Johann Roos v WBHO Civil Pty Ltd

[2015] FWC 3335

[2015] FWC 3335

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Johann Roos
v
WBHO Civil Pty Ltd
(U2015/2786)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 15 MAY 2015

Application for relief from unfair dismissal - costs application.

[1] On 10 April 2015, I dismissed Mr Johann Roos’ application for an unfair dismissal remedy because he was not protected from unfair dismissal because he earned more than the high income threshold and he was not covered by an award or an agreement. 1

[2] WBHO Civil Pty Ltd applied for costs within 14 days of the date of the decision.

Submissions of WBHO

[3] WBHO submitted that Mr Roos was put on notice on 24 March 2014 that if the matter went to a hearing it would incur considerable costs and that it reserved its rights in regards to seeking a costs order.

[4] It submitted that Mr Roos should reasonably have been aware when he made his application that he earned more than the high income threshold and his application was lodged out of time.

[5] WBHO’s employer response lodged on 10 March 2015 put Mr Roos on notice that it objected to the application because Mr Roos earned more than the high income threshold and was not covered by an award.

[6] It put forward additional submissions on 24 March 2015 clearly explaining the reason why Mr Roos’ income exceeded the high income threshold.

[7] It submitted that the test of whether it should have been reasonably apparent that the application had no reasonable prospects of success is an objective test.

[8] It submitted that a reasonable person, after seeing the material filed by WBHO, would have recognised that his or her case had serious flaws.

[9] It submitted that when combined with the fact that the application was not lodged within 21 days it should have been reasonably apparent to Mr Roos that his application had no reasonable prospects of success.

[10] It further submitted that having been put on notice, it was unreasonable for Mr Roos to continue with his application and that that unreasonable act caused WBHO to incur costs.

Submissions in reply by Mr Roos

[11] Mr Roos submitted that he had been unfairly dismissed. He said that at the time he lodged his application he had the firm belief that his salary fitted under the high income threshold because he had only worked for six months of the year. He submitted that he could not afford legal representation.

[12] He accepted that he read the email from WBHO advising that it would reserved its rights in regards to seeking a costs order but he did not realise that this created a legal basis on which WBHO could rely to make a costs application. He submitted that he would have objected to WBHO having legal representation had he known that costs could be awarded against him.

[13] He submits that he is at significant financial disadvantage as he is unemployed. He also submitted that the legal fees claimed are excessive as the first time legal representation for WBHO was raised was at the conference.

[14] He submitted that there were no exceptional circumstances warranting the ordering of costs.

WHBO in reply

[15] WHBO submitted that Mr Roos’ reliance on the merits of his claim misunderstands the issue. The issue that had to be determined was whether he earned more than the high income threshold. WBHO submitted that the use of the term ‘annual salary’ should have alerted Mr Roos that he exceeded the high income threshold. It submitted that Mr Roos’ ignorance of the law is an insufficient excuse. It also relied upon the fact that Mr Roos had the benefit of material from WBHO explaining how the high income threshold was calculated.

[16] As far as Mr Roos’ financial difficulties, it was submitted that Mr Roos earned well over the average wage.

[17] It submitted that Mr Roos’ lack of understanding about the letter from WBHO was no excuse and he was put on notice that there was a costs risk.

[18] It submitted that it was unfair for a business to incur costs when there was no reasonable basis on which the claim could succeed.

[19] It submitted that it was in the public interest to discourage claims or to encourage withdrawal of claims when it is abundantly apparent that pursuing the claim would have no prospects of success.

The Legislative Framework

[20] The Fair Work Commission has the discretion to award costs against a party if certain preconditions are met.

[21] Section 611 of the Fair Work Act 2009 provides as follows:

(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 ofthe 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.

[22] Section 400A 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.

Should it have been reasonably apparent to Mr Roos that his claim had no reasonable prospects of success?

[23] In Baker v Salva Resources Pty Ltd 2a Full Bench summarised the approach to be taken in relation to section 611(2)(b) of the Act as follows:

"[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 [Wodonga Rural City Council v Lewis, PR956243, at para 6]; 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 [Deane v Paper Australia Pty Ltd,PR932454, at paras 7 and 8] or so lacking in merit or substance as to be not reasonably arguable. [A Smith v Barwon Regional Water Authority, [2009] AIRCFB 769 at para 48]."

[24] I accept Mr Roos submission that he thought his unfair dismissal claim had merit. However once the employer response form was filed he was put on notice that there were two objections to his application. One of them was able to be remedied if he was able to persuade the Commission that there were exceptional circumstances which warranted him being granted an extension of time. The other, namely that he earned more than the high income threshold, was fatal to his application.

[25] Mr Roos commenced employment with WBHO in February 2009 and was dismissed in January 2015. Mr Roos relied upon his income in the financial year and decided that his income did not exceed the high income threshold. There is nothing in the Fair Work Act 2009 to suggest that the high income threshold is calculated on the basis of what someone earned in the preceding financial year. I might have accepted Mr Roos’ explanation if he had only been employed in that financial year but he had been employed for six years and Mr Roos was at all times aware of his annual salary.

[26] In any event, the test is objective and Mr Roos’ application was manifestly untenable or groundless. I find that it should have been reasonably apparent to him that his application had no reasonable prospect of success once the objection was lodged.

[27] Having found the necessary prerequisites for the order of costs has been met I am required to consider whether I should exercise my discretion to award costs.

[28] The starting point is that each party bears their own costs.

[29] In this case, it was said that Mr Roos was on notice from 24 March 2015 that he was at risk of having costs awarded against him. Mr Roos said he did not understand that this is what the expression used by WBHO meant. I agree that the language used by WBHO was not as clear as it could have been particularly as Mr Roos was unrepresented. Further, that letter was sent to the Commission and cc’d to Mr Roos. I am not satisfied that this clearly put Mr Roos on notice, that should his case fail on any point, that costs would be sought against him.

[30] I have had regard to the fact that Mr Roos was unrepresented. However I have also had regard to the fact that his argument as to why he earned less than the high income threshold was not credible. I accept the submission of WBHO that Mr Roos had a responsibility to assess the case put against him and make a reasonable decision about whether his case can succeed. If Mr Roos had done this he would have discontinued his application after WBHO filed its objection or at the latest after it filed its submissions.

[31] I have decided therefore to order Mr Roos pay some but not all of WBHO’s costs.

[32] While objectively the matter should have been discontinued after the objection was raised, I accept that subjectively Mr Roos was entitled to see how WBHO responded to his argument about how he calculated the high income threshold. Once WBHO’s material was filed, he should have discontinued his application and WBHO is entitled to its costs from that date.

[33] I will therefore order that Mr Roos pay WBHO costs of $1920 within 21 days of the date of this order.

DEPUTY PRESIDENT

<Price code C, PR567428>

 1   [2015] FWC 2511

 2   [2011] FWAFB 4014

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