FEDERAL COURT OF AUSTRALIA

One Tree Community Services Inc v United Voice (costs) [2020] FCA 500

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

MCKERRACHER J:

1    On 25 March 2020, I dismissed the originating application of One Tree Community Services Inc without ordering costs: One Tree Community Service Inc v United Voice (No 2) [2020] FCA 390. It is correct as the respondent, the United Workers Union observes, that my tentative view was that the application should be dismissed with costs. However, I made no order for costs and I invited the parties to make submissions on orders other than the dismissal. Having reflected upon the written submissions that were filed, I am of the view that effect should be given to the statutory purpose of s 570 of the Fair Work Act 2009 (Cth) (the FW Act), such that there should be no order as to costs.

RELEVANT PRINCIPLES

2    The parties accept, as I do, that s 570 of the FW Act is applicable. It provides as follows:

570    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.

(Emphasis added.)

3    It can be seen that s 570 limits the Court’s powers to make costs, including under s 43 of the Federal Court of Australia Act 1976 (Cth). Section 570(2)(b) has no present application. Section 570(2(c), like s 570(2)(a), depends on the Court being satisfied as to unreasonableness. It is not the position that exceptional circumstances need to be shown in order to obtain a costs order: Australian Workers Union v Leighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428 (at  [7(2)]). As observed by Wilcox J in Kanan v Australian Postal & Telecommunications Union (1992) 43 IR 257 (at 264-265), followed in Leighton Contractors and Ashby v Slipper (No 2) (2014) 314 ALR 84 (at [35]), if success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise a proceeding as being ‘without reasonable cause’. I can accept the United Workers Union submission that where, on the applicant’s own version of the facts, it is clear that a proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.

4    The United Workers Union contends that this is a clear case where the proceedings lacked a reasonable cause and that One Tree’s originating application never had a reasonable prospect of success and was therefore instituted without reasonable cause. In this regard, it stresses the factual matters set out in One Tree (No 2) (at [96]), which were factual matters always known to One Tree. It knew that it did not have to recruit Mission’s existing employees; it knew the Mission Australia Early Learning Services Enterprise Agreement, 2013 - 2016 (the EA) existed before hiring them; it knew of the transfer of the business regime under the FW Act; and it would also have been known to One Tree that it had never made any applications under s 318 or s 320 of the FW Act to the Fair Work Commission. The United Workers Union argues that, even on One Tree’s own legal case, it was doomed to fail on the facts known to it, which were the facts behind the essential reasoning in the Commission rejecting One Tree’s jurisdiction objection. One Tree, therefore, had notice of this defect in its argument, such that its legal case was entirely flawed.

5    The United Workers Union contends that the fact that the Court granted an interlocutory injunction is not determinative, as the Court did not have the benefit of full argument and expressed its own misgivings about the argument advanced by One Tree. Nonetheless, it was regarded as being sufficiently arguable, having regard to the strength, not of the argument, but of the balance of convenience.

6    Also significant, the United Workers Union says, is the way One Tree sought to conduct its case by shifting emphasis to the constructional arguments, which should or could always have been argued before the Commission as the arbitration clause in the EA contemplated.

7    The United Workers Union should be compensated, it says, for the expense to which it has been put. It seeks costs on an indemnity (alternatively, party/party basis), as it should have been apparent to One Tree at the outset, properly advised that it had no chance of success whether on the current position at law or on its own version based on contract law.

CONSIDERATION

8    I am certainly not persuaded that this is an appropriate case for an award of indemnity costs. The case was, by no means, as straightforward as the United Workers Union suggests. Although it is not necessary to demonstrate exceptional circumstances, many of the authorities emphasise the caution with which the discretion (in assessing unreasonableness) under s 570 of the FW Act should be exercised, having regard to the legislative purpose as an ‘access to justice’ provision.

9    A difficulty for the United Workers Union is that One Tree’s application included a claim for declaratory relief in relation to the meaning and effect of the EA. Consistent with the United Workers Union’s submission, that part of the case was referred off to the Commission. It cannot at this point be determined that such part of the case was unreasonable.

10    More importantly, and in relation to the constitutional argument, the pursuit of an arguable point of law is sufficient to take the proceeding out of the concept of unreasonableness referred to in s 570 of the FW Act, as noted in Kanan (at 264-265) and Leighton Contractors (at [7(3)]). While I had initial as well as ultimate misgivings about the constitutional argument, it would be difficult to conclude that it was not reasonably arguable. It had been the subject of no relevant authority in any court and was, at least arguably capable of drawing on well-established principles of high authority on private arbitration. Moreover, and despite misgivings, I found that the argument as a point of law was sufficiently arguable to justify the grant of an interlocutory injunction. It would be a mistake to approach the arguability point on the basis that the Court, with the benefit of hindsight thought the point was ‘easily resolved once it [was] exposed to scrutiny’ such that its pursuit was unreasonable: Fair Work Ombudsman v Hu (No 2) [2019] FCAFC 175 (at [7]).

11    Within this conclusion, it must follow that knowledge of the identified facts by One Tree does not render the argument unreasonable. One Tree’s case was that those facts were immaterial in that they did not evidence or constitute an ‘arbitration agreement’ between One Tree and the United Workers Union or its employees. The conclusion I reached was that those facts gave rise to a notion of statutorily mandated consent: see One Tree (No 2) (at [90]).

12    Having close regard to the statutory purpose of s 570, I am not persuaded that any of the limbs of s 570(2) of the FW Act are satisfied and, on that basis, there is no capacity to award costs.

CONCLUSION

13    The final orders made on 25 March 2020 will stand in their existing terms. There will be no order as to costs.

Associate:

Dated:    16 April 2020