United Firefighters' Union of Australia v Fire Rescue Victoria
[2025] FCAFC 7
•5 February 2025
FEDERAL COURT OF AUSTRALIA
United Firefighters’ Union of Australia v Fire Rescue Victoria [2025] FCAFC 7
File number: VID 1144 of 2024 Judgment of: KATZMANN, SNADEN AND SHARIFF JJ Date of judgment: 5 February 2025 Catchwords: COSTS – application for leave to discontinue – where originating application sought constitutional writs in respect of decision of Fair Work Commission exercising arbitral powers under an enterprise agreement – where hearing of originating application vacated upon application for leave to discontinue – whether applicant should pay first respondent’s costs – whether award of costs available in consequence of Federal Court Rules 2011 (Cth) r 26.12 – whether proceeding commenced vexatiously or without reasonable cause – whether costs incurred as a result of unreasonable act or omission – whether costs should be paid on indemnity basis. Legislation: Fair Work Act 2009 (Cth) ss 186, 570, 590, 606, 739
Federal Court of Australia Act 1976 (Cth) s 43
Federal Court Rules 2011 (Cth) r 26.12
Fire Rescue Victoria Operational Employees Interim Enterprise Agreement 2020
Cases cited: Airservices Australia v Civil Air Operations Officers’ Association of Australia (2022) FCR 36
Australian Competition & Consumer Commission v Colgate-Palmolive Pty Ltd (No 5) 151 ACSR 26
Australian Workers’ Union v Leighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428
Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v ALS Industrial Australia Pty Ltd (2015) 235 FCR 305
Baker v Patrick Projects Pty Ltd (No 2) (2014) 145 ALD 548
Chapman v Luminis Pty Ltd [2003] FCAFC 162
Construction, Forestry, Mining & Energy Union v Australian Industrial Relations Commission (2001) 203 CLR 645
Construction, Forestry, Mining & Energy Union v North Goonyella Coal Mines Pty Ltd [2013] FCA 1444
Council of Kangan Batman Institute of Technical & Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275
Electric Light & Power Supply Corporation Ltd v Electricity Commission (NSW) (1956) 94 CLR 554
Endeavour Energy v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia (2016) 244 FCR 178
Hamod v New South Wales (2002) 188 ALR 659
Houssein v Under Secretary, Department of Industrial Relations & Technology (NSW) (1982) 148 CLR 88
Kanan v Australian Postal & Telecommunications Union (1992) 43 IR 257
Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221
Minister for Immigration & Citizenship v Li (2013) 249 CLR 332
Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Ryan v Primesafe (2015) 323 ALR 107
United Firefighters’ Union of Australia v Fire Rescue Victoria [2024] FWC 2619
United Firefighters’ Union of Australia v Fire Rescue Victoria [2024] FWC 2839
Division: Fair Work Division Registry: Victoria National Practice Area: Employment and Industrial Relations Number of paragraphs: 53 Date of hearing: Determined on the papers Counsel for the Applicant: Mr C Murdoch KC with Mr J McKenna Solicitor for the Applicant: Davies Lawyers Counsel for the First Respondent: Ms R Sweet KC with Mr B Avallone Solicitor for the First Respondent: Lander & Rogers Counsel for the Second Respondent: The Second Respondent filed a submitting notice, save as to costs ORDERS
VID 1144 of 2024 BETWEEN: UNITED FIREFIGHTERS’ UNION OF AUSTRALIA
Applicant
AND: FIRE RESCUE VICTORIA
First Respondent
FAIR WORK COMMISSION
Second Respondent
ORDER MADE BY:
KATZMANN, SNADEN AND SHARIFF JJ
DATE OF ORDER:
5 FEBRUARY 2025
THE COURT ORDERS THAT:
1.Leave be granted to the applicant to file a notice of discontinuance.
2.The applicant pay the first respondent’s costs on an indemnity basis.
3.The costs be fixed in a lump sum.
4.In default of agreement, the assessment of the amount of the lump sum be referred to a Registrar for determination.
THE COURT DIRECTS THAT:
5.The Registrar determine the amount of the lump sum in such manner as he or she sees fit, including, if considered appropriate, on the papers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
THE COURT:
The applicant (the “UFU”) is an employee organisation, registered as such pursuant to provisions of the Fair Work (Registered Organisations) Act 2009 (Cth). Broadly, it represents the industrial interests of firefighters, some of whom are employed by the respondent (“FRV”), an agency established under Victorian legislation.
By an originating application dated 25 October 2024, the UFU moved the Court for prerogative relief directed to a decision of the second respondent, the Fair Work Commission (the “Commission”). The matter was scheduled for hearing before a full court on Monday, 18 November 2024. On Friday, 15 November 2024, the UFU applied for leave to discontinue the proceeding with no order as to costs. It is to that application that these reasons pertain. There is no controversy that the matter should be discontinued; the issue for the Court is whether the UFU should pay FRV’s costs and, if so, on what basis.
For the reasons that follow, we consider that the UFU should pay FRV’s costs, and that they should be assessed (if not agreed) on an indemnity basis. Before exploring the competing submissions, it is necessary to set out some uncontroversial matters of background.
BACKGROUND
The terms and conditions of employment of FRV’s firefighter employees are the subject of the Fire Rescue Victoria Operational Employees Interim Enterprise Agreement 2020 (the “EA”). The EA is an enterprise agreement that was made pursuant to—and that has force by reason of—the provisions of the Fair Work Act 2009 (Cth) (the “FW Act”).
At least until recently, the UFU and FRV were (and perhaps still are) parties to a dispute concerning the payment by FRV of sums referrable to income protection insurance cover for its employees (or some cohort amongst them). Some context is required. The EA requires consultation as between the UFU and the FRV about the implementation of an agreed income protection insurance scheme. That, it appears, has occurred. Pursuant to a scheme that is apparently in place in consequence of those discussions, FRV makes contributions on behalf of relevant employees to a trust known as the United Firefighters Union of Australia – Victorian Branch Discretionary Trust (the “Trust”). That situation has obtained since January 2023—a point that assumes some temporal significance that will shortly become apparent.
The trustee of the Trust is Alternative Risk Management Services Pty Ltd. The insurance cover that it obtains for the benefit of the relevant employees is provided via a broker, Howden Insurance Brokers (Australia) Pty Ltd (“Howden”). The amounts in which FRV’s contributions are made have, to date, been the subject of orders made by the Commission. Presently, FRV contributes $55.22 per employee per week into the Trust. In January 2023—the equivalent amount was $50.43.
In January 2023, Howden provided FRV with a breakdown of what its $50.43-per-employee-per-week contribution covered. It suffices to observe that most of that figure was said to be referrable to “Trust Cover”. Howden confirmed that that “…Trust Cover for FRV employees [was] fully discretionary, and that the Trust ha[d] no contractual obligation to support a member financially". $2.00 of the $50.43 figure was said to be attributable to “Loss of Income” insurance cover. Other small amounts were referrable to other forms of insurance.
That advice appears to have prompted some concern on the part of FRV that its contributions to the Trust might attract an unforeseen tax liability. In October 2023, it asked the UFU to provide it with a copy of the trust deed by which the Trust was established. The UFU agreed to provide a copy of that deed (the “Trust Deed”) to FRV’s tax advisors; but only on the basis that it not be provided to FRV itself.
On Wednesday, 1 May 2024, FRV wrote to the UFU and expressed concern that its contributions to the Trust might give rise to unforeseen tax implications. It noted that “…as a Victorian public entity, it [was] critical that FRV [had] visibility over the beneficiaries of payments of public funds, and the purposes of those payments”. It again requested from the UFU a copy of the Trust Deed (amongst other things).
Apprehending some prospect that FRV might attempt to remove or distance itself from the agreed scheme in some way, the UFU notified the Commission of a dispute as between it and FRV concerning the income protection insurance scheme to which the EA refers. That notice of dispute was given pursuant to two dispute resolution clauses contained within the EA. Each contemplates the resolution of disputes through the assistance of the Commission; providing in terms that the Commission “may utilise all its powers in conciliation and arbitration to settle the dispute” and that a decision of the Commission under the dispute resolution clause “may be appealed as of right to a Full Bench”.
In the context of the dispute that the UFU had notified, FRV made an application to the Commission for orders requiring that the UFU produce to it a copy of the Trust Deed. That application was the subject of a hearing before the Commission held on Monday, 16 September 2024. By a decision dated Tuesday, 24 September 2024, the Commission granted it and made orders requiring that the UFU produce to FRV (subject to certain access limitations that need not here be particularised) a copy of the Trust Deed: United Firefighters’ Union of Australia v Fire Rescue Victoria [2024] FWC 2619 (the “Production Decision”; Wilson C). In justification of that course, the Commission observed in respect of the Trust Deed (Production Decision, [21]):
The document plainly has relevance to the course of proceedings before me. I am concerned that without production of the document, further conciliation will be ineffective, with a key party perhaps not being as aware of its situation as it should be, and being unable to respond with appropriate concessions or responses to the UFU. I am then concerned that, without production of the document, arbitration, if necessary, may be similarly ineffective, or that the Commission as arbitrator is inadvertently misdirected.
By the Production Decision, the UFU was required (subject to conditions to which attention will shortly return) to produce to FRV a copy of the Trust Deed by Tuesday, 1 October 2024. That deadline was later extended to 10:00am on Tuesday, 8 October 2024.
At 4:54pm on Monday, 7 October 2024, the UFU filed a notice of appeal from the Production Decision. That notice additionally made application for orders to stay the Production Decision pending the determination of the appeal. FRV opposed that application (the “Stay Application”) without expedition of the appeal. The UFU opposed such expedition. The Stay Application thus was the subject of a hearing before the President of the Commission, Justice Hatcher, on Thursday, 10 October 2024. The following day, his Honour published a decision refusing to grant the stay for which the UFU had moved: United Firefighters’ Union of Australia v Fire Rescue Victoria [2024] FWC 2839 (the “Stay Decision”; Hatcher P).
It was in respect of the Stay Decision that the UFU commenced the present action (some two weeks later). It proceeded upon the contention that it was legally unreasonable (in a sense recognised by authorities such as Minister for Immigration & Citizenship v Li (2013) 249 CLR 332) for President Hatcher not to grant the stay for which it had applied.
On 6 November 2024 the Court made case management orders, with which the parties complied. At the case management hearing that day, senior counsel for FRV informed the Court that its position was that the Stay Decision was not amenable to constitutional writs, citing Endeavour Energy v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (2016) 244 FCR 178 (“Endeavour Energy”). In earlier correspondence the UFU informed the Court that it did not intend to challenge any Full Court authority. There followed an exchange of submissions in chief. Those of FRV maintained its position that the relief the UFU was seeking was not available as the Stay Decision was made in the exercise of a private arbitration power. Shortly thereafter, the UFU made its application to discontinue.
RELEVANT STATUTORY PROVISIONS
Section 570 of the FW Act relevantly provides as follows:
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)...
…
(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
…
The present application for leave to discontinue is advanced under r 26.12 of the Federal Court Rules 2011 (Cth) (the “FCA Rules”), which provides as follows:
Discontinuance
(1)A party claiming relief may discontinue a proceeding in whole or in part by filing a notice of discontinuance, in accordance with Form 48.
(2)The party may file the notice of discontinuance:
(a) without the leave of the Court or the other party’s consent:
(i)at any time before the return date fixed in the originating application; or
(ii)if the proceeding is continuing on pleadings—at any time before the pleadings have closed; or
(b)with the opposing party's consent—before judgment has been entered in the proceeding; or
(c)with the leave of the Court—at any time.
…
(7)Unless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim, or part of the claim, that is discontinued.
BASIS FOR AWARDING COSTS
FRV’s pursuit of its costs has two foundations. First, it says that the UFU must pay them in consequence of r 26.12(7), such that it is not necessary for the Court specifically to make any order. It says that it should suffice for the Court simply to grant the UFU leave to discontinue the matter—costs would be automatically payable, at least on a standard basis.
Second, FRV submits that, notwithstanding s 570(1) of the FW Act, the Court should make an award of costs because the matter was commenced vexatiously or without reasonable cause, or because FRV has incurred costs as a result of an unreasonable act or omission (or unreasonable acts or omissions) attributable to the UFU.
Section 570(1) of the FW Act operates as an express limitation on the broad discretion to award costs that is conferred upon the Court by s 43 of the Federal Court of Australia Act 1976 (Cth): Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221, 252 [140] (Tracey, Gilmour, Jagot and Beach JJ, with whom White J relevantly agreed). That limitation does not apply if (amongst other circumstances) the Court is satisfied that one or more of the criteria listed in s 570(2) are satisfied.
It is well established that a want of reasonable cause cannot be established merely because an applicant’s case does not succeed: Council of Kangan Batman Institute of Technology & Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275, 289 [60] (Black CJ, North and Mansfield JJ); Baker v Patrick Projects Pty Ltd (No 2) (2014) 145 ALD 548, 549-50 [9], (Dowsett, Tracey and Katzmann JJ). In assessing whether a proceeding has been instituted without reasonable cause, the “…relevant question is whether the proceeding had reasonable prospects of success at the time it was instituted”: Australian Workers’ Union v Leighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428 (“Leighton Contractors”), 430 [7] (Dowsett, McKerracher and Katzmann JJ).
In Kanan v Australian Postal & Telecommunications Union (1992) 43 IR 257, 264-5, Wilcox J (referring to a predecessor provision in a passage that was endorsed by the Full Court in Leighton Contractors) observed:
It seems to me that one way of testing whether a proceeding is instituted “without reasonable cause” is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being “without reasonable cause”. But where, on the applicant's own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.
FRV maintains that s 570(1) should not stand as a bar to an award of costs in this matter. In order that that contention may better be understood, it is necessary to say something about the nature of the substantive application that is to be discontinued. FRV maintains that it was instituted vexatiously or without reasonable cause because the Stay Decision to which it pertains was not a decision that was amenable to constitutional writs.
It is to that question that the following section of these reasons pertains. The analysis is embarked upon appreciating that there is to be no adjudication upon the merits of the substantive contentions. It proceeds not by way of “a hypothetical trial” of those contentions but, rather, to assess whether (and the extent to which) the Court might be confident about how the matter would have been determined had it progressed: Chapman v Luminis Pty Ltd [2003] FCAFC 162, [7] (Beaumont, Sundberg and Hely JJ), citing Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622, 625 (McHugh J).
THE AVAILABILITY OF CONSTITUTIONAL WRITS
As has been noted, the proceeding before the Commission was notified pursuant to the dispute resolution clauses within the EA. In order that an enterprise agreement might be approved under the FW Act (and, thereafter, might assume binding statutory force), it must contain a clause of that nature: FW Act, s 186(6). Typically—as here—such clauses envisage the resolution of disputes by means of assistance from the Commission (including assistance in the form of arbitral orders). Section 739(4) of the FW Act permits the Commission to arbitrate disputes that are referred to it under clauses of that nature.
Arbitral powers conferred upon the Commission by a dispute resolution clause in an enterprise agreement are powers of private arbitration: Construction, Forestry, Mining & Energy Union v Australian Industrial Relations Commission (2001) 203 CLR 645, 658 [31] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ). Their exercise does not involve the exercise of a statutory or prerogative jurisdiction; but rather a jurisdiction conferred privately by the parties to a dispute (in this case, the UFU and FRV): Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v ALS Industrial Australia Pty Ltd (2015) 235 FCR 305 (“ALS Industrial”), 338 [85] (Dowsett, Tracey and Katzmann JJ); Endeavour Energy at 183 [12]-[13], 189 [32]-[33] (North, Jessup and Reeves JJ).
Unless they are qualified specifically by its terms, a dispute resolution clause in an enterprise agreement that contemplates the resolution of disputes by arbitration in the Commission is presumed also to contemplate that, in the discharge of that function, the Commission shall have available to it such other relevant powers as it enjoys by operation of the FW Act: ALS Industrial, 328 [57]-[58]; see also, in a statutory context, Electric Light & Power Supply Corporation Ltd v Electricity Commission (NSW) (1956) 94 CLR 554, 560 (Dixon CJ, McTiernan, Williams, Webb, Fullagar, Kitto and Taylor JJ) and Houssein v Under Secretary, Department of Industrial Relations & Technology (NSW) (1982) 148 CLR 88, 95-6 (Stephen, Mason, Aickin, Wilson and Brennan JJ). Here, of course, there is no need to presume: as we have already observed, the dispute resolution clauses expressly provide that, in the exercise of its dispute-settlement function, the Commission “…may utilise all its powers in conciliation and arbitration…”.
Presently, there is no dispute that the FW Act confers upon the Commission broad powers that it may exercise in the matters that come before it. Nor is it in dispute that the power to require the production of documents is one of them: FW Act, s 590(2)(c). The ability to stay the application of an order pending an appeal is another: FW Act, s 606.
In the present case, there is no suggestion that those powers were not available to the Commission in the discharge of its arbitral function under the dispute resolution clauses of the EA. It is clear that they were. More importantly, the powers were available not as a product of statutory or executive conferral; but because they were conferred by agreement of the parties, as expressed in the EA.
Powers of that nature are not amenable to constitutional writs. That was the conclusion of the Full Court in ALS Industrial, 338-9 [85]-[86] (Dowsett, Tracey and Katzmann JJ); and again (albeit in the context of an interlocutory application) in Endeavour Energy, 183 [12]-[13] (North, Jessup and Reeves JJ). In the latter, the Full Court rejected the submission that the conclusion in ALS Industrial was plainly wrong and endorsed it: Endeavour Energy, 189 [32]-[33] (North, Jessup and Reeves JJ).
The UFU maintains that neither of those authorities forecloses the possibility that the Court might grant constitutional writs in respect of the Stay Decision. To that end, it focuses upon the nature of the power that the Commission exercised by making the Production Decision. It argues that the order requiring production of the Trust Deed “…involved the exercise of powers under s 590(2)(c) in a way that is distinguishable from decisions or determinations of the Commission in private arbitration[,] which do not involve making ‘orders’ under the FW Act”. Because the Stay Decision was made with respect to that “order”, it was said that it, too, “…is also arguably made ‘under the FW Act’”. If that were so, “…the Stay Decision would be made pursuant to a statutory conferment of power upon an officer of the Commonwealth and constitutional writs would go to such an order”.
The UFU submitted that the question of whether orders made under s 590 of the FW Act would be amenable to review by way of constitutional writs was left open in ALS Industrial at [85] in the sentences emphasised below:
The effect of the High Court’s decision in Gordonstone, and that in TCL, is that an arbitrator’s power to resolve a dispute arises out of the agreement to arbitrate. It follows that to the extent that FWC exercises power derived from such an agreement, it is not exercising government powers and so is not susceptible to the issue of the constitutional writs. However, as the Union has submitted, in carrying out the arbitrator’s function FWC may exercise a power conferred upon it by statute. Section 739(3) assumes such a possibility. We have previously referred to the powers conferred upon FWC by ss 590 and 595 of the Fair Work Act. Section 595(4) seems to permit FWC to exercise statutory powers in the course of a private arbitration. There may be room to argue that such exercise is pursuant to the statutory conferment of power. However it might also be argued that the availability of the power is a function of the agreement to arbitrate. It is possible that review by way of the constitutional writs may be available to third parties (eg persons summoned as witnesses) but not against parties to the arbitration agreement. We need not take this matter further. We do not understand the Union to challenge any exercise by FWC of a specific statutory power.
Those contentions are misconceived.
That the Commission styled the outcome of its Production Decision as an “order” may be accepted; but so to recognise is not to doubt that it involved the exercise of a power that was conferred upon it by the parties’ agreement, rather than by statute. There is no room for doubt. By their agreement, the parties envisaged that the Commission should have the same powers to resolve their disputes as are conferred upon it by statute in other contexts. That plainly includes the power to require—whether by “order” or otherwise—one of the parties to such a dispute to produce a document to the other and the power to grant or not grant a stay thereupon pending an appeal. The exercise of such powers is binding upon the parties because they agreed that it would be. Their agreement is enforceable like all the other stipulations that they agreed and recorded in the EA.
While the Full Court in ALS Industrial at [85] did leave open the question of whether orders made under s 590 of the FW Act (in the course of dealing with a dispute of the kind to which s 739 refers) would be amenable to review by way of constitutional writs, it did not leave the question open in a case such as this where it was an express term of the EA that the Commission could make such orders and where the order was made against a party to the EA.
The conclusions expressed in ALS Industrial and Endeavour Energy, which the UFU did not challenge, were fatal to its application. When the Commission exercises powers toward the settlement of a dispute that is referred to it under a dispute resolution clause in an enterprise agreement, it does so by way of private arbitration; and, unless they offend the stipulation in s 739(5) of the FW Act (and at least to the extent that they extend no further than the parties to the dispute), the decisions that are made to that end are not amenable to constitutional writs.
We therefore accept that the proceeding was instituted without reasonable cause and that, that being so, the Court’s discretion to award costs is enlivened.
We conclude by noting that FRV initially foreshadowed an alternative submission in defence of the UFU’s application: namely, that the suggestion that the Stay Decision (assuming, contrary to authority, that it might be amenable to prerogative relief) was a product of legal unreasonableness was itself unsustainable. That is not now put as an alternative basis upon which the Court might accept that the proceedings were instituted without reasonable cause, so it is unnecessary to consider it.
UNREASONABLE ACTS OR OMISSIONS
Having reached these conclusions, it is not strictly necessary to explore FRV’s alternative submission that it has incurred costs as a result of unreasonable acts or omissions attributable to the UFU. We shall do so only at a headline level.
FRV submits that unreasonable acts inhere in “[b]oth the issuing of the [originating application]…and the continuing of the proceeding on and after 6 November 2024”; and also in its “…delaying the discontinuance until just 17 minutes before the UFU’s reply submissions were due to be filed, the business day before the Full Court hearing”.
The first proposition raises nothing additional to what has already been addressed. FRV submits that it was unreasonable for the UFU to commence a proceeding that was doomed to failure. That is simply an alternative way of saying that the proceeding was instituted without reasonable cause. Either way, the Court’s discretion to award costs is enlivened.
With respect to the UFU’s ongoing prosecution of and/or late withdrawal from the matter, each seems to be related to what is said to have been—and what we accept was—the hopeless nature of the case that was to be advanced. The significance of the reference to 6 November 2024 is that it was at least by that date that FRV had made clear to the UFU its reliance upon the principles identified in ALS Industrial and Endeavour Energy. FRV says that the maintenance of the action beyond that point was unreasonable. Again, without doubting the correctness of the proposition, it does not appear to add much to what has already been addressed as to the absence of reasonable cause.
RULE 26.12
It is also not necessary to address FRV’s contentions concerning the application of r 26.12 of the FCA Rules. The UFU should pay FRV’s costs because the Court should make an order to that effect. Whether it should pay them because the FCA Rules require it is not a question that needs to be determined.
Having said that, we respectfully consider that there is much to commend the observation that Mortimer J made in Ryan v Primesafe (2015) 323 ALR 107, 134 [106], namely that “[i]t is difficult to see any room for the presumption in r 26.12(7) to operate in proceedings arising under the [FW Act]”. In a matter arising under the FW Act, the Court’s general jurisdiction to award costs (conferred by s 43(1) of the FCA Act) is expressly limited to the circumstances contained in s 570(2) of the FW Act. In any case, a court would not ordinarily be understood, by its rules, to require what the legislature has prohibited by statute.
INDEMNITY COSTS
Having been commenced without reasonable cause, a question arises as to whether this matter is one that should attract an award of costs on an indemnity basis.
An award of indemnity costs serves the purpose of “…compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs”: Hamod v New South Wales (2002) 188 ALR 659, 665 [20] (Gray J, with whom Carr and Goldberg JJ agreed).
There could be no doubt that it is unreasonable for a respondent to have been subjected to the expenditure of costs in a proceeding that was instituted without reasonable cause: see Australian Competition & Consumer Commission v Colgate-Palmolive Pty Ltd (No 5) (2021) 151 ACSR 26, 28 [10] (Wigney J), and the authorities referred to there. That being so, the case for an order for costs on an indemnity basis is apparent.
The UFU seeks to resist that course on two footings: first, that it did not institute the proceeding without reasonable cause; and, second, that its prosecution of it has not been attended by any sense of malice or impropriety of purpose.
The first contention is, of course, advanced principally to resist any order for costs. We have already rejected it.
The second contention might readily be accepted; but it is not dispositive. Contrary to the UFU’s submission, it is not necessary in order that a court might be disposed to award costs on an indemnity basis for it first to be satisfied that the party against whom the order is to be made should be thought guilty of misconduct or having acted maliciously. That is at least so in relation to proceedings instituted without reasonable cause. Such a proceeding can commence (and may be progressed) without any impropriety of purpose on the part of an applicant, yet still attract an order for indemnity costs. In that reality, indemnity costs might be appropriate by reason of what an applicant has done rather than their reasons for doing it.
The UFU’s submissions to the contrary notwithstanding, the basis upon which the Court might entertain an order for costs on an indemnity basis remains apparent. Nonetheless, the Court retains a discretion to grant costs on that basis (or, indeed, at all). We would not wish to be taken as accepting that it will do so in all cases where the hurdle established by s 570(2)(a) of the FW Act is cleared. As Logan J observed (albeit not in the context of a proceeding instituted without reasonable cause) in Construction, Forestry, Mining & Energy Union v North Goonyella Coal Mines Pty Ltd [2013] FCA 1444, [78]:
It does not…axiomatically follow that because one is satisfied for the purposes of s 570(2)(b) [of the FW Act] that one must exercise the discretion given under s 570(1) always to order indemnity costs. Each case must be considered on its individual merits.
In the present matter, we consider that an award of costs on an indemnity basis is appropriate. The substantive application was instituted in the face of binding Full Court authority, the correctness of which the UFU did not dispute, by the force of which it was inevitable that it would be dismissed. Moreover, it was instituted on the misconceived footing that the UFU might avoid having to comply with a requirement imposed upon it in accordance with a dispute-resolution procedure to which it had freely agreed and which it itself had engaged. The proceeding should not have been commenced and FRV should not have been required to expend effort or money defending it.
DISPOSITION
The UFU should have leave to file herein a notice of discontinuance. It should pay FRV’s costs of, and pertaining to, the application on an indemnity basis. There will be orders to that effect.
I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Katzmann, Snaden and Shariff. Associate:
Dated: 5 February 2025
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