FEDERAL COURT OF AUSTRALIA

Shea v EnergyAustralia Services Pty Ltd (No 2) [2015] FCAFC 14

THE COURT ORDERS THAT:

1.    The appellant pay the respondent’s costs of the appeal, as agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    Immediately following the delivery of the Full Court’s reasons in Shea v EnergyAustralia Services Pty Ltd [2014] FCAFC 167, EnergyAustralia applied for an order for costs of the appeal and that they be taxed on indemnity costs under s 570(2) of the Fair Work Act 2009 (Cth). That sub-section provides for the circumstances in which one party can be ordered to pay costs incurred by another party in proceedings, including an appeal, in relation to any matter arising under the Act, relevantly as follows:

(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; or …

Ms Shea’s submissions

2    Ms Shea contended that no order for costs should be made. First, she argued that her appeal could not be described as having no reasonable prospects of success or being doomed to failure. Secondly, she submitted that the appeal gave rise to issues of substance particularly in respect of grounds 1 and 2 that sought to challenge the primary judge’s reasons concerning her Honour’s finding that a person had to have a belief in the truth of the subject matter of a complaint for its expression to be capable of being the exercise of a workplace right, as discussed in Shea [2014] FCAFC 167 at [9]-[13].

3    Thirdly, Ms Shea argued that her arguments had not been wholly rejected in the Full Court’s reasons and that the Full Court may arguably have disapproved of her Honour’s reasons. Fourthly, Ms Shea contended that EnergyAustralia’s argument was no more than that costs should follow the event, and, she argued, this approach ignored the requirements of s 570(2). She submitted that her conduct of the appeal did not reflect any unreasonable acts or omissions and the appeal had not been instituted without reasonable cause. She argued that it was reasonable and proper for her to have relied on each of her grounds of appeal and that “[a]n appeal brought without, in particular, ground 7, would have been susceptible to attack on the reasoning in Baker v Patrick Projects Pty Ltd (No 2) [2014] FCAFC 166: i.e. that the appeal could not succeed even if the Appellant’s arguments had been accepted”.

Consideration

4    Ms Shea’s arguments must be rejected. They ignored, and did not engage with, the Full Court’s findings that Ms Shea’s senior counsel had made substantive and time consuming submissions on the appeal about what he claimed had been his conduct of the trial that were “materially contrary to the actual way in which [Ms Shea] conducted the case in the Court below” ([2014] FCAFC 167 at [25]). EnergyAustralia’s application for an order that Ms Shea pay its costs of the appeal should be granted, but only on a party/party basis and not on an indemnity basis for the following reasons.

5    At the time Ms Shea instituted the appeal, she had the primary judge’s detailed reasons, in particular, for the critical finding that because her Honour believed and accepted Mr McIndoe’s evidence she found that he had not made Ms Shea’s position redundant for the reason that she had made any of her five complaints. The difficulty of challenging detailed findings of fact based on credibility cannot be gainsaid, as was explained by Gleeson CJ, Gummow and Kirby JJ in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at 127 [26]-[72]. Ms Shea’s grounds and argument on appeal asserted that her Honour erred by examining the truth of Ms Shea’s five complaints, thus somehow “polluting” the balance of her Honour’s reasoning process. Yet, Ms Shea’s case at trial, as ultimately became clear when the Full Court was taken on the second day of the appeal to the opening below of Ms Shea’s senior counsel, was just that – namely that her serious complaints were true. Her Honour, having been invited to do so by Ms Shea, examined the complaints for what they were and substantially found against Ms Shea on both their substance and their alleged role in her redundancy.

6    As her written and oral submissions on the appeal showed, there was no reasonable basis for Ms Shea to appeal against her Honour’s findings that resolved the issue of the truth of Ms Shea’s complaints, the impact of that resolution on Ms Shea’s credit and her case generally, and Mr McIndoe’s reasons for deciding to make Ms Shea’s position redundant. Ms  Shea’s arguments on appeal on these matters were without substance and ought never to have been made: see the findings at [2014] FCAFC 167 at [22] and [30]. Likewise ground 8 was hopeless and was abandoned during the course of oral argument.

7    Despite the reasons of Jessup J making limited orders against Ms Shea for indemnity costs on issues that she had fought at trial unreasonably, she also appealed against his Honour’s orders. Her argument on appeal challenging his Honour’s discretionary judgment was specious and failed to identify any error in his Honour’s reasons. There was no reasonable basis for challenging his Honour’s orders.

8    Although the substantive issues raised by grounds 1 and 2 of Ms Shea’s notice of appeal were not insignificant, they could not, and did not, arise unless the principal factual findings as to Mr McIndoe’s reasons for making Ms Shea’s position redundant were overturned. The balance of the issues raised by the grounds of appeal were without substance and unmeritorious: cf Cheedy v Western Australia (No 2) [2011] FCAFC 163; (2011) 199 FCR 23 at 33 [44] per North, Mansfield and Gilmour JJ. Unless Ms Shea could have succeeded on the latter grounds, grounds 1 and 2 could not arise.

9    On the facts apparent to Ms Shea and her lawyers at the time that the appeal was filed (taking into account the amendment to raise the challenge to Jessup J’s costs orders), there was no reasonable prospect of the appeal succeeding: Baker [2014] FCAFC 166 at [9]-[10]. In other words, Ms Shea instituted the appeal (and the amendment to add ground 9 in respect of the costs orders below) without reasonable cause, except as to grounds 1 and 2.

10    The power to order a party to pay costs conferred by s 570 is enlivened once one of the jurisdictional criteria in s 570(2) has been satisfied. After that has occurred, the Court is then authorised to exercise its discretion to award costs under s 43(1) of the Federal Court of Australia Act 1976 (Cth), having regard to all of the circumstances. In the circumstances of this application it is not necessary to analyse precisely how the respective discretions in s 570(2) of the Fair Work Act and s 43(1) of the Federal Court of Australia Act interact. If the criterion in s 570(2)(a) were satisfied in a matter, it may well be that the Court could make an order for costs to be paid on an indemnity basis, as it could, and often would, in litigation where the general law of principles as to the award of such costs applied.

11    However, the power to order costs, once a criterion in s 570(2) has been satisfied, is discretionary and should be exercised, not so as to impose a penalty or punishment on the losing party but to provide an appropriate means of compensating the successful party having regard to all of the circumstances: see Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 at 62-65 [24]-[34] per Gleeson CJ, Gummow, Hayne and Crennan JJ; Kazar v Kargarian [2011] FCAFC 136; (2011) 197 FCR 113 at 115-117 [2]-[9] per Greenwood and Rares JJ.

12    Here, Ms Shea’s conduct can be seen to fall within s 570(2)(b), for the reasons given above, in that, in a considerable number of respects, her unreasonable acts in propounding most of her appeal have caused EnergyAustralia to incur costs for which it should be compensated.

Conclusion

13    The case is close to the line of justifying an order for costs of the appeal on an indemnity basis or a separate order, on that basis, for all issues except those raised by grounds 1 and 2. On balance, however, it is not appropriate to separate the issues in this appeal for the purposes of awarding costs. Rather, justice will be done by ordering that Ms Shea pay EnergyAustralia’s costs of the appeal on a party/party basis.

Associate:

Dated:    16 February 2015