Jonathon Lawes v Recochem Inc

[2020] FWC 3860

[2020] FWC 3860

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Jonathon Lawes
v
Recochem Inc.
(U2020/5812)

DEPUTY PRESIDENT BEAUMONT PERTH, 30 JULY 2020

Application for an unfair dismissal remedy – interlocutory decision relating to section 404 of the Fair Work Act - application for security for payment of costs – application refused.

[1] On 10 June 2020, Recochem Inc. (Recochem) made an application under s 404 of the Fair Work Act 2009 (Cth) (Act) for Mr Jonathon Lawes to provide security for costs. Rule 55 of the Fair Work Commission Rules 2013 (Rules) empowers the Commission to make an order of this nature. The application has been made in the context of an Unfair Dismissal application (substantive application) brought by Mr Lawes. Recochem is the respondent in the proceedings.

[2] Recochem contended that a security for costs order against Mr Lawes should be made on various grounds. Its submissions in this respect were extensive, but can be summarised as follows:

a) Mr Lawes’ claim is baseless, and his responses to allegations were superficial and do not provide any insight into the seriousness of the conduct that was alleged;

b) Mr Lawes was accused of serious and ongoing fraudulent behaviour, and had claimed bonuses and payments for work that was not performed;

c) Mr Lawes maintains there was not a valid reason for dismissal in circumstances where the evidence does not support such contention, given he was dismissed for allegedly making false entries in Recochem’s database, with respect to several clients over a period of two weeks, and thereby falsifying the extent of his performance and attendance to clients;

d) Mr Lawes’ application is vexatious in that the claims sought to be made by him in the substantive application lack reasonable grounds;

e) during a conciliation conference, Mr Lawes was provided with several opportunities to settle the matter, and such opportunities were, in Recochem’s view, reasonable;

f) while Mr Lawes has made submissions regarding financial hardship, this is not a bar to a person prosecuting a claim in the first instance and that there is no absolute rule that security for costs should be ordered against a party suffering financial hardship; and

g) Rechochem has been put to the expense of resisting a claim that is without reasonable cause and has been unreasonably instituted.

[3] Recochem sought that the amount of the security be $9,465.50, which was revised to $10,807.50, after Mr Lawes requested a hearing of the security for payment of costs application.

[4] Mr Lawes objected to the security for costs application. His submissions in this respect were premised on there not being ‘any hard evidence of alleged misconduct’ and that he was ‘innocent until proven guilty, not the other way round [sic]’. Mr Lawes continued to state Recochem had based its case on hearsay, and he had never intentionally misled or made false claims to Recochem. Observing that Recochem had chosen to hire a lawyer and understanding that lawyers cost money, Mr Lawes submitted that it was unreasonable for the company to expect that the cost of the lawyers lay with him.

[5] While it was the case that the parties were informed of the relevant sections of the Act in the introductory remarks of the proceedings, Mr Lawes had cause to ask whether I considered him to be a ‘living man’, which was answered in the affirmative. The relevance of the question purportedly arose from Mr Lawes’ incomprehension as to how the Act applied or was relevant to him as a ‘living man’. Counsel for Recochem submitted to the effect that the Act did apply to Mr Lawes and it was relevant in the circumstances. I observe that there was no evidence before me to suggest that Mr Lawes was illiterate, the materials filed concerning the application provided sufficient detail concerning the nature of the application and its application to Mr Lawes, and it was at all times open to Mr Lawes to make his own enquiries if he required clarification of matters he may not have understood regarding the application for security of costs.

The law

[6] Turning to the law, the costs application has primarily been filed pursuant to s 404 of the Act which provides:

404 Security for costs

The procedural rules may provide for the furnishing of security for the payment of costs in relation to matters arising under thisPart.

[7] Rule 55 of the Fair Work Commission Rules 2013, is the relevant procedural rule. Itprovides:

55  Order for security for payment of unfair dismissal matter costs

(1) A respondent or applicant in a matter before the Commission arising under Part 3-2 of the Act (unfair dismissal) may apply to the Commission for an order that a person provide security for the payment of costs in respect of the matter or part of the matter.

Note 1:       The application must be in the approved form—see subrule 8(2).

Note 2:       The Commission will not ordinarily make such an order before the conclusion of conciliation.

(2) The person to whom an order made under subrule (1) applies must pay the amount of security at the time, and in the manner and form, required by the order.

(3) If the Commission orders that security for the payment of costs be given in respect of a matter or part of a matter arising under Part 3-2 of the Act, a respondent or applicant in the matter may apply to the Commission to:

(a) reduce or increase the amount of security to be provided; or

(b) vary the time at which, or manner or form in which, the security is to be provided.

(4) Without limiting any other power which the Commission may exercise, if the Commission directs a person to provide security for costs in relation to a matter or part of a matter arising under Part 3-2 of the Act, the Commission may order that the matter be:

(a)  adjourned until security is provided; or

(b)  adjourned indefinitely.

[8] Section 400A of the Act permits the Commission to make an order for costs against a party to a matter arising underPart 3-2 of the Act, for the costs incurred by the other party to the matter, if the Commission is satisfied that the first party caused the 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.

[9] More generally, s 611 of the Act, whilst setting out that a person must bear their own costs in relations to a matter before the Commission, does allow the Commission to order costs in certain circumstances. Those circumstances include where the Commission is satisfied the application was made vexatiously or without reasonable cause, or where it should have been reasonably apparent to the applicant that her or his application had no prospects of success.

Principles

[10] The principles to be considered in exercising the discretion to award security for costs are found in Harris v Home Theatre Group (Harris) 1as extracted below:

Principles relevant to the making of orders for security of costs can be summarised as follows. There is no absolute rule to control the exercise of the discretion to order security for costs, and what should be done in each case depends on the circumstances of the case with the governing consideration being what is required by the justice of the matter. The making of an order for security for costs should not be oppressive in that it would stifle a reasonably arguable claim.

The financial position of the party against whom the order is sought, will be relevant in a number of circumstances. There is no absolute rule that impecuniosity of a party will entitle its opponent to an order for security for costs. There is also a general rule that poverty should not be a bar to a person prosecuting a claim at first instance. On appeal, the question of security is to be determined differently on the basis that the appellant has had his or her day in court, and should not be given a “free hit”, particularly in circumstances where the costs of a proceeding below had not been paid by the appellant.

In cases where the impecuniosity of the party against whom the order for security for costs is sought, it is relevant that the impecuniosity is itself a matter which the litigation may help to cure or arises from the conduct the party is complaining of. In such circumstances the party against whom the order is sought should not be shut out of litigation.

The prospects of success and the strength of the case of the party resisting the order is relevant. In Merribee (Supra)Kirby J said (citations omitted):

Another consideration that has sometimes been judged to be relevant is the strength of the case of the party resisting an order that it provide security for costs and evaluation (necessarily tentative) of its prospects of success. Thus, the fact that a party has secured special leave to argue its case on appeal has been thought a relevant consideration in some circumstances. Similarly, if a proceeding appeared hopeless and such as was bound to fail, the lack of apparent merit in a party’s case might be a reason for ordering it to provide security for the costs to which, it appears, it is needlessly putting its opponent. Such a consideration would need to be exercised with care, given that the real merits of a case might not emerge until the final hearing or might not sufficiently emerge in the necessarily brief proceedings typically involved in an application for security of costs. Furthermore, if a party asserts that its opponent’s proceedings are manifestly lacking in legal merit, other remedies are available to it to protect it from needless vexation.

In relation to costs, it is relevant that the nature of a proceeding is such that, even if successful, an order for costs might not be made or might be limited. The inability of a party to meet the costs of an unsuccessful proceeding, or the risk that a cost order will not be satisfied is also relevant to the exercise of the discretion. Other related considerations are that a party is, or is likely to be absent from the jurisdiction when a decision is made and has no, or few assets within the jurisdiction.

There may also be aspects of public interest which are relevant to the exercise of the discretion to make an order for security for costs, such as an application raising matters of general public importance, quite apart from the interests of the parties. Other matters that have been considered relevant are that a hearing of the proceedings is close at hand, or the party seeking the order has delayed its application for such an order. It may also be relevant that the parties, or some of them, are legally aided. (paragraph numbers omitted)

[11] The Full Bench in Zornada v St John Ambulance Australia (Western Australia) Inc 2 agreed with the summary of principles provided in Harris, whilst confirming that cost orders in the Commission’s jurisdiction are extraordinary and security for costs even more so, and that the Commission should award security for costs only in the rarest circumstances.

Consideration and conclusion

[12] I have taken into account all of these considerations in the case authority as set out. In this respect, I am mindful of that which was said by the Full Bench, namely the Commission should only award security of costs in the rarest of circumstances.

[13] I have determined that it is not appropriate to make a security for costs order. However, I must acknowledge that the case is finely balanced. The submissions of Recochem are not absent merit. Although, on balance a review of the material submitted has led me to conclude that, as the matter currently stands, it does not persuade against the Applicant and is not so persuasive that an order for security for costs should issue.

[14] To further explain, at this stage, I am not so convinced that the proceedings are hopeless such as they are bound to fail. However, it should be observed that this view is arrived at in the context of where the proceedings currently sit. As was observed by Kirby J in Merribee, ‘…the real merits of a case might not emerge until the final hearing or might not sufficiently emerge in the necessarily brief proceedings typically involved in an application for security of costs’.

[15] It follows that the application for the payment of security for costs pursuant to s 404 of the Act is dismissed for the aforementioned reasons. An order 3 to that effect is issued accordingly.

DEPUTY PRESIDENT

Appearances:

Ms T Moltoni OAM, of IRIQ Law, for Recochem Inc.
Mr J Lawes, security for payment of costs Respondent.

Hearing details:

2020:
Perth (by telephone);
July 23.

Printed by authority of the Commonwealth Government Printer

<PR721213>

 1   [2011] FWA 2910, [7] – [12].

 2   [2013] FWCFB 8255, [36].

 3   PR721359.