FEDERAL COURT OF AUSTRALIA

Birner v Aircraft Turnaround Engineering Pty Ltd (No 2) [2019] FCA 1706

ORDERS

THE COURT ORDERS THAT:

1.    There be no costs ordered in the appeal in QUD 241 of 2017.

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

REASONS FOR JUDGMENT

COLLIER J:

BACKGROUND

1    On 11 July 2019, I delivered judgment in the appeal in Birner v Aircraft Turnaround Engineering Pty Ltd [2019] FCA 1085. The background facts and reasons for my decision are set out in detail in that judgment. In summary, I dismissed the appeal, finding that:

    The decision of the primary Judge that Mr Birner was a casual employee was correct; and

    None of the appellant’s grounds of appeal were substantiated.

2    On 18 July 2019, the solicitors for the respondent wrote to my Associates enquiring whether I would be prepared to hear the parties on the issue of costs in respect of the appeal. Both parties consented to the matter being heard on the papers. On 1 August 2019, I made the following orders:

2.    By 4.00 pm on 19 August 2019, the Respondent file and serve any additional written submissions in respect of and incidental to this appeal.

3.    By 4.00 pm on 9 September 2019, the Appellant file and serve any additional written submissions strictly in response to the Respondent’s submissions referred to in Order 2 of these Orders.

…

5.    The matter be determined on the papers.

3    In submissions dated 19 August 2019, the respondent submitted, in summary:

    The appeal was commenced and prosecuted to finality without reasonable cause.

    The primary Judge’s analysis and conclusions were unimpeachable.

    The primary Judge’s findings have withstood critical scrutiny, even in hindsight and in light of the Full Court’s reasoning in WorkPac Pty Ltd v Skene [2018] FCAFC 131; (2018) 362 ALR 311.

    The appellant’s challenges on appeal were directed at credit findings, involved points not taken at first instance, and raised purely technical points which even if established would not require or justify an appellate response.

    The appellant unnecessarily persisted in pressing an allegation of scandalous wrongdoing.

    The appellant raised no reasonable or sensible argument that the orders under appeal involved or were tainted by error requiring appellant correction. The appellant was not justified in tenaciously pursuing what was, in effect, a second opinion from the Court.

    The respondent was unreasonably put to the cost of meeting the appeal, and of defending the reasoning and orders made by the Court below.

    The appellant should be required to pay the respondent’s costs of and incidental to the appeal to be assessed on the standard, or party and party, basis.

4    The appellant filed submissions on 6 September 2019. In these submissions the appellant addresses a wide range of matters including further arguments in relation to the merits of the substantive appeal. I consider that the appellant’s submissions were not strictly in response to the respondent’s submissions. However, in light of the appellant’s position as a litigant in person, I am willing to accept these submissions to the extent that they address the issue of costs. In relation to the issue of costs, the appellant submitted, in summary:

    The appellant opposes the application for costs and considers that the application should be dismissed.

    If costs are to be ordered, they should be ordered on the event-based scale contained in Sch 1 of the Rules.

    Section 570 of the Fair Work Act 2009 (Cth) lies within Ch 4, Pt 4-2 of that Act. The Court should consider a number of policies and principles when considering s 570(2), including:

a.     The policy and purpose of the section is to free parties from the risk of having to pay their opponent’s 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.

b.    A person will rarely be ordered to pay the costs of a proceeding.

c.    It is not necessary to prove that there are exceptional circumstances warranting the making of such an order.

d.     The relevant question is whether the proceeding had reasonable prospects of success at the time it was instituted, not whether it ultimately failed: Australian Workers Union v Leighton Contractors Pty Ltd (No. 2) [2013] FCAFC 23; (2013) 232 FCR 428 at [7]; Gonzalez-Barbosa v Go to Court Franchising Pty Ltd (No 2) [2017] FCCA 910.

    The bringing and continuing of proceedings in which allegations of contravention of the Fair Work Act are made ought not to be discouraged.

    Employees ought not to be discouraged from action against employers, by the prospect of costs orders, especially where they already feel aggrieved by the employer.

    The relevant consideration is whether the proceedings had reasonable prospect of success at the time it was instituted. At this time the appellant considered that his case had merit. This is evidenced by the dismissal of the respondent’s application for costs in the Federal Circuit Court.

    Costs should not be awarded as the appellant’s case had merit.

CONSIDERATION

5    Section 570 of the Fair Work Act 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.

…

(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.

6    As the Full Court explained in Trustee for The MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8]:

Section 570 of the FW Act confers discretion on the Court to order costs in Fair Work matters where proceedings were instituted vexatiously or without reasonable cause. Not only must this discretion be exercised judicially according to the terms defining it, it must be exercised with caution because of the exceptional nature of the power in an otherwise no-costs jurisdiction. The case for its exercise should be clearly demonstrated: Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6]. As Mortimer J observed (correctly, in our opinion) in Ryan v Primesafe [2015] FCA 8 at [64]:

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. Insofar as it operates to the benefit of respondents, it is designed to ensure respondents feel free to pursue arguable legal and factual responses to the claims made against them.

(cf Barker J in Pettit v Evolution Mining Ltd [2016] FCA 1304 at [62].)

7    Proceedings in which allegations of contravention of the Fair Work Act are made out ought not to be discouraged. The construction of s 570 of the Fair Work Act means that costs will only be awarded if the Court is satisfied that one of the circumstances in s 570(2) applies. In this respect, the respondent contends that the appeal was commenced “without reasonable cause” within the meaning and for the purposes of s 570(2)(a).

8    The phrase “without reasonable cause” in s 570(2)(a) was considered by the Full Court in Australian Workers’ Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23; (2013) 232 FCR 428:

7 … 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 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 264-265 (approved in Kangan) Wilcox J said:

If success depends upon 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.

9    These comments have been subsequently cited with approval. See for example Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 2) [2015] FCAFC 97; (2015) 230 FCR 337 at [14], [17].

10    In Macushla Pty Ltd (Trading as Sunnytop Bakery Ciabatta Della Nonna) v El Souki [2019] FCA 643, Snaden J observed:

[15]     In Baker v Patrick Projects Pty Ltd (No 2) (2014) 145 ALD 548 (Dowsett, Tracey and Katzmann JJ), a Full Court of this Court endorsed (at [9]) what was said about the application of s 570(2)(a) of the FW Act in Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351 (Pagone J). There, Pagone J, at [8], said that:

…[t]o 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) 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.

[16]     The Full Court in Baker identified some “minor modification[s]” of the test when applied to appeals and judicial review proceedings. At [10], the Court observed that:

…[i]n such proceedings the focus changes to whether, having regard to the facts apparent to the appellant at the time of instituting the appeal or the application for judicial review, there were no reasonable prospects of success. In evaluating these prospects regard may be had to the reasons for judgment or decision under appeal or review, as the case may be, and the grounds relied on to challenge the judgment or decision: see Imogen Pty Ltd v Sangwin (1996) 70 IR 254 at 257 (Wilcox CJ).

11    As I explained at [31] of the primary appellate judgment, issues for determination in the appeal were:

(1)    Whether the primary Judge erred at [75] by finding that Mr Birner had been informed of the terms of his engagement, including his classification as a casual employee.

(2)    Whether the primary Judge erred at [83] by finding that the May 2010 letter:

(a)    did not establish a new legal relationship nor change the existing legal relationship between the parties; and

(b)    correctly reflected the existing arrangement.

(3)    Whether the primary Judge erred at [94] in holding that the phrase “Casual full time basis” in the May 2010 letter represented “an arrangement under which Mr Birner was and remained a casual employee, tending to work full time hours”.

(4)    Whether the primary Judge erred by accepting evidence that was false and misleading.

12    In relation to the first and second issues, in substance I found that the findings of the primary Judge were unremarkable and open to his Honour.

13    In relation to the third issue, I noted at [50] that his Honour had not explicitly disposed of the point concerning Mr Birner’s claim of having taken “annual leave” to which only permanent employees were entitled, however I was also satisfied that his Honour had rejected Mr Birner’s arguments concerning “annual leave”. In the circumstances it was not unreasonable of Mr Birner to seek to agitate this issue on appeal. Further, I note that the primary judgment the subject of appeal, was delivered prior to the decision of the Full Court in WorkPac Pty Ltd v Skene [2018] FCAFC 131; (2018) 362 ALR 311 and Mr Birner sought consideration of his appeal in light of comments of the Full Court in that case. That Mr Birner was unsuccessful in respect of his arguments concerning these points does not mean that his appeal was instituted without reasonable cause.

14    In relation to Mr Birner’s allegations of false and misleading evidence, I found that these allegations were unsubstantiated.

15    On balance, particularly in respect of Mr Birner’s claims concerning alleged “annual leave”, I am not satisfied that he failed to raise reasonable or sensible arguments concerning the primary judgment.

16    In my view there should be no costs ordered in respect of the appeal.

Associate:

Dated:    21 October 2019