FEDERAL COURT OF AUSTRALIA

Johnson v Monti-Haitsma Enterprises Pty Limited (in external administration) (No 2) [2014] FCA 1020

REASONS FOR JUDGMENT

1        On 26 August 2014, I dismissed the applicant's application for an extension of time under r 36.05 of the Federal Court Rules 2011 to file a notice of appeal from a judgment of the Federal Circuit Court of Australia.

2        I did so because, in my view, the applicant had no reasonable prospect of succeeding on any of the ten grounds in the draft notice of appeal.

3        At the time of handing down judgment, I ordered the applicant to pay the respondent's costs of the application.

4        At that time, counsel for the applicant asked me to hear the parties on the question of costs and in response I gave the parties leave to file written submission on whether or not I should vacate the costs order.

5        Both parties filed written submission and it was agreed that I should deal with the matter on the papers.

Applicant's Submissions

6        The applicant submitted that there should be no order as to costs in respect of the application to extend time to file a notice of appeal, notwithstanding that the application was unsuccessful.

7        The application and the proposed appeal were in the Court's fair work jurisdiction; s 570 of the Fair Work Act 2009 (Cth) provides:

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) 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.

8        Generally, proceedings will not be considered to have been instituted "without reasonable cause" simply because an argument in the end proves unsuccessful: R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 at 473; Cavar v Nursing Australia [2012] FCA 338 at [22] (per Flick J).

9        Such findings that a case was instituted without reasonable cause are generally limited to situations where, for example, even on the applicant's own version of the facts it is clear the proceeding must fail: see Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264-265 (Wilcox J), and Khiani v Australian Bureau of Statistics [2011] FCAFC 109 at [51] (per Gray, Cowdroy and Reeves JJ).

10        What the Court had before it in the instant case was an application to extend time to file an appeal. The appeal was otherwise as-of-right save for the extension of time issue. The granting of an extension of time involves the exercise of a discretion by the presiding judicial officer. It cannot reasonably be argued that the application for an extension of time was "instituted ... without reasonable cause".

11        Nor does the fact that the extension of time was required due to the applicant's failure to file the notice of appeal in time constitute reason to award costs. There is a clear distinction between an error or oversight and unreasonable conduct. The terms of s 570 mandate a limit on the award of costs in fair work proceedings. Costs are only available when there has been vexatious or unreasonable conduct.

12        The Court did not hear argument as to costs at the hearing of the extension of time application. Having now been addressed as to s 570, the Court is invited to vary the previous costs order. The applicant submitted that the Court should vacate the costs order made on 26 August 2014, and in place thereof make an order in terms that there be no order as to costs.

Respondent's Submissions

13        The respondent pointed out that, as it had submitted on the hearing of the application for an extension of time to appeal, there were two "gateways" through which the applicant would have to pass in order to obtain relief, no matter what hours she allegedly worked. They were, either:

(1)    Whether an award covered her employment; or

(2)    Whether the National Minimum Wage involves a calculation of overtime.

14        The reasons of Judge Driver in Johnson v Monti-Haitsma Enterprises Pty Ltd [2014] FCCA 259 ("R") outlined clear deficiencies in the applicant's case regarding each "gateway", and from the time of that judgment, the applicant would have been abundantly aware that:

(1)    The decision of Marshall J in the Industrial Relations Court of Australia in Kerr v Jaroma Pty Ltd t/a Treasury Motor Lodge (1996) 70 IR 469, involving as it did remarkably similar facts and award classifications to the matter (at R [32], [33] and [35]), stood in the way of relief pursuant to Award coverage; and

(2)    The clear provisions of the Fair Work Act (conveniently extracted at R [40] to [42]) stood in the way of any entitlement to minimum wage payments on hours over 38 hours a week in the absence of an agreement.

15        The grounds of appeal advanced in the proceedings for extension of time to appeal simply claimed the Judge had "erred" (Grounds 1 and 2), or "should have held" (Ground 3) with no more. Not one basis for error was put in the grounds of appeal, which was apparently the subject of counsel's attention between 7 and 15 July, 2014 (Affidavit of John Hamish Giles Finney dated 16 July 2014, at [7]).

16        While s 570 provides some cost protection to an applicant, it does not provide a "free kick", without consequences. From the time of the receipt of the decision of Judge Driver, the applicant was aware of the fundamental deficiencies in her case that precluded any reasonable prospects of success. The agitation of the application for extension of time to appeal was therefore pursued without reasonable cause, and the applicant should pay the respondent 's costs.

Conclusion

17        I agree with the respondent's submission. The consideration of costs in relation to the application to extend time to appeal draws into consideration the important distinction between whether a "first instance" application is without reasonable cause, as opposed to whether appeal applications are without reasonable cause. As Flick J observed in Cavar v Nursing Australia (at [23]), when awarding costs:

Irrespective of whether or not the proceeding before the Federal Magistrate could be characterised as one being "without reasonable cause", it is concluded that the present Application for Leave to Appeal can accurately be so characterised. By the time the present Application was filed, Ms Cavar had the benefit of the reasons for decision of the Federal Magistrate. Those reasons carefully set forth the deficiencies in her claims for relief. Having had those deficiencies identified, it remained a matter for Ms Cavar to determine whether or not she wished to seek to appeal to this Court. Having decided to do so, however, her further pursuit of the claims before this Court is "without reasonable cause". The deficiencies identified by the Federal Magistrate were so fundamental to the claim sought to be advanced by Ms Cavar that any further pursuit of those claims was "without reasonable cause".

18        In the face of my finding in Johnson v Monti-Haitsma Enterprises Pty Limited (in External Administration) [2014] FCA 906) at [15] that the applicant's appeal had "no merit" and "would inevitably fail", the pursuit of the application for an extension of time was "without reasonable cause".

19        For the foregoing reasons, I decline to vacate order 2 made on 26 August 2014.

Associate:

Dated:    19 September 2014