Isileli Uoifalelahi v Teys Australia Southern Pty Ltd T/A Teys Australia Wagga

[2014] FWC 2670

[2014] FWC 2670

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Isileli Uoifalelahi
v
Teys Australia Southern Pty Ltd T/A Teys Australia Wagga
(U2013/666)

COMMISSIONER DEEGAN CANBERRA, 23 APRIL 2014

Application for costs - application dismissed.

[1] This decision arises from an application for costs made under s.401of the Fair Work Act 2009 (the Act) by Teys Australia Southern Pty T/A Teys Australia (Wagga) (the employer) for costs incurred in defending an application for unfair dismissal made by Isileli Uoifalehahi (the employee).

[2] The employer seeks an order for costs against the employee’s solicitors, O’Halloran Deal Lawyers (OHD).

Background

[3] The employee’s application for unfair dismissal was filed on 6 March 2013. The matter was heard on 9 October 2013 and, in a decision issued on 5 December 2013 1 I dismissed the application, having found that the termination of the applicant’s employment was not unfair. The application for costs was filed on 19 December 2013, and directions were issued on 20 December for the filing of submissions in relation to the application. The matter was not listed for a further hearing and the application for costs has been decided on the basis of the documentation filed.

The Legislation

[4] The relevant provisions of the Act provide:

401 Costs orders against lawyers and paid agents

(1) This section applies if:

(a) an application for an unfair dismissal remedy has been made under section 394; and

(b) a person who is a party to the matter has engaged a lawyer or paid agent (the representative) to represent the person in the matter; and

(c) under section 596, the person is required to seek the FWC’s permission to be represented by the representative.

(1A) The FWC may make an order for costs against the representative for costs incurred by the other party to the matter if the FWC is satisfied that the representative caused those costs to be incurred because:

(a) the representative encouraged the person to start, continue or respond to the matter and it should have been reasonably apparent that the person had no reasonable prospect of success in the matter; or

(b) of an unreasonable act or omission of the representative in connection with the conduct or continuation of the matter.

(2) The FWC may make an order under this section 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.

402 Applications for costs orders

An application for an order for costs under section 611 in relation to a matter arising under this Part, or for costs under section 401, must be made within 14 days after:

(a) FWA determines the matter; or

(b) the matter is discontinued.

The Employer’s Case

[5] In essence, it was the employer’s submission that a costs order should be made against OHD under s.401 of the Act as OHD caused the employer to incur costs by encouraging the employee to continue pursuing the matter when it should have been reasonably apparent that the employee had no reasonable prospect of success. It was also put that OHD caused the employer to incur costs by omitting to advise the employee to accept an offer of settlement made by the employer on 23 September 2013, and actively encouraging the employee to continue with his application by making an ‘exorbitant offer on 26 September which was incapable of being accepted by (the employer)’. 2

The employer relied on the decision of the Full Bench in Baker v Salva Resources Pty Ltd 3noting that the Full Bench had stated that “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 substances to not be reasonably arguable.”4

[6] The employer put that as :

● OHD should have known that there was a possibility that the position put (by the employer) would be preferred; and
● it should have been apparent that if the evidence of the employer’s main witness was preferred to that of the applicant the application was doomed to fail; and
● the submission that the alleged incident was not so serious as to warrant summary dismissal had no reasonable basis;

it should have been reasonably apparent to the OHD that the employer had made a reasonable offer of settlement on 23 September 2013.

[7] It was noted that the letter of offer made on 23 September 2013 made it clear that an application for costs might be made against the employee if he did not receive an award of compensation higher than the offer.

[8] So far as the counter-offer of settlement made by the employee on 26 September 2013 was concerned, the employer noted that in order to achieve compensation of a similar quantum the employee would have needed to convince the Commission that he had not urinated as alleged or that his actions were not so serious as to justify summary dismissal. In respect of the quantum of compensation, it was also noted that the applicant had found other employment not long after his dismissal. Costs were thus sought on an indemnity basis.

[9] Finally it was put for the employer that costs could be awarded against the solicitors firm as such an order would be “consistent with the reasoning of Deputy President Hamilton in Alexander M Paty Ltd v Gregory Lloyd; McDonald Murlholme Solicitors’ 5. The employer acknowledged the decision of Senior Deputy President Richards in Dean v Sybecca Pty Ltd t/as Sleepy Lagoon Hotel 6 but submitted that ‘the approach of DP Hamilton to the issue of whether an order can be made against a law firm is the correct interpretation of s.401 of the FW Act.’ It was put that it is ‘expected that Mr Uoifalelahi’s retainer was with the firm O’Halloran Deal, rather than directly with the partners of the firm or its employees’ and that, “an order, if made, can be directed against the firm of O’Halloran Deal.” 7

OHD’s Case

[10] It was submitted for OHD that;

● OHD was not the ‘representative’ who obtained leave at the hearing to represent the employee and the application was therefore invalid;
● An award of costs cannot be made against a ‘lawyer’ who is not a natural person, given the definition of lawyer contained in s.12 of the Act;
● There is no evidence before the Commission to support the submissions made by the employer; and
● There was no evidence before the Commission that OHD advised the employee as alleged by the employer and, at the time the application was made and until it was determined, the employee had reasonable prospects of success and it was not unreasonable for advice to be given by OHD that the applicant should continue to hearing.

[11] OHD referred to s.401 of the Act and conceded that the original application was made under s.394. It was put that OHD is a partnership of lawyers and that the partner (Ms Briggs) with carriage of the employee’s matter is a solicitor and a ‘lawyer’ within the meaning of s.401(1)(b) of the Act. It was noted that Mr Cleary, the barrister who represented the employee at the hearing was also a ‘lawyer’ within the meaning of that section.

[12] It was argued that the barrister, Mr Cleary, and not OHD, was ‘the representative’ for the purposes of s.401(1A) and that any order under s.401(1A) must be made against ‘the representative’. According to OHD an application directed at OHD was, therefore, invalid.

[13] In the alternative, it was argued that an application under s.401(1A) could not be made against a partnership but only against “a lawyer”, a term defined in s.12 of the Act. Relying on the decision of Richards SDP in Dean v Sybecca Pty Ltd t/as Sleepy Lagoon Hotel, 8 it was put that any order under s.401 could only be made against a lawyer who is a natural ‘person admitted to the legal profession by a Supreme Court of a State or Territory.’9

[14] OHD submitted that there was no evidence to support the employer’s submissions that OHD had actively encouraged the employee to continue with his application when it should have been reasonably apparent to OHD that the employee has no reasonable prospect of success and no evidence of encouragement of the employee by OHD to continue to hearing. OHD referred to recent decisions 10 in which the lack or paucity of such evidence resulted in the refusal of applications of this type.

[15] It was put by OHD that the employee’s case was that he had not committed the alleged misconduct and the fact that, ultimately it was found that, on balance, he had urinated at the worksite as alleged, did not mean that it should have been apparent to OHD that the employee had no reasonable prospect of success.

[16] OHD further contended that :

‘Given the Employee’s case required resolution of differing witness statements and there was a line of authority to support the Employee’s case that he ought not to have been summarily dismissed even if the question of evidence (as to whether he urinated or not) was resolved against him, it is not open for Teys to argue that the claim had no reasonable prospects of success. It is enough that the Employee had an arguable case: Ustinov v Adrian Gordon T/A Gordon Consulting Engineers.’ 11

[17] It was also argued that there was no evidence to support the employer’s claim that OHD had acted unreasonably in not advising the employee to settle and in advising the employee to make a counter-offer of settlement. In this respect it was put that it is not open to the employer to rely on their ultimate success as evidence of any unreasonableness in rejecting their claim.

[18] Finally, the position of OHD was succinctly put, as follows, at paragraph 46 of their submissions:

“The Employee was entitled to test the circumstantial evidence of Tey’s witnesses in circumstances where he vigorously denied he urinated as alleged. The FWC may have preferred his version of events. There was also sound legal argument supported by authority before the Commission that the Employee’s act might not justify his summary dismissal. The FWC may have found that there was no economic impact on Teys. Indeed, as previously submitted, the Commissioner spent some time considering this aspect of the Employee’s case without any criticism of the conduct of same by OHD or Mr Cleary.” 12

Consideration

[19] While I am satisfied that the application for costs was made within the timeframe provided by s.402 of the Act, in my view the application is not valid, as it is made against OHD, a partnership of lawyers. The definition in the dictionary at s.12 of the Act clearly states that a lawyer is a person who is admitted to the legal profession by a Supreme Court of a State or Territory. While the definition of a legal ‘person’ may extend to corporations in certain circumstances, it is not possible for a partnership to be admitted to the legal profession. Rather, the partnership is comprised of individuals who have been so admitted. Clearly the reference in the dictionary is reference to a natural person. In this regard, I respectfully agree with the decision of Richards SDP in Dean v Sybecca Pty Ltd t/as Sleepy Lagoon Hotel that the application is not validly made, as OHD is not a ‘lawyer’ for the purposes of s.401(1)(b) of the Act. I note that the question was not argued before Hamilton DP in Alexander M Paty Ltd v Gregory Lloyd; McDonald Murlholme Solicitors’.

[20] Given my determination on this question I do not need to deal with the argument put by OHD that, in this matter, an order under s.401 may be made only against the representative who sought and was granted permission to represent the employee at the hearing. While I have had regard to those sections of the relevant Explanatory Memorandum 13 raised in the response of the employer, I note, that s.401(1)(c) states that the section applies if, among other matters, ‘under s.596 the person is required to seek FWC’s permission to be represented by the representative’. Given the terms of Rule 17A.1 of the Fair Work Commission Rules 201014 it would appear that permission is not ‘required’ in circumstances where a lawyer or paid agent represents a party for the purpose of preparing and/or lodging any written application, corresponding with FWC or lodging any document with FWC.

[21] Had the application been validly made, I would not have made the orders sought as I am not satisfied that the application was without reasonable prospect of success. The contention that the application was without reasonable prospect of success was relied upon by the employer in respect of s.401(1A)(a) and (b) and was thus an integral element to the costs application.

[22] An arguable case was put on the employee’s behalf at the hearing of the matter. The employee denied having urinated as alleged and no doubt communicated his denial to his representative. The employer held a different view, on the basis of the version of events that was relayed to the employer by the employer’s witness. I accept that proposition put on the employee’s behalf that given the conflicting version of events, the employee, through OHD, was entitled to test the evidence of the employer’s witness. In making my decision, I preferred the evidence of the employer’s witness and did not accept the evidence of the employee. My assessment of the veracity of the evidence that each witness gave is not something that could have been predicted with certainty. In light of this, and the employee’s long work history with the employer, it was not a foregone conclusion that the employee would have been unsuccessful in his application.

[23] Moreover, the employer did not provide any witness statements, or any documentation to support the contention that OHD encouraged the employee either to commence the proceeding or to pursue the matter through to a final determination or, alternatively, failed to advise the employee to discontinue the application. In such circumstances I cannot be satisfied that OHD encouraged the employee in the manner that the employer contends, or that OHD committed an unreasonable act or omission in relation to the employee’s pursuit of the matter.

[24] On the evidence before me I could not be satisfied that the requirements of s.401(1A)(a) or (b) are met and, were the application validly made, would dismiss the application on that basis.

Conclusion

[25] As I have found that the application for costs is not validly made, I must dismiss the application. In the alternative, as I am not satisfied that the requirements for the making of an order for costs have been met, I refuse to make the order sought.

[26] The application is dismissed.

 1   [2013] FWC 6560

 2   Paragraph 4 of the Employer’s Submissions

 3   [2012] FWAFB 6508

 4   Ibid at [14]

 5   [2013] FWC 8795

 6   [2011] FWA 1010

 7   Paragraph 28 of the Employer’s Submissions

 8   [2011] FWA 1010

 9   Fair Work Act 2009 s.23.

 10   Department of Education and Early Childhood Development v A Whole New Approach [2011] FWA 8040; Richter v Scottridge Holdings Pty Ltd T/A Super Safe Scaffolds [2013] FWC 2116

 11   [2013] FWC 3492

 12   Paragraph 46 of OHD Submissions

 13   Explanatory Memorandum to the Fair Work Amendment Bill 2012

 14   The applicable rules at the time the substantive application was made and heard.

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