Federal Court of Australia

Communications Electrical Electronic Energy Information Postal Plumbing and Allied Services Union of Australia v Simpec Pty Ltd (Costs) [2025] FCA 735

ORDERS

THE COURT ORDERS THAT:

1.    There be no order as to the costs of the proceedings.

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

REASONS FOR JUDGMENT

COLVIN J:

1    The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia brought proceedings against SIMPEC Pty Ltd claiming that a class of workers at the Iron Bridge Project had not been afforded their full leave entitlements. The issue arose because SIMPEC had required the workers to work a particular system of works pursuant to a provision in the relevant enterprise agreement. Broadly, the system of works involved working long hours for three weeks followed by one week of unpaid authorised leave instead of the more usual working hours otherwise provided for in the enterprise agreement. SIMPEC's position was that even though the workers were full-time employees who would otherwise have been entitled to accrue one year's annual and personal leave after one year of service worked in accordance with the ordinary hours provisions of the enterprise agreement, the consequence of the system of works was that annual and personal leave only accrued during the three weeks of work. This was said to be the consequence of the application of the relevant legislative provisions in the Fair Work Act 2009 (Cth) to the particular way the system of works operated. Those statutory provisions were said to apply because the enterprise agreement did not confer the leave entitlements but instead provided that those entitlements were conferred by the legislation.

2    Of course, the legislation was not drafted on the basis that there was a right for an employer to require workers to work a system of works of the kind provided for in the enterprise agreement. It had its own provisions as to ordinary hours of work. However, they were minimum standards and it was the hours of work provisions in the enterprise agreement that took effect.

3    So, it was SIMPEC's position that it could impose a system of works under the enterprise agreement that had the consequence that full-time workers accrued three-quarters of the annual and personal leave that the workers would have accrued if the system of works had not been imposed. Put another way, although working full-time, the employees did not accrue the annual and personal leave that a full-time employee would expect to accrue under usual employment conditions.

4    Viewed from the perspective of an everyday employee, there was little to commend SIMPEC's position. It depended upon deploying the statutory leave provisions in an unusual context to produce a reduction in leave entitlements for full-time employees over the period of their employment when compared to the conditions that would apply if the system of works was not imposed. Accordingly, there was a genuine basis for grievance as to the subject matter of the proceedings. However, in the result, I concluded that SIMPEC's position was legally correct as a matter of construction of the enterprise agreement and the interpretation of the legislative provisions: Communications Electrical Electronic Energy Information Postal Plumbing and Allied Services Union of Australia v Simpec Pty Ltd (Liability) [2025] FCA 470.

5    SIMPEC now applies for an order that the Union pay its costs of the proceedings on and after 26 March 2025, being a date that was just over a week before the hearing. It seeks those orders on an indemnity basis, proposing an ordinary costs order in the alternative. It relies upon the terms of a Calderbank letter sent on that date. The letter proposed settlement on the basis of an immediate discontinuance and entry into a settlement agreement providing for mutual releases, terms concerning confidentiality and non-disparagement and that each party bear their own costs.

6    The approach to be adopted in considering whether to exercise the power conferred by s 570 of the Fair Work Act to award costs in what is otherwise a no-costs jurisdiction was recently summarised by Owens J in Burt v University of Sydney (No 2) [2025] FCA 596 at [2]-[10] in terms that I gratefully adopt.

7    For the following reasons, there should be no order as to costs of the proceedings.

8    Firstly, in these proceedings, the Court's usual discretion as to costs must be exercised within the constraints imposed by s 570(2). It provides that a party may be ordered to pay 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.

9    SIMPEC makes no claim that the proceedings were instituted vexatiously or without reasonable cause. It relies upon the Union's conduct in failing to accept the Calderbank offer. So, SIMPEC must demonstrate that the Union's failure to accept the offer in the Calderbank letter was an unreasonable act or omission that caused SIMPEC to incur costs thereafter.

10    Secondly, as was explained in Stratton Finance Pty Limited v Webb [2014] FCAFC 110 at [80] (Allsop CJ, Siopis and Flick JJ):

Caution should be exercised as to how a Calderbank offer, even a generous one, is viewed in such circumstances. Calderbank letters presuppose what might be called a 'costs jurisdiction', in contrast to the usual rule in FW Act claims. To group together contractual and FW Act claims in an offer may permit the conclusion that the refusal of the offer was unwise, even unreasonable, but it does not follow that such is an unreasonable act or omission, for the purposes of s 570(2).

11    Further, the power conferred by s 570 must be exercised with caution because of the exceptional nature of the power in an otherwise no-costs jurisdiction: Trustee for The MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8] (Siopis, Collier and Katzmann JJ).

12    Thirdly, SIMPEC was unsuccessful as to certain of the points it raised in the Calderbank letter as a basis for saying in that letter that the Union's position was hopeless.

13    Fourthly, as I have explained, there was a genuine basis for grievance. Ultimate success by SIMPEC does not demonstrate unreasonableness on the part of the Union in not accepting the offer and pressing on with the claims.

14    Fifthly, I reject the submission advanced by SIMPEC that there was an absence of merit in the proceeding of a kind that was exposed by the Calderbank letter. As I explained in my reasons on liability at [71]:

… the real issue between the parties concerned the proper construction of the EA and the way in which the provisions of the EA that concerned the ordinary hours to be worked by full-time employees might have consequences for their entitlements to annual leave and personal leave under the NES provisions.

15    One matter of significance in resolving that issue was the proper construction of the provision which allowed SIMPEC to impose a system of works, particularly as to the consequences for counting ordinary hours for the purposes of leave entitlements. It required careful consideration: see [75]-[89] of my liability reasons.

16    It was not unreasonable for the Union to fail to accept the offer made by SIMPEC.

Associate:

Dated:    4 July 2025