Mark Lawrence v Metro Trains Melbourne Pty Ltd
[2022] FWC 705
[2022] FWC 705
The attached document wholly replaces the document previously issued with the code [2021] FWC 6013 on 29 March 2022 to correct document referencing.
Associate to Commissioner Harper-Greenwell
Dated 30 March 2022.
| [2022] FWC 705 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Mark Lawrence
v
Metro Trains Melbourne Pty Ltd
(U2020/11779)
| COMMISSIONER HARPER-GREENWELL | MELBOURNE, 29 MARCH 2022 |
S.400A and s.611 application for costs – application refused.
This decision concerns an application lodged by Mr Mark Lawrence (Costs Applicant) for costs (the Costs Application) against Metro Trains Melbourne Pty Ltd (Costs Respondent, Metro Trains) pursuant to ss.400A and 611 of the Fair Work Act 2009 (Cth) (the Act).
On 31 August 2020, Mr Lawrence made an application to the Fair Work Commission (the Commission) for an unfair dismissal remedy (the Unfair Dismissal Application). The matter was heard and determined, and I issued a decision on the merits of the Unfair Dismissal Application[1] (the Substantive Decision).
On 8 September 2021, I issued a further decision[2] (the Remedy Decision) in which I ordered Mr Lawrence be reinstated to the position he held immediately prior to dismissal, continuity of service and restoration of lost pay (limited to the period between 12 January 2021 and the date of Mr Lawrence’s reinstatement, and to be offset by any successful Workcover Claim).
Following receipt of the Costs Application, I issued directions requiring Mr Lawrence and Metro Trains to file written submissions in regard to the Costs Application. The parties each filed their written submissions accordingly.
The Costs Application was then determined on the papers.
Statutory Framework
The Commission has the discretionary power to award costs against a party to an unfair dismissal matter if it is satisfied that one party caused the other party to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the matter. [3] The Commission also has the discretionary power to award costs where it is satisfied that a party made, or responded to, and application vexatiously or without reasonable cause, or that it ought to have been apparent that the person’s application, or response to an application, had no reasonable prospects of success.[4] However, the presumption of the Act is that each party bears their own costs.[5]
The Costs Application having been lodged on 21 September 2021 was made in compliance with the requirement under s.402 of the Act to lodge an application for costs within 14 days of the determination of the matter.
Submissions
Costs Applicant
Mr Lawrence submits that costs should be awarded against Metro Trains because its defence was made without reasonable cause and it should have been apparent to Metro Trains that it had no reasonable prospects of success.[6] In addition, Mr Lawrence contends that Metro Trains acted unreasonably in failing to accept his settlement offer, which consequently caused him to incur significant costs in taking his application to hearing.[7]
Mr Lawrence drew my attention to the recent Full Bench decisions in Vassallo v Easitag Pty Ltd [[2021] FWCFB 3974] and Tracey v BP Refinery [Kwinana] Pty Ltd [[2021] FWCFB 4970] which dealt with the interpretation of s.611 of the Act. Mr Lawrence’s representative summarised the relevant principles as follows:
“a) whether an application is responded to “without reasonable cause” may be tested by asking, on the facts apparent to the respondent at the time the response was made, whether there was no substantial prospect of success;
b) a response will have been made “without reasonable cause” if it can be characterised as so obviously untenable that it cannot possibly succeed, is manifestly groundless or discloses a case where the tribunal is satisfied it cannot succeed;
c) “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;
d) a conclusion that a response “had no reasonable prospect of success” should only be reached with extreme caution in circumstances where the response is manifestly untenable or groundless or so lacking in merit or substance as to not be reasonably arguable.”[8]
Mr Lawrence submits that on any objective assessment, Metro Trains failed to recognise that the dismissal would be rendered unfair to some degree if even one of the factors that were raised in his application and submissions were substantiated.[9] Mr Lawrence notes in particular his lengthy service of over 18 years, the summary nature of his dismissal, the personal and economic consequences of his dismissal and the disproportionate nature of the penalty imposed.[10] Mr Lawrence further submits that an application need only have one arguable point to transcend the s.611 hurdle, whereas a response needs to meet all arguments advanced in order to defeat an application for an unfair dismissal remedy.[11]
Mr Lawrence submits that Metro Trains was, or should have been, aware of all the facts found in the Substantive Decision, and therefore it should have been reasonably apparent to Metro Trains at that time that it could not succeed in the unfair dismissal proceedings.[12]
Mr Lawrence also submits that any reasonable employer would have endeavoured to settle the Unfair Dismissal Application on the facts before them.[13] Mr Lawrence submits that Metro Trains’ decision to not engage in settlement discussions from August 2020 to September 2021 was an unreasonable act or omission which caused Mr Lawrence to incur substantial costs.[14]
Whilst Mr Lawrence concedes that a party has no obligation to settle or to engage in settlement discussions for the purposes of s.400A of the Act, he contends that what is unreasonable is where an employer is indifferent and unresponsive to settlement discussions where it has no complete defence, no reasonable cause or prospects of success and instead, constant denials.[15]
Mr Lawrence relies on the decision in Walker v Mittagong Sands Pty Ltd T/A Cowra Quartz [[2011] FWA 2225] (Walker), which involved an employee being awarded costs against the employer, in circumstances that he argues are similar to those in the current matter. In the case of Walker, the relevant manager had engaged in dishonesty and was then the same manager who had carriage of the disciplinary and dismissal process. I note however that whilst some decisions as to credit were made, there were no findings that any of the witnesses were dishonest.
Mr Lawrence submits that the Commission should therefore exercise its discretion to award costs, as he was put to considerable expense to meet an employer case that was objectively without substance, and in circumstances where the employer made no attempt, and had no desire, to settle.[16]
Costs Respondent
Metro Trains submits that the Costs Application should be dismissed as there is no basis for costs to be awarded under either s.400A or s.611 of the Act.[17] Metro Trains submits that its defence was reasonably arguable and, whilst it was unsuccessful in the Unfair Dismissal Application, this fact was not immutable at the time Metro Trains prepared and filed its responses.[18]
Metro Trains contends that several of the findings and conclusions made in the Substantive Decision were as a result of weighing up competing evidence and probabilities.[19] Metro Trains submits that it could not have “been aware of all the facts found by the Commission” as suggested by Mr Lawrence.[20] It submits that I came to the conclusion that Mr Lawrence was unfairly dismissed after a full argument and examination of the evidence as a whole.[21] It submits that costs should not be awarded in circumstances where a conclusion is reached in this manner.
Metro Trains relied on the following decisions: Church v Eastern Health T/A Eastern Health Great Health and Wellbeing [[2014] FWCFB 810], 240 IR 377, Kanan v Australian Postal and Telecommunications Union [[1992] FCA 539]; (1992) 43 IR 257 (Wilcox J) and Baker v Salva Resources Pty Ltd [2011] FWAFC 4014, and summarised the principles governing an application for costs under s.611(2) of the Act as follows[22]:
“a) an application is made vexatiously when the predominant motive or purpose of the applicant is to harass or embarrass the other party or to gain a collateral advantage;[1]
b) an application is not made without reasonable cause simply because the application did not succeed;[1]
c) whether an application is made without reasonable cause may be tested by asking, on the facts apparent at the time the application was made, whether there was no substantial prospect of success. If success depends upon the resolution of one or more arguable points of law, it is inappropriate to characterise the application as having been made without reasonable cause;[1]
d) the composite phrase “should have been reasonably apparent” imports an objective test;[1]
e) 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 or so lacking in merit or substance as to be not reasonable arguable.”[1]
Metro Trains submits that it did not act unreasonably in not accepting Mr Lawrence’s settlement offer.[23] Metro Trains contends that the Commission must not only consider the relative strengths of the parties’ cases, their prospects of success and the likely length and cost of proceeding to a hearing, as was outlined by Mr Lawrence, but also the terms of the settlement offered in relation to the relief sought, and any adverse consequences that would accrue to a party if they accept a settlement on particular terms rather than successfully prosecute or defend the primary application.[24]
Metro Trains submits that their failure to accept Mr Lawrence’s settlement offer was not an unreasonable act or omission, in circumstances where the offer greatly exceeded the best possible outcome Mr Lawrence could have achieved if he was successful in the Unfair Dismissal Application.[25]
Costs Applicant Submissions in Reply
In Mr Lawrence’s written submissions in reply, he refers to the recent Federal Court decision in Salama v Sydney Trains[No2] [2021] FCA 1200, and states that the following observations of the decision are equally applicable to costs applications pursuant to ss. 611 and 400A of the Act:
“It has been said that the policy ensures that the spectre of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings: Ryan v Primesafe [2015] FCA 8; 323 ALR 107 at [64] (Mortimer J); Trustee for the MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8] (Siopis, Collier and Katzmann JJ). The discretion must be exercised with caution because of the exceptional nature of the power in an otherwise no-costs jurisdiction, and a case for its exercise should be clearly demonstrated: Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6] (Bromberg J). That is because, absent caution, there is potential to discourage parties in the complete and robust pursuit of claims for contravention of the FW Act. Accordingly, a person will rarely be ordered to pay the costs of the proceedings. However, it is not necessary to prove that there are exceptional circumstances warranting the making of an order.”[26]
Mr Lawrence submits that the policy emphasis is clear and that it is primarily to protect applicants not respondents, insofar as it should not deter an applicant with genuine grievances and an arguable case from commencing or continuing proceedings.[27]
It is Mr Lawrence’s submission that the initial Form F3 Employer’s Response to the Unfair Dismissal Application is when the response is to be assessed as objectively having “no reasonable prospect of success” or as having been made “without reasonable cause” for the purposes of s.611 of the Act, however the subsequent responses of a respondent through submissions, witness statements, evidence and exhibits as the case unfolds are also relevant.[28] Mr Lawrence argues that as a respondent’s case demonstrates that it is becoming increasingly improbable, it is unreasonable of the respondent to make no effort to settle whatsoever.[29]
Mr Lawrence submits that if Metro Trains had approached the evidence objectively from the date of the incident on 9 August 2020 and thereafter, rather than, quoting from the Substantive Decision, through the eyes of an “investigator who was biased”, and rather than having “formed a view of the outcome before obtaining all relevant evidence”, conducted an investigation which “lacked the basic principles of procedural fairness and natural justice” and was “conducted within a narrow framework that was bound to support a finding that was inconsistent with the evidence”, then Metro Trains would have recognised that its defence would not be successful.[30]
Consideration
The power to award costs is discretionary and subject to specified statutory prerequisites.
The exercise of discretion must be in a manner which is “fair and just” and takes into account “equity, good conscience and the merits of the matter”, and there is a broad nature to the factors which may be relevant to the exercise of the discretion.[31] There is also a requisite causal link between the act or omission and the costs incurred.
The presumption under the Act is that each party bears their own costs.[32]
Section 400A of the Act
I will deal with the s.400A application first.
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.”
Section 400A was inserted into the Act by virtue of the Fair Work Amendment Act 2012 (Cth). 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:[33]
“[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[34]. 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 parties did not file any evidence as to the conduct of any settlement negotiations. The only information I have is that contained in the submissions, which has not been tested. It appears that Mr Lawrence sought compensation be paid by way of settlement which exceeded the maximum that could be awarded by the Commission in the event the Unfair Dismissal Application was successful (and reinstatement was not awarded). Metro Trains contends that the offer was unrealistic, and it determined to not make an offer as it believed its case would prevail.
Whilst I accept that strong prospects of success will not always justify a failure to participate in settlement negotiations, it appears to me that the parties each held a similar (but opposing) view of the strength of their respective cases. In such matters it is difficult to reach a compromise. In circumstances where both parties viewed their cases as having reasonable prospects of success, and Mr Lawrence was seeking a settlement that was purported to be beyond that which he could have possibly obtained had his Unfair Dismissal Application been successful, there is no suggestion that either party proposed a compromise. The failure of the Metro Trains to accept Mr Lawrence’s offer, or to make a counter offer, is not in and of itself sufficient reasoning to award costs. Metro Trains held the view that it had a case that could be successfully argued and that there were contested facts that it could reasonably and successfully argue in proceedings before the Commission; I will deal with this contention in more detail later in my decision. There is insufficient evidence before me to reach a conclusion that Metro Trains acted unreasonably in failing to settle.
On this basis I have determined that an award under s.400A is not appropriate.
Section 611 of the Act
I now turn to the contention that the Metro Trains’ defence had no reasonable prospects of success.
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).”
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[35] 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 (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).
4_
In order for me to find that Metro Trains’ case had no prospects of success, I would need to find that Metro Trains’ case at its highest could not support the requirements of s.387 of the Act. It cannot reasonably be determined that a response to an application is made without reasonable cause simply because the response did not succeed.
I have considered the submissions of the parties however a review of the reasons for my Substantive Decision reveals that whilst the factual material relied upon (principally the CCTV footage and Mr Lawrence’s account of the incident) was largely consistent between the parties, the interpretation of the material differed. Metro Trains considered that Mr Lawrence did not appropriately de-escalate the incident and that he used an excessive level of force. Metro Trains’ assessment arose in part from its rejection of some of Mr Lawrences account of the incident.
At paragraphs [114]-[117], [119], [121] and [127] of the Substantive Decision I made various findings in respect of the evidentiary contest. These findings were made as a result of my assessment of the evidence as deduced during the hearing, and an assessment of the competing possibilities of what had occurred and of the credibility of the evidence of each witness. Generally, I preferred the evidence of Mr Lawrence over that of Metro Trains’ witnesses. Had I made different findings (for example that that Mr R had not threatened to kill Mr Lawrence), the outcome of the evidentiary contests would have been significantly different.
The fact that Metro Trains did not persuade me on the matters in contest does not reasonably lead to a conclusion that its defence was “manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable.”[36]
I am unable to find that the Respondent’s case was without prospects of success and therefore the s.611 application must fail.
Conclusion
For the reasons detailed above the application for costs is dismissed.
COMMISSIONER
Written submissions:
Applicant, 28 September 2021
Respondent,12 October 2021
Applicant reply, 15 October 2021
[1] [2021] FWC 1078.
[2] [2021] FWC 3789.
[3] Fair Work Act 2009 (Cth) s.400A(1).
[4] Fair Work Act 2009 (Cth) s. 611(2).
[5] Fair Work Act 2009 (Cth) s.611(1).
[6] Fair Work Act 2009 (Cth) s.611.
[7] Fair Work Act 2009 (Cth) s.400A.
[8] Applicant’s Submissions [24].
[9] Applicant Submissions [29].
[10] Applicant’s Submissions [10].
[11] Applicant’s Submissions [25].
[12] Applicant’s Submissions [9].
[13] Applicant’s Submissions [12].
[14] Applicant’s Submissions [16].
[15] Applicant’s Submissions [32], [49].
[16] Applicant’s Submissions [60].
[17] Respondent’s Submissions [2].
[18] Respondent’s Submissions [2].
[19] Respondent’s Submissions [2], [9].
[20] Respondent’s Submissions [9].
[21] Respondent’s Submissions [9], [10].
[22] Respondent’s Submissions [3].
[23] Respondent’s Submissions [15].
[24] Respondent’s Submissions [13].
[25] Respondent’s Submissions [15].
[26] Salama v Sydney Trains [[No.2] [2021] FCA 1200] at [11].
[27] Applicant’s Submissions in Reply [7], [8].
[28] Applicant’s Submissions in Reply [16], [17].
[29] Applicant’s Submissions in Reply [16], [17].
[30] Applicant’s Submissions in Reply [19].
[31] Baxter Healthcare Pty Ltd v Portelli[2017] FWCFB 3891, [104]
[32] Fair Work Act 2009 (Cth) s.611(1).
[33] [2016] FWC 2659.
[34] [2014] FWCFB 1175 [10]-[14].
[35] [2015] FWCFB 1856.
[36] Baker v Salva Resources Pty Ltd [2011] FWAFB 4014 [10].
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