Applicant v Respondent

[2017] FWC 52

[2017] FWC 52

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

s.400A—Costs

Applicant
v
Respondent
(U2016/769)

SENIOR DEPUTY PRESIDENT O'CALLAGHAN ADELAIDE, 10 JANUARY 2017

Application for relief from unfair dismissal – application for costs by respondent employer – ss.400A and 611(2)(b) application – costs awarded.

[1] On 31 October 2016 the Respondent applied for an order for costs against the Applicant. The costs application was made pursuant to ss.611 and 400A of the Fair Work Act 2009 (the FW Act). It followed a decision 1 issued by Commissioner Cloghan on 17 October 2016. In that decision the Commissioner dismissed the Applicant’s s.394 application on the basis that the termination of his employment was not harsh, unjust or unreasonable.

[2] Following that decision, Commissioner Cloghan retired. The costs matter has subsequently been referred to me for consideration.

[3] The costs application was the subject of three brief telephone proceedings. The first two of these dealt with the manner of the provision of information to the Commission and, particularly to issues of confidentiality. In this respect I have preserved the same approach to confidentiality adopted by the Commissioner. Both parties provided extensive written submissions relative to the costs application and agreed that the matter should be determined on the basis of those submissions. Notwithstanding this position, I convened a brief telephone conference on 20 December 2016 in order to clarify an issue raised in these submissions. A sound file record of that conference was retained.

[4] In the costs matter, the Respondent was represented by its in-house counsel. The Applicant was represented by Mr Heathcote, of counsel, pursuant to an unopposed grant of permission made in accordance with s.596(2)(a) and (c) of the FW Act.

[5] Section 611 states:

“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).”

[6] The Respondent asserts that the Applicant made, and continued his application:

● without reasonable cause, and
● in circumstances where it should have been reasonably apparent to him that his application had no reasonable prospects of success.

[7] The Respondent asserts that the Applicant acted unreasonably in maintaining his position that he continued to deny the conduct alleged during the investigation which led to his dismissal. The Respondent asserts that the Applicant’s continued denials were unreasonable in the light of six witness statements provided by its employees. Further, that the Commissioner’s findings discredited the Applicant and his evidence in critical respects.

[8] Section 400A states:

“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.”

[9] In the alternative to the order sought pursuant to s.611, the Respondent asserts that the Applicant’s conduct represented unreasonable acts or omissions in that he:

● made the application, and
● rejected a settlement offer of four week’s pay made at a conciliation conference on 8 April 2016, and
● did not discontinue his application after the Respondent filed six witness statements, and
● rejected a settlement offer made on 8 September 2016 for a payment of $20,000, with an opportunity to resign and a statement of service.

[10] The Respondent provided substantial submissions and references to the confidential transcript of the hearing before Commissioner Cloghan in support of its position.

[11] The Respondent asserts that the Applicant’s unreasonable acts caused it to incur significant costs. It claimed costs on an indemnity basis or, in the alternative, a party-party basis in accordance with Schedule 3.1 of the Fair Work Regulations 2009. Costs were sought from the time the application was commenced, or, in the alternative, from 17 June 2016 when the Respondent filed its witness statements, or, again in the alternative, from 9 September 2016 when the Applicant rejected the settlement offer of 8 September 2016.

[12] On 15 December 2016 the Respondent provided an amended, itemised schedule of the costs sought in the application. The Respondent has confirmed that it is not seeking costs relative to the interlocutory proceedings in this matter.

[13] The Applicant’s position in response to the costs application was also set out in written submissions. This position is to the effect that the Applicant consistently sought reinstatement rather than compensation and that he rejected both of the Respondent’s settlement offers because:

● he wanted to clear his name, and
● he sought reinstatement.

[14] The Applicant referred to 2 interlocutory matters which required determination before the substantive hearing. The Applicant submitted:

“1.8 The first was the Applicant’s application for the Respondent to be required to produce documents relevant to its investigation and the Respondent’s false claim that the documents sought were subject to privilege against disclosure. That matter was resolved in the Applicant’s favour.

1.9 The second controversy arose when the Respondent asked Cloghan C to recuse himself on the basis that his continued involvement gave rise to apprehended bias. The Applicant did not take a position on the Respondent’s application. Cloghan C concluded that he should not recuse himself.” 2

[15] The Applicant agreed that the outcome of the application fundamentally turned on whether he had engaged in conduct of the nature contended by the Respondent. He conceded that, if he had engaged in that conduct, his dismissal would have been justified. He contended that the witness evidence was inconsistent and further, that the effect of his own evidence was necessarily, to deny the allegations made against him. He maintained his position in this respect in the costs application submissions.

[16] The Applicant contended that, with respect to s.611, on the facts apparent to him at the time the application was made, were not to the effect that there was no substantial prospect of success and that his case was not so manifestly untenable or groundless, or lacking in substance, so as to be unarguable. Further, that had the Commissioner accepted the Applicant’s account of the various incidents which led to his dismissal, it is likely that his application would have succeeded.

[17] In terms of s.400A, the Applicant contends that his refusal to accept the Respondent’s settlement offers should not be regarded as an unreasonable act because:

“3.3 The Applicant contends that his refusal to accept the offers described in paragraph 3.2 above, were not unreasonable acts for the following reasons:

(a) both offers would have required to Applicant to renounce rights to bring other claims against the Respondent, because the release the Respondent sought as a precondition to the payment extended to circumstances beyond the application;

(b) accepting either offer would have prevented him from:

(i) obtaining a declaration that he had been unfairly dismissed;

(ii) obtaining an order that he be reinstated.”

The Background

[18] I have summarised the sequence of events that led to this costs application.

[19] The Applicant’s employment was summarily terminated on 4 February 2016 because, following an investigation, the Respondent concluded that he had engaged in sexual harassment of other employees.

[20] The Applicant’s application was made on 23 February 2016. It was the subject of a telephone conciliation conference on 8 April 2016 and was subsequently referred to Commissioner Cloghan. Various listings for the application before the Commissioner were cancelled for a number of reasons including concerns over confidentiality and the nature of the materials to be exchanged between the parties.

[21] At an early point in the proceedings, issues of confidentiality were identified, given the potential for documented evidence to adversely affect both parties and the witnesses. Two confidentiality orders, 3 including restrictions on access to transcript, were made by the Commissioner.

[22] A disagreement over documents sought by the Applicant was considered by the Commissioner and an interlocutory decision 4 was issued on 1 August 2016.

[23] There followed an effective disagreement over dates for consideration of the merits of the application. The parties both made submissions in this respect and the Commissioner issued a further interlocutory decision, 5 addressing this issue on 26 August 2016.

[24] On 8 September 2016 the Respondent made an offer of settlement, without prejudice except costs, to the Applicant’s lawyer. This offer followed informal discussions between the lawyers for the parties and was to the effect that the Respondent confirmed an offer to pay the Applicant $20,000 (gross), to record the Applicant’s dismissal as a resignation on his personnel file, and to provide the Applicant with a letter confirming his service with the Respondent. The lawyer for the Applicant provided email advice to the Respondent on the following day in which he confirmed that his instructions were to reject that settlement proposal. In the conference I convened on 20 December 2016 both parties confirmed that the settlement proposal arose out of informal discussions between the relevant lawyers, who were concerned about the costs associated with the matter.

[25] Whilst there is only very limited information before me about the actions of the Commissioner around this time, I have concluded that the Commissioner continued to endeavour to expedite some form of settlement of the application. On 21 September 2016 the Commissioner issued a further interlocutory decision 6 in which he refused an application made by the Respondent to recuse himself from further hearing the matter following his earlier findings, and his involvement in separate conference discussions with the parties. The Respondent asserted that the Commissioner had demonstrated apprehended bias. In that decision, the Commissioner refused the Respondent’s application.

[26] The application was the subject of a hearing on the merits from 4-7 October 2016. The Commissioner’s decision 7 was issued on 17 October 2016.

[27] In the course of reaching his final conclusion the Commissioner found that, contrary to the Applicant’s evidence, that he had:

● made a statement to another employee that could reasonably have been taken to be offensive or humiliating, 8
● proposed multiple sexual arrangements to other employees, 9
● made inappropriate comments to other employees, 10
● showed other employees, naked photographs of another employee, 11
● suggested that another employee should remove her clothes. 12

[28] Whilst I am not satisfied that the other elements of s.387 of the FW Act are relevant to my consideration of the costs issues, I have noted that the Commissioner concluded that whilst the Applicant had been sent sexually explicit photographs by another employee, that these were neither unwelcome and, nor offensive. 13

[29] The Commissioner made a number of findings about the Applicant’s dishonesty. 14

[30] The Commissioner concluded:

“[239] On numerous occasions in evidence, the Applicant conceded that if I find that the conduct alleged occurred, it would have been unwelcome, disrespectful, offensive and contrary to the Respondent’s EEO Policy and Code of Conduct. I find, when considering the totality of the evidence, the alleged conduct did occur and it was serious misconduct. The Respondent had a valid reason to dismiss the Applicant pursuant to s.387(a) of the FW Act.

[240] Having also taken into account the matters in s.387(b) to (h) of the FW Act, I am satisfied that the Applicant’s dismissal was not “harsh, unjust or unreasonable”. Accordingly, the application must be dismissed and an Order to this effect is issued with this Decision.”

The approach to statutory interpretation

[31] I have considered the Respondent’s application in the context of the principles summarised in the following decisions. In Church v Eastern Health T/A Eastern Health Great Wealth and Well-being 15 a Full Bench considered the relevant principles relating to the application of s.611(2)(a). In Palm v Sydney Night Patrol & Enquiry Co Pty Ltd T/A SNP Security16 a Full Bench summarised these principles in the following terms:

“ An application is made vexatiously when the predominant motive or purpose of the applicant is to harass or embarrass the other party or to gain a collateral advantage.

• An application is not made without reasonable cause simply because the application did not succeed.



• Whether an application is made without reasonable cause may be tested by asking, on the facts apparent to the applicant at the time the application was made, whether there was no substantial prospect of success.



• If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to characterise the application as having been made without reasonable cause.



• In relation to an appeal, the question becomes whether the appeal has no substantial prospect of success. The prospect of success must be evaluated in the light of the facts of the case, the judgment appealed from and the points taken in the notice of appeal. If there is a not insubstantial prospect of the appeal achieving some success, it cannot fairly be described as having been made without reasonable cause.



• An application will have been made without reasonable cause if it can be characterised as so obviously untenable that it cannot possibly succeed, or manifestly groundless, or discloses a case which the tribunal is satisfied cannot succeed.” 17

[32] In Baker v Salva Resources Pty Ltd 18 a Full Bench addressed s.611(2)(b) in the following terms:

“[10] The concepts within s.611(2)(b) “should have been reasonably apparent” and “had no reasonable prospect of success” have been well traversed:

• “should have been reasonably apparent” must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis, rather than a subjective test; and



• a conclusion that an application “had no reasonable prospect of success” should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable.”

(references omitted)

[33] I note that approach was also adopted in SNP Security. 19

[34] In terms of s.400A, a Full Bench in Roy Morgan Research Ltd v Baker 20 considered the background to this section in the following terms:

“[8] The Explanatory Memorandum refers to this section and to s.401 in the following terms:

“Parts 3 and 4 of Schedule 6 to the Bill enhance the FWC’s ability to order costs against a party and/or their representative in unfair dismissal matters. The new ‘party costs’ provision applies where a party to an unfair dismissal matter (either an employee or employer) has caused the other party to incur costs by an unreasonable act or omission. Under section 401 of the FW Act, lawyers and paid agents may currently be exposed to costs orders if FWA has granted permission for a person to be represented in an unfair dismissal matter. The Bill will provide for the FWC to order costs against a lawyer or paid agent whether or not the FWC has given permission for a person to be represented.

The amendments strike a balance between the need to protect workers from unfair dismissal, and to provide a deterrent against unreasonable conduct during proceedings. The amendments will enable costs orders to be more easily made in the case of unreasonable conduct but will not prevent genuine claims from being pursued. They will discourage frivolous and speculative claims and assist in the efficient resolution of claims by encouraging all parties to approach proceedings in a reasonable manner. These measures are reasonable and proportionate to address the time and expense that an unreasonable conduct by a participant and/or their representative may cause another party to incur.”

[9] The phrase “unreasonable act or omission” was used in s.170CJ(3) of the Workplace Relations Act 1996 (the WR Act). Sections 170CJ(1), (2) and (3) as they applied in March 2006 provided:

“170CJ Commission may order payment of costs

(1) If the Commission is satisfied:

(a) that a person (first party):

(i) made an application under section 170CE; or

(ii) began proceedings relating to an application; and

(b) the first party did so in circumstances where it should have been reasonably apparent to the first party that he or she had no reasonable prospect of success in relation to the application or proceeding;

the Commission may, on application under this section by the other party to the application or proceeding, make an order for costs against the first party.

(2) If the Commission is satisfied that a party (first party) to a proceeding relating to an application under section 170CE has acted unreasonably in failing:

(a) to discontinue the proceeding; or

(b) to agree to terms of settlement that could lead to the discontinuance of the application;

the Commission may, on an application under this section by the other party to the proceeding, make an order for costs against the first party.

(3) If the Commission is satisfied:

(a) that a party (first party) to a proceeding relating to an application made under section 170CE caused costs to be incurred by the other party to the proceeding; and

(b) that the first party caused the costs to be incurred because of the first party’s unreasonable act or omission in connection with the conduct of the proceeding;

the Commission may, on an application by the other party under this section, make an order for costs against the first party.”

[10] The unreasonable act or omission phrase in s.170CJ(3) of the WR Act was considered in Goffet v Recruitment National Pty Ltd, which concerned a failure to attend conciliation proceedings. In that matter the Full Bench stated:

“[35] In the absence of medical evidence of Ms Goncalves and an opportunity for the Appellant to be heard on the point no weight should attach to the affidavit of Ms Goncalves claim that she was ill on the day of the conciliation on 5 November 2008. The notice of listing for the 5 November 2008 conciliation was sent to the Respondent by fax on 20 October 2008. The matter was listed for 11.30am. The Respondent only notified the Commission that it would not be attending the conciliation when the Commissioner’s associate telephoned the Respondent to inquire of its whereabouts at the time of the conciliation. Assuming Ms Goncalves was ill, as it is submitted that she was, no explanation appears to be given for the failure of the Respondent to inform the Appellant or the Commission of the fact prior to the scheduled commencement time of the conciliation or at all at the initiative of the Respondent. That represents conduct in our view, which caused the Appellant and her representative an unnecessary attendance at the Commission for which we think she should have her costs. The failure to initiate contact with the Commission and/or the Appellant prior to the scheduled start time for the conciliation to inform it or them of the non-attendance of the Respondent was unreasonable. If the act was intentional it would be an unreasonable act. If unintentional it would be an unreasonable omission. There is no evidence that the Respondent’s conduct in this regard was an intentional act. We are satisfied that the Respondent’s conduct in respect of the conciliation on 5 November 2009 was an unreasonable omission which caused the Appellant to incur costs.”

[11] The Full Bench continued:

“[47] The Respondent’s failure to take steps to inform the Appellant of its intentions immediately after the issue of the notice of listing was either a deliberate or reckless act that could not be regarded as anything other than unreasonable. Alternatively, to the extent that the failure might be regarded as an omission, it was equally unreasonable. That those unreasonable acts or omissions caused the Appellant to incur the costs in connection with the conduct of the proceeding is unquestionable. We are satisfied that the Respondent must be ordered to pay the Appellant’s costs of and incidental to the submissions and preparation for arbitration. We allow also the costs on an indemnity basis in respect of the costs application.”

[12] A Full Bench considered the former ss.170CJ(2) and (3) of the WR Act in Brazilian Butterfly Pty Ltd and Charalambous.8 The Full Bench discussed authorities and said:

“[39] Very strong prospects of success will not always justify a failure to participate in settlement negotiations initiated by a serious settlement offer from the other party. For example, where reinstatement is not sought and the amount offered by a respondent is equivalent to the statutory cap on compensation that can be ordered pursuant to s.170CH, it will likely be unreasonable for an applicant to fail to agree to a settlement on those terms, irrespective of how strong the applicant’s case is. Of course, even then, it is possible to conceive of circumstances where a failure to agree terms of settlement on the basis of such an offer would not be unreasonable. For example, depending upon the circumstances, it may be entirely reasonable for an applicant to insist upon a withdrawal of the dismissal and acceptance of a resignation in its stead if this were necessary to repair substantial damage done to an applicant’s professional reputation and future professional job prospects as a result of the dismissal.

[40] On the other hand, modest or even poor prospects of success on liability or remedy will not necessarily always make it unreasonable for a party to fail to agree terms of settlement that may lead to the discontinuance of the application. For example, an applicant who was a long term employee close to retirement may have very substantial contingent superannuation entitlements that will be lost unless he or she obtains reinstatement. The difference between the value of those contingent entitlements and the amount offered by the respondent as a monetary settlement may be so great as to make it reasonable for the applicant to refuse the respondent’s offer, notwithstanding that the applicants’ prospects of success are only modest or even poor. Again, each case will turn on its own facts.” [references omitted]

[13] The Full Bench continued:

“[43] A reasonable person, who is a party to proceedings pursuant to s.170CE, when confronted with an offer of settlement from the other party, will determine whether, and if so, how to respond to such an offer after considering all the circumstances of the case, including:

• the terms of the settlement offered in relation to the relief sought;



• the relative strengths of the parties’ cases (and thus their relative prospects of success) in relation to both ‘liability’ and the relief sought;



• any assessment of the merits in the certificate issued by the Commission pursuant to s.170CF(2);



• the likely length and cost of proceeding to a hearing if the matter does not settle; and



• any adverse consequences that will accrue to a party if they accept a settlement on particular terms rather than successfully prosecute or defend the primary application, as the case may be.

[44] This list is not intended to be exhaustive. All of the circumstances are relevant and, as is made clear in the joint judgment in Blagojevch, there is no basis in the Act for giving primacy to any particular factor in every case.

[45] In many, if not most, cases there will be contested facts or contested interpretations of particular facts. What knowledge in this regard is to be attributed to the reasonable person considering whether, and if so, how to respond to an offer of settlement? The passage in Abbey, upon which the Commissioner relied was, clearly enough, an attempt to grapple with that problem. However, there is a tension between the way in which that passage is expressed and the apparent acceptance by the majority in Blagojevch that a party can act reasonably in responding to an offer of settlement by reference to that party’s “genuine perception or recollection of events”. The Full Court’s formulation is to be preferred although, even then, it is not to be seen as a substitute for the words of the Act. Of course, there is an issue as to what constitutes a “genuine” perception. The Full Bench in Kangan Batman TAFE observed, we think correctly, that:

‘A party cannot simply disregard matters that should have been reasonably apparent and then claim that such matters were not apparent to them.’” [references omitted]

[14] A Full Bench in Stagno v Frews Wholesale Meats said:

“This last extract introduces a point of distinction between s.170CJ(1) and s.170CJ(2). The former refers to ‘without reasonable cause’, the latter to ‘acted unreasonably’. This anomaly, as it was described, is noted by a full bench in K.M. Lloyd v. International Health and Beauty Aids Pty Ltd t/as Elly Lukas Beauty College [Print Q5446] and, by inference, the bench is of the view that the tests are different in s.170CJ(1) and (2). That there is a different formula is clear but we are of the view that the formulations are based on the stage of proceedings at which they occur. Section 170CJ(1) relates to the initiation of proceedings. Section 170CJ(2) relates to the failure to discontinue or the discontinuance of the matter. In each case what attracts the discretion to award costs is unreasonable action or the absence of sufficient reason for the action taken. What is considered to be without reason is determined by reference to the stage that the proceeding has reached. We note that this leaves open the possibility that proceedings may commence which are with reasonable cause but may, in particular circumstances at a later stage, be further prosecuted unreasonably.

‘We are of the view that a party to a proceeding commenced under s.170CE of the Act in which the Commission has begun arbitrating has acted unreasonably in failing to discontinue the matter if when, at the relevant time, upon the facts apparent to the applicant there was not substantial prospect of success.’”” 21

[35] Because the Respondent has sought indemnity costs, it is appropriate that I note that the relevant principles in this respect was summarised by a Full Bench in Post v NTI Ltd T/A NTI. 22

[36] I have applied these approaches.

Findings – s.611

[37] I am not satisfied that the Applicant’s application was made vexatiously in order to harass or embarrass the Respondent. It seems to me that the Applicant had formed the view that his behaviour was not of a character or magnitude that it warranted termination of employment and he made the application on that basis.

[38] The fact that the Applicant did not succeed in this application is not a foundation for an award of costs pursuant to s.611(2)(a).

[39] I am not satisfied that the Applicant’s case related to an arguable point of law. It was a case that turned on the facts. Consequently, the critical question in this respect goes to whether, on the facts apparent to the Applicant at the time he made the application, there was no substantial prospect of success. In this respect, I have concluded that the Applicant was entitled to think he had some prospect of success, either as a consequence of acceptance of his version of events, or simply as a consequence of a commercial settlement. Whilst that settlement possibility goes against the Applicant’s contentions that he was intent upon achieving reinstatement, it reflects a reality associated with the unfair dismissal system.

[40] Finally, in this respect, I am not satisfied that, at the time the application was made, the Applicant’s case was such that it should have been clear to him that the Commission could not conceivably support his position. The Commissioner made findings about the extent to which the Applicant was dishonest in his participation in the investigation process. 23 Notwithstanding those findings, I am not satisfied, on the information available to me, that the full basis of the case against the Applicant was detailed to him at the time of the termination of his employment. Given the nature of this matter and the allegations involved, I think this reflects an understandable position on the part of the Respondent but it makes a conclusion that the Applicant should have known that his case was manifestly groundless and doomed to fail, a little more difficult.

[41] Consequently, I am not satisfied that costs should be awarded pursuant to s.611(2)(a).

[42] In terms of s.611(2)(b), I have considered four separate points in time.

[43] Firstly, on a similar basis to that which I have set out above, I am not satisfied that, at the time he made the application, it should have been reasonably apparent to the Applicant that his application had no reasonable prospect of success. In blunt terms, applicants who are dishonest have, on occasion, probably been successful in the Commission as a consequence of the evidence, or the shortcomings of the evidence which is presented. In more general terms, and again on the limited information before me, I am not satisfied that the information provided to the Applicant at the time of the termination of his employment would have necessarily led a reasonable person to conclude that the case against them was so strong that they had no reasonable prospect of success. In reaching this conclusion I have applied the cautious approach referred to in Baker v Salva Resources.

[44] I have considered whether the Applicant acted unreasonably in either not discontinuing his application at the time of the conciliation conference in April 2016, or when a settlement proposal was put to him at that conference. I have concluded that such a position has not been established. At that time, the evidence of the Respondent had not been set out in full to the Applicant and I accept the Applicant’s submission that his preferred remedy was that of reinstatement.

[45] The third point in time is 17 June 2016 when the Applicant received the witness statements for the Respondent. At that point in time, an objective assessment of the case against the Applicant was clearly possible. The evidence in support of the Respondent’s position was very clear and, absent on-going debate and disputation over hearing dates and witness availability, I consider that an objective assessment of the case would have led the Applicant to a conclusion that his case had no reasonable prospect of success. The weight of the evidence against the Applicant at that time must have reasonably compelled a conclusion that his application for reinstatement must fail. A reasonable person, even if they were telling the truth, must have been aware that the evidence of six people contradicted the Applicant’s version of events. I am not satisfied that this evidence disclosed significant inconsistencies. Having reviewed the evidence in the matter, I agree with the Commissioner’s assessment that the Applicant was not telling the truth. Accordingly, as someone who was not telling the truth, the applicant must have been aware that the compelling evidence against him meant that he had no reasonable prospect of success. Were it not for the extent that, soon after 17 June 2016, there was uncertainty about the hearing date and consequently, which of the Respondent’s witnesses would be able to give evidence, I would have concluded that an award of costs from this point in time would be appropriate. I consider that the known potential for the Respondent to be restricted in the evidence that it could provide is a factor that should be taken into account in reaching a conclusion about the Applicant’s failure to discontinue the application after receiving the Respondent’s evidentiary material. Consequently, I have given the Applicant the benefit of the substantial doubt at that point in time.

[46] The final point in time I have considered relates to the settlement offer put by the Respondent on 8 September 2016. That offer was rejected by the Applicant on 9 September 2016. I have accepted that the parties were not engaged in settlement discussions at that time. Nevertheless, at that point, the evidence of the Respondent’s witnesses was very clear. The Applicant had, by that time, had the benefit of being able to comprehensively consider the evidence that the Respondent was going to bring. There was no remaining uncertainty about the witnesses that were to be called. The case against the Applicant was absolutely compelling.

[47] Evidence to support the Applicant’s denials of the allegations against him was not being proposed. Whilst not determinative of the costs issue, the futility of continuing to pursue reinstatement in light of the Respondent’s evidence should also have been apparent to the Applicant.

[48] It seems to me that it should have been reasonably apparent to the Applicant at that time, that his application should have been abandoned in favour of the substantial settlement offer proposed by the Respondent. Looked at from another perspective, the continued pursuit of the application, without corroborating evidence to counter the known evidence of the Respondent, was an unreasonable act. Further, the conclusions reached by the Commissioner about the Applicant’s credibility confirm the extent to which his rejection of the 8 September 2016 settlement proposal represented a circumstance where it should have been reasonably apparent that, by that time, his application had no reasonable prospect of success.

[49] Consequently, I am satisfied that the Applicant should bear costs associated with the application from 9 September 2016. Before considering the quantum of those costs, I have addressed s.400A of the FW Act.

[50] For the same reasons which led to my conclusion relative to s.611(2)(b), I am satisfied that, by 8 September 2016, the Applicant was aware of the case against him and had a clear option to settle the matter. It is true that that settlement offer did not entail reinstatement, but it was, nevertheless, a substantial offer in the context of this matter. The Applicant’s decision to proceed with the application in the face of clear and compelling evidence from six witnesses was an unreasonable act or omission which caused the Respondent significant additional costs.

[51] Consequently, I am satisfied that a basis for a costs order pursuant to either s.611(2)(b) or s.400A has been established.

[52] The Respondent seeks indemnity costs. Consistent with the approach summarised in Post v NTI, 24 I have reviewed the extent to which the circumstances of this matter were special or unusual.

[53] On fine balance, I am not satisfied that the facts of the matter warrant an order of indemnity costs.

[54] The delays in the final consideration of the application are not matters that were sought, nor are appropriately to be taken into account in this respect, as they reflect positions adopted by both parties. The Applicant’s actions did not unduly prolong the matter.

[55] The Applicant’s decision to take the matter to arbitration after 8 September 2016 was a decision which could have permitted a conclusion that indemnity costs were appropriate. The Commissioner’s findings about the Applicant’s credit or lack thereof, tend to support such a position in that they suggest unreasonableness associated with dishonesty. However, I have taken into account that the Applicant was represented by a lawyer and I do not have information which establishes the extent to which the Applicant’s decision to pursue the matter may have taken into account advice from his lawyer. In those circumstances it seems to me that the benefit of the very substantial doubt should go to the Applicant.

[56] Consequently, I have concluded that costs should be awarded against the Applicant on a party-party basis, from 9 September 2016 to the conclusion of the hearing on the merits on 7 October 2016. An Order (PR589086) reflecting that conclusion will be issued. I have not specified an exact content in that regard as it seems to me that the detailed itemised schedule of costs provided by the Respondent should enable the parties to agree on a final amount and a timeframe for the payment of that amount. Clearly, the costs do not take into account the interlocutory proceedings.

[57] If the parties are unable to agree on such an amount and period for its payment, by 31 January 2017, the Respondent may advise my office accordingly so as to allow these issues to be addressed.

 1   [2016] FWC 7077

 2   Applicant’s Outline of Argument, dated 16 December 2016, paras 1.8 and 1.9

 3   PR583571 and PR586101

 4   [2016] FWC 5006

 5   [2016] FWC 6047

 6   [2016] FWC 6565

 7   [2016] FWC 7077

 8   [2016] FWC 7077, para [36]

 9   [2016] FWC 7077, para [110]

 10   [2016] FWC 7077, paras [116] and [164]

 11   [2016] FWC 7077, paras [133] and [158]

 12   [2016] FWC 7077, para [137]

 13   [2016] FWC 7077, para [197]

 14   see, for example, [2016] FWC 7077, paras [188], [190] and [210]

 15   [2014] FWCFB 810, paras [23]-[33]

 16   [2016] FWCFB 8664

 17   [2016] FWCFB 8664, para [3]

 18   [2011] FWAFB 4014

 19   [2016] FWCFB 8664

 20   [2014] FWCFB 1175

 21   [2014] FWCFB 1175, paras [8]-[14]

 22   [2016] FWCFB 6765, paras [25]-[35]

 23   [2016] FWC 7077, para [210]

 24   [2016] FWCFB 6765

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