Fair Work Ombudsman v NSW Motel Management Services Pty Ltd
[2018] FCCA 508
•21 February 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v NSW MOTEL MANAGEMENT SERVICES PTY LTD & ORS | [2018] FCCA 508 |
| Catchwords: INDUSTRIAL LAW – Costs application by applicant for costs arising from interlocutory application by second and third respondents – whether unreasonable act or omission – whether caused applicant to incur costs. |
| Legislation: Fair Work Act 2009, s.570 Evidence Act 1995, ss.128, 192A |
| Cases cited: Fair Work Ombudsman v NSW Management Service Pty Ltd & Ors (No.1) [2017] FCCA 416 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | NSW MOTEL MANAGEMENT SERVICES PTY LTD |
| Second Respondent: | MICHAEL PARKES |
| Third Respondent: | ROWENA SIOCO PARKES |
| File Number: | MLG 661 of 2016 |
| Judgment of: | Judge O'Sullivan |
| Hearing date: | 20 February 2018 |
| Date of Last Submission: | 20 February 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 21 February 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Avallone |
Solicitors for the Applicant: | Fair Work Ombudsman |
Counsel for the Respondents: | Mr Albert |
Solicitors for the Respondents: | Stonier & Associates |
ORDERS
There be no order as to costs and the application in a case filed on 30 November 2017 be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 661 of 2016
| FAIR WORK OMBUDSMAN |
Applicant
And
| NSW MOTEL MANAGEMENT SERVICES PTY LTD |
First Respondent
| MICHAEL PARKES |
Second Respondent
| ROWENA SIOCO PARKES |
Third Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
Introduction
These reasons concern an application for costs as a result of an interlocutory application made by two of the respondents to these proceedings which was dismissed for the reasons set out in Fair Work Ombudsman v NSW Motel Management Services Pty Ltd & Ors (No.2) [2017] FCCA 2759 .
Background
The substantive proceedings were commenced on 31 March 2016 by the Fair Work Ombudsman (“the applicant”) against NSW Motel Management Services Pty Ltd (“the first respondent”), Michael Parkes (“the second respondent”) and Rowena Siocco Parkes (“the third respondent”).
In the substantive proceedings the applicant alleged the abovenamed respondents contravened, or were involved in contraventions by the first respondent of various provisions of the Fair Work Act 2009 (Cth) (“the FW Act”), the Fair Work Regulations 2009 (Cth) and applicable modern awards arising from the employment of four Philippine nationals between 2013 and 2014 at three motels operated by the first respondent in Halls Gap, Queanbeyan and Taree.
After the substantive proceedings had been commenced, but before the trial began, an issue arose as to whether the applicant ought pay the abovenamed respondents’ costs of a directions hearing. For the reason set out in Fair Work Ombudsman v NSW Motel Management Services Pty Ltd & Ors [2017] FCCA 416 no order for costs was made.
The specific background to this application is set out in reasons in Fair Work Ombudsman v NSW Motel Management Services Pty Ltd & Ors (No.2) [2017] FCCA 2759 (“NSW Motel No. 2”).
Costs application
Applicant’s position
Following the dismissal of the interlocutory application by the second and third respondents for the reasons set out in NSW Motel No. 2 the parties agreed on a timetable to deal with the issue of whether the applicant should have its costs for that application. The applicant filed an application for costs on 30 November 2017 and an outline of submissions on 7 December 2017. In those submissions the applicant contended:
“1. On 3 August 2017, two days into a trial listed with an estimate of three days, counsel for the Second and Third Respondents announced that the Second and Third Respondents objected to giving evidence in the proceeding under section 128 of the Evidence Act 1995 (Cth) (s.128 Objection).[1] The Respondents had not yet opened their case.[2] Neither of the Second or Third Respondents had given evidence.[3] Neither was under any compulsion to give evidence.[4] And yet counsel for the Second and Third Respondents pressed the objection. As a consequence of the manner and timing of the objection, the trial was adjourned and directions were made for the Second and Third Respondents to file an application in a case and any evidence and submissions in support.[5]
2. Having been asked by the Court on 3 August 2017 to “nail your colours to the mast”,[6] the Second and Third Respondents had three opportunities to clarify their objection. The first was in their submissions dated 11 August 2017.[7] The second opportunity was their solicitors’ letter dated 22 August 2017 which was written in response to correspondence from the Applicant dated 18 August 2017 seeking clarification of the objection.[8] The third opportunity was the Second and Third Respondents’ submissions in reply dated 26 October 2017.[9] Despite these three opportunities, the scope of the Second and Third Respondents’ objection was ambiguous and unclear.[10]
3. The objection was premature and, to the extent that it had been made, there were no reasonable grounds for the objection.[11]
4. The manner in which the Second and Third Respondents pressed their objection, including its timing, its scope, and the Second and Third Respondents’ failure to clarify or withdraw the objection prior to or during the hearing of 1 November 2017, were “unreasonable act[s] or omission[s]” within the meaning of section 570(2)(b) of the Fair Work Act 2009 (Cth) (FW Act). This conduct caused the Applicant to incur costs,[12] and the Court should exercise its discretion to order that the Second and Third Respondents pay the Applicant’s costs of opposing the objection.
5. On 11 August 2017, the Second and Third Respondents filed an application in a case seeking a suppression order under section 15 of the Federal Circuit Court Act 1999 (FCC Act).[13] This was subsequently replaced by their amended application in a case dated 4 September 2017 (Amended Application).[14] The Amended Application sought the making of a suppression order under Part 6A of the FCC Act in relation to documents relating to the Second and Third Respondents’ objection. The Second and Third Respondents’ initial reliance on section 15 of the FCC Act was not pressed.
6. By the time that the Second and Third Respondents first applied for a suppression order on 11 August 2017, the proceedings had been on foot for many months. There had been a number of interlocutory hearings[15] and the trial was already part heard on 2 and 3 August 2017 with the Applicant having closed her case. All of those proceedings, even the Second and Third Respondents’ counsel indicating the grounds of their objection on the grounds of self-incrimination on 3 August 2017, had been in open court. There was no suggestion of a suppression order being sought at any of those stages. Evidence filed by the Second and Third Respondents in support of their application for a suppression order[16] made clear that “…the allegations made against the respondents have already been the subject of publicity and to adopt the language used by the parties the “horse has bolted”.”[17]
7. The Second and Third Respondents’ Amended Application was dismissed for the reasons set out in FWO v NSW Motel Management (No 2) at [78]-[79], including that the Second and Third Respondents’ objections to giving evidence were “intricately connected to the application for a suppression order”.[18] The heavy onus of setting aside the principle of open justice had not been discharged.
8. In the circumstances, the Second and Third Respondents’ conduct in making and pressing the Amended Application was an “unreasonable act or omission” within the meaning of section 570(2)(b) of the FW Act, which caused the Applicant to incur costs. The Applicant seeks that the Court exercise its discretion to order that the Second and Third Respondents pay the Applicant’s costs of opposing the Amended Application.
9. The Applicant seeks an order for the payment of her costs, for the period of 11 August 2017 (the date of the Second and Third Respondents’ application for a suppression order and their evidence and submissions in support of their objection and the application) to 14 November 2017 (the date of the interlocutory judgment and the related mention), on a party/party basis. Despite having incurred additional costs in relation to disbursements,[19] and internal legal costs[20] which are capable of being the subject of a costs order,[21] the Applicant does not seek to recover those costs.[22]
10. The Applicant seeks that her costs be fixed at $10,063, calculated pursuant to Schedule 1 of the Federal Circuit Court Rules 2001 (FCC Rules) and in accordance with Attachment 1 to these submissions.”
[1] Affidavit of George Stavros Raptis affirmed 30 November 2017 (Second Raptis Affidavit) at [8]. See also Annexure GSR-3 (p. 9 from line 24 to p. 10 at line 6, and p. 15 at lines 36-42) and Fair Work Ombudsman v NSW Motel Management Services Pty Ltd & Ors (No.2) [2017] FCCA 2759 (FWO v NSW Motel Management (No 2)) at [9]-[10].
[2] Second Raptis Affidavit at [8], Annexure GSR-3 (p.8 at lines 39-44). See also FWO v NSW Motel Management (No 2) at [9]-[10].
[3] FWO v NSW Motel Management (No 2) at [41].
[4] FWO v NSW Motel Management (No 2) at [44].
[5] Second Raptis Affidavit at [9], Annexures GSR-3 (p. 15 at lines 8-22, p. 21 at lines 28-36) and GSR-4 (pp. 29-30).
[6] Second Raptis Affidavit, Annexure GSR-3 (p. 14 at lines 1-2).
[7] See the Court Book prepared by the Fair Work Ombudsman for the 1 November 2017 interlocutory hearing and provided to the Court and to the Second and Third Respondents’ solicitors and counsel on 1 November 2017 (FWO’s Interlocutory Application Court Book) at Tab 3, pp. 7-18.
[8] See Second Raptis Affidavit at [12] and [14], Annexures GSR-5 (pp. 33-34) and GSR-6 (p. 36).
[9] FWO’s Interlocutory Application Court Book at Tab 6, pp. 62-66.
[10] FWO v NSW Motel Management (No 2) at [55].
[11] FWO v NSW Motel Management (No 2) at [51]-[55].
[12] Second Raptis Affidavit at [34]-[35].
[13] FWO’s Interlocutory Application Court Book at Tab 1, pp. 1-3.
[14] FWO’s Interlocutory Application Court Book at Tab 2, pp. 4-6.
[15] 12 May 2016, 16 September 2016, 2 December 2016, 10 March 2017, 28 June 2017.
[16] Affidavit of Sally Stonier affirmed 11 August 2017 (FWO’s Interlocutory Application Court Book at Tab 21, pp. 899-944).
[17] FWO v NSW Motel Management (No 2) at [78].
[18] FWO v NSW Motel Management (No 2) at [79].
[19] Second Raptis Affidavit at [26]-[29].
[20] Second Raptis Affidavit at [16] and [31].
[21] Commonwealth Bank of Australia v Hattersley [2001] NSWSC 60 at [21]; Ly v Jenkins & Ors [2001] FCA 1640 at [160]; Colan Products Pty Ltd v Luxon Pty Ltd (No.2) [2002] FMCA 90 at [13]; Deputy Commissioner of Taxation v Debaugy [2012] FMCA 451 at [17]; and Hamlin v The University of Queensland (No 3)[2013] FCCA 1129 at [6]-[13].
[22] Second Raptis Affidavit at [30].
The applicant’s submissions then went on to address the “Principles relating to section 570(2)(b)” before continuing at paragraphs [16] to [33] to address what was submitted to be the unreasonable acts/omissions of the second and third respondents.
Second and third respondents’ position
Then, and also pursuant to a timetable agreed to by the parties and given effect to by orders made on 1 December 2017, the second and third respondents’ filed an outline of submissions on 21 December 2017 which contended inter alia:
“1. The Applicant can receive an order for costs only if the Court is satisfied that the Respondents’ ‘unreasonable act… caused the [Applicant] to incur the costs’. For the reasons set out below, the Court cannot be so satisfied in respect of the invocation of s 128 of the Evidence Act 1995 (Cth) (“the objection”) nor the application for an order under Part 6A of the Federal Circuit Court of Australia Act 1999 (Cth) (“the application”) in this proceeding.
…”
The second and third respondent’s submissions then went on to address why there should be no order as to costs at paragraphs [3] to [18].
Applicant’s position in reply
Finally, and also pursuant to the agreed timetable, on 11 January 2018 the applicant filed submissions in reply which took issue with the claims made in the second and third respondents’ submissions.
Oral Submissions
On 20 February 2018 the parties had the opportunity to supplement those written submissions. For that purpose, the parties were referred to two recent decisions of the Federal Court in Cleland v Skycity Adelaide Pty Ltd [2017] FCAFC 22 and Construction Forestry Mining and Energy Union v Australian Building and Construction Commission [2018] FCAFC 4.
Counsel for the applicant relied on the written submissions referred to earlier and by reference to Cleland (supra) submitted the acts or omissions of the second and third respondents in the interlocutory application were always unreasonable and the only party seeking to engage in hindsight (in the sense referred to in Cleland (supra)) was the second and third respondents.
Counsel for the second and third respondents also relied on the written submissions and submitted by reference to the decision in Australian Securities and Investments Commission; in the matter ofWhitebox Trading Pty Ltd v Whitebox Trading Pty Ltd [2017] FCA 324 that the course the proceedings took in relation to their interlocutory application was analogous to the process in s.192A of the Evidence Act 1995. Viewed against these provisions and the stage of the proceedings Counsel for the second and third respondents submitted their acts could not be held to be unreasonable in the sense referred to in the authorities.
In reply Counsel for the applicant took the Court to the decision TKWJ v R [2002] HCA 46, and maintained the issue raised by the second and third respondents which occasioned the interlocutory hearing could have been avoided if they had waited until they were under compulsion. It was submitted it was significant that the second and third respondents had not referred to s.192A of the Evidence Act 1995.
Relevant provisions as to costs
The application for costs falls to be determined by reference to the provisions of s.570 of the FW Act which provides:
“(1)A party to proceedings (including an appeal) in a court (including a court of a State or Territory) exercising jurisdiction 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
…”
In Ryan v Primesafe [2015] FCA 8, Mortimer J dealt with an application for costs arising from proceedings under the FW Act. In relation to the provisions in s.570 of the FW Act generally it was said:
“64. I accept the general import of the authorities relied on by the applicant and Mr McDonald in their written submissions about the significance of the threshold set by s570(2) of the Fair Work Act. Although some of the authorities relied on dealt with the predecessor provisions to s570, there is no difference in substance in the way the threshold is expressed. The discretion conferred by the confined terms of s570(2)should be exercised cautiously, and the case for its exercise should be clear: see Saxena v PPF Asset Management Ltd [2011] FCA 395at [6] per Bromberg J. The reason for caution is the potential for discouraging parties’ pursuit in a complete and robust way of the claims for contravention which they seek to make under the Fair Work Act, or the defence of such claims. The policy behind s570 is to ensure that the spectre of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular, in my opinion) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings. It is an access to justice provision. Insofar as it operates to the benefit of respondents, it is designed to ensure respondents feel free to pursue arguable legal and factual responses to the claims made against them. There is an almost identical provision in s611 of the Fair Work Act, giving the Fair Work Commission a similar costs power, conditioned by similarly-worded considerations. The predecessor provisions, and the conscious broadening of the statutory terms used in s570, are traced by the Full Court in Australasian Meat Industry Employees’ Union v Fair Work Australia (No 2) (2012) 203 FCR 430; [2012] FCAFC 103 at [3]- [4] per Jessup and Tracey JJ.
65. None of those propositions deny the Court’s ability to find that one or both of the two preconditions expressed in
ss570(2)(a) and (b) exist where the factual circumstances warrant it. The legislative policy behind a provision such as s570(1) is not inconsistent with the requirements for proceedings to be conducted reasonably, fairly and efficiently. As an access to justice provision, it contemplates parties and their legal representatives will access the Court responsibly.”In Tsilibakis v Transfield Services (Australia) Pty Ltd (No. 2) [2015] FCA 1048 White J said at [7] to [8]:
“It is not necessary to canvass in detail the authorities bearing upon the application of s 570. The relevant principles are well established. Section 570 and its predecessors are to be understood as reflecting a legislative policy of protecting parties to proceedings under the FW Act from orders for costs so that parties with a genuine grievance will not be discouraged from pursuing a remedy to which they may be entitled, or from pursuing litigation in the manner which they deem best, for fear of an adverse costs order: Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143, (2008) 170 FCR 574 at [29]; Ashby v Slipper (No 2) [2014] FCAFC 67, (2014) 314 ALR 84 at [35]. The occasions upon which costs will be awarded under s 570 are likely to be exceptional: Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission [2006] FCAFC 199; (2006) 156 FCR 275 at [60].
The questions of whether a party’s act or omission was unreasonable and whether such an act or omission has caused the other party to incur costs are to be determined having regard to the particular circumstances of each case: Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879; (2007) 162 FCR 392 at [27][28]. The fact that a party has conducted the litigation inefficiently, has made concessions relatively late, may have acted in a different or more timely fashion, or has adopted a genuine but misguided approach will be relevant to, but are not conclusive of, the party having acted unreasonably in the relevant sense: Clarke at [29][30]...”.
The effect of s.570 of the FW Act is to limit the Court’s power in relation to any order for costs in respect of proceedings under the FW Act. As a result the Court may only order a party to such proceedings to pay the costs of another party only if the Court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause, or that the party’s unreasonable act or omission caused the other party to incur costs.
No order for costs can be made unless it is demonstrated one or more of the abovementioned exceptions in s.570(2) of the FW Act has been established. Even then, the award of costs remains within the discretion of the Court (cf Ashley v Slipper (No 2) [2014] FCAFC 67).
Given the submissions of the parties, I now turn to consider the ground upon which the applicant relies in light of the approach to the relevant provisions set out about.
Consideration
The proceedings are governed by s.570 of the FW Act. The basis for an award of costs against the respondents under s.570(2)(b) of the FW Act that is alleged by the applicant is unreasonable act or omission by the second and third respondents and that this caused her to incur costs. The applicant relies on the affidavit of their solicitor in support of such an order and the submissions referred to earlier in support of that application.
Whilst pursuant to s.570(2)(b) of the FW Act the Court may order a party to pay costs if the Court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs, such an order is discretionary.
For the purposes of s.570(2)(b) of the FW Act, the Court must be satisfied that two criteria have been fulfilled, as set out in Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574 (“Clarke”) they are:
“(a) that a party must have engaged in an unreasonable act or omission; and
(b) that the unreasonable act or omission must have caused another party to incur costs in connection with the proceedings.”
The authorities including Clarke (supra) at [29] cautioned against the use of the discretion with undue haste and that the “limited discretion”…“ought not become the basis for arguments about costs in relation to any and every transgression in the conduct of a case” (see Saxena v PPF Asset Management [2011] FCA 345 at [6]).
The first question that arises is whether the second and third respondents acted unreasonably in relation to the interlocutory proceedings referred to in NSW Motel No. 2. The second question is whether the respondents’ unreasonable acts or omissions caused the applicant to incur costs.
Whilst not referred to in submissions the decision in Health Services Union NSW v Peter Mylan [2014] NSWSC 1026 deals with an s.128 objection in those proceedings and used the vehicle of s.192A to do so. However it appears this was not during the course of a trial.
Other authorities, however, albeit in the context of criminal trials, refer to a similar process (see for example Montgomery v R [2013] NSW CCA 73 and R v BI (No. 3) [2016] ACT SC 356).
In those circumstances, and given the course of the proceedings on 3 August and 23 August 2017 (and the concession no costs were reserved) I am not satisfied the second and third respondents acts were unreasonable in the sense referred to in the authorities.
Finally in light of the provisions in s.570, and the decision and costs outcome in Construction Forestry Mining and Energy Union v Australian Building and Construction Commission [2018] FCAFC 4, I would not in any event exercise my discretion to order costs.
Conclusion
Accordingly there will be no order as to costs.
I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Judge O'Sullivan
Date: 2 March 2018
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