Lyndon John Kube v Dominelli Group Pty Ltd T/A Rockdale Nissan

[2016] FWC 8933

[2016] FWC 8933

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
ss.400A, 611—Costs

Lyndon John Kube
v
Dominelli Group Pty Ltd T/A Rockdale Nissan
(U2016/1455)

SENIOR DEPUTY PRESIDENT HAMBERGER SYDNEY, 23 DECEMBER 2016

Costs application by respondent to unfair dismissal application – Fair Work Act 2009 ss.400A and 611 – unreasonable act or omission of the first party in connection with the conduct or continuation of the matter – costs awarded.

Introduction

[1] On 31 October 2016, Dominelli Group Pty Ltd (Dominelli, the costs applicant) applied to the Fair Work Commission (the Commission) for costs under ss.400A and 611 of the Fair Work Act 2009 (the FW Act). The costs are sought in relation to an application for an unfair dismissal remedy by Mr Lyndon John Kube.

[2] Following receipt of the costs application, the parties were directed to file written submissions. While the costs applicant did so, no submissions were received from Mr Kube.

Background

[3] Mr Kube made his application for an unfair dismissal remedy against Dominelli on 30 March 2016. Mr Kube had been employed by Dominelli as a Used Car Sales Consultant. His wife, Kristy Kube, was also employed by Dominelli, as its General Sales Manager. Mr Kube was dismissed by Dominelli on 11 March 2016 for serious misconduct.

[4] Outlines of submissions and written statements were filed by both parties and the matter was listed for arbitration on 5 August 2016.

[5] Due to illness on the part of Mr Kube (notified on the morning of 5 August 2016), the hearing was adjourned until 24 October 2016. On 21 October 2016, Mr Kube sent an email to Dominelli’s legal representative (Patrick Thompson) indicating that he did not intend to cross-examine any of Dominelli’s witnesses.

[6] On 24 October 2016, Mr Thompson wrote to Mr Kube saying inter alia:

‘We put you on notice that if there is no appearance for or on behalf of the applicant on 24 October 2016, the respondent intends to apply to the Commission to dismiss the application on the basis that there has been a failure to prosecute, and that the application has no reasonable prospects of success.

If there is no appearance the respondent also intends to seek payment of its costs on an indemnity basis.’

[7] The hearing proceeded on 24 October 2016. At the conclusion of the hearing, I issued a decision dismissing the application. 1 The decision included the following findings:

‘[8] On Tuesday 8 March 2016, the applicant and his wife were both on a rostered day off. They had not left any instructions to anyone from the respondent not to be contacted. In any case, Ms Kube exchanged text messages with other staff that day.

[9] A body repairer had shown up on site and said to Jonathan Puttick (the respondent’s Chief Operating Officer) that he been instructed by Ms Kube to touch up a small paint defect on a stock vehicle in the yard which was due for delivery soon by the applicant. He said it could not be done as a touch up and would need a more time-consuming spray repair.

[10] At approximately 10:40 am, Mr Puttick asked Lisette Sfeir (Stock Controller) to call Kristy Kube to find out if they should alert the customer about a delay if the vehicle was due for immediate delivery.

[11] Ms Sfeir then rang Ms Kube, in accordance with Mr Puttick’s instructions.

[12] Kristy answered her phone, and upon recognising the call was from Ms Sfeir, she said ‘I can’t talk, I’m sick’.

[13] Ms Sfeir sent a text message to Ms Kube at 10:50 AM which stated:

“sorry I know you are sick but when you get the chance Jonathan said Eddie was here to fix scratch but it can’t be fixed by him it needs panel shop. What do you want done?”

[14] Ms Kube then rang Mr Puttick and resolved the situation with the contractor.

[15] I am satisfied that Ms Sfeir made no other call to Ms Kube that morning.

[16] At approximately 11:15 AM, Ms Sfeir received a call from the applicant on her private mobile. He began to abuse her using words such as ‘don’t fucking call us ever’ and ‘we are busy’. When Ms Sfeir said that she had called at the request of Mr Puttick the applicant said ‘let Jonathan call her not you’ to which she responded ‘I’m sorry Lyndon, I’m not a mind reader you should have told me the previous day you both didn’t want to be disturbed’. The applicant then responded by yelling at Ms Sfeir ‘you stupid cunt’ and then hung up.

[17] Ms Sfeir immediately went into Mr Puttick’s office, visibly shaken, and told him that the applicant had yelled at her and called her a stupid cunt.

[18] I am also satisfied that the applicant had on a number of occasions in the months leading up to this event ridiculed Ms Sfeir in front of her colleagues, and insulted her. Mr Puttick had had cause to speak to him about this behaviour on several occasions.

[19] After Ms Sfeir’s complaint to him, Mr Puttick rang the applicant and asked him to confirm what Ms Sfeir had told him. He said it was okay as it was his day off when the event occurred. Mr Puttick told the applicant that he would be disciplined and possibly dismissed. He said that he was not prepared to leave the applicant on the same site and proximity to Ms Sfeir.

[20] Mr Puttick sought advice from the respondent’s Human Resources Manager, Ms Semkoska. They agreed to meet with the applicant to discuss his phone conversation with Ms Sfeir.

[21] On the morning of 11 March 2016 the applicant met with Puttick and Ms Semkoska. The applicant did not deny speaking to Ms Sfeir in the manner alleged, nor did he seek to defend his behaviour. He was then advised that he was being dismissed on the grounds of serious misconduct.

[22] I am satisfied that the respondent had a valid reason for dismissing the applicant. His actions in speaking to Ms Sfeir were utterly unacceptable and constituted serious misconduct. Moreover they were the latest in a series of unacceptable actions directed at Ms Sfeir.

[23] I am also satisfied that the applicant was notified of the reason for his dismissal and was given an opportunity to respond, at the meeting on 11 March 2016.

[24] There is no evidence of an unreasonable refusal by the respondent to allow the applicant to have a support person present at the meeting.

[25] The employer is a medium-sized business with access to human resources expertise. I can find nothing to criticise in the manner in which it went about effecting the dismissal.

[26] I do not consider there are any other matters that I need to take into account.’

The relevant statutory provisions

[8] Section 611 of the FW Act reads:

‘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).’

[9] Section 400A is contained in Part 3-2 of the FW Act, which deals with unfair dismissal. It reads:

‘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.’

[10] The primary position is that each party bears its own costs in proceedings before the Commission. This is designed to enable a person to make or defend an application without being burdened with the risk that an order for costs might be made against the person.

[11] However, ss.400A and 611 of the FW Act provide exceptions to that general rule. They are provisions which provide the Commission with the discretion to order that a party pay some or all of another party’s costs where there has been what might broadly be termed ‘an abuse of process’ by that other party.

Application made without reasonable cause: s.611(2)(a)

[12] In the decision in Keep v Performance Automobiles Pty Ltd 2, a Full Bench of the Commission summarised the principles relevant to when an application is made without reasonable cause:

‘The proper construction of s.611(2)(a) was recently considered by a Full Bench in Church v Eastern Health t/as Easter Health Great Health and Wellbeing (Church (Church). 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’.’

Reasonably apparent that there was no reasonable prospect of success: s.611(2)(b)

[13] In Green v Toll Holdings, 3Gostencnik DP said the following about s.611(2)(b) of the FW Act:

‘[22] Section 611(2)(b) also directs attention to the substance of an application or response. A conclusion that a particular application or response “had no reasonable prospect of success” is one that should only be reached with extreme caution in circumstances where the application or response is manifestly untenable or groundless, or so lacking in merit or substance, so as to be not reasonably arguable.

[23] In Spencer v The Commonwealth of Australia, ((2010) 241 CLR 118) the majority (Hayne, Crennan, Kiefel and Bell JJ) of the High Court of Australia considered the meaning of the phrase, “no reasonable prospect,” in the context of s.31A of the Federal Court of Australia Act 1976. In that case, their Honours said the following:

“In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described with or without the additional intensifying epitaphs like “clearly”, “manifestly” or “obviously” as “frivolous”,” untenable”, “groundless” or “faulty” but none of these expressions alone or in combination should be understood as providing a sufficient chart of the metes and bounds of the powers given by section 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.

Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under section 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 “just and equitable” when it is used to identify the ground for winding up of 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 power as revealed by the text of the provision would be defeated if its application is read as confined to cases of a kind which fell within the earlier different procedural regimes.”

[24] In Spencer, the High Court was saying that one should not make the mistake of only concluding that a proceeding has no reasonable prospect of success if it is frivolous, untenable, groundless or faulty and that full expression should be given to that phrase. It seems to me that the observations in Spencer are apt to apply to the construction and application of the phrase “had no reasonable prospect of success” as it appears in s. 611 of the Act.’

Costs incurred because of an unreasonable act or omission: s.400A

[14] Section 400A was inserted by the Fair Work Amendment Act 2012. It was in response to Recommendation 45 of the Review Panel. The explanatory memorandum relevantly stated:

‘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. … 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.’

[15] The circumstances envisaged by the expression ‘unreasonable act or omission’ include unreasonably failing to discontinue an unfair dismissal application.

The costs applicant’s submissions

[16] Dominelli submitted that Mr Kube should pay its costs in the proceedings in the amount of $22,595.50, pursuant to ss.611 and/or 400A of the FW Act.

[17] In particular, it argued that Mr Kube’s application was commenced without reasonable cause (s.611(2)(a)) because proceedings did not have reasonable prospects of success at the time they were instituted, Mr Kube’s application was made in circumstances where it should have been reasonably apparent to him that the application had no reasonable prospects of success (s.611(2)(b)), and Mr Kube caused Dominelli to incur costs because of his unreasonable conduct by continuing to pursue his application in circumstances where he no longer sought to pursue the claim for a proper purpose and in so doing caused proceedings to be an abuse of process (s.400A).

[18] The costs applicant submitted that Mr Kube’s case had no reasonable cause, on his own case, for four reasons. First, Mr Kube did not at any stage during proceedings deny that he had committed the offence that constituted serious misconduct (the abusive phone call to Ms Sfeir). Secondly, Mr Kube did not deny that he had been dismissed because of this offence. Thirdly, Mr Kube did not deny that the conduct that led to his dismissal was offensive. His only attempt at justification was that it occurred on a rostered day off and not in normal working hours, and he was acting as a ‘concerned husband’, not as an employee. This was undermined by the failure of Mr Kube to challenge either by way of written evidence or during the hearing that he was aware that his wife had contacted Ms Sfeir and other Dominelli employees the morning of the offence. Fourthly, Mr Kube’s own version of events supported the view that he was given an opportunity to explain his conduct.

[19] The costs applicant submitted that the same considerations would support the proposition that, viewed objectively, it would have been reasonably apparent to a person in Mr Kube’s position that his claim did not have reasonable prospects of success.

[20] Dominelli also submitted that it was unreasonable for Mr Kube to continue to prosecute proceedings and/or fail to discontinue them when he, by his own admission, had no interest in prosecuting them.

[21] The costs applicant drew particular attention to the following statement from Mr Kube, while he was being cross-examined:

‘MR KUBE … I haven’t even looked at my statement, I don't care for it, it’s something I just want to move on from.  Okay.  You’re quoting things that I said.  I've got the worst memory.  I can’t recall.  I haven’t read it, I don’t want to.’ 4

[22] They also referred to the following interchange between the Commission and Mr Kube:

‘THE SENIOR DEPUTY PRESIDENT:  Yes.  Okay.  Now, Mr Kube, obviously I have your written outline of submissions and we’ve got your statement.  But this is an opportunity for you to say anything else you wish to say in support of your application.  Yes.

MR KUBE:  The truth to the matter is, your Honour, my feelings regarding this application, and I hope I haven't wasted the court’s time sincerely, is when I received this on Thursday stipulating what the company intended on doing - - -

THE SENIOR DEPUTY PRESIDENT:  When you say “this” what are we referring to?

MR KUBE:  The – what do you call it?

THE SENIOR DEPUTY PRESIDENT:  You mean the letter they - - -

MR KUBE:  The default judgment.  The - - -

THE SENIOR DEPUTY PRESIDENT:  Okay.  Right.

MR KUBE:  Yes, when I received it that Thursday I didn’t even think about this to be honest.

THE SENIOR DEPUTY PRESIDENT:  Didn’t think about what, sorry?

MR KUBE:  I didn’t think about this unfair dismissal sort of scenario because when I received that $15,000 which I’d stolen from the company or which my wife had stolen from the company, we don’t operate like that.  We never have and never will.

THE SENIOR DEPUTY PRESIDENT:  Right.

MR KUBE:  And then that document was dated 31 August when I received a – spoke to Adam.

THE SENIOR DEPUTY PRESIDENT:  But, I mean, you weren’t dismissed – I’m not getting into whether you did or didn’t steal from the company at the moment, but you weren’t dismissed for that.

MR KUBE:  Yes, I understand that.  That’s correct.

THE SENIOR DEPUTY PRESIDENT:  So in terms of the reason – I mean, you have lodged this application for unfair dismissal.  I'm giving you an opportunity to say anything additional you want to say beyond what you’ve already said in your outline of submissions as to why I should find that you were unfairly dismissed?

MR KUBE:  Well, your Honour, it’s pretty clear cut.  I did speak to Lisette.  I was very rude to Lisette.  I made it very well aware to all the staff.  Kristy did as well, on what Kristy had to do that morning.  I understand Kristy did contact Lisette and Benny Yu that morning via text messages before we went in for a procedure.  I wish she didn’t do that because then all the calls started rolling through, so to speak.  And I swore at Lisette.  I called her that name.  It is what it is.  It did happen on my day off.  It was Kristy’s day off there and Kristy and I, we worked for the company.  We were there seven days a week irrespective of what day it was we were there.  Irrespective of if we're on the dealership or we’re at home, we’re on the phone.  I understand that.  I know how the car game works.  But it was just that particular day.  I asked Lisette, I was polite.  I said, “Please of all days, can you please just refrain from calling us, please?” And she wouldn’t though.  She just keeping going and going.  So whatever decision the court makes today I would respect that and - - -

THE SENIOR DEPUTY PRESIDENT:  Right.  But can I ask you one question?

MR KUBE:  Sure.

THE SENIOR DEPUTY PRESIDENT:  Why did you decline to cross-examine the respondent’s witnesses?

MR KUBE:  It’s not necessary.  It really - - -

THE SENIOR DEPUTY PRESIDENT:  Well, there are clear contradictions between what they said and what you’ve said on a number of key points.

MR KUBE:  I mean - - -

THE SENIOR DEPUTY PRESIDENT:  And you’ve chosen not to challenge what they’ve said.

MR KUBE:  Like I said, your Honour, I’m not concerned about this any more.

THE SENIOR DEPUTY PRESIDENT:  Right.  Okay.

MR KUBE:  And I hope I haven’t wasted the court's time.  I understand that.  I understand what you’re saying and I understand what – and I’m - - -

THE SENIOR DEPUTY PRESIDENT:  You’re expected to put your case.

MR KUBE:  And I’m being honest with you and telling you how I feel.

THE SENIOR DEPUTY PRESIDENT:  Okay.

MR KUBE:  I’m very disappointed with Adam Dominelli.  Adam Dominelli is Kristy, my wife, her cousin, which they are very close to, is Adam’s best mate, and my grandmother just passed away and we were at the funeral all together and we were saying to Kristy, “Does he know what's” – we don’t even know.  It’s just put that across the family, you know, if you understand.

THE SENIOR DEPUTY PRESIDENT:  Right.

MR KUBE:  So but when I received – and we only just received it a couple of days ago.

THE SENIOR DEPUTY PRESIDENT:  Anyway the unfair dismissal proceedings have been going for months.

MR KUBE:  I understand that.

THE SENIOR DEPUTY PRESIDENT:  Okay.

MR KUBE:  That’s why I’ve been so vague with my statement, with the whole thing.

THE SENIOR DEPUTY PRESIDENT:  Okay.  Anything you want to add?

MR KUBE:  That’s it.

THE SENIOR DEPUTY PRESIDENT:  Thank you.

MR KUBE:  Thank you, your Honour.’ 5

[23] Dominelli submitted that, in light of what was said by Mr Kube during the hearing, his failure to discontinue and/or to continue the proceedings – in which he no longer had an interest – constituted an abuse of process and was an unreasonable act or omission that caused Dominelli to incur costs.

Consideration

[24] I am not satisfied that when Mr Kube made his unfair dismissal application it had no reasonable prospects of success. He did not deny the offensive conduct towards Ms Sfeir on 8 March 2016; however, he argued that it was on his day off and he had specifically asked staff not to contact him or his wife on that day (even though he agreed that it would be normal to be contacted on one’s day off in his line of business). He did not concede that he had been rude to Ms Sfeir prior to that date. On his version of events, he had at least an arguable (if weak) case.

[25] However, based on what Mr Kube said during the hearing, it is very clear that he had lost all interest in pursuing his unfair dismissal application. I am satisfied that this occurred well before even the original hearing date, most probably from the time he and his wife received a demand for payment of $14,090.02 from Dominelli, associated with alleged activities of a fraudulent and deceitful nature. It was unreasonable for him not to discontinue his application at that point. The letter of demand was dated 17 June 2016.

[26] I consider that this failure on Mr Kube’s part caused additional costs to be incurred by Dominelli. Mr Kube should be ordered to pay those costs incurred by Dominelli after 17 June 2016.

[27] I have examined the schedule of costs submitted by the costs applicant. Having considered that schedule in light of reg. 3.08 of the Fair Work Regulations 2009, it would be reasonable and appropriate for Mr Kube to pay Dominelli the sum of $17,292.62.

Conclusion

[28] I consider that it is appropriate to award costs under s.400A of the FW Act. Mr Kube is ordered to pay Dominelli Group $17,292.62 within 28 days of the date of this decision. An order will accompany the publication of this decision.

SENIOR DEPUTY PRESIDENT

Written submissions:

Dominelli Group Pty Ltd T/A Rockdale Nissan: 31 October 2016.

[No submissions were filed by or on behalf of Lyndon John Kube.]

 1   Kube v Dominelli Group Pty Ltd T/A Rockdale Nissan [2016] FWC 7697.

 2   [2015] FWCFB 1956 [17].

 3   [2016] FWC 2790.

 4   PN175.

 5   PN353-PN392.

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