Ms Fiona Fox v Wilderness Escape Outdoor Adventures Pty Ltd

[2011] FWA 8803

[2011] FWA 8803

FAIR WORK AUSTRALIA

REASONS FOR DECISION

Fair Work Act 2009
s.611 - Application for costs

Ms Fiona Fox
v
Wilderness Escape Outdoor Adventures Pty Ltd
(U2011/7880)

COMMISSIONER HAMPTON ADELAIDE, 22 DECEMBER 2011

Application for costs - unfair dismissal application determined in favour of applicant - whether respondent acted vexatiously or without reasonable cause or made response when it should have reasonably known that its position was without reasonable prospects - jurisdictional finding made on balance - position and conduct not vexatious - reasonable case presented and attempts to resolve matter not consistent with alleged vexatious defence of application - pre-conditions for costs order not met - costs application dismissed.

INTRODUCTION

[1] This is an application by Ms Fiona Fox (Ms Fox or the applicant) seeking costs pursuant to s.611 of the Fair Work Act 2009 (the Act). The application is made in the context of an earlier application claiming a remedy for an unfair dismissal pursuant to s.394 of the Act. The respondent employer is Wilderness Escape Outdoor Adventures Pty Ltd (Wilderness or the respondent).

[2] The original s.394 application was determined by this arm of Fair Work Australia on 28 November 2011 1 where I found on balance that Ms Fox had been dismissed within the meaning of the Act, the dismissal was unreasonable, and that an amount of $3,631 in compensation was appropriate.

[3] On 20 December 2011, after hearing the s.611 application and considering the relevant materials and submissions of both parties, I advised that I was not satisfied that the statutory requirements for the costs application had been met and that it would be dismissed. 2 I also advised that I would subsequently issue reasons for that decision, which I now do.

THE POWER TO AWARD COSTS

[4] Section 611 of the Act provides as follows:

“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.”

[5] Accordingly, the power to award costs is discretionary and subject to specified statutory prerequisites. Costs do not follow the event as the presumption of the Act is that each party bears their own costs. However, costs may be awarded (in this case) where Fair Work Australia is satisfied that the respondent has responded vexatiously or without reasonable cause, or alternatively, that it should have been reasonably apparent to the respondent that its response to the application had no reasonable prospects of success.

THE PRESENT APPLICATION

[6] Mr Scragg, who continued to appear with permission for Ms Fox, contended that costs should be awarded in favour of the applicant based upon both Wilderness’s response and its conduct in the lead up to and during the hearing of the substantive application.

[7] Those elements said by the applicant to satisfy the requirements of s.611 of the Act included the following assertions:

• Wilderness refused to acknowledge that it had terminated Ms Fox (or alternatively constructively dismissed her) so as to cause distress, embarrassment or annoyance to the applicant;



• Wilderness raised a number of personal matters that went beyond the scope of the applicant’s “complaint” and other issues that were collateral to the issue to be determined that were intended to gain a collateral advantage by causing embarrassment to Ms Fox;



• The respondent refused to conciliate in good faith on the basis that there was no jurisdiction for Fair Work Australia and this compelled Ms Fox to proceed with a hearing;



• Wilderness conducted itself during the hearing in a manner that protracted the hearing and put the applicant to additional and unnecessary costs; and



• Wilderness engaged legal representation during the process that made it necessary for Ms Fox to obtain representation and to engage a solicitor.

[8] In particular, the applicant sought her costs for the second day of the hearing of the substantive matter based primarily upon what was said to have been the unreasonable conduct of the respondent in its defence of the application during the hearing.

[9] The respondent was represented, with permission, in these proceedings by Ms Albertini. Wilderness contended that no costs should be awarded against it and that this application should not have been made.

[10] Wilderness asserted in effect that it had conducted itself reasonably and further, genuinely considered that it did not dismiss the applicant. The respondent also denied it had raised irrelevant matters or intended to cause distress to Ms Fox. On the contrary, Wilderness pointed out that it had offered re-employment to Ms Fox at all relevant times including during the hearing of the matter.

[11] Wilderness also contended that it had twice offered to settle for a monetary sum in the lead up to the hearing and made various attempts to achieve a “mediated” outcome.

CONSIDERATION

[12] In Council ofKangan Batman Institute of Technology and Further Education v AIRC and Anor [2006] FCAFC 199 the Full Federal Court said relevantly as follows:

“60 The question therefore arises whether, as contended by counsel for Ms Hart, the plaintiff instituted the proceeding vexatiously or without reasonable cause. A party does not institute proceedings without reasonable cause merely because that party fails in the argument put to the Court: R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia (1978) 140 CLR 470 per Gibbs J at 473. The section reflects a policy of protecting a party instituting proceedings from liability for costs, but that protection may be lost. Although costs will rarely be awarded under the section and exceptional circumstances are required to justify the making of such an order (see Heidt v Chrysler Australia Ltd. (1976) 26 FLR 257 per Northrop J), a proceeding will be instituted without reasonable cause if it has no real prospects of success, or was doomed to failure: see Kanan v APTU (1992) 43 IR 257 per Wilcox J; see also Bostik (Aust) P/L v Gorgevski (No 2) (1992) 36 FCR 439; and Nilsen v Loyal Orange Trust (1997) 76 IR 180.”

[13] This approach remains apposite to s.611(2)(a) of the Act with the necessary modifications in this case to address the conduct and motives of the respondent and its response to the unfair dismissal application. A party may also be found to have acted vexatiously where the predominate purpose of its application or response is to harass or embarrass the other party or to gain a collateral advantage rather than seeking adjudication of the issues. 3

[14] In Baker v Salva Resources Pty Ltd 4 the Full Bench provided a useful summary of the approach to be taken to s.611(2)(b) of the Act as follows:

“[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; 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 or so lacking in merit or substance as to be not reasonably arguable.”

[15] Although the parties (constructively) agreed to deal with all issues arising from the unfair dismissal application as part of a single hearing, the major focus of the proceedings concerned whether there was a dismissal within the meaning of the Act.

[16] Without detracting from the balance of the substantive unfair dismissal decision, the following extract illustrates the nature of the findings as to the existence of a reviewable dismissal:

“[72] An objective consideration of the respondent’s conduct is required. If the applicant had resigned, the question would be whether the employer’s course of conduct was such that resignation was the probable result or that the applicant had no effective or real choice but to resign?

[73] In relation to any form of dismissal in a case such as this, it is also important to look beyond the stated intentions of the parties and to objectively consider the effect of the parties’ action in the context in which they occurred.

[74] There was nothing unreasonable about the concept of expressing mutual appreciation and Wilderness had been generous to the employees in relation to its attitude to the TOIL and other overpayments, and in providing access to company equipment. However, the manner in which it sought that indication of appreciation led to Ms Fox feeling threatened and uncomfortable and the focus upon the staff housing as an issue was in her case, unfair and unhelpful. The repeated insistence upon an expression of appreciation in these circumstances as the basis for employment to continue became the focus.

[75] The applicant’s final refusal to respond positively was not a resignation, but rather in reality, the acceptance of the inevitable that Wilderness was treating the relationship as being at an end and the employer was suggesting a basis upon which it might have been resumed, which she was not willing to accommodate.

[76] On balance, I consider that the applicant was dismissed within the meaning of the Act. That is, the fundamental reason for the conclusion of the relationship was that the respondent was seeking an expression of personal appreciation from Ms Fox, including in relation to the staff housing, and the applicant’s failure to do so led to Wilderness purporting to treat her conduct as a resignation and removing her from the roster and in effect, from employment more generally. In other words, the cessation of the employment relationship was objectively, the probable result of the employer's course of conduct.”

[17] The evidence about the attempts by the parties to resolve the matter is incomplete. There is also a question as to whether the post lodgement conduct more generally is relevant to the issues raised by s.611(2)(b) of the Act. However, both parties have relied on various matters arising during the pre-hearing and hearing stages of the matter and such conduct is in my view capable of shedding light upon the question of motive and intent particularly as raised by s.611(2)(a) of the Act. 5

[18] It is reasonably apparent that the respondent initially did not wish to consider the resolution of the matter on the basis of some form of payment to the applicant. This could be described in this case as being unwise and in isolation, perhaps unhelpful however this falls well short of being vexatious. Indeed, the respondent was offering at various points of the immediate pre-hearing and hearing stages to reinstate Ms Fox. Although I have found that reinstatement was not an appropriate remedy following the impact of the hearing and the attitude of Ms Fox to that prospect, 6 the fact that the respondent was in effect offering the primary remedy under the Act is an important consideration.

[19] The respondent did also offer to resolve the matter by a payment of “compensation” in the lead up to the hearing. Although this was less than that ultimately granted (about half) these actions are not consistent with the suggestion that Wilderness was acting vexatiously or without reasonable cause in its response to the application.

[20] It is also important to note that in the immediate pre-hearing stage, I recommended to both parties that some further conciliation take place. Wilderness actively sought that this conciliation occur and it was Ms Fox who after initially agreeing to do so, then declined. 7

[21] In terms of the basis of Wilderness’s response, this involved the contention that it had not dismissed Ms Fox. Although, I ultimately found that there was a dismissal within the meaning of the Act, this was a finding made on balance. It could not be said that the respondent’s position was manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable.

[22] I have also considered the range of matters raised by the respondent in the earlier proceedings as part of its response to the unfair dismissal application. I did find that elements of Mr Govan’s evidence were unsatisfactory and exaggerated. However the issues cited by the applicant as being collateral were in general terms relevant to the determination of the whole application; bearing in mind that I needed to consider the context for the exchanges leading to the end of the relationship, the reasonableness of the positions contributing to that point and the various considerations going to the remedy.

[23] It should also be noted that I had some reservations about each of the witnesses but found that none of them had sought to mislead Fair Work Australia. 8

[24] I also accept that the fact of the respondent seeking legal advice impacted upon the applicant. However, it was not unreasonable for it to seek that advice given the legal issues associated with the jurisdictional matter that was to be arbitrated and I also note that Ms Fox was represented by the Working Women’s Centre of SA during the initial stages. Further, the written submission which was initially presented on behalf of the respondent, and apparently reflected its legal advice, ultimately provided some focus for the conduct of the matter and this development is not consistent with what was claimed to have been the vexatious motives of Wilderness.

[25] In terms of the conduct of the proceedings themselves, this is the focus of the case for costs as argued by Mr Scragg. The substantive matter did unfortunately require more than the single day set aside and the manner in which the respondent’s case was conducted made a contribution, amongst other factors, to that outcome. However, the respondent was not professionally represented and the issues raised were generally relevant given the broad nature of the matter to be determined. That conduct could not in any event be described, either in isolation or in the overall context, as being vexatious, without reasonable cause or advancing a position that was manifestly groundless.

CONCLUSION

[26] Having considered all of the relevant circumstances of this matter, I am not persuaded that Wilderness has acted vexatiously or without reasonable cause, or that it should have been reasonably apparent that its response to the application had no reasonable prospects of success.

[27] There is no basis to consider an award of costs in this matter and the costs application was dismissed. The file has been closed.

COMMISSIONER

Appearances:

P Scragg of Peter Scragg and Associates (with permission) for Ms Fox.

S Albertini of Minter Ellison(with permission) for Wilderness Escape Outdoor Adventures Pty Ltd.

Hearing details:

2011
Adelaide
December 20.

 1   Fox v Wilderness Escape Outdoor Adventures Pty Ltd[2011] FWA 7476.

 2   An order dismissing the application was recorded in transcript on 20 December 2011.

 3   See Nilsen v Loyal Orange Trust IRCA Decision No: 267/97 and Attorney-General v Wentworth (1998) NSWLR 481 as cited by Asbury C in Holland v Nude Pty Ltd t/a Nude Delicate[2011] FWA 8012, 25 November 2011.

 4   [ 2011] FWAFB 4014,27 June 2011 per Watson SDP, Drake SDP and Harrison C.

 5   I have not found it necessary or appropriate in the circumstances of this case to have regard to the without prejudice positions apparently advanced during the confidential FWA conciliation process.

 6   Paras [99] and [111] of the substantive decision discuss the basis of this finding and that it may earlier have been reasonable to accept some further employment with the respondent.

 7   See comments at para [3] of the substantive decision.

 8   Paras [14] to [16] of the substantive decision.

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