Elizabeth Ghali v Sutherland Shire Montessori Society (Inc) T/A Sydney Montessori School
[2015] FWCFB 345
•30 JANUARY 2015
| [2015] FWCFB 345 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decision
v
Sutherland Shire Montessori Society (Inc) T/A Sydney Montessori School
(C2014/4083)
Susan Chahwan
v
Sutherland Shire Montessori Society (Inc) T/A Sydney Montessori School
(C2014/4084)
JUSTICE BOULTON, SENIOR DEPUTY PRESIDENT | SYDNEY, 30 JANUARY 2015 |
Appeal against decision [2014] FWC 2060 of Commissioner Cambridge at Sydney on 28/3/2014 in matter numbers U2013/12744 and U2013/12694 - application for costs - order for payment of part of costs.
[1] The employment of Mrs Elizabeth Ghali and Ms Susan Chahwan (the appellants) was terminated by their employer Sutherland Shire Montessori Society (Inc) trading as Sydney Montessori School (the employer) in August 2013. Applications for unfair dismissal remedies were made by the appellants pursuant to s.394 of the Fair Work Act 2009 (the Act). The applications were dismissed by Commissioner Cambridge in a decision given on 28 March 2014. 1 The appellants sought to appeal against the decision of the Commissioner. The Full Bench decided on 13 August 2014 not to grant permission to appeal.2
[2] On 27 August 2014 the employer made applications to the Full Bench pursuant to ss.400A(1) and 611(2) of the Act seeking orders for costs against each of the appellants.
[3] Directions were given for the filing of written submissions by the parties. The submissions of the employer were filed on 17 September 2014. In those submissions, the employer advised that it did not press its claim under s.400A(1) of the Act. The submissions of the appellants were filed on 12 October 2014. Both parties indicated by 18 November 2014 that the matter could be determined by the Full Bench on the basis of the submissions filed and without the need for a hearing to be held.
[4] Section 611 of the Act is 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).”
[5] Subsection 611(1) sets out the general rule that a person must bear his or her own costs in relation to a matter before the Fair Work Commission (the Commission). Subsection 611(2) provides an exception to the general rule in certain limited circumstances, namely that the Commission may order a person to bear some or all of the other party’s costs where it is satisfied that the person made the application or responded to an application “vexatiously or without reasonable cause” or that it should have been reasonably apparent to the person that the application or response had “no reasonable prospects of success”.
[6] In unfair dismissal matters, the Commission may also order costs against a party who has caused costs to be incurred because of an unreasonable act or omission in connection with the conduct or continuation of a matter (s.400A(1)). The power of the Commission to order costs in unfair dismissal matters under s.611 is not limited by s.400A (see s.400A(3)). As noted earlier, the employer in the present matters does not press its claim under s.400A of the Act.
[7] In the present matters the employer seeks an order for costs against each of the appellants in relation to the applications constituted by the appeals on the basis that:
• the applications were made without reasonable cause (s.611(2)(a)); and
• it should have been reasonably apparent to the appellants that the applications had no reasonable prospect of success (s.611(2)(b)).
[8] In particular, it was submitted that having regard to the arguments available to the appellants at the time of instituting the appeals, the appeals had no substantial prospect of success and it should have been reasonably apparent to the appellants that the appeals had no reasonable prospect of success. In this regard it was submitted that the appellants, who were legally represented at all times, must have known that their arguments on appeal had little prospect of success to the extent that such arguments had not been advanced in the proceedings at first instance. 3 It was also submitted that it should have been obvious to the appellants that in proceedings in which the appellate function is hinged upon the correction of error, there was no prospect of demonstrating that the Commissioner had fallen into error by not making findings of fact about various issues in circumstances where he was not invited by the applicants in the first instance proceedings to make such findings.
[9] In support of these submissions, the employer referred to various passages in the decision of the Full Bench, 4 including the following:
“[30] It is well established that an appeal can only succeed if there is error shown on the part of the primary decision maker. In the present matter, the applicants have sought on appeal to raise matters that were not fully advanced in the proceedings before the Commissioner and have invited the appeal bench make evidential findings which are not supported having regard to the evidence, material and conduct of the case before the Commissioner.
[31] It has been submitted that the Commissioner erred in that he failed to make a finding that the actual reasons for dismissal were as disclosed by the Board minutes of 12 June 2013 and not those reasons set out in the termination letters. However it was not put to the Commissioner that the reasons given in the termination letters were a sham or that the Board minutes of 12 June meeting established that the real reasons for the dismissals were different from those in the termination letters. Little reliance was placed on the Board resolution and minutes in the proceedings before the Commissioner. These arguments were only fully developed on appeal and underpinned most of the grounds of appeal.
[32] In effect the appeal bench in this matter is being asked to review the evidence and material before the Commissioner and to make findings about the reasons for dismissal that the Commissioner was not asked to make. Any finding of the kind sought by the applicants would have to be made by inferential reasoning based upon the Board minutes and related documents and contrary to evidence and testimony presented by the employer in the first instance proceedings. Such a finding would also need to discount the events and circumstances in the period after the Board resolution on 12 June 2013 and before the applicants were dismissed on 7 August 2013 which might have influenced the Board in regard to its reasons for the dismissals.
[33] In our view the evidence and materials relied upon by the applicants do not provide a sufficient basis to establish that the reasons for dismissal were other than those stated in the termination letters. It has not therefore been demonstrated that the Commissioner erred in the approach which he adopted in the consideration of the matter or in the conclusions reached. It follows that, to the extent that many of the grounds of appeal are dependent upon the submissions regarding the reasons for the dismissals, those grounds cannot be made out.
...
[39] In many ways, the appeals are little more than an attempt to reargue the case which was before the Commissioner in the hope of getting a different result. In some respects the appeal bench is being asked to consider a different case to that which was put to the Commissioner and to discount evidence not challenged in the first instance proceedings and on that basis to make findings different to those of the Commissioner. These are matters which could and should have been raised in the first instance proceedings and which would have been able to be tested and considered in those proceedings. It is not appropriate or in the public interest for an appeal bench to embark upon such a course, or to set aside a discretionary decision made, unless there is some demonstrated error in the decision-making process at first instance.
[40] For the reasons given, we do not consider that the applicants have demonstrated that there is any error of law or significant error of fact in relation to the Commissioner’s decision. Further, in the circumstances of the present matters and given the nature of the case advanced by the applicants on appeal, we do not consider that it is in the public interest that permission to appeal from the decision be granted (s.400(1)).”
[10] Finally, it was submitted by the employer that the special or unusual features of the appeals which warrant the exercise of the Commission’s discretion to make an order for costs are: (a) the disregard by the appellants of clearly established law that a party is bound by the conduct of their case at first instance; and (b) the pursuit of grounds of appeal which should not have been relied upon because the Commissioner was never invited in the initial proceedings to make findings of fact on the relevant matters.
[11] In their reply submissions, the appellants submitted that there was no improper purpose or abuse of process by them in instituting the appeals in the present matters and that there were reasonable prospects of the appeals achieving some success.
[12] In this regard, it was said that it was legitimate, based on a review of the evidence before the Commissioner, for them through instituting an appeal to challenge various aspects of the Commissioner’s decision including the findings that procedural fairness was accorded to the appellants and that the set of reasons given by the employer for the dismissals were genuine and to ask whether the Commissioner correctly apprehended the evidence. It was also contended that the finding by the Commissioner that the mere registration of a dormant company was a betrayal of fiduciary duty was legitimately appealed based on the circumstances and information extant at the time of lodging the appeals.
Consideration
[13] The general rule in matters before the Commission is that parties should bear their own costs and that it will only be in limited circumstances that a party will be ordered to pay the costs of another party. In the present matters, orders for costs in relation to the appeals are sought against the appellants on the basis that the appeals were made “without reasonable cause” or in circumstances where it should have been reasonably apparent to the appellants that the appeals had “no reasonable prospect of success”. If the Commission is satisfied that either of these grounds has been made out, there is a discretion to make an order for the payment of costs.
[14] A Full Bench of the Commission in E. Church v Eastern Health t/as Eastern Health Great Health and Wellbeing 5considered the exceptions to the general rule and the meaning of the expression “without reasonable cause”. The Full Bench 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.”
[33] In construing s.570 and its legislative antecedents courts have observed that the test imposed by the expression ‘without reasonable cause’ is similar to that adopted for summary judgement, that is ‘so obviously untenable that it cannot possibly succeed’, ‘manifestly groundless’ or ‘discloses a case which the Court is satisfied cannot succeed’.”
[15] The meaning of the expression “no reasonable prospect of success” was considered by a Full Bench of the Commission in ACI Operations Pty Ltd v Cook. 6 The expression was also considered in the context of other legislation by the High Court in Spencer v The Commonwealth of Australia.7
[16] It is clear that an assessment of whether an application was made without reasonable cause or had no reasonable prospect of success should be undertaken with caution, particularly where there are disputed issues of fact or questions of law involved. In the case of an appeal, the assessment relates to the time when the appeal was instituted and would have recurrent to the facts of the matter, the decision appealed against and the points taken in the notice of appeal. It will be a matter of judgement for the Commission as to whether it is satisfied that the prerequisites for the exercise of the power in s.611(2) of the Act have been made out and, if so, whether an order for costs should be made. In general, it might be expected that it will only be in rare cases that a party will be ordered to pay costs in relation to Commission proceedings.
[17] The employer in the present matters submitted that the appeal applications were made “without reasonable cause” and in circumstances where it should have been reasonably apparent to the appellants that the applications had “no reasonable prospect of success”.
[18] The amended notices of appeal filed by the appellants set out some 18 grounds alleging that the Commissioner made errors of law or significant errors of fact in determining the unfair dismissal applications before him. The grounds are broadly drafted and challenge almost all of the findings and conclusions reached by the Commissioner in his decision. The grounds are summarised in paragraphs [7] to [11] of the Full Bench decision. 8
[19] Most of the alleged errors in the notices of appeal relate to the Commissioner’s findings about the employer’s stated reasons for dismissal and the reasons which the appellants maintained were the “real” reasons for their dismissal. The consideration of these matters did not involve the determination of complex issues of law or fact. In essence what was being sought by the appellants on appeal was a reconsideration of the evidence presented before the Commissioner and the making of findings based on that reconsideration different to those made by the Commissioner. For an appeal to succeed on this basis, it would be necessary to point to some clear error by the decision maker in the consideration of the evidence such that an appeal bench should review the findings made and reach its own conclusions on the evidence presented. Otherwise the general approach would be for an appeal bench to take into account the benefit that the primary decision maker had in making findings relevant to the determination of the matters before him because he had heard the evidence and observed the witnesses. It is unlikely that an appeal bench would interfere with such findings of fact unless some error was clearly shown to have occurred in the decision-making process. 9
[20] Some of the grounds of appeal sought to raise issues which were not put to the Commissioner at first instance. The failure of the appellants to advance these issues at first instance would be a factor weighing against the grant of permission to appeal in relation to those grounds. Other grounds of appeal sought the making of findings which were not based on a consideration of the totality of the evidence presented and which would involve the rejection of evidence not challenged in the proceedings before the Commissioner. 10 Again it is unlikely that an appeal based on such grounds would be successful.
[21] In some respects the notices of appeal might appear to raise a range of apparently complex questions of fact and other issues. This is because the notices would seem to have been drafted in such a way as to suggest that there are many significant errors in the Commissioner’s decision which warrant correction on appeal. It might be thought by some parties that the substance of an appeal will be weighed according to the number and length of the grounds set out in the notice of appeal. The opposite is often the case. More concise drafting of the notices of appeal in the present matters might have revealed the paucity of the grounds relied upon and the limited prospects of such grounds succeeding on appeal.
[22] Having regard to all these considerations, we consider that the appeal applications can be properly characterised as having very limited prospects of success. As referred to above, we consider that the appeals did not raise any significant issues of fact or law and that it should have been reasonably apparent at the time of instituting the appeals that there were many obstacles in the way of the appeals succeeding. In some respects it would seem that the appeals were pursued more for political reasons having regard to the continuing dispute involving the parties as to the management and future of the Sydney Montessori School than for reasons based upon a proper analysis of the Commissioner’s decision and the principles applied in the determination of appeals within the Commission.
[23] In these circumstances we are satisfied that the appellants instituted the appeal proceedings without reasonable cause (s.611(2)(a)) and that it should have been reasonably apparent to them that the appeals had no reasonable prospect of success (s.611(2)(b)).
[24] We have also come to the conclusion that it is appropriate in all the circumstances to make an order that the appellants bear some of the costs of the employer in relation to the appeals. However given the general policy in the Act that parties should bear their own costs in relation to matters before the Commission, the context in which the dismissals occurred and were challenged, and the general position of the appellants in having lost their livelihood and employment at the School, we have decided that each of the appellants should be ordered to pay $2500 towards the costs of the employer in the appeals. We will make orders to this effect.
SENIOR DEPUTY PRESIDENT
Written submissions:
Sutherland Shire Montessori Society (Inc) trading as Sydney Montessori School (the applicant for costs): 17 September 2014.
Elizabeth Ghali and Ms Susan Chahwan (the appellants): 13 October 2014 and 18 November 2014.
1 [2014] FWC 2060.
2 [2014] FWCFB 5390.
3 University of Wollongong v Metwally (No. 2) [1985] HCA 28; (1985) 59 ALJR 481.
4 [2014] FWCFB 5390.
5 [2014] FWCFB 810.
6 [2012] FWAFB 3292
7 (2010) 241 CLR 118. See especially at 132-133 per French CJ and Gummow J and at 141 per Hayne, Crennan, Kiefel and Bell JJ.
8 [2014] FWCFB 2060.
9 See [2014] FWCFB 2060 at [12] - [16] and [34] and cases referred to therein.
10 See [2014] FWCFB 2060 at [24] - [28].
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