Ms Diane Miles v Hansen Yuncken Pty Ltd

[2013] FWC 6129

[2013] FWC 6129

FAIR WORK COMMISSION

DECISION

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

Ms Diane Miles
v
Hansen Yuncken Pty Ltd
(U2012/10488)

COMMISSIONER HAMPTON ADELAIDE, 13 SEPTEMBER 2013

Unfair dismissal application granted - application for costs - whether respondent acted vexatiously or without reasonable cause - whether should have been apparent that respondent had no reasonable prospects of success - grounds not satisfied - application dismissed.

1. Introduction and case outline

[1] Ms Diane Miles had been an Administrative Assistant employed in connection with the New Royal Adelaide Hospital (NRAH) project and was dismissed on the grounds of an alleged redundancy. She successfully applied to the Fair Work Commission under the Fair Work Act 2009 for a remedy in relation to an unfair dismissal by her former employer, Hansen Yuncken Pty Ltd. Ultimately, Ms Miles was awarded compensation of $22,267. 1

[2] Ms Miles has now applied to have her legal costs paid by Hansen Yuncken on the basis that her former employer has acted vexatiously and without reasonable cause in its response to the application. Further, she contends that it should have been reasonably apparent to Hansen Yuncken that it had no reasonable prospects of success.

[3] Leading up to the final award of compensation there were two separate proceedings.

[4] The application to “re-open” - which involved the determination of the following issues:

• Whether Ms Miles had discontinued her unfair dismissal application during the course of earlier conciliation conducted by an officer of the Commission and should be re-opened;



• Whether the application had effectively been abandoned; and



• Whether the application was statute barred due to a related matter involving a workers compensation claim.

[5] The substantive hearing - which ultimately involved a concession by Hansen Yuncken that the dismissal was unfair and the determination of the remedy to be awarded. Up until that concession, Hansen Yuncken had contended that the dismissal of Ms Miles was a genuine redundancy and beyond the jurisdiction of the Commission. 2

[6] My findings in the application to re-open included that:

• The unfair dismissal application had not been determined by the Commission or properly discontinued by Ms Miles and the administrative treatment of the file could not be conclusive as to its actual standing; 3

There remained a valid application before the Commission and no formal re-opening was required. In reality, the present application was one to have the matter listed for determination; and 4

• The application was not statute barred as contended by Hansen Yuncken. 5

[7] Prior to the substantive hearing Hansen Yuncken conceded that the dismissal was unfair on procedural grounds. At that time, it contended that a small amount of compensation was warranted given the likelihood of dismissal a short time after the actual dismissal and the need to take into account the redundancy and other payments made by it at that time. Ms Miles sought the maximum compensation available under the Act on the basis that she had anticipated being in employment with Hansen and Yuncken for many years beyond the point of dismissal.

[8] I found that it was reasonable to assess the compensation on the basis that the applicant would, on the balance of probabilities, have remained in employment for a further period of some seven months. 6 I also took into account the severance payments and additional notice provided by Hansen Yuncken at the time of the dismissal.7

[9] Given the nature of the matter and the timing of the dismissal, 8 the capacity for the Commission to award costs in this case is established by s.611 of the Act in the following terms:

“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) 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).”

[10] There is no contest between the parties that this application has been validly made and that the other costs provisions of the Act are not relevant here. Hansen Yuncken however strongly opposes the suggestion that it acted in such a manner as to attract the findings required by s.611(2) of the Act.

[11] Accordingly, the following issues arise in this matter:

• Has Hansen Yuncken responded to Ms Miles’ application vexatiously or without reasonable cause?



• In the alternative - was Hansen Yuncken’s response made in circumstances where it should have been reasonably apparent that it had no reasonable prospects of success?

[12] A positive finding on either ground is sufficient to establish the discretion to consider whether an award of costs should be made against Hansen Yuncken in relation to this matter. There is also a degree of overlap between the two grounds in terms of the foundation relied upon by Ms Miles in each case.

[13] It is also necessary to consider the implication of the parties’ conduct in relation to both hearings, and the matter more generally, leading to the final decision in the unfair dismissal application.

2. The approach to be adopted in considering section 611 of the Act

[14] Given the overlap between the two issues and the matters relied upon by the parties, it is convenient to initially establish the approach that the Commission should adopt to the relevant costs provisions.

[15] The relevant principles have been conveniently summarised by Hatcher C in Walker v Mittigong Sands Pty Ltd T/A Cowra Quartz 9 and endorsed by the Full Bench in ACI Operations Pty Ltd v Cook.10 The principles relevant to this matter may be expressed as follows:

• In respect of unfair dismissal proceedings the point in time that the relevant test is to be applied is:



• in respect of s.611(2)(a)- when the parties file their evidence in response to the commission's directions and an assessment can be made on the uncontested material facts; and



• in respect of s.611(2)(b)- any time up until the parties complete their evidence and submissions i.e. the arbitration process is completed.



• The criteria 'no reasonable prospect of success' in paragraph 611(2)(b) is lower and wider than the term 'without reasonable cause' referred to in paragraph 611 (2)(a). The latter criteria is similar to the test traditionally applied by a Court to summarily dismiss actions. 11

In order to be 'satisfied' the Commission must make an assessment and arrive at the required conclusion on the balance of probabilities.

The term 'reasonably apparent' means that in undertaking its assessment the Commission must act objectively, but this does not exclude consideration of matters of impression or interpretation.

When the Commission is forming an opinion as to whether an application had a reasonable prospect of success, it is not necessary to find that there was a certainty of failure in the relevant party’s case. 12

No paraphrase of the expression 'no reasonable prospect of success' should be adopted, rather, full weight must be given to the expression as a whole.

• It is a matter of judgment, sometimes of fine judgment, whether in all of the circumstances of a particular case an application or response had no reasonable prospect of success.



• An assessment of whether an application or response was made without reasonable cause or had no reasonable prospect of success should be undertaken with caution, particularly when the matter had not been determined by the Commission and questions of fact and issues of law are important and in dispute.

[16] It is also the case that simply because an application or a response does not succeed, this does not mean that it had no reasonable prospects of success. 13

3. Has Hansen Yuncken responded to Ms Miles’ application vexatiously or without reasonable cause - s.611(2)(a)?

[17] Ms Miles contends that Hansen and Yuncken’s conduct was vexatious and without reasonable cause in relation to the application to re-open and the matter more generally.

[18] In relation to the application to re-open, Ms Miles contends that:

• Hansen and Yuncken raised matters of alleged hardship and loss in its outline of argument but did not attempt to establish that by evidence;



• Ms Miles was not represented at the original conciliation conference and Hansen Yuncken were aware that she had sought to obtain legal advice; and



• Hansen Yuncken argued the matter even though it was not prejudiced by the application to re-open.

[19] In relation to the substantive hearing and the application more generally, Ms Miles contends that:

• Hansen Yuncken knew the actual basis of the dismissal and its reliance upon the suggestion that it was a genuine redundancy as a jurisdictional point was not genuine and was only abandoned when it was forced to produce relevant documents to her representative;



• The concession by Hansen Yuncken was made some 11 months after the initial application and only after significant costs had been incurred by Ms Miles; and



• Any offers to settle made by Hansen Yuncken involved the resolution of all matters between the parties and this would have included Ms Miles’ claims in another jurisdiction. In that light, the proposals were not reasonable and the compensation awarded was significantly more than any settlement offers made.

[20] Hansen Yuncken contends that there is a very high hurdle to find that a party has acted vexatiously or without reasonable cause and that the applicant has not demonstrated those circumstances here.

[21] I am not persuaded that the conduct of Hansen and Yuncken in responding to the application was either vexatious or taken without reasonable cause. In terms of the re-opening application, the position of Hansen Yuncken was arguable and there were relevant disputes of fact and law. Further, the application of the Act and the Fair Work Australia Rules 2010 to the particular circumstances evident in this case had not been extensively considered by the Commission.

[22] In relation to the response more generally, I am not satisfied that the position of Hansen Yuncken was misconceived and advanced without reasonable cause. The original application raised many issues associated with the dismissal, including allegations that Ms Miles was dismissed because of allegations of sexual harassment. Indeed, these were amongst the central features of the application.

[23] Given the concession of Hansen Yuncken in relation to the unfairness of the dismissal, neither party led evidence in relation to that aspect. In the circumstances, it is not reasonable to presume that its position in relation to the application lacked reasonable cause. I do have reservations about its approach to the issue of genuine redundancy and whether the dismissal was unfair, however these concerns are not such as to meet the higher test of s.611(2)(a) of the Act.

[24] It is also clear to me that the actions of Hansen Yuncken in relation to its response could not be described as being vexatious. That is, the apparent motives could not be described as being to harass, annoy or embarrass Ms Miles, or to gain collateral advantage. 14 Further, for reasons outlined above, the position of Hansen Yuncken on the application generally could not be described as being obviously untenable or manifestly groundless.15 There was also nothing in its actual conduct of the response that would establish an abuse of process or other vexatious behaviour.16

[25] On that basis, there is no foundation to consider an award of costs under s.611(2)(a) of the Act.

4. Was Hansen Yuncken’s response made in circumstances where it should have been reasonably apparent that it had no reasonable prospects of success - s.611(2)(b)?

[26] Both parties also relied upon their position outlined above in relation to this issue.

[27] The immediate issue also requires an overall assessment; however it is convenient to consider the two proceedings that were conducted in this matter in order to reach the necessary conclusion.

[28] In relation to the application to re-open, Ms Miles contends that:

• Hansen Yuncken argued that the application had been discontinued and that there was no power to re-open; and it should have been reasonably apparent that this was not so;



• At no stage did Hansen Yuncken establish a reasonable belief that Ms Miles was not going to pursue the unfair dismissal application; and



• It should have been apparent that the application was not discontinued given that there was no formal notification from Ms Miles to that effect and Hansen Yuncken had sought to have further conciliation discussions after the point that it suggests the application was withdrawn.

[29] I have already found that the position of Hansen Yuncken on this element was arguable and there were relevant disputes of fact and law. I also found in the re-opening decision that Hansen Yuncken had acted on the understandable presumption that Ms Miles was in effect going to discontinue the application 17 and I accepted all its evidence as to the facts. This included a finding to the effect that the further conciliation discussions were initiated by Hansen Yuncken with a view to resolving other potential legal action with Ms Miles.

[30] Further, given the lack of clarity about the operation of the Act and the Rules in this case, it could not be said that it should have been reasonably apparent to Hansen Yuncken that its position on that matter had no reasonable prospects of success.

[31] On that basis, the response of Hansen Yuncken as it applied to the application to re-open does not provide a basis for a costs order. I would also add that given the conduct of the matter by Ms Miles to that point, which for the most part led to the need for the issue to be determined, I would not have exercised my discretion in relation to costs associated with that aspect in any event.

[32] In relation to the substantive hearing and the response to the application more generally, Ms Miles contends that:

• Hansen Yuncken should have known that its decision to dismiss Ms Miles was bound to be found unfair and that the alleged redundancy was not genuine;



• It should have been reasonably apparent to Hansen Yuncken that it had simply replaced Ms Miles and that a significant award of compensation would follow; and



• The evidence of Hansen Yuncken confirmed that Ms Miles was dismissed for reasons other than redundancy and this should have been evident.

[33] Hansen Yuncken contends that it was entitled to wait until the totality of Ms Miles’ evidence was known before making an assessment of its own case. Having done so, it conceded that the dismissal was unfair due the fact that it had not complied with a procedural obligation. In that regard it further contends that:

• The concession only went to procedural grounds and it would have been entitled to argue that the dismissal was not unfair, given that procedural deficiencies on their own do not mean that a dismissal is automatically unfair;



• The role performed by Ms Miles was no longer required and this was consistent with a redundancy;



• The fact that it chose not to contest the issues should not be held against it and it would not be reasonable to draw an inference that its position was not arguable;



• The concession was made before the substantive hearing and in the lead up to further conciliation conducted by another Member of the Commission; and



• The extent of compensation is a broad discretion for the Commission and the extent of projected employment (in the absence of the dismissal) was in particular subject to contested facts and findings.

[34] Before dealing with the substance of this issue, I would observe that settlement discussions between the parties are not in themselves an appropriate consideration as to the awareness of Hansen Yuncken in relation to the prospects of its case. There were discussions both before and after the application to re-open and it is of course reasonable in many circumstances for parties to attempt to resolve matters in their own best interests. However, the fact that a party attempts to resolve a matter should not be considered in the present context.

[35] I do note that settlement discussions may be relevant to an assessment of the conduct of the parties in terms of s.611(2)(a) and I have already considered this aspect in that context in this matter. I add that settlement discussions would also be relevant to the question as to whether costs should be granted as a matter of discretion, if the grounds for that existed.

[36] The concept of a party having “no reasonable prospects” is a lower threshold, however the presumption in the Act is that parties will, in most circumstances, not be responsible for the other party’s costs. Accordingly, in this case I must be positively satisfied that it should have been reasonably apparent to Hansen Yuncken that it had no reasonable prospects of success in its response to the application.

[37] I have earlier found that this threshold has not been met in relation to this matter in connection with the application to re-open.

[38] I do have reservations about the position of Hansen and Yuncken in relation to whether there was a genuine redundancy and whether the dismissal was unfair. On those aspects, I am inclined to the view that it should have been reasonably apparent that its case had no reasonable prospects of success in that respect. That is, assuming the dismissal was a redundancy - there was no suggestion that it had consulted about the redundancy as contemplated by the definition of genuine redundancy 18 in the Act. Further, its position on whether reasonable re-deployment options were utilised19 was always going to be problematic given the employment of another employee in the same position while the process was underway.

[39] In terms of the fairness of the dismissal, as part of the consideration of the remedy I found that Ms Miles was selected for dismissal on the basis of apparent performance concerns that were not properly identified to her at any time and that this had the effect of avoiding having to deal with them. I also found that in reality, Ms Miles was replaced by another employee. 20 Hansen Yuncken was entitled to wait and see the detail of Ms Miles’ case and to adjust its position accordingly.21 However, these findings were based for the most part, on the evidence provided by its own witness and these matters were therefore within its own knowledge.

[40] It is however important to note that the evidence led by Hansen Yuncken in relation to remedy was somewhat more limited than would have been the case if the concession on remedy was not made. I am reluctant to draw any inferences for present purposes from that fact, particularly given that prior to the substantive hearing it was not clear that either party was to give evidence and the Commission was only dealing with the more limited question of remedy at that point.

[41] The compensation awarded was significantly more than that proposed by Hansen Yuncken in the substantive hearing. However, the extent of compensation did depend to a large degree on the findings made in relation to likely duration of Ms Miles’ employment in the absence of the dismissal. These included findings about the circumstances leading to the dismissal, such as those outlined above, and despite the adverse findings, the extent of compensation was always going to depend upon inferences drawn from those findings and a degree of discretion. It is also relevant that Hansen Yuncken did not contend that no compensation should be given.

[42] On that basis, the following additional issues arise:

What are the implications of the concession on remedy including its timing; and

Should the potential findings about one element of the response lead to a finding in relation to Hansen Yuncken’s position more generally?

[43] Hansen Yuncken did not ultimately insist that the preliminary point in relation to the existence of a genuine redundancy be determined in advance of the merit. The concession on that issue and the nature of the dismissal took place immediately after the filing of Ms Miles’ submissions and evidence, and prior to the further conciliation and the substantive hearing.

[44] In the final wash-up, although there would have been some time spent on the submissions about the nature of the dismissal, much of the evidence provided was relevant to remedy and relied upon by Ms Miles in that context. Both parties benefited from the concession in terms of the context set for the Member-assisted conciliation and the significant reduction in the length and costs of the substantive hearing.

[45] These particular factors are however more relevant to issues of discretion and the extent of costs that should be awarded if an order is made.

[46] The second aspect is however more immediately relevant. The issue of merit (the nature of the dismissal) and remedy (in this case the extent of compensation) were always going to be intertwined. The Commission is obliged to consider all relevant factors in determining whether compensation is appropriate and if so, the level of that compensation. 22 Indeed, I heard some evidence about the circumstances leading to dismissal as part of the case about compensation. Given the nature of that assessment, and my view that the level of any compensation would always depend upon inferences that would arise from the facts, it is difficult to separate aspects of the response for present purposes.

[47] The context in which the limited evidence touching upon remedy was provided in this matter, is also relevant here. In particular, the absence of direct evidence about the reasons for dismissal occurred in relation to the limited issue of remedy and I consider that considerable care should be exercised when assessing the reasonable prospects of a case more generally in these particular circumstances.

[48] On balance, I am not persuaded that Hansen Yuncken’s response was made in circumstances where it should have been reasonably apparent that it had no reasonable prospects of success within the meaning of s.611(2)(b) of the Act.

5. Conclusions

[49] I am not persuaded that the circumstances permit an award of costs to be made in this matter.

[50] Even if the problematic aspects of Hansen and Yuncken’s case were considered in isolation, I would not have been inclined to award costs in any event due to the timing of the concession, the view that I have formed about other aspects of the case, and the interconnectedness of the matters in this particular jurisdiction.

[51] For the reasons given, there will be no award of costs in this matter.

Appearances:

B Deegan of Brian Deegan Lawyers (with permission) for Ms Miles.

A Manos (of Counsel)with T Kidman of Crawford Legal (both with permission) for Hansen Yuncken Pty Ltd.

Hearing details:

2013

Adelaide

August 19

 1   Diane Miles v Hansen Yuncken Pty Ltd[2013] FWC 3469.

 2   As a result of s.385(d) of the Act.

 3   Diane Miles v Hansen Yuncken Pty Ltd[2013] FWC 1394 at par [33].

 4 Ibid at par [34].

 5 Ibid at par [48].

 6   [2013] FWC 3469 at par [60].

 7 Ibid at par [67].

 8   Different costs provisions apply to an unfair dismissal application where the dismissal took place after 1 January 2013.

 9   [2011] FWA 2225.

 10   [2012] FWAFB 3292. (footnotes omitted)

 11   See also Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257.

 12   See also Spencer v Commonwealth of Australia [2010] HCA 28.

 13   Stan Kunce v Deliver Australia Pty Ltd[2012] FWA 6203.

 14   Nilsen v Loyal Orange Trust IRCA Decision No:267/97.

 15   Attorney-General v Wentworth (1998) 14 NSWLR 481 at 491.

 16   Re: Cameron (1998) 14 NSWLR 481 at 491.

 17   [2013] FWA 3469 at par [50].

 18   S.389(1)(b) of the Act.

 19   S.389(2) of the Act.

 20   [2013] FWC 3469 at par [45].

 21   Stan Kunce v Deliver Australia Pty Ltd[2012] FWA 6203.

 22   S.390 and s.392 of the Act.

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