Industrial Relations Commission of New South Wales CITATION : New South Wales Independent Education Union and Allambia Pty Ltd [2000] NSWIRComm 177 APPLICANT PARTIES : New South Wales Independent Education Union RESPONDENT Allambia Pty Limited, trading as Cuddly Possums FILE NUMBER: 3092 of 1999 CORAM: Sams DP Costs application - whether costs should follow the event - discretion to order costs - default of directions - costs under s130 dispute proceedings. CATCHWORDS : Held, costs are discretionary - special circumstances - delemma as to concurent proceedings - costs refused. Industrial Relations Act 1996 LEGISLATION CITED : Annual Holidays Act 1944 Long Service Leave Act 1955 Legal Profession Act 1987 CASES CITED : Lismore Challenge Limited v Lavis, 88 IR 230 HEARING DATES: 06/14/2000; 07/05/2000; 07/26/2000; 08/02/2000 DATE OF JUDGMENT: 09/06/2000 APPLICANT Ms C Howell of Counsel UNION LEGAL REPRESENTATIVES: New South Wales Independent Education Union RESPONDENT Ms E Devine, Employers Federation of New South Wales JUDGMENT: - 9 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP 6 September, 2000 Matter No IRC99/3092 Notification under section 130 by the New South Wales Independent Education Union of a dispute with Allambia Pty Limited trading as Cuddly Possums re payment of award entitlements DECISION (as to costs) 1 By decision of 30 May, 2000, the Commission, as presently constituted, published a decision arising from a s130 notification of dispute between the New South Wales Independent Education Union and Allambia Pty Ltd. 2 For present purposes it is unnecessary to detail the full extent of my findings, directions and orders, suffice to observe that the Commission was required to determine a number of matters including, inter alia: i) the identity of the true employer at the date of a transfer of business; ii) when the transfer of business occurred; iii) the effect of Supreme Court liquidation orders on the parties; iv) any entitlements that might have accrued for the period of employment of the Union's member. 3 Shortly stated, the Commission found Allambia Pty Ltd legally liable for certain accrued entitlements in respect to redundancy payments and annual leave according to the relevant Award and the Annual Holidays Act 1944. 4 An order was made, in part based upon an application for a small claims order, pursuant to s379 and s380 of the Industrial Relations Act 1996 ("the Act"). 5 In the decision, the Commission required any cost application to be made by way of notice of motion within fourteen (14) days. Such application was duly made and submissions in writing filed in accordance with an agreed timetable. It is from these submissions that the Commission is asked to make a costs order of an amount of $5000 in favour of the applicant union. 6 I proceed to summarise the submissions of the parties. 7 For the applicant, Ms Howell submitted: i) Costs will ordinarily follow the event in proceedings for the recovery of remuneration and other amounts (See: Lismore Challenge Limited v Lavis 88 IR 230). There is no reason to depart from the ordinary rule. ii) The case involved complex legal issues which required legal representation. The Commission granted leave for legal representation with the consent of the respondent. (iii) Some of the costs incurred by the applicant arose from the fault of the respondent in not complying with the Commission's directions. 8 For the respondent, Ms Devine put the following: i) Costs orders are discretionary. s181(2) of the Act is relevant. ii) The claim brought by the Union was initially a s130 dispute notification. The Commission's procedure is relatively informal, not requiring adherence to the strict rules of evidence. iii) It should not be assumed that the respondent accepted that it was appropriate to engage counsel when it did not oppose leave being granted for it to do so. s375(5) is concerned with disadvantage. iv) The applicant could not assert it was taken "by surprise" by oral evidence adduced. The respondent consented to an adjournment, but the applicant did not take it up. v) An affidavit sworn by Union official, Jacqueline Groom, was not in the form of reply in accordance with the Commission's directions. vi) The respondent incurred costs and expenses in excess of $15,000 and an order of $10,000 - which it has complied with. vii) Lismore Challenge is not authority for the proposition put by the applicant. The Full Bench's citing of Supreme Court Rules is mentioned only as "instructive". Proceedings contemplated by such rules are not relevant to this matter. viii) The applicant can cite no other authority for its submissions and in any event, the Commission's "ordinary rule" in industrial disputes is not to order costs. The "ordinary rule" submitted by the applicant is not incorporated in the Act or the Commission's Rules. ix) The claim for costs is not particularised. If costs were to be ordered the assessment should be according to the requirements of Part 11 of the Legal Profession Act 1987. 9 In reply, Ms Howell submitted: i) The discretion to award costs should be made in favour of the applicant. ii) s373 of the Act cannot be read down by the general provisions of s181(2). There is, therefore, no reason to depart from the general rule that costs follow the event. iii) The respondent's failure to comply with directions should not be downplayed or disregarded. iv) Lismore Challenge is applicable as it deals directly with s373 of the Act. The respondent could cite no authority to support its position. v) If the respondent's approach is correct, successful applicants would rarely obtain costs and would be deterred from pursuing claims of underpayment. vi) Costs are not being assessed. The Commission is being asked to fix an amount of costs which is reasonable in all the circumstances. CONSIDERATION 10 This is an application for costs made by a successful party (the Union) under Pt 2 ch 7 of the Industrial Relations Act 1996. 11 The Commission can usefully commence a consideration of this matter by stating the fundamental principle which applies in all costs applications; i.e. the award or order for costs by the Commission is entirely a matter of discretion. This is plainly evident by the use of the word "may" in the section of the Act under which this application is made. Section 373 Order for Costs In any proceedings under this part, the industrial court may award costs to either party and assess the amount of those costs. 12 There is, of course, no doubt that the Commission, as presently constituted, is a Court for the purposes of Part 7 by reference to the definition of "industrial court" in 364(1). In this Part: industrial court means: (a) the Commission in Court Session, or (b) in the case of proceedings under section 380 (Small claims during other Commission proceedings) - the Commission, whether or not in Court Session, or (c) a Local Court constituted specifically for the purposes of this Part by an Industrial Magistrate sitting alone. 13 Ms Howell relied on Lismore Challenge Limited v Lavis (88IR230) as authority for the proposition that costs will ordinarily follow the event in proceedings for the recovery of remuneration and other amounts. Lismore Challenge concerned applications for leave to appeal and appeals from a decision of the Chief Industrial Magistrate in respect to underpayment of wages under the Social and Community Service Employees (State) Award and outstanding entitlements under the Annual Holidays Act 1944 and Long Service Leave Act 1955. 14 While I respectfully agree with the conclusions in Lismore Challenge, I would also observe that the decision is also authority for the proposition that the general rule, so stated, may be departed from in "special circumstances". The Full Bench said at p235: A successful claimant in proceedings under s365 of the Industrial Relations Act is usually, in the absence of special circumstances, entitled to costs reasonable to that action. The same applies to associated proceedings under the Annual Holidays Act and the Long Service Leave Act . 15 In my view, Lismore Challenge can be distinguished from the instant matter for the following reasons: i) This dispute did not involve a finding of a direct breach of an Award by the employer. Rather, it was a case in which the very identity of the employer was in issue. The case, as Ms Howell put, did involve " complex legal issues ". ii) My reading of Lismore Challenge leads me to conclude that the employee's own costs for successfully pursuing his Award and statutory entitlements, would have been met by him personally. So much so seems evident by the penultimate paragraph of the decision at p236: Costs generated by such failures by the employer ought not fall upon an employee who is required to litigate in order to receive his award entitlements. However, on the face of the costs order in this matter Mr Lavis would be left to meet a significant proportion of such costs. On the other hand, in this matter, the applicant was at all times, represented by her Union and I presume was not liable to meet any, or all, of the costs. In any event, I would expect that a Union's duty of representation would result in all the incurred costs associated with defending its member's interests would be met by the Union and not by the member personally. 16 In addition, I have also considered a number of other special circumstances which satisfy me that I should depart from the usual, or ordinary rule, in awarding costs in favour of the applicant. 17 Firstly, the applicant cannot rely on the grant of leave to be legally represented, with consent of the respondent, as supportive of its argument. The relevant provision of Chapter 7 Part 2 is found at s379(5): 379(5) [Representation] A party to proceedings on a small claims application may be represented by an agent, but is not entitled to be represented by an agent who is a practicing legal practitioner unless the industrial court so approves. That approval is not to be given unless: (a) all parties to the proceedings agree, and (b) the industrial court is satisfied that the parties (other than the party who applies for approval) or any of them will not be disadvantaged. 18 I agree with Ms Devine that the intention of this section is to ensure that no party is disadvantaged by another party being legally represented. It cannot be read as a de facto acknowledgment that one party willingly accepted the legal representation of the other. As already noted, the case involved more than the usual argument about underpayments against a named employer. It concerned much more than simply comparing a time and wages record against the Award. It is a trifle ungracious of Ms Howell to suggest that the respondent should be caught and burdened by its acquiescence to the application for leave. 19 Secondly, this matter was initially brought before the Commission as a s130 notification of dispute. The dispute notification was filed on 16 June and the Commission convened a number of compulsory conferences with the parties in the second half of 1999. As the matter was listed for hearing on 21 February 2000, it is obvious that the hearing was required to determine, as a first step, the identity of the employer at the time of redundancy and, nextly to decide a small claim under s380 of the Act. I reaffirm that this ordinarily would not be the initiating process, whereby a Union seeks recovery of unpaid entitlements for a member(s). 20 While I am not at all critical of the approach taken, it does highlight a more difficult and thorny question which I feel bound to comment upon: Should costs follow the event in proceedings initiated under s130 of the Act when, in circumstances such as here, the dispute proceedings include a s380 small claim application? I have not been helped, either by the parties, or my own research, by any decided authority on this question. 21 In considering this quandry, it is necessary to refer to the Commission's general power to Award costs to be found in s181(2): However, the Commission, when it is not in Court Session, may award costs only in the following cases: (a) the Commission may award costs against an applicant if it considers that the application to it was frivolous or vexatious, or (b) the Commission may award costs against a party to proceedings who, in the opinion of the Commission, instituted proceedings without reasonable cause, or (c) the Commission may award costs against a party to proceedings under Part 6 of Chapter 2 (Unfair Dismissals) who, in the opinion of the Commission, unreasonably failed to agree to a settlement of the claim or whose application was frivolous or vexatious, or (d) the Commission may award costs in proceedings for a breach of an industrial instrument or the recovery of money under Chapter 7, as provided by sections 357 and 373. In my view, the clear intention of this provision is to restrict costs applications to specific proceedings [(c) and (d)] or in any proceedings where the application is either frivolous or vexatious or a party instituted proceedings without reasonable cause [(a) and (b)]. Obviously, it was not put, and there is no basis for any finding of the application being frivolous, vexatious or having been instituted without reasonable cause. Relevantly, sub para (d) applies to small claims applications. s373 only reinforces the general capacity for costs orders which may be available under ch 7. To my mind, however, it does not resolve the dilemma of concurrent proceedings involving a s130 dispute notification and a s380 application. Instructively, Pt 1 ch 3 Industrial Disputes is silent as to the capacity to recover costs. It must logically follow that where other proceedings expressly provide for costs and s181(2) makes plain the only circumstances in which costs can be awarded, that there is no statutory grounding for costs to follow the "ordinary rule" in s130 dispute proceedings. There are obvious policy and historic reasons why s130 dispute proceedings do not follow the ordinary rules in relation to costs. Unfortunately, these factors do not resolve my present dilemma. It would seem at least arguable that where there is a joinder of two proceedings, such as a s130 dispute and a s380 application that, at least for that part of the proceedings which is directly concerned with the small claim, costs orders would be available. Specificity of such orders would no doubt be blurred by the nature of the two matters proceeding concurrently. 22 I take the view, where a Union has successfully prosecuted a case arising from a s130 dispute notification, there is a reasonable community expectation that it should bear such costs in the ordinary course of its duty and obligation to represent its members. Indeed, the case itself, might well become useful precedent for its defence of other members caught in analogous circumstances. Thus, a favourable decision might be said to have a wider "value" to a Union than to an individual. 23 It follows from these conclusions that I am reluctant to award costs in this matter. I decline to do so. Each party should meet its own costs. Peter Sams Deputy President DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.