Magdalena Kot v Health Axis Pty Ltd T/A the Hader Clinic
[2018] FWC 1662
•21 MARCH 2018
| [2018] FWC 1662 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.365—General protections
Magdalena Kot
v
Health Axis Pty Ltd T/A The Hader Clinic
(C2017/7173)
DEPUTY PRESIDENT GOOLEY | MELBOURNE, 21 MARCH 2018 |
Application to deal with contraventions involving dismissal – costs application.
[1] On 22 February 2017,1 I found that Ms Magdalena Kot’s general protections application was lodged within 21 days of the date of her dismissal. Further, as the matter had been unsuccessfully conciliated on 5 February 2018, I issued a certificate under s.368 of the Fair Work Act 2009.
[2] On 7 March 2018, Ms Kot applied for costs against Health Axis Pty Ltd under s.375B and s.611 of the Act.
The Legislative Framework
[3] The Fair Work Commission has the discretion to award costs against a party if certain preconditions are met.
[4] Section 375B provides as follows:
375B Costs orders against parties
(1) The FWC may make an order for costs against a party (the first party) to a dispute for costs incurred by the other party to the dispute if:
(a) an application for the FWC to deal with the dispute has been made under section 365; and
(b) 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 dispute.
(2) The FWC may make an order under subsection (1) only if the other party to the dispute has applied for it in accordance with section 377.
(3) This section does not limit the FWC’s power to order costs under section 611.
[5] Section 611 of the Act provides as follows:
(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 ofthe 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.
The submissions
[6] Ms Kot submitted that Health Axis objected to her application arguing that her dismissal took effect on 3 November 2017 and hence her application was not lodged within 21 days of the dismissal taking effect. This was despite the letter of termination stating that the dismissal would take effect on 4 December 2017.
[7] Ms Kot submitted that the objection was plainly hopeless and made without reasonable cause and had no reasonable prospects of success. Ms Kot submitted that orders should be made under either s.611(2)(a) or (b). Alternatively, given those facts were known to Health Axis, its jurisdictional objection was an unreasonable act which caused the Ms Kot to incur costs and hence the Commission should exercise its discretion and make costs orders under s.375B. Ms Kot seeks costs of $4,223.00.
[8] Health Axis submitted that it is the conduct of Mr Jackson Oppy, the General Manager that needs to be examined. He confirmed the instructions to lodge the objection on the basis that Ms Kot’s last day of employment was 3 November 2017 and it was intended that the termination take effect on that date. It submitted that Ms Kot’s application was arguably made out of time. It was submitted that Health Axis relied upon case law to support its contention about when the dismissal took effect.
[9] It was submitted that there was no evidence that Health Axis was acting vexatiously when lodging the objection.
[10] It was submitted that on Health Axis’ version of the facts, the termination took effect on Ms Kot’s final day of work. It was submitted that had Health Axis’ version of the facts been accepted the jurisdictional objection would have been upheld. It submitted that Health Axis’ potential success depended on the resolution of a point of law relating to when the notice period concluded and the termination took effect. It was submitted that a finding that an application was made without reasonable cause is an extremely high threshold to pass. Just because the argument was unsuccessful does not mean it was made without reasonable cause.
[11] It was further submitted that it could not be found that the objection had no reasonable prospects of success. It was submitted that it could not be found that the objection was “manifestly untenable or groundless or so lacking in merit or substance as to be not reasonable arguable.”
[12] It was submitted that the objection related to how the circumstances surrounding the termination affected the date of termination and also required confirmation of whether the termination took effect. A legal issue needed resolution.
[13] It was submitted that Health Axis intended to terminate the employment on Ms Kot’s last day of work. It was submitted that the accrual and payment of entitlements was done by a lay person and it did not intend to continue the relationship by paying Ms Kot’s notice in two instalments during the regular pay cycle. It was further submitted that the continued accrual of annual leave and superannuation entitlements during this period was not indicative of an intention to continue the employment relationship. Again it was submitted that had Health Axis’ version of the facts been accepted, the application would have been successful.
[14] It was accepted that the test is an objective one and upon the facts known to Health Axis at the time of lodging the objection it cannot be said that it should have been reasonably apparent that there was no prospect of success.
[15] It was further submitted that Ms Kot claimed costs of $1,188.00 under item 1201 for three hours on general care and conduct of the file including case law research should not be allowed as the outline of argument filed by Ms Kot made no reference to case law and the arguments were factual rather than legal. Further, Ms Kot claimed $149.00 under item 1402 for her attendance at the telephone hearing of the objection which lasted approximately 15 minutes. There was no evidence that Ms Kot incurred any costs including lost income for her attendance at the hearing. Further, objection was taken to the claim in relation to an email sent to the Commission about the directions issued.
Reply
[16] In reply it was submitted that the costs represented the actual costs incurred by Ms Kot and that costs should be awarded on an indemnity basis though no arguments in support of that submission was made. Further, it was submitted that it was necessary for legal research to be undertaken to respond to the legal submissions made Health Axis.
Consideration
[17] I have had regard to the fact that no evidence was called by Health Axis at the hearing of the matter and as such the only facts that were before the Commission at the hearing of the substantive matter was that of Ms Kot.
[18] It cannot be said, as was put by Health Axis, that if the factual dispute had been resolved in Health Axis’ favour, that the objection would have been upheld as there was no factual dispute at the hearing.
[19] The letter of termination was before the Commission. It was not ambiguous or uncertain. It advised Ms Kot that her employment “will terminate” and that that would occur on 4 December 2017. Ms Kot would “not be required to attend work during this notice period.” She would be paid her redundancy pay on 13 December 2017. She would also be paid her “accrued entitlements, including superannuation, up to and including [her] last day of employment.”
[20] Despite the submissions of Health Axis that this matter revolved around the issue of payment in lieu of notice, there is nothing in the termination letter that mentions payment in lieu of notice. There was mention of four weeks’ notice but that was the explanation of why the employment would end on 4 December 2017.
[21] Health Axis did not pay Ms Kot in lieu of notice and in fact paid Ms Kot as part of the regular pay cycle except that her final pay and redundancy pay were not paid until 20 December 2017. Further consistently with the letter she continued to accrue entitlements.
[22] This case did not require the resolution of a legal question but a factual question. When did the termination take effect? Whatever might or might not have been in the mind of Mr Oppy, the General Manager who signed the termination letter is not relevant and further is not in evidence before the Commission. What is relevant was what was communicated to Ms Kot and what happened.
Did Health Axis respond to the application without reasonable cause?
[23] On the facts known to Health Axis at the time it lodged its objection, any submission that Ms Kot’s employment was terminated on 3 November 2017 was not arguable and was bound to fail. This was not a case that required the resolution of a factual dispute.
Should it have been reasonably apparent to Health Axis that the response to the application had no reasonable prospects of success?
[24] In Baker v Salva Resources Pty Ltd2 a Full Bench summarised the approach to be taken in relation to section 611(2)(b) of the Act as follows:
"[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 [Wodonga Rural City Council v Lewis, PR956243, at para 6]; 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 [Deane v Paper Australia Pty Ltd,PR932454, at paras 7 and 8] or so lacking in merit or substance as to be not reasonably arguable. [A Smith v Barwon Regional Water Authority, [2009] AIRCFB 769 at para 48]."
[25] I am satisfied that the objection had no reasonable prospects of success. The case law in this regard is settled. If an employer terminates an employee with immediate effect and pays the employee in lieu of notice, then the termination takes effect on the day the termination is communicated to the employee. If the employer terminates the employee with notice but does not require the employee to attend and perform work the termination takes effect at the end of the notice period.3 The question of when the termination takes effect is a fact.4
[26] I am satisfied that the submission made by Health Axis was not reasonably arguable and hence had no reasonable prospect of success.
Did Health Axis cause costs to be incurred because of an unreasonable act in connection with the conduct or continuation of the dispute?
[27] The making of the objection was unreasonable and caused Ms Kot to incur costs. It was on notice from 6 February 2018 that Ms Kot relied upon the letter of termination to support her claim that the termination took effect in accordance with the terms of the termination letter. It should have been aware that, in the absence of any evidence to the contrary, its objection could not succeed. It was unreasonable for Health Axis to persist with this objection.
Discretion
[28] However that is not the end of the matter. The decision to award costs is discretionary. The presumption is that parties bear their own costs. In this matter I am satisfied that I should exercise discretion and award costs. Health Axis was not a self-represented litigant. It suffered no particular disability which would cause me to exercise my discretion in its favour. It was on notice of the case made against it on 6 February 2017 and that it would need to establish its contention that the dismissal took effect on 3 November 2017. Yet no evidence was called to contradict the evidence before the Commission.
[29] I agree with the submission of Health Axis that not all the costs claimed by Ms Kot should be awarded. I am not satisfied that a case has been made that costs should be awarded on an indemnity basis. I am satisfied that the email sent to the Commission by Ms Kot’s solicitors was reasonable and it put Health Axis on notice that the evidentiary basis of its objection was challenged.
[30] I accept the submission of Health Axis that there is insufficient evidence before the Commission to support a finding that Ms Kot incurred any costs in attending the telephone hearing and hence I will not allow item 1402. I am further not satisfied that I should award an additional amount for general care and conduct. The matter involved no particular complexity nor did it require any specialised knowledge. Neither the submissions nor the witness statement filed involved any complexity and I consider that that the 2.5 hours claimed for the preparation for the hearing was sufficient for Ms Kot’s solicitor to review the submissions of Health Axis and review the relevant law.
[31] I therefore order Health Axis to pay Ms Kot $2,892.00 in costs within 21 days. An order to this effect will issue with this decision.
DEPUTY PRESIDENT
Appearances:
P. Hull for the Applicant.
M. Demirova for the Respondent.
Hearing details:
2018.
Melbourne, by telephone:
20 March.
<PR601352>
1 [2018] FWC 1153
2 [2011] FWAFB 4014
3 See CFMEU v Newcastle Wallsed Coal Co (1998) 88 IR 203
4 Ibid at 213
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