FEDERAL COURT OF AUSTRALIA

Hill v Compass Ten Pty Ltd (No 3) [2012] FCA 993

THE COURT ORDERS THAT:

1.    Pursuant to s 570 of the Fair Work Act 2009 (Cth) the Applicant pay the Respondent’s costs incurred in the entirety of the proceedings in NSD 15 of 2012.

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

REASONS FOR JUDGMENT

1    On 3 August 2012 the Court handed down its decision in Hill v Compass Ten (No 2) [2012] FCA 815 (‘the second decision’), which dismissed Mr Hill’s claim for damages resulting from a purported breach of his contract of employment with the respondent. In orders dated 3 August 2012, the Court ordered parties to provide submissions in writing on the question of whether pursuant to s 570 of the Fair Work Act 2009 (Cth) (‘the Act’) Mr Hill should pay the respondent’s costs. Section 570 of the Act states:

Costs only if proceedings instituted vexatiously etc.

(1)    A party to proceedings (including an appeal) in a court (including a court of a State or Territory) exercising jurisdiction 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.

Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 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

(b)    the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or

(c)    the court is satisfied of both of the following:

(i)    the party unreasonably refused to participate in a matter before FWA;

(ii)    the matter arose from the same facts as the proceedings.

2    On 15 August 2012 the Court received the respondent’s written submissions pertaining to its application for costs and an affidavit affirmed by Atticus Busby dated 14 August 2012 which summarised the costs incurred by the respondent in this matter. The respondent’s submissions contend that costs should be awarded on the basis that following the determination of the strikeout application (see Hill v Compass Ten [2012] FCA 761), the claim made by Mr Hill was predominantly one of breach of contract and was not a claim to which s 570 of the Act applied. Alternatively the respondent contends that the proceedings were initiated by Mr Hill without reasonable cause and thus pursuant to s 570 of the Act Mr Hill should pay the respondent’s costs.

3    On 17 August 2012 Mr Hill provided the Court with written submissions on the issue of costs. In Mr Hill’s submissions, Mr Hill reiterated a number of his complaints which were made during the hearing of this matter, including his contention that he was dismissed after making a complaint to the NSW Department of Ageing and Home Care (‘the Department’); that he was obliged to work in very difficult circumstances with insufficient staff and resources and that his complaints to the Department regarding the treatment of residents were investigated and found to have merit. Mr Hill also stated that he had attempted to resolve the matter by mediation but was unsuccessful. Mr Hill contends that costs should not be awarded against him.

4    The Court rejects the respondent’s first submission that s 570 of the Act has no application to the breach of contract claim made by Mr Hill. The Court exercised its accrued jurisdiction in determining the breach of contract claim: see s 32(1) Federal Court Act 1976 (Cth). The exercise of the Court’s jurisdiction was therefore dependent on the existence of a claim under a federal statute. Had there been no claim made under the Act, the Court would have no jurisdiction. In Philip Morris Inc v Adam P. Brown Male Fashions Pty Ltd (1981) 148 CLR 457, the High Court stated at 475:

It is settled doctrine in Australia that when a court which can exercise federal jurisdiction has its jurisdiction attracted in relation to a matter, that jurisdiction extends to the resolution of the whole matter.

5    Further in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 French J (as he then was) stated at [85]:

Jurisdiction conferred on a Federal Court in respect of a matter authorises the Court to determine all the claims, federal and non-federal, which are involved in the controversy. That the federal claim is determined adversely to the applicant does not thereby deprive the Court of jurisdiction to deal with the non-federal claims. They are all part of the federal jurisdiction conferred upon the Court. Nor does it matter to the scope of that jurisdiction whether the federal claim is defeated on a question of law or fact. [Emphasis added]

[…]

6    This quote indicates that the limitation on the award of costs imposed by s 570 of the Act extends to the ancillary matters with which the Court must deal in resolving the claim under the Act, since the ancillary matters are part of the federal jurisdiction which the Act confers upon the Court. Such principle was applied by the Full Court in Goldman Sachs JB Were Services Pty Ltd v Nikolich (2007) 163 FCR 62 (‘Goldman Sachs’). That decision considered s 170CS of the Workplace Relations Act 1996 (Cth) which was in similar terms to s 570 of the Act. Jessup J stated at [379]:

In my view, the 1996 legislature must be assumed to have been aware of the existence of the accrued jurisdiction of the court, and of the potential, to say the least, for non-statutory causes of action to be litigated in proceedings where the court had a statutory jurisdiction which arose under particular provisions of the WR Act. I do, with respect, agree with Moore J as to the connotation of the word “proceeding” in provisions such as s 347. I think that the legislature must be taken to have had it in contemplation that a single proceeding might have involved claims arising directly under s 170CK(2)(f) (or some other relevant provision) as well as claims in the accrued jurisdiction. That being so, it is a simple matter to read the words in s 170CS “a proceeding under s 170CP” as a reference to a proceeding which had its statutory basis under that section. The section was concerned with proceedings under s 170CP, not merely with claims under that section. A proceeding might well have involved claims in the accrued jurisdiction and I can think of no reason why s 170CS should not be construed accordingly.

7    There are also sound policy considerations which support this conclusion. In a matter which raises both a statutory claim under the Act and a common law breach of contract claim, if the Court was required only to award costs in respect of the breach of contract claim and not the claim under the Act it would be faced with the extremely difficult task of assessing what proportion of costs was devoted to the breach of contract claim and what portion to the statutory claim. Further, this view is in keeping with the rationale of s 570 of the Act, which is to facilitate the bringing of legitimate claims under the Act: see Goldman Sachs at [92].

8    The Court must now consider whether pursuant to s 570 of the Act costs should be awarded against Mr Hill. The test is whether, on the facts apparent to Mr Hill at the time of initiating proceedings, there was no substantial prospect of success: see Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264 to 265 (‘Kanan’) and Cavar v Nursing Australia [2012] FCA 338 at [22].

9    The principal claims of Mr Hill were predicated on the contention that Mr Hill’s employment was terminated after Mr Hill informed the respondent that he would be making a complaint to the Department. Mr Hill claimed that the complaint was made by email. Mr Hill further claimed that he did not have copies of the email in his possession.

10    The proceedings were commenced on 9 January 2012. On 14 June 2012 (i.e. after proceedings had been commenced) a subpoena was issued to the Department for production of any emails between it and Mr Hill. The subpoena revealed no emails that could constitute a complaint, which resulted in a substantial portion of Mr Hill’s claim being struck out. However, the Court is not in a position to conclude that as at 9 January 2012 Mr Hill was aware he had not made a complaint to the Department. Mr Hill stated that he did not have copies of the emails that he sent to the Department and the Court has received no evidence to indicate otherwise. It is possible that Mr Hill misconceived the contents of the emails which he sent. Applying Kanan, it could not be said that on the facts apparent to Mr Hill at the time of initiating proceedings the action had no substantial prospect of success.

11    In the second decision the Court found at [27]–[28] that Mr Hill deliberately misled Compass Ten when he attached his son’s first aid certificate and stated to Compass Ten that it was his own certificate and that he held the requisite first aid qualification. The Court accepts that Mr Hill could not have been aware that this would in fact be relied upon as a ground for his dismissal at the time he filed proceedings in this Court, as the respondent was also not aware of the fact that there were issues concerning the validity of Mr Hill’s first aid certificate at the time the proceedings were commenced.

12    However, the Court has found that Mr Hill knew at the time he attached the first aid certificate in his application for employment that he had misled his employer. Further it was clearly stated in his contract with the respondent that dishonesty constituted a ground for summary dismissal. Accordingly, the Court finds that Mr Hill knew prior to the proceedings being commenced that he had committed an act which constituted a ground for summary dismissal and which would inevitably provide the respondent with a complete defence to a claim for breach of contract as soon as the respondent discovered it.

13    The Court therefore finds that Mr Hill would have been aware prior to commencement of proceedings that his claim for breach of contract on the ground that the respondent summarily dismissed him in contravention of the terms of the contract would have been doomed to fail. Accordingly, the Court finds that the action had no prospect of success. In these circumstances, the Court concludes that Mr Hill initiated these proceedings without reasonable cause as referred to in s 570(2) of the Act. As such, Mr Hill should pay the respondent’s costs.

14    It is therefore unnecessary to canvas the remainder of the issues raised in the respondent’s submissions. The Court will order that the applicant pay the respondent’s costs of these proceedings.

Associate:

Dated:    11 September 2012