Federal Court of Australia Sabapathy v Jetstar Airways (No 2) [2021] FCAFC 68 Appeal from: Application for leave to appeal: Sabapathy v Jetstar Airways & Ors [2020] FCCA 1433 File numbers: NSD 615 of 2020 NSD 786 of 2020 Judgment of: LOGAN, FLICK AND KATZMANN JJ Date of judgment: 11 May 2021 Catchwords: PRACTICE AND PROCEDURE – Costs – Fair Work Act 2009 (Cth), s 570(2) – whether occasion for the awarding of costs established – order for costs against solicitor Legislation: Fair Work Act 2009 (Cth) s 570 Federal Court of Australia Act 1976 (Cth) ss 37M, 37N, 43 Federal Court Rules 2011 (Cth) rr 1.40, 40.07 Cases cited: Adam P Brown Male Fashions Proprietary Limited v Philip Morris Incorporated (1981) 148 CLR 170 Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 In re the Will of FB Gilbert (deceased) (1946) 46 SR (NSW) 318 Joseph v Parnell Corporate Services Pty Ltd [2021] FCAFC 67 Re McJannett; Ex parte Australian Workers' Union of Employees, Queensland (No 2) (1997) 189 CLR 654 Ryan v Primesafe [2015] FCA 8; 323 ALR 107 Sabapathy v Jetstar Airways [2021] FCAFC 25 Stanley v Service to Youth Council Inc (No 3) (2014) 225 FCR 357 Transit Systems West Services Pty Ltd v Australian Rail, Tram and Bus Industry Union (No 2) [2021] FCAFC 13 Trustee for The MTGI Trust v Johnston (No 2) [2016] FCAFC 190 Division: Fair Work Division Registry: New South Wales National Practice Area: Employment and Industrial Relations Number of paragraphs: 19 Date of last submission/s: 21 April 2021 Date of hearing: Determined on the papers Solicitor for the Applicant: Haywards Solicitors Counsel for the Respondents: Mr R Dalton QC with Mr A Pollock Solicitor for the Respondents: Herbert Smith Freehills Counsel for Mr Michael Harmer, Solicitor: Mr E Munston Solicitor for Mr Harmer: Sparke Helmore Lawyers ORDERS NSD 615 of 2020 BETWEEN: RAJESH SABAPATHY Applicant AND: JETSTAR AIRWAYS ABN 33 069 720 243 First Respondent CAPTAIN PETER TERRILL Second Respondent CAPTAIN DAVID MCCUTCHEON (and others named in the Schedule) Third Respondent order made by: LOGAN, FLICK AND KATZMANN JJ DATE OF ORDER: 11 May 2021 THE COURT ORDERS THAT: 1. Mr Michael Harmer pay the respondents' costs on an indemnity basis, to be assessed by a registrar if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ORDERS NSD 786 of 2020 BETWEEN: RAJESH SABAPATHY Applicant AND: FEDERAL CIRCUIT COURT OF AUSTRALIA First Respondent JETSTAR AIRWAYS ABN 33 069 720 243 Second Respondent CAPTAIN PETER TERRILL (and others named in the Schedule) Third Respondent order made by: LOGAN, FLICK and KATZMANN JJ DATE OF ORDER: 11 may 2021 THE COURT ORDERS THAT: 1. There be no order as to costs. [Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.] REASONS FOR JUDGMENT THE COURT: 1 This proceeding involved an application for leave to appeal (NSD 615/2020) (the leave application) and a related application for orders under s 39B of the Judiciary Act 1903 (Cth) (NSD 786/2020) (the s 39B application). Orders were made on 4 March 2021 dismissing first and allowing the second: Sabapathy v Jetstar Airways [2021] FCAFC 25 (principal judgment). At the same time provision was made for the contingency that an application for costs might be made by providing for any such application to be determined on the papers, upon the consideration of written submissions filed in accordance with the Court's orders. 2 The respondents sought an order for costs in each proceeding. They submitted that the costs should be paid by Mr Sabapathy's solicitor, Mr Michael Harmer of Harmers Workplace Lawyers, and applied for an order to that effect. Mr Harmer was given an opportunity to make submissions and, in addition to those made by the parties, the Court has considered those submissions. 3 These reasons for judgment must be read in conjunction with the principal judgment. 4 As each of the proceedings in this Court was "a matter arising under" the Fair Work Act 2009 (Cth) (FW Act), a party may only be ordered to pay the costs of another party in accordance with the provisions of s 570(2): FW Act, s 570(1). 5 The reason for that conclusion is obvious enough in respect of the leave to appeal application. The interlocutory order made by the Federal Circuit Court of Australia that the respondents sought to challenge was made in a proceeding in which that court's jurisdiction under the FW Act had been invoked. While s 39B(1A) of the Judiciary Act was the source of the Court's jurisdiction to grant relief with respect to the other decision of the Federal Circuit Court, the orders that were quashed were made by that court in the same proceeding and in the exercise of the same original jurisdiction. 6 As used in s 570(1), "in relation to" requires a relevant connection between a proceeding and a matter arising under the Fair Work Act: Stanley v Service to Youth Council Inc (No 3) (2014) 225 FCR 357 at [26] per White J. A matter will so arise if "the right or the duty that is sought to be enforced owes its existence to a provision of the Act": Re McJannett; Ex parte Australian Workers' Union of Employees, Queensland (No 2) (1997) 189 CLR 654 at 656 (Brennan CJ, McHugh and Gummow JJ). Here, the respondents sought the 39B order to remedy an asserted denial of procedural fairness in just such a proceeding. Here, the relief sought and granted on the s 39B application related to the removal by the Federal Circuit Court of its own motion of all but two of the 10 respondents to that proceeding. As there was no right of appeal from such an order, Mr Sabapathy could only obtain redress through a s 39B application. In any case, the connection required by s 570(1) is broad enough to capture a proceeding which has a relationship to another proceeding in which relief is sought under the FW Act but which does not itself seek relief under the FW Act, as the recent judgment of the Full Court in Joseph v Parnell Corporate Services Pty Ltd [2021] FCAFC 67 (Logan, Katzmann and Snaden JJ) at [105]–[115] demonstrates. 7 What follows, therefore, is that, in each proceeding before it, this Court only has power to make an order for costs against a party if satisfied, materially, that either or each of the criteria specified in s 570(2)(a) and (b) is satisfied. This means that an order for costs may only be made against Mr Sabapathy if the Court is satisfied that he instituted the proceedings in this Court vexatiously or without reasonable cause (para (a)) or that his unreasonable act or omission caused the respondents to incur the costs (para (b)). 8 In the s 39B proceeding, the respondents were the unsuccessful parties. That does not necessarily preclude the making of an order for costs in their favour but it might have given pause for thought as to whether such an order should have been sought. In light of the orders made in the s 39B proceeding, it could hardly be concluded that Mr Sabapathy instituted that proceeding vexatiously or without reasonable cause. True it is, as revealed in the principal judgment, that it was only late in the course of that proceeding that the utility of granting relief emerged, but emerge it did. It was always to the respondents to concede that there had been a denial of procedural fairness and to promote, consensually, the making of orders by this Court addressing the wrong done to Mr Sabapathy. This it did not do. All that occurred was that, on the day appointed for the hearing of the s 39B application, Mr Sabapathy satisfied the Court that he was entitled to the relief sought. We are not satisfied that any unreasonable act or omission of Mr Sabapathy caused the respondents to incur any of the costs sought. Rather, this is just a case where Parliament intended the usual rule to apply, namely, that there should be no order as to costs. While s 570 only limits the Court's power to make a costs order against a party and would not prevent the making of an order against a non-party, in these circumstances an order should not be made against Mr Harmer either: see Ryan v Primesafe [2015] FCA 8; 323 ALR 107 at [67] (Mortimer J). 9 It does not follow, however, that there should be a like outcome in relation to the respondents' costs application with respect to the dismissal of the leave application. The respondents succeeded on that application. The usual discretionary position (that costs follow the event) is not applicable because of s 570. Nevertheless, the Court has the power to award costs because, for the reasons that follow, we are satisfied that the proceeding was instituted without reasonable cause. 10 As is highlighted in the principal judgment, the leave application was an attempt to challenge an interlocutory value judgment on a matter of practice and procedure. Further, the order under challenge, through it struck out the statement of claim, gave leave to Mr Sabapathy to re-plead his case against those respondents who were not removed as parties by the order the subject of the s 39B application. 11 When, some four decades ago, in Adam P Brown Male Fashions Proprietary Limited v Philip Morris Incorporated (1981) 148 CLR 170 at 177, the High Court sounded a cautionary note in relation to attempted challenges such as the present, it was underscoring a point made more than a generation earlier by Jordan CJ in In re the Will of FB Gilbert (deceased) (1946) 46 SR (NSW) 318 at 323. Even then, the observations made by Jordan CJ were hardly novel. The importance of those observations has been reinforced in modern times by the parliamentary prescription in s 37M of the Federal Court of Australia Act 1976 (Cth) (FCA Act) of an "overarching purpose" in relation to the conduct of civil litigation and, in s 37N of that Act, of correlative obligations of parties to comply with that purpose and of lawyers to assist them in such compliance. 12 This was truly a leave to appeal application that ought never to have been made if that cautionary note had been heard and attention had been paid to the duties imposed by s 37N. Nothing we have stated in the principal judgment about the reasons given by the primary judge detracts from that. Those reasons were given in order promptly to resolve a dispute about a matter of practice and procedure in a court that has notoriously heavy demands on its judicial resources and in respect of a poorly drawn statement of claim. 13 Good practice has always required of practitioners a degree of self-reflection and self-criticism about alleged deficiencies in the conduct of a case. Especially in a penal proceeding, the deficiencies in this statement of claim, as explained in the principal judgment, were such that the order striking it out was unremarkable. There the matter ought to have rested. Nothing in Mr Sabapathy's written or oral submissions on the application disclosed a reasonable basis either for instituting or prosecuting the application. 14 The case is thus one which falls within each of the bases specified in s 570(2)(a) and (b). While the discretion to award costs in a FW matter should be exercised with some caution (see Trustee for The MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8] per Siopis, Collier and Katzmann J), in the present matter, a case for its exercise has been clearly demonstrated. 15 These statutory prescriptions also provide bases upon which, in the exercise of the general discretionary power to award costs, costs might be awarded on an indemnity basis: Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 233. If there be occasion in some circumstances not to award costs on an indemnity basis when the Court is satisfied that one or more than one of the criteria in s 570(2) is met, this is not such an occasion. It follows that the costs of the leave application should be awarded on an indemnity basis. 16 The respondents seek such an order, however, not against Mr Sabapathy but against Mr Harmer. 17 Although he does not concede that there is any unreasonable conduct by him, including any breach of the duty of assistance imposed by s 37N of the FCA Act, which might warrant the making of an order for costs against him personally, Mr Harmer has, nonetheless, volunteered to pay such costs as the Court is satisfied under s 570(2) would otherwise permit the making of an order for costs against Mr Sabapathy. Consent is not, of course, a source of power. However, the power conferred by s 43 of the FCA Act is broad. It includes the power to award costs against a non-party, both on an ordinary and an indemnity basis: Trustee for The MTGI Trust v Johnston (No 2) at [29]. Section 43(3)(f) makes it clear that that power extends to ordering a party's lawyer to bear costs personally. A specific power is also conferred on the Court through the combined effect of rr 40.07 and 1.40 of the Federal Court Rules 2011 (Cth). The former enables a party to apply for such an order where the party has reasonable cause to believe that additional costs have been incurred because of a lawyer's "misconduct", which includes incurring costs without reasonable cause. The latter gives the Court the power to make such an order, whether upon the application of a party or of its own motion. In the present case, however, given the position taken by Mr Harmer, it is neither necessary nor desirable to explore whether, in the absence of his agreement to do so, an order for costs should be made against him personally. 18 Mr Harmer's concession did not extend to costs in the Federal Circuit Court in relation to the interlocutory application. These, too, were sought by the respondents. A similar application was made in the court below but not pressed. As Mr Harmer submitted, the fact that the respondents chose not to press their application for costs before the primary judge and sought to revive it for the first time in submissions after the application was heard and determined is a powerful reason not to accede to it: Transit Systems West Services Pty Ltd v Australian Rail, Tram and Bus Industry Union (No 2) [2021] FCAFC 13 at [21]–[23]. 19 For completeness, we record that we have considered whether or not, given that there will be no order as to costs in respect of the s 39B application, some apportionment order should be made. There is power to make such an order and any such order would necessarily be robust and impressionistic. But in this case the question as to how to assign costs as between the leave application and the s 39B application, if the parties cannot themselves resolve that by agreement, is better left to the costs assessing experience of a registrar. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Logan, Flick and Katzmann. Associate: Dated: 11 May 2021 SCHEDULE OF PARTIES NSD 615 of 2020 Respondents Fourth Respondent: CAPTAIN BRETT FOXELY CONOLLY Fifth Respondent: CAPTAIN PHILLIP SCHWARTZ Sixth Respondent: CAPTAIN SEAN WALLACE Seventh Respondent: CAPTAIN HAROLD BOYD Eighth Respondent: CAPTAIN JEREMY SCHMIDT Ninth Respondent: CAPTAIN MARK WHEELER Tenth Respondent: CAPTAIN MICHAEL KRAUSSE NSD 786 of 2020 Respondents Fourth Respondent: CAPTAIN DAVID MCCUTCHEON Fifth Respondent: CAPTAIN BRETT FOXELY CONOLLY Sixth Respondent: CAPTAIN PHILLIP SCHWARTZ Seventh Respondent: CAPTAIN SEAN WALLACE Eighth Respondent: CAPTAIN HAROLD BOYD Ninth Respondent: CAPTAIN JEREMY SCHMIDT Tenth Respondent: CAPTAIN MARK WHEELER Eleventh Respondent: CAPTAIN MICHAEL KRAUSSE