Federal Court of Australia

Transit Systems West Services Pty Ltd v Australian Rail, Tram and Bus Industry Union (No 2) [2021] FCAFC 13

File number:

NSD 100 of 2020

Judgment of:

KATZMANN, KERR AND O'CALLAGHAN JJ

Date of judgment:

17 February 2021

Catchwords:

COSTS application for lump sum costs by successful respondent in proceedings brought under Fair Work Act 2009 (Cth) – whether applicant instituted proceedings “without reasonable cause” within meaning of s 570(2)(a) of Fair Work Act 2009 (Cth) – where no application for costs made or foreshadowed at or before hearing, whether application should be refused in any event in exercise of Court’s discretion — application dismissed

Legislation:

Fair Work Act 2009 (Cth) ss 570, 570(2), 570(2)(a)

Cases cited:

Clarke v Dixie Cummings Enterprises Pty Ltd [2013] FCA 987

Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 2) (2015) 230 FCR 337

Fair Work Ombudsman v Hu (No 2) [2019] FCAFC 175

Fair Work Ombudsman v Valuair Limited (No 3) [2014] FCA 1182

Kable v New South Wales (No 2) [2012] NSWCA 361

Sino Dragon Trading Ltd v Noble Resources International Pte Ltd (No 2) (2015) 246 FCR 498

Thomas v Commissioner of Taxation (No 2) [2017] FCAFC 144

Transit Systems West Services Pty Ltd v Australian Rail, Tram and Bus Industry Union [2020] FCAFC 193

Division:

Fair Work Division

Registry:

Victoria

National Practice Area:

Employment and Industrial Relations

Number of paragraphs:

25

Date of last submissions:

21 December 2020

Date of hearing:

Determined on the papers

Counsel for the Applicant:

Mr M Moir

Solicitor for the Applicant:

Meridian Lawyers

Counsel for the First Respondent:

Mr R Reitano

Counsel for the Second Respondent:

The second respondent filed a submitting notice save as to costs

ORDERS

NSD 100 of 2020

BETWEEN:

TRANSIT SYSTEMS WEST SERVICES PTY LTD T/A TRANSIT SYSTEMS WEST SERVICES

Applicant

AND:

AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION

First Respondent

FAIR WORK COMMISSION

Second Respondent

order made by:

KATZMANN, KERR AND O'CALLAGHAN JJ

DATE OF ORDER:

17 FEBRUARY 2021

THE COURT ORDERS THAT:

1.    The first respondent’s application for costs be dismissed.

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

REASONS FOR JUDGMENT

THE COURT:

Introduction

1    This is an application by the successful respondent, the Australian Rail, Tram and Bus Industry Union (ARTBIU) for an order that the applicant, Transit Systems West Services Pty Ltd (Transit Systems) pay its costs (sought to be determined on a lump sum basis) notwithstanding that the proceedings were brought in relation to a matter arising under the Fair Work Act 2009 (Cth) (Fair Work Act). The reasons for judgment are found in Transit Systems West Services Pty Ltd v Australian Rail, Tram and Bus Industry Union [2020] FCAFC 193 (the primary reasons).

2    Section 570 of the Fair Work Act relevantly provides:

(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 …

3    It is uncontentious that in the ordinary course a successful party is not to be awarded costs in respect of a matter arising under the Fair Work Act. Whether or not costs are open to be awarded depends on satisfaction of one or more of the criteria provided for by way of exception in s 570(2). The only criterion potentially relevant in this instance is that provided for in s 570(2)(a).

The ARTBIU’s submissions

4    The ARTBIU submits that the Court should be satisfied that Transit Systems instituted the proceedings without reasonable cause within the meaning of s 570(2)(a), thus engaging that exception as would permit an award of costs to be made.

5    The ARTBIU acknowledges that in determining any application for costs the Court must avoid simply conflating the failure of the proceedings brought by Transit Systems with the conclusion that those proceedings had been brought without reasonable cause: see Clarke v Dixie Cummings Enterprises Pty Ltd [2013] FCA 987 (Clarke) at [14] in which Jessup J said:

It is true that I have found that the applicant’s resistance to the respondent’s privilege claim was without substance, and it might even be said that I regard this as a clear case. On the other hand, I think there is a danger of the exceptions in s 570(2) being used in circumstances in which the most that one can say is that the losing party had a self-evidently weak case. In my opinion, that is not the kind of situation to which s 570(2) is addressed. There must be a higher level of criticism or disapprobation which the court is able to express about a losing party’s case if the bars in paras (a) and (b) of s 570(2) are to be crossed by a party which succeeds on the application concerned.

(ARTBIU’s emphasis.)

6    The ARTBIU relies on a number of passages in the primary judgment critical of the case advanced by Transit Systems which, it contended, “relevantly encapsulate all of the reasons given by the Full Court”:

a.    Transit Systems relied before the Court upon a contention about ss.739(5) and 768(3) that had not been rehearsed at all before the Full Bench which the Court said at [27] ‘would be sufficient on its own to refuse the application on purely discretionary grounds’;

b.    Transit Systems [sic] contention about those sections was described at [28] by the Court as ‘untenable’ and as having ‘no support from the terms of those provisions’;

c.    The Full Court said at [30] that it was ‘at a loss to understand how anything that the Full Bench said, even on the applicant’s own case could give rise to jurisdiction[al] error’ noting of course that jurisdictional error was identified [by] Transit Systems as the limited basis upon which its application was founded;

d.    The Full Court said at [32] even if Transit Systems ‘had a point which it does not making a declaration that the decision made by the Full Bench is invalid would be inutile …’; and

e.     The Full Court noted at [32] that existing authority identified that the relief sought, so far as public law writs were concerned was not available.

7    The ARTBIU submits that those strong criticisms went well beyond identifying what were mere weaknesses in Transit Systems case. The reasoning, the ARTBIU submits, establishes that, from the outset, that case had “no real prospects of success” and was “doomed to failure”. In that circumstance, it argues, the bringing of the proceedings was entirely unjustified and Transit Systems having pressed ahead regardless deserves the “higher level of criticism or disapprobation” that Jessup J in Clarke identified as necessary to engage the operation of s 570(2)(a). It submits that costs should be awarded in its favour.

Transit Systems’ submissions

8    Transit Systems submits that the threshold condition imposed by s 570(2)(a) has not been met. It further submits that, if that proposition is not accepted, in the exercise of its discretion the Full Court should not order the payment of costs because the question was not at least foreshadowed at the hearing of the appeal.

9    In respect of its primary contention, Transit Systems submits:

3.    First, in the context of s. 570 and its legislative antecedents the Court has observed that an applicant who has the benefit of the protection of a provision such as s. 570(1), (i.e. the general rule that parties bear their own costs), will only rarely be ordered to pay costs and that the power should be exercised with caution and only in a clear case …

4.    Second, there is an additional need for caution in this matter because of the way in which the respondent has advanced its costs application. The respondent’s submissions rely solely on the [primary judgment] and highlight at [7]-[8] some of the observations made by the Full Court in its judgment. Yet the authority cited in the respondent’s submissions (at [5]) warns against this approach. In Fair Work Ombudsman v Valuair Limited (No 3) [2014] FCA 1182, costs were not awarded against the FWO even though elements of the FWO’s case were described in the primary judgment as ‘artificial and unsatisfactory’ and ‘potentially bizarre: at [12]-[15]. After referring to these earlier descriptions of the FWO’s case, Buchanan J went on to observe at [15]:

those reproaches were offered after the advantage of a full trial and comprehensive written and oral submissions. Although it may be argued (and has been in this case) that the conclusions I reached should have been apparent to the losing party well in advance, that is a counsel of perfection which I am not prepared to act upon in the present case.

10    In respect of how the matter ought to be viewed, Transit Systems further submits:

21.    Turning to the exception in s. 570(1)(a), the fact that the applicant was unsuccessful in the substantive proceedings does not mean that the proceedings were commenced without reasonable cause. This reflects that the without reasonable cause threshold is a demanding one.

22.    The applicant’s claim of jurisdictional error in the Full Bench of the Commission rested on whether s. 768AI meant that the Full Bench was precluded from having regard to the 2013 settlement agreement in construing the copied State award. The Full Court rejected the applicant’s contention as to s 768AI, and therefore found there could be no jurisdictional error in light of that contention being rejected.

23.    The applicant’s contention regarding the meaning and effect of s.768AI was a point of law. In other words, the applicant’s claim of jurisdictional error was founded on an asserted point of law. It is well established that the pursuit of an arguable point of law, even one that is self-evidently weak or barely arguable or with minimal support, is sufficient to take the proceeding out of the concept of ‘without reasonable cause’ referred to in s. 570 of the FW Act: for example, Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23; (2013) 232 FCR 428 at [7(3)].

24.    The following factors are relevant in deciding whether, objectively viewed, the applicant’s contention of law was arguable, looked at prospectively from the time that the proceedings were commenced and not retrospectively, with the benefit of hindsight, from the vantage point of the Full Court’s reasons for judgment:

a.    It was unarguable that the 2013 settlement agreement was not ‘an order, a decision or a determination’ within the meaning of s. 768AI(3).

b.    It was apparent from the Second Reading Speech that a key purpose of Part 6-3A of the FW Act was to provide certainty for new employers. It was arguable that such certainty informed the meaning and effect of s. 768AI so that a copied State award could not be affected by a settlement agreement that was not reflected in an order, a decision or a determination.

c.    It was also apparent that s. 768AI(3) was unique in the structure of the FW Act and clearly crafted by the Parliament to deal with the unique circumstances of copied State awards. For example, there was no equivalent provision found in Part 2-8 ‘Transfer of Business’, as her Honour Katzmann J noted during the oral argument at the hearing.

d.    It was also apparent that s. 768AI had not been the subject of judicial consideration.

e.    It was arguable that the operation and effect of s. 768AI might affect the proper construction of cl. 67.3 of the copied State award (i.e. the task undertaken by the Full Bench of the Commission).

f.    As to the point that the applicant’s contention had not been rehearsed before the Full Bench, the circumstances in which a court of review will entertain a point not raised below are well known … Those circumstances include cases like the present one where the issue is one of law and the facts are not controversial (Connecticut Fire Insurance Co. v Kavanagh (1892) AC 473 at 480 (Lord Watson)):

When a question of law is raised for the first time in a court of last resort, upon the construction of a document, or upon facts either admitted or proved beyond controversy, it is not only competent but expedient in the interests of justice, to entertain the plea.

g.    Only the Court, not the Commission, could conclusively determine the rights and obligations of the parties under the FW Act, by reference to the parties’ arguments as to s. 768AI and the copied State award.

h.    The application was listed for hearing before the Full Court. In this respect, the Chief Justice may direct that a matter in the original jurisdiction be exercised by a full court only if he considers it to be of sufficient importance to justify the giving of a direction to that effect: Federal Court of Australia Act 1976 (Cth), s 20(1A). His Honour, the Chief Justice made this direction on or about 17 February 2020.

i.    The respondent union filed extensive written submissions on the question of law raised by the applicant’s application.

11    Transit Systems also refers to the fact that the ARTBIU only made its application for costs after the publication of judgment, citing a number of cases to which reference is made below.

The ARTBIU’s reply submissions

12    In reply, the ARTBIU does not dispute that its application for costs is based on the observations found in the primary judgment. However, it submits that it was not open for it to have pressed for costs before then. It submits that in what is usually a no-costs setting it would have been impertinent for it to have anticipated the Full Court’s high level of criticism and disapprobation of its opponent’s case. With respect to discretionary considerations, the ARTBIU submits as follows:

6.    It is, with respect, facile to suggest that Transit Systems is in any way limited in what it can say about costs because the issue was raised immediately after the Judgment was delivered and that somehow that is relevant to prejudice. The suggestion that there is some prejudice of some kind (irremediable or otherwise) is completely illusory as none is identified. Transit Systems has had every opportunity in its written submissions to be heard on costs and to say whatever it wishes about the making of such an order.

7.    The ARTBIU does not at all suggest that Full Court’s strong criticism should be used to deride or punish Transit Systems at all; rather those criticisms simply open the way for a finding in terms of s.570 that the proceedings were instituted without reasonable cause such that a costs order should be made in the circumstances of this case.

Consideration

13    This is not one of those exceptional or rare cases in which costs should be awarded under570(2) of the Fair Work Act.

14    Although the Court concluded that the submissions advanced by Transit Systems were untenable, it does not follow without more that the proceeding was instituted without reasonable cause within the meaning of s 570 of the Fair Work Act.

15    In Fair Work Ombudsman v Valuair Limited (No 3) [2014] FCA 1182 at [15], for example, Buchanan J described elements of the applicant’s case as “artificial and unsatisfactory” and the consequence of the construction of the award contended for by the applicant as “potentially bizarre”, but observed that those characterisations “were offered after the advantage of a full trial and comprehensive written and oral submissions [and] [a]lthough it may be argued (and [had] been in [that] case) that the conclusions reached should have been apparent to the losing party well in advance, that is a counsel of perfection which [his Honour was] not prepared to act upon”.

16    Valuair was a case in which the legal arguments ultimately accepted by the Court had been pressed upon the losing party before the hearing. Noting that the respondents had obtained a judgment which vindicated those arguments, his Honour said at [14] that, one way of testing whether the applicant’s case was entirely without merit is to ask what most likely would have happened if the respondents had sought summary judgment. His Honour had no doubt that an application of that kind would not have succeeded. The same could be said in the present case.

17    Similarly, in Fair Work Ombudsman v Hu (No 2) [2019] FCAFC 175 at [7] the Full Court (Flick, Reeves and Bromberg JJ), in refusing an application for costs for a variety of reasons, remarked that although a question of construction of an enterprise agreement or a provision of the Fair Work Act may ultimately be easily resolved once it is exposed to scrutiny, any such ease of resolution does not necessarily translate into a submission that the presentation on appeal to a Full Court of that question was ‘vexatiously’ instituted or instituted without ‘reasonable cause’”. The present is such a case.

18    As a differently constituted Full Court (Logan, Bromberg and Katzmann JJ) observed in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 2) (2015) 230 FCR 337 at 345 [19], [i]t is in the nature of an exercise of judicial power that an outcome has a clarity in hindsight that it may not have in prospect”.

19    In the present case, notwithstanding the unfavourable characterisation of the case advanced by Transit Systems in the primary judgment after the benefit of full argument from both sides, we are not persuaded that the proceeding was instituted without reasonable cause.

20    It follows that we are not satisfied that the power to award costs is enlivened.

21    In any event, even if we were satisfied that the power was enlivened, we would have dismissed the ARTBIU’s application in the exercise of our discretion, because the application was neither made nor foreshadowed at the hearing of the appeal or in submissions before judgment.

22    As Edelman J said in Sino Dragon Trading Ltd v Noble Resources International Pte Ltd (No 2) (2015) 246 FCR 498 at 506 [31]:

Generally, a party should make submissions on costs during a hearing: Harding v Deputy Commissioner of Taxation (2008) 172 FCR 469 at [13] citing Hanave Pty Ltd v LFOT Pty Ltd [1999] FCA 572. In Siminton v Australian Prudential Regulation Authority (No 2) [2008] FCAFC 113 at [4], the Full Court of this Court said that [n]ormally the Court would assume that a successful litigant desired that costs would follow the event. If some different course was to be urged then it should be foreshadowed’. Justice Buchanan has expressed the rationale as being 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’: Tristar Steering & Suspension Australia Ltd v Industrial Relations Commission (NSW) (No 2) (2007) 159 FCR 274 at [26].

23    Further, in Kable v New South Wales (No 2) [2012] NSWCA 361 at [14] (cited with approval in Thomas v Commissioner of Taxation (No 2) [2017] FCAFC 144 at [4] (Dowsett, Perram and Pagone JJ)), Basten JA observed that if a party seeks to be heard with respect to costs after orders have been made, even if the application is timely made, that party should expect to have to explain and justify its failure to take advantage of the opportunity to address on costs at the hearing of the appeal and, if there were reasons for not doing so, why those reasons were not explained to the Court on the hearing of the appeal …” Similarly, no such explanation or justification was advanced in this case.

24    We fail to see how it would have been “impertinent” for the ARTBIU to say at the hearing that, if the court were minded to dismiss the originating application, it wished to be heard on costs. There is nothing in this case that would have rendered that course inappropriate, imprudent or unwise.

25    Accordingly, the order of the Court will be that the application for costs be dismissed.

I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Katzmann, Kerr and O’Callaghan.

Associate:

Dated:    17 February 2021