Indemnity costs in the Fair Work Commission

As a general rule, costs in proceedings in the Fair Work Commission do not “follow the event” which is the practice in most Australian courts which deal with civil litigation where as a general rule the loser pays the winners’ costs.

Costs which are ordinarily ordered to be paid in such cases are what are called “party and party” costs, which are generally prescribed by law as the costs which are to be awarded to the winner, and which are more often than not considerably less than legal fees payable in the real world, where lawyers would go out of business if forced to limit their fees to the notional party and party fees set by courts and bureaucrats without regard to reality.

In civil litigation, the courts have always had a discretion to order that the costs payable by the loser to the winner should be assessed on a lawyer/client or “indemnity” basis so that the costs to be paid by the loser are sufficient to ensure that the winner is not out of pocket.

In very rare cases the Fair Work Commission regards itself as having a discretion to award costs on this basis, although it is very, very rare for it to do so.

“In Stanley v QBE Management Services Pty Limited T/A QBE, 23 the Commission’s power to award indemnity costs was considered in light of s 403. It was observed that s 403 expressly provided that the Commission was not limited to the items of expenditure in any schedule. Further, Schedule 3.1 to Regulation 3.08 of the Regulations contemplated that in relation to a number of items specified, the Commission should exercise discretion in determining the amounts to be awarded.24 In Shaun Welsh v Just Fine Food T/A Vanilla Slice Pty Ltd,25 Deputy President Clancy concluded that when awarding costs under either s 400A or s 611, there is discretion to award costs on either a party-party, or indemnity basis.26 The same approach is therefore followed, and in this case, an order for costs on an indemnity basis will be made.”

Sharkey v Life Without Barriers (2019) FWC 2287 delivered 21 June 2019 per Beaumont DP