[2018] FWC 813[Note: An appeal pursuant to s.604 (C2018/1572) was lodged against this decision - refer to Full Bench decision dated 5 June 2018 [[2018] FWCFB 3027] for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s 739 - Application to deal with a dispute

CKC Accountants Pty Limited t/a CKC Accountants
v
Ms Emma Marshall
(C2017/1705)

DEPUTY PRESIDENT SAMS

SYDNEY, 5 MARCH 2018

Alleged dispute about a matter arising under a Modern Award – correct classification of an accountant under the Clerks’ Private Sector Award 2010 – underpayment claim of former employee – conciliation conferences – s 372 General Protections application – same issues in both matters – nature of proceedings – no settlement of underpayment claim – allegations of bullying, false or misleading statements, abuse of process, unethical conduct, dishonesty, deception, corruption and criminal conduct – various offers of settlement – application for costs against employer – no resolution of substantive matter – costs sought pursuant to s 611 of the Act – whether agitating originating application made vexatiously or without reasonable cause – whether application has no reasonable prospects of success – exercise of discretion – grounds for the making of a costs order not made out – costs application refused and dismissed.

[1] This decision will determine a costs application, pursuant to s 611 of the Fair Work Act 2009 (the ‘Act’) filed on 27 September 2017, by Ms Emma Marshall, the respondent to a substantive application filed under s 739 of the Act, to deal with a dispute under the dispute settlement procedure (‘DSP’) of the Clerks – Private Sector Modern Award 2010 (the ‘Award’). The notifier of this latter dispute – CKC Accountants Pty Ltd (‘CKC’ or the ‘applicant’) is a small accounting firm in Orange, New South Wales for whom Ms Marshall previously worked. At issue in the s 739 dispute filed on 30 March 2017, was the correct classification of Ms Marshall when she worked for CKC from April 2011 to sometime in 2015. She has not worked for CKC since then.

[2] CKC described the s 739 dispute as follows:

Underpayment of wages for Cadet Accountant for the period 28 April 2011 to 26 July 2012.

Emma’s [sic] believes she has still been underpaid and CKC accountants seeks to have FairWork [sic] Commission make a determination on this dispute.

We have done our best to make good on underpayment of wages using the correct classification and rates of pay with the assistance of the tools provided by FairWork [sic]. This has become a disruption for our small business and has become quite costly in terms of lost time and legal expenses.

[3] While on its face, the dispute application had all the hallmarks of a relatively straightforward underpayment claim by Ms Marshall (which might ordinarily be dealt with by the processes of the Fair Work Ombudsman) the employer sought the Commission’s assistance in resolving the underpayment issue. However, far from being straightforward, the dispute has now had a long, complicated and convoluted history for which some detail is required to be explained; albeit in summary only.

[4] On 13 April 2017, in an apparent response to CKC’s s 739 application, Ms Marshall engaged a lawyer and gave instructions to the law firm, Madden Thompson to lodge a s 372 application – General Protections Not Involving a Dismissal, on her behalf. This application was replete with allegations that CKC had knowingly and recklessly made false and/or misleading representations about Ms Marshall’s employment and particularly her salary, a failure to communicate with her, unethical behaviour, deceptive conduct and bullying. The linkage to the CKC application was plainly apparent when one looks at the relief sought in the s 372 application; namely:

1. Compensation for loss of income –

a. Underpayment of wages at a minimum Award classification Level 4 (preferable Level 5), and interest on said underpayment (at a compounding rate) either at the rate of return the Applicant received on her investments during that employment period as determine by the pre-judgement interest rates for the applicable period (as recorded on the Local Court website…), and

b. Underpayment of superannuation relating to “1(a)” and the mandated interest required by the Superannuation Guarantee (Administration) Act 1992, Part 3, clause 31 “Nominal interest component”

2. Pecuniary penalties (Part 4-1) – as appropriately determined by the Commission given the facts of the case

3. Legal costs – but for the actions of the Respondent, both their contravention of “the Act” and their resistance to resolving the matter, these costs would not have been incurred by the Applicant

4. Other – stress, hurt and humiliation $1,000

[5] Indeed, Ms Marshall sought the joinder of the two matters on 13 April 2017. Relevantly, on 28 July 2016, Ms Marshall also filed a ‘request for assistance – workplace dispute’ with the Fair Work Ombudsman (‘FWO’) in which she identified an underpayment claim from April 2011 to that point in the amount of $1,942.01. In a response from the FWO on 4 August 2016, it was said:

The majority of issues that come to the FWO’s attention are the result of a genuine misunderstanding between a business and their employee. As such , we encourage you both to work together to resolve the issues raised.

…

Generally, qualified accountants are considered to be award free. If an employee is award free, their minimum entitlements are taken from the Fair Work Act 2009, the Federal Minimum Wage and the NES:

Below is a table with the Federal Minimum Wage (hourly rates) for the different time period:

…

1 July 2015	$17.29
1 July 2016	$17.70

We suggest both parties review Emma’s time and wage records, calculate what Emma would have received had she been paid according to the minimum entitlements and compare this to what Emma had received for the calimed period. *Please note* when comparing the entitlements and the salary, the salary should exclude the superannuation component.

If an amount is found to be owing, then the amount may need to be taxed and superannuation may be payable. I suggest contacting the ATO for any questions in relation to what tax and super may apply.

Emma, the Company understands there appears to be an issue that requires further attention and has requested that you consider that this part of the year is generally their busiest, so they may need some time to provide a response. My suggestion would be for the company to provide Emma with a date that they will work to in providing a response, and provide her with an update if more time is required.

[6] Ms Marshall prepared, or had prepared terms of settlement which included the payment of $1,942.01. She signed the terms of settlement, but it appeared the employer did not, as it had prepared its own terms of settlement, which Ms Marshall would not sign, notwithstanding it was in a standard form and did not alter the payment amount of $1,942.01.

[7] Both the s 739 dispute application and the s 372 General Protections claim were listed for telephone conference on 26 April 2017, with Mr A Suthers, Solicitor with Mr Wren, Company Director representing CKC and Mr M Madden with Ms J Banks representing Ms Marshall. Although Ms Marshall had been granted permission to be represented by a lawyer, pursuant to s 596 of the Act, four months later, she took issue with CKC being legally represented.

[8] Perhaps more curiously, at this conference, an employee of the FWO, Mr Tony Miletto, appeared (presumably at the invitation of Mr Wren), to assist, it was said, in any technical issues associated with Award coverage. While this was very unusual, I did not exclude Mr Miletto from the discussion and he did not make any contribution which could have been said to be irregular, much less intimidatory or improper. However, Ms Marshall subsequently (again some months later) made a complaint to the FWO about Mr Miletto’s involvement in the Commission proceedings. She received an apology from the FWO on 2 August 2017. The FWO letter makes clear that Mr Miletto neither sought, nor was he granted approval to attend the Commission’s proceedings and by doing so, his conduct was subject to the FWO’s internal disciplinary procedures.

[9] Putting this to one side, the parties now appeared to be more apart than ever with CKC having paid Ms Marshall an unspecified amount of $6,201.11 and her claim (now totalling $20,237.54) left a balance said to be owing of $14,036.43, plus costs and interest. The amount increased again in her letter of 17 November 2017 to $20,752.42 (less $6,201.11).

[10] On 28 August 2017, Ms Marshall advised the Commission she was no longer represented by Thompson Madden.

[11] Ms Marshall subsequently sought documents under an order for production. She objected to the employer’s continued representation by lawyers. CKC conceded to this later objection with a new Director, Mr Andrew Miller, taking over responsibility for seeking to settle Ms Marshall’s claims and corresponding with her and the Commission and appearing in the Commission proceedings.

[12] On 23 September 2017, CKC discontinued the s 739 dispute application matter in writing, although that discontinuance was rescinded later that day on the basis that the employer would not discontinue the matter until Ms Marshall had signed a Deed of Settlement and monies were paid by CKC to her.

[13] On 27 September 2017, I had cause to send the following email to the parties:

1. Matter C2017/1705 – a dispute application lodged by CKC Accountants was discontinued (and therefore concluded) by the applicant in an email to the Commission dated 13 September 2017, which is understood to have been copied to you. Accordingly, that matter is concluded.
2. The only role the Commission has in s 372 applications (Matter C2017/2024) is to convene a conference with the parties in order to explore settlement of the matter (s 374). It is understood that settlement was reached and a deed of release was being considered by the parties. However, if the matter is not settled, the Commission’s role is concluded and the file is closed. This does not mean however that your rights to pursue a s 372 general protections application in a court of competent jurisdiction are extinguished and it is open to you to pursue those rights elsewhere.
3. On the other hand, if a deed of release has been signed by the parties, but there is an allegation that the deed has been breached, the Commission has no power to enforce the deed. Again, separate proceedings in a court of competent jurisdiction would need to be initiated to enforce the deed.
4. Accordingly, the Commission intends to close the file in Matter C2017/2024 in 7 days unless a request for a further conference is made by either party as a consequence of the settlement having broken down.
5. The Commission has no power to prepare a ‘brief to the CDPP’ (presumably, Commonwealth Director Public Prosecutions) about your allegations concerning criminal charges against the respondent. Moreover, the Commission is entirely unclear what you allege in this respect. Furthermore, it is difficult to understand why you would pursue such matters, in light of your own deed proposal to settle the matter ‘in full and final settlement’ of claims against the employer concerning underpayment of wages and superannuation.

[14] Importantly, this email noted the s 372 application was concluded as far as the Commission was concerned, as no settlement of that matter could be achieved. Notwithstanding CKC’s confusing communications on 13 September 2017, the parties continued to exchange documents.

[15] On 27 September 2017, Ms Marshall filed a costs application against CKC. On 10 October 2017, the Commission issued directions that the parties file and serve outlines of submissions, witness statements and any other documentary material in respect to the costs application. Despite this, I note that on 20 November 2017, Mr Miller set out a detailed offer to Ms Marshall totally $9,069.77, with the usual releases and standard conditions. The offer expired on 23 November 2017 with no response from Ms Marshall, save for her reply submissions of 25 November 2017 as to costs.

[16] In my earlier directions (10 October 2017) the parties were directed to advise if they sought a hearing of the costs application. Section 589 of the Act provides as follows:

589 Procedural and interim decisions

(1) The FWC may make decisions as to how, when and where a matter is to be dealt with. [my emphasis]

(2) The FWC may make an interim decision in relation to a matter before it.

(3) The FWC may make a decision under this section:

(a) on its own initiative; or

(b) on application.

(4) This section does not limit the FWC's power to make decisions.

[17] In his submission, while Mr Miller sought a hearing, I apprehend he was really seeking a further opportunity to resolve all of Ms Marshall’s claims. So much so was evident by the draft orders he sought and confirmed in his email of 25 January 2018. While I appreciate his purpose and desire for doing so, he misunderstood my direction as to a hearing. The hearing option was limited to the costs application and not the substantive issues underpinning CKC’s original dispute application.

[18] I decided to reject the request for a hearing for the following reasons:

● Ms Marshall strongly opposes a hearing on the costs application;
● Ms Marshall’s trenchant pursuit of this costs application;
● The Commission has sufficient material before it, to readily determine the costs application, without the need for a hearing; and
● Most costs application in the Commission do not require a formal hearing to be determined.

[19] Accordingly, I will proceed to determine Ms Marshall’s costs application ‘on the papers’.

SUBMISSIONS

For Ms Marshall

[20] On her own behalf, Ms Marshall provided a 113 page submission comprising 361 paragraphs and over 400 pages of attachments. I do not intend to summarise all of Ms Marshall’s arguments, although I have read all her material and have taken it into account. Nevertheless, Ms Marshall helpfully set out a summary of her submissions, which I reproduce below:

346. I hereby request that the FWC exercises its discretion to order costs under section 611(2) of the Act wherein power is granted if an applicant brings a claim, or makes an application, vexatiously, without reasonable cause or where it should be reasonably apparent that there was no prospect of success, and indeed in some matters, because of an unreasonable act or omission of the party.

347. I submit that CKC lodged their application "vexatiously" given, for example,:

(a) CKC's stated motive in making in their application and then maintaining it is not consistent if not contradictorily with the advice specifically given to them by the FWO,

(b) the historical information (e.g. the communication between the parties) and the issues flowing there-from show CKC has acted, from the very beginning, deceptively and dishonestly with all parties connected with the matter - me, the FWO and the FWC),

(c) CKC’s bullying and threatening behaviour

(d) CKC's false accusations, and

(e) CKC's request for Inspector Mileto to appear at the FWC conference, being an abuse of the process or indeed a perversion of the proceedings.

348. CKC lodged its application for the purpose of bullying me into submission while embarrassing me before the FWC.

349. I submit that CKC intended to pursue an avenue that they knew was not legally appropriate to cause further cost (in terms of time and money) to me, and thereby harass me, and moreover to abuse the process to ultimately force settlement in their favour. [emphasis in original]

350. CKC's application was also made ''without reasonable cause". Based on a preliminary review it might seem plausible that CKC had a reasonable basis for making their dispute application. Indeed there was a dispute about 'classification level' and therefore 'the amount of the underpayment' that was in contention, but that was my stance, my 'allegation of fact', not CKC's.

351. On CKC's, the applicant's, own version of the facts (i.e. there was a "concluded compromise" and therefore an existence of a legally binding and enforceable contract where my ..offer did not lapse", and moreover CKC had correctly assessed both my classification level and the calculated total of underpayment), it is clear that the proceeding therefore must fail as a contract would need enforcement by a court of competent jurisdiction.

352. As CKC's "allegation of fact" was that there was no dispute (the matter was allegedly "concluded" between the parties, and thus settled in their mind), there was no reasonable cause for CKC to lodge their 'dispute application' requiring a determination, resolution or even conciliation of the matter.

353. Thus if CKC wanted to enforce the alleged contract, then they should have applied to a court of competent jurisdiction to enforce the alleged "concluded compromise", and furthermore, when CKC assert that they have correctly assessed classification level, correctly calculated the underpayment and also paid the total owed to me and thereby have "made good" on the underpayment.

354. Thus according to CKC's own version of the facts, CKC's application was made without there being any real reason, basis or purpose.

355. I submit that CKC's only purpose was to cause vexation to me, the respondent, and to gain an advantage over me. There was no legal and/or lawful purpose for their application given their stated motive does not stand up under pressure, and that if CKC sought the determination they were requesting they should have applied to a court of competent jurisdiction. I remind the FWC that I was in the process of doing exactly that and CKC lodged their application instead. This begs the question "why" would CKC submit such a claim to the FWC.

356. Moreover CKC's application had "no reasonable prospect of success" as the FWC does not have jurisdiction to determine classification level, enforce a contract or make an order for the underpayment of wages. Indeed, it would have been apparent to a reasonable person that such was the situation with the dispute application lodged by CKC in light of the generally available and freely accessible information, and more -so following the specific advice provided to CKC, while also at all relevant times being legally represented. For instance, CKC had been advised "the dispute resolution clause is for a dispute over the terms of an award between a current employee and their employer ...Generally, if one party wants a determination then they can seek the determination of a court of law. "

357. If the reasonable person received the specific advice given to CKC about their application, with its circumstances and requested remedy, it would have been apparent to the reasonable person that there was no reasonable prospect of success.

358. Indeed the reasonable person would have applied to the courts to have the "concluded compromise" determined, given CKC's allegation of fact regarding a contract.

359. Moreover it would or should have been apparent to CKC that their application had no reasonable prospects of success.

360. If a review is made of the history of the matter and the communication between the parties it would reveal that legal advice and representation was requisite. CKC behaved unscrupulously and did not act in good faith or in a trustworthy manner, nor did they correctly advise me on my workplace rights but undertook to hide the same notwithstanding having "certainly known for many years” that an Award applied.

361. Given CKC's unreasonable conduct costs were incurred by me that would not have otherwise been incurred if CKC meet their legal obligations and/or acted in good conscience in responding to my underpayment of wages claim, and the FWC proceedings lodged by CKC constituted an abuse of process.

For CKC

[21] Mr Miller provided a two page submission and proposed a series of draft orders. He submitted that the Company had been attempting to settle the dispute, including the claim for costs, directly with Ms Marshall, including as recently as 20 November 2017. Up to this point, Ms Marshall had not accepted, or rejected CKC’s latest offer. CKC continued to be willing to negotiate a settlement.

[22] Mr Miller rejected Ms Marshall’s claim that this dispute was made vexatiously or without reasonable cause. CKC had acted in good faith by asking the Commission to determine the dispute because:

(a) the Commission can determine the question of the appropriate classification of Ms Marshall;

(b) despite its desire to negotiate a settlement over an extended period, this process had failed; and

[23] Mr Miller put that while CKC rejects all of the allegations made by Ms Marshall, it acknowledges it had made ‘some errors in judgement’ in the way it had handled the dispute. However, it had never acted maliciously or intended to avoid its responsibilities. This is demonstrated by the numerous offers it has made to settle the dispute. Mr Miller recognised Ms Marshall had been underpaid. CKC had apologised and made good the underpayment; but Ms Marshall had consistently refused to sign a Deed of Release.

[24] Mr Miller also acknowledged that Ms Marshall incurred legal costs in order to respond to the dispute. Accordingly, CKC was prepared to include a component for costs in its most recent offer of settlement, which expired on 23 November 2017, without any response from Ms Marshall.

[25] Mr Miller proposed the Commission make the following orders:

1. The Dispute is settled in favour of the respondent on the basis of the offer attached as Annexure A to the Orders (the Offer).

2. The respondent is directed to execute a deed of settlement with the applicant in the form attached as Annexure A and provide it to the FWC by no later than (date).

3. The applicant is ordered to make the payments set out in the Offer to the respondent and IOOF in line with the terms of the Offer by no later than date, provided the respondent has provided the signed deed.

4. The applicant is ordered to pay only those of the respondent's legal costs that have been incurred by the respondent in relation to the dispute in accordance with the schedule 3.1 Schedule of Costs in the Fair Work Regulation 2009, being $2,106.50.

[26] In reply, Ms Marshall filed a 36 page submission consisting of 45 paragraphs, with 46 pages of further attachments, much of which was a repetition of her earlier submissions. Ms Marshall set out the following outline of her reply submission which reads:

In the following submission I will show that CKC have not demonstrated an appropriate level of preparation and response, lending to a lack of seriousness for the matter, whilst their request for a hearing and an ordered re-settlement agreement is not appropriate given the circumstances. Moreover, I will demonstrate how CKC's reply is ill conceived with reference to the lack of substance in their response as well as the deficiencies with their statements and evidence (or lack thereof). Further, I will show how in fact CKC's reply supports (and even request approval for) my application for costs from the FWC. At [the] same time, I will reject CKC's implication that my conduct somehow contributed to costs being incurred in responding to their dispute application. Then finally I will reiterate how my cost submission with its evidence supported an order for costs, under section 611, in my favour despite CKC's reply thereto, which was a simple denial of ‘the allegations’ and a lack of any evidence of CKC acting in ‘good faith’, without malice, or in an attempt to avoid responsibility.

[27] Ms Marshall contended that it was ‘strange’ the respondent sought a hearing of the costs application when it proposed to pay costs of $2,106.50. She rejected CKC’s request for a hearing as a further example of CKC seeking to prolong the matter against her. CKC had provided no statements to support their opposition to the costs application and it followed that they did not contest her evidence. Ms Marshall put that CKC was seeking a hearing merely to force a settlement on her and compel her to sign its settlement agreement. It was an attempt to ‘buy time’. This was not a proper or lawful demand on her. Ms Marshall submitted that the Commission could not force a legally binding agreement on her. She noted the offer proposed by CKC was more than $4,000 than the previous settlement offer. She contended that CKC’s request was an attempt to prevent her pursuing civil and criminal proceedings against the Company.

[28] Ms Marshall observed that CKC had discontinued the dispute application and were now seeking to reopen the file. She further noted that CKC had denied all of her allegations, without addressing any of the particulars of her claim and allegations. This means her evidence must be accepted and the costs order should be made. Ms Marshall said it was inconsistent of CKC to claim the assistance of the Commission to resolve her underpayment claim when CKC had claimed the FWO had already decided the issue. This was false and misleading conduct. Ms Marshall put that CKC had effectively admitted that he had made a financial threat against her and this supports her vexatious argument. Moreover, the Commission should accept her statements as being unchallenged and award costs accordingly. Ms Marshall further claimed that CKC had ignored her feedback to them.

[29] In any event, CKC has acknowledged that she had incurred legal costs in responding to their application and admitted there was no previous settlement of the matter. This constituted a financial threat against her. Ms Marshall criticised CKC’s belated apology as arising from them being ‘caught out’. She claimed the apology was a ‘strategic response to her costs application’ and did not alter the facts.

[30] Ms Marshall believed CKC was ‘playing games’ by insisting she reply to their offer of settlement one day after it was proposed. This conduct was unreasonable and very demanding. Ms Marshall denied CKC had ever acted in good faith, which was a requirement on them under her contract of employment. Ms Marshall believed that CKC should not have lodged a s 739 dispute, but rather have a court of competent jurisdiction hear the issues in contention between the parties.

[31] Ms Marshall submitted that CKC filed this application with the knowledge that the FWO had advised them there may be jurisdictional problems with doing so. Ms Marshall put that this application was an attempt to bully her to accept their preferred unilateral terms. In doing so, CKC’s:

conduct was intended, as stated in my Form FSC in reply to CKC's lodgement of their Form F10 application, to bully me to meet CKC's preferred unilateral terms of correcting the issue in the hopes that they can reduce or avoid liability altogether. To achieve this result, I submitted that CKC bullied me, made false and misleading statements, threatening statements, false accusations, failing and/or knowingly conniving at an incomplete disclosure of documents, by undue influence (an abuse of process), and unethical conduct, involving dishonesty and deception and, as I allege, illegal behaviour.

[32] Ms Marshall referred again to Mr Miletto’s (who she described as ‘their mate’) improper attendance at the Commission’s conference on 26 April 2017.

[33] Ms Marshall relied on Kanan v Australian Postal & Telecommunications Union [1992] FCA 539; 42 IR 57(‘Kanan’)and Imogen Pty Ltd v Sangwin (1996) 70 IR 254 to demonstrate that CKC instituted these proceedings without reasonable cause and with no prospects of success. Moreover, a reasonable person would not have done so because the application was ‘hopeless’ from the outset.

[34] At the risk of repetition, I set out Ms Marshall’s reply submission as follows:

(a) I noted that CKC lodged their reply submission late.

(b) I objected to CKC's request for a hearing:

• CKC has effectively consented to a cost order being made in my favour for the amount of $2,106.50, which costs CKC has acknowledged as having been incurred by me as a result of responding to their dispute application;

• CKC's stated purpose for the hearing was a continuation with their dispute application, which the FWC originally declined to hear on jurisdictional grounds;

• CKC's reply lacked substance, in the fact that

● it did provide considered counter arguments;
● it did not challenge nor contest the evidence previously supplied by me
● (i.e. the evidence's interpretation or veracity was not questioned);
● it did not provided any relevant statements or evidence of its own to support a finding that costs should not be awarded; and
● it did not address the statutory criteria and the approved tests for the various findings sought by me; and
● CKC’s request for a hearing is therefore not "the best use of the FWC’s time".

(c) I further objected to CKC's request for an ordered revised settlement agreement, including but not limited to it being outside the authority of the FWC and more specifically the scope of a 'cost application', being the current matter before the FWC, or indeed, if approved, a 'cost application hearing'.

(d) Also, I asserted a lack of substance in CKC’s reply and a deficiency in their evidence [as outlined above in paragraph 44(b)]. I identified and outlined the flaws of each of CKC's reply paragraphs including but not limited to the lack of relevant information or counter arguments with supporting evidence, as well as the inconsistent and contradictory statements by CKC (for instance, the second reason now given for the lodgement of CKC's Form F10 application).

(e) I showed that CKC's reply and "annexures" in fact support my application for costs and an order being made in my favour, as:

● CKC admit, acknowledge and agree that costs were incurred by me in responding to their dispute application;

● CKC have effectively consented to a cost order;

● CKC have stated that costs in the amount of $2,106.50 should be award; and

● CKC now admit that their assertion of a concluded compromise was not true, and hence supportive of my allegation of a 'financial threat'.

(f) Whilst CKC have asserted in several paragraphs that they have acted in good faith, CKC have failed to provide any evidence whatsoever of doing so (either in lodging their application or at any other time in their conduct of this matter).

(g) CKC have acknowledged, in paragraph 6, that their conduct has caused at least grief (or upset) for me, and accordingly their conduct was inappropriate, and thus I submitted unreasonable in the circumstances.

(h) CKC's rationale that both parties incurred costs is an irrelevant justification of sorts for lodging their Form F10 application, and moreover CKC's implied assertion that I inappropriately contributed these costs was not supported by evidence.

(i) At last I provided a summation of my arguments in response to CKC's ill conceived reply, and reiterated how my cost submission with its evidence supported an order for costs, under section 611, in my favour.

CONSIDERATION

Commission’s power to award costs and relevant principles

[35] The Commission’s general powers to award costs are grounded in s 611 of the Act which reads:

611 Costs

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

(2) However, the FWC may order a person (the first person) to bear some or all of the costs of another person in relation to an application to the FWC if:

(a) the FWC is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or

(b) the FWC is satisfied that it should have been reasonably apparent to the first person that the first person’s application, or the first person’s response to the application, had no reasonable prospect of success.

Note: The FWC can also order costs under sections 376, 400A, 401 and 780.

(3) A person to whom an order for costs applies must not contravene a term of the order.

Note: This subsection is a civil remedy provision (see Part 4 1).

[36] Items 2353-2354 of the Fair Work Bill 2008 Explanatory Memorandum provides as follows:

2353. Subclause 611(1) provides that generally a person must bear their own

costs in relation to a matter before FWA.

2354. However, subclause 611(2) provides an exception to this general rule

in certain limited circumstances. FWA may order a person to bear some

or all of the costs of another person where FWA is satisfied that the

person made an application vexatiously or without reasonable cause or

the application or response to an application had no reasonable

prospects of success.

[37] The starting point in relation to costs of proceedings before the Commission is that each person involved in a matter must bear their own costs; often known as the ‘general rule’. This policy imperative is derived from the statutory purpose that a person is entitled to make, or defend an application made under the Act, without the risk that a costs order may be made against them. This has been the traditional approach under industrial legislation, particularly as it relates to industrial disputes that might arise between an employee/s or an employer about their rights and obligations in the employment relationship. Thus, it is very unusual that one party to an industrial dispute would be successful in a costs application against the opposing party.

[38] As mentioned, s 611 of the Act sets out the general rule, but sub section (2) makes obvious that there are exceptions to that rule in certain circumstances; see: Explanatory Memorandum to the Fair Work Bill 2008 paras [2353]-[2356]. Those circumstances arise if the Commission is satisfied that:

(a) a person made an application, or responded to an application vexatiously or without reasonable cause; or
(b) it should have been reasonably apparent to a person that their application or a person who responded to an application had no reasonable prospects of success.

[39] There is no doubt that (a) above is directed to a consideration of the circumstances when an application is made or responded to. Whereas satisfaction of (b) above may be established at various points of time doing the progress of a matter before the Commission, when it becomes reasonably apparent that the person’s application, or response to the application has no reasonable prospects of success. It is important to note that even if one or both of the legs of s 611 are enlivened, the Commission retains an overall discretion as to whether an order of costs should follow.

[40] Sections 577 and 578 of the Act state:

577 Performance of functions etc. by the FWC

The FWC must perform its functions and exercise its powers in a manner that:

(a) is fair and just; and

(b) is quick, informal and avoids unnecessary technicalities; and

(d) promotes harmonious and cooperative workplace relations.

Note: The President also is responsible for ensuring that the FWC performs its functions and exercises its powers efficiently etc. (see section 581).

578 Matters the FWC must take into account in performing functions etc.

In performing functions or exercising powers, in relation to a matter, under a part of this Act (including this Part), the FWC must take into account:

(a) the objects of this Act, and any objects of the part of this Act; and

(b) equity, good conscience and the merits of the matter; and

(c) the need to respect and value the diversity of the work force by helping to prevent and eliminate discrimination on the basis of race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer's responsibilities, pregnancy, religion, political opinion, national extraction or social origin.

[41] It follows from ss 577 and 578 that in exercising the discretion to order costs the Commission must exercise its powers in a manner which is ‘fair and just’ and takes into account ‘equity, good conscience and the merits of the matter.’ The broad nature of these considerations suggests that the factors which are relevant to the exercise of the discretion are not confined.

[42] Section 611 contains no positive indication of the considerations which the Commission must take into account in deciding how to exercise its discretion. The discretion conferred is expressed in general, unqualified, terms. As the High Court observed in O’Sullivan v Farrer [1989] HCA 61; (1989) 168 CLR 210 (‘O’Sullivan’) at [216]:

‘Where a power to decide is conferred by statute, a general discretion, confined only by the scope and purposes of the legislation, will ordinarily be implied if the context (including the subject matter to be decided) provides no positive indication of the considerations by reference to which a decision is to be made.’

[43] But, of course, the discretion conferred by s 611(2) must be exercised judicially, that is to say not arbitrarily, capriciously or so as to frustrate the legislative purpose. Further, consistent with O’Sullivan, the discretion is also confined by the subject matter, legislative context and purpose.

[44] In the present matter, as Ms Marshall seeks to satisfy the Commission that both legs of s 611(a) and (b) have been enlivened, I refer now to the relevant authorities of the Commission on the subject. Although the principles are well known, given both parties have unrepresented, I shall set out these principles in some detail.

Meaning of ‘vexatiously’

[45] Examination of the circumstances under s 611(a) requires consideration of two matters contained therein; ‘vexatiously’ and ‘without reasonable cause’. In Qantas Airways v Carter [2013] FWCFB 1811, the Full Bench of the Commission said at para [17]:

‘[17] We refer to the approach we have taken to considering if the provisions of s.611(2)(a) or s.611(2)(b) are established. We first deal with the application made on the basis that Qantas has made its appeal vexatiously. The approach generally taken by members of the Commission as to the meaning to be ascribed to the word “vexatiously” in s.611(2)(a) is to adopt the comments of Justice North in Nilsen v Loyal Orange Trust (Nilsen). Nilsen was decided in 1997 when the then Workplace Relations Act 1996 applied however the relevant provision considered by his Honour was in terms similar to s.611(2)(a) being whether an applicant “instituted the proceeding vexatiously or without reasonable cause”. About this provision his Honour said:

“The next question is whether the proceeding was instituted vexatiously. This looks to the motive of the applicant in instituting the proceeding. It is an alternative ground to the ground based on a lack of reasonable cause. It therefore may apply where there is a reasonable basis for instituting the proceeding. This context requires the concept to be narrowly construed. 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 a collateral advantage.”’ [citations removed]

[46] Another Full Bench in Church v Eastern Health [2014] FWCFB 810 (‘Church’) said at [29]:

[29] The question of whether an application was made ‘vexatiously’ looks to the motive of the applicant in making the application. It is an alternative ground to the ground that the application was made ‘without reasonable cause’ and may apply where there is a reasonable basis for making the application. In Nilsen v Loyal Orange Trust (Nilsen) North J observed that this context requires the concept of vexatiousness to be narrowly construed. His Honour went on to state that an application will be made vexatiously ‘where the predominant purpose ....is to harass or embarrass the other party, or to gain a collateral advantage’. Deane and Gaudron JJ made a similar observation in Hamilton v Oades in which they said:

“The terms ‘oppressive’ and ‘vexatious’ are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are ‘seriously or unfairly burdensome, prejudicial or damaging’ and ‘productive of serious and unjustified trouble and harassment’.” [citations removed]

Meaning of ‘without reasonable cause’

[47] In Hamilton James and Bruce Pty Ltd v Gray [2011] FWAFB 9235, a Full Bench of Fair Work Australia, (as the Commission was then styled), said at paras [18]-[19]:

[18] The phrase “without reasonable cause” was considered in Kanan v Australian Postal and Telecommunications Union (‘Kanan’). Section 347(1) of the then Industrial Relations Act 1988 (Cth) provided that:

“A party to a proceeding (including an appeal) in a matter arising under this Act shall not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause.” (Underlining added)

[19] In Kanan’s case, Justice Wilcox said in respect of the phrase that:

“A proceeding is not to be classed as being launched ‘without reasonable cause’ simply because it fails. As Gibbs J said in R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia [1978] HCA 51; (1978) 140 CLR 470 at 473, speaking of the Conciliation and Arbitration Act equivalent of s 357 (s 197A):

‘... a party cannot be said to have commenced a proceeding “without reasonable cause”, within the meaning of that section, simply because his argument proves unsuccessful. In the present case the argument presented on behalf of the prosecutor was not unworthy of consideration and it found some support in the two decisions of this court to which I have referred. The fact that those decisions have been distinguished, and that the argument has failed, is no justification for ordering costs in the face of the prohibition contained in s.197A.’

In Standish v University of Tasmania [1989] FCA 166; (1989) 28 IR 129 at 139 Lockhart J applied the qualification in ordering costs against an applicant whose case he thought ‘misconceived’, rather than simply unsuccessful. But, as the Full Court pointed out in Thompson v Hodder (1989) 29 IR 339 at 342, ‘there may be cases which could not be described properly as “misconceived” but which would nevertheless be held to have been instituted without reasonable cause’.

It seems to me that one way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether, upon the facts 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 it appears that, 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.”

[48] Similarly, the Full Bench in Church said at [30]-[33]:

[30] We now turn to the expression ‘without reasonable cause’. A party cannot be said to have made an application ‘without reasonable cause’, within the meaning of s.611(2)(a), simply because his or her argument proves unsuccessful. The test is not whether the application might have been successful, but whether the application should not have been made. In Kanan v Australian Postal and Telecommunications Union., Wilcox J put it this way:

“It seems to me that one way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether, upon the facts 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.”

[31] In the context of an appeal the question becomes whether, having regard to the arguments available to the appellant at the time of instituting the appeal, there was no substantial prospect of success. As Wilcox CJ (with whom Madgwick J agreed) observed in Imogen Pty Ltd v Sangwin:

“The prospect 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 having regard to those matters, there was not insubstantial prospect of the appeal achieving some success, albeit not necessarily complete success, then it would seem to me it cannot be fairly described as having been instituted ‘without reasonable cause’. This is so even if, in the result, the appeal proved unsuccessful.”

[32] In the same matter Ryan J said:

“The existence of ‘‘reasonable cause’’ within the meaning of s 347 falls to be determined at the time when the relevant proceedings were instituted. The fact that the party instituting the proceedings later discontinues them is therefore not a matter to be taken directly into account in the application of the section. However, an appeal stands in somewhat different case from proceedings at first instance in that discontinuance may bear indirectly on the discretion conferred by s 347 by tending to confirm an impression derived from the grounds of appeal and the reasons for judgment below that the prospects of success on the appeal were slight.

Not without significance to an assessment of the reasonableness of the institution of an appeal are the amount at issue and the nature of the points raised by the notice of appeal. Where, as here, the appeal is essentially against findings of fact made by the trial judge after a two day hearing resulting in a judgment for $16,900 and raises no important or distinctive point of law or principle, the Court may more readily conclude that it was not reasonable in the circumstances to have instituted it. On a fairly fine balance of the relevant considerations and not without hesitation, I have been led to reach that conclusion in this case and agree with the Chief Justice and the orders which he has proposed.”

[33] In construing s.570 and its legislative antecedents courts have observed that the test imposed by the expression ‘without reasonable cause’ is similar to that adopted for summary judgement, that is ‘so obviously untenable that it cannot possibly succeed’, ‘manifestly groundless’ or ‘discloses a case which the Court is satisfied cannot succeed’ [citations removed]

[49] For completeness, I refer to the final two paragraphs in Kanan, where Wilcox J said:

‘29. It seems to me that one way of testing whether a proceeding is instituted "without reasonable cause" is to ask whether, upon the facts 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 it appears that, 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. That is the situation in the present case. The qualification of s.347 applies. The Court has power to order costs against the applicant.

30. I see no discretionary reason to withhold such an order. It is not a matter of the applicant's motives but, rather, that he has put the respondent to the expense of resisting a claim which was always doomed to failure. There is no question of punishing the applicant for his unreasonable course of action. The rationale for making a costs order is that a measure of indemnity should be conferred upon the respondent for the costs it has been obliged to incur in responding to the unreasonably instituted proceeding. I propose to order that the principal proceeding be dismissed with costs. The costs of the motion will be costs in the principal proceeding and so covered by that order.’

No reasonable prospects of success

[50] The High Court in Spencer v Commonwealth of Australia (2010) 241 CLR 118 considered the meaning of the phrase ‘no reasonable prospects of success’, albeit in the context of s 31A of the Federal Circuit Court of Australia Act 1976. The plurality (Hayne, Crennan, Kiefel and Bell JJ) said:

‘59 In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like "clearly", "manifestly" or "obviously") as "frivolous", "untenable", "groundless" or "faulty". But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word "reasonable", in the phrase "no reasonable prospect", be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a "frivolous", "untenable", "groundless" or "faulty" claim.

60 Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is "no reasonable prospect" of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to "no reasonable prospect" can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase "just and equitable" when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.’

[51] A person may gain knowledge in the lead up to proceedings (when the opposing party’s evidence is filed) or during the proceedings (e.g. after the cross examination of a crucial witness) which, when viewed objectively, would satisfy the test of the person’s case having no reasonable prospects of success. It would be from that point that costs may be awarded, if the person did not take steps to recognise that their case was frivolous, untenable, groundless or faulty. For an applicant this may mean discontinuing the matter and for a respondent it may mean making offers to settle a matter. In either case, a respondent to an application cannot discontinue an application which it had not initiated.

[52] As I also apprehend Ms Marshall is seeking indemnity costs, it is necessary to be mindful that such costs orders are rare and unusual:

‘[58] In Dye v Commonwealth Securities Limited (No 2) [2012] FCA 407, Buchanan J identified one of the foundations for an order of indemnity costs may be on the basis of the findings made in the earlier judgment that the applicant’s case was, in all relevant aspects, based on a falsehood.His Honour said at para [5]:

‘Each of these foundations appears to me to provide a sufficient basis for the award of indemnity costs from the dates specified. As to the first basis upon which indemnity costs have been sought, it is well-established that indemnity costs are not awarded as a punishment against an unsuccessful litigant. However, they will be awarded in appropriate cases to protect a respondent from the financial burden of proceedings which were unjustified and should not have been commenced. Each of the proceedings commenced by the applicant falls, in my view, into this category. In the present case, the lack of merit in each of the proceedings is so marked, and the claim for protection by the respondents against unwarranted financial burden is so well-founded, that there is a sufficient justification for the award of indemnity costs with respect to the whole of each of the proceedings, subject to an issue to which I will return concerning the basis on which the Supreme Court proceedings were transferred to this Court. It is not necessary for me to repeat here the findings which were made in the earlier judgment. The proceedings were, in each case, based on falsehood and were without any legal substance. The respondents are entitled to claim that they should be relieved, so far as an order for costs would achieve this, from the financial burden of defending them.’

The issue in this case

[53] At the outset, I am bound to observe that the animus Ms Marshall has towards her former employer, CKC, is palpable. It springs from almost every page of Ms Marshall’s submissions with an intensity which is baffling and I must say, for my own part, quite concerning. One small example serves to demonstrate this point. Ms Marshall made an improper and extraordinary request that the Commission prepare a ‘brief of evidence’ to be sent to the Federal Director of Public Prosecutions (the ‘DPP’) to prosecute CKC for illegal conduct. Ms Marshall pointed to no power under the Act which would permit the Commission to do so. It was a bizarre request.

[54] Ms Marshall was so obsessed by minutia and petty detail that it was difficult to discern what her priorities were in resolving her dispute with CKC, or more lately, pursuing a properly constructed costs application. One of many such examples was her criticism of CKC for being five minutes late in filing their submissions in reply to her costs application. I am reminded of what Pembroke J said in Zepinic v Chateau Constructions (Aust) Limited [2017] NSWSC 582 when, although His Honour was there dealing with a vexatious litigant (not the case here), he said at [46]-[47]:

‘46. In this case, and in many similar such cases, the litigant’s enthusiasm and passionate engagement in his quest for supposed justice, obscures the essential unreality of his expectations; blinds him to the chaos that his pursuit has created; and renders him oblivious to the waste and expense that he has generated or the disproportionate court time that he has consumed. Such a litigant’s level of pre-occupation, ruminative thinking, pedantic attention to the minutiae of his case and dogged persistence, serve only to hinder the efficient administration of justice. It is usually made worse by extravagant language, repeated assertions of fraud and the constant denunciation of the tactics or behaviour of the opposing party.

47. Mr Zepinic’s conduct is an extreme example, but given his constant resort to exaggerated description and unjustified language, it is useful to recall the advice of Atticus Finch to his daughter Scout. She said: ‘Atticus told me to delete the adjectives and I’d have the facts’: To Kill a Mockingbird, Harper Lee, ch 7. And it is worth repeating my own words in McLaughlin v Dungowan Manly Pty Ltd (No 3) [2011] NSWSC 717 at [32]:

...The promiscuous use of extravagant language tends to obscure the value that may exist in the underlying submission. It is timely to repeat the compelling wisdom of the words attributed to Lord Bingham of Cornhill by Lord Mackay of Clashfern in his address at the Thanksgiving Service for Lord Bingham; The Times, 26 May 2011:

The effective advocate is not usually he or she who stigmatises conduct as disgraceful, outrageous, or monstrous, but the advocate who describes it as surprising, regrettable or disappointing.’

[55] That said, I am obliged to also observe that Ms Marshall’s submissions were well structured, neatly set out, grammatically precise and incredibly detailed. I accept she holds a strong and passionate belief as to the injustice she perceives has been occasioned upon her by CKC. However, I do not accept her belief is warranted or justified.

Jurisdictional Objections

[56] At this juncture, I should say that Ms Marshall’s submission alleging CKC’s s 739 application to the Commission to determine her claim of being incorrectly classified, as being beyond jurisdiction, is fundamentally wrong. This dispute about her classification, on her own evidence, arose in mid-July 2016 at a time when Ms Marshall was employed by CKC. Accordingly, in accordance with the principles set out in ING Administrators v Jajoo PR974301, a dispute commenced before a person ceases to be employed, is not one jurisdictionally barred by the statute. While the FWO’s observations as to the Commission’s jurisdiction may have given her some comfort, the FWO has no authority, let alone a power, to determine whether the Commission has jurisdiction in any matter before it.

[57] Moreover, Ms Marshall misrepresented or misunderstood my comments about the Commission’s jurisdiction to determine the matter, although I note that at the time, her lawyers would have had no doubt about the Commission’s powers. While I agreed that the s 739 dispute was unusual (in the sense it was lodged by the former employer), I did not say it could not be dealt with, as the Commission does almost every day, when such disputes are lodged which allege underpayment claims. It is becoming an ever increasing phenomenon. Most claims are settled during conferences with the Commission (even those where there is no jurisdiction). What I did make clear was that the Commission’s jurisdiction does not extend to making orders for the payment of underpaid wages or entitlements, or their enforcement. These are matters for the courts of competent jurisdiction. Nevertheless, the Commission does have the power to (and frequently does) interpret the relevant industrial instrument to answer the question of whether an employee’s role and tasks performed, are covered by a particular classification in an industrial instrument. To the extent Ms Marshall spent a significant part of her submission in arguing that very point, it is not the matter she has asked to be determined by this costs application. Accordingly, it is not open to justify her costs application or support an argument as to the alleged self evident correctness of her claim, when that question has never been properly argued or tested under cross examination.

Witness Statements

[58] Ms Marshall sought to rely on witness statements from her husband Mr Cameron Marshall and sister Ms Laura Doyle. It is usually the case in contested proceedings that witnesses are required for cross examination in a hearing. Of course, Ms Marshall strongly opposed a hearing. It is incumbent on me to say something about Ms Marshall’s inclusion in her materials of these statements, dated 1 November 2017. This untested evidence does not assist the Commission in determining the relevant issues in this costs application. Nevertheless, I will make a few obiter observations on this material.

[59] This evidence went to what Mr Marshall and Ms Doyle had observed about Ms Marshall’s demeanour and what she had told them about the Commission’s telephone conference on 26 April 2017 and her thoughts and feelings of subsequent events.

[60] Firstly, the statements of Ms Marshall’s husband and sister were prepared almost six months after the Commission’s conference; a conference neither of them was involved in. There was no evidence that either of them made contemporaneous notes at the time. In other words, they relied on what Ms Marshall told them had happened six months earlier in circumstances where they were not eye witnesses to the events. Their evidence was hearsay (accepting of course the Commission is not bound by the rules of evidence and by this time, Ms Marshall was no longer legally represented). It is uncontroversial that recollection of events is diminished over time. (I note Mr Marshall also referred to events in December 2016). It may safely be assumed after such a passage of time that what Ms Marshall had told them earlier would have been less than pristine than if the event was more contemporaneous to their statements.

[61] Secondly, both witnesses say Ms Marshall had appeared upset and intimidated by Mr Miletto’s unauthorised participation in the Commission’s conference. For her part, Ms Marshall continues to take issue with this matter, notwithstanding she received an unconditional apology from the FWO as to his agreeing to attend the conference. Moreover, it would seem he was disciplined for doing so. In any event, Mr Miletto said very little during the phone conference and certainly said nothing which could be described as intimidating. Pointedly, Ms Marshall was not alone in this conference. She was represented by two lawyers (Mr Madden and Ms Banks).

[62] Thirdly, in my opinion, the acceptance by the Commission as to the reliability of supportive (and untested) evidence of close relatives of a litigant, should be treated with some caution; see my decision in Uckert v Australian Water Technologies Pty Ltd [2000] NSWIRComm 123, 25 July 2000 at [329]-[333]. This is so because such evidence will invariably be crafted through the prism of the natural and understandable human tendency to protect a close family member and to believe everything they say, particularly where it may involve the alleged poor conduct or bad behaviour of a former employer of the relative.

Whether a costs order should be made

[63] It is unnecessary and unproductive for the Commission to address each of the arguments Ms Marshall advanced in support of her largely repetitive and voluminous submissions (many of which were duplicates or triplicates). As identified by her, they include the following allegations:

• bullying behaviour;

• false and misleading statements;

• threatening statements;

• false accusations;

• failing and/or knowingly conniving at an incomplete disclosure of documents;

• undue influence, an abuse of process; and

• unethical conduct, involving dishonesty and deception.

[64] Much of her densely populated submissions were peppered with self serving rhetorical questions said to support these allegations, but without any underpinning objective evidence. Her submissions bear little resemblance to the reality of CKC’s unremarkable and measured reactions in reply to a straightforward underpayment claim; albeit one which transmogrified from its original $1,905 to one in excess of $20,675. Ms Marshall’s 113 page submission contains numerous alleged examples of deceptive and/or misleading conduct, each of which is followed by the expression ‘but that begs the question.’

[65] Ms Marshall’s view is that her claim of being wrongly classified is self evidently correct. Whenever CKC has challenged that opinion, she alleges the employer was either engaged in deceptive, misleading, even criminal and corrupt conduct; and further by putting monies into her account, without her agreement, in order to seek to settle her claim, including with a Deed of Release, that this was threatening behaviour, constituting bullying. I will address this latter point first.

[66] It was entirely understandable, why CKC was making offers to settle Ms Marshall’s underpayment claim and requiring a Deed of Release to be signed by her. In my opinion, this was an entirely orthodox and conventional exercise where, in response to an employee’s underpayment claim, offers and counter offers are exchanged. Such a negotiated approach is one which is endorsed and encouraged by the FWO (see: para [5] above) and this Commission. If offers are put and ultimately accepted, a Deed of Release is invariably the mechanism to conclude the matter. In my view, CKC was engaged in nothing unethical or unusual by its response to Ms Marshall’s claims and counter claims; let alone was its conduct or actions threatening or bullying. Secondly, Ms Marshall could hardly claim she was being bullied into signing a Deed of Release when she never signed one. She made numerous unacceptable amendments to the employer’s draft deed when, at least at one point, she was represented by a lawyer. Ms Marshall was not threatened or bullied into anything.

[67] Given the tone and content of Ms Marshall’s communications with CKC and this Commission, including her strong advocacy of what she perceives to be her legal and industrial rights, and her determination in pursuing these perceived rights, it is apparent that Ms Marshall is no ‘shrinking violet’. Even so, at all times, this dispute was under the aegis of the Commission and could have been relisted, at any time, and at short notice, if either party felt intimidated or aggrieved by the actions or conduct of the other. That said, I do not see how any allegation of bullying can be attached to the conduct or actions of CKC at any time.

[68] In my view, Ms Marshall’s view that her underpayment claim was self evidently correct and CKC must be wrong and motivated by mala fide intent, is difficult to fathom when she made no request to have her claim determined by this Commission, or as I understand it by a court of competent jurisdiction, even after she lodged a s 372 general protections application in which she indicated she would be taking the matter further.

CONCLUSIONS

[69] In my assessment, there is no basis to Ms Marshall’s submission that CKC acted vexatiously in filing this dispute. It was doing no more than seeking to resolve a long standing and intractable dispute with Ms Marshall as to her claim of being incorrectly classified. It is the kind of dispute which this Commission regularly encounters (albeit usually filed by employees) and one which the Commission invariably resolves through conciliation.

[70] In addition, the dispute notification was not filed with any mala fide intent. It was expressed in respectful and neutral language; see: para [2] and most certainly was not driven by any desire to cause Ms Marshall hurt, embarrassment or humiliation. Moreover, it was not lodged for any collateral purpose. As I said earlier, proposing offers of settlement with a Deed of Release, is not bullying. CKC’s only purpose was to seek the Commission’s assistance in resolving a dispute whose resolution had eluded the parties for over 12 months. Importantly, neither party was initially legally represented and that is how the matter ultimately proceeded. Ironically, it was Ms Marshall who first engaged legal representation, which CKC responded to by engaging its own legal advice.

[71] True it is that the employer has conceded it might have acted differently or responded quicker to Ms Marshall’s claims. But given CKC’s lack of expertise in employment related matters, (it being a small employer in a regional town), it is not surprising that its conduct and actions were not entirely conventional or strictly according ‘to the book’. Contrary to Ms Marshall’s criticisms, it is to CKC’s credit that it has acknowledged its procedural mistakes and sought to rectify them. However, the fundamental question of Ms Marshall’s correct classification remained in the background and have never been resolved - despite Ms Marshall’s opinion that she has been thoroughly vindicated and her claims are, and remain entirely justified. It follows that the application filed by CKC was not made ‘without reasonable cause’. To stress again, there was nothing unreasonable about an employer seeking the Commission’s assistance, either through conciliation and/or arbitration (if permitted by the DSP in the Award or Agreement) to resolve a long standing and seemingly intractable dispute over classification coverage, or even whether the Award applied to Ms Marshall at all. Indeed, it was entirely proper for it to do so.

[72] Accordingly, s 611(2)(a) of the Act has not been satisfied as the dispute was not lodged by CKC ‘vexatiously’ or ‘without reasonable cause’.

[73] As to s 611(2)(b) it could not possibly be said that the s 739 application had no reasonable prospects of success. There was a real and ‘live’ issue between the parties which screamed for resolution.

[74] The fact CKC made limited admissions and acknowledgements and deposited monies into Ms Marshall’s account in the hope of resolving her claims, does not establish that Ms Marshall’s claim was wholly determined in her favour and therefore by bringing the application, it was bound to fail. Of course, given the parties remain at odds as to the extent of Ms Marshall’s underpayment claim, it cannot be fairly said, or at all, that Ms Marshall’s claims were bound to succeed in contested Commission proceedings, or in a court of competent jurisdiction; neither course of which has ever happened.

[75] Moreover, even when the Commission ceased to be actively involved in conciliating the matter (around September 2017) and Ms Marshall insisted all communication with her come from CKC directly and not their lawyer, and a new Director took responsibility for the matter, Mr Miller has continued to attempt to negotiate settlement of all claims (including legal costs) directly with her - but to no avail. Indeed, Ms Marshall described these communications as not being a genuine attempt to resolve the differences between the parties. In my view, Mr Miller’s efforts were genuine. His emails to her have been conciliatory, courteous, even apologetic.

[76] Accordingly, I am not satisfied that the s 739 dispute notification had no reasonable prospects of success. In these circumstances, s 611(2)(b) is not enlivened.

CKC’s proposed orders

[77] Finally, in respect to the draft orders proposed in CKC’s submission (see: para [25] above), while I understand the employer’s desire to have some finality about this matter and recognise that CKC is unrepresented, the proposed orders do not arise from the application for costs made by Ms Marshall. Orders of this kind cannot be made in the absence of consent. In particular:

(a) Order 1 seeks a declaration that the dispute is settled in favour of CKC in circumstances where I have not even heard a case about the correct classification of Ms Marshall;

(b) Order 2 seeks to direct the parties to execute a Deed of Release in specified terms. The Commission has no power to direct parties to settle matters; let alone require them to enter into binding terms of settlement against their will;

(c) Order 3 requires payment of an offer to Ms Marshall, provided she sign a Deed of Release. As she has given no indication of any willingness to do so, the Commission cannot force her to sign a Deed of Release; and

(d) Order 4 requires the payment of her legal costs amounting to $2,106.50. As I have found no basis for awarding any costs against CKC, and as it expresses its offer of $2,106.50 as a ‘sign of good faith’, dependant on the signing of the Deed, it is open to CKC to pay whatever it likes, and for whatever reason it chooses. However, it cannot be a term of an order dependant on a Deed of Release Ms Marshall refuses to sign. The Commission cannot force her to do so.

CONCLUSION

[78] For the above reasons and upon a thorough review of the parties submissions and all of the preceding background material, Ms Marshall has not established the conditions precedent, under s 611 of the Act, for the Commission to take the next discretionary step of ordering Ms Marshall’s legal costs be paid in part, or in full by CKC in this matter. Accordingly, the costs application is dismissed. I order accordingly.

Postscript

[79] Regrettably, the consequences of the outcome of this costs application does not resolve the substantive issue underpinning CKC’s original s 739 dispute application. It is open to the parties to have this matter determined through the processes of this Commission (clause 9 – Dispute Resolution of the Modern Award is limited to mediation, conciliation and consent arbitration) or a court of competent jurisdiction. While I doubt the present disposition of the parties is amendable to further settlement discussions between them, as to all Ms Marshall’s claims to finality, that course of action remains a possibility and should be seriously considered. In my view, this dispute has gone on for far longer than it ever needed to. These proceedings are otherwise adjourned until further direction or order of the Commission or their discontinuance by CKC as the applicant in matter C2017/1705.

DEPUTY PRESIDENT

Appearances:

Ms E Marshall for herself.

Mr A Miller for CKC.

Written submissions:

For CKC, 21 November 2017.

For Ms Marshall, 6 and 25 November 2017.

Printed by authority of the Commonwealth Government Printer

< PR600209>

CKC Accountants Pty Limited t/a CKC Accountants v Ms Emma Marshall

[2018] FWC 813

5 MARCH 2018

DECISION