Costs and the Fair Work Commission

These passages from an unfair dismissal case explain the basic legal principles at play concerning orders for costs in the Fair Work Commission.

“STATUTORY PROVISIONS

[19] Section 400A of the FW Act states as follows:

“Costs orders against parties

(1) The FWC may make an order for costs against a party to a matter arising under this Part (the first party ) for costs incurred by the other party to the matter if the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter.

(2) The FWC may make an order under subsection (1) only if the other party to the matter has applied for it in accordance with section 402.

(3) This section does not limit the FWC’s power to order costs under section 611.”

[20] A Full Bench in Gugiatti v SolarisCare Foundation Ltd [2016] FWCFB 2478 provided the following guidance as to the application of s.400A:

“Section 400A(1) establishes two pre-conditions for the making of an order for costs under the subsection (in addition to the requirement in s.400A(2)). The first is that the Commission must be satisfied that a party engaged in an unreasonable act or omission in relation to the conduct or continuation of a matter. The second is that such act or omission caused the other party to the matter to incur costs. Once these preconditions are satisfied, a discretionary power to order the payment of such costs is enlivened. The Full Bench in Veal v Sundance Marine Pty. Ltd. As trustee for Sundance Unit Trust T/A Sundance Marine [2013] FWCFB 8960 held that “[t]he phrase “unreasonable act or omission” was a component of provisions of s 170CJ(3) of the Workplace Relations Act 1996 (the WR Act).” In dealing with an application for costs pursuant to s.400A of the Act, the Full Bench has followed previous decisions of the Full Bench of the Commission made in respect of s.170CJ(3) of the WR Act.”

[21] Section 611 of the FW Act provides as follows:

“611 Costs

(1) A person must bear the person’s own costs in relation to a matter before the FWC.

(2) However, the FWC may order a person (the first person) to bear some or all of the costs of another person in relation to an application to the FWC if:

(a) the FWC is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or

(b) the FWC is satisfied that it should have been reasonably apparent to the first person that the first person’s application, or the first person’s response to the application, had no reasonable prospect of success.”

[22] In Hansen v Calvary Health Care Adelaide Limited3 a Full Bench said in relation to s.611 generally:

“It is trite to observe that the statutory and policy imperative underpinning a costs application under the Act, is that a person in a matter before the Commission must bear their own costs. So much is plainly obvious by the precise and unambiguous language of s 611(1).

However, the statutory scheme sets out the relatively circumscribed circumstances in which an order for costs might be found by the Commission to be appropriate in a particular case. It includes the exercise of discretionary power where the Commission is satisfied that one, or more of the circumstances set out in s 611(2), has been established. If such circumstances are established, the Commission, in the broad exercise of its discretion, may make an order that a person/s bear some, or all of the costs of another person, in relation to the application, including on an indemnity basis, or decline to make any order at all.”4

[23] The principles concerning the interpretation and application of s.611(2)(a) were comprehensively stated in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing5 and then summarised in the following terms by a Full Bench in Chapman v Ignis Labs Pty Ltd: 6

  • An application is made vexatiously when the predominant motive or purpose of the applicant is to harass or embarrass the other party or to gain a collateral advantage.
  • An application is not made without reasonable cause simply because the application did not succeed.
  • Whether an application is made without reasonable cause may be tested by asking, on the facts apparent to the applicant at the time the application was made, whether 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 characterise the application as having been made without reasonable cause.
  • In relation to an appeal, the question becomes whether the appeal has no substantial prospect of success. The prospect of success must be evaluated in the light of the facts of the case, the judgment appealed from and the points taken in the notice of appeal. If there is a not insubstantial prospect of the appeal achieving some success, it cannot fairly be described as having been made without reasonable cause.
  • An application will have been made without reasonable cause if it can be characterised as so obviously untenable that it cannot possibly succeed, is manifestly groundless or discloses a case where the tribunal is satisfied it cannot succeed.

[24] The principles that are relevant to s.611(2)(b) were summarised in the following terms by a Full Bench in Baker v Salva Resources Pty Ltd: 7

“The concepts within s.611(2)(b) ‘should have been reasonably apparent’ and ‘had no reasonable prospect of success’ have been well traversed:

  • ‘should have been reasonably apparent’ must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis, rather than a subjective test; and
  • A conclusion that an application ‘had no reasonable prospect of success’ should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable.”8”

 

Tzoukas v Hype Moore Park Pty Ltd (2023) FWC 3324 delivered 13 December 2023 per Crawford C