This extract from a Fair Work Commission decision deals with the thorny issue of costs orders in the Fair Work Commission.
“[5] As a statutory tribunal, the Commission has no inherent power to make costs orders. Such power must find its source in the Act.3 The general position in relation to costs of proceedings brought under the Act is that each party bears their own costs in relation to matters before the Commission.4 This allows parties to bring or defend proceedings without being burdened by the risk of having to pay the costs of the opposing party.5 The Act provides for specific exceptions to this general rule. Section 400A is one such exception. The section was introduced by the Fair Work Amendment Act 2012 (Amendment Act). The Explanatory Memorandum to the Amendment Act provides as follows:
- As with the new power to dismiss applications under section 399A, the power to award costs under section 400A is not intended to prevent a party from robustly pursuing or defending an unfair dismissal claim. Rather, the power is intended to address the small proportion of litigants who pursue or defend unfair dismissal claims in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.
- The FWC’s power to award costs under this provision is discretionary and is only exercisable where the first party (whether the applicant or respondent) causes the other party to incur costs because of an unreasonable act or omission. This is intended to capture a broad range of conduct, including a failure to discontinue an unfair dismissal application made under section 394 and a failure to agree to terms of settlement that could have led to the application being discontinued.
- However, the power to award costs is only available if the FWC is satisfied that the act or omission by the first party was unreasonable. What is an unreasonable act or omission will depend on the particular circumstances but it is intended that the power only be exercised where there is clear evidence of unreasonable conduct by the first party.
[6] The power to award costs in industrial matters is exercised with caution so as not to erode the broad principle embodied in s.611(1). This caution extends to applications brought under s.400A.6
[7] In Gugiatti v SolarisCare Foundation Ltd,7 a Full Bench of the Commission observed that s. 400A(1) establishes two preconditions for the making of an order for costs under the subsection. 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.
[8] I am satisfied in this case that these two preconditions to the making of an order for costs under s.400A have been satisfied. The action of Mr. Kha in sending the large number of emails that were plainly unrelated to the proper conduct of the proceedings was entirely unreasonable and was an act that was undertaken in relation to the conduct or continuation of his application. Further, I am satisfied on the basis of the uncontested evidence of Ms. Kyriacou, that Mr Kha’s actions caused Glenbourne to incur costs.
[9] I am also of the view that it is appropriate in the circumstances to exercise my discretion in favour of the making of an order for costs and that such a costs order should, subject to limitations in s.403 of the Act referred to below, be made on an indemnity basis.
[10] In Stanley v. QBE Management Services Pty Ltd8 (Stanley), Commissioner Jones, as she then was, considered the power to make an indemnity costs order and the circumstances in which such orders should be made, under s.611 of the Act. In doing so, the Commissioner referred to the decision of the Full Bench in Goffett v Recruitment National Pty Ltd9 in which the Bench was considering the operation of s.658(3) of the former Workplace Relations Act 1996. Amongst other authorities, the Full Bench there referred to the decision in Oshlack v Richmond River Council (Oshlack) where their Honours Gaudron and Gummow JJ said:
It may be true in a general sense that costs orders are not made to punish an unsuccessful party. However, in the particular circumstance of a case involving some relevant delinquency on the part of the unsuccessful party, an order is made not for party and party costs but for costs on a ‘solicitor and client’ basis or on an indemnity basis. The result is more fully or adequately to compensate the successful party to the disadvantage of what otherwise would have been the position of the unsuccessful party in the absence of such delinquency on its part.10
[11] I am of the view that s.400A permits the making of an order for costs on an indemnity basis in appropriate circumstances.11 In this case I conclude that there was a clear delinquency on the part of Mr. Kha that would warrant an award of costs on an indemnity basis. On 19 September 2025, upon the application of Glenbourne, directions were made in the unfair dismissal proceedings that were designed to ensure amongst other things, that Mr. Kha limit correspondence to the solicitors for Glenbourne to that which was strictly necessary for the conduct of the proceedings. At the time of the making of the directions I explained to Mr Kha the potential consequences of breaching directions and engaging in conduct that might prompt an application under s.400A. I also explained that the costs applicant’s solicitors had a professional obligation to consider any correspondence that was sent to them ostensibly in relation to the proceedings that Mr. Kha had instituted and that correspondence that was unrelated would likely result in Glenbourne incurring unnecessary costs. Mr. Kha indicated that he understood what had been explained to him. Notwithstanding the directions and the explanation that had been provided, Mr. Kha persisted with the barrage of emails that ultimately resulted in the dismissal of his application. Moreover, it is apparent from the content of one of these emails that Mr. Kha continued the flood of emails for the very purpose of adversely affecting the respondent. His email of 6 October 2025 to Ms. Kyriacou said that he was forcing “the opposition to wade through hundreds of pages of NONSENSE just to confirm whether it’s nonsense or prophecy” In the circumstances, it is appropriate that an order for indemnity
costs operate in relation to the costs incurred by the costs applicant on and from 19 September 2025 when the directions were made by the Commission.
[12] The costs applicant and its solicitors had entered into a costs agreement that capped the amount of costs that would be charged to the costs applicant for legal representation in the unfair dismissal proceedings. According to the evidence of Ms. Kyriacou, the amount that would have been charged to the costs applicant in the absence of that agreement would have exceeded that cap on the basis of the usual time-costing arrangements. However, I do not propose to make an order for costs based on the time-costed value of the work performed. Section 400A(1) refers to ‘costs incurred by’ the other party to the matter. This is a reference to the amount of costs actually incurred by the costs applicant, not the value of the work performed by the costs applicant’s representative on a time-costed or other basis. I therefore do not propose to make orders on the alternative basis sought by the costs applicant.
[13] I do, however, propose to make an order in relation to the costs associated with the costs application itself. In Stanley the Commission rejected the proposition that s.611 permitted an award of costs in relation to the hearing of a costs application in a matter arising under Part 3-2 of the Act.12 It was said in that matter that the reference in s.611 to costs ‘in relation to an application’ meant ‘the power to award costs is one confined to costs incurred whilst the application was extant.’13 In s.400A the relevant reference is to costs incurred because of an act or omission ‘in connection with the conduct or continuation of the matter.’ This is not a case of costs being incurred because an application was made that should not have been initiated in the first place and s.400A is not directed to those circumstances. Nor is it a case of a costs applicant being put to the trouble of bringing a separate application to recover costs to which they were entitled by a previous order.14 In other matters it has been said that the costs of bringing a costs application under s.400A are recoverable.15 I have not had the benefit of full argument about this point but I think that the provisions of s.400A contemplate the making of costs orders for the costs associated with bringing a costs application in appropriate circumstances. The section provides that costs orders are available for costs incurred ‘because of an unreasonable act or omission…in connection with the conduct or continuation of the matter.’ Those are costs that are caused by and are therefore directly referable to the act or omission of the costs respondent. The act in this case was the sending of the emails. The relevant costs are those that were incurred as a result of that act and that includes, in my view, the costs associated with bringing the costs application itself. There is no discretionary basis on which I should decline to grant those costs in this matter and in fact, discretionary considerations favour the making of such an order.
[14] Section 403 of the Act imposes a restriction in relation to the making of certain costs orders. It provides:
403 Schedule of costs
(1) A schedule of costs may be prescribed in relation to items of expenditure likely to be incurred in relation to matters that can be covered by an order:
(a) under section 611 in relation to a matter arising under this Part; or
(b) under section 400A or 401;
including expenses arising from the representation of a party by a person or organisation other than on a legal professional basis.
(2) If a schedule of costs is prescribed for the purposes of subsection (1), then, in awarding costs under section 611 in relation to a matter arising under this Part, or awarding costs under section 400A or 401, the FWC:
(a) is not limited to the items of expenditure appearing in the schedule; but
(b) if an item does appear in the schedule—must not award costs in relation to that item at a rate or of an amount that exceeds the rate or amount appearing in the schedule.
[15] Regulation 3.08 of the Fair Work Regulations 2009 (Regulations) prescribes Schedule
3.1 to the Regulations for the purpose of subsection 403(1). Accordingly, although the Commission is not limited to making orders only in respect of items of expenditure appearing in the Schedule, to the extent that Schedule 3.1 identifies a particular item, the Commission must not make an award of costs for that item that exceeds the amount in the Schedule for that item. I also note that in many of the items contained in the Schedule, the ‘charge’ is expressed in terms of a particular amount or, in effect, such other amount as the Commission determines in the exercise of its discretion.
[16] The present application was made using a Form F1 rather than the Form F6 as provided for in the Fair Work Commission Rules 2024 (Rules). To the extent necessary, and in accordance with Rule 7, I propose to dispense with compliance with the Rules in this case. However, because the costs applicant has not identified which of the claimed cost items are covered and limited by Schedule 3.1 in the application,16 I am unable to determine the final amount of any order at this stage. I therefore propose to direct the costs applicant to file a revised schedule of costs that takes into account the limitations imposed by Schedule 3.1 within 14 days of this decision. Subject to any submission the costs respondent may wish to make in relation to that revised schedule, a final form of costs order will follow in due course.”
Kha v Glenbourne Investments Pty. Ltd.- [2025] FWC 3416 delivered 20 November 2025 per Roberts DP