Kempall Pty Ltd T/A Ray White Woollahra/Paddington v Dean Emerson
[2022] FWC 2279
•29 AUGUST 2022
| [2022] FWC 2279 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.365—General protections
Kempall Pty Ltd T/A Ray White Woollahra/Paddington
v
Dean Emerson
(C2022/2796)
| COMMISSIONER PLATT | ADELAIDE, 29 AUGUST 2022 |
Application for costs pursuant to s.375B and s.611 of the Fair Work Act 2009 – application for costs dismissed.
This Decision concerns an application made by Kempall Pty Ltd T/A Ray White Woollahra/Paddington (the Costs Applicant) seeking an order for costs against Mr Dean Emerson pursuant to s.375B and s.611 of the Fair Work Act 2009 (Cth) (the Act).
The application was made following the dismissal of an earlier general protections application made by Mr Emerson under s.365 of the Act. Mr Emerson’s application was dismissed as a result of my finding that he had not been dismissed within the meaning of s.386 of the Act. My reasons for this decision are recorded in Dean Emerson v Kempall Pty Ltd T/A Ray White Woollahra/Paddington.[1]
The application for costs was made on 1 August 2022. Mr Emerson (the Costs Respondent) provided a brief response to the application for costs through his representative on 11 August 2022.
On 11 August 2022, I issued directions in respect of the application for costs, and notified parties that a Hearing would be listed on 29 August 2022 to determine the matter. Upon receiving both parties’ material, I asked both parties if they would consent to the matter being determined on the papers, which they did.
The Substantive Case
The original application was allocated to my Chambers to determine the jurisdictional objection raised by the employer, that being that Mr Emerson was not dismissed. Mr Emerson relied on s.386(1)(b) of the Act in his submissions by contending that he was ‘constructively dismissed’ through conduct, or a course of conduct, engaged in by his employer.
The following findings were made in respect of the jurisdictional objection:
“[21] I am not persuaded that the circumstances, when viewed objectively, were such that the Applicant had no other option that to resign. I am not persuaded that the Applicant’s medical condition was any more severe than the level of stress and anxiety which would normally accompany a disciplinary process.
[22] The Applicant had engaged extensively in the show cause process and could have simply waited for the outcome. It appears that the main driver of the Applicant’s decision to resign was either his fear that a termination would impact on his future employment prospects and/or reputation, or alternatively, that he made a decision to wait until he secured alternative employment before resigning. Whilst I suspect the real reason is the former, the lack of clarity in the Applicant’s evidence leaves the latter option open.
[23] Neither of these circumstances fall within the meaning of a constructive dismissal.”[2]
Given my finding that Mr Emerson was not dismissed within the meaning of s.386 of the Act, I dismissed his application.
Law
The application for costs was made under s.375B, s.400A and s.611 of the Act. It is noted that s.400A only applies to matters arising under Part 3-2 of the Act and therefore has no application to the general protections application made by Mr Emerson.
Section 611 of the Act provides:
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).
Section 375B of the Act provides:
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.
In Hansen v Calvary Health Care Adelaide Limited[3] a Full Bench said in relation to s.611 generally:
“[15] It is trite to observe that the statutory and policy imperative underpinning a costs application under the Act, is that a person in a matter before the Commission must bear their own costs. So much is plainly obvious by the precise and unambiguous language of s.611(1).
[16] However, the statutory scheme sets out the relatively circumscribed circumstances in which an order for costs might be found by the Commission to be appropriate in a particular case. It includes the exercise of discretionary power where the Commission is satisfied that one, or more of the circumstances set out in s 611(2), has been established. If such circumstances are established, the Commission, in the broad exercise of its discretion, may make an order that a person/s bear some, or all of the costs of another person, in relation to the application, including on an indemnity basis, or decline to make any order at all.”
The principles concerning the interpretation and application of s.611(2)(a) were comprehensively stated in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing.[4] I adopt the summary of these principles set out by the Full Bench in Chapman v Ignis Labs Pty Ltd,[5] as set out below:
· An application is made vexatiously when the predominant motive or purpose of the applicant is to harass or embarrass the other party or to gain a collateral advantage.
· Whether an application is made without reasonable cause may be tested by asking, on the facts apparent to the applicant at the time the application was made, whether there was no substantial prospect of success.
· In relation to an appeal, the question becomes whether the appeal has no substantial prospect of success. This must be evaluated in light of the facts of the case, the judgment appealed from, and the points taken in the notice of appeal.
· An application will have been made without reasonable cause if it can be characterised as so obviously untenable that it cannot possibly succeed, is manifestly groundless or discloses a case where the tribunal is satisfied it cannot succeed.
The principles that are relevant to s 611(2)(b) have been summarised by the Full Bench in Baker v Salva Resources Pty Ltd[6]:
“[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; 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 or so lacking in merit or substance as to be not reasonably arguable.”
The relationship between applications made under s.375B and s.611 was explored by the Full Bench in Azad v Hammond Park Family Practice Pty Ltd:[7]
“[9] Sections 611 and 375B require separate consideration. Section 611 is directed towards the conduct of a person at the time an application (or response) is first made and requires consideration of whether the application was “made” vexatiously or without reasonable cause, or whether it should have been reasonably apparent, at the time the application was made, that it had no reasonable prospect of success.
[10] Section 375B is directed to conduct by a party ‘in connection with the conduct or continuation of [a proceeding]’ and requires consideration of whether that conduct caused costs to be incurred and was ‘an unreasonable act or omission.’”
Submissions
The Costs Applicant submitted that given my finding that Mr Emerson was not dismissed, Mr Emerson’s s.365 application was baseless and therefore unreasonable. In addition, the Costs Applicant submitted:
· Mr Emerson’s conduct in bringing the application was motivated by an improper purpose and was thus vexatious and without reasonable cause.
· As a result of Mr Emerson’s application being without reasonable cause it had no reasonable prospects of success.
· It was an unreasonable act for Mr Emerson to file the application in the first place given the circumstances above.
· As a result of the Costs Applicant foreshadowing the costs application in its submissions, the costs consequences should have come as no surprise to Mr Emerson.
· It is only fair, just and reasonable that the Costs Applicant does not have to incur the significant legal expenses it has been put through as a result of defending a manifestly groundless application.
· Mr Emerson’s conduct demonstrated a complete disregard for the Commission’s time and resources and such conduct should be discouraged by making the cost order in favour of the Costs Applicant.
The Costs Respondent made the following submissions in reply:
· It is the general rule that each party who incurs legal costs in a matter before the Commission pay their own costs.
· The fact that the Commission found against Mr Emerson on the initial question to be answered does not give rise to having the action declared as frivolous or vexatious.
· Mr Emerson felt genuinely aggrieved by the treatment and processes adopted by the Costs Applicant in the handling of his employment. Despite the application failing the initial question, the remaining questions that may have had greater merit were not subject to scrutiny or assessment by the Commission.
· An application is not without reasonable cause just because the court (or Commission) rejects a person’s arguments.
Consideration
Making an order for costs against a party under either s.611 or s.375B of the Act is a two-step process. Firstly, I must be satisfied that one of the limbs of either s.611 or s.375B have been met. Secondly, I must consider it appropriate to exercise my discretion to make an order for costs.
I am not satisfied that any of the limbs of s.611 or s.375B have been met in this application.
In the original Decision, credit findings were made against Mr Emerson. Such findings meant that the evidence of the Costs Applicant was preferred. Had I made a different determination in relation to credit, the jurisdictional question could have been decided differently. As such, it cannot be said that Mr Emerson’s application had no reasonable prospects of success.
I see no basis for the claim that Mr Emerson’s application was made vexatiously or without proper purpose. It is clear on the evidence that Mr Emerson felt aggrieved by the treatment from his employer and may have genuinely felt that the circumstances gave rise to a constructive dismissal. My finding to the contrary does not mean that his application was made vexatiously. Similarly, I see no basis to make a finding that it was unreasonable for Mr Emerson to make the application such that s.375B(1)(b) is enlivened.
I am not satisfied that any of the limbs of s.611 or s.375B of the Act have been met. In any event, considering the matters outlined above I am not satisfied that this is an appropriate case for me to exercise my discretion to award costs. Accordingly, the application for costs is dismissed.
COMMISSIONER
[1] [2022] FWC 1864.
[2] Ibid.
[3] [2016] FWCFB 8162.
[4] [2017] FWCFB 810 at [23]-[33].
[5] [2021] FWCFB 932 at [14].
[6] [2011] FWAFB 4014.
[7] [2022] FWCFB 110 at [9]-[10].
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