FEDERAL COURT OF AUSTRALIA Yum! Restaurants Australia Pty Ltd v Full Bench of Fair Work Australia (No 2) [2012] FCA 419 Citation: Yum! Restaurants Australia Pty Ltd v Full Bench of Fair Work Australia (No 2) [2012] FCA 419 Parties: YUM! RESTAURANTS AUSTRALIA PTY LTD v FULL BENCH OF FAIR WORK AUSTRALIA and SHOP, DISTRIBUTIVE AND ALLIED EMPLOYEES ASSOCIATION KENTUCKY FRIED CHICKEN PTY LTD v FULL BENCH OF FAIR WORK AUSTRALIA and SHOP, DISTRIBUTIVE AND ALLIED EMPLOYEES ASSOCIATION File numbers: NSD 430 of 2011 NSD 428 of 2011 Judge: COWDROY J Date of judgment: 26 April 2012 Catchwords: INDUSTRIAL LAW – Application for prerogative writs requiring members of Full Bench of Fair Work Australia to perform statutory duties – application dismissed – application for costs by successful respondent – whether relief was to be characterised as a matter arising under Fair Work Act 2009 or under Judiciary Act 1903 – proceedings seeking enforcement of duty under Fair Work Act 2009 – operation of s 570 of Fair Work Act 2009 prevents order for costs – application for costs dismissed Legislation: Fair Work Act 2009 (Cth) s 570 Federal Court of Australia Act 1976 (Cth) s 43 Federal Court Rules 2011 r 1.39 Industrial Relations Act 1988 (Cth) s 347(1) Judiciary Act 1903 (Cth) s 39B(1A) Workplace Relations Act 1996 (Cth) ss 170CP, 824(1) Cases cited: Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (2007) 157 FCR 260 Gallo v Dawson (1990) 93 ALR 479 Goldman Sachs JB Were Services Pty Ltd v Nikolich (2007) 163 FCR 62 Hawkins v Kingsway Group Ltd [2009] FCA 1073 Mavra v Logan (1980) 24 SASR 567 R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 Re McJannet & Ors; Ex parte The Australian Workers' Union of Employees, Queensland & Ors (No 2) (1997) 189 CLR 654 Re Polites & Anor; Ex parte The Hoyts Corporation Pty Ltd (1991) 173 CLR 78 Samuels v Linzi Dresses Ltd [1981] 1 QB 115 Schafer v Blyth [1920] 3 KB 140 Shanahan v Australian Industrial Relations Commission (No 3) (2007) 162 IR 116 Tristar Steering and Suspension Australia Ltd & Anor v Industrial Relations Commission of New South Wales & Anor (No 2) (2007) 159 FCR 274 Vallani v Holcim (Australia) Pty Ltd [2011] FCAFC 155 Yum! Restaurants Australia Pty Ltd v Full Bench of Fair Work Australia [2011] FCA 1315 Date of hearing: 14 March 2012 Place: Sydney Division: FAIR WORK DIVISION Category: Catchwords Number of paragraphs: 41 Counsel for the Applicants: Mr P Kite SC with Mr G Boyce Solicitor for the Applicants: Moray & Agnew Lawyers Counsel for the Second Respondent: Mr JJE Fernon SC with Mr M Rinaldi Solicitor for the Second Respondent: AJ Macken Lawyers IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY FAIR WORK DIVISION NSD 430 of 2011 BETWEEN: YUM! RESTAURANTS AUSTRALIA PTY LTD Applicant AND: FULL BENCH OF FAIR WORK AUSTRALIA First Respondent SHOP, DISTRIBUTIVE AND ALLIED EMPLOYEES ASSOCIATION Second Respondent JUDGE: COWDROY J DATE OF ORDER: 26 April 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application for costs be dismissed. Note: Settlement and entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY FAIR WORK DIVISION NSD 428 of 2011 BETWEEN: KENTUCKY FRIED CHICKEN PTY LTD Applicant AND: FULL BENCH OF FAIR WORK AUSTRALIA First Respondent SHOP, DISTRIBUTIVE AND ALLIED EMPLOYEES ASSOCIATION Second Respondent JUDGE: COWDROY J DATE OF ORDER: 26 April 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application for costs be dismissed. Note: Settlement and entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY FAIR WORK DIVISION NSD 430 of 2011 BETWEEN: YUM! RESTAURANTS AUSTRALIA PTY LTD Applicant AND: FULL BENCH OF FAIR WORK AUSTRALIA First Respondent SHOP, DISTRIBUTIVE AND ALLIED EMPLOYEES ASSOCIATION Second Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY FAIR WORK DIVISION NSD 428 of 2011 BETWEEN: KENTUCKY FRIED CHICKEN PTY LTD Applicant AND: FULL BENCH OF FAIR WORK AUSTRALIA First Respondent SHOP, DISTRIBUTIVE AND ALLIED EMPLOYEES ASSOCIATION Second Respondent JUDGE: COWDROY J DATE: 26 APRIL 2012 PLACE: SYDNEY REASONS FOR JUDGMENT 1 In these proceedings judgment in respect of the substantive issue was delivered on 18 November 2011: see Yum! Restaurants Australia Pty Ltd v Full Bench of Fair Work Australia [2011] FCA 1315. The second respondent (hereafter referred to as 'the Association') now applies for an order that its costs of each proceeding be paid by the unsuccessful applicants, namely Yum! Restaurants Australia Pty Ltd ('Yum') and Kentucky Fried Chicken Pty Ltd ('KFC'). 2 At the outset, it is necessary to refer to the orders made by the Court when delivering the above decision. The orders made on 18 November 2011 in both proceedings, namely NSD 430 of 2011 and NSD 428 of 2011, were as follows: 1. Application is dismissed. 2. Costs be reserved subject to the parties notifying chambers within 7 days if they wish to make an application regarding costs. 3 On 23 November 2001 the Court agreed, upon the application of the Association for the order for costs to be treated as an order in the following terms: Costs be reserved, subject to the parties notifying chambers within 7 days after the decision of the Full Court in Vallani v Holcim (Australia) Pty Ltd if they wish to make an application regarding costs. 4 The decision in Vallani v Holcim (Australia) Pty Ltd [2011] FCAFC 155 was delivered on 2 December 2011. On 13 December 2011 an Application for Extension of Time to Appeal was filed by the applicants in respect of both proceedings. In fact time prescribed by the Federal Court Rules 2011 ('the Rules') for such an application to be made expired on the previous day, namely 12 December 2011. The Association opposed the necessary extension of time. Accordingly, an application was made by the applicants for an extension of time in which to appeal. Due to the non-sitting period, this application was not heard until 9 February 2012 before Jacobson J. His Honour granted the application for Extension of Time to Appeal on that day and Notices of Appeal were duly filed and served. 5 No application was made by the Association for the costs of the principal proceedings until 8 February 2012. Yum and KFC oppose the Association's applications for costs in each proceeding on the grounds that they have been brought out of time, and secondly that as a matter of law, no costs orders can be made in each proceeding. 6 The issues give rise to the first question whether the Court has jurisdiction to entertain the application for costs or whether the Court is functus officio. EXTENSION OF TIME 7 Rule 1.39 of the Rules provides: The Court may extend or shorten a time fixed by these Rules or by order of the Court: (a) before or after the time expires; and (b) whether or not an application for extension is made before the time expires. 8 Yum and KFC submit that the Court should not exercise its discretion provided by r 1.39 of the Rules to extend the time fixed by the Court's order for the reasons that the application for costs was not accompanied by an application for extension of time; no reasons had been provided to explain the failure to bring the application for costs within the time fixed by the Court's orders; and that the Court's orders should be obeyed unless there are sound reasons for departing from them. 9 Quite apart from r 1.39 an implied power exists in a court to extend time in order to avoid injustice: see for example Hawkins v Kingsway Group Ltd [2009] FCA 1073 at [3]; Schafer v Blyth [1920] 3 KB 140; Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257. In Gallo v Dawson (1990) 93 ALR 479, McHugh J at 480 observed that the discretion to extend time can only be exercised in favour of an applicant upon proof that strict compliance with the Rules would operate to create an injustice upon the applicant. 10 In this instance the Court accepts, as a general proposition, the submissions of Yum and KFC that the power to extend time should be granted cautiously and 'with due regard to the necessity for maintaining the principle that orders are made to be complied with and not to be ignored': see Samuels v Linzi Dresses Ltd [1981] 1 QB 115 per Roskill LJ at 126-127. Taking into consideration the purpose of Rule 1.39 the Court will consider hereunder the circumstances in which the applicant makes this application out of time. 11 The Association has provided the following explanation for the delay. Although the decision in Vallani was delivered on 2 December 2011, the legal advisers for the Association state that they were not aware of its delivery. They also rely upon the distraction of the proposed appeal against the Court's decision. Thereafter, the Christmas holiday period ensued with the Court having its non-court sitting period. The Association's application for costs in each proceeding was foreshadowed immediately after such period ended. 12 The explanation was given by way of statements from the bar table rather than being contained in an affidavit. However, the Court accepts that it provides the necessary facts to warrant the Court exercising its jurisdiction. The Court is also minded that where the delay has been the result of the conduct of the lawyers, the Court does not consider it appropriate to blame such default upon the litigant: see Mavra v Logan (1980) 24 SASR 567. 13 Yum and KFC have pointed to no specific prejudice by the fact that this application is brought beyond the period specified in the Court's order and as indicated above, an appeal is pending. Taking into consideration these reasons, and the fact that there has been no extensive delay in bringing the application, the Court will extend the time to the Association in which to bring its applications for costs. POWER TO AWARD COSTS 14 In support of its costs application the Association relies upon the provisions of s 43 of the Federal Court of Australia Act 1976 (Cth) which relevantly provides: (1) Subject to subsection (1A) and section 570 of the Fair Work Act 2009, the Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which this or any other Act provides that costs shall not be awarded. 15 The Association submits that s 570 of the Fair Work Act 2009 (Cth) ('the FW Act') has no operation since the proceedings for the principal relief did not arise under the FW Act. The Association asserts that Yum and KFC did not invoke the jurisdiction of the Court under the FW Act in seeking the relief they claimed, but instead sought relief by way of constitutional writs. Accordingly, it is submitted that the provisions of s 570 of the FW Act do not operate to prevent the Court from exercising its power to award costs. 16 Section 570 of the FW Act relevantly provides: (1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) exercising jurisdiction under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) … (2) The party may be ordered to pay the costs only if: (a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or … … 17 Since there is no suggestion by any party that the proceedings were vexatious or conducted without reasonable cause, the provisions of s 570(2)(a) can be ignored. 18 The Association refers to the Explanatory Memorandum to the FW Act and particularly to paragraph 2229 which provides: … the 'matters arising' language has been interpreted broadly. A proceeding not brought under the WR Act [the Workplace Relations Act 1996 (Cth)] could still arise under the WR Act. The broad application of the costs provision has given rise to technical arguments that the provision does not apply in a range of proceedings not involving exercise of jurisdiction under the WR Act and its predecessors (see, e.g. Tristar Steering and Suspension v Industrial Relations Commission (NSW) (No.2) [2007] FCAFC 95; 159 FCR 274). Given the nature of the complexity of 'matters arising' that are determined before State Supreme Courts, the Federal Court and the High Court, it is not appropriate that the limitation on costs orders apply to matters arising under the Bill which do not involve the exercise of jurisdiction under the Bill. 19 Accordingly the issue for determination is whether the Court, in the application by Yum and KFC, was exercising jurisdiction under the FW Act or pursuant to s 39B(1A) of the Judiciary Act 1903 (Cth) ('the Judiciary Act'). Section 39B(1A) relevantly provides: The original jurisdiction of the Federal Court of Australia also includes jurisdiction in any matter: …. (c) arising under any laws made by the Parliament, other than a matter in respect of which a criminal prosecution is instituted or any other criminal matter. CONSIDERATION 20 Section 562 of the FW Act confers jurisdiction on the Federal Court 'in relation to any matter (whether civil or criminal) arising under this Act'. Further, s 563 of the FW Act relevantly provides: The jurisdiction conferred on the Federal Court under s 562 is to be exercised in the Fair Work Division of the Federal Court, if: … (b) a writ of mandamus or prohibition or injunction is sought in the Federal Court against a person holding office under this Act; or … 21 To determine this issue, it is essential to have regard to the relief which was claimed in the proceedings in order to determine under which of the two Acts, namely the Judiciary or the FW Act, the application was instituted. 22 The proceedings were commenced by an application for prerogative writs in the following terms: 1. A Writ of Certiorari directed to the Full Bench of Fair Work Australia (constituted by Vice President Watson, Deputy President Ives and Commissioner Roberts) quashing its decision of 11 March 2011 in KFC National Enterprise Award 2001 [2011] FWAFB 1078. 2. A Writ of Mandamus directed to the Full Bench of Fair Work Australia directing it to hear, consider and determine according to law the Application under Schedule 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 in FWA Matter number EM2009/2. 23 The writs of certiorari and prohibition were sought by the Association against the Full Bench on the ground that the Full Bench misunderstood and failed to apply the 'Modern Enterprise Awards Objective'; took into account matters not relevant to the exercise of discretion; and failed to take into account matters relevant to the exercise of discretion; and consequently that the Full Bench erred in its exercise of the jurisdiction conferred upon it by the FW Act. 24 The question whether the application before the Court for prerogative relief should be characterised as one falling within the Judiciary Act or the FW Act can be resolved by reference to established principle. In R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141, Latham CJ said at 154: The relevant inquiry is whether the matter arises under the law. Thus one is compelled to the conclusion that a matter may properly be said to arise under a Federal law if the right or duty in question in the matter owes its existence to Federal law or depends upon Federal law for its enforcement, whether or not the determination of the controversy involves the interpretation (or validity) of the law. In either of these cases the matter arises under the Federal law. 25 In Re Polites & Anor; Ex parte The Hoyts Corporation Pty Ltd (1991) 173 CLR 78 prerogative relief was sought to compel Deputy President Polites of the Australian Industrial Relations Commission to continue a hearing. The order nisi having been issued, the matter returned to the High Court where it was made absolute. An application for costs of the proceedings was opposed on the basis that s 347(1) of the Industrial Relations Act 1988 (Cth) ('the IR Act'), an analogous provision to s 570 of the FW Act, applied so as to prevent any costs order being made. Their Honours Brennan, Gaudron and McHugh JJ said at 93: The order made in this case was an order to enforce that statutory duty [i.e. a duty arising under the IR Act]. As the duty owes its existence to the Act [the IR Act], the controversy between the parties as to the enforcement of the duty is a matter arising under the Act. The jurisdiction of this Court conferred by s 75(v) of the Constitution was invoked to determine that matter. It follows that the proceeding in this Court was itself a proceeding in a matter under the Act. It follows that s 347(1) of the Act is applicable to the proceeding in this Court, albeit the jurisdiction of this Court invoked in that proceeding is conferred by s 75(v) of the Constitution. 26 Consequently, no order for costs could be made. 27 Subsequently, in Re McJannet & Ors; Ex parte The Australian Workers' Union of Employees, Queensland & Ors (No 2) (1997) 189 CLR 654 an application was made for an order for prohibition addressed to judges of this Court on the basis that the Court had no jurisdiction. Their Honours Brennan CJ, McHugh and Gummow JJ said at 656: The question whether a proceeding is in a matter arising under the Act within the meaning of s 347(1) was considered by Re Polites; Ex parte Hoyts Corporation Pty Ltd where this Court made an order absolute for mandamus directing Mr Deputy President Polites to hear and determine a matter which was pending under the Act before him in the Industrial Relations Commission. That order enforced the statutory duty imposed upon the Deputy President by the Act. That was sufficient to make the proceeding in this Court itself a proceeding in a matter under the Act. By contrast, the proceeding in this case was to prohibit the continuance of the proceeding in the Federal Court on the ground that that Court had no jurisdiction under the Act to determine the matter in controversy between the parties as to their substantive rights. 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. 28 Thereafter, their Honours cited the observations of Latham CJ as set out at [24] above. 29 In Shanahan v Australian Industrial Relations Commission (No 3) (2007) 162 IR 116, the Full Court considered that costs could be awarded where constitutional writ relief was sought in respect of a decision of the Full Bench. That application was remitted to this Court. In respect of the costs application, the Court said at [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. 30 In Tristar Steering and Suspension Australia Ltd & Anor v Industrial Relations Commission of New South Wales & Anor (No 2) (2007) 159 FCR 274 the Full Court considered an application for costs by a party who had succeeded in obtaining prerogative relief. At the conclusion of the hearing of the principal proceedings, the successful applicant did not apply for costs, but the Association was ordered to pay the applicants' costs. The Association then sought to set aside the costs order, whereupon the applicants applied for costs. 31 The Full Court held that the proceedings were not a matter arising under s 824(1) of the Workplace Relations Act 1996 (Cth) ('the WR Act') and accordingly the Court had power to award costs in the proceeding. Buchanan J, with whom Keifel and Gyles JJ agreed, considered the decision in Re Polites and other authorities concerning costs. At [13] Buchanan J in discussing the decision in Shanahan (No 3) said: The case fell clearly within the principle in Polites. As the Full Court concluded that the proceedings had not been instituted vexatiously or without reasonable cause (see s 824(1)) costs were refused (Shanahan v Australian Industrial Relations Commission (No 3) [2007] FCAFC 53 ('Shanahan (No 3)'). 32 At [15] Buchanan J rejected a submission that s 824 of the WR Act applied to the whole of the proceedings because the proceedings also sought to enforce a right or duty which owed its existence to the WR Act. At [15] Buchannan J said: However, the present case did not, unlike Polites and Shanahan, seek enforcement of duties under the WR Act by persons whose role it was to perform such duties. It is a case with different legal elements. The Court's power to order costs does not depend on the contentions advanced by the parties but on the correct characterisation of the nature of the proceedings. It may be accepted that the proceedings involved a matter arising under the Constitution and the Court was invested with jurisdiction in relation to the proceedings at least by s 39B(1A)(b)) of the Judiciary Act as contended. However, for my own part, I do not think it correct to say that the proceedings arose under the WR Act in the way the applicants suggested in their Amended Points of Claim (although not in their written submissions on the question of costs where they argued to the contrary). 33 His Honour continued at [16]: In my view, it cannot correctly be maintained that the relief which was granted by the orders earlier made in the present matter was a vindication of a right or duty conferred or created by the WR Act. Rather the right or duty (if that is the correct way to regard the absence of jurisdiction in the IRC) arose from the operation of s 109 of the Constitution. The proceedings were brought to enforce the duty upon the IRC not to act outside its jurisdiction, in circumstances where the IRC had made plain its intention to do so. The fact that s 109 of the Constitution was engaged by reason of the terms of the WR Act does not signify, in my view, that the proceedings were 'in a matter arising under' the WR Act within the meaning of s 824 of the WR Act. In my view the Court has power to make an order for costs in the proceedings. 34 The above authorities make it clear that there is a demarcation between two distinct categories. Where proceedings allege a jurisdictional failure by Fair Work Australia to fulfil its statutory duties under the FW Act, such proceedings are properly categorised as falling under the provisions of the FW Act and s 570 applies. Where however the relief sought, as in Tristar, raises the question whether the Tribunal has jurisdiction, the jurisdiction of the Court arises under s 39B(1A)(b) of the Judiciary Act. 35 A further example of such principle is referred to in Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (2007) 157 FCR 260 in which the Full Court said at [80]: A matter arises under a Federal law "... if the right or duty in question in the matter owes its existence to Federal law or depends upon a Federal law for its enforcement whether or not the determination of the controversy involves the interpretation (or validity) of the law": R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett [1945] HCA 50; (1945) 70 CLR 141 at 154. The matter presently before the Court concerns the proper interpretation of an eligibility rule of a registered organisation under the [Workplace Relations Act]. It concerns its interpretation by the Full Bench of the Commission exercising the appellate function conferred upon it by the Act as it stood prior to the Work Choices Act. Part of the matter is said to involve the question whether the Full Bench has fulfilled its duty under the Act in determining whether [the Senior Deputy President of the Commission] was correct in her interpretation of the rule. The matter can therefore be said to be one which arises under the [Workplace Relations Act] and in respect of which this Court has jurisdiction by virtue of s 39B(1A)(c). 36 The rationale for the 'no costs' principle was considered in Goldman Sachs JB Were Services Pty Ltd v Nikolich (2007) 163 FCR 62 at [81]-[95] (per Black CJ), [164]-[166] (per Marshall J) and [372]-[380] (per Jessup J). The case considered an application under s 824(1) of the former the WR Act, which was in similar terms to s 570 of the FW Act. Section 824(1) of that Act provided: A party to a proceeding (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. 37 In those proceedings a claim was brought under s 170CP of the WR Act. Other claims were added under the Trade Practices Act 1974 (Cth) and under the common law. Judgment was entered for the applicant and costs were awarded in his favour. On appeal the judgment for damages for breach of contract was dismissed and the Full Court set aside the order for costs. At [92] Black CJ said: The application of a 'no-costs' regime in such circumstances suggests that the object was to facilitate the exercise of an employee's right to apply for an order under s 170CR in respect of an alleged contravention. Without the threat of a potentially disabling cost penalty, an employee may feel better able to assert the rights given to him or her by the WRA. 38 Both Marshall and Jessup JJ came to the same conclusion, namely that where a matter arose under the extant WR Act, costs could not be awarded. 39 In the present proceedings, the application was made for prerogative writs to require the Full Bench to perform, according to law, the duties imposed upon it by the FW Act. The circumstances are analogous to those arising in Re Polites, in contrast to the circumstances in Re McJannet in which the relief which was sought was independent of any provisions of the IR Act. 40 In summary, the Court is satisfied that proceedings NSD 430 of 2011 and NSD 428 of 2011 constitute 'matters arising' under the FW Act. Accordingly, the provisions of s 570 of the FW Act apply, with the result that the Court is not empowered to make any order in favour of the Association for costs in those proceedings, nor of this application for costs. 41 It should be observed that the decision of the Full Bench in Vallani does not assist since the issue of costs, although raised, was the subject of a concession. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy. Associate: Dated: 26 April 2012