FEDERAL COURT OF AUSTRALIA Construction, Forestry, Mining & Energy Union v Australian Industrial Relations Commission (No 2) [2007] FCAFC 145 COSTS – application for costs – unsuccessful applicant given invitation to abandon the proceedings – whether continuation of proceedings was without reasonable cause Held: application dismissed Workplace Relations Act 1996 (Cth), s 824 Workplace Relations Amendment (Work Choices) Act 2005 (Cth) Workplace Relations Regulations 2006 (Cth) Construction, Forestry, Mining & Energy Union v Australian Industrial Relations Commission [2007] FCAFC 32 referred to Daemar v Industrial Commission of New South Wales (1988) 12 NSWLR 45 referred to Hatchett v Bowater Tutt Industries Pty Ltd (No 2) (1991) 28 FCR 324 cited Hughes v Western Australian Cricket Association Inc (1986) 8 ATPR 40-748 referred to Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 cited Latoudis v Casey (1990) 170 CLR 534 referred to McAleer v The University of Western Australia (No 2) [2007] FCA 247 considered Paras v Public Service Body Head of the Department of Infrastructure (No 3) [2006] FCA 745 cited Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1987) 17 FCR 211 referred to R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 cited Re Carter Smith; Ex parte The Commissioners of Taxation (1908) 8 SR (NSW) 246 referred to Re Ross; Ex parte Crozier [2001] FCA 1665 referred to CONSTRUCTION, FORESTRY, MINING & ENERGY UNION v AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION AND DYNO NOBEL ASIA PACIFIC LIMITED (ACN 000 269 010) NSD 2157 OF 2005 SPENDER, FRENCH AND COWDROY JJ 7 september 2007 perth (heard in SYDNEY) IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 2157 OF 2005 BETWEEN: CONSTRUCTION, FORESTRY, MINING & ENERGY UNION Applicant AND: AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION First Respondent DYNO NOBEL ASIA PACIFIC LIMITED (ACN 000 269 010) Second Respondent JUDGES: SPENDER, FRENCH AND COWDROY JJ DATE OF ORDER: 7 SEPTEMBER 2007 WHERE MADE: perth (heard in SYDNEY) THE COURT ORDERS THAT: 1. The application for an award of costs be dismissed. 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 2157 OF 2005 BETWEEN: CONSTRUCTION, FORESTRY, MINING & ENERGY UNION Applicant AND: AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION First Respondent DYNO NOBEL ASIA PACIFIC LIMITED (ACN 000 269 010) Second Respondent JUDGES: SPENDER, FRENCH AND COWDROY JJ DATE: 7 September 2007 PLACE: PERTH (HEARD IN SYDNEY) REASONS FOR JUDGMENT SPENDER J: 1 I agree with the reasons of judgment of Cowdroy J and with the order he proposes. I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Spender. Associate: Dated: 7 September 2007 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 2157 OF 2005 BETWEEN: CONSTRUCTION, FORESTRY, MINING & ENERGY UNION Applicant AND: AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION First Respondent DYNO NOBEL ASIA PACIFIC LIMITED (ACN 000 269 010) Second Respondent JUDGES: SPENDER, FRENCH AND COWDROY JJ DATE: 7 SEPTEMBER 2007 PLACE: PERTH (HEARD IN SYDNEY) REASONS FOR JUDGMENT FRENCH J: 2 I agree with the reasons for judgment of Cowdroy J and with the order he proposes. I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice French. Associate: Dated: 7 September 2007 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 2157 OF 2005 BETWEEN: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION Applicant AND: AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION First Respondent DYNO NOBEL ASIA PACIFIC LIMITED (ACN 000 269 010) Second Respondent JUDGES: SPENDER, FRENCH AND COWDROY JJ DATE: 7 september 2007 PLACE: perth (heard in SYDNEY) REASONS FOR JUDGMENT 3 On 19 March 2007 the Court delivered judgment in these proceedings: see Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission [2007] FCAFC 32. The Court dismissed the application for writs in the nature of certiorari and mandamus (the application). The Court also dismissed an application by the Construction, Forestry, Mining and Energy Union (the CFMEU) made during the hearing of these proceedings in May 2006 to amend the application to seek declaratory relief (the application for declaratory relief). 4 The second respondent (Dyno Nobel) now makes application for an order that the unsuccessful CFMEU pay a portion of the costs of the proceedings. HISTORY OF THE PROCEEDINGS 5 The CFMEU filed its original application for constitutional writs on 5 September 2005. Accordingly, the proceedings were commenced whilst s 347(1) of the Workplace Relations Act 1996 (Cth) (the WRA 1996) prevailed. That subsection made provision for costs as follows: (1) A party to a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 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 Section 347(1) of the WRA 1996 was supplemented by item 206 of Schedule 1 of the Workplace Relations Amendment (Work Choices) Act 2005 (Cth)(the Work Choices Act) and became s 824. Section 824, which commenced on 27 March 2006 relevantly provides: (1) A party to a proceedings (including an appeal) in a matter arising under this Act (other than an application under section 663) must 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. (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. Transitional provisions also apply in respect of the amendments to the cost provisions by virtue of the Workplace Relations Regulations 2006 (Cth) (the Regulations). DYNO NOBEL'S SUBMISSIONS 7 Dyno Nobel seeks an order that the CFMEU pay its costs from 28 February 2006 in respect of the application for constitutional writs. The date of 28 February 2006 is 14 days after Dyno Nobel's solicitors wrote to the solicitors for the CFMEU pointing out that in view of the amendments to the WRA 1996 being introduced by the Work Choices Act, there would be no utility in the CFMEU continuing to prosecute the application. The CFMEU was invited to withdraw its application and was further put on notice that if it failed to withdraw the proceedings, Dyno Nobel would seek costs in the event that the action failed. 8 In its written submissions filed on 24 April 2006 Dyno Nobel submitted that, in consequence of the amendments to the WRA 1996, the proceedings in relation to the industrial dispute the subject of the appeal from the Full Bench of the Industrial Relations Commission (the Commission) had lapsed. Accordingly, it was submitted, no duty was owed by the Full Bench of the Commission to take any action. 9 Dyno Nobel does not suggest that the proceedings were instituted vexatiously or without reasonable cause. However, in view of the changes to the WRA 1996 Dyno Nobel submits that it became unreasonable to pursue the claim for the constitutional writs. 10 With regard to the application for declaratory relief, Dyno Nobel submits that since such relief was sought on 24 April 2006 it constituted the institution of a "proceeding" for the purpose of s 824(1) of the WRA 1996. Dyno Nobel submits that the application was made without reasonable cause since the amendments to the WRA 1996 had become operative by the date of the application. It relies upon the observations of Wilcox J in Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264-5 in which his Honour found that there was "no substantial prospect of success" in respect of the application before him. Alternatively, Dyno Nobel submits that the words "without reasonable cause" (as contained in s 824(1) of the WRA 1996) are similar to the words adopted in an application for summary judgment (see Re Ross; Ex parte Crozier [2001] FCA 1665 at [11] and [12]). Dyno Nobel submits that the Court, by its refusal to grant declaratory relief, has effectively granted summary judgment and accordingly costs should be awarded to Dyno Nobel. FINDINGS 11 In the absence of special rules as to costs in particular matters, as a general rule, costs follow the event. However in the exercise of its discretion, the Court will consider whether a departure from that rule is warranted and whether there are circumstances justifying any other order: see Hughes v Western Australian Cricket Association Inc (1986) 8 ATPR 40-748 per Toohey J at 48,136. The Full Court of this Court in Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1987) 17 FCR 211 referred to the principles referred to by Toohey J as "the well known guidelines within which the discretion as to costs is exercised" (see Queensland Wire Industries 17 FCR 222). Nevertheless special consideration must be given to the provisions of the WRA 1996 relating to the award of costs and of the industrial nature of these proceedings. 12 When the proceedings were instituted the unamended provisions of the WRA 1996 prevailed. On 27 March 2006 s 824(2) of the WRA 1996 became operative. However, a transitional provision applied to certain matters. Regulation 2.10 of Div 8 of Part 2 of Chapter 7 of the Regulations (Reg 2.10) provides: 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. Accordingly, s 824(2) does not apply to "an action or omission" which occurred before 27 March 2006. The application for constitutional writs was based upon events which preceded this date and the proceedings were also commenced prior to this date. In these circumstances I consider that these proceedings constitute an "action" as referred to in Reg 2.10 (see Re Carter Smith; Ex parte The Commissioners of Taxation (1908) 8 SR (NSW) 246 at 249; Daemar v Industrial Commission of New South Wales(1988) 12 NSWLR 45 at 53-55). It follows that the issue of costs for the application for constitutional writs continues to be governed by s 347 of the pre-reform WRA 1996. 13 It could not be said, nor does Dyno Nobel claim, that the proceedings were instituted vexatiously or without reasonable cause as referred to in s 347(1) of the pre-reform WRA 1996. The only question is whether, in consequence of the invitation to abandon the proceedings, the CFMEU acted "without reasonable cause" (see s 347(1)) in declining such request. 14 The fact that the CFMEU may have been unsuccessful in its application does not, of course, necessarily lead to the conclusion that the continuation of the proceedings was unreasonable: see McAleer v The University of Western Australia (No 2) [2007] FCA 247 wherein Siopis J found that the absence of power in the Court to grant relief did not result in the finding that a counter claim by the respondent university constituted an "unreasonable act" for the purpose of s 824. His Honour observed that the counter claim raised "a blend of public and private law issues". In these proceedings the amendments to the WRA 1996 created significant changes to the conduct of litigation in industrial matters and the Court's determination affected not only the immediate interests between the parties, but had a wider application for other litigation of an industrial nature. 15 In R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 at 473, Gibbs J (as he then was) said of s 197A of the Conciliation and Arbitration Act 1904 (Cth): In my opinion a party cannot be said to have commenced a proceeding "without reasonable cause", within the meaning of that section, simply because his argument proves unsuccessful. 16 Young J made a similar observation in Paras v Public Service Body Head of the Department of Infrastructure (No 3) [2006] FCA 745 at [22] where his Honour said: There is, however, a distinction between an application that proves unsuccessful and an application or argument that is so misconceived that it can be characterised as unreasonable or vexatious. An order for costs might be made under s 824 in the latter case but not the former. 17 Added to this consideration is the observation, referred to in Hatchett v Bowater Tutt Industries Pty Ltd (No 2) (1991) 28 FCR 324 that in industrial matters the usual rule applied by courts when awarding costs does not apply. Von Doussa J stated at 326: The court may in the exercise of its discretion, and having regard to the general policy of the Act, expressed in s 347, that parties will usually be freed from the traditional risk of an order for costs following the event, make no order as to costs. 18 Despite the invitation from Dyno Nobel to abandon the proceedings being declined by the CFMEU, in my opinion it could not be said, because of the above circumstances, that their continuation was unreasonable. For this reason, the application for costs in respect of the application for constitutional writs should fail. 19 Although made after 27 March 2006, the application for declaratory relief was brought in the same proceedings as the application for constitutional writs. In these circumstances such application should be considered as being one which sought to raise an alternative claim for relief in the existing proceedings. It was considered simultaneously with the application for the constitutional writs and for these reasons I consider that pursuant to Reg 2.10 the provisions of s 347(1) of the pre-reform WRA 1996 should apply to that claim also. 20 I do not consider that it was unreasonable for the CFMEU to seek declaratory relief. As the Court found at [87] of its decision, s 39B(1A)(c) of the Judiciary Act 1903 (Cth) provides the Court with jurisdiction to grant declaratory relief. However, the relief was declined because for the Court to exercise a substantive role and make findings of fact different to those made by the Full Bench would have impermissibly altered the nature of the appeal. The application did not unreasonably prolong proceedings (see Latoudis v Casey (1990) 170 CLR 534 at 565) and accordingly in my opinion there is no basis for the Court to exercise its discretion in favour of granting an award of costs. Accordingly, the application for costs should be dismissed. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy. Associate: Dated: 7 September 2007 Counsel for the Applicant: S Crawshaw SC and A Slevin Solicitor for the Applicant: Slater & Gordon Counsel for the Second Respondent: HJ Dixon SC and AR Moses Solicitor for the Second Respondent: McCullough Robertson Date of Hearing: The application for costs proceeded on written submissions Date of Judgment: 7 September 2007