Joan Obuchowski v RNTT Pty Ltd T/A Jobs Statewide Employment Solutions

[2018] FWC 5663

[2018] FWC 5663

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal
ss.400A, 611—Costs

Joan Obuchowski
v
RNTT Pty Ltd T/A Jobs Statewide Employment Solutions
(U2017/13421)

SENIOR DEPUTY PRESIDENT HAMBERGER MELBOURNE, 7 SEPTEMBER 2018

Application for unfair dismissal remedy – application dismissed – respondent’s application for costs – no reasonable prospects of success – costs ordered.

[1] On 15 December 2017, Joan Obuchowski applied to the Fair Work Commission (the Commission) for an unfair dismissal remedy under Part 3-2 of the Fair Work Act 2009 (Cth) (the FW Act) in relation to the termination of her employment by RNTT Pty Ltd T/A Jobs Statewide Employment Solutions (RNTT) on 24 November 2017.

[2] On 28 May 2018, I dismissed Ms Obuchowski’s application for an unfair dismissal remedy.

[3] On 11 June 2018, RNTT applied for a costs order against Ms Obuchowski under both ss.400A and 611 of the FW Act. I subsequently issued directions for both RNTT and Ms Obuchowski to file written submissions regarding the costs application.

Principles and consideration

[4] Section 400A of the FW Act provides:

‘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] Section 611 of the FW Act provides:

‘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).’

[6] I note that even if either s.611(2)(a) or s.611(2)(b) is satisfied, the Commission is not obliged to order costs. It is a discretionary decision. The power to award costs pursuant to s.611(2) is to be exercised with caution and only in a clear case. 1

Unreasonable act or omission: s.400A

[7] The explanatory memorandum to the Fair Work Amendment Bill 2012, which proposed, among other things, to amend the FW Act by inserting what is now s.400A, states:

‘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.’

Vexatiously or without reasonable cause: s.611(2)(a)

[8] RNTT contends that the application was made without reasonable cause, but does not appear to contend that it was made vexatiously.

[9] In Keep v Performance Automobiles Pty Ltd 2 (Keep), a Full Bench of the Commission summarised the principles relevant to when an application is made without reasonable cause:

‘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 (Church (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”.’

Reasonably apparent that application had no reasonable prospect of success: s.611(2)(b)

[10] In Keep, the Full Bench also summarised the principles relevant to the second limb of s.611(2) of the FW 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 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”.’ [endnotes omitted]

[11] Similarly, the Full Bench in Baker v Salva Resources Pty Ltd 3 stated:

‘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 to be not reasonably arguable.’ [endnotes omitted]

Consideration

[12] In my decision dismissing Ms Obuchowski’s application, 4 I found that Ms Obuchowski (together with her husband, who is also a former employee of RNTT) knowingly breached the respondent’s confidentiality and information technology policies.5 She attended the respondent’s premises after she had decided that she would never be returning to work for them6 and physically removed at least one document and notebooks containing job seekers’ personal information from those premises.7 She also deleted and directed her husband to delete emails and documents from the respondent’s computer system.8

[13] During the proceedings, the applicant denied that she had done any of these things. Her case was based on her assertion that she attended the office that day solely to print information about her entitlements upon redundancy (which she had some reason to think was about to occur), gather her personal belongings to prepare for a relocation to another office and clear her computer of personal documents. 9

[14] The applicant must have known, both when she made her application and during the proceedings, that this assertion was untrue. For reasons given in the decision, she must have known that she had breached the respondent’s policies.

[15] This is to be contrasted with a case where the applicant admits her conduct but argues that her dismissal was harsh, unjust or unreasonable because, for example, the misconduct was not serious enough when weighed against mitigating factors, or because of a lack of procedural fairness. That is not the type of case the applicant ran.

[16] In circumstances where Ms Obuchowski relied on factual assertions that she knew to be untrue, it is reasonable to conclude that her case was so lacking in merit or substance as to be not reasonably arguable. It follows that it should have been reasonably apparent to her that her application had no reasonable prospect of success. Her actions therefore satisfy s.611(2)(b) of the FW Act.

[17] I consider that a costs order is appropriate in the circumstances.

Conclusion

[18] The case Ms Obuchowski ran had no reasonable prospects of success, and this should have been reasonably apparent to her. Pursuant to s.611 of the FW Act, I will therefore order that she should pay the respondent’s costs, calculated in accordance with Sch 3.1 to the Fair Work Regulations 2009 (Cth). I will issue an order with this decision.

SENIOR DEPUTY PRESIDENT

Written submissions:

RNTT Pty Ltd T/A Jobs Statewide Employment Solutions: 3 July 2018.

Joan Obuchowski: 24 July 2018.

Printed by authority of the Commonwealth Government Printer

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 1   Church v Eastern Health t/as Eastern Health Great Health and Wellbeing[2014] FWCFB 810.

 2   [2015] FWCFB 1956 [17].

 3   [2011] FWAFB 4014 [10].

 4   Obuchowski v RNTT Pty Ltd T/A Jobs Statewide Employment Solutions[2018] FWC 3040.

 5 Ibid [33].

 6 Ibid [18].

 7 Ibid [34].

 8 Ibid [35].

 9 Ibid [16].