Prados v Chief Commissioner of Police for the State of Victoria (No.2)
[2018] FCCA 3444
•30 November 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PRADOS v CHIEF COMMISSIONER OF POLICE FOR THE STATE OF VICTORIA (No.2) | [2018] FCCA 3444 |
| Catchwords: INDUSTRIAL LAW – Costs – where proceeding was set aside as not engaging a Federal matter and no claim within accrued jurisdiction open – where respondent answered applicant’s demand in pointing to authority which indicated claim was destined to fail – where s 570 of Fair Work Act 2009 (Cth) establishes default provision that parties bear their own costs – where court satisfied that party instituted proceeding without reasonable cause and that unreasonable act cause respondent to incur costs – where ordinary basis for costs in Federal Circuit Court is that costs be calculated upon items of costs provided by Schedule to Federal Circuit Court – where not usual to make order for payment of taxed costs – order made that applicant pay costs – parties to consult as to items of costs which should be allowed. |
| Legislation: Fair Work Act 2009 (Cth), ss.50, 570 Federal Circuit Court of Australia Act 1999 (Cth), s.79 Federal Circuit Court Rules 2001 (Cth), rr.21.02, 21.04, 21.10 Federal Court of Australia Act 1976 (Cth), s.43 |
| Cases cited: Ashby v Slipper (No.2) (2014) 144 ALD 10 |
| Applicant: | LEIGH PRADOS |
| Respondent: | CHIEF COMMISSIONER OF POLICE FOR THE STATE OF VICTORIA |
| File Number: | MLG 2495 of 2017 |
| Judgment of: | Judge A Kelly |
| Hearing date: | 27 November 2018 |
| Date of Last Submission: | 27 November 2018 |
| Orders pronounced | 27 November 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 30 November 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Millar |
| Solicitors for the Applicant: | McDonald Murholme Solicitors |
| Counsel for the Respondent: | Mr Follett |
| Solicitors for the Respondent: | Clayton Utz |
ORDERS
The applicant pay the respondent’s costs of the proceeding to be calculated in accordance with the items of costs and disbursements fixed by Schedule 1 of the Federal Circuit Court Rules 2001 (Cth).
There be a certificate for advocacy.
Direct that by 4.00pm on Tuesday, 4 December 2018, the respondent furnish an itemised claim for costs in electronic format to the applicant.
Direct that by 4.00pm on Tuesday, 11 December 2018, the applicant file and serve a response to the itemised claim for costs in electronic format indicating where he agrees or disagrees with the claim for costs.
To the extent that there be disagreement on any particular item of cost, the quantum of costs be determined on the papers.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2495 of 2017
| LEIGH PRADOS |
Applicant
And
| CHIEF COMMISSIONER OF POLICE FOR THE STATE OF VICTORIA |
Respondent
REASONS FOR JUDGMENT
By an order made on 16 November 2018, this proceeding was set aside and directions were given regulating any application for costs. On that date, reasons for judgment were given. These reasons should be read with those reasons.
The respondent, who applies for costs on a party-party basis, accepts that any entitlement to costs must confront s 570 of the Fair Work Act 2009 (Cth) (Act). By s 570 of the Act, a party to proceedings in a court in relation to a matter arising under the Act may be ordered to pay costs incurred by another party only in accordance with, relevantly, sub-s 570(2). Sub-section 570 reads:
(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 respondent submits that the court should be satisfied the proceeding was instituted without reasonable cause and that the institution of the proceeding constituted an unreasonable act which caused it to incur costs.
The present proceeding is a proceeding in relation to[1] a matter arising under the Act notwithstanding the conclusion that no federal matter was in existence.
[1]Stanley v Service to Youth Council Inc (No.3) (2014) 225 FCR 357, [25] (White J).
As the respondent correctly submitted, the relevant principles were distilled in Fair Work Ombudsman v Skilled Offshore (Australia) Pty Ltd (No.2)[2] (Gilmour J) and King v Patrick Projects Pty Ltd (No.2)[3] (Gilmour J). As Gilmour J stated in Skilled Offshore those principles are uncontroversial. His Honour described them as follows:
Satisfaction of s 570 of the FW Act as an express limitation on the Court’s broad discretion to award costs under s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act): s 43(1)(c); Melbourne Stadiums Ltd v Sautner.[4]
The purpose of s 570 is to ensure that litigants, including respondents, are not deterred from “complete[ly] and robust[ly]” defending claims for contravention: Ryan v Primesafe.[5]
In light of this purpose, “costs will rarely be awarded under [s 570] and exceptional circumstances are required to justify the making of such an order”: Ashby v Slipper (No.2),[6] adopting what was said in Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission,[7] which concerned the similar provision in the former Workplace Relations Act 1996 (Cth). Courts should be particularly cautious before finding that a party has an engaged in an unreasonable act or omission, lest that discourages parties from pursuing litigation in the manner which they deem best: Construction, Forestry, Mining and Energy Union v Clarke[8] (CFMEU v Clark).
That a party has a “self-evidently weak case” is not enough to warrant a costs order. There must be “a higher level of criticism or disapprobation”: Clarke v Dixie Cummings Enterprises Pty Ltd.[9] Indeed, costs were not awarded against the FWO in Fair Work Ombudsman v Valuair Limited (No.3)[10] even though elements of the FWO’s case were “artificial and unsatisfactory” and “potentially bizarre”: at [12]-[17] cross-referencing to the liability decision – Fair Work Ombudsman v Valuair Ltd (No.2).[11]
Where a party relies on s 570(2)(b), the Court must be satisfied of two matters: there must be an unreasonable act or omission; and that act or omission must have “caused” costs to be incurred: CFMEU v Clarke.[12]
The pursuit of a case by a party in circumstances where, on the materials before the party at the time, there was no substantial prospect of success may constitute an unreasonable act or omission: Reeve v Ramsay Health Care Australia Pty Ltd (No.2).[13] However, that an argument is ultimately not accepted does not mean it is unreasonable to put it: Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No.2).[14]
Even if the Court is satisfied of a s 570(2) precondition, it retains a discretion not to order costs.[15]
[2][2015] FCA 1509, [7]-[113].
[3][2017] FCA 388, [7]-[15].
[4](2015) 229 FCR 221 at [140] per the majority.
[5](2015) 323 ALR 107 at [64].
[6](2014) 144 ALD 10 at [35].
[7](2006) 156 FCR 275 at [60].
[8](2008) 170 FCR 574 at [29].
[9] [2013] FCA 987 at [14].
[10] [2014] FCA 1182.
[11] (2014) 224 FCR 415.
[12] at [28].
[13][2012] FCA 1322 at [17]-[18].
[14][2014] FCA 351 at [11].
[15]Corinthian at [12].
In Patrick Projects, Gilmour J further stated[16] that:
In addition to the principles that I have outlined above, it is well-established that the Court’s powers to make cost orders pursuant to s 570(2) of the Fair Work Act must be exercised cautiously for public interest reasons: Australian Workers Union v Leighton Contractors Pty Ltd (No.2).[17]
Costs orders made pursuant to protective provisions such as s 570(2) of the Fair Work Act are not designed to punish litigants for undertaking an unreasonable course of action: Kanan v Australian Postal and Telecommunications Union.[18] Rather, a cost order is made on the basis that a measure of indemnity should be conferred upon respondents for the costs incurred in responding to unreasonably instituted proceedings: Kanan.[19]
[16][2017] FCA 388, [9]-[10].
[17](2013) 232 FCR 428 at [7]-[8].
[18](1992) 43 IR 257 at 265.
[19] at 265.
I apply the foregoing principles in respect of this application.
I note that in Patrick Projects, his Honour made an order for indemnity costs where, on the facts, the applicants’ had instituted proceedings in the Federal Court of Australia based on the same legal and factual dispute which had been determined by the Fair Work Commission. Gilmour J recounted the procedural history of that matter which had included that it was struck out as disclosing no reasonable cause of action and further that the institution of the proceeding was held to be an abuse of process.[20] His Honour held[21] that viewed objectively, the applicants’ knowledge of the reasons of the FairWork Commission would have reasonably supported a conclusion that the attempt to re-litigate the same issue in the Federal Court was made “without reasonable cause” for the purposes of s 570(2)(a) of the Act. While the exercise of a discretion in relation to costs in another proceeding does not dictate the result of an application for the favourable exercise of discretion in another case, the analysis of the issues in Patrick Projects is nonetheless instructive and of some assistance.
[20][2017] FCA 388, [4], [16]-[17].
[21][2017] FCA 388, [22].
The applicant opposes the application for costs.
I accept the applicant’s submission that the exercise of power respecting costs is governed and constrained by s 570. I also accept that the ‘default’ position established by s 570 in relation to matters to which it applies is that parties will generally bear their own costs. The policy reason which underlies s 570 is that the fear of costs ought not be permitted to discourage genuine litigants from pursing claims with reasonable cause.[22] For that reason, the discretion is to be used carefully, cautiously and only in very clear cases.[23] Contrastingly, the care and caution expounded by Bromberg J in the authorities cited, did not deter his Honour (or the Full Court) from making an order for costs upon the hearing and determination of Energy Australia Yallourn.[24]
[22]Hutchinson v Comcare (No.2) [2017] FCA 370, [7] (Bromberg J).
[23]Saxena v PPF Asset Management Ltd [2011] FCA 395, [6] (Bromberg J).
[24] His Honour concluded that s 570 was not engaged by reason of the conclusion that no matter existed: [2018] FCA 47, [17]. The Full Court concluded that s 570 did apply: [2018] FCAFC 146, [101].
The question whether the proceeding was instituted without reasonable cause is to be assessed at the time the time when the proceeding was instituted.[25] The test is not whether the application might have been successful but whether the application should not have been made.[26] In this connection, the applicant submitted that a misguided approach without more, was not conclusive of a party having acted unreasonably. In support of this submission the applicant relied upon Construction, Forestry, Mining and Energy Union v Clarke.[27] There Tamberlin, Gyles and Gilmour JJ held that:
As the authorities indicate, 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. (citations omitted)
[25]Australian Workers Union v Leighton Contractors (No.2) [2013] FCAFC 23, [7] (Dowsett, McKerracher and Katzman JJ).
[26]Church v Eastern Health [2014] FWCFB 810, [29]ff.
[27](2008) 170 FCR 574, [29].
I find that the applicant instituted this proceeding without reasonable cause in circumstances where it had no real or substantial prospect of success. I make that assessment of the matter considered at the time the proceeding was instituted. I consider that this proceeding should not have been brought. That it had no such prospect was clear in combined circumstances that the facts upon which the proceeding was based were almost entirely uncontroversial and the applicant had knowledge of the issues that were to be determined and had been determined by the arbitral panel whose decision was not subject to appeal. This had been the agreed basis on which the arbitration was established.
Objectively, the applicant, and those who represented him, knew or ought to have known that the very issue upon which it was sought to ground a claim for contravention of s 50 had been decided by the arbitral panel that conducted the arbitration in which the applicant had participated and in which he had enjoyed a measure of success, albeit not to the full extent that he sought.
The parties were represented by experienced practitioners each of whom profess to be specialists in this sphere. I do not accept that the discretion to order costs was not open to be exercised by reason that, as was suggested, it was for the respondent to have forewarned the applicant’s lawyers of the decisions of a single justice and Full Court in Energy Australia Yallourn Pty Ltd v AMWU.[28] Even if this was a relevant consideration, I consider that those decisions stand as recent illustrations of the application of the seminal statement of principle in Dobbs v National Bank ofAustralasia[29] which has been applied in a litany of cases (some of which were addressed in the first Reasons).[30]
[28][2017] FCA 1245, [2018] FCAFC 146.
[29](1935) 53 CLR 643, 652-654.
[30]First Reasons at [127]ff.
Upon the orthodox application of those principles, it should have been known and considered that the effect of the Panel’s determination was to conclusively determine that the applicant’s entitlement to a COT Allowance was conclusively established by that determination and that the asserted causes of action were extinguished by that determination such that that there was nothing upon which an alleged breach of s 50 could be grounded.[31]
[31]First Reasons, [150]-[151].
Nor do I consider that the length of the first reasons is strongly suggestive of a conclusion that there were issues of substance that were to be determined. To the contrary, as the First Reasons made clear,[32] it was necessary to examine in detail the facts and circumstances giving rise to the application because the application of settled principles required that this examination occur. The length of that analysis was largely a reflex of the lengthy of the parties’ industrial dispute.
[32]First Reasons, [19], [105], [170], [184].
I do not accept that Energy Australia was readily distinguishable from the present case. The present case was arguably stronger than Energy Australia because the applicant was a party directly engaged in the arbitration. The applicant was not merely in the position of a privy to an industrial organisation which was pursuing the application on his behalf. As the submissions made to the Panel expressly stated, they had been filed with the endorsement of the named applicants, one of whom was the applicant in this proceeding.
In the exercise of the residual discretion as to costs I am not satisfied that that I should not make an order in the respondent’s favour. There is no good reason why costs ought not follow the event. The discretionary factors relied upon by the applicant do not weigh in favour of a conclusion that the respondent ought not be entitled to costs. In this case, the respondents brought to the attention of the applicant’s solicitors a leading authority on abuse of process and had put on the evidence which demonstrated facts which were objectively known to the parties and not in any serious contest. I reject the submission that the respondent had not ‘come with clean hands.’ Its request for a deed of release was explicable in light of the recommendation made by the FairWork Commission. The applicant had rejected out of hand the offer to pay him his entitlement and defaulted to a position of pressing for what he considered to be his full entitlement. That he chose to institute this proceeding ignored facts which were known and established by the decision of the arbitral panel.
A question arises as to the nature of the order that should be made. Section 79 of the Federal Circuit Court of Australia Act 1999 (Cth), relevantly provides:
(2) The Federal Circuit Court of Australia or a Judge has jurisdiction to award costs in all proceedings before the Federal Circuit Court of Australia (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs must not be awarded.
(3)Except as provided by the Rules of Court or any other Act, the award of costs is in the discretion of the Federal Circuit Court of Australia or Judge.
Division 21.2 of the Federal Circuit Court Rules 2001 (Cth) provides for costs and disbursements. In making an order for costs, the court may set the amount costs, set the method by which costs are to be calculated, refer the costs for taxation under Part 40 of the Federal Court Rules: r 21.02(2). Reserved costs follow the event unless the court otherwise orders: r 21.04. So too, unless the court otherwise orders, a party entitled to costs is entitled to costs in accordance with the Items in Parts 1 and 2 of Schedule 1 and disbursements properly incurred: r 21.10.
Where the court certifies that it was reasonable for a party to employ an advocate the amount payable for counsel to appear is the daily hearing fee and advocacy loading in accordance with Parts 1 and 2 of Sched 1. Both parties engaged counsel as was appropriate to the application. I will give a certificate for advocacy.
I am not satisfied that the question of costs should be referred for taxation. Mr Follett of counsel did not submit to the contrary.
However, the parties have not turned their minds to the items of costs applicable under Parts 1 and 2 of Sched 1. I will make directions to require the parties, by their lawyers to confer and identify where they agree or disagree on particular items of cost, including reserved costs, which are claimed. Should the applicant indicate disagreement with any item of costs that is claimed, the response should indicate the reason for that disagreement.
Absent agreement, I will resolve the quantum of costs on the papers.
I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Associate:
Date: 30 November 2018
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