Collateral purpose & avoiding a costs order

11 December 2019 

If you bring a claim to the Fair Work Commission for a collateral purpose, you could face a costs order. 

For this reason, it's important to know exactly what a collateral purpose is and the triggers for a costs order.

In a hurry? Jump ahead below.

Collateral purpose meaning

A proceeding is brought for a collateral purpose if the person bringing it has a reason other than seeking a remedy that the application provides.

For example, getting back at an employer by harassing or embarrassing them or causing delays to deliberately inconvenience them - that's a collateral purpose. 

When a costs order will be made

The Fair Work Commission may order costs in these cases: 

  • a claim made for a vexatious reason; 
  • a claim without a reasonable cause; 
  • no reasonable prospects of success; or
  • unreasonable acts or omissions

Below, we’ll break down those cases further. 

Vexatious

Vexatious means that the main reason for the application (or response) was to harass, annoy or embarrass the other party. 

Without reasonable cause

This test is based on General Steel Industries Inc. v Commissioner for Railways (NSW) (1964) 112 CLR 125.

These are traits of a claim made without reasonable cause:  

  • ​so obviously untenable that it cannot succeed 
  • manifestly groundless 
  • manifestly faulty 
  • discloses a case which the Court is satisfied cannot succeed 
  • under no possibility can there be a good cause of action 

No reasonable prospect of success

This is an objective test - that is, looking at the view of a reasonable person, whether it would have been apparent to a reasonable person that an application or response had no reasonable prospect of success. 

Unreasonable acts or omissions

Unreasonable acts or omissions may include failure to agree to terms of settlements or to discontinue an application. It will depend on the circumstances. 

Case examples of costs orders 

Below is a summary of instances where costs were awarded. 

  • an employer relying on false evidence that an employee stole: Walker v Mittagong Sands Pty Limited T/A Cowra Quartz [2011] FWA 2225
  • employer that did not attend a hearing then appealed: Cremona (formerly trading as Frooty Fresh) v Lane [2011] FWAFB 6984
  • an employee that appealed a decision with no proper basis:  Timmins v Compass Security t/a Compass Integrated Security Solutions [2012] FWAFB 1093
  • an applicant that had not been dismissed: Mijaljica v Venture DMG Pty Ltd [2012] FWA 2800  
  • an appeal application made vexatiously: Church v Eastern Health t/as Eastern Health Great Health and Wellbeing [2014] FWCFB 810

Whats next?

Objective advice from an experienced employment lawyer can help if you are unsure whether your application or response could trigger a costs order. 


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Vivian Michael
 

Vivian Michael is a lawyer and founder of Michael Law Group. Vivian's mission is to deliver the best quality business legal services to entrepreneurs launching an Australian business, wherever they are in the globe.

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