Evan Tzoukas v Hype Moore Park Pty Ltd
[2023] FWC 3324
•13 DECEMBER 2023
| [2023] FWC 3324 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
ss.400A and 611—Costs application
Evan Tzoukas
v
Hype Moore Park Pty Ltd
(U2023/4226)
| COMMISSIONER CRAWFORD | SYDNEY, 13 DECEMBER 2023 |
Unfair dismissal – application discontinued by employee – costs application by employer – application dismissed
BACKGROUND – UNFAIR DISMISSAL APPLICATION
On 16 May 2023, Evan Tzoukas (Mr Tzoukas) filed a Form F2 unfair dismissal application. The application indicated Mr Tzoukas was dismissed by Hyper Karting Pty Ltd (Hyper Karting) on 26 April 2023. The application raised various concerns about Mr Tzoukas’ treatment by the owner of Hyper Karting, Andrew Richardson (Mr Richardson).
Hyper Karting and its related entities operate a go-karting track in the carpark of the Entertainment Quarter at Moore Park in Sydney. Mr Tzoukas commenced employment on 12 May 2021[1] and was employed as Facilities and Workshop Manager[2] prior to his employment ending on 26 April 2023.
On 13 June 2023, a Form F3 response form was filed on behalf of “Hyper Karting Pty Ltd & Group Companies”. The Form F3 identified a jurisdictional objection on the basis that Mr Tzoukas resigned rather than being dismissed. No other jurisdictional objections were raised.
Attached to the Form F3 response was a resignation letter signed by Mr Tzoukas, Mr Richardson and Nattali Taouk on 26 April 2023. In addition to indicating Mr Tzoukas was resigning from employment with “Hyper Karting (including Hype Moore Park Pty Ltd, Hyper Karting Pty Ltd & RiMO Australasia Pty Ltd” effective 26 April 2023, the letter relevantly stated:
“I have agreed to accept a pay run in the sum of $10,000 in full and final settlement of any claims whatsoever relating to my employment with Hyper Karting.”
The companies named in the header of the letter are Hyper Karting and Hype Moore Park Pty Ltd. The letter also contained a non-disparagement provision directed at Mr Tzoukas and a provision requiring Hyper Karting to “request” that its directors and executive officers not disparage Mr Tzoukas.
A conciliation conference was listed before a Commission staff member on 16 June 2023. This did not proceed because Mr Richardson declined to participate after finding out Mr Tzoukas was seeking to be legally represented. A conciliation conference was subsequently held on 14 July 2023 and no resolution was reached.
I listed the application for a Mention/Directions hearing on 15 August 2023. I granted permission for Mr Tzoukas to be represented by Edwina Clifton of counsel and Mr Richardson represented the employer. During the Mention/Directions hearing, I asked Mr Richardson which legal entity employed Mr Tzoukas and he indicated he would need further time to clarify this issue. I issued directions for the filing of material regarding whether Mr Tzoukas was dismissed and listed this issue for Determinative Conference/Hearing on 12 October 2023. Given the uncertainty concerning the employing entity, the directions referred to Hyper Karting Pty Ltd/Hype Moore Park Pty Ltd.
Submissions were filed on behalf of Hyper Karting Pty Ltd/Hype Moore Park Pty Ltd on 1 September 2023. In addition to arguing Mr Tzoukas voluntarily resigned from his employment, the submissions argued the resignation letter included a binding release clause which barred Mr Tzoukas from making an unfair dismissal application. The submissions accepted the letter did not constitute a formal deed of settlement but indicated it was still a valid bar given Mr Tzoukas had received an ex-gratia payment of $2,813.56 plus superannuation as consideration in accordance with the letter. The submissions accepted the resignation letter had been prepared by the employer prior to a meeting with Mr Tzoukas on 26 April 2023.
Mr Tzoukas filed submissions and an affidavit on 22 September 2023. The submissions relevantly stated:
“… the Commissioner should set aside the release clause and the purported resignation letter in its entirety on the basis that the Applicant was unduly influenced and placed under duress.”
The submissions also sought to distinguish Mr Tzoukas’ situation from authorities relied on by the employer because the purported release provision was within the resignation letter, as opposed to being contained in a separate settlement agreement negotiated after the employment had ended. The submissions also questioned whether the $10,000 payment did include an ex-gratia element as consideration and suggested the Commission should resolve this issue when determining the unfair dismissal application.
On 6 October 2023, reply submissions were filed on behalf of Hyper Karting. There was no reference to Hype Moore Park Pty Ltd. Hyper Karting also filed a statement from Mr Richardson dated 6 October 2023. The reply submissions argued the Commission does not have jurisdiction to determine Mr Tzoukas’ unfair dismissal application because he “freely resigned” and because the release clause in the resignation letter acts as a bar to the application.
The reply submissions engaged with Mr Tzoukas’ arguments concerning a lack of consideration, duress, and undue influence. The reply submissions included the following content:
“The Applicant’s submissions have not pleaded duress with any particularity. There is no evidence of any threatened or actual unlawful conduct on the part of the Respondent. The Respondent submits that there is no evidence before the Commission that would satisfy a finding of duress…
The Applicant has made no attempt at addressing the elements of undue influence…”
After reviewing the filed material, an email was sent from my chambers to the parties on 11 October 2023 which relevantly stated:
“The Commissioner notes the Applicant’s submission at [37] of the outline of submissions dated 22 September 2023 that the “FWC should set aside the release clause”.
The Commissioner wishes to inform the parties that he will be seeking submissions concerning whether the Commission has jurisdiction to set aside a purported contractual clause during tomorrow’s hearing.”
Later in the day on 11 October 2023, Mr Tzoukas’ legal representative filed a Form F50 notice of discontinuance.
COSTS APPLICATION FOLLOWING DISCONTINUANCE
On 22 October 2023, a Form F6 costs application was filed on behalf of Hyper Karting Pty Ltd and Hype Moore Park Pty Ltd. The application relied on ss.400A and 611 of the Fair Work Act 2009 (FW Act). The application sought a payment of $13,860 including GST. Submissions were filed in support of the application which raised the following grounds for a costs order:
a.Mr Tzoukas’ claim had no reasonable cause pursuant to s.611(2)(a) of the FW Act because the Commission could not have set aside the contractual clause which extinguished the Respondent’s claim for unfair dismissal.
b.Mr Tzoukas’ claim had no reasonable prospect of success pursuant to s.611(2)(b) of the FW Act because of the contractual clause and that should have been reasonably apparent.
c.Mr Tzoukas caused costs to be incurred by acting unreasonably in the conduct of the dispute pursuant to s.400A by:
(i)failing to disclose significant material facts relevant to its claim when he was in a position to do so and ought to have made such disclosure; and/or
(ii)by waiting until the last minute to discontinue his claim.
On 23 October 2023, an email was sent from my chambers to the employer seeking confirmation of which legal entity is making the application for a costs order. The email identified that:
a.The Form F6 costs order application identified the applicant as Hyper Karting Pty Ltd and Hype Moore Park Pty Ltd.
b.The employment contract filed by the employer in relation to the unfair dismissal application identified the employer as Hype Moore Park Pty Ltd.
c.Pay-slips filed by the employer in relation to the unfair dismissal application identified the employer as Hyper Karting Pty Ltd.
d.The Form F3 employer response form identified the employer as “Hyper Karting Pty Ltd & Group Companies”.
e.Section 536(2) of the FW Act and Regulation 3.46 of the Fair Work Regulations 2009 require the name and ABN of an employer to be included on pay-slips.
The email ended by directing the employer to provide further material clarifying the name of the employing entity by 27 October 2023.
On 23 October 2023, a submission was filed in response to the email from my chambers. The submission stated “Mr Tzoukas was, at all relevant times, employed by Hype Moore Park Pty Ltd” and “due to an administrative oversight, the pay-slips issued to Mr Tzoukas after 18 January 2023 were not amended to reflect that Mr Tzoukas was employed by Hype Moore Park Pty Ltd.” Given this clarification, I consider Hype Moore Park Pty Ltd (Hype Moore Park) was the correct respondent for the unfair dismissal application and is the correct applicant for the costs order. To the extent necessary, I exercise my discretion to amend the applications to reflect this.
On 24 October 2023, I directed Mr Tzoukas to file materials in response to the costs application by 3 November 2023. This date was extended and Mr Tzoukas ultimately filed an outline of submissions on 24 November 2023.
A dispute subsequently emerged regarding whether Hype Moore Park should be permitted to file submissions in reply. I allowed this, despite objections from Mr Tzoukas, largely because I was intending to offer the parties the option of having a hearing or having the matter determined on the papers. Hype Moore Park could have requested a hearing and made the submissions it intended to make orally. The dispute was therefore more about style than substance.
Hype Moore Park filed submissions in reply on 2 December 2023. Both parties agreed that I should determine the application on the papers and I am satisfied it is appropriate to do so.
STATUTORY PROVISIONS
Section 400A of the FW Act states as follows:
“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.”
A Full Bench in Gugiatti v SolarisCare Foundation Ltd[2016] FWCFB 2478 provided the following guidance as to the application of s.400A:
“Section 400A(1) establishes two pre-conditions for the making of an order for costs under the subsection (in addition to the requirement in s.400A(2)). The first is that the Commission must be satisfied that a party engaged in an unreasonable act or omission in relation to the conduct or continuation of a matter. The second is that such act or omission caused the other party to the matter to incur costs. Once these preconditions are satisfied, a discretionary power to order the payment of such costs is enlivened. The Full Bench in Veal v Sundance Marine Pty. Ltd. As trustee for Sundance Unit Trust T/A Sundance Marine[2013] FWCFB 8960 held that “[t]he phrase "unreasonable act or omission" was a component of provisions of s 170CJ(3) of the Workplace Relations Act 1996 (the WR Act).” In dealing with an application for costs pursuant to s.400A of the Act, the Full Bench has followed previous decisions of the Full Bench of the Commission made in respect of s.170CJ(3) of the WR Act.”
Section 611 of the FW Act provides as follows:
“611 Costs
(1) A person must bear the person’s own costs in relation to a matter before the FWC.
(2) However, the FWC may order a person (the first person) to bear some or all 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.”
In Hansen v Calvary Health Care Adelaide Limited[3] a Full Bench said in relation to s.611 generally:
“It is trite to observe that the statutory and policy imperative underpinning a costs application under the Act, is that a person in a matter before the Commission must bear their own costs. So much is plainly obvious by the precise and unambiguous language of s 611(1).
However, the statutory scheme sets out the relatively circumscribed circumstances in which an order for costs might be found by the Commission to be appropriate in a particular case. It includes the exercise of discretionary power where the Commission is satisfied that one, or more of the circumstances set out in s 611(2), has been established. If such circumstances are established, the Commission, in the broad exercise of its discretion, may make an order that a person/s bear some, or all of the costs of another person, in relation to the application, including on an indemnity basis, or decline to make any order at all.”[4]
The principles concerning the interpretation and application of s.611(2)(a) were comprehensively stated in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing[5] and then summarised in the following terms by a Full Bench in Chapman v Ignis Labs Pty Ltd: [6]
· An application is made vexatiously when the predominant motive or purpose of the applicant is to harass or embarrass the other party or to gain a collateral advantage.
· An application is not made without reasonable cause simply because the application did not succeed.
· Whether an application is made without reasonable cause may be tested by asking, on the facts apparent to the applicant at the time the application was made, whether 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 characterise the application as having been made without reasonable cause.
· In relation to an appeal, the question becomes whether the appeal has no substantial prospect of success. The prospect of success 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 there is a not insubstantial prospect of the appeal achieving some success, it cannot fairly be described as having been made without reasonable cause.
· An application will have been made without reasonable cause if it can be characterised as so obviously untenable that it cannot possibly succeed, is manifestly groundless or discloses a case where the tribunal is satisfied it cannot succeed.
The principles that are relevant to s.611(2)(b) were summarised in the following terms by a Full Bench in Baker v Salva Resources Pty Ltd: [7]
“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.”[8]
CONSIDERATION
I accept pursuing an unfair dismissal application after signing a document releasing the employer from “any claims whatsoever” could meet the description of making an application “without reasonable cause”, and that it could also constitute a circumstance where it should have been “reasonably apparent” that the application had “no reasonable prospect of success” for the purposes of s.611(2)(a) and (b) of the FW Act.
However, I consider the following factors weigh against finding these thresholds have been met in this case:
a) The release relied upon by the employer in this case was included within a resignation letter drafted by the employer. It is unusual to encounter a single document being used to record an employee’s resignation and a release in favour of the employer. I accept Hype Moore Park’s submission this does not necessarily mean the release is not binding. However, it does generate legal questions and uncertainties that would not arise in relation to a standard settlement agreement or deed executed after the termination of employment has been communicated via a dismissal or resignation letter. This is presumably why the itemised schedule of costs included in the costs application contains the following entry:
(i)$1,050 on 27 August 2023 for work including “research case law on effect of release clause and consider issues”.
b) Mr Tzoukas was not represented when he filed the application. I do not accept a self-represented person should be expected to understand that the inclusion of a release term in a pre-prepared resignation letter can be relied upon as a bar to an unfair dismissal application.
c) The Form F3 response filed by “Hyper Karting Pty Ltd & Group Companies” did not raise the release clause as a jurisdictional objection to the application. The Form F3 only referred to Mr Tzoukas not being dismissed.
d) The reply submissions filed by the employer on 6 October 2023 contain arguments around duress and undue influence. The submissions expressly state “there is no evidence before the Commission that would satisfy a finding of duress”. That submission proceeds on the basis that the Commission could have jurisdiction to make a finding of duress. Nowhere in the reply submissions is there an argument that the Commission does not have jurisdiction to take any steps in relation to the release clause. While I accept there is reference to the release clause in the submissions filed by the employer earlier on 1 September 2023, those submissions do not make the argument that it is a court, rather than the Commission, that would have jurisdiction to take any steps in relation to the release clause. The first communication squarely raising whether the Commission could set aside the release clause was the email from my chambers sent on 11 October 2023. The application was discontinued later that day.
e) The uncertainty around the release clause is heightened by the confusion around the employing entity in this matter. While I accept Mr Richardson’s explanation for the confusion, it is not satisfactory that the issue was not clarified until 23 October 2023, given I had first expressed concern about the issue during a Mention/Directions hearing on 15 August 2023. The issue creates uncertainty regarding which legal entity Mr Tzoukas was resigning from on 26 April 2023 and which legal entity was being released from claims “relating to my employment at Hyper Karting”. While issues of legal uncertainty would also need to be agitated in a court rather than the Commission, I consider the uncertainty is relevant to the assessment of whether the application was made without reasonable cause and whether it should have been reasonably apparent it had no prospect of success.
After taking into account all of these factors and the arguments raised by both parties, I am not satisfied that Mr Tzoukas made the application without reasonable cause. I am also not satisfied that it should have been reasonably apparent to Mr Tzoukas that the application had no reasonable prospect of success. As a result, the discretion to make a costs order under s.611(2) of the FW Act is not enlivened.
Hype Moore Park submitted Mr Tzoukas caused costs to be incurred by acting unreasonably in the conduct of the dispute pursuant to s.400A by:
(i)failing to disclose significant material facts relevant to its claim when he was in a position to do so and ought to have made such disclosure; and/or
(ii)by waiting until the last minute to discontinue its claim.
In relation to the material facts relevant to the unfair dismissal application, the parties filed a large amount of evidence that ultimately was not tested because the application was discontinued. I do not consider I can make a positive finding that Mr Tzoukas did not disclose significant material facts when there is a variety of conflicting evidence that was not tested via cross-examination.
I also do not accept the submission from Hype Moore Park that Mr Tzoukas waited “until the last minute” to discontinue his application. Mr Tzoukas discontinued the application on the same day that the Commission’s potential lack of jurisdiction to set aside the release clause was squarely raised for the first time. As identified above, the employer’s submissions dated 6 October 2023 suggested the Commission may be able to make a “finding of duress”. Mr Tzoukas acted promptly to discontinue the application after the Commission’s potential lack of jurisdiction was raised and this saved the employer the costs associated with attending the Determinative Conference/Hearing listed for 12 October 2023. While I consider this was an appropriate action to take, I do not consider it was the only option given the unusual elements of the release clause in this case, which are outlined above. For example, Mr Tzoukas could have attended the Determinative Conference/Hearing and argued that the release clause did not apply to Hype Moore Park because it referred to his employment at “Hyper Karting”.
If the employer had consistently raised an argument that the Commission does not have jurisdiction to set aside the release clause from the filing of the Form F3 response onwards, I may have been inclined to issue a costs order in its favour. However, that simply did not happen in this case. The first time the Commission’s lack of jurisdiction to set aside the release clause was raised was when my chambers sent an email on 11 October 2023. The application was discontinued later that same day.
I am not satisfied Mr Tzoukas caused Hype Moore Park to incur costs because of an unreasonable act or omission in connection with the conduct or continuation of the matter. As a result, the discretion to make a costs order under s.400A of the FW Act is not enlivened.
CONCLUSION
The application for costs is dismissed.
COMMISSIONER
Matter determined on the papers.
[1] According to the Form F3 response.
[2] According to the resignation letter dated 26 April 2023.
[3] [2016] FWCFB 8162.
[4] Ibid at [15]-[16].
[5] [2014] FWCFB 810 at [23]-[33].
[6] [2021] FWCFB 932 at [14].
[7] [2011] FWAFB 4014.
[8] [2011] FWAFB 4014 at [10].
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