelahan J). 22 In addition, the Commonwealth acknowledges that any costs order by this Court, including as to its terms, is ultimately a matter for this Court, in the exercise of its discretion under s 43 of the Federal Court Act. In my view, there is no matter before the Court which indicates that the Commonwealth should be denied the costs order that it now seeks. 23 Having regard to the submissions of the Commonwealth, and the discretion as to costs under s 43 of the Federal Court Act, I will make a lump sum costs order in the amount of $3,720.98 in favour of the Commonwealth. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Anderson.