FEDERAL COURT OF AUSTRALIA

Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd [2016] FCA 1526

ORDERS

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

REEVES J:

1    In Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd [2016] FCA 199 (the liability judgment) and Construction, Forestry, Mining and Energy Union v Hail Creek Coal Pty Ltd (No 2) [2016] FCA 1032 (the penalty and compensation judgment), I made declarations sought by the Construction, Forestry, Mining and Energy Union (the CFMEU) and assessed the compensation and pecuniary penalties that Hail Creek Coal Pty Ltd was required to pay. The latter judgment was reflected in orders I subsequently made on 31 August 2016.

2    These reasons concern an application the CFMEU has made for an order that Hail Creek Coal pay 20% of its costs of the proceeding on the ground that it acted unreasonably in defending its claim related to the second of the two declarations mentioned above. That declaration was to the effect that:

The respondent contravened s 50 of the Fair Work Act 2009 (Cth) by failing to pay Mr Michael Haylett wages from 18 March 2014 to the date of judgment, contrary to clauses 7.1 and 7.6 of the Hail Creek Agreement 2011.

3    The CFMEU’s reliance on unreasonableness arises from the provisions of s 570(2)(b) of the Fair Work Act 2009 (Cth) (FWA). 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 [Fair Work Commission];

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

(Emphasis added)

4    In Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574; [2008] FCAFC 143, the Full Court said, of an analogous provision in the Workplace Relations Act 1996 (Cth), that it required two criteria to be met, as follows (at [28]):

The first criterion is that one party must have engaged in “an unreasonable act or omission”. As the reasoning of Tracey J in Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392 and Siopis J in McAleer v University of Western Australia (No 2) (2007) 161 IR 151 demonstrates, whether a party has conducted itself or its litigation in such a way as to cross this threshold will depend on the particular circumstances of the case. The second criterion is that the act or omission of one party must have “caused another party to the proceeding to incur costs in connection with the proceeding”. Once both criteria are satisfied, then the Court “may” in its discretion order the party which has engaged in the unreasonable act or omission to pay some or all of the costs of the other party.

5    The Court added (at [29]) that:

… while courts should use the discretion in s 824(2) to ensure that parties to litigation arising from the WR Act [Workplace Relations Act 1996 (Cth)] do not engage in unreasonable acts and omissions which put the other party to undue expense, they should also be careful not to exercise the discretion with too much haste, given that such haste may discourage parties, for fear of an adverse costs order, from pursuing litigation under the WR Act in the manner which they deem best.

6    The CFMEU submitted that, where a respondent has raised an argument in its defence which did not have reasonable prospects of success at the time it was pleaded, such conduct amounts to unreasonableness for the purposes of s 570(2)(b). It submitted that circumstance arose in this case because, in its defence of the CFMEU’s claim that it had breached s 50 of the FWA, Hail Creek Coal alleged that Mr Haylett was not ready, willing and able to work as a multi-skilled operator when it had not at any time given any direction to Mr Haylett to perform that role. The CFMEU claimed that, in responding to this aspect of Hail Creek Coal’s defence, it had incurred costs which it should never have been required to incur. Recognising the difficulty of apportioning the total costs incurred in the proceeding to that particular issue, the CFMEU proposed a broad assessment of 20% of those costs. In the alternative, it proposed that Hail Creek Coal should be ordered to pay its costs of and incidental to its claims for the declaration, penalty and compensation with respect to its contravention of s 50 of the FWA and the quantum of those costs should be either agreed, or assessed by a taxing officer.

7    For its part, Hail Creek Coal sought to draw a distinction between failing in an argument put to a court by way of defence and the cogency, or strength, of that argument. It submitted that it was therefore necessary to distinguish between a “self-evidently weak” defence and an argument raised by way of defence that could not possibly have succeeded, or was otherwise manifestly groundless and should not have been raised. It submitted its defence to the CFMEU’s s 50 claim, at worst, fell into the former category. On the question of causation, it submitted that the unreasonable act or omission in question must be the sole, or at least the dominant, cause of the other party incurring costs unnecessarily. In this matter, it submitted that the costs associated with the CFMEU’s main claim, the adverse action claim, were “virtually or practically inseparable from” those associated with its s 50 claim.

8    In the liability judgment, I summarised the CFMEU’s contentions on its s 50 claim as follows (at [47]):

For its part the CFMEU contended that Mr Haylett was entitled to receive an annual salary, payable monthly, under clauses 7.1 and 7.6 of the Hail Creek Agreement 2011. It contended that, at all times since 19 November 2013, Mr Haylett has been ready, willing and able to perform the position he had been performing up until that time, of an operator operating a drill rig. It contended he was not, before that date, required to, and he has not since been required to, perform any other work under clause 5.3 of the Hail Creek Agreement 2011. Accordingly, it contended that Hail Creek Coal had breached the Hail Creek Agreement 2011 by not paying him his salary under clauses 7.1 and 7.6.

9    I also summarised Hail Creek Coal’s contentions in defence of this claim, as follows (at [46]):

Hail Creek Coal contended that, from 18 November 2013 Mr Haylett was not entitled to receive wages under the Hail Creek Agreement 2011 because he was not able to perform the role he was employed to perform, namely, an operator, in the sense of a multi-task operator. It contended that Mr Haylett could not perform that role because he did not have a valid assessment under the CMSH Regulations [Coal Mining Safety and Health Regulation 2001 (Qld)]. It claimed the Hail Creek Agreement 2011 did not evince an intention to provide for the payment of salary irrespective of performance. It pointed to clause 10.1, which states: “Employees will be required to work the hours that are reasonably necessary to perform their role.” It also relied upon clause 6 and the categories set out in annexure 1, relating to operators, to contend that an employee's entitlement to salary is connected with their ability to perform that category of work.

10    It can be seen from these summaries that the CFMEU’s s 50 claim raised the issue whether Mr Haylett was employed as an operator, in the sense of a multi-task operator, or whether he was employed as an operator with the specific task of operating a drill rig. While I ultimately concluded that, at the relevant time, there was no evidence that Hail Creek Coal had required Mr Haylett to perform the work of a multi-skilled operator under clause 5.3 of the Hail Creek Agreement 2011, I do not consider Hail Creek Coal’s defence as outlined above falls into the unreasonable category prescribed by s 570(2)(b). That is so because, in my view, the following facts made this defence at least arguable: first, Mr Haylett was originally employed as an operator (see the liability judgment at [45]); secondly, there were only two classifications – operator and maintainer – mentioned in clause 6 of the Hail Creek Agreement 2011; and finally, Mr Haylett was no longer able to perform all the tasks that an operator was ordinarily required to perform. Against this factual background, I do not consider my ultimate rejection of this defence because of the operation of clause 5.3 of the Hail Creek Agreement 2011 permits of a conclusion that it was, from the outset, bound to fail, or was manifestly groundless.

11    For these reasons, I do not consider that the CFMEU has established the kind of unreasonableness required by s 570(2)(b) of the FWA, to justify an order for costs with respect to its s 50 claim. Accordingly, there will be no order for costs in this proceeding.

Associate:    

Dated:    16 December 2016