Ms Cassandra Thong v The Trustee for the Smartscape Trust T/A RAMS Home Loans Centre Sydney CBD

[2019] FWC 1814

[2019] FWC 1814

FAIR WORK COMMISSION

DECISION

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

Ms Cassandra Thong
v
The Trustee for the Smartscape Trust T/A RAMS Home Loans Centre Sydney CBD
(U2018/10413)

DEPUTY PRESIDENT BULL SYDNEY, 21 MARCH 2019

Application for costs, matter discontinued, application for costs under s.400A and s.611 against the applicant, meaning of ‘vexatiously,’ ‘without reasonable cause’ and ‘no reasonable prospect of success,’ application dismissed.

[1] On 9 October 2018, Ms Thong (the applicant) made an application under s.394 of the Fair Work Act 2009 (the Act) alleging she was unfairly dismissed. The application named Smartscape Pty Ltd T/A Rams Home Loans as the employer.

[2] Ms Thong’s unfair dismissal application stated that she had been dismissed for poor performance but had not been given any warnings or a chance to improve.

[3] On 10 October 2018, the Commission forwarded a copy of the application to the respondent and advised that the matter had been listed for telephone conciliation before a Fair Work Commission (the Commission) Conciliator on 2 November 2018. The correspondence stated that a response must be filed within 7 days, and a copy of an employer response Form F3 was attached to the correspondence.

[4] On 30 October 2018, the Commission wrote to the employer advising that an employer response had not yet been filed and that Rule 19 of the Fair Work Commission Rules 2013 required a response to be filed within 7 days of receipt of the unfair dismissal application and attached another copy of the Form F3.

[5] On 30 October 2018, a Form F3 was filed. The response was filed by an entity known as The Trustee for the Smartscape Trust T/A RAMS Home Loans Centre Sydney CBD (the respondent) naming itself as the employer. Pursuant to s.586 of the Fair Work Act 2009 (the Act) the application is amended to the extent that the true legal employer of the applicant is correctly identified.

[6] The response submitted that the Commission was without jurisdiction to deal with the application as the respondent was a small business with 9 employees and the applicant did not meet the minimum employment period of 12 months employment for a small business. Under the heading of representation the F3 stated that the employer did not have a representative.

[7] On 1 November 2018, a Form F53 was filed by Mr Brad Adams from The HR Dept – Lower North Shore advising that he had commenced to act for the respondent.

[8] There is no issue that the applicant’s employment period was less than 12 months but greater than 6 months. Section 383(b) of the Act provides that an employee must have completed a minimum of 12 months’ employment when employed by a small business to be protected from unfair dismissal.

[9] The telephone conciliation proceeded but was unsuccessful. The matter was then referred to the chambers of Deputy President Dean who, on 9 November 2018, requested the applicant provide any evidence that she had completed the minimum period of employment.

[10] On 15 November 2018, the applicant sent an email to the Commission advising that she disputed the employer’s contention that it was a small business and only had 9 employees. The applicant’s email provided a list of 17 persons whom she stated were employees of the respondent and named 3 businesses that she stated were associated with the respondent.

[11] On 26 November 2018, the respondent provided a detailed list of its full time employees at the relevant time, being 11 in total, a variation from the response provided in the F3.

[12] The Commission then wrote to the applicant on 28 November 2018 asking whether she wished to continue with her application. On the same day the applicant responded in the following terms:

“I will definitely not withdraw my application as the response with the evidence are all lies from them (sic).

I want the opportunity for a fair hearing and to prove it’s not a small business.”

[13] On 29 November 2018, the application was referred to my chambers and on 30 November 2018 directions were issued to the parties advising that a hearing would take place on 4 February 2019 to deal with the jurisdictional objection raised by the respondent and for the parties to file their outline of submissions and witness statements by the listed dates below:

•  4 January 2019 - Respondent’s jurisdictional submissions and witness statements

•  25 January 2019 – Applicant’s jurisdictional submissions and witness statements

•  1 February 2019 – Respondent’s reply

[14] The matter was also listed for a telephone mention before the Commission on 11 December 2018 at which the directions were confirmed. Mr Adams appeared for the respondent and the applicant advised she would have 2 witnesses at the hearing.

[15] In accordance with the directions the respondent’s representative Mr Adams filed and served their submissions and witness statements on 3 January 2019. The submissions concluded by stating that the respondent employed 11 employees and that the application should be dismissed. It further sought to be heard on costs following the dismissal of the application. The basis for the foreshadowed costs application was not declared.

[16] On 30 January 2019, the Commission sent an email to the applicant advising that she had not complied with the directions to file submissions and witness statements by 25 January 2019.

[17] On 1 February 2019, the respondent sent an email to the Commission and the applicant requesting the application be dismissed pursuant to ss. 399A(1)(b) and 587 of the Act and again foreshadowed an application for costs, referring to ss. 400A and 611.

[18] On the same day the Commission records indicate that the applicant left a voice mail with my Chambers requesting advice on how to discontinue her application. Shortly thereafter the applicant sent an email to the Commission and the respondent stating:

“Hi I would like to with (sic) this application that is scheduled for the hearing on 4 February 2019.

Regards

Cassandra Thong”

[19] In response the Commission sent the applicant correspondence noting that she wished to discontinue her application and confirming that the 4 February 2019 hearing would be cancelled.

[20] On 15 February 2019, the respondent filed an application for costs stating that the applicant had caused costs to be incurred by the respondent by her failure to discontinue her claim after conciliation of the matter in light of the material provided to her. Further, the applicant caused costs to be incurred by the respondent by her failure to discontinue her claim earlier and by waiting until one working day prior to the hearing to withdraw her claim when she had the respondent’s evidence from on or about 4 January 2019. 1

[21] The costs claimed total $9,637.50 being $6,737.50 for the services of The HR Dept and $2,900 for legal counsel fees for the period of 30 October 2018 to 2 February 2019.

[22] Ms Thong opposed the costs application stating she was advised by the Commission she had put in the wrong application and the right application should be ‘general protections or work place bullying’. 2

Determination

[23] In general parties bear their representational costs in any matter before the Commission. However, the Commission has the discretion to order one party in an unfair dismissal matter to pay the other party’s costs where it is satisfied that certain conditions have been met.

[24] The respondent makes its costs application under and ss.400A and 611 of the Act. An application for an order for costs under ss.611 or 400A of the Act must be made within 14 days after the matter is discontinued. 3 Ms Thong discontinued her application on 1 February 2019, the costs application was made on 15 February 2019 being the 14^th day following the applicant’s discontinuance advice.

Section 400A

[25] Section 400A Costs Orders against Parties of the Act is a specific costs provision for unfair dismissal applications and is couched in the following terms:

(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.

[26] The questions of whether a party’s act or omission was unreasonable and whether such an act or omission has caused the other party to incur costs were discussed in Australian and International Pilots Association v Qantas Airways Ltd (No 3). 4 The concept was also considered in Anita Goffet v Recruitment National Pty Ltd5 under the Workplace Relations Act 1996 concerning a failure of the applicant to attend conciliation proceedings.

[27] The respondent raised its jurisdictional objection to the unfair dismissal application when filing its F3 response on 30 October 2018. 6

[28] On 15 November 2019, the applicant provided to the Commission by way of email advice why she did not accept the respondent’s jurisdictional arguments with a list of alleged associated entities and employees of the respondent. On 27 November 2019, the respondent provided a written response dated 26 November 2018 as to why its jurisdictional objection was being maintained and increased the number of its stated employees from 9 to 11 and requested that the application be withdrawn.

[29] The following day the applicant advised the Commission and the respondent that she did not accept the employer’s response. As a result, the matter was set down to hear the respondent’s jurisdictional objection.

[30] The respondent states that the applicant failed to discontinue her claim “after conciliation of the matter in light of the material provided to her.” It is assumed that this assertion refers to claiming costs under s.400A of the Act as being an unreasonable act in connection with continuation of the matter.

[31] The Commission is not privy to what occurred at the telephone conciliation conducted by the Commission conciliator. It is presumed the material the respondent is referring to, by stating “in light of the material provided to her,” is the respondent’s letter of 26 November 2018 to Dean DP.

[32] It is unclear on what basis the costs application seeks to recover costs of the respondent in filing its F3 response (albeit out of time) on 30 October 2019. The unreasonable act of the applicant in connection with the filing of her unfair dismissal application is not readily apparent to the Commission.

[33] The preparing for and attending the telephone conciliation, and providing a written response to the submissions of the applicant during November 2019, likewise do not relate to an unreasonable act of the applicant in connection with the conduct of her application or continuation of it.

[34] The prosecution of an incompetent or hopeless case can be regarded as "an unreasonable act" within the meaning of s.400A of the Act. However, the applicant was entitled to dispute the respondent’s assertion that it was a small business employer. As is evident from the respondent’s correspondence of 26 November 2018 its business arrangements are not straightforward. The respondent itself adjusted the number of employees it employed in responding to the application.

[35] Where in this case the jurisdictional objection is not accepted by the applicant, and the details of the jurisdiction objection resides within the corporate knowledge of the respondent, it was incumbent upon the respondent to elaborate on its assertion that it and its associated entities employed less than 15 employees. This was done appropriately by way of filing submissions and a witness statement.

[36] I am not satisfied that the respondent’s costs of filing its submissions and a witness statement including the costs of legal counsel, particularly where legal counsel are not on the record, 7 have been incurred by an unreasonable act of the applicant in connection with the conduct of her application or continuation of it.

[37] The applicant did not file as directed a response to the respondent’s submissions by 25 January 2019 and discontinued her application 7 days later on 1 February 2019 before the 4 February 2019 listed hearing date.

[38] The respondent states that the applicant caused costs to be incurred by her failure to discontinue her claim earlier and by waiting until one working day prior to the hearing to withdraw her claim when she had the respondent’s evidence from on or about 4 January 2019. Exactly when the applicant should have discontinued her claim is not stated other than submitting it should have been earlier than it was and stating it should have occurred after conciliation of the matter.

[39] The applicant discontinued her application prior to the hearing; there is no evidence of additional costs incurred by the respondent following the filing of their submissions on the objection they raised, other than the cost of 2 hours for follow up calls/emails and finalising Ms Thong’s discontinuance.

[40] Having considered the above, I am not satisfied that the Commission’s discretion should be invoked under s.400A of the Act to award costs to the respondent because of an unreasonable act or omission of the applicant in connection with the conduct or continuation of her application.

Section 611

[41] Section 611 Costs of the Act states as follows:

“(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, 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)”

[42] Sub-section s.611(2) of the Act provides an exception to the general rule at s.611(1), that parties will bear their own costs in proceedings before the Commission. The exception being that the Commission may make an order for costs if it is satisfied that the application was made vexatiously, without reasonable cause or that it was reasonably apparent that the application had no reasonable prospects of success.

[43] The power to award costs conferred by s.611 of the Act is clearly discretionary in nature. It provides that where the Commission is ‘satisfied’ of certain matters, then the Commission ‘may’ make an order for costs. 8 In considering whether the Commission should exercise its discretion to award costs, as an exception to the general rule that a party must bear their own costs, it does not necessarily follow that if the limited circumstances prescribed under s.611 apply, that the discretion will be exercised9.

[44] In Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission 10, the High Court observed that:

“‘Discretion’ is a notion that ‘signifies a number of different legal concepts’. In general terms, it refers to a decision-making process in which ‘no one [consideration] and no combination of [considerations] is necessarily determinative of the result.’ Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made. The latitude may be considerable as, for example, where the relevant considerations are confined only by the subject-matter and object of the legislation which confers the discretion. On the other hand, it may be quite narrow where, for example, the decision-maker is required to make a particular decision if he or she forms a particular opinion or value judgment. (Footnotes omitted)”

S.611(2)(a) Vexatious or without reasonable cause

[45] Wilcox J in Re Joseph Michael Kanan v Australian Postal and Telecommunications Union 11 stated:

“[29] 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. … ”

[46] The application is for an unfair dismissal remedy of which the merits have not been determined by the Commission. On the applicant’s own version of the circumstances leading to her dismissal regarding the lack of warnings, performance management or support it cannot be said the unfair dismissal application was made without reasonable cause.

[47] The approach generally taken by the Commission as to the meaning of vexatious in s.611(2)(a) of the Act is that stated by North J in Nilsen v Loyal Orange Trust. 12 The observations relate to the Workplace Relations Act 1996, however the relevant provision was in terms similar to s.611(2)(a) of the Act being whether an applicant “instituted the proceeding vexatiously or without reasonable cause”. His Honour said:

“The next question is whether the proceeding was instituted vexatiously. This looks to the motive of the applicant in instituting the proceeding. It is an alternative ground to the ground based on a lack of reasonable cause. It therefore may apply where there is a reasonable basis for instituting the proceeding. This context requires the concept to be narrowly construed. A proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party, or to gain a collateral advantage: see Attorney General v Wentworth (1988) 14 NSWLR 481 at 491. The approach of the High Court in an application for a permanent stay of criminal proceedings on the ground of abuse of process constituted by improper purpose is instructive. In Williams v Spautz [1992] HCA 34, (1992) 174 CLR 509,at 522, Mason CJ, Dawson, Toohey and McHugh JJ said:

“Bridge LJ identified one difficulty when he said ([1977] 1 WLR, at p 503; [1977] 2 All ER, at p 586):

‘What if a litigant with a genuine cause of action, which he would wish to pursue in any event, can be shown also to have an ulterior purpose in view as a desired byproduct of the litigation? Can he on that ground be debarred from proceeding? I very much doubt it.’ (Emphasis added.)

So would we. But his Lordship, by implication, evidently sees no difficulty with the case in which the plaintiff does not wish to pursue his or her cause of action to a conclusion because he or she intends to use the proceedings for a collateral and improper purpose.””

[48] The Full Bench in Church v Eastern Health t/as Easter Health Great Health and Wellbeing,  13defined a vexatious application in the following manner:

“[29] The question of whether an application was made 'vexatiously' looks to the motive of the applicant in making the application. It is an alternative ground to the ground that the application was made 'without reasonable cause' and may apply where there is a reasonable basis for making the application. In Nilsen v Loyal Orange Trust (Nilsen) North J observed that this context requires the concept of vexatiousness to be narrowly construed. His Honour went on to state that an application will be made vexatiously 'where the predominant purpose ....is to harass or embarrass the other party, or to gain a collateral advantage'.”

[49] In summary, a proceeding will be considered to have been instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party, or to gain a collateral advantage. None of these purposes have to my satisfaction been demonstrated as being attributed to the unfair dismissal application filed by Ms Thong.

S.611(2)(b) No reasonable prospect of success

[50] In A Baker v Salva Resources Pty Ltd 14 a Full Bench made the following observations with respect to s.611(2)(b) of the Act:

“[10] The concepts within s.611(2)(b) “should have been reasonably apparent” and “had no reasonable prospect of success” have been well traversed:

•  “should have been reasonably apparent” must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis, rather than a subjective test; 15 and

•  a conclusion that an application “had no reasonable prospect of success” should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless 16 or so lacking in merit or substance as to be not reasonably arguable.”17

[51] In Keep v Performance Automobiles Pty Ltd 18 a Full Bench stated that:

“[16] The FWC’s power to order that a person bear some or all of the costs of another person in relation to an application is only enlivened if the FWC is satisfied as to the matters set out in either s.611(2)(a) or s.611(2)(b) .

[17] The proper construction of s.611(2)(a) was recently considered by a Full Bench in Church v Eastern Health t/as Easter Health Great Health and Wellbeing (Church). Church is authority for the following propositions:

(i) The power to order costs pursuant to s.611(2) should be exercised with caution and only in a clear case.

(ii) A party cannot be said to have made an application ‘without reasonable cause’ within the meaning of s.611(2)(a), simply because his or her argument proves unsuccessful.

(iii) One way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether upon the facts known to the applicant at the time of instituting the proceeding, there was no substantial prospect of success.

(iv) The test imposed by the expression ‘without reasonable cause’ is similar to that adopted for summary judgment, that is, ‘so obviously untenable that it cannot possibly succeed’, ‘manifestly groundless’ or ‘discloses a case which the Court is satisfied cannot succeed’.

[18] As to s.611(2)(b), the FWC may make a costs order against a person if satisfied that ‘it should have been reasonably apparent’ to that person that their application had ‘no reasonable prospect of success’. The expression ‘should have been reasonably apparent’ in s.611(2)(b) imports an objective test, directed to a belief formed on an objective basis as opposed to the applicant’s subjective belief.

[19] There is Full Bench authority for the proposition that the Commission should exercise caution before arriving at the conclusion that an application had ‘no reasonable prospects of success’. In Deane v Paper Australia Pty Ltd 19 a Full Bench made the following observation about this expression in the context of enlivening a power to award costs under s.170CJ(1) of the Workplace Relations Act 1996;

“unless upon the facts apparent to the applicant at the time of instituting the [application], the proceeding in question was manifestly untenable or groundless, the relevant requirement in s.170CJ(1) is not fulfilled and the discretion to make an order for costs is not available 20”.”

[52] The matter was discontinued prior to the hearing of a jurisdictional objection raised by the respondent. Accepting that the jurisdictional argument of the respondent is correct, it does not follow that at the time of filing her application it should have been reasonably apparent on the facts known to the applicant that her unfair dismissal application had no reasonable prospect of success.

[53] In view of the above conclusions I am not satisfied that a costs order should be made in this matter and the respondent’s application is dismissed.

DEPUTY PRESIDENT

Written submissions

2019

Respondent

February 15

Applicant

March 11

Printed by authority of the Commonwealth Government Printer

<PR706016>

 1   At 2.2 (o) and (p) of respondent’s application

 2   Email of 11 March 2019. Who the applicant spoke to at the Commission was not stated

 3   S.402 of the Act

 4 [2007] FCA 879; (2007) at [28]

 5   [2009] AIRCFB 626 at[47]

 6   Rule 19 of the Fair Work Commission Rules The application was served on the respondent on 10 October 2018

 7   Pursuant to Rule 11(1) See Stephen Fitzgerald v Woolworths Limited[2017] FWCFB 2797 at [46]

 8   See S&L Kurc Nominees Pty Ltd as trustees for the Kurc Family Trust trading as Riot Art and Craft v Saddington [2006] (PR966909) at [22-23]

 9   See Wayne Stuart Walker v Mittagong Sands Pty Limited T/A Cowra Quartz [2011] FWA 2225 at [74]

 10 [2000] 203 CLR 194 at p204 per Gleeson CJ, Gaudron and Hayne JJ

 11 [1992] FCA 366, 43 IR 257

 12 [1997] 76 IR 180 at page 181

 13   [2014] FWCFB 810

 14   [2011] FWAFB 4014

 15   Wodonga Rural City Council v Lewis, PR956243, at para 6

 16   Deane v Paper Australia Pty Ltd, PR932454, at [7 and 8].

 17   A Smith v Barwon Region Water Authority, [2009] AIRCFB 769, at para 48

 18   Keep v PerformanceAutomobiles Pty Ltd [2015] FWCFB 1956

 19   PR932454

 20   Ibid at [8], also see Baker v Salva Resources Pty Ltd[2011] FWAFB 4014 at [10]; and Metecno Pty Ltd T/A Bondor v Cameron[2014] FWCFB 2128 at [16]