David Armstrong v Taxation Management Services Pty Ltd ATF TMS
[2016] FWCFB 1179
•16 MARCH 2016
| [2016] FWCFB 1179 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
v
Taxation Management Services Pty Ltd ATF TMS
(C2015/5234)
VICE PRESIDENT WATSON | MELBOURNE, 16 MARCH 2016 |
Application for costs – Whether unreasonable act or omission – Whether application made vexatiously or without reasonable cause –– Fair Work Act 2009 – ss.400A and 611.
Introduction
[1] This decision concerns an application for costs made by Taxation Management Services Pty Ltd ATF TMS (TMS) against David Armstrong arising from an application for permission to appeal and an appeal that was listed for hearing before this Full Bench on 30 September and 19 November 2015. Mr Armstrong sought to appeal a decision of Commissioner Riordan handed down on 6 August 2015.
[2] The application for permission to appeal was granted by the Full Bench in a decision issued 6 October 2015 1 and directions were subsequently issued for the filing of additional witness statements and other evidence in advance of the hearing of the substantive appeal. The appeal was dismissed by the Full Bench in a decision handed down on 2 December 2015.2
[3] On 16 December 2015, TMS filed an application for costs pursuant to ss. 400A and 611 of the Fair Work Act 2009 (the Act). As the parties agreed that the costs application can be dealt with on the papers, directions were issued for the filing of written submissions by both parties.
Background
[4] On 2 May 2014, Mr Armstrong made an application under s.394 of the Act for an unfair dismissal remedy. On 6 August 2015, Commissioner Riordan dismissed Mr Armstrong’s application and found that the summary dismissal of Mr Armstrong was consistent with the Small Business Fair Dismissal Code.
[5] On 27 August 2015, Mr Armstrong lodged a Notice of Appeal in which he made an application for permission to appeal and an appeal against the decision of the Commissioner. In the Notice of Appeal, Mr Armstrong submitted that the owner and principal of TMS, John Hoff, had deliberately fabricated evidence in order to establish the grounds by which to summarily dismiss him from his employment with TMS and also that he had new evidence which could prove that no break-in occurred at the company’s office. Permission to appeal was granted by the Full Bench for the reason that such evidence, which would have been highly relevant to findings of fact necessary to determine the unfair dismissal matter, was not put to the Commissioner because it was not then known or available.
[6] At the hearing of the substantive appeal, Mr Armstrong gave evidence which he submitted proved that the theft of a TMS timesheet did not occur and that the office break-in was a fabrication by Mr Hoff to create a reason for summary dismissal. Evidence was also given in relation to these issues by Mr Hoff and Guy Bridge, an IT expert. The Full Bench made the following findings in relation to the evidence of the parties:
“[18] We have assessed the evidence of Mr Armstrong and Mr Hoff. We have also observed them giving evidence and being cross-examined in the matter before us. In relation to the new evidence of an email communication between Aegis Accounting and TMS, the evidence is directly contradictory. Mr Armstrong says that he caused the email to be sent to Mr Hoff from Aegis Accounting (under the name of a person not involved in the business) and received the response from Mr Hoff of TMS. Mr Hoff states that he did not receive an email from Aegis Accounting and did not send a reply. This evidence cannot be reconciled. Either Mr Armstrong gave false evidence about sending and receiving information from TMS or Mr Hoff gave false evidence about receiving the email and forwarding the information.
[19] We found Mr Armstrong initially self-assured but inconsistent in his evidence. As his evidence developed he remained forthright but showed signs of evasiveness, nervousness and irritation at the questions asked of him and testing of his evidence. We did not find Mr Armstrong to be a reliable witness. Mr Hoff’s evidence was clear and consistent. We considered him to be reliable and consistent in his evidence. His evidence was reasoned and plausible.
[20] We accept the evidence of Mr Hoff and Mr Bridge that no email was sent from the TMS server to Aegis Accounting on 12 August 2015. That raises the question of the origin of the email. There are a number of possible explanations. It may be that email records have been altered to remove all records of its existence, the email was sought to be disguised by Mr Hoff to allow him to later deny its existence, or it had been fabricated by someone other than Mr Hoff in an effort to apportion responsibility on Mr Hoff. Our efforts on the day of the hearing to obtain further information on this question through the evidence of Mr Bridge were thwarted by Mr Armstrong’s lack of cooperation. We found Mr Armstrong to be evasive and lacking in credibility in relation to these enquiries.
[21] We accept the evidence of Mr Bridge that any alteration in the log would show up in the data he considered. We consider it highly unlikely that the log was changed. In our view, the email was either disguised or fabricated.
[22] It is conceivable that someone may wish to deny possession of a document that they had previously alleged had been stolen and no longer in their possession. However it is inherently unlikely that a person would forward the document unnecessarily to a third party, and highly unlikely that they would disguise the sending of an email of an apparently routine nature by sending a phony email from a different IP address on the same day as receiving the request for client information. There is no basis for accepting the possibility that Mr Hoff disguised the email himself by sending it from another email account.
[23] In all of the circumstances we are drawn to the conclusion that the 12 August 2015 email allegedly from Mr Hoff to Aegis Accounting was fabricated by or on behalf of Mr Armstrong in order to create a foundation for an allegation that Mr Hoff had lied to the Commission about the break-in and the stolen information. We conclude that Mr Armstrong also gave false evidence about this matter. It should be observed that it is a serious offence to fabricate evidence and it is also a serious offence to give false or misleading evidence.
Conclusions
[24] For the purposes of the matter before us it is not necessary that we consider the other evidence adduced by the parties. We find that the additional evidence on email communications and other matters adduced in the appeal proceedings does not alter the validity of Commissioner Riordan’s finding that Mr Hoff believed on reasonable grounds that Mr Armstrong’s conduct was sufficiently serious to justify immediate dismissal. The dismissal was therefore consistent with the Small Business Fair Dismissal Code. Accordingly we dismiss the appeal against the Commissioner’s decision. In the light of the serious matters we have encountered in this matter we propose to forward a copy of this file to the Director of Public Prosecutions.”
Legislation
[7] The power to make an order for costs is dealt with in s.611 of the Act which provides:
“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).”
[8] It is well established that an order for costs is a discretionary matter when the basis for making a costs order is established. Section 611 contains a number of separate bases for granting an order for costs. An application has been held to be made without reasonable cause if it is so untenable that it cannot possibly succeed. 3
[9] Section 400A of the Act provides:
“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.”
Should an order for costs be made?
[10] TMS submits that the Commission ought exercise its discretion and order that Mr Armstrong pay all of the company’s costs of the appeal for the following reasons:
- That Mr Armstrong’s actions in the fabrication of evidence and giving false evidence to the Commission constituted an unreasonable act or omission;
- That Mr Armstrong’s commencement of an appeal on the basis of fabricated supporting evidence concerning TMS and Mr Hoff meant that the appeal was vexatious and commenced without reasonable cause; and/or
- That it should have been apparent to Mr Armstrong that once the truth became known in relation to the fabrication of evidence, the appeal had no reasonable prospects of success and was bound to fail.
[11] TMS submits that the conduct of Mr Armstrong is particularly serious. This is because Mr Armstrong fabricated evidence and lied to the Commission in an attempt to deceive the Commission into finding that Mr Hoff had lied. It submits that if Mr Armstrong had been successful in deceiving the Commission as to the circumstances around the termination of his employment, then other serious personal and professional consequences may have arisen for Mr Hoff.
[12] Mr Armstrong submits that the grounds of appeal raised in his matter were reasonable, in particular given that the Full Bench granted him permission to appeal the decision of Commissioner Riordan. He states that this refutes any allegations that the application was groundless. He further submits that while the Full Bench came to a different conclusion about the origins of the timesheet, it cannot be considered fraudulent as it is a representation of the truth. Mr Armstrong also contends that he was not put on notice that an application for costs would be made, that the costs quoted are inflated and unreasonable, and that a reasonable settlement has been offered to TMS in this regard. Mr Armstrong also notes that he is in severe financial hardship and could not raise any significant funds in the event that an order for costs was made.
[13] TMS notes that the submissions of Mr Armstrong were not focused on reasons as to why costs should or should not be ordered, and that the submission instead addresses and challenges the findings of the Full Bench. TMS further contends that it is not appropriate for the Commission to determine facts or evidence that was or ought to have been before the Full Bench during the appeal, as it considers that all of this evidence provided by Mr Armstrong relates to the substantive dispute
Conclusion
[14] The application for an order for the payment of TMS’s costs falls for determination in the context of the findings we have made in relation to Mr Armstrong’s appeal, which are set out above. We are satisfied that Mr Armstrong’s appeal was, to a large extent, based on the fabricated documentary evidence and the dishonest oral evidence he subsequently gave in relation to that documentation. That evidence sought to challenge the key findings of the Commissioner in the decision under appeal. Permission to appeal was granted on the basis of the potential of that evidence to put into question the factual findings made by the Commissioner. These matters constituted the thrust and import of the appeal. Given the impact of the allegations on Mr Hoff’s professional standing and future it was necessary for TMS to vigorously defend the appeal and incur the resulting costs. The costs of the appeal were clearly incurred because of Mr Armstrong’s unreasonable act – to use the qualifying words of s.400A. Indeed a more accurate description would not be in such mild terms. In these circumstances, it is not necessary to determine whether or not costs should be paid pursuant to s.611.
[15] In our view, the basis of a costs order has been established and in our view such an order should be made. We accept the submissions of TMS as to the quantification of a costs order and make an order in conjunction with the issuing of this decision for payment of the amounts concerned.
VICE PRESIDENT
Final written submissions:
TMS on 22 January 2016.
David Armstrong on 29 January 2016.
TMS in reply on 5 February 2016.
1 [2015] FWCFB 6789.
2 [2015] FWCFB 8094.
3 General Steel Industries Inc v Commissioner for Railways (NSW) (1964)112 CLR 125.
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