Applicant v Respondent

[2017] FWC 1179

[2017] FWC 1179

FAIR WORK COMMISSION

DECISION

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

Applicant
v
Respondent
(U2016/769)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 8 MARCH 2017

Application for relief from unfair dismissal – quantum of costs.

[1] On 10 January 2017 I issued a decision 1 and Order2 in which I determined that the Applicant in this matter was to pay costs incurred by the Respondent from 9 September 2016 to the conclusion of the hearing on the merits on 7 October 2016. Those costs were to be determined on a party-party basis. My Order specified that if the parties were unable to agree on such an amount and a period of payment of that amount by 31 January 2017, the Respondent may advise my office so as to allow those issues to be addressed.

[2] On 31 January 2017 the Respondent advised that no agreement had been reached in relation to the costs to be paid and requested that the Fair Work Commission determine that issue. The Respondent advised that it had put a proposal to the Applicant in relation to an amount and period for payment of its costs. It advised that, whilst the parties had exchanged correspondence in this regard, the Applicant (through his legal representative) had expressed an inability to accept that proposal, or put forward a counter proposal. On that same day, I received email advice from the Applicant’s legal representative which agreed with the advice provided by the Respondent, but added that the Respondent should be commended for the very practical way in which it had approached this difficult discussion so far and, that despite his, and the Respondent’s best efforts to resolve the matter, the Applicant’s financial position was so dire that he could not afford to pay the amount that the Respondent had (generously) offered to accept.

[3] Accordingly, this decision deals with the quantum of costs and the period within which those costs are to be paid. On 1 February 2017 I issued directions which specified time limits for the provision of submissions and any additional material relative to this issue. Those directions noted that this issue was listed for a further hearing on 7 March 2017.

[4] I subsequently received further submissions from the Respondent, together with an amended Itemised Schedule of Costs. In terms of that schedule, the Respondent advised:

“12. The Respondent has reviewed regulation 3.1 in relation to the costs during the Relevant Period and considers that while some of the costs incurred can be attributed item numbers in accordance with the schedule, many of the costs incurred do not appear within the schedule, appear within the schedule but the amount to be charged is at the Commission’s discretion, or it is not possible to accurately determine the amount to be charged in accordance with the schedule because the matters required to determine the precise amount to be charged in accordance with the schedule are not within the Respondent’s knowledge (for example, the number of folios in the brief to counsel).

13. The total amount incurred by the Respondent over the Relevant Period was $47,596.20 (including GST). Considering this amount and His Honour’s determination that costs should be paid on a party-party basis, the Respondent considers that an order for costs of $25,000 (including GST) is reasonable and appropriate in the circumstances. This represents 53% of the total cost incurred by the Respondent over the Relevant Period.

14. The Applicant’s representative has raised with the Commission and the Respondent (for example in correspondence with the Commission dated 31 January 2017 and earlier correspondence with the Respondent) that he is encountering financial difficulties. In this regard, the Respondent would be supportive of the Commission making an order that the amount to be ordered be paid to the Respondent in instalments, for example, over a 6 month period.

15. The Respondent seeks an order that the Applicant pay the Respondent costs of $25,000 and that such costs are paid in instalments at intervals as considered appropriate by the Commission.” 3

[5] On 13 February 2017 I received written advice from the Applicant’s legal representative in the following (redacted) terms:

“Madam Associate …

Thank you for the submissions. I don’t have any instructions to prepare any submissions in reply.

The only instructions I have, and I’ve already shared these with xxxxxxx and xxxxxxx, are that the Applicant is in a dire financial position and he lacks the capacity to pay whatever amount is ordered. As I understand my instructions, the Applicant’s essential outgoings (debt repayments and living expenses) already exceed his income. In short, he has no capacity to pay. I’m aware that his financial situation is not a relevant consideration for the Commission in reaching its decision. I made those observations only to explain why there is no submission in reply.”

[6] At the hearing on 7 March 2017, the Respondent confirmed its submissions but added little information to the earlier submissions. Significantly, the Applicant’s legal representative took no issue with the extent to which the reduction proposed by the Respondent of its total costs of $47,596.20 over the relevant period, to an amount of $25,000, was appropriate and was a conservative estimate of the costs in this matter..

[7] The itemised schedule of costs claimed by the Respondent include:

● costs incurred by its solicitors, in preparing for the hearing over the period 4-6 October 2016;
● costs incurred by its counsel in preparing for that same hearing; and
● costs incurred by its solicitors and counsel in attending the three-day hearing, 4-6 October 2016.
[8] Section 403 of the Fair Work Act 2009 (the FW Act) states:

“403 Schedule of costs

(1) A schedule of costs may be prescribed in relation to items of expenditure likely to be incurred in relation to matters that can be covered by an order:

(a) under section 611 in relation to a matter arising under this Part; or

(b) under section 400A or 401;

including expenses arising from the representation of a party by a person or organisation other than on a legal professional basis.

(2) If a schedule of costs is prescribed for the purposes of subsection (1), then, in awarding costs under section 611 in relation to a matter arising under this Part, or awarding costs under section 400A or 401, the FWC:

(a) is not limited to the items of expenditure appearing in the schedule; but

(b) if an item does appear in the schedule—must not award costs in relation to that item at a rate or of an amount that exceeds the rate or amount appearing in the schedule.”

[9] Schedule 3.1 of the Fair Work Regulations 2009 sets out the Schedule of Costs. Certain matters have prescribed charges whilst others are left to the discretion of the Fair Work Commission to determine what it “considers to be fair and reasonable according to the circumstances of the case and the seniority of the solicitor”. 4

[10] The Respondent has agreed at the outset that, not all of the items identified in the itemised schedule of costs are able to be easily reconciled with Schedule 3.1. However, s.403(2) makes it clear that the Fair Work Commission is not restricted in its award of costs to items that are listed in Schedule 3.1. It is also significant that I note that the Respondent is only seeking an amount of costs which approximate one half of the costs identified in its itemised schedule. I am satisfied that this amount is consistent with the considerations required in s.403.

[11] I have considered the Respondent’s costs claim in the context of the overall circumstances of this matter and the manner in which the case proceeded. I am satisfied that significant legal costs have been incurred and that these were related to the inherent complexity of the proceedings. In my earlier costs decision 5 I set out my conclusions in this regard.

[12] I have decided that it is appropriate that I make an order for costs of $25,000 and that further proceedings directed at the taxation and assessment of costs would result in a substantially higher figure. The Applicant’s and the Respondent’s indication that they are prepared to accept an order for costs of $25,000 is a relevant factor in this respect..

[13] The only remaining issue then goes to the extent to which the Applicant should be required to pay those costs in instalments. Generally speaking, an applicant seeking an order that provides for any costs to be paid by way of instalments would be obligated to provide some evidence of their financial position to support that request. In this case, the Applicant has not provided any material of this nature and I am simply left with his Lawyer’s advice about his dire financial predicament. That advice is to the effect that the Applicant is currently undertaking further study which may enable him to gain alternative employment and hence begin to repay his debts in the next 12-18 months. However, at present the Applicant has no significant unencumbered assets and faces the real prospect of bankruptcy. Were it not for the position adopted by the Respondent, to the extent that it does not oppose an order providing for payment of those costs over a twelve month period, I would have prescribed a payment arrangement in a much shorter period. However, in these particular circumstances I have concluded that it would be appropriate for the Applicant to be required to pay the $25,000 costs within a twelve month period from the date of this decision. An Order (PR590604) giving effect to this decision will be issued.

Appearances (by telephone):

S Heathcote Counsel for the Applicant.

Internal Counsel for the Respondent.

Hearing Details:

2016.

Adelaide:

March 7.

 1   [2017] FWC 52

 2   PR589086

 3   Respondent Submissions of 13 February 2017, paras 12 - 15

 4 See, for example Schedule 3.1 of the Fair Work Regulations 2009 item 1301

 5   [2017] FWC 52

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<Price code C, PR590603>