Cheung v Aust Landing Group Pty Ltd (No 2)
[2024] FedCFamC2G 457
•23 May 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)Cheung v Aust Landing Group Pty Ltd (No 2) [2024] FedCFamC2G 457
File number(s): MLG 2683 of 2022 Judgment of: JUDGE CHAMPION Date of judgment: 23 May 2024 Catchwords: FAIR WORK – Costs – Whether s. 570 of the Fair Work Act applies to a proceeding in which the court decides that it does not have jurisdiction as to one of the claims in the proceeding – Section 570 applies – Where proceedings not instituted without reasonable cause – Where Court not satisfied that a party’s unreasonable act or omission caused the other party to incur costs – No order as to costs Legislation: Fair Work Act 2009 (Cth) ss. 117, 323, 570 Cases cited: Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392
Australian Workers Union v Leighton Contractors Pty Limited (No 2) [2013] FCAFC 23
Construction, Forestry, Mining and Energy Union v Clarke [2008] 170 FCR 574; FCAFC 143
Energy Australia Yallourn Pty Ltd v Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union (2018) 264 FCR 342, [2018] FCAFC 146
Fencott v Muller (1983) 152 CLR 570
Fountain v Alexander (1982) 150 CLR 615
Geneff v Peterson (1986) 19 IR 40
Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257
Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221, [2015] FCAFC 20,
Ryan v Primesafe (2015) 323 ALR 107; [2015] FCA 8
Division: Division 2 General Federal Law Number of paragraphs: 37 Date of last submission/s: 2 May 2024 Date of hearing: On the papers Place: Melbourne Solicitor for the Applicant: Jewell Hancock Employment Lawyers Solicitor for the Respondents: Jiangty Law ORDERS
MLG 2683 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: ANDREW CHEUNG
Applicant
AND: AUST LANDING GROUP PTY LTD
Respondent
ORDER MADE BY:
JUDGE CHAMPION
DATE OF ORDER:
23 MAY 2024
THE COURT ORDERS THAT:
1.There is no order as to costs.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE CHAMPION:
INTRODUCTION AND SUMMARY
On 28 March 2024 I delivered reasons and made orders dismissing the application in the principal judgment (Cheung v Aust Landing Group Pty Ltd [2024] FedCFamC2G 278) (Principal Judgment; PJ). I reserved the question of costs.
In due course, the Respondents sought an order that the Applicant “pay 50% of their costs in circumstances where two of the three claims advanced by the Applicant were not within the jurisdiction of the Court”.
The Applicant submits that the appropriate order is that there be no order as to costs.
This costs judgment ought to be read together with the Principal Judgment.
In the Principal Judgment, in the event either party sought a costs order, I directed the parties to file short written submissions (PJ, [235]). Each party filed a written outline (Respondent’s Costs Submission or RCS; Applicant’s Cost Submissions or ACS). As a result, and as foreshadowed in the primary judgment, in the absence of either party seeking an oral hearing, I will determine the costs application on the papers.
For the reasons set out below, I will order that there be no order as to costs.
BACKGROUND
In the substantive proceeding the Applicant brought employment claims for breach of the Fair Work Act 2009 (Cth) (FW Act) and breach of an employment contract. He claimed that he had not been paid an agreed annual salary of $150,000 under an oral contract. As to the alleged short-payment of his salary, he brought a statutory claim under s. 323 of the FW Act and contractual claims. Further, he claimed that his employment had been terminated in breach of an implied contractual term of reasonable notice or, alternatively, in breach of the notice requirements of s. 117 of the FW Act.
In addition, a brought a claim that he was entitled to repayment of expenses of $112,794.73 pursuant to an “Expenses Agreement” (PJ, [137]). He abandoned the Expenses Agreement claim at the commencement of the trial. He brought another claim that he was entitled to repayment of a loan of $396,214.46 under a “Loan Agreement”.
The Respondents are referring to the “Expenses Agreement” claim and the “Loan Agreement” claim when they contend that “2 of the 3 claims advanced by the Applicant were not within the jurisdiction of the Court” (RCS, [1]). I found in the primary judgment that the Loan Agreement claim was a severable claim not within the jurisdiction of the court (PJ, [191]–[192]). On the basis that I was wrong as to that jurisdictional issue I found that, in any event, the Applicant had not proved his Loan Agreement claim on the facts (PJ, [13]; [228]). Because the Applicant abandoned the Expenses Agreement claim at the start of the trial, it was not necessary for the court to determine whether the Expenses Agreement claim was within or outside jurisdiction.
THE COSTS APPLICATION
Because the Applicant invoked the jurisdiction of the court under the FW Act, it is necessary to consider s. 570 of the FW Act on any costs application.
Section 570
Section 570 of the FW Act is in the following terms:
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.
Section 570(1) provides that the usual position is that each party will pay its own costs in proceedings “in relation to a matter arising under” the FW Act. Section 570 reflects the important aim of promoting access to justice by ensuring the spectre of adverse costs orders not discourage applicants with genuine grievances from commencing or continuing proceedings (Ryan v Primesafe (2015) 323 ALR 107; [2015] FCA 8, [64] (Mortimer J, as she then was).
Section 570 does not impose a universally applicable cost prohibition. There will be circumstances in which a party seeks a “special order for costs under s. 570(2)” (Energy Australia Yallourn Pty Ltd v Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union (2018) 264 FCR 342, [2018] FCAFC 146, [95]).
I accept the Applicant’s submissions that s. 570(2) “operates in two stages: first, the court must be satisfied that one of the enlivening conditions in paragraphs (a) to (c) exists, second, the court has a residual discretion as to whether and to what extent to order costs even once satisfied that its power is enlivened” (ACS, [2]).
The Respondents’ costs application
As noted, the Respondents seek an order “that the Applicant pay 50% of their costs in this proceeding, in circumstances where two of the three claims advanced by the Applicant were not within the jurisdiction of the Court” (RCS, [1]).
The Respondents relied on both s. 570(2)(a) and (b) of the FW Act (RCS, [11], [14]). Section 570(2)(c) is not currently relevant.
Section 570(2)(a): A party instituted the proceedings vexatiously or without reasonable cause
A proceeding may be described as instituted “without reasonable cause” if it was clear that it must fail on the applicant’s own version of the facts (Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257, 264 (Wilcox J) endorsed by a Full Court in Australian Workers Union v Leighton Contractors Pty Limited (No 2) [2013] FCAFC 23, [7] (Dowsett, McKerracher and Katzmann JJ).
As a Full Court observed in Construction, Forestry, Mining and Energy Union v Clarke [2008] 170 FCR 574; FCAFC 143, [29]:
…there is a distinction between a party who pursues arguments which are ultimately abandoned or rejected by the Court and a party who commences a proceeding which is misconceived in the sense of being incompetent or unsupportable
Accordingly, whether a proceeding was instituted “without reasonable cause” is a different question from whether the proceeding “ultimately failed” (Leighton Contractors, [7]; Clarke, [29]).
Section 570(2)(a) proceeds on the basis that the court is satisfied that the applicant instituted the proceeding as a whole vexatiously or without reasonable cause (Geneff v Peterson (1986) 19 IR 40, 90 (Gray J), endorsed by a Full Court in Melbourne Stadiums Ltd v Sautner(2015) 229 FCR 221, [2015] FCAFC 20, [156] (Tracey, Gilmour, Jagot and Beach JJ).
In this case, there is only one proceeding although there are a number of separate claims within that one proceeding.
In circumstances in which the Respondents have no contended that the Applicant commenced his FW Act claims without reasonable cause, the submission that the proceeding as a whole was commenced without reasonable cause cannot be substantiated.
Further, there was contested evidence as to oral conversations both as to the employment claims (statutory and contractual) and as to the contractual Loan Agreement. In the Principal Judgment I have not accepted the Applicant’s version of events. It was not a case, however, in which it can be said that it was clear at the time the proceedings were instituted that the case would fail on the Applicant’s own version of the facts.
The enlivening condition in s. 570(2)(a) is not satisfied.
Section 570(2)(b): A party’s unreasonable act or omission caused the other party to incur costs
Section 570(2)(b) requires an objective analysis of a party’s conduct (Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392, [32] (Tracey J).
The late abandonment of the claim under the Expenses Agreement
The Applicant commenced the proceeding on 24 November 2022, but abandoned the Expenses Agreement claim on the first morning (12 February 2024) of what turned out to be a 5-day trial.
Although the maintenance of the Expenses Agreement Claim was close to the threshold of an unreasonable act measured by reference to the Applicant’s own evidence ultimately given at trial that he had already been paid these amounts by March 2021, a date substantially before the date he issued this proceeding in November 2022 (PJ, [137]), the claim was abandoned before the evidence commenced. The commercial dealings between the parties were not necessarily easily separated one from another. The circumstances for the pleading of the Expenses Claim and its maintenance until trial were not explored in any detail in the evidence for the very reason its abandonment meant the issue required no detailed examination. In all the circumstances, I have not been persuaded that the maintenance of the Expenses Claim until the first morning the trial is an unreasonable act or omission which causes me to exercise my discretion to make an award of costs to the Respondents.
As to the Expenses Agreement claim, the Respondents have not established a foundation for the costs claim insofar as they rely upon a contention that the Applicant engaged in an unreasonable act or omission by pursuing a claim which was outside the court’s jurisdiction because, by reason of the abandonment of the claim, the court was not ultimately called upon to decide whether or not it had jurisdiction as to the Expenses Agreement.
Finally, even if I had been persuaded that the maintenance of the Expenses Agreement claim until the morning of the trial was unreasonable, I have not been persuaded as to the quantum of costs the respondents seek. The Respondents’ evidence filed before trial as to the alleged Expenses Agreement was very brief. Mr Hu dealt with issues as to the Expenses Agreement in 4 paragraphs of a trial affidavit which ran to some 69 paragraphs (Mr Hu, Affidavit, [57]– [61]; CB338). The Respondents only other witness, Mr Liu, did not appear to address the matter of the Expenses Agreement at all in his evidence. The Respondents do not differentiate the Expenses Agreement and the Loan Agreements in their costs application. The Respondents have not persuaded me that the substantial costs order they seek insofar as they contend the Applicant engaged in an unreasonable act or omission as to the Expenses Agreement claim is commensurate with the very limited part the Expenses Agreement claim played in the course of the trial.
Claims outside the jurisdiction of the court: the Loans Agreement claim
The expression “in relation to” in the introductory words to s. 570(1) is of wide and general import (Energy Australia, [98], citing Fountain v Alexander (1982) 150 CLR 615, 629). In Energy Australia, the Full Court rejected a contention that a court’s finding that it had no jurisdiction as to a controversy necessarily entailed that the proceedings were not “in relation to a matter arising under this Act.”
In this case, s. 570 is enlivened in relation to the whole proceeding because the whole proceeding was “in relation to a matter arising under” the FW Act, albeit that I have found that the Loans Agreement claim was a severable claim which formed part of the proceeding and was outside the court’s jurisdiction. In that sense, s. 570 applies to the whole of the proceeding in circumstances in which a party has brought several claims within that proceeding one of which is in relation to a matter arising under the FW Act even if the court finds it does not have jurisdiction as to a severable claim brought within the same proceeding.
As to s. 570(2)(a), as explained above, the Respondents did not contend that the Applicant instituted the proceeding insofar as they concerned alleged employment entitlements under the FW Act “without reasonable cause” albeit that those claims were unsuccessful. As s. 570(2)(a) attaches to the proceeding as a whole (Geneff, Sautner, above), the fact that I found that the Loans Agreement claim was outside the jurisdiction of the court does not enliven the precondition for an order for costs under s. 570(2)(a).
Did the pursuit of the Loans Agreement claim entail an unreasonable act or omission by the Applicant within the meaning of s. 570(2)(b)?
It cannot be said that it was an unreasonable act or omission for the Applicant to persist with the Loans Agreement claim because it was plainly outside jurisdiction.
The jurisdictional point was arguable, albeit ultimately unsuccessful. I accept the Applicant’s submission and the applicability of the passage from the judgment of the plurality in Fencott v Muller (1983) 152 CLR 570 at 607:
…in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter.
My ultimate conclusion that the claim under the Loan Agreement was outside jurisdiction does not mark it as a claim that it was an unreasonable act to bring and persist with the claim. That the claim was outside jurisdiction was not self-evidence.
As to whether it was objectively unreasonable to persist with the Loans Agreement claim because of the underlying facts, the evidence of the witnesses in a key oral conversation at the Riversdale Golf Club in February 2018 was contested. The fact that I have not accepted the Applicant’s evidence does not mark it as a claim which was objectively unreasonable to pursue. There was evidence, particularly by reference Mr Liu’s bank account descriptions of amounts he advanced to ALG as “loans” that provided support to the Applicant’s claim that he made loan to the First Respondent. The Loans Agreement claim was unsuccessful. It was not a claim which it was objectively unreasonable for the Applicant to pursue.
DISPOSITION
There will be no order as to costs.
I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Champion. Associate:
Dated: 23 May 2024
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