Costs

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Introduction

See Fair Work Act s.611

People who incur legal costs in a matter before the Fair Work Commission generally pay their own costs.^[1]

The Commission has the discretion to order one party to pay the other party’s legal costs.^[2]

This is called a ‘costs order’ and it will only be granted in certain situations.

What are costs?

Costs are the amounts a party has paid to a lawyer or paid agent for advice and representation in a matter before a court or tribunal.

If a party is ordered to pay another party’s legal costs it will not usually be for the whole amount of legal costs incurred.

The Commission may order that only a proportion of the costs be paid. Costs may be ordered either on a party-party basis or on an indemnity basis.

Party‒party costs

Party‒party costs are the legal costs that are deemed necessary and reasonable.^[3]

The Commission will look at whether the legal work done was necessary and will decide what a fair and reasonable amount is for that work.^[4]

Indemnity costs

Indemnity costs are also known as solicitor‒client costs.

Indemnity costs are all costs including fees, charges, disbursements, expenses and remuneration as long as they have not been unreasonably incurred.^[5]

Indemnity costs cover a larger proportion of the legal costs than party-party costs.

They may be ordered when there has been an element of misconduct or delinquency on the part of the party being ordered to pay costs.^[6]

Party‒party costs are the costs that one side pays to the other side in legal proceedings. They are the result of the Commission ordering that one party pay costs to the other party.

Indemnity costs are the costs that you pay to your solicitor for the work that they perform for your matter. The basis of these costs is a costs agreement between you and your solicitor.

Applying for costs

An application for costs must be made within 14 days after the Commission finishes dealing with the dispute.^[7]

What costs may be recovered?

The Fair Work Regulations include a ‘schedule of costs’ which sets out appropriate rates for common legal services. The schedule provides the Commission with guidance when exercising its jurisdiction to make an order for costs.^[8]

The Commission is not limited to the items in the schedule of costs, but cannot exceed the rates or amounts in the schedule if an item is relevant to the matter.^[9]

When are costs ordered?

See Fair Work Act s.611

Section 611 of the Fair Work Act 2009 (the Fair Work Act) sets out the general provision for when the Commission may order costs. The Commission may order a person to pay the other party’s costs if it is satisfied:

that the person’s application or response to an application was made vexatiously or without reasonable cause, or
it should have been reasonably apparent that the person’s application or response to an application had no reasonable prospect of success.

The power to award costs is discretionary. It is a two stage process:

decide whether there is power to award costs, and
if there is power, consider whether the discretion to award costs is appropriate.^[10]

Vexatiously

Vexatious means that:

the main purpose of an application (or response) is to harass, annoy or embarrass the other party,^[11] or
there is another purpose for the action other than the settlement of the issues arising in the application (or response).^[12]

Without reasonable cause

The test for ‘without reasonable cause’ is that the application (or response):

is ‘so obviously untenable that it cannot possibly succeed’
is ‘manifestly groundless’
is ‘so manifestly faulty that it does not admit of argument’
‘discloses a case which the Court is satisfied cannot succeed’, or
‘under no possibility can there be a good cause of action’.^[13]

The Commission may also consider whether, at the time the application (or response) was made, there was a ‘substantial prospect of success.’^[14] It is inappropriate to find that an application (or response) was without reasonable cause if success depends on the resolution of an arguable point of law.^[15]

An application (or response) is not without reasonable cause just because the court rejects a person’s arguments.^[16]

In simple terms, without reasonable cause means that an application (or response) is made without there being any real reason, basis or purpose.

No reasonable prospect of success

Whether it should have been reasonably apparent that an application (or response) had no reasonable prospect of success is an objective test.^[17]

A finding that an application (or response) has no reasonable prospect of success should be reached with extreme caution and should only be reached when an application (or response) is ‘manifestly untenable or groundless’.^[18]

An objective test considers the view of a reasonable person. In this case it looks at whether it would have been apparent to a reasonable person that an application or response had no reasonable prospect of success. This is the appropriate test.

A subjective test would look at the view of the person themselves. A subjective test would look at whether it would be reasonably apparent to the person that their application or response had no reasonable prospect of success. This is not the appropriate test as the person has a vested interest in the matter being decided in their favour, which can influence how the person will look at the issues.

Case examples

Costs ordered – vindictive and frivolous

Hill v L E Stewart Investments Pty Ltd T/A Southern Highlands Taxis and Coaches and Others

[2014] FWC 5588 (Hatcher VP, 21 August 2014).

Decision on the substantive aplication [2014] FWC 4666 (Hatcher VP, 25 July 2014).

Facts

An application was made by Mr Paul Hill under s.789FC(1) of the Fair Work Act for an order to stop bullying. This application was dismissed on the basis of two findings: firstly, that Mr Hill had failed to prosecute his application since 19 June 2014, and secondly, that Mr Hill’s application had no reasonable prospect of success. At the hearing of Mr Hill’s anti-bullying application, which he did not attend, the respondents (the employer and persons named) foreshadowed an intention to apply for costs.

The respondents claimed the costs on the grounds of inconvenience and disruption, evidenced by the time they spent preparing for and participating in the listed telephone conferences and attending the hearing in Wollongong. The respondents supported the claim for costs on the ground that Mr Hill’s anti-bullying application was ‘vindictive and frivolous’. Mr Hill did not file any submission on the question of costs.

Outcome

The Commission was satisfied that it should have been reasonably apparent to Mr Hill that his application had no reasonable prospect of success. Mr Hill’s working relationship with the respondents came to an end on 11 March 2014, six days before Mr Hill filed his application, with there being no reasonable prospect of the working relationship re-commencing at some future time, there was no further risk of Mr Hill continuing to be bullied by the respondents at work. The legislative scheme is directed to preventing potential future conduct, not punishing or compensating for past conduct. Costs were ordered with respect to the hearing in Wollongong on 10 July 2014.

Relevance

Mr Hill’s unreasonable behaviour in not attending the hearing of his application, not advising that he would not attend, not responding to the Commission’s prior inquiries as to whether he would attend, and his failure to provide any reasonable explanation for this conduct, justified the awarding of the respondents' costs.

Costs NOT ordered – not reasonably apparent there was no reasonable prospects of success

Re Ms S.W.

[2014] FWC 4476 (Hampton C, 2 June 2014).

Facts

An application was made by Ms S.W. under s.789FC(1) of the Fair Work Act for an order to stop bullying. This application was dismissed on the basis that the applicant was not at work in a constitutionally-covered business. The applicant was a teacher employed in a public school by the Western Australian Department of Education (WA Department).

The WA Department sought that costs be awarded against Ms S.W. as it should have been reasonably open to the applicant that her claim had no prospect of success.

The identity of an applicant’s employer may not always be decisive; rather it is a question as to who was conducting the workplace concerned and whether it is a constitutionally-covered workplace. The fact that the WA Department operated with an ABN was a consideration.

Outcome

Though no findings were made, the Commission held that the substantive allegations appeared to be capable of being considered as unreasonable conduct for the purposes of this jurisdiction. The Commission was not persuaded that it should have been reasonably apparent to Ms S.W. that her application had no reasonable prospects of success. The costs application was dismissed.

Relevance

This matter actually required consideration as to the corporate or other status of the applicant’s workplace. This type of issue can make a matter more complex than it might initially appear. As a result it would not have been reasonably apparent to the applicant that there was no reasonable prospect of success.

References

^[1] Fair Work Act s.611(1).

^[2] Fair Work Act s.611(2).

^[3] Butterworths Australian Legal Dictionary, 1997, at p. 852.

^[4] ibid.

^[5] Butterworths Australian Legal Dictionary, 1997, at p. 586.

^[6] Oshlack v Richmond River Council [1998] HCA 11 (25 February 1998) at para. 44, [(1998) 193 CLR 72]; cited in Goffett v Recruitment National Pty Ltd [2009] AIRCFB 626 (Lacy SDP, Hamilton DP, Larkin C, 28 August 2009) at para. 50, [(2009) 187 IR 262]; and Stanley v QBE Management Services Pty Limited T/A QBE [2012] FWA 10164 (Jones C, 18 December 2012) at para. 24.

^[7] Fair Work Act s.377.

^[8] Fair Work Regulations reg 3.04; sch 3.1.

^[9] Fair Work Regulations reg 3.04; sch 3.1.

^[10] McKenzie v Meran Rise Pty Ltd t/as Nu Force Security Services Print S4692 (AIRCFB, Giudice J, Watson SDP, Whelan C, 7 April 2000) at para. 7.

^[11] Nilsen v Loyal Orange Trust [1997] IRCA 267 (11 September 1997), [(1997) 76 IR 180 at p. 181]; citing Attorney-General v Wentworth (1988) 14 NSWLR 481, at p. 491; cited in Holland v Nude Pty Ltd T/A Nude Delicafe) [2012] FWAFB 6508 (Harrison SDP, Richards SDP, Blair C, 3 August 2012) at para. 7, [(2012) 224 IR 16].

^[12] ibid.

^[13] General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 (9 November 1964) at para. 8, [(1964) 112 CLR 125 at p. 129]; cited in Walker v Mittagong Sands Pty Limited T/A Cowra Quartz [2011] FWA 2225 (Thatcher C, 14 April 2011) at para. 17, [(2011) 210 IR 370].

^[14] Re Joseph Michael Kanan v Australian Postal and Telecommunications Union [1992] FCA 366 (31 July 1992) at para. 29, [(1992) 43 IR 257]; cited in Dryden v The Bethanie Group Inc [2013] FWC 224 (Williams C, 11 January 2013) at para. 20.

^[15] ibid.

^[16] R v Moore; Ex Parte Federated Miscellaneous Workers’ Union of Australia [1978] HCA 51 (14 December 1978) at para. 3 (Gibbs J), [(1978) 140 CLR 470 at p. 473]; cited in Walker v Mittagong Sands Pty Limited T/A Cowra Quartz [2011] FWA 2225 (Thatcher C, 14 April 2011) at para. 20, [(2011) 210 IR 370].

^[17] Baker v Salver Resources Pty Ltd [2012] FWAFB 4014 (Watson SDP, Drake SDP, Harrison C, 27 June 2011) at para. 10; citing Wodonga Rural City Council v Lewis PR956243 (AIRCFB, Watson SDP, Lloyd SDP, Gay C, 4 March 2005) at para. 6, [(2005) 142 IR 188].

^[18] Baker v Salver Resources Pty Ltd [2012] FWAFB 4014 (Watson SDP, Drake SDP, Harrison C, 27 June 2011) at para. 10; citing Deane v Paper Australia Pty Ltd PR932454 (AIRCFB, Giudice J, Williams SDP, Simmonds C, 6 June 2003) at para. 7.

Updated time

Last updated

06 April 2018

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Costs

Table of contents

On this page

Introduction

What are costs?

Party‒party costs

Indemnity costs

Applying for costs

What costs may be recovered?

When are costs ordered?

Vexatiously

Without reasonable cause

No reasonable prospect of success

Case examples

Costs ordered – vindictive and frivolous

Facts

Outcome

Relevance

Costs NOT ordered – not reasonably apparent there was no reasonable prospects of success

Facts

Outcome

Relevance

References

Updated time

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