2025 WAIRC 01016
INDUSTRIAL MAGISTRATES COURT OF WESTERN AUSTRALIA


CITATION
:
2025 WAIRC 01016



CORAM
:
INDUSTRIAL MAGISTRATE C. TSANG



HEARD
:
MONDAY, 21 JULY 2025



DELIVERED
:
MONDAY, 22 DECEMBER 2025



FILE NO.
:
M 62 OF 2023



BETWEEN
:
PHILLIP ANTHONY GALANTY


CLAIMANT





AND





AUSCOR PTY LTD


RESPONDENT

CatchWords : INDUSTRIAL LAW – Application for the claimant to pay the respondent’s costs pursuant to s 570(2)(a) or (b) of the Fair Work Act 2009 (Cth) – Whether claimant instituted the proceedings vexatiously or without reasonable cause where he claimed to be an employee entitled to leave and payment for absences on public holidays when his own business records record him being an independent contractor – Whether the claimant acted unreasonably in continuing the proceedings where his discovered documents record him being an independent contractor – Whether it was an unreasonable act or omission not to accept the respondent’s ‘walkaway’ offer – Whether the court should make a costs order where there has been no hearing on the merits – Whether the court should make an order for indemnity costs
Legislation : Fair Work Act 2009 (Cth), s 570(1), s 570(2)(a), s 570(2)(b)
Cases referred
to in reasons: : Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879
Buchanan v G&R Rossen Pty Ltd [2020] WAIRC 00388
Cheng v Western Pursuits Trust (No. 2) [2017] FCCA 659
Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1
Kanan v Australian Postal and Telecommunications Union [1992] FCA 366
Nilsen v Loyal Orange Trust [1997] IRCA 267
ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270
Oshlack v Richmond River Council [1998] HCA 11
Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6
Rodwell v Hutchinson [2010] WASCA 197
Tweedie v Zenitas Healthcare Pty Ltd [2024] WAIRC 00351
ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2
Result : Costs awarded
Representation:
Claimant : In person
Respondent : Mr E Young (of counsel) as instructed by McWilliams Davis Lawyers



REASONS FOR DECISION
1 These reasons concern an application for costs pursuant to s 570(2)(a) and (b) of the Fair Work Act 2009 (Cth) (Act).
2 On 14 March 2025, the claimant (Mr Galanty) filed a Notice of Discontinuance, discontinuing his claim, commenced by Originating Claim on 26 April 2023, in which he sought the following orders:
(a) The First Respondent pay to [Mr Galanty] the amount of $52,276.58 in accrued but unused annual leave.
(b) The First Respondent pay to [Mr Galanty] the amount of $13,860.00 for his absences on public holidays.
(c) The First Respondent pay to [Mr Galanty] $9,227.00 in annual leave loading.
(d) The First Respondent pay to [Mr Galanty] $11,310.66 in long service leave.
(e) The First Respondent pay [Mr Galanty] pre-judgement interest.
(f) The First Respondent contravened s 44 of the Act when it failed to pay [Mr Galanty] his accrued but unused annual leave and for his absences on public holidays.
(g) The First Respondent contravened s 44 of the Act when it breached clause 34.4 of the Award by not paying annual leave loading.
(h) The First Respondent contravened s 9(2A) of the [Long Service Leave Act 1958 (WA) (LSL Act)].
(i) The Second Respondent was knowingly concerned in and party to the First Respondent’s contraventions.
(j) The First Respondent pay a pecuniary penalty for its contraventions of the Act.
(k) The Second Respondent pay a pecuniary penalty for his contraventions of the Act.
(l) The pecuniary penalties imposed on the First and Second Respondents be paid to [Mr Galanty].
(m) Any other orders that the Court sees fit.
3 On 28 March 2025, the respondent (Auscor) filed an application (Costs Application), supported by an affidavit of Brendan Taylor (Auscor’s solicitor with the daytoday conduct of the matter since the commencement of the claim) (Affidavit), for Mr Galanty to pay:
(a) Auscor’s costs pursuant to s 570(2)(a), alternatively s 570(2)(b), on an indemnity basis from 26 April 2023, to be taxed if not agreed.
(b) Michael Edward McCoy’s, the former second respondent’s (Mr McCoy’s), costs pursuant to s 570(2)(a), alternatively s 570(2)(b), on an indemnity basis from 26 April 2023 to 13 December 2023, to be taxed if not agreed.
(c) Auscor’s costs on the Costs Application.
4 On 28 March 2025, the court issued orders for Auscor to serve the Costs Application and Affidavit on Mr Galanty. The orders required:
(a) Mr Galanty, if he opposes the Costs Application, to file a Response to the Costs Application, and if he intended to rely on any evidence at the hearing of the Costs Application, to file witness statements, by 5 May 2025.
(b) Auscor to file any evidence responsive to the witness statements filed by Mr Galanty, and its written submissions, by 2 June 2025.
(c) Mr Galanty to file his written submissions by 30 June 2025.
5 The Costs Application was heard on 21 July 2025.
Auscor’s contentions
6 By the Affidavit, Auscor contended that:
(a) Mr Galanty commenced the proceedings by Originating Claim and statement of claim, which were deficient, embarrassing and susceptible to being struck out, as they did not coherently make out a claim that he was an employee.
(b) As the respondents could not sensibly respond to the claim, on 16 May 2023, they wrote to Mr Galanty outlining the deficiencies in his claim; including that there were inadequate particulars of facts central to his case, namely that he was an employee of Auscor.
(c) On 19 May 2023, Mr Galanty responded, and while he clarified some aspects of the claim, other aspects remained unclarified, and Mr Galanty refused to amend his claim; such conduct was unreasonable.
(d) On 26 May 2023, the respondents wrote to Mr Galanty, informing him that it remained their view ‘that it would be desirable for all parties for you to amend your statement of claim to address our concerns, but acknowledge that your pleadings may have cleared the low bar set out in the Practice Direction [No. 1 of 2017].’
(e) As Mr Galanty refused to amend his claim, the respondents were required to spend more time than they should have in deciphering the claim and his letter dated 19 May 2023, in preparing the Response which was filed on 15 June 2023.
(f) On 6 September 2023, a pre-trial conference was held before the Clerk of the Court. The Clerk made orders for Mr Galanty to file further and better particulars of his claim, including of the nature of the alleged employment relationship between the parties and the identity and nature of any relevant statutory instrument that applied to the relationship (First Discovery Order).
(g) On 12 December 2023, the court made orders for Mr Galanty to give discovery on oath by 31 January 2024 of his tax returns and business activity statements (BAS) for the period 1 August 2012 to 30 September 2021, and of the invoices issued by him in the period 1 January 2012 to 1 October 2021.
(h) On 13 December 2023, Mr Galanty consented to discontinuing his claim against Mr McCoy. However, Mr Galanty had no basis for commencing a claim against Mr McCoy in the first place. The claim was brought against Mr McCoy without reasonable cause, and it was vexatious and unreasonable for Mr Galanty to bring and continue the claim against Mr McCoy.
(i) The date for Mr Galanty to give discovery under oath (31 January 2024) was extended by consent orders to 7 February 2024.
(j) On 9 February 2024, Mr Galanty’s then representative, Stephen James Farrell (Mr Farrell), filed an affidavit of discovery (First Affidavit), deposing to being duly authorised by Mr Galanty to swear the affidavit, and deposing that Mr Galanty had possession or control of the documents in Part 1 of the Schedule, but no longer had possession or control of those in Part 3:
Part 3 of Schedule – Documents not now in the possession of the claimant*/respondent*
Description of document
Date last in possession or control
Manner in which documents ceased to be in possession or control
Identity and address of persons believed to be in possession or control of document
Individual Tax Return
2017–2018
Unknown
Lost
Unknown
Individual Tax Return
2018–2019
Unknown
Lost
Unknown
Individual Tax Return
2019–2020
Unknown
Lost
Unknown
Individual Tax Return
2020–2021
N/A
[Mr Galanty] has yet to file this tax return with the ATO.

Business Activity Statements
2012–2013
Unknown
Lost
Unknown
Business Activity Statements
2013–2014
Unknown
Lost
Unknown
Business Activity Statements
2014–2015
Unknown
Lost
Unknown
Business Activity Statements
2015–2016
Unknown
Lost
Unknown
Business Activity Statements
2016–2017
Unknown
Lost
Unknown
Business Activity Statements
July–September 2017
Unknown
Lost
Unknown
Business Activity Statements
October–December 2017
Unknown
Lost
Unknown
Business Activity Statements
October–December 2018
Unknown
Lost
Unknown
Business Activity Statements
January–March 2019
Unknown
Lost
Unknown
Business Activity Statements
January–March 2020
Unknown
Lost
Unknown
Business Activity Statements
October–December 2020
Unknown
Lost
Unknown
Business Activity Statements
April–June 2021
Unknown
Lost
Unknown
Business Activity Statements
July–September 2021
Unknown
Lost
Unknown
(k) Given Mr Galanty failed to discover all tax returns and BAS, and what he did produce proved the opposite of his claim that he was an employee (i.e. that he had worked and made tax deductions as a contractor), on 21 February 2024, Auscor filed an application for summary judgment based on Mr Galanty’s case having no reasonable prospects of success, or based on his failure to comply with discovery orders (First Application).
(l) On 28 February 2024, Mr Galanty consented to orders requiring him to give further discovery on oath by 12 March 2024, including calculations, schedules and workings that support the deductions on his tax returns (Second Discovery Order).
(m) On 11 March 2024, Mr Galanty filed two affidavits of discovery. The first, sworn on 1 March 2024 (Second Affidavit), deposed to the following at Part 3:
Part 3 of Schedule – Documents not now in the possession of the claimant*/respondent*
Description of document
Date last in possession or control
Manner in which documents ceased to be in possession or control
Identity and address of persons believed to be in possession or control of document
Individual Tax Return
2012–2013
Unknown
Lost
Unknown
Individual Tax Return
2018–2019
N/A
[Mr Galanty] has yet to file this tax return with the ATO.

Individual Tax Return
2019–2020
N/A
[Mr Galanty] has yet to file this tax return with the ATO.

Individual Tax Return
2020–2021
N/A
[Mr Galanty] has yet to file this tax return with the ATO.

Individual Tax Return
2021–2022
N/A
[Mr Galanty] has yet to file this tax return with the ATO.

Business Activity Statements
2012–2013
Unknown
Lost
Unknown
Business Activity Statements
2013–2014
Unknown
Lost
Unknown
Business Activity Statements
2014–2015
Unknown
Lost
Unknown
Business Activity Statements
2015–2016
Unknown
Lost
Unknown
Business Activity Statements
2016–2017
Unknown
Lost
Unknown
Business Activity Statements
July–September 2017
Unknown
Lost
Unknown
Business Activity Statements
October–December 2017
Unknown
Lost
Unknown
Business Activity Statements
October–December 2018
Unknown
Lost
Unknown
Business Activity Statements
January–March 2019
Unknown
Lost
Unknown
Business Activity Statements
January–March 2020
Unknown
Lost
Unknown
Business Activity Statements
October–December 2020
Unknown
Lost
Unknown
Business Activity Statements
April–June 2021
Unknown
Lost
Unknown
Business Activity Statements
July–September 2021
Unknown
Lost
Unknown
(n) In contradiction to the First Affidavit, Mr Galanty deposed in the Second Affidavit that the tax returns originally claimed to be ‘lost’ (save for the 2017/2018 return which was discovered), were in fact never filed with the Australian Taxation Office (ATO). Mr Galanty did not depose to any facts to correct this contradiction.
(o) The other affidavit filed on 11 March 2024, sworn by Mr Galanty on 6 March 2024 (Third Affidavit), deposed to the following at Part 3:
Part 3 of Schedule – Documents not now in the possession of the claimant
Description of document
Date last in possession or control
Manner in which documents ceased to be in possession or control
Identity and address of persons believed to be in possession or control of document
Calculations, workings or schedules, supporting, explaining or containing derivatives of the tax deductions contained in the tax returns for the years:
2013–2014
2014–2015
2015–2016
2016–2017
2017–2018
Unknown
As these tax returns were filed more than 5 years ago, they were archived and no longer available
David Aylmore – Aylmore & Assoc
(p) At the hearing of the First Application on 18 March 2024, the court made orders that Mr Galanty file a further affidavit setting out the efforts made by him to produce the documents listed as ‘lost’ in Part 3 of the Second Affidavit (Third Discovery Order).
(q) On 21 March 2024, the Third Discovery Order was varied by consent orders, staying the proceedings until Mr Galanty files an affidavit confirming that he has filed tax returns for the financial years 2018–2019, 2019–2020, 2020–2021 and 2021–2022 with the ATO, and outlining the efforts made by him to produce the documents listed as ‘lost’ or ‘archived’ in the Third Affidavit.
(r) It appeared to Auscor from the First Affidavit, Second Affidavit and Third Affidavit, that some of the documents listed as ‘lost’ were not lost because they had not been created or did not exist and had not been filed with the ATO at the time each affidavit was sworn. Therefore, on 14 June 2024, Auscor wrote to Mr Galanty informing him of its view that the statements regarding the ‘lost’ documents may have misled the court and invited him to comply with the Third Discovery Order by 21 June 2024.
(s) On 24 June 2024, Auscor filed an application seeking orders that default judgment be given in favour of Auscor, or in the alternative, that if Mr Galanty does not comply with the Third Discovery Order within 7 days of an order requiring him to do so, that default judgment is automatically given in favour of Auscor (Second Application).
(t) On the day of the hearing of the Second Application on 22 July 2024, Mr Galanty advised Auscor that he had filed all tax returns and would file an affidavit of discovery to that effect within a week. Accordingly, the court made an order that Mr Galanty file a further affidavit of discovery by 29 July 2024 (Fourth Discovery Order).
(u) On 7 August 2024, Mr Galanty filed the further affidavit of discovery, sworn on 3 August 2024 (Fourth Affidavit), discovering all missing tax returns and BAS originally listed as ‘lost’ in the Second Affidavit. In contradiction to the First Affidavit, Mr Galanty deposed to the following:
March 11 Affidavit
9. As I work on a fly in fly out basis in remote Western Australia, I relied on my partner Kirsty Menzies to access the documentation ordered by the Court on 28 February 2024.
10. On 7 March 2024, Ms Menzies telephoned David Aylmore, and requested that he provide the documents listed in Order 2 of the Orders issued by the Court on 28 February 2024.
11. On 8 March Mr Aylmore sent an email that he was unable to provide these documents.
…
15. … At the time, I was aware that I had not filed my income tax returns for 2018/2019–2021/2022, however I was not aware of where the missing BAS statements were so I put them as lost.
(v) The Fourth Affidavit directly contradicts the First Affidavit, and Mr Galanty has made no attempt to explain the contradiction.
(w) Auscor discontinued the Second Application in light of Mr Galanty filing the Fourth Affidavit.
(x) On [19] August 2024, the court made orders by consent, for David Aylmore (Mr Galanty’s accountant) (Mr Aylmore) to be summoned to produce the calculations, workings or schedules explaining the deductions claimed in Mr Galanty’s tax returns for 2013–2014, 2014–2015 and 2015–2016, and the calculations, workings or schedules explaining the expenses of $16,604 and $3,300 claimed in Mr Galanty’s 2017 tax return and the expenses of $16,904 and $3,300 claimed in Mr Galanty’s 2018 tax return.
(y) On 9 September 2024, Mr Aylmore produced the calculations, workings and schedules in respect of the deductions on Mr Galanty’s tax returns. These indicated to Auscor that the statements made by Mr Galanty in his Fourth Affidavit [10]–‍[11] were false. Mr Galanty has made no attempt to correct any statements in the various affidavits.
(z) The documents produced by Mr Aylmore revealed that Mr Galanty claimed tax deductions in the 2016–2017 and 2017–2018 financial years of $15,000 attributed to ‘Bookkeeping fees (KM)’.
(aa) On 12 September 2024, Auscor wrote to Mr Galanty informing him that it was of the view that the deductions were likely for his spouse, Kirsty Menzies, and requesting Mr Galanty’s consent for orders to issue requiring Ms Menzies to produce documents and appear at trial.
(bb) Mr Galanty did not respond, and on 18 September 2024, Auscor filed an application for Mr Galanty to give discovery on oath of all invoices for bookkeeping for the period 1 August 2012 to 30 September 2021, and for Ms Menzies to be summoned to produce her tax returns and any invoices for bookkeeping issued to Mr Galanty or his associated entities in the period 1 August 2012 to 30 September 2021 (Third Application).
(cc) On 24 September 2024, the court made orders requiring Auscor to serve the Third Application on Mr Galanty, and requiring Mr Galanty, if he opposes the Third Application, to file a Response to the Third Application by 21 October 2024. Mr Galanty has not indicated whether he opposed the Third Application, nor has he filed a Response to the Third Application.
(dd) On 18 November 2024 and 4 December 2024, Auscor wrote to Mr Galanty seeking that he produce the documents the subject of the Third Application, or that he file a Response to the Third Application.
(ee) On 18 November 2024, Auscor wrote to Mr Galanty, offering to settle the proceedings on the basis that, if Mr Galanty discontinued his claim, then Auscor would not make an application for costs. The offer lapsed on 29 November 2024.
(ff) In summary, Mr Galanty’s conduct from the commencement of his claim has been characterised by obfuscation, delay, repeated breaches of court orders, and contradictory statements across affidavits. This rendered Mr Galanty’s claim vexatious or without reasonable cause, as it was contradicted by Mr Galanty’s own business records indicating contractor status. This caused both Auscor and Mr McCoy to incur unnecessary costs.
7 On 30 May 2025, Auscor filed submissions, stating:
(a) Mr Galanty’s claim was hopeless from the very outset and was riddled with problems throughout its lengthy course in the court. Mr Galanty had no case; he had always worked for Auscor as a contractor, been paid as a contractor, made tax deductions as a contractor, and been taxed as a contractor.
(b) Mr Galanty’s claim was vague, ambiguous and confusing, and was the subject of prompt complaint by Auscor (see letter dated 16 May 2023).
(c) Auscor’s Response filed on 15 June 2023, did not include bare denials, but identified the key problems with Mr Galanty’s claim, for example at [21]–‍[22]:
21. [Mr Galanty] had no direct supervisor but was allocated work by the lead on whichever project, or projects he had become involved with.
22. [Auscor] had no control over how [Mr Galanty] performed his work. Once allocated work, [Mr Galanty] was required to use his own initiative and skills to complete the task however he thought was correct and safe to arrive at the end result. The only stipulation was that [Mr Galanty] was required to perform his work to the high standards required by [Auscor’s] clients.
(d) The affidavit in support of the First Application filed on 28 February 2024, is telling; it explains the repeated declarations made by Mr Galanty to the ATO that he is running his own business for personal services, the business expense tax deductions claimed by Mr Galanty over numerous years, and that his case, contradicted by his documents, had no reasonable prospect of succeeding.
(e) Contradicting statements made in the First Affidavit, Mr Galanty filed the Second Affidavit and the Third Affidavit, in which he:
(i) Falsely claimed that the 2012–2013 tax return was lost, when it had in fact never been filed;
(ii) Admitted that certain tax returns had never been filed with the ATO;
(iii) Falsely claimed that various BAS had been lost when they had never been filed;
(iv) Falsely claimed that documents required to be discovered were ‘archived and no longer available’ (which was shown to be false as they were subsequently provided by Mr Galanty’s accountant under subpoena).
(f) Contradicting earlier statements made under oath, Mr Galanty filed the Fourth Affidavit with the tax returns that had not been filed (including the 2012–2013 tax return he had previously claimed was lost), and the BAS he had previously claimed were lost.
(g) On 12 November 2024, Mr Galanty’s agent ceased to act for him. On 20 November 2024, Mr Farrell filed a Form 27 - Notice of Cessation of Representation by Lawyer or Agent.

(h) On 18 November 2024, and despite all of the time and expense incurred by Auscor, Auscor offered to settle the matter with no order as to costs. The letter of offer took the trouble to explain to Mr Galanty the numerous insuperable problems in his case.
(i) Auscor accepts that costs do not follow as a matter of course, and that in this jurisdiction costs do not follow the event. However, in these proceedings:
(i) Mr Galanty’s case was legally hopeless from its very inception;
(ii) Mr Galanty knew at all times that he had only ever worked for Auscor as a contractor;
(iii) Mr Galanty consistently declared himself to the ATO to be a contractor and had extracted large tax deductions at taxpayer expense on the basis of being a contractor. Despite this, Mr Galanty filed a claim on the completely contradictory basis of being an employee;
(iv) Mr Galanty repeatedly failed to comply with court orders, and made false statements in affidavits, both via his industrial agent and also himself, regarding the status of documents he had been ordered to discover;
(v) It is not reasonably possible to infer that such falsehoods were inadvertent; they were made knowing that disclosure of the true position would be damaging to his case;
(vi) Mr Galanty ignored a reasonable offer of settlement.
(j) Mr Galanty instituted his case vexatiously and/or without reasonable cause in light of his knowledge at all times of the true position of him only ever having worked for Auscor as a contractor and having consistently represented that to the ATO over many years.
(k) Additionally, Mr Galanty’s conduct of his case was redolent with unreasonable acts and omissions, particularly his repeated breaches of court orders, falsehoods contained in affidavits of discovery, and failure to provide adequate or sufficient discovery contrary to orders that he do so. These unreasonable acts and omissions significantly extended the time and costs incurred by Auscor in this case, even leading to the matter being stayed for a period of time.
(l) Auscor accepts that costs are a matter of discretion; but submits it would be appropriate for the court to exercise its discretion in the circumstances of this matter.
(m) An order for costs is compensatory and not punitive. Oshlack v Richmond River Council [1998] HCA 11 [67]–‍[68].

(n) It would be unfair to Auscor to be forced to incur considerable legal costs over a period of almost two years, with numerous and repeated instances of unreasonable conduct by Mr Galanty, who then belatedly discontinues his case, only to leave Auscor heavily outofpocket. It took Auscor considerable persistence, time, trouble, and costs to reveal Mr Galanty’s attempts at dishonesty and deception in relation to his tax returns and BAS; all of which counted heavily against Mr Galanty’s claim that he was an employee.
(o) If all litigants brought and conducted their cases in the manner that Mr Galanty had, it would work considerable injustice in this court. Such cases, and the conduct of them in such manner, ought not be encouraged. This is a case where to do justice; it is appropriate that the court exercises its discretion to make an order for costs in favour of Auscor.
8 At the hearing, Auscor made the following further submissions:
(a) Auscor’s walkaway offer involves an element of compromise; it was made more than two years after the proceedings had commenced, in circumstances where there was a real prospect that Auscor might seek a costs order given the difficulties in Mr Galanty’s case and that he was aware that Auscor was legally represented from the outset.
(b) The court can assess a settlement offer and whether it is unreasonable for a party to have not accepted it even where a matter has concluded without a determination of the merits, where it is apparent that one party has effectively given up or capitulated in the face of overwhelming evidence against them. Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6 (Lai Qin); ONE.TELLtd v Deputy Commissioner of Taxation [2000] FCA 270 (ONE.TEL).

(c) This is a textbook case of Mr Galanty capitulating, when it became obvious that his case had no basis either in fact or at law and could not possibly succeed.
(d) It was readily apparent to Mr Galanty based on the hundreds of invoices he issued to Auscor, and the tax returns that he had filed, that his claim had no basis in fact or law.
(e) Indemnity costs are sought because of Mr Galanty’s knowledge from the outset of his own circumstances of being a contractor, having acted as a contractor for years prior, before he filed his case. An order for costs is not punitive but compensatory, and Auscor has had to respond to a case that Mr Galanty knew or ought to have known, with the benefit of the advice he would have received, did not have a proper basis, having regard to his own documents.
(f) Mr Galanty contends that there is no evidence to suggest that he did not genuinely believe that he was an employee. That contention should be rejected, as, having regard to Mr Galanty’s own documents that he filed with the ATO, it cannot be said that Mr Galanty held a genuine belief that he was an employee when he filed his claim. The court may infer from the objective documentary material that Mr Galanty filed the claim in an attempt to extract a financial benefit.
(g) Given Mr Galanty had objectively conducted himself as a contractor, represented himself as a contractor to the ATO and claimed tax deductions for bookkeeping and expenses, and represented himself as a contractor to Auscor by issuing tax invoices over many years, but then filed a claim claiming to be an employee, supports Auscor’s contention that at the point of filing the claim that Mr Galanty did so vexatiously.
(h) Accordingly, Auscor seeks its costs on an indemnity basis from the commencement of the claim and seeks Mr McCoy’s costs on an indemnity basis from the commencement of the claim until it was discontinued against him on 13 December 2023. Auscor does not seek to double-dip and accepts that the costs of Auscor were the costs of Mr McCoy (and vice versa) as there was a single legal representative acting for both during the period there were two respondents.
(i) Should the court find that the evidence does not reach the threshold for an indemnity costs order, Auscor seeks that ordinary costs be granted.
(j) While Auscor’s primary submission is that it was readily apparent to Mr Galanty from the outset that his claim was hopeless, it says that it would have become apparent very rapidly at the early stages of the proceedings that Mr Galanty should not have pursued the claim. Auscor says that at least from 9 February 2024 and the filing of the First Affidavit, it would have been readily apparent that Auscor was alive to the fact that Mr Galanty would need to establish that the objective circumstances would lead to a finding of Mr Galanty being an employee, which was impossible based on his own documents.
(k) While the documents were discovered after Mr Galanty commenced his claim, they were documents that Mr Galanty knew of before he filed his claim. Therefore, this matter is one that falls at the more extreme end of circumstances relating to costs orders in this jurisdiction, because Mr Galanty knew from the outset that the documents provided with the First Affidavit illustrated that he had been operating as a contractor.
(l) The court should not give any weight to the submission Mr Galanty belatedly made at the hearing that he discontinued the proceedings for financial reasons, given there is no evidence to support this submission. Mr Galanty had every opportunity to produce evidence to support this submission but did not produce any evidence.
(m) The court should also disregard the assertion of sham contracting Mr Galanty belatedly made at the hearing. It was not a claim ever made, and it cannot be said that anyone forced Mr Galanty to issue tax invoices, nor claim the tax deductions, which he did for many years. Mr Galanty set up his business before entering into the engagement with Auscor and continued on his independent contracting business with Auscor. Mr Galanty has reaped the benefits of doing so, both in terms of getting paid a higher rate, but also in terms of receiving tax deductions at taxpayer expense.
Mr Galanty’s contentions
9 On 6 May 2025, Mr Galanty filed a Response to the Costs Application, contending that:
(a) The default position is that parties to matters under the Act bear their own costs.
(b) The language of s 570(2)(a) makes it clear that it is at the time that the claim was instituted that the assessment must be made of whether the proceedings were instituted vexatiously or without reasonable cause.
(c) The Cambridge dictionary defines ‘vexatiously’ as being ‘in a way that has little chance of succeeding in law but is intended to annoy or cause problems for someone’.
(d) Further, in Nilsen v Loyal Orange Trust [1997] IRCA 267 (Nilsen), North J stated:
The next question is whether the proceeding was instituted vexatiously. This looks to the motive of the applicant in instituting the proceeding. It is an alternative ground to the ground based on a lack of reasonable cause. It therefore may apply where there is a reasonable basis for instituting the proceeding. This context requires the concept to be narrowly construed. A proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party, or to gain a collateral advantage.
(e) He has been represented throughout the proceedings, and it can be inferred that prior to commencing the claim, that he received advice that his claim had chances of success.
(f) While Auscor has argued that his claim had little chance of succeeding in law, there is no evidence that his motive in commencing the claim was anything other than having a genuine belief that his contract with Auscor was one of employment and that he was entitled to payment of his claimed entitlements. There is no evidence demonstrating otherwise.
(g) It cannot be said that his claim was instituted without reasonable cause.
(h) Firstly, his claim was not determined and dismissed by the court because he was engaged as a contractor; rather, he discontinued his claim.
(i) In Kanan v Australian Postal and Telecommunications Union [1992] FCA 366 (Kanan), Wilcox J stated:
It seems to me that one way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being ‘without reasonable cause’. But where, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.
(j) Secondly, there are a number of factors that indicate he had at least an arguable case:
(i) While the claim was filed after the High Court’s decisions were handed down on 9 February 2022 in ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 (Jamsek) and Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 (Personnel Contracting), there was no written contract between the parties stating that he and Auscor had agreed to the arrangement between them being one of contracting.
(ii) The assessment of whether the claim was instituted without reasonable cause needs to be made at the time the claim was filed, and prior to these High Court decisions, the prevailing approach in Australia to resolving whether a person was an employee or a contractor was the multifactorial test arising from the High Court decisions of Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1 and Hollis v Vabu Pty Ltd [2001] HCA 44.
(iii) He performed work for a long period of time for Auscor, in the whole he worked solely for Auscor, and Auscor exerted considerable control over his activities. This points to his claim at least having an arguable possibility of success.
(iv) While Auscor has criticised the claim for being deficient, embarrassing and capable of being struck out, the claim was detailed in setting out what he was seeking and the reasons why.
(v) In any event, he was represented by Mr Farrell, an industrial agent, and he left it to Mr Farrell to set out his claim and was not responsible for its content. Therefore, if the claim was deficient, which is not conceded, this was not his fault. Mr Farrell was not ‘a party’ to the proceedings, so Mr Farrell’s failures, if any, are not relevant to the assessment of s 570(2)(b).
(vi) Furthermore, the claim complies with the Court’s Practice Direction 1 of 2017.
(vii) There is no requirement for the claim to set out his arguments as to why he was an employee, as the purpose of the claim is to advise the court and the respondent of what the claim is about, not to contain evidence.
(k) The court should be cautious in determining that he engaged in an unreasonable act by allowing Auscor’s settlement offer to lapse. He relies on Cheng v Western Pursuits Trust (No. 2) [2017] FCCA 659 (Cheng), in which Driver J states:
Neither does Ms Cheng’s rejection of the Calderbank offer constitute an unreasonable act or omission. As noted above, the Calderbank offer was a ‘walkaway’ offer. In my view, in the Fair Work jurisdiction which is, in principle, a no costs jurisdiction, the rejection of a ‘walkaway’ offer is not, of itself, unreasonable. Something more would need to be demonstrated in order to establish that the rejection of the offer was unreasonable in the circumstances of the particular case.
(l) Furthermore, an assessment of his inaction needs to be made at the time the offer was made, and at that time, he was changing representatives.
(m) Finally, s 570(2)(b) requires Auscor to have incurred costs as a result of any unreasonable act or omission, and Auscor has not provided any evidence that his acts caused it to incur costs. Many of what Auscor says were unreasonable acts did not require it to incur costs.
(n) Many of Auscor’s complaints regarding the discovered documents could have waited until trial before being adjudicated. While Auscor alleges the documents were deficient, the documents have not been adjudicated by the court as being deficient.
10 The orders (at [4] above) required Mr Galanty to file any evidence by 5 May 2025 and his written submission by 2 June 2025. Mr Galanty did not file any evidence, nor written submissions.
11 Prior to the hearing, the following Form 27 – Notice of Cessation of Representation by Lawyer or Agent and Form 24 – Notice of Change of Lawyer or Agent were filed:
(a) On 20 November 2024, Mr Farrell gave notice that he ceased to represent Mr Galanty on and from 20 November 2024.
(b) On 29 November 2024, MKI Legal gave notice that Mr Galanty is represented by MKI Legal from 29 November 2024 until further notice.
(c) On 13 March 2025, MKI Legal gave notice that it ceased to represent Mr Galanty on and from 13 March 2025.
12 As outlined at [2] above, Mr Galanty filed a Form 18 – Notice of Discontinuance – Whole of Claim on 14 March 2025.
13 At the hearing on 21 July 2025, Mr Galanty was self-represented and made the following submissions:
(a) He was a sham contractor because he performed work under the direction of Auscor, Auscor provided him with all his material, tools, uniforms and insurances. He had no direct control in what jobs he was working on, which you would do as a contractor.
(b) The primary position on costs is that each party is responsible for their own costs. As there has not been a hearing or testing of the evidence, it is not apparent that his claim was hopeless. There was no written contract between the parties; there was no written evidence showing that he had been engaged as a contractor. As Auscor was the one making the agreement, it was incumbent on Auscor to ensure that an agreement was in place; it is ‘their own fault that they were required to defend the claim. All they needed to do was put in place a contract. The claim has been withdrawn due to financial reasons, not the legitimacy of [his] case’.
(c) The original intention of making the claim was to verify that Auscor was a sham contractor. He could not continue with his claim for financial reasons. It is unfair for Auscor to claim their costs against him for defending themselves being a sham contractor. He was treated as an employee in every definition of the word, but paid as a contractor, which meant he missed out on all his employee entitlements.
14 Mr Galanty was invited to address the court on the matters at paragraph 13 of Auscor’s settlement offer letter, which outlines what Auscor says are the circumstances indicating that the relationship between Auscor and Mr Galanty was one of contracting and not employment:
13. In addition to the above, the circumstances surrounding the relationship between our respective clients have always been strongly suggestive of a contractor relationship. Those circumstances being:
a. Your client plainly agreed with our client that he would be a contractor;
b. Your client was registered as a sole trader and maintained an ABN and business name, and such registrations pre-dated his relationship with our client;
c. Throughout the engagement, your client provided approximately 450 invoices to our client;
d. Your client invoiced our client at handsome rates, being almost double the relevant award rate;
e. Your client charged our client GST;
f. Your client did not accrue annual leave, sick leave or long service leave;
g. Your client represented himself to the ATO as running a business and claimed significant deductions for business expenses;
h. Your client enjoyed significant tax advantages from splitting his business income with his spouse.
15 In relation to the matters at [14] above, Mr Galanty said:
(a) He does not agree that he agreed with Auscor that he would be a contractor.
(b) He agrees he was registered as a sole trader, maintained an ABN and business name, and that his registration as a sole trader predated his relationship with Auscor.
(c) He agrees that throughout his engagement with Auscor that he issued Auscor 450 invoices.
(d) He does not agree that the rate in the invoices he issued to Auscor was higher than the Award rate. He says that for electrical work, the invoiced rate is below the Award rate. He agrees that he has not made a claim for breach of the Award, and that his claim was for leave entitlements calculated at the rate he was paid. He says the Award rate for a labourer is very low, and that his claim did not mention his electrical qualifications and that he was employed as an electrician. Mr Galanty’s Form 8.1 – Case Outline/Further and Better Particulars of Case Outline filed on 17 October 2023 states, ‘At all material times, the Claimant alleges that he was employed by the First Respondent as a Technician’; ‘The Claimant asserts that he was classified as C11 – Manufacturing Employee Level IV [of the Manufacturing and Associated Industries and Occupations Award 2020]’ or in the alternative ‘as an Electrical worker grade 4 [of the Electrical, Electronic and Communications Contracting Award 2020]’; ‘However … other than the claim detailed in paragraphs 21–‍23 of the statement of claim (Annual Leave Loading), the Claimant does not allege any breaches of either Award.’: [3], [8]–‍[12].

(e) He agrees that he charged Auscor GST.
(f) He agrees that he did not accrue annual leave, sick leave and long service leave.
Consideration
16 Sections 570(1) and (2) of the Act, state:
570 Costs only if proceedings instituted vexatiously etc.
(1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A.
(2) The party may be ordered to pay the costs only if:
(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b) the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; …
17 Auscor referred to Tweedie v Zenitas Healthcare Pty Ltd [2024] WAIRC 00351 (Tweedie) [5]‍–‍[13] as a recent decision outlining the principles relevant to a s 570 costs application: (citations truncated)
Principles
5 The law concerning orders for costs is settled. The limited power to award costs is found in s 570 of the [Act]. …
6 Section 570 confers a discretion to order costs where a pre-condition of s 570(2) is met. This discretion must be exercised judicially according to the terms defining it. It must also be exercised with caution because of the exceptional nature of the power in an otherwise non-costs jurisdiction: Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23 [(AWU)] per Dowsett, McKerracher and Katzmann JJ [8].
7 This means that the case for a costs order must be clearly demonstrated by the party seeking a costs order: Saxena v PPF Asset Management Ltd [2011] FCA 395 [6].
8 In relation to the precondition in s 570(2)(a), the relevant question is whether the proceedings had reasonable prospects of success at the time it was instituted, not whether it ultimately failed: [AWU [7]].
9 That can be tested by asking whether the party bringing the action, on the facts apparent to the party, properly advised, should have known the claim had no reasonable prospects of success: Baker v Patrick Projects Pty Ltd (No2) [2014] FCAFC 166 [9]–‍[10]. A distinction can be drawn between cases where success depends on resolution in the claimant’s favour of one or more arguable points of law, and cases which are misconceived, unsupportable, incompetent or hopeless: Australian [and] International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879 [(AIPA) [36]]; Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143 [29]. Pursuit of cases in the latter category can be characterised as unreasonable.
10 Whether a party has engaged in an ‘unreasonable act or omission’ for the purposes of s 570(2)(b) turns on the facts and circumstances of the case: Sivwright v St Ives Group Pty Ltd [2022] FCA 136 per Jackson J at [9].
11 Even if the Court is satisfied of a s 570(2) precondition, it retains a discretion not to order costs: Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351 per Pagone J [12].
12 Once the power to award costs is enlivened under s 570(2) of the [Act], the Court can make an order for costs to be paid on an indemnity basis, with the general law principles as to the award of such costs applied: Shea v Energy Australia Services Pty Ltd (No 2) [2015] FCAFC 14 [10].
13 The test as to whether indemnity costs should be awarded is whether the justice of the case might so require or, whether there exists some special or unusual feature of the case to justify the Court in departing from the ordinary practice: [AIPA].
18 The principles at [17] above, emphasise the exceptional nature of costs orders in this jurisdiction, requiring Auscor to clearly demonstrate its case for seeking a costs order. Tweedie [6], [7].

19 Tweedie [13] cites AIPA, for the test to be satisfied when deciding whether indemnity costs should be awarded. In AIPA, the respondent sought an order of costs in its favour, principally under s 824(2) of the Workplace Relations Act 1996 (Cth) (WR Act):
824 Costs only where proceeding instituted vexatiously etc.
(1) A party to a proceeding (including an appeal) in a matter arising under this Act … must not be ordered to pay costs incurred by any other party to the proceeding unless the first mentioned party instituted the proceeding vexatiously or without reasonable cause.
(2) Despite sub-section (1), if a court hearing a proceeding (including an appeal) in a matter arising under this Act … is satisfied that a party to the proceeding has, by an unreasonable act or omission, caused another party to the proceeding to incur costs in connection with the proceeding, the court may order the first mentioned party to pay some or all of those costs.
(3) In subsection (1) and (2):
‘Costs’ includes all legal and professional costs and disbursements and expenses of witnesses.
20 Tracey J said in AIPA [39]: (citations truncated)
Where costs are ordered by the Court they will ordinarily be paid on a party and party basis. Any departure from this usual practice, according to the authorities collected by Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536, will only occur in a limited range of cases. The ‘tests’ used to identify such cases have been couched in general terms such as ‘when the justice of the case might so require’ or whether there exists ‘some special or unusual feature on the case to justify the Court in departing from the ordinary practice.’ These ‘tests’ have, for example, been found to have been met in cases in which unwarranted allegations of fraud have been made, proceedings have been prosecuted for some ulterior motive or in wilful disregard of known facts or clearly established law or where there has been an imprudent refusal of an offer of compromise.
Decisions that Mr Galanty relies upon
21 As outlined at [9(d), (i) and (k)] above, Mr Galanty relies upon the decisions of Kanan, Nilsen and Cheng.
22 Kanan is a Federal Court of Australia decision, delivered on 31 July 1992, involving a request for costs under s 347 of the Industrial Relations Act 1988 (Cth) (IR Act) arising from the respondent succeeding in its motion for summary dismissal for want of jurisdiction. Section 347 of the IR Act states that a party to a proceeding in a matter ‘shall not be ordered to pay costs incurred by any other party to the proceeding’…‘unless the firstmentioned party instituted the proceeding vexatiously or without reasonable cause.’
23 Wilcox J said in Kanan, 264–‍265:
I do not doubt that, in instituting this proceeding, Mr Kanan was motivated to obtain relief to which he considered himself entitled. There is no reason to believe that he was actuated by a desire to harass the respondent. To the extent that the word ‘vexatious’ imports considerations additional to the question whether there was a reasonable cause for the proceeding, I make no finding adverse to Mr Kanan. But, for the qualification of s 347 to operate, it is sufficient that the proceeding be instituted ‘without reasonable cause’. A proceeding is not to be classed as being launched ‘without reasonable cause’ simply because it fails. As Gibbs J said in R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia (1978) 140 CLR 470 [(Moore)] at 473, speaking of the Conciliation and Arbitration Act equivalent of s 357 (s 197A):
[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.
In Standish v University of Tasmania (1989) 28 IR 129 at 139 Lockhart J applied the qualification in ordering costs against an applicant whose case he thought ‘misconceived’, rather than simply unsuccessful. But, as the Full Court pointed out in Thompson v Hodder (1989) 29 IR 339 ([Thompson]) at 342, ‘there may be cases which could not be described properly as ‘misconceived’ but which would nevertheless be held to have been instituted without reasonable cause’.
It seems to me that one way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being ‘without reasonable cause’. But where, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause. That is the situation in the present case. The qualification of s 347 applies. The Court has power to order costs against the applicant.
I see no discretionary reason to withhold such an order. It is not a matter of the applicant’s motives but, rather, that he has put the respondent to the expense of resisting a claim which was always doomed to failure. There is no question of punishing the applicant for his unreasonable course of action. The rationale for making a costs order is that a measure of indemnity should be conferred upon the respondent for the costs it has been obliged to incur in responding to the unreasonably instituted proceeding. I propose to order that the principal proceeding be dismissed with costs. The costs of the motion will be costs in the principal proceeding and so covered by that order.
24 Nilsen is an Industrial Relations Court of Australia decision, delivered on 11 September 1997, involving a costs application made under s 347(1) of the WR Act, following North J giving judgment in the proceedings and dismissing Ms Nilsen’s claim that her dismissal was in breach of the WR Act. Section 347(1) of the WR Act states that a ‘party to a proceeding (including an appeal) in a matter arising under this Act’ ‘shall not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause.’
25 North J cited Kanan, 264–‍265 (at [23] above) and said in Nilsen, 2:
In Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 at 274, Northrop J said, in relation to a predecessor of s 347:
Great care must be exercised to ensure that in finding that a party has instituted proceedings vexatiously or without reasonable cause, that party is not improperly deprived of his freedom from liability to pay costs to an opposing party. The test is a substantial one.
In [Thompson], at 470, the Full Court of the Federal Court said:
It is apparent from these authorities that an applicant who has the benefit of the protection of s 347 will only rarely be ordered to pay the costs of a proceeding in exceptional circumstances.
In relation to the meaning of ‘without reasonable cause’, in [Moore] Gibbs J said, at 473:
[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.
26 Applying the authorities at [25] above, North J found that while Ms Nilsen’s case was dismissed because it was not maintainable, this does not mean that Ms Nilsen instituted proceedings ‘without reasonable cause’. North J said in Nilsen, 3:
This was not a case in which the evidence to be called by the applicant could not have sustained the applicant’s case. Rather, the applicant depended for her success on the Court drawing inferences favourable to her and accepting evidence called on her behalf. For instance, she depended on the Court inferring that her dismissal was linked to her expulsion from membership of the [Loyal Orange Institution of Victoria]. She depended on the Court accepting the evidence of Mr Simpson that the resolution of 25 November 1994 terminating her employment was pre-arranged. She was entitled to hope that the Court would draw inferences favourable to her and to accept the evidence of Mr Simpson. In the result, I did not draw those inferences and I did not accept Mr Simpson’s evidence. These examples show that, when the review was instituted, the review was not utterly hopeless in the sense that it was doomed to failure. For the reasons expressed in my judgment, the applicant’s case was weak, but the fact that it did not have a strong chance of success does not mean that it was instituted without reasonable cause. The evident policy behind s 347 is to allow an applicant, without the risk of paying the costs of the opposing party, to institute a weak case as long as it is not utterly hopeless.
The next question is whether the proceeding was instituted vexatiously. This looks to the motive of the applicant in instituting the proceeding. It is an alternative ground to the ground based on a lack of reasonable cause. It therefore may apply where there is a reasonable basis for instituting the proceeding. This context requires the concept to be narrowly construed. A proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party, or to gain a collateral advantage: see Attorney General v Wentworth (1988) 14 NSWLR 481 at 491.
27 Cheng is a Federal Circuit Court of Australia decision, delivered on 13 April 2017, where the issue under consideration was whether Ms Cheng’s rejection of the respondent’s ‘walkaway’ Calderbank offer constituted an unreasonable act or omission under s 570(2)(b) of the Act.
28 In relation to settlement offers, Driver J said in Cheng [38]–‍[39]: (footnotes omitted)
38. Judge O’Sullivan went on to observe in Govan at [19] that ‘usually a deliberate decision to refuse a reasonable offer of settlement is a factor which would weigh in favour of a finding of unreasonable action’.
39. In Cugura Tracey J made the following observation at [31] about a ‘deliberate decision’ to reject an offer of settlement:
A deliberate decision to refuse a reasonable offer of settlement is a factor which would normally weigh more heavily in favour of a finding of unreasonable action than would a mere failure to respond by an unrepresented litigant.
29 In relation to ‘walkaway’ offers, Driver J said in Cheng [42]–‍[46]: (footnotes omitted) (original emphasis)
42. It is established that a ‘walkaway’ offer will be treated as constituting a compromise where the offeror has a strong case and the compromise is found to be the offer to give up pursuing costs which would in likelihood be payable if the offeree continues. The stronger the merits of the offeror’s case, the more compelling is the conclusion that the ‘walkaway’ offer constituted a true compromise. Such findings have been made in the context of applications pursuant to s.570(2)(b) of the [Act].
43. In Trustee for The MTGI Trust, their Honours Siopis, Collier and Katzmann JJ observed:
Further, we note that on 1 March 2016 Mr Laxon, the lawyer for Mr Johnston, wrote to applicant’s Counsel, and placed MTGI on notice that Mr Johnston considered the application to be frivolous, vexatious and without merit. On 5 July 2016 Mr Laxon again wrote to MTGI’s Counsel, materially in the following terms:
Offer
On a without prejudice basis, we invite your client to discontinue its Application within 21 days, with each party paying its own costs (Offer). The Offer is made pursuant to the principles in Calderbank v Calderbank [1975] 3 All ER 333, and will be relied upon in support of an application for indemnity costs. …
It is well-established that a failure to accept a Calderbank offer may justify the exercise of the Court’s discretion to award costs on an indemnity basis. Principles referable to Calderbank offers are wellknown. As the Full Court explained in Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2011] FCAFC 141:
[T]he purpose of the principles governing Calderbank offers and offers of compromise in accordance with court rules is to ensure that, when one party makes another an offer that contains a genuine element of compromise, the recipient of the offer is compelled to give real consideration to the costs and benefits of prosecuting its claim by reason of the prospect of suffering an indemnity costs order should its failure to accept the offer prove unreasonable.
In determining whether the Court should exercise its discretion and order indemnity costs in light of a rejection by the unsuccessful party of a Calderbank offer, a key question for consideration by the Court is whether the Calderbank offer was reasonable and proposed a genuine compromise of a case brought without a realistic prospect of success: Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53 [(Sagacious)] [125].
In our view Mr Johnston’s offer was reasonable, and did propose a genuine compromise of MTGI’s case which, as we have found, had no realistic prospect of success at that time. The fact that Mr Johnston’s offer envisaged both parties ‘walking away’ and bearing their own costs falls within the parameters of a reasonable offer: [Sagacious] [129]–‍[132]. …
Further, we consider that the failure of MTGI to accept Mr Johnston’s offer of 5 July 2016 was an unreasonable omission which caused Mr Johnston to incur costs in these proceedings, within the meaning of s 570(2)(b) of the [Act] (cf Ashby v Slipper (No 2) [2014] FCAFC 67 at [2]–‍[3]).
44. Similarly in Western Pursuits’ submission, the ‘walkaway’ offer contained in the Calderbank letter constituted a genuine compromise of Ms Cheng’s case, given her case had no realistic prospect of success as at the date of the Calderbank letter, being 28 July 2016, given her failure to particularise in any meaningful sense how there had been a ‘dismissal’ for the purposes of the meaning of adverse action in s.342, which had been made apparent not only in the terms of the Calderbank letter but also in Western Pursuits’ response filed on 3 May 2016.
45. The timing of the Calderbank letter is also said to be relevant in this respect, given the parties had attended a mediation on 26 July 2016, had prepared and provided mediation papers and had to consider their respective positions in preparation for that mediation.
46. In Rickard Constructions McDougall J observed at [47]:
[I] have concluded that the offer was a genuine offer of compromise, and that it was a reasonable offer of compromise. The circumstances in which it was made, and the circumstances to which I have referred, demonstrate, in my view, that the rejection of the offer was unreasonable. At the time the offer was made, the parties must be taken to have been fully apprised of the strengths and weaknesses of their respective cases. This is so partly because of the advanced stage of preparation at the time when the offer was made, and partly because preparation for the mediation must have required each party to consider its own position both in the light of its own analysis of the relevant facts and circumstances and in the light of its analysis of the positions advanced by the opposing parties in their mediation position papers and at the mediation.
30 Driver J concluded in Cheng [49]–‍[50]:
49. As noted above, the case against Western Pursuits ultimately collapsed due to a near complete absence of supporting evidence. Ms Cheng had been given time to prepare affidavit evidence but virtually nothing material had been filed by the time of the trial. Western Pursuits, on the other hand, had filed and relied upon a significant body of evidence to support its version of the circumstances pertaining to the cessation of Ms Cheng’s employment. Most of the costs of Western Pursuits would have been incurred in preparing for trial and attending the trial. Those steps were undertaken in accordance with procedural orders made by the Court. Ms Cheng’s failure to prepare properly for the trial was unfortunate, not least for her, but I am unable to conclude that it was an unreasonable act or omission. The reality is that Ms Cheng was in no fit emotional state to prepare and run her case and she had been unable to obtain legal assistance. I had, on several occasions during the interlocutory stage of the proceedings, invited Ms Cheng to consider terminating the proceedings given her emotional state. She declined to do so. As I understand it, this was because she wanted her ‘day in court’. Ultimately, she was unable to take advantage of that day in court but it was not unreasonable for her to make the attempt, however ineffectual it ultimately was. Her case failed, not because she was found to be untruthful or because her claim was found to be a sham but, rather, because she presented nothing to support it. It is impossible to say whether the outcome might have been any different if her case had been properly prepared and presented.
50. Neither does Ms Cheng’s rejection of the Calderbank offer constitute an unreasonable act or omission. As noted above, the Calderbank offer was a ‘walkaway’ offer. In my view, in the Fair Work jurisdiction which is, in principle, a no costs jurisdiction, the rejection of a ‘walkaway’ offer is not, of itself, unreasonable. Something more would need to be demonstrated in order to establish that the rejection of the offer was unreasonable in the circumstances of the particular case. The case of The MGTI Trust, referred to above at [42], is the only Fair Work precedent I have been taken to. That was a truly exceptional case, involving an indemnity costs order against a non party in vexatious proceedings. The present case is distinguishable. In my view, the particular circumstances of this case, and the circumstances of the case overall, while unfortunate and expensive for Western Pursuits, do not point to any clear unreasonable act or omission by Ms Cheng, who is a vulnerable and troubled young woman.
Decisions that Auscor relies upon
31 As outlined at [8(b)] above, Auscor relies upon the decisions of Lai Qin and ONE.TEL.
32 Lai Qin is a High Court decision, delivered on 28 February 1997, concerning Order 71, r 39 of the High Court Rules 1952 (Cth): ‘When for any reason the further prosecution of a proceeding becomes unnecessary, except for the purpose of determining by whom the costs of the proceeding should be paid, any party may apply to the Court or a Justice to determine the question, and thereupon the Court or Justice may make such order as is just’.
33 McHugh J said in Lai Qin, 624–625: (footnotes omitted)
In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. …
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in The South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80 per cent of the applicant’s taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare.
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.
The critical question in this case then is whether or not the prosecutrix acted reasonably in bringing these proceedings and whether the respondents acted so unreasonably in not informing the prosecutor that an application to review the decision to refuse a visa was being considered that it would be proper for the Minister to pay the whole or part of the cost of the proceedings. …
34 ONE.TEL is a Federal Court of Australia decision, delivered on 13 March 2000, where the issue for consideration was whether the Deputy Commissioner of Taxation (DCT) should pay the applicants’ costs, in circumstances where the applicants had applied to the court to set aside notices issued under s 108 of the Sales Tax Assessment Act 1992 (Cth), and the DCT agreed to consent orders setting aside the notices.
35 Burchett J said in ONE.TEL [5]–‍[8]:
5 It is accepted that, in a case which terminates before there has been a hearing, the Court should not resolve the issue of costs by engaging in something in the nature of a hypothetical trial: Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 [(Aust-Home)] at 201; [Lai Qin] at 624. But this does not mean that the Court can never make an order for costs. Often, it will be unable to do so; but in other cases an examination of the reasonableness of the conduct of the parties, respectively, may provide the basis of an order, or ‘a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried’, as McHugh J put it in [Lai Qin] at 625. His Honour added:
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.
Although his Honour thought this would ‘usually’ be so, he made it clear that he was not laying down an invariable rule. At the beginning of his discussion of the applicable principles (at 624), he referred to the discretionary nature of the power to order costs, and to the ‘general rule [that] the successful party is entitled to his or her costs’, and he said:
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action.
As Sackville J pointed out in Rizal v Minister for Immigration and Multicultural Affairs [1999] FCA 334 [(Rizal)] at para 16, the remarks made by McHugh J evince ‘a somewhat more flexible approach’ than that taken by the Court in Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284 [(Gribbles)] at 287, when it suggested that ‘there will be very few cases where the issues will be sufficiently clear, in the absence of a hearing, for an order for costs to be made in favour of a party.’ What is well established is that frequently the determining factor will be the reasonableness of the conduct of the parties, a matter which was emphasized in each of the decisions I have cited, and also in Reddy v Hughes (1996) 37 IPR 413 [(Reddy)]; Sun Zhan Qui v Minister for Immigration and Ethnic Affairs [1999] FCA 119 [Qui]; and Australian Securities Commission v Berona Investments Pty Ltd (1995) 18 ACSR 772 [(Berona)]. In the last case, Cooper J commented (at 774), concerning the principles laid down in [Aust-Home]:
These propositions are of assistance in focusing attention upon some of the relevant circumstances which should be considered in the exercise of the discretion to award costs where proceedings do not proceed to a final hearing. However they are not the only circumstances; nor are they intended to limit the discretion.
6 In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court’s discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs. In [Lai Qin], McHugh J was careful to state (at 624) that the principles with which he was concerned were those that ‘govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra-curial means’. As his Honour recounted the facts, the instant case was one where the applicant had challenged a decision of the Refugee Review Tribunal denying her status as a refugee but, during the pendency of her action in the High Court, the Minister had exercised his special discretion in her favour under s 417 of the Migration Act 1958. The question whether the Tribunal had or had not erred in law thus became moot. [Qui] was a similar case. Following the decision of the Full Court in Sun v Minister for Immigration and Ethnic Affairs (1997) 81 FCR 71, the Minister exercised his discretion under s 417, with the result that an outstanding proceeding in respect of one of several decisions of the Refugee Review Tribunal lost any significance for either party. Beaumont J followed [Lai Qin]. [Gribbles] was a variation on the theme. There, the Health Insurance Commission was sued by a pathologist because it declined to recognize particular services as eligible for the payment of Medicare benefits; but during the pendency of the proceeding, certain arrangements affecting the performance of the services were changed, with the result that the Commission reversed its decision. The original dispute thus ceased to have any significance, and the argument about the appropriate costs order had to take place in the absence of any determination of the merits. Again, in [Aust-Home] and in [Berona], as Cooper J put it in the latter case (at 777), ‘events had overtaken the proceedings’. The relief originally sought was no longer required, and the proceedings were terminated without any decision on the merits. Neither side had won or lost (see the former case at 202, and the latter at 777). [Reddy] and [Rizal] perhaps each turned even more clearly on an assessment of the reasonableness of a party’s behaviour. In [Reddy], the respondent had offered the applicant a substantially complete remedy before the institution of proceedings, and Branson J held (at 415) that her Honour was ‘not able to be satisfied that the applicant acted reasonably in commencing the proceeding’. In Rizal, although the applicant achieved the result he sought by his proceeding in the Court, there was an ‘at least arguable’ objection to the Court’s jurisdiction to entertain the application, and a proposed amendment to overcome the jurisdictional problem would have required leave to file an application long out of time. That leave had not been granted when the proceeding became moot because of the Minister’s plainly reasonable decision to reconsider the request the previous rejection of which was the subject and casus belli of the litigation.
7 By contrast with the decisions I have been discussing, the present matter involves a clear winner. The applicants, by their proceeding, sought to challenge the validity of certain notices, and to have them set aside. The respondent, after initially defending those notices, encountered at least an evidentiary difficulty, and acknowledged that they were to be set aside. That means that the applicants have succeeded, just as the respondent succeeded in Ahmetaj v Minister for Immigration and Multicultural Affairs [1999] FCA 332, where a proceeding failed by reason of the occurrence of an event that was always liable to occur and to defeat the proceeding; in those circumstances, Sackville J, when the hearing did not proceed, distinguished [Lai Qin] and made a costs order. As in that case, so here, the result one party sought was achieved without a hearing, but not by a ‘settlement’ in the ordinary sense, or as McHugh J used the word, and certainly not by what his Honour called ‘extra-curial means’.
8 In any event, if, as the respondent contends, I should determine the question of costs by assessing whether, to borrow the language of McHugh J in [Lai Qin] (at 625), ‘both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation [came to an end by the respondent’s decision not to seek to uphold his notices]’, I would arrive at the same result. The respondent asserts that his decision to desist from defending the proceeding was reached ‘consistently with his obligation as an officer of the Commonwealth to act as a model litigant’. Since reliance upon clear proof, by secondary evidence, that an authorisation actually existed would be in no way inconsistent with the attitude of a model litigant, this can only mean that there was some degree of dubiety about the secondary evidence. Moreover, if a model litigant would not have maintained the validity of these notices as respondent to proceedings to set them aside, a fortiori a fairminded officer of the Commonwealth would not have sought to enforce the same notices by criminal sanctions against an unsuspecting citizen or corporation – or even against a protesting one. On the [DCT’s] own stance now, his stance earlier must have been unreasonable, at least once he had ascertained the true position. Yet that stance was maintained by opposition to the applicant’s motion to amend, and by service of the notice to admit facts. It was only abandoned after the applicants defeated the attempt to obtain admissions.
Applying the principles from the decisions that the parties rely upon
36 Applying Kanan, Mr Galanty’s claim may be considered as instituted without reasonable cause under s 570(2)(a), if:
(a) The claim is not one where Mr Galanty’s success depends upon the resolution in his favour of one or more arguable points of law; but where on his own version of facts, it is clear that the proceedings must fail.
(b) Upon the facts apparent to Mr Galanty at the time of instituting the proceedings, there was no substantial prospect of success.
(c) Mr Galanty’s claim was ‘always doomed to failure’.
37 Applying Nilsen, Mr Galanty’s claim may be considered as instituted without reasonable cause under s 570(2)(a), if:
(a) The claim is not one where Mr Galanty depended on his success on the court drawing inferences favourable to him and accepting evidence to be called on his behalf; but a case in which the evidence to be called by Mr Galanty could not have sustained his case.
(b) When the proceedings were instituted, it was utterly hopeless, in the sense that it was doomed to failure.
38 Applying Nilsen, Mr Galanty’s claim may be considered as instituted vexatiously under s 570(2)(a), if the predominant purpose in instituting the proceedings was to harass or embarrass Auscor, or to gain a collateral advantage.
39 Applying Cheng, Mr Galanty’s failure to accept Auscor’s ‘walkaway’ offer would not, in itself, be unreasonable in this jurisdiction, which is, in principle, a no costs jurisdiction; ‘something more’ would need to be demonstrated in order to establish that the rejection of Auscor’s offer is unreasonable in the circumstances of this case.
40 Applying Lai Qin, Mr Galanty may be ordered to pay Auscor’s costs where the proceedings ended by way of his discontinuance and not by a hearing on the merits, if the court concludes that:
(a) Mr Galanty acted so unreasonably that Auscor should obtain the costs of the action.
(b) Although both parties have acted reasonably, Auscor was almost certain to have succeeded if the matter had been fully tried.
41 Applying ONE.TEL, Mr Galanty may be ordered to pay Auscor’s costs where the proceedings ended by way of his discontinuance and not by a hearing on the merits, if the court concludes that:
(a) Mr Galanty, after litigating for some time, effectively surrendered to Auscor.
(b) Auscor was the ‘clear winner’.
The parties’ respective cases
42 As outlined at [9] and [13] above, Mr Galanty filed a Response to the Costs Application, selfrepresented at the hearing on 21 July 2025, and made oral submissions opposing the Costs Application. Mr Galanty’s contentions may be summarised as follows:
(a) His claim was brought based on his genuine belief that he was an employee of Auscor entitled to the benefits claimed under the Act and the LSL Act. The nature of his working relationship with Auscor bore the hallmarks of employment, including control over his work, provision of tools by Auscor, and a long term exclusive arrangement.
(b) As he has been represented throughout the proceedings, the court should infer that prior to instituting the claim, he ‘received advice that his claim had chances of success’.
(c) Any deficiencies in his Originating Claim were minor or were the responsibility of his representative.
(d) He discontinued the proceedings due to financial reasons, rather than any admission that his claim lacked merit.
(e) An order for costs in the circumstances would be unjust.
43 As outlined at [7(i)(i)–‍(iii)] above, Auscor contends that given the representations Mr Galanty made over many years that he operated a business, to the ATO through his tax returns and BAS filings, and to Auscor through the issuance of tax invoices charging GST, by the mere act of Mr Galanty filing a claim contending the contradictory position that he was an employee of Auscor’s, the court should be satisfied of each of the following:
(a) That Mr Galanty instituted the proceedings vexatiously (s 570(2)(a)).
(b) That Mr Galanty instituted the proceedings without reasonable cause (s 570(2)(a)).
(c) That Mr Galanty engaged in an unreasonable act or omission and caused Auscor to incur costs (s 570(2)(b)).
44 As outlined at [7(i)(iv)–‍(vi)] above, Auscor also contends that Mr Galanty engaged in an unreasonable act or omission and caused Auscor to incur costs (s 570(2)(b)) by continuing to pursue the proceedings, and by failing to accept its ‘walkaway’ offer.
Did Mr Galanty institute the proceedings vexatiously or without reasonable cause?
45 On 26 April 2023, Mr Galanty filed the Originating Claim, claiming that in the period from 8 October 2012 to 9 September 2021, he was an employee of Auscor.
46 As outlined at [9(j)(i)–‍(ii)] above, Mr Galanty accepts that when he filed the Originating Claim on 26 April 2023, the law was settled by Personnel Contracting and Jamsek, decisions of the High Court of Australia handed down on 9 February 2022.
47 Prior to Personnel Contracting and Jamsek, the characterisation of the parties’ relationship as one of employment or contracting may have been determined by a multifactorial consideration of the totality of the relationship between the parties including the terms of the contract governing the relationship and the performance of the contract in practice.
48 However, Personnel Contracting and Jamsek clarified that:
(a) The task of a court is to enforce the parties’ rights and obligations, not to form a view as to what a fair adjustment of the parties’ rights might require. Therefore, the characterisation of the parties’ relationship as one of employment or contracting is determined by reference to the parties’ rights and obligations under the contract governing their relationship. Personnel Contracting [59] (Kiefel CJ, Keane and Edelman JJ); Jamsek [8] (Kiefel CJ, Keane and Edelman JJ).

(b) Consideration of the totality of the relationship between the parties is relevant only if it concerns the rights and duties established by the parties’ contract; not if it concerns an aspect of how the parties’ relationship has come to play out in practice but bearing no necessary connection to the contractual obligations of the parties. Personnel Contracting [61] (Kiefel CJ, Keane and Edelman JJ).

(c) Where there is a written contract, the validity of which is not in dispute, the characterisation of the relationship as one of employment or contracting, proceeds by reference to the rights and obligations of the parties under that written contract, with the contract to be construed in accordance with the established principles governing contractual interpretation. Personnel Contracting [59]–‍[60] (Kiefel CJ, Keane and Edelman JJ).

(d) Where there is no written contract, the characterisation of the relationship as one of employment or contracting, still proceeds by reference to the rights and obligations of the parties under that contract, but with the parties’ subsequent conduct relevant to determining the terms of that contract. Any such inquiry of the parties’ conduct is an objective one, the purpose of which is to ascertain the terms the parties can be taken to have agreed. Personnel Contracting [177]–[179] (Gordon J, Steward J agreeing [203]); Personnel Contracting [183] (Steward J agreeing [203]).

49 Kiefel CJ, Keane and Edelman JJ said in Personnel Contracting [39]: (footnotes omitted) (emphasis added)
While the ‘central question’ is always whether or not a person is an employee, and while the ‘own business/employer’s business’ dichotomy may not be perfect so as to be of universal application for the reason that not all contractors are entrepreneurs, the dichotomy usefully focusses attention upon those aspects of the relationship generally defined by the contract which bear more directly upon whether the putative employee’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise. In this way, one may discern a more cogent and coherent basis for the time-honoured distinction between a contract of service and a contract for services than merely forming an impressionistic and subjective judgment or engaging in the mechanistic counting of ticks on a multifactorial checklist.
50 Gordon J said in Personnel Contracting [183] (Steward J agreeing [203]): (footnotes omitted) (emphasis added)
The better question to ask is whether, by construction of the terms of the contract, the person is contracted to work in the business or enterprise of the purported employer. That question is focused on the contract, the nature of the relationship disclosed by the contract and, in this context, whether the contract discloses that the person is working in the business of the purported employer. It invites no inquiry into subsequent conduct. A consequence of a negative answer to that alternative question may be that the person is not an employee. Another consequence may be, but does not have to be, that they have their own business. As five judges of this Court said in Hollis v Vabu Pty Ltd, both employees and contractors can work ‘for the benefit of’ their employers and principals respectively, and so that, ‘by itself’, cannot be a sufficient indication that a person is an employee (emphasis added). That does not detract from the fact that where the contract is oral, or partly oral and partly in writing, subsequent conduct may be admissible in specific circumstances for specific purposes – to objectively determine the point at which the contract was formed, the contractual terms that were agreed or whether the contract has been varied or discharged.
51 There is no dispute that there was no written contract between the parties, nor that Mr Galanty was engaged under an oral contract. Originating Claim [6]; Affidavit filed in support of the First Application on 21 February 2024 [13] (at [88] of these reasons).

52 Applying Personnel Contracting (at [48]–‍[50] above), requires consideration of the evidence of the parties’ conduct to ascertain the terms of the contract between Auscor and Mr Galanty that can be taken to have been agreed, and whether those terms support Auscor’s case that an express term of the contract included that Mr Galanty would provide services to Auscor as a sole trader contractor, using his existing ABN and business name.
53 In the Originating Claim, Mr Galanty confirms that the terms of his contract were not put in writing, and claims:
4. On or around August 2012, [Mr Galanty] responded to an advertisement placed in Seek by [Auscor] and applied for a position there. He then attended a panel interview, at which [Mr McCoy] also attended, where he was questioned as to his suitability to work for [Auscor]. Following this interview, he was offered the position and commenced work on 8 October 2012.
5. [Auscor] agreed to pay [Mr Galanty] $36.50 for each hour of work and [Mr Galanty] worked on a full time basis.
6. The terms and conditions of the engagement between [Mr Galanty] and [Auscor] were not put in writing.
7. The work [Mr Galanty] performed was under [Auscor’s] and [Mr McCoy’s] direction and control.
8. As a result, the relationship between [Mr Galanty] and [Auscor] was one of employer and employee.
54 On 15 June 2023, Auscor filed a Response, stating:
3. The Respondents deny paragraph l(c), and state that [Mr Galanty] was engaged by [Auscor] under a contract for services which contained the following express terms:
a. [Mr Galanty] would provide services as an Electrical Technician to [Auscor] as a contractor.
b. [Mr Galanty] would be a sole trader and provide services utilising his existing ABN and business name.
c. [Mr Galanty] confirmed that he was familiar with what it meant to be a contractor because of previous arrangements with previous entities.
d. [Mr Galanty] was to submit weekly tax invoices to [Auscor].
e. [Mr Galanty] was to be responsible for his own tax.
f. [Mr Galanty] would invoice for a flat hourly rate above the award and it would cover all entitlements
g. [Mr Galanty’s] hourly rate was an ‘all in rate’ inclusive of:
i. Annual leave;
ii. Sick leave;
iii. Payments for being absent on public holidays; and
iv. Long service leave.
h. [Mr Galanty] would invoice at a rate of $34.00 p/hr (which he later increased to $36.50 p/hr on or about 15 January 2018 and again to $38.50 p/hr on or about 1 July 2021).
i. [Mr Galanty] would attend work on the basis of what had been arranged.
j. From time to time, [Auscor] and [Mr Galanty] would arrange that [Mr Galanty] would perform project work which would often involve early starts, long hours and time away from home. In addition to the hourly rate, [Mr Galanty] would be able to charge a flat fee of $100 for each night he was away from home.
k. In addition to the project work, there would generally be work at the workshop from 8am each weekday if [Mr Galanty] chose to attend.
l. As a contractor, if [Mr Galanty] worked for 2 hours he would be paid for 2 hours, if he worked for 10 hours he would be paid for 10 hours.
Particulars
The express terms of the contract were agreed orally in the course of 2 pre-contractual discussions between Mr Scott McCoy (Manager) and [Mr Galanty].
The first discussion occurred on or about October 2012 at a meeting at [Auscor’s] premises (then) in Booragoon. Present at the meeting was Mr Scott McCoy and Mr Jonathan Wass (Procurement and Logistics Manager).
The second discussion occurred soon after the first discussion where Mr Scott McCoy telephoned [Mr Galanty] to inquire as to [Mr Galanty’s] availability for work.
The express terms of the contract can also be inferred from the post contractual conduct of the parties.
55 Orders 2 and 3 of the Orders of the court made on 22 July 2024 state:
2. The Claim be listed for 3-day trial on a date to be determined by the Registry that is not before 1 February 2025 (Trial).
3. By 19 August 2024, the parties to file a Statement of Agreed Facts, Issues and Contentions, and a Bundle of Agreed Documents of the common facts, issues and contentions, and documents, each attached to a Form 29 – Multipurpose Form, which they intend to rely upon at the Trial.
56 Despite the terms of Order 3 (at [55] above), on 21 August 2024, the parties filed a Statement of Agreed Facts, Issues and Contentions consisting of only four paragraphs:
1. The claimant replied to an advertisement placed on seek by the respondent.
2. The claimant attended a meeting with representatives of the respondent.
3. 16 October 2012 was the first occasion that the claimant’s labour was supplied to the respondent.
4. 16 September 2021 was the last occasion that the claimant’s labour was supplied to the respondent.
57 The matter was discontinued by Mr Galanty prior to the parties filing witness statements in support of the matters asserted by them regarding the formation of, and terms of, the contract governing their relationship. This means that, beyond the parties’ assertions at [53]–[54] and [56] above, there is no evidence before the court regarding the formation of, and terms of, the contract governing their relationship.
58 Evidence of Mr Galanty’s subsequent conduct includes:
(a) Mr Galanty’s concessions at [15(b)–(c), (e)–‍(f)] above, including that prior to his relationship with Auscor, he was registered as a sole trader and maintained an ABN and business name.
(b) The publicly available information, which suggests that Mr Galanty registered as a sole trader with an ABN on 5 February 2004 and registered his business name on 10 February 2004. Australian Business Register.

(c) Mr Galanty’s tax returns for 2012–2013, 2013–2014, 2014–2015 and 2015–2016, in which he reports amounts/information in the following categories: First Affidavit filed on 9 February 2024, 6–20; Fourth Affidavit filed on 7 August 2024, 78–‍82.

· BPI Personal Services Income
o PSI Other
o Total amount of other deductions against PSI
o Net PSI
· Business name of main business: PHILLINK
· Australian Business Number (ABN): 57845884610
In 2012–2013, 2013–2014 and 2014–2015:
· Description of main business or professional activity: AIR CONDITIONING EQUIP | INSTALLATION EXC MOTOR VEHICLES
In 2015–2016:
· Description of main business or professional activity: ELECTRICAL SERVICES | PIPELINE PROTECTIONS
(d) Mr Galanty’s tax returns for 2016–2017 and 2017–2018, in which he reports amounts/information in the following categories: First Affidavit filed on 9 February 2024, 21–25; Second Affidavit filed on 11 March 2024, 6–‍26; Fourth Affidavit filed on 7 August 2024, 83–‍88.

· Net income or loss from business
o Nonprimary productiontransferred from Z item P8
o Net small business income
· Description of main business or professional activity: Underground Electrical Cabling Service
· Business name of main business and ABN: Phillink
o ABN: 57 845 844 610
· Business income and expenses:
o Other business income – Nonprimary production
o Expenses – Motor vehicle expenses
o Expenses – All other expenses
o Net income or loss from business this year
(e) Mr Galanty’s tax returns for 2018–2019, 2019–2020, 2020–2021, 2021–2022, in which he reports amounts/information in the following categories: Fourth Affidavit filed on 7 August 2024, 89–‍129.

· Net income or loss from business
o Nonprimary productiontransferred from Z item P8
o Net small business income
· Description of main business or professional activity: Underground Electrical Cabling Service
· Business name of main business and ABN: Phillink
o ABN: 57 845 844 610
· Business income and expenses:
o Other business income – Nonprimary production
o Expenses – All other expenses
o Net income or loss from business this year
· Small Business Entity – Eligibility Tests
o Question 1: Is the taxpayer carrying on a business? Y
o Queston 2: Is the aggregated turnover of the business less than $10 million? Y
· Profession, trade or business income and deductions excluding primary production
o ATO ANZSIC code: 32320
o Business activity: Underground Electrical Cabling Service
(f) Mr Galanty’s quarterly BAS filings, which are documents that are only filed with the ATO by persons engaged in business activity, for the periods July 2012 to March 2015 and July 2015 to September 2021. First Affidavit: Part 1 of Schedule; Fourth Affidavit [8].

59 As outlined at [46] above, Mr Galanty accepted that at the time he filed the Originating Claim, the law was settled by Personnel Contracting and Jamsek, which meant the task of the court was to determine the terms of the contract governing the parties’ relationship and whether they support a relationship of employment or contracting.
60 As outlined at [54] above, Mr Galanty was put on notice by Auscor’s Response filed on 15 June 2023 that Auscor claimed that the express terms of the contract between Mr Galanty and Auscor included that Mr Galanty would provide services to Auscor as a sole trader contractor, using his existing ABN and business name.
61 Therefore, applying Personnel Contracting [177]–[179] (that where there is no written contract, the parties’ subsequent conduct is relevant to ascertaining the terms the parties can be taken to have agreed to, at [48(d)] above), it is difficult to comprehend how Mr Galanty or his advisors, could have assessed the evidence at [58] above, and concluded that he had reasonable prospects of success of defeating the purported express term Auscor claims the parties can be taken to have agreed to, and reasonable prospects of success in establishing that the express terms of the contract that the parties can be taken to have agreed to included that Auscor would employ Mr Galanty as its employee.
62 The evidence at [58] above, demonstrates consistent business activities, including deductions for expenses (such as for motor vehicle and other expenses), which are hallmarks of an independent enterprise under the ‘own business/employer’s business’ dichotomy in Personnel Contracting [39] (at [49] above).
63 Therefore, applying Personnel Contracting [39] (regarding the useful focus of the own business/employer business dichotomy to the central question of whether a person is an employee, at [49] above), it is difficult to comprehend how Mr Galanty or his advisors, could have assessed the evidence at [58] above, and concluded that he had reasonable prospects of success in his claim that he was as employee. The evidence at [58] above wholly aligns with Mr Galanty operating his own business (Phillink), rather than subordination to Auscor’s business. The evidence at [58] above, aligns with Mr Galanty having conducted himself in a manner wholly consistent with him engaging in his own business for many years; the evidence demonstrates that Mr Galanty established his business structure and registered as a sole trader prior to commencing work for Auscor, and maintained this independent status throughout his relationship with Auscor. Originating Claim [4]: Mr Galanty states that he commenced work with Auscor on 8 October 2012.
This pre-existing and continuous conduct is irreconcilable with Mr Galanty’s assertion that he was integrated into Auscor’s business as an employee.
64 In the context of the partnerships in Jamsek, Kiefel CJ, Keane and Edelman JJ noted in Jamsek [63] that the partnerships earned income, incurred expenses, and took advantage of the tax benefits of their structure, and said that it is not possible to square the respondents’ contention that they were not conducting a business of their own, with the circumstance that, for many years, they enjoyed the advantage of splitting the income generated by the business conducted by the partnerships with their fellow partners. This is apposite to the evidence at [58] above in relation to Mr Galanty’s business (Phillink).
65 The evidence at [58] above, constitutes ‘facts apparent to Mr Galanty at the time of instituting the proceeding’ and ‘the evidence to be called by Mr Galanty’. Kanan and Nilsen (at [36]–‍[37] of these reasons).

66 I am therefore satisfied that Auscor has established that Mr Galanty instituted the proceedings without reasonable cause, for the following reasons.
67 The core of Mr Galanty’s claim, that he was an employee entitled to employee entitlements, is fundamentally undermined by his own evidence. Mr Galanty’s business registration and the discovered tax returns and BAS filings (at [58] above), contradict his assertion of working as an employee in Auscor’s business as opposed to working in his own business (Phillink).
68 Mr Galanty’s own evidence (at [58] above), indicates that he consistently conducted himself as a sole trader contractor, and claimed substantial deductions for business expenses. These documents were in his possession or control (either directly or via his accountant) when he commenced the claim on 26 April 2023.
69 Applying Kanan and Nilsen, Mr Galanty’s case could not have been sustained on his own evidence, which was apparent to him at the time of instituting the proceedings. The evidence at [58] above, demonstrates Mr Galanty’s consistent self-representation as a contractor, through his ABN registration, tax deductions, BAS filings, and invoices, which contradict his claim of employment. As such, there was no substantial prospect of success from the outset, rendering the proceedings ‘doomed to failure’ and ‘utterly hopeless’. This satisfies the threshold in Kanan and Nilsen that Mr Galanty’s claim was instituted without reasonable cause under s 570(2)(a).
70 To reinforce this, the tax advantages claimed by Mr Galanty (such as the deductions for motor vehicle and other expenses at [58] above), align with the High Court’s observations in Jamsek [63] (at [64] above), that such tax benefits are irreconcilable with a contention of not conducting one’s own business. The simultaneous claim of employment status in this court, while maintaining a tax position of an independent enterprise with the ATO to secure financial advantages unavailable to employees, renders the institution of these proceedings unreasonable.
71 While Lai Qin and ONE.TEL caution against a court resolving the issue of costs by engaging in a hypothetical trial in proceedings that terminate before a hearing on the merits; Lai Qin and ONE.TEL provide that a costs order may be made where one party has acted so unreasonably such as to warrant the other party being awarded its costs, or alternatively, where both parties have acted reasonably but one party was almost certain to have succeeded if the matter had proceeded to a hearing on the merits.
72 Applying Lai Qin, Mr Galanty’s act of instituting the proceedings claiming to be an employee, in circumstances where his own evidence (at [58] above) demonstrates consistent selfrepresentation as a sole trader contractor, constitutes an unreasonable act that warrants Auscor being awarded its costs.
73 Applying the alternative in Lai Qin, if the matter had proceeded to trial, Auscor was almost certain to have succeeded. Mr Galanty’s own evidence aligns with his relationship with Auscor being one of contracting and not of employment. Mr Galanty’s own evidence (at [58] above) indicates that he was a sole trader prior to engaging with Auscor, he provided his own ABN to Auscor, issued invoices to Auscor, incurred expenses and claimed substantial deductions inconsistent with employment, and did not receive typical employee benefits during the relationship.
74 While Mr Galanty asserted that he instituted the proceedings because he held a genuine belief in his employment status, this assertion is difficult to reconcile with Mr Galanty’s own evidence (at [58] above). As Mr Galanty concedes in his Response to the Costs Application, he was represented throughout the proceedings. As outlined at [61] above, it is difficult to comprehend how Mr Galanty or his advisors, fully cognisant of the evidence at [58] above, specifically the tax benefits claimed as a business, could conclude that Mr Galanty had reasonable prospects of success in running a claim that directly contradicted his own conduct at [58] above. Objectively, the hallmarks of an independent enterprise (preexisting sole trader registration, the issuance of tax invoices charging GST, and substantial business deductions) overwhelmingly point to contractor status under the ‘own business/employer’s business’ dichotomy. Personnel Contracting [39] (at [49] of these reasons).
Mr Galanty’s subjective assertion of a genuine belief in his employment status, carries little weight when weighed against the objective evidence at [58] above. Accordingly, I find that Mr Galanty’s asserted genuine belief in his employment status to carry little weight, when it simultaneously requires him to ignore his own sworn declarations to the ATO that he was conducting a business.
75 Mr Galanty raised for the first time at the hearing that he considered his engagement with Auscor was one of sham contracting. As Mr Galanty was represented throughout the proceedings, and at no time during the proceedings (commenced by Originating Claim on 26 April 2023 and discontinued on 14 March 2025) was the suggestion of sham contracting raised, I accept the respondent’s submission that Mr Galanty’s assertion should be rejected.
76 Mr Galanty’s assertion of sham contracting should also be rejected on the grounds that it is directly contradicted by his own conduct at [58] above. Mr Galanty’s evidence (at [58] above) including pre-existing sole trader registration, issuance of invoices charging GST, and tax deductions for business expenses, demonstrate that he actively presented and benefited from the arrangement as a contracting relationship. The evidence indicates that Mr Galanty did not merely accept the label of contractor; rather, he utilised the contracting structure to his financial benefit including via the tax system. This contradicts Mr Galanty’s assertion that Auscor unilaterally misrepresented the relationship, or that he was a victim to Auscor misrepresenting the contract as a contract for services when Auscor reasonably believed the contract to be a contract of employment. Section 357 of the Act.

77 While Mr Galanty asserted at the hearing that he discontinued the proceedings due to financial reasons, no evidence was adduced to support this submission. In any event, the reason Mr Galanty discontinued the proceedings is irrelevant to the court’s consideration of whether he instituted the proceedings without reasonable cause. As outlined at [69] above, I have found that he did.
78 Given the objective weaknesses in Mr Galanty’s case, as demonstrated by his own evidence at [58] above, which Auscor placed Mr Galanty on notice of through the First Application, Second Application and Third Application (discussed further below at [86]–[105]), I am inclined to accept Auscor’s submission that the timing of Mr Galanty’s discontinuance (subsequent to the Third Application) supports the inference that Mr Galanty was aware of the weaknesses in his case and that his discontinuance amounted to an effective surrender to Auscor, as contemplated in ONE.TEL.
79 For the preceding reasons, I am satisfied that Mr Galanty instituted the proceedings without reasonable cause and should be ordered to pay Auscor’s costs pursuant to s 570(2)(a) of the Act.
80 As outlined in Nilsen, 3 (at [26] above), whether the proceedings were instituted vexatiously looks to Mr Galanty’s motive in instituting the proceedings, and is an alternative ground to the ground based on a lack of reasonable cause. In circumstances where I have found that Mr Galanty instituted the proceedings against Auscor without reasonable cause pursuant to s 570(2)(a) of the Act, I do not consider it necessary to determine whether he also instituted the proceedings vexatiously.
Did Mr Galanty’s unreasonable act or omission cause Auscor to incur costs?
81 While Auscor contended that Mr Galanty instituting the proceedings claiming to be an employee when he had consistently conducted himself as a contractor including with the ATO, constituted conduct that satisfied both s 570(2)(a) and (b), Auscor conceded that s 570(2)(b) is almost always relied upon for conduct during the course of proceedings. ts 5.

82 Auscor did not rely upon any authorities to support its contention that costs should be awarded under s 570(2)(b) for the institution of proceedings that are otherwise captured in s 570(2)(a).
83 In any event, where I have found that Mr Galanty should be ordered to pay Auscor’s costs for instituting the proceedings without reasonable cause, I consider it unnecessary to consider whether the same act (of instituting the proceedings) also constitutes an unreasonable act warranting a costs order under s 570(2)(b).
84 In the alternative to a costs order under s 570(2)(a), Auscor sought a costs order under s 570(2)(b) on the basis that Mr Galanty’s unreasonable acts/omissions during the course of the proceedings, caused it to incur costs.
85 As outlined at [79] above, I have found that Mr Galanty instituted the proceedings without reasonable cause and should be ordered to pay Auscor’s costs pursuant to s 570(2)(a) of the Act. If I had not made this finding, I would have found in the alternative that Mr Galanty should be ordered to pay Auscor’s costs pursuant to s 570(2)(b) of the Act, because his unreasonable acts/omissions during the course of the proceedings caused Auscor to incur costs, for the following reasons.
86 The First Affidavit was filed on 9 February 2024 as a result of the court order made on 12 December 2023 requiring Mr Galanty to provide discovery under oath, which order was subsequently varied by consent.
87 In the First Affidavit, which Mr Farrell deposed he was authorised by Mr Galanty to swear, Mr Galanty disclosed the following 14 documents:
Part 1 of Schedule – Documents in the control or possession of the claimant*/respondent*
Document number
Description of document
Claimant Document 1
Individual Tax Return 2013–2014
Claimant Document 2
Individual Tax Return 2014–2015
Claimant Document 3
Individual Tax Return 2015–2016
Claimant Document 4
Individual Tax Return 2016–2017
Claimant Document 5
Invoices Issued to Auscor Pty Ltd July 2021 – October 2021
Claimant Document 6
Business Activity Statement January – March 2018
Claimant Document 7
Business Activity Statement April – June 2018
Claimant Document 8
Business Activity Statement July – September 2018
Claimant Document 9
Business Activity Statement April – June 2019
Claimant Document 10
Business Activity Statement July – September 2019
Claimant Document 11
Business Activity Statement October – December 2019
Claimant Document 12
Business Activity Statement April – June 2020
Claimant Document 13
Business Activity Statement July – September 2020
Claimant Document 14
Business Activity Statement January – March 2021
88 The affidavit filed in support of the First Application on 21 February 2024, refers to the content of Mr Galanty’s tax returns for the 2013–2014, 2014–2015, 2015–2016 and 2016–2017 financial years, disclosed in the First Affidavit (at [87] above) as follows: (references omitted)
4. For the financial year 2013–2014, [Mr Galanty] declares that he is running a business with personal services income (PSI) of $98,069 and ‘total amount of other deductions against PSI’ as $7,644.
5. For the financial year 2014–2015, [Mr Galanty] declares that he is running a business with personal services income of $84,124 and ‘total amount of other deductions against PSI’ as $7,685.
6. For the financial year 2015–2016, [Mr Galanty] declares that he is running a business with personal services income of $74,850 and ‘total amount of other deductions against PSI’ as $8,479.
7. For the financial year 2016–2017, [Mr Galanty] declares at Item P5 that he is running a business but declares that he is not receiving personal services income. Instead, he declares that he is receiving ‘other business income’ of $77,946 and declares deductions of ‘motor vehicle expenses’ of $3,300 and a further amount for ‘all other expenses’ of $16,604. Total business expenses (and deductions) for that financial year were therefore $19,904.
8. It is submitted that [Mr Galanty’s] representations to the ATO, that he is running a business, together with significant business expense deductions claimed in the 4 financial years above are at odds with his claim that he was employed by [Auscor].
9. Particularly focusing on the 2016–2017 financial year. [Mr Galanty] makes deductions for business expenses of $19,904 against income of $77,946. The nature of the business expenses are presently unclear, but what is clear is that [Mr Galanty] has been using his business arrangement with [Auscor] (namely his contractor status) to gain tax advantages and that such behaviour is typical of a business operator.
10. It would be uncommercial for any taxpayer (including [Mr Galanty]) to incur such large expenses (for example $19,904 in the 2016–2017 financial year) and apply those expenses against their income generated unless they were operating a business. It would be common behaviour to incur such large expenses in business when the taxpayer/business person is either trying to establish themselves and or invest for the future by incurring larger expenses. This is unlikely to occur in an employment arrangement, where conversely, such expenses would be incurred by the employer.
11. It makes no sense at all to say that in the 2016–2017 financial year, that [Mr Galanty] earned $77,946 in wages but [then] incurred $19,904 in business expenses. The only logical conclusion available to the Court is that the $77,946 earned was business income, the $19,904 deductions were business expenses, and that [Mr Galanty] was running a business. In fact, [Mr Galanty] declared exactly that to the ATO. It is submitted that [Mr Galanty] could not have been an employee, must have been running a business and must have been a contractor.
12. [Mr Galanty], represents himself to the ATO as running a business in order to gain significant tax benefits. However, in an act of duplicity, [Mr Galanty], in filing his claim, represents himself to the Court as employee and seeks to claim significant benefits only available to an employee (long service leave, annual leave, annual leave loading, and public holiday payments). He is not entitled to any such amounts.
13. There is no dispute in this matter that [Mr Galanty] was engaged under an oral contract. We refer to paragraph 9 of [Auscor’s] outline of submissions 13.11.2023 (located on the Court file), where we submitted that in the case of an oral contract, the Court can look to the post contractual conduct of the parties to infer the terms of the oral contract.
14. It is submitted that the Court can have no difficulty inferring that the oral contract between the parties contained terms specifying that [Mr Galanty] was a contractor. The post contractual conduct of the parties (and particularly [Mr Galanty] interactions with the ATO) was consistent with such terms.
15. It follows that the claim has no reasonable prospect of succeeding.
16. Furthermore, because of the operation of [s 570 of the Act], [Auscor] may have limited ability to recover its costs if the matter proceeds to hearing and is ultimately dismissed. It is submitted that [Auscor] should be spared the expense of having to continue with this matter to hearing. The Court’s resources should also be saved.
89 It is evident from the affidavit at [88] above, that Auscor had placed Mr Galanty on notice of its concerns about his case. Specifically, that in the four financial years from 2013–2017, Mr Galanty had declared to the ATO that he is running a business. Furthermore, that based on Mr Galanty’s own conduct, that Auscor would be seeking to argue that the oral contract between the parties contained terms specifying that Mr Galanty was a contractor. The affidavit stated that ‘[i]t follows that the claim has no reasonable prospect of succeeding.’ Auscor also referred to a contemplation of its ability to recover its costs under s 570 of the Act.
90 The affidavit at [88] above, was served on Mr Galanty together with notice that the First Application was listed for hearing on 5 March 2024. The court file indicates that due to Mr Galanty’s agent’s unavailability on 5 March 2024, and taking into account Auscor’s and the court’s availability, that the hearing was re-listed on 18 March 2024.
91 Prior to the hearing on 18 March 2024, Mr Galanty filed the Second Affidavit and Third Affidavit, on 11 March 2024.
92 In the Second Affidavit, Mr Galanty disclosed the following 15 documents:
Part 1 of Schedule – Documents in the control or possession of the claimant*/respondent*
Document number
Description of document
Claimant Document 1
Individual Tax Return 2013–2014
Claimant Document 2
Individual Tax Return 2014–2015
Claimant Document 3
Individual Tax Return 2015–2016
Claimant Document 4
Individual Tax Return 2016–2017
Claimant Document 5
Individual Tax Return 2017–2018
Claimant Document 6
Invoices Issued to Auscor Pty Ltd July 2021 – October 2021
Claimant Document 7
Business Activity Statement January – March 2018
Claimant Document 8
Business Activity Statement April – June 2018
Claimant Document 9
Business Activity Statement July – September 2018
Claimant Document 10
Business Activity Statement April – June 2019
Claimant Document 11
Business Activity Statement July – September 2019
Claimant Document 12
Business Activity Statement October – December 2019
Claimant Document 13
Business Activity Statement April – June 2020
Claimant Document 14
Business Activity Statement July – September 2020
Claimant Document 15
Business Activity Statement January – March 2021
93 The documents disclosed with the Second Affidavit were the same as those disclosed with the First Affidavit, with the addition of Mr Galanty’s tax return for the 2017–2018 financial year.
94 Accordingly, the issues raised in the affidavit (at [88] above), apply equally to the Second Affidavit as they do to the First Affidavit.
95 Relevantly, in the Second Affidavit, Mr Galanty swore to the truth of the statements of fact made in the affidavit, and swore to the documents listed in Part 1 of the Schedule (at [92] above), as having ‘been filed with this affidavit’.
96 I am persuaded by Auscor’s submissions that the apparently contradictory statements made in the First Affidavit and Second Affidavit, which Mr Galanty did not correct on the filing of the Second Affidavit and Third Affidavit on 11 March 2024, in circumstances where Mr Galanty was on notice in relation to the apparent contradictions between his case and the documents disclosed with the First Affidavit, had the potential to mislead the court and Auscor.
97 Mr Galanty bore the responsibility to depose to, and file, accurate affidavits. Therefore, I consider that Mr Galanty’s failure to depose to, and file, accurate affidavits, and his failure to explain the apparent contradictions in his affidavits, to be unreasonable.
98 Furthermore, I am satisfied that Mr Galanty’s unreasonable conduct in not ensuring the truth of the statements of fact made in the affidavits of discovery, and not explaining the apparently contradictory statements made in the affidavits of discovery, necessitated Auscor filing the First Application and the Second Application.
99 It was only in the Fourth Affidavit, filed following the Fourth Discovery Order, made at the hearing of the Second Application, that Mr Galanty produced his tax returns after filing them with the ATO, and produced his BAS filings. However, the Fourth Affidavit raised other apparently contradictory statements made under oath, which I am satisfied constituted an unreasonable act or omission, which necessitated Auscor filing the Third Application.
100 As the claimant, Mr Galanty bore the responsibility to actively prosecute his matter. However, his conduct included delayed compliance, or noncompliance, with court orders.
101 The court orders made on 24 September 2024 required Mr Galanty, if he opposed the Third Application, to lodge a response to the Third Application by 21 October 2024. Mr Galanty did not lodge a response to the Third Application by 21 October 2024, or at all.
102 The Third Application was listed for hearing on 12 November 2024. At the hearing, the court ordered the matter be listed for a pre-trial conference before the Clerk of the Court, which was ultimately held on 30 January 2025.
103 On 7 February 2025, the court wrote to Mr Galanty requesting him to confirm by 11 February 2025, whether he opposes the Third Application, and if so, to advise when a response to the Third Application could be expected.
104 On 11 February 2025, Mr Galanty’s solicitors (MKI Legal) advised the court that they were still seeking Mr Galanty’s instructions in relation to providing a response to the Third Application and were expecting to further advise the court within 21 days.
105 As outlined at [11]–[12] above, on 13 March 2025, MKI Legal notified the court that it ceased to represent Mr Galanty, and on 14 March 2025, Mr Galanty discontinued his claim.
106 For the reasons outlined at [86]–‍[105] above, I am satisfied that Mr Galanty’s unreasonable acts or omissions (non-compliance with court orders and apparently contradictory affidavits), necessitated Auscor filing multiple applications (including for summary judgment and default judgment) and caused Auscor to incur the costs of these applications (the First Application, Second Application and Third Application).
107 Auscor’s offer was made on 18 November 2024, within a week of the hearing of the Third Application on 12 November 2024, and before the pre-trial conference was held before the Clerk of the Court (as outlined at [102] above, this was held on 30 January 2025).
108 As outlined at [6(ee)] above, Auscor proffered a ‘walkaway’ offer, that was open for acceptance until 29 November 2024.
109 In all the circumstances of this matter, I find Mr Galanty’s failure to accept Auscor’s ‘walkaway’ offer to be unreasonable. Applying Cheng, I find Auscor’s offer to be a reasonable one, particularly given the weaknesses in Mr Galanty’s case, and the point in the proceedings when the offer was made. At the time the offer was made, Auscor had placed Mr Galanty on notice through the First Application, Second Application and Third Application, of the apparent contradictions in Mr Galanty’s sworn evidence in his affidavits of discovery, and of the apparent contradictions between his discovered documents and his Originating Claim. Auscor had placed Mr Galanty on notice through the affidavit filed in support of the First Application on 21 February 2024, that based on Mr Galanty’s discovered documents, it considered his claim as having no reasonable prospect of succeeding, and that it was contemplating its ability to recover its costs under s 570 of the Act.
110 Auscor’s offer presented a genuine compromise; that Auscor would forego its right to pursue costs, in exchange for Mr Galanty discontinuing a claim in which it considered he had no reasonable prospect of success.
111 I consider Auscor’s offer to have been reasonable, which means Mr Galanty’s failure to accept it was an unreasonable omission, and that applying Cheng, Auscor has demonstrated the ‘something more’ in all the circumstances of this matter.
The costs orders to be issued
112 For the reasons at [45]–‍[79] above, I find that the proceedings were instituted without reasonable cause, and that Mr Galanty should be ordered to pay Auscor’s costs pursuant to s 570(2)(a) of the Act.
113 The remaining issues are the period of time which the costs orders should cover and whether indemnity costs should be ordered.
114 In relation to the period of time, I am satisfied that Mr Galanty’s own objective records and knowledge of his own business affairs (through his conduct at [58] above) from the outset, and his knowledge that when he instituted the Originating Claim that the law was settled by Personnel Contracting and Jamsek, warrant the issuance of an order for Mr Galanty to pay Auscor’s costs pursuant to s 570(2)(a) from 26 April 2023, to be taxed if not agreed.
115 Auscor seeks a costs order under s 570(2)(b) in the alternative to a costs order under s 570(2)(a). Where I consider it appropriate for the order at [79] above to issue, it would be unnecessary to issue an order under the alternative provision (s 570(2)(b)).
116 If I was not persuaded to issue the order at [79] above, and it was necessary to consider the issuance of an order under s 570(2)(b), I would have issued an order for Mr Galanty to pay Auscor’s costs pursuant to s 570(2)(b) from 9 February 2024 (the date the First Affidavit was filed). This is because I am persuaded by the respondent’s submissions (at [8(j)] above), that upon preparing and filing the First Affidavit on 9 February 2024, producing Mr Galanty’s tax returns for the financial years 2013–‍2017, it would have been readily apparent to Mr Galanty, and his advisors, that Mr Galanty’s own evidence wholly aligns with him operating his own business (Phillink), and having conducted himself in a manner wholly consistent with him engaging in his own business for many years.
117 As outlined at [48] above, Mr Galanty accepts that when he filed the Originating Claim, the law was settled by Personnel Contracting and Jamsek. As outlined at [64] above, Kiefel CJ, Keane and Edelman JJ said in Jamsek [63] that the respondents incurring expenses and taking advantage of tax benefits available only to businesses, was irreconcilable with the contention that they were not conducting a business of their own.
118 At the hearing, Auscor conceded that Mr McCoy and Auscor had common legal representation, such that Mr McCoy’s costs were Auscor’s costs and vice versa during the period that Mr McCoy was the second respondent to these proceedings. Auscor acknowledged that Mr McCoy was the sole director of Auscor. ts 26.
In circumstances where Auscor’s legal representatives would have needed to take instructions from Mr McCoy in relation to the claim against Auscor, it is difficult to see how the costs Mr McCoy incurred in defending the claim against him as the second respondent, would be different to the costs incurred by Auscor in defending the claim against it as the first respondent. Accordingly, I am not inclined to make an order that Mr Galanty pay Mr McCoy’s costs.
119 However, I am inclined to issue an order for Mr Galanty to pay Auscor’s costs on the Costs Application.
120 In relation to whether indemnity costs should be ordered, I am not satisfied that they should, for the reasons that follow.
121 As outlined at [18] above, it is for Auscor to clearly demonstrate its case for seeking the orders sought in its Costs Application (at [3] above): (emphasis added)
That the claimant pay the respondent’s costs pursuant to section 570(2)(a) and alternatively 570(2)(b) of the Fair Wok Act 2009 on an indemnity basis from 26 April 2023 (the commencement of the claim), to be taxed if not agreed.
122 While Auscor sought orders for Mr Galanty to pay its costs on an indemnity basis, to be taxed if not agreed, Auscor did not satisfy me of the following:
(a) That the costs in this matter should not be subject to the Legal Profession (Magistrates Court) (Civil) Determination 2022 and the Legal Profession (Magistrates Court) (Civil) Determination 2024. Buchanan v G&R Rossen Pty Ltd [2020] WAIRC 00388.

(b) That Rodwell v Hutchinson [2010] WASCA 197 does not apply to limit this court’s power to award indemnity costs.
123 As outlined at [8(i)] above, Auscor contended that if the court was not satisfied that an indemnity costs order should issue, then in the alternative, an order for ‘ordinary costs’ should issue.
124 Accordingly, I will issue an order for Mr Galanty to pay Auscor’s costs pursuant to s 570(2)(a) of the Act, on a party and party basis, from 26 April 2023, to be taxed if not agreed.
Conclusion
125 For the preceding reasons, I find that Mr Galanty instituted the proceedings without reasonable cause.
126 Therefore, I consider that an order requiring Mr Galanty to pay Auscor’s costs in the proceedings, including its costs on the Costs Application, pursuant to s 570(2)(a) of the Act, from 26 April 2023, on a party and party basis, to be taxed if not agreed, should be issued.
127 I will list the matter for a Directions Hearing to hear from the parties on whether the parties should attend a conference before the Clerk of the Court to give them an opportunity to agree the costs, and on any other orders to be issued to give effect to these reasons.




C. TSANG
INDUSTRIAL MAGISTRATE