FEDERAL COURT OF AUSTRALIA Commonwealth of Australia v Construction, Forestry, Mining and Energy Union [2003] FCAFC 115 COSTS – costs under s 347 of the Workplace Relations Act 1996 (Cth) – whether a proceeding is "a proceeding in a matter arising under the Act" Workplace Relations Act 1996 (Cth) s 347 Re McJannet; Ex parte Australian Workers' Union of Employees, Queensland [No 2] (1997) 189 CLR 654 considered Thompson v Hodder (1989) 21 FCR 467 considered Shackley v Australian Croatian Club Ltd (1996) 141 ALR 736 followed Heidt v Chrysler Australia Ltd(1976) 26 FLR 257 followed Quickenden v O'Connor (2001) 109 FCR 243 cited THE COMMONWEALTH OF AUSTRALIA v CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION AND JONATHAN HAMBERGER (IN HIS CAPACITY AS THE EMPLOYMENT ADVOCATE) V605 OF 1999 BLACK CJ, TAMBERLIN & SUNDBERG JJ MELBOURNE 3 JUNE 2003 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 605 OF 1999 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: THE COMMONWEALTH OF AUSTRALIA APPELLANT AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION FIRST RESPONDENT JONATHAN HAMBERGER (IN HIS CAPACITY AS EMPLOYMENT ADVOCATE) SECOND RESPONDENT JUDGE: BLACK CJ, TAMBERLIN & SUNDBERG JJ DATE OF ORDER: 3 JUNE 2003 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The order for costs provisionally made in favour of the appellant be set aside. 2. There be no order for costs, either in respect of the appellant's application before Marshall J or of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 605 OF 1999 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: THE COMMONWEALTH OF AUSTRALIA APPELLANT AND: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION FIRST RESPONDENT JONATHAN HAMBERGER (IN HIS CAPACITY AS EMPLOYMENT ADVOCATE) SECOND RESPONDENT JUDGE: BLACK CJ, TAMBERLIN & SUNDBERG JJ DATE: 3 JUNE 2003 PLACE: MELBOURNE REASONS FOR JUDGMENT AS TO COSTS the court: 1 The Court has allowed an appeal against orders made by a judge of the Court permitting the first respondent ("the Union") to inspect a copy of an undated letter from the Minister for Employment, Workplace Relations and Small Business to the Prime Minister. Instead the Court has declared that the document in question is privileged on the ground of public interest immunity and is not required to be produced. 2 The issue concerning the discovery and inspection of the copy letter that has given rise to the present appeal arose in a proceeding before the Court in which the Union sought the imposition of a penalty upon the second respondent ("the Advocate") pursuant to the Workplace Relations Act 1996 (Cth) ("the Act"). The Union claimed that the Advocate contravened s 170NC of the Act by, it said, threatening to take action with intent to coerce an employer, the Union and two other unions to vary an industrial agreement. The Union also sought an injunction under s 170NG of the Act, incidental orders and interlocutory relief. An order for the filing of a verified list of documents having been made, the Advocate filed such a list and in respect of the copy of the letter to the Prime Minister claimed public interest immunity from production. An affidavit by Mr Henderson, the Executive Co-ordinator in the Department of the Prime Minister and Cabinet responsible for the custody of Cabinet records, supporting the claim for immunity was then filed and served on behalf of the Commonwealth. That was done in support of the claim already made by the Advocate. 3 The primary judge heard argument on the public interest immunity claim from counsel retained upon behalf of the Commonwealth and counsel for the Union and, having formed the view that the public interest in the proper administration of justice outweighed the competing interest in non-disclosure of what his Honour characterised as a Cabinet document, he ordered that there be inspection. 4 Although the Commonwealth is not a party to the substantive proceeding for a penalty, the Full Court considered it appropriate that it be granted leave to appeal from the order for inspection. The Commonwealth having now succeeded in the appeal a question has arisen as to costs. 5 The Court provisionally ordered that the Commonwealth should have its costs of its application before the primary judge and its costs of the appeal. The Union submitted, however, that s 374 of the Act applies to prevent the making of any order for costs. Section 374(1) provides: "A party to a proceeding (including an appeal) in a matter arising under this Act (other than an application under s 170CP) shall not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause." 6 The Union says that the appeal, and the Commonwealth's intervention before the primary judge, were each part of the one "proceeding" in a "matter" arising under the Act or, alternatively, were each a separate matter – that is to say, separate from the substantive proceeding – in the one matter arising under the Act. Either way, the Union submits, s 347(1) applies. The Commonwealth, on the other hand, argues that the provision does not apply because, however viewed, the proceedings in question concern the enforcement of a right, namely the right to claim public interest immunity, that does not owe its existence to a provision of the Act. Thus, it is said, on the authority of Re McJannet; Ex parte Australian Workers' Union of Employees, Queensland [No 2] (1997) 189 CLR 654 ("Re McJannet"), s 347(1) has no application. Alternatively, the Commonwealth submits, s 347 does not operate to prevent a costs order being made in favour of a non-party and the Commonwealth is a non-party to the original proceedings. 7 There is no doubt that the substantive proceeding in which the Union seeks an order for a penalty to be imposed upon the Advocate for contravention of a provision of the Act is a proceeding in a matter arising under the Act. It is plainly such, because the test for determining whether a proceeding is in a matter arising under the Act for the purposes of s 347(1) is whether the right or duty that is sought to be enforced owes its existence to a provision of the Act: Re McJannet at 656. 8 The Commonwealth's claim for public interest immunity and its subsequent application for leave to appeal and the appeal itself can however be seen as separate proceedings. In Thompson v Hodder (1989) 21 FCR 467 a Full Court of this Court, constituted by Keely, Gray and Ryan JJ, held that for the purposes of the relevantly identical provisions of s 347(1) of the Industrial Relations Act 1988 (Cth), an application for leave to appeal, even from an interlocutory judgment, was a proceeding in its own right. In that case the separate "proceeding" was nevertheless a proceeding "in" the same "matter". In Shackley v Australian Croatian Club Ltd (1996) 141 ALR 736, a decision of the Full Bench of the Industrial Relations Court of Australia, Wilcox CJ reviewed the cases and relevant usage and concluded that in the context of the expression "proceeding in a matter" in s 347(1), "proceeding" included a subsidiary application made in the course of the principal action: see at 737 – 745. Wilcox CJ then drew attention to the distinction between a proceeding and a "matter" and held that each of the subsidiary proceedings that arose in the course of the litigation of the principal proceeding arose "in" the matter that was the subject of the principal proceeding. His Honour concluded (at 746): "Once it is accepted that a single controversy, or "matter", may give rise to a multiplicity of proceedings, some of which may overlap, there is no difficulty in treating a review application [from a judicial registrar] as a "proceeding… in a matter arising under [the] Act", within the meaning of s 347." von Doussa J agreed with Wilcox J (at 746). 9 It is of course true that in one sense the "matter" or controversy between the Commonwealth and the Union in respect of the copy letter concerned the inspection of the copy document and this centred upon the right asserted by the Union to inspect it in the ordinary course of pre-trial discovery and the "right" of public interest immunity asserted by the Commonwealth (and by the Advocate). Viewed in this way, there would be no proceeding in a "matter" arising under the Act. 10 To approach the question in this way would, however, involve reading s 347(1) very narrowly and without regard to the objects it seeks to achieve. The object that s 347(1) seeks to achieve is plain enough: it is to give effect to a policy choice about the controversial issue of whether costs should ordinarily follow the event or whether they should ordinarily be borne by the party incurring them. As Northrop J said of its predecessor, s 197A of the Conciliation and Arbitration Act 1904 (Cth), in Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 at 272 (Australian Industrial Court): "The policy of s. 197A of the Act is clear. It is designed to free parties from the risk of having to pay the costs of an opposing party. At the same time the section provides a protection to parties defending proceedings which have been instituted vexatiously or without reasonable cause. This protection is in the form of conferring a power on the court to order costs against a party who, in substance, institutes proceedings which in other jurisdictions may constitute an abuse of the process of a court." 11 In an action brought to enforce a right given by the Act, it would be quite contrary to this object to read s 347(1) narrowly such that interlocutory proceedings about, for example, discovery were not seen as proceedings "in the matter" at the heart of the principal proceeding and were instead seen as proceedings in a separate matter, defined according to the narrower and subsidiary controversy about discovery. Viewed in that way, the policy choice that s 347(1) reflects would be undermined since the so-called ordinary rule as to costs would often, perhaps nearly always, prevail in interlocutory matters. Only the trial of the principal action would be unassailably a proceeding in a matter arising under the Act. Such a result could not have been intended. 12 In the present case, inspection of the copy document could have been sought only for the purposes of the principal proceeding and as an interlocutory step in the resolution of the matter that the principal proceeding had been brought to resolve. In those circumstances what may be seen as separate proceedings concerning the inspection of the document and the claim for immunity, are properly to be regarded as proceedings "in" the principal matter. The circumstances here are quite different to those in Re McJannet and in Quickenden v O'Connor (2001) 109 FCR 243, in which a Full Court applied Re McJannet on the question of costs. 13 Consistently again with the objects of the section, there is no reason to construe "party" narrowly and the Commonwealth, having taken part in the proceeding before the trial judge, and having sought and obtained leave to appeal and having had the carriage of the appeal, is to be treated as a party for the purposes of s 347(1). 14 It has not been suggested that the Union acted in any respect vexatiously or without reasonable cause in respect of the proceedings concerning the copy document so there is no question of the proviso applying. 15 In these circumstances, s 347(1) precludes the making of any order as to the costs of the proceedings concerning the production of the copy document, either at first instance or on appeal. The order that we provisionally made without hearing the parties on the question of costs should be set aside and instead there should be no order as to costs. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Black , Justice Tamberlin & Justice Sundberg. Associate: Dated: 3 June 2003 Counsel for the Appellant: Dr G Griffith QC D Batt Solicitor for the Appellant: Australian Government Solicitor Counsel for the Respondent: S Rothman SC R Doyle Solicitor for the Respondent: Slater & Gordon Date of Judgment: 3 June 2003