Mrs Chimfwembe Bwalya v PM Financial Services Pty Ltd T/A McKinley Plowman & Associates

[2016] FWC 6857

[2016] FWC 6857

FAIR WORK COMMISSION

DECISION

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

Mrs Chimfwembe Bwalya
v
PM Financial Services Pty Ltd T/A McKinley Plowman & Associates
(U2016/5009)

COMMISSIONER CLOGHAN PERTH, 29 SEPTEMBER 2016

Application for relief from unfair dismissal - costs application.

[1] This is an application to the Fair Work Commission (Commission) by PM Financial Services Pty Ltd T/A McKinley Plowman & Associates (MPA or Employer) for the payment of costs in accordance with sections 400A and 611 of the Fair Work Act 2009 (FW Act).

[2] MPA is seeking costs against Mrs Chimfwembe Bwalya (Mrs Bwalya) arising from her application to the Commission for alleged unfair dismissal pursuant to s.394 of the FW Act.

[3] In response to Mrs Bwalya’s initiating application, MPA asserted that she was not protected from the unfair dismissal provisions of the FW Act as her dismissal was a case of genuine redundancy.

[4] On 12 August 2016, I issued a Decision [2016] FWC 5547. For the reasons set out in the Decision, I was satisfied that Mrs Bwalya’s dismissal was a case of genuine redundancy, and accordingly, her application was dismissed for want of jurisdiction.

PROCEDURAL BACKGROUND

[5] On 2 March 2016, Mrs Bwalya made an application seeking a remedy for alleged unfair dismissal.

[6] The Applicant was self-represented.

[7] On 17 March 2016, MPA made a “without prejudice” offer to Mrs Bwalya. The Employer’s correspondence states that MPA does not accept that any of the allegations made by Mrs Bwalya are correct or true, however:

“We are in the process of appointment a lawyer to assist us in the forthcoming proceedings and have been informed that the cost will be $4,000. We would prefer to offer you that money than pay it to a lawyer. It is obviously your decision whether to accept this offer or not, however it is our view that this is a commercially sensible approach.

In the event that you decline our offer, we will proceed with the lawyer’s appointment and defence of your action. No further offer will be made at this point due to the legal costs we will incur.”

[8] MPA, through its representative, Mr S Farrell, Senior Consultant, Chamber of Commerce and Industry WA, provided a response to Mrs Bwalya’s initiating application on 4 April 2016.

[9] Prior to a conciliation conference on 13 April 2016, Mrs Bwalya forwarded to the Commission’s Victorian Service Team, but not copied to MPA, the following email:

“I’m forwarding a letter I received from MPA. I thought without prejudice applies where there’s a genuine attempt to resolve the issue and not an attempt at not paying lawyer’s fees. Hence I declined the offer.”

[10] At the conference on 18 April 2016, Mrs Bwalya was self-represented. MPA was represented by Mr Farrell.

[11] MPA submitted, at the conference, that Mrs Bwalya’s dismissal was a genuine redundancy. The matter was not resolved at conciliation. MPA indicated that it preferred a conference be held with a member of the tribunal, prior to a hearing.

[12] On 25 May 2016, the Commission was advised that Mr L Kristopher of counsel now acted for Mrs Bwalya. Mr Kristopher sought and was granted leave to represent Mrs Bwalya at the conference before me, on 1 June 2016.

[13] The matter remained unresolved at the conclusion of the conciliation conference.

[14] On 18 June 2016, the Commission was advised that Mr Davies Chibale, Agent, now acted for Mrs Bwalya.

[15] MPA’s jurisdictional objection was heard on 4 August 2016.

[16] At the hearing on 4 August 2016, Mrs Bwalya was represented by Mr Chibale.

[17] On 12 August 2016, I provided the parties with my decision and reasons for decision that Mrs Bwalya’s dismissal was a case of genuine redundancy.

RELEVANT LEGISLATIVE FRAMEWORK

[18] Section 400A of the FW Act provides the circumstances in which the Commission can make an order requiring one person to be accountable for all or part of the costs incurred by another party in relation to an unfair dismissal application to the Commission.

[19] Section 400A reads 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.”

[20] The general powers referred to in s.400A(3) relating to s.611 of the FW Act are 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 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) ...”

COSTS SOUGHT BY MPA

[21] MPA is seeking costs of work done by Mr Farrell to the extent of $6 468. The costs can be divided into two categories: preparation and attendance at conciliation conferences, and preparation and attendance at the Commission hearing.

MPA’s CASE FOR COSTS

[22] Primarily, MPA’s case for costs is that Mrs Bwalya had three (3) opportunities to settle the matter:

“ The first when she was offered $4,000 prior to the Employer filing a response and start (sic) incurring costs.

• The second at the conciliation teleconference when she was offered $2,000 after being clearly shown that her application was fatally flawed.



• The third at the conciliation conference facilitated by A/Commission (sic) Cloghan when it was clearly outlined to her in explicit detail that her dismissal was a genuine redundancy.”

[23] Further, the reasons cited in Mrs Bwalya’s initiating application that she was unfairly dismissed, were not relied upon or pressed by her at the hearing.

[24] Finally, MPA state that:

“On all three occasions, the Applicant’s refusal to settle the matter was unreasonable and her actions in continuing to press her claim, despite knowing that it had no prospect of success and having been put on notice that if she continued with her claim, the Respondent [MPA] would be seeking to recover costs, meant that the Respondent incurred costs to defend the application.”

MRS BWALYA’S CASE RESISTING THE COSTS APPLICATION

[25] Mrs Bwalya opposes MPA’s application for costs on two grounds that she:

• did not make the application vexatiously or without reasonable cause and that it was not reasonably apparent to her that her claim had no reasonable prospects of success; and



• did not cause costs to be incurred by MPA because of any unreasonable act or omission.

CONSIDERATION

Section 400A of the FW Act

[26] As can be seen at paragraph [21] of this Decision, the general rule is that parties will bear their own costs in proceedings before the Commission. However, there are exceptions both at s.611(2) and s.400A of the FW Act.

[27] Section 400A of the FW Act enables the Commission to award costs against a party. Section 400A requires the Commission to determine whether there was an unreasonable act(s) or omission(s) and, secondly, whether those acts or omissions, caused the other party to incur costs in connection with the conduct or continuation of the application.

[28] The Explanatory Memorandum (EM) to the Fair Work Amendment Bill 2012 provides assistance to an understanding of s.400A. The EM reads at paragraphs 168-171 as follows:

“168. Item 4 inserts a new section 400A to enable the FWC to order costs against a party to an unfair dismissal matter (the first party) if it is satisfied that the first party caused the other party to the matter to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the matter.

169. As with the new power to dismiss applications under section 399A, the power to award costs under section 400A is not intended to prevent a party from robustly pursuing or defending an unfair dismissal claim. Rather, the power is intended to address the small proportion of litigants who pursue or defend unfair dismissal claims in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.

170. The FWC’s power to award costs under this provision is discretionary and is only exercisable where the first party (whether the applicant or respondent) causes the other party to incur costs because of an unreasonable act or omission. This is intended to capture a broad range of conduct, including a failure to discontinue an unfair dismissal application made under section 394 and a failure to agree to terms of settlement that could have led to the application being discontinued.

171. However, the power to award costs is only available if the FWC is satisfied that the act or omission by the first party was unreasonable. What is an unreasonable act or omission will depend on the particular circumstances but it is intended that the power only be exercised where there is clear evidence of unreasonable conduct by the first party.”

[29] Clearly, Parliament envisaged that s.400A is intended to “capture a broad range of conduct” including “failure to agree to terms of a settlement that could have led to the application being discontinued”.

[30] The costs application can, in my view, be divided into three parts. The first part comprises of a number of questions relating to the Employer’s offers of settlement. The second part concerns the issue of Mrs Bwalya not pressing, in the hearing, those matters cited in her originating application, as to why the dismissal was unfair. And finally, whether Mrs Bwalya’s application was made without reasonable cause, or had no reasonable prospect of success.

[31] I now turn to the first part dealing with the offers of settlement.

Can the Commission be satisfied that Mrs Bwalya unreasonably caused costs to be incurred in refusing the offers of settlement?

[32] The concept of reasonable or unreasonable conduct implies a standard of, or expected, conduct.

[33] The Australian Concise Oxford Dictionary (ACOD) defines “reasonable” as “having sound judgement; sensible, moderate, not expecting too much, ready to listen to reason…not greatly less or more than might be expected…tolerable, fair”.

[34] The concept of reasonable or unreasonable behaviour is not something asserted in the abstract but within a context. The context, in this case, was an application in which Mrs Bwalya alleges, but MPA denied, that she was unfairly dismissed. It is within this context, the Commission must be satisfied whether Mrs Bwalya’s actions were reasonable or unreasonable, in causing costs to be incurred in continuing with the matter.

[35] As Mrs Bwalya’s actions have to be considered in context, it is necessary to consider what features, or criteria, should be considered to determine whether Mrs Bwalya’s actions were unreasonable, as alleged by MPA. These features or criteria include:

• Was Mrs Bwalya made aware by MPA of the reasons why it resisted her allegation of unfair dismissal, and if so, when?



• Was Mrs Bwalya advised by MPA that it would seek costs in the event that Mrs Bwalya rejected an offer which was more favourable than an outcome determined by the Commission?



• Were the offers made by MPA reasonable and intended to encourage settlement? Put differently, was there a reasonable basis for the offers?



• Was there a reasonable basis for Mrs Bwalya rejecting the offers?



• Frequency of offers.



• Whether Mrs Bwalya was represented or took advice on the offers made to settle the matter.



• The outcome of the application.



• Any other matters the Commission considers relevant.

Was Mrs Bwalya made aware by MPA of the reasons why it resisted the allegation of unfair dismissal when it made the offer of $4 000 on 17 March 2016?

[36] MPA’s offer of $4 000 on a “without prejudice” basis on 17 March 2016, does not state why her former employer resisted Mrs Bwalya’s claim. In short, MPA sought to resolve Mrs Bwalya’s application on commercial grounds.

[37] The offer by the Employer of $4 000 was an estimate of what it would cost a lawyer in “forthcoming proceedings”.

[38] MPA framed the offer in the following way – “If you are willing to accept our offer, we would require a response in writing before 23 March 2016”. Mrs Bwalya did not respond within the time frame but was contacted by MPA and the same offer was put by the Employer. Mrs Bwalya did not agree to the proposal.

[39] At this stage, it could not be said that Mrs Bwalya knew why MPA resisted her application, save to say, that the Employer did not “accept any of [her] allegations”. Further, the correspondence does not say that the Employer is opposing the application on the grounds that Mrs Bwalya’s dismissal was a case of genuine redundancy – to be fair, at this point in time, the Employer appears not to have engaged a “lawyer”.

[40] I find nothing unreasonable in Mrs Bwalya’s conduct. Mrs Bwalya’s state of mind is most probably best reflected in her email to the Victorian Service Team (which was not copied to MPA) where she, not unreasonably, questioned the relationship between an offer of $4 000 to resolve the matter on the basis of legal costs, and “a genuine attempt to resolve the issue”.

[41] I apprehend Mrs Bwalya’s expectation was that any offer of settlement would be based on all the circumstances and not just anticipated legal costs.

[42] In finding nothing unreasonable in Mrs Bwalya declining the offer of $4 000, I have also taken into account, and have no reason to disbelieve her, that she was self-represented, not a “seasoned negotiator” and had not had previous dealings with the Commission.

[43] In summary, while the application could have been resolved at this early stage, I am not satisfied that there was anything unreasonable, when all the circumstances are considered, of Mrs Bwalya rejecting the offer of $4 000.

Was Mrs Bwalya’s rejection of the offer of $2 000 at the conciliation conference before the Conciliator an unreasonable act?

[44] MPA’s response to Mrs Bwalya’s initiating application sets out its jurisdictional objection that the dismissal was a case of genuine redundancy, and consequently, she could not have been unfairly dismissed.

[45] However, the jurisdictional objection in MPA’s response may have been confusing to Mrs Bwalya as the covering email states, “I am instructed…my client [MPA] is willing to proceed with the scheduled conciliation…However, please note that my client reserves its rights, should the conference not result in a settlement, to press the objection at a later date”.

[46] For a lay person, it may not have been apparent that the Employer’s jurisdictional objection had relevance to negotiations for settlement at the conciliation conference. Mrs Bwalya possibly understood that the jurisdictional objection would become an issue, “at a later date”.

[47] The Commission must be cautious in concluding that if a party during proceedings refuses to accept an offer of settlement, and their application ultimately fails, it is, of itself, an unreasonable act.

[48] If the Commission concluded that the rejection of a monetary settlement in unfair dismissal proceedings was automatically an unreasonable act, the provisions of s.400A(1) would be narrowly defined and satisfied on the facts alone, rather than at the tribunal member’s discretion taking into account all the circumstances. Further, in a negotiating sense, it would invite a party to make offers (whether reasonable or unreasonable) with the purpose of making a successful costs application at a later date.

[49] In answer to a question in the initiating application regarding what outcome Mrs Bwalya is seeking, she states, “compensation/damages for loss of income and trauma’. This answer, in my view, demonstrates not only Mrs Bwalya’s lack of knowledge of the compensation provisions of the unfair dismissal provisions of the FW Act, but also the disconnect between her understanding of what compensation should be about (such as emotion, perception, needs and satisfaction) and the Employer’s commercial settlement approach.

[50] At the conciliation conference, MPA submit:

“Despite the facts supporting its case, the Respondent still made another offer to settle the application for $2000, which was based on the initial ‘without prejudice’ offer minus costs incurred to attend the telephone conference”.

[51] Mrs Bwalya rejected the offer.

[52] In my view, the circumstances of the rejection of the $2 000 are similar to that of Mrs Bwalya not accepting the $4 000. The offer of $2 000 occurred in the conciliation conference in the context of an amount which had been halved (because of legal costs already incurred) and put to a self-represented applicant unfamiliar with negotiations in the Commission. In addition, the context of the conference, as set out in MPA’s covering email response, was that any settlement would be on a commercial basis and that the jurisdictional objection, is in the “back pocket”.

[53] Mrs Bwalya’s email sent to the Victorian Service Team on 13 April 2016 was only days before the conciliation conference. The email appears to express the inability of Mrs Bwalya to understand the connection between lawyer’s costs and an offer to settle the matter on its merits - as she understood them to be.

[54] Having considered all the circumstances, I am not satisfied that Mrs Bwalya’s rejection of the offer to settle at the conciliation conference before a Conciliator, was an unreasonable act which caused MPA to incur costs in connection with the continuation of the matter.

[55] However, it needs to be emphasised that my conclusion relates to the circumstances of this particular application. In other circumstances, rejection of offers to settle an application, may be an unreasonable act, leading to a party incurring unnecessary costs.

Was Mrs Bwalya’s rejection of the offer of $2 000 at the conciliation conference before the Commission, an unreasonable act?

[56] At the request of MPA, the Commission held a conciliation conference prior to the hearing of the former employer’s jurisdictional objection.

[57] The circumstances of the conciliation conference before me were different. Mrs Bwalya was legally represented, albeit a lawyer who was engaged only a week before the conference. Mrs Bwalya does not dispute in MPA’s submission that Mr Farrell’s comments at the conference before me were similar or to his comments at the conciliation conference before a Conciliator. Nor does Mrs Bwalya deny that, at the Commission conference, she was put on notice that if she went ahead with the hearing and failed, MPA would be seeking costs.

[58] While Mrs Bwalya did not accept MPA’s offer to resolve the application, it has to be assumed that she did so after receiving legal advice. For this reason, I hesitate to conclude that it was an unreasonable act. Legal advice has “source” credibility, whether it proves right or wrong in the long term.

[59] I now turn to MPA’s submission that Mrs Bwalya did not press the claims made in her initiating application at the hearing into the Employer’s jurisdictional objection.

Was it an unreasonable act in Mrs Bwalya not pressing her claims in the initiating application at the hearing into the Employer’s jurisdictional objection?

[60] Mrs Bwalya made her unfair dismissal application on 2 March 2016 and stated that the following reasons demonstrated why her dismissal was unfair:

• the duties of Finance Assistant were still being performed;



• the “real” reasons for her dismissal was poor performance;



• the consultation was a sham and MPA had already made up its mind to dismiss her;



• discrimination; and



• “bullying, prejudice, harassment…verbal abuse”.

[61] Mrs Bwalya’s assertions in her application have features of a genuine belief. While the assertions are denied by MPA, I am not satisfied (even though not tested) that they did not fall outside a band of reasonableness (from her perspective) when making the application. However, I emphasise I am not agreeing with Mrs Bwalya’s allegations.

[62] MPA submit that the reasons set out by Mrs Bwalya in her initiating application were not “pressed” at the hearing. In my view, that is a fair reflection, with maybe the exception of “performance”, which was raised in cross-examination.

[63] In view of the Applicant not pressing the matter, MPA suggests that Mrs Bwalya “knew the claims were false and as such her claim is without reasonable cause”. However, MPA proceed to further submit, “at the time she made the application, the Applicant was very aware that the allegations she made were false”.

[64] The hearing itself and documentation provided prior to the hearing from Mrs Bwalya reveal that her prime contention was that she was suitable for the Finance Manager’s role, following the abolition of the Finance Assistant’s position.

[65] MPA set out its reasons why Mrs Bwalya was not suitable for the Finance Manager’s role and did not persuade the Applicant to its position. However, because Mrs Bwalya disagreed with the Employer, this should not, of itself, lead to the conclusion that the allegations of bullying etcetera were false, and consequently the application had no reasonable prospect of success or was made without cause.

[66] Putting aside the allegations by Mrs Bwalya, unfortunately when dealing with industrial disputes, hard facts and information often cede to emotion. Having made a decision in her own mind that she was suitable for the Finance Manager’s role, Mrs Bwalya raised matters which she thought were the “real” reasons while MPA considered she was unsuitable for the role. MPA reject the allegations; the dismissal was a genuine redundancy.

[67] I am not satisfied that because Mrs Bwala did not press the matters in paragraph [60] (save for performance) this was an unreasonable act. Mrs Bwalya, as a self-represented applicant, colloquially speaking, “unloaded” on her former employer on the application, but the “guts” of her complaint was that she thought she was capable of being the Finance Manager – the Employer through differently; that was the focus of the hearing.

[68] I now turn to MPA’s submission that Mrs Bwalya’s application was made without reasonable cause or had no reasonable prospect of success.

Was Mrs Bwalya’s application made without reasonable cause and/or had no reasonable prospect of success?

[69] Pursuant to s.611(2)(a) of the FW Act, before an order for costs is made by the Commission, the Commission member must be satisfied that the party making the application did not do so “vexatiously or without reasonable cause”.

[70] MPA does not submit that Mrs Bwalya made the application vexatiously. Accordingly, I now consider whether she made the application without reasonable cause or with no prospect of success.

[71] On 18 January 2016, Mrs Bwalya was asked by the Employer when she was returning to work after maternity leave. On the same day, Mrs Bwalya responded. Mrs Bwalya intended to return to work on 1 March 2016.

[72] On 27 January 2016, MPA sought clarification that she was returning to work full-time. Again, on the same day, Mrs Bwalya responded in the affirmative.

[73] On 1 February 2016, Ms Jackson recommended that Mrs Bwalya’s position be made redundant and replaced with a Finance Manager’s position.

[74] On 5 February 2016, Mrs Bwalya was advised that due to some senior employee resignations and a restructure for operational reasons, her position of Finance Assistant was being considered for abolition.

[75] Discussions occurred between MPA and Mrs Bwalya which resulted in the position of Finance Assistant being abolished and Mrs Bwalya being dismissed on 11 February 2016.

[76] In view of the earlier emails and the rapidity of her dismissal – less than one week, it was, in my view, understandable of Mrs Bwalya to question the genuineness of her position being abolished.

[77] While MPA denied Mrs Bwalya’s allegations, it was not necessary in my earlier decision to make a determination on each and every one of the allegations in paragraph [60] above. However, I am satisfied that the detail and extent to which the Applicant set them out in her application, did not demonstrate that Mrs Bwalya had no cause to make the application.

[78] Finally, I observe that the provisions of s.622(1)(a) of the FW Act have to be considered in the context of the time Mrs Bwalya “made the application. The plain and ordinary meaning of “made” is at the time the application was made, that is, 2 March 2016. The “test” of “without reasonable cause” is in the present. Further, it appears Mrs Bwalya made the application without seeking legal advice.

[79] In conclusion, having considered all the circumstances, I am not satisfied that Mrs Bwalya made the application without reasonable cause or that, in doing so, it had no reasonable prospect of success.

CONCLUSION

[80] For the reasons set out above, the Employer’s application for costs is dismissed. An Order to this effect is issued in conjunction with this Decision.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<Price code C, PR585728>