Michael Archer v Oalbay Pty Ltd T/A Amazing Clean Canberra

[2014] FWC 3184

[2014] FWC 3184

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.365—General protections

Michael Archer
v
Oalbay Pty Ltd T/A Amazing Clean Canberra
(C2013/7840)

COMMISSIONER DEEGAN CANBERRA, 14 MAY 2014

Application to deal with contraventions involving dismissal.

[1] On 24 December 2013 Mr Michael Archer (the employee) made an application under s.365 of the Fair Work Act 2009 (the Act) alleging that he was dismissed in contravention of the general protections provisions of the Act. The employee indicated that he had been made redundant by his employer, Oalbay Pty Ltd trading as Amazing Clean Canberra (the employer) on 16 December 2013 but had not received any redundancy pay.

[2] The application was served on the employer on 24 December 2013 and on 13 January 2014 the employer filed a Form F8A - Employer’s Response.

[3] On 14 January 2014 a notice of listing was issued, advising the parties that the matter was listed for a conference on 5 February 2014. On 4 February 2014 the employee’s representative discontinued the application and the conference was cancelled.

[4] On 10 February 2014, the employer’s solicitor lodged an application for costs under s.611(2)(b) of the Act. The basis for the costs application was that the original s.365 application had no reasonable prospect of success as it was ‘incorrect as to the law’.

[5] Costs were sought on the basis that the employee discontinued the matter the day before the conference, obliging the respondent to incur unnecessary costs in preparing to defend the application.

[6] Pursuant to Directions issued on 12 February 2014, the employer’s representative filed submissions in support of the costs application on 21 February 2013. The employee’s response to the costs application was filed on 7 March 2014. The employer’s reply to those submissions was lodged on 19 March 2013.

[7] Having considered the submissions lodged, and in the interests of avoiding further costs for the parties in the matter, I determined that a hearing of the matter was not required and that I would deal with the matter on the papers.

[8] In its submissions lodged 21 February the employer submitted that an application had been made under s.377 of the Act for an order to be made under s.376(2)(a) of the Act, cumulative, or in the alternative, to an order being made under s.611(2)(b) of the Act.

[9] The employer contended that the employee was aware that a business that employs less than 15 employees is not obligated to pay redundancy pay pursuant to s.121(1)(b) of the Act, and despite this awareness, a failure by the employer to provide a redundancy package was the basis for the alleged contravention in the employee’s application. According to the employer, the application had no reasonable prospects for success as s.121(1)(b) is clear in its operation and any business that employs less than 15 employees is exempt from having to make redundancy payments. The employer sought costs on an indemnity basis, noting that the employer’s solicitor was fully instructed for the conference that was listed to take place the day after the employee discontinued.

[10] In response the employee submitted that he had been employed under either the Timber Industry Award 2010 1or the Manufacturing and Associated Industries and Occupation Award 20102 and that neither award exempts employers with fewer than 15 workers from making redundancy payments.

[11] According to the employee’s submissions, the employee was not advised until 24 hours prior to the conference that the employer had enlisted the services of a solicitor. The employee stated that, despite his conviction about the strength of his case, the employee was not in a position to engage and pay for a solicitor to represent him at the conference. It was put that the employer’s choice to engage a solicitor was a discretionary commercial decision, and that the employee was “not in a position to increase his level of representation”. As a consequence the employee made the “tough” decision not to proceed with his application.

[12] In reply to the employee’s submissions the employer claimed that the employer’s office staff are employed under the Clerks - Private Sector Award 2010 3 and that the employee could have confirmed the correct award with the Fair Work Ombudsman prior to lodging the application. According to the employer, if the employee believed his case was strong, the employer obtaining the services of a solicitor should have no bearing on proceedings, that the employee had engaged the services of a company who claimed to have industrial relations knowledge and that the onus was on the employee to bring an application with reasonable prospects for success. It was argued that an employer engaging a solicitor does not result in the employee bearing the risks associated with the cost of the employer’s representation, unless the application was vexatious or without reasonable cause, or if it was reasonably apparent that the application had no reasonable prospects for success. According to the employer, the employee’s application fell into that category.

Consideration and Conclusion

[13] As the originating application was lodged on 24 December 2013 the costs application is dealt with under the legislation as it existed prior to the amendments that commenced 1 January 2014. 4

[14] The relevant provisions of the Act at that time provided:

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 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.

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).

376 Costs Orders against Lawyers and Paid Agents

(1) [When FWC may make a costs order] If FWC has granted permission in accordance with section 596 for a person to be represented by a lawyer or paid agent in relation to an application under section 365 or 372, FWC may make an order for costs against the lawyer or paid agent only if satisfied:

(a) that:

(i) the lawyer or paid agent caused costs to be incurred by another party to the dispute because the lawyer or paid agent encouraged the person to make the application; and

(ii) it should have been reasonably apparent that the application would have no reasonable prospects of success; or

(b) that the lawyer or paid agent caused costs to be incurred by another party to the dispute because of an unreasonable act or omission of the lawyer or paid agent in connection with the conduct or continuation of the dispute.

(2) [Party must apply for order] FWC may make an order under this section only if the other party has applied for it under section 377.

(3) [Section does not limit power to order costs] This section does not limit the FWC’s power to order costs under section 611.

[15] In the F6 (Application for Costs) lodged by the employer on 10 February the employer indicated that “[a]n application for costs is made under section 611(2)(b) of the Fair Work Act 2009...” and that “as a result of the applicant discontinuing the proceedings the day before the hearing the respondent incurred unnecessary legal costs...”. In the F6 it was clear that the employer was seeking an order for costs against the employee under s.611 of the Act. The employee is clearly identified as the party/person against whom a costs order is sought. There is no assertion in the form as to the culpability of the employee’s representative in the employer incurring costs, and no reference in the application to s.376 or s.377 of the Act. The first reference to an application for an order for costs under s.376 is made by the employer in the employer’s submissions which were lodged in accordance with the Directions issued by the Commission. These Directions related solely to the employer’s s.611 application.

[16] An application for costs must be made in accordance with the Fair Work Rules 2013 5. In making an application for costs, the party seeking a costs order is required to lodge a Form F66, and clearly identify against whom the cost order is sought. This did not occur in respect of the employer’s application under s.376 of the Act. In the circumstances of this case, I am not prepared to exercise my discretion to waive the irregularity in the manner in which the application under s.376 was made7, coming as it did in the employer’s submissions. Furthermore, even had I been prepared to waive the irregularity, the application was doomed to fail, as it was made outside the time limit prescribed in s.377 of the Act. Section 377 stipulates that an application for an order for costs must be to be made within 14 days after the Commission finishes dealing with the dispute. The Commission finished dealing with the dispute on 4 February 2014, the day the application was discontinued. The submissions containing the application for an order for costs under s.376 were filed by on behalf of the employer on 21 February 2014, 3 days after the time limit for making the application had expired. On this basis, the application would have been dismissed had it been validly made.

[17] A valid application for costs was made under s.611(2)(b) of the Act. In the recent Full Bench decision of E. Church v Eastern Health t/as Eastern Health Great Health and Wellbeing 8 the Full Bench noted the similarities between s.611 and s.570 of the FW Act and relied on judgments which had construed s.570 and its legislative antecedents when giving consideration to s.611. The Full Bench then found as follows:

“[26] Section 611 sets out the 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 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 9 and that the power should be exercised with caution and only in a clear case10. 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.”

[18] The concepts “should have been reasonably apparent” and “had no reasonable prospect of success” have been considered in a number of decisions of the Commission. From these decisions, it is apparent that “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. Similarly, 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’ 11 or ‘so lacking in merit or substance as to be not reasonably arguable’12.

[19] In this matter the employer submits that costs should be ordered as it should have been apparent to the applicant at the time he made his application that the application had no reasonable prospect of success.

[20] In order to make an order that the employee bear some or all of the costs of the employer, I must be satisfied that at the time the employee made the application it should have been reasonably apparent to the employee that the application had no reasonable prospect of success. There is minimal content in the application. The application was not the subject of a conference. The parties’ submissions are not evidence and it is clear that there is a dispute as to the facts. Whether the employee would ultimately be successful in establishing that the alleged contravention had occurred would depend on the case that was eventually put before the court. While it may be possible for me to form an opinion about the prospects of such success, on the limited amount of information before me I am not prepared to make a finding that the application had no reasonable prospect of success.

[21] The role contemplated for the Commission in dealing with this type of application is not a determinative role 13, the determination as to the merit of the substantive application is within the jurisdiction of the courts. While the Commission is required, if possible, to form an opinion as to the applicant’s prospects of success and to advise the parties of this opinion, generally such advice would only be forthcoming, if at all, after the Commission has had the benefit of hearing from both parties at a conference convened to deal with the application.

[22] It is clear on the authorities that extreme caution should be exercised by the Commission in coming to conclusions about the merits or otherwise of a general protections application, where the facts of the case, and the applicable legal arguments, have not been fully canvassed and tested in a formal hearing. In these circumstances I am unable to find that the application was so ‘manifestly untenable or groundless’, or ‘so lacking in merit or substance as to not be reasonably arguable’.

[23] In all the circumstances of this case, I am not satisfied that it should have been reasonably apparent to the applicant that the application, had no reasonable prospect of success. The application for costs is dismissed.

Final written submissions:

Employer 26 February; 19 March 2014

Employee 12 March 2014

 1   [MA000071]

 2   [MA000010]

 3   [MA000002]

 4   Fair Work Amendment Act 2013, s.2

 5  Fair Work Act 2009, s.585;

 6   Fair Work Commission Rules 2013 r.8(2)

 7   Fair Work Act 2009, s.586(b)

 8   [2014] FWCFB 810

 9   Thompson v Hodder (1989) 21 FCR 467 at 470; Hatchett v Bowater Tutt Industries Pty Ltd (1991) 28 FCR 324 at 325; Re Ross and others; Ex parte Crozier (2001) 111 IR 282 at [11]

 10   CFMEU v Clark (2008) 170 FCR 574 at [29]; Saxena v PPF Asset Management Ltd [2011] FCA 395 at [4]

 11   Wodonga City Rural Council v Lewis PR956243 [6]

 12   Deane v Paper Australia Pty Ltd PR932454 [7]-[8]

 13   Ms Delwyn Hewitt v Topero Nominess Pty Ltd T/A Michaels Camera Video Digital[2013] FWCFB 6321

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