David Paul Neville v Lake Fox Limited T/A Rocky's Own Transport Company

[2021] FWC 2996

[2021] FWC 2996

FAIR WORK COMMISSION

DECISION ON COSTS

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

David Paul Neville
v
Lake Fox Limited T/A Rocky’s Own Transport Company
(U2020/3651)

COMMISSIONER CAMBRIDGE SYDNEY, 28 MAY 2021

Unfair dismissal claim - application for costs - s.611 and s.400A - consideration of without reasonable cause, no reasonable prospects of success and unreasonable act or omission - application for costs refused.

[1] This Decision is made in respect to an application for costs that was made pursuant to ss. 611 and 400A of the Fair Work Act 2009 (the Act). The costs application was made on 13 November 2020, by Lake Fox Limited T/A Rocky’s Own Transport Company (the employer or the costs applicant). The respondent to the application for costs is David Paul Neville (the employee or Mr Neville). In accordance with the requirements of s. 402 of the Act, the costs application was made within 14 days after the originating unfair dismissal application was determined by the Fair Work Commission (the Commission).

Background

[2] On 26 March 2020, Mr Neville filed an Unfair Dismissal Application (Form F2) in respect to his dismissal from employment with the employer on 16 March 2020. At all relevant times during the proceedings, Mr Neville has represented himself.

[3] Attempts to reach a conciliated settlement of the unfair dismissal claim were unsuccessful, and the matter proceeded to arbitration. Prior to the Hearing of the arbitration, the Commission issued a Decision [2020] FWC 4095 (the representation Decision), which granted permission for the Parties to be represented by lawyers or paid agents. The representation Decision was made against the opposition that was advanced by Mr Neville.

[4] The arbitration involved a Hearing conducted at Orange on 12 August 2020. The unfair dismissal claim was dismissed in a Decision (the unfair dismissal Decision) [2020] FWC 5809, issued by the Commission on 30 October 2020.

[5] The subsequent application for costs made by the employer was the subject of Mention and Directions proceedings held on 26 November 2020. The Commission issued Directions that required the Parties to file and serve their respective evidence and other materials on the issue of costs in accordance with a timetable that required the Parties to advise the Commission by 12 February 2021, as to whether a formal Hearing was required or alternatively, whether the issue of costs could be determined upon the filed documentary material. Regrettably, the Parties had divergent views about the need for a Hearing on the question of costs. Mr Neville requested a Hearing in Dubbo, and the employer advised that it was content for its application for costs to be determined on the papers and without the need for any Hearing.

The Case for Costs

[6] The application for costs was primarily advanced under s. 611 of the Act. In this regard, the employer asserted that Mr Neville had made the initiating unfair dismissal application without reasonable cause, or that it should have been reasonably apparent to him that the application had no reasonable prospects of success. The employer also advanced its application for costs under s. 400A of the Act, and it asserted that Mr Neville caused costs to be incurred because of his unreasonable continuation of the matter.

[7] The employer filed evidence in support of its application for costs in the form of a witness statement dated 18 December 2020, made by Mr C Mossman, solicitor from Wotton Kearney lawyers. The evidence of the employer included a copy of tax invoices that it had received from Wotton Kearney lawyers. The employer also filed submissions in support of the costs application dated 18 December 2020, and submissions in reply dated 5 February 2021.

[8] The submissions made by the employer in support of its application for costs, firstly asserted that Mr Neville’s unfair dismissal application was made without reasonable cause and in satisfaction of s. 611 of the Act. It was submitted by the employer that at the time of making his unfair dismissal application, Mr Neville knew or reasonably ought to have known, that the employer had validly terminated his employment and that his application had no reasonable prospects of success.

[9] In support of this submission, the employer referred to evidence involving the three primary issues that had been established as valid reasons for the dismissal of Mr Neville. The employer submitted that at the time of making his unfair dismissal application, Mr Neville knew of the factual existence of the reasons for his dismissal which were subsequently verified in the unfair dismissal Decision. Consequently, the employer submitted that Mr Neville knew or should have reasonably known, that the application had no reasonable prospects of success and it was taken without reasonable cause.

[10] The employer’s costs application was also advanced on the basis that the relevant conduct of Mr Neville satisfied the requirements of s. 400A of the Act. The employer asserted that once it had filed its full evidentiary case in July 2020, which included video evidence of Mr Neville smoking and driving without a seatbelt, it became untenable for Mr Neville to continue the proceedings. The employer asserted that Mr Neville acted unreasonably by continuing the proceedings after he had received the employer’s evidentiary material in July 2020.

[11] In summary, the employer submitted that the Commission should exercise its discretion to award costs pursuant to sections 611 and 400A of the Act. The employer submitted that Mr Neville’s unfair dismissal application was made without reasonable cause and it had no reasonable prospects of success. In addition, the employer asserted that Mr Neville had acted unreasonably when he continued to pursue his unfair dismissal case after he had been provided with the employer’s full evidentiary case. The employer sought that costs be Ordered on an indemnity basis, or alternatively on a party/party basis.

The Case against Costs

[12] Mr Neville provided no formal evidence on the question of costs, but on 21 January 2021, he filed a document which has been treated as his submissions opposing any costs Order.

[13] The submissions made by Mr Neville asserted that costs should not be awarded as there was true merit in the application. Further, Mr Neville noted that the video footage was provided by the employer only after he had commenced his unfair dismissal proceedings. Mr Neville further asserted that he was correct in his view that his dismissal was harsh, unjust, and unfair.

[14] As part of his submissions opposing the costs application, Mr Neville stated that there had never been any expression that the application would not be successful or that the respondent would be making any claim for costs if it was successful in defending the unfair dismissal claim. Further, Mr Neville submitted that the employer’s costs application was frivolous and against the “spirit of the FWC” as there was never an offer or an indication that he might not succeed.

[15] In summary, the submissions made by Mr Neville asserted that the unfair dismissal claim that he made was taken with the genuine belief that the claim had reasonable prospects of success. Mr Neville submitted that if the employer was unsuccessful with its cost application, he would pursue costs.

Consideration

[16] Although there are a number of different sections of the Act which deal with costs, in this instance the application for costs, as set out in the initiating Form F6, was made under ss. 611 and 400A of the Act.

[17] The Commission may make a costs Order in respect to an unfair dismissal claim if any of the terms of either ss. 400A or 611 have been satisfied. Relevantly, these two sections of the Act are in the following terms:

“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

and

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).”

General Approach to Costs

[18] The approach to consideration of any application for costs made under the Act should, at the outset, recognise the significance of subsection 611 (1) and the implications that have been established to flow from those particular provisions. In this regard, it is relevant to refer to a Full Bench Decision in the matter of E. Church v Eastern Health t/as Eastern Health Great Health and Wellbeing 1 and the following extract from that Decision is relevant:

“[26] Section 611 sets out a general rule - that a person must bear their own costs in relation to a matter before the Commission (s.611(1)) - and then provides an exception to that general rule in certain limited circumstances. The Explanatory Memorandum confirms this interpretation of the section, it is in the following terms:

2353. Subclause 611(1) provides that generally a person must bear their own costs in relation to a matter before FWA.

2354. However, subclause 611(2) provides an exception to this general rule in certain limited circumstances. FWA may order a person to bear some or all of the costs of another person where FWA is satisfied that the person made an application vexatiously or without reasonable cause or the application or response to an application had no reasonable prospects of success.

2355. A note following subclause (2) alerts the reader that FWA also has the power to order costs against lawyers and paid agents under clauses 376, 401 and 780 which deal with termination and unfair dismissal matters.

2356. Subclause 611(3) provides that a person to whom a costs order applies must not contravene a term of the order.

[27] In the context of s.570 and its legislative antecedents courts have observed that an applicant who has the benefit of the protection of a provision such as s.570(1), (ie the general rule that parties bear their own costs), will only rarely be ordered to pay costs 5 and that the power should be exercised with caution and only in a clear case 6. In our view a similarly cautious approach is to be taken to the exercise of the Commissions powers in s.611 of the FW Act.” [emphasis added]

[19] Consequently, it has been well established that there should be a cautious approach taken in respect to any application for costs made under the Act. This caution operates to establish an underlying reluctance to grant any application for costs and to only do so in instances where a clear case has been made out to satisfy the exceptions to the general rule that each side bear its own costs. Those exceptions are specified in subsections 611 (2) (a) and (b) of the Act, and in the case of a claim for unfair dismissal, also extend to circumstances identified in subsection 400A (1).

[20] In this case, the employer has advanced its costs application upon two identified grounds. Firstly, it was asserted that the unfair dismissal application had been made without reasonable cause or that it should have been reasonably apparent to Mr Neville that the application had no reasonable prospects of success. Secondly, the employer asserted that the conduct of Mr Neville in respect to the continuation of the proceedings after the full evidentiary case for the employer had been filed and served, established unreasonable acts or omissions which caused the employer to incur costs. The employer asserted that on either or both of these grounds, there was basis upon which the exceptions to the general rule that each side bear its own costs, had been established.

Without Reasonable Cause - s. 611 (2) (a)

[21] On the question of whether the application could be considered to have been taken without reasonable cause, it is important to have regard for the established stringency of the test that must be met to satisfy that a case was taken without reasonable cause. In numerous Judgements and Decisions there have been various descriptions used to characterise the test required for a finding that a case was commenced without reasonable cause. Terminology such as “manifestly groundless” “obviously untenable” and “incapable of argument” has provided guidance.

[22] The relevant tests for finding that a matter was taken without reasonable cause, when translated into the context of an application for unfair dismissal remedy, require identification of some aspect of the application which would unquestionably defeat the claim. An unfair dismissal claim that was taken without reasonable cause would contain some aspect which was identifiable from the application document and which of itself, would operate to strike the claim out. For example, an application which stated and provided verification that the period of employment was less than six months would be a claim that would be likely to have been taken without reasonable cause.

[23] In this case, there was no suggestion that the claim for unfair dismissal contained some defect(s) which meant that it should have been struck out or otherwise subject to interlocutory disposal. At no point prior to the making of the application for costs did the employer articulate the proposition that the unfair dismissal claim was fatally defective or otherwise incapable of argument.

[24] Although the employer correctly identified that Mr Neville’s unfair dismissal claim was not particularly strong, at no stage was there some identified defect that would have made a case for it to have been found to be manifestly groundless, or obviously untenable, or incapable of argument. There is no identifiable aspect of the application which could be capable of defeating the claim without any recourse to argument. Consequently, the application was not made without reasonable cause as contemplated by s. 611 (2) (a) of the Act.

No Reasonable Prospect of Success - s. 611 (2) (b)

[25] The employer also advanced its application for costs upon the assertion that it should have been reasonably apparent to Mr Neville that his application had no reasonable prospect of success. It seems to be well settled that the test to establish that a case had no reasonable prospects for success is not as stringent as that required to find that a matter had been taken without reasonable cause.

[26] Consideration of this aspect of the application for costs involves a broad assessment of the merits of the case as should have been properly evaluated at the time of the making of the application. However, caution must be exercised to carefully evaluate whether any alleged absence of merit would have been reasonably apparent to an applicant at the time of making the claim.

[27] In this instance it is relevant to recognise that Mr Neville was unrepresented. Importantly, without any disrespect to Mr Neville, he was clearly inexperienced in litigation generally, and employment law specifically. Therefore, Mr Neville’s own subjective assessment of the strengths and weaknesses of his case, would have understandably led to a misconstrued evaluation that despite his misconduct, there may have been a reasonable prospect for success of his unfair dismissal claim.

[28] In addition, it is well-established that the assessment regarding no reasonable prospects for success is to be made at the time of the making of the application rather than at a later point when the employer had filed and served its full evidentiary case. Further, there was no evidence that the employer had put Mr Neville on notice that if he continued to pursue his claim for unfair dismissal and was unsuccessful, a costs application would be made.

[29] In this instance, although a careful, objective, and informed assessment of Mr Neville’s unfair dismissal case may have established that it did not have reasonable prospects for success, that evaluation could not in all fairness, be imposed upon Mr Neville himself. Consequently, no finding can be made that Mr Neville’s unfair dismissal application had no reasonable prospect of success in satisfaction of the provisions of s. 611 (2) (b) of the Act.

Unreasonable Act or Omission - s. 400A (1)

[30] The employer also pursued its costs application on the basis that there was conduct on the part of Mr Neville that satisfied subsection 400A (1) of the Act.

[31] Subsection 400A (1) of the Act introduces a further exception to the general rule established by subsection 611 (1) that each side bear its own costs in relation to a matter before the Commission. This particular exception is confined to unfair dismissal proceedings and requires that the Commission be satisfied that a Party caused costs to be incurred by another Party because of an unreasonable act or omission. An unreasonable act or omission could occur in respect to a particular aspect or part of the proceedings, or such act or omission might involve a more general finding in respect to a combination of factors surrounding the application and any part or parts of the proceedings.

[32] The employer asserted that the conduct of Mr Neville in continuing his unfair dismissal claim after the employer had filed and served its full evidentiary case including the video evidence, represented unreasonable acts or omissions in connection with the conduct or continuation of the unfair dismissal claim in satisfaction of s. 400A of the Act.

[33] As has been earlier identified, Mr Neville was an unrepresented and inexperienced litigant. In all fairness and good conscience, no finding could be made against Mr Neville for continuing his unfair dismissal claim after he had the benefit of examining the employers evidentiary case including the important video evidence. Mr Neville’s subjective assessment of his prospects for success may have been altered by this evidence, but without any notice of a potential pursuit of costs, it was not unreasonable for him to continue the proceedings.

[34] Consequently, in the particular circumstances of this case, it would be unreasonable and unjust to find that Mr Neville engaged in any unreasonable conduct which may have represented an act or omission capable of satisfying the terms of subsection 400A (1) of the Act.

Conclusion

[35] This application for costs was made by the respondent employer who successfully defended unfair dismissal proceedings that were taken by its former employee, Mr Neville. The costs application was made under ss. 611 and 400A of the Act. Consequently, the Commission has been required to consider whether the requirements of subsections 611 (2) (a) and (b) and s. 400A of the Act were met so that costs should be Ordered in favour of the employer.

[36] In respect to subsection 611 (2) (a) of the Act, an analysis of the circumstances at the time that the unfair dismissal application was made, has confirmed that the application was not made without reasonable cause.

[37] Further, for the purposes of subsection 611 (2) (b) of the Act, having regard for the plethora of factors which may establish that a dismissal was unfair, the Commission could not be satisfied that at the time that the application was made, or upon some subsequent assessment, it should have been reasonably apparent to Mr Neville that the application had no reasonable prospects of success.

[38] In respect to subsection 400A (1) of the Act, the Commission has not been satisfied that the actions of Mr Neville in connection with the conduct or continuation of the matter could be found to have been unreasonable. Consequently, the Commission has not been satisfied that any unreasonable acts or omissions on the part of Mr Neville have been established in satisfaction of the requirements of subsection 400A (1) of the Act. However, it should be noted that any subsequent pursuit of costs by Mr Neville may be likely to establish an unreasonable act in satisfaction of subsection 400A (1) of the Act.

[39] In summary therefore, the requirements of subsections 611 (2) (a) and (b) and 400A (1) of the Act have not been properly satisfied. The general rule established by subsection 611 (1) of the Act, that each Party bear its own costs, is not disturbed by any one or more of the exceptions provided in subsections 611 (2) and 400A (1) of the Act.

[40] The employer’s application for costs must be refused and an appropriate Order shall be issued in conjunction with this Decision.

COMMISSIONER

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 1   E. Church v Eastern Health t/as Eastern Health Great Health and Wellbeing [2014] FWCFB 810.