Mr Emmanuel Young v Janart Holdings Pty Ltd T/A Stewart Automotive Group

[2015] FWC 1927

[2015] FWC 1927

FAIR WORK COMMISSION

DECISION

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

Mr Emmanuel Young
v
Janart Holdings Pty Ltd T/A Stewart Automotive Group
(U2014/11415)

COMMISSIONER CARGILL SYDNEY, 23 MARCH 2015

Application for costs.

[1] On 1 December 2014 I issued a decision which dealt with an application for an unfair dismissal remedy made by Mr E Young (the applicant) pursuant to section 394 of the Fair Work Act 2009 (the Act). In that decision I determined that the applicant had not been unfairly dismissed by his former employer Janart Holdings Pty Ltd trading as Stewart Automotive Group (Janart). Also on 1 December I issued an order dismissing the applicant’s claim.

[2] On 15 December 2014 Janart made an application for an order for costs against the applicant. The application is made on two bases: section 400A and section 611 of the Act. The application was made within 14 days after the determination of the matter as required by section 402.

[3] By agreement, the costs application was dealt with by way of an exchange of written material. That exchange concluded on 18 March 2015 with Janart’s reply.

JANART’S CASE

[4] It is noted that the power to award costs is discretionary. It is further noted that the test as to unreasonableness under both sections 400A and 611 is an objective one and involves a consideration of all of the circumstances of the case: Baker v Salver Resources Pty Ltd[2012] FWAFB 4014 and Wodonga Rural City Council v Lewis (2005) 142 1R 188. It is further submitted that the principles set out in Brazilian Butterfly Pty Ltd v Charalambous (PR968915) continue to be relevant to such consideration.

[5] In relation to that part of its claim which is based on section 400A Janart refers to the Full Bench decision in Roy Morgan Research Ltd v Baker[2014] FWCFB 1175 (Roy Morgan). It submits that the applicant made allegations in his application which were baseless, for which no evidence was provided and which were not pursued at the hearing. Janart denied those allegations in its response and provided material in support of its denial. The applicant continued to rely on the allegations until conceding them during cross-examination.

[6] Janart submits that the applicant’s conduct in this regard contributed to the failure of the conciliation and further submits that the making and maintenance of the allegations was an unreasonable act. Alternatively, the applicant’s failure to withdraw the allegations was an unreasonable omission.

[7] Janart wrote to the applicant on 2 November 2014, the day prior to the commencement of the hearing, stating that it considered that his claim had been made without reasonable cause and that it was reasonably apparent that it had no prospect of success. It invited the applicant to withdraw his claim. It noted that, if it was successful in its defence of the claim, costs would be sought on an indemnity basis. Correspondence from the applicant’s solicitor rejected the offer and stated that the applicant was “the victim of a most dishonest smear”. Both pieces of correspondence were filed as annexures to an affidavit from Janart’s solicitor.

[8] Janart submits that the applicant’s failure to withdraw his claim is an unreasonable act or omission in connection with the conduct or continuation of the matter.

[9] In relation to its claim under section 611 Janart submits that the original application was made without reasonable cause and, on the evidence filed, it should have been reasonably apparent to the applicant that his case had no reasonable prospect of success. Janart submits that, although the application identified a cause of action, the cause was not reasonable.

[10] Janart refers to the decision of Hamilton James and Bruce P/L v Gray[2011] FWAFB 9235 @ 18/21 (Hamilton James). It notes that, in the present case, there was no legal argument to be decided. The applicant had conceded that, if his version of events was not accepted, his dismissal was justified.

[11] Janart submits that, in order to decide whether the original claim was made without reasonable cause, it is necessary to consider whether the applicant’s claim was supported by the evidence he filed. Janart submits that the applicant’s evidence was deficient in several respects: other than his own denial, the applicant had provided no evidence to support his version of events or to oppose the respondent’s evidence; the applicant’s evidence contradicted the recordings of various meetings and the respondent’s statements of evidence but provided no basis for attacking the truth or accuracy of those recordings and statements; and, the applicant had provided no evidence to attack the truth of PM’s evidence.

[12] Janart submits that it would not have been reasonable to have preferred an individual’s statement which was contradicted by recordings and statements of others. It also submits that the applicant, and his wife, had a vested interest in the outcome of the case and the evidence they presented.

[13] Janart submits that costs should be awarded on an indemnity basis on and from 2 November 2014. The applicant was on notice of this. Janart submits that the applicant’s response to its letter of 2 November amounted to delinquency: Oshlack v Richmond River Council (1998) 193 CLR 72; Goffett v Recruitment National Pty Ltd (2009) 187 IR 262; and Stanley v QBE Management Services Pty Ltd[2012] FWA 10164. Party/party costs should be awarded for the respondent’s case prior to 2 November 2014.

APPLICANT’S CASE

[14] The applicant submits that proceedings in the Fair Work Commission are conducted on a “no-costs” basis and costs are awarded only in the most narrow and exceptional circumstances which do not exist in the present case.

[15] The applicant notes that the costs application does not suggest that the originating claim had been made vexatiously. The applicant submits that the main purpose of his claim was to seek a ruling as to the unfairness of the dismissal not for some improper, collateral purpose: Nilsen v Loyal Orange Trust (1997) 76 IR 180 @ 181.

[16] The applicant submits that there was a fundamental cause in seeking to have his claim arbitrated. He was of previous good record and his professionalism was acknowledged by the respondent’s witnesses. He denied the alleged conduct and had sought to show inconsistencies in the respondent’s evidence.

[17] The applicant submits that “without reasonable cause” does not mean “unsuccessful” but rather “nothing of substance to be considered”. He notes that there were no jurisdictional bars to his claim, he disputed his dismissal and was within his rights to make his application.

[18] The applicant also rejects Janart’s submission that his claim had no reasonable prospect of success. He notes that he had advanced considerable evidence to demonstrate both the unlikelihood that he had engaged in the alleged misconduct and Janart’s true motivation in dismissing him.

[19] The applicant notes that the outcome of the case largely depended upon the determination of the conflicting evidence of PM and himself. The applicant submits that, if his evidence had been preferred, he would have been successful in his claim. Losing does not mean winning was not possible.

[20] The applicant submits that he did not act unreasonably in bringing his claim. He notes that Janart submits that he acted unreasonably in continuing to press his claim after the correspondence of 2 November 2014. The applicant submits that Janart’s letter did not contain any offer of settlement but was in fact a “warning off” which threatened the present costs application if he did not discontinue his claim. The applicant submits that this was an unreasonable act by Janart.

[21] The applicant submits that, at that time, he considered that he was “the victim of a most dishonest smear”. The applicant submits that he had provided evidence on all important aspects of his case. He concedes that he was mistaken in initially claiming that he had not received two weeks pay in lieu of notice. The applicant submits that, in any event, this was a peripheral part of his case. The applicant notes that the parties are still in dispute in relation to the payment of commissions.

[22] The applicant submits that Janart’s contention that conciliation had failed because of his mistaken belief was at odds with its actions. He submits that, if a monetary amount had been offered, it would have been considered.

[23] The applicant notes Janart’s reliance on the Full Bench decision in Roy Morgan and refers in particular to passages at paragraphs 9 and 30 of the first instance decision in that matter: [2014] FWC 1856. The applicant submits that, in contrast with that case, the present matter was one involving competing evidence determined on the balance of probabilities. The applicant notes that Janart has not identified what separate costs were incurred in relation to the question of the two weeks’ pay in lieu. He also notes that the allegations concerning the payment of commissions to Mr Seal were put during cross-examination.

[24] The applicant refers to the Hamilton James decision and highlights passages at paragraphs 19 and 20. The applicant submits that, on his version of the facts, he would have succeeded. His case was not manifestly untenable or groundless. The applicant submits that he brought appropriate evidence and, contrary to Janart’s submissions, could not have brought witnesses observing him “not doing something”.

JANART’S REPLY

[25] Janart submits that the applicant’s submission fails to properly engage with its own submissions. It rejects the applicant’s submission that he had provided certain factual material showing the unlikelihood that he had engaged in misconduct. It also rejects the applicant’s assertion that he had established inconsistencies in Janart’s evidence.

[26] Janart submits that simply being eligible to bring a claim does not equate with that claim being considered a reasonable cause. It repeats its earlier submission that a reasonable cause requires evidence in support. The applicant failed to provide that. All he produced was an unsupported denial of the alleged misconduct.

[27] Janart rejects the applicant’s submission that he had brought evidence of Janart’s true motivation. It submits that all that was brought were unsupported assertions and propositions. Janart submits that the applicant’s right to bring his claim is qualified by requiring a reasonable cause and a reasonable prospect of success.

[28] Janart submits that there were no prospects that the applicant could have been successful in his claim. The evidence against him was overwhelming.

[29] Janart denied that its correspondence of 2 November was a “warning off”. It submits that, in the circumstances, its offer not to seek costs was a generous one.

[30] Janart submits that the applicant’s claim was misconceived in the sense of being incompetent or unsupportable. It submits that the applicant had produced no evidence to support the allegation that his commissions had been paid to Mr Seal. It also submits that the applicant could have produced witnesses to provide evidence of his activities in the workplace but did not do so.

[31] Janart submits that the applicant has misunderstood the principles in Hamilton James. In this case there were no arguable points of law to be determined, only factual matters. Janart submits the claim was so lacking in merit that it was not reasonably arguable.

CONCLUSIONS

[32] As indicated earlier in this decision the application for costs is brought under both section 400A and section 611 of the Act. Those sections are as follows:

“Section 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 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.

....”

[33] Two recent Full Bench decisions are of particular relevance in considering these provisions. In Church v Eastern Health t/as Eastern Health Great Health and Wellbeing [2014] FWCFB 810 (Church) a Full Bench provided a detailed analysis of section 611. The Full Bench in Roy Morgan dealt extensively with both sections 400A and 611. I adopt and follow the approach of both Full Benches in dealing with the present application.

[34] In essence, the claim under section 400A is threefold. First, Janart says that the application contained baseless claims about which no evidence was produced and which were not pursued at hearing. This is said to be an unreasonable act. Secondly, it is said that the applicant’s failure to withdraw the allegations prior to the hearing amounted to an unreasonable omission.

[35] The allegations which are complained of relate to whether the applicant had received an amount of pay in lieu of notice and whether one of his former colleagues, Mr Seal, had received commissions for sales which the applicant had made.

[36] As I understand it, there was an issue about the amount of money due as payment in lieu of notice although, by the time of the hearing, this had been rectified. The question as to whether any commissions remained due was still in dispute. These matters are referred in paragraph 51 of my decision of 1 December 2014.

[37] The allegation that Mr Seal had received commissions which were properly owing to the applicant was put to Mr Seal in cross-examination. He denied it, however, it cannot be said that the allegation was not pursued.

[38] I note that it is often the case in these types of matters that initiating applications contain some claims which, although not formally withdrawn, are not pursued at hearing.

[39] In any event I do not consider that the applicant’s conduct in relation to the allegations referred to amount to either an unreasonable act or an unreasonable omission.

[40] The third basis for the section 400A claim is that the applicant’s failure to discontinue his claim after Janart’s correspondence of 2 November 2014 was an unreasonable act and/or omission. However the correspondence is characterised, it came the day before the commencement of the hearing and the terms offered were complete withdrawal of the claim or costs would be sought. In the particular circumstances I do not consider the applicant’s failure to discontinue his claim at that stage to be an unreasonable act or omission.

[41] I shall now turn to consider the second limb of the costs application which is based on section 611 of the Act. As indicated earlier, Janart relies on both paragraphs (a) and (b) of subsection (2), namely that the substantive claim was made without reasonable cause and that it should have been reasonably apparent that it had no reasonable prospect of success. I note that Janart does not assert that the claim was made vexatiously.

[42] The phrase “without reasonable cause” in section 611(2)(a) is dealt with in both the Roy Morgan and Church decisions. It is noted that the test is not whether the application might have been successful but whether it should not have been made. The Church Full Bench notes that the courts have observed that the test is similar to that adopted for summary judgement, that it is “so obviously untenable that it cannot possibly succeed”, is “manifestly groundless” or “discloses a case which the Court is satisfied cannot succeed”. Similar observations can be made about the phrase “no reasonable prospect of success” in section 611(2)(b).

[43] I agree that the mere absence of a jurisdictional bar does not mean that a claim could not be found to have been made without reasonable cause or have no reasonable prospect of success. However I do not agree that the evidence against the applicant was so overwhelming as to make his case “manifestly groundless” or “so obviously untenable”.

[44] It is true that there was no matter of legal principle to be determined in the case however there was a very stark factual contest. My determination that there was a valid reason for the applicant’s dismissal almost entirely rested on my preference for the evidence of PM over that of the applicant.

[45] The evidence of Mr Seal and Ms Venables provided some support for PM’s version of events although there were several inconsistencies. In the final analysis it came down to one person’s word against another’s. If I had accepted the applicant’s version of events it is most likely that his claim would have been successful.

[46] It is also of relevance to note that there were issues as to whether the respondent had prejudged the applicant and had decided to dismiss him before providing him an opportunity to respond. I decided that question in the respondent’s favour but it was not straightforward. A contrary finding could have been made on the evidence.

[47] All in all I do not consider that the applicant’s claim was made without reasonable cause or that it was so lacking in merit or substance as not to be reasonably arguable.

[48] In summary I find that Janart has not made its case under either section 400A or section 611. The costs application is dismissed.

COMMISSIONER

Written submissions

Janart - 30 January 2015

Applicant - 6 March 2015

Janart’s reply - 18 March 2015

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