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Costs
Table of contents
Introduction
See Fair Work Act s.611
People who incur legal costs in a matter before the Fair Work Commission generally pay their own costs.[1]
The Commission has the discretion to order one party to pay the other party’s legal costs.[2]
This is called a ‘costs order’ and it will only be granted in certain situations.
What are costs?
Costs are the amounts a party has paid to a lawyer or paid agent for advice and representation in a matter before a court or tribunal.
If a party is ordered to pay another party’s legal costs it will not usually be for the whole amount of legal costs incurred.
The Commission may order that only a proportion of the costs be paid. Costs may be ordered either on a party-party basis or on an indemnity basis.
Party‒party costs
Party‒party costs are the legal costs that are deemed necessary and reasonable.[3]
The Commission will look at whether the legal work done was necessary and will decide what a fair and reasonable amount is for that work.[4]
Indemnity costs
Indemnity costs are also known as solicitor‒client costs.
Indemnity costs are all costs including fees, charges, disbursements, expenses and remuneration as long as they have not been unreasonably incurred.[5]
Indemnity costs cover a larger proportion of the legal costs than party-party costs.
They may be ordered when there has been an element of misconduct or delinquency on the part of the party being ordered to pay costs.[6]
Party‒party costs are the costs that one side pays to the other side in legal proceedings. They are the result of the Commission ordering that one party pay costs to the other party.
Indemnity costs are the costs that you pay to your solicitor for the work that they perform for your matter. The basis of these costs is a costs agreement between you and your solicitor.
Applying for costs
An application for costs must be made within 14 days after the Commission finishes dealing with the dispute.[7]
Related information
What costs may be recovered?
The Fair Work Regulations include a ‘schedule of costs’ which sets out appropriate rates for common legal services. The schedule provides the Commission with guidance when exercising its jurisdiction to make an order for costs.[8]
The Commission is not limited to the items in the schedule of costs, but cannot exceed the rates or amounts in the schedule if an item is relevant to the matter.[9]
When are costs ordered?
See Fair Work Act s.611
Section 611 of the Fair Work Act 2009 (the Fair Work Act) sets out the general provision for when the Commission may order costs. The Commission may order a person to pay the other party’s costs if it is satisfied:
- that the person’s application or response to an application was made vexatiously or without reasonable cause, or
- it should have been reasonably apparent that the person’s application or response to an application had no reasonable prospect of success.
The power to award costs is discretionary. It is a two stage process:
- decide whether there is power to award costs, and
- if there is power, consider whether the discretion to award costs is appropriate.[10]
Vexatiously
Vexatious means that:
- the main purpose of an application (or response) is to harass, annoy or embarrass the other party,[11] or
- there is another purpose for the action other than the settlement of the issues arising in the application (or response).[12]
Without reasonable cause
The test for ‘without reasonable cause’ is that the application (or response):
- is ‘so obviously untenable that it cannot possibly succeed’
- is ‘manifestly groundless’
- is ‘so manifestly faulty that it does not admit of argument’
- ‘discloses a case which the Court is satisfied cannot succeed’, or
- ‘under no possibility can there be a good cause of action’.[13]
The Commission may also consider whether, at the time the application (or response) was made, there was a ‘substantial prospect of success.’[14] It is inappropriate to find that an application (or response) was without reasonable cause if success depends on the resolution of an arguable point of law.[15]
An application (or response) is not without reasonable cause just because the court rejects a person’s arguments.[16]
In simple terms, without reasonable cause means that an application (or response) is made without there being any real reason, basis or purpose.
No reasonable prospect of success
Whether it should have been reasonably apparent that an application (or response) had no reasonable prospect of success is an objective test.[17]
A finding that an application (or response) has no reasonable prospect of success should be reached with extreme caution and should only be reached when an application (or response) is ‘manifestly untenable or groundless’.[18]
An objective test considers the view of a reasonable person. In this case it looks at whether it would have been apparent to a reasonable person that an application or response had no reasonable prospect of success. This is the appropriate test.
A subjective test would look at the view of the person themselves. A subjective test would look at whether it would be reasonably apparent to the person that their application or response had no reasonable prospect of success. This is not the appropriate test as the person has a vested interest in the matter being decided in their favour, which can influence how the person will look at the issues.
Case examples
References
[1] Fair Work Act s.611(1).
[2] Fair Work Act s.611(2).
[3] Butterworths Australian Legal Dictionary, 1997, at p. 852.
[4] ibid.
[5] Butterworths Australian Legal Dictionary, 1997, at p. 586.
[6] Oshlack v Richmond River Council [1998] HCA 11 (25 February 1998) at para. 44, [(1998) 193 CLR 72]; cited in Goffett v Recruitment National Pty Ltd [2009] AIRCFB 626 (Lacy SDP, Hamilton DP, Larkin C, 28 August 2009) at para. 50, [(2009) 187 IR 262]; and Stanley v QBE Management Services Pty Limited T/A QBE [2012] FWA 10164 (Jones C, 18 December 2012) at para. 24.
[7] Fair Work Act s.377.
[8] Fair Work Regulations reg 3.04; sch 3.1.
[9] Fair Work Regulations reg 3.04; sch 3.1.
[10] McKenzie v Meran Rise Pty Ltd t/as Nu Force Security Services Print S4692 (AIRCFB, Giudice J, Watson SDP, Whelan C, 7 April 2000) at para. 7.
[11] Nilsen v Loyal Orange Trust [1997] IRCA 267 (11 September 1997), [(1997) 76 IR 180 at p. 181]; citing Attorney-General v Wentworth (1988) 14 NSWLR 481, at p. 491; cited in Holland v Nude Pty Ltd T/A Nude Delicafe) [2012] FWAFB 6508 (Harrison SDP, Richards SDP, Blair C, 3 August 2012) at para. 7, [(2012) 224 IR 16].
[12] ibid.
[13] General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 (9 November 1964) at para. 8, [(1964) 112 CLR 125 at p. 129]; cited in Walker v Mittagong Sands Pty Limited T/A Cowra Quartz [2011] FWA 2225 (Thatcher C, 14 April 2011) at para. 17, [(2011) 210 IR 370].
[14] Re Joseph Michael Kanan v Australian Postal and Telecommunications Union [1992] FCA 366 (31 July 1992) at para. 29, [(1992) 43 IR 257]; cited in Dryden v The Bethanie Group Inc [2013] FWC 224 (Williams C, 11 January 2013) at para. 20.
[15] ibid.
[16] R v Moore; Ex Parte Federated Miscellaneous Workers’ Union of Australia [1978] HCA 51 (14 December 1978) at para. 3 (Gibbs J), [(1978) 140 CLR 470 at p. 473]; cited in Walker v Mittagong Sands Pty Limited T/A Cowra Quartz [2011] FWA 2225 (Thatcher C, 14 April 2011) at para. 20, [(2011) 210 IR 370].
[17] Baker v Salver Resources Pty Ltd [2012] FWAFB 4014 (Watson SDP, Drake SDP, Harrison C, 27 June 2011) at para. 10; citing Wodonga Rural City Council v Lewis PR956243 (AIRCFB, Watson SDP, Lloyd SDP, Gay C, 4 March 2005) at para. 6, [(2005) 142 IR 188].
[18] Baker v Salver Resources Pty Ltd [2012] FWAFB 4014 (Watson SDP, Drake SDP, Harrison C, 27 June 2011) at para. 10; citing Deane v Paper Australia Pty Ltd PR932454 (AIRCFB, Giudice J, Williams SDP, Simmonds C, 6 June 2003) at para. 7.
Updated time
Last updated
02 October 2019
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