Ms Alana Sostarko v Dr Rosarii Mbu
[2012] FWA 5210
•19 JUNE 2012
[2012] FWA 5210 |
|
DECISION |
Fair Work Act 2009
s.611 - Application for costs
Ms Alana Sostarko
v
Dr Rosarii Mbu
(U2011/9821)
COMMISSIONER STEEL | ADELAIDE, 19 JUNE 2012 |
Termination of employment - Application for costs.
Introduction
[1] On 16 March 2012, the tribunal gave an ex-tempore decision in the determination of the unfair dismissal application by Ms Sostarko (the applicant) against her former employer Dr Mbu (the respondent). That decision found the applicant was summarily dismissed without substantive and procedural fairness and was unfair within the meaning of the Act. The applicant was awarded compensation of $5096.00.
[2] The applicant was represented by counsel in that matter with the permission of the tribunal, taking into consideration the respondent had no objection to the request by the applicant for representation and an observation as to the most efficient progress of the application at that time.
[3] This decision concerns a subsequent application by Ms Sostarko for costs against Dr Mbu.
[4] Both parties were represented, with permission, by counsel, in relation to the costs application.
The power to award costs
[5] The tribunal’s discretion to award costs in relation to an unfair dismissal application lies within s.611 of the Fair Work Act 2009 (the Act). It relevantly states:
“611 Costs
(1) A person must bear the person’s own costs in relation to a matter before FWA.
(2) However, FWA may order a person (the first person) to bear some or all ofthe costs of another person in relation to an application to FWA if:
(a) FWA is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or
(b) FWA 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: FWA can also order costs under sections 376, 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).”
[6] The power to award costs is therefore discretionary and subject to the above statutory requirements. In this matter costs may be awarded where the tribunal is satisfied that the respondent had responded vexatiously or without reasonable cause to the application; or alternatively, that it should have been reasonably apparent to the respondent that its response to the application had no reasonable prospects of success.
Applicant’s submissions
[7] The applicant is seeking that the respondent pays the costs in respect to the unfair dismissal proceedings and the costs of and incidental to the costs application.
[8] Mr Sloan, for the applicant, asserts that the following aspects of evidence satisfy the requirements of s.611 of the Act:
“In the ‘Respondent’s Outline of Submissions’ the Respondent:
a. Admits that the Applicant was dismissed without notice. (Paras. 1 and 5)
b. Says that the Applicant was asked to leave immediately. (Para. 2)
c. Denies that the dismissal was harsh, unjust and unreasonable. (Paras. 6 and 34)
d. Says the Applicant was dismissed for poor performance and behaviour. (Paras. 6, 9 and 31)
e. Acknowledges that she does not assert the reasons for dismissal constitute serious misconduct. (Para. 32)
f. Acknowledges that she did not specifically warn the Applicant that if she did not improve her performance she would be dismissed. (Para. 33 g)
g. Denies that the Application is entitled to any further compensation, (other than a payment of 2 weeks in lieu of notice). (Paras. 35 and 36)” 1
[9] The respondent, a small business employer, was required to comply and give consideration to the requirements of the Small Business Fair Dismissal Code (SBFDC) in terminating the applicant and on the evidence they failed to comply or give consideration to such requirements;
[10] The termination was an instant dismissal for reasons that were not considered by the tribunal to be serious misconduct by an employee. The respondent when alerted to this and the requirements of the SBFDC during the merit proceedings, failed to respond and did not alter her approach to these matters. The applicant asserts that the respondent’s reasons were always going to be found to be not substantive to sustain such a dismissal; that the respondent accepts by her evidence that the reasons for dismissal are do not fall within the definition of serious misconduct and that the respondent was given sufficient opportunity to reconsider her approach and position at various times in the proceedings but declined to do so.
[11] Mr Sloan asserts that the respondent had no valid reason for an instant dismissal and hence a basis to argue they had reasonable grounds to defend these proceedings; that it was readily apparent to the respondent before the hearing and further during the course of the hearing that the respondent’s position had no prospect of succeeding; that the continuation of the respondent’s defence of the proceedings was a vexatious response to the application; that the applicant offered to settle this matter and advised an offer of $2200 prior to the hearing and this was not responded to by the respondent; that the respondent’s offer of 2 weeks pay was not a serious offer as it simply reflected the notice not paid by the respondent and that the applicant had made realistic offers and could not be considered unreasonable in her pursuit of a remedy.
Respondent’s submissions
[12] The respondent relies on various precedent decisions which reflect that s.611 of the Act indicates a presumption against costs in Fair Work Australia matters and that parties bear their own costs. Costs will be awarded rarely under the section and exceptional circumstances are required to justify the making of such an order (see Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission and Another 2).
[13] The respondent further states that the context of the Act supports that such unfair dismissal applications be available for persons of limited means, that many respondents are small businesses of limited means and proceedings may be conducted without legal representation. Costs or the threat of costs should not be detriment and prevent such proceedings (see O’Reilly v SA Waste Management Pty Ltd 3).
[14] The respondent’s actions were not vexatious and as such did not reflect the grounds examined by Asbury C in the matter of Harris v Home Theatre Group Pty Ltd t/as Home Theatre Group, 4 but were based on motivation to defend her reasons for dismissal.
[15] The respondent asserts that there is a significant threshold to be considered in respect to the basis of a finding on there being “no reasonable prospects of success” as characterised in the matter of Australian Broadcasting Commission v Dickson. 5 The respondent encouraged extreme caution by the tribunal in that the respondent’s case was always plausibly arguable and by an unrepresented party. Further, that the respondent when she ascertained the requirements for notice within the SBFDC that she offered to pay and did not contest such a liability.
[16] The respondent asserts that they were entitled to pursue the issue of whether the dismissal was harsh unjust or unreasonable in arbitral proceedings despite conceding the applicant was summarily dismissed because the summary dismissal was only one consideration in the determination of the harsh, unjust or unreasonable finding by the tribunal, .i.e. findings of fact on the assertions of the parties.
[17] The respondent instead relies on the decision of Roberts C in the matter of Fisher v M & D Employment Services Pty Ltd. 6 They also assert that the actions of the respondent are not sufficient to meet the high threshold for “no reasonable prospects of success.” The actions were not vexatious on the evidence and were based on the identification of genuine performance issues for the dismissal.
[18] The failure to pay notice does not meet that threshold and does not render a dismissal harsh unjust or unreasonable whereby the respondent’s case is not manifestly untenable or groundless.
[19] In considering whether it should have been reasonably apparent to the respondent, this needs to be considered in the context of her self-representing at all stages of the proceedings. As such, this would not be a sufficiently exceptional case as to warrant cost being awarded.
Consideration
[20] The Act provides that unfair dismissal applications be accessible to persons of limited means and the proceedings be conducted without legal representation. Procedures are required to be quick, flexible and informal, addressing the needs of the parties and ensuring a fair go all around. A party to an application for costs shall have to establish that the discretion to award costs be instigated and the discretion be applied.
Did the respondent react to the application vexatiously or without reasonable cause?
[21] In relation to this question the tribunal is guided by the views of Asbury C in the matter of Harris. 7 The Commissioner relevantly states:
“The grounds in s.611(2) relate to the point at which an application was made. The ground in s.611(2)(b) may include circumstances where an applicant persists with an application after being informed during conciliation that there are no reasonable prospects of success, or in circumstances where, on facts that are apparent, the applicant is excluded from making an application for an unfair dismissal remedy.
The question of whether an application was instituted vexatiously is answered by reference to the motives of the applicant in instituting the proceedings. A proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass, annoy or embarrass the other party, or to gain a collateral advantage. A proceeding will also be instituted vexatiously where irrespective of the motive of the litigant, it is: ‘so obviously untenable or manifestly groundless as to be utterly hopeless.’
Other grounds upon which an application could be said to have been instituted vexatiously have been identified as: the legitimacy or otherwise of the motives of the applicant; existence or lack of reasonable grounds for the claims sought to be made; repetition of compliance with or disregard of the Court’s practices, procedures and rulings; persistent attempts to use the Court’s processes to circumvent its decisions or other abuse of process; wastage of public resources and funds; and the harassment of those who are subject of the litigation which lacks reasonable basis.”
(Endnotes and paragraph numbers omitted)
[22] From the file references in this matter conciliation was delayed as the applicant failed to be available and thereafter changed representation. Apparently conciliation did not occur and the matter was referred for arbitration.
[23] In an examination of all the material as to the motivation of the respondent, there is no evidence prior to the commencement of the hearing of the respondent involving herself in vexatious conduct as referenced above. The respondent has not been legally represented nor has apparently delayed the proceedings, harassed the applicant or attempted to circumvent the applicant’s submissions.
[24] In respect to the respondent being vexatious in continuing the matter when they were made aware that the applicant had in fact been summarily dismissed by their actions. That is the nature of the dismissal without notice was summary dismissal. The tribunal does not agree with the respondent’s submission that such conduct in continuing the proceedings and not seeking to bring them to an end is vexatious conduct. The respondent submitted and consistently argued a position of lack of performance by the applicant and a termination of employment including warnings. The tribunal found it to be otherwise but found the respondent consistent and resolute in the belief of her actions.
[25] Similarly “without reasonable cause” must be considered in the context of the respondent’s situation. A respondent must answer the application. It is apparent from the evidence the respondent held a genuine belief and felt strongly that the applicant did not perform well in her role as an employee and was considered to have been repeatedly warned and failed to improve and was dismissed for such performance. It is later accepted by the respondent that it was a summary dismissal in discussion within the hearing. The respondent was entitled to vigorously defend its actions in conciliation and in fact not make offers to the applicant in these circumstances, as was the applicant.
[26] It is clear the respondent considered her case at least arguable on her terms and knowledge in that she submitted her version of warnings and intended to provide multiple witnesses to support her assessment of the applicant. She submitted various grievances as to the applicants conduct. The tribunal found the dismissal harsh, unjust and unreasonable as there were no valid warnings or meetings and an inept approach to the disciplining of the employee who was ultimately summarily dismissed. Given the apparent perceptions and the actions of the respondent the tribunal made a decision in the applicant’s favour. If the respondent had been otherwise more skilled and knowledgeable in disciplinary procedures and employment the dismissal may have been characterised and completed differently. It follows the validity of the reason and fairness of the process would have been different. In this context and in this matter I am not persuaded that the respondent’s actions give rise to a response characterised as vexatious or without reasonable cause.
Should it have been reasonably apparent to the respondent that their response to the application had no reasonable prospects of success?
[27] It is asserted by the respondent that such a conclusion can only be reached if the circumstances of the response are “...so lacking in merit or substance as to be not reasonably arguable.” 8
[28] The respondent took the position it had dismissed the applicant albeit for performance, had provided warnings and applied the dismissal ‘with immediate effect’. The respondent’s evidence was direct and given unhesitatingly and frankly. It could not be said that the respondent’s position was not argued and based on the applicant’s conduct. The respondent intended to provide several witnesses to substantiate her case. The tribunal however declined to hear such witnesses as they were considered not directly involved in the employment matters and processes.
[29] The conduct of the hearing was not extended by the respondent and she continued to indicate a serious and considered view albeit somewhat misconceived and inaccurate, conceptually of her position as an employer.
[30] In consideration the respondent’s case could not be described as manifestly groundless or lacking in merit as to be not reasonably arguable in the context of a small business medical practice employer with one employee.
[31] Having considered all the circumstances and submissions I am not persuaded that the respondent was vexatious or responded without reasonable cause in this matter or that it should have been reasonably apparent to her that that her response had no reasonable prospect of success. The respondent’s position was misconceived but does not instigate the statutory requirements. I therefore find that this application is not one where I should exercise my discretion to award costs. The application for costs is dismissed.
COMMISSIONER
Appearances:
Mr C Sloan for the applicant
Ms A Sibree for the respondent
Hearing details:
2012:
Adelaide
7 June
1 Applicant’s Submissions on Application for Costs at Para 7
2 (2006) 237 ALR 672
3 [2012] FWA 608 at paras 12-13
4 [2011] FWA 2910
5 Unreported judgement AIRC, PR977410, 13 July 2007, Lawler VP
6 [2011] FWA 3290 at para 25
7 Ibid at 19-21
8 Baker v Salva Resources Pty Ltd, [2011] FWAFB 4014
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