Dlima v Illion Australia Pty Ltd
[2019] FCCA 2312
•21 August 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DLIMA v ILLION AUSTRALIA PTY LTD | [2019] FCCA 2312 |
| Catchwords: INDUSTRIAL LAW – Alleged breaches of Part 3-1 of the Fair Work Act 2009 (Cth) – application by respondent for costs of directions hearing – whether refusal by unrepresented applicant of offer of settlement is unreasonable act or omission – whether caused the respondent to incur costs – no order as to costs. |
| Legislation: Fair Work Act 2009 (Cth), s.570 |
| Cases cited: Ryan v Primesafe [2015] FCA 8 |
| Applicant: | JOHN DLIMA |
| Respondent: | ILLION AUSTRALIA PTY LTD |
| File Number: | MLG 3209 of 2018 |
| Judgment of: | Judge O'Sullivan |
| Hearing date: | 21 August 2019 |
| Date of last submission: | 21 August 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 21 August 2019 |
REPRESENTATION
| Counsel for the Applicant: | In person |
| Solicitors for the Applicant: | In person |
| Counsel for the Respondent: | Mr Wheelahan |
| Solicitors for the Respondent: | Holding Redlich |
ORDERS
There be no order as to costs of the directions hearing of 17 May 2019.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 3209 of 2018
| JOHN DLIMA |
Applicant
And
| ILLION AUSTRALIA PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons concern an application by the respondent for its costs of the directions hearing held on 17 May 2019.
The substantive proceedings were commenced by application filed on 25 October 2018 by Mr John Dlima (“the applicant”) against Illion Australia Pty Ltd (“the respondent”). The applicant alleged contraventions of Part 3-1 of the Fair Work Act 2009 (Cth) (“the Act”) by the respondent. The applicant commenced employment with the respondent on 13 June 2017 as a ‘Collector (Call Centre Consultant)’. On 6 August 2018, the applicant’s employment was terminated by the respondent.
In the substantive proceedings, the applicant alleges that the respondent contravened inter alia, s.340 of the Act. In his form 2 filed with his initiating application, under a heading “remedy sought” the applicant sought:
“REMEDY SOUGHT
About Compensation: Loss of income from 7 August 2018 to 16 September 2018.
I was unemployed during the above period and my lost compensation would amount of $5,019.22 for the 29 working days during the period of unemployment. This has been computed on the basis of my hourly rate of $23.0769 per hour and a 7.5 hour work day.”
The matter is set for a three day trial commencing on 19 February 2020.
Background to the costs application
The matter came before the Court on 16 November 2018 for the first Court date. The applicant appeared in person and Mr Marshall, Solicitor, appeared for the respondent. On that date, the Court made directions for the parties to file statements detailing the agreed facts and the disputed factual and legal issues. The matter was also referred to mediation. The matter was listed to return to Court on 17 May 2019 for further directions
On 21 March 2019, the respondent’s solicitor sent the applicant an email with a letter of settlement, offering (without admitting liability) a payment to the applicant in the sum of $6,000.00 (less the applicable taxation withholding amounts). The terms of the offer included that the money would be paid to the applicant within 7 days of his acceptance of this offer. The offer made it clear it was open to acceptance until 12:00pm, 28 March 2019 after which the offer would lapse. In addition to this, the respondent’s solicitor put the applicant on notice that if the offer was rejected, the respondent would seek a costs order against the applicant and estimated the respondent’s costs to be over $100,000.
The applicant responded the same day, via return email stating:
“Hi Ben McKinley,
The court issued order to both parties in the matter MLG3029/2018 i.e. John Dlima and Illion Australia Pty Ltd.
Now instead of making efforts to file statements as requested as per the court orders, I have been receiving emails from you about threats as ordered by the court.
We are already very late in this matter.
With regards to your intention to produce this letter or any other letter to the court, I suppose you have your right to do that and please do it and send a copy once done if and when your intention changed to action.
Kind regards,
John Dlima”
It is uncontroversial that the applicant did not accept the offer prior to it lapsing on 28 March 2019 and the parties attended a mediation on 30 April 2019 which was unsuccessful.
On 17 May 2019, the parties attended the directions hearing. The applicant appeared in person and Mr Wheelahan of Counsel appeared for the respondent. Counsel for the respondent brought the above matters to the Court’s attention and sought that an order be made for the applicant to pay the respondent’s costs of the directions hearing.
As the applicant was not on notice that such an application would be made at the directions hearing (as such), was self-represented and the respondent resisted the issue of costs being reserved, directions were made for the filing of submissions on the issue of whether the Court should make the order for costs sought by the respondent. The costs application was then adjourned to 21 August 2019.
Costs application
Respondent’s position
On 30 May 2019, the respondent filed an outline of submissions and a supporting affidavit from Mr Benjamin McKinley, the respondent’s solicitor.
In that material it was made clear that the respondent sought a costs order on the grounds that the rejection of the settlement offer made to the applicant was an “unreasonable act” within the meaning of s.570(2)(b) of the Act. The respondent’s submissions at paragraphs [8] to [16] addressed the “Legal Principles” relating to this. The respondent in its submissions contended:
“…
“17.The offer of settlement was in excess of the amount claimed by the applicant.
18.It is contended that the applicant’s refusal of the settlement offer was an unreasonable act or omission that caused the respondent to incur the costs of the directions hearing on 17 May 2019. If the offer had been accepted prior to its expiry on 28 March 2019, then upon the terms of the offer the proceedings would have been discontinued well before the directions hearing on 17 May 2019.
19.The offer was in clear terms and contained no additional burdens upon the applicant beyond agreeing to file consent orders seeking to have to the matter dismissed, 7 days after receipt of payment of the settlement monies.
20.The applicant was advised in the letter of offer to seek legal advice.
21.The offer was open for a reasonable period: 21 March 2019 to 12 noon on 28 March 2019.
22.The consequences of a rejection of the offer of settlement were clearly set out for the applicant.
23.In all the circumstances the rejection of the offer was unreasonable and indemnity costs of respondent are sought.”
Applicant’s position
On 19 June 2019, the applicant filed submissions in reply. In those submissions, the applicant contended:
“…
4.The respondent's offer of settlement is not a reasonable offer because in its offer it is giving consideration only to the applicant's claim in regards to monetary compensation for the loss of income, while disregarding the other outcomes sought by the applicant. In Part G and Part H of the applicant's Form 2, Claim under the Fair Work Act 2009 alleging dismissal in contravention of general protections, the Applicant is seeking an outcome that includes determining contraventions to general protections and compensation for loss of income and pecuniary penalty.
5.The respondent's submission that the offer of settlement was in excess of the amount claimed by the applicant would be true if the only remedy sought by the applicant was towards compensation for loss of income. This is a general protections claim and the remedy sought by the Applicant includes admission of fault by the respondent in regards to contravention of general protections and pecuniary penalty.
6.It is unreasonable of the respondent to make a submission for costs against the Applicant for not accepting the offer of settlement where the respondent has refused to clarify on an enquiry made by the Applicant seeking clarity about their offer. The respondent has not outlined in sufficient detail how the Offer of settlement is to occur. This is explained in more detail in Paragraph 7 below.
7.On 23 March 2019 at around 4.01 pm and while the Offer of Settlement was open for acceptance, the Applicant by email made a request to Ben McKinley of Holding Redlich for the Delegation of Authority document of Illian Australia Pty Ltd {Refer Exhibit 1 on Page 7 of this submission). The Applicant requested this document for transparency on how the Respondent may execute a deed in matters where Simon Bligh, CEO has a conflict of interest. In response Ben McKinley after 16 minutes and at 4.17 pm on the same day by email informed the Applicant, that 'lllion's open offer did not require a deed to be signed by the parties' and that this document will not be provided to the Applicant at this stage (Refer Exhibit 1 on Page 7 of this submission). Ben McKinley was not forthcoming on how the Offer of Settlement will occur and was not acting with a required level of transparency about how the offer will be finalised and executed.
8.The Applicant has pursued his claim reasonably, including attempting to pursue arbitration at the Fair Work Commission before making the court application. The Applicant on 13 October 2018 by email made a request to Marina Passaris, HR Manager at Illion and Ben McKinley of Holding Redlich for consent to have the matter arbitrated at the Fair Work Commission (Refer Exhibit 2 on Page 8 of this submission). The Respondent did not give its consent to have this matter arbitrated at the Fair Work Commission. Arbitration would determine if the dismissal was a contravention to general protections. The Respondent has a specialist Human Resources team and can represent itself at the Fair Work Commission. The Applicant agrees that the Respondent has the prerogative to not consent to arbitration but in doing so then carried the burden of costs associated with being legally represented at the courts. The Respondent has acted unreasonably by not consenting to arbitration if it intended to contain its costs.
9.It was unnecessary for counsel to attend at the directions hearing in question for which costs are being sought by the respondent that include cost of counsel. The respondent is aware that in matters related to general protections under the Fair Work Act 2009 each party bears their own legal costs.
10.The reasons given for the termination and as mentioned in the applicant's termination letter dated 6 August 2018 impacts the Applicant's credibility in a negative manner. The Applicant is disadvantaged when applying for new employment since most employers ask for work references and want to know the reason for leaving previous employment. It is important to the Applicant that the matter is determined and the Applicant exonerated and vindicated.
11.General protections are about protection to an employee from adverse actions that include altering the position of the employee to the employee's prejudice. The Applicant has to start all over again with a new employer under a period of probation during which his employment is less secure. The Applicant had completed his period of probation at IIlion. The Applicant's new employment is less secure for this reason.
12.The unlawful termination disadvantages the Applicant in his career. The Applicant will have to work for a period of time before he can apply for more senior positions within' a new organisation. The Applicant was interviewed for an Account Manager position at Illion a few months before being terminated.
13.The Applicant has made efforts to contain costs towards loss of income that he has claimed in his court application by accepting any employment that is available and including short term contract employment. The Applicant has acted very reasonably in this matter.
14.The Applicant has been unemployed for a further six weeks between the 25 October 2018 which is the day he filed his application with the Federal Circuit Court and as of today. The Applicant was unemployed due to a short term contract ending. This loss of income could not be included at the time of lodging the court application on 25 October 2018 since it was unknown at the time. The Applicant is currently employed.
15.The Team Members Issues Resolution Policy of Illion Australia Pty Ltd. mentions that dispute resolution must be fair. Simon Bligh, CEO, Justin Pierce, Director and Marina Passaris have noted in their affidavits filed with the Court on 29 April 2019, 9 May 2019, 14 May 2019 respectively that they were involved in the decision to terminate the Applicant's employment. Whereas they use the services of qualified legal professionals at cost to Illion Australia Pty Ltd. to protect their own interests, the Applicant represents himself. Being fair and equal at dispute resolution should mean that IIlion compensate the Applicant adequately for the work done by the Applicant if the matter is being settled out of court and without the matter being determined at court that could potentially bring to light contraventions to general protections involving their CEO, a Director and a Human Resources Manager. The additional work that the Applicant must do in regards to this dispute at the court comes at a cost to health, loss of personal time and loss of income from absenteeism from current work to complete such tasks. The offer of settlement does not give any consideration to compensate for such losses in any way making the respondent's offer unreasonable.
16.The Applicant earned $44000 per annum working full time at lllion Australia Pty Ltd. and this is agreed in Paragraph 3 in the Statement of Agreed Facts filed with the Court on 22 February 2019. Considering the low income of the Applicant, the loss of income is unlikely to add up to much. What can cause a bigger monetary loss to the Respondent is pecuniary penalty and this is because there have been multiple breaches to general protection as mentioned in Part G of Form 2 and the Applicant's statement of Factual and Legal Issues in dispute filed with the court on 21 May 2019. The Respondent is at a risk to its own reputation if the matter is decided in the Applicant's favour by the court, considering the involvement of Simon Bligh, CEO, Justin Pierce, Director and Marina Passaris, HR manager in the decision to dismiss the Applicant. The Respondent in its offer of settlement omits giving any consideration to offer compensation for such factors in the Applicant's claim that are of primarily of much greater importance to both the Applicant and the Respondent.”
The applicant’s submissions then went on to address why there should be no order as to costs due to what was alleged to have been to the respondent’s “acts of omissions” at paragraphs [17] to [21].
Oral submissions
Each of the parties had an opportunity to make further submissions today. Not surprisingly, they were consistent with their written submissions save that the respondent referred to an additional case[1]. However, the case referred to is not analogous to the situation in this case given the stage of these proceedings.
[1] Carr v ILSC (Brisbane) Pty Ltd & Anor [2019] FCCA 1028 at [14(e)]
Costs under the Act
The costs application falls to be determined by reference to the provisions of s.570 of the Act which provides:
“(1)A party to proceedings (including an appeal) in a court (including a court of a State or Territory) exercising jurisdiction under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or s.569 or 569A.
(2)The party may be ordered to pay the costs only if:
(a)the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b)the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or
…”
In Ryan v Primesafe [2015] FCA 8, Mortimer J dealt with an application for costs arising from proceedings under the Act. In relation to the provisions in s.570 of the Act generally it was said:
“64.I accept the general import of the authorities relied on by the applicant and Mr McDonald in their written submissions about the significance of the threshold set by s570(2) of the Fair Work Act. Although some of the authorities relied on dealt with the predecessor provisions to s570, there is no difference in substance in the way the threshold is expressed. The discretion conferred by the confined terms of s570(2)should be exercised cautiously, and the case for its exercise should be clear: see Saxena v PPF Asset Management Ltd [2011] FCA 395at [6] per Bromberg J. The reason for caution is the potential for discouraging parties’ pursuit in a complete and robust way of the claims for contravention which they seek to make under the Fair Work Act, or the defence of such claims. The policy behind s570 is to ensure that the spectre of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular, in my opinion) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings. It is an access to justice provision. Insofar as it operates to the benefit of respondents, it is designed to ensure respondents feel free to pursue arguable legal and factual responses to the claims made against them. There is an almost identical provision in s611 of the Fair Work Act, giving the Fair Work Commission a similar costs power, conditioned by similarly-worded considerations. The predecessor provisions, and the conscious broadening of the statutory terms used in s570, are traced by the Full Court in Australasian Meat Industry Employees’ Union v Fair Work Australia (No.2) (2012) 203 FCR 430; [2012] FCAFC 103 at [3]-[4] per Jessup and Tracey JJ.
65.None of those propositions deny the Court’s ability to find that one or both of the two preconditions expressed in
ss570(2)(a) and (b) exist where the factual circumstances warrant it. The legislative policy behind a provision such as s570(1) is not inconsistent with the requirements for proceedings to be conducted reasonably, fairly and efficiently. As an access to justice provision, it contemplates parties and their legal representatives will access the Court responsibly.”In Tsilibakis v Transfield Services (Australia) Pty Ltd (No.2) [2015] FCA 1048 White J said of the relevant provisions under the Act at [7] to [8] that:
“…
[7]It is not necessary to canvass in detail the authorities bearing upon the application of s 570. The relevant principles are well established. Section 570 and its predecessors are to be understood as reflecting a legislative policy of protecting parties to proceedings under the Act from orders for costs so that parties with a genuine grievance will not be discouraged from pursuing a remedy to which they may be entitled, or from pursuing litigation in the manner which they deem best, for fear of an adverse costs order: Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143, (2008) 170 FCR 574 at [29]; Ashby v Slipper (No.2) [2014] FCAFC 67, (2014) 314 ALR 84 at [35]. The occasions upon which costs will be awarded under s 570 are likely to be exceptional: Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission [2006] FCAFC 199; (2006) 156 FCR 275 at [60].
[8]The questions of whether a party’s act or omission was unreasonable and whether such an act or omission has caused the other party to incur costs are to be determined having regard to the particular circumstances of each case: Australian and International Pilots Association v Qantas Airways Ltd (No.3)[2007] FCA 879; (2007) 162 FCR 392 at [27][28]. The fact that a party has conducted the litigation inefficiently, has made concessions relatively late, may have acted in a different or more timely fashion, or has adopted a genuine but misguided approach will be relevant to, but are not conclusive of, the party having acted unreasonably in the relevant sense: Clarke at [29][30]...”.
The effect of s.570 of the Act is to limit the Court’s power in relation to any order for costs in respect of proceedings under the Act. As a result, the Court may only order a party to such proceedings to pay the costs of another party only if the Court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause, or that the party’s unreasonable act or omission caused the other party to incur costs.
No order for costs can be made unless it is demonstrated one or more of the abovementioned exceptions in s.570(2) of the Act has been established. Even then, the award of costs remains within the discretion of the Court (cf Ashbey v Slipper (No.2) [2014] FCAFC 67).
Given the submissions of the parties, I now turn to consider the ground upon which the respondent relies in light of the approach to the relevant provisions set out above.
Consideration
The relevant basis for which the respondent seeks an award of costs against the applicant under s.570(2)(b) of the Act is that it is alleged by the respondent that there was an unreasonable act or omission by the applicant and that this caused them to incur costs.
For the purposes of s.570(2)(b) of the Act, the Court must be satisfied that two criteria have been fulfilled, as set out in Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574 (“Clarke”) they are:
“(a)that a party must have engaged in an unreasonable act or omission; and
(b)that the unreasonable act or omission must have caused another party to incur costs in connection with the proceedings.”
The authorities including Clarke (supra) at [29] cautioned against the use of the discretion to award costs with undue haste and that the “limited discretion”…“ought not become the basis for arguments about costs in relation to any and every transgression in the conduct of a case” (see Saxena v PPF Asset Management [2011] FCA 345 at [6]).
The first question that arises is whether the applicant acted unreasonably in relation to the refusal of the offer of settlement by the respondent. The second question is whether the applicant’s unreasonable acts or omissions caused the respondent to incur costs.
A deliberate decision to refuse a reasonable offer of settlement is a factor which would normally weigh more heavily in favour of a finding of unreasonable action than would be a mere failure to respond by an unrepresented litigant.” (see Cugura v Frankston City Council [2012] FCA 1299 at [31]. Moreover:
“The assessment of whether the refusal to accept that offer is not determined by a simple mathematical exercise. (see Blagojevch v Australian Industrial Relations Commission [2000] FCA 483; 172 ALR 611 (“Blagojevch”) at [34].
The applicant is his submissions gives several reasons as to why he did not accept the respondent’s offer. The first being at paragraph [5] of his submissions that the offer was not a ‘reasonable’ one as it failed to take into account to any pecuniary penalties that may be imposed as a result of any declarations of unlawful conduct, if proved in the substantive proceedings. The applicant also asserts (at paragraphs [6] and [7]) that on 23 March 2019, when he sought a copy of the ‘Delegation of Authority’ document from the respondent’s solicitor, the applicant was advised that given the parties did not require a deed to be signed a copy of this document would not be provided.
The applicant also asserted that due the respondent’s failure to provide a copy of the requested documentation, he was not able to make a fully informed decision about the offer and the applicant was concerned about a lack of transparency regarding the execution of the offer.
In Blagojevch[2], the Full Court of the Federal Court, albeit in the context of predecessor provisions of the Act, discussed at paragraphs [30] to [37] issues concerned with offers of settlement. It is noted that the Full Court accepted that a party can act reasonably in responding to an offer of settlement by reference to that party’s “genuine perception or recollection of events”.
[2] Blagojevch v Australian Industrial Relations Commission [2000] FCA 483; 172 ALR 611
I do not consider it was unreasonable for the applicant (who was unrepresented) to fail to accept the offer in terms. The offer was on its face, time limited and assumed (as the applicant himself points out in his submissions) that the Court would not proceed to impose a penalty (and make any other order as a result) on top of what the applicant sought in the application.
Whilst it is true that the applicant could have accepted the respondent’s offer, the offer was made at a time when he was unrepresented. In all the circumstances I am not persuaded that the applicant’s failure to accept the respondent’s offer was an unreasonable act or omission on his part. It is therefore, not necessary to consider whether that caused the respondent to incur costs.
Conclusion
For the reasons set out above, I could not be satisfied that it is appropriate to exercise the discretion and there will be no order as to costs.
I certify that the preceding thirty two (32) paragraphs are a true copy of the reasons for judgment of Judge O'Sullivan
Associate:
Date: 23 August 2019
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