Alka Kumari v Metro Trains Melbourne

[2017] FWC 2615

[2017] FWC 2615

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Alka Kumari
v
Metro Trains Melbourne
(U2016/9610)

COMMISSIONER WILSON MELBOURNE, 17 MAY 2017

Application for costs orders against a party involved in an application for an Unfair Dismissal Remedy; costs order refused. Dispute regarding order for lost remuneration; lost remuneration assessed as earnings the employee would have received had she been at work, less deduction related to employee’s lack of cooperation with investigation.

INTRODUCTION

[1] Through a decision published by the Commission on 1 February 2017, Alka Kumari was found to have been unfairly dismissed by Metro Trains on 1 July 2016 and an order for reinstatement of Ms Kumari, maintenance of the continuity of her employment and continuous service and for the payment of lost remuneration was issued by the Commission. 1 Liberty to apply was granted to the parties for the purposes of settling the order for lost remuneration only.

[2] Subsequent to the issuing of the decision Ms Kumari returned to her former employment on 15 February 2017.

[3] The parties have been unable to agree the quantum of lost remuneration which should be provided to Ms Kumari. Separately Ms Kumari seeks an order for costs against Metro Trains in relation to her legal costs in the original hearing.

[4] A hearing in relation to the costs application and the dispute between the parties about the quantum of lost remuneration was held on Friday, 21 April 2017. This decision concerns both matters.

[5] For the reasons set out below, I dismiss the costs application and determine that lost remuneration should be assessed as earnings the employee would have received had she been at work, less a deduction related to Ms Kumari's lack of cooperation with the investigation conducted by Metro Trains.

BACKGROUND TO THE COSTS APPLICATION

[6] The hearing of the merits of the matter was conducted by me on 19 and 20 January 2017 and at that hearing Ms Kumari was represented by Maurice Blackburn, solicitors, and Joel Fetter, of Counsel. Metro Trains was represented by Jessica Gillam, its Employee Relations Consultant.

[7] Ms Kumari seeks an order for the payment of her costs of representation which she puts at $27,500.01.

[8] The costs application made by Ms Kumari was received in the Commission on 15 February 2017 in the specified form.

[9] However, likely labouring under a misapprehension, Ms Kumari, then represented by her husband Ashok Soeny, in response to a question on the relevant form “Under which section(s) of the Fair Work Act 2009 are you making this application?” ticked each of the four available boxes, two of which relate to costs against parties in general protections matters and unlawful termination matters, which plainly this application is not. As a result I proceed to determine this application on the basis that it relates to the other two indicated boxes, both of which relate to unfair dismissal matters, namely an application pursuant to s.400A (Costs against parties in unfair dismissal matters) and s.611 (General provision in relation to costs).

[10] The submissions made by Mr Soeny on behalf of Ms Kumari in relation to costs put forward that Ms Kumari was initially concerned once she had seen the Respondent's outline of submissions which she took to be the continuation of false and inaccurate claims in the earlier part of the investigation.

[11] One of the matters the Applicant took issue with was the claim that Ms Kumari had tried to steal money through two different mechanisms; selling cloned Myki cards, as well as endeavouring to steal Myki cards with a transferable balance. She was further concerned after a telephone mention hearing before Deputy President Clancy on 4 November 2016 at which she considers further false claims were made against her. Until that time Ms Kumari had been planning to argue the case herself but through the representation of her husband Mr Soeny, but says that at that point it became clear to Ms Kumari that Metro Trains “was determined to mislead and prejudice the mind of anyone who hears the case unless she is represented by an experienced barrister to argue her case as she was innocent and had done nothing wrong”.

[12] In the costs hearing Mr Soeny elaborated upon these matters, as well as putting forward that the costs incurred by him and his wife were forced upon them by circumstance and that the Respondent did not have a case from the very beginning.

[13] In response to these matters Metro Trains argue that at all times it believed it had reasonable evidence to conduct the investigation into Ms Kumari and to then terminate her employment, although properly conceding that in hindsight those beliefs were not sufficient in the Commission's eyes. The company maintained the case was worthy of consideration and this was not a case of Metro Trains having acted unreasonably or vexatiously when it commenced the investigation into Ms Kumari or decided upon her subsequent termination. Metro Trains also put forward that this was not a case in which it should have been reasonably apparent to it that it had no reasonable prospects of success if the matter were to continue.

LEGISLATION

[14] Section 400A of the Act provides as follows;

400A Costs orders against parties

(1) The FWC may make an order for costs against a party to a matter arising under this Part (the first party) for costs incurred by the other party to the matter if the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter.

(2) The FWC may make an order under subsection (1) only if the other party to the matter has applied for it in accordance with section 402.

(3) This section does not limit the FWC’s power to order costs under section 611.

[15] Relevantly, section 400A was inserted into the Act by virtue of the Fair Work Amendment Act 2012. The Explanatory Memorandum to the Fair Work Bill 2012 provides;

“168. Item 4 inserts a new section 400A to enable the FWC to order costs against a party to an unfair dismissal matter (the first party) if it is satisfied that the first party caused the other party to the matter to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the matter.

169. As with the new power to dismiss applications under section 399A, the power to award costs under section 400A is not intended to prevent a party from robustly pursuing or defending an unfair dismissal claim. Rather, the power is intended to address the small proportion of litigants who pursue or defend unfair dismissal claims in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.

170. The FWC's power to award costs under this provision is discretionary and is only exercisable where the first party (whether the applicant or respondent) causes the other party to incur costs because of an unreasonable act or omission. This is intended to capture a broad range of conduct, including a failure to discontinue an unfair dismissal application made under section 394 and a failure to agree to terms of settlement that could have led to the application being discontinued.

171. However, the power to award costs is only available if the FWC is satisfied that the act or omission by the first party was unreasonable. What is an unreasonable act or omission will depend on the particular circumstances but it is intended that the power only be exercised where there is clear evidence of unreasonable conduct by the first party.”

[16] Section 611 of the Act provides as follows:

611 Costs

(1) A person must bear the person’s own costs in relation to a matter before the FWC.

(2) However, the FWC may order a person (the first person) to bear some or all of the costs of another person in relation to an application to the FWC if:

(a) the FWC is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or

(b) the FWC is satisfied that it should have been reasonably apparent to the first person that the first person’s application, or the first person’s response to the application, had no reasonable prospect of success.

Note: The FWC can also order costs under sections 376, 400A, 401 and 780.

(3) A person to whom an order for costs applies must not contravene a term of the order.

Note: This subsection is a civil remedy provision (see Part 4 1).

CONSIDERATION – COSTS

[17] Section 400A of the Act allows for costs orders to be made if the Fair Work Commission is satisfied that costs were incurred because of an unreasonable act or omission of a party in connection to the conduct of the case. The Commission’s power to award costs under this provision of the Act is discretionary. There is also a requisite causal link between the act or omission and the costs being incurred.

[18] Section 611 allows for an order to be made for the payment of costs if the Commission is satisfied that a party’s application or response to an application was vexatious, without reasonable cause or if the Commission is satisfied that the application or a party’s response to an application had no reasonable prospect of success.

[19] As a general rule each party must bear their own costs in proceedings before the Commission. 2 It has been held in respect of s.611(2)(a) that the legislative intention under the section was for the power to order costs to be exercised where there is clear evidence of unreasonable conduct and that the power to order costs under the section should be exercised with caution and only in clear cases.3 Further, a party cannot be said to have made an application ‘without reasonable cause’ within the meaning of s.611(2)(a) simply because his or her argument proves unsuccessful. The Full Bench has indicated that the test imposed by the expression ‘without reasonable cause’ is similar to that adopted for summary judgment, that is, “so obviously untenable that it cannot possibly succeed”, “manifestly groundless” or “discloses a case which the Court is satisfied cannot succeed”.4 An application will have been made vexatiously ”where the predominant purpose ... is to harass or embarrass the other party, or to gain a collateral advantage”.5

[20] The costs incurred and claimed by Ms Kumari are in the order of $27,500.01 and pertain to the cost of representation in the period after the telephone mention hearing before Deputy President Clancy until the conclusion of the merits hearing before me.

[21] Consideration of the evidence as a whole would indicate that I cannot be satisfied that Metro Trains’ actions after the commencement of the unfair dismissal proceedings were unreasonable or that their responses to the action taken by Ms Kumari were without reasonable cause or were otherwise vexatious. There is no evidence that their response was for the purpose of harassment or embarrassment or to gain a collateral advantage.

[22] In its response to the costs application, Metro Trains referred to the finding made by me in the course of determination of the merits of the matter in which I found that Ms Kumari had not been fully cooperative with the investigation conducted by the Respondent into her behaviour. 6 While certainly the Commission found that Ms Kumari had been unfairly dismissed and that the Metro Trains investigation into her behaviour was weak and reliant almost entirely upon data provided by a PTV audit,7 it was also the case that Ms Kumari had not especially sought to assist Metro Trains in its investigation of what was an obvious problem and which had reasonably required investigation. The following was held about Ms Kumari's response to the allegations in the original merits decision;

“[129] Ms Kumari’s evidence when asked about the specifics of the allegations made was to largely brush them aside. Somewhat rhetorically she asked how can I respond to an allegation about something that I did not do? While that proposition certainly has some legitimacy to one in her position, however, the problem with Ms Kumari brushing aside as she did the questions put to her is that she must also be seen as having failed to engage in any meaningful way with what was being put to her. The very large numbers of irregular transactions demanded an investigation, and Ms Kumari had an obligation to assist. The questions of her in the course of the investigation were reasonable, if somewhat lacking in specifics. She had an obligation to let Metro Trains know as much as she knew about the circumstances of the matter, which extended to endeavouring to recollect the dates in question, as well as any knowledge she may have had of suspicious behaviour by others. Rather than endeavouring to remember a particular shift and a particular set of circumstances, and putting forward any defence that could reasonably be put forward, her response was simply to say that she could not respond. I do not consider that she informed Metro Trains as early as she could of all the knowledge she had.

[130] However, in respect of cooperation with the Metro Trains investigation into the alleged irregular transactions I consider she could and should have made greater efforts and that a reduction of one-quarter is warranted for this reason.

[131] Had Ms Kumari engaged fully with the investigation, even with her claims that one or more employees may have committed the fraud using her staff ID or that the irregularities were the product of an innocent mistake, it may have been that the Metro Trains management, acting reasonably, took a different course than the dismissal. She could have named at the time the people she suspected of fraud and could have provided particulars, after careful thought and analysis, about the days she remembered computer problems or having been careless with procedure. However, she did neither at the time. In this regard, I note that Ms Kumari did not name any person as having been suspected of fraud until well after these proceedings were commenced. There is no mention of the name of who she suspected in her witness statement, and a name appears not to arise until her solicitors wrote to the Metro Trains representative, Ms Gillam, on 23 December 2016.” 8 (reference omitted)

[23] While Ms Kumari does not challenge those findings as such, Mr Soeny put forward in the costs hearing that such information may not have reasonably been available to Ms Kumari. While that may be so, and I note there is no formal evidence before me on the subject, I am unpersuaded by the submission.

[24] The fact that Metro Trains’ case against Ms Kumari may have been weak and ultimately found to have been the cornerstone of an unfair dismissal, along with findings made about serious deficiencies in procedural fairness, it in no way removes the proposition that at the time it responded to Ms Kumari’s unfair dismissal application it was reasonably entitled to do so. Equally it does not elevate the costs application above the matters that must be tested about the reasonableness of Metro Trains’ responses to the application.

[25] I am satisfied that Metro Trains did not cause cost to be incurred because of an unreasonable act or omission on its part; neither did it respond to the application vexatiously or without reasonable cause or that it should have been apparent that its response to Ms Kumari’s application had no reasonable prospect of success.

[26] Accordingly, I do not find in favour of Ms Kumari's applications for costs either pursuant to s.400A or s.611 of the Act. An Order dismissing the costs application will be issued at the same time as these reasons for decision.

LOST REMUNERATION ORDER

[27] The merits decision determined that an order for lost remuneration in favour of Ms Kumari was appropriate to make, but that there should be no deduction for reason of Ms Kumari’s efforts to mitigate the loss after dismissal. 9 It also determined that the quantum of lost remuneration should be reduced by one quarter for reason of Ms Kumari’s lack of cooperation with the investigation conducted by Metro Trains. The merits decision then concluded;

“[132] As a result, an order is issued by the Commission at the same time as this decision, requiring Metro Trains to reinstate Ms Kumari to the position of Station Officer Class 2 at Parliament Station; to maintain her continuity of her employment and her continuous service; and to pay her an amount for lost remuneration for the period between 1 July 2016 and the date on which she is reinstated, from which shall be deducted an amount of one-quarter of the total, with the payment to be taxed according to law. The order will require Ms Kumari’s reinstatement within 14 days from the date of this decision.

[133] In the course of closing submissions, it was put forward that Ms Kumari’s rate of pay at the time of dismissal was $33.3096 per hour for a 38 hour week and that the hourly rate increased to $33.8092 on 1 January 2017, and that at all relevant times Ms Kumari was entitled to be paid a further 9.5% of those rates for superannuation. The basis of the order for lost remuneration will be a calculation at these rates (including superannuation) for the entire period between dismissal and reinstatement, less one-quarter of the total. The parties are directed to confer and endeavour to agree the precise amount, and whether annual leave and long service leave paid out at the time of dismissal should be recredited to Ms Kumari and deducted from the total of the order. Liberty to apply is granted for the purposes of settling the final arrangements, in respect of the order for lost remuneration only.” 10

[28] The differences now evident between the parties largely relate to whether or not the calculation of lost remuneration should include amounts for the payments of weekend penalties, shift penalties, rostered overtime and public holiday penalties that would otherwise be paid to Ms Kumari had she actually worked on the days concerned. Ms Kumari also puts forward that there should be no 25% deduction made from the employer superannuation that would be paid to her, submitting that the effects of such a deduction will be long-term, owing to the fact that superannuation by its very nature is something accessible after employment has finished and retirement commenced.

[29] In response to directions from the Commission about these matters both parties filed schedules of the amounts they believe should be paid. While there is a dispute between the parties on the inclusion of penalty rates and how superannuation should be treated, the hours worked in each fortnight and the base pay rate attributable to those hours are the same. 11

[30] In considering these matters I take account of the fact that there is little firm guidance to be given to the Commission from earlier cases. The award of lost remuneration is a matter of discretion on the part of the Member concerned, as is the consideration of deductions such as that made by me. Within the context of a matter focused upon returning a former employee to a particular position and what that entailed, the High Court has held that the purpose of reinstatement is to “put back in place” and to do so literally;

• “To construe the power ‘to reinstate’ as confined to restoring contractual or other legal rights fails to give full effect to the term ‘reinstate’. To reinstate means to put back in place. In this context, it means that the employment situation, as it existed immediately before the termination, must be restored. It requires restoration of the terms and conditions of the employment in the broadest sense of those terms.” 12

“‘Reinstate’ literally means to put back in place. To pay the appellant but not to put him back in his usual situation in the workplace would not be to reinstate him. The words ‘reappoint’ and ‘position’ should not be read in any restricted way.” 13

[31] The evidence and material before the Commission in all phases of this matter leads me to be satisfied that Ms Kumari regularly worked the penalty times referred to in her preferred payment schedule.

[32] As a result the order will be based upon the reasonable expectation she held that had she been at work during the period between the time of the termination and reinstatement that she would have worked the weekends, evenings, public holidays and overtime she now claims. The employer superannuation contributions will be calculated upon those payments as well. While I have considered Ms Kumari’s claim that the 25% deduction referred to above should not be applied to the employer superannuation contributions, I do not agree that that should be the case. The intention of the original decision was to ensure that the order for lost remuneration in total (both earnings paid directly to Ms Kumari as well as employer superannuation contributions) should then be subject to a 25% reduction.

[33] On that basis, I assess that Ms Kumari’s loss during the period between her termination and the reinstatement was; $56,165.39, being the wages she would likely have been paid directly; and $5,335.71, being the employer superannuation contribution that would likely have been paid on her behalf. The total of those amounts is $61,501.10.

[34] The reduction of these amounts by 25% leaves $42,124.04 in wages, and $4,001.78 in superannuation, a total of $46,125.82.

[35] An order will be issued by me requiring Metro Trains within 7 days of the date of the order to pay Ms Kumari $42,124.04 in wages, and to pay to Ms Kumari’s superannuation fund on her behalf the amount of $4,001.78, both to be taxed according to law.

COMMISSIONER

Appearances:

Mr A Soeny on the Applicant’s behalf.

Ms J Gillam for the Respondent.

Hearing details:

2017.

Melbourne:

21 April.

 1   [2017] FWC 605; PR589860.

 2   Fair Work Act 2009 (Cth) s 611(1); see also Church v Eastern Health[2014] FWCFB 810 [26].

 3   Keep v Performance Automobiles Pty Ltd[2015] FWCFB 1956 [13], [17].

 4   Ibid [17], with reference to Heidt v Chrysler Australia Limited (1976) 26 FLR 257 [272]–[273].

 5   Church v Eastern Health[2014] FWCFB 810 [29], with reference to Nilsen v Loyal Orange Trust [1997] 76 IR 180 at 181.

 6   [2017] FWC 605 [131].

 7   Ibid [69]–[72].

 8   Ibid [129]-[131].

 9   Ibid [126]–[127].

 10   Ibid [132]-[133].

 11   Exhibit A11, Ashok Soeny’s email to FWC, 22 March 2017; Exhibit R10, Metro Trains’ email to FWC, 28 March 2017.

 12   Blackadder v Ramsay Butchering Services Pty Ltd [2005] HCA 22, (2005) 221 CLR 539 [14], per McHugh J.

 13   Ibid [75], per Callinan and Heydon JJ.

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