Mark Patience v Animal Kingdom Gym Pty Ltd

[2020] FWC 3017

[2020] FWC 3017

FAIR WORK COMMISSION

DECISION ON COSTS

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

Mark Patience
v
Animal Kingdom Gym Pty Ltd
(U2020/867)

COMMISSIONER CAMBRIDGE SYDNEY, 11 JUNE 2020

Unfair dismissal claim - application for costs - s. 400A and s. 611 - consideration of without reasonable cause, vexatious application, no reasonable prospects of success and unreasonable act or omission - no opposition advanced against costs application - initiating application made vexatiously - unreasonable acts and omissions of employee - application for costs granted.

[1] This Decision is made in respect to an application for costs that was taken pursuant to ss. 400A and 611 of the Fair Work Act 2009 (the Act). The costs application was made on 9 April 2020, by Animal Kingdom Gym Pty Ltd (the employer or Animal Kingdom or the company). The respondent to the application for costs is Mark Patience (Mr Patience or the employee). In accordance with the requirements of s. 402 of the Act, the application for costs was made within 14 days after the initiating unfair dismissal application was determined by the Fair Work Commission (the Commission).

Relevant Background

[2] On 27 January 2020, Mr Patience filed an unfair dismissal application (Form F2) in which he asserted that he had been unfairly dismissed from employment with the employer on 8 January 2020. The application indicated that Mr Patience was represented by Deborah Patience whose postal address was the same as that provided for Mr Patience.

[3] On 13 February 2020, Tom Howard Legal, lawyers acting on behalf of the employer, filed an employer response to unfair dismissal application (Form F3). The Form F3 indicated inter alia, that the applicant had been dismissed on 7 January 2020, and that the employer had nine employees at the time that Mr Patience was dismissed. The Form F3 also indicated that no jurisdictional objection was raised in respect to the unfair dismissal application.

[4] On 27 February 2020, the matter was the subject of unsuccessful conciliation, and on 3 March 2020, the file in the matter was allocated to the Commission as currently constituted.

[5] On 10 March 2020, the matter was listed for attendance proceedings involving a Pre-Hearing Conference/Conciliation at the Commission premises at 80 William Street, East Sydney. On 10 March 2020, Mr T Howard solicitor, appeared for the employer together with the employer’s Director Mr L Trakman. There was no appearance by or on behalf of Mr Patience, and my Associate made numerous unsuccessful attempts to make telephone contact with Mr Patience and his representative.

[6] In view of the failure of Mr Patience or his representative to either attend the listed proceedings on 10 March 2020, or establish some communication with the Commission, a letter was sent from the Commission to Mr Patience (by email and express post), which inter alia, required him to provide a written explanation for his non-attendance. Further, Mr Patience was advised that if he did not provide such written communication within 14 days of the date of the correspondence (10 March 2020), his unfair dismissal application may be dismissed for want of prosecution.

[7] On 26 March 2020, the lawyers acting for the employer wrote to the Commission asking whether Mr Patience had provided any explanation for his non-attendance at the proceedings on 10 March 2020 in accordance with the Commission’s correspondence sent to him on that day. The Commission had received no further communication from Mr Patience or his representative in any form. Consequently, on 27 March 2020, the Commission issued a Decision, [2020] FWC 1600, which dismissed Mr Patience’s unfair dismissal application for want of prosecution.

[8] On 9 April 2020, the employer filed an application for costs (Form F6) which was subsequently listed for Mention and Directions proceedings by telephone on 20 April 2020. At the Mention and Directions telephone proceedings held on 20 April 2020, the employer was represented by its lawyer, Mr T Howard, together with its Director, Mr L Trakman. My Associate made numerous unsuccessful attempts to contact the applicant by telephone, and no appearance was made by Mr Patience or any person acting on his behalf.

[9] On 21 April 2020, the Commission issued Directions that required the Parties to file and serve their respective evidence and other materials on the issue of costs in accordance with a timetable that required the Parties to advise the Commission by 29 May 2020, as to whether a formal Hearing was required or alternatively, whether the issue of costs could be determined upon the filed documentary material.

[10] In accordance with Direction 1 issued on 21 April 2020, the employer filed and served an affidavit of Laurence Trakman dated 4 May 2020, together with an outline of submissions in support of the application for costs. Mr Patience was Directed to file and serve witness statements and any other material by no later than 18 May 2020. Regrettably, this Direction was not complied with, and on 21 May 2020, my Associate sent an email communication to Mr Patience indicating that the Commission had no record of any material being filed by him in accordance with Direction 2 issued on 21 April 2020. Further, Mr Patience was advised that the question of costs may be determined in the absence of any argument against the application for costs unless he urgently redressed the apparent absence of compliance with Direction 2.

[11] Somewhat surprisingly, the Commission received an email response from Mr Patience on 21 May 2020 at 5:20 PM. In this email response, Mr Patience relevantly advised as follows: “I am awaiting direction from my lawyers as this is not the only matter being dealt with regarding the business…. This matter need [sic] to be postponed until the more pressing [sic] are resolved. I will have my lawyers contact you.”

[12] On 22 May 2020, the Commission sent an email communication to Mr Patience acknowledging and thanking him for his email response, and relevantly advising that if his lawyers wish to make an urgent application for him to be relieved of any obligation to comply with the Directions of the Commission such application should be made urgently and by no later than 5 PM on Friday, 29 May 2020.

[13] The Commission has not received any application or other contact from Mr Patience or lawyers or other representatives acting on his behalf in respect to his non-compliance with the Directions issued by the Commission on 21 April 2020. On 1 June 2020, the employer’s lawyers sent an email communication to the Commission noting the absence of any evidence or submissions from Mr Patience or his representatives, and seeking to have the application for costs determined on the papers. On 2 June 2020, the Commission sent an email communication to the employer’s lawyers and to Mr Patience, advising that the application for costs would be determined having regard to the filed material.

The Case for Costs

[14] The application for costs indicated that it was made under both s. 400A and s. 611 of the Act. The application outlined the grounds on which costs were sought, and it included assertions that Mr Patience caused costs to be incurred due to an unreasonable act or omission, and further, the application lacked reasonable cause or prospect of success, and finally, that the application had been made vexatiously. The application for costs included an itemised schedule of costs containing 12 entries, and which were summarised to have involved total costs and disbursements amounting to $2,692.50.

[15] The employer filed evidence in support of its application for costs in the form of an affidavit of Laurence Trakman (Mr Trakman) dated 4 May 2020. The affidavit of Mr Trakman was made in his capacity as a Director of the employer, and indicated inter alia, that Mr Patience was also a Director of the employer and an employee engaged to manage the gym operations business on a full-time basis. The affidavit of Mr Trakman set out the uncontested factual circumstances surrounding the proceedings and related events that occurred as a result of the unfair dismissal application being made by Mr Patience.

[16] The submissions made on behalf of the employer in support of its application for costs, firstly asserted that Mr Patience’s unfair dismissal application was made without reasonable cause. It was submitted by the employer that Mr Patience did not, in his application, provide any explanation as to how his dismissal was harsh, unjust or unreasonable. Instead, it was submitted that much of Mr Patience’s application focused on raising various allegations against Mr Trakman and other Directors of the company.

[17] In support of this submission, the employer also referred to the relief that was sought in the application which related to employment entitlements and which in any case, could not be provided as remedy in respect of an unfair dismissal application. Further, it was submitted that although Mr Patience did not have expertise in industrial law nor familiarity with the statutory limitations of the Act, it was clear that his application was wholly misconceived and left the company with no case to answer.

[18] The submissions made by the employer also asserted that the application made by Mr Patience lacked reasonable cause. It was submitted that in his application, Mr Patience had not provided any relevant version of facts that could have given rise to a successful claim.

[19] The employer also submitted that the application had been made vexatiously. In this regard it was asserted that the evidence provided in the affidavit of Mr Trakman demonstrated that since Mr Patience’s dismissal, he had been sending harassing emails to shareholders, Directors and employees of the company, and it appeared that the unfair dismissal application was in keeping with the pattern of behaviour designed to harass the employer or its Directors, shareholders and employees.

[20] The employer’s costs application also sought to rely upon conduct of Mr Patience which it said satisfied the requirements of s. 400A of the Act. In this regard, it was submitted that it was unreasonable for Mr Patience to have commenced the proceedings in the first instance because there was no reasonable prospect of success for the claim which was taken without reasonable cause and vexatiously. It was further submitted that it was unreasonable for Mr Patience to simply cease to prosecute his case without affording the employer or the Commission the courtesy of any notification. The employer submitted that it had incurred costs associated with this unreasonable omission on the part of Mr Patience.

[21] In summary, the employer submitted that the Commission should exercise its discretion to award costs pursuant to sections 400A and 611 of the Act. The employer submitted that Mr Patience’s unfair dismissal application was made without reasonable cause and it had no reasonable prospects of success. In addition, the employer asserted that Mr Patience had made the unfair dismissal application vexatiously as part of his disputation with other Directors of the employer. Further, the employer submitted that it had incurred costs because of the unreasonable actions and omissions of Mr Patience in commencing the unfair dismissal claim and abandoning it without notice or correspondence to the employer.

The Case against Costs

[22] Mr Patience failed to provide any material in opposition to the application for costs.

Consideration

[23] There are a number of different sections of the Act which deal with costs. In this instance the application for costs, as set out in the initiating Form F6, was made under both s. 400A and s. 611 of the Act. Consequently, the application for costs has been considered in terms of any satisfaction of s. 400A and/or s. 611 of the Act.

[24] The Commission may make a costs Order in respect to an unfair dismissal claim if any of the terms of either ss. 400A or 611 have been satisfied. Relevantly, these two sections of the Act are in the following terms:

“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

and

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).”

General Approach to Costs

[25] The approach to consideration of any application for costs made under the Act should, at the outset, recognise the significance of subsection 611 (1) and the implications that have been established to flow from those particular provisions. In this regard, it is relevant to refer to a Full Bench Decision in the matter of E. Church v Eastern Health t/as Eastern Health Great Health and Wellbeing 1 and the following extract from that Decision is relevant:

“[26] Section 611 sets out a general rule - that a person must bear their own costs in relation to a matter before the Commission (s.611(1)) - and then provides an exception to that general rule in certain limited circumstances. The Explanatory Memorandum confirms this interpretation of the section, it is in the following terms:

2353. Subclause 611(1) provides that generally a person must bear their own costs in relation to a matter before FWA.

2354. However, subclause 611(2) provides an exception to this general rule in certain limited circumstances. FWA may order a person to bear some or all of the costs of another person where FWA is satisfied that the person made an application vexatiously or without reasonable cause or the application or response to an application had no reasonable prospects of success.

2355. A note following subclause (2) alerts the reader that FWA also has the power to order costs against lawyers and paid agents under clauses 376, 401 and 780 which deal with termination and unfair dismissal matters.

2356. Subclause 611(3) provides that a person to whom a costs order applies must not contravene a term of the order.

[27] In the context of s.570 and its legislative antecedents courts have observed that an applicant who has the benefit of the protection of a provision such as s.570(1), (ie the general rule that parties bear their own costs), will only rarely be ordered to pay costs 5 and that the power should be exercised with caution and only in a clear case 6. In our view a similarly cautious approach is to be taken to the exercise of the Commissions powers in s.611 of the FW Act.” [emphasis added]

[26] Consequently, it has been well established that there should be a cautious approach taken in respect to any application for costs made under the Act. This caution operates to establish an underlying reluctance to grant any application for costs and to only do so in instances where a clear case has been made out to satisfy the exceptions to the general rule that each side bear its own costs. Those exceptions are specified in subsections 611 (2) (a) and (b) of the Act, and in the case of a claim for unfair dismissal, also extend to circumstances identified in subsection 400A (1).

[27] In this case, the employer has advanced its case that particular aspects of the making of the application for unfair dismissal remedy, and the conduct of Mr Patience in respect to the proceedings, established basis upon which the exceptions to the general rule that each side bear its own costs, have been established. The employer asserted that the unfair dismissal claim made by Mr Patience was taken without reasonable cause and/or that it had no reasonable prospect of success and/or that it had been made vexatiously. Further, the employer asserted that the actions of Mr Patience caused it to incur costs because of certain unreasonable acts or omissions on the part of Mr Patience.

Without Reasonable Cause - s. 611 (2) (a)

[28] On the question of whether the application could be considered to have been taken without reasonable cause, it is important to have regard for the established stringency of the test that must be met to satisfy that a case was taken without reasonable cause. In numerous Judgements and Decisions there have been various descriptions used to characterise the test required for a finding that a case was commenced without reasonable cause. Terminology such as “manifestly groundless” “obviously untenable” and “incapable of argument” has provided guidance.

[29] The relevant tests for finding that a matter was taken without reasonable cause, when translated into the context of an application for unfair dismissal remedy, require identification of some aspect of the application which would unquestionably defeat the claim. An unfair dismissal claim that was taken without reasonable cause would contain some aspect which was identifiable from the application document and which of itself, would operate to strike the claim out. For example, an application which stated and provided verification that the period of employment was less than six months would be a claim that would be likely to have been taken without reasonable cause.

[30] In this case, there was no suggestion that the claim for unfair dismissal contained some defect(s) which meant that it should have been struck out or otherwise subject to interlocutory disposal. Consequently, I believe that it would be unsound to make any finding that the application was taken without reasonable cause.

No Reasonable Prospect of Success - s. 611 (2) (b)

[31] The employer also advanced its application for costs on the basis that it should have been reasonably apparent to Mr Patience that his application had no reasonable prospect of success. It seems to be well settled that the test to establish that a case had no reasonable prospects for success is not as stringent as that required to find that a matter had been taken without reasonable cause.

[32] Consideration of this aspect of the application for costs involves a broad assessment of the merits of the case as should have been properly evaluated at the time of the making of the application. However, caution must be exercised to carefully evaluate whether any alleged absence of merit would have been reasonably apparent to an applicant at the time of making the claim.

[33] In this instance it is relevant to recognise that Mr Patience has no identified knowledge or training in respect of employment law. Further, it appeared that his representative may have similarly been unfamiliar with legal processes and other aspects of employment law. Therefore, Mr Patience’s assessment of the strengths and weaknesses of his case, would have been made with an understandable level of inexperience and unfamiliarity. In such circumstances it would be unlikely that any proper assessment of whether there may have been a reasonable prospect for success of his unfair dismissal claim could have been made.

[34] Consequently, I am reluctant to make any finding that Mr Patience’s unfair dismissal application had no reasonable prospect of success in satisfaction of the provisions of s. 611 (2) (b) of the Act.

Vexatious application - s. 611 (2) (a)

[35] The uncontested evidence that was provided in support of the application for costs has strongly endorsed a finding that the application for unfair dismissal remedy was made vexatiously. The evidence established that Mr Patience had been involved in a vigorous dispute with the other Directors of the employer. Mr Patience made an unfair dismissal claim and then failed to pursue it with due diligence. Consequently, his unfair dismissal claim was dismissed for want of prosecution.

[36] The conduct of Mr Patience whereby he commenced an unfair dismissal claim and then repeatedly failed to take reasonable steps to prosecute that claim in circumstances where he was engaged in a vigorous dispute with his fellow company Directors, has provided compelling basis to conclude that the unfair dismissal claim was taken for extraneous purposes. Mr Patience made the unfair dismissal claim as some strategic component or leverage weapon in his battle with his fellow Directors. Therefore, Mr Patience made the unfair dismissal claim vexatiously and without any genuine intention to have the claim properly determined or otherwise resolved.

[37] Therefore, the Commission finds that in satisfaction of s. 611 (2) (a) of the Act, the unfair dismissal application made by Mr Patience was taken vexatiously.

Unreasonable Act or Omission - s. 400A (1)

[38] The employer also pursued its application for costs on the basis that there was conduct on the part of Mr Patience that satisfied subsection 400A (1) of the Act.

[39] Subsection 400A (1) of the Act introduces a further exception to the general rule established by subsection 611 (1) that each side bear its own costs in relation to a matter before the Commission. This particular exception is confined to unfair dismissal proceedings and requires that the Commission be satisfied that a Party caused costs to be incurred by another Party because of an unreasonable act or omission. An unreasonable act or omission could occur in respect to a particular aspect or part of the proceedings, or such act or omission might involve a more general finding in respect to a combination of factors surrounding the application and any part or parts of the proceedings.

[40] The employer has asserted that the conduct of Mr Patience in both making the application for unfair dismissal remedy and in respect to his abandonment of the claim, represented unreasonable acts or omissions in connection with the conduct or continuation of the unfair dismissal claim in satisfaction of s. 400A of the Act.

[41] As the application for unfair dismissal remedy was made vexatiously, the making of the application and the subsequent failure to take reasonable steps to either prosecute the claim or alternatively to discontinue it, represented unreasonable acts and omissions in satisfaction of s. 400A of the Act.

[42] Consequently, in the particular circumstances of this case, the conduct of Mr Patience was on any objective contemplation, unreasonable acts and omissions that caused the employer to incur costs.

Conclusion

[43] This application for costs was made by the respondent employer after the Commission had dismissed the initiating unfair dismissal claim for want of prosecution. The costs application was made under both section 400A and section 611 of the Act. Consequently, the Commission has been required to consider whether the requirements of subsections 611 (2) (a) and (b) and/or s. 400A of the Act were met so that costs should be Ordered in favour of the employer.

[44] In respect to subsections 611 (2) (a) and (b) of the Act, the Commission has not been satisfied that the application was made without reasonable cause or that it had no reasonable prospects of success. However, in circumstances where Mr Patience repeatedly failed to take reasonable steps to either prosecute his unfair dismissal claim or discontinue it, in the context of his vigorous collateral dispute with fellow Directors, his conduct has established that the application was made vexatiously.

[45] Further, in respect to subsection 400A (1) of the Act, the Commission has been satisfied that the actions of Mr Patience in connection with the conduct or continuation of the matter represented unreasonable acts or omissions that caused the employer to incur costs in satisfaction of the requirements of subsection 400A (1) of the Act.

[46] It is well established that Courts and Tribunals are entitled to act to protect themselves from abuse of process. In circumstances where an unfair dismissal claim was made vexatiously for collateral purposes, and it was subsequently not prosecuted with reasonable diligence, the respondent employer should be entitled to recover costs that it has incurred. The recovery of such costs represents some means by which the Commission may protect its processes from abuse. Regrettably, there is no mechanism by which the Australian taxpayers might be able to recover the costs associated with the expenditure incurred through the utilisation of the Commission’s resources in instances involving abuse of its processes.

[47] In summary therefore, the requirements of subsections 611 (2) (a) and 400A (1) of the Act have been properly satisfied. The general rule established by subsection 611 (1) of the Act, that each Party bear its own costs, must, in this case, not apply, as the exceptions to that rule as contemplated by subsections 611 (2) (a) and 400A (1) of the Act have proper basis to operate.

[48] The employer’s application for costs is granted. The itemised schedule of costs and disbursements filed with the application for costs has been assessed, and an appropriate Order shall be issued in conjunction with this Decision.

COMMISSIONER

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 1   E. Church v Eastern Health t/as Eastern Health Great Health and Wellbeing [2014] FWCFB 810.