Monique McCloskey v Norgrove Training Pty Ltd T/A Norgrove Training

[2019] FWC 732

[2019] FWC 732

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
Section 394 - Application for unfair dismissal remedy

Monique McCloskey
v
Norgrove Training Pty Ltd T/A Norgrove Training
(U2018/6215)

DEPUTY PRESIDENT ANDERSON ADELAIDE, 7 FEBRUARY 2019

Application by employer for costs in unfair dismissal claim – application discontinued prior to hearing after settlement of related Supreme Court proceedings – delay in filing Notice of Discontinuance – conduct put employer to costs – conduct as a whole not unreasonable – jurisdictional facts not established – application dismissed

[1] This decision determines an application for costs made by Norgrove Training Pty Ltd (Norgrove or the employer) on 10 December 2018. Norgrove seeks an order of the Fair Work Commission (Commission) that a former employee, Monique McCloskey (Ms McCloskey) pay costs associated with Norgrove’s defence of unfair dismissal proceedings commenced by her. The costs sought are those incurred by Norgrove’s solicitors for a two month period from 11 October 2018.

[2] Norgrove’s application seeks orders under both section 400A of the Fair Work Act 2009 (FW Act) (on the ground of an alleged unreasonable act or omission in connection with the conduct or continuation of Ms McCloskey’s claim) and section 611 of the FW Act (on the ground that Ms McCloskey’s claim was made vexatiously or without reasonable cause or that it should have been reasonably apparent that it had no reasonable prospects of success).

[3] I issued directions on the costs application on 12 December 2018. Written submissions were filed by Norgrove (through its legal representatives) 1 and by Ms McCloskey (through her representative the Australian Nursing and Midwifery Federation SA Branch)2. I have two affidavits before me relating to the costs application; one by Keith Reynolds (a director of Norgrove) dated 21 December 2018 and the other by Ms McCloskey dated 16 January 2019.

[4] Based upon an itemised schedule accompanying its application, Norgrove incurred costs of $10,493.50 being costs incurred by its solicitors across a two month period from 11 October 2018 to 10 December 2018. Two principal activities are encompassed in this period: legal costs of $6,013.00 which primarily concern a section 399A application (incurred between 11 October and 27 November 2018 prior to a Notice of Discontinuance being filed); and legal costs of $4,347.00 which primarily concern the costs application (incurred between 27 November and 10 December 2018 following a Notice of Discontinuance being filed).

[5] The evidence of Mr Reynolds 3 is that further legal costs were incurred by Norgrove after 10 December 2018 resulting in total legal costs since 11 October 2018 of $12,062.05.

[6] It is this sum that Norgrove seeks.

[7] Both parties agreed that the costs application be determined ‘on the papers’ without a hearing or examination of witnesses.

The Facts

[8] The relevant facts are largely not in dispute. I make findings of fact based on a combination of uncontested facts, the affidavit evidence before me and material available to the parties on the Commission’s unfair dismissal file.

[9] Norgrove is a registered training provider. It provides vocational training and education qualifications in the heath and aged care industries. It is a small business employer within the meaning of the FW Act.

[10] Ms McCloskey first worked for Norgrove as a contractor in June 2015. In March 2017 she was employed by Norgrove as a Lead Trainer (described by Ms McCloskey as ‘Training Manager’).

[11] On or about 23 May 2018 Norgrove formed a view that Ms McCloskey and another employee (Business Manager Emily Melgar) had misused confidential information belonging to the business and were developing plans to compete with the business (allegedly) contrary to their duties as employees.

[12] On 24 May 2018, through its solicitors, Norgrove made certain demands of Ms McCloskey (and Ms Melgar), sought undertakings concerning restraint of trade and reserved its right to commence legal proceedings concerning those matters.

[13] On 28 May 2018 Norgrove summarily dismissed Ms McCloskey for serious misconduct.

[14] Through her then solicitors, on 31 May 2018 Ms McCloskey asserted that “the purported termination is without any basis and our client disputes the purported grounds of the termination. Your client’s allegations of misconduct and misuse of confidential information are strongly denied. My client is currently considering her options with respect to this matter.” 4 Ms McCloskey also asserted that she was owed monies for past work as a contractor and as an employee.

[15] On 6 June 2018 Norgrove filed proceedings in the Supreme Court of South Australia against Ms McCloskey claiming damages for misuse of confidential information and breach of employment obligations (the Court or the Supreme Court proceedings). Ms Melgar was also a defendant in those proceedings.

[16] On 7 June 2018 the Supreme Court issued interim orders by consent restraining Ms McCloskey (and Ms Melgar) from setting up in competition with Norgrove, requiring access to and the return of certain property, and related orders.

[17] On 18 June 2018 Ms McCloskey filed unfair dismissal proceedings in the Commission.

[18] On 3 July 2018 Norgrove filed a response opposing the unfair dismissal claim.

[19] Directions hearings in the Supreme Court on 17 and 27 July 2018 scheduled a hearing for 8 October 2018 to review the status of the Court’s interim order.

[20] The unfair dismissal claim came before a Commission-appointed conciliator on 16 July 2018 but did not resolve. It was then referred to me for determination.

[21] At a directions hearing before me on 8 August 2018, Norgrove made a stay application. The employer requested that the unfair dismissal claim be stayed in its entirety (that is, not listed for hearing or subject to directions for filing of materials) until the Supreme Court proceedings had been determined. In the alternative, Norgrove submitted that the unfair dismissal application not be listed for further directions until after 8 October 2018 when the status of the interim Supreme Court order may be clearer.

[22] Ms McCloskey opposed the stay application.

[23] I issued directions on 8 August 2018 requiring both Norgrove and Ms McCloskey to file materials in relation to the stay application.

[24] On 17 August 2018 I received materials from the employer in the form of a written submission and an affidavit of a director of the company, Joyce Southern. The employer’s materials attached affidavits (including attachments) filed in the Supreme Court by Ms Southern.

[25] On 24 August 2018 I received a statement from Ms McCloskey. It attached Ms McCloskey’s responding affidavit (including attachments) filed in the Supreme Court. Ms McCloskey also filed a Supreme Court affidavit of Christine Ledwidge of 5 June 2018 and unsigned and undated statements of four other persons, Kristy Castle, Lucille Outhred, Louisa Bignell and Melissa Oxford.

[26] Norgrove filed a written submission in reply on 5 September 2018.

[27] On 7 September 2018 I conducted a hearing by telephone of the employer’s application for a stay. Norgrove made submissions in support of its written submissions and evidence. Ms McCloskey made submissions in response. Neither party sought to adduce oral evidence. Beyond the oral submissions made, it was agreed that I determine the stay application on the written materials before me. I reserved my decision.

[28] On 13 September 2018 I published a Decision 5 and issued an Order6 granting a stay but for a limited period of time only, until 11 October 2018. My reasons included the following:

“[37] In these circumstances I consider that a case has been made out, on balance, for a stay of Ms McCloskey’s application but for a limited period only. I will not grant the respondent employer’s application for a stay until the court application is determined. That would be an excessive period and be indeterminate. The Commission would lose control of the application in which I am vested, and that outcome would not be consistent with the FW Act’s scheme or discharging my statutory responsibility.

[38] On the facts as they are currently before me, I consider there to be reasonable grounds to stay the application for a month, to enable the proceedings before the Supreme Court scheduled for 8 October 2018 to take place, for the status of the interim order to be brought before the Court and for any related settlement discussions to take place. That would permit both parties to prepare for the interlocutory court proceeding without being further required to prepare and submit materials for the Commission proceedings. That may eliminate some duplicate cost and some actual or perceived prejudice.

[39] I will relist the matter for directions at 4.15pm (ACDT) Thursday 11 October 2018.

[40] However, subject to hearing further from the parties at that time, my preliminary intention is to then list the Commission proceedings for a future date or dates on which the application will be determined, and issue directions for the preparation of the matter in advance of that determination, if Ms McCloskey’s application is still proceeding.”

[29] Mediation (external to the Commission) was conducted on the dispute as a whole (being the Court and the Commission proceedings) on 4 October 2018 resulting in a Heads of Agreement being signed that day between Ms McCloskey and Norgrove. The Heads of Agreement was to be formalised by a Deed of Settlement (the Deed or the proposed Deed). The Heads of Agreement resolved all matters between the parties in both the Court and the Commission. 7 It included the following:

“13. The Parties will release each other from all claims they may have against each other.” 8

[30] On 5 October 2018 solicitors for Norgrove sent Ms McCloskey a Deed of Settlement signed by Norgrove. Amongst other things, the proposed Deed provided that the unfair dismissal proceedings be discontinued “within three business days of the execution of this Deed” 9. Ms McCloskey did not sign the proposed Deed. On 10 October 2018 she informed solicitors for Norgrove that she would be seeing a solicitor “in the next two weeks to go over the deed and finalise a few of the issues I have”10. Following an objection to this delay by solicitors for Norgrove, she sent a further email saying “I did not say I am not withdrawing. I am postponing matters until the deed is settled”11.

[31] On 11 October 2018 at 9.54am solicitors for Norgrove wrote to the Commission (copied to Ms McCloskey) in the following terms:

“Dear Associate

On Thursday 4 October 2018 the parties reached a binding agreement to resolve all claims. The agreement is attached. The agreement is being reflected in a deed. In light of this my client seeks to have today’s directions vacated with liberty to apply pending the Applicant filing a notice of discontinuance. The Applicant has indicated that she would prefer to adjourn the matter for 6 to 8 weeks. My client prefers that the directions be vacated as the matter has resolved pending the filing of a notice of discontinuance, so there would be no need for a further directions hearing and it is keen to minimise the costs that it has incurred and to not tie up the Commission’s resources. (my emphasis)

Kind regards

Lincoln Smith”

[32] At 12.47pm that day Ms McCloskey responded to the Commission (copied to Norgrove) as follows:

“Good afternoon,

Both parties have discussed remedies on 4 October 2018. The deed however, provided on 5 October 2018 have not been finalised until review from my legal representative. I have been advised by my legal representative not to withdraw from Fair Work until the content of the deed have been agreed on and submitted to the Supreme Court. 

The deed provided to me on Friday does not represent our discussion on Thursday and is by no means a final agreement. The Supreme Court have given us another 12 months to finalise our discussions and to come to an agreement. I will be asking Chambers for an adjournment of 8 weeks to give both parties the ability to come to final agreement on the deed provided to me on Friday last week. 

Kind regards,

Monique McCloskey”

[33] At 1.10pm on 11 October 2018 the Commission advised the parties as follows:

“In light of this correspondence the Deputy President will adjourn the matter for a further four (4) weeks at which time a Notice of Discontinuance will be required from the Applicant.

Should a Notice of Discontinuance not be received, the Deputy President will relist the matter.

A cancellation Notice of Listing for today’s Directions hearing will be sent to parties shortly.

Kind regards,

Associate to Deputy President Anderson”

[34] Four weeks later, on 8 November 2018 the Commission received correspondence from solicitors for Norgrove. That correspondence drew attention to the fact that Ms McCloskey had not filed a Notice of Discontinuance, asserted that Ms McCloskey was unreasonably delaying proceedings and sought to make an application under section 399A(1)(c) of the FW Act for an order dismissing her unfair dismissal claim on the grounds that Ms McCloskey had “failed to discontinue the application after a settlement agreement had been concluded.”

[35] On 8 November 2018 my Chambers informed Norgrove that if it sought to make an application under section 399A it would need to do so in the prescribed form in accordance with the Fair Work Commission Rules 2013.

[36] On 9 November 2018 Ms McCloskey emailed my Chambers advising that she had been hospitalised on 21 October 2018, was recuperating, and had informed solicitors for Norgrove of her hospitalisation on 25 October 2018.

[37] On 12 November 2018 Norgrove made an application for dismissal of the unfair dismissal claim under section 399A of the FW Act on the ground that a binding settlement agreement (the Heads of Agreement of 4 October 2018) had been reached (the strike-out application).

[38] On 13 November 2018 Norgrove’s section 399A application was set down for hearing (for 3 December 2018). I issued directions that both Norgrove and Ms McCloskey lodge written materials on the section 399A application by 28 November 2018.

[39] On 27 November 2018 at 1.59pm Ms McCloskey filed a Notice of Discontinuance under cover of an email to my Chambers (not copied to Norgrove) which said as follows:

“I have met with my psychologist this morning, as well as my medical doctors. I have been suffering greatly with medical concerns and my mental health due to the ongoing unfair treatment from my previous employer.

It is against legal advice received from my nursing council, but considering my health, that I submit this withdrawal.

Kind regards,

Monique McCloskey”

[40] At 2.13pm on 27 November 2018 my Chambers emailed Ms McCloskey and solicitors for Norgrove advising that the Notice of Discontinuance had been received by the Commission, cancelling the Notice of Listing for 3 December and noting that the Commission file would be closed.

[41] On 11 December 2018 Norgrove made this application for costs.

Representation

[42] It is relevant to note the status of representation by the parties to the unfair dismissal proceedings.

[43] At a directions hearing on 8 October 2018 and by consent, I granted permission to Norgrove to be legally represented at interlocutory hearings on this matter, including proceedings on its stay application. I made no determination on permission to be represented at a merits hearing. Norgrove was represented at the stay hearing. Although Norgrove’s costs application and submissions relating thereto were filed by its solicitors, the Commission was advised by Norgrove on 11 December 2018 12 that it would not be represented by its solicitors at the hearing of its costs application.

[44] Ms McCloskey was self-represented in proceedings before the Commission save that in respect of the current costs application Ms McCloskey has been represented by an Industrial Officer of the Australian Nursing and Midwifery Federation SA Branch (ANMF). The ANMF advised the Commission on 20 December 2018 that it had “only just being (sic) engaged to represent Ms McCloskey” 13.

[45] In respect of the Supreme Court proceedings it would appear from the interim orders made by the Court and related correspondence put before the Commission that Norgrove was legally represented before the Court and that Ms McCloskey was legally represented or had access to legal representation for relevant periods.

[46] Correspondence between solicitors for Norgrove and solicitors for Ms McCloskey was also exchanged prior to her dismissal.

Consideration

[47] A decision to order costs against a party in an unfair dismissal matter is governed by sections 400A and 611 of the FW Act. Section 400A, which is specific to Part 3-2 ‘Unfair Dismissal’, provides:

“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.”

[48] Section 611, which sits amongst general provisions in Part 5-1 ‘The Fair Work Commission’, provides:

“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).”

[49] Section 402 provides:

“402 Applications for costs orders

An application for an order for costs under section 611 in relation to a matter arising under this Part, or for costs under section 400A or 401, must be made within 14 days after:

(a) the FWC determines the matter; or

(b) the matter is discontinued.

[50] Norgrove’s application is within time. It was lodged within 14 days of Ms McCloskey discontinuing her unfair dismissal claim.

[51] I now consider the grounds on which Norgrove advances its claim for an order for costs.

Alleged unreasonable conduct in litigation: section 400A(1)

[52] The unreasonable conduct Norgrove asserts is (individually or collectively):

•  an alleged failure to file a Notice of Discontinuance in a timely manner; and

•  the filing of a Notice of Discontinuance one day prior to submissions being due on the employer’s section 399A application.

[53] Ms McCloskey filed a Notice of Discontinuance on 27 November 2018. Norgrove does not contend that the filing of a Notice of Discontinuance was unreasonable but that its filing on 27 November and not earlier was unreasonable.

[54] Norgrove submit that the Heads of Agreement dated 4 October 2018 and signed by Ms McCloskey that same day committed her to discontinuing her unfair dismissal claim. It points to the fact that seven weeks and four days elapsed following that agreement before the Notice of Discontinuance was actually filed. In that time the Commission had required a Notice of Discontinuance to be filed within four weeks (i.e. by 8 November 2018) otherwise the matter would be relisted, and in that time Norgrove made its section 399A application and was bound to comply with Commission directions dated 13 November 2018 requiring materials on which it relied to be filed by close of business 28 November 2018.

[55] Ms McCloskey contends that her conduct was not unreasonable. She submits that she was entitled to seek legal advice on the terms of the Deed, that she kept solicitors for Norgrove and the Commission informed of her position and that she unexpectedly fell ill requiring hospitalisation on 21 October 2018.

[56] Section 400A of the FW Act sits within a statutory scheme in which costs in matters before the Commission do not generally follow the event. It was included in the statute in 2012 following a review of the Act. 14 It was intended to dissuade certain conduct in unfair dismissal cases but to not frustrate or deter access to the jurisdiction or the robust pursuit of genuine claims15. As said by a full bench of the Commission in Hansen v Calvary Health Care Adelaide Ltd:

“Section 400A is a relatively recent amendment to the Act (1 January 2013) and is designed to provide the Commission with a discretionary power to award costs against a small proportion of litigants who pursue or defend unfair dismissal claims in an unreasonable manner. As stated in the Explanatory Memorandum accompanying the s.400A amendment, ‘the power is only intended to apply where there is clear evidence of unreasonable conduct by the first party’ and ‘is intended to capture a broad range of conduct, including a failure to discontinue an unfair dismissal application made under s.394.’” 16

[57] Assessing whether conduct is unreasonable for the purposes of section 400A of the FW Act involves applying an objective test. Without being exhaustive, principles emerging from full bench decisions of the Commission 17 include:

1. Before an order can be made under section 400A, causation must exist between the unreasonable conduct and incurring the costs 18;

2. The power to order costs involves the exercise of a general discretion. Section 400A provides that the Commission “may” make an order. Where the Commission finds that the requisite jurisdictional facts exist (that a party acted unreasonably in the conduct or continuation of a matter and that the unreasonable conduct caused the costs to be incurred) then an order may be made. The statute does not compel the Commission to make an order, even in those circumstances 19;

3. Being a general discretion, account must be taken of all relevant factors including context. The discretion must be exercised judicially; that is to say not arbitrarily, capriciously or so as to frustrate the legislative intent. Ultimately the provision sits within a framework where statutory objects include that the parties be provided ‘a fair go all round’ 20;

4. An “unreasonable” act in the context of proceedings, whilst to be objectively assessed, is not limited to a defined circumstance 21. Although an individual act or omission may not be unreasonable, conduct may be unreasonable when viewed cumulatively or in combination.22

5. Examples of unreasonableness were discussed in Roy Morgan Research v Baker 23and summarised in Sidney v Employsure Pty Ltd:

“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.” 24

[58] Have the jurisdictional facts required by section 400A been established?

[59] By 8 November 2018 a Notice of Discontinuance had not been filed by Ms McCloskey as was required by the Commission’s email to the parties of 11 October 2018. I am satisfied that it was thereafter reasonable for Norgrove to exercise its right to make a section 399A application relying as it did on the Heads of Agreement and the case law of Masters v Cameron 25.

[60] I am also satisfied, given the directions issued by the Commission on 13 November 2018 once the section 399A application had been filed, that it was reasonable for Norgrove through its solicitors to prepare materials for filing by 28 November. I am satisfied therefore that the costs incurred by Norgrove on its strike-out application were “caused” (within the meaning of section 400A) by the conduct of Ms McCloskey in not filing a Notice of Discontinuance by 8 November 2018 and not doing so until 27 November.

[61] Contrary to submissions made by Ms McCloskey 26, I do not consider this costs application to be vexatious or made for a collateral purpose (to force execution of the proposed Deed). Norgrove made it clear in its email to the Commission (copied to Ms McCloskey) on 11 October that it was “keen to minimise the costs that it has incurred”. This position, particularly for a small business, was understandable. Filing a costs application after expending monies on a strike-out application in circumstances where it had an expectation that Commission proceedings would be withdrawn after reaching a Heads of Agreement was the expression of a genuine desire to recover costs that it had sought to minimise.

[62] However, section 400A is not concerned with whether the employer’s conduct was reasonable or understandable, but whether Ms McCloskey’s conduct (by act or omission) during the relevant period was unreasonable.

[63] Ms McCloskey’s Notice of Discontinuance expressly referred to the matter being discontinued “as part of a settlement agreement”. I am satisfied that at all relevant times following 4 October 2018 Ms McCloskey knew that the Heads of Agreement imposed an obligation to discontinue her unfair dismissal proceedings.

[64] I am also satisfied that Ms McCloskey’s conduct was “in connection with the conduct or continuation of the matter” within the meaning of section 400A(1). Filing the Notice of Discontinuance and corresponding thereto directly concerned her unfair dismissal claim.

[65] In order to apply an objective test, Ms McCloskey’s conduct should be viewed as a whole and in context. I accept that the Heads of Agreement was a signed agreement that included a promise on her part to withdraw her unfair dismissal claim. However, it was an agreement to settle not just her unfair dismissal claim. It was a mutual release by both parties from all claims including the employer’s Supreme Court proceedings. It was negotiated in the context of a mediation of the dispute as a whole (a dispute that involved multiple elements), not just an unfair dismissal claim. Further, the parties expressly contemplated that the Heads of Agreement would be reflected in a Deed of Settlement. The terms of the Heads of Agreement of 4 October 2018 and of the proposed Deed of 5 October did not exclusively concern Ms McCloskey’s unfair dismissal claim. They concerned the broader dispute about her duties as an employee, access to and the use of company property, her dismissal and restraints of trade.

[66] I also take into account that the Heads of Agreement did not specify a date by which withdrawal of the unfair dismissal claim (or the Supreme Court proceedings for that matter) would occur. On the evidence before me, a three-day stipulation was one unilaterally advocated on 5 October by the employer in the proposed Deed, not one agreed by Ms McCloskey on 4 or 5 October.

[67] Nor was it unreasonable for Ms McCloskey to seek legal advice on the proposed Deed before signing it. Given that the settlement of the unfair dismissal claim and the Supreme Court proceedings were interwoven by the parties themselves I also consider it not unreasonable for Ms McCloskey to have taken the view, at least at 10 October, that she would not discontinue her Commission proceedings until she had taken advice on the proposed Deed. Her then intention to take legal advice within two weeks would still have enabled her time to file a Notice of Discontinuance by 8 November, as the Commission required.

[68] I accept that taking legal advice on these matters required a degree of urgency on Ms McCloskey’s part, given their significance and the levels to which the matters in dispute had been escalated. However it would appear from the evidence that at least post the Heads of Agreement Ms McCloskey was dealing with solicitors made available by the Supreme Court. The two weeks she foreshadowed on 10 October was not an unreasonable period of time to allow for that advice.

[69] However, it was another six weeks, not a fortnight, before Ms McCloskey’s Notice of Discontinuance was filed. Ms McCloskey explains this further delay on account of her unexpected illness. I am satisfied on the basis of the evidence that Ms McCloskey was hospitalised on 21 October, was discharged on 24 October and was directed to bed rest until 29 October. Ms McCloskey suffered an illness for which she received medical treatment in the very period that it would have otherwise been reasonable for her to have obtained advice on the proposed Deed and then discontinue the Commission proceedings.

[70] I give weight to the fact that Ms McCloskey was aware from 11 October that Norgrove was “keen to minimise costs that it had incurred and not tie up the Commission’s resources” 27. I also give weight to the fact that at least from 8 November, Ms McCloskey was on notice that further costs had been incurred by Norgrove as a result of her not having discontinued her claim by then. From that date solicitors for Norgrove brought to Ms McCloskey’s attention (in writing) that a Notice of Discontinuance had not been filed as required, that it would be applying to strike-out the unfair dismissal claim and had been directed by the Commission that if it wished to do so it would need to use formal processes.

[71] However, I also give weight to the fact that Ms McCloskey was (at that time) self-represented in the Commission proceedings. As put to me by the ANMF, a self-represented litigant may not have the same level of appreciation as a represented party of the consequences to the other of filing a Notice of Discontinuance one day prior to materials needing to be filed in compliance with Commission directions.

[72] Taking these factors into account, I am not satisfied that Ms McCloskey acted unreasonably in not discontinuing the Commission proceedings prior to 27 November. She was slow to do so and her delay, especially after 8 November, was prejudicial to the employer and put it to cost. However, her sluggishness was not without objectively assessed reason. She was entitled to legal advice on the proposed Deed before discontinuing given that the Heads of Agreement creating her obligation to discontinue interwove her Commission proceedings with the employer’s Supreme Court proceedings. Although by 8 November she had been released from hospital for almost two weeks she was still recovering her health and taking steps to obtain advice. She was not indifferent to the Commission proceedings but as she said in her email to the Commission on 9 November 2018 “I ask for more time to complete all relevant paperwork. I have attached required medical notes”.

[73] On balance, I conclude that Ms McCloskey’s did delay in filing the Notice of Discontinuance but it was not, in an overall sense, unreasonable conduct when taking into account the relationship between her promise to withdraw and the Supreme Court proceedings, the reasonableness of seeking legal advice on the proposed Deed, her self-represented status and her unexpected illness.

[74] For similar reasons, and particularly in light of her self-represented status, I do not consider that her conduct in filing a Notice of Discontinuance one day prior to the employer being required to file materials on its strike-out application was unreasonable. Nor do I consider that her failure to copy the employer into her email of 27 November was evidence of unreasonableness. Failing to do so was contrary to Commission requirements but was not of sufficient consequence to characterise it as unreasonable. The employer was informed by the Commission of the Notice of Discontinuance fourteen minutes after it had been filed. The employer was not prejudiced by the failure to be copied into the lodgment email.

Application made vexatiously or without reasonable cause: section 611(2)(a)

[75] Norgrove submits that Ms McCloskey made her unfair dismissal application “vexatiously, or without reasonable cause” within the meaning of section 611(2)(a) of the FW Act. It contends that the unfair dismissal application “was brought for collateral purposes and not for the purpose of having the Commission arbitrate the issues to which it gives rise” 28. The collateral purposes advanced are alleged “retaliation”29 for Norgrove commencing Supreme Court proceedings and securing interim orders and to “strengthen her position in the Court proceedings”30. Norgrove also contend that the application “could not be said to be made on the basis of a genuinely held belief”31, and was an abuse of the Commission’s resources.

[76] In support of these contentions Norgrove point to the timing of Ms McCloskey’s application (18 June), made shortly after the employer’s Supreme Court proceedings were filed (6 June) and the interim orders issued by consent (7 June). It submits that Ms McCloskey could not have objectively formed a genuine belief in her claim once the Court issued interim orders. The employer submits that the Court applies a higher threshold for misconduct than the Commission and that the interim orders ought to have made Ms McCloskey aware that the conduct for which she had been dismissed was misconduct.

[77] Ms McCloskey claims that she commenced proceedings on the basis of a genuinely held belief that her dismissal was unfair and because the Commission was vested with jurisdiction to determine whether her dismissal was unfair 32.

[78] Section 611 of the FW Act also sits within a statutory scheme in which a person must bear their own costs in proceedings before the Commission. Section 611(1) expressly provides so. It too involves the exercise of a general discretion to set aside what has been described as the “prima facie assumption” that a party will bear their own costs. 33 The discretion must be exercised judicially and only where the requisite jurisdictional facts in section 611(2) have been made out.34 At least with respect to the term “vexatious” this statutory context requires “the concept to be narrowly construed”.35

[79] It is readily apparent that Ms McCloskey’s unfair dismissal claim was made after the Supreme Court proceedings were commenced and after interim orders of the Court were made. However, this is not evidence, without more, that the unfair dismissal application was made for a collateral purpose. Ms McCloskey’s unfair dismissal claim was made within the statutory time limit for filing unfair dismissal claims (on the 21^st day after Ms McCloskey’s dismissal). The employer’s response did not assert that Ms McCloskey was ineligible to make such a claim (its jurisdictional point concerned the Small Business Fair Dismissal Code). It is not reasonable to draw a conclusion that a dismissed employee eligible to make an unfair dismissal claim has done so for collateral purposes simply because their former employer inside the 21 day period for filing a claim exercised its right to issue separate proceedings in another forum alleging (amongst other things) breach of contract, and had secured interim orders.

[80] Nor do I accept that the interim orders of 7 June are evidence that the unfair dismissal claim made eleven days later was made without reasonable cause. The unfair dismissal claim was filed by Ms McCloskey under her own hand. On its face it pleaded (albeit briefly) orthodox grounds on which a dismissed employee in this jurisdiction commonly asserts unfairness including a denial of misconduct and an assertion that no warning, counselling or support was given.

[81] I found in my stay decision of 13 September 2018 36 an “apparent substantial factual overlap” between the Court and Commission proceedings and “material commonality” between the Court proceedings and the employer’s response to the Commission claim. However, neither a factual overlap nor material commonality means that the same issues are being determined. Related but ultimately different questions were being litigated. Whether a dismissal is unfair is a separate and broader question to whether a contract of employment or other legal duty has been breached by a dismissed employee. For example, adjudicating unfairness under Part 3-2 of the FW Act may involve a consideration of the issues outlined in section 387 or section 388 (the Small Business Fair Dismissal Code). Those considerations go beyond the determination of contractual or legal rights and obligations.

[82] Nor do I conclude that the making of interim orders by the Court on 7 June warrants a conclusion that Ms McCloskey’s unfair dismissal application was made for no reasonable cause. Prior to her dismissal solicitors on her behalf wrote to Norgrove contesting that she was in breach of duty. In the materials she filed in the Court following her dismissal she adopted a similar position. The Court orders of 7 June were made in interlocutory proceedings and although made by consent were expressed as interim only. They were to be subject of review at further interlocutory proceedings weeks and months later. Ms McCloskey’s affidavit material contested the evidential basis for the interim orders as defiantly as Norgrove asserted its position.

[83] I accept that an employee litigating an unfair dismissal claim in the context of their former employer having already commenced separate proceedings asserting its legal rights may have the effect of altering the dynamic (including the settlement dynamic) in which the Court proceedings would otherwise be conducted. However, this is a consequence of dual proceedings operating in parallel but not evidence that one or other of those proceedings is an abuse of process if they are otherwise grounded in a cause of action available at law and genuinely advanced.

[84] I also take into account the statutory context of section 611(2)(a).

[85] I am not satisfied that Norgrove has established that Ms McCloskey made her unfair dismissal application vexatiously or for no reasonable cause as those terms are properly applied within the statutory context.

No reasonable prospects of success: section 611(2)(b)

[86] Norgrove further submits that it should have been “reasonably apparent” to Ms McCloskey that her unfair dismissal application “had no reasonable prospect of success” within the meaning of section 611(2)(b) of the FW Act.

[87] In A Baker v Salva Resources Pty Ltd a full bench of the Commission said:

“[10] The concepts within s.611(2)(b) “should have been reasonably apparent” and “had no reasonable prospect of success” have been well traversed:

● “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; and

● 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 reasonably arguable.” 37

[88] A dismissed employee is entitled to test the case against them 38 and may pursue litigation not just for the sake of remedy but to also to protect their reputation.39 However, an overambitious litigant or one indifferent to the case against them runs the risk of conduct that falls foul of these statutory provisions. A party should reasonably be expected, in managing their case, to have regard to their prospects of success and what that success may look like.40

[89] Norgrove submit that it should have been reasonably apparent to Ms McCloskey that her claim had no reasonable prospects of success due, amongst other things, to the operation of the Small Business Fair Dismissal Code. It says that at least from the time that the employer filed its response (3 July) Ms McCloskey was on notice that her claim was being met with a jurisdictional contention that unfairness in a general sense was incapable of being assessed because of (alleged) compliance by the employer with the Code.

[90] Ms McCloskey submits that she did not commit serious and wilful misconduct and thereby could not be expected to have formed a view that her former employer complied with the Code and that her claim had no reasonable prospects of success.

[91] I accept Norgrove’s proposition that summary dismissal by a small business employer for serious misconduct falls to be considered by the Commission under the Code, and that involves (at least in the first instance) different considerations to those applying in the case of summary dismissal by other employers. In particular, a small business employer will successfully defend an unfair dismissal application if they can establish “that they believed on reasonable grounds that the employee’s conduct was sufficiently serious to justify immediate dismissal” 41. Doing so obviates the need to consider factors relevant to harshness in section 387 of the FW Act, including whether a valid reason for dismissal is established on the evidence.

[92] Norgrove was a small business employer. Ms McCloskey was summarily dismissed for alleged serious misconduct. The Code applied to an assessment of her claim, and was pleaded by Norgrove in its response.

[93] However, these facts alone do not lead to the conclusion that an employee working in a small business who has been summarily dismissed has no reasonable prospects of success in advancing an unfair dismissal claim simply because section 387 considerations do not automatically apply. Under the terms of the Code, a small business employer is required to “provide evidence of compliance with the Code”. This includes evidence that would satisfy the Commission that the small business employer had “reasonable grounds” to form the belief that its employee had committed serious misconduct. If the employer cannot so satisfy the Commission, the claim would (if otherwise within jurisdiction) then fall to be considered under section 387.

[94] Ms McCloskey’s unfair dismissal claim and the employer’s jurisdictional challenge had not been the subject of evidence before the Commission or the testing of that evidence. She was disputing that she had committed serious misconduct. The employer was asserting that she had, and that it had formed a reasonable belief that she had done so. These were propositions which remained in contention at all relevant times including when the Notice of Discontinuance was filed. They were matters the Commission was yet to rule upon. No admissions or representations had been made by Ms McCloskey in correspondence to Norgrove, to its solicitors or to the Commission (including in the Heads of Agreement) that disturbed that position.

[95] Norgrove relies on the interim orders of the Court as evidence that Ms McCloskey’s claim had no reasonable prospects of success. As noted earlier, those were interim orders. Being made by consent, there are no reasons for decision, and they include no representations as to past conduct. They were directed to future conduct and restraints on future conduct. They do not establish a basis to objectively conclude that it ought to have been reasonably apparent to Ms McCloskey, once the orders were issued, that her unfair dismissal claim had no reasonable prospects of success.

[96] I accept that at all relevant times Norgrove and its officers held a genuine belief that Ms McCloskey had committed serious misconduct, and considered that it would successfully defend the unfair dismissal claim on that ground. However whether that belief was, objectively speaking, reasonably held had not been tested. Whilst the pursuit of its rights in the Supreme Court and the material it filed in the Court (especially the affidavit of Ms Southern of 14 June 2018) should have given Ms McCloskey cause to reflect on the prospects of her claim in light of the jurisdictional objection, the evidence, objectively assessed, does not lead me to conclude that it should have been reasonably apparent to Ms McCloskey that she had no reasonable prospects of success. If the affidavit evidence of Ms Southern was found to be credible and factual Ms McCloskey’s case was not strong and it would have been more likely than not to have failed given the terms of the Small Business Fair Dismissal Code. However, Ms McCloskey’s responding affidavit to the Court of 18 July 2018 contested key aspects of that evidence and advanced counter propositions. Given the claim and counterclaim in the affidavit evidence, and the then unknown status of how a Commission member would view the credibility of witnesses, Ms McCloskey faced a significant jurisdictional barrier but it cannot be safely concluded that she had no reasonable prospect of success.

[97] Norgrove also relies on the fact that Ms McCloskey’s unfair dismissal claim pleaded that “the company still owes me in excess of $60,000 in wages”. It points to the fact that the Commission has no jurisdiction to make an order for monies owed. That is so. However, the fact that an irrelevant assertion or one seeking orders beyond power is made in an application for unfair dismissal does not render that claim without reasonable prospects of success if otherwise relevant grounds are advanced and orders within power are sought. Ms McCloskey’s claim did seek an order within power (compensation) and briefly asserted relevant grounds. I also take into account that Ms McCloskey herself, and not lawyers or paid agents, lodged her claim.

[98] Having regard to the evidence as a whole, together with the need to proceed with appropriate caution in finding that an unfair dismissal claim “had no prospects of success” in circumstances where the matter did not go to hearing and evidence had not been tested, I am not satisfied that Ms McCloskey’s claim was manifestly untenable or groundless or so lacking in merit or substance as to have no reasonable prospects of success.

Conclusion

[99] Although Ms McCloskey’s claim and conduct in respect of the Commission proceedings did put Norgrove to cost and expense, and although Norgrove acted reasonably in defending its position in the Commission, Norgrove has not made out the jurisdictional facts required as a precondition to making a costs order under either section 400A or section 611 of the FW Act.

[100] I am therefore not able to consider whether I should exercise discretion to make an order for costs or consider the quantum of such an order.

[101] The application for an order for costs is dismissed. An Order is issued to that effect in conjunction with the publication of this decision.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<PR704639>

 1 F6 Annexure 1 11 December 2018; Submissions in Reply 23 January 2019

 2   Submissions 16 January 2019

 3   Affidavit Keith Reynolds 21 December 2018 paragraph 31 and attachments KR1, KR2 and KR3

 4   Paragraph 13 of JS57 to Affidavit of Joyce Southern 4 June 2018 paragraph 47

 5   [2018] FWC 5760

 6   PR700354

 7   Affidavit Monique McCloskey 16 January 2019 paragraph 13; Affidavit Keith Reynolds 21 December 2018 paragraph 16

 8 F6 Annexure 1 Attachment 1

 9 F6 Annexure 1 Attachment 5 paragraph 2.1.4

 10   Affidavit Monique McCloskey 16 January 2019 paragraph 15 and MM1 Email Monique McCloskey to Lincoln Smith 10 October 2018 248pm

 11   Affidavit Monique McCloskey 16 January 2019 paragraph 16 and MM1 Email Monique McCloskey to Lincoln Smith 10 October 2018 407pm

 12   Email Norman Waterhouse Lawyers to Chambers Anderson DP 11 December 2018 230pm

 13   Email ANMF to Chambers Anderson DP 20 December 2018 1255pm

 14 Fair Work Act Review Panel ‘Towards More Productive and Equitable Workplaces: An Evaluation of the Fair Work Legislation’ (June 2012)

 15   Second Reading Speech, Minster for Employment and Workplace Relations (Hon Bill Shorten MP), House of Representatives, 30 October 2012; Explanatory Memorandum to Fair Work Amendment Bill 2012 at [169] – [171]

 16   [2016] FWCFB 8162 at [18]

 17   For example, Roy Morgan Research v Baker [2014] FWCFB 1175; Hansen v Calvary Health Care Adelaide Ltd [2016] FWCFB 8162; Gugiatti v SolarisCare Foundation Ltd[2016] FWCFB 2478; Baxter Healthcare Pty Ltd v Portelli[2017] FWCFB 3891

 18   Gugiatti v SolarisCare Foundation Ltd[2016] FWCFB 2478 at [43]

 19   Baxter Healthcare Pty Ltd v Portelli[2017] FWCFB 3891 at [95] – [96]

 20   Section 381(2); see also Baxter Healthcare Pty Ltd v Portelli[2017] FWCFB 3891 at [97] and [113]

 21   Roy Morgan Research v Baker [2014] FWCFB 1175 at [12]

 22   Submissions, 20 October 2017 at paragraph 3.1

 23   Ibid at [10]

 24   [2016] FWC 2659 at [28] per Commissioner Bissett

 25 (1954) 91 CLR 353

 26   Submissions 16 January 2019 paragraph 40; Affidavit Monique McCloskey 16 January 2019 paragraph 27

 27   Email Lincoln Smith to Chambers Anderson DP 11 October 2018 954am

 28 F6 Annexure 1 paragraph 63

 29   Submissions in Reply paragraphs 2.23 and 2.24

 30 F6 Annexure 1 paragraph 63

 31   Submissions in Reply paragraph 2.22

 32   Submissions 16 January 2019 paragraph 24

 33   Young v Inovit Pty Ltd t/as Inovit[2017] FWCFB 2161 at [12]

 34   Baxter Healthcare Pty Ltd v Portelli[2017] FWCFB 3891 at [95] – [96]

 35   Nilsen v Loyal Orange Trust (1997) 76 IR 180 at 181 as cited in NSW Trains v Ayub[2017] FWCFB 2801

 36   [2018] FWC 5760 at [33]

 37   [2011] FWAFB 4014; see also Go To Court Franchising Pty Ltd T/A Go To Court Lawyers v Lewis[2018] FWCFB 630

 38   Submissions, 27 October 2017 at paragraph 5.3(b) – (d)

 39   Ibid at paragraph 5.3(i)

 40   Roy Morgan Research v Baker [2014] FWCFB 1175 at [13]

 41 Section 388 FW Act Small Business Fair Dismissal Code