Fair Work System - No Cost Jurisdiction – or is it?
Applications under the Fair Work Act 2009 (Cth) (the Act) have traditionally been considered as a “no cost jurisdiction” where parties, in most circumstances, bear their own costs. An order for costs is often difficult to achieve as the applying party needs to demonstrate the other party acted unreasonably. Two recent cases under two different sections of the Act as outlined below, indicate the threshold requirements for successfully seeking costs may be lowering.
Dickason v Endeavour Industries Pty Ltd and ors
Background
In January 2012, Mr Dickason lodged a general protections application against his former employer, Endeavour Industries Pty Ltd (Endeavour). The matter was listed for conference on 20 February 2012 before Fair Work Australia (FWA). Mr Dickason attended the conference but Endeavour failed to attend. It was subsequently determined that Endeavour failed to attend as it was not advised of the conference due to an administrative error. FWA was also advised that Taylor Woodings had been appointed as receivers and managers for Endeavour.
A further conference was listed for 2 March 2012. Mr Dickason again attended but neither Endeavour or Taylor Woodings attended.
Mr Dickason made an application for costs under section 611 of the Act which provides that a party may apply for costs where the application or response to the application in the proceedings was vexatious or without reasonable cause or, it should have been apparent that the application or response had no reasonable prospect of success.
Decision
In considering the matter, Commissioner Lewin determined that Endeavour did not act vexatiously in not attending the conferences and no order of costs should be made. He considered that the failure to attend the scheduled conferences, in these particular circumstances, did not amount to a vexatious response or a response that had no reasonable prospect of success.
However, in reaching this decision, Commissioner Lewin considered and disagreed with the precedence set in Ford v Fish Liquor Pty Ltd T/A Marina Quay International stating that “I respectfully disagree with the conclusion in Ford that abstention from proceedings under the Act cannot, under any factual circumstances, constitute a response for the purposes of s 611…”
Of particular note, Commissioner Lewin stated that where a respondent deliberately failed to attend a conference and announced a “contemptuous and obdurate” refusal to participate in proceedings, it would be characterised as a vexatious response to the application and which may result in the imposition of costs.
Cugura v Frankston City Council (No. 2)
Background
Mr Cugara filed several applications in various jurisdictions in relation to a general protections claim, with the most recent being filed in the Federal Magistrates Court. On 24 April 2012, Mr Cuguara’s application was dismissed and Frankston City Council sought a costs under section 570 of the Act which states that a Court may make an order for costs where:
- the proceedings were instituted vexatiously or without reasonable cause;
- an unreasonable act or omission caused the other party to incur costs; or
- a party unreasonably refused to participate in a matter before FWA.
Frankston City Council had previously applied for and failed to gain a costs order in April 2011 regarding earlier proceedings.
In September 2011, Frankston City Council, wrote to Mr Cugara stating that due to the weight of evidence against his application, that if he withdrew his application, it would not seek a costs order against him (the Offer). Neither Mr Cugara or his legal representative responded to the Offer. Nor did it appear to consider the Offer further when he was in receipt of Frankston City Council’s evidence in relation to the application.
In February 2012, Mr Cugara made further allegations in his submissions that were subsequently withdrawn. Despite abandoning the allegation, Mr Cugara still required eight of Frankston City Council’s witnesses for cross examination even though, only three were directly relevant to the application being considered.
Decision
Federal Magistrate O’Sullivan found that although Mr Cugara instituted the proceedings, as a whole, with reasonable cause, the Court held discretion to order costs where a party’s unreasonable act or omission caused the other party to incur costs.
By requiring witnesses for cross examination on areas which were not relevant to his claim or the question that the Court was required to consider, legal costs were incurred. Further, although Mr Cugara’s failure to respond to the Offer at the time it was made may not have been unreasonable, his failure to subsequently consider it once he was in receipt of the evidential material, or by the way the trial itself was conducted, may be found to be an unreasonable omission.
Mr Cugara was ordered to pay the Frankston City party/party costs.
Summary
These two recent decisions indicate a willingness on behalf of FWA and the Court to consider costs applications in certain circumstances. Care should be taken to ensure that appropriate responses to proceedings are made as these and other matters will be taken into account in any matter relating to costs.
In some circumstances, it may also be beneficial for respondents to consider if a costs order should be pursued.
If you would like more information about costs in matters under the Fair Work System or please contact National Workplace Lawyers on +61 2 9233 3989.
National Workplace Lawyers
Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.