Federal Court of Australia|1989-12-01|Before: O'Loughlin J, Doussa J, Northrop J

Re Neville William Thompson and Others v Eroll Hodder and Others [1989] FCA 493; 29 IR 339 (1 December 1989)

Industrial Law - costs - application for leave to appeal - whether a proceeding in a matter arising under the Industrial Relations Act - whether proceeding instituted without reasonable cause.

Words and Phrases - "proceeding" - "matter" - "proceeding...in a matter arising under this Act" - "without reasonable cause".

Counsel for the appellants: Mr. Di Fazion and Mr. Moloney

Counsel for the respondents: Mr. Phillips and Mr. Murdoch

The appellants pay the respondents' costs of the application for leave to appeal from the order of O'Loughlin J. made on 31st October 1989.

NOTE: Settlement and entry of orders is dealt with by O.36 of the Federal Court Rules.

On 7th June 1989, a rule to show cause was granted to the present appellants, who sought orders against the respondents, pursuant to s.209 of the Industrial Relations Act 1988 ("the Act"). The appellants are members of the Australian Workers' Union ("the Union"), an organisation registered pursuant to the Act. The respondents, together with the first appellant, constitute the executive council of the Union.

2. The orders sought in the rule to show cause were concerned with certain charges which had been laid against the appellants by the second respondent, John Dunnery, pursuant to the rules of the Union. An order was sought against the respondents that they dismiss the charges. An order was sought against the respondent Dunnery that he withdraw or not tender any evidence in support of the charges. In the alternative, an order was sought that the first respondent, Eroll Hodder, the general secretary of the Union, not sit as a member of the executive council when the charges were heard and determined.

3. On 9th June 1989, von Doussa J. made an interim order, restraining the respondents from proceeding further with the hearing of the charges, pending the hearing and determination of the application. The trial took place on 8th, 9th and 10th August 1989, before Northrop J. His Honour delivered judgment on 27th September 1989 and discharged the rule to show cause. On 17th October 1989, the appellants filed a notice of appeal from the judgment of Northrop J.

4. By notice of motion filed on 25th October 1989, the appellants sought an order that the order of Northrop J. be stayed, pending the hearing and determination of the appeal. This motion was heard by O'Loughlin J. on 31st October 1989. Although there were necessarily doubts whether a stay of the judgment of Northrop J. would have had the effect of preventing the respondents from proceeding with the hearing of the charges against the appellants before the hearing and determination of the appeal from the judgment of Northrop J., O'Loughlin J. dealt with the matter on the basis that what was sought, in substance, was a further interim order restraining the respondents from dealing with the charges. His Honour held that the appellants were not entitled to such a further interim order, and dismissed the motion.

5. The applicants then sought leave to appeal from the order of O'Loughlin J. Their application for leave was heard by this Full Court as a matter of urgency on 6th November 1989, because the respondents proposed to proceed to deal with the charges on 8th November. After the conclusion of argument by counsel for the appellants in support of the application for leave to appeal, and without calling upon counsel for the respondents, the Court refused leave to appeal, for reasons which were then stated.

6. Counsel for the respondents thereupon applied for an order that the appellants pay the respondents' costs of the application for leave.

7. Section 347 of the Act provides as follows:

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."

8. Counsel for the respondents put their argument on two bases. First, they contended that s.347 of the Act was inapplicable, on the ground that the application for leave to appeal from the judgment of O'Loughlin J. was not "a proceeding...in a matter arising under" the Act. The second basis for the argument was the contention that, if s.347 was applicable, the application for leave to appeal had been instituted without reasonable cause.

9. The Act makes no provision with respect to an appeal from a judgment of a single Judge of the Federal Court of Australia, except in s.50(2), which has the effect of requiring such an appeal to be dealt with in the Industrial Division of the Court. It is s.24(1)(a) of the Federal Court of Australia Act 1976 which gives the Court jurisdiction to hear and determine an appeal from a judgment of a single Judge of the Court. Sub-section (1A) provides that an appeal shall not be brought from an interlocutory judgment unless the Court or a Judge gives leave to appeal. Accordingly, counsel for the respondents argued that the application for leave to appeal is brought under the Federal Court of Australia Act 1976, not under the Act. This argument ignores the careful wording of s.347(1) of the Act. The prohibition on orders to pay costs is applicable not to a proceeding arising under the Act, but to a proceeding in a matter arising under the Act. There is much authority as to what constitutes a "matter" for the purposes of Chapter III of the Constitution. In substance, a "matter" is "a single justiciable controversy". See the joint judgment of Mason, Murphy, Brennan and Deane JJ. in Fencott v. Muller (1983) 152 CLR 570, at p 608. In the present case, the justiciable controversy between the parties embraces the question whether the respondents should perform and observe the rules of the Union by taking or refraining from certain actions in relation to the charges laid against the appellants. Orders for performance and observance of the rules accordingly are sought pursuant to s.209 of the Act. The alleged obligation to perform and observe the rules in that way is thus the "matter" upon which each proceeding between the present parties has been founded, namely the rule to show cause granted on 7th June, the interim orders made on 9th June, the appeal filed on 17th October, the motion for a stay of judgment filed on 25th October and the application for leave to appeal from the judgment of O'Loughlin J. Each of those steps is a "proceeding" as defined in s.4 of the Federal Court of Australia Act 1976. It is unnecessary at present to determine whether, in the absence of a similar definition in the Act, the word "proceeding" in s.347(1) should receive a similar interpretation. It is enough to say that, on any view, an application for leave to appeal, even from an interlocutory judgment, is a proceeding in its own right. That proceeding is, however, one in the same matter as were each of the earlier steps. It is plain that the matter arises under the Act. It involves the assertion of a right provided by s.209 of the Act. See Poulos v. Waltons Stores (Interstate) Ltd. (1986) 68 ALR 537, at p 543 in the judgment of Gray J., with whom Keely J. agreed.

10. The application for an order for costs therefore falls to be determined by reference to the phrase "without reasonable cause".

11. Section 347 replaced the now repealed provision in s.197A of the Conciliation and Arbitration Act 1904. That provision was considered in a number of cases. In R. v. Moore; Ex Parte Federated Miscellaneous Workers' Union of Australia [1978] HCA 51; (1978) 140 CLR 470, at p 473, Gibbs J. said:

"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. In the present case the

argument presented on behalf of the prosecutor

was not unworthy of consideration and it found

some support in the two decisions of this

Court to which I have referred. The fact that

those decisions have been distinguished, and

that the argument has failed, is no

justification for ordering costs in the face

of the prohibition contained in s.197A."

In Heidt v. Chrysler Australia Ltd. (1976) 26 FLR 257 at p 272, Northrop J. said:

"The policy of s. 197A of the Act is clear.

It is designed to free parties from the risk

of having to pay the costs of an opposing

party. At the same time the section provides

a protection to parties defending proceedings

which have been instituted vexatiously or

without reasonable cause. This protection is

in the form of conferring a power in the court

to order costs against a party who, in

substance, institutes proceedings which in

other jurisdictions may constitute an abuse

of the process of a court."

12. It is apparent from these authorities that an applicant who has the benefit of the protection of s.347 will only rarely be ordered to pay the costs of a proceeding in exceptional circumstances. Counsel for the respondents in the present case argued that, because the application was made in the form of an application for a stay of the judgment by Northrop J., it was bound to fail, because the order of Northrop J. was one discharging the rule to show cause, and its mere revival would accomplish nothing. As has been pointed out already, however, the application was treated as being, in substance, one for an interim order restraining the respondents from dealing further with the charges pending the hearing and determination of the appeal from Northrop J. Viewed in that way, it was therefore not inherently futile. See Paringa Mining & Exploration Co. PLC v. North Flinders Mines Ltd. (No. 2) [1988] HCA 53; (1988) 81 ALR 609, especially at pp 614-615.

13. Nevertheless, we are of the view that the application for leave to appeal from the judgment of O'Loughlin J. was made without reasonable cause. The appellants conceded that they were seeking to appeal from the exercise of a discretion by O'Loughlin J., and that to show that his Honour's discretion had miscarried they had to demonstrate that their right to appeal from the judgment of Northrop J. would be rendered nugatory unless they were granted an appropriate stay. The strengths and weaknesses of the case which could be put by way of discharging that obligation were fully exposed before O'Loughlin J. It must have been apparent that nothing new could be put on appeal, and that unless O'Loughlin J.'s judgment proceeded from a manifest error or misapprehension the application for leave to appeal would fail.

14. Counsel for the respondents called in aid passages from the judgment of the Court in Standish v. The University of Tasmania (Federal Court of Australia, Lockhart J., 12th May 1989, unreported). In that case, a proceeding had been instituted seeking an interpretation of an award. Such a proceeding, if properly brought, would no doubt have been one in a matter arising under the Act, for the purposes of s.347. The Court awarded costs against the applicants in that case for three reasons. In the first place, it was held that the application for an interpretation of the award was incompetent; no question of interpretation of the award arose. Secondly, it was held that the proceeding was "without reasonable cause"; the Court described it as "misconceived". The third ground involved a separation of those issues in the proceeding which might have depended upon the Act from those which did not.

15. The Standish case illustrates the care which must be taken in the application of s.347. The mere fact that an applicant fails to make out a case for the relief sought in a proceeding cannot render the proceeding something other than one in a matter arising under the Act. Careful scrutiny is required to ascertain whether the claim made was vexatious or without reasonable cause at its inception, before an order for costs can be made. Nor can the word "misconceived", used in that case, be applied as a substitute for the phrase "without reasonable cause", used in s.347. The words of the Act must be allowed to speak for themselves. There may be cases which could not be described properly as "misconceived" but which would nevertheless be held to have been instituted without reasonable cause. The third comment we would make is that, in the light of the authorities relating to the word "matter", we doubt whether the Court should seek to discern within a single "proceeding" those elements which might have been brought otherwise than in a matter arising under the Act, for the purpose of attaching an order for costs to those elements. Provided that they are elements of the single justiciable controversy, in which the provisions of the Act are called in aid, by way of claim or defence, it may be said that they are in a matter arising under the Act.

16. Counsel for the respondents also invited us to deal with the question of the costs of the motion before O'Loughlin J. At the time when the application for leave to appeal was heard and determined, O'Loughlin J. had not yet decided the question of costs on that motion. He had reserved that question, giving leave to the parties to deliver written submissions. We have no power to deal with that issue. Nor would we wish to pre-empt anything which his Honour might wish to say with respect to the costs of the motion before him, which is a question entirely separate from that of the costs of the application for leave to appeal.

17. The application for leave to appeal having been instituted without reasonable cause, the prohibition on the Court ordering the payment of costs is not applicable. In the ordinary course, costs follow the event. The order of the Court is that the appellants pay the respondents' costs of the application for leave to appeal from the order of O'Loughlin J. made on 31st October 1989.

Court of Australia Act 1976

Conciliation and Arbitration Act 1904

Court of Australia Act 1976

Conciliation and Arbitration Act 1904

Court of Australia Act 1976

Conciliation and Arbitration Act 1904

Court of Australia Act 1976

Conciliation and Arbitration Act 1904

Re Neville William Thompson and Others v Eroll Hodder and Others [1989] FCA 493; 29 IR 339

At a glance

Court

Decision date

Before

Source

Judgment (29 paragraphs)

Re Neville William Thompson and Others v Eroll Hodder and Others [1989] FCA 493; 29 IR 339 (1 December 1989)

Parties

Legislation Cited (12)

Cases Cited (5)