FEDERAL COURT OF AUSTRALIA

Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351

THE COURT ORDERS THAT:

1.    There be no order as to costs.

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

REASONS FOR JUDGMENT

1    Corinthian Industries (Australia) Pty Ltd and Baltic Doors Pty Ltd (which can for convenience be referred to as “Corinthian”) were successful in resisting claims which had been made against them by the Construction, Forestry, Mining and Energy Union (“the Union”) under the Fair Work Act 2009 (Cth): [2014] FCA 239. Corinthian now seeks its costs in respect of two claims which the Union abandoned at trial.

2    The general rule in proceedings under the Fair Work Act 2009 (Cth) is that orders against a party to pay the costs incurred by others are exceptional and will rarely be ordered. Section 570, however, provides that costs may be awarded in certain circumstances. Section 570 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.

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 the FWC;

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

Corinthian contended that it is entitled to its costs for the claims abandoned by the Union because they had been instituted “without reasonable cause” within the meaning of s 570(2)(a) or because the costs were incurred by the Union’s unreasonable act within the meaning of s 570(2)(b).

3    The Union’s claim against Corinthian had been that impermissible adverse action had been taken against members of the Union by not giving gift vouchers to those workers at its sites who had taken strike action and that a reason for not giving the striking workers a gift card was because they had exercised a workplace right by going on strike. The Union’s claim, until the hearing, had also included claims that (a) the striking employees had not received the gift cards, contrary to s 346(a), because they had been members of the Union (“the Union membership claim”), and (b) that the striking employees at its Canning Vale and Regency Park sites had not received the gift cards, contrary to s 340(1), because they had exercised their workplace right (“the claim in relation to the Canning Vale and Regency Park employees”).

4    Corinthian contended that the Union should never have instituted the Union membership claim because the Union was able to determine before instituting the proceedings whether any of its members had received a gift card and that the Union had knowledge of the fact, or was in a position to determine prior to instituting the proceedings, that Corinthian did not deduct union dues and, therefore, that Corinthian could not have known which employees were, or were not, members of the Union. On that basis it was contended that the alleged breach of s 346 of the Fair Work Act 2009 (Cth) was bound to fail because the Union must have known, or was easily in a position to determine, that Corinthian could not have taken adverse action by reason of membership of the Union.

5    The Union’s claim in relation to the Canning Vale and Regency Park employees had been that the striking workers at those sites had not received the gift cards, but it was contended by Corinthian in the costs application that the Union knew, or ought to have known, that no employees at those sites (whether striking or non-striking) had been provided with a gift card and that, therefore, the proceeding in respect of the employees at those sites was also bound to fail. The Union had pleaded in paragraphs 7(e) and (f) of the statement of claim that the strikers at Canning Vale and Regency Park had not been provided with a gift card. However, paragraphs 7(a)-(d) of the Union’s statement of claim had made a distinction between Corinthian giving a gift card to working employees and not to those who were striking at the St Mary’s, Dandenong and Scoresby sites, whereas the pleading in paragraphs 7(e) and (f) in respect of the Canning Vale and Regency Park sites drew no distinction between the striking employees and the working employees. From this it was contended that the Union knew that Corinthian had not given gift cards to any of the employees at the Canning Vale and Regency Park sites and that, therefore, the Union knew at all times that it was impossible to establish a claim of adverse action in respect of the Canning Vale and Regency Park strikers in circumstances where Corinthian had not given a gift card to any employees at those sites irrespective of whether or not they had participated in the strike. It also followed that there could then also not have been injury, prejudice or discrimination suffered by the employees, as had been alleged, on any basis which could have related to the exercise of a workplace right.

6    It was not until the second day of the hearing, and after the conclusion of the witness evidence, that the Union informed the Court that it had decided not to press the Union membership claim or the allegation that Corinthian had contravened the Fair Work Act 2009 (Cth) in relation to the Canning Vale and Regency Park strikers. Concessions of that kind are generally to be encouraged for the efficient and prompt determination of disputes, to promote the efficient use of court time and to reduce costs and unnecessary inconvenience to other parties.

7    Corinthian was at risk in respect of the two abandoned claims, however, until they were abandoned. Section 361 of the Fair Work Act 2009 (Cth) imposed upon Corinthian the burden of proving that adverse action was not taken. The Union had pleaded, and Corinthian had admitted, that it had failed to give the Canning Vale and Regency Park strikers a gift card. The effect of s 361 in light of the pleading was to presume that one of the reasons for failing to give gift cards to the Canning Vale and Regency Park strikers was a prohibited reason unless Corinthian proved otherwise. That made it necessary for Corinthian to call evidence from those able to give evidence about Corinthian’s reasons in respect of the employees at Canning Vale and Regency Park: see Board of Bendigo Regional Institute of Technology and Further Education v Barclay (2012) 290 ALR 647, [44]-[45]. To that end Corinthian called Roger Preston and James Edwards to give evidence. The former was the general manager for the Regency Park site and the latter was the general manager for the Canning Vale site. They gave direct evidence about the reasons why they did not give a gift card to any of the employees at their site.

8    Corinthian contended that the two abandoned claims were instituted without reasonable cause and that costs should be awarded under s 570(2)(a) of the Fair Work Act 2009 (Cth). To exercise the discretion conferred by that provision the Court must be satisfied that the claims were, relevantly, instituted without reasonable cause. That is not established merely because a party fails in the claims: R v Moore; ex parte Federated Miscellaneous Workers Union of Australia (1978) 140 CLR 470, 473. The relevant provisions reflect “a policy of protecting a party instituting proceedings from liability for costs” and costs will rarely be awarded unless justified by exceptional circumstances: see Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275 at [60]. In Kangan Batman Institute it was said by the Full Court at [60] that “a proceeding will be instituted without reasonable cause if it has no real prospects of success, or was doomed to failure”. In Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 Wilcox J indicated at 264 that one way of testing whether a proceeding was instituted “without reasonable cause” was to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no “substantial prospect of success”. His Honour went on to say that a proceeding lacks a reasonable cause where it is clear that it must fail on the applicant’s own version of the facts.

9    There is some force in Corinthian’s claim for its costs in respect of the Union membership claim. Sections 37M and 37N of the Federal Court of Australia Act 1976 (Cth) imposes a positive duty upon parties and their legal advisers to facilitate the just resolution of disputes. The obligations imposed by those provisions fall upon the parties to proceedings under the Fair Work Act 2009 (Cth) as much as to litigants in other proceedings. However, I am not satisfied that it is appropriate to award costs against the Union in respect of the Union membership claim in this case. Section 570(2)(a) imposes a high threshold to be established before costs can be awarded, and the threshold may be difficult to meet where the complaint concerns forensic judgments made together with other forensic judgments which would not meet the threshold. The test in s 570(2)(a) is, relevantly, whether the claim was instituted “vexatiously or without reasonable cause”. Applications under s 570(2)(a) are not occasions for courts to be invited to second guess forensic decisions made by litigants, but to compensate a party for costs incurred by them in defending proceedings which were instituted vexatiously or without reasonable cause. It may be true that the Union could have discovered that some Union members had been given the gift vouchers, but that fact would not of itself necessarily exclude a decision by Corinthian not to grant gift vouchers to others having, as one of the reasons, that those employees had been members of the Union. It does not follow, therefore, that it was clear from the Union’s own version of the facts that the Union membership claim lacked a reasonable cause. The fact that there were some members of the Union who crossed the picket line from the much greater number of those engaged in industrial action did not mean that one of the reasons for a decision might not have been Union membership.

10    The claim by Corinthian for its costs in respect of the claim in relation to the Canning Vale and Regency Park employees is also not made out. The Union’s statement of claim does not establish that its claim in relation to the Canning Vale and Regency Park employees was, on its own version of events, doomed to fail or lacked reasonable cause. It was not until, at the earliest, when Corinthian had given discovery of documents in respect of those employees that the Union might have been in a position to have concluded that the case against Corinthian in respect those employees could not succeed. But the claim for costs under s 570(2)(a) depends upon a consideration of the position as at the time of the institution of the proceeding and not at a later date. At that date the claim was not clearly bound to fail. The fact that the non-striking workers at the Canning Vale and Regency Park sites did not receive gift cards did not exclude the possibility that a reason for the striking workers there not receiving a gift card was that they had engaged in protected industrial action. Failing to give gift cards to the non-striking workers could, as was explored in cross examination, have been explained by other reasons which did not exclude the possibility that a reason for not giving gift cards to the striking workers was that they had gone on strike.

11    Corinthian also relied upon s 570(2)(b) to seek its costs in respect of the claim in relation to the Canning Vale and Regency Park employees, contending that after discovery on 31 January 2014 the Union unreasonably acted or omitted to act by not abandoning the claim promptly after discovery. Corinthian contended that upon receipt of discovered documents on 31 January 2014 it would have been reasonably apparent to the Union that no employees at Canning Vale or Regency Park had been in receipt of a gift card (whether or not a striking employee). The continued prosecution of “any incompetent or hopeless case can be regarded as “an unreasonable act”” just as the pursuit of a “contentious, [but] ultimately unsuccessful, argument is not an unreasonable act”: Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392, [36]. The failure by the Union to abandon the claim in relation to the Canning Vale and Regency Park employees at an earlier time was not unreasonable in the context of the whole of the claims. The late abandonment of a claim does not establish that it was unreasonable to have maintained it until then: see Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574, [29]. What the Union came to know after discovery did not necessarily exclude that a reason the striking employees did not receive a gift card was that they had gone on strike. Furthermore, the evidence concerning Corinthian’s employees at Canning Vale and Regency Park was relevant to Corinthian’s decision about rewarding its employees who continued to work during the strike. The relevant decision by Corinthian which was challenged by the Union was not that made by the general managers at those sites, but had been made by Mr Bruce in consultation with, amongst others, Messrs Grundy and Webster. That emerged from the oral testimony at trial and, until then, it was not clear who had been the relevant decision maker. The conduct of Corinthian at the Canning Vale and Regency Park sites, however, was at all times inextricably linked to the claims about Corinthian’s decision and the evidence about what occurred at those sites was relevant in disposing of the proceeding.

12    I would, in any event, as a matter of discretion not award costs under s 570(2)(a) or (b) on the basis that, in my assessment, the costs relating exclusively to the Union claim and to the claim in relation to the Canning Vale and Regency Park employees were relatively insignificant. There was no evidence tendered during the hearing of argument about costs to justify an award of costs for any meaningful percentage of the proceeding taken up by the abandoned claims. The time spent at trial on each of the abandoned claims, even the evidence of those called to attend from Western Australia and South Australia, was insignificant and would not justify an award of costs for any percentage of the proceeding that might not be an arbitrary or token amount. It would, in any event, be difficult to identify those costs which related solely to the abandoned claims and which would not have been incurred had the claim been abandoned sooner. The evidence in relation to the Canning Vale and Regency Park employees was also adduced in support of Corinthian’s overall defence and it has not been established by Corinthian that it would not have incurred those costs had the claim in relation to the Canning Vale and Regency Park employees been abandoned earlier. Furthermore, the costs which Corinthian incurred in respect of the Canning Vale and Regency Park employees were at least to some extent incurred by the forensic decision made during the course of the trial not to accept an open offer made in Court by counsel for the Union for the entire case to be decided on the evidence in respect of the sites at St Mary’s, Dandenong and Scoresby without the need to call evidence in respect of the Canning Vale and Regency Park employees. The offer had been made at a point before the witnesses were called and in the expectation that if the offer had been accepted it would not have been necessary for the witnesses to travel from, respectively, Western Australia and South Australia.

13    Accordingly, there will be no orders as to costs.

Associate:

Dated:    8 April 2014