Mr Glen Hughes v Fire Protection Design & Management Pty Ltd

[2021] FWC 4741

[2021] FWC 4741

FAIR WORK COMMISSION

DECISION

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

Mr Glen Hughes
v
Fire Protection Design & Management Pty Ltd
(U2020/15201)

DEPUTY PRESIDENT CROSS SYDNEY, 4 AUGUST 2021

Application by respondent for costs arising from dismissal of unfair dismissal application. Application for costs orders against lawyers and paid agents. Application dismissed.

Introduction

[1] A Form F2 unfair dismissal application (the Form F2) was filed on 25 November 2020 (the UD Application), by Mr Glen Hughes (the Applicant/Costs Respondent), pursuant to s.394 of the Fair Work Act 2009 (Cth) (the Act), following his alleged dismissal on 4 November 2020.

[2] On 4 December 2020, Fire Protection Design & Management Pty Ltd (the Respondent/Costs Applicant) filed a Form F3 response to unfair dismissal application (the Form F3), and a Form F4 Objection to unfair dismissal (the Form F4) that raised the jurisdictional objection that the Applicant was not dismissed.

[3] On 17 March 2021, the Respondent filed the Form F6 - Application for costs (the Costs Application) that is the subject of these proceedings.

[4] Neither the Form F2 nor the Form F4 were required to be determined, and the Form F2 was ultimately discontinued. The costs sought relate to costs incurred in the conduct of the matter and its preparation for hearing. Each party was legally represented at all relevant times. The Applicant was represented by Solve Legal Pty Ltd (the Applicant’s solicitor), and the Respondent was represented by Sharpe & Abel Pty Ltd (the Respondent’s solicitor).

[5] Resolution of the Costs Application will necessarily involve consideration of the conduct of the legal practitioners. For the reasons outlined in the consideration of the Costs Application, I consider the conduct of the legal practitioners for each party to have been less than satisfactory, and neither could be characterised as attending with “clean hands.”

[6] The Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 apply as the Legal Profession Conduct Rules under the Legal Profession Uniform Law to solicitors and Australian-registered foreign lawyers acting in the manner of a solicitor. They quite simply provide the following:

“Fundamental duties of solicitors

3 Paramount duty to the court and the administration of justice

3.1 A solicitor’s duty to the court and the administration of justice is paramount and prevails to the extent of inconsistency with any other duty.

4 Other fundamental ethical duties

4.1 A solicitor must also:

4.1.1 act in the best interests of a client in any matter in which the solicitor represents the client,

4.1.2 be honest and courteous in all dealings in the course of legal practice,

4.1.3 deliver legal services competently, diligently and as promptly as reasonably possible,

4.1.4 avoid any compromise to their integrity and professional independence, and

4.1.5 comply with these Rules and the law.”

[7] As the facts will disclose, this matter involved at times conduct falling short of the above duties, including discourteous dealings, obscure and inconsistent legal positions being taken, and conduct that can only be described as “point scoring.”

Factual Background

[8] The factual background of this matter can be ascertained primarily from correspondence between the parties. Where any disputed facts exist, they are determined at the relevant point of this factual background.

[9] On 4 November 2020, the Applicant, the Respondent, and their respective legal representatives attended an informal without prejudice settlement conference by video, in an attempted settlement of the Applicant’s employment status and his shareholding in the Respondent and a related body corporate.

[10] At 5.45pm on 4 November 2020, and after the above video conference, the Respondent sent an email to the employees of the Respondent in the following terms:

Subject: Flamesafe Staff Changes

Good evening,

I wish to inform you all that Glen Hughes was made redundant today.

Regards,

[11] On 5 November 2020, at 4.35pm, the Respondent’s solicitor sent a draft settlement deed to the Applicant’s solicitor for review and execution.

[12] At 5.40pm on 5 November 2020, the Respondent sent a further email to the employees of the Respondent in the following terms:

Subject: Glen Hughes

Good evening all,

Please be advised that Glen will not be returning the office.

Glen has been an integral part of FlameSafe for over 10 years and has made an immense contribution the business' success in that time.

Glen's knowledge of, & expertise within the fire industry will be missed, and we wish him all the best in the future.

Regards,

[13] On 9 November 2020, the Respondent’s solicitor, telephoned the Applicant’s solicitor and left messages as the Respondent was required to pay entitlements to the Applicant by 11 November 2020, in order for such payments to be made within seven days of the end of the Applicant’s employment.

[14] On 10 November 2020 at 14:04 AEDT, the Respondent’s solicitor telephoned the Applicant’s solicitor to follow up on the draft settlement deed. The Applicant’s solicitor was asserting no agreement had been reached. I accept, in the absence of any denial, and noting the existence of a file note, that the Applicant’s solicitor said: “I will delay it [the settlement deed] for another 3 weeks and see how you like that!”

[15] Later on 10 November 2020, the Respondent’s solicitor sent an email to the Applicant’s solicitor. In that email, the Respondent’s solicitor asserted, incongruously, that telling the Respondent’s employees that the Applicant was redundant was not an indication that the Applicant’s employment was terminated, that Mr Hughes remained employed and was on authorised paid leave. The email included the following:

“The communications that were sent out within FlameSafe are attached. As you will see, there is no indication in the communication that Mr Hughes' employment was terminated. The communication states that Mr Hughes' has been made redundant (which is what was agreed at your behest) and wishes Mr Hughes well. Given that Mr Hughes has been out of the office for a significant amount of time (which, by law, he was entitled to be), his colleagues were eager to know what the arrangements were, as they have been covering his role during his absence.”

[16] On 25 November 2020 shortly before 5.00pm, being exactly three weeks after the informal settlement conference on 4 November 2020, the Applicant’s solicitor lodged the Form F2.

[17] On 27 November 2020, the Respondent wrote to the Applicant in the following terms:

“Dear Glen,

Employment contract dated 20 October 2009

We understand from your legal representative that you consider that a way forward has not been agreed after the 4 November 2020 informal settlement conference. Please do not construe this letter as any kind of admission: while the parties may have different views on what has or has not been agreed, it is important for all of FlameSafe's customers and employees that we carry on the business as usual.

Consequently, further to the medical certificate that you provided us with, we will need to make arrangements for your return to work as of Monday 30 November 2020. To ensure that FlameSafe provides you with a safe place of work and that you are not put at risk from the work that you are asked to carry out, we will need you to provide the following:

•  Details and, where appropriate, medical evidence that confirms your continuing fitness to undertake the duties required under your employment contract;

•  Medical information that shows us what you can and cannot do currently and in the likely long term.

•  If you are unable to provide this information, here are some alternatives:

1. Please provide us with a signed letter allowing us to obtain that information from your medical practitioner; or

2. We can arrange for you to be examined by a medical practitioner at our cost.

Please provide the information requested or let us know your preference before you commence work on 30 November 2020.”

…

[18] On 3 December 2020, The Applicant’s solicitor wrote to the Respondent’s solicitor, part of which correspondence was in the following terms:

“We refer to your correspondence dated 27 November 2020.

Your assertion that there was an oral agreement is partially correct. But what you have failed to mention is that this agreement was subject to formalisation by way of written deed (see Masters v Cameron (1954) 91 CLR 353). Before you even sent us a draft Deed to consider, your client had openly terminated our client's employment and notified this to other employees of FlameSafe.

During mediation, the communication of the termination was never discussed. When we drew this to your attention, instead of apologising on behalf of your client, you continued to assert that such behaviour was proper. It is not.

It was also never discussed in mediation as to when the deeds needed to be executed. With respect, our client will do things when he is good and ready to do so. Your arbitrary deadlines are of no concern to us.

Employment matters

With respect to the content of your revised draft Deeds, it sadly seems that the matters related to the employment appear to now be unresolvable, as your client appears to be reneging on the agreement it made.

Your client openly terminated our client's employment on 4 November 2020, in writing. You confirmed this was so on by email to us on 10 November 2020.

Therefore, your assertions that our client remains employed and is on unauthorised unpaid leave is pure hokum. How can you even assert such facts in light of your email of 10 November? It's bizarre.

Further, your continued assertions that your client is not required to pay accrued entitlements and notice is absurd. You should familiarise yourself with the National Employment Standards, which are contained in the Fair Wok Act 2009. Notably, these provisions cannot be contracted out of.

…

8) Schedule 1A- Payments. You have indicated that our clients payment in lieu of notice of termination, annual leave, long service leave are amounts that our client is entitled to draw from the payments that Fire Protection Design & Management Pty Ltd have made into the Australian Construction Industry Redundancy Trust and therefore these amounts do not require further payment by the company. This is simply not the case, as you would be aware our client has a legal obligation under the Fair Work Act 2009 (Cth) to have these payments made to him and they should not be inclusive of any of the monies held by ACIRT on his behalf. Therefore, please have this schedule amended to reflect same.”

[19] On 4 December 2020, the Respondent filed the Form F3 and the Form F4.

[20] On 11 December 2020, the Applicant, the Respondent, and their respective legal representatives attended a conciliation conference held by the Commission. During that conciliation conference, the Applicant addressed the issue of the source of payment of various of his entitlements, arguing that the Respondent was refusing to pay those entitlements and sought that they be paid from the Australian Construction Industry Redundancy Trust (ACIRT).

[21] On 14 December 2020, the Respondent applied to amend its form F3 to allow the Applicant to be reinstated in the event that the Commission held that there was a dismissal. Despite reinstatement being sought by the Applicant in the Form F2, the Respondent’s solicitor criticised the Applicant’s solicitor for failing to respond to the offer of reinstatement. It became apparent in the hearing of the Costs Application, however, that the Applicant’s solicitor had received no notice of that variation having been made.

[22] On 15 December 2020, the Applicant’s solicitor sent an email to the Respondent’s solicitor, notifying of the Applicant’s intention to continue with the Unfair Dismissal Application. That email stated:

“Dear Ms Kirby,

I enclose correspondence below.

Clearly your client doesn't want to resolve anything. Thanks for letting us know. We'll just proceed with the unfair dismissal application.

Regards,”

[23] On 17 December 2020, the Respondent’s solicitor responded to the Applicant’s solicitor’s email of 15 December 2020. In that email the Respondent’s solicitor noted that the Applicant’s solicitor had asserted there was no legally binding contract in place. The Respondent’s solicitor noted that the Applicant remained employed by the Respondent, and sought his return to work.

[24] On 21 December 2020, the Respondent’s solicitor provided the Applicant’s solicitor with a further offer of settlement. The terms of this offer became prominent in these proceedings, and it was extraordinary that neither party, particularly the Respondent, included it in their materials filed. The offer was only produced during the hearing of the Costs Application at the request of the Commission. 1 The terms of that offer were as follows:

[25] On or around 22 December 2020, the Applicant’s solicitor emailed to the Respondent’s solicitor signed and executed counterparts of a Deed of Termination and Release in respect of the Applicant’s employment (the Deed), and a Deed of Release and Settlement in relation to the shareholdings in the Respondent of the Applicant and his corporate entity (the Shareholding Deed). Clause 2.4 of the Deed provided “Upon acceptance of this Deed, the Employee shall immediately withdraw the FWC Proceedings against the Company.” The Applicant’s solicitor requested the Respondent’s solicitor return their signed counterparts of the Deed and the Shareholding Deed.

[26] On 23 December 2020, the Respondent’s solicitor sent the Applicant’s solicitor a letter in the following terms:

“Dear Mr Kutasi,

RE: G Hughes and Fire Protection Design & Management Pty Ltd FWC 02020/15201

1. We refer to:

a. your email of 22 December 2020 of 14:43 AEDT attaching a Microsoft Word document entitled 'FLAMESAFE GROUP HANDOVER SCHEDULES ( 22 .12 .20 20 )" (Handover Schedules); and

b. your email of 23 December 2020 of 22 December 2020 of 21:39 AEDT attaching two documents executed by your client (Hughes Executed Deeds).

2. All defined terms in this letter are as defined in our letter of 21 December 2020 (21 September 2020 Letter)[Erroneous dating of defined term].

Handover Schedules

3. We confirm that:

a. The Handover Schedules constitute an exhaustive list of items to be returned by your client to our client;

b. The date on which our client will arrange for the items set out in the Handover Schedules to be handed over is 4 January 2021, not 22 December 2020;

c. While the Handover Schedules are useful to identify the items of Company Property, our client will not be exchanging or executing any document; and

d. The Handover Schedules do not vary, amend or otherwise affect the terms of the Offer.

Hughes Executed Deeds

4. We note that the Hughes Executed Deeds do not comply with the requirements of the 21 [December](sic) 2020 Letter and as such, does not constitute acceptance of the Offer.

5. Please be advised that the Offer has been designed to take into account:

a. the principle regarding the efficacy of a deed as set out in 400 George Street (Qld) Pty Ltd v BG International Ltd [2010] QCA 245 at [32] as adopted by the New South Wales Supreme Court, most recently in Realm Resources Ltd v Aurora Place Investments Pty Ltd [2019] NSWSC 379 at [49]; and

b. the fact that the current restrictions on travel make it impossible for our respective clients to execute the deeds simultaneously.

6. As you will be aware, the Offer supersedes any earlier offer and will remain open until 11:00 AEDT on 24 December 2020 should your client wish to accept it in the terms set out therein.

Yours sincerely ,

Sharpe &Abel
SHARPE&ABEL
Digitally signed”

[27] By the above letter, the Respondent’s solicitor required the Applicant’s solicitor to post an original executed deed before the Respondent’s solicitor was to send a signed accessible copy of the Deed and the Shareholding Deed by email. The Respondent’s solicitor refused to provide an accessible copy of the signed Deed and Shareholding Deed without the Applicant’s solicitor first providing an undertaking concerning posting the deeds.

[28] On 4 January 2021, the Respondent’s solicitor provided the Applicant’s solicitor with a further offer of settlement. The terms of this offer also became prominent in these proceedings, and it was again extraordinary that neither party, particularly the Respondent, included it in their materials filed.

[29] The offer was only produced during the hearing of the Costs Application at the request of the Commission. 2 The terms of that offer were as follows:

[30] Apparently in early January 2021, the Respondent made an application to ACIRT to have funds accrued to the Applicant’s benefit paid to the Respondent. The Applicant was unaware of this request until contacted by ACIRT.

[31] On 14 January 2021, the Respondent apparently executed its counterparts of the Deed and the Shareholding Deed, but the Respondent’s solicitor refused to send a hard copy of those documents to the Applicant’s solicitor.

[32] On 25 January 2021, the Respondent’s solicitor wrote to the Applicant’s solicitor regarding the Applicant’s failure to withdraw the unfair dismissal application, demanding that a form F50 be filed by 29 January 2021.

[33] On 29 January 2021, the Respondent filed a Form F1 application for the Commission to discontinue the unfair dismissal claim.

[34] On 1 February 2021, the Applicant’s solicitor wrote to the Commission stating that “The Applicant is unaware of any settlement.”

[35] On 1 February 2021, the Respondent’s Solicitor wrote to the Commission attaching evidence in support of the Form 1 application. The Commission issued directions directing the Applicant to file an outline of submissions, witness statements and other documentary material that the Applicant intended to rely on in opposition to the Respondent’s application by form F1 by 4pm on 8 February 2021. The Applicant failed to file any submissions, witness statements or any documentary materials on 8 February 2021.

[36] The Applicant’s solicitor sent the necessary executed share transfer forms under the Shareholding Deed to the Respondent’s solicitor on 8 February 2021. Pursuant to the Shareholding Deed, the Respondent was to pay the Applicant the amount of $200,000.58 by 15 February 2021, being seven days after the execution of the share transfer forms.

[37] On 15 February 2021, the Applicant’s solicitor wrote to the Respondent’s solicitor asking for consent to notify the Commission that the parties had resolved their dispute in principle and to hold the file pending the filing of a notice of discontinuance. The Respondent’s solicitor stated that they would not oppose an application for a variation to the directions of 1 February 2021.

[38] On 15 February 2021, the Applicant’s solicitor wrote to the Commission asking for an adjournment and an extension of time for the Applicant’s materials to be filed and served. The Respondent’s solicitors did not oppose this but did reserve rights regarding costs given that the hearing was to take place on 16 February 2021.

[39] On 16 February 2021, the Commission issued a notice of listing with directions directing the Applicant to file an outline of submissions, witness statements and other documentary materials the Applicant intended to rely by 4pm on 23 February 2021, and for hearing to take place on 4 March 2021. The Applicant’s solicitor failed to file any submissions, witness statements or any documentary materials on 23 February 2021 or at all. The Applicant’s solicitor stated that it refrained from submitting evidence on 8 and 23 February 2021 as it did not wish to needlessly incur costs pursuing an application that it had believed had been settled.

[40] On 3 March 2021 at 5:39pm, being less than one day before the hearing was to take place the following day, the Applicant’s solicitor filed a form F50 to discontinue the unfair dismissal application.

[41] On 17 March 2021, the Applicant confirmed receipt of $184,048.29 on 12 March 2021, being $15,952.29 less than the amount agreed in the Deed and Shareholding Deed.

[42] Later on 17 March 2021, the Respondent’s solicitor responded to the Applicant’s solicitor’s request for an explanation of the shortfall in settlement monies by claiming they had a right to withhold the amount from the settlement as they were seeking to lodge this Costs Application.

[43] Also on 17 March 2021, the Respondent filed the Costs Application that is the subject of these proceedings.

[44] Later on 17 March 2021, at 5:33pm, the Applicant’s solicitor put the Respondent on notice that if the outstanding settlement amount was not paid within 24 hours, the Applicant would commence proceedings in the Local Court of New South Wales. The Applicant’s solicitor also put the Respondent on notice that should the Respondent not discontinue their costs application, the Applicant would make his own cost application for costs on the Respondent’s cost application on the basis that it had no merit.

[45] On the 19 March 2021, the Applicant filed a Statement of Claim against the Respondent in the Local Court of New South Wales (2021/77931) for failing to pay the Applicant the amount of $15,952.29.

[46] Later on 19 March 2021, the Respondent paid the Applicant the amount of $16,822.59, being the amount claimed in the Statement of Claim, plus costs, and then filed a Notice of Payment to the Local Court of New South Wales in the matter of 2021/77931.

Respondent’s/Costs Applicant’s Submission

[47] The Respondent sought costs against the Applicant for costs pursuant to ss.400A and 611 of the Act, and in the alternative against the Applicant’s solicitor pursuant to s.401 of the Act. The Respondent sought payment of $16,501.65.

[48] The Respondent contended that the Applicant caused the Respondent to incur costs, that those costs were incurred due to a number of unreasonable acts or omissions of the Applicant, and that the unreasonable acts or omissions of the Applicant were in connection with the conduct and continuation of the UD Application. The Respondent’s solicitor outlined seven alleged unreasonable act or omissions. They were:

(1) The lodging of the Form F2 was submitted to be the first unreasonable act of the Applicant in connection with the conduct of the matter (the First Unreasonable Act or Omission). It was submitted to be unreasonable because:

a. The Applicant was given every opportunity to negotiate the draft settlement agreement arising from the information settlement conference on 4 November 2020. Instead of responding to that draft settlement agreement or entering into any discussions, the Applicant chose to lodge an unfair dismissal claim; and

b. The Applicant’s solicitor failed to respond substantively at all to the Respondent’s solicitors’ draft settlement agreement.

(2) The failure of the Applicant to respond to the offer of reinstatement in the amended Form F3 was submitted to be the second unreasonable act of the Applicant in connection with the conduct of the matter (the Second Unreasonable Act or Omission). It was submitted to be unreasonable because the offer to reinstate was one of the remedies that the Applicant applied for.

(3) The conduct of the Applicant/Applicant’s solicitor during the conciliation conference was submitted to be the third unreasonable act of the Applicant (the Third Unreasonable Act or Omission). It was submitted to be unreasonable because:

a. It contravened the requirements of natural justice because the Applicant’s arguments bore no relation to its unfair dismissal claim; and

b. The Applicant’s arguments and demand had nothing to do with anything within the Commission’s jurisdiction.

(4) The failure of the Applicant to file a form F50 by 29 January 2021 (the Fourth Unreasonable Act or Omission) was submitted to be unreasonable because:

a. The Applicant had already executed a deed of termination and release that required him to withdraw matter U2020/15201 immediately; and

b. This failure necessitated the Respondent to continue to respond to the unfair dismissal claim.

(5) The Applicant’s/Applicant’s solicitor’s failure to file any submissions, witness statements or any documentary materials on 8 February 2021 or at all (the Fifth Unreasonable Act or Omission) was submitted to be unreasonable because:

a. The Applicant failed to comply with the directions of the Commission;

b. The Applicant’s failure to act in accordance with the directions of the Commission meant that the Respondent was unable to proceed with the application to have the Commission discontinue the unfair dismissal claim;

c. The Applicant’s statement that there was no settlement is demonstrably untrue;

d. The Applicant failed to pursue the claim it had brought against the Respondent; and

e. The Applicant obviated the right of the Respondent to make any progress at all. Although the Applicant failed to file any submissions, witness statements or any documentary materials at all, the Respondent complied with the Commission’s directions and filed its submissions, witness statements and other documentary materials on 12 February 2021 as directed. However, these filings were unable to meet the substance of the Applicant’s claim as the Applicant failed to file any materials opposing the Respondent’s application under form F1.

(6) The Applicant’s/Applicant’s solicitor’s failure to file any submissions, witness statements or any documentary materials on 23 February 2021 or at all (the Sixth Unreasonable Act or Omission) was submitted to be unreasonable for reasons that were the same as those set out in the above paragraph.

(7) The failure of the Applicant to file a form F50 before 3 March 2021 (the Seventh Unreasonable Act or Omission) was submitted to be unreasonable because:

a. The Respondent allowed the Applicant two opportunities to file submissions, witness statements or any documentary materials opposing the application to have the Commission discontinue matter U2020/15201. Notwithstanding these two opportunities, the Applicant failed on both occasions to file anything to substantiate its opposition the Respondent’s application; and

b. The form F50 was filed outside of business hours and without even one days’ notice so the Respondent had to make all arrangements and incur all costs to proceed to hearing on 4 March 2021.

[49] The Respondent further submitted that even if the Commission were to find that any or all of the Applicant’s and/or Applicant’s solicitor’s acts or omissions were not unreasonable, that the Applicant instituted the unfair dismissal proceedings vexatiously. That was submitted to be clear from two pieces of evidence, being:

1. The Applicant used the unfair dismissal jurisdiction to harass the Respondent in respect of the draft deed of settlement that arose from the informal settlement conference that took place on 4 November 2020.

2. Further on 10 December 2020, the Applicant’s solicitor wrote in response to a settlement proposal: “The unfair dismissal proceedings were filed to protect our client’s position on the employment aspect. They will be discontinued once your client prepares a Deed that includes payment of the entitlements he shall be receiving, as agreed. If your client doesn’t want to pay them, that’s their choice. But the court will require it. So you choose.”

The above was submitted to clearly show that the unfair dismissal claim was used by the Applicant to attempt to bargain for more in settlement than to address an actual unfair dismissal.

[50] Regarding the claim against the Applicant’s solicitor (Mr Kutasi), the Respondent submitted that Mr Kutasi encouraged (and possibly initiated on his own) the Applicant to start the unfair dismissal application, when it should have been reasonably apparent to Mr Kutasi that the Applicant had no reasonable prospect of success for the reasons set out in the Respondent’s response to the application filed by way of form F3 and form F4 on 4 December 2020.

[51] Even if it was not apparent to the Applicant’s solicitor on 4 December 2020, that the Applicant had no reasonable prospect of success, when the Respondent filed on 14 December 2020 to amend its form F3 to allow the Applicant to be reinstated and to offer an apology if the Commission held that there had been a dismissal, the Applicant’s solicitor:

1. Omitted to respond to the offer of an apology and to reinstate the Applicant. That was unreasonable because these were two of the three remedies that the Applicant applied for;

2. Brought into the conciliation conference matters that were not set out in the form F2 and which had nothing to do with the unfair dismissal application;

3. Failed on every occasion to comply with the directions of the Commission to file submissions, witness statements and other documentary materials;

4. Failed to discontinue the UD Application on or before 29 January 2021, when the Applicant had executed a settlement agreement on 22 December 2020 and this settlement agreement required the Applicant to discontinue the UD Application immediately;

5. Claimed that there was no settlement when a delivery receipt showed that the settlement deed was received by the Applicant’s solicitor on the same day that it was sent; and

6. Omitted to discontinue the UD Application until 3 March 2021, with less than three business hours’ notice before the hearing was listed for 4 March 2021.

Applicant’s/Costs Respondent’s Submission

[52] The Applicant responded to each alleged unreasonable act or omission. Those submissions were as follows:

(1) The First Unreasonable Act or Omission – This was submitted to be an absurd and desperate claim. The Applicant’s solicitor noted that subsequent to the settlement conference on 4 November 2020, there was not any execution of the proposed agreement. Additionally, while having advised its employees that the Applicant was redundant, the Respondent’s solicitor claimed that did not somehow constitute termination of employment. As such, and in response to that illogical position and volatile conduct of the Respondent’s solicitor, the Applicant quite reasonably lodged his UD Application in order to protect his interests.

(2) The Second Unreasonable Act or Omission – Most pertinently, the Applicant’s solicitor noted that he was not copied into the correspondence with the Commission whereby the amendment to the Form F3 was made, and was not aware of that amendment.

(3) The Third Unreasonable Act or Omission – The Applicant’s solicitor was unclear of what matter the Respondent’s solicitor was referring to, and highlighted the absence of evidence to support the allegation. In reply the Respondent’s solicitor outlined it related to the issue of entitlements and a claim on ACIRT.

(4) The Fourth Unreasonable Act or Omission – The Applicant submitted that it did not discontinue proceedings as the deeds had not been properly exchanged. It was not until 8 February 2021 that Respondent’s solicitor properly served its executed counterpart, affecting exchange. Further, despite alleging the existence of a settlement, the Respondent failed to comply with their obligations under the deeds.

(5/6) The Fifth and Sixth Unreasonable Acts or Omissions – The Applicant submitted that the Respondent contradicted itself by alleging that prior to the 8 February 2021, there was an agreement in place and therefore the matter should have been discontinued, however it was not until 8 February 2021, that Respondent’s solicitor properly served its executed counterpart, effecting exchange. The Applicant therefore reasonably expected to receive a signed and accessible deed in the lead up to the deadlines, thus hoping to discontinue the proceedings thereafter. It was reasonable for the Applicant to have held off from filing materials, with a view to mitigate client costs (in an otherwise limited costs jurisdiction), as it reasonably expected that the matter would be concluded by then.

(7) The Seventh Unreasonable Act or Omission - The Applicant submitted that conduct of the Respondent/Respondent’s solicitor had exasperated the Applicant. On the one hand the Respondent’s solicitor was insisting the proceedings had been settled and therefore ought to be discontinued, and on the other hand was also filing submissions saying the exact opposite, and otherwise behaving in a manner that could only be interpreted as suggesting that it did not consider the matter settled. Notably, despite insisting that the matter had settled, the Respondent did not make payment in full in accordance with the terms of settlement until 19 March 2021 (some 38 days overdue) and even then, only after the Applicant was forced to commence proceedings in the Local Court of NSW.

Respondent/Costs Applicant’s Reply Submissions

[53] The Respondent replied in relation to each of the Applicant’s submissions regarding the alleged unreasonable act or omission. Those submissions were as follows:

(1) The Respondent submitted that in the 4 November 2020 conference, the Applicant’s solicitor himself suggested that the Applicant be made redundant. Given that the Applicant had asked to be made redundant on 4 November 2020, on 5 November 2020, the Respondent informed its employees that the Applicant was made redundant. It was submitted “At worst, the internal emails to the [Applicant’s] colleagues, who had been carrying out his work during his long period of leave, was an honest mistake by the [Respondent].”

(2) The Respondent submitted that the Commission did not have jurisdiction since there had been no dismissal, or in the alternative, that the Applicant could be reinstated if he so wished.

(3) During the conciliation conference, the Applicant’s contention was that the Respondent refused to pay entitlements and that an ACIRT agreement which the Applicant had signed did not apply to the Applicant’s entitlements. The Applicant’s argument in the conciliation conference were unreasonable because:

(a) There was nothing about entitlements in the Applicant’s unfair dismissal application;

(b) ACIRT is outside the Commission’s jurisdiction; and

(c) In any event, the Applicant had executed an agreement with the Respondent to have any entitlements paid into ACIRT.

(4) The Applicant executed two deeds of settlement on 22 December 2020. The deeds were binding as of that date. The Applicant’s solicitor was of the incorrect belief that the deeds needed to be exchanged before they became effective.

(5/6) In accordance with the directions of the Commission issued on 1 February 2021, the Applicant should have applied to vary the Commission’s directions.

(7) The Respondent submitted that the Applicant is stating that his failure to discontinue the unfair dismissal claim was due to his own failure to understand the difference between taking on an obligation, in this case, to discontinue the unfair dismissal claim, and settlement of a dispute.

Consideration

[54] The Act provides in s.400A that costs may be awarded against a party to an application for unfair dismissal remedy, and s.401 provides for costs to be awarded against a lawyer or paid agent. The respective provisions are as follows:

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.

401 Costs orders against lawyers and paid agents

(1) This section applies if:

(a) an application for an unfair dismissal remedy has been made under section 394; and

(b) a person who is a party to the matter has engaged a lawyer or paid agent (the representative) to represent the person in the matter; and

(c) under section 596, the person is required to seek the FWC’s permission to be represented by the representative.

(1A) The FWC may make an order for costs against the representative for costs incurred by the other party to the matter if the FWC is satisfied that the representative caused those costs to be incurred because:

(a) the representative encouraged the person to start, continue or respond to the matter and it should have been reasonably apparent that the person had no reasonable prospect of success in the matter; or

(b) of an unreasonable act or omission of the representative in connection with the conduct or continuation of the matter.

(2) The FWC may make an order under this section 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.

[55] In addition to ss.400A and 401, s.611 provides a cost remedy (which is preserved for applications such as this through ss.400A(3) and 401(3)). The section provides the following:

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).

[56] The language and tests of s.611 are different to the provisions of ss.400A and 401, and especially so in relation to the consideration that an action may have been taken “vexatiously or without reasonable cause.” As noted above, the Respondent sought costs against the Applicant for costs pursuant to sections 400A and 611 of the Act, and in the alternative against the Applicant’s solicitor pursuant to section 401 of the Act.

(1) The First Alleged Unreasonable Act or Omission

[57] I consider no unreasonable act occurred in the Applicant filing the Form F2. Contrary to the submissions of the Respondent, and as evidenced by the plethora of subsequent correspondence, a concluded agreement between the parties did not occur on 4 November 2020, or any time shortly thereafter.

[58] What did occur is that the day following that conference the Respondent advised all staff in two emails that the Applicant was redundant, and “not be returning the office,” when the terms of any agreed cessation of employment were still being determined. Some five days later those emails were, quite unacceptably, said to provide “… no indication in the communication that Mr Hughes' employment was terminated.” It is beyond rational comprehension to suggest that redundancy does not involve termination of employment.

[59] On 25 November 2020 shortly before 5.00pm, being exactly three weeks after the informal settlement conference on 4 November 2020, the Applicant lodged the Form F2. I consider the action of the Applicant in filing the Form F2 to be entirely unremarkable, and an expected step where there was existing disputation regarding the Applicant’s employment. Were the Form F2 not filed on that day, the Applicant could have faced the prospect of the Respondent raising a jurisdictional objection that any subsequent unfair dismissal application was out of time.

(2) The Second Alleged Unreasonable Act or Omission

[60] In the hearing of the Costs Application the Respondent’s solicitor belatedly did not press the application regarding this alleged act or omission as it accepted that the Applicant’s solicitor was not in fact aware of the amendment to the Form F3.

(3) The Third Alleged Unreasonable Act or Omission

[61] There is no jurisdictional limitation on the matters that may be raised in a conciliation conference before the Commission, and the usual incarnation of the “standard” terms of settlement includes a release of all and any claims relating to an applicant’s employment, but for Worker’s Compensation and Superannuation. Such claims can routinely involve such issues as alleged underpayments, post-employment restraints of trade, outstanding entitlements and non-disparagement undertakings. Such considerations do not need to arise within the Commission’s jurisdiction to be considered.

[62] I consider it entirely unremarkable that during the conciliation conference on 11 December 2020, the Applicant raised the issue of his entitlements and ACIRT. The issue of entitlements and ACIRT had been an issue between the parties since at least 3 December 2020, when it was addressed in correspondence from the Applicant’s solicitor to the Respondent’s solicitor. While in the hearing of the Costs Application the Respondent submitted “It was, and that (the Conciliation) was the first time that we heard anything about it (the ACIRT issue),” 3 that submission was patently incorrect.

(4) The Fourth Alleged Unreasonable Act or Omission

[63] The failure of the Applicant to file a form F50 by 29 January 2021 was submitted to be the Fourth Unreasonable Act or Omission of the Applicant. The Applicant had already executed the Deed that required him to withdraw the UD Application immediately. However, the Applicant’s solicitor was not provided with a signed Deed from the Respondent’s solicitor until 8 February 2021. The following exchange from transcript summarises the Respondent’s position: 4

THE DEPUTY PRESIDENT:  When was the costs respondent provided with a signed deed from the costs applicant?

MS KIRBY:  Later on in - later on in February.  However, this is a critical part, Cross DP, where I think that the cost respondent misunderstands.  The execution of a deed is different from an execution of a contract, because the execution of a deed is binding upon execution by that person.  And as such, upon his execution of that deed, he is obliged to withdraw that matter, that unfair dismissal matter.  The fact that he didn't receive the corresponding other part until later on does not negate his obligation to actually withdraw the unfair dismissal claim.

[64] The explanation provided by the Applicant’s solicitor regarding the failure to discontinue the UD Application was as follows: 5

So essentially, Deputy President, we laboured in this difficult situation in January and February where on one hand, the costs applicant was saying, "You've got a settled deed, you need to discontinue", (indistinct) hand keeps telling us at various times, "Well, we are making a claim on ACIRT.  We are not sending you a finalised wet deed.  We are only going to send you a version that you can't print.  And we reserve the right to withdraw unless you give us a written undertaking to do with Australia Post", which can be seen in the statutory declaration attached to the letter of 4 January.  So requiring my client to give an undertaking as to when he posted them. …

[65] I consider the Applicant’s reticence to discontinue the UD Application to have been understandable. The Respondent’s solicitor’s conduct was such as to render a reasonable person to be concerned about the finality of any settlement. By way of example, I note that while the Respondent’s solicitor submitted that they provided executed deeds to the Applicant’s solicitor on 14 January 2021, those deeds were security encoded in a fashion that would not allow their printing. The reason for that extraordinary state of affairs was provided in the Hearing as follows:

MS KIRBY: I dispute that, Cross DP. Because yes, he could open it, and yes, he could read it. He could not print it, but the fact that he could read it and that he could take screenshots or whatever of it, right, under the Electronic Transactions Act, that is good evidence.

THE DEPUTY PRESIDENT:  Why not let him print it?

MS KIRBY:  At that point, we wanted to - we were still very circumspect about whether the deed was actually executed by Mr Hughes.  There was a risk to our client, and bearing in mind that Mr Hughes is an individual and not a corporation, we wanted to make sure that he had entered into that deed and it was his signature on that deed.

[66] I consider the above explanation to be extraordinarily unacceptable. Deeds sent by a legal practitioner representing the Applicant could not be, by virtue of the ostensible authority of that legal practitioner, reasonably subject to the doubt asserted. But further, if such doubt were seriously held by the Respondent’s solicitor, it begs the question as to why it can be said that the Applicant’s reticence regarding the binding nature of the settlement was unreasonable. I consider it entirely unremarkable, bearing in mind the state of the dealings between the parties, that the Applicant did not file a form F50 by 29 January 2021. In fact, a signed hard copy of the Deed was not provided by the Respondent’s solicitor to the Applicant’s solicitor until March 2021, after the discontinuance of the UD Application.

(5/6) The Fifth and Sixth Alleged Unreasonable Acts or Omissions

[67] These alleged unreasonable acts or omissions are the more typical of such acts or omissions that may attract a costs order. The Applicant’s silence and inaction as directions approached and passed is deserving of censure, but I do not consider it warrants an order for costs.

[68] The Applicant didn't want to incur costs on something that he believed was being settled, or had been settled, and the Respondent continued to assert had been settled. What occurred in relation to these alleged unreasonable acts or omissions was yet another by-product of the Respondent’s solicitor’s unreasonable conduct and requirements that it placed on the execution of the Deed.

(7) The Seventh Alleged Unreasonable Act or Omission -

[69] I accept that the Applicant chose to discontinue the UD Application with a view to pressing his rights to enforce the terms of the Deed elsewhere. That he did so late in the day before the hearing on 4 March 2021, was again deserving of censure, but I also do not consider it warrants an order for costs.

[70] I accept that the Applicant and/or the Applicant’s solicitor was frustrated by the Respondent’s solicitor’s unreasonable conduct and requirements that it placed on the execution of the Deed the Applicant, and chose, albeit at a very late stage, to seek enforcement elsewhere. Were the Respondent’s solicitor not to have conducted itself the way it did in executing the terms of settlement, the events surrounding this alleged omission would never have occurred. I also consider it notable that the Respondent did not eventually make payment in accordance with the terms of settlement until 17 March 2021, and even then, full payment was only made two days later after the Applicant was forced to commence proceedings in the Local Court of NSW.

Conclusion

[71] I have rejected each limb of alleged unreasonable acts or omissions advanced in the Costs Application. For the same reasons I reject the application as it relates to the Applicant’s solicitor. The Costs Application is dismissed.

DEPUTY PRESIDENT

Appearances:

Mr K Kutasi, for the Applicant/Costs Respondent
Ms M Kirby, for the Respondent/Costs Applicant

Hearing details:

2021.
Sydney (by videoconference)
June 21.

Printed by authority of the Commonwealth Government Printer

<PR732455>

 1   Transcript 21 June 2021, at PN 11 to 23.

 2   Transcript 21 June 2021, at PN 47.

 3   Transcript PN 128.

 4   Transcript PN 153 and 154.

 5   Transcript PN 197