Lisa Knight v Fawcett Plumbing Pty Ltd T/A Fawcett Plumbing

[2017] FWC 5280

[2017] FWC 5280

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Lisa Knight
v
Fawcett Plumbing Pty Ltd T/A Fawcett Plumbing
(U2017/1699)

COMMISSIONER PLATT ADELAIDE, 13 OCTOBER 2017

Application for costs pursuant to s.400A and s.611 of the Fair Work Act 2009 – unreasonable act or omission – costs awarded.

[1] This is an application by Miss Lisa Knight seeking an order for costs against Fawcett Plumbing Pty Ltd T/A Fawcett Plumbing (Fawcett Plumbing) pursuant to s.400A of the Fair Work Act 2009 (the Act). The application is made in the context of an earlier application made pursuant to s.394 of the Act on 17 February 2017 by Miss Knight in relation to a remedy for an alleged unfair dismissal which occurred on 27 January 2017. The dismissal was found to be harsh, unjust or unreasonable and, on 18 August 2017, compensation in the amount of $4,943.00 was awarded.¹

The Substantive Case

[2] The substantive case is summarised as follows.

[3] On 17 February 2017, Miss Knight lodged an application pursuant to s.394 of the Fair Work Act 2009 (the Act) seeking a remedy for an alleged unfair dismissal by her former employer Fawcett Plumbing Pty Ltd T/A Fawcett Plumbing (Fawcett Plumbing) on 27 January 2017.

[4] A conference was conducted on 26 April 2017 where the matter was listed for arbitration and directions for the filing of statements and submissions were made.

[5] A number of witness statements were filed by Fawcett Plumbing but after receiving correspondence alleging that the statements had not been prepared by the persons named, I convened a further directions conference on 24 May 2017 and after Mr Fawcett admitted that the statement preparation process may not have included consultation with the relevant authors, I required those statements to be replaced with statutory declarations by each witness.

[6] The matter was arbitrated on 15 and 16 June 2017. Ms Kaukas of counsel represented Miss Knight (with permission) and Mr Fawcett represented Fawcett Plumbing.

[7] Miss Knight was employed in the role of Office Manager at Fawcett Plumbing from 13 July 2016.

[8] The position of Miss Knight is summarised as follows:

• During her employment she was not subject to any disciplinary action. Mr Fawcett had, however, informally counselled her on a few occasions about smoking at work and being a few minutes late.



• On 27 January 2017, she was approached by Mr Butler who informed her that Mr Fawcett had reviewed the yard cameras and had seen her arrive late to work. Mr Butler instructed her to write herself a warning for being late.



• On the same day, Mr Lambi approached her and verbally gave her two weeks’ notice, no reason for the dismissal was provided.



• Mr Fawcett advised that the reason for termination was due to her anxiety and not being suitable for the position.



• Miss Knight was not notified of the reason prior to the dismissal and was not afforded the opportunity to respond and was therefore denied procedural fairness.



• Fawcett Plumbing failed to provide written confirmation of the dismissal and written reasons for the dismissal.



• There was no valid reason for the dismissal.

[9] The position of Fawcett Plumbing is summarised as follows:

• Miss Knight was counselled twice a week and Fawcett Plumbing was considerate about her lateness and smoking at work.



• Mr Fawcett had viewed Miss Knight attending work late and smoking on the CCTV security cameras whilst in Thailand.



• There was a valid reason – Miss Knight was dismissed for misconduct which was affecting the wellbeing of other staff. 2

Mr Fawcett was overseas at the time he made the decision to dismiss Miss Knight and delegated the task to Mr Lambi.

[10] In my Decision 3 I made the following findings:

“[82] Fawcett Plumbing employed 27 persons at the time of the dismissal and accordingly the Small Business Fair Dismissal Code does not apply.

[83] It appears to me that the working environment at Fawcett Plumbing was disorganised and the communications were of a robust nature, with four letter words featuring in verbal and electronic communications.

[84] I am not satisfied that Miss Knight’s language towards other staff was outside the ‘norm’ at Fawcett Plumbing. Mr Fawcett also used inappropriate language and it appears that Miss Knight and was not solely responsible for the robust culture at Fawcett Plumbing. That is not to condone the use of such language.

[85] The suggestion that Miss Knight’s management style had an adverse impact on employees was not borne out by the evidence. It appears that performance ‘feedback’ was freely given in a manner which some employees found confronting.

[86] I accept Miss Knight’s contention that she was trying to manage the other employees to perform their tasks, but it appears her management style was abrasive to some. The employees who gave evidence had differing views on what was appropriate conduct in the workplace and some found the robust environment at Fawcett Plumbing and Miss Knight’s management style confronting. The use of dismissal as a motivational tool appears to have been regularly employed by Mr Fawcett who appears to have set the tone. Miss Knight appears to have followed that lead.

[87] In terms of Miss Knight’s lateness, I accept that this occurred but has been explained by her child care responsibilities, and that she was in a self-managed role with some flexibility as to working hours. No information was provided about impact of the late attendances on the business.

[88] With respect to smoking, it appears that Mr Fawcett’s issue was that Miss Knight smoked, rather than the time she spent outside the office, again there was no detail provided as to how the time spent smoking outside the office adversely impacted the business.

[89] Mr Fawcett’s evidence was vague with little detail. I prefer Miss Knight’s evidence as to the discussions had with her by Mr Fawcett concerning her work performance. Whilst Mr Fawcett informally raised issues with Miss Knight, I am not convinced that it was done at the frequency he suggests or in any structured manner which should have been perceived by Miss Knight as performance management.

[90] The frequent use of the threat of dismissal referred to earlier may have reduced Miss Knight’s perception that Mr Fawcett had genuine concerns about her conduct and/or performance.

[91] Whilst Miss Knight may have acted inappropriately towards other employees, or had too many smoke breaks or was late on too many occasions, these concerns were never expressed to her as part of a formal disciplinary process which put her on notice that her role was in jeopardy.

[92] The disciplinary approach taken in respect of Miss Knight appears inconsistent with the approach taken towards other employees. From the evidence it appears that Mr Fawcett has some experience in disciplinary processes as evidenced by issuing written warnings given to employees including Mr Lambi for inappropriate conduct.

[93] The dismissal on 27 January 2017 occurred without prior warning and was conducted through an intermediary. In his closing submissions Mr Fawcett said “I didn’t notify her and I didn’t explain it to her because of being in a position I was in.” I accept that Mr Fawcett may have been impacted by the death of his father-in-law but this does not excuse the absence of any notion of procedural fairness.”

[11] I found that the dismissal was harsh, unjust and/or unfair and awarded compensation.

Parties Submissions as to Costs

[12] Miss Knight filed submissions and a number of witness statements of Ms Margaret Kaukas. The position of Miss Knight is relevantly summarised as follows:

• The Form F2 Unfair Dismissal application was lodged on 17 February 2017.



• The conciliation conference on 23 March 2017 did not proceed as Fawcett Plumbing was unavailable.



• On 23 March 2017, Ms Kaukas wrote to Fawcett Plumbing on behalf of Miss Knight and made an offer of settlement inclusive of compensation amounting to 12 weeks wages.



• Fawcett Plumbing did not respond to the offer of settlement.



• A second conciliation conference proceeded on 12 April 2017. Fawcett Plumbing did not make any offer to settle.



• The Form F3 Employer Response, filed by Fawcett Plumbing on 13 April 2017 and served on Miss Knight by the Commission on 18 April 2017, did not answer the allegations in any particular detail and did not answer the allegations relating to a breach of procedural fairness.



• A directions conference was conducted on 26 April 2017 and the Commission issued formal directions and set the matter down for hearing on 15 and 16 June 2017.



• On 19 May 2017, Ms Kaukas wrote to Fawcett Plumbing and made a further offer to settle on the basis that Fawcett Plumbing pays Miss Knight eight weeks pay. In this correspondence, Fawcett Plumbing was placed on notice that if the matter proceeded to hearing, an application for costs would be made on the grounds that Fawcett Plumbing had acted unreasonably in failing to negotiate a resolution of the matter.



• Ms Kaukas was instructed by Miss Knight that she would give serious consideration to accepting a lesser sum than that proposed in the offer of 19 May 2017.



• On 22 May 2017, Miss Knight filed her submissions, witness statement and documents, as directed.



• Mr Fawcett filed a number of statements on 22 May 2017.



• On 23 May 2017, Ms Kaukas contacted the Chambers of Commissioner Platt and raised concerns about the statements filed by Mr Fawcett.



• The matter was listed for directions conference on 24 May 2017.



• On 24 May 2017, Commissioner Platt advised Mr Fawcett that he had read the documents filed, had difficulty appreciating the valid reason for dismissal and noted that there was no evidence of warnings or Miss Knight being advised of the reason for dismissal. Mr Fawcett responded “Go to court as soon as possible”.



• Mr Fawcett filed statutory declarations on 29 May 2017 to replace the unsworn statements previously filed.



• On 2 June 2017, Miss Knight filed a supplementary statement.



• On 9 June 2017, Ms Kaukas emailed Mr Fawcett in response to his email that he “couldn’t make it to the hearing the following week” and reiterated the advice that if the matter proceeded to hearing and Miss Knight succeeded in establishing that the dismissal was harsh, unjust or unreasonable that a costs order would be sought.



• On 12 June 2017, Mr Fawcett sent an email to the Commission and to Ms Kaukas that he would accept a resignation to keep Miss Knight happy.



• On 13 June 2017, Ms Kaukas rejected that offer via email and reiterated the position in relation to a costs application being filed if the matter proceeded to hearing.



• On 13 June 2017, Ms Kaukas wrote to Mr Fawcett again and reiterated that he was being placed on notice that if the matter proceeds to hearing and Miss Knight succeeds in securing compensation, that a costs application would be made.



• The matter proceeded to hearing on 15 and 16 June 2017.



• The Commission made its decision on 18 August 2017.



• Miss Knight seeks an order pursuant to s.400A of the Act on the grounds that Fawcett Plumbing caused the costs of the hearing to be incurred because of its conduct of the matter and its unreasonable omission to enter into settlement negotiations in good faith and failing to make any settlement proposal to Miss Knight notwithstanding the intimation made by Commissioner Platt at the directions conference on 24 May 2017 in relation to the merits of the case.



• If the Commission does not rule in Miss Knight’s favour, then Miss Knight seeks costs in relation to the unreasonable act of the respondent in filing witness statements on 22 May 2017 that were unsigned and one of which was not authorised by the witness.

[13] On 15 September 2017, Miss Knight sought to amend the s.400A application for costs by adding an application pursuant to s.611 of the Act.

[14] Section 402 of the Act requires that an application under s.611 be lodged within 14 days of the determination of the matter. Miss Knight’s s.611 application was made outside that time period and I have no power to extend the period. Accordingly the s.611 application must fail.

[15] Mr Fawcett filed submissions which are summarised as follows:

• Not answering the questions in the Form F3 Employer Response in sufficient detail does not constitute an unreasonable act or omission that caused Miss Knight to incur costs in excess of the normal costs that Miss Knight would have incurred.



• In relation to Mr Fawcett being unavailable at the conciliation conference on 23 March 2017, this does not constitute an unreasonable act or omission that caused Miss Knight to incur costs.



• In relation to the second conciliation conference, these discussions are strictly confidential.



• The Commission ordered Mr Fawcett to pay approximately 38% of the amount Miss Knight was prepared to accept in full and final settlement as at 23 March 2017 and as such failing to make an offer of settlement in response does not constitute an unreasonable act or omission that caused Miss Knight to incur costs. The same argument is made for the offer made by Miss Knight on 19 May 2017.



• The directions conference held on 24 May 2017 to deal with the documents filed by Mr Fawcett was held as a result of a decision of the Commission. This was not caused by an unreasonable act or omission of Fawcett Plumbing.



• The contentions that Fawcett Plumbing was placed on notice numerous times that if the matter proceeded to hearing a costs application would be filed is a strategy designed to intimidate and/or force acceptance of a settlement and as such does not strengthen Miss Knight’s position in relation to the costs application.



• The Commission should not make an order requiring Fawcett Plumbing to pay any of Miss Knight’s costs. Alternatively, if an order is made it should be restricted to any individual and identifiable unreasonable act and/or omissions.



• Miss Knight did not make an offer that was less than the final amount of compensation ordered. The compensation awarded to Miss Knight was only 57% of the lowest amount that Miss Knight advised Fawcett Plumbing that she was willing to accept.



• If costs are awarded, they should be applied pursuant to Schedule 3.1 of the Fair Work Regulations 2009 (Cth) and not pursuant to Schedule 2 of the Supreme Court (Civil) Rules 2006 as is contained in Miss Knights Form F6 application.

The Power to Award Costs

[16] The power to award costs is discretionary and subject to specified statutory prerequisites. The presumption under the Act is that each party bears their own costs.

[17] Section 400A of the Act provides as follows:

“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.”

[18] A decision to award costs pursuant to s.400A of the Act requires a consideration of whether Fawcett Plumbing, by some unreasonable act or omission, caused Miss Knight to incur costs.

[19] 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.”

Consideration

Did Fawcett Plumbing engage in an unreasonable act or omission that caused costs to be incurred (s.400A)?

[20] Miss Knight contends that Fawcett Plumbing’s failure to attend a conciliation conference on 23 March 2017 was unreasonable. The attendance of parties at conciliation conferences, whilst desirable, is voluntary and accordingly I do not regard the failure of Fawcett Plumbing to attend as an unreasonable act or omission.

[21] With respect to the conduct of a second conciliation conference on 12 April 2017 and the failure of the matter to settle, there is insufficient information before to determine that Fawcett Plumbing engaged in an unreasonable act or omission.

[22] In my view s.400A of the Act cannot require any party to make an offer of settlement or penalise a party for failing to do so.

[23] The fact that Fawcett Plumbing did not accept two offers of settlement made by Miss Knight made prior to Fawcett Plumbing receiving the detail of the case against them, does not convince me that a failure to accept those offers is an unreasonable act or omission.

[24] By 24 May 2017, Fawcett Plumbing had received Miss Knight’s submissions and witness statement, and had prepared its own witness statements. At a directions hearing on that date which was recorded, I raised with Mr Fawcett a concern that the documents filed did not appear to establish any valid reason for the dismissal, and there was a complete absence of procedural fairness. In my view, despite Mr Fawcett’s unfamiliarity with this jurisdiction, it should have been reasonably apparent to Fawcett Plumbing that its defence of the claim had little foundation. In my view the continued defence of the claim from that point on by Fawcett Plumbing was an unreasonable act which resulted in costs being incurred by Miss Knight.

[25] Pursuant to s.400Aof the Act, I order that Fawcett Plumbing is to pay Miss Knight’s party/party costs incurred after 24 May 2017 and until 18 August 2017.

[26] Miss Knight is to provide a written assessment of the costs to Fawcett Plumbing within 14 days of this decision, noting if any items to be claimed are mentioned in the Schedule of Costs in Schedule 3.1 of the Fair Work Regulations 2009, the rate or amount claimed for that item must not exceed the rate or amount appearing in the Schedule (see s.403(2) of the Act).

[27] If the costs are not agreed within 14 days of the receipt of the assessment by Fawcett Plumbing, Miss Knight is to lodge the assessment in the Commission for referral to Deputy President Clancy for the purposes of taxing the costs.

[28] The costs are to be paid within 28 days of the date of this decision, or the date the costs are taxed by the Commission, whichever is the latter.

[29] An order giving effect to this decision will issue.⁴

COMMISSIONER

Final written submissions:

Miss Knight 15 September 2017 and 29 September 2017.

Fawcett Plumbing Pty Ltd T/A Fawcett Plumbing 21 September 2017.

1 [2017] FWC 4286 and PR595406

 2   Audio transcript 12:40pm

 3   [2017] FWC 4286

4 PR596774.

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