Applicant v Respondent

[2015] FWC 3309

[2015] FWC 3309

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Applicant
v
Respondent
(U2014/12879)

COMMISSIONER SIMPSON BRISBANE, 11 SEPTEMBER 2015

Application for costs under s.400A and s.611 - Application dismissed.

[1] On 25 June 2015 I issued a decision [2015] FWC 552 and order dismissing an application under s.394 of the Fair Work Act 2009 (‘the Act’). In accordance with a separate Order, the Decision and Order were not published on the Fair Work Commission website. The Respondent in the Unfair Dismissal matter then made application for costs under ss.400A and 611 of the Act. The matter was listed for directions on 23 July 2015 and by agreement the matter was to be determined on the papers. Both parties filed written submissions as directed.

[2] Both parties were self-represented in both the unfair dismissal matter, and this costs application. Considerations under s.401 of the Act do not arise. Both parties agreed to the unfair dismissal matter proceeding as a determinative conference rather than a public hearing.

[3] In these matters costs do not follow the result, but may only be ordered in a limited range of circumstances set out in s.400A, s.611 of the Act.

[4] To avoid confusion, within the body of this decision any references to the Applicant are a reference to the Respondent in the unfair dismissal proceedings, and any references to the Respondent, are a reference to the Applicant in the unfair dismissal proceedings.

Section 611 provides:

“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).”

[5] I have taken account all of the submissions and material put forward.

Section 611(2)(a)

[6] The approach generally taken by members of the Tribunal as to the meaning to be ascribed to the word “vexatiously” in s.611(2)(a) is to adopt the comments of Justice North in Nilsen v Loyal Orange Trust. 1 In that decision His Honour said the following:

“The next question is whether the proceeding was instituted vexatiously. This looks to the motive of the applicant in instituting the proceeding. It is an alternative ground to the ground based on a lack of reasonable cause. It therefore may apply where there is a reasonable basis for instituting the proceeding. This context requires the concept to be narrowly construed. A proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party, or to gain a collateral advantage : see Attorney General v Wentworth (1988) 14 NSWLR 481 at 491. The approach of the High Court in an application for a permanent stay of criminal proceedings on the ground of abuse of process constituted by improper purpose is instructive. In Williams v Spautz [1992] HCA 34, (1992) 174 CLR 509, at 522, Mason CJ, Dawson, Toohey and McHugh JJ said:

“Bridge LJ identified one difficulty when he said ([1977] 1 WLR, at p 503; [1977] 2 All ER, at p 586):

‘What if a litigant with a genuine cause of action, which he would wish to pursue in any event, can be shown also to have an ulterior purpose in view as a desired by product of the litigation? Can he on that ground be debarred from proceeding? I very much doubt it.’

So would we. But his Lordship, by implication, evidently sees no difficulty with the case in which the plaintiff does not wish to pursue his or her cause of action to a conclusion because he or she intends to use the proceedings for a collateral and improper purpose.”“

[7] A Full Bench of the FWC considered the phrase “without reasonable cause” as it appears in s.611 in the matter of Read v Gordon Square Child Care Centre Inc T/A Gordon Square Early Learning Centre  2That Full Bench stated:

“[5] The phrase “without reasonable cause” was considered by Wilcox J in Kanan v Australian Postal and Telecommunications Union. 5 Section 347(1) of the then Industrial Relations Act 1988 (Cth) provided that:

“A party to a proceeding (including an appeal) in a matter arising under this Act shall not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause.”

[8] In Kanan, Wilcox J said in respect of the phrase:

“A proceeding is not to be classed as being launched ‘without reasonable cause’ simply because it fails. As Gibbs J said in R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia (1978) 140 CLR 470 at 473, speaking of the Conciliation and Arbitration Act equivalent of s 357 (s 197A):

‘... a party cannot be said to have commenced a proceeding “without reasonable cause”, within the meaning of that section, simply because his argument proves unsuccessful. In the present case the argument presented on behalf of the prosecutor was not unworthy of consideration and it found some support in the two decisions of this court to which I have referred. The fact that those decisions have been distinguished, and that the argument has failed, is no justification for ordering costs in the face of the prohibition contained in s.197A.’

In Standish v University of Tasmania (1989) 28 IR 129 at 139 Lockhart J applied the qualification in ordering costs against an applicant whose case thought ‘misconceived’, rather than unsuccessful. But, as the Full Court pointed out in Thompson v Hodder (1989) 29 IR 339 at 342, ‘there may be cases which could not be described properly as “misconceived” but which would nevertheless be held to have been instituted without reasonable cause’.

It seems to me one way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, 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 stigmatise the proceeding as being ‘without reasonable cause’. But where it appears that, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.”

Section 611(2)(b)

[9] In Baker v Salva Resources Pty Ltd (footnote) a Full Bench of the Commission said as follows in regard to s.611(2)(b):

“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.”

Section 400A

[10] 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.”

[11] Section 400A took effect in January 2013. 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.”

[12] The unreasonable act or omission phrase was considered in Goffet v Recruitment National Pty Ltd,  3which 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.”

[13] The 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.”

Decision on Costs

s.611(a)

[14] The Applicant for costs submits the Respondent made an application on the basis she was forced to resign from her position due to;

a. Alleged prolonged bullying, harassing and inappropriate behaviour exhibited by the Principals of the Respondent; and

b. An inundation of emails from the Respondent levelling false and wholly unsubstantiated allegations against the applicant.

[15] When considering the requirements of s.611(2)(a) the Applicant submits that the evidence comprised by the Judgement, the Transcript, the Submissions and the Statements proves that the Respondent’s predominant purpose was to harass and embarrass the Applicant and employees of the Applicant who provided witness statements, or to gain collateral advantage. The Applicant asserted the Respondent had fabricated the allegations of bullying, harassing, intimidating and inappropriate behaviour by the Principals of the Applicant towards the Respondent.

[16] The submissions of the Applicant refer to parts of the decision that describe the Respondent’s evidence as not being clear 4, being vague, 5 and not very specific. 6

[17] The Applicant variously relies on findings concerning the Respondent’s lack of clarity in giving evidence and poor recollection of events, not answering questions directly during cross examination, exaggeration, including concerning the number of emails sent to her, raising new issues in reply material and raising matters not relevant to the case.

[18] The Applicant also says that significant portions of the Respondent’s material was completely irrelevant to the application and was included only to harass or embarrass the Applicant and the Applicant’s witnesses, this material included completely unfounded allegations.

[19] It is argued that the case was so obviously untenable or manifestly groundless as to be utterly hopeless. Reliance was placed on the finding that the conduct, or a course of conduct engaged in subsequent to a meeting held on 5 July 2014 was relevant to the issue of whether the Respondent was unfairly dismissed, and that the findings on these matters was that the conduct did not occur or was not sufficient to force the Respondent to resign.

[20] It is important to remember that this matter involved both a jurisdictional question concerning whether the Respondent was dismissed, and the substantive application. The directions for the hearing of the matter had always been set on the basis that the jurisdictional and substantive matters would be heard together. Further, whilst the directions provided for the filing of material in respect of the jurisdictional matter and substantive matter separately, in reality there was a significant cross over in terms of issues relevant to the two matters to be determined which resulted in a number of interlocutory issues arising before the dates for the determinative conference.

[21] It was not until part way through the first day of the determinative conference, that it was decided by the Commission that given the volume of material, and the real prospect that if the matter continued to proceed on the basis that both matters would be dealt with together, that it was unlikely to conclude in the allotted three days. In those circumstances it was determined that the balance of convenience favoured the separation of the matters, and the confining of evidence to limited matters related to the jurisdictional question and the exclusion of other matters until the jurisdictional matter was determined.

[22] As the jurisdictional objection ultimately succeeded, and an oral decision was issued to that effect at the conclusion of the second day, much of the material that the Applicant is critical of never got to the point of being considered as the case did not proceed to that stage. Written reasons for dismissing the Application were issued to the parties several weeks later.

[23] The approach ultimately adopted by the Commission resulted in saving of time and cost to both parties. It was always the case, that had the matter proceeded past the jurisdictional question, matters of credit that ranged wider than the issues relevant for the purposes of the jurisdictional question may have become relevant, and more witnesses would have been required to attend to give evidence.

[24] The written reasons for Decision included the following:

“[209] …. Having viewed the Applicant giving her evidence, I am not satisfied she deliberately fabricated allegations as has been asserted by the Respondent. It was my impression the Applicant believed she had been the subject of bullying and harassment, however it is clear the evidence simply does not support her claim.”

[25] An application pursuant to s.587(1)(b) and s.587(c) that the unfair dismissal matter should be struck out was made by the Applicant on the first day of proceedings and dealt with in an ex tempore decision. In determining that matter a submission that the application was obviously untenable and manifestly groundless was rejected on the basis that it was found the Respondent’s case included a range of factual claims that were in dispute, including competing claims, particularly concerning the events of 5 July, claims of bullying by exclusion and the matter of all data on the Respondents personal telephone which had been linked to the Applicants computer server being mysteriously wiped.

[26] The decision rejecting the strike out application also referred to a fact not in dispute that the Applicant had taken a decision (prior to the Respondent’s resignation) that any communication between the Respondent and the two principals of the Applicant would be limited to circumstances where a witness was present and discussions recorded. This of itself is highly unusual in an on-going employment relationship, and raised the issue of how in practical terms the Applicant had intended the employment relationship could continue to operate given the nature of the work performed by the Respondent for the Applicant, and depending on the facts whether such circumstances may fall within the meaning of what is contemplated in s.386(1)(b). The application that the matter be struck out was dismissed on the basis that the factual circumstances justified examination.

[27] It does not follow from the matters in issue being ultimately found by the Commission in favour of the Applicant, that it should have been reasonably apparent to the Respondent that she had no reasonable prospect of success.

[28] There were a range of matters in contest that warranted scrutiny given the nature of claim, including the examples referred to above, and others such as an apology offered in a text message to the Respondent by one of the principals of the Applicant after the meeting of 5 July, which on its face could have lent support to the Respondents claimed version of events of 5 July.

[29] It should also be remembered that the Respondent agreed to a proposal from the Commission for the matter to be conducted as a private determinative conference. This tends to weigh against the submission of the Applicant that the Respondent was motivated by a desire to embarrass or harass the Applicant or its employees.

[30] For the reasons set out above I have concluded not to order costs in favour of the Applicant on grounds argued in connection with s.611(2)(a) or (b) of the Act.

Section 400A

[31] The Applicant submits that the following are unreasonable acts or omissions of the Respondent that warrant an award of costs in the Applicant’s favour.

(a) The Respondent continued to prosecute her application after receiving the Applicant’s material when it should have been apparent to her at that time that she had no reasonable prospects of success.

(b) The Respondent continued to prosecute her case even when given the opportunity to withdraw her application by the Applicant in correspondence dated 23 April 2015, in which correspondence the Applicant offered for the application to be withdrawn by the Respondent on the basis that both parties bear their own costs.

(c) The Respondent filed voluminous material, a large amount of which was completely irrelevant, disjointed, disorderly and repetitious and in breach of the Commissions orders, causing the Applicant to have to file an enormous amount of material in reply, thereby significantly increasing the Applicant’s costs.

(d) The Respondent could not distinguish between her Application and the Applicant’s jurisdictional objection, leading to repetition of material and complicating the application process, thereby increasing costs.

[32] The Respondent characterised the opportunity to withdraw her application referred to by the Applicant for costs as a ‘threat’ that if she did not withdraw the matter the Applicant would immediately file an application for costs. The Respondent said she immediately advised the Applicant of its inability to file a costs application (as the matter had not been determined or discontinued) however the Applicant knowingly filed a costs application in contravention of the Act.

[33] The Respondent submits that she filed material she considered pertinent to the matter, and the Applicant filed over 650 pages of material, later withdrew that material and then later refilled substantially the same material. The Respondent further argues that much of the witness material filed by the Applicant was hearsay, irrelevant, non-expert opinion and in many cases statements made by staff that either had not worked directly with the Respondent, had not witnessed interactions with the Respondent and directors of the Applicant, and in one case was not even employed by the Applicant at the time the Respondent was employed.

[34] The Respondent is correct in its submission when it states that on more than one occasion the Commission had, in the course of the proceedings, referred to the considerable overlap between matters relevant to the jurisdictional matter, and the application for unfair dismissal.

[35] This is a case where the directions for the filing of material, which included separate steps for the jurisdictional and substantive matters, involved duplication of some evidence given the intertwined nature of matters relevant to both matters. That of itself is not a matter of the Respondents making. It is noted that the Applicant filed a large number of statements in support of its jurisdictional objection, and subsequently decided to withdraw those statements, and later filed similar statements in response to the Application.

[36] Whilst much of the Respondents material was excluded from consideration for the purposes of the jurisdictional matter in accordance with a ruling of the Commission, the question of what may or may not have been relevant in the substantive matter was never determined because the case never progressed to that stage. I am not inclined to award costs against a party for filing material that it intended to seek to rely on in accordance with a direction to file, in circumstances where the material never got to the point of being considered.

[37] I accept the Respondent’s submission that the failure to establish a case is not an unreasonable act or omission in itself. The Applicant also submits that the Respondent was dishonest, and deliberately fabricated allegations. There are no findings to that effect in the decision upholding the jurisdictional objection. The decision does however include a finding that the Commission was not satisfied that the Respondent had deliberately fabricated allegations as had been asserted by the Applicant.

[38] I am not satisfied that the Respondent failed in such a significant way to comply with directions of the Commission that would give rise to an order for costs under s.400A. A number of matters arose in the period before the dates allocated for the determinative conference which required amendments to earlier directions. Such amendments were made to accommodate matters raised by both parties at various times.

Conclusion

[39] I dismiss the application for costs for the reason I have set out in this Decision.

COMMISSIONER

 1   Nilsen v Loyal Orange Trust IRCA Decision No 267/97

 2   Read v Gordon Square Child Care Centre Inc T/A Gordon Square Early Learning Centre  [2013] FWCB 4056

 3   Goffet v Recruitment National Pty Ltd, [2009]ARICFB 626

 4   Paragraph 21

 5   Paragraph 22

 6   Paragraph 23

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