Shanahan v Australian Industrial Relations Commission (No 3) [2007] FCAFC 53

FEDERAL COURT OF AUSTRALIA

Shanahan v Australian Industrial Relations Commission (No 3) [2007] FCAFC 53

WORKPLACE RELATIONS – costs in respect of an unsuccessful application for constitutional writ relief in relation to a decision of the Full Bench of the Australian Industrial Relations Commission Workplace Relations Act 1996 (Cth) ss 170CE(1), 170CG(3), 347(1) and (renumbered) 824(2) Workplace Relations Regulations reg 2.10 Shanahan v Australian Industrial Relations Commission [2006] FCAFC 172 Paras v Public Service Body Head of the Department of Infrastructure (No 3) [2006] FCA 745 Re McJannet; ex parte The Australian Workers' Union of Employees, Queensland [No 2] (1997) 189 CLR 654 Abebe v The Commonwealth of Australia (1999) 197 CLR 510 IAN SHANAHAN v AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION AND UNIVERSITY OF WESTERN SYDNEY NSD 693 OF 2006

MARSHALL, GRAHAM AND JESSUP JJ

19 APRIL 2007

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 693 OF 2006

BETWEEN: IAN SHANAHAN

Applicant

AND: AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

First Respondent

UNIVERSITY OF WESTERN SYDNEY

Second Respondent

JUDGES: MARSHALL, GRAHAM AND JESSUP JJ

DATE: 19 APRIL 2007

PLACE: SYDNEY

THE COURT ORDERS THAT:

1. There be no order as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 693 OF 2006

BETWEEN: IAN SHANAHAN

Applicant

AND: AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

First Respondent

UNIVERSITY OF WESTERN SYDNEY

Second Respondent

JUDGES: MARSHALL, GRAHAM AND JESSUP JJ

DATE: 19 APRIL 2007

PLACE: SYDNEY

REASONS FOR JUDGMENT

MARSHALL AND GRAHAM JJ 1 On 13 December 2006 the Court ordered that the applicant's Application for an Order to Show Cause be dismissed. The second respondent has now made an application for a costs order pursuant to s 824 of the Workplace Relations Act 1996 (Cth) ('the Act'). 2 By an application filed 13 August 2003 under s 170CE(1)(a) of the Act the applicant sought relief in relation to the termination of his employment by the second respondent in the Australian Industrial Relations Commission ('the Commission') on the basis that the termination was harsh, unjust or unreasonable. 3 On 5 July 2004 Senior Deputy President Cartwright ordered that the application under s 170CE(1) of the Act be dismissed. 4 On or about 26 July 2004 the applicant filed a 'Notice Of Appeal Under Section 45' in the Commission. Leave to appeal was granted. By a majority of 2:1 the Full Bench dismissed the appeal. The decision of the Full Bench was handed down on 27 May 2005. 5 On 25 November 2005 the applicant filed an Application for an Order to Show Cause in the High Court of Australia in which constitutional writ relief was sought in respect of the decision of the Full Bench. That application was remitted to the Federal Court of Australia by Kirby J in the High Court on 1 April 2006. 6 The remitted application was heard by the Court on 21 November 2006 and decided adversely to the applicant on 13 December 2006. 7 During the course of the hearing of the application before the Court as presently constituted, the applicant advanced a number of issues which had not been raised as grounds in the Application for an Order to Show Cause. At 2.15 pm on the day of the hearing the applicant applied for leave to amend the Application so as to raise five additional grounds. That application was refused (see Shanahan v Australian Industrial Relations Commission [2006] FCAFC 172). 8 At the time of the institution of the Application for an Order to Show Cause in the High Court s 347 of the Act relevantly provided: '347(1) A party to a proceeding … in a matter arising under this Act … 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.' 9 With effect from 27 March 2006 s 347 of the Act was amended and renumbered as s 824. Relevantly, the word 'shall' in s 347(1) was amended to read 'must' and a new subsection (1A) was inserted which, following the renumbering, became s 824(2) of the Act. 10 Section 824(2) provided: '824(2) Despite subsection (1), if a court hearing a proceeding … in a matter arising under this Act … 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.' 11 Chapter 7 of the Workplace Relations Regulations entitled 'Transitional and other provisions for the Work Choices Act' included regulation 2.10 reading: '2.10 The amendments of section 347 of the pre-reform Act made by Schedule 1 to the Work Choices Act do not apply in relation to an action or omission that occurred before the reform commencement [i.e. 27 March 2006].' 12 The grounds upon which the applicant sought constitutional writ relief in this court were set out in paragraph [18] of our joint reasons for judgment. 13 The applicant's employment had been regulated by an industrial agreement certified under the Act. Under clause 49.21(iii)(c) of that agreement the Vice-Chancellor of the second respondent was empowered to terminate the employment of an academic staff member 'provided that a decision to terminate the employment of the academic staff member can only be made in instances of serious misconduct, as defined in clause 3 Definitions of this Agreement'. 14 Clause 3 drew a distinction between 'misconduct' and 'serious misconduct'. 15 The majority of the Full Bench concluded that the termination of the applicant's employment was not harsh, unjust or unreasonable, the majority having addressed, seriatim, each of the matters which under s 170CG(3) of the Act the Commission 'must have regard to'. However, as pointed out in paragraphs [44] and [48] of our joint reasons for judgment there were two matters of potential importance which required consideration. The majority of the Full Bench had failed to make a finding, in terms, that there had been 'serious misconduct' on the part of the applicant which provided a 'valid reason for the termination'. We addressed this omission, finding that 'whilst the words "serious misconduct" were not expressly incorporated in the majority of the Full Bench's reasons, it may be inferred from the findings made [by the Full Bench at [209]-[211] of their reasons], especially their adoption of Senior Deputy President Cartwright's view, that the majority in fact addressed the correct issue and were entitled to come to the conclusion that the applicant's conduct provided a valid reason for the termination of his employment'. 16 The second matter of potential importance was the failure by the majority of the Full Bench to carry forward into its reasoning an express reference to its findings in respect of the evidence of a Dr Teoh. We concluded that, in the context of the majority's overall reasons, that was unimportant. The fact was that the conduct in which the applicant had engaged and of which complaint was made was not, as the majority found, considered by Dr Teoh as being 'a direct result of' a medical condition affecting the applicant; rather, his conduct was simply considered to be 'consistent' with such a condition (see our joint reasons for judgment at [48]). 17 At [49]-[50] we concluded that it was, in the circumstances, unnecessary for the majority of the Full Bench to address whether involuntary conduct occasioned by a psychiatric condition could amount to 'serious misconduct' for the purposes of the certified agreement, the Full Bench having failed to find that the actions of the applicant were involuntary and the result of a psychiatric condition affecting him. 18 In the second respondent's submissions on the question of costs reliance was placed upon the decision of Young J in Paras v Public Service Body Head of the Department of Infrastructure (No 3) [2006] FCA 745. That case concerned an application for costs in relation to a Notice of Motion dated 25 May 2006 by which the respondent sought orders discharging or staying an interlocutory injunction which his Honour had granted on 19 May 2006. All relevant matters in that case occurred after 27 March 2006. 19 Whilst s 347(1) of the Act as it was on 25 November 2005 may be seen to be procedural in nature, it seems to me that, as its focus is upon the institution of the relevant proceeding, it should be the relevant operative provision by which the costs of the current application for an Order to Show Cause should be determined. This does not deny the operation of s 824(2) were it to be the case that by an 'unreasonable act or omission' of the applicant occurring on or after 27 March 2006, the second respondent was caused to incur costs in connection with the proceeding. In such circumstances the Court could order the applicant to pay 'some or all of those costs'. 20 The ordinary rule in respect of costs is, of course, that the unsuccessful party must pay the successful party's costs. That rule must yield to any relevant statutory provision to the contrary. In this case, by virtue of s 347(1) of the Act, a party to a proceeding in a matter arising under the Act 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. 21 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 the duty that is sought to be enforced owes its existence to a provision of the Act (per Brennan CJ, McHugh and Gummow JJ in Re McJannet; ex parte The Australian Workers' Union of Employees, Queensland [No 2] (1997) 189 CLR 654 at 656). 22 In Abebe v The Commonwealth of Australia ('Abebe') (1999) 197 CLR 510 at 585 [215] Kirby J said: '215 The meaning of the word "matter" is elusive. Established doctrine … holds that the word has the same meaning in each of the sections in Ch III [of the Constitution] in which it is used …. It does not connote "a legal proceeding" as the parties may have chosen to frame it …. Rather it refers to "the subject matter for determination in a legal proceeding" ….' 23 At p555 in Abebe [117] Gaudron J said: '117 It has been accepted since In re Judiciary and Navigation Acts … that, in ss 75, 76 and 77 of the Constitution, the word "matter" means "the subject matter for determination in … legal proceeding[s]" rather than the proceedings themselves. …' 24 At p529-530 [36] Gleeson CJ and McHugh J drew attention to the fact that an employee may obtain an order from an industrial court that a term of the employment contract is void because it is harsh or unconscionable and at the same time have a right to obtain an order from a court of general jurisdiction that the term is unjust or unfair under legislation such as the Trade Practices Act 1974 (Cth) or the Contracts Review Act 1980 (NSW). In both cases, the 'matter' determined in one court is separate and independent from the 'matter' determined in the other court even though each 'matter' arises out of the same factual substratum. They held at 529 [36] that the same legal controversy can give rise to separate matters because different courts can provide different remedies. 25 It is clear in the present case that the proceeding which was instituted by the applicant was in a 'matter arising under' the Act. Whatever other 'matters' may be inherent in the one legal controversy, the present case involved a proceeding in respect of a controversy which arose under the Act. 26 For the second respondent to succeed in securing an order for costs it must demonstrate that the proceeding was instituted vexatiously or without reasonable cause. 27 Whilst the applicant's Application may have failed his proceeding could not in my opinion be said to have been instituted vexatiously or without reasonable cause. The conclusion at the end of the day that the applicant did not have an arguable case that the first respondent had exceeded its jurisdiction must be read in the context of the above observations concerning possible errors in the reasoning of the majority of the Full Bench, which required careful consideration to be given to what was left unsaid but was implicit in their reasoning. 28 The application for leave to amend the grounds relied upon by the applicant did not relevantly cause the second respondent to incur any additional costs. Even if one were to assume that the application for leave to amend was made unreasonably, we would not be disposed to make any order as to costs in relation to it. 29 There should be no order as to costs. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Marshall and Graham.