Federal Court of Australia

Twomey v Que 5 Pty Ltd (No 2) [2023] FCA 1481

ORDERS

THE COURT ORDERS THAT:

1.    The applicant must pay the first respondent's costs of the proceeding, fixed in the sum of $8,000.

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

REASONS FOR JUDGMENT

JACKSON J:

1    On 27 September 2023 I dismissed an application by Mr Twomey for judicial review of a decision of the Fair Work Commission (FWC) dismissing his application for unfair dismissal, and a subsequent decision of the Full Bench of the FWC refusing Mr Twomey permission to appeal: Twomey v Que 5 Pty Ltd [2023] FCA 1155 (Twomey (No 1)).

2    Mr Twomey claimed before the FWC that he was unfairly dismissed by the respondent, Que 5 Pty Ltd. The FWC at first instance dismissed Mr Twomey's application because, having been employed by Que 5 for less than a year, and Que 5 being a small business within the meaning of s 23 of the Fair Work Act 2009 (Cth) (FWA), he did not meet the minimum employment period to be a person who was protected from unfair dismissal under s 382 and s 383. Mr Twomey applied to the Full Bench of the FWC for permission to appeal this decision, which was refused. Mr Twomey then applied for judicial review in this Court.

3    At the judicial review hearing, Que 5 indicated that it if it were successful in resisting the application, it would seek costs under s 570(2)(a) of the FWA on the ground that Mr Twomey instituted the proceeding without reasonable cause. The parties agreed that if this application was made, it could be determined on the papers. Programming orders for the filing of submissions and affidavits were made. Que 5 filed submissions in support of the application and an affidavit of Michael Baldwin affirmed 1 November 2023. Mr Twomey did not file any submissions or affidavits.

4    For the following reasons, Que 5 will be awarded costs in the amount of $8,000.

5    Section 570 of the FWA relevantly 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.

(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; …

6    Que 5 accepts that the application for judicial review was a ‘matter arising under this Act' within the meaning of the section. But it submits that Mr Twomey should pay its costs of the proceeding because he did not have a reasonable cause for commencing and continuing the application. Que 5 does not submit that Mr Twomey instituted the proceedings vexatiously.

7    The power to award costs under s 570 should be exercised with caution because of the exceptional nature of the power in an otherwise no-costs jurisdiction, and the case for its exercise should be clearly demonstrated: Trustee for the MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8] (Siopis, Collier and Katzmann JJ).

8    What is meant by want of a reasonable cause for the purposes of s 570(2)(a) was explained in Australian Workers Union v Leighton Contractors Pty Limited (No 2) [2013] FCAFC 23; (2012) 232 FCR 428 at [7] (Dowsett, McKerracher and Katzmann JJ), as follows:

(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.

9    The reasons for decision in Twomey (No 1) point to the conclusion that the proceeding did not have reasonable prospects of success at the time it was instituted. In particular:

(1)    Mr Twomey's originating application did not identify any coherent grounds of judicial review: at [22], [25].

(2)    It was not in dispute that Que 5 met the definition of a small business employer, meaning that the minimum period of employment to be a person protected from unfair dismissal was one year. It was also not in dispute that Mr Twomey was employed by Que 5 for a period of about eight months, having commenced employment on 3 January 2022 and been dismissed on 1 September 2022: at [5]-[7], [30]-[31].

(3)    Contrary to Mr Twomey's contention, s 23(2)(b) of the FWA does not mean that Mr Twomey was a person who was protected from unfair dismissal. Section 23(2)(b) concerns counting how many employees an employer has for the purpose of the definition of a 'small business employer'. Whether or not Mr Twomey was a person protected from unfair dismissal turned on other provisions of the FWA, namely s 382-s 384. Mr Twomey's reliance on s 23(2)(b) was misconceived: at [30]-[32].

(4)    Mr Twomey's contention that a conciliator in the FWC said Mr Twomey had a case, but then the Deputy President said he did not have a case, had no reasonable prospects of success in disclosing a jurisdictional error, given that the conciliation process can have no bearing on the decision that the FWC makes after the hearing, and there was no evidence that it did or that it resulted in any denial of procedural fairness: at [33]-[34].

(5)    As for his contention about Mr Coulter's police statement, Mr Twomey did not suggest that the police statement was before the Deputy President, or that it should have been, or that the Full Bench's refusal to receive the police statement into evidence was a jurisdictional error. Further, and in any event, the police statement would not have established that Mr Twomey's service with Que 5 was continuous, such that Mr Twomey had been employed for at least one year at the time of his dismissal: at [35]-[36].

10    A proceeding is not said to have been brought 'without reasonable cause' simply because the party is unsuccessful in their claim: R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 at 473 (Gibbs J). But where it is clear on the applicant's version of the facts that the proceeding must fail, it may be said that it lacks reasonable cause: Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264-265 (Wilcox J); affirmed in Khiani v Australian Bureau of Statistics [2011] FCAFC 109 at [51] (Gray, Cowdroy and Reeves JJ). The summary given above shows that is the case here. Mr Twomey was challenging a decision based on the duration of his employment when on his own evidence he had less than one year of continuous employment with Que 5 at the time that he was dismissed.

11    I therefore conclude that this proceeding was instituted without reasonable cause. To the extent that it was possible to comprehend the basis on which Mr Twomey brought the case, that basis was misconceived or without foundation. The precondition for the exercise of the power to award costs under s 570(2)(a) has been established.

12    Even so, the Court maintains a discretion not to award costs. However, Mr Twomey has chosen not to make any submissions on the costs point and so has not brought to the Court's attention any reason why the discretion should not be exercised in favour of the successful respondent. The fact that Mr Twomey is self-represented is not by itself a sufficient reason to refrain from awarding costs against him: see Reeve v Ramsay Health Care Australia Pty Ltd (No 2) [2012] FCA 1322 at [15] (Barker J). He commenced this proceeding with no apparent basis, in circumstances where the merits of his claim to unfair dismissal had already received proper consideration in the FWC. And he put Que 5 to the expense of defending the proceeding after being offered, and refusing, the opportunity to try to settle the dispute with the assistance of a registrar of the Court acting as mediator.

13    In those circumstances, a costs order will be made in favour of Que 5.

14    Que 5 submits that Mr Twomey should pay its costs in the amount of $11,650 on a party-party basis or should pay a lump sum amount fixed in the Court's discretion by reference to the scale amounts in Schedule 3 of the Federal Court Rules 2011 (Cth). The invoices rendered to Que 5 are in evidence. $11,650 is the actual amount of its legal costs, including counsel fees of $3,850.

15    It is appropriate to fix a lump sum to avoid further costs and delay. But I do not consider that an amount of $11,650 is appropriate. The issues were not complex, there were only two case management hearings, the final hearing of the matter took less than half an hour, Que 5 filed no documents beyond brief grounds of opposition, and there were no written submissions to prepare or to consider. I have considered the itemised invoices that have been put into evidence. In my view, $8,000 inclusive of counsel fees (and GST) is a fair lump sum award of costs in all the circumstances.

Associate:

Dated:    28 November 2023