See Fair Work Act ss. 375B, 377 and 611
Section 611 of the Fair Work Act 2009 sets out the general provision for when the Fair Work 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.
Section 375B of the Fair Work Act sets out the circumstances in which the Commission can make costs orders against parties in general protections matters. Orders under this section can only be made if a party has lodged an application in accordance with s.365 of the Fair Work Act.
The Commission may order costs against a party to a general protections dispute if the first party caused the second party to incur costs because of an unreasonable act or omission in connection with the conduct or continuation of the matter.
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.
Vexatious means that:
- The main purpose of an application (or response) is to harass, annoy or embarrass the other party.
- There is another purpose for the action other than the settlement of the issues arising in the application (or response).
The question of whether an application was made ‘vexatiously’ looks to the motive of the applicant in making the application. It is an alternative ground to the ground that the application was made ‘without reasonable cause’ and may apply where there is a reasonable basis for making the application.
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’
- ‘under no possibility can there be a good cause of action’.
The Commission may also consider whether, at the time the application (or response) was made, there was a ‘substantial prospect of success.’ 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.
An application (or response) is not without reasonable cause just because the court rejects a person’s arguments.
A proceeding is not to be classed as being instituted without reasonable cause simply because it fails, but rather in circumstances where on the applicant’s own version of the facts, it is clear that the proceeding must fail.
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.
A finding that an application (or response) has no reasonable prospects of success should be reached with extreme caution and should only be reached when an application (or response) is ‘manifestly untenable or groundless’.
Anobjective 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.
Unreasonable act or omission
An unreasonable act or omission can include a failure to discontinue a general protections dispute application or a failure to agree to terms of settlement. What is unreasonable will depend on the circumstances. It is intended that costs only be ordered where there is clear evidence of unreasonable conduct.