FEDERAL COURT OF AUSTRALIA

Shamir v Commonwealth of Australia (Australian Taxation Office) [2015] FCA 1463

REASONS FOR JUDGMENT

1    The respondent (“the Commonwealth”) seeks an order for its costs against the applicant, Mr Ron Shamir, pursuant to s 570(2)(a) and (b) of the Fair Work Act 2009 (Cth), in proceedings instituted by Mr Shamir on 17 June 2015, but which were discontinued on 24 July 2015. Mr Shamir seeks an order that the costs which had been awarded in his favour on 22 October 2015 be payable on an indemnity basis and that they be taxed immediately in default of agreement.

2    The Commonwealth’s application for costs is made in proceedings brought by Mr Shamir in reliance upon the Fair Work Act 2009 (Cth) in which costs are generally not awarded against an unsuccessful party. Section 570 of the Fair Work Act 2009 (Cth) 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 [Fair Work Commission];

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

The section expresses a general policy against the awarding of costs in proceedings under the Fair Work Act 2009 (Cth), but costs may be awarded in the circumstances contemplated by s 570(2). In Ryan v Primesafe Pty Ltd [2015] FCA 8 Mortimer J referred at [64] to the policy behind s 570 and to the reason for caution before awarding costs saying:

The reason for caution is the potential for discouraging parties’ pursuit in a complete and robust way of the claims for contravention which they seek to make under the Fair Work Act, or the defence of such claims. The policy behind s 570 is to ensure that the spectre of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular, in my opinion) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings. It is an access to justice provision.

In Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23 the Full Court said at [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.

The application of the section depends upon objective facts but is not based upon “an exceptional circumstances test”: Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 2) (2015) 230 FCR 337, 344 [16]-[17]. The Court’s power to award costs under s 570(2), however, is restricted to “only” those circumstances specified in the section. Even if the Court is satisfied that the grounds in s 570(2)(a) or (b) are made out the Court may still decline to order costs in the exercise of its discretion: Hatchett v Bowater Tutt Industries Pty Ltd (No 2) (1991) 28 FCR 324, 326.

3    The Commonwealth in this proceeding relies upon s 570(2)(a) and (b), contending (a) that Mr Shamir’s proceeding was initiated “vexatiously or without reasonable cause” or (b) that the Commonwealth’s costs were caused by the unreasonable act of Mr Shamir maintaining the proceeding: see Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143, [29]. In Baker v Patrick Projects Pty Ltd (No 2) [2014] FCAFC 166 the Full Court at [9] approved the following passage from Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351 at [8] summarising the relevant authorities concerning the exercise of the Court’s discretion under s 570(2)(a):

To exercise the discretion conferred by [s 570(2)(a) of the FW Act] 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] HCA 51; (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. [See also Fair Work Ombudsman v Devine Marine Group Pty Ltd [2015] FCA 370 at [43]; and Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 2)(2015) 230 FCR 337, 342-3, [13]].

Costs against an unsuccessful party under s 570(2)(a) do not “follow the event” but require a clear case that the proceeding ought not to have been brought or that it was instituted vexatiously. The conduct of the parties prior to the institution of proceedings may be relevant in deciding whether the proceedings were instituted vexatiously or without reasonable cause, as is the conduct of the opposing party both prior to and subsequent to the institution of proceedings: Hatchett v Bowater Tutt Industries Pty Ltd (No 2) (1991) 28 FCR 324, 326.

4    The application of the test suggested by Wilcox J in Kanan requires consideration of the material in which the applicant’s version of the facts is set out and which is said to found a case for the relief sought in the action which was instituted. In this case that requires attention to the formal application and statement of claim (and their subsequent amendments), but consideration may also be given to the other material before the Court from which a “reasonable cause” may be ascertained. An application under s 570(2) is not the same as a pleadings dispute, or a strike out application, where the test is whether a claim has been pleaded adequately: see Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392, 402 [32]. The inquiry called for in an application under s 570(2)(a) is, rather, whether a proceeding was commenced to be vexatious or without reasonable foundation. An analysis of the pleadings in that context is therefore directed to seeing whether the facts set out show the purpose of vexation or a lack of reasonable cause. The applications and statements of claim in this case, and the affidavits filed in the proceedings, establish the existence of disagreement and dispute but not of a reasonable cause in the institution of the proceeding. A number of affidavits were relied upon in support of the competing contentions in the Commonwealth’s application for its costs. There were four affidavits by Mr Shamir, two by his former legal practitioner, Mr Andrew Blige, and an affidavit of Ms Virginia Masters filed on behalf of the Commonwealth. The material, including that in opposition to the Commonwealth’s claim for costs, shows that the proceeding ought not to have been commenced and that Mr Shamir’s legal adviser was not able adequately to conduct the proceeding.

5    Mr Shamir had been employed by the Commonwealth at the Australian Taxation Office (“ATO”). His work in that capacity became the subject of a notice from the Inspector-General of Taxation seeking information and evidence. The notice issued to Mr Shamir by the Inspector-General of Taxation led to discussions by, or on behalf of, Mr Shamir and others in the ATO concerning Mr Shamir’s employment. On 10 June 2015 Mr Shamir was required to leave the premises of the ATO and was warned that his employment would be terminated if he did not respond to questions raised about his absences and failure to comply with management requests. He was handed a “notice of possible termination” and was asked to show cause within seven days why his employment should not be terminated. On 19 June 2015 he was informed that his employment would be terminated on 22 June 2015.

6    On 17 June 2015 Mr Shamir, through his then legal practitioner, Mr Blige, commenced proceedings in this Court by originating application and statement of claim purporting to rely, amongst other matters, upon the Fair Work Act 2009 (Cth). The application sought urgent interlocutory relief and was supported by an affidavit by Mr Shamir dated 17 June 2015. The first interlocutory hearing was before Tracey J on 22 June 2015, but the materials were inadequate for the Court to deal with the application for urgent interlocutory relief which Mr Shamir had sought. Ms Masters, who appeared for the Commonwealth, also submitted that Mr Shamir’s application was significantly defective and his Honour ordered that an amended application be filed by 26 June 2015. The application for interlocutory relief was adjourned to 2 July 2015 with orders for the parties to file material on the application for urgent interlocutory relief, upon the parties each giving undertakings to the Court which enabled the status quo to be maintained in the meantime.

7    Amongst the defects identified in submissions to Tracey J were: that no relief had been sought against the then second to fifth respondents; that breaches had been alleged of the Public Governance, Performance and Accountability Act 2013 (Cth) and Public Service Act 1999 (Cth) in circumstances where Mr Shamir had no private right of enforcement under those statutes; that a breach of contract had been alleged but no contractual relationship had been pleaded; and that contraventions of ss 340 and 342 of the Fair Work Act 2009 (Cth) had been alleged but there had been no allegations about how s 340 was said to have been breached and that s 342 was a definition section that was not able to be breached.

8    The reason for the deficiencies in the proceeding was partly explained in an affidavit by Mr Blige dated 16 July 2015. In that affidavit Mr Blige deposed to the fact that he had been engaged by Mr Shamir to provide advice on what Mr Blige described as “surrounding a coercive notice [Mr Shamir] received from the Inspector-General of Taxation in relation to anomalies in work practices he discovered in his employment with the [ATO]”. Mr Blige explained in the affidavit that on 10 June 2015 the respondent (which at that stage was incorrectly described as “Australian Taxation Office”) had served Mr Shamir “with a possible termination of employment/show cause notice and removed him from” the ATO’s Box Hill office. On 17 June 2015 Mr Blige acted upon instructions from Mr Shamir “to seek an urgent injunction in the Federal Court seeking an order, inter alia, that [Mr Shamir] be reinstated into his role in order to comply with the Inspector-General of Taxation notice” although it was not until 19 June 2015 that Mr Shamir was informed that his employment would be terminated on 22 June 2015. The 16 July 2015 affidavit by Mr Blige recounted that on 19 June 2015 Mr Shamir informed Mr Blige of having received a notice of termination but that he “did not have time to adequately seek instructions from Mr Shamir” as Mr Blige was interstate at the time. That affidavit by Mr Blige also stated:

I am a sole practitioner and have limited resources and have had difficulty in managing my current workload and dealing with other clients but have attempted to represent Mr Shamir to the best of my ability under the circumstances.

Later in the affidavit Mr Blige explained that he had been unable adequately to research the material including the affidavits which had been filed or to obtain instructions from his client. It was not until 14 July 2015 that he “only just managed to brief counsel” and was experiencing an inability “to attend to other clients” who he had to turn away to free himself up as much as possible. Mr Blige stated frankly that he was “struggling to manage what [was] an extensive workload in a very short timeframe for a sole practitioner”.

9    The proceeding, issued on 17 June 2015 on Mr Shamir’s instructions, was first heard by Tracey J on 22 June 2015 for what had been said to his Honour was an application for urgent interlocutory relief and directions. His Honour heard submissions about the defects in the application and pleadings and ordered that Mr Shamir file any amended application and any further affidavits on or before 26 June 2015. The originating application had incorrectly named the respondents as “Australian Taxation Office ‘and others named in the schedule’”. The Australian Taxation Office, however, is a non-corporate entity of the Commonwealth of Australia which has no separate legal identity and is not capable of being sued in its own name. The others referred to in the schedule were four individuals against whom no relief was sought and who were never served. The originating application and statement of claim alleged a number of contraventions which had no foundation notwithstanding the certificate by Mr Blige in the statement of claim “that, in relation to the statement of claim filed on behalf of [Mr Shamir], the factual and legal material available to [Mr Blige] at present provide[d] a proper basis for each allegation in the pleading”.

10    The originating application and statement of claim were also defective in the pleading of the contraventions alleged against the respondents. A proceeding remains one in relation to a matter arising under the Fair Work Act 2009 (Cth) for the purposes of s 570 if it is also founded on other causes of action “provided that at least one of its claims arises under” the Fair Work Act 2009 (Cth): see Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221, 252-4; Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v AIS Industrial Australia Pty Ltd (No 2) [2015] FCAFC 166, [16]. The application had alleged contraventions of: ss 26, 27 and 27(b) of the Public Governance, Performance and Accountability Act 2013 (Cth); ss 10A(1)(a), 10A(1)(b), 10A(1)(c), 10A(1)(i), 10A(1)(j), 13(1), 13(2), 13(3), 13(4), 13(11) and 35(2)(c) of the Public Service Act 1999 (Cth); ss 340(1), 341, 343, 351, 355 and 772 of the Fair Work Act 2009 (Cth); ss 1(c), 2, 3.9, 113.1, 123.4 and 132.2 of the ATO Enterprise Agreement 2011; a contract of employment between Mr Shamir and his employer, including breach of implied terms; and the principles of natural justice. The statement of claim added an allegation of contravention of: ss 123, 125 and 145 of the ATO Enterprise Agreement 2011; ss 10A(1)(e) and 10A(1)(f) of the Public Service Act 1999 (Cth); s 342 of the Fair Work Act 2009 (Cth); the National Employment Standards; and “internal policy in failing to investigate [Mr Shamir’s] complaint”.

11    The allegations of contravention of the Public Governance, Performance and Accountability Act 2013 (Cth) and the Public Service Act 1999 (Cth) were brought without proper foundation in law. Mr Shamir had no private right of action in relation to the alleged infringements and those claims were instituted without reasonable cause and to maintain the proceeding was an unreasonable act. The alleged contraventions of ss 341 and 342 of the Fair Work Act 2009 (Cth) were misconceived since the provisions are definitions and not directly capable of contravention. The application under s 772 of the Fair Work Act 2009 (Cth) was not one that he was able to bring. An application under s 772 is an “unlawful termination application”, but s 723 provides that a person must not make an unlawful termination application in relation to conduct if the person can make a “general protections court application” in relation to the conduct concerned. A general protections court application is one made under Division 2, Part 4-1 for orders in relation to a contravention of Part 3-1. Mr Shamir was a national systems employee pursuant to s 13 of the Fair Work Act 2009 (Cth) and was, therefore, able to bring a general protections court application in relation to alleged contraventions of Part 3-1: see s 539(2) Item 11.

12    The allegations of a breach of s 340 were each defective. Mr Shamir claimed a workplace right to be supported in raising a bullying complaint without fear of reprisals but pleaded no source of the alleged right. Mr Shamir asserted that he was treated differently upon raising “legitimate workplace rights” but did not identify any “legitimate workplace rights” or their source. He pleaded at paragraph 28 an alleged denial of a workplace “right and entitlement to be treated fairly and without discrimination” but not action falling within the scope of s 340. At paragraph 38 he pleaded that he exercised “his workplace right by lodging a bullying and harassment complaint” and that the respondent had failed to remove Mr Shamir from his role and had not provided him with a safe workplace free from bullying and harassment, but did not plead how the failure to take action fell within the scope of s 340 of the Fair Work Act 2009. In paragraphs 39 to 51 under the heading “Inspector-General of Taxation Notice”, in conjunction with paragraphs 52 and 53, Mr Shamir relied upon the notice issued to him by the Inspector-General of Taxation but failed to plead any allegation that the notice, or compliance with it, fell within s 340 of the Fair Work Act 2009 (Cth).

13    Mr Shamir’s allegation of coercion in contravention of s 343 failed to plead the action that was said to be organised, taken or threatened, or the workplace right that the respondent was allegedly seeking to influence. The allegation of contravention of s 346 was asserted in paragraph 31(b) but without a link to the basis of the allegation. Paragraph 29 alleged that Mr Shamir had been “treated differently and discriminated [against]” due to his union representation but identified no action said to constitute the different treatment or discrimination. Paragraph 30 alleged that Mr Shamir had “suffered undue influence and pressure and feels the union involvement has negatively altered his position” (emphasis added) but did not plead any conduct said to form the basis of these allegations. Nor was Mr Shamir’s alleged “feeling” that his position had been “negatively altered” an allegation of adverse action within the meaning of s 342 of the Fair Work Act 2009 (Cth). The allegation of discrimination contrary to s 351 appeared in an unnumbered paragraph between paragraphs 27 and 28 and in paragraphs 37 and 52. The pleading contained allegations relating to Mr Shamir’s health but there was no pleading that he had been subjected to adverse action because of a “physical or mental disability” or any other attribute protected by s 351. The allegation of coercion in contravention of s 355 in the unnumbered paragraphs between paragraphs 27 to 28 did not identify action that was “organised, taken or threatened”, or the person against whom the action was organised, taken or threatened, or which sub-paragraphs of s 355 were relied on.

14    The allegation of a breach of the ATO Enterprise Agreement 2011 failed to plead a contravention under s 50 of the Fair Work Act 2009 (Cth) necessary to enliven the court’s jurisdiction. The numerous allegations of breach of contract were without pleading the existence of a contract or of the express or implied terms relied upon beyond an implied term of mutual trust and confidence and of good faith. In this respect the pleading did not identify the conduct said to have breached the implied terms. The allegations of a breach of the principles of natural justice did not identify the circumstances enlivening Mr Shamir’s claims to have been entitled to natural justice or the principles required in the circumstances of his case or the conduct which was said to fall short of the requirement. The pleading also alleged a contravention of the National Employment Standards but there was no pleading that s 44 of the Fair Work Act 2009 (Cth) had been contravened nor of the elements of the National Employment Standards that were said to have been breached or the conduct said to constitute the breach.

15    The application and accompanying statement of claim were both amended on 29 June 2015. The amended statement of claim again contained a certificate signed by Mr Blige that the factual and legal material available to Mr Blige provided a proper basis for each allegation in the pleading. The amended application and pleading, however, did not cure the claims and the substantive allegations remained without foundation as pleaded. The respondent continued also to be described as the Australian Taxation Office although the other respondents were no longer listed in a schedule as other respondents.

16    Mr Shamir’s employment had been terminated by 29 June 2015 and he continued, through Mr Blige, to press that he had a claim for which the Court could grant relief notwithstanding the criticism of the application and the statement of claim. The respondent continued to press that the application and pleadings were defective but was required by the Court to deal with the dispute on the basis of the material as it had been filed leaving open the respondent’s rights to challenge the proceeding as being without foundation and to rely upon any material in response to any claim that might have been made. The claim and interlocutory relief sought in the amended application was:

Details of Claim

On the grounds stated in the statement of claim, accompanying affidavit or other document prescribed by the Rules, the Applicant claims:

1.    He has suffered loss and damage by reason of the respondent’s breaches as particularised in the amended statement of claim.

2.    Rescission of termination

3.    Reinstatement and transfer into an alternative suitable role in a different business line of the Respondent;

4.    Payment of outstanding wages and benefits;

5.    Pecuniary damages;

6.    Costs and interest;

7.    Such other relief as to this Honourable Court seems fit.

Claim for interlocutory relief

The Applicant also claims interlocutory relief.

1.    As particularised in the amended statement of claim, the Applicant has been terminated from his employment and is seeking an order that the termination is rescinded.

2.    As particularised in the amended statement of claim, the Applicant has been subjected to adverse actions and has requested he be reinstated and moved into an alternative suitable role.

3.    The Respondent has refused to move the Applicant despite the Applicant lodging a bullying complaint which has adversely affected the Applicant’s health and wellbeing as confirmed in a medical assessment.

4.    The Respondent has denied the Applicant a safe workplace.

5.    The Respondent has discriminated the Applicant in contrast to other employees and has not afforded the Applicant workplace rights.

6.    The Respondent has failed to acknowledge the legitimacy of a coercive notice issued to the Applicant and has further victimised the Applicant by denying him with the opportunity to comply with the notice.

7.    The Respondent has removed the Applicant from his position and terminated the Applicant in a harsh, unjust and unreasonable manner despite the Applicant already lodging a bullying dispute in the FWC and without the prior opportunity to be heard.

8.    The Respondent has adversely and detrimentally affected the rights of the Applicant and has acted mischievously in its actions with the Applicant and has breached:

a)    sections 19(1), (2), (3) and 105(1)(a)(i) Work Health and Safety Act 2011;

b)    sections 10(1)(c), 10(1)(i), 10(1)(j) of the Public Service Act 1999;

c)    sections 340, 346, 351 and 772 of the Fair Work Act 2009;

d)    sections 2.2, 2.3, 3.9, 113.1, 114.1, 123.1, 123.2, 125, 131.2, 132.2, 134.2 and 137.1 of the ATO Enterprise Agreement 2011;

e)    the principles of procedural fairness;

9.    The Applicant has tried unsuccessfully to be moved into an alternative suitable role and now faces termination after exercising his workplace rights. The Applicant has exhausted his leave and is off work and has suffered loss and damage as a result of the Respondent’s actions and requests an order that his termination notice is rescinded and he is transferred into an alternative suitable role in a different business line of the Respondent.

Additional allegations of breaches were made in the amended statement of claim. Paragraph 9 of the amended statement of claim alleged breaches of ss 10(1)(c), 10(1)(i), 10(1)(j) of the Public Service Act 1999 (Cth), ss 123.1 and 123.2 of the ATO Enterprise Agreement 2011, and s 340 of the Fair Work Act 2009 (Cth). In unnumbered paragraphs between paragraphs 34 and 35 it was alleged that the respondent had not complied with the ATO Enterprise Agreement 2011 referring to ss 114.1, 131.2, 132.2, 134.2 and 137.1 of the Agreement but without alleging how those provisions had been contravened. The heading above paragraph 37 indicated that Mr Shamir wished to plead in the paragraphs that followed that there had been a breach of s 346 of the Fair Work Act 2009 (Cth) and of paragraph 4.2 of the ATO Enterprise Agreement. The heading above paragraph 40 indicated that Mr Shamir wished to plead in the paragraphs that followed that there had been a breach of ss 340 and 351 of the Fair Work Act 2009 (Cth). The heading above paragraph 47 indicated that Mr Shamir wished to plead in the paragraphs that followed that there had been a contravention of ss 19(1), 19(2) and 19(3) of the Work Health and Safety Act 2001 (Cth) and of section 125 of the ATO Enterprise Agreement. The heading above paragraph 51 indicated that Mr Shamir wished to contend in the paragraphs that followed that there had been a contravention of s 340 of the Fair Work Act 2009 (Cth). The heading above paragraph 64 indicated that Mr Shamir wished to contend that in the paragraphs that followed there had been contraventions of s 340(1), 351, 772(1)(a), (b) and (e) of the Fair Work Act 2009 (Cth), and of ss 19(2), 105(1)(a)(i) and (ii) of the Work Health and Safety Act 2011 (Cth). At paragraph 79 Mr Shamir alleged that he had been denied procedural fairness and that the respondent had taken into account “irrelevancies” and “failed to take into account relevancies”.

17    The amended application and pleading dated 29 June 2015 was consistent with the description by Mr Blige in his 16 July 2015 affidavit of his circumstances: namely, that it was done without adequate instructions or research. It introduced, for example, an allegation of breach of s 10 of the Public Service Act 1999 (Cth) which had been repealed. The defects in the pleading based upon the Public Service Act 1999 (Cth), however, remained: namely, Mr Shamir had no private right to enforce under the provisions of that Act whether those repealed or not. The contraventions of the Work Health and Safety Act 2011 (Cth) were similarly either ones which Mr Shamir could not maintain or which could not be brought. Section 19(1), (2) and (3) imposed duties upon persons conducting a business or undertaking, and Division 5 of Part 2 created offences in relation to health and safety duties which may only be brought by the regulator, an inspector with written authorisation, or the Director of Public Prosecutions. Section 231 provides for a procedure to be followed if a prosecution is not brought and no such procedure was either followed or pleaded. The alleged breaches of s 105 were misconceived as it provided a definition of discriminatory conduct for the purposes of Part 6, Division 1 rather than containing a prohibition capable of being contravened. Section 105(1)(a)(ii) did not apply to Mr Shamir because he was not engaged on a contract for services.

18    The allegations of adverse action contrary to s 340 in the amended pleading were not pleaded by reference to material facts necessary to make out the allegations. In particular, Mr Shamir did not plead that action was taken because of workplace rights but, rather: that the transfer of roles was announced and that Mr Shamir had exercised a claimed workplace right to oppose it; that Mr Shamir exercised a workplace right to lodge a complaint and that the respondent had failed to act; and that Mr Shamir had been subjected to adverse action because he was required to comply with a notice issued by the Inspector-General of Taxation without pleading the basis upon which the notice, or compliance with it, was said to constitute a workplace right.

19    The allegation of a breach of s 346 was that he had been “treated differently and discriminated [against] due to his union representation”, but the only pleading in support of the allegation was Mr Shamir’s “feeling” that “the union involvement has negatively altered his position”. The alleged breach of s 351 failed to identify a protected attribute or adverse action taken by reason of that attribute. The pleading went no higher than an allegation of the respondent being aware of a medical condition and having failed to act. The pleading in respect of the ATO Enterprise Agreement was the same as in the earlier application and statement of claim and suffered the same defects.

20    The pleading of a denial of procedural fairness in the amended statement of claim was set out in paragraph 79, with what appeared to be particulars in paragraphs 80-89, as follows:

Procedural Fairness

79.    The Applicant has been denied procedural fairness in that the Respondent has not given the Applicant an opportunity to correctly and properly rebut or respond to the Respondent’s termination notice. The Respondent has taken into account irrelevancies and failed to take into account relevancies.

Particulars

80.    The Respondent terminated the Applicant’s employment while the Applicant had filed a complaint against the Respondent in relation to ongoing and unresolved matters as particularized at paragraphs 65-78 above.

81.    The Respondent denied the Applicant access to his outlook calendar, diary notes and other records to refute the assertions made in the reasons to terminate letter. [Emphasis in original]

82.    The Respondent stated the Applicant could rely on his ‘memory’ thereby making a diagnosis which the Respondent is not qualified to make.

83.    The Respondent failed to give the correct gravity to the coercive notice from the IGT and thereby did not take fully into account its relevance in terminating the Applicant and the necessity of compliance.

84.    The Respondent has also failed to take into account the demands of an Audit Leader role and the generically present job description of the duties none of which the Applicant possesses.

85.    The Respondent gave too much weight to the Applicant’s inability to meet his obligations to attend meetings while trying to comply with the IGT coercive notice and other competing work responsibilities.

86.    The Respondent gave too much consideration to the Applicant not completing four case reviews which are a very small numeric measure of the work required to be undertaken by an auditor over the course of the year.

87.    The Respondent took into account a very limited period for alleged non-performance of the Applicant’s duties and it is contended that the relevant provisions of the Public Service Act do not envisage termination for non-performance over such a limited time-frame.

88.    The Applicant was not given an opportunity to rebut the assumptions in the termination letter that non-performance is mutually exclusive of unsatisfactory performance.

89.    The Respondent has also taken into account the irrelevancies of the opinion of the Applicant’s former director and her percentage breakdown of the training required to complete the Audit Leader role.

Nothing in the pleading provided a foundation for a claim of the content of procedural fairness sought to be maintained by Mr Shamir in a general protections court application or of its contravention.

21    Counsel for Mr Shamir in the Commonwealth’s costs application did not seek to defend the pleadings or originating application, but submitted that “there were matters that were disclosed in Mr Shamir’s affidavit” and that “the respondent’s affidavits show that there were factual disputes”. It is true that the parties were given a hearing date for the proceeding to be heard and determined, but the material relied upon for Mr Shamir did not make out the written submission for Mr Shamir that “the substance of the matter is sufficiently disclosed in the Affidavits of the applicant sworn on 17 and 26 June 2015”.

22    It is clear enough from the affidavits of Mr Shamir sworn on 17 and 26 June 2015 that he was aggrieved by the conduct of his employer and that there was a dispute. But the affidavits do not establish the substance of a dispute sufficient to meet the complaint that the proceeding had been instituted without reasonable cause. Mr Shamir’s affidavits provide more detail and specifics of events than the applications and statements of claim, but do not set out a version of facts which if found would succeed. Applying the test suggest by Wilcox J in Kanan to the affidavits sworn by Mr Shamir leads to the same conclusion, namely, that the case he sought to make must fail on his own version of the facts. That is not to say, however, that Mr Shamir might not have had a claim capable of success but that the affidavits do not “sufficiently” disclose a cause of action capable of succeeding if established. The submissions for Mr Shamir in this respect rested upon generalities rather than upon showing how the material in the affidavits disclosed a cause of action under the Fair Work Act 2009 (Cth). Counsel for Mr Shamir submitted:

So they – well, despite their complaints, they knew what the case was about, your Honour. Now, in my submission, the evidence that was filed before the court by Mr Shamir on – in his affidavits on 17 and 26 June disclosed facts that were sufficient and provided a sufficient basis for a justiciable dispute to be determined by the court, and it’s pretty clear, in my submission, your Honour, that both the affidavits and the pleadings, bad as they are, disclosed several possible bases for a cause of action, in particular, your Honour, the adverse action claim relating to making complaints of bullying at the workplace and subsequent adverse action, in particular, the fact that the – Mr Shamir had exercised a workplace right to initiate a proceeding in relation to bullying, which he had done in the Fair Work Commission, was clearly referred to in the pleading and is an exercise of a workplace right.

There is also reference to the EBA breaches – or alleged breaches of the clauses of the EBA that required the respondent to deal with his complaints in certain manners, and if there were such breaches, then that would be a breach of section 50 of the Fair Work Act. They were clearly dealt with in the pleadings – or raised in the pleadings – I accept not in a particularly clear way, but they are there, and in those circumstances, together with the evidence that Mr Shamir produced on the interlocutory applications, which is his sworn evidence as to the circumstances – the facts and circumstances, it can’t be said, in my submission, that he didn’t have an arguable case – a factually based case that was arguable at law.

These submissions do not establish that the proceeding was instituted other than without reasonable cause. It may be accepted that Mr Shamir was unhappy by what had occurred and, perhaps, that he might have had a cause of action that could have been brought under the Fair Work Act 2009 (Cth), but the submissions for Mr Shamir on the application for costs under s 570(2) did not show that he had done so. The onus on an application under s 570 rests, of course, with the party seeking to establish that what had been instituted was “without reasonable cause”, but the Commonwealth’s case to that effect has been made out and is not rebutted by the general submissions made by counsel for Mr Shamir to the contrary.

23    Counsel for Mr Shamir also contended that the Commonwealth had acted unreasonably in continuing to incur costs in the preparation of the proceeding which it could have avoided, and in not agreeing to alter the timetable to allow further time to Mr Shamir to comply with orders which had been made. Counsel for Mr Shamir submitted that the Commonwealth had failed to discharge its obligation as a model litigant or under ss 37M and 37 N of the Federal Court of Australia Act 1976 (Cth) by, for example, failing to explain why maintaining the timetable which had been imposed upon the parties by the Court “was important to the respondent”. The respondent, however, was not obliged to provide any such explanation but was required, as was Mr Shamir, to comply with the orders which had been made by the Court. Either party was able to approach the Court to vary the orders with good cause, but they were required to comply with the orders which the Court had made unless and until varied by the Court. The proceeding had been commenced by Mr Shamir on the basis that he had an actionable claim in which he had sought urgent interlocutory relief. The respondent had an obligation to respond to the claims as best it could in light of the pleadings and the other material upon which Mr Shamir’s solicitor had sought to rely. The Court was to deal with Mr Shamir’s application, and the need for prompt relief and resolution of such dispute as was said to exist, by having fixed an early date for the hearing of the whole dispute and requiring the parties to bring forward all of their material and to distil the issues of their dispute for judicial determination. The Commonwealth had not abandoned its claims that Mr Shamir’s proceeding lacked foundation but had been required by the Court to deal with the whole case at the date appointed for final hearing of a proceeding which Mr Shamir’s lawyer had told the Court required urgent disposition and in which the Commonwealth had given an undertaking. There was nothing unreasonable in those circumstances in the Commonwealth continuing to prepare for the hearing and maintaining the timetable which had been imposed by the Court orders.

24    Accordingly, there will be an order for the respondent’s costs to be paid by Mr Shamir other than those which have previously been ordered in favour of Mr Shamir. It is therefore not necessary to consider the other matters raised in the Commonwealth’s costs application including the dispute between the parties concerning the reasonableness of the respective position each adopted in relation to offers to resolve the disputes between them. However, it might be desirable to make the following brief observations. Counsel for Mr Shamir contended that an offer made by the respondent on 10 July 2015 was unreasonable because of the short period of time that was allowed for its acceptance. A subsequent offer was said to be unreasonable because it was expressed to be on the basis of resolving all disputes between the parties including disputes beyond those which might have been understood by the parties to be engaged in the proceedings in the Federal Court. Neither criticism, however, is relevant to whether the proceeding was instituted without reasonable cause. Nor is it relevant to the question of costs that the offer on 10 July 2015 was open for acceptance and consideration for a short time. It may for present purposes be accepted that the time available was insufficient for adequate consideration and, therefore, that the time allowed for its acceptance was insufficient to warrant an adverse costs order as a Calderbank offer, but the claim for costs is not based upon either that, or any other, offer having not been accepted. The fact that the Commonwealth continued to incur costs during the time when the offers were open for consideration was proper and necessary in light of Mr Shamir’s claim, the state of the material upon which he relied, and the fact that a hearing date for the final hearing of the proceeding had been given in proceedings which Mr Shamir had instructed Mr Blige to commence and in which Mr Shamir sought urgent interlocutory relief.

25    It is next necessary to consider whether a costs order made against the Commonwealth in favour of Mr Shamir on 22 October 2015 should be made payable by the Commonwealth on an indemnity basis. To deal with that application it is necessary to return to some aspects of the history of the proceeding.

26    The proceeding was commenced, as previously mentioned, by application dated 17 June 2015 in which Mr Shamir sought both permanent and urgent interlocutory orders. The matter came before Tracey J on 22 June 2015 in circumstances where it was clear that the interlocutory application could not adequately be dealt with on that day. The reasons for that may in part be seen by the affidavits filed in the costs application as well as the transcript of the proceeding before Tracey J exhibited to the affidavit of Ms Masters. The problem arose in part because of the way the proceeding had been commenced by Mr Blige, and in part because those acting for the Commonwealth did not have access to the material which Mr Blige had filed, despite their diligent efforts to obtain that material quickly. Mr Blige had written on 17 June 2015 to the Assistant Commissioner, Workplace Relations, at the Australian Tax Office, informing him “that Mr Shamir [had] lodged an application in the Federal Court of Australia”, and gave “notice that the provisions of s 772 of the Fair Work Act 2009 would apply in the event” that Mr Shamir’s termination proceeded. The affidavit filed by Mr Blige on 16 July 2015 recounted some of the history around the lodging of the application, but made no reference to him having served a copy of the application upon anyone, or of Mr Blige having made any attempts to bring the application to the attention of anyone, other than the Assistant Commissioner to whom he had written formally on 17 June 2015. The application by Mr Blige on that day had requested an urgent hearing, and on 19 June 2015, a Friday, he was informed by telephone from “court transcript services” that his urgent application on behalf of Mr Shamir had been listed for hearing on the following Monday, 22 June 2015. There was no evidence of Mr Blige taking any step to discuss the proceeding with anyone on behalf of the Commonwealth in preparation of the hearing he had instituted for his client. The Commonwealth, for its part, had been taking steps to secure legal representation, and at 4.45pm on Friday 19 June 2015, Ms Masters received a call from Mr Greg Last, her instructor from the Australian Taxation Office. Ms Masters was informed by Mr Last that he had that evening examined the Commonwealth Courts Portal and had established that the originating process in the matter had been filed on 17 June 2015 and was listed for hearing before Tracey J at 9.30am on Monday, 22 June 2015. Ms Masters was not, however, able to download copies of the document because the Australian Government Solicitor was not at that stage on the record in the proceedings and, accordingly, made attempts from early Saturday morning to contact Mr Blige to obtain copies of the application. She was able to speak to Mr Blige at around noon and obtained an outline of the nature of the application. Ms Masters was not able to obtain copies of the relevant documents which had been filed by Mr Blige until the morning of Sunday, 21 June 2015.

27    The hearing of the application for urgent relief on 22 June 2015 was not able to proceed with answering material on behalf of the Commonwealth. Mr Blige nonetheless pressed for interim relief because, no doubt, he was concerned to prevent the termination of his client’s employment. His Honour observed that the hearing had been listed on the morning of 22 June 2015 because his Honour had been told that it was urgent and had expected that there had been timely service of the application. In that context his Honour noted that Sunday morning was “not good enough”. The transcript records the following exchange between Mr Blige and Tracey J:

MR BLIGE: Your Honour, sorry to interrupt on that matter. I was not informed of this matter until Friday afternoon by a phone call from a court transcript service in Brisbane. I then immediately logged on to the court’s portal to check and there was a notice on the court’s portal to say that the system was shut down until 8 am Sunday morning, so I could not obtain stamped copies of the documents, hence the delay. And I did so as soon as practical which was first this Sunday morning, your Honour. I apologise for those but - - -

HIS HONOUR: Yes. You could have served the material unstamped and unsworn and undertaken to have done it afterwards anyway. That’s beside the point.

MR BLIGE: My apologies, your Honour.

HIS HONOUR: Well, it’s going to create problems right now, because the respondent hasn’t had the opportunity to put any answering material. Some other respondents haven’t even been served according to Ms Masters which makes it even more difficult. Ms Masters, in the circumstances it strikes me that it would be premature to have this termination proceed this afternoon before the matter can be properly examined, even on an interlocutory basis. I know you don’t have – or you have limited instructions given that not all of the respondents have been served.

The hearing on 22 July 2015 was concluded on the basis that Mr Shamir’s interlocutory application was adjourned to 2 July 2015 upon an undertaking by him that he would not attempt to enter any premises of the Australian Taxation Office on or before 3 July 2015 with a corresponding undertaking to the Court from the first respondent not to give effect to the notice of termination of Mr Shamir’s employment on or before 3 July 2015. The expectation of all at the conclusion of the hearing on 22 June 2015 was that the application for urgent interlocutory relief would be heard on 2 July on the basis of an amended application and appropriate material which was to be filed on 26 June 2015.

28    On 29 June 2015, however, consent orders were made adjourning the hearing date for Mr Shamir’s urgent interlocutory application to 6 July 2015 with the respective undertakings being extended to 7 July 2015. On 6 July 2015 the hearing of the application as a whole was fixed for 3 August 2015 with the respective undertakings extended by each party to 4 August 2015. The issues then to be raised in the urgent interlocutory application by Mr Shamir would need to identify any cause of action against the Commonwealth and, if adequately engaged in the interlocutory proceeding, could effectively dispose of the entire dispute if, in turn, it had been effectively engaged. Other orders were therefore made for the filing of all material and submissions to accommodate the final hearing of the proceeding on 3 August 2015 to deal with all issues in one hearing and thereby avoid additional costs. On 24 July 2015, however, consent orders were made which included the striking out of the application for interlocutory relief and giving leave to Mr Shamir to discontinue the proceeding upon terms which included the mutual release of the undertakings which had given by each of the parties.

29    One of the orders made by consent on 24 July 2015 was that the respondent was to file and serve “any costs application and evidence in support by 5pm on 30 July 2015” and that any such application, if made, was to be listed for hearing at 10.00am on 14 December 2015. The orders made by consent on 24 July 2015 did not expressly contemplate any application for costs against Mr Blige and did not provide for Mr Blige to file and serve any affidavit in opposition to any application that might be made to seek costs against him personally.

30    On 30 July 2015 the Commonwealth did apply for its costs. The Commonwealth’s application for its costs to be paid by Mr Shamir, however, sought in the alternative that its costs be borne personally by Mr Blige. The addition of an application for costs against Mr Blige created, unsurprisingly, a potential conflict between Mr Shamir and Mr Blige. Such an application could be expected to give rise to questions about whether either Mr Shamir or Mr Blige would seek to lay blame on the other for any conduct in the proceeding which occasioned unnecessary costs. It could also reasonably be expected that either Mr Shamir or Mr Blige could not adequately deal with whatever response they might wish to give without having considered whether to waive client legal privilege in their communications. None of these matters had been contemplated by the Court or discussed by the parties in the context of the consent orders which had been made on 24 July 2015. The Commonwealth had not sought orders on 24 July 2015 for Mr Blige to file answering material and did not seek any variation of the orders which had been made on 24 July 2015 to take account of the fact that the application for costs was against Mr Shamir as well as his solicitor personally.

31    On 18 August 2015 Mr Blige ceased to act for Mr Shamir in the proceeding as a result of the Commonwealth’s alternative application that Mr Blige personally bear the legal costs which had been incurred by the Commonwealth. Mr Shamir subsequently swore an affidavit to that effect and added that he had been informed by Mr Blige and believed that Mr Blige was no longer able to act for Mr Shamir in the proceeding due to a conflict of interest which arose as a result of the costs application by the Commonwealth against Mr Blige personally. On 18 August 2015 Mr Shamir retained a new solicitor, Ms Sally Stonier of Stonier & Associates, who acted for him in the proceeding thereafter. On 1 September 2015 Ms Stonier applied to have set aside the orders made on 24 July 2015 after unsuccessful attempts by her to negotiate with the Commonwealth’s lawyers for a variation of the orders which had been made on 24 July 2015. That application was heard on 22 October 2015 when orders were made that the hearing listed on 14 December would proceed only to deal with the application for costs against Mr Shamir and that the balance of the Commonwealth’s application (that is, the orders sought for costs against Mr Blige) was listed only for directions on 14 December 2015. Mr Shamir was awarded costs against the Commonwealth in respect of the application made 1 September 2015 and of the hearing on 22 October 2015 but the question of whether those costs should be paid on an indemnity basis was deferred to the hearing on 14 December 2015. On that day Mr Shamir renewed the application for his costs to be paid on an indemnity basis, which was resisted by the Commonwealth, and the Commonwealth sought no directions in respect of the application which had been filed seeking costs against Mr Blige.

32    Indemnity costs are not awarded by way of punishment but to compensate a party for costs arising from misconduct. In Hamod v New South Wales (2002) 188 ALR 659 Gray J (with whom Carr and Goldberg JJ agreed) said at 665 [20]:

Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs. [See also Lowe v Mack Trucks Australia Pty Ltd (No 2) [2008] FCA 711, [6]-[8]].

Mr Shamir’s costs of the hearing on 22 October 2015 was occasioned by a failure by the Commonwealth as a litigant. It may also have been a failure to comply with the model litigant policy of the Commonwealth, but any question about whether it should pay indemnity cost is for present purposes considered on the basis of the Commonwealth as an ordinary litigant: see Australian Competition and Consumer Commissioner v Leahy Petroleum Pty Ltd [2007] FCA 1844, [25]. The Commonwealth, as an ordinary litigant, was seeking directions on 24 July 2015 for the management of a foreshadowed application for costs to be heard on 14 December 2015 upon a basis that was not fully or adequately made known to Mr Shamir or to the Court. The Commonwealth may have contemplated before 24 July 2015 that its application for costs would be against both Mr Shamir and Mr Blige but had not said so either to them or to the Court. The Commonwealth had foreshadowed that it would be seeking an order for costs but failed to give sufficient details of what it ultimately sought to enable adequate directions to be sought by those to be affected. Mr Shamir and Mr Blige had no indication that the Commonwealth’s application for costs would not be against Mr Shamir only and neither of them had any reason to assume otherwise when orders were made by consent on 24 July 2015. An application by the Commonwealth for its costs had been foreshadowed but what had not been foreshadowed was that the application would include an application that Mr Blige pay them personally. Neither they, nor the Court, therefore, were given the information necessary to consider what directions would be required if the foreshadowed application was to be an application for costs against both Mr Shamir and Mr Blige personally. The orders which were made on 24 July 2015, therefore, did not contemplate the likely consequence of Mr Blige ceasing to act for Mr Shamir if an application for costs against him was to have been made on 30 July 2015 to be heard on 14 December 2015. The Commonwealth, as an ordinary litigant, ought to have informed Mr Shamir, Mr Blige and the Court when seeking orders on 24 July 2015 if it then intended that the application for costs to be made by 30 July 2015 was to include an application for costs against Mr Blige personally. The Commonwealth, as an ordinary litigant, ought to have sought a variation to the orders made on 24 July 2015 when sought by Mr Shamir’s new solicitors once it was known that the Commonwealth was seeking costs against Mr Blige in the alternative to costs against his former client, given that a consequence of that application was to have created a conflict of interest that necessitated new solicitors being engaged for Ms Shamir and the possibility of either Mr Shamir or Mr Blige being compromised in their opposition to the application for costs to the extent that it related individually to either of them. It was unreasonable for the Commonwealth, as an ordinary litigant, either not to have informed the parties, or the Court, on 24 July 2015 if its then intention was to seek costs against both Mr Shamir and Mr Blige, and it was unreasonable for the Commonwealth thereafter not to have agreed, or to have sought, to vary the orders which had been on 24 July 2015 to accommodate the position in which Mr Shamir and Mr Blige found themselves after the application was made to seek costs against each of them individually. In those circumstances Mr Shamir is entitled to be compensated, by an award for costs on an indemnity basis, for the costs occasioned by, and incidental to, the application made on 1 September 2015 and the hearing on 22 October 2015.

33    The additional application by Mr Shamir for those costs to be taxed immediately in default of agreement within 14 days, however, will not be granted: cf J&A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Limited (No 2) [2014] FCA 705. Each party has costs orders in their favour and their payment should proceed in accordance with the Rules.

34    Accordingly there will be orders:

(a)    That Mr Shamir pay the Commonwealth’s costs, to be taxed on a party and party basis unless the parties agree otherwise, of and incidental to the proceeding (including the costs of the hearing on 14 December 2014) but excluding any other cost orders that have been made in the proceeding and excluding also the Commonwealth’s costs of and incidental to Mr Shamir’s application dated 1 September 2015 and the hearing of that application on 22 October 2015.

(b)    That the Commonwealth pay Mr Shamir’s costs of and incidental to Mr Shamir’s application of 1 September 2015 and the hearing on 22 October 2015 to be taxed on an indemnity basis unless the parties agree otherwise.

Associate:

Dated:    21 December 2015