Revill v John Holland Group Pty Ltd

JACKSON J: 1 In 2020 I dismissed an application by Mr Revill for the joinder to this proceeding of two companies associated with the respondent, John Holland Group Pty Ltd (JH Group): Revill v John Holland Group Pty Ltd [2020] FCA 1633 (Revill (No 1)). In September of this year I dismissed the entire proceeding under s 31A(2) of the Federal Court of Australia Act 1976 (Cth): Revill v John Holland Group Pty Ltd (No 2) [2021] FCA 1056 (Revill (No 2)). In summary, those decisions were made because I found that there was no reasonable prospect that Mr Revill would establish that the respondent was liable in respect of any of the causes of action he pursued, and those causes of action were time barred against the two companies which the applicant sought to join as respondents, namely John Holland Pty Ltd (JHPL) and JHG Mutual Pty Ltd (JHG Mutual). 2 These reasons relate to the costs order, if any, that is to be made as a result of the decision in Revill (No 2). By the time of that decision, the proceeding included a claim under the Fair Work Act 2009 (Cth), and it is common ground between the parties that s 570 of that Act governs the existence and exercise of any discretion to award costs in respect of the proceeding. However no Fair Work Act claim had been raised by the time of the joinder application, so in dismissing that application, I ordered that costs were to be the respondent's in any event, without applying s 570: Revill (No 1) at [39]-[40]. The respondent submits that this costs order should not be disturbed and Mr Revill does not seek that it be disturbed. But Mr Revill does oppose any order that he pay the costs of the balance of the proceeding. 3 In Revill (No 1), I also dismissed an application for default judgment made by the respondent with no order as to costs. The respondent did not seek to vary that costs order. 4 Section 570 of the Fair Work Act relevantly provides (note omitted): (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; … 5 JH Group relies on s 570(2)(a) and submits that the costs of the proceeding as a whole should be awarded to it because the proceeding was commenced without reasonable cause. Alternatively, JH Group submits that from the time that it gave discovery in relation to the question of who was the employer or alleged insurer of Mr Revill, it was unreasonable for him to continue the proceeding, so that s 570(2)(b) is engaged. 6 As to what is meant in s 570(2)(a) of the Fair Work Act by instituting a proceeding 'without reasonable cause', both parties relied on the principles set out in Australian Workers' Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23; (2013) 232 FCR 428 at [7] (Dowsett, McKerracher and Katzmann JJ), as follows: (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. 7 The findings made and conclusions reached in Revill (No 2) support the proposition that this proceeding did not have reasonable prospects of success at the time it was instituted. In particular: (1) JH Group was not Mr Revill's employer, given that he had signed a written offer of employment expressed to have been made by JHPL: at [20]. (2) The enterprise agreement on which the claim was based (EA) was not expressed to cover JH Group, but was expressed to be binding on his employer, JHPL, and this appears clearly on the face of the EA: at [14], [20], [27]. (3) The obligation concerning insurance in the EA is expressed to be undertaken by JHPL and also names JHG Mutual, but not JH Group: at [27]. (4) The policy documentation in relation to the insurance against which Mr Revill sought to claim named JHG Mutual as the insurer: at [20]. (5) Mr Revill identified no other instrument in which JH Group undertook any obligations to him: at [20]. (6) JH Group wrote to Mr Revill's solicitors on at least three occasions before the commencement of this proceeding, pointing out that any relevant insurance was to be provided through JHG Mutual and that other documents provide the details of benefits provided through JHG Mutual, that the relevant insurance wording was between JHG Mutual and JHPL, and that JHPL was the employer: at [30]. (7) The submission that JH Group, JHPL and JHG Mutual were structured the way they were in order that JH Group could evade its obligations to employees like Mr Revill was not coherent: at [41]-[42]. (8) None of the evidence to which Mr Revill's counsel had referred gave any reasonable basis to think that at trial he may be able to establish that JH Group should be equated with its related companies JHPL and JHG Mutual for the purposes of his claim: at [50]. (9) Consideration of relevant statutory provisions (s 53 of the Fair Work Act and the s 48 of the Insurance Contracts Act 1986 (Cth)) exposed further the incoherence of the case: at [51]. 8 In determining an application under s 570(2)(a) of the Fair Work Act, it is important to assess the position at the time the proceeding was instituted. A proceeding which ultimately fails is not the same thing as a proceeding instituted without reasonable cause. But by the same token, in Weeks v Commissioner of Taxation (No 2) [2013] FCAFC 22 at [6] the Full Court observed that the expression, 'without reasonable cause', may describe a proceeding that is capable of being disposed of summarily, which is what has happened here. In any event, it is apparent from Revill (No 2) and the further discussion below that all of the above matters were, or should have been, apparent to Mr Revill or his solicitors when he commenced the proceeding. 9 Against that background, counsel for Mr Revill submitted on the basis of particular items of evidence that it was nevertheless reasonable for him to commence the proceeding against JH Group. The evidence on which he relied was to the following effect, as at the time the proceeding was commenced in August 2019: (1) The relevant policy wording concerning income protection benefits provided for JHG Mutual to insure other companies in the John Holland corporate group, but not to insure those companies' employees (such as Mr Revill). (2) That was also reflected in the affixation to the policy wording of a seal by a reinsurer, Great Lakes Reinsurance (UK) plc, which confirmed reinsurance for the benefit of JHG Mutual and its insured (the other John Holland companies), not any individual employees. (3) JH Group owned 100% of the shares in JHPL and there were directors in common between JH Group, JHPL and JHG Mutual. (4) It follows that JH Group was aware that the insurance provided by JHG Mutual was provided, not to individual employees of JHPL or JH Group, but to those companies themselves. (5) Mr Revill had available to him the document setting out benefits for employees entitled 'Employee Financial Support Plan' (EFSP). This displayed the 'John Holland' logo prominently, which was said (without evidence) to be a trade mark of JH Group. (6) The EFSP relevantly said, on its cover page: 'A guide for employees employed under an industrial agreement where the industrial agreement lists JHG Mutual as the provider of income protection…'. That applied to the EA in this case. (7) The EFSP also said that JHG Mutual had outsourced the management of claims to Regis Mutual Management Pty Ltd and gave contact details for Regis and also for a 'Group Manager, Self Insurance' who (again without evidence) was said to be an employee of JH Group. (8) Mr Revill applied for benefits under the EFSP on 4 July 2013. On 21 August 2013 the claim was rejected in a letter on JH Group letterhead, by an employee of Regis expressed to be signing for and on behalf of JH Group. This decision was expressly made under the EFSP. (9) On 21 November 2013 the same person, again on JH Group letterhead and expressed to be signing on behalf of JH Group, provided information to Mr Revill's solicitors that included the EFSP (which the letter said had previously been given to Mr Revill). (10) On 4 April 2018 the same person on the same letterhead wrote to Mr Revill's solicitors saying, relevantly: Please find attached copy of 2012-2013 Protection Wording and Schedule. The Protection Wording is between John Holland Mutual and the employing entity, which is John Holland Pty Ltd, rather than the employees. As such, protection, if granted, is provided to the employing entity not the employee. Please note that the Employee Financial Support Plan (EFSP) is an additional benefit provided to John Holland employees at the discretion of the employing entity. There is no policy of insurance between the employing entity and employee. 10 Counsel for Mr Revill seemed to base the following submissions on these items of evidence. First he appeared to submit, on the basis of the knowledge of JH Group identified at item (4) above, that JH Group may have been involved in any breach by JHPL of the EA. This appeared to be a submission that JH Group was 'involved' within the meaning of s 550 of the Fair Work Act and so could be taken to have contravened s 50 of the Act: s 550(1). 11 Second, counsel for Mr Revill appeared to submit that the letter of 4 April 2018 told Mr Revill and his solicitors that there was no insurance policy granted by JHG Mutual to Mr Revill, and no insurance policy granted by JHPL to Mr Revill, but rather (in the latter case) a discretion to provide benefits only. But the EFSP seemed to indicate that JH Group was providing benefits to employees, so it was reasonable for Mr Revill to sue JH Group. In fact, counsel went further than that and submitted that the EFSP 'is the respondent's contract. It is the promise made by the respondent'. 12 The first of these submissions at least presents an intelligible reason why a court might conclude that JH Group was liable for any contravention of the EA by JHPL, if the factual foundation for that claim were established. But Mr Revill did not plead that JH Group was liable under s 550 of the Fair Work Act at the beginning of the proceeding or at any time thereafter (nor was that advanced in the summary judgment application). To the contrary, by the time he did come to invoke s 50 of the Fair Work Act (in a substituted statement of claim filed on 20 November 2020) he pleaded that JH Group (alternatively JHPL) was the employer and that JH Group was the company that breached s 50. So it may be doubted that the proceeding that was instituted was the one for which, it is said, these facts provided reasonable cause. 13 In any event, the assessment of whether a party instituted a proceeding with reasonable cause is one that must be made on the basis of the facts apparent to the applicant at the time of commencing the proceeding: Kanan v Australian Postal & Telecommunications Union (1992) 43 IR 257 at 264 (Wilcox J), approved in Baker v Patrick Projects Pty Ltd (No 2) [2014] FCAFC 166; (2014) 145 ALD 548 at [9]. There was no evidence that either of items (3) or (4) above were apparent to Mr Revill or his solicitors in August 2019 when this proceeding was commenced. Given that he never pleaded a case of involvement under s 550, it may be inferred that they were not. 14 I do not accept that the second submission discloses a reasonable cause for the institution of this proceeding against JH Group either. The court has not been called upon to find the true position concerning any insurance arrangements between JHG Mutual, JH Group, JHPL and Mr Revill. But it can be said, for present purposes, that the passage from the letter of 4 April 2018 quoted at item (10) above states the potential roles of JHPL and JHG Mutual very clearly. JHG Mutual was the insurer, and the employing entity was the insured. In Mr Revill's case, that employing entity was JHPL. That employing entity (it was asserted) had a discretion as to whether to provide the benefits sought. The letter said that there was no policy of insurance between JHPL and Mr Revill. Whether or not Mr Revill had good grounds to dispute any of that, and to sue one or both of JHG Mutual or JHPL, there is no suggestion that JH Group would be a proper party to any such proceeding. 15 To the extent that the letter refers to the EFSP, that does not assist Mr Revill here. The items of evidence on which his counsel relied omitted the following passages from page 1 of the EFSP (bold in original): In addition to the workers' compensation benefits payable, all John Holland permanent, part-time or casual employees may also qualify for financial support under this Employee Financial Support Plan if they are unable to perform their work duties due to a total and/or partial disability related to non-work related injury or sickness, or a work related injury or sickness. … Qualification for financial support provided by John Holland through the Employee Financial Support Plan is subject to the qualification criteria in this document. The assessment for financial support is made on a case by case discretionary basis on the advice of JHG Mutual Ltd and it's [sic] manager, Regis Mutual Management Pty Ltd. 16 The terms in bold are terms that are defined in the EFSP. 'John Holland' is defined (on page 10 of the document) to mean 'the partnership or company who employs the Employee and is listed as the Member who pays Contributions to JHG Mutual in respect of Employees'. It had been made clear to Mr Revill's solicitors that the employer of Mr Revill was JHPL. So it would have been reasonably clear to any solicitor reading the EFSP that, if Mr Revill did have a cause of action under it, it was against JHPL or conceivably JHG Mutual. 17 A generic 'John Holland' logo appeared on the front page of the EFSP, which is now asserted (without evidence) to be a trade mark of JH Group. The telephone number of a person is given in the document which is now said (also without evidence) to belong to an employee of JH Group. Not only is there no evidence now of either of those things, there is no evidence that they were apparent to Mr Revill or his solicitors at the relevant time. 18 In any event, they do not change the express meaning of the EFSP. The submission that on the basis of these matters the EFSP is 'the respondent's contract' or the 'respondent's promise', in so far as it relates to Mr Revill, simply defies the terms of the document. Mr Revill's counsel sought to support that submission by reference to the context provided by cl 14 of the EA but in fact that context points in the opposite direction, because it is JHPL which undertakes the obligation in that clause, not JH Group. I do not consider that any of the matters advanced by Mr Revill show that he had reasonable cause for commencing the proceeding against JH Group. 19 In my view the findings in the reasons for granting summary judgment which I have summarised above compel the conclusion that Mr Revill instituted the proceeding against JH Group without reasonable cause. On the face of the information that was available to Mr Revill at the commencement of the proceeding, there was no reasonable basis for the view that JH Group may have been liable in respect of any of the causes of action that he raised. And, as is shown by the very passage from the letter of 4 April 2018 on which Mr Revill relies, the true position as to who might (conceivably) have been liable to him was explained to his solicitors very clearly before the proceeding was commenced. To any reasonable reader, that passage would have dispelled any confusion that might have been engendered by the use of JH Group letterhead in that and previous correspondence. 20 The discretion to order costs under s 570(2)(a) of the Fair Work Act has therefore arisen here. In those circumstances, it is not necessary to consider the parties' additional submissions as to unreasonable acts or omissions for the purposes of s 570(2)(b). 21 Although a person will rarely be ordered to pay the costs of a proceeding under s 570, in my view this is one of the cases in which it is warranted. Subject to one further submission Mr Revill made, there is no reason not to exercise the discretion under s 570(2)(a) in favour of JH Group, the successful party here. 22 The further submission was based on the fact that Mr Revill is presently seeking leave to appeal from the decision to dismiss his claim summarily. He submitted that the court should either simply reserve costs until after leave to appeal and any appeal is determined, or if it does make a costs order in favour of JH Group, it should order an immediate stay of execution. 23 Either way, Mr Revill relied on the established principles as to the granting of a stay pending appeal as articulated in Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685. He submitted that a stay should be granted here because otherwise the appeal would be nugatory. But when asked why it would be nugatory, his counsel could only point to prejudice he said would arise from Mr Revill's financial position. Again, this was said without evidence. In the absence of evidence it can provide no basis for a stay. If Mr Revill wishes to pursue a stay of the costs order, the appropriate course is for him to apply for a stay, on evidence, after the order is made. 24 There will be an order for Mr Revill to pay JH Group's costs of the proceeding (not already the subject of previous orders). The costs will be referred to a registrar for determination of the amounts to be paid. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackson.