A lack of proper pleadings costs the applicant (and funder)

Class action under the Fair Work Act – Effect of s 570 of the Fair Work Act on the making of costs orders – Whether presence of a litigation funder is relevant to costs – Costs order made against the applicant after respondent forced to prepare multiple defences in circumstances where pleadings should have been amended earlier.

This is a class action under the Fair Work Act 2009 (Cth) (FWA) alleging, inter alia, that the respondent failed to pay certain workers in accordance with an applicable award, and falsely represented to them that they were independent contractors and not employees. Following the filing of a Further Amended Originating Application and Further Amended Statement of Claim, the respondent sought the ‘usual’ order that the applicant pay its costs thrown away by reason of the amendments. However, s 570 of the FWA imposes limits on the Court’s power to make costs orders in proceedings under the FWA, and indicates 'a clear legislative intent that the Fair Work jurisdiction be primarily a 'no costs' jurisdiction, unless a statutory threshold of unreasonable litigious conduct is demonstrated' (at [7]).

Justice Lee considered that, where the pre-conditions for the making of a costs order under s 570 of the FWA are satisfied, the Court still retained a discretion whether or not to make such an order, but that its reluctance to do so would be diminished where the proceeding is funded by a litigation funder (at [11]-[13]):

These considerations [i.e. against making a costs order in proceedings under the FWA] seem to me to have less force, however, when one is dealing with a Fair Work representative proceeding, which is funded by a litigation funder seeking to use the processes of the Court in order to conduct an enterprise to derive a profit.

…   [P]rovided the statutory preconditions for an award of costs under s 570(2) of the [FWA] are met, then given the existence of a funder, amorphous broad policy considerations as to access to justice, which have real weight in different contexts, should not mean that I should show excessive caution and shrink from making an order for costs in this funded Fair Work litigation, if I otherwise thought it was appropriate.

His Honour determined that a costs order against the applicant was appropriate in this case, though not in the precise terms sought by the respondent. In particular:

  • at an earlier stage of the proceeding the respondent had challenged its validity as a representative proceeding under s 33C of the Federal Court of Australia Act 1976 (Cth)
  • although Wigney J found that the proceeding did meet the threshold requirements under s 33C, his Honour was in some respects critical of the way in which the case was pleaded (Bywater v Appco Group Australia Pty Ltd [2018] FCA 707)
  • despite his Honour’s comments, the applicant declined to amend his statement of claim at that time, and put the respondent to the expense of filing a defence to it, only to then (belatedly) file an amended statement of claim later
  • Justice Lee considered that such conduct was unreasonable, and ordered the applicant to pay the respondent’s costs of preparing a defence to the earlier pleading, which had now been superseded.

Case details

Bywater v Appco Group Australia Pty Ltd [2019] FCA 799

  • Federal Court of Australia, Lee J, 11 April 2019
  • Applicant's Solicitors: Adero Law
  • Respondent's Solicitors: Baker & McKenzie
  • Applicant's Funder: Harbour Fund III LP

Read more on Austlii: Bywater v Appco Group Australia Pty Ltd [2019] FCA 799


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