Mrs Teisha Lazarus v SKF Australia Pty Ltd

[2014] FWC 5376

[2014] FWC 5376

FAIR WORK COMMISSION

DECISION

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

Mrs Teisha Lazarus
v
SKF Australia Pty Ltd
(U2014/5076)

VICE PRESIDENT WATSON MELBOURNE, 12 AUGUST 2014

Application for costs - costs application granted - Fair Work Act 2009 - s.394, s.389, s.611.

Introduction

[1] This decision concerns an application for an order for costs by SKF Australia Pty Ltd (SKF) in respect of an unfair dismissal application brought by Mrs Teisha Lazarus pursuant to s.394 of the Fair Work Act 2009 (the Act) in respect of the termination of her employment by SKF.

[2] Mrs Lazarus was notified of the termination of her employment on 3 February 2014, effective 5 February 2014. She filed an application for unfair dismissal with the Fair Work Commission (the Commission) on 26 February 2014. A telephone conciliation conference was not held as SKF requested that its jurisdictional objection be dealt with prior to conciliation.

[3] SKF contended that the dismissal was a case of genuine redundancy and that Mrs Lazarus was barred from making the unfair dismissal application because she had entered a deed with the company whereby she agreed not to do so.

[4] Throughout these proceedings, SKF was represented by Ms R. Newman, solicitor. Mrs Lazarus has represented herself.

[5] The matter was listed for Jurisdiction (Genuine Redundancy) and Arbitration Conference/Hearing on 2-4 June 2014. Directions were made for the filing of written material in relation to the application. Mrs Lazarus was directed to file her submission in support of her application by 28 April 2014 and her material in opposition to the jurisdictional objection by 19 May 2014. SKF was directed to file its submission in support of the jurisdictional objection by 28 April 2014 and their material in opposition to the unfair dismissal application by 19 May 2014.

[6] On 29 April 2014, Mrs Lazarus gave notice to the Commission via email that she was withdrawing her unfair dismissal application.

[7] On 28 May 2014, SKF filed an application for costs pursuant to s.611 of the Act against Mrs Lazarus.

[8] The matter was listed for a Costs Hearing before the Commission. However, the parties later agreed that the application for costs could be dealt with on the papers and were given an opportunity to file written submissions in relation to the costs application. The essential factual matters are not in contest.

Background

[9] In 2013 SKF experienced a downturn in its business. On 6 January 2014 the Managing Director of SKF sent an email to staff advising of the need for a number of changes and business efficiencies. On 20 January 2014 he wrote a further memorandum to staff stating that the company had decided to make structural changes to its business and a number of positions would no longer be required.

[10] The SKF Human Resources Manager, Ms Hosking wrote to Mrs Lazarus on 24 January 2014 requesting that she attend a meeting to discuss the impact of the restructure on her. Ms Hosking met with Mrs Lazarus on 30 January 2014. Ms Hosking advised of a potential alternative position for Mrs Lazarus and asked her to consider whether she was interested in applying for it. After that meeting Ms Hosking provided a letter confirming the discussions held earlier that day. The letter contained formal notice of the redundancy of her position and provided an opportunity to Mrs Lazarus to raise any issues, concerns or matters that she wished SKF to take into account before it proceeded to implement its decision.

[11] On 31 January 2014 Ms Hosking wrote a further letter to Mrs Lazarus inviting her to a meeting on 3 February 2014. At the meeting on 3 February 2014 Mrs Lazarus stated that she did not wish to accept the alternative role raised with her at the previous meeting. Mrs Lazarus did not raise any further issues for consideration by SKF.

[12] On 5 February 2014 Mrs Lazarus executed a deed in which she obtained additional entitlements to her redundancy entitlements at law. The deed contained a bar to further proceedings in respect of or related to the employment relationship between Mrs Lazarus and SKF.

[13] After the unfair dismissal application was made by Mrs Lazarus, SKF’s solicitors wrote to her on two occasions advising her that her application was without basis because of the genuine redundancy issue and the bar to proceedings in the deed she had entered into. The letters were sent on 24 March 2014 and 23 April 2014. At approximately 4pm on 28 April Mrs Lazarus sent an email to SKF’s solicitors advising that she would not be proceeding with her application for health reasons.

[14] In accordance with the directions made by the Commission, SKF filed its outline of submissions and a detailed witness statement on the jurisdictional issues on 28 April 2014. Mrs Lazarus did not file her outline of submissions on the merits of her application by 28 April 2014 as required by the directions issued by the Commission. She sent an email to the Commission on 29 April 2014 advising of the withdrawal of her complaint.

The Legislative Test

[15] The power to make an order for costs is dealt with in s.611 of the Act which relevantly 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).”

[16] It is well established that an order for costs is a discretionary matter when the basis for making a costs order is established. Section 611 contains a number of separate bases for granting an order for costs. An application has been held to be made without reasonable cause if it is so untenable that it cannot possibly succeed 1.

Should an order for costs be made?

[17] SKF advances a number of alternative bases for its application for costs. In my view the basis with the most prospects of success is that the application was made without reasonable cause.

[18] The first jurisdictional argument advanced by SKF was that the termination was on account of a genuine redundancy. This concept, defined in s.389 of the Act, has a number of components and involves the assessment of a range of factual circumstances. Not all terminations of employment on account of redundancy will fall within this definition. I do not consider that the circumstances of this matter which involved a relatively short period between the decision to make Mrs Lazarus’s position redundant and the termination of her employment, leads to the conclusion that the application was manifestly untenable.

[19] On the other hand the bar to instituting proceedings in the deed entered into by Mrs Lazarus was quite clear. In my view the consequence of entering the deed meant that the application was manifestly untenable and was made without reasonable cause. It follows that the Commission has jurisdiction to make a costs order.

[20] It remains necessary to consider whether an order for costs should be made in the circumstances of this case. The policy behind the power to award costs on this ground appears to be to discourage frivolous applications. It is not consistent with the objects of the Act that applications that do not have a sound basis are made and consume time, resources and costs of parties who are required to participate in them.

[21] In this case I note that the deed was clarified by SKF in a number of communications between Mrs Lazarus and Ms Hosking prior to it being signed. Its terms contain an acknowledgment that an opportunity had been provided to obtain independent legal advice on its force and effect. Correspondence from SKF prior to the signing of the deed made it clear that the redundancy benefits to which Mrs Lazarus was entitled, would be paid irrespective of her entering the deed. A further payment was made arising purely from the making of the deed. The letters to Mrs Lazarus advising her that her application was in breach of the bar to proceedings in the deed were clear. They were sent to her on 24 March 2014 and 23 April 2014. Notwithstanding these circumstances, SKF was put to the expense of filing a detailed outline of submissions and a supporting witness statement with the Commission on 28 April 2014.

[22] In all of the circumstances I consider that Mrs Lazarus should be ordered to pay reasonable costs of preparing the outline of submissions on jurisdictional grounds and the supporting witness statement. I determine that the amount to be paid for costs should be $1,000. I issue an order giving effect to this decision concurrently with the handing down of this decision (PR554149).

VICE PRESIDENT

Final written submissions:

SKF Australia Pty Ltd on 20 June 2014.

Mrs Teisha Lazarus on 29 July 2014.

SKF Australia Pty Ltd on 5 August 2014.

 1   General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125.

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<Price code A, PR554032>