Colin Ferry v GHS Regional WA Pty Ltd T/A GHS Solutions

[2016] FWC 3120

[2016] FWC 3120

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Colin Ferry
v
GHS Regional WA Pty Ltd T/A GHS Solutions
(U2014/14619)

COMMISSIONER WILLIAMS PERTH, 24 MAY 2016

Application for costs.

[1] This decision concerns an application for an order for costs made by GHS Regional WA Pty Ltd T/A GHS Solutions (GHS or the respondent) who were the respondent to a prior application made by Mr Colin Ferry (Mr Ferry or the applicant) for an unfair dismissal remedy under section 394 of the Fair Work Act 2009 (the Act).

[2] On 14 December 2015 the Commission as currently constituted issued a decision 1 and order2 dismissing Mr Ferry’s application.

[3] This costs application is made under section 400A of the Act.

The decision at first instance

[4] Relevant extracts of the Commission’s decision dealing with Mr Ferry’s unfair dismissal remedy application are set out below:

“[24] Considering all of this evidence on the question of Mr Ferry’s need to seek authorisation before entering the yard out of hours Mr Ashton’s, Mr Taylor’s and Mr Ferry’s evidence has satisfied me that prior to July 2014 this requirement had not been strictly applied to Mr Ferry because of his role as Yard Manager. The evidence of all of the other witnesses however has satisfied me that from July 2014 onwards GHS had expressly made it clear to employees, including Mr Ferry, that employees must seek prior authorisation before entering the premises of GHS, including the yard, out of hours. I am satisfied that Mr Ferry had been made aware of this and new this applied to him.

[25] I find that from 2014 onwards GHS required that employees not enter the company’s premises after hours without authorisation and that this applied to Mr Ferry.

...

[39] Considering all this evidence I am satisfied that Mr Ferry was aware that he was not allowed to take any property from GHS’s premises without prior authorisation.

[40] Turning then to the events of Saturday, 4 October 2014. The evidence is that Mr Ferry, without seeking prior authorisation from Mr Pitcher, entered GHS’s yard with his vehicle and a trailer.

[41] Mr Sims was already present at the premises at that time.

[42] Mr Ferry did not seek prior authorisation from Mr Pitcher to remove anything from the premises on that day.

[43] In his witness statement Mr Ferry says that on this day he loaded “...some scrap and salvaged steel…” onto his trailer.

[44] Under cross-examination Mr Ferry gave evidence that he spoke to Mr Sims and then proceeded to place items in his vehicle and on his trailer. He agrees he put some items into the front of his car and he put some items in his trailer. He then moved his vehicle and trailer to another part of the yard and placed a large rear rack bar onto his trailer having asked Mr Sims for some assistance to move this. Mr Ferry agrees that this rear rack bar was the one he discussed with Mr Pitcher some days later on 13 October 2014 and is referred to in the letter of termination of employment he received and is shown in photographs attached to that letter of termination.

[45] Mr Ferry agrees he also placed an L-shaped bar with a wheel at one end of it, which Mr Ferry refers to as the “strong arm” onto his trailer.

[46] Mr Ferry agrees he also placed another item onto his trailer which is a small winch with an adjacent rusty handle “the little boat winch”.

[47] Mr Ferry acknowledges that he did not have authorisation to remove these items and he did not use the GHS system for recording borrowed equipment to log these items.

[48] With respect to the rear rack bar Mr Ferry agrees that it was removed some time earlier from a GHS truck. Under cross-examination Mr Ferry initially agreed it was not his property but he then sought to explain that somebody, he was not sure whom but it may have been Mr Pitcher’s former business partner, had given him permission a year earlier to take it.

[49] I accept the evidence of Mr Pitcher that the rear rack bar had been removed from a GHS truck purchased in January 2013 from another business GNC Concrete. Following its purchase GHS replaced the tray floor of the truck, fitted a small hiab crane so that it could be used as a servicing truck for portable toilets. The rear rack bar was removed from the vehicle when the new tray floor was fitted and the rear rack bar was stored in the yard.

[50] With respect to the strong arm Mr Ferry under cross examination stated that this was his property and it was not to GHS property. There is no explanation proffered as to why it was located on GHS’s premises. Mr Ferry had no good explanation as to why days later when challenged about the removal of these items by Mr Pitcher he returned both the rear rack bar and the strong arm if indeed they were his property and not GHS’s property.

[51] Mr Ferry’s evidence that the rear rack bar had been given to him and so was his property and that the strong arm was his property was not at all convincing. Mr Pitcher’s evidence is to the contrary and I am satisfied that neither the rear rack bar nor the strong arm were Mr Ferry’s property and in fact they were the property of GHS.

[52] With respect to the little boat winch Mr Ferry’s explanation, in some detail, was that on a work trip to Carnarvon and Shark Bay he removed this from a boat trailer which was located next door to the work site he was working on, after speaking to the trailer’s owner. Mr Ferry recalls that job being for a community centre approximately a year ago. He then used the GHS vehicle he was using for work purposes to transport this little boat winch back to the GHS yard where it had remained until he removed it from the yard on 4 October 2014.

[53] With respect to this little boat winch I accept Mr Ferry’s evidence as to how the item was obtained and came to be in the GHS yard. The question then is whether this should be viewed as having been Mr Ferry’s property to do with as he wished.

[54] The evidence is that this item was taken by Mr Ferry whilst he was working for GHS and he then used GHS’s vehicle to transport it to GHS’s yard where it remained for approximately a year. Mr Ferry had not sought approval from the respondent to use the GHS vehicle nor had he sought approval from GHS to leave it at the yard.

[55] In these circumstances I accept as submitted by the respondent that an employee who receives property during the course of their employment as occurred in this instance is accountable for that property to the employer. Mr Ferry was not entitled to treat the little boat winch as his own property.

…

Valid reason

[93] The evidence is that on 4 October 2014 Mr Ferry entered the premises of GHS after hours without authorisation contrary to the policy of GHS. This conduct of Mr Ferry was a valid reason for his dismissal.

[94] Having entered the premises of GHS on 4 October 2014 Mr Ferry removed the rear rack bar and the strong arm which were the property of GHS without authorisation and he also removed the little boat winch without authorisation This conduct of Mr Ferry was a valid reason for his dismissal.

[95] On 10 October 2014 when Mr Ferry was challenged by Mr Pitcher about allegedly entering the premises of GHS after hours without authorisation and removing GHS property without authorisation Mr Ferry agreed he had entered the premises without authorisation but admitted only to removing one item of GHS property and failed to mention other items. Mr Ferry’s failure to be open and honest about his unauthorised removal of GHS property was a valid reason for his dismissal.

[96] After having dismissed Mr Ferry from employment it has become known that he secretly recorded the conversation he had with Mr Pitcher on 13 October 2014 without the consent of Mr Pitcher or Mr Dewar. In the circumstances this conduct of Mr Ferry was a valid reason for his dismissal.

[97] For the purposes of what follows it should be noted that the respondent at the time of dismissing Mr Ferry was not aware that he had secretly recorded the conversation with Mr Pitcher and so whilst this was also a valid reason for his dismissal it was not a reason relied upon by the employer in its decision to dismiss Mr Ferry. Consequently Mr Ferry was not notified of this reason nor given an opportunity to respond to this reason.

Notification of the reasons for dismissal

[98] Mr Ferry was notified during meetings on 10 October and again on 13 October 2014, including in a letter provided to him at that second meeting, of the reasons the employer ultimately dismissed him for.

Opportunity to respond to the reasons for dismissal

[99] Mr Ferry had an initial opportunity to respond to allegations regarding unauthorised entry to the GHS premises and unauthorised removal of GHS properties during the meeting on Friday, 10 October 2014. He was advised at that time that the allegations against him were serious and he was stood down. He was given an opportunity to respond to those allegations at that time and did so.

[100] At the meeting on Monday, 13 October 2014 Mr Ferry was provided with a letter specifying the reasons the employer was considering dismissing him. He was given an opportunity to read and consider that letter. Mr Ferry read the letter made a number of notations upon it and then discussed with Mr Pitcher the reasons the company was considering dismissing him.

...

Conclusion

[107] Mr Ferry was aware of the requirements of GHS that he not enter the premises of the business after hours without authorisation and also that he was not entitled to remove property of GHS from the premises without authorisation. Mr Ferry chose to ignore both of these requirements. When he was confronted with the fact that the respondent was aware of his actions he failed to be open and honest as to his actions. When provided with the opportunity to explain Mr Ferry did not provide any satisfactory explanation for his misconduct.

[108] Consequently the respondent’s decision to dismiss Mr Ferry was not harsh, unjust or unreasonable. This application for an unfair dismissal remedy will be dismissed and an order to that effect will now be issued in conjunction with this decision.”

Submissions of the parties

The respondent

[5] The respondent has made an application for an order for costs under section 400A of the Act. The respondent submits that the applicant caused costs to be incurred by the respondent because of an unreasonable act or omission of the applicant in connection with the conduct or continuation of the matter.

[6] Section 400A of the Act was considered in the Full Bench decision in Roy Morgan Research Ltd v Baker 3 (Roy Morgan). The Full Bench noted a number of authorities relating to the expression “unreasonable act or omission”. A number of those authorities deal with the situation where a party does not agree to a settlement proposal and is ultimately unsuccessful in the proceedings. Roy Morgan itself dealt with an unsuccessful party’s omission in not putting a reasonable settlement proposal in response to the other party’s settlement proposal.

[7] The respondent submits that, having regard to the Explanatory Memorandum, and the authorities cited in Roy Morgan, a failure by a party to agree to terms of settlement that could have led to the application being discontinued is conduct that may be considered by the Commission to be an unreasonable act or omission under section 400A of the Act. The relevant issue will be whether the conduct is unreasonable in the particular circumstances.

[8] The respondent contends that the applicant engaged in an unreasonable act, or an unreasonable omission, or both, when the applicant did not accept the respondent’s offer to settle the matter, as set out in a letter from the respondent’s representative to the applicant dated 12 June 2015, and continued to pursue the matter to hearing.

[9] The offer of settlement was not made in a conciliation conference and was made on the basis that it was “without prejudice save as to costs”. In the letter, the respondent expressly advised the applicant of its intention to rely upon the offer in relation to costs if the applicant was unsuccessful in his unfair dismissal claim. The applicant did not advise the respondent directly of the applicant’s refusal to accept the offer, but communicated his decision in an email to the Commission of 25 June 2015 (which attached a copy of the respondent’s letter), to which the Associate to Commissioner Johns responded on 26 June 2015 (email chain at Attachment A to the respondent’s submissions), noting that the Commissioner was no longer conciliating the matter.

[10] The email correspondence at Attachment A confirms that the applicant received the respondent’s offer and decided not to accept it. However, it is not apparent from that correspondence that the applicant properly considered the respondent’s offer or sought any advice in relation to the implications of not accepting the respondent’s offer having regard to the basis upon which it was made. The applicant did not put a counter offer to the respondent in response to the respondent’s offer of 12 June 2015 and continued to pursue his claim to hearing. The applicant’s conduct in that regard, whether each aspect is characterised together or separately as an act or omission, or both, was unreasonable, including in light of the terms of the response from the Commission on 26 June 2015 (at which time the Commissioner was no longer conciliating the matter).

[11] The applicant’s claim was dismissed in its entirety on 14 December 2015.

[12] The respondent submits that, having regard to the terms of the respondent’s offer of settlement, the circumstances of the applicant’s decisions to refuse to accept that offer and to continue the proceedings, and the Commission’s reasons for decision of 14 December 2015, the applicant’s conduct is sufficient to establish a basis upon which the Commission can exercise the power under section 400A of the Act, and also warrants the exercise of the Commission’s discretion in favour of making a costs order.

Prospects of applicant’s case

[13] The respondent notes that in some decisions a matter that has been taken into account in determining whether a party has engaged in an unreasonable act or omission is whether at the time a settlement offer is refused, upon the facts apparent to the party there is no substantial prospect of success.

[14] In this regard, at the time the respondent’s settlement offer was made, all witness statements and documents that the parties would rely upon in the proceedings, and the parties’ respective outlines of submissions, had been filed and served. Accordingly, the applicant was aware of the detail of the respondent’s case, and the matters relevant to the applicant’s claim that the respondent contended the applicant was not able to make out, on the materials filed by the applicant.

[15] In particular:

(a) The applicant was aware that the respondent considered that the applicant had taken items of the respondent’s property from the respondent’s premises without permission and that conduct justified dismissal. At hearing, the applicant did not present any credible evidence that the items did not belong to the respondent, and accepted that he did not seek the respondent’s permission to take the items from the respondent’s premises on 4 October 2014. Having regard to the evidence, the respondent submits that the applicant at all times knew the items (which he returned on 10 October 2014) did not belong to him, and that he should not have taken them without the respondent’s permission; and

(b) The applicant was aware that the respondent considered the applicant’s conduct in secretly recording a private discussion in the workplace on 13 October 2014 without the consent of those present at the meeting amounted to unlawful conduct justifying dismissal. At hearing, the applicant presented no credible evidence in support of a contention it was incumbent on the applicant to prove --- that an exception to section 5 of the Surveillance Devices Act 1998 operated such that the applicant’s conduct was not unlawful.

[16] Further, the conclusions reached by the Commission in dismissing the matter, and in particular at [107] of the Commission’s decision, were all matters that were, or should have been, readily apparent to the applicant prior to the hearing.

[17] The respondent submits that the applicant knew or should have known that his case was very weak, with no substantial prospects of success, and that the applicant should have accepted the respondent’s offer of a payment of a not insignificant amount in return for the applicant discontinuing the claim (which offer was put without additional conditions, for example, relating to any other claim the applicant might have had against the respondent). The applicant’s conduct went beyond mere “hard bargaining” and ventured into the realm of a refusal to reasonably assess the prospects of his case, notwithstanding the clear contentions put by the respondent in response to the applicant’s claim and the materials filed in support of those contentions.

[18] The respondent submits that this conduct is a further and sufficient basis upon which the Commission can exercise the power under section 400A of the Act, and also warrants the exercise of the Commission’s discretion in favour of making a costs order.

[19] The costs sought by the respondent are in respect of costs incurred by the respondent relating to representation in responding to the matter on and from 18 June 2015, including in relation to the respondent’s representative preparing for and appearing at the hearing of the matter in Geraldton on 20 August 2015, and the respondent’s representative preparing and perusing written closing submissions in accordance with the directions of the Commission, filed by the parties on 31 August 2015 and 7 September 2015.

[20] The costs sought by the respondent total $13,875.70, comprising the following:

(a) Travel expenses (return flights Perth to Geraldton) in the sum of $375.70; and

(b) Legal fees in the sum of $13,500.00.

[21] A detailed Bill of Costs relating to the legal fees and when the travel took place is Attachment 1A to the Schedule to the costs application file by the respondent.

[22] The respondent submits that, whilst costs in that amount are effectively sought on an indemnity basis, the particular costs are fair and reasonable, and consistent in any event with Schedule 3.1 to the Fair Work Regulations 2009.

The applicant

[23] The issue for determination is whether the applicant caused costs to be incurred by the respondent because of an unreasonable act or omission of the applicant in connection with the conduct or continuation of the matter.

[24] Specifically, the respondent claims that the applicant’s refusal to accept an offer of settlement made on 12 June 2015 and continuing with his claim constituted an unreasonable act or omission.

[25] The applicant submits that he did not make any unreasonable acts or omissions in connection with the conduct or continuation of the matter. Specifically, the applicant’s refusal to accept the respondent’s offer of settlement and continue with the proceedings was not an unreasonable act or omission in all the circumstances. As such, the Commission should not exercise its discretion to make an order for costs against the applicant.

[26] It is clear from the legislation, Explanatory Memorandum and the relevant case law, that the Commission should only exercise its discretion to award costs where there is clear evidence of an unreasonable act or omission has occurred, and that a mere failure to agree to a settlement offer, even when a person’s case may be weak and ultimately unsuccessful, does not necessarily warrant the exercising of the discretion to award costs.

[27] Section 400A of the Act does not preclude parties from hard bargaining and compel them to accept the best, or near best offer, of the other party.

[28] The respondent contends in its submissions that the applicant engaged in an unreasonable act, or an unreasonable omission, or both, when the applicant did not accept the respondent’s settlement offer and proceeded with his matter.

[29] The applicant submits that he did not make an unreasonable act or omission in connection with the conduct or continuation of the matter when the applicant refused to accept the respondent’s settlement offer dated 12 June 2015.

[30] The respondent has failed to put the entirety of the facts and circumstances which surrounded the putting of the settlement offer to the applicant so that that a “complete picture” is formed in order to determine whether the applicant acted unreasonably.

[31] The respondent has in their submissions detailed a number of offers and counter offers and interactions with various other Members of the Commission whom were involved in conciliations prior to the hearing of this matter.

[32] Without detailing the particulars of these what occurred apparently was that:

• On 17 November 2014, the parties participated in a telephone conciliation before a Commission Conciliator.



• The matter was listed by a Commission Member for hearing in 2 July 2015.



• Then it was relisted for hearing before a different Commission Member on 29 and 30 June 2015.



• In early 2015, the applicant made a request to the Commission that a further conciliation conference be conducted.



• On 2 June 2015 a second telephone conciliation was convened by a third Commission Member.



• On 4 June 2015 that Commissioner initiated a third telephone conciliation.



• Communication between this Commissioner and the parties continued by email until 7 June 2015.



• On 12 June 2015 the respondent made an offer directly to the applicant. This is the offer the respondent relies on for this costs application.



• On 26 June 2015 the applicant rejected the offer in an email directed to the Commissioner whom had most recently dealt with the application which was copied to the respondent and its representative.



• No further offers of settlement were received.



• The matter was then allocated to the Commission as currently constituted and a hearing on the merits of the matter was held on 20 August 2015.

[33] The “complete picture” to which the applicant refers is the series of offers and counter offers made during the multiple conciliations that were held.

[34] The applicant submits in deciding whether the applicant was unreasonable in rejecting the respondent’s settlement offer, the Commission is required to apply the standard of a reasonable person in the applicant’s position.

[35] At the time the settlement offer was made to the applicant, he was in a position where:

• his employment had been terminated on 13 October 2014;



• he had received no payment in lieu of notice;



• the applicant had taken all the necessary steps to proceed to hearing, such as preparing witness statements, submissions, etc., and was in fact ready to proceed to hearing;



• the respondent did not claim that his case was unmeritorious, instituted without reasonable cause, or was so poor that it should have been obvious to him that it would fail;



• at the time, he believed that the respondent had authorised him to take the equipment; and



• at the time, he believed that having regard to his performance record and impact on him personally the termination of his employment was harsh even if there was a valid reason for the termination.

[36] Merely because the decision of the Commission on 14 December 2015 went against the applicant, does not mean that he acted unreasonably when the settlement offer was made to him on 12 June 2015 and that he rejected on 26 June 2015.

[37] Therefore it is submitted the applicant’s conduct is not sufficient to establish a basis upon which the Commission should exercise the power under section 400A of the Act to make a costs order.

Prospects of applicant’s case

[38] The respondent has submitted that the applicant knew or should have known that his case was very weak, with no substantial prospect of success, and that the applicant should have accepted the respondent’s settlement offer.

[39] It should be noted that the respondent did not put to the applicant on notice when making the settlement offer that his case was very weak or had no substantial prospects of success.

[40] The applicant represented himself throughout the proceedings and is not legally qualified or experienced in the Commission, and therefore cannot be expected to have brought the level of understanding or judgement to the matter that may be expected of a person with experience in the jurisdiction.

[41] It is well acknowledged that a self-represented litigant is at a disadvantage when faced by a respondent who is represented by a lawyer.

[42] The applicant’s case was not without some merit; notwithstanding that it was ultimately unsuccessfully. In contrast with Roy Morgan, the applicant received no warning or indication from the Commission that the applicant had a weak or barely arguable claim.

The Full Bench in Brazilian Butterfly Pty Ltd v Charalmbous 4 stated:

“On the other hand, modest or even poor prospects of success on liability or remedy will not necessarily always make it unreasonable for a party to fail to agree terms of settlement that may lead to the discontinuance of the application.”

[43] On the applicant’s perception of the facts leading to his unfair dismissal, the applicant believed his case to have merit, notwithstanding that the Commission at hearing ultimately preferred the facts of the respondent.

[44] Although the applicant was aware of the respondent’s case, the applicant still perceived his case to have merit.

[45] The applicant is not a seasoned negotiator, and cannot have been expected to bring the skills and understandings of one to the negotiations over a settlement. The respondent contends that the applicant’s conduct went beyond mere “hard bargaining” and ventured into the realm of a refusal to reasonably assess the prospects of his case. This contention cannot be maintained when regard is had to the circumstances and the respondent’s failure to even put this to the applicant.

[46] The applicant refers to the submissions above in regards to his assessment of the settlement offer provided to him by the respondent on 12 June 2015. The applicant submits that his actions did not go beyond mere “hard bargaining”.

[47] For the above reasons, the applicant submits that the Commission should not exercise its discretion to award costs to the respondent under section 400A of the Act.

[48] The applicant submits that his conduct or continuation of the matter, even if unreasonable, was not of such an extent to involve “some relevant delinquency”, notwithstanding that the applicant refused the respondent’s settlement offer and the applicant was ultimately unsuccessful in the matter.

[49] The respondent has provided no justification as to why indemnity costs ought to be ordered in the circumstances of this matter. As such, the Commission should not exercise its discretion to make an order for indemnity costs against the applicant.

Consideration

[50] Section 611(1) of the Act says that parties should usually bear their own cost in relation to matters before the Commission, however costs may be ordered against a party in the circumstances set out in section 611(2). In addition for unfair dismissal matters such as Mr Ferry’s application section 400A(1) of the Act provides the Commission may also order costs against a party who has caused costs to be incurred because of an unreasonable act or omission in connection with the conduct or continuation of a matter. It is this section the respondent has applied under.

[51] This section of the Act is set out below:

“400A Costs orders against parties

(1) The FWC may make an order for costs against a party to a matter arising under this Part (the first party) for costs incurred by the other party to the matter if the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter.

(2) The FWC may make an order under subsection (1) only if the other party to the matter has applied for it in accordance with section 402.

(3) This section does not limit the FWC’s power to order costs under section 611.”

[52] The expression “unreasonable act or omission” found in section 400A of the Act was previously found in section 658(3) of the Workplace Relations Act 1996. A Full Bench of the Commission in Goffett v Recruitment National Pty Ltd 5 considered the conduct of the respondent throughout the proceedings to determine whether there had been “deliberate or reckless” acts or omissions on its part which could be regarded as unreasonable and which caused the other party to incur costs in connection with the conduct of the proceedings.

[53] The respondent submits that rejecting the respondent’s offer of settlement was an unreasonable act in connection with the continuation of the matter which caused the respondent to incur costs and consequently the Commission should make an order for costs against Mr Ferry.

[54] I accept that section 400A of the Act does allow the Commission to make an order for costs against a party where that party has unreasonably rejected an offer of settlement.

[55] The offer of settlement was made on 12 June 2015. It was not made during a conciliation conference but rather was made openly on the basis that it was “without prejudice save as to costs”.

[56] The respondent’s offer in short was to pay Mr Ferry a gross amount of $3,000 in consideration of Mr Ferry discontinuing his application. The offer was expressly made on the basis that if he did not accept it and the respondent incurred costs and expenses including legal costs and witness costs and expenses in any future proceedings the respondent may rely on the letter of offer in any application to recover its costs from him. The letter warned him that the respondent would seek to cover its costs in the event he continued with the proceedings and the proceedings are dismissed by the Commission.

[57] It is not disputed that the applicant both received this settlement offer from the respondent, did not accept it and made no counter offer.

[58] The applicant argues that the Commission should not consider the respondent’s settlement offer of 12 June 2015 in isolation but rather should consider the course of negotiations during a number of conciliation conferences conducted by various Commission Members as being the complete picture it should have regard for.

[59] The respondent opposes the Commission having regard for any offers the parties respectively made in conciliation.

[60] In I McKenzie & McDonald Murholme v Meran Rise Pty Ltd (t/a Nu Force Security Services 6 a Full Bench held that the Commission at first instance erred in relying on an offer made in conciliation which was not later repeated on an open basis when deciding to award costs against the applicant and her legal representative. The Full Bench stated at [12]:

“An offer of settlement made in conciliation proceedings is by its nature made on a without prejudice basis. It is inappropriate that an offer made in those circumstances should be taken into account in a costs application unless the offer is subsequently repeated on an open basis. It has long been accepted that positions taken in conciliation are without prejudice to the position to be taken in arbitration. The protection afforded to participants by this principle is an essential feature of conciliation proceedings. This is so whether the conciliation takes place in relation to an industrial dispute, an application pursuant to s.170CE or any other proceeding. In this case, however, the respondent’s representative referred to the offer in the proceedings before Commissioner Foggo and relied upon the fact that the offer had been made. Mr McDonald acknowledged that when the offer was referred to by the respondent's representative, counsel then appearing for Mr McKenzie made no objection. We think it is clear that this failure to object constituted a waiver by Mr McKenzie of his right to object to the disclosure in arbitral proceedings of anything said or done in conciliation: s104(5). But does it follow that the Commissioner was entitled to take the offer into account when considering the question of costs? With respect to the Commissioner's view we do not think it does. Reference to the offer in the hearing before Commissioner Foggo did not change the offer from one which was made on a without prejudice basis to one which was appropriate to be taken into account on the question of costs. To hold otherwise would not only be contrary to principle but would also have the potential to do great damage to the conciliation process which is such a central part of the Commission's work. If the offer had subsequently been repeated in a fashion which deprived it of its without prejudice status in relation to costs, the position would have been quite different. In this case, however, there is no suggestion that the offer was repeated in that way. By relying on Mr McKenzie’s failure to accept the respondent's offer of reinstatement the Commissioner fell into error. The offer could not be taken into account in considering an application for costs for the reasons we have given. Although this point was not raised before the Commissioner we cannot ignore it because of the importance of the issue which underlies it.”

[61] This approach was more recently considered by Members of this Commission in the cases of Harsha Aggarwal v Vision Asia Pty 7 and in Christopher Bradshaw v BHP Coal Pty Ltd8and on both occasions adopted, albeit with some misgiving. For my part I also am of the view that I am bound to follow the Full Bench approach on this issue and will do so.

[62] This Full Bench decision is authority for the proposition that it is inappropriate that an offer made in conciliation should be taken into account in a costs application unless the offer is subsequently repeated on an open basis.

[63] Consequently I will not have regard for the submissions the applicant’s representative has made concerning offers made by either side during the process of conciliation.

[64] Returning then to consider whether it was unreasonable for Mr Ferry to reject the respondent’s settlement offer it is apparent from the reasons for decision that at the time the respondent’s offer to settle was made Mr Ferry had within his knowledge sufficient information to conclude that he had little chance of succeeding with his application.

[65] This specifically included that Mr Ferry was aware he must seek prior authorisation before entering the respondent’s premises out of hours and he was aware he was not allowed to take any property from the respondent’s premises without prior authorisation.

[66] Mr Ferry also knew that without prior authorisation he had entered the respondent’s premises on 4 October 2014, a Saturday, with his vehicle and trailer.

[67] He knew he had then proceeded to remove the strong arm, the little boat winch and the rear rack bar from the respondent’s property without any prior authorisation.

[68] He knew when he was challenged some days later about this he was not open and honest about his unauthorised removal of the respondent’s property.

[69] These were straightforward matters within Mr Ferry’s knowledge.

[70] In addition to knowing the above facts as he did, Mr Ferry would also have been assisted when considering the respondent’s settlement offer, by the fact that he already had received the respondent’s witness statements, supporting documents and outline of submissions that had been filed in preparation for the hearing.

[71] In those circumstances I am satisfied that the applicant did not reasonably assess the prospects of his case and his refusal to accept the respondent settlement offer went beyond “hard bargaining” 9 and did amount to an unreasonable act in connection with the continuation of his application which caused costs to be incurred by the respondent. Consequently I find that costs should be ordered against Mr Ferry.

[72] An award of costs may be made on a party and party basis or an indemnity basis. The respondent submits the costs should be ordered on an indemnity basis.

[73] Commissioner Jones in Stanley v QBE Management Services Pty Limited 10 discussed the particular circumstances in which this Commission may award indemnity costs. Commissioner Jones helpfully reviewed the relevant authorities and the principles to be applied. Those principles are that generally costs orders are not made to punish an unsuccessful party however in a case involving some delinquency on the part of the unsuccessful party an order is made not for party and party costs but for costs on a “solicitor and client” basis or on an indemnity basis. Some circumstances which have been thought to warrant indemnity costs being ordered are making allegations of fraud knowing them to be false, the fact that proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law, the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions or an imprudent refusal of an offer to compromise.

[74] Section 400A of the Act had effect from 1 January 2013 which was after the above decision of Commissioner Jones was made. Justice Bolton, Senior Deputy President in a previous decision expressed the view that it would seem almost axiomatic that an unreasonable act or omission, as referred to in section 400A of the Act, that causes a party to incur costs would provide a basis for an order being made not for party and party costs but rather for costs on a “solicitor and client” basis or on an indemnity basis 11. I agree with his view on this point.

[75] In the circumstances of this case I am satisfied that Mr Ferry’s failure to accept the offer of settlement involved the continuation of proceedings in wilful disregard of known facts and also was an imprudent refusal of an offer to compromise and this delinquent conduct warrants the Commission exercising its discretion to award indemnity costs under section 400A of the Act.

[76] I note in this case there is no difference between the amount of costs that might be awarded on an indemnity basis and the costs that might otherwise be awarded, because the schedule of costs provided by the respondent is consistent with Schedule 3.1 of the Fair Work Regulations 2009 and is in my view fair and reasonable.

[77] Accordingly I intend to issue an order that the applicant pay the respondent’s costs totalling $13,875.70.

[78] An order to that effect will now be issued.

COMMISSIONER

Final written submissions:

Applicant, 23 February 2016 and 18 March 2016.

Respondent, 2 February 2016 and 25 February 2016.

 1   [2015] FWC 8552.

 2   PR574940.

 3   [2014] FWCFB 1175.

 4   PR968915.

 5   [2009] AIRCFB 626.

 6   Print S4692, Guidice J, Watson SDP, Whelan C, 7 April 2000.

 7   [2014] FWC 4479.

 8   [2014] FWC 4871.

 9   Roy Morgan Research Ltd v Baker[2014] FWCFB 1175.

 10 [2009] FWA 10164.

 11   [2015] FWC 996 at [42].

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<Price code C, PR580463>