Kylie Jeffrey v IBM Australia Limited
[2015] FWCFB 5226
•3 AUGUST 2015
| [2015] FWCFB 5226 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.611 – Costs application
v
IBM Australia Limited
(U2012/13165, C2014/7304)
VICE PRESIDENT LAWLER | SYDNEY, 3 AUGUST 2015 |
Costs application
[1] This is an application for costs by Ms Jeffrey, in relation to her unfair dismissal proceedings and an associated appeal she made.
[2] Ms Jeffrey filed an application for an unfair dismissal remedy (the unfair dismissal application), matter U2012/13165, which was heard and decided by Deputy President McCarthy on 17 November 2014. The Deputy President found that Ms Jeffrey’s dismissal had been unfair. He found that reinstatement would not be appropriate but declined, as a matter of discretion, to order any remedy of compensation in lieu of reinstatement.
[3] Ms Jeffrey lodged an appeal against that decision (the appeal), matter C2014/7304, seeking reinstatement or, alternatively, the maximum amount of compensation.
[4] On 30 January 2015, a Full Bench of the Fair Work Commission (the Commission) granted Ms Jeffrey permission to appeal the Deputy President’s decision, but only in so far as the Deputy President refused to order compensation. 1
[5] On 22 June 2015, this Full Bench allowed that appeal, set aside the Deputy President’s decision not to order compensation and ordered the respondent, IBM Australia Limited (IBM), to pay Ms Jeffrey an amount of compensation equivalent to three months’ pay, or $28,936.25. 2
[6] On 1 July 2015, an application for costs was filed by solicitors retained by Ms Jeffrey. In it, costs were sought in relation to both the unfair dismissal application and the appeal.
[7] The costs sought are particularised as follows:
Barrister’s fees | $1,540.00 |
Solicitor’s fees – retained in relation to this costs application | $1,000.00 |
Solicitor’s fees – retained in relation to the unfair dismissal application | $2,502.15 |
Industrial consultant’s fees – retained in relation to the unfair dismissal application | $2,079.00 |
Expert witness attendance at unfair dismissal hearing | $363.00 |
Out-of-pocket expenses (photocopying etc.) | $500.00 |
“Additional circumstances” | $9,259.60 |
Total | $17,243.75 |
[8] Ms Jeffrey appeared for herself at the unfair dismissal hearing, the hearing of the application for permission to appeal and at the appeal. She nevertheless incurred some costs of a kind that could properly be the subject of a costs order if the prerequisites to the grant of such are made out.
[9] We note that one of the costs sought is the expense of retaining a barrister to provide advice. 3 This was done on or after 9 July 2015, well after our decision on the appeal was handed down. Further, it appears the advice relates to potential Federal Court proceedings. Even if we were persuaded that IBM acted vexatiously or without reasonable cause, or that it should have been reasonably apparent to IBM that it had no reasonable prospect of success, we do not think that this could properly be categorised as a cost incurred either in relation to the appeal or the unfair dismissal application.
[10] Similarly, the item “Additional circumstances” is not properly a cost which could be the subject of an order we may make. It represents a claim for repayment of an amount of tax deducted by IBM from the compensation ordered by the Full Bench. That issue is not one that can properly be agitated in the present application.
[11] The costs application is made under s.611 of the Fair Work Act 2009 (the Act). That section 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).”
[12] Section 402 of the Act provides that an application for an order for costs under s. 611 in relation to a matter arising under Part 3-2 must be made within 14 days after the Commission determines the matter or the matter is discontinued. We will assume that where an appeal is brought successfully against an unfair dismissal decision, the rehearing conducted by the Full Bench involves the Commission determining the matter afresh, such that a costs application in relation to the first instance hearing can be made within 14 days of a Full Bench decision on a rehearing of the originating application.
[13] The grounds set out in the formal Application for Costs are:
“A. The Respondent … relied on the medical opinion of Dr Simone Ryan in reaching the conclusion to terminate the Applicant, Ms Jeffrey’s employment relationship, whom was not a qualified or registered Specialist Occupational Physician in Occupational and Environmental Medicine to practice in Australia, that both she and IBM held her out to be (in breach of sections 115 and 118 of the Health Practitioner Regulation National Law 86a of 2009)
B. The Applicant had never met Dr Simone Ryan face-to-face or been requested to have a medical examination with Dr Simone Ryan.
C. The Respondent (IBM Australia) has acted vexatiously and frivolously without any reasonable cause.
D. The application or response to the unfair Dismissal Matter had no reasonable prospect of Success.”
[14] On 8 July 2015, we issued directions for Ms Jeffrey to file submissions setting out the grounds and arguments in support of her application. We did not, at that time, issue any directions for IBM to file submissions in reply. We indicated that we would issue such directions as we considered necessary after we had received Ms Jeffrey’s submissions. Having considered Ms Jeffrey’s submissions, we do not consider it necessary to call upon IBM to reply.
[15] As a general rule, each party will bear its own costs in proceedings before the Commission. That is what s.611(1) provides. However, the section then goes on to provide for limited exceptions to that general rule. The power to award costs pursuant to s.611(2) is to be exercised with caution and only in a clear case: Church v Eastern Health t/as Eastern Health Great Health and Wellbeing. 4
[16] The first paragraphs of the submissions filed on behalf of Ms Jeffrey state:
“The Applicant, Ms Jeffrey seeks costs against the Respondent… with respect to both the determination of the matter at first instance and the appeal on the basis that it should have been reasonably apparent to the Respondent and their legal representatives, who relied upon false evidence, that their response was made vexatiously, without reasonable cause and no reasonable prospect of success.
It is submitted that IBM Australia Limited relied upon the medical opinion of Dr Simone Ryan in reaching the conclusion to terminate the Applicant, Ms Jeffrey’s employment relationship, whom was not a qualified or registered Occupational Physician in Occupational and Environmental Medicine to practice in Australia at the time, that both she and IBM held her out to be (in breach of sections 115 and 118 of the Health Practitioner Regulation National Law Act 86a of 2009)”
[17] Paragraph 14 of the submissions states:
“It is submitted that IBM Australia limited sought to pursue the appeal even though the decision at first instance was that no evidence of any medical opinion or advice provided by the Respondent supported any finding about Ms Jeffrey’s being unable to perform the inherent requirement of the job for the foreseeable future.”
[18] There is little in the remainder of the submissions that expands upon the basis upon which it is contended that the prerequisites in s.611(2) are made out. Most of the submissions are a chronology of the course of the matter, or relate to associated complaints that are outside the scope of the present costs application. So far as the costs application is concerned, the focus appears to remain on IBM’s reliance on the medical opinion of Dr Ryan.
Section 611(2)(a) – that IBM “responded to the application vexatiously”
[19] In Qantas Airways Limited v Carter 5 at [17], a Full Bench of the Commission endorsed the observations of North J in Nilsen v Loyal Orange Trust, made in relation to an analogous provision, who stated:
“The next question is whether the proceeding was instituted vexatiously. This looks to the motive of the applicant in instituting the proceeding. It is an alternative ground to the ground based on a lack of reasonable cause. It therefore may apply where there is a reasonable basis for instituting the proceeding. This context requires the concept to be narrowly construed. A proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party, or to gain a collateral advantage.” 6
[20] A key aspect of Ms Jeffrey’s case both at first instance and on appeal was that, while Dr Ryan’s job title with IBM was “Occupational Physician”, she was not formally registered in that specialty at the time she decided that Ms Jeffrey was unfit for work. However, the Deputy President at first instance accepted that Dr Ryan was registered as a medical practitioner at the relevant time. Further, we were not taken to any evidence that establishes that the IBM managers who ultimately made the decision to terminate the Ms Jeffrey’s employment were aware that Dr Ryan lacked formal registration as an occupational physician, or that their reliance on her report was other than genuine. 7 There was no evidence that IBM relied on her opinion other than to the extent it was that of a medical practitioner simpliciter. It was not suggested that extra weight had been placed on her view because IBM considered her a specialist occupational physician.8
[21] Ms Jeffrey has not identified evidence that allows a conclusion that IBM’s response to the initial unfair dismissal application was vexatious in the requisite sense. At the time IBM decided to oppose the unfair dismissal application, or indeed at any time during the proceedings, there is nothing in the evidence to suggest that it was acting in bad faith or for an improper purpose. The evidence of the IBM managers was they had formed the view, based both on their own observations of Ms Jeffrey and on the medical evidence, that she was unable to perform the inherent requirements of her job. There is no evidence from which it can properly be inferred that they were motivated in any way to harass or embarrass Ms Jeffrey.
[22] So far as the appeal is concerned, there is no basis for us to find that IBM responded to it in a manner that can be described as vexatious. IBM had succeeded on remedy at first instance and, on appeal, contended that the Deputy President was correct to have decided neither reinstatement nor compensation should be ordered. To the extent IBM opposed compensation, it did so on the basis that no amount should be ordered and, in the alternative and contrary to Ms Jeffery’s submissions, any sum should be for a substantially lesser amount than sought. Again, in doing so, there is no basis for us to find it was motivated in any way to harass or embarrass Ms Jeffrey or acted for any collateral purpose.
Section 611(2)(a) – that IBM “responded to the application… without reasonable cause”
[23] In Keep v Performance Automobiles Pty Ltd, 9 (Keep) the Full Bench summarised relevant principles as follows:
“[17] The proper construction of s.611(2)(a) was recently considered by a Full Bench in Church v Eastern Health t/as Easter Health Great Health and Wellbeing ([2014] FWCFB 810) (Church). Church is authority for the following propositions:
(i) The power to order costs pursuant to s.611(2) should be exercised with caution and only in a clear case.
(ii) 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.
(iii) One way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether upon the facts known to the applicant at the time of instituting the proceeding, there was no substantial prospect of success.
(iv) 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.’”
[24] We are not satisfied that IBM responded to the unfair dismissal application “without reasonable cause”. The application sought a finding that the dismissal was unfair, and that reinstatement be ordered. IBM’s response cannot be characterised as “so obviously untenable that it cannot possibly succeed” or “manifestly groundless”. Its managers had formed the view, on the history of Ms Jeffrey’s employment, her substantial absences from work, the difficulty in establishing a return to work plan, her own comments about her health and the medical evidence, that she could not perform the inherent requirements of her job. That was an arguable basis on which to oppose the unfair dismissal application.
[25] The fact that Ms Jeffrey’s dismissal was found to be unfair does not mean that IBM responded to the appeal without reasonable cause. IBM did not cross-appeal against the unfair dismissal finding. It did, however, oppose the appeal in relation to any remedy being awarded. In this respect, its position was that the Deputy President was not in error in deciding to neither reinstate Ms Jeffrey nor order any compensation. That position was at least arguable, for reasons we have earlier given. We are not persuaded the evidence establishes that IBM opposed the appeal without reasonable cause.
Section 611(2)(b) – should have been reasonably apparent to IBM that its response had “no reasonable prospects of success”
[26] In Keep, the Full Bench summarised the relevant principles this way:
“[18] As to s.611(2)(b), the FWC may make a costs order against a person if satisfied that ‘it should have been reasonably apparent’ to that person that their application had ‘no reasonable prospect of success’. The expression ‘should have been reasonably apparent’ in s.611(2)(b) imports an objective test, directed to a belief formed on an objective basis as opposed to the applicant’s subjective belief.
[19] There is Full Bench authority for the proposition that the Commission should exercise caution before arriving at the conclusion that an application had ‘no reasonable prospects of success’. [Wright v Australian Customs Service, PR926115, 23 December 2002] In Deane v Paper Australia Pty Ltd (PR932454, 6 June 2003) a Full Bench made the following observation about this expression in the context of enlivening a power to award costs under s.170CJ(1) of the Workplace Relations Act 1996;
“unless upon the facts apparent to the applicant at the time of instituting the [application], the proceeding in question was manifestly untenable or groundless, the relevant requirement in s.170CJ(1) is not fulfilled and the discretion to make an order for costs is not available”. (Ibid at [8], also see Baker v Salva Resources Pty Ltd[2011] FWAFB 4014 at [10]; and Metecno Pty Ltd T/A Bondor v Cameron[2014] FWCFB 2128 at [16])”
[27] The extract from Baker v Salva Resources Pty Ltd 10 referred to above is as follows:
“[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 to be not reasonably arguable.”
[28] In relation to the unfair dismissal application and the appeal, the reasons we have relied on by reference to s.611(2)(a) are also relevant here. Objectively assessed, the facts relied on by IBM to respond to each proceeding could not be said to have been untenable, groundless or not reasonably arguable. We are not persuaded that the requirements of s.611(2)(b) are made out in relation to its response to either the unfair dismissal application or the appeal.
[29] For these reasons, the costs application must be dismissed.
VICE PRESIDENT
Written submissions:
20 July 2015: submissions by Ms Jeffrey
1 [2015] FWCFB 397.
2 [2015] FWCFB 4171.
3 Applicant’s submissions, paras. 31-2.
4 [2014] FWCFB 810.
5 [2013] FWCFB 1811.
6 See also Church and Eastern Health t/as Eastern Health Great Health and Wellbeing [2014] FWCFB 810 at para [29].
7 We note she had completed all assessments required for formal registration in early 2012 and that in December 2012, she was awarded her fellowship.
8 Transcript, 21 January 2015, PN149-PN152.
9 [2015] FWCFB 1956.
10 [2011] FWAFB 4014.
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