Plaintiff v First Defendant

1 This ruling primarily concerns whether or not the plaintiff can rely upon s 570(1) of the Fair Work Act 2009 (Cth) ('FWA') in respect of costs. It effectively provides that where a proceeding is in relation to a matter arising under the FWA, then generally each party will bear their own costs.

2 This ruling is consequential to the determination of the substantive matters in this proceeding: Tucker v State of Victoria [2019] VSC 420. The plaintiff's claims were unsuccessful.

3 The plaintiff says that this proceeding is a 'matter arising under FWA' because it concerns obligations that are the subject of contract and that arise by virtue of the Victorian Public Service Enterprise Agreement 2016 ('the VPSEA'). The VPSEA owes its existence entirely to the FWA. The VPSEA claims, he says, were fundamental to his contractual claim and were the basis for the claim pursuant to the Public Administration Act 2004 ('PAA'). All but one of the obligations pleaded were referable to the VPSEA. There is a sufficient nexus, he says, between the VPSEA and the proceeding.

4 The plaintiff says that when a claim is based on a federal Act, it is unnecessary for a cause of action to be conferred by that Act for it to be considered a 'matter arising' under that Act. He relies upon LNC Industries Ltd v BMW (Australia) Ltd[1] ('LNC'), a case arising under the Customs Act 1901 (Cth). The plaintiff says a matter arises under a federal Act:

if the contract...is in respect of a right or property which is the creation of federal law, the claim arises under federal law. The subject matter of the contract or trust in such a case exists as a result of the federal law.[2]

5 The plaintiff says the justiciable matter in this proceeding arose from the VPSEA which is made pursuant to the FWA. Therefore it is said that there is a contractual dispute which owes its existence to federal law.

6 The plaintiff relies on Rana v Google Inc[3] ('Rana'), a decision of the Full Court of the Federal Court. The Full Court held that:

A matter will 'arise under' a law of the Parliament in a number of ways. These include cases ...where a Commonwealth statute is relied upon as establishing a right to be vindicated... where the subject matter of the controversy owes its existence to Commonwealth legislation - that is where the claim is in respect of or over a right which owes its existence to federal law; where it is necessary to decide whether a right or duty based on a Commonwealth statute exists even where that has not been pleaded by the parties, or where a federal issue is raised on the pleadings but it is unnecessary to decide...[4]

7 The plaintiff says that this is still a matter arising under federal law even where the claim is not pleaded by the parties.

8 The plaintiff concedes the cause of action here was not created by the FWA but says it establishes rights to be vindicated - the rights created by the VPSEA caused the claim for breach of contract and also for breach of the PAA.

9 The plaintiff says that in Bannon v Nauru Phosphate Royalties Trust (Cost Ruling)[5] ('Bannon') there is no concluded view in relation to s 570. He seeks to distinguish it on the basis that the claims made in it, that were under the FWA, were only abandoned at trial and made so as to rely on s 570.

10 In the alternative, the plaintiff opposes the defendants' application for indemnity costs arising from the amendment application under the Judiciary Act 1903 (Cth) ('Judiciary Act'). He says there was no need for further evidence or for the case to be re-opened, and no delay.

11 The defendants say this was not at any time a claim based on the FWA, nor was the defence. It was put as a common law claim with incorporation of terms of the VPSEA into the contract. This may be compared with the situation in LNC where the case was directed to specific elements of legislation. Here, there was no need at all to consider the FWA.

12 The defendants say that one only needs to ask the question as to whether the terms of the VPSEA were incorporated into contract and if so, what it means. If the VPSEA was never registered, the argument would have been exactly the same. That entirely disarms the submission that this proceeding is in relation a matter arising under the FWA.

13 The defendants say the ruling on the Judiciary Act first required leave to amend the claim. Leave was not granted and the FWA claim was not part of proceeding. Even if it was, the Act relied upon by the plaintiff is the Judiciary Act not the FWA.

14 The defendants rely upon Bannon. They are not alleging the last minute amendment application was done for costs purposes, but say that given the amendment application was an abuse of process, s 570 has not been brought into play. Further, unlike Bannon, here the attempted amendment is not even part of the proceeding.

15 Relying on the finding of abuse of process in the substantive proceeding, the defendants sought the following order in respect of indemnity costs:

The Plaintiff pay the Defendants' costs of and incidental to his application for leave to amend his claim (including the Plaintiff's attempt to rely on the Judiciary Act 1903 (Cth)), such costs to be taxed on an indemnity basis in default of agreement.

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.

17 I find this proceeding is not in relation to a matter arising under the FWA. Accordingly, s 570(1) is not applicable.

18 The applicable principles are cited in Melbourne Stadiums Ltd v Sautner[6] ('Melbourne Stadiums'):

The Full Court's decision in CFMEU (No 2) was made under s 824 of the Workplace Relations Act 1996 (Cth). That section was worded differently from s 570(1). Relevantly, it provided that:

(1) A party to a proceeding (including an appeal) in a matter arising under this Act ... must 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.

The Full Court undertook an extensive examination of decisions made under s 824 and its predecessors. This review disclosed conflicting lines of authority. One line held that, in a proceeding in which claims were made under the Workplace Relations Act and its predecessors and also under other Commonwealth legislation or at common law, s 824 and its predecessors operated to prevent any award of costs in that proceeding. The alternative line of authority held that it was possible to treat causes of action based on the Workplace Relations Act separately from any other claims. The costs restriction applied to the former but not the latter.

In CFMEU (No 2) the Court had dealt with claims made under the Workplace Relations Act and another Commonwealth Act. There was no equivalent of s 824 in that other Act. The Court held that the two Acts could be read harmoniously if the costs restriction only applied to the claims made under the Workplace Relations Act.

Section 570, in its present form, came into force on 1 January 2013. Unlike s 824 which applied "to a proceeding ... in a matter arising under this Act" it applied to a proceeding '"in relation to" a matter arising under this Act' (emphasis added).

The word "proceeding" is not defined in the Fair Work Act. In the context of s 570 it bears a different meaning from the word "matter". "Matters", in the sense of claims or causes of action or their underlying controversies, are raised in the "proceeding" or "proceedings" which is or are prosecuted in the Court: cf Shea v Energy Australia Services Pty Ltd (No 7) [2014] FCA 1091 at [22] (Jessup J). As Gray J said in Geneff v Peterson (1986) 19 IR 40 at 90, in dealing with the construction of s 197A of the Conciliation and Arbitration Act 1904 (Cth) (a predecessor of s 570):

"[T]he section operates in relation to a 'proceeding'. There is only one proceeding before the Court, although that proceeding involves a number of separate claims, each of which might have been the subject of a separate proceeding. ... In my view, it is impossible to split the claims within a proceeding for the purpose of the application of s 197A."

See also Qantas Airways Ltd v Transport Workers' Union of Australia (No 2) [2011] FCA 816; (2011) 211 IR 119 at 182 (Moore J); Grout v Gunnedah Shire Council (No 3) [1995] IRCA 117; (1995) 59 IR 248 at 260-1 (Moore J)...; Goldman Sachs JBWere Services Pty Ltd v Nikolich [2007] FCAFC 120; (2007) 163 FCR 62 at 65 and 69.

There was a single proceeding which was commenced and prosecuted to judgment in the County Court. Mr Sautner made claims under the Fair Work Act and at common law. The claims under the Fair Work Act were "matters" within the meaning of s 570(1) of the Fair Work Act. The proceeding was, as a result, a proceeding in relation to a matter arising under that Act. Section 570(1) operated to preclude the Court from ordering MSL ('another party to the proceedings') to pay any costs incurred by Mr Sautner in prosecuting his claims unless he could satisfy the Court that one of the exceptions, provided for in s 570(2), applied.

19 Further, McDonald J's decision in Bannon is applicable. In that case, as with here, there was a finding of abuse of process. For clarity, I add that the abuse of process was on different grounds to that here. His Honour stated in Bannon:

Whether the current proceeding is 'in relation to' a matter arising under the FWA requires consideration of whether there is sufficient nexus between the proceeding and a matter arising under the FWA...

In Stanley v Service to Youth Council Inc (No 3), an applicant failed in claims under the Sex Discrimination Act 1984 (Cth) and succeeded partially in claims under the FWA. The respondent sought costs in relation to the failed discrimination claims. White J of the Federal Court considered whether s 570 limited the court's power with respect to costs under the Sex Discrimination Act:

The limitation on the courts' powers with respect to costs operates in respect of any "party to the proceedings", provided that those proceedings relate to a "matter" arising under the [FWA]. On its face, the limitation operates whenever those considerations are satisfied, whether or not the proceedings also include claims under other federal legislation or in the accrued jurisdiction.

I agree with White J that 'ordinarily' the requisite degree of connection in the context of s 570 would be satisfied where an applicant seeks to enforce an entitlement for which the FWA provides. However, the requisite degree of connection is not made out in the circumstances of the present case where the pleaded claims under the FWA were, from the outset, plainly untenable. This conclusion is reinforced by the fact that ultimately Mr Bannon did not seek to enforce an entitlement under the FWA.[7]

20 The causes of action in this proceeding are breach of a common law contract and breach of the PAA, a Victorian statute. They are not in relation to a matter arising under the FWA. There is an insufficient connection with the FWA. References to the VPSEA obligations by way of the allegations about incorporation into the common law contract, or by way of being part of the Misconduct Policy and therefore giving rise to obligations in the PAA, do not have the consequence of this proceeding being in relation to a matter arising under the FWA. There is an insufficient nexus between the proceeding and a matter arising under the FWA. I therefore reject the plaintiff's submission that the justiciable matter in this proceeding arose from the FWA.

21 LNC may be distinguished as the contracts in that case 'were concerned solely with entitlements under the Regulations'.[8] The contracts existed 'only by reason of the provisions of the Regulations and the Act'.[9] As the plaintiff concedes, here the employment contract is a common law contract which exists independently of the FWA. It has a life of its own.

22 As for the principles that the plaintiff relies upon in Rana, they are not applicable here. The plaintiff did not rely upon the FWA to establish a right being vindicated. Indeed, the plaintiff conceded at the hearing before McDonald J on 13 June 2018 that this Court was not the appropriate forum to agitate the s 50 FWA claim. Further, I did not allow an amendment to include the s 50 FWA claim and found the application for the amendment was an abuse of process. The plaintiff's claim in this proceeding does not include the s 50 FWA claim.

23 For completeness, Melbourne Stadiums does not have the consequence that although the amendment application was rejected, the FWA forms part of the proceeding. There is no such authority in Melbourne Stadiums. It is an appeal decision and directed to the outcome of substantive claims. As cited above, those claims were made both under the FWA and at common law.

24 As s 570 of the FWA is not applicable, costs should follow the event. The question is on what basis. The defendants seek indemnity costs in respect of the plaintiff's application to amend his claim to include the Judiciary Act, and also the fourth day of hearing. I have made a finding that there is an abuse of process by the amendment application made on the fourth day of trial after 4pm.[10] It is appropriate that indemnity costs be limited to that issue. To avoid unnecessary dispute in the Costs Court, I have formulated the indemnity costs order in the following way:

The Plaintiff pay the Defendants' costs of and incidental to the written submissions on the application for amendment, that were made after 7 May 2019 and received by the Court on 13 May 2019 and 17 May 2019, on an indemnity basis.

[1] LNC Industries Ltd v BMW (Australia) Ltd [1983] HCA 31; (1983) 151 CLR 575 ('LNC').

[3] Rana v Google Inc [2017] FCAFC 156; (2017) 254 FCR 1.

[4] Ibid 5-6 [18] (citations omitted).

[5] [2018] VSC 643 ('Bannon').

[6] [2015] FCAFC 20; (2015) 229 FCR 221, 253-4 [151]-[157].

[7] Bannon (n 5) [30]-[32]. Given my findings below that s 570 is not applicable here, it is unnecessary to consider the issue in para [18] of Bannon, namely, the interaction between s 24 of the Supreme Court Act 1986 and s 570 of the FWA.

[10] Tucker v State of Victoria [2019] VSC 420, [308]-[326].