Industrial Court of New South Wales CITATION: Manefield v Association of Quality Child Care Centres of NSW Inc T-as Child Care New South Wales (No 2) [2010] NSWIRComm 119 PARTIES: Bruce Manefield (Applicant/Respondent on motion) Association of Quality Child Care Centres of NSW Inc T/as Child Care New South Wales (Respondent/Applicant on Motion) FILE NUMBER(S): IRC 660 of 2009 CORAM: Boland J President CATCHWORDS: COSTS - UNFAIR CONTRACT- No order as to costs - Inconsistency between s 106 of the Industrial Relations Act 1996 and s 824 of the Workplace Relations Act 1996 (Cth) - Jurisdictional error - Matters arising under the Workplace Relations Act The Constitution (Cth) LEGISLATION CITED: Industrial Relations Act 1996 Judiciary Act 1903 (Cth) Workplace Relations Act 1996 (Cth) Bankstown Handicapped Children's Centre Association Inc v Hillman [2010] FCAFC 11; (2010) 182 FCR 483 Felton v Mulligan [1971] HCA 39; (1971) 124 CLR 367 Fonseka v Epic Hotels Pty Limited [2008] NSWIRComm 79 Goldman Sachs JBWere Services Pty Ltd v Nikolich [2007] FCAFC 120; (2007) 163 FCR 62 CASES CITED: Hillman v Bankstown Handicapped Children's Centre Association Inc [2008] NSWIRComm 64; (2008) 183 IR 376 Manefield v Association of Quality Child Care Centres of NSW Inc T-as Child Care New South Wales [2010] NSWIRComm 85 R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett v Opitz [1945] HCA 50; (1945) 70 CLR 141 State of New South Wales v Gebethner [2009] NSWCA 237 Tristar Steering & Suspension Australia Ltd v Industrial Relations Commission of New South Wales (No 2) [2007] FCAFC 95; (2007) 159 FCR 274 HEARING DATES: Written submissions:13 and 16 July 2010 DATE OF JUDGMENT: 26 August 2010 Mr R J de Meyrick of counsel (Applicant/Respondent on Motion) Paris J Carr & Associates LEGAL REPRESENTATIVES: Mr P Newall of counsel (Respondent/Applicant on Motion) Guild Lawyers JUDGMENT: INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: BOLAND J, President Thursday 26 August 2010 Matter No IRC 660 of 2009 BRUCE MANEFIELD v ASSOCIATION OF QUALITY CHILD CARE CENTRES OF NSW INC TRADING AS CHILD CARE NEW SOUTH WALES Application under section 106 of the Industrial Relations Act 1996 JUDGMENT [2010] NSWIRComm 119 1 This matter concerns an application by the respondent for costs arising from the judgment in Manefield v Association of Quality Child Care Centres of NSW Inc T-as Child Care New South Wales [2010] NSWIRComm 85. 2 In those proceedings the court dismissed the summons for relief and in doing so made the following orders: Orders and directions [53] The Court orders that the summons for relief filed on 5 May 2009 by Bruce Manefield in this matter is dismissed for want of jurisdiction. [54] The respondent shall have seven days to file submissions on costs with the applicant having a further seven days in which to reply. Unless a party indicates a desire to be heard orally on costs, the question will be determined on the papers. 3 In written submissions, the respondent sought orders that the applicant pay its costs pursuant to s 181 of the Industrial Relations Act 1996. Respondent's submissions 4 The respondent's submissions, in summary, were as follows: 1. the applicant's claim for relief was dismissed for want of jurisdiction; 2. costs should follow the event; and 3. the respondent should, accordingly, be awarded costs as agreed or assessed. 5 The respondent submitted that its claim has particular validity because: 1. The respondent went to some trouble and expense to alert the applicant to the very difficulty with the s 106 proceedings that ultimately led to those proceedings being determined against the applicant. The applicant ignored this, and the repeated request to discontinue; he chose expressly to proceed. 2. Ordinarily costs follow the event and the successful litigant should receive its costs in the absence of special circumstances justifying some other order. Indeed, the position is that only in 'the most extraordinary circumstances' will the rule that costs follow the event be departed from: see State of New South Wales v Gebethner [2009] NSWCA 237 at [10] per Handley AJA: There is an expectation that the successful party is entitled to his costs, whether the proceedings were commenced with or without good cause. If the proceedings ultimately fail the unsuccessful party must expect in all but extraordinary circumstances to have to meet the costs of the successful party. 3. Here there are no extraordinary circumstances, or any circumstances, warranting departure from the usual approach, and indeed the applicant had every forewarning of the event. 4. There is no argument that may be mounted or sustained by the applicant that this was a matter arising under the Workplace Relations Act 1996 (Cth) and that, therefore, the costs regime under that Act should apply. 5. The applicant's claim was always an application commenced in the jurisdiction of this Court, conducted in the jurisdiction of this Court and determined to finality in this Court. It was always an invocation of the Court's powers under a statutory right to do so; unfortunately for the applicant, it was misconceived. It was erroneously commenced in the face of a want of jurisdiction. It is no different to a matter under s 106 which is commenced late, or which is commenced where the contract is not in and of New South Wales, each of which would have led to the same result; jurisdiction did not lie and the Court had the power to so determine. 6. The costs order should attach to the whole of the proceedings, not just the Notice of Motion; for the reasons set out above, the Summons has been subject to be dismissed since it was filed, and the solicitors for the applicant have been on notice of that since at the latest 4 March 2009. The Reply to the Summons for Relief and all the affidavit material have had to be prepared, filed and served subsequent to that date. 7. The applicant should pay the respondent's costs of the proceedings as agreed or in default of agreement as assessed. Applicant's submissions 6 The applicant filed written submissions opposing the orders sought and submitting that each party should bear their own costs for the notice of motion and the whole of the proceedings. 7 The applicant submitted that there should be no order made with respect to costs on two bases: a. The matter attracts the operation of s 824 of the Workplace Relations Act 1996 (Cth) and thus is not amenable to a costs order except in circumstances inapplicable to this matter; and/or b. The extraordinary circumstances of the state of the jurisdictional boundaries of the Industrial Court's jurisdiction at the time of filing the application make it unjust and inappropriate to visit a costs order upon the applicant. 8 As to the second limb of the applicant's argument, it was submitted: Prior to the recent orderly handover of much of the NSW State jurisdiction to the federal sphere, the law remained in a very unacceptable state of flux in respect to the status of incorporated associations, where each case had to be dealt with on a case by case basis, and trading activity ultimately had to be measured as substantial or insubstantial by the Court. There was simply no reasonable way an Applicant in the position of Mr Manefield could ascertain whether his matter fell within the State or Federal jurisdiction without asking a Court or tribunal in one or either jurisdiction to rule upon same. The state of confusion is no better typified by the NSW State's own opposition to the successful appeal brought by Mr Hillman's employer. The jurisdictional handover did not apply to actions already commenced such as that of Mr Manefield, whose case remained to be dealt with under the principles discussed in Hillman. In all the circumstances, the Court ought to depart from the usual order that "costs follow the event" and make no order as to costs. Consideration 9 In these proceedings the usual rule that costs follow the event should be adopted unless it is accepted that the applicant has made out one or the other of the two limbs he relies upon. 10 The first limb is that s 824 of the Workplace Relations Act applies. Section 824 is in the following terms: 824 Costs only where proceeding instituted vexatiously etc . (1) 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. (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. (3) In subsections (1) and (2): Costs includes all legal and professional costs and disbursements and expenses of witnesses. 11 In Fonseka v Epic Hotels Pty Limited [2008] NSWIRComm 79 the Court had occasion to consider whether s 824 ousted the Industrial Court's power to deal with costs. That case involved a claim by the applicant under s 106 of the Industrial Relations Act. The respondents moved the Court to dismiss the application for want of prosecution and applied for costs. In relation to the motion to dismiss, the Court ordered a stay until certain orders had been complied with. In relation to costs, the applicant contended that given the respondents had raised as a defence the issue of whether the applicant's employment was subject to federal award coverage, costs may not be ordered except in the circumstances that arise in s 824 of the Workplace Relations Act. Reliance was placed on Goldman Sachs JBWere Services Pty Ltd v Nikolich [2007] FCAFC 120; (2007) 163 FCR 62 per Black CJ at [86]. 12 The Court in Fonseka dismissed the applicant's contentions on the basis of the decision in Tristar Steering & Suspension Australia Ltd v Industrial Relations Commission of New South Wales (No 2) [2007] FCAFC 95; (2007) 159 FCR 274 (see Fonseka at [34] - [40]): [34] As Kiefel J observed in Tristar Steering and Suspension Australia Limited v Industrial Relations Commission of New South Wales (No. 2) [2007] FCAFC 95 in relation to s 824: The test for determining whether a proceeding is a matter arising under the Act, for the purposes of the section, is 'whether the right or duty that is sought to be enforced owes its existence to a provision of the Act': Re McJannet; Ex parte Australian Workers' Union of Employees (Q) [No 2] (1997) 189 CLR 654 at 656. [35] This Court's power to award costs is governed by s 181 of the Industrial Relations Act and the relevant Rules: see Pt 27 of the Industrial Relations Commission Rules 1996. Section 181(1) of that Act provides: (1) Subject to the rules of the Commission and any other Act or law: (a) the Commission may award costs, and (b) costs are in the discretion of the Commission, and (c) the Commission may determine by whom and to what extent costs are to be paid, and (d) the Commission may order costs to be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis. [36] The term "Act or law" is to be interpreted to mean a State Act or law and not a Commonwealth Act (see s 65 and s 67(2) of the Interpretation Act 1987 (NSW)). It would seem, however (notwithstanding that notices under s 78B of the Judiciary Act 1903 (Cth) had not been issued), that the applicant contends there is an inconsistency between s 824 of the Workplace Relations Act and s 181 of the Industrial Relations Act and that by virtue of s 109 of the Constitution, s 824 prevails to the extent of the inconsistency. [37] The respondents' answer to this is that they are not relying upon a defence or a matter arising under the Workplace Relations Act (see National Union of Workers and Another v Davids Distribution Pty Ltd (1999) 91 FCR 513 at [20]-[21], which was relied upon by the applicant) but rather s 109 of the Constitution. Consequently, it was submitted, s 824 of the Workplace Relations Act does not prevent an order of costs being made in circumstances where the defence is based upon s 109 of the Constitution concerning the Commission's lack of jurisdiction: see Tristar Steering and Suspension Australia Limited v Industrial Relations Commission of New South Wales (No. 2) [2007] FCAFC 95 Kiefel J at [2]; Gyles J at [4] and Buchanan J at [7-16]. [38] The respondents' contention in the substantive proceedings is to be that the applicant's employment was subject to the coverage of a federal award (either the Hotel Managerial Staff (Federal) Award 1974 or the Hospitality Industry - Accommodation, Hotels Resorts and Gaming Award 1995) and, therefore, by virtue of s 109 of the Constitution, the Court has no jurisdiction to determine the applicant's claims: Hansen Yuncken Pty Ltd v Costopoulos (2004) 136 IR 61 and Everitt v Cuscal Shared Services Pty Ltd and anor [2005] NSWIRComm 319. [39] In Tristar (No 2), Buchanan J observed at [16]: [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 s109 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. [40] In the present case, the respondents are engaging s 109 by reason of the terms of the Workplace Relations Act, which provides for the making of federal awards, such federal awards prevailing over any inconsistent State law by virtue of s 109 of the Constitution. The respondents' defence, based as it is on the existence of a federal award, does not arise under the Workplace Relations Act but rather as a consequence of the Constitution. Accordingly, the Court has power to make an order for costs in the proceedings. 13 Notwithstanding the decision in Fonseka and its reliance on Tristar, the applicant submitted those authorities had been overtaken by the decision of the Full Federal Court in Bankstown Handicapped Children's Centre Association Inc v Hillman [2010] FCAFC 11; (2010) 182 FCR 483 ('Hillman'). In that case the appellants had appealed from a judgment of a Full Bench of the Industrial Court in Hillman v Bankstown Handicapped Children's Centre Association Inc [2008] NSWIRComm 64; (2008) 183 IR 376. 14 An issue arose in Hillman as to the competency of the appeal. As the Full Court stated at [12]: In issue is whether the matter arising from the application for relief under s 106 of the NSW IR Act (made under s 108 of that Act) constituted a matter arising under the WR Act so as to result in a right to appeal to this Court under s 853 because the judgment of the Industrial Court was a judgment in such a matter. 15 Section 853 of the Workplace Relations Act provided: An appeal lies to the [Federal] Court from a judgment of a court of a State or Territory in a matter arising under this Act... 16 The Court found that the appeal was competent: [13] Mr Hillman, and the State in support, referred to a number of authorities concerning what is comprehended by the expression "matter arising under [a federal law]" or other statutory formulations, which raised a similar question. Those authorities included Tristar Steering and Suspension Australia Ltd v Industrial Relations Commission (NSW) (No 2) [2007] FCAFC 95; (2007) 159 FCR 274; Collins v Charles Marshall Pty Ltd [1955] HCA 44; (1955) 92 CLR 529; Quickenden v O'Connor [2001] FCA 303; (2001) 109 FCR 243; Felton v Mulligan [1971] HCA 39; (1971) 124 CLR 367; and Re McJannet; Ex parte Australian Workers' Union of Employees (Qld) (No 2) [1997] HCA 40; (1997) 189 CLR 654. With one qualification, it is unnecessary to analyse these various authorities because there is clear binding authority of the High Court, which answers the argument, put by Mr Hillman. It is sufficient to note that the question, in this appeal, is not whether the appeal is a matter arising under the WR Act which, by analogy, is the issue in cases concerning whether there is any limit on a Court's power to award costs because of s 824 or its statutory predecessor (such as Tristar , Quickenden and McJannet ). Rather the question posed by s 853(1) is whether the proceedings in the Industrial Court gave rise to a judgment in a matter arising under the WR Act. That is not to say, however, that the appeal itself need not be a matter arising under a federal law or otherwise comprehended by s 76 of the Constitution which is a more fundamental question concerning the reach of s 77(i) of the Constitution . However if the proceedings in the Industrial Court concerned a matter arising under the WR Act there would be little reason to doubt, in a case such as the present, that an appeal would similarly be such a matter. [14] The answer to the question of whether the proceedings in the Industrial Court gave rise to a judgment in a matter arising under the WR Act is, in our opinion, plainly yes. We say that because the Association and Ms Moore raised as a defence in the proceedings in the Industrial Court the legal effect of a provision in the WR Act which (together with s 109 of the Constitution) either denied the Industrial Court jurisdiction to hear and determine Mr Hillman's application on its merits and grant the relief he sought or denied Mr Hillman statutory right to make the application or both. In a joint judgment of six Justices of the High Court (with the seventh Justice, Murphy J, concurring) in LNC Industries Ltd v BMW (Australia) Ltd [1983] HCA 31; (1983) 151 CLR 575, the following is said (at 581): The conclusion reached by Latham CJ in that case [ R v Commonwealth Court of Conciliation and Arbitration; ex parte Barrett [1945] HCA 50; (1945) 70 CLR 141], and stated in a passage that has often been cited with approval, is "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". Equally, there is a matter arising under a federal law if the source of a defence, which asserts that the defendant is immune from the liability or obligation alleged against him, is a law of the Commonwealth: Felton v Mulligan . The conclusory statement in the last sentence appears to us to apply to the proceedings in the Industrial Court. As already discussed, the Association asserted an immunity from liability (on two possible bases referred to earlier) in its defence in those proceedings and the WR Act was the source of the defence. Accordingly those proceedings involve a matter arising under a federal law, the WR Act. The order of 16 September 2008 was a judgment in such a matter and no party suggested it was not, relevantly, a judgment 17 The relevant question for the Full Federal Court in Hillman was whether the matter arising from Mr Hillman's application under s 106 constituted a matter arising under the Workplace Relations Act so as to result in a right to appeal to the Full Court of the Federal Court under s 853 because the judgment of the Industrial Court was a judgment in such a matter. The Court noted that (at [13]): [T]he question, in this appeal, is not whether the appeal is a matter arising under the WR Act which, by analogy, is the issue in cases concerning whether there is any limit on a Court's power to award costs because of s 824 or its statutory predecessor (such as Tristar, Quickenden and McJannet ). 18 The relevant question for the Full Federal Court in Tristar was whether the proceedings were 'in a matter arising under' the Workplace Relations Act within the meaning of s 824 of that Act. It was held that the matter did not involve a right or duty arising under the Workplace Relations Act, but rather it arose because of the operation of s 109 of the Constitution. Kiefel J observed (at [2]) that: [2] ... The matter has a connexion with the WRA, but does not involve a right arising under it and the duty of the first respondent not to proceed, which was enforced, arose because of the operation of s 109 of the Constitution and the resultant effect upon the State Act. 19 The decisions in Tristar and Hillman were in relation to proceedings under the Workplace Relations Act. The present proceeding was brought under the Industrial Relations Act. Nevertheless, if it is correct that this proceeding involves a matter arising under the Workplace Relations Act, s 824 will have effect unless it can be said no inconsistency arises between that provision and s 181 of the Industrial Relations Act. 20 It seems to me that there may be a potential conflict between Tristar and Hillman. What is said in Hillman, a decision that post-dated Fonseka is, with respect, the correct view, given the High Court authority there relied on, which I note was not referred to in Tristar. 21 If a Commonwealth law gives a right sought to be vindicated or is the source of a defence asserted, the matter in which the defence or right arises is a matter arising under a Commonwealth law: R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett v Opitz [1945] HCA 50; (1945) 70 CLR 141 at 154; Felton v Mulligan [1971] HCA 39; (1971) 124 CLR 367 at 374, 388, 403, 408. 22 What occurred in the present proceedings was that the respondent 'asserted an immunity from liability' in its defence in the proceedings and the Workplace Relations Act, a Commonwealth law, was the source of the defence. Without the existence of s 16 there would have been no defence available. 23 I was required to determine, as a step in the proceeding, whether that defence was available, that is, whether s 16 of the Workplace Relations Act taken together with s 109 of the Constitution, provided the respondent with the necessary immunity. I found that the defence was available. 24 Notices under s 78B of the Judiciary Act 1903 (Cth) were served on the Attorneys General but none sought to appear in the proceedings. No submission was made that I had no jurisdiction to make such a finding on the ground that the Industrial Court was not a court of a State: s 39(2) of the Judiciary Act. 25 I do not consider the proceedings were instituted vexatiously nor do I consider s 824(2) of the Workplace Relations Act applies such that the respondent should have its costs. Whilst I acknowledge the respondent went to some trouble in its correspondence with the applicant to convince the applicant he had no case, it could not be said the applicant's case was unarguable. 26 As to whether there is an inconsistency between s 181 of the Industrial Relations Act and s 824 of the Workplace Relations Act, I consider the inconsistency is plain on the face of the two provisions. Section 181 is the source of the Court's power to award costs. Section 824 provides that costs are not to be ordered against a party to a proceeding in a matter arising under the Act unless the party instituted the proceeding vexatiously or without reasonable cause. 27 In light of my conclusions regarding s 824 of the Workplace Relations Act, it is not necessary to consider the second limb of the applicant's argument. ORDER 28 There shall be no order as to costs in Matter No IRC 660 of 2009. _____________________________________ 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.