Lorraine Roche v Trustees of the Roman Catholic Church for the Diocese of Wagga Wagga

[2020] FWC 326

[2020] FWC 326

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s 394—Unfair dismissal

Lorraine Roche
v
Trustees of the Roman Catholic Church for the Diocese of Wagga Wagga
(U2017/13136)

DEPUTY PRESIDENT SAMS SYDNEY, 22 JANUARY 2020

Application for costs – unfair dismissal application – applicant reinstated with associated orders – costs decision appealed – Full Bench remittal on two matters – whether unreasonable act or omission (s 400A) – whether original application had no reasonable prospects of success (s 611(2)) – offers of financial settlement not reinstatement – Commission not satisfied offers of settlement unreasonable act or omission – limitations on no reasonable prospects of success criterion – prospects of success not hopeless at time of filing employer’s original response – costs jurisdiction not enlivened – costs application dismissed.

BACKGROUND

[1] On 24 July 2019, in Trustees of the Roman Catholic Church for the Diocese of Wagga Wagga v Lorraine Roche; see: [2019] FWCFB 4684 (the Appeal Decision), a Full Bench of the Fair Work Commission (the ‘Commission’) upheld an appeal of the Trustees of the Roman Catholic Church for the Diocese of Wagga Wagga (the ‘Diocese’) of a costs decision of Deputy President Dean; see: Lorraine Roche v Trustees of the Roman Catholic Church for the Diocese of Wagga Wagga [2019] FWC 2768 (the ‘Costs Decision’). The Deputy President had determined, on 24 April 2019, a costs application filed by Ms Lorraine Roche (‘Ms Roche’ or ‘the applicant’) in her favour, pursuant to s 400A(1) of the Fair Work Act 2009 (the ‘Act’). It is noted that the quantum of the costs order was not determined by the Deputy President. The costs application arose following the Deputy President’s earlier decision of 14 August 2018, finding that Ms Roche’s dismissal by the Diocese on 17 August 2017, was unfair. As a consequence, the Deputy President ordered Ms Roche’s reinstatement, continuity of employment and payment of lost wages from the date of dismissal to her reinstatement; see: Lorraine Roche v Trustees of the Roman Catholic Church for the Diocese of Wagga Wagga[2018] FWC 3933.

[2] In the Appeal Decision, the Full Bench identified the Diocese’s six grounds of appeal as follows:

‘[12] Ground 1 contends that the Deputy President erred in taking into account an irrelevant consideration that the Appellant ought to have been aware that there were significant risks in continuing to defend the application in determining that the rejection of Ms Roche's Second Offer was unreasonable.

[13] Ground 2 contends the Deputy President erred in finding that after the first two days of hearing and on or before 20 April 2018, the Appellant could not have reasonably held the view it could defend the application. This is because the Deputy President is said to have failed to pay regard to the Appellant's submissions and the evidence of Mr MacLean; relied upon a factually incorrect submission of Ms Roche that Mr Bowyer had conceded on or before 20 April 2018 that there were serious flaws with respect to the investigation report of Mr Tawfiq; and failed to have regard to the evidence of Ms Campbell concerning impracticability of reinstatement.

[14] Ground 3 contends the Appellant was denied procedural fairness in relation to the findings that the Appellant should have known that monetary offers without reinstatement would not be accepted by Ms Roche and that it held certain knowledge about the prospects of successfully defending the application based on the quantum of its 24 April 2018 settlement offer.

[15] Ground 4 contends the Deputy President erred in finding that the Appellant recognised that it had diminished prospects for defending the application given the quantum of its 24 April 2018 settlement offer.

[16] Ground 5 contends the Deputy President erred in finding that the Appellant's offers of 21 February 2018 and 24 April 2018 were not reasonable.

[17] Ground 6 contends the Deputy President erred in incorrectly applying the Appellant’s duties under the common law and the Work, Health and Safety Act 2011 (NSW) (NSW WHS Act).’

[3] It is unnecessary to recite the detailed consideration and conclusions of the Full Bench on each of the appeal grounds; suffice to observe that permission to appeal was granted; appeal grounds 1, 2 and 4 above were upheld and, for present purposes, the Full Bench concluded at [57] as follows:

‘[57] The Respondent’s application for costs will be remitted to another member for rehearing for two reasons. Firstly, the Deputy President did not deal with the Respondent’s alternative argument that the failure to concede that the Respondent’s dismissal was unfair was an unreasonable act or omission which could have confined the remainder of the proceedings to dealing only with remedy. Secondly, the Deputy President did not deal with the application under s.611(2)(b) of the Act. These are matters that are appropriately dealt with by a single Member at first instance.’

[4] In the result, the outstanding matters set out at [57] were remitted to me for hearing and determination. On 12 August 2019, directions were issued for the filing and service of further submissions on the two remaining issues. The parties subsequently requested that I determine the matter ‘on the papers’. I propose to adopt the parties’ consent position in this respect.

Legislative provisions and applicable principles

[5] On remittal, I have been asked to consider:

(a) whether the Diocese’s failure, after two days of a five-day hearing, to concede that Ms Roche’s dismissal was unfair was an unreasonable act or omission, which could have reduced, by at least two days, the remainder of the proceedings to dealing with remedy only (the s 400A(1) issue); and

(b) whether it should have been reasonably apparent to the Diocese when it responded to Ms Roche’s unfair dismissal application that it had no reasonable prospects of success (the s 611(2)(b) issue).

[6] It is useful, at this point, to set out the provisions of ss 400A and 611 of the Act, which read:

‘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.’

‘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).’

[7] The Explanatory Memorandum to the Fair Work Amendment Bill 2012 relevantly provides in respect of s 400A of the Act:

‘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.

171. However, the power to award costs is only available if the FWC is satisfied that the act or omission by the first party was unreasonable. What is an unreasonable act or omission will depend on the particular circumstances but it is intended that the power only be exercised where there is clear evidence of unreasonable conduct by the first party.’

[8] Section 400A imports a test of objective reasonableness based on facts which were known, or which should have reasonably been known at the time of the alleged act or omission. This may be at any point in the proceedings. So much so is clear from the decision in Stagno v Frews Wholesale Meats [1998] 84 IR 270 where the Full Bench said:

‘What is considered to be without reason is determined by reference to the stage that the proceeding has reached. We note that this leaves open the possibility that proceedings may commence which are with reasonable cause but may, in particular circumstances at a later stage, be further prosecuted unreasonably.’

[9] In practical terms, a person may gain knowledge in the lead up to proceedings (when the opposing party’s evidence is filed) or during the proceedings (e.g. after the cross examination of a crucial witness) which, when viewed objectively, would satisfy the test of an unreasonable act or omission in continuing the matter, for which costs may be awarded against the defaulting party. It would be from that point that costs may be awarded, if the person did not take steps to recognise that their case was frivolous, untenable, groundless or faulty. For an applicant, this may mean discontinuing the matter and for a respondent it may mean making substantial offers to settle a matter.

[10] Sections 577 and 578 of the Act are also relevant and state:

‘577 Performance of functions etc. by the FWC

The FWC must perform its functions and exercise its powers in a manner that:

(a) is fair and just; and

(b) is quick, informal and avoids unnecessary technicalities; and

(c) is open and transparent; and

(d) promotes harmonious and cooperative workplace relations.

Note: The President also is responsible for ensuring that the FWC performs its functions and exercises its powers efficiently etc. (see section 581).’

‘578 Matters the FWC must take into account in performing functions etc.

In performing functions or exercising powers, in relation to a matter, under a part of this Act (including this Part), the FWC must take into account:

(a) the objects of this Act, and any objects of the part of this Act; and

(b) equity, good conscience and the merits of the matter; and

(c) the need to respect and value the diversity of the work force by helping to prevent and eliminate discrimination on the basis of race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer's responsibilities, pregnancy, religion, political opinion, national extraction or social origin.’

[11] It follows from ss 577 and 578 that in exercising the discretion to order costs, the Commission must exercise its powers in a manner which is ‘fair and just’ and takes into account ‘equity, good conscience and the merits of the matter’. The broad nature of these considerations suggests that the factors which are relevant to the exercise of the discretion are not confined.

[12] Section 611 of the Act contains no positive indication of the considerations which the Commission must take into account in deciding how to exercise its discretion. The discretion conferred is expressed in general, unqualified, terms. As the High Court observed in O’Sullivan v Farrer [1989] HCA 61; (1989) 168 CLR 210 (‘O’Sullivan’) at [216]:

‘Where a power to decide is conferred by statute, a general discretion, confined only by the scope and purposes of the legislation, will ordinarily be implied if the context (including the subject matter to be decided) provides no positive indication of the considerations by reference to which a decision is to be made.’

[13] But, of course, the discretion conferred by s 611(2) must be exercised judicially; that is to say, not arbitrarily, capriciously, or so as to frustrate the legislative purpose. Further, consistent with O’Sullivan, the discretion is also confined by the subject matter, legislative context and purpose.

Meaning of ‘no reasonable prospects of success’ (s 611(2)(b))

[14] The High Court in Spencer v Commonwealth of Australia (2010) 241 CLR 118 considered the meaning of the phrase ‘no reasonable prospects of success’, albeit in the context of s 31A of the Federal Circuit Court of Australia Act 1976. The plurality (Hayne, Crennan, Kiefel and Bell JJ) said:

‘59 In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like "clearly", "manifestly" or "obviously") as "frivolous", "untenable", "groundless" or "faulty". But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word "reasonable", in the phrase "no reasonable prospect", be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a "frivolous", "untenable", "groundless" or "faulty" claim.

60 Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is "no reasonable prospect" of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to "no reasonable prospect" can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase "just and equitable" when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.’

[15] In Baker v Salva Resources Pty Ltd[2011] FWAFB 4014, the Full Bench said at [10]:

‘[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 as to be not reasonably arguable.’

See also: Qantas Airways Limited v Carter[2013] FWCFB 1811 (‘Qantas v Carter’).

SUBMISSIONS

[16] Both parties relied on their submissions and statement evidence filed in the original costs application before the Deputy President, the Costs Decision of 24 April 2019 and the Appeal Decision of 24 July 2019. I have reviewed all of this material and have taken it into account in determining the two remitted issues.

For the Diocese

[17] The Diocese referred to the two issues for determination and submitted that, in Ms Roche’s case, there is a requirement to assess whether the Diocese had no reasonable prospects of defending an order that the dismissal was unfair, at two points in time:

•  at the time the Diocese filed its response to Ms Roche’s originating application; and/or

•  at the end of the first two days of the five-day hearing.

[18] By reliance on Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351 at [9], the Diocese submitted that, on any objective view, its case at either point in time, was not one ‘doomed to fail’. Prior to dismissal, the Diocese had the benefit of an independent investigation in relation to the matters which formed the basis of the dismissal, prior to filing its response. The Report had taken into account Ms Roche’s responses, but had still determined she had engaged in misconduct. The Diocese also relied on the Full Bench’s observations at [26] of the Appeal Decision to establish that after two days of hearing, its case was not ‘doomed to fail’:

‘[26] All of this evidence is relevant to the question of reinstatement. It is doubtless the case that by the end of day two of the hearing the Appellant’s prospect of successfully defending against a finding that the Respondent’s dismissal was unfair had been damaged. But it had not put on its full case. In any event, the relevant act or omission that the Deputy President found to be unreasonable was the failure by the Appellant to accept the Second Offer. That offer, like the first offer, was for reinstatement. The Appellant was resisting reinstatement.’ (my emphasis)

For Ms Roche

[19] It was submitted that the power to award costs under s 611 of the Act is such that it may be exercised on the Commission’s own motion; see: Creative Every Day Pty Ltd t/as Sameway Magazine v Leung [2019] FWCFB 5416 at [23], and the expression ‘should have been reasonably apparent’ imports an objective test; see: Keep v Performance Automobiles Pty Ltd [2015] FWCFB 1956 at [18]. Further, the Commission has the power to conduct an assessment of the Diocese’s prospects of success at any point in time during the proceedings, including when the Diocese’s offer of $54,000 was made on 24 April 2018; see: Sharkey v Life Without Barriers[2019] FWC 2287 (although I note that this decision was quashed on appeal in Sharkey v Life Without Barriers [2019] FWCFB 7644).

[20] Ms Roche submitted that at the time of filing its Form F3 response, it should have been reasonably apparent to the Diocese that it would not be able to successfully defend the unfair dismissal application, for the following reasons:

(a) The Diocese had access to legal advice at all relevant times;

(b) The Diocese had, at all relevant times, access to Ms Campbell, and therefore her written records, which indicated the ‘volatility’ and ‘unpredictability’ of Ms Culla. This was a significant hurdle for the Diocese to establish valid reason;

(c) The Diocese had, at all relevant times, access to Mr Tawfiq and should have known the concessions that he would have made during cross-examination in relation to the reliability of the report which arose from the investigation in 2015. This was a significant hurdle for the Diocese to establish valid reason;

(d) The Diocese had, at all relevant times, access to Mr Bowyer, the decision-maker, and therefore knew that the decision to dismiss Ms Roche was not as set out in the final show cause letter issued to her. This was a significant hurdle for the Diocese to establish procedural fairness; and

(e) Both the investigation report and the reason for dismissal used by the Diocese were flawed on any objective analysis of the relevant facts. For example, Mr Tawfiq chose not to personally interview Ms Roche, and instead rely on materials provided by the Diocese in preparing his report.

[21] In the alternative, it was submitted that it should have been reasonably apparent to the Diocese on 24 April 2018, that it would not be able to successfully defend the claim that the applicant was unfairly dismissed, because:

(a) The $54,000 offer (representing 12 months of the applicant’s wages) invites a strong inference that the Diocese had actual knowledge that it would not succeed in its unfair dismissal defence; and

(b) By 24 April 2018, Ms Campbell had in fact given evidence of Ms Culla’s ‘volatility’ and ‘unpredictability’, which would have put beyond doubt that the Diocese had no valid reason to dismiss the applicant.

[22] The applicant also submitted that the Diocese should have appreciated that it did not have any prospects of successfully defending a finding of unfair dismissal and no reasonable prospect of resisting reinstatement upon the close of evidence, once Mr Tawfiq and Mr Bowyer were discredited, and once Ms Campbell was plainly identified as the most relevant witness.

[23] Ms Roche put that for the reasons set out above, the failure by the Diocese to have conceded the dismissal was unfair was an unreasonable omission under s 400A(1) of the Act. Due to the Diocese’s failure to confront the weakness of its position in relation to the unfairness of her dismissal, it was submitted that the Commission should order the Diocese to pay the following costs, either on an indemnity basis or, in the alternative, on a party/party basis:

(a) Costs incurred after the date of the Diocese filing its Form F3 response, less one hearing day to allow for the resolution of the reinstatement issue; or in the alternative (pursuant to s 611(2)(b) of the Act);

(b) Costs incurred after 24 April 2018 in relation to two hearing days and written closing submissions (pursuant to ss 400A(1) or 611(2)(b) of the Act); or in the alternative;

(c) Costs for closing submissions; or

(d) Any other costs the Commission believes appropriate.

In reply

[24] The Diocese addressed each of Ms Roche’s reasons relating to ‘both points in time’, as follows:

(a) In relation to the first point in time, that the Diocese had access to legal advice at all relevant times and with such access filed a reply, is a matter that provides a basis for a finding that it did have a reasonable basis for defending the application given the duties held by legal practitioners to their clients, Courts and Tribunals;

(b) Mr Tawfiq, in preparing his investigation report had access to the information concerning Ms Culla's unpredictability and volatility and it did not affect his conclusion that the applicant had engaged misconduct;

(c) There is no basis upon which the Diocese could have been aware that any concessions would have been made by Mr Tawfiq in relation to the report prior to the filing of its reply. Furthermore, it is unclear what concessions, if any, the applicant alleges Mr Tawfiq made on 23 May 2018 in relation to this ground;

(d) Deputy President Dean did not determine that the dismissal was procedurally unfair in that the applicant was not provided with an opportunity to respond to the reasons for dismissal relied upon by Mr Bowyer. The Deputy President did in fact determine that the applicant was provided an opportunity to respond to the reasons for her dismissal;

(e) The conclusion in the investigation report of Mr Tawfiq and ultimately relied upon by the Diocese, i.e. that the applicant was the instigator of the incident was also a conclusion reached by the NSW Police Force. Furthermore, Deputy President Dean did not determine that there were flaws with Mr Tawfiq's report for the reason he had not personally interviewed the applicant;

(f) In relation to the second point in time, there is no basis for drawing the inference that the Diocese knew that it would not have succeeded in defending the claim that the applicant was unfairly dismissed. The test for the drawing of an inference was stated by the Full Bench in the Appeal Decision. Furthermore, the Full Bench determined that the motivation of the respondent in making the offer was a matter of mere conjecture. The direct evidence of Mr MacLean, both in his witness statement and in the Fourth Offer was that the respondent was still of the view that it had reasonable prospects of success in defending the unfair dismissal application and that the offer was not only made to deal with possible reinstatement, but as set out in the letter of offer also was made on a commercial basis to avoid the further costs and time associated with the anticipated further litigation. In any event, the appropriate test for the determination of a costs application under ss 611 and 400A is to be determined on an objective basis and not the subjective belief of an individual such as Mr MacLean; and

(g) In response to the submission that the Diocese after the first two days of hearing should have known about Ms Culla's volatility etc., it repeats the submission at (b) above.

[25] The Diocese also submitted that the applicant’s further alternative s 611 submissions should not be entertained. These submissions are beyond the boundaries of the costs application and the evidence filed by both parties in accordance with the orders made by the Commission. Secondly, the evidence of Mr Tawfiq and Mr Bowyer was not the subject of any adverse credit findings. In any event, the Diocese submits that it still had a reasonable basis to conclude that its case, in establishing that the dismissal of the applicant, was not ‘doomed to fail’ at the conclusion of the evidence.

CONCLUSIONS

[26] In my view, Ms Roche’s submissions largely conflate the reasons relating to a ‘no reasonable prospects of success’ argument under s 611(2)(b) of the Act with the unreasonable failure to concede unfairness, as an act or omission under s 400A(1) of the Act.

[27] I shall return shortly to the ‘no reasonable prospects of success’ argument.

The s 400A(1) issue

[28] Ms Roche placed considerable emphasis on the 24 April 2018 settlement offer as being the ‘trigger’ for the Diocese to concede the unfairness of her dismissal, and that consequently, two days of hearing could have been avoided, with the focus only on remedy. I make the following observations on this submission.

[29] Firstly, given the strongly-held views of the parties as to the practicality of reinstatement, and, even if the Diocese had a concern as to the strength of its case going to the fairness of Ms Roche’s dismissal, there is no objective evidence that a focus entirely on remedy would have generally shortened the proceedings, or that the hearing would have specifically been reduced by two days. In my view, it is notoriously difficult to speculate on the length of time that is required in a strongly contested case, involving the cross-examination of witnesses on key issues in a matter. In short, it can be no more than a speculative guess. Indeed, Ms Roche’s submissions recognise such speculation by proposing costs orders on either a one-day or two-day estimation.

[30] That said, in my opinion, the Commission should exercise a considerable degree of caution (as warned by the authorities on costs applications) before too readily accepting, or even inferring, a proposition that an employer’s offer to settle an unfair dismissal application, which is greater than the 26 weeks’ pay maximum compensation under s 392 of the Act, is a concession that the dismissal was unfair, and, therefore, that a failure to make such a concession is an unreasonable omission, as contemplated by s 400A(1) of the Act.

[31] There may be many reasons why an employer elects to make such an offer, including before a hearing, or during a proceeding, a fortiori, in a vigorously contested unfair dismissal case. For example, employers invariably make such offers to avoid costly and time-consuming proceedings, particularly if the costs may exceed the 26-week settlement payment, or the employer might have a genuine concern for the health and welfare of its employee witnesses in giving evidence in often stressful and unpleasant circumstances, including concerns as to the well-being of the dismissed employee.

[32] It seems to me that unless there is clear and incontrovertible evidence or a concession is openly made, such as to plainly demonstrate that the employer’s case as to the fairness of the dismissal is manifestly untenable, hopeless, or doomed to fail, then a large offer to settle a matter is unlikely to constitute an unreasonable omission, within the meaning of s 400A(1) of the Act. In my judgment, this is not such a case.

[33] Secondly, the mere fact that a dismissed employee consistently maintains reinstatement as the only remedy they seek, and eschews generous financial settlements, does not lead to an inference that an employer’s continued resistance to reinstatement is an unreasonable act or omission contemplated by s 400A(1) of the Act. So much is clear from the Explanatory Memorandum, which states at para 169:

‘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.’

[34] My recent experience in two lengthy and costly unfair dismissal hearings serves to demonstrate the point. In two very different unfair dismissal cases, one involving a failure to follow the reasonable directions of the employer and the other involving breaches of rail safety procedures; see: respectively, Dias v Commonwealth Securities Limited[2019] FWC 5479 and Singh v Sydney Trains[2019] FWC 182, the applicants in both cases consistently maintained reinstatement as the only settlement they would accept. Both employers proposed settlement offers in excess of 26 weeks’ pay, including after the close of both parties’ evidentiary cases. Relevantly, in both cases, the applicants were unsuccessful as to any findings of unfairness and their unfair dismissal applications were dismissed. Self-evidently, the offers in those cases were not motivated by a concern that the employers’ cases were ‘doomed to fail’. Although rare, I suspect there would be other Commission examples involving similar circumstances.

[35] Thirdly, and significantly, as the Full Bench found in the [26] of the Appeal Decision, the Diocese ‘had not put on its full case’ by the end of the first two days of hearing. In these circumstances, it is difficult to see how Ms Roche can establish a reasonable basis for a finding that one or two days of hearing were wasted because of the failure of the Diocese to accept the unfairness of her dismissal.

[36] Fourthly, the evidence, as also observed by the Full Bench in the Appeal Decision at [23] and [25], of the School Principal, Ms Campbell, was not fully supportive of reinstatement. Ms Campbell’s evidence in total might reasonably have led to a conclusion that reinstatement was at least problematic. It most certainly was not inevitable, or a ‘sure thing’. While Deputy President Dean was plainly entitled to exercise her discretion as to ordering reinstatement, reasonable minds might differ as to such an outcome, in light of Ms Campbell’s and Mr MacLean’s evidence. In any event, given these circumstances, it could not be said that an admission of unfairness (procedural or otherwise) was inevitable, with a resultant failure to offer reinstatement or a focus only on remedy, was an unreasonable omission, such as to enliven s 400A(1) of the Act.

[37] For these reasons, I am not satisfied that the failure of the Diocese, at the end of the second day of hearing, to concede Ms Roche’s dismissal was unfair was an unreasonable act or omission, within the contemplation of s 400A(1) of the Act. Accordingly, no order for costs should be made under s 400A(1) of the Act.

The s 611(2)(b) issue

[38] In my view, the Commission’s power to award costs under s 611(2) of the Act can only be exercised at two specific points of time. This is consistent with the overarching policy intention of the Act, that a person must bear their own costs in any matter before the Commission, subject to the limiting default provisions of ss 611(2)(a) and (b). I note that sub-s (a) is not relevant here.

[39] The two specific points of time referable to when the Commission may order costs, if any, or at all, are if the express limitations in sub-ss (a) and (b) are met. These are firstly, the time when the first person (the applicant) made the application, or secondly, when the person (the respondent) responded to the application. In an unfair dismissal case, that is, respectively, the Form F2 of the dismissed applicant and the Form F3 of the respondent employer. So much is plain from Qantas v Carter, where a Full Bench of the Commission said at [20] and [23]:

‘[20] It is clear from the terms of s.611 of the Act that the point at which the Commission must determine whether or not Qantas' application to appeal was vexatious, without reasonable cause or had no reasonable prospect of success, is when Qantas made the application to appeal.

…

[23] The considerations we have referred to above are also relevant to a consideration of whether the circumstances in s.611(2)(b) were made out. We are not persuaded that on an objective basis it should have been reasonably apparent that, at the time Qantas made its appeal, it had no reasonable prospect of success.’ (my emphasis)

[40] Accordingly, Ms Roche’s submission that the Commission can assess the Diocese’s prospects of success at any point during the proceedings, including when the $54,000 offer was made, must be rejected. Further, while the applicant’s claim that the Commission may exercise its powers on its own motion is correct, it did not do so in this case. While there have been some differing views of Commission Members as to the correctness of Qantas v Carter (about which I have some sympathy), given the plain, ordinary meaning of the words used in s 611(2) of the Act, and by applying the usual principles of statutory construction, the Full Bench in Qantas v Carter made an entirely unremarkable interpretive decision as to the meaning of that subsection. In any event, reliance on single-Member decisions which have expressed contrary opinions to Qantas v Carter cannot be accepted. It is desirable that decisions of the Full Bench of the Commission be followed. This principle was reaffirmed in the decision of the Full Bench in Sharkey v Life Without Barriers[2019] FWCFB 7644 where at [114] it was said:

‘[114] We are of the view that it is desirable that members sitting alone should adhere to Full Bench decisions which are relevant to the matter being determined. It is clear that the Deputy President was cognisant of that point and at [126] referred to the position stated by a Full Bench of the Commission as follows:

“There is not a developed system of stare decisis in this jurisdiction. However, it is clearly desirable for members of the Commission sitting alone to adhere to Full Bench decisions which are relevant to the matter being determined. Such a policy aids consistent decision making which in turn provides the parties to Commission proceedings with greater certainty.”’ (endnote omitted)

[41] Nevertheless, Ms Roche did identify a number of matters which it was assumed by her to apply at the time of the Diocese’s filing its Form F3 response: see [20] above. In my view, Ms Roche’s assumptions do not reach the level of objective evidence going to establishing that it should have been reasonably apparent to the Diocese that, at the time of filing its Form F3, it would not be able to successfully defend the fairness of the applicant’s dismissal. I have reviewed the Diocese’s Form F3 and various attachments. I set out below extracts from its Form F3:

‘3. On 17 August 2017 the Respondent was advised by the Assistant Principal of the School of an incident involving the Applicant and another employee Ms Christine Culla.

4. The Respondent commenced an investigation into the incident and initially this focused on allegations against Ms Culla regarding. her conduct during the incident. The Applicant was advised of the investigation by letter d'3ted 18 August 2017. Attached and marked "A" is a copy of the letter. The Applicant provided a written statement regarding the incident dated 21 August 2017.

5. On 27 September 2017 the Applicant was advised by letter that as part of the investigation allegations had arisen regarding the Applicant's conduct during the incident. These allegations were outlined in the letter and the Applicant was advised that these would be investigated by the Respondent. Attached and marked "B" is a copy of the letter.

6. The Applicant attended an interview with the Respondent on 5 October 2017 in order to respond to the allegations and was accompanied by a support person Ms Jackie Groom of the Independent Education Union (IEU).

7. The interviews in the investigation into the Applicant's conduct were undertaken by staff of the Respondent. The Respondent then engaged an external investigator, Mr Alex Tawfiq of Workplace Consulting Services, to review the investigation material and to prepare an investigation report and findings. The findings of the investigation were that three of the four allegations of misconduct made against the Applicant were sustained. The fourth allegation was found to be not sustained due to insufficient evidence.’

[42] The Diocese responded to Ms Roche’s contentions in her Form F2 as follows:

‘1. The Applicant restates her version of events which she has previously provided during her interview on 5 October 2017 and also in her written statement dated 20 November 2017 provided during the show cause process.

2. These matters were taken into consideration by the investigator when finalising the investigation report and making findings. The external investigation found that the Applicant's actions towards Ms Culla during the incident were likely a deliberate attempt to antagonise Ms Culla, rather than an attempt to smooth things over or to calm her as contended by the Applicant. The Respondent carefully considered the investigation report and its findings when determining its response to the matter.

3. The Applicant refers to discussions between the Respondent and the IEU regarding the termination and a possible resignation. The IEU was representing the Applicant during the investigation and show cause process. The IEU approached the Respondent to ask whether it would consider allowing the Applicant to resign rather than be terminated. The Respondent advised that it would be open to considering other options and left this with the IEU to raise with the Applicant. The Respondent contacted the IEU on 30 November 2017 to follow up as to whether the Applicant wished to explore other options. The IEU advised that it had not heard from the Applicant and so the Respondent proceeded to finalise the termination.

4. The Applicant appears to contend that the Respondent had a bias against her and in favour of Ms Culla. The Applicant refers specifically to comments or actions of Mr Alan Bowyer, Ms Julie Price and Ms Sue Delaney. The Respondent categorically denies any bias against the Applicant. The investigation into the allegations of misconduct was comprehensive and procedurally fair. Further, the investigation report and findings were prepared by an external investigator.

5. The Applicant makes a number of statements and claims regarding Ms Culla's past employment, her behaviour in the workplace and changes she made in the workplace since her commencement at the School. These issues are irrelevant to the matter of the Applicant's conduct towards Ms Culla and the subsequent termination of her employment.

6. The Applicant refers to her good working relationships with other staff at the School and the School community. The Applicant provided a number of references as part of the show cause process and these were considered by the Respondent. However, the fact that the Applicant has a good rapport with other staff, students and parents does not excuse her behaviour and conduct towards Ms Culla. The Respondent expects its staff to behave reasonably, courteously and respectfully towards all staff.

7. The Respondent maintains that it had a valid reason to dismiss the Applicant. The Respondent found that the Applicant's behaviour towards Ms Culla was a deliberate attempt to antagonise her and that this conduct breached the Respondent's Guidelines and fell seriously short of the standard of behaviour the Respondent expects of its employees. The breach of the Guidelines also constitutes a breach of an express term in the Applicant's contract of employment which requires her to comply with the Respondent's policies. The Applicant's conduct was also inconsistent with her obligations under work health and safety legislation and her general duty of care to others.

8. The Applicant had received an earlier warning on 16 November 2015 regarding her conduct in the workplace in relation to Ms Culla. The Applicant was advised that any further incidents, failures or issues with her performance may result in a review of her ongoing employment. The Applicant's response to this warning was to disagree with the investigation's findings and refuse to acknowledge the warning.

9. The Respondent put considerable effort into working directly with the Applicant and Ms Culla to resolve their conflict and to facilitate a harmonious working relationship. This included a number of meetings to discuss strategies to resolve issues of concern in the workplace and to clarify roles and responsibilities. The Respondent did not state that these processes had been "time wasted" as claimed by the Applicant. The Respondent wanted to resolve matters and so put resources towards achieving this. These were not meetings to discipline and reprimand the Applicant as she has asserted. Both employees were reminded that they needed to maintain a professional relationship and that a failure to do so would have consequences for their ongoing employment.

10. The Applicant's contentions indicate her view that Ms Culla was the sole problem in the workplace with no acceptance that she contributed to the workplace conflict. This reinforces the Respondent's view that it had no confidence that the Applicant's attitude or behaviour would change in the future should a similar situation arise.

11. The Respondent contends that the termination of the Applicant's employment was not harsh, unjust or unreasonable. The Respondent engaged an independent investigator to finalise the investigation report and make findings. The Applicant was afforded procedural fairness by being advised of the allegations against her, being given the opportunity to respond to the allegations, the findings and the Respondent's intention to terminate her employment. A support person attended all interviews and meetings held with the Applicant. The Respondent carefully considered the findings and response of the Applicant before making a decision to terminate the Applicant's employment.’

[43] I would add, as to item (d) of Ms Roche’s basis for her submission as to the Diocese’s F3, I do not understand there to have been any findings of the Deputy President as to procedural unfairness issues; see: Lorraine Roche v Trustees of the Roman Catholic Church for the Diocese of Wagga Wagga[2018] FWC 3933 at [157]-[167]; let alone that such issues were a ‘significant hurdle for the Diocese to overcome’.

[44] Four other matters corroborate my conclusion that, at the time of filing its Form F3, it would not have been reasonably apparent that it had no reasonable prospects of success. Firstly, the Diocese had the report of the investigator, Mr Tawfiq, which found three of the four allegations against Ms Roche had been substantiated.

[45] Secondly, prior to the filing of the Form F3 response, Ms Roche’s Union had made approaches to the Diocese seeking that her dismissal be converted to a resignation.

[46] Thirdly, Ms Roche had received an earlier warning in November 2015 concerning her conduct towards Ms Culla in the workplace; although I accept Ms Roche disputes this warning.

[47] Fourthly, it would appear that at the time of the filing of the Diocese’s Form F3, it was not represented by Counsel, as its representative is identified as Ms Carolyn Synnott from the Catholic Commission for Employment Relations.

[48] In my opinion, a fair, objective analysis of the Diocese’s Form F3 response would not lead to a conclusion that it should have been reasonably apparent to the Diocese that its case had no reasonable prospects of success. Accordingly, the conditions precedent under s 611(2)(b) of the Act, have not been satisfied. No order for costs should follow in these circumstances.

[49] For the aforementioned reasons, Ms Roche’s application for costs pursuant to s 400A(1) and/or s 611(2)(b) of the Act is dismissed. The proceedings are determined accordingly and an order to this effect will accompany the publication of this decision.

DEPUTY PRESIDENT

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