On 26 April 2023, an electrical technician (the claimant) lodged a claim against Auscor Pty Ltd (respondent) and its sole director (former second respondent), alleging breaches of both the Fair Work Act 2009 (Cth) (FWA) and the Long Service Leave Act 1958 (WA). The claimant claimed he was an employee entitled to annual leave, public holiday pay, leave loading, and long service leave, which he had not received from the respondent during the period 8 October 2012 to 9 September 2021, totalling $86,674.24. The claimant also sought interest and penalties. Throughout the proceedings, the respondents maintained the claimant was an independent contractor and not entitled to the amounts sought in the claim. On 14 March 2025, after proceedings had continued for almost two years, the claimant discontinued the claim.

On 28 March 2025 the respondent filed an application with the Court (Costs Application) which sought that the claimant pay both the respondent’s and former second respondent’s costs on an indemnity basis from 26 April 2023, to be taxed if not agreed. The respondent also sought their costs on the Costs Application. The respondent sought the order for costs under s 570(2)(a), and alternatively s 570(2)(b), of the FWA. Section 570(2)(a) allows the Court to issue costs where claims are instituted vexatiously or without reasonable cause, while s 570(2)(b) allows costs orders when an unreasonable act or omission by a party has caused the other party to incur costs. The Costs Application was heard on 21 July 2025 before the Industrial Magistrate.

The respondent contented that the claimant instituted the proceedings vexatiously without reasonable cause, stating that the claim was legally hopeless from its inception and that the claimant knew at all times that he had only ever worked for the respondent as a contractor, not an employee. Evidence of this working relationship included the claimant’s own business records, his registration as a sole trader with an Australian Business Number, issuance of tax invoices (charging GST), and tax returns or Business Activity Statement filings declaring business income and claiming significant business expense deductions. The respondent referred to an affidavit, filed by the claimant on 28 February 2024, which they said explained repeated declarations made by the claimant to the Australian Tax Office that the claimant was running his own business for personal services, the business expense tax deductions claimed by the claimant over numerous years, and that the case, contradicted by the claimant’s own documents, had no reasonable prospect of succeeding. Further, the respondent argued the claimant engaged in unreasonable acts and omissions and caused the respondents to incur costs by repeatedly failing to comply with Court orders, made false statements in affidavits and ignored a reasonable walkaway offer of settlement. The respondent said these actions significantly extended the time and costs incurred by the respondents in the proceedings.

The claimant contested that there was no evidence his motive in commencing the claim was anything other than having a genuine belief his contract with the respondent was one of employment and that he was entitled to payment of his claimed entitlements. Although self-represented at the time of the Application, the claimant raised that he had been represented through the proceedings by an industrial agent, and it could be inferred that prior to commencing the claim, he had received advice that his claim had chances of success. He further contested that it could not be said his claim was instituted without reasonable cause. The claimant submitted he had left it to his industrial agent to set out his claim and was not responsible for its content.

After considering the parties’ respective cases and applying principles from the decisions that each party relied upon, the Industrial Magistrate found that the claimant instituted the proceedings without reasonable cause. Her Honour found it was difficult to comprehend how the claimant or his advisors could conclude he had reasonable prospects of success given the evidence overwhelmingly pointed to the claimant being a contractor. Her Honour determined that pursuant to s 570(2)(a) of the FWA, an order requiring the claimant to pay the respondent’s costs in the proceedings from 26 April 2023, on a party and party basis, to be taxed if not agreed, should be issued. Her Honour was satisfied that this should include the respondent’s costs on the Costs Application, however, was not inclined to make an order that the claimant pay the former second respondent’s costs.

The full decision can be read here.