Golden Glow Corporation (NT) Pty Ltd T/A Golden Glow Nursing v Mrs Leisal MacDonald

[2020] FWC 3424

[2020] FWC 3424

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay

Golden Glow Corporation (NT) Pty Ltd T/A Golden Glow Nursing
v
Mrs Leisal MacDonald
(C2020/1356)

COMMISSIONER SPENCER BRISBANE, 3 JULY 2020

Variation of redundancy pay – redundancy pay not reduced – costs application made – costs awarded; subject to process set out.

APPLICATION FOR COSTS

INTRODUCTION

[1] This decision (the Costs Decision) deals with the application for costs made in response to the above matter. It relates to the associated decision [2020] FWC 2159, which deals with the application made pursuant to section 120(1)(b)(i) of the Fair Work Act 2009 (the Act) to reduce the redundancy payment to nil (the Redundancy Decision).

[2] Mr Penman, solicitor for Ms MacDonald (the Respondent/employee) sought a costs order pursuant to section 611(2)(b) of the Act. The Respondent submitted that it should have been reasonably apparent to Golden Glow Corporation (NT) Pty Ltd (the Applicant/Employer) that their s.120(1)(b)(i) application, had no reasonable prospect of success. The employer had sought to reduce the redundancy payment to nil, on the basis that they had obtained other acceptable employment for the Respondent.

[3] I intend to exercise the discretion to order costs be paid, subject to the steps outlined in this decision.

LEGISLATION

[4] Section 611 of the Act, sets out the basis on which an order for costs can be made:

“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.

(1) 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] The Respondent submitted that Ms MacDonald was entitled to 6 weeks’ redundancy pay, given her length of service being more than 2 but less than 3 years. Further, that there are no exemptions that Golden Glow Nursing could rely on, given the written material provided. The Respondent said Ms MacDonald's service was continuous and the Applicant had the financial capacity to pay the redundancy.

[6] The Respondent submitted that Ms MacDonald sourced her own employment and that Golden Glow, did not assist her to obtain that employment, and there is no evidence of a transfer of employment. The Respondent further submitted that the Award applies the same redundancy scheme as per the Act. The Respondent submitted that under section 120(2), the Commission can reduce the redundancy payment, but there was no evidence to support reducing this payment in any way. The Respondent sought a costs order for $2000 in legal costs pursuant to section 611(2)(b) of the Act. Mr Penman provided an invoice for legal services to the amount of $2000. The Respondent was put to the additional cost of having to review the Applicant’s additional submissions, given that the Applicant appeared at the Hearing, having not read the Respondent’s material. Accordingly, leave had to be provided to allow her and then the Respondent a further response, thus increasing costs.

[7] Ms Schaffer on behalf of the Applicant was provided with an opportunity to file submissions in reply, to the costs application. Ms Schaffer submitted that the Commission is generally not a jurisdiction where costs are often awarded, and that the parties coming to the Commission, should expect to pay their own costs.

[8] Ms Schaffer said that the Applicant had not made the s.120 application, or responded to an application, vexatiously or without reasonable cause and has not made an application, or responded to an application where it should have been reasonably apparent that the application, or response to an application, had no reasonable prospects of success. Ms Schaffer submitted that given the evidence provided of her actions, or endeavours regarding possible other employment opportunities for the Respondent, that she had met the test of ‘obtained’ other employment. However, given the Applicant had no knowledge of securing an actual position for the Respondent and she had no knowledge of the employment, the Respondent had accepted, it was clear the test of obtaining other employment for the Respondent, prior to lodging the s.120 application, could not have been met. This should have been reasonably apparent to the Applicant. The Applicant conceded that she had not obtained employment the Respondent.

[9] Ms Schaffer submitted that seeking a reduction of redundancy payments, given that other employment options were explored for the staff, and there was no break in employment for any of them, was a reasonable course of action, which could result in a reduction of redundancy payments. Ms Schaffer said that on that basis, it is not appropriate for them to pay the costs as sought.

CONSIDERATION

[10] Section 611 provides that the Commission is generally a jurisdiction where each party bears its own costs. However, as identified, there is a capacity under the Act, for costs to be awarded in certain circumstances.

[11] In this matter, the Applicant brought an application which, if granted, would have had a significant financial impact on the Respondent, in reducing her redundancy payment. The Respondent sought and received legal representation and responded promptly, and detail to the Directions issued for filing of the material. The Respondent was represented at hearing and was prepared, informed, and capable in assisting the Commission in determining the matter.

[12] In contrast, the Applicant failed to address the initial Directions, therefore causing further Directions to be issued and further delay. The Applicant then appeared at the Hearing unprepared, having not attended to checking, in line with the Directions, to see if the Respondent’s material had been received. The material had then not been read by the Applicant, and a further opportunity after the Hearing had to be provided for her response and then for the Respondent’s review. The submissions provided by the Applicant’s Co-Director were limited in detail and little to no evidence was provided, showing that the Applicant had found other alternative employment for Ms MacDonald.

[13] It is noted that the application to reduce the redundancy payment, was made weeks after when the redundancies took effect; and the payments should have been made. The Respondent in these circumstances should not have to seek representation, to secure her redundancy payment.

[14] It is acknowledged that the Applicant was represented by Ms Schaffer, who does not appear to have any experience in dealing with matters before the Commission. However, in this case, detailed Directions were sent to the parties, identifying the relevant elements of the Act required to be considered in determining an application under s.120. The Respondents, even those who were self-represented, adhered to the Directions. In addition, the Applicant appeared at the Hearing with the Human Resources Manager

[15] In this case, the Applicant has proceeded with little evidence and has shown a lack of engagement with the process. As noted, the matter was listed for a Hearing which the Respondent and their representative attended. The Applicant was not prepared for this Hearing, incurring further costs for the Respondent.

[16] In Keep, 1 the Full Bench also summarised the principles relevant to s.611(2)(b) of the Act:

“[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 24 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”.25

[17] More recently, when considering the meaning of s.611(2)(b), the Full Bench in Health Services Union – Victoria No.1 Branch v Sanli 2stated:

“[113] The observations of the High Court in Spencer v The Commonwealth 27 as to the meaning of the expression ‘no reasonable prospect’ in s.31A of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act), are apposite to the matter before us:

‘In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like “clearly”, “manifestly” or “obviously”) as “frivolous”, “untenable”, “groundless” or “faulty”. But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word “reasonable”, in the phrase “no reasonable prospect”, be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a “frivolous”, “untenable”, “groundless” or “faulty” claim.

Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is “no reasonable prospect” of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to “no reasonable prospect” can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase “just and equitable” when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.’ 28

[114] Section 31A of the Federal Court Act is a power to enter summary judgment and accordingly is not directly relevant to the matter before us. However, the High Court’s observation (in Spencer) that full weight must be given to the expression as a whole and that descriptors such as ‘frivolous’, ‘untenable’, ‘groundless’ or ‘faulty’ do not provide a sufficient chart of the metes and bounds of the power, are also applicable to s.611(1)(b).”

[18] Having regard to the above authorities, it is recognised that caution should be exercised in determining whether to exercise the power to order costs pursuant to s.611(2)(b) of the Act. Consideration should be given as to whether it would have been apparent to a reasonable person that Golden Glow’s application “had no reasonable prospect of success”, giving full weight to this expression as a whole.

[19] It is particularly relevant that at the Hearing that Ms Schaffer conceded the Applicant did not obtain other acceptable employment for the Respondent, further stating in her written submissions:

“The employer did not source the alternative employment for Leisal. She sourced alternative employment the day after being informed that the office would be closing.”

[20] As noted in the Redundancy Decision, the Applicant provided no evidence of obtaining other acceptable employment for Ms MacDonald. This was admitted in their submissions of 26^th March 2020 and at the Hearing. I therefore find it would have been reasonably apparent that Golden Glow’s application, had no reasonable prospect of success, in these circumstances.

[21] Ms MacDonald sourced her own employment. This does not remove her entitlement to a redundancy. It is common sense that most employees who are dismissed or are notified their job is to be made redundant, will make finding other employment an immediate priority. The fact that they are successful of their own accord, does not remove their entitlement to a redundancy payment. No other grounds were raised as a basis for reducing the redundancy amount payable.

[22] Equally, it must be taken into account that the Applicant’s failure to actively prosecute the matter, (as set out), particularly an application that is straight forward and is to be based on evidence of obtaining other acceptable employment. The Applicant was unaware of the employment, that the Respondent actually accepted. This was in the context that Ms Schaffer was aware that she was not involved in concluding or obtaining the new employment contract. She merely provided an awareness, to the redundant employees, of some other employers

[23] Permission was granted for legal representation for the Respondent. There was some complexity to the matter, and the result that the Respondent would not receive her redundancy payment, was a significant consequence for the Respondent. I consider it should have been evident to the Applicant, that they had no reasonable prospects of success in this case from the outset, if not sooner. The Directions clearly set out the matters to be addressed, including the indicia to be addressed, in terms of the comparison of the old job and the ‘obtained’ job. Had the Applicant prepared the submissions appropriately, in accordance with the Directions, this should have been very evident that the Applicant was not able to undertake this job comparison, and the application may not have been pressed. It should have been apparent that she had not obtained other employment that could have been the subject of the comparison on the indicia set out in the Directions. The submissions of the Respondent are concise and well-reasoned and spelt out the objection in detail. They directly addressed the factors to be considered under s.120 and identify, that the Applicant did not find Ms MacDonald ‘other acceptable employment’.

[24] In Diane Porteous v G. Kakafikas and A.G. Bek partnership t/a Yarra Glen Pharmacy[2019] FWC 6264, Colman DP was critical of applicants who brought applications and failed to prosecute them. Colman DP said:

“[19] It is completely unacceptable that a person can institute a legal proceeding, fail to prosecute it, and waste the other party’s time and that of the Commission, all with impunity and at no cost to themselves other than a filing fee of $73.20. Although there is the possibility under the Act to bring an application for costs, there is a high bar for success and such applications are, understandably, rarely brought. Further, in many cases, particularly those involving small businesses, there are no costs such as legal fees that might be recouped through cost orders. What has been expended is valuable time that could have been put to productive use. In my view there should be more robust consequences under the Act for litigants who fail to make reasonable efforts to prosecute applications.”

[25] I find the Applicant’s failure to appropriately evaluate their conduct against the s.120(1)(b)(i) tests, prior to filing the application, lead to an application where it should have been reasonably apparent, prior to filing, that the application had no reasonable prospects of success. After filing, the Applicant failed to actively prosecute the matter, or consider the Respondent’s submissions. The Respondent was required to defend the application, as it had significant potential for financial consequences, for the Respondent, for the loss of the redundancy payment. The Respondent’s lawyer detailed the circumstances of his client.

[26] On this basis, the Respondent sought legal representation as they were entitled to do, and therefore incurred costs in defending the application. An itemised invoice for legal work ($2000 in costs was sought) was provided by Mr Penman. This was provided to Golden Glow for response.

CONCLUSION

[27] Pursuant to s.611(2)(b) of the Act, for the reasons set out, I intend to exercise the discretion to Order that Golden Glow Nursing is to pay Ms MacDonald legal costs incurred in relation to the pursuit of her redundancy entitlements.

[28] In the first instance, in relation to costs, I Order as follows; The matter of costs is first to be subject to the following steps: The Respondent is ordered to provide to Ms Schaffer; a written itemised schedule of the legal costs incurred. This is to be done within 7 days of this Decision, (by 10 July 2020). The Schedule of Costs should be prepared, as set out below. It is noted that the rate or amount claimed for items mentioned in the Schedule of Costs, as per Schedule 3.1 of the Fair Work Regulations 2009, must not exceed the rate or amount appearing in that Schedule.

[29] Following receipt of the Schedule of Costs, the parties are directed to confer and seek to reach agreement by 17 July 2020 on the quantum of the costs, to be payable. Upon agreement as to the costs, the amount is to be paid by the Applicant, to the trust account of Mr Penman, by 24 July 2020.

[30] If the costs are not agreed by 17 July 2020, the Respondent’s solicitor is to file the itemised schedule of costs to the Commission, (at [email protected]). This will then be referred to Deputy President Clancy, (the Member responsible for the taxing of the costs). Upon receipt of taxed costs from the Commission, the Applicant is ordered to pay that amount, by separate Order. An Order to that effect will be issued subject to [28] and [29].

COMMISSIONER

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 1   Neil Keep v Performance Automobiles Pty Ltd [2015] FWCFB 1956

 2   [2018] FWCFB 745