FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Construction, Forestry and Maritime Employees Union (Kwinana Bulk Jetty Case) (Costs) [2026] FCA 126

ORDERS

THE COURT ORDERS THAT:

1.    The first respondent’s application for costs is dismissed.

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

REASONS FOR JUDGMENT

DOWLING J

INTRODUCTION

1    In Fair Work Ombudsman v Construction, Forestry and Maritime Employees Union (Kwinana Bulk Jetty Case) [2025] FCA 994 (liability judgment), I determined allegations that the Union and its member, Mr Jason Gill, contravened the Fair Work Act 2009 (Cth) as the result of events at a picket at the Kwinana Bulk Jetty, Fremantle Harbour on 24 August 2021.

2    I found that Mr Gill said threatening and intimidating things to Mr Christopher Copperthwaite, an employee of Qube Ports Pty Ltd who continued to work through the protected industrial action, at the Jetty on 24 August 2021. I found that conduct breached various provisions of the Act. However, I did not find the Union liable for Mr Gill’s conduct or for the conduct of unknown persons at the Jetty on 24 August 2021.

3    The Union submits that the claims against it were “unsustainable and without merit”. It says the “fundamental defects” in the Ombudsman’s case were set out in the Union’s submissions dated 24 June 2024 and in correspondence of 25 June 2024 that offered to resolve the proceedings on the basis that the Ombudsman discontinue her claim against the Union and there be no order as to costs (the settlement offer). The Union says the Ombudsman’s rejection of that offer, on 28 June 2024, was unreasonable as contemplated by the costs provisions in s 570(2)(b) of the Act. It says therefore it is entitled to its costs of the proceeding from 29 June 2024.

4    For the reasons that follow, I find that the Union is not entitled to its costs of the proceeding from 29 June 2024.

PROVISIONS AND PRINCIPLES

5    Section 570(1) of the Act provides that a party to proceedings in a court in relation to a matter arising under the Act may be ordered to pay costs incurred by another party to the proceedings only in accordance with s 570(2). Section 570(2)(b) confers on a court a discretionary power to award costs if the court is satisfied that one party’s unreasonable act or omission caused the other party to incur costs.

6    The following principles are relevant:

(1)    the discretion conferred by s 570(2) should be exercised cautiously, and the case for its exercise should be clear: Ryan v Primesafe [2015] FCA 8; 323 ALR 107 at [64] (Mortimer J); BDR21 v Australian Broadcasting Corporation (No 2) [2021] FCA 1347 at [25] (Halley J);

(2)    the reason for caution in the exercise of the discretion conferred by s 570(2) is the potential for discouraging parties to pursue, in a complete and robust way, the claims they seek to make under the Act, or the defence to those claims, and to ensure that the spectre of costs does not loom so large as to discourage parties from commencing, continuing or responding to claims: Ryan at [64]; BDR21 at [26(f)] and the cases cited;

(3)    unreasonableness is to be determined objectively and is to be assessed by reference to the particular circumstances of the case: see BDR21 at [26(e)] and the cases cited;

(4)    the word “unreasonable” in s 570(2)(b) is not capable of precise definition and is inherently sensitive to context. It is appropriate for a court to examine the context or circumstances of the relevant conduct to ascertain whether that conduct could be characterised as unreasonable: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (the costs of the Cup of Tea Case) [2019] FCAFC 36 at [18] (Flick, Reeves and O’Callaghan JJ);

(5)    inefficient conduct of the case or a misguided approach may be relevant to, but will not be conclusive of, unreasonableness: see BDR21 at [26(b)] and [26(c)] and the cases cited; and

(6)    a failure to accept a reasonable offer of compromise, including an offer expressed in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333, is capable of constituting an unreasonable act or omission for the purposes of s 570(2)(b) of the Act: see Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; 229 FCR 221 at [166] (Tracey, Gilmour, Jagot and Beach JJ); Salama v Sydney Trains (No 2) [2021] FCA 1200 at [14] and [39] (Burley J).

7    Further, in Patrick Stevedores Holdings Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (No 5) [2021] FCA 1645 at [6(4)] Lee J observed that in considering whether it is unreasonable for a settlement offer to be rejected, the following matters should ordinarily be considered:

(1)    the stage of the proceeding when the offer was made;

(2)    the time afforded to the offeree to consider the offer;

(3)    the extent of compromise involved;

(4)    the offeree’s prospects of success, assessed as at the date of the offer;

(5)    the clarity with which the terms of the offer were expressed; and

(6)    whether the offer foreshadowed an application for indemnity costs in the event of refusal.

THE CONTEXT AND CIRCUMSTANCES

8    The proceedings were commenced by originating application and statement of claim on 24 March 2022.

9    The Union and Mr Gill filed defences on 14 July 2023. On 20 September 2023, Colvin J made orders that the matter be listed for hearing commencing on 1 July 2024. The Ombudsman filed witness statements on 15 April 2024 and an expert report on 1 May 2024. The Union filed witness statements on 13 May 2024.

10    On 22 May 2024, the Ombudsman filed an interlocutory application seeking, among other things, leave to file an amended statement of claim (ASOC) and amended outlines of evidence of Messrs Coelho, Copperthwaite and Kranendonk. I made orders granting that relief on 23 May 2024. The ASOC and amended outlines of evidence were filed the next day, on 24 May 2024.

11    The Union filed an amended defence on 5 June 2024. The Ombudsman filed opening submissions on 15 June 2024 and the Union filed opening submissions on 24 June 2024.

12    At the time the Union sent the Ombudsman the settlement offer on 25 June 2024, there were six days until the hearing on 1 July 2024. The hearing was listed for five days but ran for four days on 1-3 July 2024 and 18 July 2024.

13    The settlement offer is annexed to the affidavit of Luke Anthony Edmonds dated 25 September 2025. The Ombudsman’s submissions say that the correspondence was sent to the Ombudsman on 25 June 2024 at 2.45 pm AWST. The settlement offer is central to the Union’s application for costs. I set out the relevant parts of the settlement offer in full:

The applicant's case against the first respondent is, including for the reasons set out in the first respondent's submissions filed 24 June 2024, problematic.

We respectfully submit that the applicant's case is neither tenable nor likely to succeed. Amongst other things, the case against the first respondent suffers from a number of fundamental deficiencies which are set out in detail in the submissions filed 24 June 2024 and not rehearsed here. For present purposes, it is sufficient to note that those difficulties include:

l. that there are no material facts pleaded and no evidence to ground the contention that Mr Gill was or could have been the first respondent's agent;

2. that no official (as that expression is defined in s 12 to the Fair Work Act 2009 (Cth)) of the first respondent acting within the scope of his or her authority was present at, or is alleged to have been involved in, the conduct complained of on the morning of 24 August 2021; and

3. that no official of the first respondent is alleged to have done anything that organised particular the conduct complained of on the morning of 24 August 2021.

The applicant's case is also problematic insofar as the array of ‘industrial activities’ relied upon are incongruent with the evidence proposed to be led in relation to the ‘reasons’ for the asserted action. Insofar as the proceedings rely on s 347(b)(iv) of the FW Act in relation to Qube Ports Pty Ltd, they are unsustainable given binding Full Court authority.

The applicant's case also rests, in large part, on identification evidence. That species of evidence is both problematic and lacking in probative value. It is apparent that the problems inherent in identification are acute in present matter given the apparent means by which Mr Gill was purportedly identified by Mr Copperthwaite.

The first respondent offers to resolve the proceedings against it on the basis that the proceedings be discontinued with no order as to costs with the intent that each party bear their own costs of the proceedings.

This offer remains open to 4PM AWST 28 June 2024.

In the event the offer is not accepted, the first respondent will incur the costs of both preparing and running the trial. Rejection of the offer will be contended by the first respondent to be an unreasonable act.

The first respondent puts the applicant on fair notice that it will rely on this correspondence for the purposes of claiming its costs of the proceeding pursuant to s 570(2)(b) of the FW Act.

We look forward to your prompt response.

14    On 28 June 2024 at 5.59 pm AWST, the Ombudsman’s representatives replied by email rejecting the offer. The email did not explain the basis or reasons for the rejection. The Ombudsman’s email further provided:

The Fair Work Ombudsman remains open to resolving the matter if your client is prepared to admit a sufficient number of the pleaded contraventions. If such admissions were made, the FWO is open to not pursuing the balance of the contraventions against your client.

15    It is this 28 June 2024 rejection which the Union alleges is an unreasonable act pursuant to s 570(2)(b) of the Act. A second affidavit of Mr Edmonds dated 10 October 2025 details the costs said to have been incurred by the Union because the Ombudsman did not agree to the settlement offer. Those costs, as they are described in that affidavit, total $39,829.79.

16    I observe for completeness that there was a further settlement offer made by the Union on 5 July 2024 which offered to resolve the proceedings with each party bearing their own costs. That was sent after the conclusion of the evidence. It was largely based upon the Union’s assessment of that evidence. It was also rejected by the Ombudsman. The Union does not rely on that offer in this application.

17    In its application for costs, the Union relies on written submissions dated 10 October 2025 and two affidavits of Mr Edmonds dated 25 September 2025 and 10 October 2025. The Ombudsman relies on written submissions dated 31 October 2025. In my orders of 5 September 2025, I made allowance for a hearing on costs in the event that either party requested to be heard. Neither party requested to be heard. I therefore determine the costs issue on the papers.

WAS THE OMBUDSMAN’S REJECTION OF THE UNION’S OFFER UNREASONABLE?

18    The Union relies upon discrete parts of the ASOC which set out the Ombudsman’s pleaded case regarding the Union’s liability. It is those pleadings that it says were unsuccessful and “unsustainable and without merit”. They are as follows:

(1)    at [80] of the ASOC, the Ombudsman claimed that the Union “organised and/or took the 24 August 2021 Actions”. The “24 August 2021 Actions” are described in Part D1 of the ASOC. Part D1 claims that Mr Gill and unidentified picketers engaged in the conduct described at [70] of the ASOC, including Mr Gill saying “you’ll end up dead dog if you keep going like this” to Mr Copperthwaite. The conduct at [70] of the ASOC is summarised at [8] of the liability judgment. The ASOC at [80] states that the Union’s organisation of and engagement in the 24 August 2021 Actions was to be inferred from the facts and matters described in Parts 7(d)-A10 and Part B of the ASOC, and “the operation of ss. 363 and/or 793 of the FW Act and/or the common law principle of vicarious liability”;

(2)    elsewhere in the ASOC, the Ombudsman claimed that the Union organised and/or took the 24 August 2021 Actions contrary to:

(a)    ss 343 and 348 of the Act as against Qube (at [91]-[92] and [99]-[100(c)]);

(b)    ss 346 and 348 of the Act as against Mr Copperthwaite ([97], [100(a)] and [109]-[110]); and

(c)    ss 346 and 348 of the Act as against Mr Coelho ([98], [100(b)] and [111]-[112]).

(3)    at [115]-[117] of the ASOC, the Ombudsman alleged that the Union had “advised, encouraged or incited” Mr Gill to commit contraventions of ss 343 and 348 of the Act for the purposes of s 362 of the Act;

(4)    at [120]-[128] of the ASOC, the Ombudsman pleaded that Mr Gill took the “Gill 24 August 2021 Action” in his capacity as an agent of the Union, and that pursuant to ss 363 and 793 of the Act the Union committed each contravention of ss 343, 346 and 348 of the Act committed by Mr Gill. The words “Gill 24 August 2021 Action” are defined at [81] of the ASOC by reference to Mr Gill’s participation in the 24 August 2021 Actions;

(5)    at [129]-[132] of the ASOC, it is alleged that the Union was “involved in” Mr Gill’s contraventions of ss 343, 346 and 348 of the Act as an accessory for the purposes of s 550(2) of the Act, such that the Union committed each of those contraventions; and

(6)    at [133] of the ASOC, it is alleged the Union is vicariously liable “at common law” for each contravention of ss 343, 346 and 348 committed by Mr Gill.

19    The Union submits that there were no, or insufficient, material facts pleaded to make out each of the above pleadings.

20    The Union relies upon its submissions dated 24 June 2024 read together with its settlement offer. The Union points to the following parts of its 24 June 2024 submissions where it complained:

(1)    the Ombudsman did not plead any individual who “organised” or “engaged in” the 24 August 2021 Actions;

(2)    there were no pleaded facts to identify how Mr Gill was an agent of the Union, nor were any material facts pleaded that Mr Gill, if an agent of the Union, was acting within the scope of his actual or apparent authority;

(3)    the Ombudsman’s case premised on s 362 of the Act should be dismissed as no person whose conduct could be attributed to the Union was pleaded to have advised, encouraged or incited Mr Gill to engage in the contravening conduct;

(4)    there was no pleaded basis on which Mr Gill could be found to be an agent of the Union, meaning that the Union cannot rely on either ss 363 or 793 to attribute any conduct by Mr Gill and his states of mind in relation to that conduct to the Union;

(5)    the Ombudsman’s reliance on s 550 must fail because no conduct by any person capable of establishing any of the species of accessorial conduct in s 550(2) was pleaded, nor was there any material fact pleaded that the Union, or any person whose state of mind was or can be attributed to the Union, knew the essential elements of Mr Gill’s contraventions; and

(6)    the Ombudsman’s vicarious liability case is untenable as vicarious liability only arises in the employment relationship and Mr Gill was not a Union employee. To the extent that the Ombudsman in its submissions had asserted a different case based on a non-delegable duty, no such duty had been pleaded or raised.

21    The Union says that it alerted the Ombudsman to the above “fundamental problems” with her case by its settlement offer combined with its 24 June 2024 submissions, and despite that the Ombudsman chose to press on.

22    In its submissions dated 10 October 2025 in respect of costs, the Union points to a number of findings I made in the liability judgment at [244]-[317] and [432]-[453], in which I found that the Union was not liable for Mr Gill’s contraventions or the actions of the unknown picketers. The Union raises those findings in support of its position that the Ombudsman’s case against the Union was “devoid of legal and evidentiary merit”. In the liability judgment, I determined that the Union was not liable:

(1)    by operation of “primary corporate responsibility” pursuant to ss 363 and 793 of the Act: see [246]-[285] and [435]-[445];

(2)    by operation of “derivative liability” pursuant to ss 362 and 550 of the Act: see [286]-[298];

(3)    by operation of “common law vicarious liability”: see [299]-[307] and [446]-[448]; and

(4)    by directly contravening ss 343, 348 and 346 of the Act in circumstances where the Union was said to have organised the picket: see [308]-[317] and [449]-[453].

23    The Union says that, in the above circumstances, it was unreasonable for the Ombudsman to have rejected the Union’s settlement offer. It says that rejection caused the Union to incur significant costs preparing and running the case post 28 June 2024. It says it is appropriate to order the Ombudsman to pay the Union’s costs given:

(1)    the Ombudsman’s case against the Union was devoid of legal strength and doomed;

(2)    the Ombudsman is a sophisticated litigant and has had access to experienced counsel and solicitors;

(3)    the substantial problems with the Ombudsman’s case were pointed out to her. She elected to press on; and

(4)    the Ombudsman, as an officer of the Commonwealth and subject to the model litigant requirements, should be held to a high standard and should not subject parties to having to defend unmeritorious claims.

24    It is necessary for me to determine unreasonableness objectively and by reference to the particular circumstances of this case. Together with the submissions above I weigh the factors outlined in Patrick Stevedores directed particularly at the reasonableness of the rejection of a settlement offer.

The timing and duration of the offer

25    I accept that the offer was made at a late stage. It was sent on 25 June 2024, six days before the hearing commenced on 1 July 2024. However, I acknowledge that the offer was made approximately one month after the ASOC was filed on 24 May 2024, and ten days after the Ombudsman’s written submissions were filed on 15 June 2024.

26    The time afforded to the Ombudsman to consider the offer was approximately three days. As noted above, the Ombudsman’s submissions state the settlement offer was sent at 2.45 pm AWST on Tuesday 25 June 2024. The offer was open until 4.00 pm AWST on Friday 28 June 2024. I consider this to be a short window of time to consider the offer, although I accept that the duration offered was influenced by the proximity of the trial which was to commence the following workday, on Monday 1 July 2024.

27    On balance, these considerations weigh in favour of the decision to refuse the settlement offer not being unreasonable.

The extent, clarity and terms of the offer

28    I accept, as the Ombudsman submits, that the basis on which the offer was made was not put to the Ombudsman. That is, the offer did not identify whether it was an offer to compromise under r 25.01 of the Federal Court Rules 2011 (Cth) or whether it was a Calderbank offer. However, the offer made clear that the letter would be relied upon to seek costs under s 570(2)(b).

29    The Ombudsman complains that the offer referred to the Union’s submissions filed on 24 June 2025 but did not directly refer to any specific parts of those submissions. I accept that much. The letter made assertions about the perceived weaknesses of the Ombudsman’s case regarding the Union’s liability based on three propositions. Those propositions did not set out each of the ways the Union was alleged to be liable and explain in detail why each of those claims must fail. However, the letter must be read in the context of the 24 June 2025 submissions that preceded it. I make some allowance for the two to be read together.

30    On balance these considerations do not weigh strongly for or against the refusal not being unreasonable.

The Union’s prospects of success at the time of the offer and other considerations

31    I am not satisfied that, at the time of the offer, the Ombudsman’s prospects of success were, in the words of the Union, “doomed”. Whilst the Ombudsman’s arguments were unsuccessful, I also take account of the circumstances that:

(1)    I found Mr Gill’s conduct to be a contravention of ss 343, 346 and 348 of the Act, and I accepted Mr Copperthwaite’s evidence as to the identification of Mr Gill: see [114]-[122] and see generally [193]-[233];

(2)    I accepted that the Union organised and promoted the picket (at [10]) and that several of the events of 24 August 2021 pleaded at [70] of the ASOC occurred; and

(3)    I gave detailed consideration to each of the Ombudsman’s arguments as to the Union’s liability. I did not come to those conclusions lightly. I accept that, in relation to at least some of the Ombudsman’s arguments, there was no direct authority either way on the question of the Union’s liability in the circumstances of this case. I accept that pursuing claims that may be described as contentious does not in itself give rise to an adverse costs order under s 570 of the Act: Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879; 162 FCR 392 at [36] (Tracey J); Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351 at [11] (Pagone J).

32    I also take into account that, at the time the offer was made, the matter was to proceed to a five-day trial the following Monday. The trial was proceeding by way of outlines with viva voce evidence.

33    These considerations weigh in favour of the refusal not being unreasonable.

34    Further, I repeat, as the parties accepted, that the discretion conferred by s 570(2)(b) should be exercised cautiously, and the case for its exercise should be clear. That caution is to ensure that the parties are not discouraged from pursuing or defending claims: see [6] above. The assessment of unreasonableness is to be made by reference to the particular context and circumstances, and ordinarily by additional considerations directed at the reasonableness of the rejection of a settlement offer: see [7] above.

Conclusions on the offer and its rejection

35    On balance and in all of the circumstances explained above, I am not satisfied that the Ombudsman’s rejection of the Union’s settlement offer was unreasonable so as to enliven the entitlement to costs under s 570(2)(b).

36    I note further that the Union submitted that by virtue of the Ombudsman’s status as an officer of the Commonwealth, and being “subject to the model litigant requirements”, she should be held to a “high standard and should not subject parties to having to defend unmeritorious claims”. Insofar as that submission suggests the Ombudsman’s status or obligations lead to a different approach to the costs entitlement of the Union, I adopt the conclusions of Gray J in Australian Competition & Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 1844 at [25], which was recently cited with apparent approval by the Full Court of this Court in Arrotex Pharmaceuticals Pty Ltd v Minister for Health and Aged Care [2025] FCAFC 22 at [57] (Katzmann, O’Sullivan and McElwaine JJ):

There were some suggestions in argument that orders for indemnity costs against the ACCC might be appropriate because it had failed in some respects to act in accordance with the model litigant policy of the Commonwealth of Australia. In my view, considerations as to whether there has been compliance with that policy are irrelevant to questions of indemnity costs. The model litigant policy has been adopted by the Australian Government as a guide to the manner in which it and its agencies should conduct themselves in litigation, so as not to take advantage of the superiority of resources for litigation, which the Commonwealth often has when compared with those against whom it is litigating. The policy is of significant value to parties against whom the Commonwealth is involved in litigation, and to the courts in which that litigation is conducted. To use lapses in compliance with the policy as a ground for awarding indemnity costs against Commonwealth agencies might have the result that the Commonwealth abandoned the policy. This would be detrimental to the public good.

37    Whilst those remarks were in the context of a consideration of whether costs might be ordered on an indemnity or party-party basis, I consider that the remarks have some application to costs contemplated under s 570 of the Act. In other words, I do not consider that the Ombudsman’s obligations as a model litigant alter the approach or standard to be applied under s 570 in assessing costs against the Ombudsman.

38    The application for costs pursuant to s 570(2)(b) is dismissed.

Associate:

Dated:    20 February 2026