Lui Setefano v ICF (Australia) Pty Ltd T/A IC Frith & Associates

[2012] FWA 10682

[2012] FWA 10682

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Lui Setefano
v
ICF (Australia) Pty Ltd T/A IC Frith & Associates
(U2012/7034)

COMMISSIONER BISSETT MELBOURNE, 24 DECEMBER 2012

Costs application.

[1] On 10 October 2012 I issued a decision with respect to the jurisdiction of Fair Work Australia (FWA) to deal with the application of Mr Setefano (the Applicant) for a remedy for unfair dismissal. On considering all of the evidence I made the following findings:

[41] I find that the letter of 4 April 2012 does not alter the fact that the Applicant’s employment was terminated due to redundancy on 30 March 2012. That he has not been paid his redundancy entitlements does not alter the essential characterisation of the reason for his dismissal. If the Applicant wishes to pursue the redundancy payments he says are due to him in respect of the letter of 30 March 2012 he is free to do so but that is not a matter that I can deal with. Whilst the Applicant may see the non-payment of the redundancy pay as inherently unfair that does not bring the matter within the jurisdiction of the Tribunal.

[42] I find that the operative reason for the dismissal of the Applicant on 30 March 2012 is redundancy.

[2] I dismissed the application on the grounds that it was a genuine redundancy and therefore no jurisdiction existed for FWA to deal with the matter.

[3] At the conclusion of the hearing on 24 August 2012, ICF (Australia) Pty Ltd T/A IC Frith & Associates (IC Frith, the Respondent) indicated that it intended to seek costs against the Applicant. I issued directions on the costs application pending advice from Mr Franken as to the intended course of action with respect to the application. I indicated at that time that, should the Applicant proceed with the application, my directions with respect to filing material on costs would need to be amended.

[4] Given these circumstances I am satisfied that the application for costs has been made in accordance with s.402 of the Fair Work Act 2009 (the Act).

[5] This decision deals with the costs application. Both parties have agreed that I should make a decision based on the papers with no need for a further hearing.

The application for costs

[6] The Respondent is seeking:

• An order that Livingstones 1 pay the costs of the Respondent.



• Further, or in the alternative, an order that Mr Franken pay the costs of the Respondent.



• Further, or in the alternative, an order that Mr Setefano pay the costs of the Respondent.

[7] The Respondent seeks costs pursuant to s.401 of the Act with respect to Livingstones and Mr Franken and s.611 with respect to Mr Setefano.

Legislative provisions

[8] Section 401 of the Act provides for the making of a costs order by FWA against a lawyer or paid agent:

401 Costs orders against lawyers and paid agents

(1) If FWA has granted permission in accordance with section 596 for a person to be represented by a lawyer or paid agent in a matter arising under this Part before FWA, FWA may make an order for costs against the lawyer or paid agent if FWA is satisfied:

(a) that:

(i) the lawyer or paid agent caused costs to be incurred by the other party to the matter because the lawyer or paid agent encouraged the person to start or continue the matter; and

(ii) it should have been reasonably apparent that the person had no reasonable prospect of success in the matter; or

(b) that the lawyer or paid agent caused costs to be incurred by the other party to the matter because of an unreasonable act or omission of the lawyer or paid agent in connection with the conduct or continuation of the matter.

(2) FWA may make an order under this section only if the other party to the matter has applied for it in accordance with section 402.

(3) This section does not limit FWA’s power to order costs under section 611.

[9] There is no dispute that permission was granted to both the Applicant and Respondent to be represented in accordance with s.596 of the Act. The Applicant was represented by Mr Franken of Livingstones as a paid agent and the Respondent was represented by Mr Reidy of Counsel. Gillis Delaney Lawyers (Gillis Delaney) is the solicitor for the Respondent.

[10] Section 401 of the Act gives discretion to FWA to make a costs order. A prerequisite for the exercise of such discretion is that either subsection (a) or (b) is met. It is also necessary that the application has been properly made.

[11] Section 611 of the Act allows FWA to order costs against a person:

611 Costs

(1) A person must bear the person’s own costs in relation to a matter before FWA.

(2) However, FWA may order a person (the first person) to bear some or all ofthe costs of another person in relation to an application to FWA if:

(a) FWA is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or

(b) FWA 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: FWA can also order costs under sections 376, 401 and 780.

(3) A person to whom an order for costs applies must not contravene a term of the order.

Submissions

The Respondent

[12] The Respondent submits that the background facts as set out paragraph [9]-[16] of the jurisdictional decision are accurate. The Respondent says the following matters are also relevant:

• The termination of employment was a genuine redundancy, affirmed by Mr Franken at the hearing on 24 August 2012;



• The Applicant and his advisers first put in their original submissions that the first termination (for redundancy) was valid and the second termination (for misconduct) was invalid. Such a claim was futile.



• Gillis Delaney wrote to Livingstones on 23 August 2012 seeking admissions. The apparent reliance on the redundancy was sought to be clarified and this was done in correspondence from Livingstones on 23 August 2012.



• When confronted with the jurisdictional futility of the claim at the hearing on 24 August 2012 the Applicant and Mr Franken realised the intractability of the situation. The matter was adjourned.



• The Respondent gave notice of the costs application at the hearing on 24 August 2012.



• Gillis Delaney wrote to Mr Franken on 27 August 2012 stating that the application could not proceed and drawing attention to an ulterior purpose. No response was received.



• When the matter came back on for hearing on 26 September there was a complete reversal of argument with the Applicant contending that the second dismissal reviewed and replaced the first dismissal.

[13] The Respondent says that a scholarly reading of the Act was not necessary to comprehend that the operation s.385 of the Act (which sets out what is an unfair dismissal) meant that the dismissal was not unfair.

[14] Further the Respondent says that the review and replace theory advanced by Mr Franken flew in the face of authority (Birrell’s case) ‘so well known that it mostly goes without the need to cite it’ - that is, that giving notice of termination is a unilateral right that does not depend on acceptance or rejection.

[15] The Respondent says that the Applicant and his advisers have run a claim that could not have succeeded, there was no hidden trick, and some basic research would have found the answer.

The Applicant

[16] Mr Franken for the Applicant submits that the key issue is: whether the Applicant’s understanding (that the original reason for his dismissal (redundancy) was later changed to serious misconduct) was justifiable; or whether the Applicant’s understanding was based on misconstruing the correspondence with the resultant documentation filed as a dismissal for serious misconduct whilst at all times it was a genuine redundancy.

[17] Mr Franken says that, following the issue of directions for the hearing of the application for unfair dismissal, the Respondent failed to provide material other than a bundle of documents on which it indicated it intended to rely. This documentation did not include an outline of submissions or witness evidence. In response to an email from my chambers the Respondent filed an outline of submissions one week prior to the hearing. That submission, in part, said:

Consequently, the Contract of Employment was still on foot when the respondent terminated the Contract of Employment on 4 April 2012 for misconduct as the notice period had not expired and/or the respondent had not made a payment to the applicant in lieu of notice. 2

[18] Mr Franken says that at all times during the proceedings the Applicant relied on the response from the Respondent’s solicitor which stated that the reason for termination of the Applicant’s employment had changed from redundancy to termination for misconduct.

[19] Mr Franken submits that the Respondent, at the hearing on 26 September 2012, abandoned the stated ground of termination for misconduct and was relying on the redundancy grounds. Further he submits that the Respondent opportunistically used the reason of genuine redundancy as a method of denying the Applicant the opportunity to have his unfair dismissal application dealt with. As a direct result of the actions of the Respondent the Applicant incurred costs.

[20] Further, Mr Franken says that even if the Respondent had exercised a contractual right (to rely on post discovered conduct) the provisions of the Fair Work Act 2009 still applied and the provisions of s.387 of the Act had not been complied with, and that up until the hearing on 24 August 2012 there was no mention made by the Respondent that it was relying on a case of genuine redundancy.

Application against Livingstones and/or Mr Franken

[21] The legislative considerations in deciding to make an order for costs against Livingstones and/or Mr Franken are the same. Mr Franken is a Senior Consultant with Livingstones.

[22] The first question to be determined is if an order can be made against Mr Franken. He says not, as the Applicant’s paid agent was, at all times, Livingstones.

[23] Section 596 of the Act allows FWA to grant permission to a lawyer or paid agent to appear. Section 401 of the Act allows for an order to be made against a lawyer or paid agent.

[24] Both the term ‘lawyer’ and ‘paid agent’ are defined in s.12 of the Act:

lawyer means a person who is admitted to the legal profession by a Supreme Court of a State or Territory.

paid agent, in relation to a matter before FWA, means an agent (other than a bargaining representative) who charges or receives a fee to represent a person in the matter.

[25] There is no definition of ‘agent’ in the Act.

[26] ‘Agent’ is defined in the Macquarie Dictionary as:

1. a person acting on behalf of another;

2. someone or something that acts or has the power to act.

[27] Mr Franken sought and was granted permission to appear in the proceedings. The transcript from the first hearing of the matter reads:

MR J. FRANKEN: May it please you, Commissioner. Franken, initial J, Livingstones, acting for the applicant in this matter.

[28] In announcing his appearance Mr Franken identified himself as Livingstones. I have no material that defines the relationship between Mr Franken and Livingstones except that Mr Franken says Livingstones, and not he, is the paid agent. Whilst a lawyer means ‘a person’ there is no such restriction in the definition of paid agent. Nothing suggests the ‘paid agent’ cannot be an organisation. The definition of ‘agent’ suggests it may be someone or something. Mr Franken’s uncontested submission that Livingstones is the paid agent must therefore be accepted. I therefore accept that Mr Franken is not the paid agent but that Livingstones is. For this reason the application for a costs order against Mr Franken cannot be considered.

[29] Where Mr Franken is referred to below it should be read as a reference to Mr Franken as a representative of Livingstones.

[30] Having determined that Livingstones is the paid agent it is now necessary to determine if a costs order should be made against it. In order to do so it is necessary to set out a detailed history of this matter.

[31] On 30 March 2012 Mr Setefano’s employment was terminated on grounds of redundancy.

[32] On 4 April Mr Setefano received a further letter from the Respondent which indicated that, in light of further information, Mr Setefano’s employment was terminated for serious misconduct. As a consequence Mr Setefano did not receive the redundancy pay that would otherwise have been due to him. 3

[33] On 11 April Mr Setefano made an application to FWA for unfair dismissal remedy. That application says the Applicant was summarily dismissed for alleged misconduct relating to the content of emails. 4

[34] On 7 May Gillis Delaney for the Respondent filed a Form F3 employer response to the application in which it said that the Applicant was dismissed for serious and wilful misconduct.

[35] On 25 May Gillis Delaney wrote to Mr Franken on a ‘without prejudice save as to costs’ basis and said, in part:

1. we agree the contract of employment between your client and our client was terminated on 30 March 2012; and

2. the reason provided to your client on 30 March 2012 that his contract was terminated was as a result of redundancy; and

3. your client was notified by way of letter dated 4 April 2012 that as a result of his conduct during the course of his employment with our client (such conduct of which our client was unaware), that the reason for termination of his employment had changed from redundancy to termination for misconduct.

We do not seek to challenge your assertion that the contract of employment was terminated on 30 March 2012. What we do seek to challenge is our client’s right to change the reasons provided to your client for his termination.

As you would be aware, your client has an ongoing obligation during his employment to notify our client of any misconduct of any employee of IC Frith including himself.

Your client breached that obligation and deliberately withheld information regarding his misconduct from our client. Your client now seeks to gain a financial advantage from his deception prior to the termination of his contract. 5

[emphasis in original]

[36] On 18 June in accordance with the directions issued by FWA, the Applicant filed and served submissions and material on which he sought to rely. Those submissions stated that it was not in dispute that the Applicant’s employment was terminated on 30 March 2012 as a result of redundancy (the first termination) and that on 4 April the Applicant was advised that the Respondent had reviewed the reason for termination resulting from redundancy and was terminating the Applicant’s employment for serious misconduct (the second termination).

[37] On 16 July in accordance with directions Gillis Delaney filed and served material consisting of the Applicant’s employment contract, emails relevant to the dismissal and company policies. No submissions as such were received.

[38] On 17 July Mr Franken wrote to Gillis Delaney noting that the Respondent had not provided any written submissions or witness statements and that the Applicant would object should the Respondent seek to introduce such material at the hearing.

[39] On 16 August my chambers wrote to Gillis Delaney advising that any submissions on which the Respondent sought to rely would have to be received by my chambers by 17 August.

[40] On 17 August brief submissions were received on behalf of the Respondent. These submissions stated that:

• The Respondent gave written notice of termination of the contract of employment on 30 March 2012.



• The contract terminates on the making of payment (in lieu of notice) as required by the contract.



• The emails sent by the Applicant amounted to wilful misconduct and/or were a breach of the implied term of mutual trust and confidence and/or the conduct struck at the heart of the employment relationship.



• In the alternative, if the Respondent was in breach of the contract of employment by failing to pay the redundancy and notice payments the Applicant was entitled to sue the Respondent for damages.



• The dismissal was not unfair (or if it was unfair any unfairness could be easily remedied).

[41] On 23 August Gillis Delaney wrote to Livingstones seeking admissions from the Applicant that the Applicant’s job was no longer required to be performed by anyone and the redundancy was a genuine redundancy.

[42] That same day Mr Franken responded (although the letter is dated ‘17/07/2012’) to the effect that the admissions sought were irrelevant and that the Respondent’s representative had failed to grasp the claim of the Applicant.

[43] On 24 August the unfair dismissal application was heard. That hearing raised the question of how, if this was a genuine redundancy, the jurisdiction of FWA was attracted such that the application could be determined.

[44] During that hearing Mr Franken said he (and presumably his client) had no problem with the redundancy 6 and agreed that, even if I heard the evidence, it would inevitably be my finding that I could not get past s.385 of the Act.7

[45] Mr Reidy for the Respondent maintained that the way the Applicant could pursue the redundancy pay (which had not been paid to him) was to bring an

application in the appropriate jurisdiction to enforce the payment. The issue that has been raised is...that at the time the termination took effect there was another matter unknown to the employer at that time that entitled the employer to terminate the contract on other grounds. 8

[46] Because of the unique circumstances surrounding this matter and the apparent genuine redundancy I gave the Applicant one week to advise me if he wished to proceed with the application.

[47] On 31 August Livingstones advised that the Applicant wished to proceed with his application.

[48] On 26 September the jurisdictional objection was heard. During that hearing the Applicant submitted that the second termination (for misconduct) reviewed and replaced the first termination (for redundancy) and that the second termination (for misconduct) was unfair. 9

[49] The Respondent maintained that the termination occurred on 30 March 2012, that it was a case of genuine redundancy and there was, therefore, no jurisdiction for FWA to deal with the application. The letter of 4 April could not retrospectively replace the reason given for the termination on 30 March.

[50] On 10 October I issued a decision in which I found that the operative reason for the termination of employment was redundancy, that the redundancy was a genuine redundancy within the meaning of s.389 of the Act and that FWA therefore did not have jurisdiction to hear the application for unfair dismissal.

[51] Given these circumstances, from 30 March 2012 until the issuing of the decision in October the question to be answered is whether Mr Franken caused costs to be incurred because of some unreasonable act or omission on his part. As such the issue is not as formulated by Mr Franken in the Applicant’s submissions made in response to the costs application. 10

[52] ‘Unreasonable act’ and ‘omission’ as used in s.401 of the Act are not defined in the Act. The Macquarie Dictionary definitions and a plain reading suggest that the question is whether Livingstones caused costs to be incurred by the Respondent by doing something (eg continuing with the claim) not based on sound judgement or by a failure to make use (of information available) or through a failure to do (the necessary research).

[53] The Respondent submits that the following demonstrates the unreasonable acts and omissions by the paid agent:

• Not reading the Act.



• Not searching publically available sources.



• If the above 2 points were done, pressing on in complete disregard of the words of s.385.



• Pressing on with a futile claim when the matter had been brought to his attention on 24 August.



• Pressing ahead when the matter had been raised in correspondence from Gillis Delaney on 27 August.

• Developing an argument without recourse to basic research which should have uncovered Birrell’s Case.

[54] In assessing the behaviour of Livingstones it should first be noted that it (and Mr Franken) is no stranger to FWA. Both Livingstones and Mr Franken have dealt with the jurisdiction of FWA in the past. Livingstones and Mr Franken should quite reasonably be expected to undertake the necessary research prior to embarking on an application or continuing to pursue an application in FWA.

[55] The original claim never turned on s.387 of the Act (as asserted by Mr Franken 11) but always on the ability of FWA to deal with the matter if the termination was, indeed, a genuine redundancy.

[56] Having agreed with me during the hearing on 24 August that the Applicant had no issue with the redundancy and by virtue of the response to the correspondence of Gillis Delaney on 23 August it is difficult to comprehend that Mr Franken was not aware that it was highly likely that the redundancy was genuine before the matter came on for hearing on 24 August. A basic reading of the Act (s.385 and s.389) at this point would indicate that there was no jurisdiction for FWA to deal with the application for unfair dismissal.

[57] Certainly at the time of the hearing on 24 August Mr Franken accepted that, even if I heard all of the evidence, I would still not be able to get past s.385 of the Act 12 yet still he pursued the application beyond this point.

[58] Whilst I can appreciate some confusion prior to 24 August (the wording of correspondence from Gillis Delaney in the letter of 24 May does not help) I find it inconceivable that Livingstones was not aware of the critical matters associated with its client’s application and the futility of the application to FWA.

[59] Even if he had not done so beforehand, research in well known and referenced texts by any industrial relations practitioner 13 would have informed Mr Franken of the folly of continuing with the application beyond 24 August.

[60] By the time of the hearing on 26 September Mr Franken chose to argue that the second termination ‘withdrew and replaced’ the first termination. Again some basic research by Mr Franken - reasonably expected of someone in his position - would have made it obvious that the first termination (the redundancy) could not be withdrawn by the Respondent without some agreement from the Applicant which was clearly not asked for by the Respondent.

[61] I should say that I do not hold Gillis Delaney totally blameless for any confusion on the part of the Applicant’s agent prior to 24 August. The Respondent chose not to make any submissions to FWA in accordance with the directions originally issued (save for a bundle of documents) that might have made the basis of its objection clearer.

[62] In these circumstances I am satisfied that Livingstones did cause costs to be incurred by the Respondent by his failure to take reasonable steps to research the relevant law and his failure to withdraw the proceedings based on a lack of legal research that could reasonably be expected of him.

[63] For these reasons I consider it reasonable to make an order for costs against Livingstones.

[64] Gillis Delaney has submitted a schedule of costs drawn up in accordance with Schedule 3.1 of the Fair Work Regulations 2009. They add fees for Counsel and disbursements.

[65] On the basis of my findings above I do not consider it reasonable that Livingstones should meet any of the costs incurred prior to (and including) the hearing of 24 August as it was at this point that the extent of the objection of the Respondent became abundantly clear.

[66] I have therefore determined that Livingstones should pay to the Respondent an amount of $8310.00. An order to this effect shall be issued in conjunction with the decision. The order shall require payment within 30 days. If the order requires variation as to timing or payment to the representatives of the Respondent either party is at liberty to apply.

Application that Mr Setefano pay the costs of the Respondent.

[67] Given this finding with respect to the Applicant’s paid agent I do not need to consider if the Applicant himself should be subject to costs pursuant to s.611 of the Act.

COMMISSIONER

Final written submissions:

Applicant, 6 November 2012.

Respondent, 23 October 2012.

 1   Mr Franken of Livingstones represented the Applicant in the unfair dismissal proceedings.

 2   Respondent’s submissions of 17 August 2012, paragraph 5.

 3   See letter of 4 April 2012 at attachment LS4 to the witness statement of Mr Setefano filed on 18 June 2012.

 4   Form F2.

 5   Applicant’s submissions of 6 November, attachment B.

 6   Transcript PN12.

 7   Transcript PN72-3.

 8   Transcript PN57.

 9   Transcript PN129-35.

 10   Applicant’s submissions of 6 November, paragraph 3.

 11   See in particular transcript PN253-65.

 12   Transcript PN72-3.

 13   For example Creighton B., and Stewart A., Labour Law (4th ed) or Macken J., O’Grady P., and Sappideen C., Macken, McCaryy and Sappideen’s The Law of Employment (4th ed). Both contain quite detailed discussions of notice and the inability to withdraw such notice unilaterally.

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