Fair Work Act 2009
s.604—Appeal of decision

Appeal against decision [2016] FWC 1059 at Perth on 4 March 2016, decision [2016] FWC 4725 at Perth on 14 July 2016 and order PR582797 at Perth on 14 July 2016 of Commissioner Williams in matter number U2014/14956 – arguable appealable error – permission to appeal granted

[1] Mr Post’s Notice of Appeal is confusing. He has lodged what he clearly intends to be an appeal from the Decision 1 (Costs Decision) of Commissioner Williams made in Perth on 4 March 2016 and Commissioner Williams’ subsequent Decision2 (Quantum Decision) and Order3 (Quantum Order) issued in Perth on 14 July 2016. We intend to deal with this application for permission to appeal as if Mr Post’s Notice of Appeal had been properly drafted to give effect to that intention. To the extent that leave to amend the Notice of Appeal is necessary to effect Mr Post’s intention we grant that leave to amend. Based on Mr Post’s misunderstanding that Commissioner Williams’ Costs Decision was not effective until the Commissioner had issued his Quantum Decision and Quantum Order, Mr Post’s Notice of Appeal was also lodged out of time.

[2] Mr Post’s application for permission to appeal was heard by video link between Sydney, Brisbane and Perth on Tuesday 6 September 2016. Mr Lawler, solicitor from Clayton Utz, solicitors, appeared in Brisbane for NTI Limited trading as NTI (NTI). Mr Mullaly from Workclaims Australia, appeared for the appellant Mr Post.

History of proceeding

[3] On 23 October 2014 Mr Post’s employment was terminated by NTI.

[4] On 10 November 2014 Mr Post lodged an application for an unfair dismissal remedy pursuant to s394 of the Fair Work Act 2009 (Act).

[5] Mr Post’s application was heard in Perth on 22 and 23 April 2015.

[6] On 9 July 2015 Commissioner Williams issued a Decision 4 and Order5 and dismissed Mr Post’s application.

[7] On 23 July 2015 NTI filed an application seeking an order for costs against Mr Post pursuant to s.400A and s.611 of the Act. The application was filed within the 14 days prescribed by s.402 of the Act.

[8] On 5 August 2015 Mr Post filed a Notice of Appeal from the Decision and Order of Commissioner Williams dated 9 July 2015.

[9] On 16 October 2015 a Full Bench of the Fair Work Commission (Commission) dismissed the appeal filed by Mr Post.

[10] Following the decision of the Full Bench to dismiss his appeal Mr Post lodged an application in the Federal Court seeking a judicial review of the decision of the Full Bench and an order to set aside its Decision.

[11] On 20 October 2015 and 3 November 2015 Commissioner Williams issued Directions for the lodgement of a reply to be provided by Mr Post in response to NTI’s application for costs and for NTI to file and serve any further materials in response to Mr Post’s reply. Both directions contained the following statement.

“At this point it is proposed that the application for costs will be determined on the papers. If, as a result of the materials provided, the Commission considers it necessary to hold hearing it will advise the parties accordingly.”

(our emphasis)

[12] On 9 November 2015 the applicant provided submissions regarding NTI’s costs application.

[13] On 24 November 2015 the respondent provided its written submissions.

[14] On 24 December 2015 Mr Post wrote to Commissioner Williams seeking that he disqualify himself from any further hearing of matters involving him. 6 This correspondence is extracted below.

“Dear Commissioner Williams

Re U2014/14956 – Respondents request for costs:

I write in reference to the Respondents request to be awarded costs in relation to U2014/14956.

You may be aware that I have objected to your decision in relation to my unfair dismissal case that I believe I did not receive due consideration or any degree of fairness or courtesy. I was also equally unhappy with the result of the appeal I launched in relation to the case which I do not believe received due consideration.

I have commenced proceedings in the Federal Court for a Judicial Review of the decision of the full bench.

Given this I believe you should take no further part in the application by the Respondent for costs. I therefore request that you take no further action in relation to the Respondent’s application for costs and that you cease to act in this process.”

(Our emphasis)

[15] Commissioner Williams did not respond to the correspondence from Mr Post nor did he deal in any other manner with the application that he disqualify himself. He did not indicate whether or not he had reviewed his decision to hear the application on the papers already before him.

[16] On 2 February 2016 Mr Post discontinued his application for judicial review.

[17] On 4 March 2016 Commissioner Williams issued a decision determining the merit of NTI’s application for costs. He found that he was satisfied that Mr Post’s failure to accept offers of compromise after 5 December 2014 was “…an imprudent refusal of an offer to compromise and this delinquent conduct warrants the Commission exercising its discretion to award indemnity costs from this date onwards under section 400A.” 7

(our emphasis)

[18] Commissioner Williams stated that directions would issue requiring NTI to submit a Bill of Costs in accordance with his decision after which he would determine the quantum of costs to be paid by Mr Post.

[19] On 14 July 2016 Commissioner Williams issued a Decision 8 and ordered9 Mr Post to pay the sum of $113,286.69 in costs to NTI within 30 days.

Costs Provisions in the Act

[20] The Commission has the discretion to order that one party to an unfair dismissal matter pay the other party’s legal or representational costs only where it is satisfied that:

● the matter was commenced or responded to vexatiously or without reasonable cause; 10 or
● it should have been reasonably apparent that the matter was commenced or responded to with no reasonable prospect of success; 11 or
● costs were incurred as a result of an unreasonable act or omission of the other party. 12

Cost orders may also be sought against lawyers and paid agents pursuant to s.401 of the Act. 13

[21] The Act sets out the principles for awarding general cost orders or what otherwise are called party/party costs. It does not prescribe circumstances in which indemnity costs might be awarded.

[22] Section 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.

[23] Section 402 – Applications for costs orders

An application for an order for costs under section 611 in relation to a matter arising under this Part, or for costs under section 400A or 401, must be made within 14 days after:

(a) the FWC determines the matter; or
(b) the matter is discontinued.

(Our emphasis)

[24] Section 611 – Costs

(1) A person must bear the person’s own costs in relation to a matter before the FWC.

(2) However, the FWC may order a person (the first person) to bear some or all of the costs of another person in relation to an application to the FWC if:

(a) the FWC is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or
(b) the FWC is satisfied that it should have been reasonably apparent to the first person that the first person’s application, or the first person’s response to the application, had no reasonable prospect of success.

Note: The FWC can also order costs under sections 376, 400A, 401 and 780.

(3) A person to whom an order for costs applies must not contravene a term of the order.

Note: This subsection is a civil remedy provision (see Part 4-1).

Principles regarding Applications for Indemnity Costs

[25] In general, parties bear their own legal and other representational costs in any matter before the Commission. However, the Commission has the discretion to order one party in an unfair dismissal matter to pay the other party’s costs where it is satisfied that certain conditions mandated by the Act have been met. Orders that indemnity costs be paid are not usual. The ordinary rule in most jurisdictions is that costs are awarded on a party-party or standard basis. It is well-settled that indemnity costs should not be ordered unless there is some ‘special or unusual feature’ of the case that justifies departure from the ordinary practice. 14

[26] Costs can usually be divided into party/party and solicitor/client costs. An ordinary costs order refers to party/party costs, which are those costs which naturally follow from the issue of and defence of proceedings. Solicitor/client costs are also incurred because of the issue of and defence of proceedings, but may be less directly connected with or arising from the court processes and are more focused on the service of a client. As a rule of thumb party/party costs can often be about two thirds of the total account to a client. Indemnity costs orders involve the payment of the total of both party/party and solicitor/client costs. However, the costs ordered to be paid as a result of an indemnity costs order must not be unreasonably incurred or be of an unreasonable amount. The High Court in Oshlack v Richmond River Council (Oshlack) stated,

“Indemnity Costs are all costs including fees, charges, disbursements, expenses and remuneration incurred by a party provided they have not been unreasonably incurred or are not of an unreasonable amount. They involve a larger proportion of the legal costs than that of party-party costs, which only involve legal costs that are deemed necessary and reasonable. Indemnity costs may be ordered when there has been an element of misconduct or delinquency on the part of the party being ordered to pay costs.”  15

[27] Gray J, with whom Carr and Goldberg JJ agreed, in the Full Federal Court case of Hamod v New South Wales (Hamod) 16 explained the principles underlying an award of indemnity costs as follows:

‘Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs.’

[28] Gilmour J stated in D S Clarke Nominees Pty Ltd v Adder Holdings Pty Ltd 17:

‘Importantly, the court should only make an order for the payment of costs on some basis other than a party and party basis where the circumstances of the case warrant the court departing from the usual course, including where the justice of the case might require or where some special or unusual feature in the case justifies the court in departing from the ordinary practice.”

[29] Davies J stated in TSG Franchise Management Pty Ltd v Cigarette & Gift Warehouse (Franchising) Pty Ltd (No 3) 18:

‘It is well-settled law that indemnity costs should not be ordered unless there is some special or unusual feature [emphasis added] of the case that justifies departure from the ordinary practice… The cases illustrate the appropriateness of awarding costs on an indemnity basis where there has been particular misconduct that caused a loss of time to the Court and to other parties, where proceedings were commenced or continued in wilful disregard of known facts or clearly established law, where allegations were made which ought never to have been made, or where the proceeding was unduly prolonged by groundless contentions.’

(Our emphasis)

[30] A ‘special or unusual feature’ may include the following circumstances identified by Sheppard J in the leading case of Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited 19. However, the categories in which discretion may be exercised are not closed:

● where a party makes allegations of fraud, knowing them to be false, or makes irrelevant allegations of fraud; 20
● where there is evidence of misconduct that causes a loss of time to the court and to the other parties; 21
● where proceedings were commenced for some ulterior motive; 22
● where proceedings were commenced or continued in wilful disregard of known facts or clearly established law; 23
● where allegations were made which ought never to have been made; 24
● where the proceeding was unduly prolonged by groundless contentions; 25
● where there was an imprudent refusal of an offer to compromise. 26

[31] The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

Costs Provisions in the Federal Court Rules

[32] The Federal Court Rules 2011 (FCR) do not apply to proceedings in the Commission. The FCR provide, in certain prescribed circumstances, that a party must be awarded indemnity costs. Despite the use of the word ‘must’, these rules are discretionary. These include circumstances where there is a failure to meet a genuine offer made by an applicant, failure to beat a genuine offer made by a respondent, if a respondent makes an offer that is not accepted by an applicant and the applicant obtains a judgment that is less favourable than the terms of the offer or if a respondent makes an offer that an applicant unreasonably fails to accept and the applicant’s proceeding is dismissed. The jurisdiction of the Federal Court is one where costs normally follow the cause. This is in direct contrast to the usual situation before the Commission where parties, all things being equal, attend to the payment of their own costs. This distinction needs to be considered when considering orders issued for indemnity costs in jurisdictions where costs follow the cause.

Recent Case Law Examples

[33] TSG Franchise Management Pty Ltd v Cigarette & Gift Warehouse (Franchising) Pty Ltd (No 3) 27

The failure to discover critical documents without proper explanation justified an award of indemnity costs as it affected the way the other party prepared and conducted its case, as well as caused a delay in the trial.

Kostov v YPOL Pty Ltd 28

Schmidt J ordered that the plaintiff pay the defendant’s costs on an indemnity basis as a result of her unreasonable conduct, being that she discontinued her claim against the defendant. Her Honour reasoned that that every litigant is aware that commencing proceedings will incur costs so that if plaintiffs no longer wish to pursue the proceedings or if the proceedings they bring fail, costs will follow.

Sargeant v He & Fe Campbell Agricultural Machinery (No 2) 29

Indemnity costs were not awarded in this case because the defendant did not warn the plaintiff that costs would be sought on an indemnity basis. Adamson J held that the omission to foreshadow an application for indemnity costs, whilst it is not an essential precondition, is a relevant factor.

Telfer v Fairfax (in his capacity as administrator of the estate of Telfer (No 2) 30

The plaintiff made an application for indemnity costs on the basis that the offers she made the defendant were rejected. The Court found that the offers did not involve any real element of compromise and therefore were not effective to justify an award of indemnity costs.

Boensch (as trustee of Boensch Trust) v Pascoe (No 2) 31

The plaintiff was ordered to pay indemnity costs from the date of the making of a Calderbank offer. In this case, the terms of the offer were clear and the offer also expressly stated to be made pursuant to the principles enunciated in Calderbank. There was a genuine offer of compromise and it was unreasonable for the plaintiff not to accept it.

CDW v LVE 32

This was a family law matter where the father appealed and had the appeal dismissed. The mother applied to obtain an indemnity costs award on the basis that the father’s appeal was based on an ulterior motive and had no chance of success on the merits. The Court acknowledged that the father’s case on appeal was weak but held that it was ‘not so weak as to support an inference of impropriety or unreasonableness.’

Mulhern v Bank of Queensland (No 2) 33

The plaintiffs in this case were ordered to pay the defendant’s costs on an indemnity basis. Gleeson J held that the plaintiffs must have known or should have realised from the incoherence of the statement of claim that their proceedings were foredoomed to failure. Further, the plaintiffs’ conduct in their inability to identify a viable cause of action and their persistence in seeking to reagitate issues determined adversely to them was an abuse of the court’s process.

Chen v Monash University (No 2) 34

The Court ordered that the plaintiff be awarded the indemnity costs order sought by the respondents as a result of her failure to accept a generous offer of settlement before any substantial costs had been incurred. This was regarded as unreasonable conduct, particularly since the plaintiff possessed independent legal advice highlighting the weakness of her case.

Legislative provisions

[34] An appeal under s.604 of the Act is an appeal by way of rehearing and the Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker. 35 There is no right to appeal and an appeal may only be made with the permission of the Commission.

[35] This appeal is one to which s.400 of the Act applies. 36 Section 400 of the Act provides:

(1) Despite subsection 604(2), the FWC must not grant permission to appeal from a decision made by the FWC under this Part unless the FWC considers that it is in the public interest to do so.

(2) Despite subsection 604(1), an appeal from a decision made by the FWC in relation to a matter arising under this Part can only, to the extent that it is an appeal on a question of fact, be made on the ground that the decision involved a significant error of fact.

[36] The test under s.400 is “a stringent one”. 37 The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment.38 In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest:

“... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters. 39 “

[37] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error. 40 However, the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.41

Conclusion

Appealable error

Arguable Failure to deal with Mr Post’s application that he disqualify himself from hearing the costs application of NTI

[38] Mr Post made an application on 24 December 2015 that Commissioner Williams disqualify himself from further hearing any matter involving him. Commissioner Williams made no response to that application.

[39] Applications for orders that costs be paid are invariably heard by the person before whom the relevant application was conducted because the person who heard the application is in the best position to consider the merits of an application for costs. An application for a Member to recuse themselves from the hearing of an application must be heard and determined. It cannot be ignored.

[40] We are satisfied that Commissioner Williams’ failure to respond to, or otherwise deal with, Mr Post’s application was arguably a denial of procedural fairness and an appealable error.

Arguable failure to conduct a hearing in person and provide an opportunity to Mr Post to give evidence in the costs application of NTI

[41] Commissioner Williams determined NTI’s application for costs by way of written submissions. This was an application which required the making of findings on disputed facts as to the state of mind, intentions and information of Mr Post.

[42] The issues for resolution in the application for costs hearing involved a consideration of different issues than that of the s.394 application.

[43] Having decided to determine the application in this manner Commissioner Williams found, amongst other things, that Mr Post commenced the proceedings heard by him “…with wilful disregard of facts known to him”. We do not understand on what basis a finding of wilful disregard could be made on submissions alone, even with the benefit of prior hearings. This issue was pivotal in the Commissioner’s decision to order indemnity costs. He also determined that Mr Post’s refusal of offers of compromise was imprudent and that he engaged in delinquent conduct. It is arguable that there was not any safe basis for making these findings on the basis of Commissioner Williams’ receipt of submissions only from the parties.

[44] There are matters canvassed in the cases of indemnity costs referred to by this Full Bench which required the consideration of evidence. These include the advice obtained by the applicant as to whether his case was so weak as to support an inference of impropriety or unreasonableness in refusing offers, and the applicant’s state of knowledge and belief at the particular relevant points in time.

[45] The jurisdiction of the Commission is not one where costs ordinarily follow the cause and there are no rules in the Commission dealing with formal offers such as offers of compromise. It is not a jurisdiction where the only remedy is monetary. An arrangement of the kind followed in the courts involving offers of compromise or Calderbank offers is therefore not necessarily appropriate where reinstatement is a possible remedy. An applicant may also pursue an application where there is no financial gain possible to seek to overturn a finding of misconduct on which their termination of employment was based and which affects their prospects of ongoing employment.

[46] We are satisfied that Commissioner Williams’ failure to conduct a hearing regarding NTI’s application for costs and provide Mr Post with an opportunity to give the evidence at that hearing regarding these matters was arguably a denial of procedural fairness and an appealable error.

The Quantum Decision

[47] Having considered the items claimed by NTI we are persuaded that it is arguable that not all of the items allowed by Commissioner Williams in NTI’s Bill of Costs are reasonable as to the item or to the amount. Perth is not a remote outpost bereft of a competent and senior legal profession. The inclusion of expenses for legal representatives to travel from Queensland to Perth are arguably not properly and reasonably incurred and therefore arguably not able to be included in an indemnity costs order against an applicant in Perth. Commissioner Williams’ allowance of these items is arguably an appealable error.

Public interest

[48] In light of the arguable appealable errors we have identified in relation to Commissioner Williams’ failure to deal with Mr Post’s application that he disqualify himself, his failure to provide Mr Post with an opportunity to be heard and give evidence in defence of NTI’s costs application and his approval of items in the Bill of Costs arguably not properly or reasonably incurred, we are satisfied that Mr Post’s appeal attracts the public interest.

[49] We extend time for the lodgement of Mr Post’s Notice of Appeal until the actual date of lodgement. We grant permission to appeal. The appeal will be listed for hearing by this Full Bench on a date to be fixed. Directions will be issued in due course.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr P Mullally of Workclaims Australia for the appellant.

Mr P Lawler of Clayton Utz for the respondent.

Hearing details:

2016

September 6

Sydney/Perth/Brisbane via videolink.

 1   [2016] FWC 1059

 2   [2016] FWC 4725

 3   PR582797

 4   [2015] FWC 3911

 5   PR568213

 6   Appeal Book page 10

 7   Decision PN166

 8   [2016] FWC 4725

 9   PR582797

 10   FW Act s.611(2)(a)

 11   FW Act s.611(2)(b)

 12   FW Act s.400A(1)

 13   FW Act s.401

 14   TSG Franchise Management Pty Ltd v Cigarette & Gift Warehouse (Franchising) Pty Ltd (No 3) [2016] FCA 828

 15   (1998) 193 CLR 72 [44]; cited in Goffett v Recruitment National Pty Ltd (2009) 187 IR 262 [50]; and Stanley v QBE Management Services Pty Ltd [2012] FWA 10164 (Jones C, 18 December 2012) [24].

 16   (2002) 188 ALR 659; [2002] FCA 424 [665] (ALR)

 17   [2015] FCA 277

 18   [2016] FCA 828

 19   [1993] FCA 536

 20   Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397

 21   Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 187

 22   Ragata Developments Pty Ltd v Westpac Banking Corporation (1993) 217 ALR

 23   Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397

 24   Ragata Developments Pty Ltd v Westpac Banking Corporation (1993) 217 ALR

 25   Ibid

 26   Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721

 27   [2016] FCA 828

 28   [2016] NSWSC 827

 29  [2016] NSWSC 667

 30  [2016] NSWSC 639

 31   [2016] NSWSC 343

 32   [2015] WASCA 247 (S)

 33   [2015] FCA 569

 34   [2015] FCA 552

 35   Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission and Others (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ.

 36   See Australia Postal Corporation v Gorman [2011] FCA 975 at [37].

 37  Coal & Allied Mining Services Pty Ltd v Lawler and Others (2011) 192 FCR 78 at [43] per Buchanan K (with whom Marshall and Cowdrey JJ agreed).

 38   O’Sullivan v Farrer and Another (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78 at [44] -[46].

 39   [2010] FWAFB 5343 at [27], 197 IR 266.

 40   Wan v Australian Industrial Relations Commission (2001) 116 FCR 481 at [30].

 41   GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]-[27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28], 202 IR 288, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler and Others (2011) 192 FCR 78; New South Wales Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28].

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