Federal Court of Australia

Woods v T&F.S. Woods Pty Ltd (No 2) [2026] FCA 1411

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    The orders of the Federal Circuit and Family Court of Australia (Division 2) made on 22 May 2025 in BRG627 of 2020 be set aside.

3.    The Application in a Proceeding filed on 23 August 2024 in BRG627 of 2020 be dismissed, with no order as to costs.

4.    The Application in a Proceeding filed on 16 October 2024 in BRG627 of 2020 be dismissed, with no order as to costs.

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

REASONS FOR JUDGMENT

MEAGHER J

introduction

1    This is an appeal from the decision of the primary judge, a judge of the Federal Circuit and Family Court of Australia (Div 2) (FCFCOA), ordering that the appellant (the applicant before the primary judge) pay the respondent’s costs of and incidental to the whole proceeding (the Substantive Proceeding), and of its application for costs filed on 23 August 2024 (Respondent’s Costs Application), on a party-party basis (Costs Orders): Woods v T & F.S. Woods Pty Ltd (No 2) [2025] FedCFamC2G 747 (Costs Judgment).

Procedural History

Background

2    The matter is the subject of a long procedural history which bears setting out.

3    The respondent carried out a trucking business in Moree, New South Wales: Costs Judgment at [2].

4    On 24 July 2019, the applicant commenced a proceeding in the name of the respondent alleging a breach of director’s duties by his brother in respect of the respondent (Director’s Duties Proceeding). On 27 November 2019, the Director’s Duties Proceeding was settled, and a deed of settlement and release (Deed) was entered into: Costs Judgment at [8] – [10]. The parties to the Deed are:

(1)    the applicant;

(2)    the respondent;

(3)    Mr Alan Woods, the applicant’s brother;

(4)    Ms Julianne Woods, Mr Alan Woods’ wife; and

(5)    Woods Transport Pty Ltd, of which the applicant and Mr Alan Woods were directors.

5    One of the recitals to the Deed provided as follows:

The Parties wish to settle all disputes between them arising out of the issues of the Proceedings and all disputes that have or may have arisen as a consequence of the entire dealings between Allan and David as directors and shareholders of [the respondent], and Julie as director and employee of [the respondent], howsoever arising (the Disputes).

6    The recitals also referred to the Director’s Duties Proceeding and to a dispute between the applicant and Mr Allan Woods regarding the will of their deceased father, Mr Terence Woods: Costs Judgment at [9]. At [10] of the Costs Judgment, the primary judge noted that the applicant, Mr Allan Woods and the other parties were each in dispute regarding:

a)     The respective distributions to which [the applicant, Mr Allan Woods and Ms Julieanne Woods] were entitled to the assets in the estate of the late Terence Woods who was the father of [the applicant and Mr Allan Woods].

b)     The control and management of [the respondent] and Woods Transport Pty Ltd as documented in [the Director’s Duties Proceeding].

7    On 25 November 2020, the respondent made the final payment pursuant to the Deed.

8    On 2 December 2020, the applicant commenced the Substantive Proceeding by filing an originating application and statement of claim in the FCFCOA seeking (Costs Judgment at [1]):

(1)    Declarations that the respondent had contravened various sections of the Fair Work Act 2009 (Cth) (FW Act) by failing to pay him amounts owing for accrued annual leave and leave loading upon the termination of his employment, wages, allowances, and superannuation, in accordance with the Road Transport (Long Distance Operations) Award 2010 and the Road Transport and Distribution Award 2010 (Local Award). He also sought a declaration that the respondent had contravened the FW Act by failing to pay him overtime in accordance with the Local Award.

(2)    An order for compensation for loss suffered because of the contraventions.

(3)    An order that the respondent pay the applicant outstanding long service leave under the Long Service Leave Act 1955 (NSW).

(4)    A declaration that the applicant is entitled to possession of certain personal property and an order that the respondent deliver up that property to the applicant, or alternatively damages for conversion.

(5)    Payment of damages for breach of deed.

9    On 5 July 2021, the respondent made an offer to settle the Substantive Proceeding for $50,000.00, which was rejected on 26 July 2021. The offer was extended to operate in respect of persons other than the parties to the proceeding: Costs Judgment at [14]. The respondent again made an offer to settle the Substantive Proceeding for $50,000.00 on 6 September 2021. The appellant rejected this offer and made a counter-offer on 14 September 2021 to settle for $700,000.00, to be paid in tranches. On 20 September 2021, the respondent filed an application seeking summary dismissal of the Substantive Proceeding on the basis that the terms of the Deed barred its commencement (Summary Dismissal Application): Costs Judgment at [15]. The application was granted on 20 December 2021: Woods v T & F.S. Woods Pty Ltd [2021] FedCFamC2G 369 (Summary Dismissal Judgment). The appellant appealed that decision on 19 January 2022 (Summary Dismissal Appeal), and on 18 September 2023, the appeal was allowed: Woods v T&F.S. Woods Pty Ltd [2023] FCA 1108; 325 IR 464 (Summary Dismissal Appeal Judgment). Thomas J found that it was at least arguable that the applicant’s claims were not barred by the Deed: Summary Dismissal Appeal Judgment at [86]. The primary judge in the Costs Application found that the terms of the Deed did not preclude the appellant making the claims that he did: Costs Judgment at [26].

10    On 20 October 2023, the appellant advised the respondent that the Substantive Proceeding was ready for trial. On 1 December 2023, the appellant requested the respondent’s consent to filing an amended statement of claim in the Substantive Proceeding in light of the recent decisions in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1; 275 CLR 165, ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2; 275 CLR 254 and Secretary, Attorney-General’s Department v O’Dwyer [2022] FCA 1183; 318 IR 216. Following an application by the appellant dated 21 December 2023, the primary judge on 6 February 2024 ordered that the parties be granted leave to file amended pleadings, file and serve affidavits of disclosed documents, and file submissions.

11    On 17 June 2024, the appellant made an offer to settle for $160,000.00. The respondent on 26 June 2024 rejected that offer and made a counteroffer to settle for receipt of $80,000.00 for legal costs. On 3 July 2024, the appellant rejected the respondent’s counteroffer and offered to settle for no payment and for each party to bear their own costs. The respondent on 8 July 2024 rejected that offer and made a counteroffer to settle for no payment on the basis that the respondent could still pursue a costs order against the appellant. The appellant on 12 July 2024 rejected that offer and again offered to settle for no payment and for each party to bear their own costs. The respondent on 16 July 2024 rejected that offer and again offered to settle for no payment on the basis that the respondent could still pursue a costs order against the appellant. On 24 July 2024, the appellant rejected that offer and made a counteroffer to settle if each party bore their own costs, and foreshadowed discontinuing the Substantive Proceeding if that offer was rejected. The respondent on 26 July 2024 rejected that offer and made no counteroffer.

12    On 29 July 2024, the appellant filed a notice of discontinuance (Notice of Discontinuance or Discontinuance) in respect of the entirety of the claim against the respondent in the Substantive Proceeding: Costs Judgment at [3]. On 23 August 2024, the respondent filed the Respondent’s Costs Application, seeking, inter alia:

1.    Pursuant to clause 4 of the Deed … the Applicant pay the Respondent’s costs of and incidental to the [Substantive Proceeding] on an indemnity basis.

2.    Further, and in the alternative, pursuant to section 570(2)(a) of the Fair Work Act 2009 (Cth), the Applicant pay the Respondent’s costs of and incidental to the [Substantive Proceeding] on an indemnity basis, or in the alternative, on any basis the Court considers appropriate.

3.    Further, and in the alternative, pursuant to section 570(2)(b) of the Fair Work Act 2009 (Cth), the Applicant pay the Respondent’s costs incurred by the unreasonable act(s) or omission(s) of the Applicant on an indemnity basis, or in the alternative, on any basis the Court considers appropriate.

4.    Further, pursuant to section 570(2)(b) of the Fair Work Act 2009 (Cth), the Applicant pay the Respondent’s costs of and incidental to [the Respondent’s Costs Application] on an indemnity basis, or in the alternative, on any basis the Court considers appropriate.

13    The appellant on 16 October 2024 filed an application in a proceeding for costs (Appellant’s Costs Application) seeking the following:

1.    Pursuant to section 570(2)(b) of the Fair Work Act 2009 (Cth), the Respondent pay the Applicant’s costs of and incidental to the [Respondent’s Costs Application] on an indemnity basis, or in the alternative, on the standard basis.

2.    Alternatively: (a) pursuant to rule 22.02 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law Rules) (Rules), the Applicant be given leave to make the application herein for an order for costs in respect of the [Respondent’s Costs Application] with such application to be heard and determined on 18 November 2024; and (b) pursuant to section 570(2)(b) of the Fair Work Act 2009 (Cth), the Respondent pay the Applicant’s costs of and incidental to the [Respondent’s Costs Application] on an indemnity basis, or in the alternative, on the standard basis.

3.    Pursuant to rule 22.02 of the Rules, the Court refer any order for costs to be paid to the Applicant or alternatively any order for costs to be paid to the Respondent, for taxation under Part 40 of the Federal Court Rules 2011.

14    The primary judge found that the respondent had not made out its claim that s 570(2)(a) of the FW Act had been met: Costs Judgment at [30]. As to s 570(2)(b) of the FW Act, his Honour found that for the whole of the Substantive Proceeding, the appellant “unreasonably caused the respondent to incur costs in resisting” the appellant’s claims: at [40]. This finding was based primarily on two interrelated reasons. First, his Honour stated the foundational premise of his reasoning, at [37]:

When a party commences a proceeding in this Court under provisions of the [FW Act], it is inferred that they do so with a resolution to bring their claim to a conclusion by and through the taking of steps as set out in the Rules of Court. The legislative scheme under the Act is that a party does so in accordance with the overarching principles of the Act. …

15    The overarching purpose provisions are ss 190 and 191 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFCOA Act).

16    His Honour considered at [37] that the “filing by the [appellant] of a Notice of Discontinuance was an act devoid of a resolution on his part to have the issues in dispute in the proceeding finally determined by the Court”.

17    His Honour made much of the appellant’s failure to personally swear to issues raised against him by the respondent after the filing of the Respondent’s Costs Application: at [38]. Rather, an affidavit was filed on 31 October 2024 by the appellant’s solicitor, Mr Hodgens (Hodgens Affidavit) which included the following paragraphs:

56.     I have been informed by Mr Dreyer and the Applicant and I believe, including from review of the file maintained by Macpherson Kelley, that the Applicant’s decision to discontinue the proceedings was informed by the following matters.

57.     As at 29 July 2024, being the date which the notice of discontinuance was filed by the Applicant, the Applicant had incurred significant billed legal costs, including those associated with the Appeal. In circumstances where the relief claimed by the Applicant totalled $982,773.76, the Applicant formed the view that, even if he was wholly successful, there would not be a beneficial commercial outcome, because it would be likely that:

a.     he would incur further legal costs of at least $200,000 to progress the proceeding to trial;

b.     there was concern that the Respondent would appeal a decision in favour of the Applicant, which would incur additional legal costs; and

c.     he would incur further costs of pursuing enforcement.

58.     I am further informed by Mr Woods and verily believe it to be true that in or around May 2024, Mr Woods dissolved his relationship with Mary Hawker. Ms Hawker swore an affidavit on 16 April 2021, which was filed in this proceeding on 19 April 2021. The dissolution of that relationship significantly undermined his desire and resolve to pursue the proceeding, in addition to the anticipated additional cost and time to resolve the dispute.

18    His Honour considered that in the absence of a reason why the appellant had not personally deposed to these matters, the Court “gives no weight” to that evidence. Therefore, the Court was “left in the position of having no evidence of weight before it as to why the [appellant] discontinued his proceeding”. Accordingly, the Court inferred that he “had no good reason as to why he discontinued his proceeding”: at [39].

19    The primary judge speculated that the appellant chose not to personally depose to these matters because he did not wish to be cross-examined on them, or because he was not prepared to swear to why he decided to discontinue the Substantive Proceeding: at [39]. In either case, “the actions and omissions in that regard were contrary to the overarching principles and purpose of the [FCFCOA Act]”, contrary to ss 190(1)(b), (2)(a) – (e) and 191(1) of that Act. His Honour considered that they “constituted a failure on the part of the [appellant] to in any way justify his commencement, and early discontinuance, of the proceeding, and were unreasonable”: at [39]. At [40], his Honour stated as follows:

Having regard to the provisions of s. 191(4) of the [FCFCOA Act], and s. 570(2)(b) of the [FW Act], the Court finds that it is satisfied that the [appellant’s] failure to adduce any evidence on the question as to why a s. 570(2)(b) costs order ought not to be made against him justified a finding that for the whole of the proceeding the [appellant] unreasonably caused the respondent to incur costs in resisting the [appellant’s] claims.

20    Leave to appeal the Costs Judgment was granted by Rofe J on 21 August 2025: Woods v T &F.S. Woods Pty Ltd [2025] FCA 1001. On 28 August 2025, the appellant filed a notice of appeal in respect of the Costs Judgment. The respondent filed a notice of contention on 25 September 2025.

The orders sought by the appellant

21    By his notice of appeal, the appellant seeks that the Costs Orders be set aside, that the Respondent’s Costs Application be dismissed, and in respect of the Appellant’s Costs Application, the respondent pay the appellant’s costs. Alternatively, he seeks that the Respondent’s and Appellant’s Costs Applications be remitted to the FCFCOA, differently constituted, for further hearing and determination. The appellant seeks his costs of the appeal.

22    The appeal raised, essentially, the issue of whether the appellant had engaged in any unreasonable act or omission which had caused the respondent to incur costs, such that the FCFCOA’s jurisdiction to award costs was enlivened under s 570(2)(b) of the FW Act. As will be explained, the parties were not in agreement regarding the applicable costs principles where a discontinuance had occurred. Further, at times there were difficulties discerning the unreasonable act or omission which the parties focused on in their submissions.

23    For the following reasons, the appellant’s appeal is allowed, the Costs Orders are set aside, and in their place no order for costs is made. No order is made as to the costs of this appeal.

Principles

Principles applicable to this appeal

24    The appeal from the decision of the primary judge comes before me as a single judge exercising appellate jurisdiction pursuant to ss 24(1)(d) and 25(1AA)(a) of the Federal Court of Australia Act 1976 (Cth) (FCA Act). The appeal is by way of rehearing: Whiteman v Deputy Commissioner of Taxation [2022] FCA 975 at [61]; Nida v BKA Practice Co Pty Ltd [2022] FCA 1257 at [20]; Zaghloul v Jewellery & Gift Buying Service Pty Ltd t/as Nationwide Jewellers [2020] FCA 1045 at [14]. Therefore, the powers of the Court are exercisable only on the demonstration of legal, factual or discretionary error, having regard to all the evidence before the Court. On an appeal by way of rehearing, the Court can substitute its own decision based on the facts and law as they stand: Allesch v Maunz [2000] HCA 40; 203 CLR 172 at [23].

25    In Jadwan Pty Ltd v Rae & Partners (a firm) [2020] FCAFC 62; 278 FCR 1, the Court at [405] stated as follows:

In evaluating whether there is appealable error in relation to a finding of fact, the authorities distinguish between cases where findings depend upon some benefit enjoyed by the trial judge that is not available to an appellate court, and other cases, such as those where the impugned findings are inferences drawn from uncontroverted facts. Findings that are the product of some benefit enjoyed by a trial judge may include findings of secondary facts that are based on a combination of impressions and other inferences from primary facts. …

(Footnotes omitted.)

26    Though the respondent did not specifically address this point, there appeared to be no doubt, as the appellant submitted, that the findings impugned in the notice of appeal were “not the product of some benefit enjoyed by the primary judge”. All the evidence was by way of affidavit, and only a small portion thereof was in fact referred to by the primary judge: Costs Judgment at [14], [33], [38] – [39]. I accept, therefore, that the appellate restraint described in Fox v Percy [2003] HCA 22; 214 CLR 118 at [25] – [26], is not applicable. There, Gleeson CJ, Gummow and Kirby JJ stated:

Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge’s reasons. Appellate courts are not excused from the task of “weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect”. …

After Warren v Coombes [[1979] HCA 9; 142 CLR 531], a series of cases was decided in which this Court reiterated its earlier statements concerning the need for appellate respect for the advantages of trial judges, and especially where their decisions might be affected by their impression about the credibility of witnesses whom the trial judge sees but the appellate court does not. …

27    The approach to be followed is therefore that set out by Bell, Gageler, Nettle and Edelman JJ in Lee v Lee [2019] HCA 28; 266 CLR 129 at [55]:

A court of appeal is bound to conduct a “real review” of the evidence given at first instance and of the judge’s reasons for judgment to determine whether the trial judge has erred in fact or law. Appellate restraint with respect to interference with a trial judge’s findings unless they are “glaringly improbable” or “contrary to compelling inferences” is as to factual findings which are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence. It includes findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts. Thereafter, “in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge”. …

(Emphasis added, footnotes omitted.)

28    The parties were in agreement that the standard of review for the purposes of whether the criteria under s 570(2)(b) of the FW Act were satisfied, and therefore whether the discretion to award costs was enlivened, was the “correctness standard”. The decision as to whether an unreasonable act or omission caused the incurring of costs is a binary one. “Under the correctness standard, the appellate court determines for itself the correct outcome while making due allowance for such ‘advantages’ as may have been enjoyed by the judge who conducted the trial or hearing”: Moore (a pseudonym) v The King [2024] HCA 30; 282 CLR 460 at [14], referring to Warren v Coombes [1979] HCA 9; 142 CLR 531 at 552 and Fox at [23].

Section 570 of the Fair Work Act 2009 (Cth)

29    Section 43 of the FCA Act grants the Court a wide discretion to award costs in a proceeding. However, s 43 of the FCA Act is subject to s 570 of the FW Act, which 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.

…

(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;

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

30    I did not understand the parties to dispute the general principles applicable to s 570(2)(b) of the FW Act. The appellant drew my attention to the following passages, which I accept accurately set out the applicable principles.

31    In Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 3) [2017] FCA 810, Katzmann J at [25] – [26] stated as follows:

The Court’s powers to award costs in an application of this kind are constrained by the terms of s 570 of the FW Act. That section relevantly provides that a party to proceedings relating to a matter arising under the Act may only be ordered to pay the costs incurred by another party if the court is satisfied that the first mentioned party’s “unreasonable act or omission” caused the other party to incur the costs: s 570(2)(b). In the present case that means that the Court only has the power to make the orders the Ombudsman seeks if two conditions are established. First, the Court must be satisfied that GPS, by its action(s) or omission(s), behaved unreasonably. That question is to be determined objectively: Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392 at [32]. Secondly, the Court must be satisfied that GPS’s unreasonable act(s) or omission(s) caused the Ombudsman to incur costs. If those two conditions are established, the Court has a discretion to make a costs order against GPS and in the Ombudsman’s favour: Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574 at [28].

Importantly, the touchstone for the exercise of the power is unreasonableness, not negligence or inefficiency. That said, once the power is enlivened and the Court is considering whether or not to exercise its discretion to make an order, the Court is bound 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: s 37M(3). At this point questions of inefficiency are very relevant, for the overarching purpose of the civil practice and procedure provisions includes the efficient resolution of disputes.

    (Emphasis in original.)

32    In Heal v Sydney Flames Basketball Pty Ltd (No 2) [2024] FCA 794, Halley J at [71] collected the relevant statements of principle applicable to s 570(2)(b), and inter alia stated the following:

…

(b)     if a claim has not been shown to be brought without reasonable cause so as to fall within s 570(2)(a), an alternative claim for a costs order under s 570(2)(b) needs to point to the act relied upon being in itself inherently unreasonable in some way; the filing of evidence in the ordinary way in relation to a claim that has not been shown to be brought without reasonable cause, albeit one that was abandoned, does not render the filing of that evidence an unreasonable act: Tran v Kodari Securities Pty Ltd (No 2) [2020] FCA 1819 at [27] (Bromwich J);

(c)     an appellants’ late withdrawal of contentions does not amount to an unreasonable act or omission in circumstances where a respondent did not suggest that the withdrawn contentions were speculative or foredoomed to failure, or that the appellants deliberately or carelessly delayed their withdrawal; it is only when regard is had in combination, to both the timing of the withdrawal and the quality of the withdrawn contention and the circumstances in which the withdrawal was effected that it is possible to determine whether a particular withdrawal trespasses into the realm of unreasonableness: PIA Mortgage Services Pty Ltd v King (No 2) [2020] FCAFC 53 at [14] – [17] (Rangiah, Charlesworth and Snaden JJ);

…

Principles applicable to a discontinuance in the context of s 570(2)(b) of the Fair Work Act 2009 (Cth)

33    The respondent sought to rely on several authorities which it said supported the proposition that “[o]n the ordinary principles governing the costs consequences of discontinuing proceedings at a late stage, the circumstances here indicate that in substance the discontinuance was a surrender by the Appellant”. That would warrant a conclusion that the conduct of the Substantive Proceeding was an unreasonable act. In oral submissions, the respondent acknowledged that this position followed the usual consequences of a discontinuance, “admittedly outside the context of this specific statutory context”, but that because the Court’s power to award costs under s 570(2)(b) was contingent on unreasonableness, these principles were relevant in that they referred to the reasonableness of the parties’ conduct.

34    First, it said that the principles governing costs after the termination of a proceeding at a late stage without judgment were summarised in Chapman v Luminis Pty Ltd [2003] FCAFC 162 at [7], as follows:

The authorities establish the following propositions in relation to the making of costs orders in circumstances such as the present:

•    where a proceeding terminates before there has been a hearing, the Court should not resolve the issue of costs by engaging in something in the nature of a hypothetical trial: Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201;

•    this does not mean that a Court can never make an order for costs. Often it will be unable to do so, but in other cases an examination of the reasonableness of the conduct of the parties may provide the basis for an order, or a judge may be confident that one party was almost certain to have succeeded if a matter had been fully tried: Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 625 (McHugh J);

•    a distinction is to be drawn between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court’s discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should be bear the costs: ONE.TEL Ltd v Deputy Commissioner of Taxation (2000) 171 ALR 227 at 231-232 (Burchett J).

35    Second, it submitted orally that in determining whether costs should be awarded where a party has discontinued a matter, the parties’ reasonableness in “commencing and defending or conducting the proceeding[]” is relevant. It referred to the following statement at [13] of O’Neill v Mann [2000] FCA 1680:

… The conduct of the parties in the matter and the reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs. As McHugh J observed in Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Qin (1997) 186 CLR 622 at 625 of one common category of case:

“[i]f it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.”

… By way of contrast, where the discontinuance can be said to be an acknowledgment by an applicant of likely defeat or where no objective circumstance provides reason for the discontinuance, a costs order in favour of the other party will ordinarily be made.

36    It referred further to Ahmetaj v Minister for Immigration & Multicultural Affairs [1999] FCA 332 at [6] – [7], where Sackville J said as follows:

The fact is, however, that the applicant has chosen to discontinue the proceedings without obtaining the relief he sought. The event which rendered the proceedings “futile” was the difficulty that the applicant always faced in relation to any application for a Territorial Asylum Visa, namely that the Minister for Foreign Affairs and Trade might refuse to grant the relevant instrument. The applicant commenced the proceedings knowing that, if the Minister took the course he ultimately did, they would serve no practical purpose. Indeed, it was the absence of an instrument from the Minister for Foreign Affairs and Trade that was held by the IRT to be the fundamental difficulty in the path of the applicant securing a Bridging Visa.

In substance, the applicant has not succeeded in his claim for relief, by reason of a difficulty that he has always faced. This is not a case where the proceedings have been rendered futile because the Minister has granted the relief in substance sought by the applicant: cf Re The Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622. Nor is it a case where the Minister has conceded that the applicant’s arguments were bound to succeed. On the contrary, the Minister has always intended to support the IRT’s decision and no ruling has been sought or made on whether the Minister’s position is correct.

37    It said that in determining whether costs should be awarded where a party has discontinued a matter, the parties’ reasonableness in “commencing and defending or conducting the proceeding[]” was relevant, and the above cases assisted in considering whether or not the party had “acted reasonably in conducting litigation in circumstances where they discontinue at a late stage”.

38    The appellant in oral submissions characterised the respondent’s submission as being that discontinuance amounted to surrender, which was unreasonable conduct for the purpose of s 570(2)(b) of the FW Act. The appellant submitted that the respondent’s reliance on the above authorities, which concern the Court’s general costs discretion, was wrong. He relied on Hutchinson v Comcare (No 2) [2017] FCA 370 at [10] where Bromberg J rejected the applicability of a case of the New South Wales Court of Appeal in circumstances where “the Court’s discretion to make a costs order is constrained by s 570” of the FW Act. He submitted that to transpose the reasoning from authorities such as Chapman and Ahmetaj would “import by analogy a general cost regime that the [FW Act] ha[d] deliberately displaced and would lead the Court into error”.

39    The appellant submitted that s 570 of the FW Act reflected a long-standing position that parties to a proceeding arising under federal industrial legislation were not to be ordered to pay another party’s costs, except if the proceeding was instituted vexatiously or without reasonable cause. In these circumstances, he emphasised that the authorities “caution[ed] against approaches that effectively reintroduce the conventional costs shifting rule through expansive readings” of s 570(2)(b) of the FW Act. Relatedly, he contended that s 570(2)(b) of the FW Act required “something more than the ordinary incidence of litigation” and mandated an objective assessment of whether the act or omission was unreasonable.

40    In Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879; 162 FCR 392, upon which the appellant relied in this regard, Tracey J at [36] said as follows:

In dealing with an application for costs under s 347(1) of the Act, in Standish v University of Tasmania (1989) 28 IR 129, Lockhart J was called on to decide whether the proceeding had been instituted “without reasonable cause”. His Honour drew a distinction between the pursuit of an argument which does not succeed and the institution of a proceeding which is misconceived in the sense of being incompetent: see at 138-9. This distinction may, in my view, assist in determining whether conduct is unreasonable for the purposes of s 824(2). The prosecution of any incompetent or hopeless case can be regarded as “an unreasonable act” within the meaning of s 824(2). Conversely, in my opinion, the pursuit of a contentious, and ultimately unsuccessful, argument is not an unreasonable act. …

(Emphasis added.)

41    In Tran v Kodari Securities Pty Ltd (No 2) [2020] FCA 1819, Bromwich J at [27] stated as follows:

Once a claim is made that has not been shown to be brought without reasonable cause so as to fall within s 570(2)(a), the first alternative or additional basis for a costs order under s 570(2)(b) of an unreasonable act (or omission) causing the other party to incur costs needs to point to the act relied upon being in itself inherently unreasonable in some way. …

42    In Heal, Halley J held at [80] as follows:

… I do not accept that merely taking steps to pursue a claim that is not otherwise found to have been commenced without reasonable cause or vexatiously, can, without more, constitute unreasonable acts or omissions for the purposes of s 570(2)(b) of the FW Act. As Tracey J explained in Qantas Airways, the prosecution of an incompetent or hopeless case may be regarded as an unreasonable act, but the pursuit of a contentious, and ultimately unsuccessful argument is not an unreasonable act: Qantas Airways at [36].

43    The appellant submitted that Tran at [25] – [31] also supported the proposition that “the filing of evidence in the ordinary way, pursuant to a Court-ordered timetable, even in support of a claim later abandoned”, did not meet the description of an unreasonable act or omission for the purposes of s 570(2)(b) of the FW Act, nor did the refusal of an offer to compromise the proceeding, in circumstances where the outcome was not clearly predictable. He said that Heal supported his contention that s 570(2)(b) of the FW Act was not engaged “merely because an applicant presses an arguable case to trial and loses”.

44    Further, the appellant relied on the following passage from PIA Mortgage Services Pty Ltd v King (No 2) [2020] FCAFC 53 at [14] – [16] for the proposition that timing alone was not determinative, that lateness in withdrawing issues could not of itself amount to an unreasonable act or omission under s 570(2)(b) of the FW Act, that the withdrawal of issues was to be encouraged, and that withdrawal of an otherwise live contention could not of itself amount to unreasonableness:

The narrowing of issues that are to be ventilated before a court is always to be encouraged. By itself, the withdrawal of an otherwise live contention cannot amount to unreasonableness of the sort to which s 570(2)(b) of the FW Act refers, no matter when it occurs.

Unreasonableness may, however, arise by reason of the nature of the contention that is withdrawn or the circumstances in which that withdrawal occurs (or both). A litigant who fails until the proverbial eleventh hour to withdraw a speculative contention might more readily be thought to have committed an unreasonable omission for the purposes of s 570(2)(b) of the FW Act than would a litigant who withdraws an arguable contention at the same point or earlier. Similarly, the failure to withdraw a contention before the eleventh hour might more readily qualify as an unreasonable omission if there is reason to think that the party withdrawing it could, with proper care, have withdrawn it more promptly. In combination, the timing of the withdrawal, the quality of the withdrawn contention and the circumstances in which the withdrawal was effected inform whether a particular withdrawal trespasses into the realm of unreasonableness. It is, in that sense, that unreasonableness is a question of impression and degree, to be assessed by reference to the particular circumstances of a given case: Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574, 582 [28] (Tamberlin, Gyles and Gilmour JJ).

Here, the respondent’s submission does not rise beyond a complaint that the appellants withdrew what they withdrew at a relatively late stage of the proceeding. He says, simply enough, that had he been notified of the withdrawals sooner than he was, it would not have been necessary for him to incur costs in respect of their defence. That, with respect, is undoubtedly (if not axiomatically) so; but it is not nearly sufficient. To impugn the withdrawal of otherwise live contentions as unreasonable, the respondent needs to point to something more than simply the late stage at which they occurred: there needs to be something about the circumstances within which a particular withdrawal was effected or the quality of what was withdrawn (or both) that enlivens the spectre of unreasonableness.

(Emphasis added.)

45    On the basis of the above authorities, I do not accept the respondent’s submissions that because s 570(2)(b) of the FW Act is contingent on unreasonableness, the authorities to which it referred relating to discontinuance are relevant because they refer to the reasonableness of the parties’ conduct. First, while it is accepted that those authorities refer to unreasonableness, the reference to unreasonableness is made in the context of the exercise of the Court’s discretion to award costs in the event of a proceeding being terminated prior to judgment: see Chapman at [7], O’Neill at [13]. However, reasonableness is primarily relevant in the present proceeding as to whether the Court’s discretion itself is enlivened pursuant to s 570(2)(b) of the FW Act: Grouped Property Services at [25]. Furthermore, even if those authorities were relevant to assessing reasonableness, no explicit connection is drawn by the Court in those authorities between the fact of discontinuance and the parties having acted unreasonably by virtue of that discontinuance. Rather, the Court’s emphasis in both Chapman and O’Neill was on whether, where a discontinuance had occurred, the parties’ respective conduct in the proceeding was reasonable. In the quoted portions of Ahmetaj, the Court did not use the language of reasonableness per se, but exercised its discretion to award costs in light of the circumstances existing at the time that the applicant commenced the relevant proceeding. Thus, the Court was still required to determine the reasonableness of the parties’ conduct.

46    Second, as the appellant submitted, s 570 of the FW Act preserves the position that absent the circumstances set out in that section, the Court cannot make an order for costs: United Firefighters’ Union of Australia v Fire Rescue Victoria [2025] FCAFC 7 at [20]. As the appellant submitted, the provision reflects a long-standing position that generally, no order for costs is made under federal industrial legislation. That provision operates to promote access to justice in this area: Trustee for The MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8]. For this reason, I accept the appellant’s submission that the general costs regime should not be transposed into the FW Act by adopting cases on costs decided outside that Act. That that would be the effect of applying Chapman in this context finds some support in the words adopted at [7] of that decision. There, in the context of a surrender, the Court referred to a costs order being made in circumstances where there is “lacking any basis for an exercise of the Court’s discretion otherwise than by an award of costs to the successful party” (emphasis added). That suggests that the Court had in mind that in the context of a surrender the usual position was for the surrendering party to pay the other party’s costs. That approach does not find support in the language of s 570(2)(b) of the FW Act, where the focus is on an “unreasonable act or omission” which caused the other party to incur costs. That is not to say that the act of a discontinuance, or the conduct of a proceeding culminating in a discontinuance, could not be unreasonable; however, the focus must be on whether the act or omission was unreasonable in the circumstances: Tran at [27]. The word “unreasonable” is not capable of precise definition and is “inherently sensitive to context”: 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].

47    Third, the authorities referred to by the appellant, decided under the FW Act, support the conclusion that mere discontinuance does not, in the context of the FW Act, have the same consequences as those it may have under the general costs regime. Each of the above-quoted portions of Qantas, Tran and Heal stands for the proposition that without more, the pursuit of a contentious claim is not an unreasonable act or omission. See also QNurses First Inc v Monash Health (No 2) [2022] FCA 277 at [19]. As Bromwich J held in Tran at [27], the filing of evidence in the ordinary way in relation to a claim not unreasonably brought is not an unreasonable act, even if it is later withdrawn. The same can generally be said in relation to the withdrawal of an otherwise live contention, as supported by the above-quoted portion of PIA.

48    On this basis, I do not consider that, in the context of the FW Act, a discontinuance of itself is an unreasonable act or warrants a conclusion that the conduct of the entire proceeding was an unreasonable act. Nor do I consider that the costs consequences applicable to a discontinuance are automatically applicable to s 570 of the FW Act. However, that does not preclude consideration of whether, in the circumstances, the conduct of a proceeding, or a discontinuance, constituted an unreasonable act or omission.

The appellant’s notice of appeal

49    The appellant set out 14 separate grounds of appeal in his notice of appeal. Those grounds of appeal mirror the proposed grounds of appeal set out in the judgment of Rofe J at [32] – [44]. At [53] – [56], her Honour stated as follows:

With respect, at least to the impressionistic level appropriate for this application, it appears that the primary judge has misconstrued and misapplied s 570(2)(b) of the Fair Work Act, by reversing the relevant onus and engaging in a subjective analysis.

In Primesafe, Mortimer J noted at [64] that the discretion conferred by the confined terms of s 570(2) should be exercised cautiously. Her Honour then described at PJ [66]−[67] the reconciliation of s 570 of the Fair Work Act with the equivalent overarching purpose provisions in the Federal Court Act, being ss 37M and 37N, observing:

Section 570, and the conditions it imposes on the Court’s general costs discretion under s 43 of the Federal Court Act, is not a licence to parties to ignore the requirements of s 37M of the Federal Court Act, nor the Court’s power to order costs against parties who fail to comply with their obligations under s 37N. The content of ss 37M and 37N, and parties’ obligations to assist the Court in achieving the objectives set out in s 37M, must be reconciled with access to justice provisions such as s 570(1). That reconciliation occurs through a focus on the reasonableness of parties’ conduct, the appropriateness of the Court processes undertaken by them, the timeliness of their compliance with Court orders or steps in the proceeding, and the existence of a substantive legal and factual basis for the claims made and arguments put.

In express terms s 570(1) constrains this Court’s power to order costs against a party, and s 570(2) directs attention to the conduct of a party. Neither provision purports to affect the Court’s power under s 43(3)(f) of the Federal Court Act, whether exercised as a general discretion or by reason of the application of s 37N(2) and (5) and a failure by a lawyer to comply with her or his duties to the Court…

Aside from the filing of the Notice of Discontinuance and the applicant’s failure to personally depose to the reason for the discontinuance, the primary judge does not mention any conduct of the applicant during the proceeding that might offend the overarching purpose provisions in the [FCFCOA Act], such as a lack of timeliness in compliance with orders.

The primary judge undertook a somewhat one-sided consideration of the overarching purpose provisions at PJ [37], [39] and [40]. No regard was had to the saving of court resources and time that accompanied the discontinuance, nor the saved resources of the parties in not having to contest a six-day trial. The approach of the primary judge to the applicant’s discontinuance is antithetical to the purpose of the overarching purpose provisions. Parties should be encouraged to narrow the issues in dispute at the earliest opportunity. Finding parties to be devoid of resolution for not prosecuting to finality the case they commenced, does not sit with the overarching purposes set out in ss 190 and 191 of the [FCFCOA Act].

50    In its written submissions, the respondent conceded that on the basis of the matters set out by Rofe J, the Costs Judgment was affected by error, but by way of a notice of contention contended that the Costs Orders should nonetheless be affirmed. For the following reasons, I agree with the respondent’s concession and address why I agree that on the basis of the appellant’s grounds of appeal, the primary judge erred.

The grounds of appeal

Grounds 1 and 2

51    By these grounds, the appellant alleged that the primary judge erred by putting an “impermissible gloss” on s 570(2)(b) of the FW Act by finding that the following were an unreasonable act or omission for the purposes of that section:

(1)    Finding that the Discontinuance was “an act devoid of resolution on his part to have the issues in dispute in the proceeding finally determined by the Court” and an unreasonable act and omission “contravening the overarching purpose provisions” of the FCFCOA Act.

(2)    Finding that filing the Notice of Discontinuance without personally swearing to his reasons for doing so was contrary to the overarching purpose provisions, and requiring the appellant to justify his commencement, and early discontinuance, of the Substantive Proceeding.

52    The overarching submission was that there is no textual foundation or support from the legislative context for the abovementioned glosses. The appellant contended that the concept of “resolution” is used in neither the overarching purpose provisions nor s 570(2)(b) of the FW Act. Further, the overarching purpose provisions do not require an applicant to justify commencement and early discontinuance of a proceeding, or to personally swear to the reasons for discontinuing. Finding parties to be “devoid of resolution” for not prosecuting their case to finality does not sit well with those provisions. Additionally, filing a notice of discontinuance was a step expressly provided for, without leave, without requiring explanation and without automatic or presumptive costs consequences: see r 13.01(2) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (FCFCOA Rules), in force at the time of the Discontinuance.

Ground 3

53    By this ground, the appellant alleged that the primary judge erred by determining whether the criteria in s 570(2)(b) of the FW Act existed on a subjective basis rather than on an objective basis.

54    His submission was that the criteria in s 570(2)(b) of the FW Act are to be determined objectively, and do not require consideration of the actual state of mind of a party, and he relied on Qantas at [32] in this regard. He said that contrary to this position, the primary judge erred by introducing and applying the notion that the appellant was required to persuade the Court that his “subjective reasons for discontinuing was not an ‘unreasonable act or omission’”. He pointed to the primary judge’s focus on the appellant being required to personally justify his commencement and early discontinuance: see Costs Judgment at [39].

Ground 4

55    The appellant alleged that the primary judge erred by placing an onus of proof on him to satisfy the Court that the criteria in s 570(2)(b) of the FW Act did not exist.

56    The appellant submitted, relying on QNurses at [11], that the onus was on the respondent to satisfy the Court that the criteria in s 570(2)(b) of the FW Act existed. The appellant referred to [37] – [40] of the Costs Judgment and made much of the primary judge’s “repeated references to the appellant’s ‘failures’ to do things which his Honour considered were relevant indicia for s 570(2)(b)” of the FW Act. That included his failure to personally swear to issues raised against him by the respondent, to in any way justify his commencement, and early discontinuance, of the Substantive Proceeding, and to adduce any evidence as to why a costs order should not be made against him under s 570(2)(b) of the FW Act.

Grounds 5 to 7

57    By these grounds, the following errors of law were alleged:

(1)    That the primary judge failed to apply the appropriate legal standard when deciding that the Discontinuance was an unreasonable act contravening the overarching purpose provisions, in circumstances where nothing in the primary judge’s reasons indicated that he had had proper regard to the whole of the appellant’s conduct over the course of the Substantive Proceeding, or had appropriately weighed the Discontinuance against the other conduct.

(2)    The primary judge’s finding that the Discontinuance “enlivened the spectre of unreasonableness”.

(3)    Alternatively, the primary judge’s failure to provide adequate reasons outlining or explaining what, other than the mere act of the Discontinuance at the time it occurred, “enlivened the spectre of unreasonableness”.

58    The appellant submitted that aside from the primary judge’s references to the filing of the Notice of Discontinuance and the appellant’s failure to personally depose to the reason for doing so, his Honour did not mention any conduct during the Substantive Proceeding that might offend the overarching purpose provisions. He submitted that the primary judge undertook a “one-sided consideration of the overarching purpose provisions” and had no regard to the saving of resources and time of the Court, or of the parties, due to a six-day trial being vacated.

59    The appellant submitted that the primary judge therefore acted on a wrong principle in treating the fact of discontinuance as warranting the making of a costs order, and alternatively, that the primary judge’s reasons did not disclose the path of reasoning leading to the conclusion that the Discontinuance at the time it occurred was an unreasonable act and omission.

Ground 8

60    By this ground, it was alleged that the primary judge (1) erred in law by failing to make a finding as to whether such unreasonable acts and omissions as found caused the respondent to incur costs, or alternatively, (2) erred in fact by making such a finding, or alternatively, (3) erred in law by failing to provide adequate reasons in failing to explain or outline how such unreasonable acts and omissions as found caused the respondent to incur costs and in respect of which event or issue of the Substantive Proceeding.

61    In his submissions, the appellant developed this ground by stating that the primary judge was required to, but did not, make a finding that the conduct that occurred on 29 July 2024 (i.e. the Discontinuance) caused the respondent to incur all, or some part, of its costs from the commencement of the Substantive Proceeding on 2 December 2020, and if so, what those costs involved.

Ground 9

62    By this ground, the appellant alleged that the primary judge erred in law and in fact by rejecting or not giving any weight to the Hodgens Affidavit, in circumstances where (1) the Costs Applications were interlocutory, and by s 75 of the Evidence Act 1995 (Cth), the hearsay rule did not apply, (2) the primary judge did not provide adequate reasons as to why it might be concluded that this evidence was unlikely to be true, and (3) the evidence in the Hodgens Affidavit was inherently likely to be true.

63    In his submissions, the appellant said that his concerns regarding the costs of the litigation, deposed to in the Hodgens Affidavit, were orthodox matters which would concern most litigants, and that the dissolution of his relationship with one of the witnesses in the proceeding was “a reason peculiar to the Appellant which accords with ordinary human experience”, which would undermine the desire to continue with a proceeding. He said that the matters were prima facie relevant, and that instead of assessing and considering the evidence, the primary judge merely speculated as to why it might be concluded to be unlikely to be true.

Ground 10

64    By this ground, the appellant contended that the primary judge erred in law and in fact by finding that the appellant “had no good reason as to why he discontinued his proceeding” (Costs Judgment at [39]), representing a bare assumption contrary to the proper finding which ought to have been made, being that the appellant had sufficient reason for discontinuing.

65    The appellant submitted that the contents of the Hodgens Affidavit supplied the justification for the Discontinuance, and that the primary judge’s finding was “not permissible fact finding”, relying on Luxton v Vines [1952] HCA 19; 85 CLR 352 at 358 and Tisdall v Webber [2011] FCAFC 76; 193 FCR 260 at [127] – [130]. Further, he submitted that the course of the proceeding demonstrated how circumstances could markedly change, contrary to the “reasonably expected contemplation of an applicant at … commencement”, affecting that party’s attitude to continuing the Substantive Proceeding. He noted that the Summary Dismissal Appeal delayed the Substantive Proceeding for nearly two years and caused costs to be incurred which were not recoverable due to s 570 of the FW Act.

Ground 11

66    By this ground, the appellant contended that the primary judge erred in law and in fact in finding that the appellant had failed to “adduce any evidence on the question as to why a s 570(2)(b) costs order ought not be made against him”: Costs Judgment at [40].

67    The appellant submitted that the Hodgens Affidavit contained cogent and probative evidence in this regard, and went beyond those parts of the evidence which the primary judge had regard to. It dealt with the merits of the causes of action and covered the full course of the Substantive Proceeding prior to the Notice of Discontinuance. On this basis, the primary judge’s finding was “simply wrong”.

Ground 12

68    By this ground, the appellant contended that the primary judge erred in law by, in determining that the Discontinuance was an unreasonable act and omission for the purposes of s 570(2)(b) of the FW Act, failing to properly consider the whole of the appellant’s conduct in the Substantive Proceeding, and further or alternatively the benefits resulting from the Discontinuance and relevant public policy considerations.

69    The appellant submitted that an error of law arose where the Court overlooked or failed to consider submissions advanced by a party, at least where the submissions were “worthy of serious consideration” or were “centrally relevant” to the decision, relying on Rand v Comcare [2014] FCA 584; 140 ALD 666 at [30]; Soliman v University of Technology, Sydney [2012] FCAFC 146; 207 FCR 277 at [55].

Ground 13

70    By this ground, the appellant contended that the primary judge erred in fact by finding that the filing of the Notice of Discontinuance was an unreasonable act and omission for the purposes of s 570(2)(b), in circumstances where his Honour had made a finding that the respondent had not established that the appellant had instituted the Substantive Proceeding vexatiously or without reasonable cause (Costs Judgment at [30]), made a contradictory finding that the appellant had failed to justify his commencement of the proceeding (Costs Judgment at [39]), and on the evidence, ought to have found that the appellant’s conduct was not such as constituting an unreasonable act or omission causing the respondent to incur costs.

Ground 14

71    By the final ground, the appellant alleged that the primary judge failed to provide adequate reasons, in failing to outline or explain why costs were ordered to be assessed under r 22.02(2)(c) of the FCFCOA Rules.

Conclusion as to the notice of appeal

72    I agree that the primary judge erred in his construction and application of s 570(2)(b) of the FW Act. The relevant act or omission referred to by the primary judge was the Discontinuance of the Substantive Proceeding, and the appellant’s failure to personally depose to the abovementioned matters set out in the Hodgens Affidavit: Costs Judgment at [39]. The primary judge did not give any weight to those matters deposed to in reaching his conclusion at [39] that those acts and omissions were unreasonable.

73    First, I agree that the primary judge placed an “impermissible gloss” on s 570(2)(b) of the FW Act by finding that filing the Notice of Discontinuance was an “act devoid of resolution” to have the issues finally determined: see Costs Judgment at [37]. An “impermissible gloss” refers to an additional requirement imported into a statutory provision which is not found in the statutory language: Grant v Federal Commissioner of Taxation [1976] HCA 64; 135 CLR 632 at 636. The primary judge introduced the concept of “resolution”, which is not contained in the language of s 570(2)(b) of the FW Act. Nor is it contained in the overarching purpose provisions. As the appellant submitted, r 13.01(2) of the FCFCOA Rules provided that a notice of discontinuance may be filed without leave, and without presumptive costs consequences. Further, the authorities provide that the inquiry under s 570(2)(b) of the FW Act is objective (Qantas at [32]), and the respondent in this case bears the onus of establishing that the circumstances enlivening the Court’s power to award costs exist: QNurses at [11].

74    Accordingly, in finding the Discontinuance to be an “act devoid of resolution” and in requiring the appellant to personally swear to the matters contained in the Hodgens Affidavit (Costs Judgment at [38] – [39]), the primary judge erred by importing requirements not found in the statutory language. In doing so, his Honour also imported subjective considerations into the application of s 570(2)(b) of the FW Act, where the relevant inquiry is objective. Relatedly, his Honour impliedly cast on the appellant an onus to satisfy the Court that the criteria in s 570(2)(b) of the FW Act did not exist. This is evident from the various references to the appellant’s failures to do certain things which his Honour considered might justify commencement, early discontinuance, or explain why a costs order should not be made: Costs Judgment at [39] – [40].

75    Second, I agree that the primary judge erred in finding that the Discontinuance warranted making the Costs Orders, and in this regard did not explain how the Discontinuance itself rendered the entirety of the conduct of the Substantive Proceeding an unreasonable act. The primary judge was required to appropriately weigh the Discontinuance against the entirety of the conduct of the proceeding: Ryan at [66]. However, as the appellant submitted, the Costs Judgment did not refer to the appellant’s conduct which might offend the overarching purpose provisions, save for the Discontinuance and his failure to personally depose to the reasons for this. I agree that his Honour failed to have regard to the saving of Court resources and time in light of the Discontinuance, and in this regard, engaged in a one-sided consideration of the overarching purpose provisions. Further, his Honour’s conclusion is at odds with the overarching purpose considerations, which encourage the narrowing of issues and the early resolution of disputes: see, e.g., s 190(1)(b), (2)(b) – (e) of the FCFCOA Act. That is also a further reason why the finding that the Discontinuance was an “act devoid of resolution” was inconsistent with the overarching purpose provisions. I therefore agree with the appellant that the primary judge erred in treating the Discontinuance as characterising the entire Substantive Proceeding as unreasonable.

76    Third, I agree with the appellant that the primary judge did not explain or make a finding as to how the Discontinuance caused the respondent to incur the costs of the entire Substantive Proceeding. In this regard, I note that the appellant commenced the Substantive Proceeding on 2 December 2020 and filed the Notice of Discontinuance on 29 July 2024. Rather, the primary judge treated the Discontinuance as demonstrating that the appellant had commenced the Substantive Proceeding without an unwavering purpose to see it through to judgment: see at [37]. As noted above, no finding was made that the appellant brought the Substantive Proceeding vexatiously or without reasonable cause, and the concept of “resolution” adopted by the primary judge was not found in the statutory language. There is therefore no explanation as to how the Discontinuance caused the respondent to incur costs.

77    Fourth, I agree that the matters contained in the Hodgens Affidavit referred to above were prima facie relevant, and therefore admissible by reason of s 75 of the Evidence Act. The primary judge’s reasons do not disclose fulsomely why those matters were unlikely to be true, in circumstances where on their face they were likely to be true: see Costs Judgment at [39]. Fifth, the primary judge’s conclusion that the appellant had “no good reason as to why he discontinued his proceeding” was one that was unsupported by the body of evidence: Costs Judgment at [39]. As the portions of the Hodgens Affidavit were admissible, it was not open to the primary judge to so conclude; in fact, that conclusion was contrary to the evidence, which ought to have been accepted and considered.

78    Relatedly, the primary judge’s finding that the appellant had failed to “adduce any evidence on the question as to why a s 570(2)(b) costs order ought not to be made against him” (Costs Judgment at [40]) was wrong. Rather, in addition to the matters already set out, the Hodgens Affidavit contained depositions regarding the appellant’s genuine belief that there was a basis for commencing the Substantive Proceeding, the course of the Substantive Proceeding, including the parties’ correspondence, relevant offers to settle, mediation, the Summary Dismissal Application and the Summary Dismissal Appeal, the appellant’s desire to amend his statement of claim, and disclosure. The Hodgens Affidavit contained various statements to the effect that it was not unreasonable for the appellant to engage in the steps that he had engaged in, in the Substantive Proceeding. As discussed above, the conduct of the Substantive Proceeding was relevant to the question of the reasonableness of the Discontinuance under s 570(2)(b) of the FW Act: Ryan at [66]. Therefore, the abovementioned matters, as deposed to in the Hodgens Affidavit, were relevant. The Hodgens Affidavit was referenced in the appellant’s submissions before the primary judge in support of a submission that the appellant had conducted the Substantive Proceeding, including the Discontinuance, in good faith and with genuine intent to comply with the overarching purpose provisions. His Honour’s finding regarding the appellant’s purported failure to adduce evidence as to why a costs order should not be made was therefore incorrect.

79    Sixth, I agree that in failing to consider the whole of the conduct of the Substantive Proceeding, and further or alternatively the benefits resulting from the Discontinuance, including costs savings, and relevant public policy considerations, the primary judge fell into error. That error constituted a failure to consider the appellant’s submissions, where those were “centrally relevant”. Those submissions were relevant to the question of the reasonableness of the Discontinuance when weighed against the conduct of the Substantive Proceeding. Finally, I agree that the primary judge’s finding that the appellant had not instituted the Substantive Proceeding vexatiously or without reasonable cause (Costs Judgment at [30]) contradicts his finding that he failed to justify his commencement (Costs Judgment at [39]).

80    As the primary judge erred in his construction and application of s 570(2)(b) of the FW Act, the appropriateness of the primary judge’s order that costs be assessed under r 22.02(2)(c) of the FCFCOA Rules need not be considered.

81    As error on the part of the primary judge has been shown, it falls for this Court to determine the issue by substituting its own decision based on the facts and the law as they stand: Allesch at [23].

redetermining the issue of costs

The unreasonable act or omission relied upon by the respondent

82    Despite the respondent’s concession, referred to at [50] above, by a notice of contention it asserted that the Costs Orders should be affirmed, and the appeal dismissed,

on the basis that Appellant’s discontinuance of the substantive proceedings constituted a surrender, and as such, the conduct of the proceedings was an unreasonable act within the meaning of 570(2)(b) of the Fair Work Act 2009 (Cth).

The appellant’s position

83    When he filed his submissions in chief, the appellant was likely not apprised of the basis on which the respondent would submit that the Costs Orders should be upheld, save to the extent that the notice of contention referred to the Discontinuance constituting “a surrender”, and the entirety of the conduct of the Substantive Proceeding consequently constituting an unreasonable act.

84    The appellant initially contended, broadly, that there was no finding below, and no proper basis to conclude, that he had improperly commenced the Substantive Proceeding, unduly prolonged it, or deliberately or carelessly delayed the Discontinuance. On the contrary, first, the Discontinuance resulted in significant private and public costs savings, including by eliminating the prospect of any appeal, with consequential delays and further costs. That weighed in favour of the Discontinuance being a reasonable act. Second, the respondent may have been in a better position as a result of the Discontinuance than if the matter had continued to trial, on the basis that the prospect that the respondent might have obtained a costs order against the appellant, and was consequently deprived of an advantage by reason of the Discontinuance, was speculative. Third, there was a strong policy of encouraging litigants to discontinue proceedings that should properly be discontinued, and the risk of paying costs should not be a disincentive to doing so. In oral submissions, he submitted that to accept the respondent’s position would be to require parties in any case to “box on to a final hearing”, contrary to the overarching purpose provisions and practitioners’ ethical obligations.

85    In the above circumstances, the appellant’s primary contention was that the Court should find that neither the Discontinuance nor the appellant’s failure to personally depose to the matters in the Hodgens Affidavit referred to above at [17] was an unreasonable act or omission for the purposes of s 570(2)(b) of the FW Act, and should redetermine the Respondent’s Costs Application in his favour.

86    In reply submissions, he contended that commencing a proceeding without an intention to litigate the proceeding to finality was conduct described by s 570(2)(a) of the FW Act, and that discontinuing litigation on the basis of costs considerations was “of an entirely different character”. In oral submissions, he emphasised that in the Costs Judgment, he had not been found to have commenced the Substantive Proceeding vexatiously or without reasonable cause. Nor had the respondent asserted that his amended statement of claim failed to disclose an arguable case. In oral submissions, the appellant rejected any suggestion that he commenced the Substantive Proceeding “without adequate resolve” or to “wrest a settlement from the respondent” without any intention to have the claim adjudicated. This was a serious allegation unsupported by the evidence. He said that the respondent could not, by s 570(2)(b) of the FW Act, mount a “collateral attack” on the appellant’s claim in the Substantive Proceeding, and thereby indirectly achieve what it could not achieve by s 570(2)(a) of the FW Act. He further submitted orally that the respondent’s argument was that the Substantive Proceeding should never have been brought or “was brought for an improper purpose, … approaching an abuse of process”, referring to Williams v Spautz [1992] HCA 34; 174 CLR 509 at 522.

87    Further, he said that a decision to discontinue on commercial grounds did not become an unreasonable act simply because an uncommercial outcome was always foreseeable. To find otherwise would invite the Court to second-guess his forensic decisions, which the Courts had held to be inappropriate in the context of s 570(2)(a) of the FW Act: see Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351 at [9]. He urged that that approach be applied to s 570(2)(b) of the FW Act. In any event, he contended in oral submissions that while the fact of costs might be foreseeable, the magnitude of those costs was not, nor was the fact that the respondent would seek summary dismissal of the Substantive Proceeding. To treat a later reassessment of matters concerning costs as retrospectively unreasonable would be to deny the reality of litigation, and convert s 570 of the FW Act into a rule that allowed “only the reckless or the well-pocketed” to commence a proceeding. He contended by his written reply submissions that it did not follow that, simply because in pursuing litigation it was foreseeable that costs would be incurred, a discontinuance justified based on costs was an unreasonable act. Rather, “litigation is not a static process somehow fixed and certain at the outset of the proceedings, remaining unchanging until trial”.

88    Additionally, he submitted that the respondent had not identified when the act of discontinuing became an unreasonable act, and in oral submissions, what act or omission at that point was unreasonable and how it caused costs. Relying on Altintas v O’Dea Lawyers (No 2) [2018] FCAFC 187 at [14], he said in written submissions that only the unreasonable act, and not the entire conduct in relation to commencing and continuing the Substantive Proceeding, was to be considered. He rejected a submission by the respondent that his unwillingness to proceed should have been recognised much earlier, as contrary to the objective circumstances, and as importing hindsight reasoning. He said further that the respondent did not say which costs incurred were caused by his putative unreasonable act. He said that there was sufficient evidence of his own incurred and foreseeable costs supporting the Discontinuance, which costs were also evident from the amount of material filed in the proceeding. In any event, the precise quantum of his costs was not relevant to s 570(2)(b) of the FW Act.

89    As to a submission that the entire conduct of the proceeding was the unreasonable act, he submitted orally that he had advanced a “coherent, factual and legal basis for the pleaded claims”, and that the proceeding was “reasonably brought and maintained”. Further, he had discontinued several months before the final hearing. Consideration of the prospective costs of the trial and potential appeal, the absence of any realistic net benefit, and the breakdown of his relationship with a key supporting witness, was “orthodox”. He noted that he had successfully appealed the Summary Dismissal Judgment, which showed his resolve in the proceeding, though the fact that the Summary Dismissal Appeal Judgment was delivered approximately three years after the commencement of the Substantive Proceeding informed the decision of whether to continue. He emphasised that the delay came about from the respondent’s step in seeking summary dismissal of the Substantive Proceeding and contended that one could not “isolate one aspect of the matter”, without considering the course of action taken by the other party. Relatedly, the appellant drew attention to the fact that notwithstanding his ultimate success in the Summary Dismissal Appeal, the costs sought by the respondent included the costs of that strand of the Substantive Proceeding.

90    He argued orally that the power under s 570(2)(b) of the FW Act was “exceptional and cautious”, and that the provision furthered an access to justice policy, with which the overarching purpose provisions needed to be reconciled. Discontinuing was reasonable and responsible because it avoided a lengthy trial, saved costs, eliminated the prospect of further appeals, and was effective months before the hearing. It was an “essential discipline” to discontinue in a jurisdiction that had “deliberately rejected routine costs shifting”. To accept the respondent’s view would require parties to continue, contrary to (1) costs considerations, (2) the policy of s 570 of the FW Act and its legislative history, (3) solicitors’ obligations and (4) the overarching purpose provisions. Further, it would penalise “discontinuing responsibly” in a jurisdiction where Parliament has deliberately rejected the usual costs shifting rule. He queried whether running the proceeding until a final hearing, as he characterised the respondent’s submission required him to do, would have been reasonable, in circumstances where the hearing was slated to run for multiple days, would incur public and private expense, and would not produce a net benefit to him even if he were successful. Viewed prospectively, his conduct throughout the Substantive Proceeding, including the Discontinuance, did not enliven either s 570(2)(a) or (b) of the FW Act.

91    The appellant referred generally to Heal at [64], [65], [69], [70], [80] – [85], [89] – [91] for the proposition that s 570(2)(b) of the FW Act was not engaged “merely because an applicant presses an arguable case to trial and loses”, and noted that the present case involved a discontinuance “because of a well-founded decision taken by the appellant”. He submitted orally that the respondent must “point to the act of discontinuance that [it] rel[ies] upon”, and establish that the discontinuance at that point was an unreasonable act or omission. The appellant asserted that there was no contention by the respondent that the appellant’s claim in the Substantive Proceeding was “speculative or foredoomed [to] failure”, or that he “deliberately or carelessly delayed discontinuance”. He relied on PIA at [16] – [18], noting there that the withdrawal of issues of itself reflected “no more than a legitimate forensic narrowing of issues, and did not engage s 570(2)(b)”.

92    He further characterised the respondent’s argument about unreasonableness as resting on a contention that the appellant, when commencing the Substantive Proceeding, should have (1) considered the likely cost of prosecuting it to finality, (2) predicted there would be an interlocutory application nine months after commencement, to have the Substantive Proceeding summarily dismissed, (3) predicted that it would take two years to overturn the Summary Dismissal Judgment and bring the Substantive Proceeding back on track, and (4) predicted that his relationship with a key witness would break down. He said that the respondent’s position invited the Court to second-guess the appellant’s forensic decisions, and to do so in a vacuum where none of the above circumstances were challenged before the primary judge or compared to any counterfactual.

The respondent’s position

93    The respondent appeared to advance two broad submissions in support of there having been an unreasonable act or omission on the appellant’s part. First, it relied on the appellant’s discontinuance as a surrender and acknowledgement of likely defeat. Second, it said that it was unreasonable for the appellant “to conduct these proceedings without a willingness to litigate them to finality” in the event that the appellant would incur the costs which formed the basis of his justification for discontinuing. It developed that second submission in its reply submissions by characterising the unreasonable act under s 570(2)(b) of the FW Act as “a series of acts”, being the appellant’s commencement and continuance of the Substantive Proceeding in respect of which he was not prepared to bear the foreseeable costs. It said it did not need to identify a particular point where the appellant engaged in an unreasonable act; rather, commencing and continuing the entirety of the Substantive Proceeding was unreasonable, and the entirety of the respondent’s costs were recoverable.

94    The respondent appeared to link the first submission relating to surrender to the second submission relating to an unwillingness to litigate to finality, by contending that the justification for the discontinuance, being the costs of the proceeding, was a circumstance that the appellant always faced. This appeared to pick up the reasoning in O’Neill and Ahmetaj, where the lack of an objective circumstance providing a reason for the discontinuance meant that a costs order in favour of the other party would usually follow. It submitted, by analogy to Ahmetaj, that the appellant always faced the “inevitable prospect” that he would incur costs in bringing the matter to finality, and he could not have been acting reasonably in commencing and continuing it where he ultimately chose not to pursue it by reason of costs that he could have always foreseen. It was therefore unreasonable for the appellant to commence and continue the Substantive Proceeding.

95    It said that the same logic applied if the event causing discontinuance was a realisation, at a late stage, that the costs already incurred, as well as the costs likely to be incurred, were too much to make continuing with the litigation “commercial”. The prospect of foreseeable costs should, in its submission, factor into the decision to commence, and any ongoing assessment to continue. An unwillingness to proceed at a “late stage” when faced with costs was an unwillingness that should have been recognised much earlier. Therefore, continuing until a very late realisation of the foreseeable costs involved was unreasonable. In any event, it submitted that the evidence supporting the appellant’s contention that continuing had become uncommercial was inadequate, and that for this Court to be satisfied of the inadequate detail regarding the costs as an explanation for the discontinuance would permit parties to hide behind bare assertions that a prospective judgment would be “uncommercial”, to conceal the reason for discontinuing being a “surrender at the eleventh hour”.

96    In its reply submissions, the respondent said that the appellant’s costs were foreseeable because every step taken, other than the Summary Dismissal Application, was routine, and the Summary Dismissal Application was not unusual and was genuinely arguable. In oral submissions, relying on Ryan at [65], it emphasised that s 570 of the FW Act contemplated parties accessing the Court responsibly, and that this framed the relevant question for the Court. It said that it could not be responsible to invoke the FCFCOA’s jurisdiction when confronted with a difficulty that would ultimately render him unwilling or unable to prosecute the matter to finality. This required him to undertake a “realistic assessment” of the likely costs required to litigate to finality, before deciding whether to commence. It could not be reasonable to commence where it was foreseeable that one would incur costs one was unprepared to incur, which would lead to discontinuance at a very late stage. Noting that the Summary Dismissal Application was brought relatively early, the costs of it and any appeal would be foreseeable, and the appellant could have then decided whether to continue.

97    Separately, in its submissions in chief, it said that it was unreasonable for a litigant to consume the Court’s and the other party’s resources in the event that the litigant is not prepared to litigate the proceeding to finality upon the dissolution of a personal relationship.

98    For the above reasons, it contended that by conducting the Substantive Proceeding, the appellant acted unreasonably so as to enliven the power under s 570(2)(b) of the FW Act.

The Appellant’s Costs Application

99    The appellant made an offer to the respondent in a letter of 1 October 2024 which was annexed to an affidavit of Mr Hodgens affirmed on 16 October 2024. The letter addressed what the appellant perceived to be “several material difficulties” with the Respondent’s Costs Application, being that it raised new relief not sought in the Substantive Proceeding, that it was contingent on a finding in relation to the Deed which had not been made and could only be determined by way of a trial, which would no longer occur, and the fact that the respondent would not succeed in an application for costs under s 570(2)(a) or (b) of the FW Act. The appellant offered to pay to the respondent $50,000.00 in full and final settlement of the Respondent’s Costs Application, with the parties to bear their own costs of and incidental to the Respondent’s Costs Application.

100    In his written submissions, the appellant submitted that the respondent’s failure to accept his offer of 1 October 2024 before the Appellant’s Costs Application was filed was an unreasonable act or omission for the purposes of s 570(2)(b) of the FW Act, and therefore that the respondent should pay the appellant’s costs of the Appellant’s Costs Application. However, that argument did not appear to be pressed in oral submissions.

101    In oral submissions, the appellant contended that the Court should order the respondent to pay his costs of the Respondent’s Costs Application before the primary judge and of this appeal. He contended that the respondent’s conduct in “bringing and maintaining” the Respondent’s Costs Application and in seeking to defend the Costs Orders on appeal through the notice of contention were unreasonable acts for the purposes of s 570(2)(b) of the FW Act. Supporting this position was that the respondent based the Respondent’s Costs Application on discontinuance being sufficient to justify an adverse costs order, which was not properly arguable under s 570(2)(b) of the FW Act, and proceeded on a basis that Parliament had deliberately displaced.

102    Further, the appellant said that the Respondent’s Costs Application was “not a proper invocation of the Court’s confined costs power”, on the basis that it treated discontinuance as inherently unreasonable, reversed the onus, adduced no evidence to justify the contention and dispensed with “any coherent analysis of causation”. As to this appeal, the appellant said that notwithstanding the respondent’s concession, the notice of contention had sought to support the Costs Orders on a basis suffering the “same foundational difficulty”, namely treating discontinuance and its timing as sufficient to justify costs from the start of the proceeding, without satisfying s 570(2)(b) of the FW Act. That had required the appeal to be fully contested and had caused the appellant to incur costs. He said that the respondent’s conduct engaged the statutory policy of discouraging the pursuit of costs claims inconsistent with the statutory scheme, putting the Court to the task of dealing with an approach that should not have been pursued.

103    The respondent characterised the appellant’s case in this regard to be that the Respondent’s Costs Application and the defence of the Costs Judgment were untenable because they were improperly based on unreasonableness said to attach to the Discontinuance. This, it said, misapprehended its argument. It referred rather to its notice of contention and its written submissions, which it said clarified the basis for its defence of the Costs Orders.

104    In oral reply submissions, the appellant emphasised his position that he should receive his costs of the appeal on the basis that the respondent has perpetuated an argument that “is unreasonably being advanced, [and is] untethered to principle or the facts in this case”.

consideration

No unreasonable act or omission occurred which caused the respondent to incur costs

105    As already discussed above, the authorities relied on by the respondent regarding the Court’s general costs jurisdiction in the context of a discontinuance do not assist it. Rather, when determining whether the Court’s costs jurisdiction is enlivened, there must be an “unreasonable act or omission” which “caused the other party to incur the costs”: s 570(2)(b) of the FW Act. Unreasonableness is to be judged objectively: Grouped Property Services at [25]. For the following reasons, I am not persuaded that any of the acts or omissions referred to by the parties were unreasonable in the circumstances of this proceeding.

106    For reasons already canvassed above, I do not think that in this context, the discontinuance can be equated to a surrender by the appellant, from which costs consequences should follow. The issue is, rather, in light of the respondent’s submissions, whether any of the following constitutes an unreasonable act or omission: (1) the commencement and maintenance of the Substantive Proceeding, or (2) the Discontinuance.

The commencement of the proceeding

107    As to the commencement of the proceeding, the pursuit of a contentious argument is not an unreasonable act: Qantas at [36], Heal at [80]. Where, as here, the claim is not shown to have been brought without reasonable cause, a claim for a costs order under s 570(2)(b) of the FW Act must point to something more; for example, an inherently unreasonable act: Tran at [27]. The Respondent’s Costs Application was unsuccessful under s 570(2)(a) of the FW Act before the primary judge, and the respondent brought no cross-appeal in respect of that part of the Costs Judgment. The fact that Thomas J upheld the appellant’s appeal against the Summary Dismissal Judgment supports the finding that the appellant’s claims in the Substantive Proceeding were arguable. Furthermore, as the appellant submitted, the respondent did not assert that the appellant’s amended statement of claim failed to disclose an arguable case. In circumstances where the appellant’s claim in the Substantive Proceeding was contentious and not “incompetent or hopeless” or brought without reasonable cause or vexatiously, it must be considered whether any other circumstance means that it satisfies s 570(2)(b) of the FW Act. Each of the possible bases raised in argument will be addressed in turn.

108    First, as to the suggestion that the appellant commenced the proceeding without an intention to litigate the matter to finality, I agree with the appellant that that conduct is captured by s 570(2)(a) of the FW Act which, as noted, was not satisfied in the present case. Relatedly, any suggestion that the appellant commenced the Substantive Proceeding “without adequate resolve” or to “wrest a settlement from the respondent” without any intention to have the claim adjudicated is, as the appellant submitted, a serious one, which was not supported by the evidence, and which the respondent expressly disavowed having made on appeal. As the appellant submitted, for example, his resolve was demonstrated by his having appealed the Summary Dismissal Judgment. Further, the fact that the Summary Dismissal Appeal Judgment was delivered approximately three years after the Substantive Proceeding was commenced weakens any submission that the appellant acted without adequate resolve because the matter was held in abeyance in that period.

109    Second, as to the broad submission that the entire conduct of the Substantive Proceeding was an unreasonable act, I note that the appellant advanced a coherent basis for his claims. The respondent’s submissions in support of a finding that the commencement and maintenance of the Substantive Proceeding were unreasonable required the Court to judge retrospectively the appellant’s prospective decision to continue and maintain the Substantive Proceeding. The respondent invited the Court to engage in this retrospective inquiry apparently in reliance on cases such as O’Neill and Ahmetaj. In those cases, which were not decided under the FW Act, the award of costs in the context of a discontinuance was premised on the basis of the reason for the discontinuance being a circumstance that the discontinuing party always faced. Accordingly, the circumstance did not explain the discontinuance, and costs consequences flowed from the discontinuance. The Court in those cases was required to consider, retrospectively, whether the circumstance justifying discontinuance existed at all material times. By the application of those cases, following the respondent’s approach, it became relevant to consider, prospectively, the circumstances by which the appellant explained his discontinuance, and determine, retrospectively, whether those circumstances had existed at the time of commencement. As already discussed, however, to apply those cases without any regard to the language and purpose of s 570 of the FW Act would be to import the general costs regime into a statutory context in which the power to award costs is only enlivened in defined circumstances, reflecting a statutory policy of promoting access to justice.

110    In this regard, to convert the observations of Mortimer J (as her Honour then was) in Ryan at [65] that s 570 of the FW Act contemplated parties accessing the Court responsibly, into a requirement that the parties undertake a “realistic assessment” of the likely costs, being a circumstance which would ultimately render the appellant unwilling or unable to continue to finality, would be to import the general costs regime into s 570 of the FW Act. Of course, the criteria in s 570(2)(a) or (b) of the FW Act may be established where the Court’s jurisdiction is not invoked responsibly, but the general costs principles contended for by the respondent are not applicable in this context.

111    Once it is recognised that the focus is on unreasonable acts or omissions, it can be seen that commencing the Substantive Proceeding was not unreasonable. Where the claims advanced were not unarguable or brought vexatiously or without reasonable cause, the circumstances relied on by the respondent do not convert that commencement into an unreasonable act. It is important that the assessment of reasonableness be conducted prospectively, not retrospectively. I accept the appellant’s submission that to treat a later assessment of costs as retrospectively unreasonable and therefore to characterise the whole proceeding as an unreasonable act would be to deny the realities of litigation, and in particular of this litigation. It would also permit only those with no regard or concern for costs to commence litigation, which would be inconsistent with s 570 of the FW Act’s policy of promoting access to justice. As the appellant submitted, it could not be said that, for the commencement to have been reasonable, the appellant must have (1) considered the likely cost of litigating to finality, (2) predicted the Summary Dismissal Application, (3) predicted the length of time in obtaining the Summary Dismissal Appeal Judgment, and (4) predicted the breakdown in his relationship with a key witness, and in those circumstances made a decision about whether to commence. To hold otherwise would cut across the access to justice policy which s 570 of the FW Act seeks to further.

112    The cases referred to by the appellant establish that in the context of an arguable claim, some further circumstance is required to enliven s 570(2)(b) of the FW Act: Qantas at [36]. More particularly, Tran supports by analogy the proposition that the furtherance of an arguable claim, even one later abandoned, is not an unreasonable act or omission. There is no factor or circumstance in this proceeding that demonstrates that the commencement of the Substantive Proceeding was unreasonable.

The maintenance of the proceeding

113    To say that the maintenance of the Substantive Proceeding is an unreasonable act is, effectively, to say that the appellant should have discontinued the proceeding at an earlier time. I accept the appellant’s submission that there is no evidence that he deliberately or carelessly delayed discontinuance. The respondent’s submission that the appellant’s unwillingness to proceed when faced with foreseeable costs should have been recognised earlier, and therefore his continuation was unreasonable, is not accepted. As the appellant submitted, that submission imported hindsight reasoning, which would be inappropriate especially where, as here, the proceeding has taken many turns and has been the subject of a summary dismissal application which ultimately delayed the proceeding by approximately two years. To accept a broad submission that the appellant was required to conduct an ongoing assessment to continue, and from this to accept that his allegedly delayed discontinuance was unreasonable, would be to ignore the procedural history of the matter. Further, the respondent did not identify at which point in time the purported failure to discontinue became an unreasonable omission. In the absence of the respondent pointing to such a point in time, its submission would invite the Court to second-guess the appellant’s forensic decisions, which would also be inappropriate.

The Discontinuance

114    As to the Discontinuance itself being an unreasonable act, I accept that the appellant discontinued the Substantive Proceeding several months before the hearing. That followed the appellant’s consideration of the prospective costs, the absence of a commercial net benefit, and the breakdown of his relationship with a key witness. Even if the lack of a commercial net benefit was foreseeable, that would not of itself render the Discontinuance on commercial grounds unreasonable. The Discontinuance avoided the parties and the Court incurring expense, in circumstances where no net benefit would accrue to the appellant even if successful. To accept the respondent’s position would penalise a party faced with the choice to avoid such expense, by making that party bear the cost of the litigation up to that point. That would be inappropriate where s 570 of the FW Act displaces the usual costs shifting rule and confines the Court’s power to award costs to the circumstances set out therein. Further, the discontinuance was explained by the appellant’s incurred costs in the Substantive Proceeding which, in light of its length, were self-evidently significant. The mere fact that the incursion of costs was foreseeable does not render unreasonable a discontinuance on the basis of the incursion of costs. In this regard, I accept the appellant’s submission that for the Court to find discontinuance on the basis of an allegedly foreseeable commercial outcome to be unreasonable would be to second-guess the appellant’s forensic decisions in the litigation. I accept that the remarks in Corinthian Industries at [9] are applicable to this context.

115    In the above circumstances, I am not satisfied on the evidence that the Discontinuance was unreasonable within the meaning of s 570(2)(b) of the FW Act. To scrutinise the evidence adduced by the appellant supporting the Discontinuance in the manner contended for by the respondent would be to cast an onus on the appellant to justify the Discontinuance and effectively disprove that it was unreasonable, where the cases make clear, and the respondent accepted by conceding error on the part of the primary judge, that the respondent in this case bore the onus of proving that the relevant act or omission of the appellant was unreasonable: QNurses at [11].

The appellant has not shown an unreasonable act or omission on the respondent’s part

116    As already referred to, the appellant did not appear to press his argument that the respondent’s failure to accept his offer of 1 October 2024 was an unreasonable act or omission for the purposes of s 570(2)(b) of the FW Act.

117    As to the argument that the respondent’s defence of the Costs Orders by way of its notice of contention was an unreasonable act or omission, I am not persuaded that the respondent’s approach enlivens the Court’s power under s 570(2)(b) of the FW Act. As the appellant submitted broadly in the appeal, the pursuit of a contentious but ultimately unsuccessful claim is not an unreasonable act or omission: Qantas at [36]; Heal at [80]. The appellant did not allege, by reference to s 570(2)(a) of the FW Act or otherwise, that the Respondent’s Costs Application or the notice of contention were brought vexatiously or without reasonable cause, and no finding to that effect is made.

118    It may be accepted that the prosecution of an incompetent or hopeless case, or persistence in pleadings inconsistent with the Court’s reasoning may be unreasonable: Qantas at [36]. It may also be accepted that the arguments advanced in support of the Respondent’s Costs Application and the preservation of the Costs Orders by way of the respondent’s notice of contention did not find support in the authorities interpreting s 570(2)(b) of the FW Act. However, those facts of themselves do not render the respondent’s actions unreasonable. The factors said by the appellant to support a finding of unreasonableness were, in oral submissions, that the application of s 570(2)(b) of the FW Act contended for by the respondent was not “properly arguable”, that it “proceeded on an approach to costs that Parliament ha[d] deliberately displaced”, and that it “fl[ew] in the face of statutory construction and the cases”. That the position that the respondent contended for was wrong does not render its acts or omissions unreasonable. The appellant did not point in his submissions to anything further supporting a finding of unreasonableness. Accordingly, I am unable to find that the respondent bringing the Respondent’s Costs Application and supporting the Costs Orders was an unreasonable act.

conclusion

119    The appeal should be allowed, and the Respondent’s Costs Application should be dismissed with no order as to costs. The Applicant’s Costs Application should be dismissed with no order as to costs. There should be no order as to the costs of this appeal.

Associate:

Dated:    24 September 2026