FEDERAL COURT OF AUSTRALIA

Tristar Steering and Suspension Australia Limited v Industrial Relations Commission of New South Wales (No. 2) [2007] FCAFC 95

COSTS – whether a statutory limitation to award costs in industrial matters applies – principles relating to discretion to award costs – no application for costs made at hearing – costs later sought – the question of costs should normally be raised at the hearing

RIGHTS OR DUTY – whether the right or duty that was sought to be enforced owed its existence to a federal act

MATTER - in a matter arising under the Act

The Constitution (Cth) s 75(v), s 109

Judiciary Act 1903 (Cth) s 39B(1A)(b), s39B(1A)(c)

Federal Court of Australia Act 1976 (Cth)

Federal Court Rules o 4 r 1, o 4 r 3(3), o 62 r 3, o 62 r 15

Industrial Relations Act 1988 (Cth) s 347(1)

Industrial Relations Act 1996 (NSW) s 146(1)(d)

Workplace Relations Act 1996 (Cth) s 16, s 45, s 824(1)

ACCC v Daniels Corporation Pty Limited [2001] FCA 936

Grygiel v Baine (No 2) [2005] NSWCA 434

Quickenden v O’Connor (2001) 109 FCR 243

Re McJannet; Ex parte Australian Workers Union of Employees, Queensland [No.2] (1997) 189 CLR 654

Re Polites; Ex parte The Hoyts Corporation Pty Limited (1991) 173 CLR 78

Seven Network (Operations) Ltd v Media Entertainment and Arts Alliance (2004) 148 FCR 145

Shanahan v Australian Industrial Relations Commission (No 2) [2006] FCAFC 175

Tristar Steering and Suspension Limited v Industrial Relations Commission of New South Wales [2007] FCAFC 50

TRISTAR STEERING AND SUSPENSION AUSTRALIA LIMITED AND CHENG HONG v INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES  AND NEW SOUTH WALES MINISTER FOR INDUSTRIAL RELATIONS

NSD 354 OF 2007

KIEFEL, GYLES AND BUCHANAN JJ

22 JUNE 2007

SYDNEY

THE COURT ORDERS THAT:

1.                  The application of the second respondent pursuant to O 35 r 7 to set aside the order for costs made on 13 April 2007 is dismissed.

2.                  There be no order as to costs in connection with that application.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

(COSTS)

KIEFEL J:

1                     The applicants have now applied for an order for costs on the basis of their success in the matter.  The second respondent contends that such an order may not be made because s 824(1) of the Workplace Relations Act 1996 (Cth) (‘the WRA’) provides that a party ‘to a proceeding in a matter arising under this Act’ must not be ordered to pay costs incurred by any other party to the proceeding.  The test for determining whether a proceeding is a matter arising under the Act, for the purposes of the section, is ‘whether the right or duty that is sought to be enforced owes its existence to a provision of the Act’:  Re McJannet;  Ex parte Australian Workers’ Union of Employees (Q) [No 2] (1997) 189 CLR 654 at 656.   

2                     The first respondent was not exercising jurisdiction under the WRA, but purported to do so under the Industrial Relations Act 1996 (NSW) (‘the State Act’).  It was its lack of jurisdiction which was the basis for the injunctions sought and ordered.  It lacked jurisdiction because an inconsistency arose between the WRA and the State Act and because the WRA disclosed an intention to cover the field of employer-employee relations.   The matter has a connexion with the WRA, but does not involve a right arising under it and the duty of the first respondent not to proceed, which was enforced, arose because of the operation of s 109 of the Constitution and the resultant effect upon the State Act.

3                     The applicants did not seek an order for costs in their application.  The delay in doing so has not given rise to any prejudice on the part of the second respondent and the parties have had an opportunity to make submissions on the question.  There is no basis shown for denying the applicants their costs.  I would order the second respondent to pay their costs, but not the costs in connection with this application, for the reasons given by Buchanan J. I agree with the orders proposed by his Honour.  

Associate:        

Dated:         22 June 2007

REASONS FOR JUDGMENT

GYLES J:

4                     I agree with the orders proposed by Buchanan J.

5                     It is not necessary in this case to consider the interplay between s 824 of the Workplace Relations Act 1996 (Cth) and s 39B(1A)(c) of the Judiciary Act 1903 (Cth) nor the issue of discrete but overlapping federal claims (cf Seven Network (Operations) Ltd v Media Entertainment and Arts Alliance (2004) 148 FCR 145 at [57]–[61]).

Associate:

Dated:   22 June 2007

REASONS FOR JUDGMENT

BUCHANAN J:

6                     In a judgment delivered on 13 April 2007 (Tristar Steering and Suspension Limited v Industrial Relations Commission of New South Wales [2007] FCAFC 50) (‘the earlier judgment’) I made the following observation:

‘57       The applicants sought their costs.  There is no reason why costs should not follow the result.’

The first sentence was incorrect.  As the second respondent has now pointed out no application for costs was earlier made by the applicants.  He seeks now to be heard on the issue to oppose any order for costs.  The applicants do not oppose the matter receiving fresh attention.  Although they did not earlier ask for costs they do so now, contending that was their intention if the proceedings were decided in their favour. 

7                     The second respondent has argued that costs may not be awarded against him because of the operation of s 824 of the Workplace Relations Act 1996 (Cth) (‘the WR Act’) which provides:

‘824     Costs only where proceeding instituted vexatiously etc.

(1)               A party to a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) 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.

(2)               Despite subsection (1), if a court hearing a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) is satisfied that a party to the proceeding has, by an unreasonable act or omission, caused another party to the proceeding to incur costs in connection with the proceeding, the court may order the first-mentioned party to pay some or all of those costs.

(3)               In subsections (1) and (2):

Costs includes all legal and professional costs and disbursements and expenses of witnesses.’

(emphasis added)

8                     The second respondent argues that the right or duty identified by the Court and enforced in favour of the applicant in the earlier judgment owed its existence to s 16 of the WR Act and that the proceedings were therefore ‘in a matter arising under’ the WR Act.  I do not think this proposition should be accepted. 

9                     Section 16 of the WR Act contains a statement of parliamentary intent.  Having regard to the terms of the WR Act (including s 16) s 109 of the Constitution was found to render invalid so much of the Industrial Relations Act 1996 (NSW) (‘the IR Act’) as would otherwise permit the Industrial Relations Commission of New South Wales (‘the IRC’) to continue to conduct an inquiry into matters referred to it under s 146(1)(d) of the IR Act by the New South Wales Minister for Industrial Relations.  Consequently, the IRC lacked jurisdiction to perform any function in relation to the terms of reference establishing the inquiry.

10                  However, that conjunction of legal effects and consequences is not correctly reduced to the proposition that the relief granted to the applicants arose from a right or duty which owed its existence to the WR Act in general or s 16 in particular or was granted to them in a proceeding ‘in a matter arising under’ the WR Act.  The relief granted by this Court arose from its power under the Federal Court of Australia Act 1976 (Cth) and the investiture of jurisdiction by s 39B(1A) of the Judiciary Act 1903 (Cth) (‘the Judiciary Act’) to deal with matters arising under the Constitution as well as under federal laws.

11                  In Re Polites; Ex parte The Hoyts Corporation Pty Limited (1991) 173 CLR 78 (‘Polites’) the High Court considered whether the operation of s 347(1) of the Industrial Relations Act 1988 (Cth) (‘the federal IR Act’) (which made similar provision to s 824 of the WR Act) had the result that costs might not be awarded in proceedings to enforce a statutory duty (to continue to hear a case) arising under the federal IR Act.  Notwithstanding that the jurisdiction of the High Court conferred by s 75(v) of the Constitution was invoked, the prohibition in s 347(1) was held to be engaged because the duty enforced owed its existence to the federal IR Act.  No order for costs was made.  Conversely, in Re McJannet; Ex parte Australian Workers Union of Employees, Queensland [No.2] (1997) 189 CLR 654 (‘McJannet’) the High Court considered the issue in proceedings (again invoking the jurisdiction conferred by s 75(v) of the Constitution) to prohibit any action upon a decision purportedly made under the federal IR Act.  The High Court held there was no jurisdiction to make the decision.  In those circumstances the High Court held that the relief sought and obtained did not relate to the enforcement of any right or duty created or conferred by the federal IR Act and that s 347(1) had no application.  Polites was distinguished.  Costs were awarded.  The present proceedings are not a direct parallel to McJannet.  Neither do they fall within the approach taken in Polites. 

12                  In Quickenden v O’Connor (2001) 109 FCR 243 (‘Quickenden’) a Full Court dismissed an appeal in which it was argued that certain provisions of, and an instrument made under, the federal IR Act were invalid.  The appellant had been ordered by the primary judge to pay costs.  He rejected an argument that s 347 of the federal IR Act prevented any order for costs.  The primary judge, in a passage approved by the Full Court on appeal said:

‘In the instant case, the proceeding was in a matter in which the controversy to be resolved was whether the decision made by the Commission exceeded the authority able to be conferred on the Commission by the Parliament and whether the Union and the University should be directed not to act on that decision.  No part of the applicant’s case involved application for the enforcement of a right or duty brought into existence by the Act.  To the contrary, the applicant sought to enforce another duty imposed on the Commission by law not to act in the absence of an authority lawfully conferred on it pursuant to a legislative power of the Parliament provided by the Constitution, and to enforce a derivative duty to like effect, imposed on the Union and the University.

The order sought for the issue of Writs of Certiorari and Prohibition did not, in form or content, relate to the enforcement or [sic] any right or duty conferred or created by the Act and, therefore, s 347 of the Act has no application to the proceeding.’

This analysis more closely approaches the circumstances of the present matter although it must be accepted that the elements at work are not identical, either procedurally or legally.

13                  In Shanahan v Australian Industrial Relations Commission (No 2) [2006] FCAFC 175; 160 IR 386 (‘Shanahan’) the Court dealt with an application where proceedings commenced in the High Court alleged a jurisdictional failure by a Full Bench of the Australian Industrial Relations Commission to properly carry out its functions in an appeal under s 45 of the WR Act.  The application sought writs of mandamus and certiorari.  It was remitted to this Court and in due course dismissed.  Costs were later sought.  The case fell clearly within the principle in Polites.  As the Full Court concluded that the proceedings had not been instituted vexatiously or without reasonable cause (see s 824(1)) costs were refused (Shanahan v Australian Industrial Relations Commission (No 3) [2007] FCAFC 53 (‘Shanahan (No 3)’).

14                  The second respondent drew attention to the following passage in Shanahan (No 3):

‘25.      It is clear in the present case that the proceeding which was instituted by the applicant was in a ‘matter arising under’ the Act.  Whatever other ‘matters’ may be inherent in the one legal controversy, the present case involved a proceeding in respect of a controversy which arose under the Act.’

It was argued that, notwithstanding that the present applicants had invoked the jurisdiction of the Court under s 39B(1A)(b) of the Judiciary Act, s 824 of the WR Act applied to the whole of the proceedings because the proceedings also sought to enforce a right or duty which owed its existence to the WR Act.  The second respondent directed attention to, and relied upon, the fact that the applicants had expressly contended that the proceedings were in a matter arising under the WR Act.  In their Amended Points of Claim the applicants contended:

‘5.        The present proceedings arise under a federal act, namely the Workplace Relations Act 1996 (Cth) and, in particular, section 16 of that Act.  The proceedings also arise under s.109 of the Commonwealth Constitution.  The Federal Court has jurisdiction to hear and determine the Amended Application by reason of s.39B(1A)(b) and (c) of the Judiciary Act 1903 (Cth).’

15                  However, the present case did not, unlike Polites and Shanahan, seek enforcement of duties under the WR Act by persons whose role it was to perform such duties.  It is a case with different legal elements.  The Court’s power to order costs does not depend on the contentions advanced by the parties but on the correct characterisation of the nature of the proceedings.  It may be accepted that the proceedings involved a matter arising under the Constitution and the Court was invested with jurisdiction in relation to the proceedings at least by s 39B(1A)(b)) of the Judiciary Act as contended.  However, for my own part, I do not think it correct to say that the proceedings arose under the WR Act in the way the applicants suggested in their Amended Points of Claim (although not in their written submissions on the question of costs where they argued to the contrary).

16                  In my view, it cannot correctly be maintained that the relief which was granted by the orders earlier made in the present matter was a vindication of a right or duty conferred or created by the WR Act.  Rather the right or duty (if that is the correct way to regard the absence of jurisdiction in the IRC) arose from the operation of s 109 of the Constitution.  The proceedings were brought to enforce the duty upon the IRC not to act outside its jurisdiction, in circumstances where the IRC had made plain its intention to do so.  The fact that s 109 of the Constitution was engaged by reason of the terms of the WR Act does not signify, in my view, that the proceedings were ‘in a matter arising under’ the WR Act within the meaning of s 824 of the WR Act.  In my view the Court has power to make an order for costs in the proceedings.

17                  The second respondent also contended that costs orders earlier made in his favour in interlocutory proceedings could be supported, notwithstanding his reliance on s 824 of the WR Act to deny the applicants an order for costs, ‘in circumstances of an application made without reasonable cause and/or an unreasonable act or omission by the Applicants’.

18                  Costs were dealt with in earlier interlocutory proceedings as follows:

(a)        On 9 March 2007 Edmonds J refused an application for interlocutory relief ([2007] FCA 348).  He reserved costs.

(b)        On 16 March 2007 Graham J ordered that costs of that day be paid on an indemnity basis and be taxed and paid forthwith.

(c)        On 21 March 2007 Cowdroy J ([2007] FCA 407) dismissed an amended notice of motion for interlocutory relief and ordered the applicants to pay costs.

19                  In the light of my conclusion that s 824 of the WR Act does not apply to the proceedings it is not necessary to address this aspect of the second respondent’s submissions.  The costs order made in the judgment of 13 April 2007 has no effect on the orders made by Graham J or Cowdroy J.  The costs reserved by Edmonds J would follow the event in the absence of any other order of the Court (O 62 r 15 of the Federal Court Rules).  They are therefore included within the order made in the earlier judgment.

20                  The next question is whether an order for costs should be made on ordinary principles.  The applicants’ suggested that:

‘5.        The usual order as to costs is that, a successful party in litigation is entitled to an award of costs in its favour, subject to certain limited exceptions Latoudis v Casey (1990) 170 CLR 534; Oshlack v Richmond River Council (1998) 193 CLR 72 at [63]-[67].’

21                  Latoudis v Casey was a case concerning a summary prosecution for theft and related offences in a magistrate’s court.  The defendant was acquitted.  The majority judges in the High Court held that ordinarily a successful defendant in a summary prosecution should have his costs against the prosecutor (per Mason CJ at 544, per Toohey J at 565, per McHugh J at 569).  This judgment, in my view, provides no real assistance in the present matter.  The reasoning was directed primarily to dispelling any principle or practice that costs should not in summary matters be awarded against an informant who acted reasonably in bringing a prosecution.

22                  The applicants also rely on Oshlack v Richmond River Council (‘Oshlack’), specifically on passages in the dissenting judgment of McHugh J.  It is from para 67 of that judgment that the proposition in para 5 of the applicants’ written submissions, set out above, is distilled.  However, Oshlack is notable for the emphasis by the majority judges on the existence and width of the discretion to order costs in a manner tailored to the circumstances of individual cases, or to not order costs, and for their rejection of the proposition that principles developed to guide the exercise of a judicial discretion to order costs should be treated as legal rules.

23                  There can be no question that the Court’s discretion to award costs, or decline to do so, is a very wide one.  I have considered, therefore, whether the delay by the applicants in making any application for costs, or asking that the question of costs be reserved for later consideration, should lead to costs now being refused, notwithstanding that, as the existing order for costs suggests, normally an order for costs would be made in accordance with the result of the litigation.

24                  On balance, and not without some reservations in view of the applicants’ delay in raising the matter, I have come to the view that the applicants remain entitled to their costs of the final hearing and any reserved costs.  Relevant to my conclusions are the following matters:

(a)                Order 4 r 1 of the Federal Court Rules provides that proceedings in the original jurisdiction of the Court are to be commenced by application but O 4 r 3(3) makes it clear that costs need not be specifically claimed.

(b)               Order 62 r 3 provides that the Court may exercise its powers and discretions as to costs at any stage of the proceeding or after the conclusion of the proceeding.

(c)        As the existing order suggests there was no apparent reason in the present case to depart from the usual approach to costs.

(d)        The second respondent has not advanced any separate submission to the effect that, if power exists to order costs, there are good reasons why, in the exercise of its discretion, the Court should not order the payment of costs.

25                  In light of the above I would not disturb the costs order made in the earlier judgment.  That order extends to the costs reserved by Edmonds J on 9 March 2007.  The order made in the earlier judgment has no effect on any order for costs in earlier interlocutory proceedings, which remain in force according to their terms.

26                  There remains the question of the costs associated with the present application to set aside the costs order earlier made.  The Court expects parties to deal with issues relating to costs in a timely and efficient way.  Normally this means that the Court should be in a position to deal with the question of costs in its judgment unless there is a particular reason to reserve that question for later, and separate, consideration (see ACCC v Daniels Corporation Pty Limited [2001] FCA 936; see also Grygiel v Baine (No 2) [2005] NSWCA 434).

27                  In the present case the applicants failed to state any claim for costs in the application or to otherwise indicate before judgment that costs were sought.  It has therefore been necessary for the matter to receive separate attention but it should not have been.  Equally, the second respondent made no earlier submission suggesting any lack of power to order costs or that costs should not follow the event in the usual way.  In the circumstances I would make no order as to the costs incurred in dealing with the present application.

28                  I propose that the following orders be made:

1.        The application of the second respondent pursuant to O 35 r 7 to set aside the order for costs made on 13 April 2007 is dismissed.

2.        There be no order as to costs in connection with that application.

Associate:

Dated:  22 June 2007