This brief extract from a decision of the Federal Court is a succinct summary of the legal principles used to determine if and when orders for costs may be made in the fair work system.
“PROVISIONS AND PRINCIPLES
Section 570(1) of the Act provides that a party to proceedings in a court in relation to a matter arising under the Act may be ordered to pay costs incurred by another party to the proceedings only in accordance with s 570(2). Section 570(2)(b) confers on a court a discretionary power to award costs if the court is satisfied that one party’s unreasonable act or omission caused the other party to incur costs.
The following principles are relevant:
(1) the discretion conferred by s 570(2) should be exercised cautiously, and the case for its exercise should be clear: Ryan v Primesafe [2015] FCA 8; 323 ALR 107 at [64] (Mortimer J); BDR21 v Australian Broadcasting Corporation (No 2) [2021] FCA 1347 at [25] (Halley J);
(2) the reason for caution in the exercise of the discretion conferred by s 570(2) is the potential for discouraging parties to pursue, in a complete and robust way, the claims they seek to make under the Act, or the defence to those claims, and to ensure that the spectre of costs does not loom so large as to discourage parties from commencing, continuing or responding to claims: Ryan at [64]; BDR21 at [26(f)] and the cases cited;
(3) unreasonableness is to be determined objectively and is to be assessed by reference to the particular circumstances of the case: see BDR21 at [26(e)] and the cases cited;
(4) the word “unreasonable” in s 570(2)(b) is not capable of precise definition and is inherently sensitive to context. It is appropriate for a court to examine the context or circumstances of the relevant conduct to ascertain whether that conduct could be characterised as unreasonable: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (the costs of the Cup of Tea Case) [2019] FCAFC 36 at [18] (Flick, Reeves and O’Callaghan JJ);
(5) inefficient conduct of the case or a misguided approach may be relevant to, but will not be conclusive of, unreasonableness: see BDR21 at [26(b)] and [26(c)] and the cases cited; and
(6) a failure to accept a reasonable offer of compromise, including an offer expressed in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333, is capable of constituting an unreasonable act or omission for the purposes of s 570(2)(b) of the Act: see Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; 229 FCR 221 at [166] (Tracey, Gilmour, Jagot and Beach JJ); Salama v Sydney Trains (No 2) [2021] FCA 1200 at [14] and [39] (Burley J).
Further, in Patrick Stevedores Holdings Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (No 5) [2021] FCA 1645 at [6(4)] Lee J observed that in considering whether it is unreasonable for a settlement offer to be rejected, the following matters should ordinarily be considered:
(1) the stage of the proceeding when the offer was made;
(2) the time afforded to the offeree to consider the offer;
(3) the extent of compromise involved;
(4) the offeree’s prospects of success, assessed as at the date of the offer;
(5) the clarity with which the terms of the offer were expressed; and
(6) whether the offer foreshadowed an application for indemnity costs in the event of refusal.”
Fair Work Ombudsman v Construction, Forestry and Maritime Employees Union (Kwinana Bulk Jetty Case) (Costs) [2026] FCA 126 delivered 20 February 2026 per Dowling J