Greg Searle v Luxwood Homes Pty Ltd
[2022] FWC 2393
•23 SEPTEMBER 2022
| [2022] FWC 2393 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Greg Searle
v
Luxwood Homes Pty Ltd
(U2022/1035)
| DEPUTY PRESIDENT LAKE | BRISBANE, 23 SEPTEMBER 2022 |
Application for costs
Introduction
On 5 April 2022, I heard Mr Searle’s application for unfair dismissal against Luxwood Homes Pty Ltd (Luxwood Homes). On 30 June 2022, I decided that Mr Searle was not unfairly dismissed by Luxwood Homes and the application had been made outside of the statutory timeframe. lodged.[1]
On 14 July 2022, Luxwood Homes filed an application for costs to be ordered (Costs Application) against Mr Searle.
Both parties consented to my determination of the Costs Application on the papers.
In determining the Costs Application, I have had regard to Luxwood Homes submissions dated 14 July 2022 and Mr Searle’s submissions dated 15 August 2022.
Basis for Costs Application
Luxwood Homes seeks payment of its legal costs pursuant to sections 400A and 611 of the Fair Work Act2009 (Cth) (Act). Submissions were sought from both parties regarding the Costs Application.
Luxwood Homes’ primary contentions in support of its Costs Application are as follows:
· Luxwood Homes submitted that Mr Searle’s application did not have reasonable cause as the application was doomed to fail because it was effectively a claim for underpayment of wages and/or breaches of contract, which the Commission lacked the jurisdiction to have referring to Hardy v Aus North Refrigeration & Air Conditioning [2020] FWC 5549 at [143].
· Mr Searle knew or ought to have known that there was no employment relationship and therefore did not have reasonable cause to pursue the matter.
· Mr Searle failed to consider a reasonable offer of settlement made on 16 March 2022 to resolve all matters on dispute. Luxwood Homes stated that there was not a possibility of further settlement discussions because of Mr Searle’s consistent unauthorised access of their information systems. Luxwood Homes cite Ferry v GHS Regional WA Pty Ltd [2016] FWC 3120 at [75].
· Luxwood Homes submitted that indemnity costs should be awarded for its costs incurred in connection with Mr Searle’s application for $18,994.93. At minimum, Luxwood Homes should be awarded a minimum of $7040.13 for its costs incurred for steps taken after 16 March 2022 when the settlement discussions broke down because of Mr Searle’s unreasonable refusal of a settlement offer and delinquent conduct.
Mr Searle has provided a response to the submissions of Luxwood Homes. His primary contentions in opposition to the application for costs are as follows:
· Mr Searle submitted that he acted with reasonable cause as he genuinely believed that he had a good chance of success that he was unfairly dismissed. He acknowledged that he incorrectly assumed that he lodged the Application out of time until the decision was handed down regarding the jurisdictional objection.
· Mr Searle acknowledged that it was not unreasonable to continue with his case because of a lack of skill, knowledge, experience, and appropriate training to present his evidence.
· Mr Searle acknowledged that he sought legal advice regarding an offer to settle made by the Costs Applicant. He states that he made amendments to this settlement through his legal representative to achieve a fair settlement. Mr Searle states that he did not act unreasonably regarding the settlement.
· The Costs Respondent asks that no costs be awarded.
Relevant legal principles
Section 611(1) of the Act establishes a general rule that parties in proceedings before the Commission must bear their own costs. There are a number of provisions in the Act which operate as exceptions to this general rule and allow costs to be awarded in specific circumstances. Sections 400A and 611(2) of the Act are two such exceptions.
Section 400A of the Act provides as follows:
“Costs orders against parties
(1) The Fair Work Commission 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 Fair Work Commission 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 Fair Work Commission 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 Fair Work Commission’s power to order costs under section 611.”
Section 400A(1) of the Act establishes two preconditions for the making of an order for costs:
(a) First, the Commission must be satisfied that the party engaged in an unreasonable act or omission in relation to the conduct or continuation of a matter; and
(b) Secondly, such act or omission caused the other party to the matter to incur costs.
If these two preconditions are satisfied, a discretionary power to order the payment of such costs is enlivened.
Section 611(2) of the Act provides as follows:
“(2) However, the Fair Work Commission 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 Fair Work Commission if:
(a) the Fair Work Commission 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 Fair Work Commission 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.”
The relevant 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 3and may be summarised as follows:
· 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 was 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.
In relation to s 611(2)(b), the relevant principles were summarised by the Full Bench in Baker v Salva Resources Pty Ltd 4as follows (footnotes omitted):
“[10] 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.”
Consideration
Without Reasonable Cause - s 611(2)(a)
On the matter of reasonable cause, the Costs Applicant asserts that Mr Searle was doomed to fail as the remedy sort was underpayment of wages, leave and a monthly lump sum. If Mr Searle had been successful in his unfair dismissal application the Commission would have only been able to award compensation based upon the Act, any non-payment of wages or leave would be a separate action through the Fair Work Ombudsman. However, a determination by the Commission would enable Mr Searle to take further action on the basis that he was declared an employee. The Costs Respondent perhaps was unaware of the potential remedy available being a self-represented, notwithstanding, this does not diminish the basis of the original application.
Regarding the merits or substantive matter, whilst ultimately the application failed as it was out of time my findings on the merits were neutral as I had not the opportunity in a jurisdictional hearing to fully hear the merits of the matter. Without having all the evidence before me regarding merits I am unwilling to determine that the matter was without reasonable cause.
No reasonable prospects of Success – s 611(2)(b)
This section must be approached with the requisite care as it is a high bar to evaluate that a matter is groundless or an application being devoid of any arguable case.
The Costs Respondent whilst being self-represented did present some arguments that on the face may have led to a conclusion that was arguable that he may have been an employee. Determining whether an Applicant to an Unfair Dismissal is an individual contractor is not necessarily a straightforward matter and does require reasonably thorough evidence to be presented. Mr Searles case was not without the potential to have an arguable case upon the material filed in the F2 form.
In this matter I granted an adjournment for the parties to negotiate a settlement which ultimately was not successful. This delayed the progress of the matter as it returned to me for determination of the jurisdictional objection. I note that although the submissions from the Costs Applicant assert that in this the Costs Respondent was unreasonable and caused further delays to the original application, I am cautious about finding that the rejection of the settlement proposal was a deliberate action. It may have been, with some more effort on the parties, a more streamlined settlement document may have achieved an outcome. Therefore, I am not satisfied that Mr Searle caused Luxwood Homes to incur the costs in question because of an unreasonable act or omission on his part in connection with the conduct or continuation of the matter.
Unreasonable act or omission in connection with conduct or continuation of matter – s400A
Much of the submission of the Costs Applicant under this section was based upon assertions regarding the Costs Respondent having unauthorised access to the Costs Applicant’s business computer system post the engagement as a contractor. The Costs Respondent has put some material forward that puts some doubt to this contention and without further evidence I do not find that argument carries weight, and I am not prepared on that basis to find the Costs Respondent has undertaken delinquent conduct.
Conclusion
For the reasons given, I have decided not to exercise my discretion to award costs in favour of Luxwood Homes against Mr Searle.
Accordingly, Luxwood Homes’ Costs Application pursuant to s 400A and/or s 611 of the Act is dismissed.
DEPUTY PRESIDENT
[1] Greg Searle v Luxwood Homes Pty Ltd [2022] FWC 1688
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