Maria Girdler v Western Sydney Community Legal Centre Incorporated T/A Western Sydney Community Legal Centre (WSCLC)

[2018] FWC 10

[2018] FWC 10

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Maria Girdler
v
Western Sydney Community Legal Centre Incorporated T/A Western Sydney Community Legal Centre (WSCLC)
(U2017/2924)

COMMISSIONER RIORDAN SYDNEY, 18 JANUARY 2018

Application for an unfair dismissal remedy – costs application.

[1] On 22 August 2017, I published a Decision 1 in which I found that Ms Girdler had been unfairly dismissed by the Western Sydney Community and Legal Centre (WSCLC). I ordered that Ms Girdler be reinstated and appointed to the new position of Director, maintain her continuity of employment and be compensated for all remuneration which she had lost, minus any payments made for notice and redundancy.

[2] On 5 September 2017, Ms Girdler’s legal representative, HWL Ebsworth Lawyers, submitted an application for costs in accordance with sections 400A and 611 of the Fair Work Act, 2009 (the Act).

[3] It is not in dispute that at the commencement of the second and final day of the proceedings, WSCLC advised that they no longer pressed their argument that Ms Girdler’s termination was a genuine redundancy in accordance with section 389 of the Act. I note that only final submissions were dealt with on the second day of the proceedings.

Submissions

[4] Ms Girdler’s representative has submitted that Ms Girdler was put to “the expense of preparing for and responding to a case that was substantially different to the case ultimately advanced by the Respondent”.

[5] Ms Girdler has requested an order from the Commission for the legal expenses she incurred as a result of her dismissal and successful unfair dismissal application.

[6] WSCLC’s legal representation, AFEI Legal, submitted that the well established principle that “costs are not imposed simply because that party’s argument has failed” should apply in this circumstance.

[7] Further, WSCLC highlighted the explanatory memorandum in relation to section 400A of the Act, which states:

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.

[8] In reply, Ms Girdler’s representation submitted that the Commission should exercise its discretion and award costs because WSCLC’s defence was misconceived and unsupportable in the circumstances, that their argument lacked merit and could not reasonably be argued.

[9] Further, that the timing of WSCLC’s concession meant that Ms Girdler had expended money unnecessarily on submissions and evidence in relation to the threshold jurisdictional issue of whether or not her termination was as a result of a “genuine redundancy”.

[10] Finally, it should have been at all times apparent to WSCLC that they had not met the essential requirements of section 389 of the Act.

Legislation

[11] Section 611 of the Act states:

Section 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).

[12] Section 400A of the Act, which deals with unfair dismissals, states:

Section 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.

[13] Section 596 of Act states:

Section 596

Representation by lawyers and paid agents

(1) Except as provided by subsection (3) or the procedural rules, a person may be represented in a matter before the FWC (including by making an application or submission to the FWC on behalf of the person) by a lawyer or paid agent only with the permission of the FWC.

(2) The FWC may grant permission for a person to be represented by a lawyer or paid agent in a matter before the FWC only if:

(a) it would enable the matter to be dealt with more efficiently, taking into account the complexity of the matter; or

(b) it would be unfair not to allow the person to be represented because the person is unable to represent himself, herself or itself effectively; or

(c) it would be unfair not to allow the person to be represented taking into account fairness between the person and other persons in the same matter.

Precedent

[14] It has been held that the power for the Commission to award costs is purely discretionary. The Commission must determine whether there is power to award costs and whether the exercise of this discretion is appropriate.

[15] The meaning of the expression “without reasonable cause” has been the subject of extensive litigation. In General Steel Industries Inc v Commissioner for Railways (NSW) 2 the High Court held that:

“8… The test to be applied has been variously expressed; “so obviously untenable that it cannot possibly succeed”; manifestly groundless”; “so manifestly faulty that it does not admit of argument”; “discloses a case which the Court is satisfied cannot succeed”; “under no possibility can there be a good cause of action”; “be manifest that to allow them” (the pleadings) “to stand would involve useless expense”.”

[16] In Kanan v Australia Postal and Telecommunications Union 3, the Federal Court held:

“29. It seems to me that one way of testing whether a proceeding is instituted “without reasonable cause” is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being “without reasonable cause”. But where it appears that, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause…”

[17] In Deane v Paper Australia Pty Ltd 4a Full Bench of the Commission held:

“[8] …unless, upon the facts apparent to the applicant at the time of instituting the appeal, 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.”

[18] This proposition applies equally to Respondents.

Consideration

[19] I have taken into account the detailed written submissions of the parties. The fact that a particular issue has not been mentioned in this decision does not mean that it has not been taken into account.

[20] I acknowledge that WSCLC did not purse the issue of “genuine redundancy” during final submissions. Whilst this decision was late in the proceedings, the decision ultimately led to the matter being dealt with more efficiently. Section 596(2)(a) of the Act provides that a reason why the Commission may grant permission for a party to be represented by a lawyer or paid agent is to enable the matter to be dealt with more efficiently. The decision by WSCLC not to pursue the issue of genuine redundancy saved the advocates and the Commission considerable time. It would be contrary to the intent of the Act to now penalise WSCLC for acting in accordance with an expressed provision of the Act. I have taken this into account.

[21] I note that Ms Girdler’s counsel, Mr Rauf, was able to quickly recover from the shock of WSCLC not continuing to press its jurisdictional objection, to provide a verbal final submissions which filled 100 paragraphs of transcript. The length of these submissions indicate that the issue of “genuine redundancy” was not the only issue that required the Applicant’s advocacy and the Commission’s consideration. I have taken this into account.
[22] I found that WSCLC did not have a valid reason to terminate Ms Girdler and subsequently reinstated Ms Girdler to the role of Director. Whilst I was critical of the process that was undertaken to terminate Ms Girdler, this does not mean that WSCLC did not have an arguable case. Following the restructure, WSCLC could have simply declared all positions vacant and undertaken a fair and thorough recruitment process. Ms Girdler stated during cross examination that she was prepared to be tested against the open employment market. WSCLC were of the view that the process that was followed was fair. I disagreed but simply because I found in favour of the Applicant does not mean that the Respondent’s case was without reasonable cause. I have taken this into account.

Conclusion

[23] I am not prepared to exercise my discretion and award costs against WSCLC. I am satisfied that WSCLC had an arguable case in relation to defending its decision to terminate Ms Girdler.

[24] I do not regard the actions of WSCLC in not pursuing its jurisdictional argument as an unreasonable action. On the contrary, I find this decision of WSCLC to be an efficient use of the parties’ and the Commission’s time.

[25] The application for costs is dismissed.

COMMISSIONER

 1   [2017] FWC 4130

 2 [1964] HCA 69

 3 [1992] FCA 539

 4   PR932454

Printed by authority of the Commonwealth Government Printer

<PR599160>