In civil litigation, costs usually ‘follow the event’; that is, the successful litigant is awarded costs to be paid by the unsuccessful litigant. By comparison, in industrial litigation, the Federal Court of Australia is generally regarded as a ‘no costs’ jurisdiction because of the operation of section 570 of the Fair Work Act 2009 (Cth) (FW Act).

This provision limits the circumstances in which costs can be awarded in respect of proceedings before a court exercising jurisdiction under the FW Act. Previously, section 824 of the Workplace Relations Act 1996 (Cth) (WR Act) operated with essentially the same effect.

In this In Brief, we examine the Full Federal Court decision in Construction, Forestry, Mining and Energy Union v Director of the Fair Work Building Industry Inspectorate (as successor to the Australian Building and Construction Commissioner) (No 2) [2013] FCAFC 25 (8 March 2013). In this decision, the Full Court considered when, despite the existence of the above statutory provisions, a costs orders will be made in favour of a successful litigant. The Full Court made a costs order in favour of the appellant in respect of a claim it had successfully resisted. That claim was brought under both the WR Act, and another federal statute which did not have any provisions controlling when costs could be awarded.

What happened?

The case concerned alleged unlawful industrial action by certain employees in October 2008, by failing to attend for work at Woodside Energy Ltd’s Phase V Expansion Project at the Burrup Peninsula in Western Australia on days on which they were rostered to work.  In proceedings brought by the Australian Building and Construction Commission. this industrial action was said to be in breach of relevant provisions of the WR Act and the Building And Construction Industry Improvement Act 2005 (Cth) (BCII Act).  The trial judge (Gilmour J) found against the Construction, Forestry, Mining and Energy Union (CFMEU) and its delegate at the work site (Mr Upton): see Australian Building and Construction Commission v Abbott (No 4) [2011] FCA 950 (22 August 2011).

The questions on appeal were whether the trial judge had erred in finding that the second appellant (Mr Upton) was involved in a contravention of section 38 of the BCII Act and section 494(1) of the WR Act; and whether, as a consequence, the first appellant (the CFMEU) contravened those provisions and the applicablecollective agreement, and was therefore liable to a penalty under section 719 of the WR Act. 

The Full Federal Court decided that the appeal should be allowed in respect of the claim  brought under both the BCII Act and the WR Act: see Construction, Forestry, Mining and Energy Union v Director of the Fair Work Building Industry Inspectorate (as successor to the Australian Building and Construction Commissioner) [2012] FCAFC 178 (6 December 2012).  The Full Court’s subsequent decision of 8 March 2013 dealt with the question of costs arising from the successful appeal.

The applicable legislation

In relation to the claim brought under section 494(1) of the WR Act, section 824 of that legislation provided that:

  1. A party to a proceeding (including an appeal) in a matter arisingunder this Act (other than an application under section 663) mustnot be ordered to pay costs incurred by any other party to theproceeding unless the first-mentioned party instituted theproceeding vexatiously or without reasonable cause.
  2. Despite subsection (1), if a court hearing a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) is satisfied that a party to the proceeding has, by an unreasonable act or omission, caused another party to the proceeding to incur costs in connection with the proceeding, the court may order the first-mentioned party to pay some or all of those costs.
  3. In subsections (1) and (2):

“costs” includes all legal and professional costs and disbursements and expenses of witnesses.

However, the BCII Act did not contain any provisions dealing with whether costs should or should not be awarded, or any restrictions on the awarding of costs.

The issues

As the appeal was a proceeding in a matter arising under the WR Act and also a proceeding in a matter arising under the BCII Act, the Full Court had to consider:

  1. first, whether the effect of section 824 of the WR Act was that the respondent could not be ordered to pay any of the appellants’ costs;
  2. secondly, if section 824 of the WR Act did not prevent the respondent from being ordered to pay any of the appellants’ costs, how the costs of the appeal should be apportioned by reference to the two pieces of legislation.

Decision

The Full Court (North, Logan and Robertson JJ) undertook an extensive review of case authority on the first issue, concluding that: 

  • Restrictions on the award of costs in proceedings under the WR Act also apply to claims brought in the Federal Court’s accrued jurisdiction (for example, where a claim is made for damages for the commission of a tort such as interference with contractual relations, based on facts common to those on which a statutory claim is based).
  • A different approach applies where a claim (or claims) are brought under two separate federal statutes.  In that event, the provisions of both statutes must be construed ‘in an endeavour “to produce a harmonious legal meaning to the provisions claimed to conflict”’ ([2013] FCAFC 25 at [61]).
  • “Applying that principle ... consideration should be given to the strong implication derived from the BCII Act that in a proceeding in which the Court has jurisdiction under that Act, by [section 43 of the Federal Court of Australia Act 1975 (Cth)], the Court has a statutory discretion to award costs.” ([2013] FCAFC 25 at [62]) 
  • Therefore, where the matter arises under two federal statutes, section 824 of the WR Act does not apply to the entirety of the proceeding to limit the Court’s power to make a costs order in respect of the claim premised on the other Act.
  • In relation to the second issue, in this instance, the Full Court rejected the commonly-used approaches for deciding whether there should be an apportionment, such as: the amount of time taken up in proceedings in respect of the WR Act claim as against the claim brought under the BCII Act; or the importance of one claim as against the other.  Instead, the Full Court said that it was preferable to:

... face directly the consequence that there are two Acts under which the matter in the proceeding arises and the facts consist of a common substratum or undifferentiated whole, but with different legislative sources of claimed liability.  It follows ... that the uncontrolled aspect should be treated as constituting one half of the proceeding. ([2013] FCAFC 25 at [66])

The Full Court emphasised that in apportioning costs in this matter, it was not appropriate to: 

  • take an approach giving full effect to the restriction on costs contained in the industrial legislation, by ensuring that costs in relation to the other discrete federal claim would only be awarded where those costs do not overlap with costs incurred in relation to the WR Act claim;
  • take a ‘disentangling’ approach to the question of what costs were incurred in respect of one claim as against the other. ([2013] FCAFC 25 at [67]-[68])

Ultimately, the Full Court adopted the approach of Jessup J in Bahonko v Sterjov [2007] FCA 1341, to the effect that “the issues that occupied the parties in the matter were wholly undifferentiated as between the two statutory bases of jurisdiction, or about equally referrable to each”. Therefore, “in all the circumstances, justice would be done, and the true costs of the appellants with respect to the non-WR Act claims would be reflected, fairly” if they were awarded 50% of the costs of the appeal, no costs being ordered in relation to the WR Act matter. ([2013] FCAFC 25 at [71]-[72])

The Full Court remitted the question of the costs at first instance back to the trial judge for determination.

Lessons from the Full Federal Court’s 8 March 2013 decision on costs

Because of the public policy interest in the finality of litigation, broadly speaking, the notion of ‘Anshun estoppel’ prevents a person from litigating a claim that they could reasonably be expected to have made in past litigation.  So, for example, if a person has a claim under the FW Act as well as under another federal statute (for example, anti-discrimination or trade practices legislation), that person would ordinarily be expected to litigate all such claims together or run the risk of being barred from litigating the non-FW Act claims in the future.

The impact of the Full Federal Court’s decision is that, in circumstances where all claims are litigated together to avoid the consequences of Anshun estoppel, an applicant faces the prospect of (for instance):

  • not being awarded costs in respect of their successful FW Act claim (because of section 570) - but having to pay costs if they are unsuccessful in respect of the other federal claim, if there are no costs-controlling provisions in respect of that claim; or
  • being able to recover costs if they are successful on the other federal claim(s), without having to pay costs if their FW Act claim is unsuccessful.
  • conversely, respondents to alleged contraventions of the FW Act may be able to recover, or have to pay, costs if they are successful or unsuccessful respectively in resisting other federal claims in the same proceedings.

In light of the Full Court decision, employers involved in proceedings under the FW Act and other federal statutes will need to carefully consider the potential for costs orders to be made in such proceedings.