Karen Baker v Roy Morgan Research Ltd

[2014] FWC 1856

[2014] FWC 1856

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Karen Baker
v
Roy Morgan Research Ltd
(U2013/539)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 24 MARCH 2014

Application for costs.

[1] On 6 September 2013 I found that Ms Karen Baker had been unfairly dismissed by Roy Morgan Research Pty Ltd (Roy Morgan) and I ordered she be paid compensation. 1 On 20 November 2013 an appeal against that decision was dismissed.2

[2] Ms Baker seeks costs against Roy Morgan because Roy Morgan:

a) unreasonably refused to accept Ms Baker’s offer to settle the claim;

b) unreasonably failed to make any genuine or reasonable effort to settle the matter;

c) unreasonably failed to attend the conciliation conference;

d) responded to the application vexatiously and without reasonable cause; and

e) it should have been reasonably apparent to Roy Morgan that its response had no reasonable prospects of success.

[3] Section 400A of the Fair Work Act 2009 (the FW Act) empowers the Fair Work Commission (the Commission) to award costs against a party:

“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.”

[4] Section 611 of the FW Act provides the Commission with the power to award costs in certain circumstances:

“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 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.

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.”

[5] Ms Baker relies on both sections.

[6] Section 400A was included in the FW Act from 1 January 2012 and applied to dismissals that occurred after that date.

[7] The Explanatory Memorandum stated that:

“168. Item 4 inserts a new section 400A to enable the FWC to order costs against a party to an unfair dismissal matter (the first party) if it is satisfied that the first party caused the other party to the matter to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the matter.

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.”

[8] In Construction, Forestry, Mining and Energy Union v Clarke 3the Full Court of the Federal Court considered the power under section 824 of the Workplace Relations Act 1996 to award costs. Section 824 provided as follows:

“(1) A party to a proceeding (including an appeal) in a matter arising under this Act (other than an application under s 663) must not be ordered to pay costs incurred by any other party to the proceedings unless the first mention party instituted proceedings vexatiously or without reasonable cause.

(2) despite subsection (1), if a court hearing a proceeding bracket including appeal) in a matter arising under this Act (other than an application under s 663) is satisfied that a party to the proceeding has, by an unreasonable act or omission, caused another party to the proceeding to incur costs in connection with the proceeding, the court may ordered the first mention party to pay some or all of those costs.”

[9] The Full Court held that: 4

As the authorities indicate, there is a distinction between a party who pursues arguments which are ultimately abandoned or rejected by the Court and a party who commences a proceeding which is misconceived in the sense of being incompetent or unsupportable: Australian and International Pilots Association  162 FCR at 402; Standish v University of Tasmania(1989) 28 IR 129 at 138-139. Simply because a party does not conduct its litigation in the most efficient way does not mean that the Court should exercise its discretion in s 824(2) of the WR Act to make a costs order. In our view, neither the late abandonment of some of its defence, nor the use of a notice of contention to advance a previously minor and ultimately unsuccessful argument, crosses the threshold of being “an unreasonable act or omission” for the purposes of s 824(2). True it is that the concession ultimately given by the respondent that it regarded the decision of Nicholson J as erroneous could have been given earlier. However, it was a concession which was, in light of the decision of this Court on the substantive appeal, properly made and beneficial to the appellants. Although it is arguable that the lateness of the concession may have put the appellants to some extra costs, we are of the view that it cannot be characterised as “unreasonable” in the circumstances of this case. Indeed, while courts should use the discretion in s 824(2) to ensure that parties to litigation arising from the WR Act do not engage in unreasonable acts and omissions which put the other party to undue expense, they should also be careful not to exercise the discretion with too much haste, given that such haste may discourage parties, for fear of an adverse costs order, from pursuing litigation under the WR Act in the manner which they deem best.

[10] These observations apply equally to section 400A of the FW Act.

[11] This provision requires the Commission to determine:

(1) whether there was an unreasonable act or omission; and

(2) did that act or omission cause the other party to incur costs in connection with the conduct or continuation of the matter?

[12] If those two criteria are satisfied the Commission may, in its discretion, award costs.

Failure to attend the conciliation conference

[13] A conciliation conference was scheduled to be held on 15 March 2013. It is not disputed the Roy Morgan did not attend the conciliation conference. On 28 February 2013, an email was sent by the Commission to Roy Morgan advising it of the conciliation conference. It is not disputed that due to an error at the Commission, that email was sent to an incorrect email address. On 15 March 2013, Mr Sam Schwarz on behalf of the Roy Morgan confirmed that it was unaware of the application or the listing for the conciliation.

[14] Ms Baker in her submission relied upon an alleged comment by the Commission conciliator that he had spoken to an unnamed member of Roy Morgan’s staff to confirm the listing. The conciliator was not called to give evidence. I am not prepared to rely on this evidence.

[15] I therefore find that Roy Morgan did not unreasonably fail to advise in advance that it was not participating in the conciliation or failed to participate in the conciliation conference and to the extent that Ms Baker relies on this to support her claim for costs this ground is rejected.

The offer of settlement

[16] On 27 May 2013, Ms Baker proposed to settle her claim if Roy Morgan paid her $28,000 gross taxed according to law. That offer was expressed as “without prejudice” however the letter advised that if Ms Baker recovered a greater amount at the arbitration she would “rely on this letter in an application for costs under section 400A.... as the failure to accept the offer [would] be an unreasonable act or omission by the respondent in the conduct or continuation of the matter.” The offer was open until 29 May 2013.

[17] On 28 May 2013, Roy Morgan made a counter offer in terms that Ms Baker discontinue her application and each party bear their own costs.

[18] On 29 May 2013, the counter offer was rejected and no further offer was made.

[19] These offers were made after the parties had filed material in support and opposition to the application. It should be noted however that Ms Baker filed further material on 31 May 2013.

[20] Ms Baker contends that there were two unreasonable acts. One was rejecting her offer and the second was that Roy Morgan unreasonably failed to make a genuine or reasonable effort to settle the matter prior to the hearing.

[21] It is accepted that “a deliberate decision to refuse a reasonable offer of settlement is a factor which would normally weigh more heavily in favour of a finding of unreasonable action than would a mere failure to respond by an unrepresented litigant.” 5

[22] Ms Baker’s offer of settlement was $28,000 and I ordered she be paid $37,000 in compensation. The assessment of whether the refusal to accept that offer is not determined by a simply mathematical exercise. 6 If the Parliament had intended the Commission to adopt the approach of the courts in assessing calderbank offers it would have made that clear in the legislation.

[23] I do not consider it was unreasonable for Roy Morgan to reject the offer of settlement.

[24] However I do accept that the failure to make a genuine or reasonable offer of settlement prior to the hearing was unreasonable. Roy Morgan’s offer assumed that it would be successful on every aspect of its jurisdictional objection. Roy Morgan made this offer at a time when it had filed its material in support of its jurisdictional objection. Given my findings in this matter, that assessment was not reasonable.

[25] To have succeeded in its jurisdictional objection, Roy Morgan needed to establish four things:

1. That Ms Baker’s job was no longer required because of changes in Roy Morgan’s operational requirements.

[26] I found that Roy Morgan produced no evidence about the changes in the operational requirements of the business which required the creation of a new position and the abolition of Ms Baker’s job. 7

2. That it had consulted with Ms Baker.

[27] I found that “there [was] nothing in the evidence that suggested that Mr Schwarz consulted with Ms Baker after he made the decision to make her position redundant.”

3. That it was not reasonable to redeploy Ms Baker.

[28] I made no final determination in respect of this. However I made findings that there was no evidence that Mr Schwarz discussed any vacancies with Ms Baker or attempted to ascertain if there were any suitable vacancies in associated entities.

4. In the event that it failed on its jurisdiction, that the termination was not harsh, unjust or unreasonable.

[29] I found that no evidence was put forward by Roy Morgan to support a finding that the termination of Ms Baker’s employment was not harsh, unjust or unreasonable. No rational for the termination of Ms Baker’s employment apart from its submissions that this was a genuine redundancy was put forward by Roy Morgan. Once this objection failed Ms Baker’s claim that she had been unfairly dismissed was bound to succeed.

[30] All these conclusions were based on the evidence called by Roy Morgan. This was not a case of competing evidence in which Roy Morgan failed on the balance of probabilities. This is a case where on the evidence of Roy Morgan alone it should have been reasonably apparent that the jurisdictional objection had no reasonable prospect of success.

[31] Given the concession of Roy Morgan that if its jurisdictional objection failed Ms Baker would have remained in its employment for a further two years, it was incumbent on Roy Morgan having reviewed its evidence to take steps to have the matter resolved without putting Ms Baker to the expense of the hearing. Instead it took the view Ms Baker’s claim had “no tenable basis on which to sustain a credible claim of unfair dismissal.”

[32] The decision to order costs is a discretionary one. I have decided in all the circumstances of the case that it is appropriate to order costs against Roy Morgan.

[33] However given my findings I am not prepared to order that Roy Morgan pay all the costs sought by Ms Baker. I have found that Roy Morgan should have reached the conclusion that its jurisdictional objection had no reasonable prospect of success after it had reviewed all its evidence, and made a reasonable offer to settle the claim so as to avoid the need for a hearing. I will therefore order costs be paid from the date of its settlement offer, namely 28 May 2013.

[34] I will not include in the order for costs, the costs associated with the hearing of the application to set aside the notice to produce as the order was set aside and a new order issued.

[35] Included in the costs to be paid are the costs of this application, as had this matter settled prior to the hearing of the substantive application these costs would have also been avoided.

[36] Given my decision it is not necessary to consider the application under s.611 of the Act.

[37] Ms Baker is to file and serve an itemised schedule of costs reflecting this decision by close of business on 31 March 2014.

DEPUTY PRESIDENT

Appearances:

N Campbell for the Applicant.

J Yeatman for the Respondent.

Hearing details:

2014.

Melbourne:

13 January.

 1   Karen Baker v Roy Morgan Research Pty Ltd[2013] FWC 6694 and PR541442

 2   [2013] FWCFB 8936

 3 (2008) 170 FCR 574

 4   Ibid at [29]

 5   Cugura v Frankston City Council [2012] FCA 1299 at [31]

 6   Blagojevch v Australian Industrial Relations Commission 172 ALR 611 at [34]

 7   Baker v Roy Morgan Research Ltd[2013] FWC 6694 at [22]

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