Costs

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.

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]

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

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]

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]

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]

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 application [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.