Browns English Language School P/L v Rafaela Sucasas, Kylie Davenport
[2021] FWC 5940
•17 SEPTEMBER 2021
| [2021] FWC 3633 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.120—Redundancy pay
BROWNS English Language School P/L
v
Rafaela Sucasas, Kylie Davenport
(C2021/2180)
COMMISSIONER SIMPSON | BRISBANE, 17 SEPTEMBER 2021 |
Application for costs.
[1] This matter involves separate applications for costs filed by Ms Kylie Davenport and Ms Rafaela Sucasas under s.611 of the Fair Work Act 2009 (the Act) against Browns English Language School P/L (Browns).
[2] Section 611 reads as follows:
“Costs
(1) [Person must bear own costs]
A person must bear the person's own costs in relation to a matter before the FWC.
(2) [FWC may order person to bear costs of another person]
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) [Person must not contravene costs order]
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).”
[3] I will briefly set out some background to matters surrounding these costs applications.
[4] On 19 April 2021, Browns made an application (the Application) under section 120 of the Act for the Fair Work Commission (the Commission) to deal with an application to vary redundancy. The matter had 14 Respondents, that included Ms Davenport and Ms Sucasas.
[5] On 24 June 2021 I issued a decision 1 dismissing Browns’ application.
[6] On 7 July 2021, Ms Davenport filed a Form F6 application for costs. Ms Sucasas also filed a Form F6 application on 12 July 2021.
[7] Browns’ s.45A application was served in a redacted form to each of the 14 Respondents and only contained each individual’s own details.
[8] On 19 May 2021 a directions conference was convened, the matter was not resolved, and directions were issued for Browns to file material by 5pm 2 June 2021 and the Respondents to file by 5pm 16 June 2021.
[9] A witness statement and submissions were filed for Browns on 2 June 2021. The material filed was not accompanied by supporting evidence such as bank statements; audited profit and loss statement(s)or other evidence Browns could not pay the redundancy amounts.
[10] On 7 June 2021, Mr John Farren, a Solicitor from Farren McRae Workplace Lawyers, commenced representation of Ms Rafaela Sucasas. On 7 June 2021 Mr Farren wrote to Browns’ representative Mr Richard Brown seeking the unredacted copy of the Form 45A that had been provided to his client in redacted form on 19 April 2021.
[11] On 8 June 2021 Mr Brown responded to Mr Farren advising that he would not provide the unredacted Form 45A lodged with the Commission on 19 April 2021, and that he was objecting to legal representation being provided to Respondent Rafaela Sucasas.
[12] On 8 June Mr Farren, submitted a Form 48 - Application for Directions on Procedure in relation to Browns providing the unredacted copy of the Form 45A that was lodged on 19 April 2021.
[13] On 10 June 2021 the Commission issued a direction to Browns to provide the unredacted Form 45A application as it pertained to all Respondents. On the same date following the issuance of this direction, Mr Farren wrote to Mr Brown seeking the Form 45A in unredacted form in compliance with the issued directions however Mr Richard Brown did not respond to this email.
[14] On 14 June 2021 Browns emailed my chambers directly to seek clarification on the direction that was issued and asking if Browns needed written consent from the Respondents to comply with the direction issued.
[15] On the same day Mr Farren, via email, objected to the conduct of Mr Brown in not providing the unredacted Form 45 and sought additional directions that Browns comply with the direction by no later than 15 June 2021, and that Direction 2 of the directions dated 20 May 2021 be amended to allow the Respondent Rafaela Sucasas (or, in the alternative, all Respondents) until 12 noon on 18 June 2021 to file and serve submissions and witness statements; or that the Application be dismissed pursuant to s.587 of the Act.
[16] On 15 June 2021 the Commission ordered that Browns comply with the direction of 10 June 2021 by 10am 16 June 2021, and that the Respondents would be granted an extension to file their material until 5pm 18 June 2021.
[17] On 17 June 2021 a Form 53 was filed advising Stephen Dryley-Collins, a Solicitor, and Miles Heffernan, Director and Paid Agent of Industrial Relations Claims now represented Ms Davenport.
[18] On 18 June 2021 a hearing to deal with the two applications of Ms Davenport and Ms Sucasas seeking leave to be represented was held, Browns opposed the applications however legal representation was granted in both cases.
[19] On 18 June 2021, after representation had been granted, Ms Davenport and Ms Sucasas, via their representation, provided their submissions and witness states in accordance with the amended directions of 15 June 2021.
[20] On Sunday 20 June 2021 at 6:30pm Browns wrote to the Commission seeking an adjournment of the hearing scheduled for 10am the next morning on 21 June 2021. This request was objected to by multiple Respondents, and subsequently denied by the Commission.
[21] The hearing proceeded on the morning of 21 June and Browns relied on the statement of Mr Brown but did not tender separate supporting documentation.
[22] On 24 June 2021 the Decision in the matter was issued by the Commission that ordered the Application be dismissed.
[23] On 28 June 2021 Browns paid the Redundancy entitlements of all the Respondent's in full.
Submissions
[24] It was submitted for Ms Davenport that Browns made the application without reasonable cause within the meaning of s611(2)(a) of the Fair Work Act 2009 (Cth). It was submitted that the details of this matter are similar to the case of Kanan v Australian Postal and Telecommunications Union 2(Kanan). It was submitted that as outlined in Kanan, later confirmed in Roy Morgan Research Ltd v Baker3 at [34], the test is reliant upon:
'acts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being "without reasonable cause". But where, on the applicant's own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause'
[25] It was submitted for Ms Davenport that Browns was aware, that there was an evidentiary requirement for the Application to be made, however no supporting evidence was provided.
[26] It was submitted that Browns should have been aware that the Application did not have any prospect of success. It was submitted Browns was afforded multiple opportunities to both comply with directions of the Commission to progress the matter in a way that would reduce any ongoing costs to the Respondents.
[27] It was submitted that Browns received guidance from the bench that evidence would be required in order to advance a successful application, and also received guidance from the bench in regard to an application for orders in regard to confidential material, and that Browns would have been aware at all material times that the relevant test was that the Applicant 'cannot' pay, however made no reasonable attempts to meet this threshold.
[28] It was submitted that at the interlocutory hearing on 18 June where the two Respondents were granted leave to be represented, Browns was also invited to provide any submissions in regard to the future conduct of the matter scheduled on 21 June 2021, and Browns declined to make any submission on the date of the hearing.
[29] It was submitted for Ms Davenport that Mr Brown while giving evidence in chief at the hearing on 21 June, attempted to shoehorn in information about Browns’ financial position, which was objected to by Ms Davenport and the objection was sustained.
[30] It was submitted for Ms Davenport that Mr Brown tried to control the evidence around Browns’ financial position demonstrating repeated acts and omissions that enliven the discretionary question of costs.
[31] It was submitted that Browns is not currently in liquidation and has also continued trading and is continuing to trade. It was submitted that by all appearances, Browns was always able to make the redundancy payments it claimed it was unable to pay.
[32] It was submitted for Ms Davenport that Browns in both making the initial Application and its subsequent conduct, sought to mislead the Commission as to its inability to pay the redundancy payments of the Respondents, and that the Commission should form a view that it has been misled with regard to the Application.
[33] It was submitted for Ms Sucasas that the Application was dismissed primarily on the basis that the Applicant elected not to file any documentary evidence to supports its claim of incapacity to pay redundancy amounts owed and that, as was said in the decision “it has been a deliberate and conscious decision of the Applicant to adopt this course”. 4
[34] It was submitted for Ms Sucasas that the Form 45A completed by Browns makes specific reference at question 2.3 on the Form to attaching “supporting documentation”. Further Mr Brown’s witness statement, subsequently filed and relied upon at the hearing of the Application, failed to address key issues relevant to establishing an incapacity to pay.
[35] In addition, despite swearing and submitting that Browns was unable to pay the redundancies, upon the Application being dismissed, Browns has nonetheless paid the redundancies evidencing that Browns did in fact have financial capacity to pay the redundancies.
[36] It is submitted for Ms Sucasas that it is open to the Commission to be satisfied that the Browns made the Application without reasonable cause on the basis that, at the time the Application was made, Browns knew that it could not, or would not place sufficient evidence before the Commission to discharge its burden of proof in respect of the jurisdictional fact of incapacity to pay and, therefore, the Application:
a. Was so obviously untenable that it could not possibly succeed; and/or
b. Was manifestly groundless; and/or
c. Had no substantial prospect of success.
[37] On this basis, it is submitted for Ms Sucasas that it is open to the Commission to make a costs order pursuant to s 611(2)(a) of the Act.
[38] It was submitted for Ms Sucasas that for similar reasons it is open to the Commission to be satisfied that, viewed objectively, it should have been reasonably apparent to Browns that the Application had no reasonable prospects of success on the basis that, at the time the Application was made, Browns knew that it could not, or would not place sufficient evidence before the Commission to discharge its burden of proof in respect of the jurisdictional fact of incapacity to pay and, therefore, the Application was manifestly untenable or groundless. It is submitted on this basis; it is open to the Commission to make a costs order pursuant to s 611(2)(b) of the Act.
[39] It was submitted for Ms Davenport that because of the conduct of Browns, the legal representatives were required to come on record in this matter, and on that basis Ms Davenport’s costs were sought as outlined in a schedule attached to her application for costs which is submitted on an indemnity basis of $4,615.
[40] Ms Sucasas sought an order for the payment of her legal costs on an indemnity basis having incurred total legal costs of $5,000.00 (inc. GST) in responding to the Application. It was submitted that in reliance upon the facts found by the Commission at paragraphs [1] to [25] of the Decision, an order for indemnity costs is justified in this case due to misconduct or delinquency on the part of Browns.
[41] Examples provided for Ms Sucasas included the delay of several weeks in bringing the Application, serving a redacted copy of the Application upon Ms Sucasas and failing to serve the Application in accordance with Fair Work Commission Rules, then refusing to voluntarily provide an unredacted copy of the Application when requested by Ms Sucasas’ legal representative. It was submitted for Ms Sucasas that this led to the additional legal costs of having to make an application to the Commission for an order directing Browns to serve an unredacted copy of the Application.
[42] It was submitted that Browns then failed to comply with a subsequent direction of the Commission to serve an unredacted copy of the Application and put Ms Sucasas to the additional legal costs of having to apply to the Commission for a further order that Browns comply with the order to serve an unredacted copy.
[43] It was also submitted for Ms Sucasas that Browns repeatedly communicated or attempted to communicate directly with the Commission’s chambers without the knowledge or consent of Ms Sucasas or her legal representative.
[44] It was submitted the late application for adjournment of the hearing on Sunday 20 June 2021 put Ms Sucasas to the additional legal costs of responding to an application that was baseless and wholly without merit.
[45] It was submitted that an order for indemnity costs in the amount of $5,000.00 is justified. In the alternative, based upon the itemised schedule of costs it is submitted that the Commission ought to make an order for costs against the Cost Respondent fixed in the amount of $1,547.00 plus an amount determined by the FWC in respect of Item 17.
[46] In opposing the two applications for costs Mr Brown submitted that it was his understanding that Section 611 of the Act states that the Fair Work Commission is generally a no costs jurisdiction, which is taken to be a reference to s.611(a). Mr Brown submitted that this means that parties coming to the Commission should expect to pay their own costs.
[47] Mr Brown said he had read that the Commission was intended to be a quick, informal tribunal where legal representation wasn’t necessary, and that the Commissioner would ensure that a fair and reasonable outcome is achieved for everyone.
[48] Mr Brown submitted that Browns had every right as a COVID-19 affected business that has been financially decimated to make a genuine F45A applicationto vary redundancy pay.
[49] It was submitted that Browns correctly ticked the box about having an incapacity to pay. Mr Brown submitted that nowhere on the Form 45A does it stipulate that financial documentation needs to be provided, however despite this some financial information was shared about the loans and losses of the organisation, and in addition financial reports were created.
[50] Mr Brown said he was later advised that these reports were likely to be shared with the recipient parties, and on the premise that sharing the financial information could put the ability of the company to trade through at risk in the unfortunate event the financial information was to be shared and could put the business and the sole shareholder at risk of incriminating himself, the decision was made for the director not to share the information.
[51] Mr Brown submitted that this was a difficult decision, but he honestly believed that his application would be successful based on the other evidence he produced, without the need to incur the risk of providing the financial information.
[52] Mr Brown said at no time was he put on notice that failing to provide financial information may result in his application being dismissed on this basis alone or result in an adverse costs order against him.
[53] Mr Brown submitted that his application was genuinely made, he had a genuine incapacity to pay, and he acted in good faith at all times as a director fulfilling his obligations under the Corporation’s Act.
[54] Mr Brown submitted that he had been self-represented through these proceedings and had not acted vexatiously or without reasonable cause. Mr Brown submitted that in extremely stressful times and while trying desperately to save his business, he has done his best to inform himself of the proceedings and the law surrounding these types of applications.
[55] Mr Brown said that he admitted that no doubt his application could have been prepared better if done by a lawyer, but he didn’t believe that his preparing it was fatal, or that it was groundless or had no reasonable prospects of success.
[56] Mr Brown submitted that the Act does not elaborate on the concept of monetary incapacity for the purpose of section 120, and the employer (‘Applicant’) bears the onus of persuading the Commission to exercise their discretionary power and vary the redundancy owed to an employee because they cannot afford to pay the full amount. Mr Brown said he made all efforts available to him in his very delicate circumstances to persuade the Commission why the order he was seeking should be granted.
[57] Mr Brown submitted that he understands that applications are assessed by the Commission on a case-by-case basis and outcomes vary subject to individual circumstances, with considerations that are relevant to making a determination in the context of the current economic climate.
[58] Mr Brown submitted that the fact that his application did not succeed does not mean that it was ‘vexatious’ or ‘without reasonable cause’ within the meaning of s.611. Mr Brown said he believes his application was genuine and may well have succeeded if he had been legally represented.
[59] In reply Ms Davenport repeated the earlier reference to the decision in Kanan5 at [30] concerning the test for ‘without reasonable cause’.
[60] Ms Davenport also relies on the Full Bench decision in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing6 and summarised by Deputy President Boyce in Phyllis Dodd v Thomas & Naaz Pty Ltd7 at [15], the relevant considerations for s.611(2)(a) of the FW Act are:
• An application is made vexatiously when the predominant motive or purpose of the applicant is to harass or embarrass the other party or to gain a collateral advantage.
• An application is not made without reasonable cause simply because the application did not succeed.
• Whether an application is made without reasonable cause may be tested by asking, on the facts apparent to the applicant at the time the application was made, whether there was no substantial prospect of success.
• If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to characterise the application as having been made without reasonable cause.
• In relation to an appeal, the question becomes whether the appeal has no substantial prospect of success. The prospect of success must be evaluated in the light of the facts of the case, the judgment appealed from and the points taken in the notice of appeal. If there is a not insubstantial prospect of the appeal achieving some success, it cannot fairly be described as having been made without reasonable cause.
• An application will have been made without reasonable cause if it can be characterised as so obviously untenable that it cannot possibly succeed, is manifestly groundless or discloses a case where the tribunal is satisfied it cannot succeed.
[61] Ms Davenport also referred to decision in A Baker v Salva Resources Pty Ltd[2011] FWAFB 40148 at [10], and affirmed in NSW Trains v Mohammed Ayub [2017] FWBFC 48019 at [18]:
“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.”
[62] It was submitted for Ms Davenport that the date the Commission provided Browns the application form to apply for an Order to suppress publication of confidential information is a critical date for Browns to be satisfied that it was reasonably apparent that its application now had no reasonable prospects of success.
[63] It is submitted that the assessment is an objective one and not based on the subjective view of the Applicant.
[64] Ms Davenport also relied on the decision in Colin Ferry v GHS Regional WA Pty Ltd T/A GHS Solutions10 at [64].
[65] It was submitted that Mr Brown, during the hearing of the matter, exercised his privilege to not incriminate himself in his personal capacity as a natural person. It was submitted that pursuant to Section 181 of the Corporations Act2001 (Cth) (Corporations Act), Mr Brownhad obligations as a Director and he has placed his own interests above that of Browns.
[66] It is submitted the lack of evidence filed by Browns is a relevant factor in any objective assessment as to the reasonable prospects of the success of the initial F45A Application to Reduce Redundancy Pay.
[67] It is submitted that since the commencement of the proceedings, Browns was put on notice by the Commission that the evidence that had been provided in support of the Form 45A Application was deficient and Browns throughout the proceedings sought to refrain from providing financial documentation due to concerns that such documentation would prejudice the business if it was to be released to a wider audience.
[68] It was submitted for Ms Davenport that while she does not resile from the position that the Application should not have been filed in the first instance, the matter proceeded in a manner that made it clear that the prospects of success were low, and the matter should not have continued. It is submitted that the Applicant became further aware during the proceedings that the Application had no prospect of success but continued to press the Application.
[69] It was submitted that the result of the Applicant’s pressing of the application, was that legal representation was sought by Ms Davenport. It is submitted that Browns continued to press the proceedings to a hearing despite being further aware of the lack of prospects of success.
[70] Ms Davenport submitted that any decision to award costs is an exercise of discretionof the Commission and in the exercise of such discretion, the Commission is empowered to inform itself on any matter it considers appropriate. It is put that given the failure to provide supporting evidentiary documents, the Commission can safely draw an inference that Browns was never in a situation where it could not pay, in whole or in part, the redundancy entitlements of the Respondents.
[71] It was submitted that the second compelling circumstance for the Commission to exercise its discretion was that the sole director, Mr Brown, placed his personal claim of privilege against self-incrimination over Browns’ legal responsibility to provide evidence in support of its Form 45A Application.
[72] It was submitted that Ms Davenport would never have incurred costs but for Mr Brown’s protection of his personal interests, and his resting on multiple opportunities afforded him to back up Browns’ claim.
[73] In reply Ms Sucasas relied on a decision of the Full Bench of the Fair Work Commission in Vassallo v Eastitag Pty Ltd 11which said as follows:
“[8] In Hansen v Calvary Health Care Adelaide Limited a Full Bench said in relation to s 611 generally:
“[15] It is trite to observe that the statutory and policy imperative underpinning a costs application under the Act, is that a person in a matter before the Commission must bear their own costs. So much is plainly obvious by the precise and unambiguous language of s 611(1)
[16] However, the statutory scheme sets out the relatively circumscribed circumstances in which an order for costs might be found by the Commission to be appropriate in a particular case. It includes the exercise of discretionary power where the Commission is satisfied that one, or more of the circumstances set out in s 611(2), has been established. If such circumstances are established, the Commission, in the broad exercise of its discretion, may make an order that a person/s bear some, or all of the costs of another person, in relation to the application, including on an indemnity basis, or decline to make any order at all.”
[9] The 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. We adopt the summary of these principles set out by the Full Bench in Chapman v Ignis Labs Pty Ltd, and note in particular the following points:
• 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.
• 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.
• In relation to an appeal, the question becomes whether the appeal has no substantial prospect of success. This must be evaluated in light of the facts of the case, the judgment appealed from and the points taken in the notice of appeal.
• 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.
[10] The principles that are relevant to s 611(2)(b) were summarised by the Full Bench in Baker v Salva Resources Pty Ltd:
“[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.”” (emphasis added).
[74] It was submitted for Ms Sucasas that the principal evidence replied upon by Browns to prove its claimed incapacity to pay is found at paragraph 38 of the Decision. It was submitted that Mr Brown swore that Browns did not have financial capacity to pay the redundancies of the 14 Respondents, and if required to all remaining staff would have to be made redundant, it would not be able to pay out their entitlements and Browns would have to enter administration as it did not have the capacity to make any further payments to creditors. It was submitted that at its essence, Mr Brown was swearing that Browns would be rendered insolvent if forced to pay the 14 redundancies.
[75] It was submitted that subsequent events have proven this evidence to be demonstrably false as soon after the Application was dismissed by the Decision, the redundancies of the 14 Respondents were paid by Browns. It is submitted that this fact alone is sufficient for the Commission to infer that Browns always had the funds available to pay the redundancies or had ready access to a source of those funds.
[76] Ms Sucasas submitted further that there was no evidence that Browns has made the remaining staff redundant and/or been forced into administration as a result of paying the redundancies to the 14 Respondents, and Ms Sucasas provided a copy of a news article on 21 July 2021, where Mr Brown was featured in in the Gold Coast Bulletin entitled ‘Browns English Language Schools director Richard Brown begs Prime Minister Scott Morrison for border reopening date.’
[77] Ms Sucasas refers to the article where Mr Brown is quoted as saying that, as a result of the effects of the COVID-19 border closures, he has had to “consolidate” Browns, and there is no indication in this article that Browns has been forced into administration or has taken any other type of insolvency action.
CONSIDERATION
[78] I have decided not to order costs in this case. I am not satisfied there is anything in the material before the Commission or in the conduct of Mr Brown to support a conclusion that the Application was made vexatiously. It is a notorious fact that businesses such Browns have suffered significant financial challenges because of the impact of COVID-19.
[79] I am also not satisfied that it was clear at the time the Application was filed that it was without reasonable cause. At the heart of this criticism of Browns is the failure to lead documentary evidence to support the claims made in Mr Brown’s witness statement regarding Browns’ incapacity to pay. This was ultimately the reason the application failed.
[80] As was explained in the Decision this appeared to be because Browns was not prepared to disclose its sensitive financial records as part of its case despite being directed to the powers available to the Commission under s.593 and 594 of the Act.
[81] Because such material never formed part of the evidence it is not possible to determine with any certainty that it was clear at the time the Application was commenced that the proceedings must fail, and therefore lacked a reasonable cause.
[82] I am not prepared to accept the submission that Browns sought to mislead the Commission. Browns was at all times self-represented. It is readily apparent from what is set out in the earlier decision, and this decision that Mr Brown was not experienced in conducting proceedings in a Court or Tribunal, and despite the efforts of the Commission to provide appropriate direction Mr Brown did not effectively prosecute his case because of his stated concerns about disclosing sensitive financial information that may in his view damage the business, and also his obligations under the Corporations Act as a Director of Browns, and the risk of self-incrimination. It seems Mr Brown held a concern given the large number of the Respondents that even with a suppression order he was concerned sensitive financial material may become public.
[83] No doubt had Mr Brown obtained legal advice the case would have been conducted differently however that is not a basis to be satisfied Mr Brown was attempting to mislead the Commission. It was my impression having observed Mr Brown in the witness box that his expressed concerns about the ongoing future viability of Browns were genuine, if not supported by evidentiary documentation.
[84] I am also not prepared to accept the fact of Browns paying the redundancy amounts shortly after the application was dismissed as a basis to be satisfied Browns was deliberately seeking to mislead the Commission about its capacity to pay, or to draw an inference that Mr Brown always knew that the premise of his application was false.
[85] Mr Brown said in his submissions in response to these costs applications that the legislation does not provide a definition of incapacity to pay. It is also the case that the Commission does not publish a Benchbook to provide guidance to self-represented parties in s.120 applications as it does in other areas within the Commissions jurisdiction such as unfair dismissals, general protections, anti-bullying or agreement making.
[86] I accept on Mr Brown’s evidence that Browns was suffering a significant financial impact because of the nature of its business in the context of the COVID-19 pandemic. As Browns never produced financial records as part of its evidentiary case, the Commission and the Respondent parties can only speculate about where the funds to pay the redundancy amounts were drawn from, but Mr Brown’s evidence included particulars of significant and continuous financial loses being suffered, reductions in staffing, and also having collapsed a number of campuses down to one. Mr Brown also expressed a concern about the business being forced into administration and did not wish to answer questions relating to the financial position of Browns for fear of self-incrimination.
[87] Whilst it is a high hurdle to seek orders of the nature sought by Browns without full disclose of relevant financial records, in the circumstances of this particular case I do not accept the submission that it should have been so obvious to Mr Brown at the time of filing his application that his case was hopeless if he did not disclose such material. In fact, at the time of filing and for a period of time thereafter Mr Brown appeared to be proceeding on the basis that he could put before the Commission itself this material in order to prosecute his case without having it disclosed to any of the Respondents. The Commission disabused Mr Brown of this notion.
[88] I am also not persuaded that when viewed objectively it should have been reasonably apparent to Mr Brown that his application had no reasonable prospects of success. It is notable a number of events occurred in reasonably close succession and in close proximity to the scheduled hearing.
[89] Ms Sucasas sought leave to be represented on 7 June. An issue arose between Ms Sucasas’ lawyer and Browns about disclosure of redacted material over the following week, and whilst misconceived, I accept Mr Brown did hold concerns at this time about his privacy obligations to the various Respondents and this explained his tardiness in complying with the Commission’s direction in this period, and his request to chambers for clarification on this point.
[90] Ms Davenport sought leave to be represented on 17 June, a few days before the scheduled hearing. The interlocutory hearing to deal with the question of leave occurred on 18 June and the two applications were opposed by Browns but were granted. Browns sought an adjournment of the hearing on Sunday 20 June which was refused.
[91] It has been argued that upon Browns being directed to the powers available to the Commission under s.593 and s.594 and not then seeking to rely on the sensitive financial information that could potentially be protected by suppression orders if granted, that it should have been reasonably apparent to Browns without seeking to introduce further evidence its case had no reasonable prospects of success. For the same reasons given above to reject the argument that the Application was without reasonable cause, I also do not accept the failure to introduce the further documentary evidence meant the case had no reasonable prospects. On the basis of Mr Brown’s witness statement it was at least arguable that Browns was in serious financial difficulty.
[92] I also do not accept Mr Brown’s claim of privilege against self-incrimination as a basis to be satisfied that Browns case was manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable. It indicates Mr Brown held concerns about whether he was meeting his obligations under Corporations law given the financial position of Browns, and not that his case was not reasonably arguable.
[93] Even if the conclusions above concerning whether s.611(2)(a) or (b) have been satisfied are wrong, in the particular circumstances of this case where a self-represented litigant whose business is clearly suffering significant financial hardship due to the impact of COVID-19, brings an application under s.120, I would have declined to exercise my discretion to award costs in any event.
[94] For the reasons set out above the applications for costs are dismissed.
COMMISSIONER
Printed by authority of the Commonwealth Government Printer
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1 [2021] FWC 3633.
2 [1992] FCA 539; 42 IR 57.
3 [2014] FWCFB 1175.
4 Transcript at [111] to [113].
5 [1992] FCA 539; 42 IR 57.
6 [2014] FWCFB 810.
7 [2021] FWC 1106.
8 [2011] FWAFB 4014.
9 NSW Trains v Mohammed Ayub [2017] FWBFC 4801.
10 [2016] FWC 3120.
11 [2021] FWCFB 3974.
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