This portion of a Fair Work Commission decision in an unfair dismissal case deals with how the Commission approaches decisions about awarding costs to the party who or which succeeds in a case.
“The Costs Provisions of the Act
[11]
The relevant provision of the Act is section 400A:
“400A 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.”
[2026] FWC 3144
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[12]
The following general principles are well established in the authorities:
(a) in the ordinary course of litigation costs follow the event. The purpose of a costs order is not to punish the unsuccessful party but to compensate the successful party against the expense to which he or she has been put by reason of the legal proceedings (per Latoudis v Casey [1990] HCA 59 at [13], (1990) 170 CLR 534 at 543);
(b) in the ordinary course of litigation under the Act, costs do not follow the event, and each party bears their own costs. The purpose or policy of the cost provisions in the Act are to free parties from the risk of having to pay their opponents’ costs in matters arising under the Act, while at the same time protecting parties who are forced to defend proceedings that have been instituted vexatiously or without reasonable cause (per Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23 at [7], (2013) 232 FCR 428 citing Khiani v Australian Bureau of Statistics [2011] FCAFC 109);
(c) to the extent that the cost provisions of the Act provide a protection against costs orders, that protection can be lost by certain conduct (per Kangan Batman Institute of Technology and Further Education v AIRC [2006] FCAFC 199 at [60], (2006) 160 IR 405 at 419);
(d) the costs provisions provide a deterrent against unreasonable conduct during proceedings, discourage frivolous and speculative claims and assist in the efficient resolution of claims by encouraging all parties to approach proceedings in a reasonable manner (per the Explanatory Memorandum to the Fair Work Amendment Bill 2012, p7); and
(e) there is a need to scrutinise the way proceedings under the Act are conducted to ensure that costs are not unreasonably incurred and that the public interest in the orderly and cost-effective administration of justice is not too readily placed to one side (per Tomvald v Toll Transport Pty Ltd [2017] FCA 1208 at [315]).
[13]
Section 400A only applies to unfair dismissal claims. Section 400A is concerned with unreasonable acts or omissions in connection with the conduct or continuation of an unfair dismissal application. The following principles apply in relation to s.400A:
(a) there are two pre-conditions, sometimes referred to as limbs, for the making of a costs order: firstly that a party engaged in an unreasonable act or omission in relation to the conduct or continuation of a matter; and secondly that the act or omission caused the other party to the matter to incur costs (per Gugiatti v SolarisCare Foundation Ltd [2016] FWCFB 2478 at [43]);
(b) whether an act is “unreasonable” is informed by its context and requires an evaluative assessment of all the circumstances (per Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222 at 171, (2017) 274 IR 420);
[2026] FWC 3144
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(c) the continuation of a matter after arbitration has commenced might be an unreasonable act if, on the facts apparent to the applicant at the relevant time, there was no substantial prospect of success (per Tracey v BP Refinery (Kwinana) Pty Ltd [2021] FWCFB 4970 at [24]); and
(d) if the requirements of s.400A are satisfied, the awarding of costs is nonetheless discretionary……”
Khan v Aldi Pty Ltd – [2026] FWC 3144 delivered 19 August 2026 per Easton DP