Michael Taylor v StarTrack Express T/A StarTrack

[2019] FWC 1597

[2019] FWC 1597

FAIR WORK COMMISSION

DECISION ON COSTS

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

Michael Taylor
v
StarTrack Express T/A StarTrack
(U2017/10094)

COMMISSIONER CAMBRIDGE SYDNEY, 15 MARCH 2019

Unfair dismissal claim - application for costs - s.611 and s.400A - consideration of without reasonable cause, no reasonable prospects of success and unreasonable act or omission - application for costs refused.

[1] This Decision is made in respect to an application for costs that was made pursuant to s. 611 of the Fair Work Act 2009 (the Act). The costs application was made on 20 July 2018, by StarTrack Express Pty Limited T/A StarTrack (StarTrack or the employer). The respondent to the application for costs is Michael Glen Taylor (the employee or Mr Taylor). In accordance with the requirements of s. 402 of the Act, the costs application was made within 14 days after the originating unfair dismissal application was determined by the Fair Work Commission (the Commission).

Background

[2] On 15 September 2017, the Transport Workers’ Union of Australia (TWU) filed an Unfair Dismissal Application (Form F2) on behalf of its member, Mr Taylor, who had been dismissed from employment with StarTrack on 28 August 2017. At all relevant times during the proceedings Mr Taylor has been represented by the TWU.

[3] Attempts to reach a conciliated settlement of the unfair dismissal claim were unsuccessful, and the matter proceeded to arbitration. Prior to the Hearing of the arbitration, the Commission issued a Decision (the representation Decision) [2017] FWC 6083, in which the employer’s application to be represented by lawyers was refused. The unfair dismissal claim was dismissed in a Decision (the unfair dismissal Decision) [2018] FWC 3909, issued by the Commission on 6 July 2018.

[4] The subsequent application for costs made by StarTrack was the subject of Mention and Directions proceedings held on 31 August 2018. 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 5 November 2018, as to whether a formal Hearing was required or alternatively, whether the issue of costs could be determined upon the filed documentary material. Regrettably, this Direction was not complied with, and StarTrack and the TWU respectively advised the Commission on 22 and 23 November 2018, that the issue of costs could be determined on the papers and without need for any Hearing.

The Case for Costs

[5] The application for costs indicated that it was made only under s. 611 of the Act. The application outlined the grounds on which costs were sought, and it included mention of s. 611 (2) (a) of the Act. Specifically, the application for costs asserted that the unfair dismissal application had been made without reasonable cause. Further, the application for costs identified grounds reliant upon s. 611 (2) (b) of the Act. Specifically, it was asserted that Mr Taylor’s application for unfair dismissal remedy had no reasonable prospects of success.

[6] Although the application for costs document specifically excluded any mention of s. 400A of the Act, StarTrack has subsequently sought to rely upon s. 400A of the Act, that is, it contended that Mr Taylor caused it to incur costs because of an unreasonable act or omission in connection with the conduct or continuation of the matter. The TWU raised no objection to the costs application being advanced by StarTrack upon the additional ground not identified in the application document, involving an assertion that an unreasonable act or omission could be identified in satisfaction of the terms of s. 400A of the Act.

[7] StarTrack filed evidence in support of its application for costs in the form of two witness statements which had been made by its Head of Workplace Relations, Mr Adam Moulton, and respectively dated 28 September and 2 November 2018.

[8] The submissions made by StarTrack in support of its application for costs, firstly asserted that Mr Taylor’s unfair dismissal application was made without reasonable cause pursuant to s. 611 (2) (a) of the Act. It was submitted by StarTrack that at the time of making his unfair dismissal application, Mr Taylor knew or reasonably ought to have known, that StarTrack had validly terminated his employment and that his application was manifestly groundless.

[9] In support of this submission, StarTrack referred to evidence involving the admissions made by Mr Taylor about his regular use of denigrating and offensive racial slurs directed towards his co-workers. Further, StarTrack submitted that Mr Taylor had received training in relation to StarTrack’s zero tolerance policy to discrimination and harassment in the workplace. Further, it was submitted that Mr Taylor’s case was based on a set of facts that he knew to be false, and his defence that his conduct was simply “banter” and that he did not intend to upset anyone was deeply flawed and had no legal basis.

[10] The submissions made by StarTrack also sought to rely upon s. 611 (2) (b) of the Act. StarTrack submitted that it should have been reasonably apparent to Mr Taylor that his unfair dismissal application had no reasonable prospects of success. It was submitted that on any objective analysis, and taking into account the training that had been provided to Mr Taylor, together with his knowledge of StarTrack’s zero tolerance policy and expectations of behaviour and community standards, that his application was manifestly untenable and lacking in merit.

[11] StarTrack’s costs application also sought to rely upon evidence of the conduct of Mr Taylor whereby it was asserted that he failed to make any genuine or reasonable efforts to settle the matter. According to the submissions made by StarTrack, Mr Taylor’s unwillingness to consider certain offers that were made during settlement discussions were unreasonable in the circumstances, and amounted to an unreasonable act or omission which caused StarTrack to incur costs. The submissions made by StarTrack asserted that the relevant conduct of Mr Taylor satisfied the requirements of s. 400A of the Act.

[12] The submissions of StarTrack included an itemised, revised schedule of costs incurred which recognised that it was unlikely to succeed in obtaining costs in relation to legal fees for work performed prior to the representation Decision, which refused StarTrack’s application for permission to be represented by lawyers.

[13] In summary, StarTrack submitted that the Commission should exercise its discretion to award costs pursuant to sections 400A and 611 of the Act. StarTrack submitted that Mr Taylor’s unfair dismissal application was made without reasonable cause and it had no reasonable prospects of success. In addition, StarTrack asserted that Mr Taylor had acted unreasonably when he made the application, and when he rejected offers of settlement made to him by StarTrack, and further, when he failed to make any genuine or reasonable efforts to settle the matter in the face of the overwhelming evidence and case law against him.

The Case against Costs

[14] The TWU provided documentary submissions in opposition to StarTrack’s application for costs. The TWU’s submissions opposed the application for costs on the basis that the requirements of ss. 611 and 400A of the Act had not been satisfied in this instance. The position of the TWU was supported by evidence in the form of statements provided by three individuals including Mr Taylor.

[15] The submissions made by the TWU addressed the assertion that costs should be Ordered under s. 611 (2) (a) of the Act. The submissions made by the TWU rejected that the s. 394 application made by Mr Taylor had been taken without reasonable cause. The TWU submitted that the Commission should only award costs in the rarest of circumstances and after it had balanced the merits of the application, the financial position of the Parties, and what is just in the circumstances. In this context, it was submitted by the TWU that the application for unfair dismissal remedy made by Mr Taylor could not be considered to have been made without reasonable cause.

[16] In support of this submission, the TWU asserted that the application seeking remedy for unfair dismissal was a genuine and reasonable application in the overall context of the employment history of Mr Taylor, and his subsequent dismissal. Further, the TWU submitted that the making of the application should be considered in the context of Mr Taylor having 17 years of loyal and unblemished employment, and that the matters for which he was dismissed arose as a result of his own admissions. In the circumstances, the TWU submitted that Mr Taylor would not have known or should have known that there was no proper basis for the making of his application. The TWU submitted that when all of the relevant facts and circumstances surrounding the termination of his employment were considered, there was a reasonable basis for Mr Taylor commencing the unfair dismissal claim.

[17] The second aspect of the submissions made by the TWU opposed any findings that the application could be considered to have had no reasonable prospects of success and thus it was asserted that s. 611 (2) (b) of the Act had not been satisfied. The TWU submitted that any finding that an application had no reasonable prospects of success should be reached with extreme caution, and should only be reached when an application was manifestly untenable or groundless. In this instance, the TWU submitted that it could not be established that Mr Taylor’s unfair dismissal application was doomed to fail from the outset. Further, the TWU submitted that the outcome of unfair dismissal proceedings were notoriously difficult to predict, and it could not be said that Mr Taylor as a freight handler/forklift driver should have reasonably formed the view that the application had no reasonable prospects of success.

[18] The TWU made further submissions opposing the assertion that Mr Taylor had acted in a manner that satisfied the requirements of s. 400A of the Act. The TWU submitted that Mr Taylor did not act unreasonably by seeking a remedy for unfair dismissal nor did he act unreasonably by continuing that application. In particular, the TWU submitted that the conduct of Mr Taylor in respect to offers that were exchanged as part of the conciliation process, should remain strictly confidential and without prejudice. In any event, the TWU submitted that Mr Taylor had not acted unreasonably when he refused offers to settle the matter for nominal amounts of money equating with approximately two weeks wages.

[19] In summary, the submissions made by the TWU asserted that the unfair dismissal claim that was made by Mr Taylor was taken with genuine belief that the claim had reasonable prospects of success. Further, the TWU submitted that the applicant had not engaged in any unreasonable act or omission in relation to the proceedings. Therefore, according to the submissions of the TWU, the Commission should not exercise its discretion to award costs pursuant to sections 400A or 611 of the Act. The TWU submitted that StarTrack’s application to recover costs should be dismissed.

Consideration

[20] Although 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 only s. 611 of the Act. The Form F6 application, specifically at clauses 2.1 and 2.2 did not include identification or mention of s. 400A of the Act. Subsequent to the applicant for costs, StarTrack has expanded the grounds for its application to include s. 400A of the Act.

[21] There was no objection taken to StarTrack expanding the grounds upon which it initially outlined the basis upon which it would pursue the application for costs. In any event, as a general rule, proceedings before the Commission, which are initiated by an application document rather than defined pleadings, are not usually constrained, and permission to amend application documents is regularly provided. Consequently, the application for costs has been considered in terms of any satisfaction of s. 400A and/or s. 611 of the Act.

[22] 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

[23] 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]

[24] 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).

[25] In this case, StarTrack has advanced its case that particular aspects of the making of the application for unfair dismissal remedy, and the conduct of Mr Taylor 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. StarTrack asserted that the unfair dismissal claim made by Mr Taylor was; (a) taken without reasonable cause and/or, (b) that it had no reasonable prospect of success. Further, StarTrack asserted that the actions of Mr Taylor caused costs to be incurred by StarTrack because of certain unreasonable acts or omissions on his part.

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

[26] 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.

[27] 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.

[28] 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. Significantly, StarTrack complained about the conduct of Mr Taylor and/or the TWU in the pursuit of settlement of the matter. As part of its evidence, StarTrack included extracts of what it asserted was said during settlement discussions that took place on 27 October 2017 2. In these exchanges, StarTrack’s representative made statements to the effect of; “We believe we have very good prospects of success and we are surprised that the TWU is pursuing this case on behalf of Mr Taylor…” and, “If Mr Taylor is not prepared to consider a more reasonable offer will have no choice but to run the matter to hearing.”

[29] StarTrack provided further evidence in the form of a copy of a letter dated 1 December 2017 3 made in the further pursuit of settlement of the matter. This letter further confirms StarTrack’s view that it has a very strong case against Mr Taylor’s unfair dismissal application. However, at no point in this letter, or in any evidence of other settlement discussions, was there any mention made by StarTrack that there was some fundamental flaw in Mr Taylor’s case which would make it open to summary disposal.

[30] Although StarTrack correctly identified that Mr Taylor’s unfair dismissal claim was not particularly strong, at no stage was there some identified defect that would have made a case for it to have been found to be manifestly groundless, or obviously untenable, or incapable of argument. There is no identifiable aspect of the application which could be capable of defeating the claim without any recourse to argument. Consequently, the application was not made without reasonable cause as contemplated by s. 611 (2) (b) of the Act.

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

[31] The second aspect upon which StarTrack advanced its application for costs involved the prospect that it should have been reasonably apparent to Mr Taylor 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 Taylor was being advised by various representatives from the TWU. No claim for costs has been advanced by StarTrack against the TWU. Importantly, as an individual with clearly limited education and inexperience in litigation generally, and employment law specifically, Mr Taylor would have been heavily reliant upon advice given to him by representatives from the TWU. Therefore, Mr Taylor’s own subjective assessment of the strengths and weaknesses of his case, would have understandably created an evaluation that despite his misconduct, but because of his admissions, and his long, unblemished employment history, there may have been a reasonable prospect for success of his unfair dismissal claim.

[34] It may also be said that a proper, objective assessment of Mr Taylor’s unfair dismissal case undertaken by a lawyer or paid agent may have concluded that it did not have reasonable prospects of success. A similar conclusion may have been reached by representatives from the TWU. However, it would appear that in unfair dismissal applications that are made in the name of the individual, neither ss. 611 or 401 of the Act allows for costs to be pursued against a registered organisation that represents the named unfair dismissal applicant.

[35] In this instance, although a careful, objective, and informed assessment of Mr Taylor’s unfair dismissal case may have established that it did not have reasonable prospects for success, that evaluation could not be imposed upon Mr Taylor himself. Further, on any reasonable and objective contemplation, there was some potential for a finding of harshness as was identified in paragraph [63] of the unfair dismissal Decision.

[36] Further, the evidence provided by StarTrack recognised that its view was that “the application was weak and was unlikely to succeed.” 4 This statement represents clear recognition that although Mr Taylor’s unfair dismissal case was unlikely to succeed, there was nevertheless still some identified potential for success. Consequently, no finding can be made that Mr Taylor’s unfair dismissal application had no reasonable prospect of success in satisfaction of the provisions of s. 611 (2) (b) of the Act.

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

[37] StarTrack also pursued its costs application on the basis that there was conduct on the part of Mr Taylor that satisfied subsection 400A (1) of the Act.

[38] 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.

[39] StarTrack asserted that the conduct of Mr Taylor in both making the application and in respect to his position in the pursuit of settlement, 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.

[40] As the application for unfair dismissal remedy was not taken without reasonable cause, the making of the application could not represent an unreasonable act in satisfaction of s. 400A of the Act.

[41] The evidence of the conduct of the Parties in the pursuit of settlement revealed a regrettable level of intransigence on both sides. Offers that are made to settle an unfair dismissal claim, and which might be described as being at the “polar ends” of the monetary compensation spectrum, are unlikely to induce success. A thorough, realistic and objective assessment of Mr Taylor’s claim should have motivated those that were acting on his behalf to have pursued settlement with more vigour and diligence than was evident.

[42] However, s. 400A of the Act is confined to the pursuit of costs Orders against a party in an unfair dismissal matter. StarTrack did not advance a case to suggest that the TWU or any specified representatives of the TWU were a Party to the matter. As has been earlier identified, Mr Taylor was heavily reliant upon advice that he received from his TWU representatives, and in all fairness and good conscience, no finding could be made against Mr Taylor for actions that would have been taken based upon the advice that he received from TWU representatives.

[43] Further, it is relevant to note that Mr Taylor has suffered the ignominy of the publicised unfair dismissal Decision. This highly undesirable outcome should have been more carefully assessed before the unfair dismissal claim was pursued to a Hearing. However, the obligation for undertaking such assessment resided with those that were representing Mr Taylor.

[44] Consequently, in the particular circumstances of this case, it would be unreasonable and unjust to find Mr Taylor solely culpable for any unreasonable conduct which may have represented an act or omission capable of satisfying the terms of subsection 400A (1) of the Act.

Conclusion

[45] This application for costs was made by the respondent employer who successfully defended unfair dismissal proceedings that were taken by its former employee, Mr Taylor. Initially the costs application was made under only s. 611 of the Act, and it was subsequently extended to include s. 400A of the Act. Consequently, the Commission has been required to consider whether the requirements of subsections 611 (2) (a) and (b) and s. 400A of the Act were met so that costs should be Ordered in favour of the employer.

[46] In respect to subsection 611 (2) (a) of the Act, an analysis of the circumstances at the time that the unfair dismissal application was made, has confirmed that the application was not made without reasonable cause.

[47] Further, for the purposes of subsection 611 (2) (b) of the Act, having regard for the plethora of factors which may establish that a dismissal was unfair, I am not satisfied that at the time that the application was made, or upon some subsequent assessment, it should have been reasonably apparent to Mr Taylor that the application had no reasonable prospect of success.

[48] In respect to subsection 400A (1) of the Act, I have not been satisfied that the actions of Mr Taylor in connection with the conduct or continuation of the matter could be solely attributed to Mr Taylor himself. In the particular circumstances of this case, significant criticism can be made of aspects of the approach to the pursuit of settlement. However, that criticism cannot be solely attributed to conduct on the part of Mr Taylor as the applicant Party in the matter. Consequently, I am not satisfied that any unreasonable acts or omissions on the part of Mr Taylor have been established in satisfaction of the requirements of subsection 400A (1) of the Act.

[49] In summary therefore, the requirements of subsections 611 (2) (a) and (b) and 400A (1) of the Act have not been properly satisfied. The general rule established by subsection 611 (1) of the Act, that each Party bear its own costs, is not disturbed by any one or more of the exceptions provided in subsections 611 (2) and 400A (1).

[50] The employer’s application for costs must be refused and an appropriate Order shall be issued in conjunction with this Decision.

COMMISSIONER

Final written submissions:

Employer: 28 September 2018 and 2 November 2018.

Applicant: 26 October 2018.

Printed by authority of the Commonwealth Government Printer

<PR705739>

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

 2   Witness statement of Adam Moulton dated 28 September 2018 @ paragraph 7.

 3   Witness statement of Adam Moulton dated 28 September 2018 @ “AM 2”.

 4   Supplementary witness statement of Adam Moulton dated 2 November 2018 @paragraph 9.