Danielle Schofield v Edcorp Group P/L
[2022] FWC 2889
•31 OCTOBER 2022
| [2022] FWC 2889 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Danielle Schofield
v
Edcorp Group P/L
(U2022/7068)
| COMMISSIONER BISSETT | MELBOURNE, 31 OCTOBER 2022 |
Application for an order for costs under s.611 – application not settled at staff conciliation – application discontinued prior to allocation to a Member – costs not ordered
BACKGROUND
On 12 July 2022 Ms Danielle Schofield made an application to the Fair Work Commission (Commission) in which she sought a remedy for unfair dismissal. Ms Schofield said that she had been unfairly dismissed from her employment with EDCORP Group P/L (EDCORP) with effect from 30 June 2022.
In her application Ms Schofield indicated that she received notification from EDCORP that it had “gone through significant hardship over the last 2 yrs” and is “required to make a number of changes to its staffing.” EDCORP thanked Ms Schofield for her input to the “vendor finance program” but advised that her employment was “no longer financially viable”. She was therefore given “three weeks’ notice” with her last day to be 1 July 2022.
Ms Schofield indicated she considered her dismissal to be unfair because:
1. The reason given in the termination did not accord with her performance
2. The period of notice was inadequate given the position she held in the company
3. EDCORP failed to pay wages, termination payments and superannuation contributions
4. No warnings were given
Ms Schofield indicated that she was seeking the payment of her statutory entitlements and compensation for the dismissal “commensurate with the time it takes to find alternate employment and any other costs associated.”
ECORP filed its response to the application of Ms Schofield on 27 July 2022. In its response EDCORP indicated that it had an objection to the application on the ground that the dismissal was a genuine redundancy as it was “no longer financially viable” to employ her. In its response to the contentions of Ms Schofield EDCORP said that it engaged in commercial negotiations with Ms Schofield which were unsuccessful. As at 1 July 2022 Ms Schofield had not returned EDCORP property and “IP” as a result of which EDCORP withheld her final pay. On 15 July 2022 EDCORP received a letter from Mr Richard Allsop on behalf of Ms Schofield in which payment of final salary, annual leave owing, sick leave and commission owing was sought. That correspondence indicated that if the monies owing were not paid Ms Schofield would pursue her application in the Commission.
A conciliation conference of the parties was held before a staff conciliator on 9 September 2022. Correspondence was sent to the parties following that conciliation which said that “settlement was not reached during conciliation,” indicated that the file would be held by the conciliator until close of business on 16 September 2022 and if the conciliator had not heard from Ms Schofield or her representative that the matter had settled or was withdrawn the application would be forwarded for arbitration.
On 16 September 2022 Ms Schofield emailed the conciliator and advised that, for the reasons outlined in the email, she would “withdraw this matter and will seek to resolve this issue through alternate means available.”
Correspondence was sent to the parties that day confirming that the application had been discontinued.
COSTS APPLICATION
On the 26 September 2022 EDCORP made an application to the Commission in which it seeks an order for the payment of costs by Ms Schofield pursuant to s.611 of the Fair Work Act 2009 (FW Act). EDCORP seeks a total amount of $10,529.00 for costs incurred between 14 July 2022 and 19 September 2022 arising from a “Loss of Earnings while preparing collating information and allocating time for conciliation” ($7,040.00) and “Financial & IP Legal Advice/consiulting (sic) Fees incl GST” ($3,489.00).
In support of the application for costs Mr Thomas Hanley of EDCORP said that:
· Ms Schofield was made redundant and given 3 weeks’ notice instead of the 2 weeks’ notice required;
· There were some commercial negotiations with Ms Schofield who had expressed an interest in continuing as a contractor on commission only;
· Ms Schofield made her application for unfair dismissal on 14 July 2022. It was made clear to Ms Schofield that she was redundant and this was reinforced in the employer response to the application;
· Ms Schofield pursued her unfair dismissal application “after obtaining legal representation/advice from Richard Allsop from Allsop & Glover Lawyers based in Sydney, demanding additional entitlements than what was owing.”
· EDCORP sought legal advice “on several occasions, spent considerable time collating documents, conducting audits on annual leave, regulatory requirements in preparation for a conciliation”. A financial offer to settle made after the conciliation was rejected;
· Ms Schofield was given until 16 September 2022 “to withdraw [her] application or settle” and she withdrew her application on 16 September 2022.
· EDCORP has incurred “considerable legal & administrative costs” as a result of the unfair dismissal claim and it is seeking reimbursement for those costs.
On 4 October 2022 I issued Directions to EDCORP and Ms Schofield in which I required each party to file and serve submissions and evidence in relation to the application for costs.
Those Directions required EDCORP to file its submissions and evidence by 13 October 2022. The Commission received no submissions or evidence from EDCORP by the required time. EDCORP failed to file any submissions or evidence in accordance with the Directions.
On 25 October 2022, in accordance with the Directions issued, Ms Schofield filed submissions which, in brief, said:
As at 15 July 2022 (2 weeks after the termination of her employment) EDCORP had failed to pay her final salary, annual leave and other payments under her contract and her superannuation;
She did not receive any correspondence from EDCORP legal representatives prior to 9 September 2022 and Mr Hanley represented EDCORP at the conciliation;
She withdrew her application for unfair dismissal on 16 September 2022;
EDCORP has no entitlement to costs in respect of costs incurred by a lawyer or paid agent because no submission was made seeking permission or such representation;
No evidence has been adduced by EDCORP to support its claim of $3,489.00 for financial and IP legal advice/consultancy fees;
EDCORP has, on its own admission, failed to pay outstanding wages and holiday pay;
The costs application should be dismissed.
Ms Schofield indicated in separate correspondence that she was content for the application of EDCORP for costs to be determined by the Commission on the basis of the written material filed by the parties. A request to Mr Hanley for EDCORP’s view as to whether a hearing should be held or the matter determined on the written material filed elicited no response.
CONSIDERATION
Section 611 of the FW Act states:
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).
There are three matters to observe about this application for costs. Firstly I note that, while the Applicant was represented by a lawyer the application for costs is directed against Ms Schofield only with no costs sought against her lawyer. Secondly, the application is made only pursuant to the general costs provision and not pursuant to s400A of the FW Act which specifically relates to costs in relation to unfair dismissal applications and provides the Commission with the ability to consider if an unreasonable act or omission contributed to the costs. Thirdly, I note that EDCORP has not indicated whether the application for costs is made pursuant to s.611(2)(a) or s.611(2)(b) of the FW Act.
While the first two of these matters are merely noteworthy, the third matter raises a fundamental issue as to the ability of the Commission to determine the grounds of the application and therefore if the necessary requirements are met to enable the Commission to consider if costs should, in fact, be awarded. The totality of the submissions in support of the application received from EDCORP is set out at paragraph [10] above and were contained in the application for costs itself, no further submissions or evidence being provided.
To the extent EDCORP relies on s.611(2)(a) of the FW Act as the basis for its application there is no material before the Commission that would allow the Commission to conclude that Ms Schofield made her application vexatiously or without reasonable cause.
An application will have been made vexatiously if the main purpose of the application is to “harass, annoy or embarrass” the other party[1] or there is some ulterior purpose in making the application.[2] Such an argument goes to the motivation of an applicant. An application will have been made without reasonable cause where it is so obviously untenable, manifestly groundless or discloses a case which the Commission is satisfied cannot succeed.
While the application for unfair dismissal made by Ms Schofield indicates that she was seeking payment of her unpaid wages and entitlements this was not the only ground on which she made her application. Ms Schofield also said she was seeking compensation for her dismissal in part because she did not consider the notice given was adequate and she had not received any warnings. The material before the Commission does not suggest that Ms Schofield had an objective of annoying, harassing or embarrassing EDCORP by the making of her application. In Holland v Nude Pty Ltd T/A Nude Delicafe[3] the Full Bench held that seeking payment for lost wages does not make the claim vexatious as lost wages (in the form of compensation) is a remedy for unfair dismissal.
Even if it is that Ms Schofield’s role was redundant there is nothing in the response filed by EDCORP to the unfair dismissal application to suggest that it met its obligations under the Banking, Finance and Insurance Industry Award 2022 to consult or that it considered redeployment options for Ms Schofield such that the redundancy may be considered a genuine redundancy pursuant to s.389 of the FW Act. Given the limited information available to the Commission in relation to the merits of the claim it is not feasible to conclude, at this stage, that the application is “manifestly groundless”.
For these reasons the application made by Ms Schofield cannot, on the material before the Commission, be considered vexatious. Further, without disclosure of the relevant evidence and/or correspondence between Ms Schofield and EDCORP it cannot be definitively concluded that the application is made without reasonable cause.
If it is that EDCORP’s costs application is made pursuant to s.611(2)(b) it must be shown that, viewed objectively,[4] it should have been apparent to Ms Schofield that her application had no reasonable prospect of success. Such a conclusion should only be reached with extreme caution and only in circumstances where an application is “manifestly untenable or groundless”.[5]
For the reasons given as to why I am not prepared to conclude the application was made without reasonable cause I am not satisfied, on the material before the Commission, that I could reasonably conclude the application has no reasonable prospect of success.
Even if I had found otherwise, I would not have awarded costs in this case. Section 611(1) of the FW Act states that a person “must bear the person’s own costs in a matter” before the Commission. The presumption is that each party meets its own costs and only in circumstances articulated in s.611(2) (relevant to this application) would costs be otherwise awarded. To award costs is a discretionary decision of the Commission. Even if one of the prerequisites in s.611(2)(a) or (b) is met it does not mean that costs will be awarded. This much is clear from the words “the FWC may order a person…to bear some or all of the costs…”
A worker who believes that they have been unfairly dismissed has a right, pursuant to the FW Act, to make an application for the Commission to deal with the application. In so doing the Commission is required to ensure a fair go all round[6] but also to conduct the matter in a way that is fair and just, quick and informal and avoids unnecessary technicalities and is open and transparent.[7] Unfair dismissal applications are processed and programmed with these requirements of the FW Act in mind.
The application of Ms Schofield went no further than conciliation before a staff conciliator. This is the first step in the Commission dealing with an application having received the application and response. Conciliation with a staff conciliator is a standard first step in which the concerns of the parties can be explored. It is not unusual for matters to resolve at this stage of the process, without the parties ever having to appear before a member of the Commission, because the parties have reached agreement to settle or because matters have been put to the parties in conciliation such that they better understand the limitations of the Commission’s powers, recognise that the remedy they seek cannot be granted, understand that there is a basis for an objection raised to the application or have re-evaluated the merits of their application. On reflection an applicant may, in such circumstances, decide not to pursue an application further. The decision to discontinue an application is not necessarily reflective of some perceived ulterior motivation for having made the application in the first place or reflective of the merits of a case or its chances of success.
To award costs in circumstances where an application is discontinued at a very early stage in the process when limited costs – and only those associated with responding to an application form – have been incurred, may be seen to deter applicants from pursuing what they consider to be unfair in the ending of their employment. The FW Act allows such applications. The paying of a filing fee in order to make a valid application may be seen as a reasonable means to dissuade a person from making an application devoid of merit. Costs at such an early stage of an application should not be seen as a legislative means to otherwise dissuade claims.
In the circumstances of this case I would observe that, in addition to not filing any submissions or evidence in support of its claim for costs, EDCORP has not substantiated or particularised the costs said to have been incurred. It is further not apparent why this application would require EDCORP to obtain “financial and IP legal advice” or incur any “consulting fees” in relation to financial and IP matters. The lack of particularisation or explanation as to the why the amounts are justified further supports my decision not to award costs and to dismiss the application.
For the reasons given the application for costs by EDCORP is dismissed. An order[8] to this effect will be issued with this decision.
COMMISSIONER
[1] Nilsen v Loyal Orange Trust (1997) 76 IR 180, at p. 180
[2] Ibid
[3] [2012] FWAFB 6508
[4] Baker v Salver Resources Pty Ltd [2012] FWAFB 4014
[5] ibid
[6] FW Act s.381(2)
[7] FW Act s.577
[8] PR747452
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