Ciara Craig v Dunsborough Beauty Spa

[2015] FWC 2861

[2015] FWC 2861

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Ciara Craig
v
Dunsborough Beauty Spa
(U2014/15364)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 27 APRIL 2015

Application for relief from unfair dismissal.

[1] On 6 March 2015, I dismissed Ms Ciara Craig’s application for an unfair dismissal remedy because I found that Gecko Bookkeeping Services Pty Ltd trading as Dunsborough Beauty Spa (Dunsborough) was a small business and Ms Craig had not served the minimum period of employment.

[2] Ms Craig commenced employment with Dunsborough on 9 July 2014 and her employment was terminated on 25 October 2014. Ms Craig stated that she did not receive the email terminating her employment until 1 November 2014. It was not disputed that Ms Craig had been employed by the predecessor employer and that she was a transferring employee. Ms Craig in her application advised that she commenced work with the predecessor employer in November 2013.

[3] Ms Craig did not attend the hearing on 6 March 2015 and after hearing the evidence of Ms Natalie Rowe, the Director of Dunsborough, I issued an ex tempore decision dismissing Ms Craig’s application.

[4] At the conclusion of the hearing Dunsborough applied for costs. Ms Craig was provided with a copy of the transcript of the hearing and a copy of an affidavit sworn by Ms Fiona Stanton dated 6 March 2015 filed in support of the costs application.

Chronology

[5] On 11 December 2014, Ms Craig was advised by Dunsborough that it had legal representation.

[6] On 17 December 2014, Dunsborough filed its response to Ms Craig’s application and in that form, it advised that it had three employees. It objected to Ms Craig’s application on the basis that Ms Craig had not served the minimum employment period, her application was out of time and her dismissal was a case of genuine redundancy.

[7] On 17 December 2014, Dunsborough’s lawyers, MDS Legal (MDS), wrote to Ms Craig briefly explaining its objection to Ms Craig’s application and advising her that “continuation of these proceedings would be unreasonable and would constitute continuation in circumstances in which it should have been reasonably apparent to [her] that [her] application had no reasonable prospect of success.” She was advised that if she did not withdraw the application, there would be an application for costs.

[8] On 18 December 2014, I caused to be sent to Ms Craig an email which advised Ms Craig that Dunsborough claimed to have provided her with a letter on 3 July 2014, prior to her employment with them, advising her that her service with her old employer would not be recognised. The email set out section 384 of the Fair Work Act 2009 (the Act) and she was asked to advise if she received the letter.

[9] On 28 December 2014, Ms Craig replied to the email from the Commission and advised that she had not seen the letter. On 28 December 2014, Ms Craig sent another email to the Commission explaining that she did not find out until the last week of her holiday that she had been dismissed.

[10] On 14 January 2015, directions were issued to the parties to file submissions and witness statements in relation to the minimum period of employment, the date of termination and the extension of time application by 28 January 2015 and to file material in reply by 25 February 2015.

[11] On 16 January 2015, MDS sent Ms Craig an email in which it stated that she had commenced employment with the predecessor employer on 26 November 2013. She was asked to advise if she agreed that this was the date she commenced work.

[12] On 19 January 2015, MDS sent Ms Craig a further email noting that she had not replied to its earlier email and that messages had been left for Ms Craig to contact MDS. She was asked to provide a copy of her payment summary in relation to work for the predecessor employer in the financial year 2013/14. She was advised that if she did not provide it, then orders for production would be sought.

[13] In response to a message left by Ms Craig, MDS again tried to make telephone contact with Ms Craig on 21 January 2015 but despite leaving messages, the calls were not returned. Ms Craig was then advised by email that her failure to return calls would be relied upon in a costs application.

[14] On 20 January 2015, I issued an order to produce directed to Ms Craig which required Ms Craig to produce to the Commission by 27 January 2015 documents showing the commencement date of her employment.

[15] On 23 January 2015, in compliance with the directions issued, Dunsborough filed its evidence and submissions. Included with the material filed was an employee details form for Ms Craig which included her superannuation details and banking details and recorded her start date as 26 November 2013. Also included was a letter dated 3 July 2014 addressed to Ms Craig from Ms Rowe which advised Ms Craig that her period of service with the old employer would not be recognised. Mr Victor Drummond filed a statement in which he said he posted that letter to Ms Craig.

[16] On 1 February 2015, MDS advised that Ms Craig had not complied with the notice to produce. As a result, the Commission left messages for Ms Craig on 2 and 5 February 2015. Later on 5 February 2015, contact was made with Ms Craig and the process was explained to her.

[17] On 5 February 2015, MDS sent Ms Craig a detailed letter responding to Ms Craig’s advice to the Commission that she commenced work with the predecessor on 1 November 2013. It advised her that its records showed she commenced on 26 November 2013 and that its costs would escalate if they needed to prepare for a hearing. Ms Craig was asked to contact them.

[18] On 6 February 2015, Dunsborough filed an application to dismiss Ms Craig’s application for non compliance.

[19] On 12 February 2015, Ms Craig sent two emails to the Commission asking some questions.

[20] On 13 February 2015, Ms Craig was advised that the Commission was unable to provide her with advice and she was directed to the Unfair Dismissal Benchbook on the Commission’s website. Ms Craig was provided with a copy of the application to dismiss and given until 23 February 2015 to file material in opposition to the application.

[21] Ms Craig did not file any material in opposition to the application to dismiss.

[22] On 26 February 2015, MDS sent Ms Craig another email. In that email MDS responded to Ms Craig’s statement that she believed that, because she was not a probationary employee at the date of her dismissal, this was relevant to Dunsborough’s application. MDS told Ms Craig that this was not relevant because Dunsborough’s objection was based on whether she had been employed for the minimum period of employment. MDS also responded to Ms Craig’s comments that Dunsborough was not a small business. MDS advised that Ms Rowe’s statement made it clear that she included in the count of employees all employees of Gecko Bookkeeping Services Pty Ltd and not just those working at the Spa.

[23] The email further advised Ms Craig as follows:

“I urge you not to ignore or disregard this email. Your continued failure to respond to our correspondence and your failure to comply with the orders of the Deputy President will be referred to by our client on the question of costs at the conclusion of the matter.”

[24] On 27 February 2015, a voice message was left for Ms Craig and an email sent to her from the Commission chasing up her submissions. On 2 March 2015, a further voice message was left for Ms Craig.

Submissions of Dunsborough Beauty Spa

[25] Costs were sought pursuant to section 611 of the Act. At the hearing, Dunsborough relied on the affidavit of Ms Stanton, a lawyer with MDS. She set out the steps taken by Dunsborough to explain its case and why it said Ms Craig’s case could not succeed. It submitted that Ms Craig was on notice that if she continued with her claim, costs would be sought. It submitted that “quite extraordinary efforts have been employed from an early stage to prevent costs being incurred.” 1 It submitted that Dunsborough was a small business and its only protection is an order for costs. It was submitted that this was “one of those exceptional cases in which an applicant, though unrepresented, has simply failed, and unreasonably failed, to avail herself of all of the assistance that is provided by the Commission and all of the explanations that [have] been provided by solicitors for the respondent, quite unreasonably and, in the process, has put the respondent to a great deal of expense.”2

Submissions of Ms Craig

[26] Ms Craig submitted that she mistakenly thought the Commission was acting on her behalf. Ms Craig said she did not make the claim vexatiously or without reasonable cause because she believed that her employment was terminated unfairly. She said her employment was terminated by email without notice whilst she was on approved annual leave in Ireland. She submitted that she did not make the claim to harass or unreasonably trouble Dunsborough. She said she brought the claim to recover the notice pay that was owed to her and to recover compensation for the three weeks she had no income.

[27] She said she did not understand the qualifying period and did not understand how this worked when the business was sold. She also said she did not know a different qualifying period applied to small businesses. She said she did not know Dunsborough was a small business. She said she was told her terms and conditions would remain unchanged and she thought that as she had completed her probationary period with her old employer, she was a full time permanent employee and her employment could not be terminated unfairly or without notice being given.

[28] She submitted that it was not reasonably apparent to her that her claim had no reasonable prospects of success. She said she misunderstood how the Commission proceedings worked. She thought the Commission would assess her case and decide if she had been unfairly dismissed. She thought the Commission would appoint a lawyer to represent her. She thought my associates were lawyers who would assist her finalise her claim.

[29] She accepted that MDS contacted her several times. She thought this was inappropriate and said she did not know Dunsborough’s lawyers could contact her. She said that when she spoke to Ms Stanton her tone was aggressive and she thought she was trying to trip her up.

[30] She said she thought the warnings about costs were scare tactics. She said she did not know that it was possible for her to be made to pay their costs.

[31] She said that during this time she was looking for work and was confused about the process. She submitted that an order for her to pay costs would cause her significant financial hardship.

Submissions in reply by Dunsborough Beauty Spa

[32] It was submitted that Ms Craig knew that she commenced her employment at some date in November 2013. She knew she had been dismissed by email dated 25 October 2014, though she said she did not receive it until 1 November 2014. It was submitted that she had no reason to believe her employment had commenced on 1 November 2013. It was submitted that she would have known she commenced on 26 November 2013. It was submitted that she knew Dunsborough only employed three employees and it was a small business.

[33] The application form submitted by Ms Craig includes the following information:

“To be eligible to apply, you must have worked for the minimum employment period…The Commission’s Unfair Dismissal Benchbook has information on each of the eligibility criteria.”

[34] It was submitted that the benchbook provides a clear explanation of the minimum employment period.

[35] Dunsborough submitted that Ms Craig knew she had not served the minimum employment period.

[36] It further submitted that the evidence of Ms Stanton was unchallenged.

[37] Dunsborough submitted:

“The evidence set out in the affidavit demonstrates extraordinary conduct on the part of a litigant in unreasonably continuing proceedings. The jurisdictional issues were brought to the applicant’s attention by the respondent not only by the response, but clearly in writing at the first opportunity. Had any genuine queries concerning eligibility existed, the applicant should have raised these, at the latest, in response to the email of 17 December [2014]. The applicant was put on notice on several occasions that a failure to deal with the respondent’s solicitors by returning phone calls and responding to correspondence would be referred to by the respondent on the question of costs at the conclusion of the proceedings. The applicant’s refusal to engage with the respondent’s solicitors was entirely unreasonable, and cannot be excused on the basis of ignorance in circumstances in which the applicant had an ample opportunity to understand her obligations as a party to legal proceedings.”

Ms Craig in reply

[38] Ms Craig submitted that at the time she made the application, she did not know that Dunsborough was a small business. She said she did not recall seeing a reference to the benchbook. She repeated that she misunderstood the role of the Commission. She submitted that she did not understand Dunsborough’s objections.

The Legislative Framework

[39] The Commission has the discretion to award costs against a party if certain preconditions are met.

[40] Section 611 of the Act provides as follows:

(1) A person must bear the person's own costs in relation to a matter before the FWC.

(2) However, the FWC may order a person (the first person) to bear some or all ofthe 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.

Did Ms Craig make her application vexatiously?

[41] North J said "a proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party or to gain collateral damage." 3

[42] I do not accept that Ms Craig made her application vexatiously. There is no evidence to support such a finding.

Did Ms Craig make her application without reasonable cause?

[43] Was Ms Craig’s application bound to fail? I agree that the test is an objective one. I am not satisfied that when she made the application, Ms Craig knew that her claim was bound to fail. I accept that Ms Craig must have known when her employment with the predecessor employer commenced. However, I am not satisfied that Ms Craig could have known when she made her application that Dunsborough was small business. The size of a small business is determined by counting all employees in the business and any associated entities. Whether there are associated entities is within the knowledge of the employer, not the employee.

Should it have been reasonably apparent to Ms Craig that her claim had no reasonable prospects of success?

[44] In Baker v Salva Resources Pty Ltd 4a Full Bench summarised the approach to be taken in relation to section 611(2)(b) of the Act as follows:

"[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 [Wodonga Rural City Council v Lewis, PR956243, at para 6]; 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 [Deane v Paper Australia Pty Ltd,PR932454, at paras 7 and 8] or so lacking in merit or substance as to be not reasonably arguable. [A Smith v Barwon Regional Water Authority, [2009] AIRCFB 769 at para 48]."

[45] Once Dunsborough had filed its material, including its documentary evidence supporting its claim that Ms Craig commenced employment on 26 November 2013 with the predecessor employer and the letter to Ms Craig advising her that her service was not recognised, it should have been reasonably apparent to Ms Craig that she had no reasonable prospects of success, particularly as she had no evidence to contradict the evidence of Dunsborough.

[46] Ms Craig relies upon her ignorance of the statutory requirements.

[47] From at least 18 December 2014, Ms Craig had been advised by my chambers of the requirements set out in the Act about the minimum period of employment. She had been provided at that time with a copy of the letter to be relied upon by Dunsborough.

[48] Further, MDS had as early as 17 December 2014 put Ms Craig on notice about the basis of its objection. It continued throughout this time to seek to engage with Ms Craig but she ignored those requests.

[49] While Ms Craig was ignorant of the statutory requirements when she made the application there is no basis for her to claim that she was ignorant of the requirements after 18 December 2014 because while she may have thought MDS were trying to trick her, she received clear advice from my chambers on that date about the requirements.

[50] Ms Craig submitted that she thought the Commission would appoint a lawyer to represent her. The application form she completed advised that the Commission did not provide legal advice and that the Commission website had a range of information that could assist.

[51] Any misunderstanding Ms Craig had about Commission proceedings would have been clarified when she was issued directions on 14 January 2015 to file material to support her claim that her application was not filed out of time and in opposition to Dunsborough’s claim that she had not served the minimum employment period.

[52] I agree with the submissions of Dunsborough that it went to great lengths to try and explain to Ms Craig why her claim would not succeed.

[53] On any objective basis, it should have been reasonably apparent to Ms Craig, at least once Dunsborough’s evidence was filed, that her application had no reasonable prospects of success.

[54] Having found the necessary prerequisites for the order of costs have been met, I am required to consider whether I should exercise my discretion to award costs.

[55] The starting point is that each party bears their own costs.

[56] I have had regard to the fact that Ms Craig was unrepresented in these proceedings. I have had regard to the submissions she made about her personal circumstances. I have had regard to the fact that Dunsborough is a small business. I have had regard to the efforts taken by Dunsborough to provide information to Ms Craig to help her understand why her case could not succeed and the fact that she did not respond to its attempts. I have also had regard to the fact that Ms Craig did not provide any evidence to support her contention that she commenced employment on 1 November 2013 even when ordered to produce those documents by the Commission. I have had regard to the fact that Dunsborough was required to participate in the hearing, yet Ms Craig did not attend the hearing.

[57] Ms Craig had ample opportunity to consider the material put to her by Dunsborough. While she may not have been able to afford legal representation, the application form advised her that the Commission could provide her with information about other organisations that may be able to assist. Ms Craig ignored all attempts by Dunsborough to get her to either produce some evidence to support a claim that she had worked for more than one year, or to understand why her claim was bound to fail.

[58] I am therefore prepared to exercise my discretion to order Ms Craig pay Gecko Bookkeeping Services Pty Ltd trading as Dunsborough Beauty Spa its costs of this proceeding from 23 January 2015. Dunsborough is directed to file and serve a schedule of costs by noon on 4 May 2015.

DEPUTY PRESIDENT

 1   Transcript PN 36.

 2   Ibid PN 37.

 3   Nilsen v Loyal Orange Trust (1997) 76 IR 180 at 181.

 4   [2011] FWAFB 4014 at [10].

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