Con Margaritis v Safiery Pty Ltd
[2024] FWC 3203
•20 NOVEMBER 2024
| [2024] FWC 3203 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Con Margaritis
v
Safiery Pty Ltd
(U2024/2601)
| COMMISSIONER CONNOLLY | MELBOURNE, 20 NOVEMBER 2024 |
Application for an unfair dismissal remedy - application for costs - application dismissed.
This decision is about an application for cost orders under sections 400A and 611 of the Fair Work Act 2009 (the Act). Mr Con Margaritis (the Applicant) seeks costs against his former employer, Safiery Pty Ltd (Safiery or the Respondent).
On 7 March 2024, Mr Margaritis made an unfair dismissal application to the Commission. He claimed that he had been unfairly dismissed and sought remedy. Safiery disputed his application.
On 9 April 2024, I issued directions for the matter to be determined by way of Hearing, requiring the parties to file their evidence and submissions.
Mr Margaritis was legally represented, with leave granted, and filed material in support of his application. The Respondent was represented by the Managing Director of the company, Mr Bruce Loxton.
On 27 May 2024, I conducted a Hearing, providing the opportunity for both parties’ evidence and submissions to be examined.
On 2 August 2024, I issued a written decision finding in favour of Mr Margaritis that he was unfairly dismissed and ordering his former employer to make a payment to him of $29,999.99 gross, plus superannuation of $3,299.99 in compensation.
On 18 August 2024, Mr Margaritis made this application for an order of costs pursuant to sections 400A and 611 of the Act.
On receipt of the application, I issued directions for the filing of evidence and submissions, in addition to seeking views on whether the application required a Hearing or could be determined on the material filed.
Mr Margaritis filed evidence and supporting materials indicating his view that the matter should be determined on the papers. Safiery failed to file or otherwise engage with the requirements of my directions relating to the costs application.
Background
Mr Margaritis commenced working for Safiery as its Victorian General Manager in February 2023. On 19 February 2024, he received an email and text message terminating his employment.
Following his dismissal, Mr Margaritis made an application for unfair dismissal which I determined in his favour. Safiery disputed whether Mr Margaritis was unfairly dismissed. Their consistent position was that Mr Margaritis was terminated for serious misconduct. In my decision, I found that there was not a valid reason for terminating Mr Margaritis’s employment, and further that he had been unfairly dismissed. My reasons can be found at [2024] FWC 1844.
The grounds of this costs application are that the Respondent acted unreasonably in rejecting an offer to resolve proceedings for a payment of $25,000.
Materials Relied On
Mr Margaritis relied upon the following material:
· Form F6 application for costs;
· Written submissions dated 29 August 2024, including the witness statement of Mr Andrew Jewel, Mr Margaritis’ representative; and
· Copies of email exchanges between the parties commencing 4 May 2024 to 22 May 2024, including an offer of settlement sent on 22 May 2024.
The Respondent did not make any submissions.
In considering my decision, I have referred to the F3 employer response form, along with the materials of record in the substantive proceeding in this matter.
With the Applicant’s consent, and due to a lack of any objections from the Respondent, I have determined the matter on the papers.
Legislative Requirements
Section 611(2) of the Act establishes a general rule that parties in proceedings before the Commission must bear their own costs.[1] There are several provisions in the Act which operate as exceptions to this general rule and allow costs to be awarded in specified circumstances.[2] Section 611 provides that:
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 ofthe costs of another person in relation to an application to the FWC if:
(a) the FWC is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or
(b) the FWC is satisfied that it should have been reasonably apparent to the first person that the first person’s application, or the first person’s response to the application, had no reasonable prospect of success.
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).
The principles applicable to the power to award costs were set out by a Full Bench of the Commission in Hansen v Calvary Health Care Adelaide Limited.[3] In that case, the Full Bench observed that the circumstances in which costs can be awarded are circumscribed and involve the exercise of a discretionary power where the Commission is satisfied that one or more of the circumstances in s. 611(2) have been established. The Full Bench went on to observe that if such circumstances are established, the Commission, in the broad exercise of its discretion, may make an order that a person bear some, or all, of the costs of another person in relation to the application, or decline to make any order at all.[4] The principles concerning s. 611(2)(a) were set out by a Full Bench of the Commission in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing[5] and summarised by a Full Bench in Gugiatti v Solaris Care Foundation Ltd[6] (Gugiatti) relevantly as follows:
· An application is made vexatiously when the predominant motive or purpose of the applicant is to harass or embarrass the other party or to gain a collateral advantage.
· An application is not made without reasonable cause simply because the application did not succeed.
· Whether an application is made without reasonable cause may be tested by asking, on the facts apparent to the applicant at the time the application was made, whether there was no substantial prospect of success.
· If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to characterise the application as having been made without reasonable cause.
· In relation to an appeal, the question becomes whether the appeal has no substantial prospect of success. The prospect of success must be evaluated in the light of the facts of the case, the judgment appealed from and the points taken in the notice of appeal. If there is a not insubstantial prospect of the appeal achieving some success, it cannot fairly be described as having been made without reasonable cause.
· An application will have been made without reasonable cause if it can be characterised as so obviously untenable that it cannot possibly succeed, or manifestly groundless, or discloses a case where the tribunal is satisfied cannot succeed.[7]
In relation to s.611(2)(b), the Full Bench in Gugiatti referred to the relevant principles as summarised by the Full Bench in Baker v Salva Resources Pty Ltd[8] as follows:
“• “should have been reasonably apparent” must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis, rather than a subjective test; and
· A conclusion that an application “had no reasonable prospect of success” should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable.”
Section 400A
Section 400A of the Act provides as follows:
“400A Costs orders against parties
(1) The FWC may make an order for costs against a party to a matter arising under this Part (the first party) for costs incurred by the other party to the matter if the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter.
(2) The FWC may make an order under subsection (1) only if the other party to the matter has applied for it in accordance with section 402.
(3) This section does not limit the FWC’s power to order costs under section 611.”
Section 400A is a further exception to the general rule in s.611. As part of the Unfair Dismissal regime in Part 3-2 of the Act, s.400A empowers the Commission to make an order for costs against a party on a discretionary basis in circumstances where a party to a matter arising under Part 3-2 has caused another party to incur costs by an unreasonable act or omission. In Gugiatti, a Full Bench of the Commission observed that:
“[43] Section 400A(1) establishes two pre-conditions for the making of an order for costs under the subsection (in addition to the requirement in s.400A(2)). The first is that the Commission must be satisfied that a party engaged in an unreasonable act or omission in relation to the conduct or continuation of a matter. The second is that such act or omission caused the other party to the matter to incur costs. Once these preconditions are satisfied, a discretionary power to order the payment of such costs is enlivened.”[9]
I have applied these principles in the present case as set out below.
611(a) - Did Safiery respond to the application vexatiously or without reasonable cause?
There is no evidence presented that Safiery responded to the application vexatiously, or that their motive or predominant purpose in their response was to harass, embarrass Mr Margaritis or gain a collateral advantage. The Full Bench authority is clear regarding the meaning and requirement to narrowly construe vexatiously in this context.[10] I am not satisfied this was the case in the present matter.
I am also not satisfied that the Respondent’s response was without reasonable cause. In making this determination, I must consider whether, on the facts apparent to Safiery at the time, there was no substantial prospect of success such that an argument contesting Mr Margaritis’s position should not have been made.[11]
The factual contest in this matter turned on whether Mr Margaritis’ conduct amounted to serious misconduct justifying dismissal. In making my decision I have not been satisfied that this was the case.
However, in determining in Mr Margaritis’ favour, I did not find that he was completely without responsibility. My finding was rather that the misconduct his employer relied upon to terminate his employment was not serious enough to warrant a termination of his employment. I did find Mr Margaritis’s conduct in not returning calls and the way, to some degree, he chose to communicate with Mr Loxton amounted to misconduct and factored this finding into my award of compensation.
This being the case, I am not satisfied that the Respondent did not have an argument to make in support of its decision to terminate Mr Margaritis’s employment.
Further, I observe that the Respondent was not legally represented in these proceedings and may not have had the benefit of advice to assist in distinguishing between misconduct and serious misconduct amounting to a valid reason to terminate the employment relationship.
As the substantive matter in this case turned on this distinction, it cannot be said that the Respondent’s position was without cause, and I am not satisfied that this was the case.
Section 611(2)(b) - Should it have been reasonably apparent to the Respondent that their response has no reasonable prospect of success?
The Full Bench in Baker v Salva Resources Pty Ltd makes clear that the words “should have been reasonably apparent” within s.611(2)(b) imports an objective test.[12] It also said that the words “no reasonable prospect of success” in the provision requires an application or response so manifestly untenable or groundless or so lacking merit that it is not reasonably arguable.
As detailed above, there are disputed facts in this matter as to whether Mr Margaritis’s conduct amounted to serious misconduct justifying dismissal. Depending on the resolution of those facts by the Commission, a point of law needed to be resolved. For the same reasons that I have set out above that the Respondent’s response was not made without reasonable cause, I do not consider it should have been reasonably apparent to the Respondent that their response was manifestly untenable, groundless or so lacking merit that it was not reasonably arguable. I am satisfied a reasonable argument was available to the Respondent on their version of the facts.
S.400A – Did an unreasonable act or omission of the Respondent cause Mr Margaritis to incur costs?
Mr Margaritis argues that the Respondent caused him to incur costs in the substantive application when it refused to settle the matter for $25,000 as proposed by his representative on 22 May 2024. And further, that at the time of rejecting the offer the Respondent was aware, or at least was made aware, that significant procedural deficiencies in effecting the dismissal would render it unfair.[13]
By procedural deficiencies it appears the Applicant refers to the nature of the dismissal being via email, text message and without notice. It is well established that in cases of serious misconduct any notice period due at termination may be withheld.
I have already indicated I am satisfied the Respondent was not acting unreasonably or vexatiously in holding a view it’s decision to terminate Mr Margaritis for serious misconduct was valid on its version of the facts. Therefore, I am also satisfied this extends to its decision to withhold any notice period and effect a summary dismissal.
The Full Bench in Keep v Performance Automobiles Pty Ltd said that the Commission’s power to order costs should only be exercised where there is clear evidence of unreasonable conduct.[14] For the reasons set out above, I do not accept that in the present circumstances the Respondent was acting unreasonably in rejecting the settlement offer proposed on 22 May 2024. Nor that there is evidence the Respondent acted unreasonably in any other way. Examples of unreasonable acts or omissions include unreasonable failings to comply with directions,[15] attend Hearings,[16] or the timing of filing an appeal notice shortly before the commencement of a Hearing.[17] The Applicant provides no additional evidence to assert the Respondent engaged in such acts and for the above reasons, I do not consider the Respondent’s response was unreasonable.
No discretion to be exercised
As I have found that there are no grounds for awarding costs under ss.400A or 611 of the Act, I cannot exercise by discretion to award costs to the Applicant as sought.
Accordingly, this application is dismissed.
COMMISSIONER
Final written submissions:
29 August 2024.
[1] See s.611 of the Act and Keep v Performance Automobiles Pty Ltd [2015] FWCFB 1956 at [15].
[2] Gugiatti v Solaris Care Foundation Ltd[2016] FWCFB 2478 at [21].
[3] [2016] FWCFB 8162.
[4] Ibid.
[5] [2014] FWCFB 810.
[6] [2016] FWCFB 2478.
[7] Ibid at [22].
[8] [2011] FWAFB 4014.
[9] [2016] FWCFB 2478 at [43].
[10] See Church v Eastern Heath T/A Eastern Health Great Health and Wellbeing[2014] FWCFB 810 at [29].
[11] Ibid at [30].
[12] [2011] FWAFB 4014 at [10].
[13] Applicant’s Outline of Submissions regarding Costs at [5].
[14] [2015] FWCFB 1956 at [12]-[13].
[15] See Application by Classic Ceramics (Importers) Pty Ltd [2023] FWC 1511.
[16] Gugiatti v Solaris Care Foundation[2016] FWCFB 2478.
[17] Church v Eastern Heath T/A Eastern Health Great Health and Wellbeing[2014] FWCFB 810.
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