Mr Brock Austin v Sandgate Taphouse Pty Ltd T/A Sandgate Post Office Hotel
[2024] FWC 3088
•8 NOVEMBER 2024
| [2024] FWC 3088 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Brock Austin
v
Sandgate Taphouse Pty Ltd T/A Sandgate Post Office Hotel
(U2023/6319)
| COMMISSIONER SIMPSON | BRISBANE, 8 NOVEMBER 2024 |
Application for costs pursuant to ss.400A and 611 of the Fair Work Act 2009 against applicant for an unfair dismissal remedy – costs denied
Sandgate Taphouse Pty Ltd T/A Sandgate Post Office Hotel (Sandgate Taphouse / the Costs Applicant) made an application to the Fair Work Commission (the Commission) seeking an order for costs against Mr Brock Austin (Mr Austin / the Costs Respondent) pursuant to ss.400A and 611 of the Fair Work Act 2009 (Cth) (the Act).
The application is made in the context of an application for an unfair dismissal remedy (unfair dismissal application) made under s.394 of the Act by Mr Austin on 12 July 2023. The matter was listed for determinative hearing of the application’s merits before me on 25 October 2023. Mr Austin was represented by Mr Thomas Allan of Allan Bullock Solicitors in the substantive case, and in this costs matter. Sandgate Taphouse was represented by Aitken Legal in the substantive matter and represented itself in this costs matter. On 23 November 2023, I issued a decision, [2023] FWC 3084, dismissing Mr Austin’s unfair dismissal application.
On 7 December 2023, Sandgate Taphouse made this application for costs against Mr Austin. The hearing of this application was adjourned pending the outcome of Mr Austin’s application to appeal the above decision.
On 1 August 2024, a decision, [2024] FWCFB 323 was issued which refused permission to appeal my decision of 23 November 2023.
Directions were issued on 21 August 2024 requiring parties to file material in respect of the costs application. The matter was determined on the papers by consent of the parties.
Relevant Legislation
Sandgate Taphouse’s application for costs against Mr Austin relied in part on s.400A of the Act, which 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.”
Section 400A was inserted into the Act by the Fair Work Amendment Act 2012. Relevantly, the Explanatory Memorandum for the Fair Work Bill 2012 outlined the following:
“The amendments strike a balance between the need to protect workers from unfair dismissal, and to provide a deterrent against unreasonable conduct during proceedings. The amendments will enable costs orders to be more easily made in the case of unreasonable conduct but will not prevent genuine claims from being pursued. They will discourage frivolous and speculative claims and assist in the efficient resolution of claims by encouraging all parties to approach proceedings in a reasonable manner. These measures are reasonable and proportionate to address the time and expense that an unreasonable conduct by a participant and/or their representative may cause another party to incur.”
Secondly, the application for costs against Mr Austin was made pursuant to s.611 of the Act, which stipulates as follows:
“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 s376, 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).”
Section 611 was included in the initially passed version of the Fair Work Act 2009 (Cth). In 2012, it was amended to include s.400A in relation to the note for s.611(2). In relation to s. 611(2), the Explanatory Memorandum for the Fair Work Bill 2009 outlined the following:
“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.”
Submissions
Sandgate Taphouse seeks a Costs Order against Mr Austin for the legal costs incurred in defending Mr Austin’s application for an unfair dismissal remedy. Sandgate Taphouse submits the application is for the legal costs incurred up until 7 December 2023, when they made an application for costs against Mr Austin. Sandgate Taphouse seeks to claim legal costs on an indemnity basis in the amount of $33,365.13.
Mr Austin seeks for parties to bear their own costs in these proceedings.
Unreasonable Act / Application Made Without a Reasonable Cause
Sandgate Taphouse submitted that the failure by Mr Austin to accept any of Sandgate Taphouse’s offers to settle amounts to an unreasonable act as outlined under s.400A and that the application for an unfair dismissal remedy was made vexatiously or without a reasonable cause as outlined under s.611(2). Sandgate Taphouse submitted that it was clearly an unreasonable act to not accept the Sandgate Taphouse’s offer made on 20 October 2023, as there was no commercial benefit in proceeding once additional legal costs to conduct the hearing were considered. Sandgate Taphouse submitted that the key commercial consideration was whether it was reasonable for Mr Austin to dismiss the third offer of $5,500 and proceed to a full hearing where Mr Austin (at the best case) may have received $8,663. Sandgate Taphouse submitted that any ‘reasonable person’ looking into the viability of the matter and assessing the costs versus the benefits of proceeding to a hearing would have accepted any of the offers, and particularly the third offer made by Sandgate Taphouse on 20 October 2023, offered just prior to the unfair dismissal hearing.
Mr Austin submitted that rejection of the settlement offers was not unreasonable. Mr Austin submitted that because in circumstances where the unfair dismissal application and defence of the dismissal were arguable and not doomed to fail, Mr Austin submits that his case was equally thorough and raised serious matters warranting adjudication by the Commission, such that it is submitted that rejection of the settlement offers was not unreasonable.
Sandgate Taphouse submitted that there were 3 substantive offers to settle the matter prior to the hearing and submits all these offers were rejected by Mr Austin.
On 20 October 2023, in relation to the third offer to settle, Aitken Legal informed Mr Allan as Mr Austin’s representative that should the offer not be accepted, then the letter of offer would be relied upon to seek a specific order for costs in accordance with the principles in Calderbank v Calderbank.[1] Sandgate Taphouse offered $5,500 as an employment termination payment as part of an offer to settle the matter.
On 24 October 2023, Mr Allan made a counteroffer in accordance with the principles in Calderbank v Calderbank.[2] Mr Austin sought $11,000 taxed according to law as part of an offer to settle the matter. Sandgate Taphouse did not provide a response by the offer’s deadline of 12:00pm, Tuesday, 24 October 2023.
On 30 November 2023, after I issued a decision, [2023] FWC 3084, dismissing Mr Austin’s application for an unfair dismissal remedy, Aitken Legal sent further correspondence to Mr Allan informing him that Sandgate Taphouse was considering making an application for indemnity costs in this matter and relied on numerous without prejudice offers to settle this matter, including the 20 October 2023 offer. Further, Aitken Legal informed Mr Austin that Sandgate Taphouse had incurred in excess of $20,000 in legal costs because of Mr Austin’s refusal to accept reasonable offers of settlement made by Sandgate Taphouse. However, Mr Allan was provided an offer that Mr Austin pay $10,000 to avoid Sandgate Taphouse making an application for legal costs. Mr Austin did not provide a response by the offer’s deadline of 12:00pm, Monday, 4 December 2023.
Application Made Vexatiously
Sandgate Taphouse also submitted that Mr Austin proceeded with vexatious intent as outlined under s.611(2) of the Act, because Mr Austin wanted to humiliate and embarrass Sandgate Taphouse and its directors and force Sandgate Taphouse to incur substantial legal costs to defend the matter at the hearing and through to appeal, overshadowing a commercial common sense to settle the matter.
Sandgate Taphouse submitted this vexatious intent was evidenced by Mr Austin’s repeated raising of an irrelevant matter concerning another business venture undertaken by the directors that failed due to Covid related issues. Sandgate Taphouse submitted this matter was raised at both the initial unfair dismissal hearing and the appeal.
Mr Austin has not dealt with this ground in his written submissions.
Consideration
I will firstly deal with the application for costs under s.611(2) on the basis that the Applicant proceeded with vexatious intent because Mr Austin wanted to humiliate and embarrass the Respondent and force it to incur substantial legal costs to defend the matter at the hearing and through to appeal, overshadowing a commercial common sense to settle the matter.
The Respondent case with respect to s.611(2) rests on the submission that the Applicant repeatedly relied on the Respondent’s directors having been involved in another failed business venture. It is true that I placed no weight on this issue in determining the matter. It was my impression however that the matter was raised as part of the Applicant case, not necessarily for the purpose of seeking to humiliate or embarrass the Respondent, but for the purpose of seeking to attempt to attack the competence of the directors as a means of persuading the Commission that his evidence concerning matters of fact in dispute concerning his performance was more believable, and should be preferred over the evidence of the Respondent. Whether this intention was misguided or not does not establish that the Applicant’s intent was vexatious or that his application was made without reasonable cause. It was clear from the material that there were a range of factual matters in dispute that would be required to be resolved by the giving of evidence.
It was my impression from the Applicant in giving his evidence that he genuinely believed his dismissal was unfair and this was his motivation for bringing the action, and his motivation was not vexatious in nature.
Regarding the second ground for the award of costs, the Respondent has submitted that it was clearly an unreasonable act for the Applicant not to accept the Respondent’s offer of $5,500 made on 20 October 2023 given the commercial considerations and the Applicant having obtained other employment.
The Applicant’s Form F2 application sought 12 weeks compensation which would have amounted to approximately $19,608 dollars based on his salary. At the time of the filing of his application he was represented by Unfair Dismissals Australia Pty Ltd.
At the commencement of the substantive hearing on 25 October 2023, I noted from the material produced in response to an order to produce that the Applicant obtained employment that commenced around six or seven weeks after his dismissal, and the new role attracted a lower rate of pay. I enquired as to whether the parties wished to engage in a further attempt to resolve the matter however this offer was declined. I noted at the time both parties were incurring further legal costs by the matter not settling however as the parties were not able to agree to settle the hearing proceeded.
Mr Allan, the Applicant’s solicitor who had been engaged to represent the Applicant after the proceedings were commenced, sought on behalf of his client to amend the 12 weeks compensation claimed in the initial application to an amount of 8.71 weeks. The Respondent did not object at the time and the application was granted. The Applicant’s remuneration with the Respondent was $85,000 per annum. It was common ground that the Applicant was paid one week’s pay in lieu of notice. $85,000 divided by 52 equals $1,634.62. $1,634.62 multiplied by 8.71 equals $14,232.14.
The Applicant’s employment as a Venue Manager with the Respondent ended on 29 June 2023. His evidence was that he applied for other positions and was successful in obtaining alternative employment as a store manager at a business at the Brisbane Airport, and he commenced this employment on 14 August 2023 on a salary of $75,000 per annum.
The Respondent submitted that the Applicant’s best case scenario had he been successful was a remedy amounting to $8,663, and given he had obtained other employment from 14 August 2023, his rejection of an offer to settle based on the Respondent’s third offer of $5,500 was an unreasonable act. This submission involves a significant degree of speculation.
Firstly, the submission does not take account of the lower rate of earnings in the new employment obtained by the Applicant going forward into the future, as compared to the Applicant’s employment with the Respondent. It is also based on an assumption that had the Applicant been successful in his case, the Commission would have been required to determine the matter of compensation based on a figure of no more than 5 weeks and a few days.
The often-cited leading case in the assessment of compensation is the decision in Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21. The first step in the Sprigg formula is to estimate the remuneration the employee would have received, or would have been likely to receive, if the Respondent had not terminated the employee.
A Full Bench decision in McCullough v Calvary Health Care Adelaide[2015] FWCFB 873 addressed the issues of estimating the likely length of future employment under step 1 of the Sprigg approach, and the need to consider the appropriateness of the compensation figure at the end of the process.
The determination of this matter always required the giving of evidence to resolve factual disputes between the parties. The Applicant’s case in the material filed prior to the hearing could not have been described as hopeless or with no reasonable prospects.
Had the Applicant succeeded, there are several variables that would have been required to be considered and weighed in assessing compensation that may have resulted in the awarding of a compensation figure that was greater than the maximum amount as proposed by the Respondent in its submissions. These included the Commission having to estimate how long the employment relationship would have otherwise lasted but for the dismissal, and the appropriate amounts to deduct from that figure including based on past and likely future earnings.
In all the circumstances I am not satisfied that the Applicant’s rejection of the offer of $5,500 to settle was an unreasonable act warranting the ordering of indemnity costs or any costs against him.
It also needs to be borne in mind that the default position in the Commission is that parties represent themselves. The Respondent’s case has been to seek costs to offset the legal costs it incurred in defending the matter. In this case, both parties decided to seek to be represented by a lawyer under s.596 of the Act. In the Respondent’s case, a decision was made for the Respondent’s solicitors to also instruct Counsel. There was no requirement for the Respondent to engage solicitors or for those solicitors to instruct Counsel. This was a decision made by the Respondent.
Conclusion
For the reasons set out above the application for costs is dismissed. An order to this effect will be issued separately and concurrently with this decision.
COMMISSIONER
[1][1976] Fam 93.
[2] Ibid.
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