Background
B.M.D. Constructions Pty Ltd (B.M.D.) commenced proceedings against the Construction, Forestry and Maritime Employees Union (CFMEU), alleging various breaches of the Fair Work Act and the Competition and Consumer Act in connection with the Centenary Bridge Upgrade Project in Queensland. In the early stages of the litigation, a dispute arose over the adequacy of the CFMEU’s defence.
B.M.D. argued that the CFMEU had improperly pleaded “non-admissions” to key allegations, claiming it did not know if certain events occurred. B.M.D. contended that this was an abuse of process because the union possessed evidence—such as video footage, entry notices, and other internal documents—that would allow it to either admit or deny the allegations. The individual union officials involved had claimed “penalty privilege” (a right against self-incrimination), but B.M.D. argued the union itself could still respond based on available information.
In a previous judgment, the Court agreed with B.M.D., finding the union’s pleading fell “far short of what could reasonably be expected,” and ordered the deficient paragraphs of the defence to be struck out. Following this procedural victory, B.M.D. applied to the Court for an order that the CFMEU pay the legal costs it had incurred in bringing the successful strike-out application.
The Court’s Holding
Justice Meagher of the Federal Court denied B.M.D.’s application for costs. The court held that although B.M.D. had been successful in its application to strike out parts of the union’s defence, the CFMEU’s conduct in resisting the application was not sufficiently unreasonable to justify a departure from the default “no costs” rule that applies in matters arising under the Fair Work Act 2009 (Cth).
The decision turned on the interpretation of section 570 of the Fair Work Act, which strictly limits the circumstances in which a court can order one party to pay another’s costs. To get costs, B.M.D. needed to satisfy the court that its costs were incurred because of an “unreasonable act or omission” by the CFMEU. Justice Meagher found that this high threshold was not met. The judge referenced prior case law establishing that deficiencies in pleadings are an “ordinary incident in litigation” and that courts should be cautious before characterising a party’s defence of its pleading as “unreasonable” for the purposes of a costs order.
While acknowledging the CFMEU’s pleading was ultimately found to be inadequate, the Court concluded that its conduct in the dispute did not rise to the level of unreasonableness required by the Act. As a result, the Court made no order for costs, meaning each party was required to bear its own legal expenses for the interlocutory application.
Key Takeaways
- Succeeding on an interlocutory application (a procedural “mini-dispute” within a larger case) does not automatically entitle a party to its legal costs in matters governed by the Fair Work Act.
- The statutory bar for awarding costs in industrial relations matters is high, requiring a clear case of “unreasonable” conduct by a party that causes another party to incur costs. Simply losing an argument or having a defective pleading is not enough.
- Courts may view disputes over the adequacy of pleadings as a normal part of the litigation process and will be hesitant to penalize a party with a costs order for defending a position that is ultimately unsuccessful.
Why It Matters
This decision reinforces the principle that, in the Australian industrial relations system, parties are generally expected to bear their own legal costs. This approach is intended to promote access to justice by ensuring that the fear of a large adverse costs order does not deter employees, unions, or employers from bringing or defending claims. The judgment illustrates that even when a party’s procedural conduct is found to be deficient and is corrected by the court, a costs penalty will not follow unless the party’s conduct is shown to have been clearly unreasonable, not merely incorrect.