Federal Court of Australia

Martires v Endura Paint Pty Ltd (No 3) [2021] FCA 314

ORDERS

THE COURT ORDERS THAT:

1.    The first respondent's application for the costs of the proceeding is dismissed.

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

REASONS FOR JUDGMENT

JACKSON J:

1    On 9 March 2021 I allowed an appeal from a decision of the Federal Circuit Court of Australia that had been made under the Fair Work Act 2009 (Cth): see Martires v Endura Paint Pty Ltd (No 1) [2021] FCA 178. On the same day I dismissed an application for judicial review of the same decision: Martires v Endura Paint Pty Ltd (No 2) [2021] FCA 179. Endura Paint Pty Ltd, the only respondent in the appeal and the first respondent in the application for judicial review, seeks its costs of the latter application.

2    Endura Paint submits, first, that s 570 of the Fair Work Act, which restricts the court's power to award costs, does not apply. That is said to be because the judicial review application was brought under s 39B of the Judiciary Act 1903 (Cth), not under the Fair Work Act.

3    I do not accept that submission. Section 570 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 [Fair Work Commission];

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

4    While Mr Martires brought the judicial review application pursuant to s 39B of the Judiciary Act, he did so seeking review of a decision that was made under the Fair Work Act. The rights he sought to enforce were rights under the latter Act. So the judicial review application was, in the words of s 570(1), a proceeding 'in relation to a matter arising under' the Fair Work Act: see Australasian Meat Industry Employees' Union v Fair Work Australia (No 2) [2012] FCAFC 103; (2012) 203 FCR 430 at [16] (Jessup and Tracey JJ); [31], [33]-[35] (Flick J); Baker v Patrick Projects Pty Ltd (No 2) [2014] FCAFC 166; (2014) 145 ALD 548 at [3].

5    Endura Paint submitted that if s 570 of the Fair Work Act does apply, it is still entitled to costs because Mr Martires instituted the judicial review application vexatiously or without reasonable cause (s 570(2)(a)) or because his unreasonable act or omission caused Endura Paint to incur the costs (s 570(2)(b)).

6    The first of these submissions is based on the fact that the judicial review application was dismissed because a more convenient and satisfactory remedy existed, namely the appeal (in which Mr Martires was successful). So the judicial review application was pointless and multiplied proceedings unnecessarily. Also, Endura Paint submits that Mr Martires was unsuccessful in obtaining the remedies he sought, which included orders awarding him the compensation which the Federal Circuit Court had refused in its original decision.

7    I do not accept that these matters mean that the judicial review application was instituted vexatiously or without reasonable cause within the meaning of s 570(2)(a) of the Fair Work Act. To exercise the discretion conferred by s 570(2)(a), the court must be satisfied that the claims were instituted without reasonable cause, which is not established merely because a party fails in the claims. Costs will rarely be awarded: see Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351 at [8]; Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23; (2013) 232 FCR 428 at [7].

8    It is true that the judicial review application was dismissed on the basis that it was pointless, since it raised the same matters as were raised in the appeal: see Martires (No 2) at [6]-[8]. But it was also dismissed because, the appeal having been successful and the Federal Circuit Court decision set aside, there was no decision on which the judicial review application could operate. And the appeal was successful on one of the same grounds as was advanced in the judicial review application, namely that the Federal Circuit Court did not accord Mr Martires natural justice. So there was underlying merit in the judicial review application; it was dismissed on the discretionary ground that the procedure adopted by Mr Martires to challenge the Federal Circuit Court decision was inappropriate, and because the point raised in the judicial review application had been successful in the appeal proceeding. I do not consider that the discretionary procedural ground, which was one of two grounds on which the application was dismissed, means that it was instituted vexatiously or without reasonable cause. The fact that Mr Martires applied for orders that were plainly unavailable to him, such as the orders for compensation he had sought in the Federal Circuit Court, does not change that conclusion. They do not mean that the proceeding as a whole was without merit, and the seeking of those orders did not occasion any extra cost to Endura Paint.

9    The second basis on which Endura Paint seeks costs is that it says it made a Calderbank offer which Mr Martires did not accept, and that is said to have been an 'unreasonable act or omission' within the meaning of s 570(2)(b) which caused Endura Paint to incur the costs of the judicial review application. The offer was contained in a letter dated 14 September 2020 from Endura Paint's solicitors. But the letter said that the appeal had no prospects of success. It offered to settle on the basis that the appeal be dismissed and the parties each bear their own costs. The letter gave 28 days for acceptance of the offer. It appears that Mr Martires did not reply to it, within 28 days or at all.

10    The simple fact is that the appeal did have prospects of success: it was allowed. It is impossible to see how Mr Martires' implicit rejection of the offer can be unreasonable conduct in those circumstances. If he had accepted the offer, his ultimately successful appeal would have been dismissed. As Mr Martires pointed out in his costs submissions, the offer was an offer to settle the appeal - not an offer to settle the judicial review application. That application had not been commenced at the time of the letter and is not mentioned in it. For Endura Paint to have any basis to submit that Mr Martires acted unreasonably in not accepting the offer to settle the judicial review proceeding in which he was unsuccessful, the offer made would need to be characterised (retrospectively) as one to settle the judicial review application, and that application only. It is not capable of being so characterised.

11    Endura Paint submitted further or alternatively that the act of commencing the judicial review proceeding was an 'unreasonable act' within the meaning of s 570(2)(b). In Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222; (2017) 256 FCR 306 at [165] Bromberg J said (citations removed):

In the context of the use of the word 'unreasonable' in s 570(2)(b), taking into account the underlying purpose of that provision which includes the promotion of access to justice, a higher standard of unreasonableness is to be adopted. It has been said that the fact that a party has conducted litigation inefficiently or adopted a misguided approach will be relevant to, but not conclusive of, the party having acted unreasonably in a sense relevant to s 570(2)(b).

12    There is a distinction between a party who pursues arguments which are ultimately abandoned or rejected by the court and a party who commences a proceeding which was misconceived in the sense of being incompetent or unsupportable: Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143; (2008) 170 FCR 574 at [29]. Here, the proceeding was not incompetent or unsupportable. It had substantive merit, but it was procedurally flawed. As procedurally misguided as it was for Mr Martires to commence the judicial review proceeding when he was also pursuing an appeal, I do not consider it to have been an unreasonable act in view of the underlying policy of s 570(2)(b), and judged by the higher standard of unreasonableness inherent in that provision.

13    There will be no order as to the costs of the judicial review application.

Associate:

Dated:    30 March 2021