R v Patrick Projects Pty Ltd (No 2)

Case [2017] FCA 388

FEDERAL COURT OF AUSTRALIA

King v Patrick Projects Pty Ltd (No 2) [2017] FCA 388

File number: WAD 641 of 2015
Judge: GILMOUR J
Date of judgment: 13 April 2017
Catchwords:

COSTS – indemnity costs – whether indemnity costs should be awarded – principles relevant to order for indemnity costs – Federal Court of Australia Act 1976 (Cth) s 43(3)(g)

INDUSTRIAL LAW – application for costs under the Fair Work Act 2009 (Cth) – whether proceedings instituted without reasonable cause – Fair Work Act 2009 (Cth)
s 570(2)(a)
Legislation:

Fair Work Act 2009 (Cth) s 570(2)(a)

Federal Court of Australia Act 1976 (Cth) s 43(3)(g)

Cases cited:

Australian Workers Union v Leighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428 cited

Baker v Patrick Projects Pty Ltd (No 2) [2014] FCAFC 166 applied

Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 2) (2015) 230 FCR 337 followed

Construction, Forestry, Mining and Energy Union v Corinthian Industries (Aust) Pty Ltd (No 2) [2014] FCA 351 cited

Danthanarayana v Commonwealth of Australia [2016] FCAFC 114 followed

Fair Work Ombudsman v Skilled Offshore (Australia) Pty Ltd (No 2) [2015] FCA 1509 followed

Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 applied

King v Patrick Projects Pty Ltd [2016] FCA 1110 considered

King and Ors v Patrick Projects Pty Ltd [2015] FWCFC 6323 considered

Reihana v Mastercare Highrise Cleaning Services Pty Ltd [2014] FCA 353 cited

Spotless Services Australia Ltd v Marsh [2004] FCAFC 155 applied

Date of hearing: Heard on the papers
Date of last submissions: 10 March 2017
Registry: Western Australia
Division: General Division
National Practice Area: Employment & Industrial Relations
Category: Catchwords
Number of paragraphs: 24
Counsel for the Applicants: Mr S Heathcote
Counsel for the Respondents: Ms K Maric
Solicitor for the Respondents: K&L Gates

ORDERS

WAD 641 of 2015
BETWEEN:

DANIEL KING

First Applicant

JASON DEENEY
Second Applicant

CHRIS HUGHES (and others named in the Schedule)
Third Applicant
AND:

PATRICK PROJECTS PTY LTD

First Respondent

ASCIANO LTD
Second Respondent

JUDGE:

GILMOUR J

DATE OF ORDER:

10 APRIL 2017

THE COURT ORDERS THAT:

1.The applicants pay the respondents’ costs of the application on an indemnity basis.

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


REASONS FOR JUDGMENT

GILMOUR J:

Introduction

  1. The applicants’ statement of claim was struck out and the originating application dismissed by orders made on 9 September 2016: King v Patrick Projects Pty Ltd [2016] FCA 1110 (Judgment). The respondents were given liberty to apply on the question of costs.

  2. The respondents seek costs in this matter against the applicants on an indemnity basis pursuant to s 570(2) of the Fair Work Act 2009 (Cth) (Fair Work Act) and s 43 of the Federal Court of Australia Act 1976 (Cth). I ordered on 1 March 2017 that the question of costs be heard on the papers.

    Background

  3. The applicants pursued their claim in the Fair Work Commission and were unsuccessful.  The

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AGLC
R v Patrick Projects Pty Ltd (No 2) [2017] FCA 388
Case
[2017] FCA 388
Decision Date

CaseChat Overview and Summary

The respondents in this case sought indemnity costs against the applicants in accordance with section 570(2) of the Fair Work Act 2009 (Cth) and section 43 of the Federal Court of Australia Act 1976 (Cth). The applicants had previously pursued their claim in the Fair Work Commission, which was unsuccessful, and they then sought leave to appeal to the Full Bench of the Fair Work Commission. Leave was refused, and the Full Bench held that the applicants’ appeal was without merit. The applicants subsequently instituted proceedings in the Federal Court based on the same legal and factual dispute that had been determined by the Fair Work Commission. The respondents considered the applicants’ claim to lack reasonable cause and be an abuse of the court's processes. The court was required to decide whether the applicants' proceedings were instituted without reasonable cause, and whether indemnity costs should be awarded to the respondents.

The court examined the relevant legal principles, which included that the purpose of section 570 of the Fair Work Act is to ensure that litigants are not deterred from defending claims for contravention, and that a party must have a self-evidently weak case to warrant a costs order. The court also noted that even if the court is satisfied of a section 570(2) precondition, it retains a discretion not to order costs. The court further found that courts have accepted that cost orders made pursuant to section 570(2)(a) of the Fair Work Act and which relate to proceedings instituted "without reasonable cause" are not restricted to exceptional cases.

In this case, the applicants were given approximately five months to re-plead their claim, which then became the subject of the respondents’ successful strike-out application. The respondents successfully demonstrated that the applicants’ case was so untenable that it could not possibly succeed. The court found that the applicants’ claim was hopeless and would have no chance of success if the action were to proceed to hearing. The court also found that, under rule 16.21(f), the proceeding was an abuse of process given the history of the proceedings and, in particular, the fact that the applicants’ claims had failed before the Fair Work Commission and the Full Bench had refused permission to appeal.

The court ordered that the applicants pay the respondents’ costs of the application on an indemnity basis.

Orders

Orders of the court

1. The applicants pay the respondents’ costs of the application on an indemnity basis.

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

Background

Background to the litigation

The respondents seek costs in this matter against the applicants on an indemnity basis pursuant to s 570(2) of the Fair Work Act 2009 (Cth) (Fair Work Act) and s 43 of the Federal Court of Australia Act 1976 (Cth). I ordered on 1 March 2017 that the question of costs be heard on the papers.Background The applicants pursued their claim in the Fair Work Commission and were unsuccessful. They then sought leave to appeal to the Full Bench of the Fair Work Commission, which refused leave. Nonetheless the Full Bench considered the substance of the Applicants’ appeal and held that it was without merit. Thereafter, in November 2015, the applicants’ instituted proceedings in this Court based on the same legal and factual dispute which had been determined by the Fair Work Commission. On 5 May 2016, the respondents, by their solicitors, informed the applicants that they considered the applicants’ claim lacked a reasonable cause of action and was an abuse of the Court’s processes. They explained to the applicants why this was the case. The applicants were also put on notice of the respondents’ intention to seek costs against them pursuant to s 570(2) of the Fair Work Act. The applicants filed two outlines of submissions dated 8 February and 8 March 2017. There was a considerable degree of overlap as between them. Accepting that they were to some extent prepared by the lay applicants with some assistance from a legal practitioner, they were nonetheless almost entirely unhelpful. To a significant degree they sought to reactivate this matter on its merits. They contained confidential material concerning communications between the parties with a view to a settlement of these proceedings. These I have not read nor taken into account. There was no real attempt to deal with the gravamen of the core issue namely whether, as the respondents submit, the applicants commenced these proceedings “without reasonable cause” and are amenable to an adverse costs order pursuant to s 570(2)(a) of the Fair Work Act.The relevant legal principles Subsection 570(2) of the Fair Work Act, upon which the respondents rely, relevantly provides as follows:(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 ... I have previously discussed the legal principles informing the ordering of costs under s 570(2) of the Fair Work Act in Fair Work Ombudsman v Skilled Offshore (Australia) Pty Ltd (No 2) [2015] FCA 1509. In that decision, at [7]–[10] and [13], I accepted the following legal principles as uncontroversial:7.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 Act1976 (Cth) (FCA Act): s 43(1)(c); Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221 at [140] per the majority. 8.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 (2015) 323 ALR 107 at [64]. …10.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 [2013] FCA 987 at [14]. Indeed, costs were not awarded against the FWO in Fair Work Ombudsman v Valuair Limited (No 3) [2014] FCA 1182 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) (2014) 224 FCR 415. …13.Even if the Court is satisfied of a s 570(2) precondition, it retains a discretion not to order costs: Corinthian at [12].

Evidence

Evidence Before The Court

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Decision

Reasons for decision

The Full Court went on to say of this summary, at [10], that:10.This test requires some minor modification when applied to the institution of an appeal or judicial review proceedings. In such proceedings the focus changes to whether, having regard to the facts apparent to the appellant at the time of instituting the appeal or the application for judicial review, there were no reasonable prospects of success. In evaluating these prospects regard may be had to the reasons for judgment or decision under appeal or review, as the case may be, and the grounds relied on to challenge the judgment or decision: see Imogen Pty Ltd v Sangwin (1996) 70 IR 254 at 257 per Wilcox CJ(emphasis added) This formulation of the relevant test was accepted by another Full Court in Kennedy v Secretary, Department of Industry (No 4) [2017] FCAFC 7 where the “relevant question” from Barker was held, at [8], to be “whether there were facts apparent to the party at the time of instituting the appeal that, viewed objectively, would demonstrate that there were no reasonable prospects of success” (emphasis added). It is worth also noting that courts have accepted that cost orders made pursuant to s 570(2)(a) of the Fair Work Act and which relate to proceedings instituted “without reasonable cause” are not restricted to exceptional cases. Although an award for costs under s 570 will generally be ‘an exceptional order’ in that it is a divergence from the usual course, it is now widely accepted that there is no need to demonstrate exceptional circumstances in order to enliven the Court’s jurisdiction to award costs: Spotless Services Australia Ltd v Marsh [2004] FCAFC 155 at [12] affirmed in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 2) (2015) 230 FCR 337 at [15]–[17].The present case Early in the history of the proceedings the applicants were given approximately five months to re-plead their claim. They filed a substantially amended claim on 19 April 2016 which then became the subject of the respondents’ successful strike out application. The strike-out application was made on 11 May 2016 pursuant to r 16.21(e) of the Federal Court Rules 2011 (Cth) on the basis that the pleading failed to disclose a reasonable cause of action. As I stated in my Judgment at [15], this required the respondents to demonstrate that the applicants’ case was so untenable that it could not possibly succeed. Put another way, they needed to establish that the applicants’ claim was hopeless and would have no chance of success if the action were to proceed to hearing. In my Judgment, I allowed the respondents’ application on the ground of r 16.21(e), finding that it had no cause of action and was bound to fail: Judgment at [16] and [25]. Moreover, I found that, under r 16.21(f), the proceeding was an abuse of process given the history of the proceedings and, in particular, the fact that the applicants’ claims had failed before the Fair Work Commission and the Full Bench had refused permission to appeal: Judgment at [30]–[31].

Ratio Decidendi

Legal Principle Established

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