Brett Powell v Group Messengers Pty Ltd
[2021] FWC 6521
•6 DECEMBER 2021
| [2021] FWC 6521 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Brett Powell
v
Group Messengers Pty Ltd
(U2021/995)
DEPUTY PRESIDENT MASSON | MELBOURNE, 6 DECEMBER 2021 |
Application for costs pursuant to s.400A of the Act – application refused.
Introduction
[1] On 8 February 2021, Mr Brett Powell (Mr Powell) made an application to the Fair Work Commission (the Commission) for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the Act) in relation to the termination of his employment by Group Messengers Pty Ltd (Group Messengers).
[2] Mr Powell was found to have not been unfairly dismissed in a decision 1 issued on 1 October 2021 (the Decision). An order2 was subsequently issued dismissing the application.
[3] Group Messengers Pty Ltd now seeks an order for costs against Mr Powell pursuant to s.400A of the Act. The costs application is validly made having been filed by Group Messengers on 15 October 2021, the 14th day 3 after the Decision and Order were issued.
[4] At a mention held before me on 22 October 2021, the parties agreed for the application to be determined on the papers and directions were issued on the same day to that effect.
Background to the costs application
[5] In his Form F2 – Unfair Dismissal Application (Form F2), Mr Powell alleged that he was dismissed on 18 January 2021 for reasons of serious misconduct. In doing so Mr Powell stated at section 3.2 paragraph 13 that a relevant factor in determining whether he was a contractor or employee is that the “the Applicant solely performed work for the Respondent”.
[6] In its Form F3 – Employer Response to Unfair Dismissal Application (Form F3) Group Messengers objected to the application being heard on the basis that Mr Powell was not an employee, he was engaged pursuant to a contractor agreement and consequently was not dismissed within the meaning of s.386 of the Act.
[7] On 22 February 2021 Mr Powell advised the Commission via email that he wished for the matter to proceed to arbitration and therefore did not wish to engage in a conciliation. In response to Mr Powell’s decision not to attend a conciliation, Group Messengers requested that the matter be listed for a separate hearing of its jurisdictional objection.
[8] On 24 February 2021 the matter was allocated to my chambers and a notice of listing and directions for the jurisdictional objection hearing were issued. The matter was set down for hearing of Group Messengers’ jurisdictional objection on 1-3 June 2021.
[9] On 12 April 2021 Mr Powell filed an outline of submissions, documents and a witness statement (Powell First Statement) which contained the following statements;
“…………….
Work performed for Capital
4. I worked as an owner truck driver exclusively for Capital Transport in Melbourne from around September 2005 until 18 January 2021, though I was formally engaged by the respondent to this proceeding, who is part of the corporate group.
……………….
17. I did not work for any other business while working for Capital. The only work I did during this time was driving for Capital. The regularity of the jobs assigned by Capital left little room to work elsewhere. Also, if your reliability or availability ever diminished, Capital was known for giving you less work, so I was somewhat afraid to even consider other work as I did not want to jeopardise my main income despite my desire to increase my income.
………”
[10] On 15 April 2021 Group Messengers (via its legal representative) wrote to Mr Powell’s legal representatives seeking various documents from Mr Powell. The documents sought were as follows;
“………………
Category 1: Copies of Mr Powell’s tax returns, and the working papers and supporting documents relating to those tax returns, for each of the years in which he was engaged with the Respondent.
Category 2: Copies of Mr Powell’s BAS statements, and the working papers and supporting documents relating to those statements, for each of the years in which he was engaged with the Respondent.
Category 3: Copies of any documents or records relating to income generated by Mr Powell, or any entities operated by him, (including, but not limited to, payslips, BASs, tax returns and bank statements showing the payment of wages/fees for service) that was not generated from the Respondent.
……………….” 4
[11] Group Messengers foreshadowed that if the Applicant declined to provide the requested documents by 21 April 2021, it would proceed to seek an order for production of documents from the Commission. In a telephone conversation between Group Messengers’ legal representative and Mr Powell’s legal representative (Mr Alkan) on 21 April 2021, Mr Alkan advised that Mr Powell had instructed him that he would not voluntarily produce documents without being ordered by the Commission to do so.
[12] On 23 April 2021 Group Messengers made an application to the Commission seeking orders for the production of documents by Mr Powell (First Notice to Produce) in the same form as sought by Group Messengers in their earlier correspondence to Mr Powell on 15 April 2021 as set out above at [10]. In a Form F1 filed in response to the First Notice to Produce, Mr Powell objected to the entirety of the First Notice to Produce and specifically objected to an order being made in respect of Category 3 documents. At paragraph [17] of Mr Powell’s Form F1 response the following was submitted;
“17. The Applicant specifically objects to item 3, on the basis that such material does not exist. On the Respondent’s own evidence as set out above, the Applicant worked nearly 9 hours a day for the Respondent.”
[13] On 30 April 2021 an order (30 April Order) was issued by the Commission that required Mr Powell to produce the following documents to the Commission on or by 10.00am on 11 May 2021:
1. Copies of Mr Powell’s tax returns lodged with the Australian Tax Office (ATO) together with the accompanying notices of assessment and any supporting documents attached to or lodged with those tax returns for the following periods:
a) 1 July 2014 - 30 June 2015;
b) 1 July 2015 - 30 June 2016;
c) 1 July 2016 - 30 June 2017;
d) 1 July 2017 - 30 June 2018.
2. Copies of Mr Powell’s BAS statements lodged with the ATO together with any supporting documents attached to or lodged with those statements for the following periods:
a) 1 July 2014 - 30 June 2015;
b) 1 July 2015 - 30 June 2016
c) 1 July 2016 - 30 June 2017;
d) 1 July 2017 - 30 June 2018.
[14] On 12 May 2021 a further application was made by Group Messengers and a subsequent order (24 May Order) was issued on 24 May 2021 requiring the production of the following documents by Mr Powell by midday on 28 May 2021:
1. Copies of Mr Powell’s tax returns lodged with the Australian Tax Office (ATO) together with the accompanying notices of assessment and any supporting documents attached to or lodged with those tax returns for the following periods:
a) 1 July 2018 - 30 June 2019;
b) 1 July 2019 - 30 June 2020.
2. Copies of Mr Powell’s BAS statements lodged with the ATO together with any supporting documents attached to or lodged with those statements for the following periods:
a) 1 July 2018 - 30 June 2019;
b) 1 July 2019 - 30 June 2020.
[15] On 13 May 2021 Mr Powell produced documents in compliance with the 30 April Order. The order was only served by Group Messengers on Mr Powell on 10 May 2021.
[16] On 28 May 2021 Group Messengers’ legal representative wrote to Mr Alkan in relation to the documents produced by Mr Powell in response to the 30 April Order and highlighted that Mr Powell had failed to comply with the order in respect of particular financial years. Group Messengers also stated in the correspondence that on review of the produced material they required further documents and requested Mr Powell to produce the following documents;
“……………
1. All relevant documents relating to the incorporation and deregistration of Powell Transport Pty Ltd (ACN 112 530 337) (Powell Transport) and all financial documents of Powell Transport for financial years 14/15 to 17/18 inclusive (including, without limitation profit and loss statements for the Powell Transport indicating receipt of income for this period). These documents are relevant to whether, and the extent to which, your client operated an incorporated entity to provide services to our client (and potentially other transport companies). This issue is manifestly relevant to an assessment of whether your client was an employee or a contractor.
2. Documents relating to the expenses that are claimed in the individual tax return for the financial year ending 30 June 2018, that is, that part of the tax return where the total deductions on account of work-related expenses were claimed in the amount of $29,832.00. These documents are relevant to the extent to which your client was able to claim deductions for expenses he incurred in the course of providing his services to our client, and the nature of those expenses. Those issues are manifestly relevant to an assessment of whether your client was an employee or a contractor.
…………….” 5
[17] On 28 May 2021 Mr Powell produced documents in compliance with the 24 May Order.
[18] On 31 May 2021 Group Messengers’ legal representatives again wrote to Mr Alkan in relation to documents produced by Mr Powell in response to the 24 May Order and identified that Mr Powell had produced unsigned individual tax returns for certain financial years and that these returns claimed deductions on account of particular expenses. Group Messengers requested Mr Powell produce supporting documents relating to the claimed expenses by the close of business on 31 May 2021 6.
[19] At 5:49 PM on 31 May 2021, Mr Powell filed in the Commission and served on Group Messengers a second witness statement 7 (Powell Second Statement) which comprised the following two paragraphs:
“1. I signed a statement in this proceeding on 12 April 2021. I re-read my statement over the weekend and wish to provide the following clarification.
2. At paragraph 17 of my statement I said “I did not work for any other business while working for Capital. The only work I did during this time was driving for Capital”. When I said this I meant in recent times, meaning the past 8 years or so. From around the time I started working for Capital in September 2005 until June 2013, I also used my truck to provide services to The Herald and Weekly Times delivering bulk newspapers at night time. At no stage did I ever have these newspapers in my truck at the same time as I was carting freight for Capital.”
[20] On 1 June 2021 at the hearing listed to deal with Group Messengers’ jurisdictional objection, Group Messengers sought two further orders be made for the production of documents relation to Mr Powell’s performance of work for the Herald and Weekly Times (HWT). The hearing set down for 1-2 June 2021 was adjourned and re-listed for 22-23 July 2021.
[21] On 4 June 2021, a further order (4 June Order) was issued by the Commission for the production of the following documents by Mr Powell:
1. Any profit and loss statement or similar financial report prepared to support the expense deductions, for the following financial years:
a. For the individual tax return for the financial year 1 July 2017 to 30 June 2018 – the expense of $3,300 for “motor vehicle expenses” and the expense of $29,832 for “all other expenses” (pg. 13 of that return);
b. For the individual tax return for the financial year 1 July 2018 to 30 June 2019 - the “total amount of other deductions against PSI” of $41,428 (pg. 7 of that return); and
c. For the individual tax return for the financial year 1 July 2019 to 30 June 2020 - the “total amount of other deductions against PSI” of $24,905 (pg. 8 of that return).
2. Documents evidencing or recording the incorporation and deregistration of Powell Transport Pty Ltd (ACN 112 530 337).
3. The following documents of Powell Transport Pty Ltd (ACN 112 530 337) for the financial years ending 30 June 2010 to 30 June 2020 inclusive:
a. company tax returns;
b. profit and loss statements or similar financial report;
c. balance sheets; and
d. to the extent not included in (a)-(c) above, any other documents evidencing or recording the receipt or distribution of income for this period.
4. Documents concerning Mr Powell’s performance of work for the Herald and Weekly Times (HWT) during the period 2005 to January 2021, whether or not conducted by Mr Powell personally or indirectly, that evidence or record:
a. contracts for services or employment agreements with the HWT;
b. documents providing details of:
(i) the number of hours and times worked;
(ii) income received; and
(iii) whether the services were performed by Mr Powell personally, by way of a registered company or by another individual on behalf of and/or driving a vehicle owned by Mr Powell.
5. Documents evidencing or recording any other work performed Mr Powell from 2005 to January 2021 including contracts or agreements for the performance of such work and details of the income received for such work whether received personally by Mr Powell or by way of a registered company or by another individual on behalf of and/or driving a vehicle owned by Mr Powell.
[22] Further, on 4 June 2021, orders were also issued by the Commission to HWT (4 June HWT Order) for production of the following documents:
1. All documents held by The Herald and Weekly Times Pty Limited (ACN 004 113 937) (HWT) (or within the possession, custody or control of a related entity to HWT, which HWT has reasonable access to) relating to the engagement, employment or provision of work or services to HWT by any of:
a) Brett Arthur Powell (Mr Powell);
b) B A Powell Transport (ABN 13 172 843);
c) "Powell Transport"; or
d) Powell Transport Pty Ltd (ACN 112 530 337),
e) during the period of 2005 to January 2021 including, without limitation, any contracts or agreements for the performance of such work or services including but not limited to documents evidencing:
i. the nature of the work or services performed;
ii. the duration of the engagement/employment;
iii. the number of hours and times worked during the period of the engagement/employment;
iv. whether the services were performed personally, by way of a registered company or by persons engaged by one of the parties listed in 1 a) to d) above on behalf of and/or driving a vehicle owned by Mr Powell; and
v. payments made to any of the parties listed in paragraph 1 a) to d) on account of work or services performed during the period of 2005 to January 2021.
Basis for costs application and submissions
[23] As stated above, the application for costs by Group Messengers was filed pursuant to s.400A which states as follows
“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.”
[24] Group Messengers submits that Mr Powell’s late filing and serving of the Powell Second Statement on 31 May 2021 (the night prior to the hearing date listed to deal with the jurisdictional objection) stating he had in fact performed work for HWT from 2005 to 2013 was an unreasonable act or omission in connection with the conduct of his unfair dismissal application resulting in Group Messengers incurring costs 8. This was in circumstances where Mr Powell stated in the Powell First Statement that he commenced working for the Respondent in 2005 and did not work for any other business while working for the Respondent9.
[25] Group Messengers submit that Mr Powell had ample opportunity to inform the Commission and Group Messengers in a timely manner that he did not perform work solely for Group Messengers in circumstances where he was on notice of documents sought by Group Messengers that went to establishing his income from other sources. Further, Group Messengers contend it is implausible that Mr Powell did not recall or have knowledge of his work for HWT at an earlier stage of the proceedings.
[26] Group Messengers further submit that Mr Powell’s failure to file and serve this evidence prior to 6:00 pm on 31 May 2021 was an unreasonable omission in connection with the proceeding. Group Messengers contend that it resulted in the adjournment of the jurisdictional hearing set down for 1-2 June 2021 and led to further orders for production of documents from the Commission being sought and thus additional costs were incurred 10.
[27] Group Messengers observe that the documents produced in relation to work performed by Mr Powell for HWT were relied upon in the Decision to support the finding that Mr Powell worked as a contractor for both HWT and Group Messengers for an overlapping period of 8 years and that such finding was ultimately important to the conclusion reached as to Mr Powell being an independent contractor rather than an employee of Group Messengers 11.
[28] An itemised schedule of costs claimed to have been incurred was included in the initial Form F6 – Application for costs filed by Group Messengers. In response to objections raised by Mr Powell in his submissions regarding the particularity of the schedule of costs, a revised itemised schedule was included in the Respondent reply submissions. Annexure A of the Respondents submissions in reply is provided below;
Item No. | Date | COSTS Description of work done | Amount |
1108 | 31 May 2021 | Conference with counsel and proofing witnesses (3.5 hours) (work performed by Partner but costed at solicitor rate). These are wasted costs that were incurred prior to the relisting of the hearing. | $540 |
601 | 31 May 2021 | Peruse email from other side (up to 3 folios) (work performed by Partner but costed at solicitor rate). These are wasted costs that were incurred prior to the relisting of the hearing. | $16 |
1102 | 31 May 2021 | Telephone conference with counsel (quarter hour) (work performed by Partner but costed at solicitor rate). These are wasted costs that were incurred prior to the relisting of the hearing. | $60 |
1102 | 31 May 2021 | Telephone conference with client (quarter hour) (work performed by Partner but costed at solicitor rate). These are wasted costs that were incurred prior to the relisting of the hearing. | $60 |
1108 | 31 May 2021 | Conference with counsel and proofing witnesses (3.5 hours) (work performed by Lawyer). These are wasted costs that were incurred prior to the relisting of the hearing. | $540 |
1102 | 31 May 2021 | Telephone conference with partner (quarter hour) (work performed by Lawyer). These are wasted costs that were incurred prior to the relisting of the hearing. | $60 |
1101 | 31 May 2021 | Email to Fair Work Commission (work performed by Lawyer). These are wasted costs that were incurred prior to the relisting of the hearing. | $34 |
1301 | 31 May 2021 | Disbursement - counsel's fees for the day (reduced by 50%). This is a wasted cost of Counsel’s preparation that was incurred prior to the relisting of the hearing. | $3,245 |
1108 | 1 June 2021 | Conference with counsel and client (up to one hour) (work performed by Partner but costed at solicitor rate). This is a wasted cost that was incurred prior to the relisting of the hearing. | $135 |
601 | 1 June 2021 | Peruse email from other side (1 folio) (work performed by Partner). This is a wasted cost that was incurred prior to the relisting of the hearing. | $16 |
1108 | 1 June 2021 | Telephone conference with client and barrister (up to 1 hour) (work performed by Partner). This is a wasted cost that was incurred prior to the relisting of the hearing. | $135 |
1109 | 1 June 2021 | Attendance at the FWC for hearing before DP Masson (up to 2 hours) (work performed by Partner but costed at a solicitor rate). This is a wasted cost that was incurred prior to the relisting of the hearing. | $221 |
1109 | 1 June 2021 | Attendance at the FWC for hearing before DP Masson (up to 2 hours) (work performed by Lawyer). This is a wasted cost that was incurred prior to the relisting of the hearing. | $221 |
401 | 1 June 2021 | Email to client (1 folios) (work performed by Partner). This is a wasted cost that was incurred prior to the relisting of the hearing. | $4 |
401 | 1 June 2021 | Email to other side regarding consent orders (1 folio) (work performed by Partner). This is a wasted cost that was incurred prior to the relisting of the hearing. | $4 |
1108 | 1 June 2021 | Conference with counsel and client (up to one hour) (work performed by Partner at a solicitor rate). This is a wasted cost that was incurred prior to the relisting of the hearing. | $135 |
1109 | 1 June 2021 | Attendance at the FWC for hearing before DP Masson (up to 2 hours) (work performed by Partner at a solicitor rate). This is a wasted cost that was incurred prior to the relisting of the hearing. | $221 |
1109 | 1 June 2021 | Attendance at the FWC for hearing before DP Masson (up to 2 hours) (work performed by Lawyer). This is a wasted cost that was incurred prior to the relisting of the hearing. | $221 |
1102 | 1 June 2021 | Telephone conference with client and barrister (quarter hour) (work performed by Partner at a solicitor rate). This is a wasted cost that was incurred prior to the relisting of the hearing. | $60 |
203 | 1 June 2021 | Prepare consent orders (work performed by Lawyer). This is a wasted cost that was incurred prior to the relisting of the hearing. | $74 |
1301 | 1 June 2021 | Disbursement - counsel's fees for the day (reduced by 50%) | $3,894 |
401 | 2 June 2021 | Email to lawyer (1 folio) (work performed by Partner). This is a wasted cost that was incurred prior to the relisting of the hearing. | $4 |
601 | 2 June 2021 | Peruse email from other side regarding amendments to consent orders (up to 3 folios) (work performed by Partner). This is a wasted cost that was incurred prior to the relisting of the hearing. | $16 |
401 | 2 June 2021 | Email to counsel regarding amendments to consent orders (1 folio) (work performed by Lawyer). This is a wasted cost that was incurred prior to the relisting of the hearing. | $4 |
1102 | 2 June 2021 | Telephone attendance with counsel regarding amendments to consent orders (quarter hour) (work performed by Partner at a solicitor rate). This is a wasted cost that was incurred prior to the relisting of the hearing. | $60 |
401 | 2 June 2021 | Email to other side (1 folio) (work performed by Partner). This is a wasted cost that was incurred prior to the relisting of the hearing. | $4 |
1102 | 2 June 2021 | Telephone attendance with client regarding instructions (quarter hour) (work performed by Partner but costed at a solicitor rate). This is a wasted cost that was incurred prior to the relisting of the hearing. | $60 |
601 | 2 June 2021 | Peruse email from other side regarding proposed amendments to consent orders (up to 3 folios) (work performed by Partner). This is a wasted cost that was incurred prior to the relisting of the hearing. | $16 |
1102 | 2 June 2021 | Telephone attendance upon lawyer regarding amendment to consent orders (quarter hour) (work performed by Partner but costed at a solicitor rate). This is a wasted cost that was incurred prior to the relisting of the hearing. | $60 |
401 | 2 June 2021 | Email to counsel (1 folio) (work performed by Lawyer). This is a wasted cost that was incurred prior to the relisting of the hearing. | $4 |
401 | 2 June 2021 | Email to client (1 folio) (work performed by Lawyer). This is a wasted cost that was incurred prior to the relisting of the hearing. | $4 |
401 | 2 June 2021 | Email to client regarding amendments to consent orders by other side (1 folio) (work performed by Lawyer) | $4 |
401 | 2 June 2021 | Email to barrister (1 folio) (work performed by Lawyer). This is a wasted cost that was incurred prior to the relisting of the hearing. | $4 |
1102 | 2 June 2021 | Telephone conference between Partner and Lawyer regarding amendment to consent orders (quarter hour). This is a wasted cost that was incurred prior to the relisting of the hearing. | $60 |
1101 | 2 June 2021 | Telephone attendance on Fair Work Commission (work performed by Lawyer). | $34 |
601 | 2 June 2021 | Peruse email from other side regarding amendments to consent orders (up to 3 folios) (work performed by Lawyer). This is a wasted cost that was incurred prior to the relisting of the hearing. | $16 |
401 | 2 June 2021 | Email to Partner regarding email to other side (1 folio) (work performed by Lawyer). This is a wasted cost that was incurred prior to the relisting of the hearing. | $4 |
Costs and Disbursements | Amount claimed | Amount taxed and allowed |
Total costs Total disbursements Total costs and disbursements | $3,111 | |
$7,139 | ||
$10,250 |
[29] Mr Powell rejects that his behaviour was unreasonable. While conceding that the late filing of the Powell Second Statement was relevantly an act or omission in connection with the case, Mr Powell contends that the act was not unreasonable as he sought merely to rectify an unintentional error made. He says his omission was due to miscommunication with his representative in preparing the Powell First Statement and that it is not unusual for a witness to correct or amend a witness statement upon later reviewing it. Further, he submits that the conduct was not dishonest, he corrected it as soon as possible and that he did not deliberately withhold information contained in the second statement.
[30] Mr Powell also contends that costs were not incurred because of this conduct. That is because the claimed costs include costs that were incurred prior to the Powell Second Statement being filed and served and it is unclear how these costs were wasted. Furthermore, only two of the five categories (categories 4 & 5) of documents required to be produced by reason of the 4 June Order related to the HWT ‘revelation’. The three other categories of documents, which are set out above at [21], were to be sought in any event according to Mr Powell, as made clear in correspondence to Mr Alkan from Group Messengers’ legal representative on 28 & 31 May 2021.
[31] Finally, Mr Powell contends that the claimed costs in the schedule of costs produced by Group Messengers are not appropriately identified and are excessive having regard to Mr Powell’s position.
Consideration
[32] Section 400A was inserted into the Act by virtue of the Fair Work Amendment Act 2012. The Explanatory Memorandum to the Fair Work Amendment Bill 2012 stated:
“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” 12 (my emphasis added).
And
168. Item 4 inserts a new section 400A to enable the FWC to order costs against a party to an unfair dismissal matter (the first party) if it is satisfied that the first party caused the other party to the matter to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the matter.
169. As with the new power to dismiss applications under section 399A, the power to award costs under section 400A is not intended to prevent a party from robustly pursuing or defending an unfair dismissal claim. Rather, the power is intended to address the small proportion of litigants who pursue or defend unfair dismissal claims in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.
170. The FWC’s power to award costs under this provision is discretionary and is only exercisable where the first party (whether the applicant or respondent) causes the other party to incur costs because of an unreasonable act or omission. This is intended to capture a broad range of conduct, including a failure to discontinue an unfair dismissal application made under section 394 and a failure to agree to terms of settlement that could have led to the application being discontinued.
171. However, the power to award costs is only available if the FWC is satisfied that the act or omission by the first party was unreasonable. What is an unreasonable act or omission will depend on the particular circumstances but it is intended that the power only be exercised where there is clear evidence of unreasonable conduct by the first party.” 13
[33] Of relevance is the Full Bench decision in Gugiatti v SolarisCare Foundation Ltd 14(Gugiatti) where it stated that s.400A of the Act “is concerned with unreasonable acts or omissions in connection with the “conduct or continuation” of a matter already instituted, not with whether it was reasonable to have instituted a matter in the first place.”15
[34] The Full Bench also relevantly stated:
“Section 400A(1) establishes two pre-conditions for the making of an order for costs under the subsection (in addition to the requirement in s.400A(2)). The first is that the Commission must be satisfied that a party engaged in an unreasonable act or omission in relation to the conduct or continuation of a matter. The second is that such act or omission caused the other party to the matter to incur costs. Once these preconditions are satisfied, a discretionary power to order the payment of such costs is enlivened.” 16
[35] Section 400A of the Act provides that costs may be awarded to Group Messengers if I am satisfied that the costs it claims were incurred as a result of an unreasonable act or omission of Mr Powell in connection with the conduct or continuation of his unfair dismissal application. However, even if I am satisfied that the relevant circumstances exist, I am not obliged to order costs. It is a discretionary decision. The legislative intent behind s.400A was that the power to award costs is to be exercised only in clear cases of unreasonable conduct.
Was there an unreasonable act or omission by Mr Powell in the conduct of the matter?
[36] I turn firstly to the conduct of Mr Powell and whether he engaged in an unreasonable act or omission.
[37] It is apparent from the timeline of events set out above that the Applicant failed to disclose prior to 31 May 2021 that he had worked for HWT and Group Messengers for an overlapping period of 8 years between 2005 and 2013. Not only had he failed to disclose that significant fact but had explicitly stated in his Form F2 and the Powell First Statement that he performed work exclusively for Group Messengers. Furthermore, he also resisted providing the category 3 documents sought by Group Messengers in its application for production of documents made on 23 April 2021. It is significant that the category 3 documents referred to were ultimately not included in the 30 April Order.
[38] Mr Powell has offered different explanations for his failure to disclose his HWT work prior to 31 May 2021. In the Powell Second Statement he attributed his earlier statement in the Powell first Statement that he worked exclusively for Powell Transport as having been focussed on “recent times, meaning the past eight years or so”. During cross examination he attributed the omission of any reference to HWT in the Powell First Statement to his misunderstanding of the question from his lawyer when he was preparing his witness statement. That is, he misunderstood the question as being directed to whether he undertook work for other clients during the hours when he was working for Group Messengers 17. In the submission advanced in the present proceeding, he attributes his omission to an unintentional error that was corrected immediately when he became aware of the error.
[39] I find unconvincing Mr Powell’s submission that his omission was an error of communication with his representative which was corrected as early as possible. That submission may have had greater force if the oversight was a minor one or where there were multiple other clients in the relevant period and one was omitted. That is not the case here. Mr Powell was on notice from at least 15 April 2021 that Group Messengers were seeking documents that related to work performed by him for any persons or businesses other than Group Messengers during the period that he performed work for Group Messengers. That he resisted production of such documents when Group Messengers sought an order that led to the 30 April Order and yet claims to have not recalled until late May 2021 that he also performed work for a significant corporate entity, HWT, is not easily reconciled in my view.
[40] I am satisfied that Mr Powell had ample time and opportunity to provide information to the Commission that he did not perform work exclusively for Group Messengers. That he did not do so until 31 May 2021 was in my view an unreasonable omission in the conduct of the matter. I now turn to consider whether the unreasonable omission of Mr Powell caused the Applicant to incur costs.
Did Mr Powell’s omission cause Group Messengers to incur costs?
[41] The costs claimed to have been incurred by Group Messengers totals $10,250 and is set out above at [28]. The range of costs incurred may be briefly summarised as follows;
• Costs incurred on 31 May 2021 of $4555.00 include costs of counsel (reduced by 50%) and; solicitor costs associated with preparation of material, review of correspondence from Applicant, correspondence with the Commission, attendance at meetings with client/counsel and proofing of witnesses with counsel.
• Costs incurred on 1 June 2021 of $5341.00 including costs of counsel (reduced by 50%) and; solicitor costs associated with review of correspondence from Applicant, attendance at meetings with client/counsel, attendance at the hearing before the Commission and preparation of consent orders.
• Costs incurred on 2 June 2021of $354.00 including solicitor costs associated with preparation and review of correspondence to/from Applicant, correspondence to counsel, telephone meeting with counsel, review of and meetings regarding consent orders.
[42] Group Messengers’ submit that the costs incurred were “wasted because they were costs incurred in the ordinary course of preparing for a hearing that were ultimately unnecessary because the hearing itself (for which the preparation day was directed) was required to be adjourned” and that there was no debate that the adjournment was caused by Mr Powell’s late filing of the Powell Second Statement 18.
[43] Group Messengers’ contend that the sole reason for the delay was the late filing of the Powell Second Statement on 31 May 2021. However, Group Messengers have not addressed in their reply material whether other documents unrelated to the HWT work, sought by them on 1 June 2021 and identified as category 1-3 documents in the 4 June Order, in any way contributed to the adjournment of the 1-2 June 2021 jurisdictional hearing. Mr Powell draws attention to the 28 & 31 May 2021 correspondence received from Group Messengers in which further documents were sought and that Mr Powell was put on notice that if the requested documents were not provided voluntarily, Group Messengers would seek orders from the Commission. That is in fact what occurred with the 4 June Order including the category 1-3 documents.
[44] No mention is made in Group Messengers’ material as to the significance, if any, of the additional category 1-3 documents sought by them on 1 June 2021 and subsequently granted in the 4 June Order. If the documents sought by Group Messengers on 1 June 2021 had been confined to material going to the HWT work performed by Mr Powell I could more confidently conclude that the adjournment was solely attributable to the late filing of the Powell Second Statement. As it is, Group Messengers put Mr Powell on notice in correspondence sent on 28 & 31 May 2021 prior to his filing of the Powell Second Statement that if he did not voluntarily produce further requested documents, a further application to the Commission for an order for the production of documents would be sought. That establishes some uncertainty as to what might have occurred in the absence of the late filing of the Powell Second Statement. Nevertheless, I am satisfied that the late filing of that statement was the primary driver of the adjournment of the proceedings. It follows that Group Messengers may have incurred costs attributable to the adjournment caused by Mr Powell’s omission
[45] Turning firstly to the costs claimed to have been incurred by Group Messengers on 31 May 2021, that of $4,555.00, the schedule of costs does not break down all of the claimed wasted preparatory activities arising from the late filing of the Powell Second Statement. For example, costs were attributed to the proofing of Group Messengers’ witnesses by solicitors and counsel but it is not made clear how that activity was wasted. Evidence that Group Messenger’s witnesses gave was unaffected by the Powell Second Statement and it is not apparent how the proofing of those witnesses could have been ‘wasted’, save for the delay in the hearing. There was simply no evidence adduced that a repeat of that proofing of those witnesses was subsequently required and if so whether it was required to the same extent as undertaken on 31 May 2021.
[46] Further to the above, there were other preparatory activities undertaken by Group Messengers legal representatives on 31 May 2021 but there is no articulation as to what element of that preparation was wasted or could subsequently be relied upon in preparation for the deferred hearing. While the issue of Mr Powell’s work for HWT was ultimately significant to the conclusion reached as to his status of independent contractor, it cannot be said that his HWT work was the dominant focus of those proceedings such as to render void all preparatory work undertaken on 31 May 2021. In these circumstances I am unable to conclude that all of the costs claimed to have been incurred on 31 May 2021 can be reasonably attributed to the delay. Further, in the absence of evidence going to a more forensic breakdown of those costs, I am unwilling to estimate costs that were thrown away.
[47] Turning to the costs claimed for the 1 June 2021, I accept that the adjournment of the proceedings caused costs to be thrown away in relation to costs of counsel for that day (Item 1301) as well as solicitor costs of appearance at the proceedings on that day (Item 1109). As to claimed ‘wasted’ costs incurred prior to relisting (Items 1108, 401 & 1102), the material does not make clear how those costs were in fact wasted. In the absence of evidence going to how those costs were wasted I am unable to conclude they were reasonably caused by the adjournment. As regards the cost of preparation of consent orders (Item 203) that cost may have been incurred at an earlier stage if the Powell Second Statement had been furnished earlier than 31 May 2021. I am satisfied that the cost that may be reasonably attributed to the adjournment of the jurisdictional hearing on 1 June 2021 was that of $4,778.00.
[48] Turning to the costs incurred and claimed for 2 June 2021, that of $354.00, much of the claimed costs arose from preparation, review and amendment of consent orders for production of documents. Given the prior history in this matter of applications for orders for production of documents by Group Messengers and resistance of Mr Powell to such orders, it would in my view be reasonable to assume that had Mr Powell’s HWT work become evident sooner in the proceedings, a similar pattern of application for orders and resistance to such orders for production may have played out. In these circumstances I am unable to conclude that the costs claimed by Group Messengers in preparing and finalising consent orders for the production of documents would not have been incurred in any case, albeit at an earlier stage of proceedings. I also note that the orders sought by Group Messengers on 1 June 2021, and ultimately granted by the Commission in the 4 June Order extended beyond the HWT work undertaken by Mr Powell. In these circumstances I am unable to conclude that the costs claimed by Group Messengers for work undertaken on 2 June 2021 can be reasonably attributed to the adjournment of the 1-2 June 2021 hearing.
[49] It follows from the above that I am satisfied that Group Messenger incurred additional costs of $4,555.00 that can be attributed to adjournment of the 1-2 June 2021 jurisdictional hearing due to Mr Powell’s late filing of the Powell Second Statement on 31 May 2021. Those costs were incurred to due to Mr Powell’s unreasonable conduct, that of failing to disclose the work he performed for HWT prior to 31 May 2021.
Should the discretion to award costs be exercised?
[50] While having found that Group Messengers incurred additional costs due to unreasonable conduct of Mr Powell in the matter, it does not automatically follow that an award of costs must be made. My findings as to the existence of the necessary preconditions merely enlivens the jurisdiction for me to exercise the discretion to make such an order.
[51] In considering whether to make such an order I have had regard to a number of factors including Mr Powell’s lack of sophistication and experience in Commission proceedings notwithstanding he was legally represented throughout. I have also taken into account the fact that while the Powell Second Statement was only filed on 31 May 2021, the belated disclosure by Mr Powell of his work for HWT was highly relevant to the proceedings and ultimately to his detriment as revealed in the conclusions of the Decision. But for his belated disclosure, that information may not have surfaced in the proceedings.
[52] Mr Powell’s omission of disclosure of his HWT work prior to 31 May 2021 was unreasonable conduct in the circumstances. However, I am not satisfied that his conduct was dishonest. If dishonesty was the explanation for withholding the HWT information, one wonders why the disclosure was belatedly made. That is in circumstances where the orders previously issued for production of documents would have been unlikely to have revealed the prior work performed for HWT.
[53] While Mr Powell engaged in unreasonable conduct, that conduct was remedied by his late disclosure of his HWT work, that disclosure ultimately being highly relevant to the findings reached in the Decision regarding his status as an independent contractor. Taking into account all of these circumstances, I decline to exercise my discretion to award costs against Mr Powell.
Conclusion
[54] I am satisfied that Mr Powell engaged in unreasonable conduct of the matter that caused Group Messengers to incur costs. However, for the reasons set out above I decline to exercise my discretion to award costs in favour of Group Messengers. The application for costs pursuant to s.400A is dismissed. An order giving effect to this decision will be separately issued.
DEPUTY PRESIDENT
Final written submissions:
Applicant, 5 November 2021
Respondent, 12 November 2021
Printed by authority of the Commonwealth Government Printer
<PR736473>
1 [2021] FWC 6039.
2 PR734487.
3 Section 402 of Act.
4 Third Witness Statement of Kellie-Ann McDade dated 14 October 2021, Annexure KM-1.
5 Mr Brett Powell Submission on Costs dated 5 November, Annexure 2 - Letter from Baker McKenzie to Michael Alkan dated 28 May 2021.
6 Mr Brett Powell Submission on Costs dated 5 November, Annexure 3 - Letter from Baker McKenzie to Michael Alkan dated 31 May 2021.
7 Exhibit A2, Witness Statement of Mr Brett Powell dated 31 May 2021.
8 Group Messengers Submissions on Costs dated 12 November 2021 at [3].
9 Exhibit A1 at [17].
10 Group Messengers Submissions on Costs dated 12 November 2021 at [4].
11 Decision at [150].
12 Explanatory Memorandum to the Fair Work Amendment Bill 2012, page 7.
13 Ibid at page 37.
14 [2016] FWCFB 2478.
15 Ibid at [61].
16 Ibid at [43], December 2019.
17 Transcript of proceedings on 23 July 2021 at PN1542.
18 Group Messengers Reply Submissions on Cost dated 12 November 2021 at [9].
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