Goran Petreski v Sydney Water Corporation T/A Sydney Water

[2017] FWC 1762

[2017] FWC 1762

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Goran Petreski
v
Sydney Water Corporation T/A Sydney Water
(U2016/6930)

DEPUTY PRESIDENT DEAN SYDNEY, 8 JUNE 2017

Application for relief from unfair dismissal - application for costs – application dismissed.

[1] On 22 December 2016 I issued a decision with respect to an application made by Mr Petreski for unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the Act). In that decision I made a finding that Sydney Water Corporation T/A Sydney Water (Sydney Water) did not have a valid reason to terminate Mr Petreski’s employment and that the dismissal was unfair. The parties were directed to confer on remedy. Following agreement reached between the parties, the Commission issued a consent order on 30 January 2017 in the following terms:

“1. Pursuant to s.391(1) of the Fair Work Act 2009 (the Act), Sydney Water Corporation T/A Sydney Water (Sydney Water) shall reinstate Goran Petreski (the Applicant) to his former position of Civil Production Employee in the maintenance Division of the Southern Region on terms no less favourable than those which would have applied had he not been dismissed on 26 April 2016, noting that the Applicant will remain at, and be paid at, level 3D.

2. The reinstatement shall take effect on and from 1 February 2017.

3. Pursuant to s.391(2) of the Act, the continuity of the Applicant’s employment shall be maintained and the period of his continuous service be treated as not to have been broken by the dismissal.

4. Pursuant to s.391(3) of the Act, Sydney Water shall pay to the Applicant an amount of $54,775.21 (less applicable taxation) for the remuneration lost, or likely to have been lost, by the Applicant because of the dismissal.

5. The amount in paragraph 4 above shall be paid within fourteen (14) working days of the date of this order.”

[2] On 13 February 2017, Mr Petreski made an application pursuant to s.400A of the Act for costs against Sydney Water. On 22 February 2017, directions were issued for the parties to file written submissions and to advise their views on whether a hearing should be held. Both parties filed written submissions and submissions in reply and agreed that the costs application be determined ‘on the papers’.

[3] For the reasons set out below, I find that there is no clear evidence of conduct by Sydney Water that in my view could reasonably be considered an unreasonable act or omission of the type contemplated by s400A of the Act. Accordingly, Mr Petreski’s application for costs is dismissed.

Relevant legislation

[4] 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.”

[5] The Explanatory Memorandum to the Fair Work Bill 2012 provides the following with respect to s.400A of the Act:

“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.

171. 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.”

Background

[6] Mr Petreski was dismissed on 26 April 2016 by Sydney Water following an investigation of an incident which found that he had engaged in serious misconduct.

[7] Mr Petreski filed his application for unfair dismissal remedy on 13 May 2016. It was the subject of conciliation by a Fair Work Conciliator on 14 June 2016. The matter remained unresolved and the application was listed for three days of arbitration before me on 10, 11 and 12 August 2016. Directions were issued for the filing of submissions, witness statements and documentary evidence.

[8] On 10 August 2017, the parties engaged in further conciliation conducted by Deputy President Sams. Subsequent to that conciliation conference, the parties sought an adjournment to have further private discussions. The matter was then relisted for arbitration on 8 and 9 September 2016 and the parties were requested to advise my chambers prior to the hearing if an agreement to resolve the matter was reached. On 26 August 2016, my chambers were informed that the parties were unable to resolve the matter. The application was then determined, resulting in a decision in favour of Mr Petreski.

[9] Both Mr Petreski and Sydney Water were given permission to be legally represented throughout the unfair dismissal hearing. Mr Petreski was represented by Mr C Lowe of JFM Law and Sydney Water by Mr J Mattson of Bartier Perry Lawyers.

[10] In this costs application, Mr Petreski was self-represented. He sought an order that Sydney Water pay to him all costs he incurred following the lodgement of his unfair dismissal application.

Submissions

[11] Mr Petreski submitted that an agreement had been reached between the parties at the conciliation conference before Deputy President Sams on 10 August 2016, and that the failure of the settlement to eventuate was an unreasonable act on Sydney Water’s part which caused him to incur costs.

[12] Sydney Water denied that any agreement was reached and argued that the settlement proposals made during the conciliation process were inadmissible and could not be relied upon in the costs application. Sydney Water opposed the ‘tender, submissions and reliance on any such offer and communication and discussion in connection with the conciliation processes of the Commission’. It relied on the decision in McKenzie v Meran Rise Pty Ltd 1 (McKenzie) where the Full Bench held:

“[12] An offer of settlement made in conciliation proceedings is by its nature made on a without prejudice basis. It is inappropriate that an offer made in those circumstances should be taken into account in a costs application unless the offer is subsequently repeated on an open basis. It has long been accepted that positions taken in conciliation are without prejudice to the position to be taken in arbitration. The protection afforded to participants by this principle is an essential feature of conciliation proceedings.”

[13] Sydney Water submitted that the principle in McKenzie remains the long standing authority.

[14] In supporting its contention, Sydney Water provided a statement of Mr Connolly (ER Specialist) in which he asserted that the parties clearly understood that the conciliation was confidential and matters discussed in that process could not be repeated outside of the conciliation process.

[15] In his response filed on 29 March 2017, Mr Petreski stated that he did not rely on the conciliation process as the basis for his costs application. Given this statement made by Mr Petreski, his submissions in relation to the offers made during the conciliation process will not be considered in my determination of this costs application. In any event, based on the McKenzie decision, I find that the communications during the conciliation conference are inadmissible.

[16] Mr Petreski submitted that he incurred significant and unnecessary legal expenses to the amount of $32,535.15 to defend his unfair dismissal claim, including costs for:

● participating in conciliation conferences;
● preparing witness statements and submission outlines;
● briefing counsel to appear at FWC hearings; and
● attending FWC hearings.

[17] Mr Petreski submitted that ‘it should never have come to the point where Fair Work Commission should be involved with myself having had to defend the matter in a Court of Law’. In supporting his application, Mr Petreski included in his outline of submissions the following:

● excerpts from submissions prepared by his solicitors in respect of the unfair dismissal claim;
● excerpts from my decision of 22 December 2016;
● witness evidence adduced at the earlier proceedings; and
● a list of Commission decisions in which costs orders were made.

[18] Mr Petreski’s costs application also relied on Sydney Water’s failure to conduct a proper workplace investigation, and that there was no valid reason for his dismissal.

[19] Mr Petreski contended that costs were incurred unnecessarily due to delays in resolving the proceedings caused by Sydney Water in January 2017 after my decision was issued. He further submitted that the offer proposed by Sydney Water in its letter of 6 January 2017 was re-employment not reinstatement and with terms and conditions much less favourable than his role prior to the dismissal. This caused further delays and incurred further legal expenses ‘as more letters needed to be drafted and sent and discussions and negotiations were required between the parties’ solicitors’.

[20] Sydney Water opposed the costs application on the following grounds:

● The settlement proposals made during the conciliation process were inadmissible and could not be relied upon in the costs application.
● There was no delay by Sydney Water after the decision was made that would warrant an order for costs.
● The mere fact the Applicant was successful does not justify an order for costs.
● The parties agreed to resolve the proceedings in the terms set out in the consent order of 30 January 2017.

[21] Sydney Water further submitted that:

● It is a general rule that each party must bear their own costs in proceedings before the Commission and the power to order costs should be exercised with caution and only in clear cases. In Roberts v Ngaanyatjarra Health Service 2, it was relevantly said: ‘As a general rule each party must bear their own costs in proceedings before the Commission … the power to order costs … should be exercised with caution and only in clear cases.’ It is only in rare and exceptional circumstances that costs will be awarded.

● There are limited exceptions to that usual rule such as with s.400A of the Act. Even if the section is enlivened, the Commission retains a discretion to not award costs. It is in rare and exceptional circumstances that costs will be awarded.

● The power to award costs can only be exercised when there is clear evidence of unreasonable conduct by a party. Sydney Water did not act in an unreasonable manner in defending the unfair dismissal claim made by Mr Petreski.

[22] With respect to the question of the delay in resolving the matter after the Commission decision was made, Sydney Water submitted the following timeline:

● On 22 December 2016 the decision of the Commission was published.
● On 6 January, soon after the Christmas break, Sydney Water wrote to Mr Petreski’s solicitor with a proposal.
● On 11 January 2017, by way of compromise, the parties agreed to a back payment.
● In the week beginning 16 January 2017 both Sydney Water’s solicitor and Deputy President Dean were on leave. Nevertheless, discussions between the parties continued.
● From 17 January 2017, Mr Petreski chose to wait for an order from Deputy President Dean before returning to work.

[23] Sydney Water said that it offered Mr Petreski a return to work on 20 January 2017 but he chose not to return at that time due to personal reasons. Sydney Water submitted that it was clear from the above chronology that it did not engage in any unreasonable act or omission that caused costs to be incurred by delaying the resolution of the proceedings.

[24] With respect to its contention that Mr Petreski relied on the outcome of the substantive application as a basis to seek an order for costs, Sydney Water submitted that a costs application was not an opportunity to simply re-argue the case, and the outcome itself does not give rise to a costs order. Sydney Water submitted that the Commission’s decision ultimately turned on the evidence at hearing and the Commission’s view and acceptance of evidence. Sydney Water said:

“There were aspects of the case where the Commission was critical of the evidence of Sydney Water but it was not the case that these views demonstrate an unreasonable act or omission by Sydney Water in the conduct of the proceedings. While Sydney Water genuinely held a different view of events, the Commission formed its own view. The Commission will normally make conclusions and inferences contrary to one side’s case. On the balance of probabilities, findings will be made and not made. This does not give rise to a liability to pay costs. It cannot be said that Sydney Water’s case was manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable. No such findings were made in the Decision.”

[25] Sydney Water further submitted that the consent order made on 30 January 2017 was agreed by the parties in ‘resolving the proceedings’ in their entirety.

Submissions in reply

[26] In his submissions in reply filed on 29 March 2017, Mr Petreski stated that the basis of his costs application was the failure of Sydney Water to conduct a proper workplace investigation.

[27] Mr Petreski argued also that Sydney Water had failed to identify and respond to his application for costs in relation to safety and failure to follow process and procedures.

[28] Mr Petreski rejected the statement of Sydney Water that from 17 January 2017 he chose to wait for an order from me before returning to work. Mr Petreski said that he was eager to get back to work and had stated this to his solicitor.

[29] Sydney Water provided further submissions in reply on 6 April 2017. It reiterated that there is no power under s.400A of the Act to award costs in respect of conduct prior to the commencement of proceedings and that Mr Petreski’s basis for seeking costs was therefore misconceived.

[30] Accompanying Sydney Water’s submission in reply was a statement of Mr Mattson. I have considered Mr Mattson’s statement but do not find it determinative in my decision and therefore will not summarise it here.

Consideration

[31] It is a well-accepted principle that each party bears its own costs in relation to a matter before the Commission. 3 The power under s.400A to award costs is discretionary and can only be exercised if there is clear evidence of ‘unreasonable act or omission’ by a party.

[32] As the Full Bench said in Gugiatti v SolarisCare Foundation Ltd 4, section 400A “is concerned with unreasonable acts or omissions in connection with the ‘conduct or continuation’ of a matter already instituted, not with whether it was reasonable to have instituted a matter in the first place.”5 In other words, a finding that the applicant was unfairly dismissed should not be confused with a claim of unreasonable act(s) or omission(s) by the respondent in connection with the conduct or continuation of the matter as referred to in s.400A(1) of the Act. Accordingly, to the extent that Mr Petreski’s application for costs relies on submissions that Sydney Water did not properly undertake a workplace investigation, and did not have a valid reason to dismiss him, these factors cannot be taken into account in my consideration as to whether to award costs.

[33] As found earlier in this decision, any offers made during the conciliation conference will not be taken into account in this costs application.

[34] My decision of 22 December 2016 in favour of Mr Petreski was reached after a careful consideration of the facts, materials and evidence before me during the proceedings. The fact that Sydney Water ultimately lost its case does not mean that it had no prospects of success. As such, the failure to reach a settlement, in particular when reinstatement was sought, cannot be regarded as an unreasonable act or omission on Sydney Water’s part. As noted earlier in this decision, section 400A is not intended to prevent a party from robustly pursuing or defending an unfair dismissal claim in good faith.

[35] Mr Petreski relied on a number of Commission decisions in which costs orders were made in situations where a party did not agree to a settlement proposal and was ultimately unsuccessful in the arbitration proceedings. Although I have considered those decisions, each matter has its own merits and turns on its own facts, as this application does.

[36] My decision of 22 December 2016 did not include a determination on remedy and parties were directed to confer and to provide written submissions as to remedy if agreement could not be reached. In the circumstances, it was appropriate for the parties to enter into discussions in an attempt to reach an agreement and avoid the costs of making further submissions. In this case, the parties did so and reached an agreement resulting in the consent order of 30 January 2017 in the terms set out at the beginning of this decision.

[37] According to the Commission’s file, Mr Lowe sent an email to my chambers on 11 January 2017 in the following terms:

“Further to her Honour’s orders, the parties apply for an extension of time to respond to the Commission on the issue of remedy.  It is hopeful that the parties can advise on an outcome and resolution by noon, Tuesday, 17 January 2017 but absent any agreement, the parties can file and serve short submissions on remedy by noon, Wednesday, 18 January 2017.

The email is sent with the consent of both parties.”

[38] The parties’ request for an extension of time was granted. On 17 January 2017, Mr Lowe wrote to my chambers in the following terms:

“As per the below email correspondence and the Deputy President’s directions, I confirm that the parties have reached an agreement regarding remedy.

I am currently preparing consent orders confirming the terms of the agreement.

The solicitor for the Respondent, Mr Mattson is currently on leave and we will be in a position to forward you signed consent orders tomorrow so that her Honour may make those orders in chambers.

This email is sent with the consent of both parties.”

[39] On 25 January 2017, Mr Lowe emailed to my chambers a form F48 (Application for Directions on Procedure) setting out the proposed consent order. Mr Lowe also stated in that email:

“If the Deputy President is able to make these orders on or before Monday 30 January 2017, that would be appreciated so that the Applicant may prepare for his return to work on Wednesday 1 February 2017.

I have copied the solicitor for the Respondent, Mr Mattson in to this correspondence who has consented to the sending of the attached.”

[40] Throughout this process no concerns were raised or expressed by Mr Petreski’s solicitor that Sydney Water was responsible for any unreasonable delay.

[41] In addition, the costs incurred at this stage would likely be incurred in any event despite any delay. Had the parties not reached an agreement, they would have been required to file written submissions and await an order of the Commission.

[42] For the reasons set out above, I am not satisfied that there was any unreasonable delay caused by any act or omission of Sydney Water.

[43] As is generally the case in matters determined by the Commission, one party will win and the other will lose. That is what happened here. I find that Sydney Water’s defence of the unfair dismissal claim made by Mr Petreski was not unreasonable.

Conclusion

[44] I am satisfied that Sydney Water did not cause Mr Petreski to incur costs because of any unreasonable acts or omissions in connection with the conduct or continuation of the matter. Accordingly, Mr Petreski’s application for costs is dismissed.

DEPUTY PRESIDENT

 1   Print S4692.

 2   [2016] FWC 4875).

 3 Section 611(1) of Fair Work Act 2009.

 4   [2016] FWCFB 2478.

 5 Ibid at [61].

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