Gina Maltman v WorkPac Pty Ltd T/A the WorkPac Group

[2017] FWC 5018

[2017] FWC 5018

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Gina Maltman
v
WorkPac Pty Ltd T/A The WorkPac Group
(U2017/7123)

COMMISSIONER PLATT ADELAIDE, 26 SEPTEMBER 2017

Application for costs pursuant to ss.400A and 611 of the Fair Work Act 2009 – costs refused.

Introduction

[1] This is an application by WorkPac Pty Ltd T/A The WorkPac Group (WorkPac) seeking an order for costs against Miss Gina Maltman pursuant to ss.400A and 611 of the Fair Work Act 2009 (the Act). The application was made in the context of an earlier application made pursuant to s.394 of the Act on 3 July 2017 by Miss Maltman in relation to a remedy for an alleged unfair dismissal.

[2] On 19 July 2017, I conducted a Directions Conference in relation to Miss Maltman’s application. On the same day, formal Directions were issued advising that the matter had been listed for hearing at 9:30am on 5 September 2017, requiring the parties to file an outline of submissions including those that relate to s.596 of the Act, witness statements for each witness to be called and any document upon which they sought to rely by 4:00pm on 3 August 2017. Any material in reply and objections to any request made pursuant to s.596 of the Act were required to be filed by 4:00pm on 10 August 2017.

[3] On 21 July 2017, a Form F53 Notice of Representative Commencing to Act was filed by WorkPac notifying the Commission that Mr Ben Duggan of DW Fox Tucker Lawyers had commenced to act on its behalf.

[4] On 27 July 2017, WorkPac filed a Form F52 Application for a Order Requiring Production of Documents etc to the Fair Work Commission. The Order was issued on 28 July 2017.

[5] On 3 August 2017 at 11:20am, my Associate sent a reminder to the parties that submissions were due that day. At 3:51pm on 3 August 2017, the Commission received WorkPac’s Submissions in relation to a request to be represented pursuant to s.596 of the Act, at 3:55pm six witness statements and at 4:19pm WorkPac’s Outline of Submissions.

[6] At 8:42am on 4 August 2017, my Associate attempted to telephone Miss Maltman’s representative at Websters Lawyers but was unsuccessful.

[7] At 10:10am on 4 August 2017, a Notice of Listing was issued advising that a Directions Conference for non-compliance with the Directions had been listed via telephone at 3:00pm on that day.

[8] At 10:31am on 4 August 2017, Ms Chan of Websters Lawyers filed an F50 Notice of Discontinuance on behalf of Miss Maltman wholly discontinuing the matter.

[9] On 7 August 2017, Workpac filed an Form F6 Application for Costs.

[10] On 7 August 2017, I issued Directions in relation to the costs application requiring WorkPac to file submissions and any material upon which it relied by 4:00pm on 21 August 2017, Miss Maltman to file any submissions and any material upon which she relied by 4:00pm on 28 August 2017 and any material in reply by WorkPac on 4 September 2017. Both parties complied with the Directions and filed their respective submissions.

[11] As there is no factual dispute relevant to the determination of the costs application, I have dealt with the matter on the papers.

Submissions on Costs

[12] The position of Miss Maltman is relevantly summarised as follows:

● Miss Maltman contends she was forced to resign from her employment on 13 June 2017, in order to preserve her mental health, as a result of the conduct of her employer. Miss Maltman received a lump sum payment of her annual leave entitlements and 4 weeks’ payment in lieu of notice.
● Miss Maltman contends her resignation was a constructive dismissal.
● On 30 June 2017, Miss Maltman was offered a role with Chandler Macleod to commence on 10 July 2017. Miss Maltman verbally accepted the role but had not yet been provided with a contract of employment and contends she had no confirmation or formal agreement as to her remuneration.
● Miss Maltman instructed her solicitors to file an unfair dismissal application on 3 July 2017.
● Miss Maltman executed the contract of employment for her new role on 6 July 2017 and calculated that she would receive $1,684.00 gross per week with the potential of participating in an incentive scheme. As at the date of resignation with WorkPac, Miss Maltman was earning $1,972.00. This resulted in a loss of income of $289.00 per week.
● On 25 July 2017, Miss Maltman made a without prejudice offer to WorkPac to resolve the application. The offer of acceptance was extended to 3.00pm on 3 August 2017.
● On 1 August 2017, the parties held a telephone discussion in relation to the offer of settlement. The matter did not resolve.
● On 3 August 2017, WorkPac filed six witness statements even though it had indicated at the Directions Conference that it would only call two witnesses. This prompted Miss Maltman to become concerned that the hearing would exceed the one day alloated and increase her legal costs to the point that any compensation would be outweighed by the cost of legal representation.
● Miss Maltman then instructed her representative to file a Notice of Discontinuance.
● Miss Maltman contends had WorkPac chosen to participate in the conciliation conference of the Commission or adequately consider Miss Maltman’s offer to settle, then WorkPac would not have incurred costs.
● Miss Maltman’s application was not without merit.

[13] The position of WorkPac is relevantly summarised as follows:

● Miss Maltman’s employment with WorkPac ceased on 13 June 2017 as a consequence of her resignation. WorkPac accepted the resignation and paid Miss Maltman 4 weeks’ salary in lieu of notice (the notice period being from 13 June 2017 to 11 July 2017).
● Miss Maltman, by her own admission, was offered employment with Chandler MacLeod on 30 June 2017.
● It is implicit that Miss Maltman filed the Form F2 Unfair Dismissal Application on 3 July 2017, requesting financial compensation for loss of income, knowing that she had already accepted an offer of employment which was due to commence on 10 July 2017, one day before the end of the notice period.
● WorkPac became aware that Miss Maltman had obtained alternative employment and on 21 July 2017 wrote to her solicitor requesting a number of documents that related to that employment.
● On 25 July 2017, Miss Maltman’s solicitor did not respond to the request for disclosure and instead restated an offer of settlement.
● As Miss Maltman had not responded to the request for disclosure, WorkPac filed a Form F52 Application for a Order Requiring Production of Documents etc to the Fair Work Commission. The Order was made on 28 July 2017.
● By letter dated 31 July 2017, Miss Maltman’s solicitor made disclosure of several documents.
● During a telephone conversation between Mr Ben Duggan and Ms Courtney Chan on 1 August 2017, Ms Chan stated that the base salary of Miss Maltman’s new employment was the same as she had received at WorkPac.
● Miss Maltman failed to file and serve documents as required by the Order of the Commission dated 28 July 2017. WorkPac contended this was an unreasonable act.
● Subsequent to the parties being served with the Notice of Listing for the non-compliance conference at 3.00pm on 4 August 2017, Miss Maltman filed a Notice of Discontinuance.
● By way of the Form F6 Application for Costs lodged on 7 August 2017, WorkPac seeks party-party costs.
● Miss Maltman made the Unfair Dismissal Application vexatiously or without reasonable cause. In the alternative, Miss Maltman made the Unfair Dismissal Application in circumstances where it was, or should have been, reasonably apparent that she had no reasonable prospect of obtaining the remedy sought.
● Miss Maltman continued to pursue her Unfair Dismissal Application to enrich herself by attempting to negotiate settlement despite knowing that she had already obtained alternative employment.
● Miss Maltman has chosen not to reveal the amount of financial compensation sought by her in the without prejudice offers and therefore this is not a factor that the Commission should consider.
● The Commission cannot take into account the possibility that the hearing could be extended as a result of WorkPac’s decision to file six witness statements.

[14] Whilst there is disagreement on the level of Miss Maltman’s salary in her new role, for the reasons detailed below, this discrepancy does not impede the determination of this matter.

The Power to Award Costs

[15] The power to award costs is discretionary and subject to specified statutory prerequisites. The presumption under the Act is that each party bears their own costs.

[16] Section 611 of the 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.

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).”

[17] Section 400A of the Act provides as follows:

“400A Costs orders against parties

(1)  The FWC may make an order for costs against a party to a matter arising under this Part (the first party ) for costs incurred by the other party to the matter if the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter.

(2)  The FWC may make an order under subsection (1) only if the other party to the matter has applied for it in accordance with section 402.

(3) This section does not limit the FWC's power to order costs under section 611.”

[18] A decision to award costs pursuant to s.400A of the Act requires a consideration of whether Miss Maltman, by some unreasonable act or omission, caused WorkPac to incur costs.

[19] Section 400A was inserted into the Act by virtue of the Fair Work Amendment Act 2012. The Explanatory Memorandum to the Fair Work Bill 2012 states:

“168. Item 4 inserts a new section 400A to enable the FWC to order costs against a party to an unfair dismissal matter (the first party) if it is satisfied that the first party caused the other party to the matter to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the matter.

169. As with the new power to dismiss applications under section 399A, the power to award costs under section 400A is not intended to prevent a party from robustly pursuing or defending an unfair dismissal claim. Rather, the power is intended to address the small proportion of litigants who pursue or defend unfair dismissal claims in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.

170. The FWC’s power to award costs under this provision 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. This is intended to capture a broad range of conduct, including a failure to discontinue an unfair dismissal application made under section 394 and a failure to agree to terms of settlement that could have led to the application being discontinued.”

[20] Commissioner Bissett usefully summarised the applicable law in Sidney v Employsure Pty Ltd: 1

“[28]The authorities relevant to a consideration of the phrase ‘unreasonable act or omission’ were considered in the decision of the Full Bench in Roy Morgan Research v Baker. I do not repeat those provisions here but note the following can be taken from those authorities:

● A failure to inform another party of an inability to attend proceedings would be, if intentional, unreasonable and if accidental, an unreasonable omission;

● a failure to advise the other party of the first party’s intentions, if deliberate or reckless, would be unreasonable and if an omission could be equally unreasonable;

● very strong prospects of success will not always justify a failure to participate in settlement negotiations;

● a reasonable person will determine if and how to respond to an offer of settlement after considering all of the circumstances of the case including the terms of settlement in relation to the relief sought; the relative strength of the parties cases; the likely length and cost of proceeding to hearing if the matter does not settle; and adverse consequences of acceptance of a settlement rather than prosecuting or defending the primary application.”

[21] The approach to be taken to an application for costs made pursuant to s.611 of the Act was considered by a Full Bench of the Commission in Keep v Performance Automobiles Pty Ltd 2where the Full Bench said:

“[16] The FWC’s power to order that a person bear some or all of the costs of another person in relation to an application is only enlivened if the FWC is satisfied as to the matters set out in either s.611(2)(a) or s.611(2)(b).

[17] The proper construction of s.611(2)(a) was recently considered by a Full Bench in Church v Eastern Health t/as Easter Health Great Health and Wellbeing h (Church). Church is authority for the following propositions:

(i) The power to order costs pursuant to s.611(2) should be exercised with caution and only in a clear case.

(ii) 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.

(iii) One way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether upon the facts known to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. 

(iv) The test imposed by the expression ‘without reasonable cause’ is similar to that adopted for summary judgment, that is, ‘so obviously untenable that it cannot possibly succeed’, ‘manifestly groundless’ or ‘discloses a case which the Court is satisfied cannot succeed’.

[18] As to s.611(2)(b), the FWC may make a costs order against a person if satisfied that ‘it should have been reasonably apparent’ to that person that their application had ‘no reasonable prospect of success’. The expression ‘should have been reasonably apparent’ in s.611(2)(b) imports an objective test, directed to a belief formed on an objective basis as opposed to the applicant’s subjective belief.

[19] There is Full Bench authority for the proposition that the Commission should exercise caution before arriving at the conclusion that an application had ‘no reasonable prospects of success’. In Deane v Paper Australia Pty Ltd a Full Bench made the following observation about this expression in the context of enlivening a power to award costs under s.170CJ(1) of the Workplace Relations Act 1996;

“unless upon the facts apparent to the applicant at the time of instituting the [application], the proceeding in question was manifestly untenable or groundless, the relevant requirement in s.170CJ(1) is not fulfilled and the discretion to make an order for costs is not available”.” (citations omitted)

[22] Whether proceedings or a response to proceedings may be vexatious was considered in Holland v Nude Pty Ltd (t/as Nude Delicafe). 3A proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party, or to gain a collateral advantage.4

Consideration

[23] I have reviewed the Form F2 Unfair Dismissal Application and attachments lodged by Miss Maltman and the material lodged by WorkPac including the statements of James Smart, Mark Barbato, Trian Misso, Claire Bell, Jake Clifford and Sheree Fierita. No statement was provided by Mr Riley but I have reviewed emails exchanged between him and Miss Maltman.

[24] Miss Maltman was engaged by WorkPac as a Business Development Manager in January 2015.

[25] Miss Maltman reported difficulties in interacting with other staff in October 2016 and February and May 2017. The staff members reported that they had issues with Miss Maltman. I make no finding as to fault in relation to these issues.

[26] On 8 May 2017, a meeting was held with Mr Misso in relation to her interaction with Ms Bell. A further meeting was held on 9 May 2017 where Mr Misso sought to issue a formal warning. Miss Maltman refused to accept the warning. The matter was escalated to Mr Riley.

[27] On 29 May 2017, during a meeting with Mr Riley, two options were proposed. The first being the acceptance of the written warning and a performance management plan, the second involved Miss Maltman resigning by 5.00pm that day. Miss Maltman sought an extension of time to consider the matter which was not granted. At 9.29pm on that day, Mr Riley advised Miss Maltman that WorkPac had determined to restructure her role and that she would now be primarily focused on new sales generation. This account is supported by the email exchanges between Miss Maltman and Mr Riley.

[28] On 30 May 2017, Miss Maltman attended for work but was unable to log on to the WorkPac network. Miss Maltman left the office reporting stress and anxiety. WorkPac subsequently alleged that Miss Maltman breached the leave policy. Communications continued between the parties.

[29] On 13 June 2017, Miss Maltman resigned in writing. Miss Maltman contends the resignation was brought about by WorkPac’s conduct towards her. WorkPac contends the resignation was freely given and was accepted in writing on the same day.

Was Miss Maltman’s application made without reasonable cause (s.611(a))?

[30] Based my findings above, I am unable to accept that the application was made without reasonable cause. It appears that there was an arguable case that that the resignation was not voluntary and if that argument was successful, there was an arguable case that in the circumstances the dismissal was harsh, unjust or unreasonable. I find that the application was not without merit.

Did Miss Maltman’s application have no reasonable prospects of success (s.611(b))?

[31] I have found that the application was not without merit and accordingly it cannot be said that it had no reasonable prospects of success.

Was Miss Maltman’s application made vexatiously (s.611(a))?

[32] The next question is whether the application was vexatious. It appears to be argued by WorkPac that Miss Maltman having found employment at the same or proximate level of remuneration, and in the knowledge that she was not seeking reinstatement, should have been aware that the costs of prosecuting her claim outweighed the legal costs. Whilst Miss Maltman was verbally offered new employment on 30 June 2017, she did not execute a written offer of employment until 6 July 2017 (three days after the application was lodged). Miss Maltman contends her loss to date was $289 per week. I have not been advised if Miss Maltman in her new role receives commissions.

[33] I note that WorkPac were seeking to discover detail as to Miss Maltman’s post dismissal earnings just prior to the matter being withdrawn and the representatives were in discussion in relation to documents provided on 1 August 2017.

[34] WorkPac contend that Miss Maltman was vexatious in knowing that, prior to the making of the application, she would commence employment at the same, or substantially similar, level then she ought to have known that she would suffer no financial loss. Whilst that may have been the case it is difficult to accept that an application would be vexatious in circumstances where I have found it was not without merit.

[35] Whilst it could be argued that Miss Maltman was being vexatious in using the negotiation process to obtain a financial settlement, I have no information as to what the settlement offers included.

[36] There is insufficient information before me to find that the application was intended to harass, embarrass or gain some collateral advantage against WorkPac.

[37] Accordingly, I am unable to find that Miss Maltman’s application was vexatious such as to enliven costs under s.611 of the Act.

Did Miss Maltman engage in an unreasonable act or omission (s.400A)?

[38] For an award to be made under this provision the Commission needs to be satisfied that Miss Maltman caused costs to be incurred because of an unreasonable act or omission in connection with the conduct or continuation of the matter.

[39] I accept that Miss Maltman failed to provide material in accordance with my Directions but I note that the matter was withdrawn within approximately 18 hours of that failure. There is no information before me of any costs incurred in between the time of the failure to comply and the discontinuance.

[40] The second argument is that Miss Maltman acted unreasonably in continuing to prosecute her claim after she accepted new employment. That argument involves the consideration of the matters discussed at paragraphs [22]-[28] above.

[41] Whilst it could be argued that Miss Maltman used the negotiation process to obtain a financial settlement in circumstances where it was extremely unlikely that in the event of her success the Commission would award compensation, and unreasonably chose to continue to pursue her claim, I have no information as to the detail of settlement offers and the basis that they were made.

[42] I am unable to find that Miss Maltman caused those costs to be incurred because of an unreasonable act or omission in connection with the conduct or continuation of the matter.

[43] Having made the above findings, I dismiss the applications for costs and so order.

COMMISSIONER

Final written submissions:

WorkPac Pty Ltd T/A the WorkPac Group 21 August 2017 and 4 September 2017.

Miss Gina Maltman 28 August 2017.

 1   [2016] FWC 2659

 2   [2015] FWCFB 1956

 3 (2012) 224 IR 16

 4   See Attorney General v Wentworth (1988) 14 NSWLR 481 at 491

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