Even airtight documentary evidence couldn't shift the Fair Work costs rule
A worker accused a colleague of physical assaults at work. The employer had records it said showed the incidents never happened. The court still refused to award costs.
On 7 May 2026, the Federal Circuit and Family Court of Australia (Division 2) handed down its decision in Fezzuoglio v Employers Mutual Management Pty Ltd [2026] FedCFamC2G 736, dismissing the employer's bid to recover legal costs after the former employee discontinued her case by consent.
The worker, Sara Fezzuoglio, had filed her original application on 19 September 2024. The proceeding concerned complaints she said she had raised in the workplace, which on the Respondent's case underpinned allegations said to have been workplace rights under the Fair Work Act 2009 (Cth). Those complaints centred on allegations that a colleague, Ms Davis, had physically assaulted her at work and at after-work events.
The employer's response was, by any measure, forensic. In its submissions, Employers Mutual Management told the court that the alleged events simply did not occur. The applicant, it said, was not in the office on 28 April 2024, the date she had listed as her date of injury on her workers' compensation claim form, and that date was a Sunday. The employer also told the court that the drinks event did not occur, and that Ms Davis had never caught her hair in an escalator, an incident the applicant had referenced. Separately, the employer said Ms Davis was also not in the office on 28 April 2024.
Ms Davis denied assaulting the applicant. According to the employer's submissions, no other person saw any such assaults occur, despite the alleged incidents taking place in front of coworkers and at work or after-work events. A review of MS Teams messages for the relevant team (Team S21) turned up no reference to the applicant being struck, no mention of anyone's hair being caught in an escalator, and no mention of Ms Davis attending drinks during or after work.
Human Resources records also came under the microscope. The employer told the court that HR Department records indicated the applicant never made a complaint about being struck or assaulted by any person. Annabel Evans, a Senior HR Business Partner, denied that the applicant raised any such complaint with her, including at a meeting on 12 June 2024, and her notes of that meeting contained no reference to one. Nicole Medway, Senior Manager, NI (Nominal Insurer) SM&S Claims Operation 2 Segment, denied receiving a written statement from the applicant raising bullying and sexual harassment allegations in late June 2024.
At a meeting on 3 July 2024 attended by the applicant, Ms Evans, Ms Medway and Kimberley Wnyon (Manager, Recovering Independence), the applicant admitted that she had breached confidentiality and sent inappropriate MS Teams messages, two of the three reasons for her dismissal. Yolanda Testini, a Team Leader in Team S21, denied attending drinks with the applicant and said she had never seen Ms Davis strike the applicant or have her hair caught in an escalator. The employer also submitted that the decision to terminate the applicant's employment was not because of any of the alleged complaints, and that the relevant decision-maker only became aware of the facts underlying the alleged complaints after termination.
The employer argued that, on this evidence, the applicant did not have a genuine grievance and the matter did not enjoy reasonable prospects at the time it was initiated. The costs application was brought under s 570(2)(a) of the Fair Work Act 2009 (Cth), and was opposed by the applicant.
Judge Laing was not persuaded. The judge accepted that the material facts set out in the Statement of Claim, if proven, at least potentially disclosed a cause of action under the Fair Work Act. The proceeding was proposed to be discontinued before evidence was filed in support of (or against) the matters pleaded, and before such evidence had been tested through disclosure or cross-examination.
Citing earlier authority, the judge noted it "will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits", particularly "where a trial on the merits would involve complex factual matters where credit could be an issue".
The judge also quoted with approval an earlier observation that "It is not necessarily unreasonable for an employee to have a view of a set of facts quite at odds with the reality, simply because the employee possesses incomplete or imperfect information."
The judge found that resolution of factual disputes at trial would likely have turned, to a significant extent, on questions of credit, and was not satisfied that the applicant had instituted the proceeding vexatiously or without reasonable cause. The interlocutory costs application, filed on 22 December 2025, was dismissed.
The decision is a reminder that costs orders against employees in Fair Work matters remain exceptional, even when documentary evidence looks compelling on paper. It also illustrates the weight courts place on contemporaneous HR records, meeting notes, and communications audits when the facts of a workplace dispute are contested. Building that paper trail in real time is what shapes the outcome long before any costs argument is heard.
