Mutch v ISG Management Pty Ltd (No 2)

• Jurisdiction: Australia Federal only
• Judge: BROMBERG J
• Judgment Date: 08 July 2020
• Neutral Citation: [2020] FCA 954
• Date: 08 July 2020
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Mutch v ISG Management Pty Ltd (No 2) [2020] FCA 954

File number:	VID 1492 of 2018
Judge:	BROMBERG J
Date of judgment:	8 July 2020
Catchwords:	COSTS – s 570(2)(b) of the Fair Work Act 2009 (Cth) – various interlocutory applications unsuccessful – adjournment application causing costs to be thrown away – whether any “unreasonable act or omission” to justify adverse costs orders – consideration of purpose of s 570 – whether presence of litigation funder relevant to exercise of discretion
Legislation:	Fair Work Act 2009 (Cth) s 570
Cases cited:	BMW Australia Limited v Brewster [2019] HCA 45 Bywater v Appco Group Australia Pty Ltd [2019] FCA 799 Construction, Forestry, Mining and Energy Union v Clark (2008) 170 FCR 574 Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275 Hutchinson v Comcare (No 2) [2017] FCA 370 Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191 MTGI Trust v Johnston (No 2) [2016] FCAFC 190 Mutch v ISG Management Pty Ltd [2020] FCA 362 Ryan v Primesafe [2015] FCA 8 Saxena v PPF Asset Management Limited [2011] FCA 395 Turner v Tesa Mining (NSW) Pty Ltd [2019] FCA 1644
Date of hearing:	Determined on the papers
Registry:	Victoria
Division:	Fair Work Division
National Practice Area:	Employment & Industrial Relations
Category:	Catchwords
Number of paragraphs:	33
Counsel for the Applicant:	Mr I Pike SC with Mr J Dooley
Solicitor for the Applicant:	Shine Lawyers Pty Ltd
Counsel for the Respondent:	Mr F Parry QC with Ms C Button QC and Mr B Avallone
Solicitor for the Respondent:	Lander & Rogers

ORDERS

		VID 1492 of 2018
BETWEEN:	ROBERT MUTCH Applicant
AND:	ISG MANAGEMENT PTY LTD (ACN 142 916 970) Respondent

JUDGE:	BROMBERG J
DATE OF ORDER:	8 july 2020

THE COURT ORDERS THAT:

1. There be no order for costs in each of the following interlocutory applications:

   1. the applicant’s application dated 19 July 2019; and

   2. the respondent’s application dated 10 May 2019.

2. In relation to the applicant’s interlocutory application of 24 May 2019:

   1. there be no order as to costs in relation to the hearing on 20 August 2019; and

   2. costs are otherwise reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

BROMBERG J:

1. These reasons deal with various applications for costs arising from the various interlocutory applications addressed in my reasons for judgment published as Mutch v ISG Management Pty Ltd [2020] FCA 362 (“earlier reasons”). By that judgment the Court dismissed the respondent’s (“ISGM”) interlocutory application for declassing and class-closure/opt-in orders (“ISGM’s declassing application”) and two interlocutory applications brought by the applicant (“Mutch”) – an interlocutory application for a common fund order (“application for CFO”) and an application for summary judgment on ISGM’s cross claim (“application for summary judgment”). As indicated in the earlier reasons, I reserved costs in each application and directed the parties to consult on the question of costs and attempt to reach agreement on appropriate consent orders. Disappointingly, no agreement was reached and consequently submissions had been exchanged on the basis that I would deal with any order for costs on the papers. These reasons should be read with my earlier reasons.

2. The interlocutory applications with which these reasons deal were brought in a representative proceeding commenced by Mr Mutch. A key question in that proceeding is whether Mr Mutch and over 3,000 group members, on whose behalf Mr Mutch brings the proceeding, were employees of ISGM or, alternatively, were employees or contractors of various corporations which provided services to ISGM. As well as other relief, Mr Mutch seeks declarations that he was an employee of ISGM and that, contrary to various obligations imposed by the Fair Work Act 2009 (Cth) (“FW Act”) and an industrial award made under that Act, ISGM failed to pay or provide him with various employee entitlements.

3. ISGM filed a cross claim, premised on the Court finding (contrary to ISGM’s Defence) that Mr Mutch was an employee of ISGM. The cross claim seeks restitution of monies paid by ISGM in relation to work performed by Mr Mutch and damages for misleading and deceptive conduct based on various representations said to have been made by Mr Mutch or a corporation with which he is said to be associated.

4. The proceeding in which these applications for costs have been made is a matter arising under the FW Act. Consequently, s 570 of the FW Act applies to limit the circumstances in which the Court may order a party to pay costs. In each of the interlocutory applications which I have mentioned, each of Mr Mutch and ISGM seek an order for costs. In each case, each of those parties contends that the pre-condition for an order awarding costs required by s 570(2)(b) of the FW Act is made out – namely, that the Court should be satisfied that an “unreasonable act or omission caused” the costs which are claimed.

5. For the reasons which follow, I am not satisfied that the requisite pre-condition of an “unreasonable act or omission” is established in relation to any of the applications for costs. Those applications should be dismissed.

section 570 - relevant principles

6. Section s 570 of the FW Act relevantly provides:

Costs only if proceedings instituted vexatiously etc.

(1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising 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) or section 569 or 569A.

Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A.

(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

(b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or

(c) the court is satisfied of both of the following:

(i) the party unreasonably refused to participate in a matter before the FWC;

(ii) the matter arose from the same facts as the proceedings.

7. Section 570 imposes a limitation on the circumstances in which an order for costs may be made in relation to a matter arising under the FW Act. One such circumstance is where the Court is satisfied that a party’s unreasonable act or omission caused another party to incur costs: s 570(2)(b). The term “unreasonable” in s 570(2)(b) is unsurprisingly not defined. It is a term not conducive to precise definition. The word “unreasonable” is used in s 570(2)(b) to control the extent of the limitation on the making of a costs order sought to be imposed by s 570. The term takes much of its meaning from the underlying reason for that limitation. It is well settled that the limitation imposed by s 570 seeks to provide access to justice by ensuring that the fear of an adverse costs order does not discourage litigants from pursuing good claims: Trustee for the MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8] (Siopis, Collier and Katzmann JJ); Ryan v Primesafe [2015] FCA 8 at [64] (Mortimer J); Hutchinson v Comcare (No 2) [2017] FCA 370 at [8] (Bromberg J) (“Hutchinson (No 2)”). As Lee...