Sukantamala v Bowan Island East Village Pty Ltd

1. The applicant pay the first respondent's costs and disbursements of and incidental to the proceedings as agreed or, failing agreement, as taxed pursuant to the Federal Court Rules 2011 (Cth).

Note: The form of the order is subject to the entry in the Court's records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 24.04(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2025 (Cth)), or to record a variation to the order pursuant to r 24.04 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2025 (Cth).

1. The applicant commenced proceedings against his former employer (the first respondent) and a director of the employer (the second respondent) alleging contraventions of the Fair Work Act 2009 (Cth) ('Fair Work Act'). The employer, a company, was subject to a deed of company arrangement at the time the proceedings were commenced. That meant the applicant required leave of the Court to proceed against the employer pursuant to s 444E(3) of the Corporations Act 2001 (Cth) ('Corporations Act'). The applicant duly applied for leave but liquidators were appointed to the employer company on the day before that application for leave was to be heard. The parties agreed the proceedings against the employer should be dismissed, although the applicant wishes to continue his claim against the second respondent.
2. The order dismissing the proceedings against the first respondent was made on 31 October 2025. At the hearing where that order was made, both the applicant and the first respondent applied for orders as to costs. These reasons deal with those applications.
3. Both parties acknowledge costs orders in relation to proceedings under the Fair Work Act may only be made in the limited circumstances set out in that legislation: see s 570(1) of the Fair Work Act. The limited circumstances where costs orders may be made include those set out in s 570(2). Section 570(2) says a Court may order a party to pay costs where:

(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.

1. The applicant says he incurred significant costs preparing the application for leave and was ready to proceed when his lawyers found out at the last moment about the employer company being placed into liquidation. Mr Chou, the applicant's solicitor, argued the employer's failure to communicate news of its demise in a timely way amounted to an "unreasonable act or omission [that] caused [the applicant] to incur the costs".
2. I am not satisfied there is anything unreasonable about the employer's conduct in the circumstances.
3. Anyone who commences proceedings against a company under a deed of company arrangement must be taken to be aware of (a) the need to seek leave to proceed, which may occasion costs; and (b) the possibility that winding up proceedings might be commenced at relatively short notice, which would likely render the proceedings otiose. I note the affidavit of Ms Xu (one of the employer's deed administrators, now liquidators) dated 20 October 2025 confirmed at [57] the deed administrators were considering whether to wind up the company.
4. As I understand it, the deed administrators resolved to appoint liquidators on 23 October 2025. Their solicitors informed the applicant of that news shortly afterwards. There was no unreasonable delay on the part of the deed administrators. While I accept commencement of winding up proceedings frustrated the applicant's application for leave under s 444E of the Corporations Act, that frustration was ultimately a consequence of the operation of the legislation. The employer has not done (or omitted to do) anything that would satisfy the test outlined in s 570(2)(b) of the Fair Work Act.
5. I am not satisfied the applicant has any basis for claiming costs pursuant to s 570(2) of the Fair Work Act.

1. Mr Elliott, counsel for the first respondent's liquidators, applied for an award of costs in respect of the proceedings. He argued the proceedings were commenced without reasonable cause within the meaning of s 570(2)(a) of the Fair Work Act. He said the applicant should have participated along with other creditors in the orderly process for resolving claims in respect of outstanding debts. He noted that part of the applicant's claim had already been accepted for lodgement in that process, although no decision had been made on whether and in what amount any debt would be paid. The claim in respect of the balance of the debt had not been considered because the applicant had not provided sufficient information to substantiate the claim. Mr Elliott emphasised the applicant could have provided that further information and the claim would have been considered in the ordinary course. Mr Elliott said the applicant's decision to commence these proceedings was unreasonable in circumstances where it was a more expensive and time-consuming way of pressing the claim when the same result could have been achieved at much lower cost by participating in the process under the terms of the deed of company arrangement.
2. The applicant relied on affidavit evidence which explained the background to the decision to launch the proceedings. In his affidavit dated 22 October 2025, Mr Chou recorded the history of the applicant's attempts to obtain the applicant's employee records from the employer company. The history was also addressed in the affidavit of the applicant dated 28 May 2025. Those records were needed to substantiate the applicant's claims that he was owed amounts with respect to entitlements.
3. The affidavits show the approaches to the employer occurred before and after the employer company was placed into voluntary administration on 24 September 2024. To illustrate the challenge, the affidavit of Mr Chou records a letter of demand being addressed to the company, and the administrators responding with a request for evidence in the form of the applicant's employee records - which the applicant did not have.
4. The applicant said that exchange left the parties at an impasse that could only be resolved by commencing the present proceedings. In written submissions provided in connection with the application for leave, Mr Chou said the applicant could address what amounted to a forensic disadvantage by obtaining orders for discovery of relevant records, and might in any event reverse the onus of proof in relation to the claim pursuant to s 557C of the Fair Work Act.
5. The applicant's acknowledged motivation for commencing the proceedings is not illogical, but were the proceedings instituted without reasonable cause as the employer contends? Mr Elliott pointed out the applicant could have relied on s 70-45 of the Insolvency Practice Schedule (Corporations) in sch 2 to the Corporations Act which permits a creditor to request an external administrator to provide company information. Section 535 of the Fair Work Act and reg 3.42(1) of the Fair Work Regulations 2009 (Cth) also create a right to access employee records held by the company. Mr Elliott says the applicant should not have commenced proceedings unless and until those processes had been exhausted. When the applicant chose to ignore those pathways and commence proceedings instead, Mr Elliott argued the employer was forced to expend resources that should have been available to creditors without offering any material advantage to the applicant - because any damages ordered by the Court would still have to be dealt with alongside the claims of other creditors.
6. Orders for costs are the exception in this jurisdiction. The policy evident in s 570 of the Fair Work Act is clear: employees with arguable claims should not be put off by the prospect of a costs award in the event they are unsuccessful. But there are exceptions to the general rule which can be made in appropriate cases given the conduct or omissions of the parties. I am satisfied this is one of the cases in which an exception should be made. The applicant effectively rushed into the litigation against an insolvent company in circumstances where simpler, more cost-effective processes for pressing the claim were available. If the claim was refused as part of those processes, the applicant may have been justified in commencing proceedings. One of the principal stated objectives of commencing the proceedings - to assist the applicant to get evidence that would substantiate the claim and potentially reverse the onus of proof - did not justify launching the proceedings when they were commenced because there were other, more cost-effective means of securing that information which had not yet been tried.
7. I am satisfied the applicant commenced the proceedings without reasonable cause in the circumstances. I am satisfied it is appropriate to exercise the discretion to make an order for costs in favour of the first respondent in respect of those proceedings in an amount to be agreed between the applicant and the first respondent, or in the absence of agreement, as taxed.

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment of Judge McCabe.