FEDERAL COURT OF AUSTRALIA

Sunbuild Pty Ltd v Ramsay (No 2) [2014] FCA 712

THE COURT ORDERS THAT:

1.    On the application for leave to appeal by the applicants 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        On 31 March 2014, I refused the applicant leave to appeal from the answers given to two separate questions heard and determined in relation to the construction and application of the Fair Work Act 2009 (Cth) (FW Act) by a Judge of the Court (in which the applicant was the respondent): see Sunbuild Pty Ltd v Ramsay [2014] FCA 308 (the leave to appeal decision) and Ramsay v Sunbuild Pty Ltd [2014] FCA 54 (the primary decision). The question of costs of the application for leave to appeal was reserved.

2        I made orders that the question of costs be heard on the papers. The exchange of the written material has now been completed. This judgment deals with that outstanding costs issue.

3        The respondent to the application seeks costs of the application. For the reasons that follow, I refuse the respondent’s application for costs.

4        Section 43 of the Federal Court of Australia Act 1976 (Cth) (the FCA Act) confers power to the Court to award costs. The Court has a wide discretion but is required to exercise its power judicially and in accordance with established principles.

5        In this case, the general principle that costs would follow the event in the absence of special circumstances justifying some other order is modified by s 570 of the FW Act which provides:

(1)    A party to the 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 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

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

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

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

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

6        The relevant principles was summarised in Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23 (AWU), where the Full Court observed at [6]-[8]:

[6]    The basis of the respondents’ application is that the Court would be satisfied that the AWU instituted the proceedings “without reasonable cause”. The question, then, is what is meant by a want of reasonable cause.

[7]    In Khiani v Australian Bureau of Statistics [2011] FCAFC 109 (“Khiani”) the Full Court endorsed the summary of the authorities provided by Reeves J in Nimmo, in the matter of an application for an inquiry relating to an election for an office in the Australian Education Union (NT Branch) (No 2) [2011] FCA 728 at [27]- [30]. In our view the authorities establish the following principles:

(1)    The purpose or policy of the section is to free parties from the risk of having to pay their opponents’ costs in matters arising under the Act, while at the same time protecting those parties who are forced to defend proceedings that have been instituted vexatiously or without reasonable cause.

(2)    It follows from the protection offered by s 570(2) that a person will rarely be ordered to pay the costs of a proceeding. But it is not necessary to prove that there are exceptional circumstances warranting the making of an order: Spotless Services Australia Limited v The Hon Senior Deputy President Jeanette Marsh [2004] FCAFC 155 (“Spotless”) at [12]–[13] (to the extent that the Full Court in Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275 (“Kangan”) held otherwise, we would respectfully disagree).

(3)    The relevant question is whether the proceeding had reasonable prospects of success at the time it was instituted, not whether it ultimately failed: R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia (1978) 140 CLR 470 at 473 per Gibbs J; Kangan at [60]. In Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264-5 (approved in Kangan) Wilcox J said

If success depends on the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding, as being “without reasonable cause”. But where, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.

[8]    We would emphasise, however, that these principles relate to the question of whether the jurisdiction to award costs is enlivened. Even if the Court has jurisdiction to make a costs order, it retains the discretion to refrain from exercising it in an appropriate case.

Application for leave to appeal

7        The application for leave to appeal was brought with respect to the determinations of two questions of law reached by the Judge of the Court. The matter had yet to proceed to final hearing and determination. It is noteworthy that the two questions contained all the issues of law relevant to this matter. Only factual issues remain.

8        I refused leave to appeal because I found that, even if the questions were incorrectly answered, there would be no substantial injustice suffered on part of the applicant. I found that it would be inappropriate to allow the determination of those two questions to go to the Full Court when the pleadings were still open and the factual disputes remain unclear. There was an indication that there would likely be an amendment to the statement of claim and a cross-claim was foreshadowed. Once the matter has been determined, an appeal may be brought as of right, which may raise the correctness of the answers given to the two questions in the determination.

9        The issue is whether the applicant pursued the application “without reasonable cause” in the context of s 570(2)(a) of the FW Act. That is, whether it was reasonable for the applicant to bring the application for leave to appeal knowing that pleadings were open and the factual issues in dispute were unsettled.

10        I note that the parties accept that s 570 of the FW Act applies to the issue as to costs which I am addressing.

Contention

11        The respondent contended that it was readily apparent at the time the application for leave to appeal was made that the matter was not in an appropriate form to be resolved by a Full Court and that there would not be substantial injustice to the applicant if leave was not granted. Consequently, there were no reasonable prospects that the application for leave was to appeal would be granted.

12        The applicant submitted that the criteria canvassed by the Full Court in AWU had not been satisfied, because leave to appeal was refused on the ground that the applicant would not suffer substantial injustice if the determinations in the primary decision were incorrectly answered: see [8] of the leave to appeal decision.

13        The applicant’s alternative submission was that there were additional legitimate reasons concerning public interest which motivated the applicant to make the application for leave to appeal. This submission would rely on the Court’s ultimate discretion not to exercise the power to make adverse cost orders in any event.

Consideration

14        I accept the applicant’s submission that it would not be appropriate to award costs to the respondent on the basis the application for leave to appeal was refused simply because I found that there would be no substantial injustice suffered if the two questions were incorrectly answered.

15        As I said previously, only factual disputes remain. I did not consider the legal merits of the applicant’s contention in my decision. I proceeded to refuse leave on the basis that there was no substantial injustice. The applicant will not be deprived of the opportunity to appeal those determinations once there had been a final judgment on the matter.

16        In my view, it was not unreasonable for the applicant to make the application for leave to appeal as it concerned all the substantial legal issues that would be of relevance to this matter. It raised important issues as to the operation of provisions in the FW Act and the Work Health and Safety (Uniform Legislation) Act 2011 (NT) and its equivalent legislation in all jurisdictions but for Victoria and Western Australia. There were respectable arguments advanced that granting leave to appeal might provide an economically faster route to resolution of the proceedings, although I did not ultimately adopt that course for the reasons I gave. That I reached a firm view that leave to appeal should be refused does not lead me to the view that, when it was made, the application itself was brought unreasonably.

17        I am not satisfied that having outstanding factual disputes is sufficient to conclude that the application was brought without reasonable cause and had no reasonable prospects of success. In R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia (1978) 140 CLR 470, Gibbs J made the finding at 473:

… this question should not be finally determine until the facts are fully explored. The respondent, the Australian Workers’ Union, has applied for costs on the ground that the proceeding was instituted by the prosecutor “without reasonable cause”….

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.

18        Given the important issues that were sought to be the subject of the appeal and that it was not considered for the purposes of refusing the application, I am not prepared to depart from the starting position as found by the Full Court in AWU that there ought to be no costs order by making the order sought by the respondent. The overall circumstances do not persuade me to the view that s 570(2) is enlivened. That is not to preclude the respondent, if it successfully resists the claims in the principal proceeding from at that time seeking costs in relation to them, and including in that event the costs of the application for leave to appeal.

Associate:

Dated:    3 July 2014