Mrs Betty Mond v Seymour-Gross Pty Ltd T/A George Gross and Harry Who

[2014] FWC 6602

[2014] FWC 6602 [Note: An appeal pursuant to s.604 (C2014/6799) was lodged against this decision and the order arising from this decision - refer to Full Bench decision dated 5 May 2015 [[2015] FWCFB 3707] for result of appeal.]

FAIR WORK COMMISSION

DECISION

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

Mrs Betty Mond
v
Seymour-Gross Pty Ltd T/A George Gross & Harry Who
(U2014/4346)

COMMISSIONER ROE MELBOURNE, 30 SEPTEMBER 2014

Termination of employment - Costs Application.

[1] Mrs Betty Mond was successful in her unfair dismissal application. 1 Compensation was paid to Mrs Mond by Seymour Gross.

[2] The Applicant foreshadowed an application for costs under Section 400A of the Act at the hearing on 4 August 2014. The Applicant also foreshadowed a further application for costs pursuant to Section 611 of the Act at the hearing on 7 August 2014.

[3] The first application for costs is $2678.50 for legal costs incurred by the Applicant in responding to the complaint made by the Respondent to the Victoria Police. The Applicant alleges that these costs were incurred because of an unreasonable act and/or omission in connection with the conduct of the unfair dismissal matter (U2014/4346).

[4] The second application for costs relates to the costs of $21,912.44 incurred by the Applicant’s representative, Mr Mond, in prosecuting the unfair dismissal matter (U2014/4346).

[5] With the consent of the parties I noted that the applications had been made immediately following the making of the decision in the unfair dismissal matter. The parties agreed that I should determine the costs matters on the basis of written submissions.

[6] In the unfair dismissal decision I made the following findings about the report to the police:

“The allegations were reported to the police on 6 April 2014. The Applicant submits that this was about 10 weeks after the dismissal, 8 weeks after the unfair dismissal application was made and 5 days after the unsuccessful unfair dismissal conciliation conference. Copies of the correspondence between the Respondent and the police have been provided. The police concluded on 12 July 2014 that there was no basis for them to proceed against the Applicant. They found that the red skirt was returned in saleable condition and was in fact subsequently sold.

It is a reasonable inference to draw from the evidence and the submissions that the complaint to the police was a response to the failure of the conciliation of the unfair dismissal matter. However, it is also reasonable to conclude that the employer was concerned to defend the basis for the termination and once it was clear that the unfair dismissal matter was proceeding decided to make the complaint to the police in April 2014. For understandable reasons the Applicant was very upset and offended by the police report. It does not necessarily follow that the Respondent was coercing the Applicant not to proceed with the unfair dismissal application. Although the police found that there was no basis for a report or for prosecution it does not necessarily follow that making the complaint to the police was vexatious. I have found that the Applicant’s actions were misconduct even if I found that there was no reasonable basis for a finding of theft.” 2

The Section 400A costs application

[7] The conditions under which I can order costs under Section 400A are as follows:

“(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.”

[8] The central questions are:

● Are the costs incurred by Mrs Mond in responding to the police complaint costs incurred in connection with the conduct of the unfair dismissal matter?
● Is it sufficient to establish that an unreasonable act which is related to the unfair dismissal application caused the costs to be incurred? Is it necessary that both the unreasonable act and the costs relate to conduct or continuation of the unfair dismissal application?
● Was the action of notifying the police of the alleged theft an action which was in connection with the conduct of the unfair dismissal matter?
● Was the act of notifying the matter to the police an unreasonable act by Seymour Gross?

Are the costs incurred by Mrs Mond in responding to the police complaint costs incurred in connection with the conduct of the unfair dismissal matter?

[9] The answer to this question is no. The police complaint is a matter which is made, investigated, administered, continued and finalised at the discretion of the police. The Fair Work Act and the Fair Work Commission has no influence on the matter at all.

Is it sufficient to establish that an unreasonable act which is related to the unfair dismissal application caused the costs to be incurred? Is it necessary that both the unreasonable act and the costs relate to conduct or continuation of the unfair dismissal application?

[10] I am satisfied that the proper interpretation of Section 400A is that it is not just any costs associated with an unreasonable act which can be the subject of a costs order, it must be costs which relate to the prosecution or defence of the matter before the Fair Work Commission. In other words it may be that a party unreasonably institutes proceedings in another place in response to an unfair dismissal application but the costs associated with defending that unreasonable action are not costs which are in connection with the conduct of the unfair dismissal matter. Both the unreasonable act and the costs have to relate to the conduct or continuation of the unfair dismissal matter.

Was the action of notifying the police of the alleged theft an action which was in connection with the conduct of the unfair dismissal matter?

[11] I accept that there was a relationship between the police notification and the conduct of the unfair dismissal matter. However, I am satisfied that they are two separate matters and that the relationship between the action of notifying the police and the unfair dismissal matter cannot be described as action which was in connection with the conduct of the unfair dismissal matter.

Was the act of notifying the matter to the police an unreasonable act by Seymour Gross?

[12] Given the answers to the earlier questions it is neither necessary nor appropriate to answer this question.

Conclusion in respect to the Section 400A costs application.

[13] I cannot make the costs order sought because the action which is the subject of the claim is not sufficiently connected to the conduct of the unfair dismissal matter.

The Section 611 costs application.

[14] An application under Section 611 can be brought on the grounds that:

(a) Seymour Gross responded to the unfair dismissal application vexatiously or without reasonable cause; or

(b) It should have been reasonably apparent to Seymour Gross that its defence of the application for unfair dismissal remedy had no reasonable prospect of success.

[15] There is no basis to argue that it should have been apparent to Seymour Gross that the defence of the application had no reasonable prospect of success. A brief reading of the decision in the unfair dismissal matter reveals that it was necessary to decide between competing versions of events. In other words there were factual contests which Seymour Gross believed could have been decided in their favour. If those contests had been decided in their favour the outcome of the matter could have been different. One of the critical matters in any unfair dismissal case is whether or not there was a valid reason for the dismissal. I found that there was a valid reason for the dismissal. I do not consider that in a circumstance where there is a valid reason for dismissal it could be said that the employer should have been aware that their defence had no reasonable prospect of success.

[16] For similar reasons it could not be said that the defence of the matter was vexatious or without reasonable cause.

[17] Mrs Mond argues that the report to Victoria Police was an action taken as part of the proceedings and that action was vexatious or without reasonable cause. Section 611 does not relate to actions during the proceeding but rather to the making of the application and the responding to the application. The report to Victoria Police is not covered by Section 611. The fact that I found that there was no real prospect of an allegation of theft being established does not make the defence of the unfair dismissal application vexatious or without reasonable cause.

[18] Mrs Mond also argues that it was vexatious and unreasonable for Seymour Gross to fail to make Kathy Gross available in proceedings and also for Kathy Gross to have failed to deal with the matter directly on the day of the dismissal. The first of these matters was raised and dealt with during the unfair dismissal proceedings. I made no adverse finding in respect to that matter. The second of these matters is not related to the making or the defending of the unfair dismissal application.

[19] Mrs Mond raises the alleged failure to advise the police correctly about the value of the red skirt. Again this is not a matter which relates to the making or the defending of the unfair dismissal application.

[20] Mrs Mond proposes that the unfair dismissal remedy should be varied to include the costs pursuant to Section 387(h) so that the compensation awarded is net of costs. The legislation deals with costs separately from the issue of the unfair dismissal remedy. I am not satisfied that costs can be included as part of the unfair dismissal compensation. In any case I have made the decision about compensation and it would not be appropriate to change that decision.

[21] In the unfair dismissal proceedings Mr Mond said “I’m not seeking to be remunerated as a paid agent” 3 and confirmed that he was not seeking costs on that basis.4

[22] Despite Mr Mond advising during the proceedings that he was not a lawyer or a paid agent, Mr Mond has produced a letter of engagement signed by Mrs Mond and dated 4 February 2014. That letter engages Mr Mond to act on her behalf in the unfair dismissal matter. Mr Mond also produced a tax invoice for his professional services in this matter dated 29 August 2014 totalling $21,912.44.

[23] As there was no suggestion that Mr Mond was seeking to appear in the proceedings as a lawyer or a paid agent I did not consider whether or not he should be granted permission to appear in the unfair dismissal matter. He was not granted permission to appear as a paid agent or a lawyer and therefore he cannot claim costs on that basis. In any case, even if he could make such a claim, I could not grant it because the pre-conditions in Section 611 are not made out for the reasons already canvassed.

Conclusion in respect to the Section 611 costs application.

[24] For the reasons set out the application is dismissed.

COMMISSIONER

 1   [2014] FWC 5547.

 2   [2014] FWC 5547 at paragraphs 45 and 89.

 3   PN1708.

 4   PN1710 to PN1712.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR555714>