David Milner v Marthakal Homelands and Resource Centre Aboriginal Corporation T/A Marthakal Homelands Resource Centre Inc

[2016] FWC 4003

[2016] FWC 4003

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal
s.611—Costs

David Milner
v
Marthakal Homelands and Resource Centre Aboriginal Corporation T/A Marthakal Homelands Resource Centre Inc
(U2015/16863)

COMMISSIONER BISSETT MELBOURNE, 1 JULY 2016

Application for costs.

[1] This decision concerns an application for costs made under ss.611(2) and 400A of the Fair Work Act 2009 (the Act) by Marthakal Homelands and Resource Centre Aboriginal Corporation T/A Marthakal Homelands Resource Centre Inc (Marthakal) against Mr David Milner (Mr Milner). Marthakal seeks an order for all of the costs it has incurred in respect to the unfair dismissal remedy application made by Mr Milner.

Background

[2] Mr Milner made an application for relief from unfair dismissal pursuant to s.394 of the Act on 17 December 2015. Mr Milner, prior to his dismissal on 11 December 2015, worked for Marthakal and was the General Manager of Marthakal Yolunga Airlines (MYA).

[3] On 4 February 2016, Marthakal provided an amended employer response to the application (the Form F3). Attached to this were statutory declarations from a number of pilots who worked with Mr Milner.

[4] On 25 February 2016 the Commission issued directions with respect to the unfair dismissal application which required Mr Milner to file and serve any submissions and witness statement by 11 March 2016. Marthakal was required to file and serve its material by 25 March 2016. The matter was originally listed for hearing on 5-7 April 2016 in Darwin.

[5] Mr Milner filed his materials on 15 March 2016.

[6] Although Marthakal did not file submissions in the matter, on 4 April 2016 it filed two statements in addition to those attached to its Form F3.

[7] On 31 March 2016 Marthakal filed a Form F1 application to dismiss Mr Milner’s application pursuant to s.399A and/or s.587 of the Act.

[8] The unfair dismissal application was listed for hearing on 5 April 2016 in Melbourne with a video-link to Darwin. Mr Grove appeared with permission for Mr Milner and Mr Fagir, of counsel, appeared with permission for Marthakal in the matter.

[9] On 11 April 2016 Mr Milner filed a notice of discontinuance.

[10] On 24 April 2016 Marthakal made an application for costs against Mr Milner.

Jurisdiction

[11] On 28 April 2016 I issued directions for the filing of written submissions and evidence of each of the parties in relation to the application for costs. As part of those directions I sought clarification from Marthakal as to whether its application for costs was made pursuant to s.611 of the Act (it being clear from the application that it was made pursuant to s.400A of the Act).

[12] In response to this invitation, Marthakal confirmed by email dated 29 April 2016 that it ‘does make it submissions pursuant to section 611 of the Act in addition to section 400.’

[13] Mr Milner says that there is no application pursuant to s.611 of the Act before the Commission. He submits that the response of Marthakal to the request to clarify if the application was made pursuant to s.611 was ‘unresponsive’.

[14] Mr Milner says that the deficiency in Marthakal’s application cannot be cured by waiving the rules with respect to the form of the application. The Act requires that an application for costs under s.400, s.401 or s.611 must be made within 14 days of the Commission determining the matter or the matter being discontinued. Therefore the costs application must have been made by 25 April 2016 and no application pursuant to s.611 of the Act was made by that date. There is no capacity for the Commission to extend the time within which an application for costs may be made.

[15] Marthakal submits that it is plain on its face that its application was made pursuant to s.611 and s.400A and that the only deficiency in the application was a failure to tick one of the boxes on the form. It submits that this is the type of irregularity to which s.586 of the Act is directed. It submits that there is no prejudice in providing such waiver.

Consideration of jurisdiction

[16] The Form F6 – Application for costs, at question 2.1 asks:

2.1 Under which section(s) of the Fair Work Act 2009 are you making this application?

[ ] s.375B—Costs against parties in general protections matters

[x] s.400A—Costs against parties in unfair dismissal matters

[ ] s.611—General provision in relation to costs

[ ] s.779A—Costs against parties in unlawful termination matters

[17] Marthakal, in completing the Form F6, put a cross against s.400A and nothing else.

[18] In the grounds in support of its application Marthakal set out the ‘Background’ and ‘The evidence’. It then set out grounds under the headings of ‘Application commenced without reasonable cause and with no reasonable prospect of success’ and ‘Proceedings brought and conducted vexatiously’.

[19] Section 400A of the Act states:

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.

[20] Section 611 of the Act provides as follows:

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).

[21] It seems to me readily apparent from the grounds in support of Marthakal’s application that the application for costs was intended to have been made pursuant to s.611 of the Act. The first main section of its grounds in support is headed ‘Application commenced…with no reasonable prospect of success’. This is clearly a reference to the provisions of clause 611(2)(b) and does not bear a relationship to s.400A.

[22] The second main section in the grounds in support is headed ‘Proceedings brought and conducted vexatiously’, a clear reference to s.611(2)(a) of the Act and bearing little relationship to s.400A.

[23] Section 586 of the Act allows the Commission to correct or amend an application:

586 Correcting and amending applications and documents etc.

The FWC may:

(a) allow a correction or amendment of any application, or other document relating to a matter before the FWC, on any terms that it considers appropriate; or

(b) waive an irregularity in the form or manner in which an application is made to the FWC.

[24] Whilst s.586 immediately follows s.585 which states that an application must be made in accordance with the procedural rules, it is also in Part 5-1 of the Act along with s.577 which states:

577Performance 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

(c) is open and transparent; and

(d) promotes harmonious and cooperative workplace relations.

[25] Whilst s.577 of the Act does not mean the Commission can create jurisdiction when it does not otherwise exist, it does provide a context within which the operation of s.585 and s.586 of the Act must be read.

[26] I have decided to exercise my powers pursuant to s.586 of the Act and allow a correction and/or amendment to Marthakal’s application for costs, such that I accept that the application is made pursuant to s.400A and s.611 of the Act.

[27] My decision to allow a correction and/or amendment to the application does not alter the date the application was made. The application for costs pursuant to s.611 of the Act was therefore made within 14 days of the initial matter being discontinued.
[28] In the directions, the Commission asked Marthakal to clarify ‘(i) if the material constitutes its submissions in support of its application and (ii) if the application is also made pursuant to s.611 if the Act.’ 1 In its response, Marthakal confirmed that it does ‘make its submissions pursuant to section 611 of the Act in addition to section 400.’ In the context of the clarification sought by the Commission there can be little room for doubt that, in its response, Marthakal indicated that its application was also in relation to s.611 of the Act. Mr Milner had this information prior to him being required to file his written submissions in accordance with the directions issued. Mr Milner’s submission that Marthakal was ‘unresponsive’ to the request made of it by the Commission in the directions is highly technical to say the least. Mr Milner chose to ignore the grounds for the application in filing his material despite the clarification of Marthakal. That he did so does not constitute grounds to deny a correction to the application for costs.

[29] I do not consider that there is any prejudice to Mr Miner in my decision. He was aware at the time he filed his written submissions that Marthakal relied on s.611 of the Act (by the response to the matters raised in directions by me) and the language of Marthakal’s submission was clear as to the grounds it relied on.

[30] The amendment I have allowed is in accordance with the exhortations in s.586 of the Act.

Submissions as to costs

Marthakal

[31] Marthakal submits that, on the basis of the material before the Commission in the application for unfair dismissal, I can be satisfied that Mr Milner consumed alcohol on Marthakal lands and that he at least encouraged pilots to bring alcohol into those lands. It submits that this conclusion can be drawn on the basis of affidavits filed by pilots and the evidence of two pilots that was given prior to the matter being discontinued.

[32] It submits that, having been satisfied of the facts, Mr Milner should have known, at the time he made his application, that it had no reasonable prospects of success.

[33] It says that it is no answer to the claim that Marthakal may not have proved misconduct.

[34] Marthakal submits that, in these circumstances, it should not have been put to the costs of defending its actions and its application pursuant to s.611 of the Act should be granted.

[35] In the alternative, it submits that Mr Miner’s failure to admit to the conduct at an early stage was an unreasonable act and/or his failure to accept an offer of settlement and discontinue proceedings was an unreasonable act and, for this reason, the application for costs pursuant to s.400A of the Act should be granted.
[36] Marthakal submits that Mr Milner neither denied nor admitted to the reasons for his dismissal in his application but rather stated that there was no valid reason for dismissal, he did not understand the grounds raised by Marthakal but did complain about procedural matters. Marthakal admitted to a procedural deficiency with respect to one matter.

[37] Marthakal submits that, in statutory declarations filed by pilots in conjunction with its Form F3, it was evident that the allegations against Mr Milner were that he:

● Consumed alcohol on MHRAC lands and directed and encouraged pilots to smuggle alcohol in on his behalf;

● Gave direction to pilots when he was not authorised to do so; and

● Mistreated pilots under his supervision.

[38] In response to the directions of the Commission, Marthakal says Mr Milner filed minimal submissions and a one page witness statement that did not go to the matters related to the termination of his employment, although did deal with procedural irregularities.

[39] Marthakal submits that at the hearing of the application, Mr Milner refused to indicate if he had engaged in the misconduct or not and sought to have the evidence of Marthakal tested first.

[40] Marthakal says that, in cross-examining its witnesses, Mr Milner did not challenge them on the matters central to his dismissal, that is, the consumption of alcohol, the request given to pilots with respect to the transport of alcohol and other directions given to pilots.

[41] As to the procedural issues raised by Mr Milner, Marthakal submits that any procedural deficiency is of ‘limited practical significance’ and would not have been such to alter a finding by the Commission. It relies on the decision of the Full Bench in Farquharson v Qantas Airways Limited 2 in support of this proposition.

[42] Marthakal says that the evidence is such that it is inevitable that the Commission would have found that Mr Milner engaged in criminal conduct and acted in breach of safety procedures. It submits that Mr Miner knew the allegations against him to be true at the time he commenced proceedings and also knew that, if proven, the allegations would form a basis for dismissal.

[43] On this basis it says that his case was so obviously untenable and brought without reasonable cause where it had no reasonable prospect of success.

[44] Further, or in the alternative, it says that Mr Milner brought the proceedings vexatiously that is, with the objective of causing damage to Marthakal rather than vindicating a right. It submits that this is clear from the actions of Mr Milner in:

(a) Not leading any evidence in response to the allegations;

(b) Requiring all of Marthakal’s witnesses for cross-examination;

(c) Cross-examining witnesses at length disproportionate to the length of their statements;

(d) Requiring Marthakal witnesses to be cross-examined in the presence of Mr Milner when a request had been otherwise made;

(e) An unnecessary and spurious adjournment request;

(f) Spurious allegation of bias.

[45] Marthakal submits that this shows that Mr Milner had no intention of dealing with the issue at hand.

[46] For this reason it says that Mr Milner’s conduct ‘engages the Commission’s power to award costs’.

[47] Marthakal submits that all of the matters raised in its submissions were raised in correspondence to Mr Milner on 23 March 2016 and in its summary dismissal application of 31 March 2016. It submits that Mr Miner’s failure to discontinue proceedings following receipt of the 23 March 2016 letter was an unreasonable act or omission which caused Marthakal to incur costs.

[48] In response to the submissions of Mr Milner, Marthakal submits:

● The proposition that Mr Milner was entitled to ‘test the employer’s evidence’ and then decide if to continue or withdraw is wrong and has no basis in authority;

● Complaints with respect to the quality of the investigation undertaken by Marthakal are misplaced and has no bearing on whether or not the conduct occurred;

● Any variation in the alleged misconduct is also not relevant; and

● Technical complaints about the application for costs are without basis.

Mr Milner

[49] Mr Milner submits that no application for costs has been made pursuant to s.611 of the Act.

[50] Further, he submits that in relation to a costs application under s.400A of the Act, costs only apply from the date of the unreasonable act or omission that is found to have occurred and Marthakal has not identified any such matter or date. In addition Mr Milner says that Marthakal has not itemised costs so it is not possible for him to make any submissions on the reasonableness or otherwise of the claim.

[51] Mr Milner says that the failure to admit conduct cannot reasonably be seen as an unreasonable act or omission, particularly in circumstances where he did not know the precise details of the conduct, where it kept changing and where some were not persisted with by Marthakal.
[52] Mr Milner submits that his concern was always to properly know the reasons for his termination and that he sought on numerous occasions to have Marthakal to particularise these matters but it consistently did not do so. He says that the critical difficulty he faced ‘was that grounds [in relation to pilots and alcohol] became a “moveable feast” 3 with different grounds being found in ‘the suspension letter, the termination letter, the Response [Form F3], the application for summary dismissal, the application re witnesses and in the submissions as to costs.’4

[53] Mr Milner does not suggest that he did not know why he had been dismissed 5 but says that he could not know what he had to respond to in proceedings in the Commission because the precise reasons kept changing. He submits that the description of the conduct would have a bearing on whether or not the dismissal was harsh, unjust or unreasonable and, in these circumstances, the pursuit of his application was not untenable.

[54] Mr Milner says that in circumstances where he did not know what he should admit to, it was reasonable for him to say that he needed to know the case against him so that he could meet it. 6 Mr Milner relies on the decision in Edwards v Guidice and Others7 as authority for the proposition that an ‘Applicant can put the Respondent to its proof.’8

[55] Mr Milner says he was entitled to test the veracity of the evidence on which Marthakal relied prior to him being required to put any evidence. Further, he says that the Commission’s role was to determine if Marthakal had a valid reason for dismissal and not whether the evidence would support a termination at large.

[56] Mr Milner submits that he intended to challenge the ‘context and “colour”’ of the witness statements lodged by Marthakal. Further, he submits that it would have been evident that ‘a thorough examination of the investigation might have disclosed that the pilots’ evidence…had to be read in light of the investigation process…[n]ot the least of which would have been a reading that might have suggested that the investigation was…a gathering of “hearsay” and rumour…[o]r a reading might have suggested that the investigation never touched on the “critical issue”…[o]r a reading that the pilots were not coerced or bullied...[o]r a reading that the investigation…created an agenda…from which all was expected to flow…[o]r a reading would have exposed the allegations and the investigation…failing to disclose particularity to which the Applicant could fairly respond…’ 9

Consideration

Claim that the reasons for dismissal kept changing

[57] Mr Milner claims that he could not properly respond to the grounds for his dismissal as they kept changing. As I understand the submission, there are seven instances where Mr Milner says the grounds for his dismissal changed. 10 The instances and what was said are detailed below.

1. ALLEGATIONS/NOTCE OF SUSPENSION

[58] On 17 November 2015 Mr Milner was served with a notice of suspension. It contained five allegations:

1. That you have on numerous occasions issued alternative directions to operating crews on MYA commercial flights and that you have done so while being seated as a passenger on those flights. We attach a copy of the report from Senior Base Pilot Alex Pullin and correspondence from David Forsyth regarding this behaviour.

We note that you do not hold a commercial pilot license. Any attempt to influence or interfere with a pilot on any flight is an offence punishable by up to 2 years imprisonment according to section 24 of the Civil Aviation Act 1998 (Cth).

2. You have directed MYA pilots to work overtime but have prohibited each one from noting down any hours of overtime on official records. As a result, pilots have not been afforded their contractual and legislative rights to overtime payments, appropriate breaks, leave and rest time.

Further, it is alleged:

1. That you have bullied, belittled and harassed your staff with inappropriate language, behaviour, actions and threats of dismissal to the point where staff feel uncomfortable and unsafe in the workplace.

2. That you have instructed MYA staff not to speak with the Chief Executive Officer of MHRC and MYA and have further instructed MYA staff that if they must speak with the Chief Executive Officer, then they are to report all communications to you.

3. That you continually access the CCTV streaming footage on your work mobile phone and other interfaces to monitor your colleagues when you are offsite.

2. LETTER OF TERMINATION

[59] On 11 December 2015 Mr Milner was provided with a letter of termination. That letter stated:

…In the course of investigating matters raised in the letter of 17 November 2015, MHRC has obtained oral and other evidence that you have, in the course of your employment with MHRC:

1. instigated and co-ordinated an alcohol smuggling operation within Galiwin’ku by abusing your position to condone the transport of alcohol in Marthakal Yolngu Airlines (MYA) aircraft and to coerce MYA pilots to participate in regular transport of alcohol to Galiwin’ku. We enclose(*) a sample of text messages attained from various MYA pilots and from your work mobile phone showing the word “shopping” being used as code for alcohol. It is clear you were aware of the practice, encouraged it and participated in it.

2. in contravention of the Civil Aviation Safety Act (Cth), given instructions to pilots verbally and by text message; attempting to interfere and influence the course of the flight rather that to redirect pilot queries to Mr Alex Pullin or the Chief Pilot as appropriate. For example:

a) Flight of 9 November 2015, details of which have already been supplied to you

b) Flight of 30 May 2015 in which you failed to direct Mr Timothy Baird’s request for assistance to Mr Alex Pullin or the Chief Pilot and instead advised Mr Baird, a relatively inexperienced pilot to fly at 500 feet for in excess of 150 nautical mile.

Summary Dismissal

MHRC has received legal advice that is has sufficient grounds to summarily terminate your employment on grounds of serious misconduct.

As the General Manager of MYA you were responsible to ensure that MYA operated in accordance with all its statutory obligations, particularly those relating to the safety of passengers and pilots, in partnership and at the advice of the Chief Pilot and his representative.

You have been deliberately and grossly remiss in your obligations and have exposed MHRC, MYA, your colleagues and clients to grave financial, operational, legal, reputational and personal risk.

MHRC notes that the unauthorised supply and possession of alcohol into Galiwin’ku is a criminal offence. Your actions and the actions of those involved have been duly reported to the Northern Territory Police.

3. FORM F3 – EMPLOYER RESPONSE

[60] On 4 February 2016 Marthakal filed its Form F3 – Employer response form to the application. In that material, it states as the reasons for dismissal:

1. That the Applicant did instigate and co-ordinate an alcohol smuggling operation within the dry community of Galiwin’ku where alcohol consumption and possession is prohibited by federal law.

2. That the Applicant did attempt to give instructions to pilots verbally and by text message and attempt to interfere and influence the course of flights.

4. LETTER OF 23 MARCH 2016

[61] On 23 March 2013 Marthakal sent a letter to Mr Milner in which it proposed a commercial resolution to the matter and also flagged that it may seek costs. In that letter Marthakal stated:

2. The parties’ respective positions have been ventilated at some length. At no point in the parties’ correspondence has your client denied that he committed criminal offences by:

(a) unlawfully consuming alcohol in a dry community;

(b) prevailing upon pilots under his supervision to smuggle alcohol into a dry community.

3. Presumably he has not denied these allegations because he is aware that the proof of the misconduct is overwhelming.

5. SUMMARY DISMISSAL APPLICATION

[62] On 31 March 2016 Marthakal made an application for summary dismissal of the application of Mr Milner on the grounds that he had failed to comply with directions. In that application Marthakal stated:

As the materials annexed to the employer response and the Applicant’s statement make clear, the Applicant was dismissed following various species of serious misconduct, including criminal conduct in consuming alcohol in a dry community and directing and/or encouraging pilots under supervision to smuggle alcohol into a dry community. 11

6. APPLICATION REGARDING WITNESSES

[63] Mr Milner provides no information on what he is referring to. It is therefore not possible to determine what may or may not have changed at this point.

7. SUBMISSION ON COSTS

[64] On 24 April 2016 Marthakal made its application for costs. In that application Marthakal said:

4. On 3 February 2016 the employer filed its response. The response confirmed the reasons for dismissal and attached a number of statutory declarations from pilots relevant to the allegations. The declarations alleged that the applicant had:

(a) consumed alcohol on MHRAC lands, directed and encouraged pilots to smuggle alcohol onto the lands on his behalf, and fostered a culture of unlawful consumption of alcohol in the community:

(b) gave directions to pilots in circumstances where he was not authorised to do so, and pressured pilots to carry out their work in a potentially unsafe manner; and

(c) had mistreated in various ways the pilots under his supervision.

5. The employer response acknowledged a procedural deficiency in that the alcohol smuggling allegation was not put to the applicant before his dismissal, but made the obvious point that a procedural deficiency was unlikely to influence the outcome of the proceedings given the seriousness of the allegations and the weight of the evidence in support of each allegations. 12

Conclusion

[65] There is nothing in this material that suggests Mr Milner was not aware of the reasons for his dismissal, such that he could not provide material to the Commission to enable the Commission to undertake its role and determine if the dismissal was harsh, unjust or unreasonable.

[66] That the reason for dismissal varies from what was set out in the notice of allegations to the letter of termination is not unusual. A proper investigation will often result in some change to the reason for dismissal, the setting aside of some allegation/s or the finding of other matters that go to justifying dismissal.

[67] Mr Milner filed his submissions and witness statement with the Commission on 15 March 2016. At this stage, he had the notice of allegations, the letter of termination of employment and the Form F3. He also had the affidavits of six pilots filed by Marthakal with its Form F3.

[68] I do not accept that the Form F3 somehow morphed the reasons for termination set out in the letter of termination into something different. It was perhaps unfortunate that Marthakal chose to abbreviate the reasons for termination but the reasons are clearly referable to the reasons for dismissal as set out in the letter of termination.

[69] Any material produced post the hearing date of 5 April 2016 (and possibly the date Mr Milner was required to file his evidence and submissions of 15 March 2016) cannot be said to have adversely affected Mr Milner’s capacity to properly respond to the reasons for his dismissal in filing his submissions and evidence.

[70] Mr Milner’s issues with the process could properly be considered under s.387(b) or (c) or (h) of the Act as part of the consideration of his claim to unfair dismissal. The process issues are not matters relevant to determining if there was a valid reason for dismissal but may well go to whether the dismissal was harsh, unjust or unreasonable. Claims that he was not aware of the reason for dismissal, such as they are, would not have affected his ability to make submissions or produce evidence with respect to the process of investigation or the process used to affect his dismissal.

[71] I am not satisfied that Mr Milner can rely on a claim of not knowing the reason for his dismissal as a reason for a failure to file evidence or submissions with respect to the reason for dismissal or as the reason to neither admit or deny conduct.

Procedural matters associated with the dismissal

[72] It is, of course, not unusual for a person to contest a dismissal for unfairness on the grounds of procedural unfairness and this is a valid response to an unfair dismissal. An applicant for unfair dismissal may admit the conduct but argue that the process was so compromised that the dismissal was harsh, unjust or unreasonable. This is not unknown. Procedural fairness is a critical part of any process that goes to matters associated with a dismissal.

[73] Mr Milner gave five lines in his brief witness statement to procedural deficiencies with some expansion (although limited) on the topic in his submissions. These go to his claim that he never received the particulars of the allegations made against him.

[74] Whilst Mr Milner may have a claim with respect to procedural matters associated with the investigation of the allegations, on the basis of the material before me and, given the seriousness of the allegations of misconduct, it is unlikely that a finding of procedural deficiencies would result in a finding that the dismissal was unfair.

No contest

[75] Mr Milner’s failure to contest the grounds for his dismissal weighs against him in considering matters associated with the costs application.

Procedures of the Commission

[76] Mr Milner contends that he should have been able to test the evidence of Marthakal before deciding the path he should traverse.

[77] Whilst it is not unknown in certain circumstances for a respondent to an unfair dismissal application to be required to put its case on first (in particular where it is claimed a dismissal is a genuine redundancy and some other jurisdictional matters) it is not Mr Milner’s privilege to determine that he not be required to put his material on until he has heard the case of Marthakal without an application to the Commission in the course of hearing or prior to hearing. He was the applicant in the proceedings. The normal course in the Commission is that the applicant goes first followed by the respondent.

[78] I have considered the decision in Edwards v Giudice and Others 13 and do not take it to stand for the proposition that the respondent can be ‘put to its proof’. It seems to me that the case stands for principles that go to the requirement to make findings of fact with respect to conduct and the requirement of the Commission to give reasons for decision. Mr Milner provided no particular reference in the decision such that my view on it has changed.

[79] Having made this observation, the argument of procedures of the hearing has been a neutral matter in my consideration of the application before me.

Finding on the conduct

[80] Much of the resolution of the costs application relies on an assessment of the case itself. At the hearing and prior to the discontinuance of the matter, Mr Milner’s statement had been accepted and two of the pilots had been subject to cross-examination. It is, therefore, necessary for me to make some findings on the basis of the material before me to the extent that it is relevant to the determination of the costs application.

[81] I am satisfied, on the basis of the statement of Mr Milner, the statutory declarations filed and the oral evidence of two of the pilots that, on the balance of probabilities, Mr Milner instigated and co-ordinated the transport of alcohol into a dry community. I am satisfied that he did this himself or by encouraging and inveigling (without deceit as to what was occurring) other pilots to do so for him. This conclusion is supported by the evidence of Mr Tim Baird, Mr Alex Pullin and Mr Peter Grimble. There being no evidence to the contrary I have accepted their statements to the extent necessary to determine the costs application.

[82] Mr Milner has not denied that he engaged in such conduct, despite the many opportunities given to him to do so.

[83] I make no finding as to whether this conduct may be criminal conduct in the Northern Territory.

[84] I am also satisfied, that on the balance of probabilities, Mr Milner did improperly interfere with pilots in their task of flying aircraft. Again, I make no finding as whether this breached any laws but do accept that it is serious and, in his position, he should have known better. Again, I make this finding on the basis of the witness material filed and not contested in these proceedings. This conclusion is supported by the statutory declarations of Mr Tim Baird, Mr Alex Pullin, Mr Dane Lai and Mr Luke Verhagen.

[85] I am unable to find either way on the matter of deficiencies in the process of investigation of the allegations against Mr Milner. Mr Milner was provided with the allegations and invited to respond. His lawyer responded on his behalf but failed to respond to the allegations raised, instead concentrating on the lack of particulars in the allegations.

Application pursuant to s.611 of the Act

[86] Marthakal has made an application for costs pursuant to s.611 of the Act (set out above).

[87] The approach to be taken to an application for costs made pursuant to s.611 of the Act was recently considered in Keep v Performance Automobiles Pty Ltd 14where the Full Bench said:

[16] The FWC’s power to order that a person bear some or all of the costs of another person in relation to an application is only enlivened if the FWC is satisfied as to the matters set out in either s.611(2)(a) or s.611(2)(b).

[17] The proper construction of s.611(2)(a) was recently considered by a Full Bench in Church v Eastern Health t/as Easter Health Great Health and Wellbeing (Church). Church is authority for the following propositions:

(i) The power to order costs pursuant to s.611(2) should be exercised with caution and only in a clear case.

(ii) 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.

(iii) One way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether upon the facts known to the applicant at the time of instituting the proceeding, there was no substantial prospect of success.

(iv) The test imposed by the expression ‘without reasonable cause’ is similar to that adopted for summary judgment, that is, ‘so obviously untenable that it cannot possibly succeed’, ‘manifestly groundless’ or ‘discloses a case which the Court is satisfied cannot succeed’.

[18] As to s.611(2)(b), the FWC may make a costs order against a person if satisfied that ‘it should have been reasonably apparent’ to that person that their application had ‘no reasonable prospect of success’. The expression ‘should have been reasonably apparent’ in s.611(2)(b) imports an objective test, directed to a belief formed on an objective basis as opposed to the applicant’s subjective belief.

[19] There is Full Bench authority for the proposition that the Commission should exercise caution before arriving at the conclusion that an application had ‘no reasonable prospects of success’. In Deane v Paper Australia Pty Ltd a Full Bench made the following observation about this expression in the context of enlivening a power to award costs under s.170CJ(1) of the Workplace Relations Act 1996;

“unless upon the facts apparent to the applicant at the time of instituting the [application], the proceeding in question was manifestly untenable or groundless, the relevant requirement in s.170CJ(1) is not fulfilled and the discretion to make an order for costs is not available”.

[Endnotes omitted]

Were the proceedings instigated vexatiously?

[88] Whether proceedings or a response to proceedings may be vexatious was considered in Holland v Nude Pty Ltd (t/as Nude Delicafe) 15where the Full Bench said:

[7] We turn to the first issue raised by the appellants’ grounds of appeal. The approach generally taken by members of the Tribunal 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). The Commissioner referenced this case in her reasons for decision. 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 : see Attorney General v Wentworth (1988) 14 NSWLR 481 at 491. The approach of the High Court in an application for a permanent stay of criminal proceedings on the ground of abuse of process constituted by improper purpose is instructive. In Williams v Spautz [1992] HCA 34, (1992) 174 CLR 509,at 522, Mason CJ, Dawson, Toohey and McHugh JJ said:

Bridge LJ identified one difficulty when he said ([1977] 1 WLR, at p 503; [1977] 2 All ER, at p 586):

What if a litigant with a genuine cause of action, which he would wish to pursue in any event, can be shown also to have an ulterior purpose in view as a desired byproduct of the litigation? Can he on that ground be debarred from proceeding? I very much doubt it. (Emphasis added.)

So would we. But his Lordship, by implication, evidently sees no difficulty with the case in which the plaintiff does not wish to pursue his or her cause of action to a conclusion because he or she intends to use the proceedings for a collateral and improper purpose.

[Footnotes omitted]

[89] On very fine balance, I am not satisfied in this case that I can conclude that Mr Milner instituted proceedings vexatiously. Whilst Mr Milner’s reasons for making his application and his approach to the hearing raise grave questions as to his motives I have balanced this against the lack of evidence from him on this question. Mr Milner could have been cross-examined by Marthakal at the hearing and these matters put to him, but this was not done.

[90] I accept that a claim may be vexatious even when there is some basis for the claim for unfair dismissal but I am not prepared to make such a ruling in this case where there is no evidence to support the claim.

Were the proceedings instituted without reasonable cause?

[91] In Church v Eastern Health t/as Eastern Health Great Health and Wellbeing 16a Full Bench of the Commission considered the approach to be taken in determining of proceedings has been instituted without reasonable cause. It said:

[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.”

[Endnotes omitted]

[92] I respectfully adopt this approach. The question to answer is if the application was made without reasonable cause, that is, the test time is the point in time at which the application was made.

[93] At the time he made his application Mr Milner was aware of the grounds for his dismissal. He had already raised issues with respect to procedures associated with the investigation. At this time the only points of difference, in terms of what he says is the moving feast of reasons for dismissal, was the difference between the allegations and the reason for dismissal in the termination letter. I have dealt with this matter above. Complaints Mr Milner may make of changes in the reasons for dismissal post this point in time are not relevant to a consideration of whether the proceedings were instituted without reasonable cause.

[94] At the time he made his application to the Commission Mr Milner was well aware of the seriousness of the reasons for his dismissal. Mr Milner chose, in his application, not to engage in any comment on the two grounds for his dismissal. It is highly questionable, even if there were procedural deficiencies, that Mr Milner’s application for unfair dismissal would have succeeded. On the basis of the material filed with the Commission in the application for unfair dismissal, I am satisfied that it should have been apparent that the application was made without reasonable cause.

Reasonably apparent…no reasonable prospect of success

[95] In Green v Toll Holdings Ltd 17 Deputy President Gostencnik considered the meaning to be given to ‘reasonably apparent to a person’ and said:

[20] An assessment of whether the circumstance described in s.611(2)(b) existed is not limited to the time at which a person makes an application or response, although it may arise at that time. Knowledge gained by a person during the course of a proceeding and after making an application or response might lead to a conclusion that it should have been reasonably apparent to a person that the person’s application or response had no reasonable prospect of success. This knowledge could be gained, for example, at a time after the person has received an opposing party’s evidentiary material, or during the course of the hearing.

[21] Section 611(2)(b) directs attention to that which should have been “reasonably apparent to a person”. In this context, whether something should have been “reasonably apparent to a person”, is not to be determined by reference to the subjective views of the person. Rather, the question must be objectively determined. 

[Endnote omitted]

[96] For the reasons given above in relation to ‘without reasonable cause’, I am satisfied that it should have been reasonably apparent to Mr Milner that his application had no reasonable prospect of success.

[97] Any procedural issues with the investigation would be far outweighed by the reasons for dismissal. An objective assessment made beyond the time of making the application only strengthens this view. Marthakal provided statutory declarations of pilots as to the conduct of Mr Milner. He was aware, at the time Marthakal provided its response to his application, of the weight of evidence against him. Still, at the point in time in which he was given an opportunity to file his evidence and submissions he consistently failed to engage with the reasons for dismissal. To this extent, I agree with the submissions of Marthakal in the costs application that Mr Milner appeared more interested in having side bar technical arguments rather than engaging with the case.

Conclusion as to s.611 application

[98] For the reasons set out above, I am satisfied that it should have reasonably apparent to Mr Milner, at least when Marthakal filed its Form F3, that his application had no reasonable prospect of success.

Application pursuant to s.400A

[99] Section 400A of the Act requires a finding that the first party caused costs to be incurred by the second party by some unreasonable act or omission on the part of the first party.

[100] The phrase unreasonable act or omission was considered by the Full Bench in Roy Morgan Research Ltd v Baker. 18 Whilst I do not repeat that decision, I note the following can be taken from the authorities cited therein:

● a failure to inform another party of an inability to attend proceedings would be, if intentional, unreasonable and if accidental, an unreasonable omission;

● a failure to advise the other party of the first party’s intentions if deliberate or reckless would be unreasonable and, if an omission, could be equally unreasonable;

● very strong prospects of success will not always justify a failure to participate in settlement negotiations;

● a reasonable person will determine if and how to respond to an offer of settlement after considering all of the circumstances of the case including the terms of settlement in relation to the relief sought; the relative strength of the parties’ cases; the likely length and cost of proceeding to hearing if the matter does not settle; a consideration of an offer of settlement and adverse consequences of acceptance of an settlement rather than prosecuting or defending the primary application.

[101] Section 400A was inserted into the Act by virtue of the Fair Work Amendment Act 2012.

[102] I have taken into account the principles above in deciding this matter. I have also been mindful of the Explanatory Memorandum to the Fair Work Amendment Bill 2012 which states:

168. Item 4 inserts a new section 400A to enable the FWC to order costs against a party to an unfair dismissal matter (the first party) if it is satisfied that the first party caused the other party to the matter to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the matter.

169. …the power to award costs under section 400A is not intended to prevent a party from robustly pursuing or defending an unfair dismissal claim. Rather, the power is intended to address the small proportion of litigants who pursue or defend unfair dismissal claims in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.

170. The FWC’s power to award costs under this provision is discretionary and is only exercisable where the first party (whether the applicant or respondent) causes the other party to incur costs because of an unreasonable act or omission. This is intended to capture a broad range of conduct, including a failure to discontinue an unfair dismissal application made under section 394 and a failure to agree to terms of settlement that could have led to the application being discontinued.

Was Mr Milner’s failure to admit to the conduct an unreasonable act or omission?

[103] Mr Milner had a right to defend himself from the basis of dismissal put to him in the notice of termination.

[104] However, in circumstances where he has not disputed that he engaged in the conduct complained of, it is inexplicable as to why he did not concede the conduct but continue to argue on the grounds of procedural fairness. Of course, there is no requirement to do so and he is entitled to defend the claims against him but it is the sheer absence of any such defence that raises the spectre of an unreasonable act or omission on his part.

[105] By the time the matter came to hearing, Mr Milner well knew (and it is disingenuous of him to suggest otherwise) the case put against him. As mentioned above, he had the reasons for termination set out in the termination letter and the statutory declarations of all but one of the pilots who made such a statement.

[106] Alternatively, if Mr Milner had not engaged in the conduct, he then could, and should, have said so and mounted some defence of the claimed conduct. He did not.

[107] Had Mr Milner admitted to the conduct (having never denied it), it may well be that the remainder of the case would have taken a very different course. Marthakal would not have been required to incur expenses in relation to witnesses as there would have been no need to cross-examine them on the matters. It may well have been that some resolution of the matter could be found without the need to proceed to hearing.

[108] I am satisfied that it was unreasonable act on the part of Mr Milner not to admit the conduct or at least to indicate that he did not intend to file with respect to the conduct, but argue on the grounds of procedural fairness that the dismissal was unfair. Having seen the case of Marthakal and its reliance on his conduct as grounds for termination, it was appropriate that Mr Milner respond in some manner. By his actions (or lack of action), he caused costs to be incurred by Marthakal.

Was Mr Milner’s refusal to accept the settlement offer an unreasonable act or omission?

[109] On 23 March 2016, after Mr Milner had filed his material with the Commission in preparation for the hearing, Marthakal wrote to Mr Milner, set out its case and offered to settle the matter on condition he withdraw the unfair dismissal and anti-bullying applications.

[110] Given that Mr Milner did not deny the reasons for his dismissal, including in his material filed with the Commission, I am satisfied that Mr Milner engaged in an unreasonable omission by refusing the settlement offer put to him by Marthakal. The offer did not require Mr Milner to admit to the conduct and offered a nominal sum in settlement.

[111] By this time Mr Milner was not vigorously defending his position. In fact, his witness statement and submission filed with the Commission could only be viewed as a minimal defence without addressing his conduct which was, on any view, serious.

[112] Given Mr Milner’s continued failure to deal with the substance of the reasons for his dismissal, I am satisfied that at least from 23 March 2016, Mr Milner engaged in an unreasonable omission that caused costs, post this date, to be incurred by Marthakal.

Should I award costs?

[113] I have found under both s.611 and s.400A of the Act that there are grounds on which to award costs against Mr Milner. This does not however mean that I should do so. The decision to award costs is a discretionary one and should only be exercised where it is truly justified, keeping in mind the general proposition that each party should bear its own costs in matters before the Commission.

[114] In addition to the conduct of Mr Milner in this case I have also taken into account that Marthakal chose to file statutory declarations from its pilots in conjunction with its Form F3 and that it failed to advise the Commission, in accordance with the directions issued, that it relied on those statutory declarations in its case. As was said to Marthakal, its failure to advise the Commission of this was at least discourteous. This is more so as it caused the Commission to adjust the number of sitting days allocated to the matter which then provided too little time to deal with the number of witnesses, putting the Commission and Mr Milner to inconvenience.

[115] Taking all of these matters into account, I have decided to make an award of costs to Marthakal. These costs will, however, be only those incurred from 23 March 2016, the date the settlement proposal was put to Mr Milner. I find his conduct post this date particularly egregious. He has had no mind as to the right course of action to take and has ploughed on with an unclear purpose, regardless of the cost to the parties.

[116] I note that Mr Grove, for Mr Milner, says that he has not had an opportunity to peruse the proposed costs breakdown. This appears to be another attempt by him to find a matter to further delay and/or put Marthakal to more costs. Marthakal attached to its application for costs an itemised schedule of costs in accordance with the Fair Work Regulations 2009.

[117] Mr Milner will have seven days from the date of this decision to indicate if he considers any of the itemised amounts post 23 March 2016 to be in error. On receipt of any reply and pending the need for some reply from Marthakal, an order for costs will be issued.

COMMISSIONER

Appearances:

M. Grove for Mr D. Milner

O. Fagir of counsel for Marthakal Homelands and Resource Centre Aboriginal Corporation T/A Marthakal Homelands Resource Centre Inc

Hearing details:

2016.

Melbourne and Darwin (video hearing):

April 5;

May 27.

 1 Directions dated 28 April 2016 at paragraph [3].

 2   [2006] AIRC 488.

 3   Mr Milner’s submission dated 16 May 2016 at paragraph 10(f).

 4   Mr Milner’s submission dated 16 May 2016 at paragraph 10(g).

 5   Transcript at PN256.

 6   Ibid at PN133.

 7 (1999) 94 FCR 561.

 8   Mr Milner’s submission dated 16 May 2016 at paragraph 10(j)(iii).

 9   Ibid at paragraph 10(e).

 10   Mr Milner’s submission dated 16 May 2016 at paragraph 10(g) and transcript PN108.

 11   Form F1, 31 March 2016, Schedule A at paragraph 8.

 12   Form F6, Schedule B.

 13 (1999) 94 FCR 561.

 14   [2015] FWCFB 1956.

 15 (2012) 224 IR 16 at paragraph [7].

 16   [2014] FWCFB 810.

 17   [2016] FWC 2790.

 18   [2014] FWCFB 1175, at paragraphs [10]-[14].

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