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Workplace Law recently represented an employer in defending an application for costs before the Federal Circuit and Family Court of Australia (the Court,) which was decided in favour of our client.

Ordinarily, the costs of legal proceedings in general protections disputes are borne by the parties to a dispute – no matter who is successful. This is known as a “no-costs” jurisdiction.

However, the courts do have discretion to order costs in the exceptional circumstances set out under section 570(2) of the Fair Work Act 2009 (Cth) (FW Act), such as when a party’s unreasonable act or omission caused the other party to incur costs.

In Guthrie v Mondiale VGL Pty Ltd (No 3) [2025] FedCFamC2G 1848, Mr Guthrie (the Applicant) filed an application seeking an order for costs following a liability decision which found our client (the Respondent) had engaged in unlawful adverse action and a subsequent penalty decision which awarded the Applicant compensation and penalties for that contravention.

The Applicant relied on section 570(2)(b) of the FW Act and argued that the Respondent’s pursuit of its defence (which he claimed it should have known would have failed) was an unreasonable act that caused the Applicant to incur the costs of the proceedings.

Workplace Law opposed the costs application on behalf of the Respondent, submitting that there should be no departure from the ordinary rules in a “no costs” jurisdiction in circumstances where a respondent employer is simply unsuccessful in its defence of a claim.

The Court ultimately agreed with Workplace Law’s submissions and found that the Respondent did not engage in any unreasonable act or omission such that would warrant the departure from the “no costs” jurisdiction.

In reaching this view, the Court made the following findings:

• The Applicant “cast the net too wide” by claiming the entire costs of the proceedings were incurred due to the Respondent’s failure to admit what was later found to be unlawful adverse action.
• Both parties had some measures of success at the hearing on liability. While the Applicant was successful in his claim of unlawful adverse action, the Respondent was also successful in defending the Applicant’s claims regarding unpaid entitlements and incorrect payslips. It therefore could not be said that the Respondent’s defence of the Applicant’s claims was altogether hopeless and ought never to have been pursued.
• While the Applicant was successful in his claim of unlawful adverse action, this did not mean that the Respondent should never have tried to defend the application or that it acted unreasonably in seeking to do so. The pursuit of an argument that is ultimately unsuccessful is not itself an unreasonable act.
• While some of the Respondent’s evidence in the liability decision was found to be weak or missing, this did not mean that defending the Applicant’s claim was so hopeless as to make the act of defending the claim in its entirety unreasonable. The Court noted that the Applicant’s argument in this regard may have been stronger had he abandoned the other claims made by him on which he failed.
• The Applicant argued that the Respondent’s failure to call relevant decision makers was an unreasonable act. The Court did not agree, stating that forensic decisions are frequently made in the running of hearings and the decision to call or not call witnesses does not mean that the party acted unreasonably.

The Court also made the following observations at [48]:

It is dangerous in hard fought litigation, as occurred in this proceeding, to engage in dissecting forensic decisions as to the merits of individual aspects of claims and assessing them as reasonable or unreasonable for the purpose of making a costs order under s 570(2) of the Act. It invites minute scrutiny of conduct after the event.

Finding that the Applicant had failed to establish that an unreasonable act or omission by the Respondent caused him to incur legal costs, the Court dismissed the application.

Lesson for employers

As seen in this decision, the bar for what might warrant a departure from the usual “no costs jurisdiction” is high. The court must be satisfied that a party engaged in unreasonable conduct and that such conduct caused the other party to incur particular costs in the proceeding.

This decision should provide respondent employers with some comfort in knowing that the act of defending a general protections claim will not in itself be considered unreasonable conduct that warrants an order for costs – even if the employer is unsuccessful in its defence.

Had the Court found in favour of the Applicant, this decision would have had major repercussions for respondent employers who are unsuccessful in their defence of general protections claims. Such a finding would have been contrary to the “no-costs” jurisdiction, which is designed to allow parties to bring or defend claims without fear of adverse costs implications.

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