Re Kenneth John Hocking v Highway One Transport Pty Ltd and Vincentas Vytenis Patupas [1989] FCA 29 (23 February 1989)

FEDERAL COURT OF AUSTRALIA

Re: KENNETH JOHN HOCKING
And: HIGHWAY ONE TRANSPORT PTY LTD AND VINCENTAS VYTENIS PATUPAS
Nos. 6 and 7 of 1988
FED No. 41
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
INDUSTRIAL DIVISION
Von Doussa J.(1)

CATCHWORDS

Practice and Procedure - Costs - Proceedings under Conciliation and Arbitration Act 1904 - meaning of "a proceeding ... in a matter arising under this Act" - whether proceeding instituted "vexatiously or without reasonable cause".

Conciliation and Arbitration Act 1904, s.197A

Matters Nos. 6 and 7 of 1988

HEARING

ADELAIDE
23:2:1989

Counsel for the informant: Mr D.E. Clayton

Solicitors for the informant : Australian Government Solicitor

Counsel for the defendants : Mr P.V. Slattery

Solicitors for the defendants: Baker O'Loughlin

ORDER

That the informant pay the taxed costs of the defendants.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

These proceedings were instituted in the Industrial Division by summons issued upon information without indictment. The informant is an Inspector appointed under s.125(2) of the Conciliation and Arbitration Act 1904. In summons No. 6 of 1988 the sole charge which the defendants were called upon to answer reads:

"1. Between 6 August 1982 and 3 May 1985 at Ceduna
in the said State the defendants did commit a
breach of a term of an award by which HIGHWAY
ONE TRANSPORT PTY. LTD. was bound; contrary
to Section 119(1) of the Conciliation and
Arbitration Act 1904.
THE PARTICULARS OF THE CHARGE ARE:
HIGHWAY ONE TRANSPORT PTY. LTD. was bound by the
Transport Workers (Oil Agents/Contractors) Award
1981 (hereinafter referred to as "the award").
HIGHWAY ONE TRANSPORT PTY. LTD. aided, abetted,
counselled and procured by VINCENTAS VYTENIS
PATUPAS in breach of clause 33(1) and (2) of the
award failed to keep records for DEMETRIOUS JAMES
RETSAS at a yard, or depot or place easily
accessible, showing his name, the time he started
and finished work each day, the number of hours
worked by him and the wages and overtime paid in
each week during the period 6 August 1982 to 3 May
1985."

2. In summons no. 7 of 1988 the defendants were called upon to answer 126 charges of underpaying wages, each charge relating to a different week in the period from 5 August to 3 May 1985. Each charge, apart from the date and amount involved, is similarly expressed. I set out the first charge which will illustrate the nature of the others. It reads :

"1. On about 6 August 1982 at Ceduna in the said
State the defendants did commit a breach of a term
of an award by which HIGHWAY ONE TRANSPORT PTY.
LTD. was bound; contrary to Section 119(1) of the
Conciliation and Arbitration Act 1904.
THE PARTICULARS OF THE CHARGE ARE:
HIGHWAY ONE TRANSPORT PTY. LTD. was bound by the
Transport Workers (Oil Agents/Contractors) Award
1981 (hereinafter referred to as "the award").
HIGHWAY ONE TRANSPORT PTY. LTD. aided, abetted,
counselled and procured by VINCENTAS VYTENIS
PATUPAS in breach of clause 14(1) of the award
failed to pay correct overtime rates to DEMETRIOUS
JAMES RETSAS in that :
(a) For the week ending 6 August 1982 he was
underpaid wages in the sum of $311.86."

3. After service of the summonses the defendants promptly applied by notice of motion for orders, inter alia, that:

"1. That the within proceedings be struck out on
the grounds that the proceedings commenced by
the Informant are not competently constituted
for the purposes of the Federal Court Rules.
2. That the within proceedings be struck out on
the grounds that the proceedings fail to
disclose any cause of action against the
defendant Vicentas Vytenis Patupas on the
ground that the proceedings are incompetent."

4. The notices of motion were supported by an affidavit from the defendants' solicitor. The affidavit exhibited the relevant award to prove that the second defendant is not a party to it. Apart from that, the affidavit did not depose to facts concerning the relationship between the defendants and the worker Retsas, but advanced arguments in law. These arguments assume that the informant intended to bring proceedings for the imposition and recovery of penalties pursuant to s.119(1). When the notices of motion came on for hearing counsel for the informant intimated that the informant did not oppose an order striking out the summonses and informations on the grounds pleaded in paras. 1 and 2 of the notices of motion. Accordingly I ordered that the proceedings against each defendant be struck out. The defendants then sought orders for costs against the informant. The informant opposed the orders relying on s.197A of the Conciliation and Arbitration Act which in material respects reads:

"A party to:
(b) a proceeding, ... before the Court ... in a
matter arising under this Act ...
shall not be ordered to pay any costs incurred by
any other party to that proceeding except where
the party against whom the order is made
instituted the proceeding vexatiously or without
reasonable cause."

It is accepted by the parties that the court's power to award costs is governed by s.197A: see Brophy v. Mapstone [1984] FCA 257; (1984) 3 FCR 227 and Marsh & Anor. v. Adamson [1985] FCA 103; (1985) 5 FCR 124.

5. It is convenient to summarise the arguments advanced by the defendants in support of their notices of motion. In support of para.1 it was contended, correctly in my view, that s.119 does not constitute a breach or non observance of an award by the party to it as a criminal offence: Gapes v. Commercial Bank of Australia Limited [1979] FCA 62; (1979) 27 ALR 87. On the assumption that the informant intended to seek relief under s.119(1), an assumption which the informant has not sought to deny, the procedure adopted to bring the claims before the court was misconceived. The institution of proceedings by summons on information is, by FCR O.4, r.16, an express exception to the general rule stated in O.4, r.1 that all proceedings shall be commenced by filing an application in the form numbered 5 in the First Schedule. The exception applies to proceedings under s.191 of the Conciliation and Arbitration Act which provides that a person who has committed an offence against the Act may be charged before the court.

6. In support of para.2 of the notices of motion it was contended, again correctly in my view, that the laws as to the criminal responsibility of a person guilty of aiding and abetting, counselling and procuring the commission of a criminal offence cannot be applied so as to render a person who is not bound by an award liable to the imposition and recovery of a penalty under s.119(1).

7. The informant did not address any argument against these propositions. Against this background, on the question of costs, it was first submitted by the defendants that the procedures adopted by the informant were so deficient that it could not be said that a "proceeding" within the meaning of s.197A had been instituted. The procedure adopted was described as a "nullity", presumably a nullity in the sense that proceedings had never been started at all owing to a fundamental defect in the attempt to issue them: see Re Pritchard (1963) Ch 502, 523-524. It was contended that as there was no "proceeding" s.197A provided no bar to the power of the court to award costs to the defendant. I am unable to accept this contention.

8. The term "proceeding" in statutes and in rules of court, is frequently used both to describe an action or other cause or matter or to denote a step in an action, cause or matter: Halsbury's Laws of England, 4th Ed., Vol.37 para.24. In the Federal Court of Australia Act 1976, s.4, "proceeding" is defined to have both meanings. It is a term of very wide application: The Federated Amalgamated Government Railway and Tramway Service Association v. The New South Wales Railway Traffic Employes' Association [1906] HCA 94; (1906) 4 CLR 488 at 494. In s.197A its meaning is controlled by the context in which the word appears. In Viner & Others v. Australian Building Construction Employees and Builders' Labourers' Federation (1981) 38 ALR 550 at 553 Northrop J. said :

"In my opinion, the word 'proceeding' in s197A of
the Conciliation and Arbitration Act is to be read
as an action between parties to a matter arising
under the Act. In that sense, it is capable of
including all steps arising in that matter and
therefore is to be given both the meanings of a
step in a proceeding as well as the action
itself."

I respectfully agree with that broad construction of the word "proceeding". In the present case the informations and summonses validly instituted actions in the Court "in a matter arising under this Act". See Poulas v. Waltons Stores (Interstate) Limited (1986) 68 ALR 537, 542-3.

9. A wilful default in compliance with an award is created an offence by s.122. In the present case the procedure adopted was appropriate for a prosecution of a charge under s.191. With minor amendment, going to form, the summonses could properly charge offences under s.122. In my view the summonses in the present case initiated such proceedings, and the restrictions imposed by s.197A on the power to award costs apply. The proceedings so instituted are incapable of supporting the claims which the informant apparently sought to enforce under s.119(1), but that is not a consideration which renders the proceedings a nullity. This conclusion renders it unnecessary to consider the point raised by the informant that if each summons was a nullity in the sense contended for by the defendants, there would be no procedural vehicle which could carry an order for costs.

10. The second submission of the defendants in support of their application for costs assumed the application of s.197A and argued that the proceedings were instituted vexatiously or without reasonable cause. On this submission I think the defendants are on strong ground.

11. In Heidt v. Chrysler Australia Limited (1976) 26 FLR 257 at 272 Northrop J. said :

"The policy of s.197A of the Act is clear. It is
designed to free parties from the risk of having
to pay the costs of an opposing party. At the
same time the section provides a protection to
parties defending proceedings which have been
instituted vexatiously or without reasonable
cause. This protection is in the form of
conferring a power in the court to order costs
against a party who, in substance, institutes
proceedings which in other jurisdictions may
constitute an abuse of the process of a court."

The other jurisdictions to which his Honour referred were those of superior courts which have both an inherent power and a statutory power bestowed through rules of court, to summarily terminate proceedings which are frivolous and vexatious or an abuse of process either by staying or striking out the action. In General Steel Industries Inc. v. Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 128-129 Barwick C.J. said:

"The plaintiff rightly points out that the
jurisdiction summarily to terminate an action is
to be sparingly employed and is not to be used
except in a clear case where the Court is
satisfied that it has the requisite material and
the necessary assistance from the parties to reach
a definite and certain conclusion. I have
examined the case law on the subject, to some of
which I was referred in argument and to which I
append a list of references. There is no need
for me to discuss in any detail the various
decisions, some of which were given in cases in
which the inherent jurisdiction of a court was
invoked and others in cases in which counterpart
rules to O.26, r.18, were the suggested source of
authority to deal summarily with the claim in
question. It is sufficient for me to say that
these cases uniformly adhere to the view that the
plaintiff ought not to be denied access to the
customary tribunal which deals with actions of the
kind he brings, unless his lack of a cause of
action - if that be the ground on which the court
is invited, as in this case, to exercise its
powers of summary dismissal - is clearly
demonstrated. The test to be applied has been
variously expressed: 'so obviously untenable that
it cannot possibly succeed'; 'manifestly
groundless', 'so manifestly faulty that it does
not admit of argument'; 'discloses a case which
the court is satisfied cannot succeed'; 'under no
possibility can there be a good cause of action';
'be manifest that to allow them' (the pleadings)
'to stand would involve useless expense'."

Northrop J. in Heidt v. Chrysler Australia Limited (supra) concluded that the principles which have been applied by the courts to summarily terminate proceedings should guide the Court when considering matters raised by s.197A. That view has been applied in later cases. See for example Lilley v. Nauru Local Government Council (Keely J., V. No.29 of 1979, 21 November 1979 noted at 1980 AILR para.4), Geneff v. Peterson & Ors. (Gray J., W.A. No.2. of 1984, 5 December, 1986 noted at 1987 AILR para.336) and Howard v. Cummins & Ors. (Keely J., V. No.10-13 of 1987, 28 November, 1988 - unreported). I propose to have regard to those principles here as the defendants urge. The expression "vexatiously or without reasonable cause" in s.197A is a very broad one which vests the court with a wide discretion. What is or what is not a reasonable cause for instituting proceedings must vary with the circumstances of the case. Past decisions illustrate the scope and application of the notion. In Heidt v. Chrysler Australia Limited (supra), costs were awarded against an unsuccessful applicant who alleged he had been dismissed contrary to the prohibitions in s.5 of the Act. At p 275 Northrop J. said:

"there was no basis whatever for claiming that he
had been dismissed by reason of the circumstance
that he was a member of an organisation or was
entitled to the benefit of an award."

In Narqvi v. M.B.P. (SA) Pty Ltd (1981) 36 ALR 379 costs were awarded against an informant on the dismissal of summonses and informations issued outside the relevant statutory time limit. In Marsh v. Adamson [1985] FCA 103; (1985) 5 FCR 124, by a majority, the Full Court awarded costs against an unsuccessful appellant where it was held that the appeal was incompetent. At pp 125-126 St. John and Wilcox JJ. said:

"In this appeal there was no authority of any
substance on which argument could be based that
the appeal was not covered by the prohibition
against appeals in s.118B of the Act. Further,
had the appeal not been held to be incompetent
because of the existence of that section, the
appellants would have had to go on and convince
this Court that there was an unarguable case that
the facts alleged did not constitute an
'irregularity'. Such a submission would
inevitably have failed because of the strictures
upon summary dismissal of proceedings ..."

In each of these decisions the facts before the court disclosed a case which, at the time of the institution of the proceedings, manifestly could not succeed on the basis alleged. To issue proceedings that manifestly cannot succeed is an abuse of the process of the court concerned: Halsbury's Laws of England, 4th Ed., Vol. 37 para.443.

12. These decisions may be distinguished from cases where there was an argument in law or a version of the facts in dispute which made the case worthy of consideration by the court. In Dey v. Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 91 Dixon J. (as he then was) said:

"... once it appears that there is a real question
to be determined whether of fact or law and that
the rights of the parties depend upon it, then it
is not competent for the court to dismiss the
action as frivolous and vexatious and an abuse of
process.

And in R. v. Moore & Ors.; ex parte Federated Miscellaneous Workers' Union of Australia [1978] HCA 51; (1978) 140 CLR 470 at 473 Gibbs J. (as he then was) said:

"In my opinion a party cannot be said to have
commenced a proceeding 'without reasonable cause'
within the meaning of that section, simply because
his argument proves unsuccessful. In the present
case the argument presented on behalf of the
prosecutor was not unworthy of consideration and
it found some support in the two decisions of this
Court to which I have referred. The fact that
those decisions have been distinguished, and that
the argument has failed, is no justification for
ordering costs in the face of the prohibition
contained in s.197A."

Examples of this kind of case may be found in Lilley v. Nauru Local Government Council (supra), and Federated Liquor and Allied Industries Employees' Union of Australia ex parte Elton (Pincus J. - Q. No.9 of 1985 - 18 July 1985) to which counsel referred in their submissions.

13. In the present case in my view it was obvious when the proceedings were instituted by summons upon information that they could not succeed as claims under s.119(1). No possible basis upon which the proceedings could have been justified as proper procedural steps to bring claims for the imposition and recovery of penalties has been suggested by the informant. In my view the proceedings were instituted "vexatiously or without reasonable cause". I consider this is a proper case to award costs to each of the defendants in each matter upon the summons and information being struck out on the ground stated in para.1 of the notice of motion.

14. I also consider there was no arguable basis for the informant to bring a claim under s.119(1) against the second defendant and none has been suggested by the informant. I consider the second defendant is also entitled in the circumstances of the case to an order for costs upon the striking out of the summonses and informations on the ground stated in para.2 of the notice of motion.

15. I therefore order that the informant pay the taxed costs of the defendants in each proceeding.