Dr Stephen Crimston v Dr Naomi Pty Ltd
[2021] FWC 3875
•7 SEPTEMBER 2021
| [2021] FWC 3875 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.365 - Application to deal with contraventions involving dismissal
Dr Stephen Crimston
v
Dr Naomi Pty Ltd; Dr Naomi McCullum
(C2020/7321)
DEPUTY PRESIDENT BINET | PERTH, 7 SEPTEMBER 2021 |
Application to deal with contraventions involving dismissal. Application for Costs.
[1] On 26 April 2021 Dr Naomi Pty Ltd & Naomi McCullum (Dr McCullum) (together the Costs Applicants) filed an application (Costs Application) pursuant to section 375B and section 611 of the Fair Work Act 2009 (Cth) (FW Act) with the Fair Work Commission (FWC).
[2] The Costs Application seeks an order for the payment of costs by Dr Stephen Crimston (Dr Crimston) in relation to an application filed by Dr Crimston pursuant to section 365 of the FW Act (GP Application).
[3] The Costs Application was listed for a Hearing in Perth at 10:00am on Friday 9 July 2021 (Hearing). Due to restrictions arising from the COVID-19 Pandemic the Hearing was held by Microsoft Teams.
[4] Directions for the filing of materials in advance of the Hearing were issued to the parties on 6 May 2021 (Directions).
Permission to be represented
[5] The Directions invited the parties to make submissions as to whether the FWC should grant permission to the parties to be represented. A determination of this issue is necessary to ensure that the manner in which any hearing is conducted is fair and just.1
[6] Both Dr Crimston and the Costs Applicants sought permission to be represented at the Hearing.
[7] Having considered the submissions of the parties, leave was granted to Dr Crimston and the Costs Applicants to be represented, pursuant to section 596(2)(a) of the FW Act, on the grounds that it would enable the matter to be dealt with more efficiently taking into account the complexity of the matter.
[8] At the Hearing Mr Haren Pararajasingham of Mills Oakley represented Dr Crimston and Mr Colin Magee of Counsel represented the Costs Applicants.
Evidence
[9] A Digital Court Book containing the submissions, evidence and authorities relied upon by the parties was jointly tendered by the parties and marked as exhibit DCB1 at the Hearing.
[10] Written Closing submissions were filed on behalf of Dr Crimston on 23 July 2021and on behalf of the Costs Applicants on 16 July 2021.
[11] In reaching my decision, I have considered all the submissions made, and the evidence tendered by the parties even if not expressly referred to in these reasons for decision.
Background
[12] In the absence of any witness evidence the factual matrix of this matter can only be ascertained from the documents contained in Exhibit DCB1 and the submissions of the parties. Based on these materials the background of the Costs Application appears to be as set out below.
[13] Dr Naomi Pty Ltd owns and operates a cosmetic clinic trading as the Manse Clinic located in Paddington in New South Wales (Manse Clinic). Dr McCullum is a cosmetic physician and the founder and a director of the Manse Clinic. 2
[14] Dr Crimston is a general practitioner and a cosmetic physician. Dr Crimston started work at the Manse Clinic in 2017 on a part-time basis.3
[15] Dr Crimston worked part time until July 2018 when he started working full time.4
[16] In August 2018 Dr Crimston was appointed as Medical Director for the Manse Clinic. 5
[17] Prior to August 2020 Dr Crimston entered into a service agreement with the Manse Clinic (Services Agreement).6
[18] On or around 25 August 2020, the Manse Clinic requested that Dr Crimston sign a non-disclosure agreement and a new services agreement by 27 August 2020. Dr Crimston informed the Manse Clinic that he would seek legal advice in relation to the new agreements.7
[19] Dr Crimston says that subsequently his patients were reallocated to other doctors, his name was removed from the Manse Clinic’s on-line booking system; representatives of the Manse Clinic verbally informed patients that he was unavailable for appointments and that he was told he would be put ‘on leave’ until he signed the new documents. 8
[20] On 3 September 2021 Dr Crimston instructed his lawyers to send a letter raising complaints in relation to various aspects of his working arrangements. 9
[21] After further correspondence was exchanged between Dr Crimston’s lawyers and the Costs Applicant’s lawyers in relation to these issues failed to resolve his concerns on 11 September 2021 Dr Crimston notified the Manse Clinic that he considered that the Service Agreement had been repudiated by the Manse Clinic. 10
[22] On 28 September 2020 Dr Crimston filed a Form F8 – General protections application involving dismissal (Form F8) alleging that the Costs Applicants had contravened the general protection provisions of the FW Act by taking adverse action against him because he exercised a workplace right.11
[23] The Form F8 indicated that Dr Crimston was represented by the legal firm Mills Oakley.12
[24] In the Form F8, Dr Crimston contended, inter alia, that he was an employee, the Service Agreement was a sham contracting arrangement for the purposes of avoiding responsibility for employee entitlements and that adverse action had been taken against him because he exercised a workplace right.13
[25] On 28 October 2020, the Costs Applicants filed a Form F8A – Employer response to the application (Form F8C) denying the allegations.
[26] In the Form F8A the Costs Applicants asserted that:14
a. Dr Crimston was not an employee of the Manse;
b. Dr Crimston was a bona fide independent contractor; and
c. Dr Crimston was not entitled to the remedies set out in the GP Application.
[27] On 2 November 2020, the parties participated in a staff conciliation, but the issues in dispute could not be resolved.
[28] The matter was listed for a conference before me on 25 March 2021 (Conference). On 23 March 2021 Dr Crimston sought an adjournment of the Conference following a conference which I held on 21 March 2021 in relation to a general protections application from another doctor employed by Dr Naomi Pty Ltd.
[29] Dr Crimston subsequently discontinued the GP Application on 12 April 2021 to pursue an alternative application.
[30] On 22 April 2021 Dr Crimston filed a General Protections application not involving dismissal pursuant to section 372 of the FW Act (GP ND Application)
[31] The Costs Applicants contend that Dr Crimston commenced the GP Application vexatiously and without reasonable cause because he did so in circumstances where it ought to have been apparent to him that he was not an employee and was not dismissed. Additionally, or in the alternatively, the Costs Applicants contend that Dr Crimston unreasonably maintained the GP Application in circumstances where it should have been reasonably apparent to him that the GP Application had no reasonable prospect of success.
[32] The Costs Applicants seek an order for the sum of $13,605.83.
Relevant Statutory Provisions
[33] The Costs Applicants seek a costs order pursuant to sections 375B and/or 611 of the FW Act.
[34] Section 375B of the FW Act provides as follows:
“s.375B Costs orders against parties
(1) The FWC may make an order for costs against a party (the first party ) to a dispute for costs incurred by the other party to the dispute if:
(a) an application for the FWC to deal with the dispute has been made under section 365; and
(b) 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 dispute.
(2) The FWC may make an order under subsection (1) only if the other party to the dispute has applied for it in accordance with section 377.
(3) This section does not limit the FWC's power to order costs under section 611.”
[35] Section 611 of the FW Act provides as follows:
s.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).”
[36] Section 377 of the FW Act provides that an application for a costs in relation to an application under section 365 must be made within 14 days after the FWC finishes dealing with the dispute. I am satisfied that the Costs Application was made within the time frame prescribed by section 377.
Submissions of the Parties
[37] The Costs Applicants contend that an objective assessment of the material filed by Dr Crimston and the Costs Applicants reveals that:
a. the GP Application was filed ‘vexatiously’ and ‘without reasonable cause’ (s611(2)(a)),
b. had ‘no reasonable prospects of success’ (s 611(2)(b)); and
c. that his continuation of the proceedings after Costs Applicants had filed the Form F8A amounted to an ‘unreasonable act or omission’ in connection with the conduct or continuation of the GP Application (s 375B(1)(b)).
[38] The Costs Applicants contended that this should have been reasonably apparent to Dr Crimston because he knew or ought to have known that he could not establish the relevant jurisdictional test to bring an application pursuant to section 365 of the FW Act. Namely, that he had been ‘dismissed’ within the meaning of that term in the FW Act.
[39] The Costs Applicants say that Dr Crimston knew or ought to have known that he had not been ‘dismissed’ because he knew or ought to have known that he was an independent contractor and not an employee. Alternatively, the Costs Applicants say he knew or should have known that he had not been ‘dismissed’ because he terminated his engagement with Dr Naomi Pty Ltd.
[40] The Costs Applicants say that the proceedings were commenced by Dr Crimston vexatiously for the ulterior purpose of engaging the jurisdiction of the FWC with a view to bringing other claims against the Costs Applicants that could not be heard and determined in the FWC. In support of this assertion the Cost Applicants point to the remedies sought by Dr Crimston at Question 2.1 of the Form F8. The Costs Applicants say that it is apparent from the answers to Question 2.1 that the substantive claims of Dr Crimston were not related to matters relating to an alleged dismissal as an employee, but dealt with a range of commercial disputes between Dr Crimston and Dr Naomi Pty Ltd.
[41] The Costs Applicants submit that the GP Application was not properly brought is further supported by the responses to Questions 3 of the Form F8 which refer to a range of matters that could not be heard by the FWC but would need to be dealt with by a ‘court of competent jurisdiction’.
[42] The Costs Applicants further submit that Dr Crimston’s discontinuance of the GP Application before the issue of whether he was dismissed was determined and his filing of the GP ND Application is evidence that he was aware the GP Application was without jurisdiction and that he brought the proceedings for an ulterior purpose.
[43] Dr Crimston submits that following arrangements between himself and the Manse Clinic mean that the relationship could be characterised as one of employment:
a. the Manse Clinic controlled the number of patients allocated to Dr Crimston;
b. the Manse Clinic controlled the quantum that could be charged by Dr Crimston to patients for various services;
c. the Manse Clinic operated a roster which controlled the number of hours and days per week that Dr Crimston could work;
d. the Manse Clinic required Dr Crimston to provide notice if he sought to change his days of work or take leave;
e. the Manse Clinic required Dr Crimston to wear its uniform and to only use its plant and equipment when performing his duties;
f. the Manse Clinic was responsible for preparing all administrative paperwork relating to the Dr Crimston’s duties, and for advertising the services provided by Dr Crimston;
g. Dr Crimston was not required to provide tax invoices to the Manse Clinic for the services he performed; and
h. during the course of his engagement with the Manse Clinic, Dr Crimston did not work for any other entity or body and was restricted in delegating or sub contracting the performance of his duties to others.
[44] Dr Crimson says that as the ‘underlying tenants of his employment agreement had been breached’ he had in effect been dismissed at the initiative of his employer.
[45] As such Dr Crimston submits that there was an arguable basis that he was an employee who was dismissed and as such not jurisdictionally barred from bringing the GP Application. He therefore submits the GP Application did not have no reasonable prospect of success nor was it brought without reasonable cause or vexatiously.
[46] Dr Crimston submits that the remedies cited in the GP Application are not evidence of an ulterior motive in making the GP Application because he is entitled to identify any form of relief he seeks. He says that in any event the relief he sought ‘broadly accords with powers available’ under the FW Act. He also asserts that his subsequent filing of an application pursuant to section 372 is irrelevant and not indicative of a prior knowledge that the GP Application was without jurisdiction.
Consideration
[47] Section 611(2)(a) of the FW Act provides for the awarding of costs in circumstances where the FWC is satisfied that an application is vexatious or without reasonable cause.
[48] The scope of the term ‘without reasonable cause’ in the context of section 611(2)(a) was considered by the Full Bench in Church v Eastern Health [2014] FWCCFB 810 at [30] as follows:
“[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.”
[49] The scope of the term “vexatious”, in the context of s.611(2)(a), was considered by the Full Bench in Church v Eastern Health [2014] FWCCFB 810 at [29] as follows:
“[29] The question of whether an application was made ‘vexatiously’ looks to the motive of the applicant in making the application. It is an alternative ground to the ground that the application was made ‘without reasonable cause’ and may apply where there is a reasonable basis for making the application. In Nilsen v Loyal Orange Trust (Nilsen) North J observed that this context requires the concept of vexatiousness to be narrowly construed. His Honour went on to state that an application will be made vexatiously ‘where the predominant purpose ....is to harass or embarrass the other party, or to gain a collateral advantage’. Deane and Gaudron JJ made a similar observation in Hamilton v Oades in which they said:
“The terms ‘oppressive’ and ‘vexatious’ are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are ‘seriously or unfairly burdensome, prejudicial or damaging’ and ‘productive of serious and unjustified trouble and harassment’.”
[50] Section 611(2)(b) of the FW Act provides for costs if the FWC is satisfied that an application has no reasonable prospects of success.
[51] The scope of phrase “no reasonable prosects of success”, in the context of s.611(2)(b), was considered by the Full Bench in Baker v Slava Resources Pty Ltd[2011] FWAFB 4014 at [10] as follows:
“[10] The concepts within s.611(2)(b) “should have been reasonably apparent” and “had no reasonable prospect of success” have been well traversed:
• “should have been reasonably apparent” must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis, rather than a subjective test; and
• a conclusion that an application “had no reasonable prospect of success” should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable.”
[52] The power to award costs under s 375B of the FW Act is aimed at parties who pursue general protections dismissal disputes in an unreasonable manner.15
[53] What is an unreasonable act or omission will depend on the particular circumstances
of the case.16
[54] The Explanatory Memorandum which incorporated s 375B into the FW Act notes, among other things, the following:
“232. The power to award costs under new section 375B is not intended to prevent a party from robustly pursuing or defending a general protections dispute before the FWC. Rather, the power is intended to address the small proportion of litigants who pursue or defend disputes in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.
233. The FWC’s power to award costs under subsection 375B(1) 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.
234. However, the power to award costs is only available if the FWC is satisfied that the act or omission by the first party was unreasonable. What is an unreasonable act or omission will depend on the particular circumstances but it is intended that the power only be exercised where there is clear evidence of unreasonable conduct by the first party”
[55] The continuation of an application pursuant to section 365 where costs are incurred because of an unreasonable act of a party include the costs associated with preparing responses to the application and attending a conference.17
[56] The GP Application was made pursuant to section 365 of the FW Act.
[57] On 11 September 2020, prior to Dr Crimston filing the GP Application the Full Court of the Federal Court of Australia delivered its judgment in Coles Supply Chain Pty Ltd v Milford [2020] FCAFC 152. In its decision the Full Court held inter alia that where an application is lodged under section 365 of the FW Act, the question of whether or not there has been a dismissal (if such a question is raised) is a question that the FWC must first resolve before it can exercise its powers to deal with a dispute, including (but not limited to) issuing a certificate under s 368 of the FW Act.18
[58] Section 365 of the FW Act provides that:
“365 Application for the FWC to deal with a dismissal dispute
If:
(a) a person has been dismissed; and
(b) the person, or an industrial association that is entitled to represent the industrial interests of the person, alleges that the person was dismissed in contravention of this Part;
the person, or the industrial association, may apply to the FWC for the FWC to deal with the dispute.”
[59] Section 12 of the FW Act defines the word “dismissed” by reference to section 386 which relevantly provides:
“386 Meaning of dismissed
(1) A person has been dismissed if:
(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.”
[60] In order to be dismissed for the purposes of section 365 of the FW Act Dr Crimston must have been in ‘employment’ and Dr Naomi Pty Ltd must have been his employer. The Costs Applicants contend that Dr Crimston knew or ought to have known that he was not an employee of Dr Naomi Pty Ltd and that he was not dismissed.
[61] In the absence of any witness evidence the factual matrix of this matter can only be drawn from the documents contained in Exhibit DCB1 and the submissions of the parties. It is only on the very limited information contained in these documents that I can assess the nature of the relationship between the parties and the actions, knowledge and intentions of Dr Crimston and consequently the merit or otherwise of the Costs Application.
[62] Many parties struggle to understand the application of the general protection provisions and to properly articulate allege breaches in their originating application. The complexity of the general protection provisions must be taken into account in determining what should have been reasonably apparent to a party as to the prospects of success of an application when determining a costs application with respect to a general protections application.
[63] It is clear from the face of the Form F8 that his legal representatives, and presumable therefore Dr Crimston, were alert to possibility that he was at law an independent contractor rather than an employee. For example, a breach of contract is pleaded as an alternative to a breach of the sham contracting provisions at question 2.1 of Form F8.
[64] However, given that the Form F8 specifically identifies a number of aspects of the arrangement between the parties that might be indicative of an employment relationship it not clear on the face of the Form F8 that the GP Application must fail.
[65] While not expressly described as a ‘constructive dismissal’ the circumstances leading to his separation from the Manse Clinic are described in the Form 8 as occurring at the initiative of the Manse Clinic.
[66] In the absence of the opportunity to consider the precise terms of the Service Agreement or to hear evidence in relation to the actual working practices of the parties I can not be satisfied that the GP Application was bought vexatiously, unreasonably, without reasonable cause, that it had no reasonable prospects of success or that it was unreasonable continued.
[67] While the Form F8 does identify a number of alternative causes of action and potential remedies I am not satisfied that of itself demonstrates that the GP Application was bought vexatiously, unreasonably, without reasonable cause or with no reasonable prospects of success nor that it was unreasonably continued. It is not uncommon for parties to also include in their originating materials remedies that are not available at hearing before the FWC but might form the basis of a conciliated outcome. Critically, the Form F8 did identify potential breaches of the general protection provisions and remedies which were available at the hearing of such applications.
[68] I am not satisfied that the fact that Dr Crimston subsequently discontinued the GP Application and commenced the GP ND Application demonstrates that his pursuit of the GP Application was done so vexatiously, unreasonably, without reasonable cause, with no reasonable prospects of success. All it demonstrates is that having considered the Form 8A filed by the Costs Applicants and becoming aware of the issues ventilated at the conference of the related matter he or his legal representatives formed a considered view that the GP ND was a more appropriate application.
[69] I note that it appears that Dr Crimston has been legally represented from the outset of the GP Application and that his Form F8 was prepared by his legal representatives. Where a party is in receipt of legal representation it would be anticipated that a greater rigour might be applied to ensuring the originating application has a proper jurisdictional basis and that this issue is revisited if jurisdictional objections are raised in the employer response.
[70] While I have determined not to award costs on this occasion, I am only narrowly satisfied that such an order should not be made in the circumstances given the very limited evidence before me. Legal practitioners should take care not to be tempted to bring claims in the FWC simply because it provides a low cost and efficient way to resolve disputes in a conciliated forum without giving careful consideration to whether a genuine jurisdictional basis to access the jurisdiction exists.
[71] An order to this effect 19 will be issued with this decision.
DEPUTY PRESIDENT
Appearances:
Mr Haren Pararajasingham, for the Costs Respondent.
Mr Colin Magee, for the Costs Applicants.
Hearing details:
2021
Perth
July 9
Final written submissions:
Costs Applicants on 16 July 2021.
Costs Respondent on 23 July 2021.
Printed by authority of the Commonwealth Government Printer
<PR731324>
1 Warrell v Walton (2013) 233 IR 335, 341 [22].
2 Digital Court Book at page 7.
3 Ibid.
4 Ibid.
5 Ibid.
6 Ibid.
7 Ibid at page 10.
8 Ibid at pages 10-12.
9 Ibid at page 11.
10 Ibid at page 14.
11 Ibid at pages 2-17.
12 Ibid at page 2.
13 Ibid at page10.
14 Ibid at pages18-25.
15 The Supplementary Explanatory Memorandum to the Fair Work Amendment Bill 2013 (Cth)
16 Ibid at item 6, [60].
17 Zeena Fadheel v Douglass Hanley Moir Pathology Pty Ltd[2017] FWC 3382 at [26].
18 Ibid.
19 Print PR731325
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