Fair Work Ombudsman v Bushnell
[2023] FedCFamC2G 848
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Bushnell [2023] FedCFamC2G 848
File number(s): BRG 136 of 2022 Judgment of: JUDGE EGAN Date of judgment: 21 September 2023 Catchwords: INDUSTRIAL LAW - COSTS – Failure by applicant to accept a “walk away” offer to settle made by the respondents some two months prior to trial – where applicant gave notice to the Court on the day of, but prior to the commencement of the hearing, that it intended to file a Notice of Discontinuance – whether the applicant ought to have accepted the offer when made – order that the applicant pay the costs of the respondents, on a party/party basis as agreed, or failing agreement, to be assessed, from the required date for acceptance of offer. Legislation: Fair Work Act 2009 (Cth) ss. 346, 348, 349 and 570.
Queensland Building and Construction Commission Act 1991 (Qld) s. 42.
Cases cited: Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd [2005] FCA 860.
Australian Workers Union v Leighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428 at [7].
Baker v Patrick Projects Pty Ltd (No 2) [2014] FCAFC 166 at [9] – [10].
Shea v Energy Australia Services Pty Ltd (No 2) [2015] FCAFC 14 at [10].
Division: Division 2 General Federal Law Number of paragraphs: 26 Date of last submission/s: 18 September 2023 Date of hearing: 18 September 2023 Place: Brisbane Counsel for the Applicant: Ms K Slack Solicitor for the Applicant: K&L Gates Counsel for the Respondents: Mr H Clift Solicitor for the Respondents: Hall Payne Lawyers ORDERS
BRG 313 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: JASON BUSHNELL
First Respondent
CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION
Second Respondent
ORDER MADE BY:
JUDGE EGAN
DATE OF ORDER:
21 SEPTEMBER 2023
IT IS ORDERED THAT:
1.The applicant have leave to file and serve a Notice of Discontinuance in the proceeding.
2.The applicant shall pay the costs of the respondents of and incidental to the proceeding on a party/party basis subsequent to 4 pm on 27 July 2023, such costs to be agreed, or failing agreement, to be taxed pursuant to r. 22.10 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
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 Egan
Introduction
On 31 March 2022, the applicant commenced proceedings against the First and Second Respondents.
The relief claimed by the applicant as set out in [51] – [61] of the Statement of Claim was relevantly as follows:
“[51]A declaration that, in contravention of s.346 of the FWAct, Mr Bushnell, on 11 May 2021, at the Project, took adverse action against Mr Aria by prejudicing his capacity to perform work at the Project by falsely representing that he was obliged to be a member of the CFMMEU, to perform work at the Project.
[52]A declaration that, in contravention of s.346 of the FW Act, Mr Bushnell, on 11 May 2021, at the Project, took adverse action against Mr Jome by prejudicing his capacity to perform work at the Project by falsely representing that he was obliged to be a member of the CFMMEU, to perform work at the Project.
[53]A declaration that, in contravention of s.348 of the FW Act, Mr Bushnell, on 11 May 2021 at the Project, took action against Mr Aria, by falsely representing that his [sic] was obliged to be a member of the CFMMEU to work at the Project, with intent to coerce Mr Aria to become a member of the CFMMEU.
[54]A declaration that, in contravention of s.348 of the FW Act, Mr Bushnell, on 11 May 2021 at the Project, took action against Mr Jome, by falsely representing that he was obliged to be a member of the CFMMEU to work at the Project, with intent to coerce Mr Jome to become a member of the CFMMEU.
[55]A declaration that, in contravention of s.349 of the FW Act, Mr Bushnell made false or misleading representations to Mr Aria about his obligation to engage in industrial activity namely, that he was obliged to become a member of the CFMMEU to work at the Project, which representations Mr Bushnell knew to be false or misleading.
[56]A declaration that, in contravention of s.349 of the FW Act, Mr Bushnell made false or misleading representations to Mr Jome about his obligation to engage industrial activity namely, that he was obliged to become a member of the CFMMEU to work at the Project, which representations Mr Bushnell knew to be false or misleading.
[57]Declarations that, by reason of ss.793(1) and 550(2)(c) of the FW Act or, in the alternative, ss. 363(1 )(b) and 550(2)(c) of the FW Act, the CFMMEU was, by way of act or omission, directly or indirectly, knowingly concerned in or party to the contraventions set out at paragraphs 51 to 56 above and, as a result, the CFMMEU contravened ss.346, 348 and 349 of the FW Act, on each occasion.
[58]Orders pursuant to s.546(1) of the FW Act imposing pecuniary penalties on Mr Bushnell in respect of each contravention of ss.346, 348 and 349 of the FW Act.
[59]Orders pursuant to s.546(1) of the FW Act that any penalty imposed on Mr Bushnell under paragraph 58 above be paid personally in that he must not, whether before or after the payment of the penalties:
(a) seek to have or encourage the CFMMEU in any way whatsoever, directly or indirectly, to pay to him or for his financial benefit in any way whatsoever, any money or financial benefit referable to the payment of the penalty whether whole or in part;
(b) accept or receive from the CFMMEU in any way whatsoever, any money or financial benefit referable to the payment of the penalty, whether in whole or in part; and
(c) accept or receive, in any way whatsoever, any money or financial benefit derived from a crowd funding digital or electronic platform that seeks or invites financial contributions referable to the payment of the penalties, whether whole or in part.
[60]Orders pursuant to s.546(1) of the FW Act imposing pecuniary penalties on the CFMMEU in respect of each contravention of ss.346, 348 and 349 of the FW Act.
[61]An order pursuant to s.546(3)(a) of the FW Act that any pecuniary penalties imposed on the Respondents be paid to the Commonwealth of Australia within 28 days of the Court’s order.”
By Responses filed on behalf of each of the respondents on 3 May 2022, orders were sought that the application filed on behalf of the applicant be dismissed.
By a Defence filed on behalf of the first respondent on 3 May 2022, the first respondent claimed privilege “ … against self-exposure to civil penalties and, for that reason, denies each and every allegation …” made in the Statement of Claim.
By a Defence filed on behalf of the second respondent on 3 May 2022, the second respondent admitted the allegations contained in paragraphs [1] – [6] of the Statement of Claim, but as to the balance of the allegations contained in the Statement of Claim, it pleaded that it “ … does not know and therefore cannot admit the allegations in …” the Statement of Claim.
The Hearing
The trial was listed for hearing over four days commencing on 18 September 2023.
On the afternoon of 15 September 2023, the applicant by its lawyers gave notice to the respondents’ lawyers that it intended to file a Notice of Discontinuance in the matter.
An email was sent to Judge’s Chambers on the morning of trial giving notice of the applicant’s intention to file a Notice of Discontinuance.
By written submissions filed on behalf of the respondents on 18 September 2023, the respondents sought costs under s. 570 of the Fair Work Act 2009 (Cth) (‘the Act’). That section relevantly provided 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.
Note:The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 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.”
The application for costs was moved on two alternative bases, namely:
(a)Under s. 570(2)(a) of the Act on the basis that the applicant had instituted the proceedings without reasonable cause; and
(b)Under s. 570(2)(b) of the Act on the basis that the applicant had acted unreasonably, and had caused the respondents to incur costs, in circumstances where it was asserted that the applicant had unreasonably failed to accept an offer made by the respondents to settle the proceedings on a “walk away” basis with no order as to costs made in a letter of offer dated 13 July 2023. [1]
[1] See Annexure KJB-5 to the affidavit of Ms Birch filed on 18 September 2023.
The letter of offer to settle the proceeding sent by the respondents’ lawyers to the lawyers for the applicant raised several reasons why the applicant ought to file a Notice of Discontinuance, and was as follows:
“Dear Colleagues
Re: BRG136/2022 – FWO v Bushnell & anor
We refer to the above matter. As you are aware, we act for the respondents in this proceeding.
The applicant should discontinue
1.We respectfully suggest that your client should discontinue the proceeding as our clients have no case to answer and/or alternatively because it is not appropriate for the proceeding to be further pursued. We urge that course for the following reasons.
2.There is no doubt that your client is obliged to act as a model litigant. She also has the obligations imposed by ss.37M and 37N of the Federal Court of Australia Act 1976 (Cth). Those oft cited considerations loom large given the circumstances of this matter.
No written contract
3.At paragraph 35 of the statement of claim reference is made to a contract for work between Sydney Wide Coating Pty Ltd (Sydney Wide) and IJ Build Pty Ltd (IJ Build) which the applicant alleges was not completed for reasons contained in the statement of claim.
4.On 5 April 2022 we requested a copy of the contract for work pursuant to rule 14.10(1). In response, you advised that:
“The term ‘contract for work’ in paragraph 35(c) is used generally to refer the nature of the arrangement between Best Fab Pty Ltd t/a IJ Build and Sydney Wide Pty Ltd and the work to be performed; it does not refer to any formal written contract which may exist between IK Built and Sydney Wide. Accordingly, there is no document referred to in the paragraph to be produced.”
5.Whilst not expressly stated, we understand from the above that on your instructions there was no written contract in place (as opposed to there being one but your client does not have a copy).
6.As previously advised, section 67G of the Queensland Building and Construction Commission Act 1991 (Qld) (the QBCC Act) requires all building contracts to be in writing. A failure to comply with this requirement is an offence that attracts a maximum penalty of 80 penalty units. The failure to comply with this provision means that there was no valid (i.e. lawful) contract in existence. At law there was no contract/work.
7.This is no mere technical quibble. The absence of a valid contract means your client cannot establish the “contract for services” aspect of item 7(c) of the table in s.342 of the Fair Work Act 2009 (Cth), such that there was no adverse action in breach of s.346.
No building licence
8.Section 42 of the QBCC Act requires a person to hold an appropriate licence to perform building work. A failure to hold a QBCC licence when performing building work is an offence that attracts between 250 and 350 penalty units depending on how many times the person has contravened that section.
9.We also observe that during the examination of Mr Carlo Aria, the director of Sydney Wide, on 12 August 2021 Mr Aria confirmed that Sydney Wide did not have a Queensland Building Construction Commission (QBCC) licence.1 Mr Aria also stated that IJ Build deliberately purported to engineer an arrangement in an attempt to avoid the need for Sydney Wide to comply with its lawful obligations under the QBCC Act while performing building work in Queensland.
10.It appears that Sydney Wide was not licenced to perform building work in Queensland. Once again, if they cannot have lawfully performed the work, then our clients cannot be found to have unlawfully interfered with the performance of the work. At law there was no work.
11.In the alternative, insofar as it is suggested that Sydney Wide was licenced because it successfully "piggy backed" upon the licence of IJ Build, which is denied, this is plainly a sham arrangement. We submit your client should distance herself from the shoddy practices of Sydney Wide and IJ Build, including by discontinuing the proceeding.
12.In the light of the above, it is difficult to see how the applicant pursuing this matter can possibly be in the public interest. Serious questions need to be asked about how the applicant, as a model litigant, can overlook the unlawful conduct of its witnesses in its pursuit for civil penalties against the respondents in this matter.
13.We therefore respectfully submit that the applicant’s case will not succeed at trial.
Offer to settle
14.For all of the reasons set out above, we are instructed to invite the applicant to resolve the proceeding on a walk away basis. That is, your client's claims would be discontinued with no order as to costs.
15.Our clients' offer is open for acceptance, in writing, until 4.00pm on 27 July 2023 after which time is will lapse. A failure to accept this offer will constitute an unreasonable act or omission which will cause our clients to incur further unnecessary costs in the conduct of this proceeding.
16.If our clients' reasonable offer is not accepted our clients will later rely upon this correspondence for the purposes of making an application under s.570 of the Fair Work Act 2009 (Cth) for their costs against the applicant.
17.Whilst it is necessary for us to wholly reserve our clients’ rights, and we do so, it is hope that this matter will soon be resolved in a satisfactory manner.
Yours faithfully”
By a letter dated 1 September 2023, the lawyers for the applicant made a counter-offer seeking to compromise the proceeding. That counter-offer would have required the admission by the respondents of contraventions by them of ss. 346 and 349 of the Act on the basis that the applicant would not pursue the alleged contraventions by the respondents of the provisions of s. 348 of the Act. The parties would otherwise present their own submissions as to penalty and the parties would bear their own costs of the proceeding. The counter-offer dated 1 September 2023 was as follows:
“Dear Colleagues
Fair Work Ombudsman v Jason Bushnell & Anor (BRG136/2022)
We refer to your letter dated 13 July 2023.
In your letter you raise the following issues:
•That there was no written contract between Sydney Wide Coating Pty Ltd (Sydney Wide) and Best Fab Pty Ltd trading as IJ Build (IJ Build), and as a result it is asserted that section 67G of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) operates such that there can be no contract ‘at law’.
•That Sydney Wide was not licenced to perform building work in Queensland, and that Sydney Wide and IJ Build took deliberate steps to try and avoid their lawful obligations under the QBCC Act.
You have alleged that these entities and individuals have committed offences under the QBCC Act. It is no trivial matter to make allegations of this nature and our client takes them seriously.
It is within that context that our client has considered the issues you have raised and formed the view that it remains consistent with our client's obligations both as a model litigant and as a party to litigation and in the public interest for our client to continue to pursue the matter. We address each issue in turn:
No written contract
In the letter, you assert that there was no written contract between IJ Build and Sydney Wide to perform the work Mr Aria and Mr Taleb Jome were attending the project to perform on 11 May 2021, such that section 67G of the QBCC Act operates to provide that there can be no contract 'at law'.
While we accept that section 67G of the QBCC Act creates an offence for failing to have a contract in writing, it does not nullify ‘at law’ a contract that does not comply with that requirement. We refer you to the Queensland Court of Appeal decision in Nichols v Earth Spirt Home Pty Ltd [2015] QCA 219.
In any event, even if our client's position on the construction of section 67G of the QBCC Act was incorrect, our client's case would not fail because it is not dependent on the specific terms of the contract between IJ Build and Sydney Wide. It is for this reason that the statement of claim is expressed in the manner it is.
Our client has alleged that Mr Bushnell engaged in conduct contravening sections 346, 348 and 349 of the Fair Work Act 2009 (Cth) (FW Act). Contraventions of sections 348 and 349 of the FW Act are independent from whether or not a contract existed between IJ Build and Sydney Wide; they relate only to alleged statements made by your client.
Further, while a relevant aspect of adverse action for the purpose of section 346 of the FW Act can be interference with a contract between IJ Build and Sydney Wide (being Item 7(c) of section 342 of the FW Act), that has not been alleged against your client.
No building licence
Your letter also asserts that Sydney Wide did not have an appropriate building licence to perform work on the project, and that Sydney Wide and IJ Build (via their employees) deliberately purported to engineer an arrangement to avoid their lawful obligations under the QBCC Act. In the alternative, it is asserted that the contracting arrangement is a sham, where Sydney Wide was licensed because it "piggy backed" upon the licence of IJ Build.
Our review of the QBCC Act indicates that there are lawful and valid exemptions to holding a contractor's licence under Schedule 1A of that Act. It reasonably follows that, even if Sydney Wide did not hold an appropriate licence in its own name, it was still permitted to perform work as a subcontractor (as it was in this case) for an entity holding a licence.
Offer to settle
While our client remains committed to pursuing the matter, we are instructed to make an offer (on a without prejudice basis) to resolve liability in the proceeding on the following basis:
1.The Respondents admit to contraventions of sections 346 and 349 of the FW Act in the terms pled in the statement of claim.
2.The Applicant will not pursue contraventions of section 348.
3.The parties will present their own submissions as to penalty.
4.The parties bear their own costs of the proceeding.
This offer is open for acceptance until 5:00pm on 6 September 2023.
Yours faithfully”
Arguments Based Upon Licensing and Contract Considerations
As is clear from the arguments advanced by both the lawyers for the respondents and the lawyers for the applicant, there was no agreement as to the validity of the contractual and licensing arguments raised by the respondents. Much time was spent on the first day of the hearing considering submissions as to whether there was any legal basis for the commencement of proceedings. In the absence of the Court having had the opportunity to make factual findings on matters which would have gone directly to the issues raised respectively by each of the parties after a trial, the Court was not in the position to come to any concluded view as to whether the contractual or licensing arguments raised on behalf of the respondents were valid or not.
The respondents had submitted that there was no basis upon which it could reasonably be argued that the first respondent had taken any adverse action against either one Mr Aria or one Mr Jome because those persons were engaged by Sydney Wide Coating Pty Ltd (Sydney Wide) to perform work which was claimed to be unlawful. It was asserted that a person performing building work in Queensland exceeding $3,300 in value was required to have a license pursuant to the provisions of s. 42 of the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’), and that because Sydney Wide did not hold any such license, no adverse action arose. It was further submitted that rather than the applicant taking action under the Act against the respondents for alleged contraventions of ss. 346, 348 and 349 of the Act, the applicant, by both the Commissioner and the Ombudsman, ought to have referred what was asserted to be an obvious license breach to the Queensland Building and Construction Commission for investigation.
It was submitted on behalf of the applicant, and it was conceded by Counsel for the respondent, that for the purpose of assessing whether proceedings had been instituted without reasonable cause or not, one must consider whether the proceeding had a reasonable prospect of success at the time it was instituted, and not whether the proceeding ultimately failed or not. [2] Another way of assessing whether the proceeding was instituted without reasonable cause was to ask whether the party bringing the claim should have known that the claim had no reasonable prospect of success based upon the facts apparent to the party and its lawyers prior to the filing of the claim. [3]
[2] Australian Workers Union v Leighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428 at [7].
[3] Baker v Patrick Projects Pty Ltd (No 2) [2014] FCAFC 166 at [9] – [10].
The Court was taken by Counsel for the applicant to sworn evidence given by several people during the course of compulsory examinations conducted by and on behalf of the predecessor to the applicant, namely the Australian Building and Construction Commission (ABCC). Based upon a consideration of that evidence, the Court is satisfied that there was a reasonable basis for the proceedings to be commenced against the respondents for contraventions of ss. 346, 348 and 349 of the Act. There was prima facie evidence of conduct on the part of the first respondent which could constitute alleged contraventions of ss. 346, 348 and 349 of the Act. That evidence was relevantly the evidence of the following persons:
(a)Compulsory examination of Mr Aria at Court Book (CB) Vol. 2 at 401.20 – 402.34; 403.20 – 404.21.
(b)Compulsory examination of Mr Jome at CB Vol. 2 at 468.10 – 470.7.
(c)Compulsory examination of Mr Zuccara at CB Vol. 1 at 281.26 – 282.26; 283.7 - .42.
The Court finds that there is no merit to the submissions made on behalf of the respondents to the effect that the proceeding was commenced without reasonable cause.
The Respondents’ Offer to Settle
The offer to settle was made at a late stage of the proceeding prior to trial. During the course of the hearing on the question of costs, Counsel for the applicant conceded that those who were intended to be called as witnesses on behalf of the applicant on the question of coercive conduct, and in respect of the alleged contraventions of the Act, had not sworn affidavits which had been filed in the proceedings. There was an unpreparedness on the part of such intended witnesses to do so. Whether or not such witnesses had become uncooperative or even hostile to the applicant was not disclosed to the Court.
What is clear is that an offer to settle was made at a time shortly prior to trial when it was reasonably to be expected that the applicant would have by then assessed the strengths and weaknesses of its case, so as to be in a position to appropriately consider the terms of an offer to settle made on a walk away basis. As it transpired, the applicant has, by indicating its intention to discontinue the proceeding, effectively taken a course of action consistent with the applicant’s submissions in respect of the discontinuance of the proceeding in one respect, but has sought to do so on the eve of trial in circumstances where substantial costs associated with preparing for trial, and briefing counsel, have already been incurred.
The Court finds that in the particular facts of this matter, it was unreasonable, at such a late stage of the proceeding, for the applicant not to have accepted the walk away offer to settle. Had the applicant accepted the offer, valuable Court time would have been saved, and the applicant would not have incurred its own substantial costs including the briefing of counsel for trial.
In so finding, the Court has had regard to the judgment of the Full Court of the Federal Court in Shea v Energy Australia Services Pty Ltd (No 2) [2015] FCAFC 14 at [10] per Rares, Flick and Jagot JJ where it was said:
“[10]However, the power to order costs, once a criterion in s 570(2) has been satisfied, is discretionary and should be exercised, not so as to impose a penalty or punishment on the losing party but to provide an appropriate means of compensating the successful party having regard to all of the circumstances: see Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 at 62-65 [24]- [34] per Gleeson CJ, Gummow, Hayne and Crennan JJ; Kazar v Kargarian [2011] FCAFC 136; (2011) 197 FCR 113 at 115-117 [2]- [9] per Greenwood and Rares JJ.”
The Court has also had regard to the judgment of Allsop J in Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd [2005] FCA 860 at [12] insofar as His Honour was there drawing a distinction between costs in proceedings commenced by an entity having public responsibility for the administration of an important piece of Commonwealth legislation, as opposed to costs in ordinary civil litigation proceedings. Having considered His Honour’s judgment, the Court is nonetheless of the view that in the circumstances of the present matter, no good reason has been advanced on behalf of the applicant as to why it ought not pay the costs of the respondents incurred after 4:00pm on 27 July 2023, that being the time and date specified by the respondents’ lawyers within which the offer to settle was open for acceptance.
Quantum of Costs
The issues raised by the respondents in the letter of offer of 13 July 2023 had not been raised in defences filed on behalf of the respondents, and neither was the Court taken to any submission earlier made by the respondents to the applicant to similar effect. Had the respondents raised the issues countenanced in their letter of offer at an early stage in the proceedings, substantial costs incurred well prior to 27 July 2023 would have been saved.
In circumstances where a respondent party fails to forensically identify issues which would render the claims of the applicant untenable, and thereafter communicate such matters to the applicant’s lawyers at an early stage of the proceedings, the Court does not consider that the failure on the part of an applicant to accept an offer to settle ought to give rise to an adverse costs order being made against the applicant on an indemnity basis.
The Court is satisfied that the applicant’s unreasonable act in failing to accept the offer of the respondents ought to give rise to a costs order against it on a party/party basis as and from 4 pm on 27 July 2023.
And it is so ordered.
I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Egan. Associate:
Dated: 21 September 2023
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