Federal Court of Australia

Torrens University Australia Limited v Fair Work Ombudsman (No 2) [2025] FCA 1120

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application filed on 15 August 2025 be dismissed.

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

REASONS FOR JUDGMENT

HALLEY J:

A.     Introduction

1    On 16 June 2025, I made orders in this proceeding cancelling a compliance notice issued under s 716(2) of the Fair Work Act 2009 (Cth) (FW Act) by the respondent (FWO) against the applicant (Torrens) and delivered reasons for judgment: Torrens University Australia Limited v Fair Work Ombudsman [2025] FCA 634 (Judgment or J).

2    By an interlocutory application filed on 15 August 2025, Torrens now seeks an order that the FWO pay Torrens’ costs of the proceeding on an indemnity basis or alternatively, that the FWO pays the costs of Torrens on a party and party basis.

3    The application for indemnity costs is made pursuant to s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act), r 40.02(a) of the Federal Court Rules 2011 (Cth) (Rules), and s 570(2)(b) of the FW Act. The alternative party and party costs application is made pursuant to s 43 of the FCA Act, r 40.01 of the Rules, and s 570(2)(b) of the FW Act.

4    These reasons assume familiarity with the Judgment and should be read in conjunction with it.

5    For the following reasons, I am not satisfied that any order should be made for costs in the proceeding.

B.     Statutory provisions and principles

6    Section 43 of the FCA Act confers a broad discretion on the Court to make an order for costs but for present purposes that discretion is subject to s 570 of the FW Act, which has the effect of limiting the power of the Court to make an order for costs in proceedings relating to matters arising under the FW Act: Stanley v Service to Youth Council Inc (No 3) (2014) 225 FCR 357; [2014] FCA 716 at [6] (White J).

7    In BDR21 v Australian Broadcasting Corporation (No 2) [2021] FCA 1347, I distilled from the relevant authorities seven principles governing the application of s 570(2)(b), which for convenience I set out below.

8    First, the occasions on which costs will be awarded under s 570 of the FW Act are likely to be exceptional: Mutch v ISG Management Pty Ltd (No 2) [2020] FCA 954 at [8] (Bromberg J).

9    Second, the touchstone for the exercise of the power is unreasonableness, not negligence or inefficiency: Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 3) [2017] FCA 810 at [26] (Katzmann J); Tucker v Victoria (No 2) [2021] VSCA 182 at [32(h)] (Kyrou, McLeish and Sifris JJA).

10    Third, the fact that a party has conducted litigation inefficiently, made belated concessions, or adopted a misguided approach may be relevant to, but will not be conclusive of, the question of unreasonableness: Mutch at [8] (Bromberg J) citing Construction Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574; [2008] FCAFC 143 at [29] (Tamberlin, Gyles and Gilmour JJ) and Hutchinson v Comcare (No 2) [2017] FCA 370 at [8] (Bromberg J); Tucker at [32(h)].

11    Fourth, the term “unreasonableness” is not conducive to precise definition, rather it is to be understood as controlling the extent of the limitation on the making of a costs order pursuant to s 570 of the FW Act and it takes much of its meaning from the underlying reason for that limitation: Mutch at [7].

12    Fifth, unreasonableness is to be determined objectively, it is a question of impression and degree, and it is to be assessed by reference to the particular circumstances of a given case: Tucker at [32(g)] citing PIA Mortgage Services Pty Ltd v R (No 2) [2020] FCAFC 53 at [15] (Rangiah, Charlesworth and Snaden JJ).

13    Sixth, it is well settled that the limitation imposed by s 570 of the FW Act seeks to provide access to justice by ensuring that the fear of an adverse costs order does not discourage litigants from pursuing good claims: Mutch at [7] citing Trustee for The MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8] (Siopis, Collier and Katzmann JJ); Ryan v Primesafe [2015] FCA 8 at [64] (Mortimer J); Comcare (No 2) at [8] (Bromberg J).

14    Seventh, if the power to make an order pursuant to s 570 of the FW Act is enlivened, then in determining whether to exercise its discretion to make an order, the Court is bound by s 37M(3) of the FCA Act to exercise that discretion in the way that best promotes the overarching purpose of any statutory provision on a matter of practice and procedure referred to in s 37M of the FCA Act: Grouped Property Services at [26] (Katzmann J).

C.    Submissions of Torrens

15    Torrens submits that the decision by the FWO to persist in its defence of the compliance notice after proceedings were commenced by Torrens was unreasonable because at no time could the FWO have had a reasonable belief justifying the issue of the compliance notice or alternatively, Torrens could not have reasonably had this belief after the filing of the amended originating application on 16 September 2024 or its receipt of Torrens’ reply on 12 June 2025. It submits that the position advanced by the FWO in the proceeding was misconceived, fundamentally flawed and not a reasonably arguable position, and therefore the statutory threshold of unreasonable conduct is demonstrated.

16    Torrens submits that the FWO could not have had a reasonable belief in the construction of the Awards because it had communicated to the FWO on multiple occasions the correct construction, which was ultimately upheld by the Court. The construction of the Awards propounded by the FWO was characterised by Torrens as a “Direct Particular Lecture Test”.

17    More specifically, Torrens places particular reliance on my finding at J [49] that I was satisfied that:

… the FWI could not reasonably have held the belief pursuant to s 717(1)(a) that the Direct Particular Lecture Test was sound at law.

18    Torrens submits that the finding at J [49] establishes a circumstance in which costs may be awarded by the Court pursuant to s 570(2)(b) of the FW Act.

19    Further, Torrens submits that the unreasonableness of the FWO in issuing the compliance notice and then persisting in defending the notice, is demonstrated by Torrens (a) distancing itself from, but not abandoning the Direct Particular Lecture Test in both its written and oral submissions, and (b) propounding alternative constructions of the Awards for the first time in oral argument that were divorced from the realities of the tertiary education sector.

20    Moreover, Torrens submits that the absence of any sound legal basis for the construction of the Awards propounded by the FWO was confirmed by my finding at J [29] that the “FWO was not able to point to any coherent or principled basis that would” determine the boundaries between the critical language of “associated working time” and an entitlement to be remunerated under the separate “marking rate”.

D.    Consideration

21    I am not persuaded that any order for costs should be made, either on a party and party basis or indemnity basis, essentially for the reasons advanced by the FWO.

22    First, the starting position for any award of costs under s 570 of the FW Act is that the clear intention of the legislature is that costs should in the usual course be borne by each party to a proceeding to which the section applies. As Rangiah J stated in Tamu v World Vision Australia (No 2) [2021] FCA 565 at [15]:

… a party’s conduct must rise significantly above unsatisfactory prior to a Court being inclined to exercise its jurisdiction to award costs, as mere weakness in a position on arguable points of law is insufficient to justify an order…

23    Second, the construction of the Awards advanced by the FWO, specifically the meaning of the phrase “associated working time”, was not the pursuit of an incompetent or hopeless case. It may ultimately have been unsuccessful but there was a degree of imprecision and potential ambiguity in how the words were to be interpreted in the context of the Awards and industry practice. The pursuit of a contentious but ultimately unsuccessful argument is not an unreasonable act: Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392; 165 IR 464; [2007] FCA 879 at [36] (Tracey J). This is particularly the case where, as in this case, there are no authorities that have directly considered the point in issue.

24    Third, the reliance by Torrens on my finding at J [49] as providing a basis to make a costs order against the FWO was misplaced. The finding must be understood in the context of the overall paragraph which was in the following terms:

Given my conclusion that the Compliance Notice is founded on an incorrect construction of the Awards and is accordingly bad at law, I am also satisfied that the FWI could not reasonably have held the belief pursuant to s 717(1)(a) that the Direct Particular Lecture Test was sound at law.

25    The finding that the Fair Work Inspector could not reasonably have held that belief comes from the language of s 716(1) of the FW Act that provides that the FWI may issue a compliance notice if the inspector “reasonably believes” that a person has contravened any one or more of the provisions or terms of various standards, awards, and orders. It does not follow that the issue of a compliance notice without a reasonable belief that there had been a relevant contravention necessarily gives rise to an entitlement to costs pursuant to s 570(2)(b) of the FW Act. It cannot in itself establish that the issue of the compliance notice by the FWO was an unreasonable act or omission that caused Torrens to incur costs.

26    The issue and subsequent defence of the compliance notice in this proceeding was driven by a mistaken interpretation of the meaning of “associated working time” in the Awards. Torrens does not point to or otherwise identify any other conduct of the FWO that could be construed as an unreasonable act or omission that caused it to incur costs.

27    Fourth, the “alternative constructions” to the Direct Particular Lecture Test advanced during oral argument by the FWO reflected more an attempt to address the inherent imprecision and ambiguity in the phase “associated working time” in the Awards than any wholesale abandonment of that test.

28    The FWO also submitted that as a matter of discretion, the Court would not accede to the application by Torrens for a costs order because of the delay in Torrens bringing the application in circumstances in which the application (a) had not been previously foreshadowed, including at the conclusion of the hearing, and (b) was only made some five weeks after orders had been made in the proceeding and the Court had not left open the question of costs.

29    Further, I accept that in the usual course any application for a special costs order should be made during the hearing, unless it is based on an offer of compromise that cannot be disclosed until the Court has pronounced judgment: Mawhinney v Australian Securities and Investments Commission (No 2) [2022] FCAFC 205 at [35] (O’Bryan and Cheeseman JJ).

30    Given that I have determined that s 570(2)(b) is not engaged, it is not necessary to consider whether as a matter of discretion Torrens would otherwise not have been entitled to any costs order.

E.    Disposition

31    The interlocutory application filed by Torrens seeking its costs of the proceeding is to be dismissed.

Associate:

Dated:    10 September 2025