Melissa WalshRebecca EbbelsJustin WalshvThe Forest Resort Pty Ltd (Receiver and Managers Appointed)
[2010] FWA 3617
•6 MAY 2010
Note: An appeal pursuant to s.604 (C2010/4500) was lodged against this decision - refer to Full Bench decision dated 17 November 2010 [[2010] FWAFB 8022] for result of appeal.
[2010] FWA 3617 |
|
REASONS FOR DECISION |
Workplace Relations Act 1996
s.643—Termination of employment
Melissa Walsh
Rebecca Ebbels
Justin Walsh
vThe Forest Resort Pty Ltd (Receiver and Managers Appointed)
(U2009/4632, U2009/4636 & U2009/4637)
SENIOR DEPUTY PRESIDENT KAUFMAN | MELBOURNE, 6 MAY 2010 |
Costs – Costs against applicant – Costs against representative – Costs’ application under Fair Work Act 2009 where original matter brought under Workplace Relations Act 1996 – Acting unreasonably – Causing costs to be incurred.
[1] On 27 May 2009, following the appointment of receivers and managers to the Forest Resort Pty Ltd (the employer) on 1 April 2009, the employment of each applicant was terminated. Consequently, each applicant lodged an application for relief in the registry of the Australian Industrial Relations Commission on 18 June 2009.
[2] By operation of Schedule 2 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) the matter was heard by Fair Work Australia under the provisions of the Workplace Relations Act 1996 (WR Act). Each application was dismissed on 18 December 2009 when the solicitor for the applicants effectively conceded, that as the employer had at the relevant time employed 100 employeesor fewer, the applications for relief could not proceed. 1 On 4 January 2010 the employer lodged an application for costs against each applicant as well as “Mr Ben Green the Applicant’s Lawyer”.
[3] The application for costs purports to have been made under the Fair Work Act 2009 (FW Act). At the conclusion of the costs hearing on 17 March 2010 I asked the parties to file submissions as to whether the costs’ application was properly brought under the FW Act or whether the provisions of the WR Act continued to apply to this aspect of the matter. In their written submissions the employees submitted that the costs’ application should be dealt with under the provisions of the WR Act, whereas the employer submitted that it should be dealt with under the FW Act.
[4] In my view it is clear that the application for costs must be dealt with under the WR Act, albeit by Fair Work Australia. Item 11(1) of Part 3 of Schedule 2 of the Transitional Act provides that the WR Act continues to apply in relation to conduct that occurred before the WR Act repeal day. I do not accept the employer’s submission that the conduct referred to in Item 11(1) comprises the “events, behaviour or acts that provided grounds for the Costs Application”. In my view it is the conduct, the terminations of employment, which led to the lodging of the applications for relief. The application for costs relates to, albeit it might not arise from, that conduct. Accordingly the relevant provisions of the WR Act apply to the costs’ application. Section 658 of the WR Act relevantly provided:
658 Commission may order payment of costs
(1) If the Commission is satisfied:
(a) that a person (first party):
(i) made an application under section 643; or
(ii) began proceedings relating to an application; and
(b) the first party did so in circumstances where it should have been reasonably apparent to the first party that he or she had no reasonable prospect of success in relation to the application or proceeding;
the Commission may, on application under this section by the other party to the application or proceeding, make an order for costs against the first party.
(2) If the Commission is satisfied that a party (first party) to a proceeding relating to an application under section 643 has acted unreasonably in failing:
(a) to discontinue the proceeding; or
(b) to agree to terms of settlement that could lead to the discontinuance of the application;
the Commission may, on an application under this section by the other party to the proceeding, make an order for costs against the first party.
(3) If the Commission is satisfied:
(a) that a party (first party) to a proceeding relating to an application made under section 643 caused costs to be incurred by the other party to the proceeding; and
(b) that the first party caused the costs to be incurred because of the first party’s unreasonable act or omission in connection with the conduct of the proceeding;
the Commission may, on an application by the other party under this section, make an order for costs against the first party.
(4) If the Commission is satisfied:
(a) that a person (the representative) representing a party to a proceeding relating to an application made under section 643 caused costs to be incurred by the other party to the proceeding; and
(b) that the representative caused the costs to be incurred because of the representative’s unreasonable act or omission in connection with the conduct of the proceeding;
the Commission may, on an application by the other party, make an order for costs against the representative.
…
(10) For the purposes of this section, the following proceedings are examples of proceedings relating to an application under section 643 in respect of which the Commission may make an order for costs:
(a) a proceeding for dismissal of an application under section 643 on the ground that the application is outside jurisdiction;
(b) conciliation proceedings under section 650;
(c) arbitration proceedings under section 652;
(d) an appeal to the Full Bench from an order of the Commission under section 654 or a costs order under section 658;
(e) a proceeding concerning an application for costs by one party in respect of another party’s application for costs.
[5] The employer submitted that the applications for relief were made in circumstances where it should have been reasonably apparent to the applicants and their solicitor, who lodged the applications, that the applicants had no reasonable prospect of success. The reason for this aspect of the submission is that the letters of termination made it clear that the primary reason for the terminations was that the employer was no longer able to afford to continue to employ the applicants. Each letter of termination was written on the letterhead of the receivers and managers of the employer. In each letter it was stated that “[w]e have reviewed the operations of the Company and advise that due to the financial position of the Company, it is no longer in a position to maintain your employment.” Accordingly, it was submitted that each termination was for reasons that included genuine operational reasons and could not proceed 2, and that this should have been reasonably apparent to the applicants and to their solicitor.
[6] I reject this submission. The applicants were not obliged to accept the assertions of the receivers and managers that the terminations were for the reasons postulated. Neither the fact of the appointment of the receivers and managers nor their assertions would have made it reasonably apparent to the applicants or to their solicitor that they had no reasonable prospect of success in relation to the application on the genuine operational reason ground.
[7] The employer had filed a Notice of Motion to dismiss the applications on 25 June 2009. However, the grounds in support did little more than assert that the receivers and managers had determined that the employer had insufficient funds to meet the costs of employment of the applicants. The requirements of s.658(1) of the WR Act have not been met and no order as to costs should be made pursuant to it.
[8] It is then put by the employer that the applicants acted unreasonably in failing to discontinue the proceedings once it had become apparent that the employer employed fewer than 100 employees at the relevant date, being the date of the termination of the employment of the applicants. I observe that the Notice of Employer’s Appearance lodged on 25 June 2009 also asserted that the reason, or one of the reasons, for the terminations was a genuine operational reason. However, no mention was made of the employer employing 100 employees or fewer in that document. On 20 July 2009 the Notice of Motion was amended to include the 100 employees or fewer ground.
[9] There then followed a considerable volume of correspondence between the solicitors for the employer and the solicitor for the applicants. It is unnecessary to detail this correspondence. It may be characterised as letters from the solicitors for the employer attempting to demonstrate to the solicitor for the applicants that the employer had employed 100 employees or fewer at the relevant time. Some of the letters annexed tables purporting to make good the employer’s assertion as well as statutory declarations attesting to the same with spread sheets to demonstrate the validity of its assertions. On behalf of the applicants, Mr Green sought better particularisation, as well as legible spread sheets, as some of the photocopies with which he had been provided were unclear.
[10] The employer submitted that Mr Green had acted in a dilatory fashion in responding to some of its letters, and had also acted unreasonably in seeking further details. I disagree. Although Mr Green might have responded with greater alacrity, none of his replies and requests for greater detail took an unreasonable amount of time. Although the spread sheets seemed to support the position of the employer, I agree with Mr Green that he was entitled to seek enough detail for him to be able to properly advise his clients whether indeed, having regard to such matters as the numbers of casuals employed, their starting and finishing dates and the number of employees of associated companies, the employer properly asserted that it had employed 100 employees or fewer.
[11] In my view, it was not until Mr Green had received a letter from the solicitors for the employer on 4 November 2009 that he should have been sufficiently satisfied that the employer could make good its 100 employees or fewer objection. That letter enclosed a legible spreadsheet, which in combination with the previously provided material, made it tolerably clear that the employer had indeed employed 100 employees or fewer at the time of the termination of the applicants’ employment. Following the sending of that letter, the solicitors for the employer urgently sought a reply and eventually sought the listing of the Notice of Motion. It was listed on 25 November 2009 for hearing on 18 December 2009.
[12] Rather than withdraw the applications for relief, the applicants, through their solicitor, refrained from doing so. I should add that on many occasions in the course of their correspondence the solicitors for the employer indicated that if the applications were not withdrawn they would seek costs.
[13] Between 4 November 2009 and 8 December 2009, despite their attempts, the solicitors for the employer did not receive an indication of the attitude of the applicants to their 100 employees or fewer objection. On 8 December 2009 Mr Green wrote to me, I think with a copy to the solicitors for the employer, advising: “Our client’s claim under s.643 has suffered a fatal blow (subject to your deliberations) in that prima facie the respondent’s relevant entities did not at the relevant time employ 100 or more employees pursuant to s 643 (1) (f).” In his letter he also foreshadowed the making of submissions on the return of the Notice of Motion relating to an alleged presumption that that legislation was not to take away fundamental rights (here the right to employment), submissions relating to the “Human Rights Declaration 1948”, and the application of the purposive rule in statutory interpretation. He also foreshadowed an application to amend the application for relief of Rebecca Ebbels to include ground under s.659(2)(f) claiming that the termination of Ms Ebbels’ employment was “unlawful and discriminatory” because she had been pregnant at the time of the termination.
[14] I need not recite in any detail what transpired at the hearing on 18 December 2009. Suffice to say that Mr Green conceded the 100 employees or fewer point. He did indicate that he wished to make a submission “on the validity of section 643(10) in respect of that 100 employee question.” On his being pressed as to whether the validity of the legislation was a matter upon which Fair Work Australia could adjudicate, he did not persist with that particular submission. In light of Mr Green’s concession I dismissed the applications of Melissa Walsh and Justin Walsh. After having granted him an adjournment to obtain instructions, Mr Green informed me that he was unable to adduce evidence to support his application to amend the application of Rebecca Ebbels and sought to withdraw her application for relief. I considered it more appropriate to dismiss it on the same basis as I had the other two applications, namely that there was no jurisdiction to entertain the applications as the employer had employed 100 employees or fewer at the relevant time. I dismissed Ms Ebbels’ application. Mr Bower, solicitor, who appeared for the employer, made it clear that the employer would proceed with its foreshadowed application for costs.
[15] In my view, each applicant and their solicitor, Mr Green acted unreasonably, in failing to discontinue the proceedings after 4 November 2009 when it had become clear that the employer’s 100 employees or fewer objection would prevail. The requirements for the ordering of costs under s.658(2) have been met. Similarly the requirements of s.658(3), in respect of the applicants, and s.653(4) in respect of Mr Green, have been met. The applicants and Mr Green caused costs to be incurred by the employer because of their unreasonable acts in persisting with the applications after 4 November 2009.
[16] Costs are also sought in respect of the application for costs. Such an application is permitted by s.653(10). Had the applications been withdrawn after 4 November 2009, no application for costs would have been made. So much is clear from the correspondence between the parties. Accordingly, for the reasons given in relation to the substantive applications, costs should be awarded in respect of the costs’ application. There is an additional reason in relation to the application for costs in respect of the costs’ application itself. On 18 February 2010, the employer’s solicitors offered to settle the costs’ application for approximately 70% of what they assert to have been their costs. The offer was not taken up. In my view, the applicants and their solicitor acted unreasonably in failing to agree and thus s.658(2)(b) applies.
[17] In my view, this is a clear case for the awarding of costs against the applicants and their solicitor. The employer, through its solicitors, went to considerable lengths to demonstrate that s.643(10) precluded the applications for relief proceeding. Once Mr Green had digested the correspondence of 4 November it was clear to him that the applications were doomed. He should have advised his clients accordingly. By persisting with the applications, and by foreshadowing clearly untenable additional arguments which were subsequently not proceeded with, the applicants and Mr Green occasioned considerable costs to the employer. It is appropriate that a costs order be made in respect of the costs incurred by the employer since 4 November 2009, including the costs associated with the application for costs. Given the confidentiality attending to the solicitor/client relationship, and the consequent absence of any evidence as to why the matter proceeded after 4 November 2009, I am unable to do other than apportion the costs payment equally as between the applicants and Mr Green. Accordingly, it is appropriate that the order be made against each applicant as well as Mr Green.
[18] I direct the parties to confer with a view to giving effect to these reasons. In the absence of my associate being notified that agreement has been reached within 14 days of the date of these reasons, a formal order will issue and the costs will be assessed and taxed in the normal way.
SENIOR DEPUTY PRESIDENT
Appearances:
M. Bower, solicitor, for the applicant to the costs application.
P. Harris, of counsel, for the respondents to the costs application.
Hearing details:
2010
MELBOURNE
17 MARCH
Final Written Submissions:
Applicant to the costs application, 30 March 2010.
Respondent to the costs application, 1 April 2010.
1 S.643(10) of the WR Act provided:
An application under subsection (1) must not be made on the ground referred to in paragraph (1)(a), or on grounds that include that ground, if, at the relevant time, the employer employed 100 employees or fewer, including:
(a) the employee whose employment was terminated; and
(b) any casual employee who had been engaged by the employer on a regular and systematic basis for at least 12 months;
but not including any other casual employee.
2 S.643(8) of the WR Act provided:
Printed by authority of the Commonwealth Government Printer
<Price code C, PR996872>
An application under subsection (1) must not be made on the ground referred to in paragraph (1)(a), or on grounds that include that ground, if the employee's employment was terminated for genuine operational reasons or for reasons that include genuine operational reasons.
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