Luigi De Marzi v 360 Gradi Pty Ltd T/A 360 Gradi Pizzeria & Trattoria
[2017] FWC 5216
•10 OCTOBER 2017
| [2017] FWC 5216 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Luigi De Marzi
v
360 Gradi Pty Ltd T/A 360 Gradi Pizzeria & Trattoria
(U2017/2335)
| COMMISSIONER PLATT | ADELAIDE, 10 OCTOBER 2017 |
Application for costs pursuant to ss.400A and 611 of the Fair Work Act 2009 – costs not awarded.
Introduction
This is an application by 360 Gradi Pty Ltd T/A 360 Gradi Pizzeria & Trattoria (360 Gradi) seeking an order for costs against Mr Luigi De Marzi pursuant to ss.400A and 611 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 3 March 2017 by Mr De Marzi in relation to a remedy for an alleged unfair dismissal which occurred on 11 February 2017. The dismissal was found not to be harsh, unjust or unreasonable and was dismissed on 31 July 2017.[1]
The Substantive Case
The substantive case is summarised as follows.
360 Gradi asserted that Mr De Marzi was dismissed due to serious misconduct and that the dismissal was consistent with the Small Business Fair Dismissal Code. In the alternative, 360 Gradi contended that Mr De Marzi’s conduct constituted a valid reason and that the dismissal was not harsh, unjust or unreasonable.
Mr De Marzi disputed the alleged conduct, contends that he was not afforded an opportunity to respond, that the dismissal was inconsistent with the Small Business Fair Dismissal Code and was harsh, unjust or unreasonable.
The issues before me were the determination of the factual matrix and the application of the Small Business Fair Dismissal Code and s.387 of the Act to those facts.
I found that the Small Business Fair Dismissal Code did not apply.
The principal evidence that I accepted concerning Mr De Marzi’s conduct, came as a result of my preference for the evidence of Ms Furini and Mr Grasso over Mr De Marzi.
I found that that 360 Gradi had a valid reason to dismiss Mr De Marzi and that the dismissal was not harsh, unjust or unreasonable, and dismissed the application.
Submissions of the Parties as to Costs
360 Gradi filed submissions and a statement from Mr Nicola Vadagnini.
The position of 360 Gradi is relevantly summarised as follows:
· Mr De Marzi, despite being advised at the conciliation conference and again prior to the hearing of the matter that the Commission’s jurisdiction was restricted to the unfair dismissal canvased matters concerning underpayment of wages and entitlements and a commercial dispute.
· Mr De Marzi used the proceedings to make serious and unfounded allegations that Mr Vadagnini had committed fraud, that the witnesses called by 360 Gradi had given false information and that Mr Vadagnini was responsible for other witnesses not giving evidence in support of Mr De Marzi.
· The purpose of the application was to punish Mr Vadagnini for not meeting Mr De Marzi’s demand to pay him $70,000. Mr De Marzi was blinded by his personal feelings and driven by a vendetta against 360 Gradi and Mr Vadagnini.
· Mr De Marzi’s unfair dismissal application had no substantial prospect of success and as a person with considerable management experience and who was aware of the allegations made against him, he knew, or ought to have known, that the conduct alleged against him was a great departure from the norm and that such conduct would have an adverse impact on the customers, reputation and viability of 360 Gradi.
· Mr De Marzi, having received all of the material filed against him, acted unreasonably by failing to discontinue the application prior to the hearing.
· Mr De Marzi had unrealistic expectations of the remedies available to him yet he indicated during the hearing that he was prepared to accept the sum of $6,672.00 in full and final settlement of the application which is less than that offered to him at the conciliation conference. Furthermore, he sought compensation above the compensation cap.
Mr De Marzi filed submissions which are relevantly summarised as follows:
· The Commission should exercise caution when ordering costs which should only be ordered in a clear case, this is not a clear case.
· The unfair dismissal application was not commenced vexatiously or without reasonable cause.
· The issues of underpayment and money owing pursuant to a pre-existing commercial agreement were peripheral to the issue of employment, the unfair dismissal application was lodged to address Mr De Marzi’s belief that he had been unfairly dismissed.
· As an unrepresented litigant with limited experience in this area, who has recently been unwell, where English is not his first language, and further who only completed schooling up to the age of 13 years old, he had difficulty separating the issues relating to underpayment from the issues relevant to the dismissal but in any event did not raise them to harass, embarrass or to gain a collateral advantage against 360 Gradi.
· He admits receiving advice from Adelaide Legal Outreach Service, however, the service has stretched resources and as such the advice was limited.
· In relation to the allegation that Mr Vadagnini had committed fraud, the Commissioner made a finding that the document that led to Mr De Marzi’s termination had been doctored.[2]
· The unfair dismissal application was premised on the dismissal being harsh, unjust or unreasonable. Commissioner Platt found several factors which could have characterised the dismissal in that way, for example that:
· no formal warnings regarding conduct were received;
· whilst he was given an opportunity to respond, he was not provided with prior notice of the matters and was not notified in advance that the meeting was of a disciplinary nature;
· he may have potential difficulty in finding alternative employment;
· the disciplinary meeting was covertly recorded by Mr Vadagnini;
· there was no notice of dismissal or payment in lieu of notice.
· Whilst he was ultimately unsuccessful in convincing the Commission that the dismissal was harsh, unjust or unreasonable it is inappropriate to stigmatise the proceeding as being without reasonable cause in a situation were reasonable minds may differ.
The Power to Award Costs
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.
Section 611 of the Act 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.
Note: This subsection is a civil remedy provision (see Part 4-1).”
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.”
A decision to award costs pursuant to s.400A of the Act requires a consideration of whether Mr De Marzi, by some unreasonable act or omission, caused 360 Gradi to incur costs.
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.”
Commissioner Bissett usefully summarised the applicable law in Sidney v Employsure Pty Ltd:[3]
“[28] The authorities relevant to a consideration of the phrase ‘unreasonable act or omission’ were considered in the decision of the Full Bench in Roy Morgan Research v Baker. I do not repeat those provisions here but note the following can be taken from those authorities:
· A failure to inform another party of an inability to attend proceedings would be, if intentional, unreasonable and if accidental, an unreasonable omission;
· a failure to advise the other party of the first party’s intentions, if deliberate or reckless, would be unreasonable and if an omission could be equally unreasonable;
· very strong prospects of success will not always justify a failure to participate in settlement negotiations;
· a reasonable person will determine if and how to respond to an offer of settlement after considering all of the circumstances of the case including the terms of settlement in relation to the relief sought; the relative strength of the parties cases; the likely length and cost of proceeding to hearing if the matter does not settle; and adverse consequences of acceptance of a settlement rather than prosecuting or defending the primary application.”
The approach to be taken to an application for costs made pursuant to s.611 of the Act was considered by a Full Bench of the Commission in Keep v Performance Automobiles Pty Ltd[4] where the Full Bench said:
“[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 h (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”.” (citations omitted)
Whether proceedings or a response to proceedings may be vexatious was considered in Holland v Nude Pty Ltd (t/as Nude Delicafe).[5] A proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party, or to gain a collateral advantage.[6]
Consideration
I have considered the material presented during the hearing of the substantive matter, my reasons for decision and the written submissions of the parties as to this application.
Neither Mr De Marzi or 360 Gradi were represented during the hearing of the substantive matter, with an application for representation being rejected by the Commission on 12 May 2017.[7]
The material submitted by both parties contained irrelevant and/or hearsay material and the Commission issued directions for both parties to review and resubmit their material.
360 Gradi failed to demonstrate that they employed fewer than 15 persons at the time of the dismissal and 360 Gradi’s contention that it was a small business employer within the meaning of s.23 of the Act was rejected.
A number of the contentions relied on by 360 Gradi in support of the dismissal were not made out.
Mr De Marzi accepted he was a poor manager of staff, admitting to berating staff in front of others when he was stressed and thought they needed to improve.
As I stated earlier, the principal evidence that I accepted concerning the behaviours which Mr De Marzi was found to have engaged in came from my preference for the oral evidence of Ms Furini and Mr Grasso over Mr De Marzi.
Was Mr De Marzi’s application made vexatiously (s.611(2)(a))?
I accept that Mr De Marzi was clearly and considerably aggrieved by his dismissal and also believed that 360 Gradi had not correctly paid his entitlements and he was in dispute with 360 Gradi about his commercial interest in the business.
It is not unusual for unrepresented litigants in cases of this nature, to place all of their concerns before the Commission regardless of the limits of the jurisdiction. Whilst I cannot comment on the conciliation process, the extraneous material presented at the hearing was relatively minor and did not lengthen the hearing.
Whilst Mr De Marzi made some statements reflecting his displeasure towards Mr Vadagnini and 360 Gradi, I accept that Mr De Marzi’s desire was to establish that his dismissal was unfair and I am unable to accept that Mr De Marzi’s primary motivation was to harass, embarrass, or to gain some collateral advantage over 360 Gradi.
Accordingly, I do not accept that the application was made vexatiously.
Was Mr De Marzi’s application made without reasonable cause (s.611(2)(a))?
The determination that there was a valid reason was founded on my preference of the evidence of Ms Furini and Mr Grasso over Mr De Marzi. On the issue of whether the dismissal was harsh, unjust or unreasonable there were factors identified in my decision which went for and against each party, on balance I accepted that the factors were not sufficient to characterise the dismissal as harsh, unjust or unreasonable. Had I preferred the evidence of Mr De Marzi, the outcome of the matter may well have been different.
I am unable to accept that the application was made without reasonable cause.
Did Mr De Marzi’s application have no reasonable prospects of success (s.611(b))?
For the reasons discussed immediately above, I do not believe that Mr De Marzi’s case was absent merit, and thus it cannot be said that it had no reasonable prospects of success.
Did Mr De Marzi engage in an unreasonable act or omission (s.400A)?
360 Gradi relies on Mr De Marzi’s conduct during the conciliation processes, and contends he should have discontinued the matter after receiving the material filed by 360 Gradi.
There is no evidence before me about what occurred during the Commission’s conciliation processes, what offers were made, the basis upon which any offer was proposed and/or rejected. In his closing submissions, Mr De Marzi submitted that he be awarded $6672 in compensation, in the absence of any context or detail of 360 Gradi’s settlement offer, I am unable to determine that Mr De Marzi acted unreasonably in failing to settle the matter.
My findings as to the conduct which occurred and formed the basis of the valid reason, was made on the basis of the evidence of the witnesses before me and my assessment as to credit. Some of the contentions of the 360 Gradi were not proven and the determination as to whether the dismissal was harsh, unjust or unreasonable was a balancing act. I do not believe that the contents of the material filed by 360 Gradi in light of the disputed facts, was such that it was unreasonable for Mr De Marzi to continue to prosecute his case.
I am unable to find that Mr De Marzi engaged in an unreasonable act or omission in connection with the conduct or continuation of the matter.
Having made the above findings, I dismiss the applications for costs and so order.
COMMISSIONER
Final written submissions:
360 Gradi Pty Ltd T/A 360 Gradi Pizzeria & Trattoria 31 August 2017.
Mr Luigi De Marzi 7 September 2017.
[1] [2017] FWC 4014
[2] Transcript PN1248
[3] [2016] FWC 2659
[4] [2015] FWCFB 1956
[5] (2012) 224 IR 16
[6] See Attorney General v Wentworth (1988) 14 NSWLR 481 at 491
[7] [2017] FWC 2645
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