When are costs ordered?

See Fair Work Act s.611

Section 611 of 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. Awarding costs is a 2-stage process:

• First, a Commission Member will decide whether there is power to award costs, and
• if there is power, the Commission Member will consider whether an order for costs is appropriate in all the circumstances.[268]

An application is made vexatiously if:

• the main purpose of the application (or response) is to harass, annoy or embarrass the other party,[269] or
• there is another purpose for the action other than resolving the issues arising from the application (or response).[270]

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’.[271]

The Commission may also consider whether, at the time the application (or response) was made, there was a ‘substantial prospect of success.’[272] 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.[273]

An application (or response) is not without reasonable cause just because the court rejects a person’s arguments.[274]

Whether it should have been reasonably apparent that an application (or response) had no reasonable prospect of success is an objective test that is directed to a belief formed on an objective basis, rather than a subjective test.[275]

A finding that an application (or response) has no reasonable prospect of success ‘should only be reached with extreme caution in circumstances where the application [or response] is manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable.’[276]

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. At the hearing of Mr Hill’s 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. The respondents supported the claim for costs on the ground that Mr Hill’s 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, 6 days before Mr Hill filed his application. As there was 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 costs. As the respondents were self-represented, the Commission awarded costs in the nature of witness fees for their attendance at the court hearing.

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

Luke Tamu v World Vision Australia [2020] FWCFB 5342 (Hatcher VP, Sam DP, Spencer C, 6 November 2020)

Facts

The Full Bench refused Mr Tamu permission to appeal a decision to issue a certificate in respect of his general protections dismissal application. The Full Bench concluded that Mr Tamu’s appeal was ‘entirely lacking in merit’. World Vision Australia (World Vision) subsequently applied for costs under s.611 of the Fair Work Act.

Outcome

The Full Bench was satisfied that Mr Tamu’s appeal was lodged without reasonable cause and had no reasonable prospects of success. However, it was not prepared to find that the appeal was lodged vexatiously in order to harass World Vision or to seek some collateral advantage.

As s.611(2)(b) was satisfied, the Bench considered whether it should exercise its discretion to award costs to World Vision. The Bench rejected World Vision’s submission that costs should be awarded to deter Mr Tamu from making or continuing other legal proceedings against World Vision, as the Bench had no basis to assess the merits of Mr Tamu’s claim that his dismissal was unlawful.

The following matters were relevant to the Full Bench’s decision to decline to award costs:

• • World Vision did not file a Form F53 notice and so did not place Mr Tamu on notice that it was incurring costs for which he could be liable
  • although World Vision applied for permission to be represented in the appeal, this was never actually granted
  • the application for representation was made on the basis that it would enable the matter to be dealt with more efficiently, taking into account its complexity. As the Bench did not need to hear from World Vision in the appeal, this could not be said to be the case. Further, as World Vision did not seek to rely on s.596(2)(b) of the Fair Work Act, an inference was available that World Vision was capable of representing itself, and
  • the directions made in respect of the appeal did not require World Vision to file any written submissions or take any other step in relation to the appeal.

Relevance

The decision to award costs is a discretionary decision. Simply because an appeal is without merit does not mean that it is made vexatiously, or that the appellant will necessarily be made responsible for the respondent’s costs.