FEDERAL COURT OF AUSTRALIA

Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Nestlé Australia Limited [2005] FCA 717

COSTS – application for penalty pursuant to s 178 of the Workplace Relations Act 1996 (Cth) – application dismissed – whether proceeding commenced without reasonable cause – whether “reasonable” to be determined as a matter of objective fact without undue influence of the actual result – case not obviously hopeless – no order as to costs

Workplace Relations Act 1996 (Cth) ss 178, 298K 298U, 347(1)

Spotless Services Australia Ltd v Marsh [2004] FCAFC 155, applied

Hatchett v Bowater Tutt Industries Pty Ltd (1991) 28 FCR 324, followed 

R v Moore; Ex parte Federated Miscellaneous Workers’ Union (1978) 140 CLR 470, followed

Geneff v Peterson (1986) 19 IR 40, followed

AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION v NESTLÉ AUSTRALIA LIMITED

V 52 OF 2005

MARSHALL J

3 JUNE 2005

MELBOURNE

THE COURT ORDERS THAT:

1.         There be no order as to costs.

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

REASONS FOR JUDGMENT

1                     In a judgment published on 3 May 2005 (“the substantive judgment”) the Court dismissed an application by Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (“the Union”); see Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Nestlé Australia Limited [2005] FCA 488. The respondent, Nestlé Australia Limited (“Nestlé”) has applied for its costs pursuant to s 347(1) of the Workplace Relations Act 1996 (Cth) (“the Act”). These reasons for judgment must be read together with the reasons in the substantive judgment.

2                     Section 347(1) provides:

“A party to a proceeding (including an appeal) in a matter arising under this Act (other than an application under s 170CP) shall 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.”

3                     Nestlé contended that the Union instituted the proceeding without reasonable cause. It submitted that, when issued, the application had no prospect of success. It submitted that the success of the application did not depend on any seriously disputed question of fact or the resolution of any arguable point of law.

4                     As a Full Court said in Spotless Services Australia Ltd v Marsh [2004] FCAFC 155 at [13]:

“Whether a proceeding has been commenced without reasonable cause is relevantly established as a matter of objective fact.”

5                     In Spotless the Full Court considered that the application for prerogative relief was bound to fail. It ordered costs against the unsuccessful applicant. The expression “bound to fail” is similar to expressions such as “so obviously untenable that it cannot possibly succeed”, “manifestly groundless” and “bad beyond argument” as referred to by von Doussa J in Hatchett v Bowater Tutt Industries Pty Ltd (1991) 28 FCR 324 at 327. Earlier, at 327, von Doussa J said:

“The test imposed by the expression “vexatiously or without reasonable cause” is similar to the one applied by a court on an application for the exercise of summary power to stay or strike out proceedings: see Heidt v Chrysler Australia Ltd (1976)26 FLR 257 at 272 to 273 and Geneff v Peterson (1986) 19 IR 40 at 87 to 88.”

6                     As Gibbs J said in R v Moore; Ex parte Federated Miscellaneous Workers’ Union (1978) 140 CLR 470 at 473, in respect of a predecessor provision to s 347(1):

“In my opinion a party cannot be said to have commenced a proceeding “without reasonable cause”, within the meaning of that section, simply because his argument proves unsuccessful.”

7                     Further, as Gray J said in Geneff v Peterson (1986) 19 IR 40 at 88:

“…the focus of the section is on the institution of the proceedings, and the court should not allow itself to be influenced unduly by the actual result.”

8                     The proceeding in the current matter was instituted under ss 178 and 298U of the Act in respect of alleged contraventions s 178(1) and s 298K.

9                     The application, filed on 19 January 2005, was supported by an affidavit, rather than by a statement of claim. This is a course permitted by O 4 r 6(1) of the Rules of Court. Under O 4 r 6(2) the affidavit accompanying the application is required to show the nature of the applicant’s claim and the material facts on which it is based.

10                  The affidavit filed with the application (“the affidavit”) was sworn by Ms Bronwyn Halfpenny, the Regional Secretary of the Food and Confectionery Division of the Union. The affidavit referred to the certified agreement, which the Union alleged that Nestlé had breached. It stated that Ms Halfpenny was involved in the negotiations, which led to the making of the agreement. It identified the two clauses of the agreement, which the Union contended had been breached by Nestlé. It alleged that Nestlé was engaging in conduct, which breached the agreement by forcing applicants for permanent employment to accept additional conditions of employment, outside the terms of the agreement. It contended that the “letter of appointment” is an agreement “which is outside the Certified Agreement”. It attested to the urgency of the proceeding and the failure of Nestlé to respond to the Union’s request that it not impose additional conditions on the applicants for employment.

11                  The affidavit, in a rudimentary way, set the groundwork for the submissions ultimately pressed before the Court.  Namely, the affidavit alleged that Nestlé had breached the certified agreement by offering permanent employment to employees under a different form of agreement and by pursuing “extra claims”, inconsistent with the agreement during its life.

12                  As referred to above, the central issue in the Union’s ultimate submissions was the requirement in the letter of appointment for new permanent employees to agree to Nestlé having the right to require, in certain defined circumstances, such employees to attend a medical examination.

13                  The Court rejected the Union’s claims but these claims were not “so obviously untenable that they could not possibly succeed”, “manifestly groundless” or “bad beyond argument”. The requirement by an employer that an employee agree to an employment related condition in circumstances where the Union is prohibited from making extra claims during the life of a certified agreement, understandably concerned the Union. It desired to have the matter aired in Court. Whilst the arguments raised by the Union lacked merit when compared with the arguments raised by Nestlé, the Union’s case was not obviously hopeless as at 19 January 2005, when the application and the Halfpenny affidavit are considered in isolation.

14                  In my view for the foregoing reasons, it has not been established that the proceeding was instituted without reasonable cause as a matter of objective fact, viewed from the time of the institution of the proceeding, that is, on 19 January 2005.  It is unnecessary to consider whether the Court should exercise its discretion, in any event, not to make an order as to costs having regard to certain issues raised in the written submissions of the Union.  These issues concerned the pre-trial conduct of Nestlé in not consenting to the matter being resolved in the Australian Industrial Relations Commission and the benefit to Nestlé in having some of the matters ventilated in the application judicially determined.

15                  The Court will make no order as to costs.

Associate:

Dated:              3 June 2005