A Full Federal Court has found that it can award costs on appeals arising from the Fair Work Act 2009 (FW Act), even if proceedings are not issued vexatiously or without reasonable cause.


Implications for employers

Parties in appeal matters before the Full Federal Court will no longer be able to rely on the costs shield that has applied for the last 25 years in relation to proceedings arising under workplace laws. This decision could deter unions from launching “adventurous” appeals. Employers should also consider potential costs implications before lodging a Federal Court appeal.

At this stage it appears (although there is some uncertainty amongst commentators) that this decision applies only to appeals to the Full Federal Court, and not to appeals to the Federal Court from Fair Work Australia (FWA).

The CFMEU is expected to lodge a High Court appeal against this decision.

Background

The Federal Court found in an earlier decision that the CFMEU was not eligible to represent process technicians in a WA chemical plant operated by CSBP Limited (CSBP). The CFMEU appealed this decision to the Full Federal Court. The appeal was dismissed and the CFMEU was ordered to pay the appeal costs to CSBP.

Normally, in proceedings of this type, costs orders are only made in the limited circumstances contemplated by the FW Act; namely, where:

  • the party instituted the proceedings vexatiously or without reasonable cause;
  • the party’s unreasonable act or omission caused the other party to incur the costs; or
  • the party unreasonably refused to participate in a matter before FWA and the matter arose from the same facts as the proceedings. Similarly, the Fair Work (Registered Organisations) Act 2009 (FWRO Act) prohibits costs being awarded against a party to proceedings (including an appeal) in a matter arising from the FWRO Act unless the person instituted the proceedings vexatiously or without reasonable cause.

It was common ground in this case that the appeal did not fall within the scope of any of the situations which would permit a costs order under the FW Act or the FWRO Act.

The CFMEU applied for the costs order to be set aside.

CFMEU’s position

The CFMEU argued that the Full Court had no power to award costs in this case because:

  • the Full Court exercised jurisdiction under the FW Act in determining the appeal (the matter in dispute arose out of a right of entry application) and the costs provisions of the FW Act therefore applied to prevent the costs order; or alternatively
  • the appeal related to a matter arising under the FWRO Act (dispute about membership entitlement) and of the costs provisions of the FWRO Act therefore applied to prevent the costs order.  

Full Federal Court decision

The Full Federal Court rejected the CFMEU’s first argument on the basis that the Court’s jurisdiction was not conferred by the FW Act “at all”. The Full Court drew a distinction between original appeal proceedings before a single member and appeals before the Full Court and said that although the primary judge was exercising the Court’s original jurisdiction vested in it by the FW Act, the Full Court’s jurisdiction was conferred by the Federal Court Act (FC Act). This meant that the costs provisions of the FW Act did not apply to the appeal to the Full Court.

In response to the second argument, the Full Court disagreed that the matter was a dispute about membership entitlement under the FWRO Act. Accordingly, the costs provisions of the FWRO Act also did not apply. The Full Court found that, except for cases under the costs provisions of the FW Act and FWRO Act, Parliament had left “unfettered” the Court’s discretion to award costs.

In exercising its discretion on costs, the Full Court considered the reasonableness of the CFMEU putting CSBP to the further expense of defending the appeal. The Full Court said that while it may not be fair to describe CFMEU’s appeal as “vexatious” or “without reasonable cause”, the CFMEU’s arguments were “distinctly adventurous” and “not so worthy of repetition that the applicant should… be allowed to ventilate them again in this Court free of the risk that it would be required to compensate the respondent for its costs of the exercise”.

Accordingly, the Full Court dismissed the CFMEU’s application and ordered the CFMEU to pay CSBP’s costs.

Construction, Forestry, Mining and Energy Union v CSBP Limited (No 2) [2012] FCAFC 64