Katrina Sayce v The Trustee for Mag Unit Trust T/A Mag Apprenticeships
[2024] FWC 1319
•23 MAY 2024
| [2024] FWC 1319 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.365—General protections
Katrina Sayce
v
The Trustee For Mag Unit Trust T/A Mag Apprenticeships
(C2023/7220)
| COMMISSIONER WILSON | MELBOURNE, 23 MAY 2024 |
Application for costs pursuant to s.375B and s.611 of the Fair Work Act 2009 – costs application dismissed.
This decision deals with a cost application made by The Trustee For Mag Unit Trust T/A Mag Apprenticeships, (MAG Apprenticeships or the Costs Applicant) against Katrina Sayce (Ms Sayce or the Costs Respondent). The application is made pursuant to s.375B and s.611 of the Fair Work Act 2009 (the Act).
The application follows the decision made by me on 22 February 2024 in the matter of Katrina Sayce v The Trustee for Mag Unit Trust T/A Mag Apprenticeships[1] (the Jurisdictional Decision) in which I found Ms Sayce had not been dismissed within the meaning of the Act and dismissed her general protections application as it was not made in accordance with the Act.
By agreement of the parties this decision has been made on the papers filed by each party.
After consideration of all the material before me I find that costs should not be ordered under either section and the Costs Application be dismissed.
BACKGROUND TO THE COSTS APPLICATION
MAG Apprenticeships’ costs application was lodged on 7 March 2024 naming Katrina Sayce as the Costs Respondent. The application form does not state that the Costs Applicant seeks costs against Ms Sayce’s lawyer, Ms Sophie Coleman.[2]
The application is made under both s.375B (Cost orders against parties in relation to general protection applications) and s.611 (Costs, generally). The application in respect of s.375B argues Ms Sayce engaged in an unreasonable act or omission in connection with the conduct or continuation of her dispute which caused unnecessary costs to be incurred.[3] The application in respect of s.611 submits that Ms Sayce made her application without reasonable cause, and that it should have been reasonably apparent to her that the application had no reasonable prospect of success.[4]
The Costs Applicant seeks costs be awarded by the Commission either on a party-party basis or an indemnity basis.[5]
The question in dispute in the Jurisdictional Decision was whether Ms Sayce was dismissed within the meaning of the Act. My finding that she had not been dismissed turned on whether it could be established that her resignation from MAG Apprenticeships’ employment on 31 August 2023 was a forced resignation. The dismissal decision found it was not.
LEGISLATION
Section 375B of the Act provides as follows:
“375B Costs orders against parties
(1) The FWC may make an order for costs against a party (the first party) to a dispute for costs incurred by the other party to the dispute if:
(a) an application for the FWC to deal with the dispute has been made under section 365; and
(b) 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 dispute.
(2) The FWC may make an order under subsection (1) only if the other party to the dispute has applied for it in accordance with section 377.
(3) This section does not limit the FWC’s power to order costs under section 611.”
The Full Bench in Keep v Performance Automobiles Pty Ltd provided this context for consideration of applications under the provisions within s.375B:
“[11] Section 375B was inserted into the FW Act by the Fair Work Amendment Act 2013 (Cth). The new provision came into effect on 1 January 2014 and applies to dismissals which took effect from that date.
[12] The Supplementary Explanatory Memorandum to the Fair Work Amendment Bill 2013 (Cth) states as follows:
“New section 375B allows the FWC to order costs against a party to a general protections dismissal dispute (the first party) if it is satisfied that the first party caused the other party to the dispute to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the dispute. New section 375B is similar to the costs orders that are available against parties in relation to unfair dismissal matters (see section 400A).
57. This power to award costs is in relation to the dispute before the FWC and does not include costs associated with a general protections court application.
58. The power to award costs under new section 375B is not intended to prevent a party from robustly pursuing or defending a general protections dispute before the FWC. Rather, the power is intended to address the small proportion of litigants who pursue or defend disputes in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.
59. The FWC’s power to award costs under subsection 375B(1) 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.
60. 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.
61. New subsection 375B(2) provides that the power to award costs against one party in these circumstances is only exercisable if the other party to the dispute makes an application in accordance with section 377. New subsection 375B(3) makes it clear that the new power to award costs under subsection 375B(1) operates in addition to subsection 611(2), which enables the FWC to make costs orders against a person in certain circumstances, such as where an application is made vexatiously or without reasonable cause.”
[13] It is apparent from the Supplementary Explanatory Memorandum that the legislature intended that the power to order costs provided by s.375B only be exercised where there is clear evidence of unreasonable conduct. Such an approach is entirely consistent with the jurisprudence relating to the other costs provisions in the FW Act (such as s.611).””[6]
Section 611 of the Act provides as follows:
“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).”[7]
Section 375B of the Act allows for costs orders to be made if the Commission is satisfied that costs were incurred because of an unreasonable act or omission of a party in connection to the conduct of the case. An unreasonable act or omission includes one which was either deliberate or reckless.[8] A failure to consider the possible settlement of a matter may be unreasonable, but is not necessarily so,[9] as may be unreasonably failing to discontinue an unfair dismissal application.[10] A “warning” provided to a party about the prospects of their case may be relevant to the assessment of whether the continuation of a matter was reasonable.[11]
Section 611 of the Act allows for an order to be made for the payment of costs if the Commission is satisfied that a party’s application or response to an application was vexatious, without reasonable cause or if the Commission is satisfied that the application or a party’s response to an application had no reasonable prospect of success.[12]
It has been held in respect of s.611(2)(a) of the Act that the legislative intention under the section was for the power to order costs to be exercised where there is clear evidence of unreasonable conduct and that the power to order costs under the section should be exercised with caution and only in clear cases.[13] Further, 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. The Full Bench has indicated that 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”.[14] An application will have been made vexatiously “where the predominant purpose ... is to harass or embarrass the other party, or to gain a collateral advantage”.[15]
It has also been held that, as a general rule, each party must bear their own costs in proceedings before the Commission.[16] In cases where the statutory criteria may be enlivened, the Commission’s power to award costs under this provision of the Act is discretionary. There is also a requisite causal link between the act or omission and the costs incurred.
CONSIDERATION
The Costs Applicant’s case advances several matters of relevance.
Relevant to s.375B
Having made an application pursuant to s.365, a provision which deals with general protections application involving dismissal, but there having been no dismissal constructive or otherwise it follows that there can be no “application brought under section 365 “involving a dismissal”.”[17] Ms Sayce’s resignation on 31 August 2023 was “incontrovertible” and that Ms Sayce agreed that while on gardening leave she would remain available to perform tasks or to assist the business.[18] Because of these matters MAG Apprenticeships views the originating application by Ms Sayce as having being doomed to fail.
Ms Sayce disputes the reasoning of MAG Apprenticeships arguing that her application was not doomed to fail.[19] It is put forward by Ms Sayce that there was competing evidence before the Commission which necessitated a hearing and that she was entitled to have her claims tested in the Commission.[20] Further, although Ms Sayce’s application was ultimately dismissed, “the Commission accepted many of Ms Sayce’s factual claims.”[21]
Relevant to s.611
MAG Apprenticeships argues that it should have been reasonably apparent to Ms Sayce that her application had no reasonable prospects of success with her not having been constructively dismissed because she exercised her choice to separate from the respondent.[22] It puts forward that the Commission had found the various courses of conduct alleged to have been engaged in by MAG apprenticeships were proven untrue.[23]
Having voluntarily resigned and the courses of conduct complained of being either untrue or trivial Ms Sayce made the application without reasonable cause with it being reasonably apparent to her that the application had no reasonable prospect of success.[24]
Ms Sayce asserts that it was not clear that the proceeding must fail, for the same reasons as put forward relevant to s.375B.[25]
Relevant to its claim of indemnity costs MAG Apprenticeships argues the application displays “special features” because of a “without prejudice” proposal to Ms Sayce on 13 January 2024 inviting she walk away from her claim. By that time Ms Sayce had been served with all evidence upon which MAG Apprenticeships relied and so it should have been apparent to her that the application had no reasonable prospect of success given the things she complained of were untrue.[26] MAG Apprenticeships’ “without prejudice” correspondence asserts Ms Sayce had no reasonable prospect of overcoming its jurisdictional objection and that it had incurred costs of $25,025 to date. The correspondence invited Ms Sayce to discontinue her general protections application and undertake she would commence no further proceedings in any other jurisdiction dealing with the subject matter of the general protections application, in return for which MAG Apprenticeships would not seek costs against her.[27]
Ms Sayce asserts that it was not unreasonable for her to not accept the offer,[28] and “this is not a ‘special feature’ that justifies the making of an indemnity costs order”.[29] The offer was made less than 48 hours before the hearing and Ms Sayce and her representative had at the time it was received finalised their preparation for the hearing.[30] Ms Sayce did not respond to the offer as she understood the Commission to be a no costs jurisdiction, that the offer was made on a weekend and she has young children to care for, and she was focused on the hearing.[31]
Was there an unreasonable act or omission in respect of the application?
The Costs Applicant argues that the originating application itself was deficient and thereby an unreasonable act, as an application under s.365 for the Commission to deal with a dismissal dispute can only be made if a “person has been dismissed”. As there was no dismissal her application was doomed to fail. The fact that she had been on extended paid “garden leave” before resigning also told against there being a dismissal.
At all times Ms Sayce’s application was dependent on the availability of a finding she had been dismissed within the meaning of the Act as set out in s.386(1)(b). That contention was always a dependency but an uncertain one in the face of MAG Apprenticeships objection and the Commission’s obligation to determine it. The mere fact though of the dependency is insufficient for a finding that the originating application was an unreasonable act or omission. The statutory definition of dismissal plainly envisages a particular class of resignation actually being a dismissal for the purposes of the Act. It would not be unusual for claims of forced resignation to be heavily contested by the former employer.
The Costs Applicant relies for the foundation of its argument about s.375B that the application was an unreasonable act or omission that Ms Sayce’s claim of having been dismissed was doomed to fail with it being argued that “even upon the Applicant’s own evidence, there was nothing to support a forced resignation particularly considering the eleven (11) weeks of paid “garden leave””.[32]
This submission overlooks that the Jurisdictional Decision identified four potential elements of force[33] and that the findings about the evidence and merits of each varied. One of those potential elements related to the decisions made by MAG Apprenticeships surrounding Ms Sayce’s maternity leave replacement was the subject of a finding that it had been handled poorly and that Ms Sayce had a right to feel aggrieved.[34] The Jurisdictional Decision also noted there had been an implosion of the parties’ working relationship around 22 August 2023[35] and that their working relationship had deteriorated sharply before then with Mr Jones behaviour toward Ms Sayce being colder then, than in the months before May or June 2023.[36]
There is no proposition before the Commission that Ms Sayce did not earnestly believe her employment ended owing to conduct or a course of conduct entered into by MAG Apprenticeships and its management. The nature of the statutory definition of dismissal is that a finding about the section can only be made objectively and after the weighing of all available evidence.
It was not unreasonable that Ms Sayce commenced her application and continued it after the employer objected and sought the evidence of all concerned to be tested before the Commission. Despite the ultimate result of the Jurisdictional Decision its final outcome was not inevitable and each of the parties’ contentions required testing and weighing. Each of the main protagonists, Ms Sayce and Mr Jones, gave evidence in such a way that the outcome of the Jurisdictional Decision required an unusually high level of sorting and weighing of their competing claims. In that respect the outcome of the Jurisdictional Decision was not pre-ordained and Ms Sayce’s application was not doomed to fail from the start.
There is no proposition to be found in the Commission’s precedents that an applicant losing a claim of forced dismissal should be found by definition to have commenced their application unreasonably.
Potentially relevant to s.375B and the question of whether there was an unreasonable act or omission by Ms Sayce in respect of the application I consider it appropriate to consider the grounds MAG Apprenticeships puts forward regarding its claim for indemnity costs. That submission surrounds correspondence it sent to Ms Sayce on 13 January 2024 inviting her withdrawal of the general protections application. While MAG Apprenticeships did not put forward to me that this was a matter to be considered under s.375B I consider it appropriate to do so for the purposes of completeness in my consideration of the section as it potentially could be argued that Ms Sayce unreasonably acted when she proceeded with her application after receiving MAG Apprenticeships’ “walkaway” correspondence.
The letter from MAG Apprenticeships’ solicitors was sent to Ms Sayce’s lawyer, Sophie Coleman, on Saturday 13 January 2024 shortly after 3 PM. The jurisdictional hearing was scheduled for the following business day Monday 15 January 2024 at 10 AM AEDT. The letter is marked “without prejudice” and refers to without prejudice discussions the day before. It states that MAG Apprenticeships’ position is that Ms Sayce’s application has “no reasonable prospect of overcoming our client's jurisdictional objection” and that after the forthcoming hearing “[o]ur client will then seek its costs under section 611” but made no mention of an action under s.375B.
After setting out the costs incurred by MAG Apprenticeships to date, the correspondence suggests the parties walkaway with no monetary consideration involved:
“Notwithstanding the above, without any admission and on a purely commercial basis, our client has instructed us to make the following offer to the Applicant:
1. The Applicant is to immediately cease proceeding with her F8 application, which the parties will agree to be dismissed;
2. Our client will not seek its costs as against the Applicant; and
3. The Applicant agrees that the parties irrevocably settle the matters the subject of the proceeding. The Applicant will not commence any ancillary proceedings in other jurisdictions dealing with the same subject matter.
Given the significant costs our client has incurred to date, this compromise is reflective of our client's willingness to resolve the matter.
This offer will remain open for the Applicant's acceptance in writing until 5:00PM on Sunday, 14 January 2024, after which time the offer shall lapse and not be capable of acceptance.”[37]
Ms Sayce argues that it was not unreasonable for her to not accept the offer owing to it being made late and, on a weekend, and within 48 hours of the scheduled hearing with it being the case that she and her lawyer had completed their preparation for the hearing by that time.[38]
I accept that the lateness of the offer and the fact that it proposed only that each walk away from the proceedings with no monetary proposal means it was not unreasonable for Ms Sayce to reject the proposal. All concerned had sunk time and costs by then. There was likely no particular gain for Ms Sayce to walk away from the proceedings at that time. Further costs on the MAG Apprenticeships side in all likelihood should not have been great given that all submissions and witness material had been filed by that time and the only remaining costs were those of attendance at what should have been a relatively short jurisdictional hearing. As it turns out the hearing was far lengthier than necessary in my experience and required relisting. The fact that MAG Apprenticeships’ costs rose sharply from the time of the walkaway offer and eventually to over $42,000, while remarkable given the confined matter to be determined, is not a matter that requires coupling through the rear-view mirror with a proposition that rejection of the walkaway offer means it must have been an unreasonable act. Presumably MAG Apprenticeships’ lawyers were acting on its instructions and that they in turn cautioned their client about the risks and costs of pursuit of their legal strategy.
Had the walkaway proposal been connected with a monetary payment above the nominal my finding that Ms Sayce’s rejection of the proposal was not unreasonable would likely be different.
In any event I do not find that Ms Sayce’s rejection of the walkaway proposal was an unreasonable act or omission in respect of her application.
Was the application made vexatiously, without reasonable cause or did it have no reasonable prospect of success?
The Costs Applicant does not argue that Ms Sayce’s application was made vexatiously and no part of the material before me would suggest that such was the case.
MAG Apprenticeships though does submit that Ms Sayce’s application was made without reasonable cause and that it had no reasonable prospect of success. The Costs Applicant’s case in these regards repeats its submissions that Ms Sayce was not dismissed. It argues she faced an insurmountable hurdle not having been constructively dismissed; that she voluntarily resigned; and that various forms of conduct upon which she had relied had been found to be untrue.
I disagree that it could be found that Ms Sayce’s application was commenced without reasonable cause. This was not a case in which the contentions on her part were so obviously untenable that the application could not possibly succeed or was manifestly groundless. In this regard MAG Apprenticeships seeks to import a finding of retrospectivity to the effect that because Ms Sayce’s argument of forced resignation did not succeed it should follow that her application had been instituted without reasonable cause. For the same reason there is also no finding to be made that Ms Sayce’s application had no reasonable prospect of success.
In conclusion I am not satisfied that the evidence and other materials before me warrant findings against Ms Sayce under either s.375B or s.611. As the thresholds for a costs order have not been met there is no discretion for me to exercise.
It follows that the costs application must be and is dismissed.
COMMISSIONER
Final written submissions:
For the Costs Applicant 15 April 2024
For the Costs Respondent 9 April 2024
[1] [2024] FWC 366.
[2] Form F6, Application for Costs, 7 March 2024; Digital Court Book (DCB) pp.5-6.
[3] Mag Apprenticeships Outline of Submissions, 20 March 2024, [19]; DCB, p.16.
[4] Ibid, [27]; DCB, p.18.
[5] Form F6, Application for Costs, 7 March 2024; DCB p.13.
[6] [2015] FWCFB 1956.
[7] Fair Work Act 2009 (Cth) s.611.
[8] Goffett v Recruitment National Pty Ltd [2009] AIRCFB 626, [47].
[9] Roy Morgan Research Ltd v K Baker[2014] FWCFB 1175, [12]; with reference to Brazilian Butterfly Pty Ltd v Charalambous (2006) 155 IR 36, [39] – [45].
[10] Kube v Dominelli Group Pty Ltd T/A Rockdale Nissan[2016] FWC 8933, [15].
[11] Roy Morgan Research Ltd v K Baker[2014] FWCFB 1175, [21] – [23].
[12] Fair Work Act 2009 (Cth) s. 611.
[13] Keep v Performance Automobiles Pty Ltd[2015] FWCFB 1956, [13], [17].
[14] Ibid [17], with reference to Heidt v Chrysler Australia Limited (1976) 26 FLR 257, [272] – [273].
[15] Church v Eastern Health[2014] FWCFB 810, [29], with reference to Nilsen v Loyal Orange Trust [1997] 76 IR 180 at 181.
[16] Holmesby v Strathavon Resort Pty Ltd[2015] FWC 2754, at [31].
[17] Mag Apprenticeships Outline of Submissions, 20 March 2024, [20]; DCB, p.16.
[18] Ibid, [21] – [22]; DCB p.17.
[19] Sayce Outline of Submissions, 9 April 2024, [12]; DCB p.118.
[20] Ibid, [24]; DCB p.121.
[21] Ibid, [25]; DCB p.121.
[22] Mag Apprenticeships Outline of Submissions, 20 March 2024, [27]; DCB, p.18.
[23] Ibid, [29]; DCB, p.18.
[24] Ibid [30]; DCB, p.19.
[25] Sayce Outline of Submissions, 9 April 2024, [42]; DCB p.125.
[26] Mag Apprenticeships Outline of Submissions, 20 March 2024, [33]; DCB, p.20.
[27] Attachment KJH – 1; DCB, p.23.
[28] Sayce Outline of Submissions, 9 April 2024, [12]; DCB p.118.
[29] Ibid, [12]; DCB p.119; [51]; DCB p.128.
[30] Ibid, [28]; DCB p.123.
[31] Statement of Katrina Sayce, 9 April 2024, [9]-[11]; DCB p.131-132.
[32] Mag Apprenticeships Outline of Submissions, 20 March 2024, [25]; DCB, p.17.
[33] [2024] FWC 366, [38].
[34] Ibid, [85], [86].
[35] Ibid, [39].
[36] Ibid, [76].
[37] Attachment KJH – 1; DCB, p.23.
[38] Sayce Outline of Submissions, 9 April 2024, [28]; DCB, p.123.
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