Yancoal Mining Services Pty Ltd v The Secretary NSW Department of Planning and Environment in the capacity as the NSW Resources Regulator

Legislation

1. The Commission's power to award costs in respect of these proceedings is found in s 181 of the Industrial Relations Act 1996 (NSW) terms of which are: 181 Costs (1) Subject to the rules of the Commission and any other Act or law: (a) the Commission may award costs, and (b) costs are in the discretion of the Commission, and (c) the Commission may determine by whom and to what extent costs are to be paid, and (d) the Commission may order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis. (2) However, the Commission may award costs only in the following cases: (a) the Commission may award costs against an applicant if it considers that the application to it was frivolous or vexatious, or (b) the Commission may award costs against a party to proceedings who, in the opinion of the Commission, instituted proceedings without reasonable cause, or (c) the Commission may award costs against a party to proceedings under Part 6 of Chapter 2 (Unfair dismissals) who, in the opinion of the Commission, unreasonably failed to agree to a settlement of the claim or whose application was frivolous or vexatious, or (c1) the Commission may award costs against an industrial agent representing an applicant or employer in proceedings under Part 6 of Chapter 2 if: (i) the industrial agent fails to file a certificate as required by section 90A, or (ii) the Commission finds that the industrial agent has filed a certificate under that section certifying that the agent has reasonable grounds for believing, on the basis of provable facts, that the applicant's claim or employer's response to the claim had reasonable prospects of success when the agent did not have reasonable grounds for believing, on the basis of provable facts, that it had reasonable prospects of success, or (d) the Commission may award costs in proceedings for a breach of an industrial instrument or the recovery of money under Chapter 7, as provided by sections 357 and 373. (3) (Repealed) (3A) Despite subsection (1), the Commission may not award costs in proceedings under Part 7 of Chapter 2. Note. This subsection does not prevent the award of costs in appeals relating to questions of law in relation to public sector promotional and disciplinary matters under section 197B. (4) In this section, costs includes: (a) costs of or incidental to proceedings in the Commission, and (b) in the case of an appeal to the Commission, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal.

Authorities

1. The principles for the award of costs by the Commission are now well established. The Commission's jurisdiction is essentially a "non-costs" jurisdiction: Dr A v Health District (No 4) [2014] NSWIRComm 56 at [8]. The exercise of the discretion is a two stage process involving the determination of whether s 181(2) has been enlivened and, if so, the Commission is required to consider the exercise of the discretion pursuant to section 181(1): Re-Operational Ambulance Officers (State) Award (No 2) [2011] NSWIRComm 85 at [28].
2. In connection with the grounds relied upon by the respondent: 1. The meaning of the word "frivolous" was considered in Peden v Lake Macquarie Refrigeration Pty Ltd [2004] NSWIRComm 585; 134 IR 149 at [20] and in Dr A v Health District (No 4) at [12] - [13]. In Peden the Full Bench said: [20] In light of the well established line of authority, and the ordinary meaning of the word "frivolous", we are satisfied that an application under s 84 will be frivolous if, on its face, it cannot possibly succeed, if it is manifestly groundless or if it is a paltry or trifling matter. 1. In Operational Ambulance Officers at [33] the Full Bench also suggested that proceedings may be frivolous if they are brought: "thoughtlessly or flippantly or that the applicants' intention in bringing the proceedings was not serious." 1. The oft-quoted passage from the judgment of Wilcox J in Kanan v Australian Postal & Telecommunications Union [1992] FCA 366; 43 IR 257 at 264 - 265 as to the meaning of "without reasonable cause", was approved by the Full Bench in Operational Ambulance Officers at [31] - [32]. Wilcox J wrote: It seems to me that one way of testing whether a proceeding is instituted "without reasonable cause" is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceedings, there was no substantial prospect of success. If success depends upon 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 it appears that, on the applicant's own version of the facts, it is clear that the proceedings must fail, it may properly be said that the proceedings lacks a reasonable cause. 1. The relevant time for determination of the factual questions raised by s 181(2)(b) is the time of commencement of the proceedings: National Road Transport Association (NatRoad) - application to register as an employer organisation (No. 2) [2017] NSWIRComm 1072 at [8]; Transport Workers Union of New South Wales (on behalf of Darren Roger Bargwanna) and Robar Enterprises Pty Ltd (ACN 108 640 517) (No 2) [2014] NSWIRComm 9 at [9] - [11]. 2. Whether an application is frivolous or a proceeding has been instituted without reasonable cause is to be determined as a matter of objective fact; the Commission should not allow itself to be unduly influenced by the fact that the application was unsuccessful: NatRoad at [8]; Operational Ambulance Officers at [33]. 3. Even if one or more of the grounds are made out, the Commission is required to consider as a matter of discretion whether an order for costs should be made. The discretion is to be exercised judicially. It is not to be exercised arbitrarily or capriciously and it cannot be exercised on grounds unconnected with the litigation or the circumstances leading to the litigation. The purpose of an order for costs is to compensate the person in whose favour it is made and not to punish the person against whom the order is made. Gough & Gilmour Holdings Pty Ltd v Caterpillar of Australia Ltd (No 18) [2011] NSWIRComm 87 at [71]; Cretney v Director General, New South Wales Department of Education and Training (No 4) [2010] NSWIRComm 17 at [8].

Evidence

1. The respondent read an affidavit of Scarlett Rose Reid, solicitor, affirmed 15 August 2018 and the applicant read an affidavit of Sarah Louise Goodhew, solicitor, sworn 5 September 2018. Following objections by the respondent the applicant did not read subparagraph 53 (o). Other subparagraphs of 53 were admitted on a limited basis confined to the documents to which they refer. The objection to subparagraph 53 (h) was not pressed.

Submissions

1. The respondent submitted that the prayers in relation to the prohibition notices were bound to fail because: 1. on the face of the prohibition notices they were issued by inspectors and not by the regulator; 2. the applicant had not sought internal review of the decisions to issue the prohibition notices; 3. the Commission's jurisdiction to review decisions is confined to the review of internal review decisions or decisions of the regulator; 4. it was obvious from the outset that the decisions were not of a kind open to review by the Commission.
2. The applicant's evidence, contained in the affidavit of Ms Goodhew, demonstrated that it was aware the prohibition decisions were made by Inspectors. That flowed from her evidence directed to justifying the decision to come to the Commission. That decision was made because an internal review may take significant time, with attendant significant economic costs, and the exchanges with the Regulator suggested that an internal review would not be successful.
3. Acknowledging that the Commission lacked jurisdiction to review decisions of Inspectors, the applicant changed its case theory to suggest that the prohibition notices were issued by the Regulator.
4. The applicant's conduct of the proceedings was relevant to the exercise of discretion. The proceedings were adjourned on 12 June and 15 June at the request of the applicant. The applicant then advised on 19 June, through its written submissions in reply, that it was inviting the Commission to make a Jones v Dunkel inference against the respondent if the Inspectors who purportedly issued the notices were not called. The applicant then insisted on cross-examining the inspectors and issued an overly broad summons to produce documents. Senior Counsel for the applicant asked a series of questions to the first witness which were described as preparatory despite objections by the respondent and urging by the Commission to get to the point. Immediately following the cross-examination of the first witness prayers 1, 2, 4 and 5 were withdrawn and none of the documents produced under summons were relied upon.
5. The remaining prayer contained in the application was based upon the regulator having made a decision declining to cancel the prohibition notices or refusing to make such a decision.
6. As noted at [1] this argument turned on the construction of two items of correspondence. The respondent submitted the correspondence was clear and did not, and could not, on any reasonable basis support the argument of the applicant. Moreover the respondent had expressly confirmed in correspondence dated 7 and 8 June, after filing of the application but before any hearing had commenced, that no decision had been made.
7. The applicant submitted that the correspondence exchanged after proceedings were commenced was irrelevant to the question of whether the proceedings were frivolous.
8. The test of whether proceedings were commenced without reasonable cause is a "substantial one"; Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 at 274 cited with approval in Transport Workers Union of New South Wales (on behalf of Darren Roger Bargwanna) and Robar Enterprises Pty Ltd (ACN 108 640 517) (No 2) at [13] and NatRoad at [8], and "poses a high threshold"; Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275 at [60] cited with approval in Transport Workers Union of New South Wales (on behalf of Darren Roger Bargwanna) and Robar Enterprises Pty Ltd (ACN 108 640 517) (No 2) at [13].
9. At the time of commencing proceedings, upon the facts apparent to the applicant, there were prospects of success. So far as the applicant was concerned the respondent had declined to consider its applications to cancel the prohibition notices. The applicant understood that the respondent had determined that they were incompetent because they were not signed by the appropriate company officers. It was only after the commencement of proceedings that the respondent retracted the requirement for countersignatures.
10. The applicant does not seek to revisit issues determined by the Commission. In its written submissions the applicant said; "For present purposes the simple point it seeks to make is that at the time when it commenced the proceedings, on 1 June 2018, it understood that the Regulator was refusing to determine its Cancellation Applications, and [the] Applicant took this stance by the Regulator to constitute refusal decisions." The fact that the Commission determined the issue of jurisdiction adversely to the applicant does not indicate there was not a question of fact to be determined.
11. It suffices that one prayer in the applicant's application for relief would, if the applicant's version of the facts were accepted, enliven jurisdiction. A proceeding does not cease to be reasonably commenced because alternative prayers are rejected.
12. At the time of commencing proceedings the applicant "understood", based on earlier correspondence, that the respondent was directing the Inspectors' decisions to issue the prohibition notices. There was a proper basis for believing that the respondent was personally involved in the decisions to issue the notices.
13. Overall, the applicant's case was not obviously untenable or manifestly groundless as to be utterly hopeless. On the facts known to it at the time it could not be said that there was no substantial prospect of success.
14. If the Commission is satisfied as to the first stage of the process there remains the question of discretion. To exercise the discretion on the basis that the applicant's case was hopeless would be to punish the applicant which would be impermissible.
15. Second, the applicant's conduct in the proceedings is not relevant to the discretion. The respondent's conduct may be a disentitling factor in respect of some or all of its costs.
16. Although not in issue the applicant says that its conduct in the proceedings was not unreasonable. The fact that alternative sources of review existed has no bearing on the decision to award costs. The applicant was entitled to take the course it did believing it to be the "most appropriate, timely and effective way to obtain review".
17. The respondent also contested the applicant's submissions as to the various adjournments or relistings of proceedings. The vacation of the listing of 8 June was because the applicant's counsel were not available and the decision was made in chambers and by consent. The adjournment on 15 June was due to the late service, in the sense of being 1 hour prior to the scheduled hearing time, of the respondent's submissions in reply. The adjournment was required as a matter of fairness and was by consent. The respondent should have anticipated the Jones v Dunkel submission and rather than serving affidavits on the applicant the day before the hearing resumed, called the witnesses to give evidence. The applicant should not be criticised for wanting to cross-examine the Inspectors or deprived of the right to test their evidence.
18. The summons process was consequential on the late filing of evidence, was narrowed by consent and produced only seven documents, only four of which the applicant did not already have.
19. The evidence of Chief Inspector Burns, including his cross-examination, permitted the applicant to promptly withdraw prayers 4 and 5. As to the suggestion that irrelevant questions were put in cross-examination the applicant says there were 25 objections by counsel for the respondent and much of the time was spent dealing with those objections.
20. In summary there is no substance in the respondent's complaints about the applicant's conduct of the proceedings.
21. In reply the applicant submitted: 1. it is the opinion of Commission, not the applicant, of the facts apparent to the applicant at the time of commencing proceedings which is relevant to the determination of whether the proceedings were frivolous or commenced without reasonable cause; 2. even if satisfied as to reasonable cause the Commission should find that the proceedings were instituted "thoughtlessly" and therefore "frivolously"; 3. the test does not require the proceedings to be frivolous and vexatious - they are alternative grounds and the Commission only needs to be satisfied as to one to enliven the power to award costs; 4. the threshold for the award of costs in this matter has been met 5. the discretion is wide and underpinned by notions of fairness and fairness should dictate how the discretion is exercised: Gough & Gilmour Holdings Pty Ltd v Caterpillar of Australia Ltd (No 18) at [71(12)]; 6. there would be no error in having regard to the applicant's conduct in the proceedings in considering what is a fair and reasonable exercise of the discretion; 7. there was no disentitling conduct on the part of the respondent

Consideration

1. There was a fundamental flaw in the applicant's attempt to review the issue of the Prohibition Notices. The flaw was that the Commission has no jurisdiction to review such decisions by Inspectors. That the applicant knew of this flaw is revealed by two things. First its contention, argued to support prayer 3 and noted at [17] and [18], that the Regulator had refused or declined to cancel the Prohibition Notices issued by the Inspectors. Second, the evidence it led to justify bringing the issue before the Commission - that an internal review may take too long and cause economic loss.
2. While time and cost are legitimate concerns, they do not have the effect of clothing the Commission with jurisdiction. My comments, quoted at [3], put the assessment by the applicant in question in any event. The applicant is right to say that the existence of alternative rights of review is not itself a factor determinative of lack of reasonable cause. The problem is that the alternative chosen by the applicant, on facts known to it, was not available.
3. I accept the respondent's submission that it is the Commission's assessment of the facts "apparent" to the applicant which is of importance. The applicant's belief, understanding or suspicion cannot be the test. If so, an applicant's genuine belief in a manifestly hopeless case could not support a finding of commencement "without reasonable cause". The key word in the phrase is "reasonable". If the Commission finds that the applicant's assessment of the facts known to it is not reasonable, then it follows the proceedings will be commenced without reasonable cause. To that extent the applicant's submissions about its belief or understanding are misconceived. As I have noted, they are also inconsistent with its other statements and actions.
4. At the time of commencement of the review proceedings the applicant was aware the Prohibition Notices were issued by the Inspectors. Each notice contains a statement to the effect that the person issuing the notice is a government official who has personally formed a particular belief. That statement is to be understood in the context of ss 195 and 196 of the WHS Act and ss 18 and 50 of the Work Health and Safety (Mines and Petroleum Sites) Act 2013 (NSW). Those sections make clear that it is the Inspector who forms the requisite belief and issues the notice.
5. The only other information available to the applicant was a series of letters exchanged between "the Regulator" and the applicant (or its representatives). Much of the correspondence from the Regulator is signed by the Chief Inspector, Mr Burns, who issued Prohibition Notice 108. The correspondence also reflects conversations, either in person or by email, with Inspector Nicholls who issued Prohibition Notice 113 after inspecting the site on the day of issue.
6. It is the use of the term "the Regulator" in those exchanges which, the applicant submits, allowed it to reasonably form the view that the Inspectors were acting at the direction of the Regulator and not according to their own judgment. That is, that they were acting contrary to the legislation. I do not accept that to be the case. My view is also confirmed by the actions and evidence of the applicant to which I have referred.
7. The commencement of the proceedings in respect of the Prohibition Notices was not reasonable.
8. For the reasons I set out in the primary decision I do not accept the argument that it was reasonable to conclude, at the time proceedings were commenced, that the Regulator had declined to cancel the Prohibition Notices. The correspondence on which the applicant relied made clear that the Regulator was still considering the applicant's request.
9. For these reasons the proceedings were in my view commenced without reasonable cause. To the extent that the applicant commenced proceedings without giving consideration to these issues, the proceedings were commenced thoughtlessly and therefore frivolously.
10. I do not accept the applicant's argument that I cannot have regard to the manifest lack of merit in the applicant's case. It is a factor to be taken into account in the exercise of discretion. To take that factor into account is not to punish the applicant but to give due consideration to compensating the respondent for the costs she incurs in responding to the proceedings.
11. I'm also of the view that the conduct of the parties through the proceedings is relevant to the exercise of discretion to award costs in whole or in part.
12. I find no disentitling conduct on the part of the respondent. The respondent came prepared at every stage to present its case and meet that of the applicant. The production of a written outline of submissions at short notice, or the filing of two affidavits by the Inspectors, was not conduct of a kind to disentitle the respondent to her costs. I accept the submission of the respondent that its written outline could have been handed up as an aide memoire at the time of presenting its submission.
13. The decision to file the two affidavits of the Inspectors filed was a reaction to an unanticipated argument of the applicant. It was also unanticipated that the Inspectors would be required for cross-examination. It was not unreasonable to fail to anticipate either of these developments. The affidavits contained 7 and 6 paragraphs. In their affidavits the Inspectors deposed to: their appointments as Inspectors: the fact that they issued the relevant Prohibition Notices; and did so at their own initiative and not at the direction, or as a delegate, of any other person. The affidavits did no more than confirm what was in the notices.
14. If the applicant had information which permitted it to contradict any of the propositions advanced by the Inspectors, they would have been able to cross-examine immediately. The cross-examination of Mr Burns, when it did happen, was unduly lengthy and confirmed that there was no such information. The summons that was issued for the production of documents was part of the speculative chase for information to be used in the cross-examination of the Inspectors. It was also without merit.
15. Although the Commission is essentially a no costs jurisdiction, I do not see why, in an appropriate case such as this, a respondent should not have the benefit of some compensation for the costs incurred in reacting to proceedings which should never have been commenced.

Order

1. I therefore make the following order: 1. The applicant is to pay the respondent's costs as agreed or assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 October 2019