Benjamin Hatch v WesTrac Pty Ltd
[2020] FWC 6579
•7 DECEMBER 2020
| [2020] FWC 6579 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Benjamin Hatch
v
WesTrac Pty Ltd
(U2020/8327)
DEPUTY PRESIDENT SAUNDERS | NEWCASTLE, 7 DECEMBER 2020 |
Application for costs – application dismissed.
Introduction
[1] On 27 October 2020 I decided that Mr Benjamin Hatch was unfairly dismissed by WesTrac Pty Ltd (WesTrac) and ordered WesTrac to pay Mr Hatch compensation in the sum of $28,313.41 (less applicable tax). 1
[2] On 10 November 2020 Mr Hatch filed an application for costs against WesTrac.
[3] Both parties consented to my determination of the costs application on the papers.
[4] In determining the costs application I have had regard to Mr Hatch’s submissions dated 20 November 2020 and 2 December 2020, Mr Hatch’s witness statement dated 20 November 2020, a witness statement made by Mr Hatch’s solicitor, Mr Justin Claude Le Blond, dated 20 November 2020, WesTrac’s submissions dated 25 November 2020, and a witness statement made by WesTrac’s solicitor, Ms Alice Mary DeBoos, dated 25 November 2020.
Basis for costs application
[5] Mr Hatch seeks payment of his legal costs and disbursements in the sum of $26,526.50 pursuant to section 400A and/or section 611 of the Fair Work Act2009 (Cth) (Act).
[6] Mr Hatch’s primary contentions in support of his costs application are as follows:
• WesTrac was advised in writing on multiple occasions prior to Mr Hatch’s dismissal on 29 May 2020 that it had failed to conduct a ‘thorough’ investigation into the allegations. It took no steps to remedy those deficiencies (even though they were articulated in writing) and the Commission ultimately found in Mr Hatch’s favour in relation to the investigation for the reasons that had been explained to WesTrac prior to his dismissal. In doing so, WesTrac unreasonably defended the indefensible;
• WesTrac took no meaningful steps to resolve Mr Hatch’s unfair dismissal application by way of commercial settlement; and
• WesTrac did not comply with the order to pay compensation to Mr Hatch within 21 days of the Merits Decision. The order required the sum of $28,313.41(less applicable tax) to be paid within 21 days (17 November 2020). Payment was not made by that date. Mr Hatch contends that in considering the totality of WesTrac’s vexatious and unreasonable conduct and disregard for the Act and the Commission, this is a relevant factor supporting an order for costs.
[7] Mr Hatch also submits that WesTrac knew, or objectively ought to have known, prior to the dismissal, that it had no valid reason for dismissal and therefore no reasonable prospects of defending the unfair dismissal application. Mr Hatch contends that WesTrac did not have the objective information available to it to reach the requisite standard of satisfaction in relation to the question of valid reason, and WesTrac had been told that prior to the dismissal.
[8] Mr Hatch submits that at all times he sought to resolve the matter on a without prejudice basis. On 28 May 2020 Mr Hatch offered to resolve the matter on the basis that he be allowed to resign, the parties enter into a deed of release, and WesTrac pay Mr Hatch 6 months’ pay. It is contended that in circumstances where WesTrac knew (or ought to have known) that it had no valid reason for dismissal and no reasonable prospects of defending an unfair dismissal application, that offer was a reasonable initial offer.
[9] On 29 May 2020 WesTrac, through its solicitors, advised Mr Hatch that no compensation would be offered to him. That position remained the same at the conciliation conference on 8 July 2020. Indeed, WesTrac did not make any monetary offers to Mr Hatch. Mr Hatch contends that WesTrac’s failure to engage meaningfully and actively in settlement discussions constituted an ‘unreasonable omission’ in connection with the continuation of the matter within the meaning of s 400A(1) of the Act. Mr Hatch does not contend that WesTrac acted unreasonably in declining Mr Hatch’s offer of 6 months’ pay.
[10] Further, Mr Hatch contends that he has caused attempts to be made to resolve his application for costs without the need for further costs to be incurred by either party. WesTrac has declined to engage in those negotiations.
Relevant legal principles
[11] Section 611(1) of the Act establishes a general rule that parties in proceedings before the Commission must bear their own costs. There are a number of provisions in the Act which operate as exceptions to this general rule and allow costs to be awarded in specific circumstances. Sections 400A and 611(2) of the Act are two such exceptions.
[12] Section 400A of the Act provides as follows:
“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.”
[13] Section 400A(1) of the Act establishes two preconditions for the making of an order for costs:
(a) First, the Commission must be satisfied that the party engaged in an unreasonable act or omission in relation to the conduct or continuation of a matter; and
(b) Secondly, such act or omission caused the other party to the matter to incur costs.
[14] If these two preconditions are satisfied, a discretionary power to order the payment of such costs is enlivened.
[15] Section 611(2) of the Act provides as follows:
“(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.”
[16] The relevant principles concerning the interpretation and application of s 611(2)(a) were comprehensively stated in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing 2and may be summarised as follows:
• 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 was 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, is manifestly groundless, or discloses a case where the tribunal is satisfied it cannot succeed.
[17] In relation to s 611(2)(b), the relevant principles were summarised by the Full Bench in Baker v Salva Resources Pty Ltd 3as follows (footnotes omitted):
“[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.”
Consideration
Defending the indefensible?
[18] I do not accept Mr Hatch’s contention that WesTrac unreasonably defended the indefensible. The key issue in the case was whether Mr Hatch engaged in the alleged misconduct. That is, did he have an intention to steal the struts? The outcome of that issue depended on whether I believed Mr Hatch’s evidence that he had no intention to steal the struts. Prior to the hearing, Mr Hatch was given multiple opportunities to put forward relevant evidentiary material to support his contention that he had no intention to steal the struts. Those opportunities included his written responses to the show cause letter provided to him by WesTrac prior to his dismissal, his oral responses to the allegations in his meetings with WesTrac prior to his dismissal, his witness statement in chief filed in the Commission, and his witness statement in reply filed in the Commission. Notwithstanding those opportunities, much of the relevant evidence on which I relied in finding, on the balance of probabilities, that Mr Hatch did not have an intention to steal the struts only came out during cross examination and re-examination. 4 Those circumstances, coupled with the ‘troubling aspects’ of Mr Hatch’s version of events to which I referred in paragraph [22] of the Merits Decision, support a conclusion that WesTrac did not unreasonably defend the indefensible. In all the circumstances, I am satisfied that WesTrac had reasonable prospects of success in defending Mr Hatch’s unfair dismissal claim. I am also satisfied that WesTrac had a genuine conviction in its decision to dismiss Mr Hatch for intending to steal the struts. Further, I find that in defending the unfair dismissal claim, WesTrac’s motive or purpose was not to harass or embarrass Mr Hatch or to gain a collateral advantage.
[19] True it is that WesTrac failed to conduct a ‘thorough’ investigation in accordance with its own policies 5 and this was pointed out by Mr Hatch prior to his dismissal and during the proceedings in the Commission. However, this was a subsidiary issue to the question of whether Mr Hatch had an intention to steal the struts. Mr Hatch had every opportunity to put forward information to WesTrac relevant that question, both prior to his dismissal and prior to the hearing in the Commission. As I have stated, much of the relevant evidence only emerged during cross examination and re-examination. I do not accept the contention that WesTrac knew, or objectively ought to have known, prior to the dismissal, that it had no valid reason for dismissal and therefore no reasonable prospects of defending the unfair dismissal application.
Meaningful steps to resolve the unfair dismissal application by way of commercial settlement
[20] The evidence reveals that Mr Hatch made an offer of 6 months’ pay on 28 May 2020. WesTrac did not accept that offer and did not make any financial offers, although it did participate in settlement discussions. Also of relevance is the fact that Mr Hatch sought reinstatement in his unfair dismissal claim.
[21] In circumstances where the only financial offer Mr Hatch made was for the jurisdictional maximum (6 months) and he sought the remedy of reinstatement during the unfair dismissal proceedings in the Commission, it was not, in my view, unreasonable for WesTrac not to make a financial offer or take any other steps to resolve the matter by way of a commercial settlement. WesTrac successfully opposed the claim for reinstatement and ended up with an order to pay compensation in an amount equivalent to about 4 months’ pay. Further, the outcome of the case turned on my acceptance of Mr Hatch’s evidence as to his intention. The ‘troubling’ aspects of Mr Hatch’s conduct meant there was a real question as to whether Mr Hatch would be believed. Those matters support the conclusion that WesTrac did not engage in an unreasonable omission in not taking meaningful steps to resolve Mr Hatch’s unfair dismissal application by way of commercial settlement.
Failure to comply with compensation order in time
[22] On 27 October 2020 I ordered WesTrac to pay compensation to Mr Hatch within 21 days of the date of the order. Accordingly, the compensation was required to be paid by 17 November 2020. By email dated 2 November 2020, WesTrac’s lawyers informed Mr Hatch’s lawyers of the net amount that would be paid to Mr Hatch and asked for confirmation as to whether it should be paid into the bank account into which Mr Hatch’s wages were paid during his employment with WesTrac. No response was received to that email. As a result, on 5 November 2020 WesTrac’s lawyers informed Mr Hatch’s lawyers that the payment would be made into Mr Hatch’s “last known back account in which he received his pay”.
[23] On 20 November 2020 WesTrac’s lawyers sent correspondence to Mr Hatch’s lawyers in the following terms:
“We confirm receipt of the Applicant’s materials filed in the application for costs.
Please note that on 5 November 2020, Ms Bianca-Jones instructed the payroll department to immediately pay the compensation amount to your client. Ms Jones was assured by the payroll department that the payment would be processed on that day.
Despite those assurances, on Wednesday 18 November 2020, Ms Jones was advised that an administrative error had occurred and the compensation payment had not yet been processed. On 18 November 2020, Ms Jones advised the payroll department to make the payment immediately, which we are instructed occurred.”
[24] Mr Hatch accepts that he received payment of the net compensation sum on 19 November 2020.
[25] Having regard to the matters set out above, I am satisfied that the reason for the short delay in making the payment to Mr Hatch was an unintentional administrative error. WesTrac’s conduct in this regard does not, in my view, amount to an unreasonable act or omission, nor does it support a conclusion that WesTrac responded to the unfair dismissal application vexatiously or without reasonable cause. Further, I am not satisfied that the failure to make the compensation payment on time caused Mr Hatch to incur any costs.
No negotiation re application for costs
[26] Shortly after filing his costs application, Mr Hatch, through his solicitors, sought to negotiate payment of his costs and disbursements in the sum of $24,000. WesTrac rejected that proposal and has defended the application for costs.
[27] WesTrac has been successful in its defence of Mr Hatch’s costs application. Its decision to reject Mr Hatch’s costs offer and not to make any counter offer was not unreasonable in the circumstances.
Conclusion
[28] For the reasons given, I am satisfied that:
• WesTrac has not engaged in any unreasonable acts or omissions which have caused Mr Hatch to incur costs;
• WesTrac did not respond to Mr Hatch’s unfair dismissal application or his costs application vexatiously or without reasonable cause; and
• it should not have been reasonably apparent to WesTrac that its response to either Mr Hatch’s unfair dismissal application or his costs application had no reasonable prospects of success.
[29] Accordingly, Mr Hatch’s costs application pursuant to s 400A and/or s 611 of the Act is dismissed.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
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1 Hatch v WesTrac [2020] FWC 5729 (Merits Decision)
2 [2014] FWCFB 810 at [23]-[33]
3 [2011] FWAFB 4014; (2011) IR 174
4 See Merits Decision at [18] & [22]
5 Merits Decision at [35]
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