Kirk Walker v Combined Bulk Bins Pty Ltd

[2014] FWC 8372

[2014] FWC 8372

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Kirk Walker
v
Combined Bulk Bins Pty Ltd
(U2013/15700)

COMMISSIONER BISSETT DARWIN, 3 DECEMBER 2014

Costs application - previous cost application refused.

[1] This is an application by Mr Gary Dircks the principal of Just Relations - Consultants for a costs order pursuant to s.400A and s.611 of the Fair Work Act 2009 (the Act) against Combined Bulk Bins (CBB). The application was filed following an unsuccessful application for costs made by CBB against Just Relations - Consultants and Mr Brett Walker (the first costs application). The first costs application arose from an application for unfair dismissal made by Mr Walker, who was represented by Mr Dircks, which was discontinued three days prior to the scheduled arbitration of the matter.

[2] Mr Dircks represented himself in this application. CBB continues to be represented by HR Legal (Mr Geoff Krins). Both Mr Dircks and CBB have consented to this application being determined on the basis of written submissions. No hearing was therefore held.

[3] In an attempt to avoid any confusion Just Relations - Consultants and Gary Dircks are referred to in this decision as Mr Dircks; HR Legal and Jeff Krins (its principle) are referred to as Mr Krins and Combined Bull Bins is referred to as CBB. The current cost application before me is referred to as the second costs application.

[4] The application is against CBB and is opposed. Mr Krins notifies of a further potential costs application against Mr Dircks should this second costs application not succeed.

The first costs application

[5] The first costs application was made pursuant to ss.400A and 401(1A) of the Act.

[6] In rejecting the first costs application 1 I found:

[43] There is nothing to support a finding that Mr Walker caused costs to be incurred by any act or omission on his part in connection with the conduct of the matter. The application against Mr Walker pursuant to s.400A of the Act is dismissed.

[44] As to the specific claims against Mr Dircks, these are assertions on the part of Mr Krins. There is no evidence that Mr Dircks advised Mr Walker to continue proceedings or did not advise him to discontinue proceedings at any stage in the progress of the application. The assertions are not proven by evidence including that Mr Dircks saw Mr Walker’s pay slips and contract of employment for his new job at any stage prior to them being produced as a result of an Order of the Commission on 21 May 2014.

[45] Mr Dircks provided information on Mr Walker’s earnings on 14 February 2014 when asked. There was no demand from CBB for production of earnings and employment information on 21 February 2014. Mr Dircks was entitled to wait for an order to be issued following the letter of 18 March 2014. Once the Order was issued it appears he did what was necessary to ensure compliance with the Order.

[46] Nothing has been put by Mr Krins that suggests Mr Dircks did anything but represent the interests of Mr Walker. There is no evidence to conclude that he did not follow the instructions given to him by Mr Walker. There is also no evidence that he did not, at appropriate points in time, provide appropriate and considered advice as would be expected of him.

[47] CBB’s claim against Mr Dircks cannot be found without any evidence to support the assertions made. There is no evidence to support this claim - direct or circumstantial. The claim made by CBB is that there was some unreasonable act or omission by Mr Dircks in connection with the conduct of the case is not made out.

[48] In all of the circumstances I do not find there is evidence of any unreasonable act or omission by Mr Dircks in connection with the conduct of the matter that caused costs to be incurred by CBB. There is no basis on which I could award costs pursuant to s.401 of the Act against Mr Dircks. The Application against Mr Dircks is dismissed.

[49] The application for costs against Mr Dircks and Mr Walker is dismissed.

What matter does this costs application relate to?

[7] Mr Dircks represented Mr Walker in his unfair dismissal application against CBB. The application was withdrawn three days prior to the scheduled arbitration. CBB made the first costs application against Mr Dircks and Mr Walker. The first costs application was rejected by me.

[8] Mr Dircks seeks an order ‘for the whole of the case including the costs application.’

[9] Section 402 of the Act states:

402 Applications for costs orders

An application for an order for costs under section 611 in relation to a matter arising under this Part, or for costs under section 400A or 401, must be made within 14 days after:

(a) the FWC determines the matter; or

(b) the matter is discontinued.

[10] Section 402 of the Act is clear. The ‘matter’ determined by the Commission and referred to in s.402(a) is the first costs application. The second costs application was made 14 days after that decision. The second costs application is an application relating to costs arising from the first costs application.

[11] If Mr Dircks believes he has a legitimate costs application in relation to the original unfair dismissal matter he should have made an application at the appropriate time. As it is he is outside the 14 day time limit within which to bring a costs application for the original application.

[12] This second costs application, by virtue of s.402 of the Act, can only be made in respect to the first costs application and not to ‘the whole of the case’ as sought in the submissions of Mr Dircks.

The application under section 400A

[13] Mr Dircks makes an application for costs pursuant to s.400A of the Act. CBB submits that Mr Dircks cannot bring a costs application under this section of the Act as he is not a ‘party’ to a matter under Part 3-2. In particular he submits that an application for costs under s.400A (the first costs application) is not a matter arising under Part 3-2 of the Act and that this is supported by the wording of s.402.

[14] Section 400A is in Part 3-2 of the Act. It states:

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.

[15] Part 3-2 of the Act deals with unfair dismissal. The ‘parties’ to an unfair dismissal are the person dismissed (applicant) and the employer (respondent). To determine if Mr Dircks can bring a cost application under s.400A I must decide if the first costs application under s.400A is a matter arising under Part 3-2 and secondly if Mr Dircks is ‘a party’ for the purpose of s.400A.

[16] Section 400A is directed to costs against a party - distinct from the lawyer or paid agent who may represent the party.

[17] Section 400A was inserted into the Act by virtue of the Fair Work Amendment Act 2012. The Explanatory Memorandum to the Fair Work Bill 2012 states:

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.

[18] It is apparent from the Explanatory Memorandum that s.400A of the Act is directed to parties to an unfair dismissal matter. Paragraph 168 makes this clear.

[19] Mr Dircks is not a party to an unfair dismissal. He was a paid agent representing a party to an unfair dismissal from which the first costs application arose but this does not make him a party to the unfair dismissal itself.

[20] I am not satisfied that I have jurisdiction to deal with the application made by Mr Dircks pursuant to s.400A. He was not a party to the unfair dismissal matter but was a paid agent representing the Applicant. I have no application from Mr Walker who was a party.

[21] I do not consider it possible to make an order for costs against CBB pursuant to s.400A in circumstances where a paid agent (Mr Dircks) seeks those costs to defray his own costs.

The application under section 611

[22] Mr Dircks also makes an application for costs against CBB pursuant to s.611 of the Act.

[23] Section 611 of the Act states:

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.

Note: This subsection is a civil remedy provision (see Part 4-1).

[24] It is clear from the wording in s.611 that an application for an award of costs is not restricted to the parties to the initial application for unfair dismissal. A costs application under s.611 is made by a ‘person’. This can be contrasted to the words in s.400A where an application is made by a ‘party’.

[25] In his application Mr Dircks says that it was clear that the first costs application ‘must fail,’ 2 that it was made ‘without reasonable cause’3 and that it was ‘manifestly untenable.’4 From this I understand Mr Dircks to rely on both s.611(2)(a) and (b) of the Act for his application

[26] As I understand the submission of Mr Dircks he says that CBB’s costs application was purely speculative, that it had no evidence to support the facts asserted or that any evidence it did have was contradictory of the facts it proposed.

[27] Mr Dircks submits that it should have been clear to CBB that its costs application had no basis and should have been discontinued after he lodged his submissions which demonstrated CBB’s claims were without foundation; that CBB put forward no evidence in support of its claims for costs; and it should have been clear to CBB that its application must fail.

[28] CBB submits that Mr Dircks is seeking an order for compensation for ‘time and effort’ to defending the first costs application, and not for costs. This is not a submission that can be supported. Mr Dircks has clearly identified the sections of the Act on which he relies. His language may be poorly chosen but that does not change the character of his application.

[29] CBB says that it believed it had the circumstantial evidence necessary to pursue its costs application and that it genuinely believed that Mr Dircks had encouraged his client to pursue his unfair dismissal claim when it was clear he had mitigated his loss.

[30] CBB also submits that just because the Commission did not find for CBB in the first costs application does not mean that the application had no reasonable prospect of success.

[31] Mr Dircks’ application seems to be based on the premise that CBB was not successful in the first costs application, it presented little or no evidence in support of its application and therefore it should have known that it application was made without reasonable cause and had no reasonable prospect of success. It is based on a failure of CBB to discontinue the first costs application once he had filed his response to that application.

[32] Mr Dircks’ submissions are based on the findings in my decision on the first costs application.

[33] In Baker v Salva Resouces a Full Bench of the Commission said:

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
● 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. 5

[footnotes omitted]

[34] I have adopted this approach in my consideration of this application.

Consideration

[35] CBB made the first costs application after Mr Walker withdrew his application for unfair dismissal three days prior to the scheduled hearing. Its costs application was grounded in the attempts it had made to understand the claim of Mr Walker, including his loss, in circumstances where he had secured employment paying better than CBB within three weeks of him being dismissed by CBB. CBB understood that it had reasonable grounds to question Mr Walker’s continuation of his unfair dismissal claim when it appeared any loss by him was fully mitigated by the new employment.

[36] There is no evidence that CBB did not have reasonable cause to make its costs application in the first instance. CBB had reason to believe that Mr Walker and/or Mr Dircks continued the application for other purposes when they each knew, or should have known, that Mr Walker had successfully gained employment that did mitigate any loss he may have suffered in dismissal. There is nothing else put to me by Mr Dirks that would allow me to find in his favour in respect of s.611(2)(a).

[37] There is nothing put to me by Mr Dircks that would allow me to conclude that, objectively, it should have been reasonably apparent to CBB that its costs application had no reasonable prospects of success.

[38] I do not find that it should have been apparent to CBB that the first costs application had no reasonable prospect of success. CBB had arguments and circumstantial evidence - rejected by the Commission - on which it based its claim. It was not ‘manifestly untenable’ such that it could not be pursued. That it had limited prospect of success does not support this application.

[39] Mr Dircks also says that CBB should have withdrawn its application after it received his submissions in the first costs application. Section 611 of the Act is not directed to a continuation of an application. This can be contrasted to s.401(1A) of the Act (the representative encouraged the person to start, continue or respond). What may or may not have been apparent to CBB after it received Mr Dircks submissions on the first costs application is not the matter at issue under s.611 of the Act which is directed to what should have been reasonably apparent CBB when it made the application.

[40] For these reason Mr Dircks application for costs pursuant to s.611(2)(b) of the Act must fail.

[41] That I did not find in favour of CBB in the first costs application is not a reason to grant the second costs application.

Conclusion

[42] For the reasons given above the application by Mr Dircks is dismissed.

[43] During the period for receipt of written submissions in respect of this costs application Mr Krins indicated to Mr Dircks (and copied the Commission into the correspondence so I am well aware of it) that if Mr Dircks continued with his application and did not succeed Mr Krins and/or CBB would seek costs against Mr Dircks.

[44] The parties are encouraged to seriously consider the words of s.611 of the Act that ‘a person must bear the person’s own costs in a matter before the FWC.’ Each would do well not to lose sight of the primary position as set out in the Act with respect to costs. Tit for tat costs applications by lawyers and paid agents, without a strong, arguable case do little more than add to the costs of parties being represented.

COMMISSIONER

 1   [2014] FWC 6508.

 2   Dircks, paragraph 29.

 3   Dircks, paragraph 30.

 4   Dircks, paragraph 32.

 5   [2011] FWAFB 4014, [10].

Printed by authority of the Commonwealth Government Printer

<Price code C, PR558108>