Leylan Neep v Garda Services Pty Ltd

[2019] FWC 6286

[2019] FWC 6286

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.365—General protections

Leylan Neep
v
Garda Services Pty Ltd
(C2019/2228)

DEPUTY PRESIDENT CROSS SYDNEY, 13 SEPTEMBER 2019

Application for costs – ss.375B and 611of the Fair Work Act 2009 (Cth) – Whether proceedings commenced, or maintained, ‘without reasonable cause’ and with ‘no reasonable prospect of success’.

[1] This decision concerns an application for costs made on 15 July, 2019, by Mr Leylan Neep (“the Applicant”), arising from the decision in C2019/2228 delivered on 1 July, 2019 1 (“the Amendment Decision”), where the Fair Work Commission (“the Commission”) amended an error with respect to the legal name of the Respondent in the Applicant’s general protections application pursuant to s.586 of the Fair Work Act 2009 (“the Act”).

The Amendment Decision

[2] In the Amendment Decision, I noted the relevant principles regarding amendment, both generally, and specifically pursuant to the Act, as follows:

“[22] Thegeneral principles regardingamendment to the name of a party were suscinctly stated by O’Callaghan J in Knight v Visionstream Australia Pty Ltd 2, as follows (at [20] and [21]):

“There are many reported cases in which some difficulty arises about whether an applicant should be permitted to substitute one respondent for another. Some of the older cases are discussed in detail in Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231 at 238-245 (per Dawson J), 249-251 (per Toohey J), 254-259 (per McHugh J).

Modern rules of court in all Australian jurisdictions, and in the United Kingdom, permit amendments to the name of a party which have the effect of substituting one party for another, if the mistake was genuine and was not relevantly misleading.”

[23] The discretion conveyed by s.586(a) of the Act is even broader, and not confined to simply mistakes. As the Full Bench observed in Lili Sinden v HDR Inc.; HDR Pty Limited 3 (at [11]):

“Section 586(a) of the FW Act provides that the Commission may “allow a correction or amendment of any application, or other document relating to a matter before the FWC, on any terms that it considers appropriate”. The discretionary power conferred by s 586(a) is self-evidently broad, and encompasses but is not expressed as confined to the correction of mistakes. In respect of the amendment power in a previous iteration of the federal legislative scheme for industrial relations, the High Court treated it as having a wide field of operation so as to give effect to the statutory intention that proceedings should be directed to the merits and that technicalities and legal forms should not be regarded. The same approach is applicable under the FW Act having regard to the requirements in s 577(b) for the Commission to perform its functions and exercise its powers in a manner that is quick, informal and avoids unnecessary technicalities and in s 578(b) for the Commission in performing functions and exercising powers in relation to a matter to take into account equity, good conscience and the merits of the matter. In the context of the Commission’s unfair dismissal jurisdiction, the s 586(a) power has been used to correct the identification of a respondent employer to the extent of substituting one corporate entity for another.””

[3] At paragraph [24] of the Amendment Decision, it was noted that each party characterised the error in the name of the Respondent on the Form F8 as a “mistake”, with the Respondent’s Counsel submitting, with quite appropriate balance considering the evidence, the following: 4

“The fact that Garda Capital Limited was named, might have more to do with the fact that the applicant was intent on pursuing shares rather than intent on pursuing Garda Services Pty Ltd.  An inference can be drawn from that, I don't take it any higher than though.  I don't take it any higher.”

[4] The Amendment Decision characterised the mistake as being no less than egregious 5, and which arose through miscommunication, or lack of any proper communication, between Mr Neep and his Solicitor6.

[5] The Respondent’s submission, which was ultimately unsuccessful, was that the mistake was a foundational error arising out of a lack of properly instructing one’s solicitor, and the Commission should not exercise the discretion to allow the amendment.

The Costs Application

[6] The Applicant sought costs pursuant to two provisions of the Act, being:

(a) Section 375B(1)(b) of the Act, which provides that the Commission may make an order for costs incurred by a party if (relevantly) “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”; and/or

(b) Section 611(2)(a) of the Act which provides that the Commission may make an order for costs where it is satisfied that a person has “responded to the application, vexatiously or without reasonable cause”.

[7] The Applicant relied upon two specific “unreasonable acts” of the Respondent that it claimed enlivened the costs provisions. They were said to be:

(a) The Respondent’s sudden change of position on 29 April 2019 (though the correct date was 26 April, 2019); and

(b) The Respondent’s insistence that the Applicant’s choice of Respondent was a deliberate “forensic decision”.

[8] The Applicant’s submissions relating to those alleged unreasonable acts were as follows:

“Respondent’s change of position

[28] When the Respondent first raised the issue of the employing entity on 16 April 2019, its position was:

(a) it believed that “the proceedings have not been deliberately commenced against the wrong entity”;26 and

(b) there was “no basis to distinguish [Sinden v HDR Inv T/A HDR [2018] FWC 5643] from the current position facing the Applicant and the Commission”.27

[29] On 29 April 2019 [the correct date was 26 April 2019] the Respondent’s position inexplicably reversed. Suddenly, it had “serious, genuine doubts” about the veracity of the error, which it now alleged to have been “your client’s forensic decision, made with the assistance and under the watchful eye of expert legal advice”, making the current case the factual inverse of Sinden.

[30] No additional facts have arisen to explain this change of approach. No reasonable explanation has been offered. It is hard to see how such a change is not an “unreasonable act”.

Respondent’s insistence that the choice of Respondent was a “forensic decision”

[31] The Respondent’s insistence that the decision was a deliberate forensic choice involves an implied accusation of deliberate falsehood. This is a serious accusation that traditionally is not made without evidence.

[32] Yet the Respondent has produced no evidence to support its accusations. This can be contrasted with, for example, Sean Fogarty v GETT Asia Ltd; GETT Gerätetechnik GmbH [2018] FWC 7756 where a file note recorded that the Applicant had stated that his initial choice of Respondents was deliberate.

[33] The comment from the Full Bench in Siden at [20] seems apt:

“The conditional response filed in the name of HDR Inc. has all the flavour of a “too clever by half” legal tactic rather than genuinely being the product of doubt about the identity of the named respondent.”

[34] Added to this, the factual similarities between this case and Siden are striking, and those similarities are well known to the Respondent. In the circumstances, the Applicant submits that the Respondent’s continued opposition on the basis of an alleged “forensic decision” for which it has no evidence is unreasonable.

Unreasonable actions caused incurring of additional costs

[35] But for the above unreasonable acts, the application could have been dealt with simply and on the papers. Now, the Applicant is required to prepare for and participate in a contested hearing before the Commission.

[36] The Applicant therefore submits that an order for costs ought be issued against the Respondent in respect of the costs associated with the preparation for and attendance at the contested hearing in relation to this application on a party-party basis.” (Footnotes omitted).

The Respondent’s Submission

[9] The Respondent resisted the costs application noting the Applicant’s own, admitted errors associated with the preparation of his application, in circumstances where his conduct and that of his legal representative in preparing the Application, was submitted to be entirely unreasonable. It was put that it was not the acts or omissions of the Respondent that necessitated the amendment application to be made, but the Applicant's own egregious conduct.

[10] The Respondent further submitted that it was incumbent upon the Applicant to make the application to amend as there was no automatic right to amend, because s.586 of the Act requires the exercise of a discretion. The Respondent submitted that, even if the Respondent had consented to the amendment application, the Applicant was still obliged to put on adequate evidence to demonstrate that the discretion ought to be exercised favourably by the Commission in circumstances where the Applicant and his legal representative had knowingly failed to take any reasonable precautions to ensure the accuracy of the substantive Application.

[11] The Respondent noted that it had raised in its correspondence of 16 April, 2019, a jurisdictional objection in relation to the incorrectly named Respondent, which objection the Respondent was entitled to raise given the serious error made by the Applicant, and the role and documents which were readily available to the Applicant at the time of filing the Substantive Application. The Respondent reasonably sought reassurance from the Applicant that its substantive Application against the incorrect Respondent was not made for some ulterior motive.

[12] The Respondent submitted that it was open to the Applicant at this point, but also when the Applicant filed his statement in support of the Amendment Application, to provide some credible evidence that the Applicant’s error was genuinely made or otherwise. It was submitted that the Applicant did not “fulsomely and frankly explain the mistake prior to giving evidence at the hearing of the Application.”

[13] In conclusion, the Respondent submitted that:

“In light of:

(a) The Applicant's knowledge;

(b) The documents in the possession of the Applicant;

(c) The Applicant's access to expert legal advice;

(d) The Applicant's failure to reassure the Respondent that it had not named the incorrect respondent for some ulterior motive; and

(e) The requirement for the Applicant to evidence to the FWC that it should exercise its discretion, which was not guaranteed,

the Respondent opposed and continued to oppose or continue to oppose the Amendment Application.”

[14] The Respondent specifically submitted that it did not change its position in its correspondence of 26 April 2019 (incorrectly referred to as 29 April 2019 in the Applicant’s submissions at paragraph [29]). An expression of a hope and providing an invitation for the Applicant to reassure the Respondent that there was no collateral or improper purpose in naming the incorrect Respondent was neither:

(a) A change of position; nor

(b) An unreasonable act which would justify the grant of an order for costs against the Respondent.

[15] In conclusion on the point of change of position,the Respondent submitted the following:

“The Respondent submits that in the circumstances, it was reasonable to invite the Applicant, to reassure the Respondent that there was no ulterior motive and to infer that without such reassurance that there could be some collateral or improper purpose. In any event, the Respondent was at all material times entitled to make legal arguments in the alternative, and was not confined to a position set out in correspondence as if such had the effect of a court pleading.” (Emphasis added)

The Principles as to Costs before the Commission

[16] In Neil Keep v Performance Automobiles Pty Ltd 7,a Full Bench of the Commission considered an application for costs pursuant to sections 375B and 611 of the Act arising out of an application under s.365 of the Act. The Full Bench found:

“[13] It is apparent from the Supplementary Explanatory Memorandum that the legislature intended that the power to order costs provided by s.375B only be exercised where there is clear evidence of unreasonable conduct. Such an approach is entirely consistent with the jurisprudence relating to the other costs provisions in the FW Act (such as s.611).

[14] As stated in s.375B(3), the power to make an order for costs pursuant to s.375B(1) does not limit the FWC’s power to order costs pursuant to s.611. Section 611 has general application in relation to matters before the FWC and provides as follows:

“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.”

[15] It may be observed at the outset that there are some similarities between s.611 and s.570 of the FW Act, in particular the common use of the expression ‘vexatiously or without reasonable cause’. On that basis judgments which have construed s.570, and its legislative antecedents, have been regarded as relevant to the consideration of s.611. Of course s.570 deals with the ordering of costs in court proceedings in relation to matters arising under the FW Act. In court proceedings the usual practice is that an order for costs follows the outcome of the substantive proceedings. The Commission context is quite different. There is no general practice that costs follow the event and the FWC’s power to order costs only arises in the circumstances specified in ss.376, 400A, 401, 611 and 780 of the FW Act. Section 611(1) sets out a general rule - that a person must bear their own costs in relation to a matter before the FWC, and then provides exceptions to that general rule in the limited circumstances referred to in s.611(2).

[16] The FWC’s power to order that a person bear some or all of the costs of another person in relation to an application is only enlivened if the FWC is satisfied as to the matters set out in either s.611(2)(a) or s.611(2)(b).

[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 (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’.

[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’. In Deane v Paper Australia Pty Ltd 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”.” (Footnotes omitted)

Consideration

[17] The issue the subject of the Amendment Decision was amendment pursuant to s.586 of the Act, and not dealing with a dispute under s.365. As such, due to the provision of paragraph (a) of sub-section (1) of s.375B, s.375B would not be applicable.

[18] I am not satisfied that the positions taken by the Respondent were manifestly untenable or groundless, and so will not order that any of the Applicant’s costs be paid by the Respondent.

[19] The error the subject of amendment application resulted from the Applicant's own, and his legal representative’s, admitted errors associated with the preparation of his application. The error was egregious, should not have occurred, and would not have occurred had proper attention been paid to the proper identity of the Respondent.

[20] The objection to amendment pursued by the Respondent was an objection the Respondent was entitled to raise given the serious error made by the Applicant. In order to convince the Commission to exercise the discretion to amend, the Applicant was required to present adequate evidence to demonstrate that the discretion ought to be exercised in its favour.

[21] While I disagree with the Respondent’s submission that a hearing of the amendment application would nonetheless have been necessary in order for the Commission to exercise its discretion as there was no automatic right to amend, and note that the amendment could have been made by consent, it was nonetheless not manifestly untenable or groundless for the Respondent to seek to test the evidence of the Applicant.

[22] The application for costs is dismissed.

DEPUTY PRESIDENT

Appearances:

Ms M Thorley, for the Applicant.

Mr J-A Hodgens, for the Respondent.

Final written submissions:

For the Applicant: 22 August 2019

For the Respondent: 8 August 2019

Printed by authority of the Commonwealth Government Printer

<PR712166>

 1   [2019] FWC 4560.

 2 [2017] FCA 1513.

 3   [2018] FWCFB 6934.

 4   Transcript PN 539.

 5 At [26].

 6 At [27].

 7   [2015] FWCFB 1956.