Kelly Simpson v Mohammed Shahid Akram T/A Mad About Price

[2013] FWC 7613

[2013] FWC 7613

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Kelly Simpson
v
Mohammed Shahid Akram T/A Mad About Price
(U2012/17111)

DEPUTY PRESIDENT GOSTENCNIK MELBOURNE, 4 OCTOBER 2013

Application for costs.

Introduction

[1] On 26 July 2013 I issued a decision which dealt with an unfair dismissal remedy application by Ms Kelly Simpson (Applicant) made under section 394 of the Fair Work Act 2009 (the Act). I determined that the dismissal of the Applicant by Mr Shahid Akram (Respondent) was harsh, unjust and unreasonable. I also concluded that reinstatement of the Applicant to her former position with the Respondent was appropriate and therefore ordered her reinstatement together with an order restoring lost pay. On 9 August 2013, the Applicant applied for an order for costs against the Respondent in relation to the unfair dismissal remedy application.

The costs application

[2] The Applicant has applied for an order for costs on the following bases. Firstly, under section 400A (1) of the Act on the ground that the Respondent caused costs to be incurred by the Applicant because of an unreasonable act or omission of the Respondent in connection with the conduct or continuation of the Applicant’s unfair dismissal remedy application. Secondly, under section 611(2)(b) of the Act on the ground that it should have been reasonably apparent to the Respondent, that his response to be unfair dismissal remedy application, had no reasonable prospect of success.

Costs order under section 400A

[3] The first of these grounds can be dealt with in short compass. Section 400A was inserted into the Act by Item 4, Part 3 of Schedule 6 of the Fair Work Amendment Act (2012) (Amendment Act), and came into effect on 1 January 2013. Item 12, Part 6 of Schedule 11 of the Amendment Act provides that the amendments made by Part 3 of Schedule 6 apply in relation to dismissals that take effect after the commencement of that Part. Part 3 of Schedule 6 of the Amendment Act commenced on 1 January 2013. As the Applicant’s dismissal took effect on 7 December 2012, and therefore before Part 3 of Schedule 6 commenced, it follows that no order for costs may be made under section 400A in relation to the Applicant unfair dismissal remedy application. That part of the Applicant’s application for costs is therefore dismissed.

Costs orders under section 611

[4] Section 611 of the Act sets out some of the circumstances in which an order for costs might be made in relation to a matter before the Fair Work Commission (the Commission) 1. The primary position in relation to costs of a matter before the Commission is that each person involved in a matter must bear their own costs2. The policy which underpins this provision seems clear. It is designed to enable a person to make or defend an application without being burdened with the risk that an order for costs might be made against the person. However, the legislature has recognised that there will be circumstances in which an order for costs directed to a person might be appropriate. Therefore, the Commission may exercise discretion to make an order that a person bears some or all of the costs of another person in relation to an application to the Commission if it is satisfied that:

(a) a person made an application, or responded to an application, vexatiously or without reasonable cause; or

(b) it should have been reasonably apparent to a person that that person’s application or response to an application had no reasonable prospect of success 3.

Before beginning to consider whether to exercise a discretion to make an order for costs, I must first be satisfied that one of the circumstances set out in the preceding subparagraphs are engaged in relation to the Respondent’s response. Subparagraph (a) above is directed to an examination made of the circumstance at the time the response is made, while the existence of a circumstance in subparagraph (b) above may be discerned at various points in time during the conduct of a matter before the Commission and is not confined to the time at which a person responds to an application.

[5] As I indicated earlier, apart from the section 400A ground, the Applicant relies only on the ground in section 611(2)(b) of the Act to found its application for costs, I will therefore limit my consideration to that ground. I note that in the Applicant’s further submissions regarding costs dated 23 September 2013, the Applicant submits at [4] that “the Respondent has not addressed the real question of the application, which is whether the Respondent responded to the application vexatiously or without reasonable cause . . .”. These are matters which fall for consideration under section 611(2)(a) of the Act. These are not matters which are relied upon in the costs application filed by the Applicant, nor were they matters raised in the Applicant’s submissions dated 23 August 2013. No application has been made to amend the Applicant’s costs application so as to include these additional grounds, and the Respondent has not been given an opportunity to consider or to respond to these grounds. In any event apart from the allegation contained in [4] of the Applicant’s further submissions regarding costs, no cogent argument is advanced to support any assertion that the Respondent responded to the Applicant’s unfair dismissal remedy application, vexatiously or without reasonable cause. I therefore do not consider that there is any appropriate basis for an order for costs to be made on the grounds in 611(2)(a).

Submissions of the Applicant

[6] The Applicant submits that it should have been reasonably apparent to the Respondent that his response to the Applicant’s unfair dismissal remedy application had no reasonable prospect of success and advances a number of arguments in support of this contention. First the Applicant points to paragraph [46] of my decision in which I said:

…the Respondent did not have any basis to believe on reasonable grounds that the Applicant’s conduct was sufficiently serious to justify immediate dismissal.

[7] Secondly, the Applicant relies on my conclusion at paragraph [58] that:

In my view the Respondent’s reason was capricious and spiteful.

[8] Thirdly, the Applicant submits that she was awarded reinstatement with back pay in respect of lost income which is the most favourable award open to the Commission.

[9] Fourthly, the Applicant submits that, notwithstanding the fact that the Respondent was not represented in these proceedings, it should have been evident to him that his response to the application had no reasonable prospect of success. If it was not evident at the commencement of the hearing then it should have been evident during the hearing that the Applicant was bound to succeed. Finally it is submitted that my comments, referred to in [6] and [7] above highlight the manifestly untenable nature of the defence presented by the Respondent. The continuation of this matter and failure to enter into reasonable discussions of settlement further highlight that the defence had no basis.

Submissions of the Respondent

[10] The Respondent focused much of his attention to the application on the section 400A ground advanced by the Applicant. This was despite my having alerted the parties at the beginning of the oral hearing into the costs application, that by reason of the Amendment Act the Applicant’s section 400A application for costs was bound to fail.

[11] Essentially, in answer to the Applicant’s application under section 611(2)(b), the Respondent relies on the general rule that each party must bear their own costs in relation to a matter before the Commission. The Respondent says that the Applicant chose to be represented by a lawyer while he conducted his own defence of the application. He was entitled to vigorously defend the unfair dismissal remedy application and that is what he did. The Respondent says he was not dishonest and was always truthful and was argumentative “for the right reasons of defending” himself.

Consideration

It should have been reasonably apparent to a person

[12] An assessment of whether the circumstance described in section 611(2)(b) exists is not in my view, limited to the time at which the Respondent made or lodged his response, although it may arise at that time. Knowledge gained by the Respondent during the course of a proceeding and after making the response might lead to a conclusion that it should have been reasonably apparent to the Respondent that is response had no reasonable prospect of success. This knowledge could be gained, for example at a time after the Respondent has received the Applicant’s evidentiary material, or during the course of the hearing.

[13] Section 611(2)(b) directs attention to that which should have been “reasonably apparent to a person”. In this context whether something should have been “reasonably apparent to a person” is not to be determined by reference to the subjective views of the Respondent. Rather, the question must be objectively determined 4.

No reasonable prospects of success

[14] Section 611(2)(b) also directs attention to the substance of the response. A conclusion that a particular response “had no reasonable prospect of success” is one that should only be reached with extreme caution in circumstances where the response is manifestly untenable or groundless or so lacking in merit or substance so as to be not reasonably arguable 5.

Should it have been reasonably apparent to the Respondent that the response to the unfair dismissal remedy application had no reasonable prospect of success?

[15] Inasmuch as the Applicant says that it should have been reasonably apparent to the Respondent at the time that he made his that it had no reasonable prospect of success, I reject that submission. It was accepted in proceedings before me that the Applicant had been given a warning about her conduct on 28 December 2011. The forthright manner in which the Applicant pursued her payment grievance with the Respondent by SMS on 7 December 2012 resulted in the Respondent forming a view (albeit erroneously) that this was another example of unacceptable conduct on the part of the Applicant and ultimately lead to the termination of the Applicant’s employment later that day. Bearing in mind that the Respondent was a small business operator and did not have access to any human resource management specialist expertise to advise him about the appropriate steps that he should take in the circumstances, it is not unreasonable for the Respondent to respond to the Applicant’s unfair dismissal remedy application by denying that he had unfairly dismissed the Applicant and by raising the Applicant’s past behaviour. It cannot therefore be said that at the time the Respondent made the response it was manifestly untenable or groundless or so lacking in merit or substance so as to be not reasonably arguable.

[16] In the alternative, the Applicant submits it should have been evident to the Respondent during the hearing that the Applicant was bound to succeed, which by necessary implication I take to be a submission that it should have been reasonably apparent to the Respondent during the hearing of the application that his response was bound to fail and therefore had no reasonable prospect of success. The Applicant draws her primary support for this contention from extracts of the two paragraphs in my decision which are reproduced earlier above.

[17] It is insufficient in my view to point to conclusions drawn from facts found in a decision to make good an argument that it should have been reasonably apparent to the Respondent that his response to an unfair dismissal remedy application had no reasonable prospect of success. The fact that a response did not ultimately succeed does not mean that it had no reasonable prospect of success. The determination of an unfair dismissal remedy application requires the decision maker to consider all of the statutory factors that are applicable to the application. In particular a consideration of whether the Applicant’s dismissal was harsh, unjust or unreasonable is not confined to whether there was a valid reason for the dismissal. So much is clear from the enumeration of factors that must be considered by the Commission in determining whether or not a dismissal was harsh, unjust or unreasonable 6. Furthermore in the course of the hearing the Respondent’s response included an allegation that because of the disputed versions of the incident that occurred on 28 December 2011, there had on either version been a termination of the Applicant’s employment, and that the period of employment following 28 December 2011 was a new and separate period of employment, the consequence of which was that the Applicant could not maintain her unfair dismissal remedy application because she had not, at time of the dismissal on 7 December 2012 completed the minimum employment period7. The determination of this issue required a determination of facts based on competing evidence and a determination of questions of law. While this aspect of the Respondent’s response ultimately failed, it was not without merit.

[18] The Respondent also relied on allegations of past conduct of the Applicant, the determination of which required a resolution competing evidence and whilst ultimately the Respondent’s evidence in relation to many of the allegations was either not accepted by me or was insufficient to make good the allegations, it does not follow that the response founded on those allegations was manifestly untenable or groundless or so lacking in merit or substance to be not reasonably arguable.

[19] The Applicant says that the comments in my decision reproduced earlier above at [6] and [7], highlight the manifestly untenable nature of the defence presented by the Respondent. This overstates my conclusions. Had I formed the view that the Respondent’s case was manifestly untenable I would have said so. The best that can be said is that Respondent’s defence was in many respects, weak and ultimately failed.

[20] The Applicant’s reliance on the fact that she was awarded reinstatement with back pay in the resolution of her unfair dismissal remedy application in support of the application under section 611(2)(b), is misguided. The remedial outcome does not speak to whether it should have been reasonably apparent to the Respondent that his response to the unfair dismissal remedy application had no reasonable prospect of success. Reinstatement is the primary remedy and the order to reinstate that Applicant reflects the fact that I was satisfied that an order for reinstatement was appropriate. Consideration of a remedial outcome comes after the determination of the central question of whether the Applicant’s dismissal was harsh unjust or unreasonable. Moreover it does not follow that a manifestly untenable response to an unfair dismissal remedy application will result in an order for reinstatement. The question of reinstatement is always to be determined by whether that remedy is appropriate in all the circumstances and not by reference to the relative strength of the employer’s response.

[21] Similarly the Applicant’s reliance on the Respondent’s failure to enter into reasonable discussions of settlement in support of its application for costs under section 611(2)(b), is also misguided. Whether or not the Respondent entered into or participated in reasonable settlement discussions is not relevant to determining whether his response to the unfair dismissal remedy application had no reasonable prospect of success or whether that fact should have been reasonably apparent to him. This is a submission that might be made in support of an application under section 400A of the Act, but for the reasons given earlier above, such an application is not available to the Applicant.

[22] I am therefore not satisfied that it should have been reasonably apparent to the Respondent that his response to the Applicant’s unfair dismissal remedy application has no reasonable prospect of success.

Conclusion

[23] For the reasons given above the Applicant’s application for costs made under section 611(2) is dismissed.

DEPUTY PRESIDENT GOSTENCNIK

Appearances:

A. Jewell for K. Simpson

S. Akram appeared in person

Hearing details:

2013.

Melbourne:

3 September.

 1   The Commission may also make an order for costs under section 376, 400A and 780

 2   Section 611(1)

 3   Section 611(2)(a) and (b)

 4   See Baker v Salva resources Pty Ltd (2011) 211 IR 374; Wodonga Rural City Council v Lewis (2005) 142 IR 188

 5   See Baker v Salva resources Pty Ltd (2011) 211 IR 374; Smith v Barwon Region Water Authority (2009) 187 IR 276

 6   See Section 387

 7   See Section 383

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