Fair Work Ombudsman v Construction, Forestry and Maritime Employees Union (Kwinana Bulk Jetty Case) (Costs) [2026] FCA 126

This case is a costs ruling that came after a larger Fair Work Act dispute about conduct at a picket at the Kwinana Bulk Jetty, Fremantle Harbour, on 24 August 2021. In the earlier liability judgment, the Federal Court found that Jason Gill, a union member, made threatening and intimidating statements to Christopher Copperthwaite, a Qube Ports employee who continued to work through protected industrial action. The Court found that Mr Gill’s conduct breached various provisions of the Fair Work Act.

The union, however, was in a different position. Justice Dowling did not find the Construction, Forestry and Maritime Employees Union liable for Mr Gill’s conduct or for the conduct of unknown persons at the jetty. That result set up the later dispute about legal costs. The union said that the Fair Work Ombudsman should have recognised before trial that the case against the union had major defects and should have discontinued it.

The proceedings had been on foot since March 2022. Defences were filed in July 2023. The matter was listed for hearing from 1 July 2024. In May 2024, the Ombudsman obtained leave to file an amended statement of claim and amended outlines of evidence. The amended statement of claim was filed on 24 May 2024. The union filed an amended defence on 5 June 2024. The Ombudsman filed opening submissions on 15 June 2024 and the union filed opening submissions on 24 June 2024.

On 25 June 2024, with the hearing only six days away, the union sent a settlement offer. It proposed that the Ombudsman discontinue the proceedings against the union and that there be no order as to costs, so each side would bear its own costs. The letter said the Ombudsman’s case against the union was problematic and referred to the union’s written submissions filed the previous day.

The offer stayed open until 4.00 pm AWST on Friday 28 June 2024. The Ombudsman rejected it later that day, at 5.59 pm AWST, and said she remained open to resolving the matter if the union admitted a sufficient number of the pleaded contraventions. The trial then proceeded. It had been listed for five days and ran for four days on 1 to 3 July 2024 and 18 July 2024.

After the union later succeeded in defeating the claims against it in the liability judgment, it sought its costs from 29 June 2024 onward. It said the Ombudsman’s rejection of the offer was an unreasonable act under section 570(2)(b) of the Fair Work Act and had caused the union to incur further costs preparing for and running the trial.

The legal issue was narrow but commercially important. Section 570 of the Fair Work Act limits when a court can order one party to pay another party’s costs in proceedings arising under the Act. Unlike ordinary commercial litigation, costs do not simply follow the event. A party who wins is not automatically entitled to recover its legal spend.

The union relied on section 570(2)(b), which allows a costs order if the Court is satisfied that an unreasonable act or omission by one party caused the other party to incur costs. The union argued that the Ombudsman’s rejection of the 25 June 2024 settlement offer was such an unreasonable act.

The Court began by restating the general principles. The discretion under section 570(2) must be exercised cautiously, and the case for using it should be clear. The reason for that caution is policy-based. Fair Work litigation should not be run under such a heavy threat of costs that parties are discouraged from bringing, defending or properly responding to claims under the Act. Unreasonableness is assessed objectively and in context. Inefficient or misguided conduct may be relevant, but it is not automatically enough.

The Court also confirmed that failing to accept a reasonable settlement offer, including a Calderbank-style offer, can in some cases amount to an unreasonable act for section 570(2)(b). But that depends on the circumstances.

Justice Dowling then referred to the factors identified in Patrick Stevedores Holdings Pty Ltd v CFMMEU (No 5) for assessing whether rejection of a settlement offer was unreasonable. Those factors were central to the analysis here. They were: the stage of the proceeding when the offer was made, the time given to consider it, the extent of compromise involved, the offeree’s prospects of success assessed at the date of the offer, the clarity of the terms, and whether the offer foreshadowed a later costs application.

So the Court was not simply asking whether the union eventually won. It had to decide whether, at the time the offer was rejected, it was objectively unreasonable for the Ombudsman to continue with the case against the union.

On timing, the Court accepted that the offer was made late. It was sent on 25 June 2024, only six days before the hearing started on 1 July 2024. The Court did acknowledge that the offer came about one month after the amended statement of claim was filed and ten days after the Ombudsman’s written submissions were filed. Even so, the offer arrived very close to trial.

On the time allowed to consider the offer, the Court found that the Ombudsman had about three days. The offer was sent at 2.45 pm AWST on Tuesday 25 June 2024 and remained open until 4.00 pm AWST on Friday 28 June 2024. Justice Dowling described that as a short window, even allowing for the fact that the trial was due to start the following Monday. These timing considerations weighed in favour of the rejection not being unreasonable.

On the extent, clarity and terms of the offer, the Court accepted some of the Ombudsman’s criticisms. The letter did not identify whether it was being made as an offer of compromise under rule 25.01 of the Federal Court Rules or as a Calderbank offer. That said, it did clearly state that the union would rely on the correspondence for a costs application under section 570(2)(b) if the offer was rejected.

The Ombudsman also complained that the letter referred generally to the union’s submissions filed on 24 June 2024 without directly identifying the specific parts relied on. The Court accepted that criticism to a point. The letter set out three propositions about weaknesses in the Ombudsman’s case, but it did not work through every pleaded pathway to union liability and explain in detail why each one had to fail. Justice Dowling nevertheless made some allowance for the letter to be read together with the union’s written submissions from the previous day. Overall, these considerations did not weigh strongly either way.

The most important factor was the Ombudsman’s prospects of success at the time of the offer. The union argued that the case against it was unsustainable, without merit and effectively doomed. The Court rejected that characterisation. Although the Ombudsman ultimately failed to establish the union’s liability, Justice Dowling was not satisfied that the Ombudsman’s prospects were so poor at the time of the offer that continuing was objectively unreasonable.

The Court pointed to several matters. First, the Court had accepted Mr Copperthwaite’s identification of Mr Gill and found that Mr Gill’s conduct contravened sections 343, 346 and 348. Second, the Court had accepted that the union organised and promoted the picket and that several of the pleaded events of 24 August 2021 occurred. Third, the liability judgment had given detailed consideration to each of the Ombudsman’s arguments about the union’s liability. The Court said it did not reject those arguments lightly. In relation to at least some of them, there was no direct authority either way on the question of union liability in the circumstances of this case.

That reasoning is important. The Court was saying that a case can fail after full argument and still not have been unreasonable to run. Fair Work costs are not awarded just because one side’s legal theory did not succeed. Pursuing contentious claims does not itself justify an adverse costs order under section 570.

The Court also took into account the practical setting. At the time of the offer, the matter was about to proceed to a five-day trial, with outlines and viva voce evidence. In that context, the Court was not persuaded that the Ombudsman acted unreasonably by pressing on.

Justice Dowling dismissed the union’s application for costs. On balance, and taking all the circumstances into account, the Court was not satisfied that the Ombudsman’s rejection of the settlement offer was unreasonable so as to enliven a costs order under section 570(2)(b).

The Court’s reasoning can be summarised this way. The offer was made late. The response period was short. The offer did not fully spell out every alleged defect in the Ombudsman’s case, even though it did refer to the union’s written submissions and did foreshadow a later costs application. Most importantly, the Ombudsman’s case against the union was not shown to be clearly hopeless at the time the offer was rejected. The fact that the union later succeeded did not prove that the Ombudsman had acted unreasonably in continuing to trial.

The Court also dealt with the union’s argument that the Ombudsman, as an officer of the Commonwealth and a model litigant, should be held to a higher standard and should not subject parties to unmeritorious claims. Justice Dowling rejected the suggestion that model litigant obligations changed the legal standard under section 570. Referring to authority about Commonwealth model litigant obligations, the Court held that those obligations did not alter the approach or standard to be applied when assessing costs against the Ombudsman under section 570.

So the final position was this: the union had defeated the substantive claims against it in the earlier liability judgment, but it still had to bear its own costs of the proceeding from 29 June 2024 onward.

For business owners, this case is a reminder that workplace litigation often operates under a different costs framework from ordinary contract, debt or shareholder disputes. In many commercial cases, parties expect that the loser will usually pay at least part of the winner’s costs. Fair Work Act proceedings are different. Section 570 narrows the circumstances in which costs can be awarded, and courts apply that power cautiously.

That means a business can successfully defend a Fair Work claim and still be left to absorb its own legal costs. The same is true in reverse. A business bringing or defending a workplace claim should budget on the basis that costs recovery may be limited unless there is a clear statutory basis for it.

This decision also shows how settlement strategy affects later costs arguments. If you want to rely on a settlement offer as evidence that the other side acted unreasonably, the offer should be made early enough to be properly assessed. It should clearly identify the legal and factual weaknesses you say make the case untenable. It should also make the intended costs consequences plain. A letter sent just before trial may still be useful, but it may have less force if the other side has only a short time to evaluate it and the issues remain genuinely arguable.

Businesses should also be careful not to confuse a weak case with an unreasonable one. The Court accepted that the Ombudsman’s arguments ultimately failed, but still held that it was not unreasonable to run them. That distinction matters when deciding whether to spend time and money on a costs application after winning the main case.

The underlying liability issues in this matter also show how complex industrial disputes can become. The Ombudsman had advanced multiple pathways to union liability, including direct liability for organising the picket, attribution through agency and statutory provisions, accessorial liability, and common law vicarious liability. Even where those arguments fail, they may still require detailed evidence and legal analysis. For employers operating in unionised environments, disputes involving industrial action, picketing or alleged intimidation can quickly move beyond simple factual questions and into difficult issues of attribution and responsibility.

In practice, businesses should get advice early, preserve documents and communications, and think carefully about both liability and costs strategy. A sensible settlement offer can still be valuable, but it should be part of a broader litigation plan rather than a last-minute attempt to create a later costs argument.

If your business is close to a Fair Work hearing and considering a settlement offer, this case suggests a few practical steps. First, do not leave the offer until the eve of trial if you can avoid it. Second, explain the basis of the offer clearly enough that the other side can fairly assess it. Third, remember that even a well-pitched offer does not guarantee a later costs order. The Court will still ask whether rejection was objectively unreasonable in context.

If you are on the receiving end of an offer, the judgment shows that rejecting it will not automatically expose you to costs just because you later lose. The Court will look at what was reasonably apparent at the time, including whether the case was genuinely arguable and whether there was enough time to assess the proposal properly.

The costs judgment was delivered by Dowling J on 20 February 2026 in the Federal Court of Australia. It followed the earlier liability judgment in Fair Work Ombudsman v Construction, Forestry and Maritime Employees Union (Kwinana Bulk Jetty Case) [2025] FCA 994. The costs issue was determined on the papers after neither party requested an oral hearing on costs.

The order made was that the first respondent’s application for costs be dismissed.