Asiye O & Yildiz Kosaroglu v Amity College Australia Limited(U2020/5692)

[2021] FWC 5041

[2021] FWC 5041

FAIR WORK COMMISSION

DECISION ON COSTS

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

Asiye Oz
v
Amity College Australia Limited
(U2020/5665)

Yildiz Kosaroglu
v
Amity College Australia Limited
(U2020/5692)

COMMISSIONER CAMBRIDGE SYDNEY, 20 AUGUST 2021

Unfair dismissal claims - application for costs - s.400A and s.611 - consideration of without reasonable cause, no reasonable prospects of success and unreasonable act or omission - application for costs refused.

[1] This Decision is made in respect to an application for costs that was made pursuant to ss. 400A and 611 of the Fair Work Act 2009 (the Act). The costs application was made on 15 March 2021, by Work Lawyers solicitors acting for Asiye Oz and Yildiz Kosaroglu (the applicants). The applicants had each made successful unfair dismissal claims which were determined in joint proceedings and the subject of a Decision [2021] FWC 1060 (the unfair dismissals Decision) issued on 2 March 2021.

[2] The respondent in both matters, and the respondent to the application for costs is Amity College Australia Limited ABN: 72 166 175 202 (the employer). In accordance with the requirements of s. 402 of the Act, the costs application was made within 14 days after the originating unfair dismissal applications were determined by the Fair Work Commission (the Commission) in the unfair dismissals Decision.

Relevant Background

[3] On 24 April 2020, solicitors acting for the applicants filed Unfair Dismissal Applications (Form F2s) in respect to the dismissals of the applicants from employment with the employer on 6 April 2020. At all relevant times during the proceedings, both the applicants and the employer have been granted permission pursuant to s. 596 of the Act, to be represented bylawyers or paid agents. Consequently the firm of Work Lawyers has represented the applicants, and Colin Biggers & Paisley lawyers, have represented the employer.

[4] The Form F2s filed on behalf of the applicants each identified that the applicants sought a remedy of “1. Maximum compensation under the Fair Work Act [and] 2. An agreed statement of service.” On 11 June 2020, the matters were listed for Pre-Hearing Conference/Conciliation at which time attempts to reach a conciliated settlement of the unfair dismissal claims were unsuccessful.

[5] Evidence that was subsequently adduced during the Hearing of the costs application, has revealed that on the day following the Pre-Hearing Conference/Conciliation, 12 June 2020, the employer’s solicitors conveyed an offer of financial settlement of the matters to the applicants’ solicitors. On 16 June 2020, the applicants’ lawyers conveyed a counter proposition for financial settlement of the matters in response to the employer’s proposition. On 23 June 2020, the employers’ lawyers advised the applicant’s lawyers that the applicants’ proposition for settlement had been rejected and confirmed that the employer’s previous settlement offer remained open.

[6] On 10 July 2020, the applicants’ lawyers sent a communication to the employer’s lawyers which inter alia, provided notice that the applicants intended to pursue costs pursuant to s. 400A of the Act. In this communication, the basis for the notice in respect to the intended pursuit of costs was said to be “the apparent clear condonement by your client of the prior conduct that is now said to form the basis for your client to dismiss our client.”

[7] On 24 July 2020, the employer’s lawyers sent a communication to the barrister representing the applicants which essentially sought to reactivate communications in pursuit of financial settlement of the applicants’ unfair dismissal claims. On 27 July 2020, the applicants’ barrister conveyed a further counter proposition for financial settlement to the employer’s lawyers. The employer’s lawyers sought clarification of the quantum of the financial settlement that was proposed in the further counter proposition. In response to this request for clarification, the applicants’ barrister advised inter alia, that “… the applicant [sic] presses for reinstatement, [and]… this is a matter where the Commission would order costs against the respondent [because] the condonation and waiver argument [meant that] …the respondent’s response to the application is untenable.”

[8] On 28 August 2020, the employer’s lawyers sent a further communication to the applicant’s lawyers which indicated that the earlier offer for financial settlement remained open. On 31 August 2020, the applicants’ lawyers advised the employer’s lawyers that the applicants had declined the employer’s offer for financial settlement of their unfair dismissal claims. In the absence of any agreement to settle, the matters proceeded to arbitration which involved a Hearing conducted at Sydney on 31 August, 1 September, and 23 October 2020. The unfair dismissal claims were successful, and the unfair dismissals Decision provided remedy for each of the applicants by way of monetary compensation approximating with 21 weeks remuneration in each case.

[9] The subsequent application for costs made by the applicants was the subject of Mention and Directions proceedings held on 1 April 2021. The Commission issued Directions that required the Parties to file and serve their respective evidence and other materials on the issue of costs in accordance with a timetable that fixed a Hearing on Costs for 21 June 2021.

[10] At the Hearing on Costs, Ms L Doust, barrister, continued her appearance on behalf of the applicants, and she was instructed by Mr K Bolwell, solicitor, from the firm of Work Lawyers. Mr I Latham, barrister, instructed byMs K Lopes, solicitor, from the firm of Colin Biggers & Paisley appeared for the employer. Ms Doust introduced evidence by way of an email dated 10 July 2020, sent by the applicants’ lawyers to the employer’s lawyers and she made oral submissions in amplification of written submissions on costs documents dated 3 May 2021. Mr Latham adduced evidence in the form of an affidavit of Kristen Lopes, the solicitor on record for the employer. The affidavit of Ms Lopes was admitted without objection, and without the requirement for her to be cross-examined. Mr Latham made oral submissions in elaboration of a written outline of submissions on costs dated 1 June 2021.

The Case for Costs

[11] The application for costs was advanced under both s. 400A and s. 611 of the Act. In regard to s. 611 of the Act, Ms Doust asserted that the employer had made a response to the unfair dismissal applications that was without reasonable cause, or that it should have been reasonably apparent to the employer that the response had no reasonable prospects of success. Ms Doust also advanced the application for costs under s. 400A of the Act, and she asserted that the employer caused costs to be incurred because of its unreasonable defence and the continuation of that defence which the employer maintained in the absence of any reasonably arguable valid reason for the dismissals of the applicants.

[12] Ms Doust submitted that the dismissals of the applicants were manifestly indefensible and the employer’s rationale for the dismissals was so incoherent that the employer’s conduct satisfied the requirements of both s. 611 and s. 400A of the Act, and costs Orders should be made accordingly. The submissions made by Ms Doust referred to the reasons that the employer relied upon for the dismissals of the applicants. Ms Doust submitted that in the case of each of the applicants the reasons for dismissal involved firstly, conduct prior to and during 2018 for which the employer had not invoked dismissal and had therefore waived the right to rely upon that conduct, and secondly, more recent conduct which the employer’s own investigation had not established to have occurred as had been alleged.

[13] The submissions made by Ms Doust in support of the application for costs, firstly asserted that the employer’s response to the unfair dismissal applications was made without reasonable cause and in satisfaction of s. 611(2) (a) of the Act. Ms Doust submitted that the employer’s response was taken without reasonable cause because of the absence of properly established reasons for the dismissals of the applicants. Secondly, Ms Doust submitted that it should have been reasonably apparent to the employer that its response to the applications had no reasonable prospects for success as contemplated by s. 611 (2) (b) of the Act. According to the submissions made by Ms Doust, the employer’s contemplation of its response as having no reasonable prospects of success was confirmed by its attempted reliance upon reasons for the dismissals of the applicants that had not previously been identified.

[14] Consequently, Ms Doust submitted that the employer knew or should have reasonably known, that its response to the applications had no reasonable prospects of success and further, it was a response that was taken without reasonable cause. Ms Doust submitted that the requirements of ss. 611 (2) (a) and 611 (2) (b) had been established, and the application for costs should be granted.

[15] The applicants’ costs application was also advanced on the basis that the relevant conduct of the employer satisfied the requirements of s. 400A of the Act. Ms Doust submitted that the actions of the employer, particularly its continued defence of the case after the email of 10 July 2020, that was sent by the applicants’ lawyers, together with the enlargement of its defence to bring in collateral reasons for the dismissals of the applicants, represented unreasonable acts or omissions which caused the applicants to incur costs in connection with the conduct and the continuation of the matter.

[16] Ms Doust also made submissions in rebuttal of the contentions that were advanced on behalf of the employer. Ms Doust said that the employer was entirely undeserving of the exercise of any discretion in its favour having regard to the way in which it both conducted the investigation into the allegations made against the applicants, and in regard to the way it proceeded with its defence before the Commission. Ms Doust also submitted that the alleged seriousness of the allegations made against the applicants did not justify the employer proceeding willy-nilly in the face of the evidence that had been provided to it from the investigator and which had established that the allegations were ill-founded. Ms Doust also rejected criticism that the offers for settlement of the matters that were advanced by the applicants were beyond the jurisdictional limit. In this regard, Ms Doust asserted that a remedy of reinstatement could include monetary amounts beyond the 26 weeks compensation limit.

[17] In summary, Ms Doust submitted that the Commission should exercise its discretion to award costs pursuant to sections 611 and 400A of the Act. Ms Doust submitted that the employer’s response to the unfair dismissal applications was made without reasonable cause and it had no reasonable prospects of success. In addition, Ms Doust asserted that the employer had acted unreasonably when it continued the defence of the unfair dismissal claims after it had been put on notice that costs would be pursued in circumstances where the employer had waived any right to rely upon the asserted reasons for the dismissals. Ms Doust submitted that costs should be Ordered because there was no logical and defensible rationale upon which the employer acted in response to the applications for unfair dismissal remedy.

The Case Against Costs

[18] Mr Latham made submissions opposing any costs Order. The submissions made by Mr Latham commenced with a review of the historical origins of the statutory provisions regarding costs as they now appear in the Act. Mr Latham submitted that the policy position that underpinned the statutory provisions regarding costs was that Parties in industrial cases should be entitled to be able to run their case without the possibility of an adverse costs Orders in circumstances where their argument had failed to carry the day.

[19] The submissions made by Mr Latham acknowledged that in circumstances where a case was incompetent and had no merit whatsoever or if a Party took unreasonable actions, costs may follow. However, according to the submissions made by Mr Latham, the circumstances were not present in this instance, as at no stage was the employer’s position completely incompetent or unreasonably run. Mr Latham submitted that the employer’s defence was simply a case that did not succeed, and in those circumstances, it did not represent a position that should provide for costs Orders to be made.

[20] As part of his submissions opposing the costs application, Mr Latham referred to various authorities which he said had established a distinction between the pursuit of an argument which did not succeed and the institution of proceedings which was manifestly incompetent. Mr Latham referred to particular aspects of the evidence of the allegations that have been made against the applicants, and he asserted that if those allegations have been upheld the Commission would not have found that the dismissals of the applicants were harsh, unjust or unreasonable. Mr Latham asserted that the employer was entitled to think that notwithstanding a level of identified weaknesses in the employer’s position, if the evidence before the Commission confirmed in part or in full, the substance of the allegations, the applications would be likely to have failed.

[21] Mr Latham made further submissions which referred to various shortcomings that could be identified with the findings that have been made by the AIS investigation. Mr Latham stressed that the employer was not necessarily bound to accept and adopt the findings of the investigation, and particularly as the investigation sought to determine whether there was reportable conduct, it proceeded on a different basis than whether the dismissals of the applicants were harsh, unjust or unreasonable. Further, Mr Latham stressed that although the investigation process was clearly flawed, the matters under investigation were of such significance that the employer was obliged to take certain steps and actions to ensure that it complied with relevant statutory and other requirements in regard to child protection.

[22] The submissions made by Mr Latham also rejected the proposition that the identified condonation of conduct relied upon as reason for dismissal would, of itself, render the defence of the dismissals as incompetent. Mr Latham said that any condonation was just one issue that the Commission would have regard for when determining whether the dismissals should be upheld or not. Mr Latham also stressed that the employer relied upon more recent conduct of the applicants as basis for their dismissals, and although the AIS investigation had made inconclusive findings about the more recent conduct, it was, according to Mr Latham, open for the employer to consider that the Commission might make findings that supported the employer’s position.

[23] In further submissions, Mr Latham referred to the respective offers that the Parties had made in an attempt to reach settlement. Mr Latham criticised the position that had been advanced on behalf of the applicants which had increased from a proposition of 23 weeks remuneration to 26 weeks plus a further $8,000 in relation to costs. Mr Latham submitted that this proposition was clearly a figure over the jurisdictional limit. Mr Latham stated that the employer had made reasonable offers of 15 weeks remuneration as the basis for settlement, while the applicants had increased their position to be beyond the 6 months maximum compensation and introduced the alternative remedy of reinstatement which had not initially been sought.

[24] In summary, the submissions made by Mr Latham acknowledged that the employer’s investigation was poor and that the process that it had adopted in respect of the dismissals of the applicants was also deficient. However, Mr Latham stressed that the allegations made against the applicants potentially involved very serious matters, and although the employer’s defence failed to carry the day before the Commission, that did not mean that it had adopted a position that was without merit, or that it had taken a response that was without reasonable cause or had no reasonable prospects of success. Mr Latham submitted that neither the provisions of s. 611 or s. 400A of the Act had been enlivened, and that when the Commission considered all of the relevant circumstances, it should not exercise any discretion to make a costs Order against the employer.

Consideration

[25] There are a number of different sections of the Act which deal with costs, in this instance the application for costs, as set out in the initiating Form F6, was made under ss. 400A and 611 of the Act.

[26] The Commission may make a costs Order in respect to an unfair dismissal claim if any of the terms of either ss. 400A or 611 have been satisfied. Relevantly, these two sections of the Act are in the following terms:

“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

and

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).”

General Approach to Costs

[27] The approach to consideration of any application for costs made under the Act should, at the outset, recognise the significance of subsection 611 (1) and the implications that have been established to flow from those particular provisions. In this regard, it is relevant to refer to a Full Bench Decision in the matter of E. Church v Eastern Health t/as Eastern Health Great Health and Wellbeing 1 and the following extract from that Decision is relevant:

“[26] Section 611 sets out a general rule - that a person must bear their own costs in relation to a matter before the Commission (s.611(1)) - and then provides an exception to that general rule in certain limited circumstances. The Explanatory Memorandum confirms this interpretation of the section, it is in the following terms:

2353. Subclause 611(1) provides that generally a person must bear their own costs in relation to a matter before FWA.

2354. However, subclause 611(2) provides an exception to this general rule in certain limited circumstances. FWA may order a person to bear some or all of the costs of another person where FWA is satisfied that the person made an application vexatiously or without reasonable cause or the application or response to an application had no reasonable prospects of success.

2355. A note following subclause (2) alerts the reader that FWA also has the power to order costs against lawyers and paid agents under clauses 376, 401 and 780 which deal with termination and unfair dismissal matters.

2356. Subclause 611(3) provides that a person to whom a costs order applies must not contravene a term of the order.

[27] In the context of s.570 and its legislative antecedents courts have observed that an applicant who has the benefit of the protection of a provision such as s.570(1), (ie the general rule that parties bear their own costs), will only rarely be ordered to pay costs 5 and that the power should be exercised with caution and only in a clear case 6. In our view a similarly cautious approach is to be taken to the exercise of the Commissions powers in s.611 of the FW Act.” [emphasis added]

[28] Consequently, it has been well established that there should be a cautious approach taken in respect to any application for costs made under the Act. This caution operates to establish an underlying reluctance to grant any application for costs and to only do so in instances where a clear case has been made out to satisfy the exceptions to the general rule that each side bear its own costs. Those exceptions are specified in subsections 611 (2) (a) and (b) of the Act, and in the case of a claim for unfair dismissal, also extend to circumstances identified in subsection 400A (1).

[29] In this case, the applicants have advanced their costs application upon two identified grounds. Firstly, it was asserted that the employer’s response to the unfair dismissal applications had been made without reasonable cause and/or that it should have been reasonably apparent to the employer that the response to the applications had no reasonable prospects of success. Secondly, the applicants asserted that the conduct of the employer in respect to the continuation of the defence of the proceedings, particularly after the lawyers acting for the applicants had provided notice of the applicants’ intention to pursue costs, established unreasonable acts or omissions which caused the applicants to incur costs. The lawyers acting for the applicants asserted that on either or both of these grounds, there was basis upon which the exceptions to the general rule that each side bear its own costs, had been established.

Without Reasonable Cause - s. 611 (2) (a)

[30] On the question of whether the response to the applications could be considered to have been taken without reasonable cause, it is important to have regard for the established stringency of the test that must be met to satisfy that a case, or a response as in this instance, was taken without reasonable cause. In numerous Judgements and Decisions there have been various descriptions used to characterise the test required for a finding that a case, or response, was taken without reasonable cause. Terminology such as “manifestly groundless” “obviously untenable” and “incapable of argument” has provided guidance.

[31] The relevant tests for finding that a response was taken without reasonable cause, when translated into the context of a response to an application for unfair dismissal remedy, requires identification of some aspect of the response which would unquestionably defeat the defence taken against the application. A response to an unfair dismissal claim that was taken without reasonable cause would contain some aspect which was identifiable from the response and which of itself, would operate to strike the defence out. For example, a response which stated and provided verification that the only reason for dismissal had been confirmed to have been factually erroneous, would be a response that would be likely to have been taken without reasonable cause.

[32] In this case, the proposition was advanced that the reason for the dismissals included conduct from an earlier time, which was known to, and previously dealt with by the employer, and this established condonation of that conduct which waived any right for the employer to rely upon that conduct as reason for the dismissals. The condoned conduct was said to have meant that the response to the applications was taken without reasonable cause. However, the condoned conduct was not the only reason that was advanced as basis for the dismissals, more recent conduct was also said to provide reason for the dismissals. Consequently, even if the condoned conduct could be held to have established a response that was fatally defective or otherwise incapable of argument, the employer had further basis for its response which was capable of argument.

[33] In any event, it would be unusual that asserted condonation would render any defence of an unfair dismissal claim to be incapable of argument or manifestly untenable. The detailed circumstances of the condoned conduct would still permit argument as to whether any purported condonation did establish a waiver to any subsequent reliance upon that conduct as reason for dismissal. Prior conduct for which condonation was said to have occurred would not automatically translate into an absence of valid reason for dismissal, it would ordinarily be a matter open to some argument.

[34] It is also relevant to note that at no point prior to the making of the application for costs did the applicants articulate the proposition that the defence of the unfair dismissal claims was fatally defective or otherwise incapable of argument. In fact, the email of 10 July 2020 from the applicants’ lawyers only mentions; “s440A of the Fair Work Act” and “… the apparent clear condonement by your client of the prior conduct.” 2

[35] Although the employer may have properly identified that its response to the applicants’ unfair dismissal claims was not particularly strong and would probably be incapable of defence in respect to the condoned conduct, at no stage was there some identified defect that would have made the totality of the response manifestly groundless, or obviously untenable, or incapable of argument. There were identifiable aspects of the response which could be capable of defeating the claims and which were open to argument. Consequently, the response to the unfair dismissal applications was not made without reasonable cause as contemplated by s. 611 (2) (a) of the Act.

No Reasonable Prospect of Success - s. 611 (2) (b)

[36] The applicants also advanced their application for costs upon the assertion that it should have been reasonably apparent to the employer that its response had no reasonable prospect of success. It seems to be well settled that the test to establish that a case, or response, had no reasonable prospects for success is not as stringent as that required to find that a matter had been taken without reasonable cause.

[37] Consideration of this aspect of the application for costs involves a broad assessment of the merits of the case as should have been properly evaluated at the time of the making of the response. However, caution must be exercised to carefully evaluate whether any alleged absence of merit would have been reasonably apparent to the employer at the time of making the response.

[38] In this instance, it is relevant to recognise that at the time that the response was made the applicants had identified only monetary compensation as the remedy that was sought. Importantly, the employer appeared to make a realistic assessment of the strengths and weaknesses of its defence, and this assessment was reflected in the significant offer of 15 weeks remuneration as the financial component of settlement for each applicant. The 15 weeks being additional to the 5 weeks’ notice that was paid on termination.

[39] In addition, it is well-established that the assessment regarding no reasonable prospects for success is to be made at the time of the making of the response, rather than at a later point when the applicants had filed and served their full evidentiary case. Further, it is relevant to again recognise that the evidence regarding the email of 10 July 2020, whereby the lawyers acting for the applicants had put the employer on notice that a costs application would be made, referred to the condoned conduct and s. 400A of the Act. At this point in time, 10 July 2020, the remedy sought by the applicants was monetary compensation, and the employer would have understandably contemplated that even if the dismissals of the applicants were found to have been unfair, there was a realistic prospect that it may have been successful in limiting any amount of compensation. Consequently, any reasonable prospects for success of the response would have logically extended to a level of success in respect to the quantum of any remedy.

[40] In this instance, a careful, objective, and informed assessment of the employer’s response to the unfair dismissal applications may have established that even if it did not have strong prospects for success in respect to the primary determination, there were reasonable prospects that the response may be successful in respect to the quantum of any monetary compensation. Consequently, no finding can be made that the employer’s response to the unfair dismissal applications had no reasonable prospect of success in satisfaction of the provisions of s. 611 (2) (b) of the Act.

Unreasonable Act or Omission - s. 400A (1)

[41] The lawyers acting for the applicants also pursued the costs application on the basis that there was conduct on the part of the employer that satisfied subsection 400A (1) of the Act.

[42] Subsection 400A (1) of the Act introduces a further exception to the general rule established by subsection 611 (1) that each side bear its own costs in relation to a matter before the Commission. This particular exception is confined to unfair dismissal proceedings and requires that the Commission be satisfied that a Party caused costs to be incurred by another Party because of an unreasonable act or omission. An unreasonable act or omission could occur in respect to a particular aspect or part of the proceedings, or such act or omission might involve a more general finding in respect to a combination of factors surrounding the application, the response, and any part or parts of the proceedings.

[43] The lawyers for the applicants asserted that the conduct of the employer in continuing its defence after it had been put on notice that a costs application would be perused and in circumstances where the applicants had advised that they would be seeking a remedy of reinstatement, represented unreasonable acts or omissions in connection with the conduct or continuation of the matter in satisfaction of s. 400A of the Act. The position that both the employer and the applicants adopted in the pursuit of settlement has required some examination so as to ascertain whether the employer acted unreasonably by refusing to agree to the settlement terms that were advanced by the lawyers that were acting on behalf of the applicants.

[44] As has been earlier identified, the prospects for settlement of the applications were briefly traversed during the Pre-Hearing Conference/Conciliation held on 11 June 2020, and regrettably, the applicants rejected the employer’s request for a further member-assisted conciliation. The following day the employer’s solicitors conveyed an offer of 15 weeks’ pay for each of the applicants as financial settlement of the matters. On 16 June 2020, the applicants’ lawyers conveyed a counter proposition of 23 weeks’ pay as financial settlement of the matters. On 23 June 2020, the employer’s lawyers advised the applicant’s lawyers that the applicants’ proposition for settlement had been rejected and confirmed that the employer’s previous settlement offer of 15 weeks remained open.

[45] Settlement communications were reactivated by the employer’s solicitors in late July, when the 15 weeks figure was again mentioned as being in addition to the 5 weeks’ notice, and that the 23 weeks proposition that had previously been advanced on behalf of the applicants was seen to be in excess of the statutory maximum when added to the 5 weeks’ notice that had been paid upon termination. Unfortunately, the prospects for any settlement appear to have been extinguished when the lawyers acting for the applicants conveyed a further proposition for settlement that involved, inter alia, 26 weeks’ pay in addition to the 5 weeks paid in lieu of notice, and an additional amount in respect to costs of $8,000.

[46] Upon any objective and reasonable consideration of the position faced by the employer it was not an unreasonable act for it to reject the further proposition for settlement that was conveyed by the lawyers acting for the applicants. The applicants were proposing settlement for amounts that exceeded the maximum statutory amount of monetary compensation in instances where the applicants had initially sought a remedy of; “1. Maximum compensation under the Fair Work Act [and] 2. An agreed statement of service.”

[47] Although the applicants were entitled to change the remedy that they sought to reinstatement, and to increase rather that decrease the amounts on offer, a realistic, objective assessment of the potential outcome of the proceedings should have contemplated that success might provide for Orders of compensation of the 21 weeks as eventuated. Sadly, it would seem that with some realistic, conciliatory approach to negotiation of settlement, the applicants would have been likely to have moved the employer from its initial 15 weeks, to an amount close or equal to what was eventually achieved, but without the costs associated with the Hearing. In simple terms, a realistic assessment of a settlement of 15 weeks may have been considered to have produced a better outcome for the applicants than 21 weeks at arbitration.

[48] Consequently, in the particular circumstances of this case, there was no basis upon which to establish that the employer engaged in any unreasonable conduct which may have represented an act or omission capable of satisfying the terms of subsection 400A (1) of the Act.

Conclusion

[49] This application for costs was made by the successful applicants in unfair dismissal proceedings. The costs application was made under ss. 400A and 611 of the Act. Consequently, the Commission has been required to consider whether the requirements of subsections 611 (2) (a) and (b) and s. 400A of the Act were satisfied so that costs should be Ordered against the employer.

[50] In respect to subsection 611 (2) (a) of the Act, an analysis of the circumstances at the time that the response to the unfair dismissal applications was made, has confirmed that the response was not made without reasonable cause.

[51] Further, for the purposes of subsection 611 (2) (b) of the Act, having regard for the range of factors under examination and potential determination in unfair dismissal proceedings, including both the primary determination and the remedy that may follow, the Commission could not be satisfied that at the time that the response to the applications was made, or upon some subsequent assessment, it should have been reasonably apparent to the employer that the response had no reasonable prospects of some form of success.

[52] In respect to subsection 400A (1) of the Act, the Commission has not been satisfied that the actions of the employer in connection with the conduct or continuation of the matter could be found to have been unreasonable. Consequently, the Commission has not been satisfied that any unreasonable acts or omissions on the part of the employer have been established in satisfaction of the requirements of subsection 400A (1) of the Act.

[53] Very sadly, the circumstances in these proceedings have involved matters where the cost of the litigation appears to have exceeded what should have been assessed to be a likely potential outcome. There was clearly significant prospect to avoid the litigation and a sensible settlement could have been achieved if a more realistic and conciliatory approach to settlement negotiation had been adopted. Although a Party to unfair dismissal proceedings is entitled to take a robust approach to negotiations surrounding settlement, including adopting propositions which move away from rather than closer to the other side’s position, such “hard” bargaining does have consequences when any assessment is made about the reasonableness of the conduct of each Party.

[54] In summary therefore, the requirements of subsections 611 (2) (a) and (b) and 400A (1) of the Act have not been properly satisfied. The general rule established by subsection 611 (1) of the Act, that each Party bear its own costs, is not disturbed by any one or more of the exceptions provided in subsections 611 (2) and 400A (1) of the Act.

[55] The application for costs advanced by the lawyers acting for the applicants must be refused and an appropriate Order shall be issued in conjunction with this Decision.

COMMISSIONER

Appearances:

Ms L Doust, Counsel with Mr K Bolwell from Work Lawyers appearedfor the Applicants.

Mr I Latham, Counsel with Ms K Lopes from Colin Biggers & Paisley Lawyers appearedfor the employer.

Hearing details:

2021.
Sydney:
June, 21.

Printed by authority of the Commonwealth Government Printer

<PR732854>

 1   E. Church v Eastern Health t/as Eastern Health Great Health and Wellbeing [2014] FWCFB 810.

 2   Exhibit C1.