Kim v Top Tiling Services Pty Ltd

[2020] FCCA 890

FEDERAL CIRCUIT COURT OF AUSTRALIA

KIM v TOP TILING SERVICES PTY LTD & ANOR [2020] FCCA 890

Catchwords:
EMPLOYMENT LAW – Costs – Indemnity Costs – Application in a Case – Whether proceedings have reasonable cause – Whether unreasonable act or omission – Whether proceedings arise from same facts – Whether party refused to participate – Whether grounds necessarily fail – Application dismissed.

Legislation:

Fair Work Act 2009 (Cth), ss.86, 87, 323, 325, 535, 536, 570(2)

Fair Work Regulations 2009 (Cth) r.3.46

Federal Circuit Court Rules 2001 (Cth) r.4.05(2)

Cases cited:

AIPA v Qantas Airways Limited (No 3) (2007) 163 FCR 392

Australian Workers Union v Leighton Contractors (2013) 232 FCR 428

CFMEU v Corinthian Industries (Australia) Pty Ltd (No 2) (2014) FCR 351

Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257

Ryan v Primesafe [2015] FCA 8

Applicant: DAE CHAN KIM

First Respondent: TOP TILING SERVICES PTY LTD

Second Respondent: JUNG GU HWANG

File Number: BRG 486 of 2019

Judgment of: Judge Jarrett

Hearing date: By written submission

Date of Last Submission: 8 April 2020

Delivered at: Brisbane

Delivered on: 20 April 2020

REPRESENTATION

Counsel for the Applicant: Mr Reed

Solicitors for the Applicant: Park & Co Lawyers

Counsel for the Respondents: Mr T O’Brien

Solicitors for the Respondents: Emmanuel Lawyers Pty Ltd

ORDERS

1. The application in a case filed on 7 February, 2020 be dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 486 of 2019

DAE CHAN KIM

Applicant

And

TOP TILING SERVICES PTY LTD

First Respondent

JUNG GU HWANG

Second Respondent

REASONS FOR JUDGMENT

1. On 21 May, 2019 the applicant commenced these proceedings by filing an application – Fair Work Division.  His application was supported by an affidavit.  On 29 November, 2019 the applicant filed an amended application. 

2. By an application in a case filed on 7 February, 2020 the first and second respondents seek their costs thrown away from 21 May, 2019 to 29 November, 2019 and occasioned by the amendments to the initial application.  They seek those costs on an indemnity basis.

3. The applicant opposes the application. The applicant submits that the costs application should be dismissed with an order that the Respondents pay the applicant’s costs of and incidental to the application in a case.

4. The parties agree on the principles to be applied.  Given that these are proceedings in relation to a matter arising under the Fair Work Act 2009 (Cth) costs may only be awarded in the circumstances provided for in s.570(2) of the Act, namely where:

   a)the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or

   b)the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or

   c)the court is satisfied of both of the following:

   i)the party unreasonably refused to participate in a matter before the Fair Work Commission;

   ii)the matter arose from the same facts as the proceedings.

5. The respondents make their application on the basis that the Court should be satisfied that the applicant’s unreasonable act or omission caused the respondents to incur costs.  They advance no argument that the applicant’s proceedings were instituted vexatiously or without reasonable cause or that the applicant unreasonably refused to participate in a matter before the Fair Work Commission and that matter arose from the same facts relied upon in these proceedings.

6. When assessing whether a proceeding was instituted without reasonable cause, the question is whether the proceeding had reasonable prospects of success at the time it was instituted: Australian Workers Union v Leighton Contractors Pty Limited (2013) 232 FCR 428 at [7]. A proceeding will be instituted without reasonable cause if it has no apparent prospects of success, or was doomed to failure, on the applicant’s own version of the facts: CFMEU v Corinthian Industries (Australia) Pty Ltd (No 2) (2014) FCR 351 at [8]. Section 570(2)(a) imposes a high threshold to be established before costs can be awarded: CFMEU v Corinthian Industries (Australia) Pty Ltd (No 2) (above) at [9].

7. Determining a costs application under the Act involves two steps.  The first is to determine whether the jurisdiction to make an order for costs has been established and then to determine whether, as a matter of discretion, an order ought to be made: AWU v Leighton Contractors Pty Ltd (above) at [8]. 

8. Moreover, an order for indemnity costs would only be justified where there were special or unusual features justifying the Court in departing from the ordinary practice of making an order for costs on a party and party basis: AIPA v Qantas Airways Limited (No 3) (2007) 163 FCR 392 at [39]; Ryan v Primesafe [2015] FCA 8 at [110].

9. The respondent’s argument focuses on the proposition that the applicant’s claim, as originally framed in his proceedings and on his own version of the facts, must fail and it could therefore be said that the proceeding lacked a reasonable cause is explained in Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264-5.

10. The respondents contend that the relevant question is “whether the proceeding had reasonable prospects of success at the time it was instituted”.  The applicant does not cavil with that proposition and I proceed on the basis that the parties agree that such is the appropriate time to assess the applicant’s proceeding for the purposes of this application.

11. At the time of instituting the proceeding by filing application on 22 May, 2019 the applicant was seeking orders based on five grounds as set out at pages 2 and 3 of the application.  He supported his application with an affidavit.  That course was permitted, indeed required, by the Federal Circuit Court Rules 2001: rule 4.05(2).

12. The respondents contended that each ground set out in the application was unsustainable.  I will deal with each in turn.

Ground 1

1. By ground one, the applicant alleged that the respondents had contravened s.323 of the Act by:

   a)failing to pay the applicant in accordance with the actual working hours; and

   b)failing to pay the applicant overtime penalties, casual loading and annual leave.

2. In his affidavit, the applicant alleges that he had an employment contract with the first respondent and he annexes the employment contract to his affidavit. The contract does not provide for an entitlement to overtime penalties, nor a casual loading, but by their response to the application, the respondents contend that the Building and Construction General On-site Award 2010 applied to the applicant’s employment.  The award provides for overtime and penalty rates.  It is trite that the employment contract did not and does not derogate from the award.

3. The applicant set out in his accompanying affidavit, the details of his claim.  His claim for underpayment of wages was particularised.  In the event that his evidence about those matters is accepted at a trial, his claim has every chance of success.  Whilst the applicant claims underpayment of casual loading and annual leave entitlement (they being mutually exclusive), his affidavit makes clear that the claim is made in the alternative on the basis that his payslips described him as a casual employee, but his employment contract described him as a permanent full-time employee.  A claim in the alternative was clearly open.

4. The respondents argue that the applicant does not provide any evidence of whether annual leave was taken, or otherwise, during his employment by the first respondent.  But, as the respondent contends, I must assess whether the proceeding had reasonable prospects of success at the time it was instituted.  In the affidavit that he filed with his initiating application, the applicant swore that he was never paid any annual leave.  He asserts that he was employed by the first respondent for the period from 1 July, 2014 to 24 April, 2018.  His assertion that he was never paid for any annual leave could either be an assertion that he took leave but was not paid for it or alternatively was not paid any accrued annual leave entitlements upon the termination of his employment.  His evidence is sufficient to bear out either of those propositions.

5. I reject the respondent’s submission that on the applicant’s own facts, ground one must fail.  Indeed, if his evidence is accepted, he is likely to succeed.

6. The amendments made to the application on 29 November, 2019 did not change the nature of the applicant’s claim but simply gives more clarity to its expression. 

Ground 2

1. Ground 2 of the original application alleges contraventions of ss.86 and 87 of the Act. Whilst ss.86 and 87 of the Act are not possible of contravention – they provide for the way in which entitlements to annual leave accrue for workers who are other than casual workers, the claim made by the applicant was tolerably clear. Indeed, the respondent’s own submissions recognise that ground two does not much more than restate the allegations regarding annual leave from ground one. As I have indicated above, the allegation made by the applicant in respect of annual leave was either that it was not paid when he took annual leave (although as the respondents point out there is no allegation to that effect) or alternatively accrued annual leave was not paid at the conclusion of his terms of employment with the first respondent.

2. The amendments made on 29 November, 2019 more properly state the applicant’s claim in respect of accrued but unpaid annual leave entitlements.  The nature of his claim, however, has not changed.

3. I am not satisfied that ground two of the original application was misconceived or doomed to fail.

Ground 3

1. Ground three of the original application alleges contravention of s.325 of the Fair Work Act by way of “various transactions (on the applicant’s bank account) in the NSW region while the applicant resided and worked in Northern Territory”. The respondents point out that his evidence supporting this ground is found in its entirety at paragraphs 51 and 52 of the applicant’s affidavit and is to the effect that:

   a)the account is held under the applicant’s name, but is “controlled by the first and second respondent”;

   b)the impugned transactions “appears to have connection to the first respondent”; and

   c)the applicant “believes“ that the first respondent retrieved and recovered wages paid.

2. The respondents submit:

   a)the first respondent, as the employing corporation, is incapable of having “control” of the account;

   b)the first respondent, as employer, is the only entity capable of contravening s.325 as a matter of law;

   c)there is no evidence to support the applicant’s belief, and purported appearance of connection;

   d)the conduct complained of cannot, and does not, contravene the Act; and

   e)even if the Court accepted this evidence in full, it could not support a finding of contravention of s.325.

3. The difficulty with this argument is that the first proposition put by the respondents is not necessarily correct.  If, as the applicant describes, the first respondent had “control” of the bank account and it could transact on that account without the applicant’s consent, although the banking account is alleged to be in the applicant’s name, then the first respondent (through its officers) could indeed control the account depending upon the instructions given to the bank.

4. In any event, by the amendments wrought on 29 November, 2019 this aspect of the applicant’s claim was abandoned.  I am not persuaded that the claim was bound to fail especially given the probability that further evidence would be filed (which was a certainty when the application was originally filed given the directions habitually made in applications such as these). 

Ground 4

1. This aspect of the original application alleged contravention of s.535 and 536 of the Act by the respondents by knowingly providing false and misleading payslips. Contravention of s.535 requires a failure by an employer to maintain records. The respondent argues that there is no evidence to support such an allegation, other than the allegations that the applicant received less remuneration than he was entitled to.

2. Contravention of s.536 requires provision of a payslip by an employer that:

   a)is not provided within one working day of making payment to the employee; or

   b)is not in electronic form or hard copy; or

   c)does not contain all the information required at regulation 3.46 of the Fair Work Regulations 2009.

3. The respondents argue that the allegations at paragraph 5.1 (presumably a typographic error for 4.1) of the first application cannot, and do not, amount to contraventions of s.535 or s.536 of the Act. This is what ground four alleges:

   Ground 4 - Failure to provide correct payslips

   4. The first and second respondent breached its obligation with respect to the Employer obligation in relation to the employee records under sections 535 and 536 of the Fair Work Act 2009 (Cth)

   5.1 The first and second respondent knowingly provided false and misleading payslips as to the working hours, amount of superannuation contribution and annual leave for the entirety of the applicant's employment period.

4. The respondents further argue that “there is no evidence to suggest that contraventions of ss.535 and 536 of the Act have in fact been committed by the respondents. The only evidence provided is that the payslips provided by the first respondent to the applicant contain information to which the applicant disagrees”.

5. The respondents’ argument is misconceived in two respects. First, if the applicant succeeds in proving that the payslips provided by the first respondent to the applicant contain information which was in fact erroneous, he may well prove a breach of both ss.535(5) and 536(3) of the Act. Second, the originating application is nothing more than a statement of the applicant’s claim and a brief recitation of the grounds upon which he relies (see the form approved for use by the Chief Judge of the Federal Circuit Court of Australia and used by the applicant in this case). As the respondents’ argument identifies, proof of the allegations in the original application are matter for evidence and, although the applicant filed an affidavit when he commenced his proceedings, on no view could it be said that he was obliged to file all of the evidence upon which he intended to rely in the proceedings at that point. The subsequent directions order made provision for the filing of further evidence by all parties to the proceedings.

6. I am not satisfied that on the applicant’s own facts ground four must fail. 

Ground 5

1. The respondents point out that ground five of the original application alleges contraventions of the Superannuation Guarantee (Administration) Act 1992 (Cth) in that the respondents failed to pay the superannuation guarantee on behalf of the applicant. The respondents quite properly contend that the applicant does not have standing to bring a claim pursuant to that Act.

2. However the applicant points out in submissions that whilst this ground was initially framed as a breach of the obligation to make superannuation contributions on behalf of the applicant pursuant to the Act, the claim should have been framed as a breach of the award, a matter which has been rectified in the amended application. 

3. I accept the applicant’s submission that the nature of the dispute has not changed. Clause 32 of the award effectively mirrors the obligation under the Superannuation Guarantee (Administration) Act 1992 (Cth). The applicant is entitled to pursue his claim in the way he has now framed it.

Conclusions

1. I am not satisfied that the jurisdiction to make costs pursuant to s.570(2) of the Fair Work Act has been engaged in this case. In any event, even if I am wrong about that and the respondents’ arguments, particularly with respect to grounds three and five, demonstrate that the applicant had no reasonable prospects of prosecuting his claims, as a matter of discretion I would refuse the relief sought by the respondents.

2. Whilst the applicant has amended his claim and abandoned at least one of the grounds set out in his original application, the amendments have not changed the nature or extent of his case but have simply brought clarity to the grounds of his claim as I have set out above.  It is plain from the respondents’ response that the nature and extent of the applicant’s claims have always been understood by them.

3. The respondents submit that the respondents prepared and filed a response to the original application and prepared for, and attended, mediation of the matter and thereby incurred costs that have now been wasted.  However, I do not accept that submission.  The nature of the applicant’s claims have not changed in any material way.  I do not accept that the respondents’ costs of the steps I have just outlined were wasted.

4. The respondents’ application for costs should be dismissed. The respondents have not established the threshold requirement in s.570(2)(a) of the Fair Work Act. In any event I would refuse relief as a matter of discretion.

5. The applicant seeks his costs of the respondents’ application in a case. The applicant contends that the costs application was made without reasonable cause.  However, I do not accept hat submission.  The respondents’ arguments were not devoid of all merit.  No occasion for an order for costs arises on the dismissal of the respondents’ application in a case.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 20 April, 2020.

Associate:

Date: 20 April 2020