Mr Kevin Sempf v Transportable Shade Sheds Proprietary Limited
[2013] FWC 4381
•12 JULY 2013
[2013] FWC 4381 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Kevin Sempf
v
Transportable Shade Sheds Proprietary Limited
(U2012/13785)
SENIOR DEPUTY PRESIDENT DRAKE | SYDNEY, 12 JULY 2013 |
Termination of employment.
[1] I heard this application in Brisbane on Monday, 13 May 2013. At the conclusion of proceedings on that same day I issued, in transcript, an order in favour of Mr Semph. On 14 May 2013 I confirmed that order 1 in writing.
[2] Mr Semph was represented by Mr Arthur, a solicitor from Mooloolaba Law. Transportable Shade Sheds Proprietary Limited (the respondent) was represented by Mr McKee, the Human Resources/HSE Manager of the respondent and Hahn Environmental Services Proprietary Limited (Hahn).
[3] At the commencement of proceedings Mr McKee advised that he had no objection to Mr Arthur being granted leave to appear on behalf of Mr Semph. I had regard to s596 of the Fair Work Act 2009 (the Act) and was satisfied that this application was a suitable application concerning which to grant Mr Arthur leave to appear and represent Mr Semph. I considered the application would be dealt with more efficiently, taking into account its complexity, and Mr Semph’s age and background, if Mr Semph was represented by his solicitor.
[4] Mr Arthur provided a written submission and tendered statements from Mr Semph 2, Mr Walters3 and Mr Bice4. All three witnesses gave oral evidence. Mr Semph and Mr Bice were not cross-examined by Mr McKee. Mr Walters was asked one non contentious question.
[5] The respondent's Response document set out the following issues:
“ 1. What was the Applicant’s period of employment?
If you disagree with the period of employment specified in the Application for Unfair Dismissal Remedy, please provide the following information:
Date employed:
9/9/2008
Date notified of dismissal:
24/9/2012
Date dismissal took effect:
8/10/2012
2. What were the reasons for dismissal?
The reason for Kevins dismissal is very straight forward. For the months July and August Transportable Shade Sheds ran at a loss of $24989 and $27623 respectively. Evidence of this can be provided if required.
Kevin was by far our highest paid employee in production, evidence of this can be provided if required.
After 2 months running at a loss, and with minimal new orders being placed in Kevins department, Transportable Shade Sheds was left with no option but to let go of our highest paid production employee. Kevin was provided with 2 weeks paid notice as stated in his letter of dismissal.
3. What is your response to the Applicant’s contentions?
1. The date notified of dismissal was 24/9/2012. The date dismissal took effect was 8/9/2012. Kevin had already organised holidays to start that week, so it was his choice not to show up after being notified.
2. Kevin mentioned a reason for dismissal was his retirement age. This is not true, there was no mention of retirement.
3. Kevins performance was never an issue. The only issue is Transportable Shade Sheds was losing money on production, and Kevin was the highest paid production employee.
4. Do you have any jurisdictional or other object(s) to the application? No”
(my emphasis)
[6] The respondent provided a one page written submission 5,without attachments, on 20 January 2013, in accordance with the Directions issued by the Commission. This was tendered by Mr McKee. It is extracted below.
“1. Kevin was employed as a swager/bender/driver and not as a leading hand as specified in Kevin Sempf (sic) submission. He worked in the W10 shed. His role was centred around the production of shade shed structures and was identified over his years of work as being best suited to focusing on this area.
2. Allan Lear was the director of Transportable Shade Sheds. Allan Lear is also the CEO of Hahn Environmental Services. Both companies are operated as separate entities.
3. Mr Sempf was made redundant due to a lack of work. As per the NES ruling for redundancy, redundancy may happen when ‘business slows down due to lower sales or production’ and ‘the business restructures or reorganises’. Both of these conditions apply to this case. Transportable Shade Sheds had a reduction in income/sales in particular work in the W10 shed. Additionally, the business has restructured its production schedule and is now importing prefabricated steel which removes the need for a full time W10 shed employee. Transportable Shade Sheds can provide receipted proof of making changes such as the necessity of importing steel as part of economic pressures in view of the slow down in manufacturing Australia wide which is well documented and can been (sic) seen everywhere.
4. The dismissal was a genuine redundancy as outlined above. It was within the Small Business Fair Dismissal code as the employee was paid for two weeks notice. As per his employment contract Transportable Shade Sheds can request ‘he is not to attend work during this notice period.’
5. The applicants position was not taken over by ‘Cody Walters’. Mr Walters continued his role and was assisting the production manager who was managing the production in all sheds. Staff were required to multi task and work together on completing the jobs on order. Previously the W10 shed would work towards a production schedule for producing a specific number of shed frames per day for orders or stock. The loss in profits/sales required this productions target per week to cease hence the impact on Kevin Sempf (sic) role.
6. It is mentioned in the statement from Kevin Sempf that he entered the premises following his departure to ‘catch up with ex-colleagues’. Kevin states this was not a restricted area which is untrue. Kevin would have had to go through restricted areas to access his ex-colleagues. During this unauthorised access he was talking to staff/witnesses regarding this case and taking photos.
7. Transportable Shade Sheds advertised for a leading hand/production manager since Kevin’s departure. This was advertised on 6th Jan 2013 and during October 2012 advertised as a General Hand/Welder. Kevin had been with the company for 4 years but during this time was not given a role similar to Leading Hand due to management’s decision regarding his experience and educational background. Hence these advertised positions are not for a bender/swager/driver.”
(My emphasis)
[7] Mr McKee gave very short evidence concerning the respondent's financial situation. He did not call any other witnesses on this or any other issue. He tendered two financial documents 6 prepared on behalf of the respondent.
[8] Mr McKee had only been employed by Hahn for three months when he appeared before me on behalf of the respondent. He made it clear that he was not in the business when these circumstances arose and had no first-hand knowledge of the events. Despite this circumstance he submitted that the respondent “------did everything they could in the situation in regards to the business operations at the time. The business was making financial losses for two months previous, in July and August. Difficult decisions had to be made at the time in regards to staff and the decision to let Kevin go was not an easy decision. It was a difficult business decision to make”. 7
[9] Mr McKee confirmed that the submission provided in the Employer's Response was created by a marketing employee, Ms Lauren Lamont. It was not clear what, if any, direct knowledge Ms Lamont had of the circumstances involved. At the hearing Mr McKee confirmed that Ms Lamont was still employed by the respondent and was at work, but she did not attend and give evidence.
[10] A manager who might have had direct knowledge of the circumstances surrounding Mr Semph’s termination of employment was Mr Paul Whitla. He was no longer employed by the respondent. He declined to attend voluntarily. No effort was made to summons him to attend and give evidence.
[11] There was no attempt to call any evidence to contradict the evidence of the witnesses called by Mr Semph or to support the respondent’s own submissions. There was no application to adjourn the hearing to allow the respondent to call any witnesses or seek advice.
[12] I offered Mr McKee an opportunity to meet with Mr Semph and his solicitor to attempt to resolve this application, but that opportunity was refused. Mr McKee advised me that the only person capable of providing instructions had gone to China.
[13] The facts as I have found them after consideration of the evidence before me are set out below:
Mr Semph is a 65-year-old married man. He was employed by the respondent in September 2008 in Landsborough, Queensland. At the time of his dismissal on 24 September 2012 Mr Semph was employed by the respondent in full-time employment in the W10 shed.
Mr Semph submitted that his employment was terminated without warning. Given his age, he would have been entitled to 4 weeks notice. His letter of termination of employment indicated that he would be provided with two weeks paid notice. There was no explanation provided for the failure to provide appropriate notice. The respondent’s submission stated:
“The date notified of dismissal was 24/9/2012. The date dismissal took effect was 8/9/2012. Kevin had already organised holidays to start that week, so it was his choice not to show up after being notified.”
[14] The submission makes no sense.
[15] The letter provided to Mr Semph, by his Manager Mr Paul Whitla, on the occasion of the termination of his employment stated:
“------Please be advised that, due to a lack of available work, we unfortunately find it necessary to terminate your employment at Transportable Shade Sheds effective immediately. We will provide you with 2 weeks paid notice and ensure other entitlements are met including your annual leave to date.
You have been with Transportable Shade Sheds for a number of years providing the company with valuable workmanship. We wish you all the best with your future endeavours.”
[16] At the end of the evidence I was no wiser as to whether or not the two weeks pay that Mr Semph had received was holiday pay or notice. Fortunately, Mr Arthur agreed that the respondent had subsequently paid the correct notice which Mr McKee submitted had been incorrectly paid as a result of an administrative error.
[17] There was no consultation with Mr Semph concerning any prospective redundancy or retrenchment. There was no discussion regarding any possible redeployment within the respondent or any related entity. The respondent’s submission was that the retrenchment of Mr Semph was its only option. Mr Semph had no input into that decision. Possibilities such as a transfer to Hahn, part-time employment or a reduction in wages were not discussed with Mr Semph.
[18] Mr Cody Walters had been working as Mr Semph's offsider until the dismissal of Mr Semph. His evidence was that the workshop was busy at the time of Mr Semph’s dismissal. Immediately upon Mr Semph’s dismissal Mr Walters commenced to perform the duties previously performed by Mr Semph. He was paid one dollar an hour more. He was provided with an assistant. Mr Walters thought that the assistant’s name was Matt. Mr Bice thought the assistant’s name was Dan and that he had been brought up from the lower shed. There was no evidence from the respondent to clarify this issue. The replacement employee could have been an existing employee, a new employee, a casual employee or some other possibility. The evidence in transcript was as follows:
“THE SENIOR DEPUTY PRESIDENT:
...
Mr Bice, it occurred to me that I didn't know what happened after Walter left?
---Daniel took his role.
Yes?---Doing the same job, and then they called another guy that used to work there back to do the work in that shed with him, and then they got some - a couple of casuals in - - -
So the chronology is this. Mr Sempf left. Walter was promoted to Mr Sempf's position and Daniel came up - or someone else called Matt, one or the other - and worked with Walter. Then Walter left and then somebody came up from another shed and that to your knowledge until you left there were two people doing that work in that shed; is that right?---Daniel was working with Cody before he left, doing that particular job.
Yes?---He took over Cody's role.
Did I call him Walter? Why did I do that? What's his surname?
MR ARTHUR: Walters.
THE SENIOR DEPUTY PRESIDENT: Walters. That's why. Sorry.
THE WITNESS: Yes, Daniel took over that job and then they got Paddy in to assist doing the welding and then they got casuals in to do cutting. But there was always a replacement down in that bottom shed because they had to have two down there.” 8
[19] Mr Semph had been unemployed from the time of his dismissal until the day of hearing. He gave evidence of his attempts to find work. 9 I accepted that evidence.
[20] Mr McKee submitted that the dismissal of Mr Semph arose from a genuine redundancy and, because the respondent is a small business employer, no entitlement to any redundancy payment arose. If the respondent was not a small business employer Mr Semph would have been entitled to 8 weeks pay as a result of the redundancy.
[21] The respondent submitted that it employed 14 persons. It did not provide any evidence regarding the number of its employees.
[22] Mr Arthur submitted that, even if the respondent had only 14 employees, regarding which submission there was no evidence, Hahn and the respondent are associated entities and the respondent not in any event be entitled to be considered as a small business employer pursuant to the Act.
[23] Mr Arthur also submitted that there was not a genuine redundancy. He submitted that Mr Semph had been harshly, unjustly or unfairly dismissed from his employment, there being no valid reason for his dismissal.
Conclusion
[24] Is the respondent a small business employer? Are Hahn and the respondent associated entities?
[25] The submission that the respondent was a small business employer was raised by the respondent as an objection to this application proceeding to arbitration on the merits. Despite having made this submission, Mr McKee produced no evidence to establish the number of persons employed by the respondent. I only had his submission to that effect. He produced no corroborative evidence. There was no evidence on which I could determine that the number of employees employed by the respondent was less than 15.
[26] Despite this I decided to examine the facts of this case on the presumption that the respondent might have less than 15 employees.
[27] To be a small business employer, an employer must have fewer than 15 employees. The employees of any associated entities must be counted. Section 23 of the Act defines a small business employer as follows.
“(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.
(2) For the purpose of calculating the number of employees employed by the employer at a particular time:
(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and
(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.
(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.
(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):
(a) the employee who is being dismissed or whose employment is being terminated; and
(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated."
(My emphasis)
[28] Relevant provisions of the Corporations Act 2001 are set out below:
“ Section 46
What is a subsidiary
A body corporate (in this section called the first body ) is a subsidiary of another body corporate if, and only if:
(a) the other body:
(i) controls the composition of the first body's board; or
(ii) is in a position to cast, or control the casting of, more than one-half of the maximum number of votes that might be cast at a general meeting of the first body; or
(iii) holds more than one-half of the issued share capital of the first body (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital); or
(b) the first body is a subsidiary of a subsidiary of the other body.
-----
Section 50
Related bodies corporate
Where a body corporate is:
(a) a holding company of another body corporate; or
(b) a subsidiary of another body corporate; or
(c) a subsidiary of a holding company of another body corporate;
the first-mentioned body and the other body are related to each other.
-----
Section 50AAA
Associated entities
(1) One entity (the associate ) is an associated entity of another entity (the principal ) if subsection (2), (3), (4), (5), (6) or (7) is satisfied.
(2) This subsection is satisfied if the associate and the principal are related bodies corporate.
(3) This subsection is satisfied if the principal controls the associate.
(4) This subsection is satisfied if:
(a) the associate controls the principal; and
(b) the operations, resources or affairs of the principal are material to the associate.
(5) This subsection is satisfied if:
(a) the associate has a qualifying investment (see subsection (8)) in the principal; and
(b) the associate has significant influence over the principal; and
(c) the interest is material to the associate.
(6) This subsection is satisfied if:
(a) the principal has a qualifying investment (see subsection (8)) in the associate; and
(b) the principal has significant influence over the associate; and
(c) the interest is material to the principal.
(7) This subsection is satisfied if:
(a) an entity (the third entity) controls both the principal and the associate; and
(b) the operations, resources or affairs of the principal and the associate are both material to the third entity.
(8) For the purposes of this section, one entity (the first entity ) has a qualifying investment in another entity (the second entity ) if the first entity:
(a) has an asset that is an investment in the second entity; or
(b) has an asset that is the beneficial interest in an investment in the second entity and has control over that asset.
-----
Section 50AA
Control
(1) For the purposes of this Act, an entity controls a second entity if the first entity has the capacity to determine the outcome of decisions about the second entity's financial and operating policies.
(2) In determining whether the first entity has this capacity:
(a) the practical influence the first entity can exert (rather than the rights it can enforce) is the issue to be considered; and
(b) any practice or pattern of behaviour affecting the second entity's financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).
(3) The first entity does not control the second entity merely because the first entity and a third entity jointly have the capacity to determine the outcome of decisions about the second entity's financial and operating policies.
(4) If the first entity:
(a) has the capacity to influence decisions about the second entity's financial and operating policies; and
(b) is under a legal obligation to exercise that capacity for the benefit of someone other than the first entity's members;
the first entity is taken not to control the second entity."
[29] There was no evidence before me sufficient to establish that the respondent had less than 15 employees. In the absence of positive evidence I could not find that the respondent was of small business employer. For greater caution I also considered the evidence before me regarding the relationship between Hahn and the respondent, and I was satisfied and found that the respondent and Hahn were associated entities for the purposes of ss23(3) of the Act. I was satisfied that the respondent and Hahn were related bodies corporate and also that Hahn controlled the respondent in a manner that satisfied s50AAA of the Corporations Act.
[30] On both bases I was satisfied that the respondent was not a small business employer for the purposes of the Act.
[31] Was there a genuine redundancy?
“389 Meaning of genuine redundancy
(1) A person’s dismissal was a case of genuine redundancy if:
(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer”.
[32] The only evidence before me in support of the respondent’s submission that there was a genuine redundancy were the financial reports tendered by Mr McKee. 10 These reports do not establish that Mr Semph’s position was redundant. The only factual matter which is established by those reports is that the respondent had had two adverse financial results.
[33] The respondent’s submission 11 stated that Mr Semph was its highest paid employee. The submission also states that Mr Semph had never been a leading hand because he was not suitable for the job. It was not explained in the submission, or by Mr McKee in his evidence, how Mr Semph came to be the respondent’s highest paid production employee if he was not a leading hand. Nor was it explained, if Mr Semph was not a leading hand, why he could not have been found employment elsewhere within the respondent or Hahn, particularly since he was qualified as a truck driver.
[34] I was satisfied that the respondent still required Mr Semph's job to be performed when it terminated the employment of Mr Semph. I was satisfied that Mr Semph's job continued to be performed by Mr Cody Walters with the assistance of other employees.
[35] I was satisfied that there was no consultation, in compliance with any instrument, or at all.
[36] When determining whether or not a dismissal is harsh, unjust or unreasonable I must take into account those matters set out in s387 of the Act. I did so in relation to Mr Semph’s application.
[37] I considered ss387(a). I was not persuaded that there was a valid reason for the dismissal of Mr Semph related to either his capacity or conduct. The respondent did not allege any issue in relation to Mr Semph’s capacity or conduct.
[38] I considered ss387(b). Mr Semph was not notified of the reason for his dismissal until he was handed a letter of termination. In any event, the reason provided by the respondent did not relate to his capacity or conduct.
[39] I considered ss387(c). There was no reason for Mr Semph’s dismissal relating to his capacity or conduct and therefore there could be no relevant opportunity to respond. There was no opportunity to respond to any reason the respondent might have had for his dismissal, including redundancy. There was no opportunity to consult about any issue surrounding Mr Semph's dismissal.
[40] I considered ss387(d). There were no discussions in relation to any issue relevant to Mr Semph’s dismissal. There could therefore be no unreasonable refusal to have a support person present at those discussions.
[41] I considered ss387(e). Unsatisfactory performance was irrelevant.
[42] I considered ss387(f) and ss387(g). The size of the respondent’s enterprise might have impacted on the respondent’s procedures. Its impact might have been demonstrated by the total absence of procedures. However, since Hahn and the respondent share a Human Resources Department, as well as other management functions, I did not give the possible absence of dedicated human resource management or expertise in the respondent’s enterprise any significant weight.
[43] Pursuant to ss387(e) I considered other relevant matters.
[44] I considered Mr Semph’s period of service and the absence of any complaint by the respondent as to his conduct or capacity. I noted that there had been some previous warnings in relation to safety, but they were not matters relied upon by the respondent.
[45] I considered the lack of consultation with Mr Semph. There was no discussion about any possible alternative to dismissal. Transfer, demotion, part-time work or a process of merit selection were not discussed. Nothing was discussed.
[46] I considered the fact that Mr Semph’s age and his prospective difficulty in obtaining further employment did not appear to have been given any particular consideration.
[47] Mr McKee had nothing to say to me about any of these matters. The sum total of his submission was that the respondent had had a couple of bad months and the decision was a hard one.
[48] The manner in which Mr Semph was dealt with by the respondent was reflected in the way his application was dealt with before me. The only submission provided was compiled by a marketing person with no apparent first-hand knowledge of the facts. No oral evidence was called except Mr McKee’s own limited evidence. There was almost no cross-examination, minimal evidence, almost no submissions and no submissions at all in opposition to Mr Semph’s cost application. This occurred despite the fact that it is apparent from the Commission's file, that a previous manager of the respondent was aware that this application might proceed, and that legal representation might have to be considered. Mr Paul Whitla, a manager no longer employed by the respondent, and who was unavailable to give evidence, advised the Commission by e-mail on 16 November 2012 that ".... If this matter proceeds any further we will have to engage our solicitor and we will be seeking reimbursement for all legal costs from Kevin Semph..... ”
Remedy
[49] Having decided that Mr Semph was protected from unfair dismissal, and that he had been unfairly dismissed, I then considered what remedy might be appropriate.
[50] Mr Semph did not seek reinstatement and the vehemence of his opposition persuaded me that the remedy of reinstatement was not appropriate. Had Mr Semph sought reinstatement I would have awarded it.
[51] I was satisfied that compensation was appropriate in all the circumstances of this application.
[52] I took into account the criteria for deciding the amount of any compensation which are set out in s392 of the Act.
[53] There were no submissions put to me concerning the effect of a compensation order on the viability of the respondent’s enterprise. It is inherent in the respondent’s submission, by which it justified the dismissal of Mr Semph, that the respondent might be facing a downturn in income. However, given the relationship of the respondent to Hahn and, in the absence of any submissions on this particular issue, I was not persuaded that there was any issue that should prevent an otherwise appropriate order for compensation being issued by me.
[54] Mr Semph had been employed for almost 5 years. I took the length of his employment into account in my determination.
[55] I took into account the remuneration Mr Semph would have received if he had not been dismissed. I was satisfied that he would have remained in employment for at least 12 months, had his employment not been interrupted by his dismissal.
[56] I was satisfied that Mr Semph had made all possible efforts to mitigate his loss and locate other work.
[57] I was not able to consider any other earnings because Mr Semph has been unable to find alternative work.
[58] I was satisfied that Mr Semph was unlikely to earn any income between my order and his receiving compensation.
[59] I was satisfied that Mr Semph had suffered considerable financial and social disadvantage since the termination of his employment. He is a man of an age at which he is likely to find it difficult to find new work. He is competing with younger men. He was terminated after 4 1/2 years of service without any consideration of his circumstances, consultation or notice. He has suffered great disadvantage as a result. Had he wished it I would have reinstated him and restored him to the position he would have been in had he not been harshly, unjustly or unreasonably dismissed.
[60] In lieu of the remedy of reinstatement I considered that six months compensation was appropriate in all the circumstances.
The costs application
[61] At the conclusion of proceedings Mr Arthur made an application for costs. Before I heard the application I suggested to Mr McKee that he take a period of time to read the relevant provisions. He took that opportunity. I offered him further time if he needed it. He declined any further time. 12
[62] Mr Arthur made his application. Mr McKee made no submission in opposition to it. He made no response at all. 13
[63] A recent Full Bench of this Commission 14 has discussed the application of the relevant costs provisions. This discussion is extracted below.
“[4] Section 611 of the FW Act provides 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 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)”. [Underlining added]
[5] The phrase “without reasonable cause” was considered by Wilcox J in Kanan v Australian Postal and Telecommunications Union. 15 Section 347(1) of the then Industrial Relations Act 1988 (Cth) provided that:
“A party to a proceeding (including an appeal) in a matter arising under this Act shall not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause.” [Underlining added]
[6] In Kanan, Wilcox J said in respect of the phrase:
“A proceeding is not to be classed as being launched ‘without reasonable cause’ simply because it fails. As Gibbs J said in R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 at 473, speaking of the Conciliation and Arbitration Act equivalent of s 357 (s 197A):
‘... a party cannot be said to have commenced a proceeding “without reasonable cause”, within the meaning of that section, simply because his argument proves unsuccessful. In the present case the argument presented on behalf of the prosecutor was not unworthy of consideration and it found some support in the two decisions of this court to which I have referred. The fact that those decisions have been distinguished, and that the argument has failed, is no justification for ordering costs in the face of the prohibition contained in s.197A.’
In Standish v University of Tasmania (1989) 28 IR 129 at 139 Lockhart J applied the qualification in ordering costs against an applicant whose case he thought ‘misconceived’, rather than simply unsuccessful. But, as the Full Court pointed out in Thompson v Hodder(1989) 29 IR 339 at 342, ‘there may be cases which could not be described properly as “misconceived” but which would nevertheless be held to have been instituted without reasonable cause’.
It seems to me that one way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being ‘without reasonable cause’. But where it appears that, on the applicant's own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.” 16
[64] Mr Arthur submitted that it should have been reasonably apparent to the respondent that it had no reasonable prospects of success. It filed no witness statements, it called only limited evidence from Mr McKee, who was in a very difficult position, having no first-hand knowledge of the circumstances at the time of dismissal.
[65] I accepted the submissions of Mr Arthur in relation to the costs application and awarded him client party/party costs up to the date on which the statements were served on the respondent.
[66] Following service of the statements and submissions there was no response from the respondent, at even though it was clear that, if the material lodged on Mr Semph’s behalf was not contradicted, the application had a high likelihood of success. There was no opposition. Nothing happened at all. There was no opposing material supplied, there were no witnesses called and there was no representation except for Mr McKee. Mr McKee made no application for adjournment. Conciliation was refused. The respondent was committed to proceeding and did so.
[67] All of the costs related to the day of hearing could have been avoided. It was for this reason that I ordered that indemnity costs be paid for all work performed from the date of service of Mr Semph’s materials allowing a reasonable period for their consideration.
SENIOR DEPUTY PRESIDENT
1 PR536626
2 Exhibit Semph 3
3 Exhibit Semph 7
4 Exhibit Semph 8
5 Exhibit Respondent 4
6 Exhibits Respondent 2 and Respondent 3
7 Transcript PN76
8 Transcript PN684 - PN692
9 Transcript PN153 - PN157
10 Exhibits Respondent 2 and Respondent 3
11 Exhibit Respondent 4
12 Transcript PN727 - PN730
13 Transcript PN376 - PN378
14 Read v Gordon Square Child Care Centre Inc T?A Gordon Square Early Learning Centre [PR538137]
15 [2009] 43 IR 257.
16 Ibid at 264-265.
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