Ms Jodie McLennan v Northvic Parcels Pty Ltd

[2019] FWC 6439

[2019] FWC 6439

FAIR WORK COMMISSION

DECISION

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

Ms Jodie McLennan
v
Northvic Parcels Pty Ltd
(U2019/7186)

COMMISSIONER MCKINNON MELBOURNE, 16 SEPTEMBER 2019

Application for security for costs – unfair dismissal jurisdiction.

Introduction

[1] Northvic Parcels Pty Ltd (Applicant) has applied for an order for security of costs against Jodie McLennan (Respondent) in relation to an unfair dismissal application brought by the Respondent against it. The application is somewhat unusual in that it proposes that each party (itself included) pay an amount of $10,000 to the Commission to be held on trust as surety for costs pending the outcome of the proceedings.

[2] The basis for the application is that the Respondent has had her workers’ compensation claim rejected, and the Applicant is a small business that would be severely financially affected if it were to incur substantial representation costs in successfully defending the unfair dismissal claim, only to find themselves many thousands of dollars out of pocket from defending a claim “that had little merit or chance of success”.

Relevant legal principles

[3] A Full Bench of the Commission set out a summary of the principles relevant to the determination of an application for security for costs in Zornada v St John Ambulance Australia (Western Australia) Inc.(Zornada) 1 as follows:

“[34] Commissioner Asbury, as she then was, outlined the principles to be considered in assessing whether to grant an order for security for costs in Harris v Home Theatre Group t/as Home Theatre Group:

“[7] Principles relevant to the making of orders for security of costs can be summarised as follows. There is no absolute rule to control the exercise of the discretion to order security for costs, and what should be done in each case depends on the circumstances of the case with the governing consideration being what is required by the justice of the matter. The making of an order for security for costs should not be oppressive in that it would stifle a reasonably arguable claim.

[8] The financial position of the party against whom the order is sought, will be relevant in a number of circumstances. There is no absolute rule that impecuniosity of a party will entitle its opponent to an order for security for costs. There is also a general rule that poverty should not be a bar to a person prosecuting a claim at first instance. On appeal, the question of security is to be determined differently on the basis that the appellant has had his or her day in court, and should not be given a “free hit”, particularly in circumstances where the costs of a proceeding below had not been paid by the appellant.

[9] In cases where the impecuniosity of the party against whom the order for security for costs is sought, it is relevant that the impecuniosity is itself a matter which the litigation may help to cure or arises from the conduct the party is complaining of. In such circumstances the party against whom the order is sought should not be shut out of litigation.

[10] The prospects of success and the strength of the case of the party resisting the order is relevant. In Merribee (Supra) Kirby J said (citations omitted):

“Another consideration that has sometimes been judged to be relevant is the strength of the case of the party resisting an order that it provide security for costs and evaluation (necessarily tentative) of its prospects of success. Thus, the fact that a party has secured special leave to argue its case on appeal has been thought a relevant consideration in some circumstances. Similarly, if a proceeding appeared hopeless and such as was bound to fail, the lack of apparent merit in a party’s case might be a reason for ordering it to provide security for the costs to which, it appears, it is needlessly putting its opponent. Such a consideration would need to be exercised with care, given that the real merits of a case might not emerge until the final hearing or might not sufficiently emerge in the necessarily brief proceedings typically involved in an application for security of costs. Furthermore, if a party asserts that its opponent’s proceedings are manifestly lacking in legal merit, other remedies are available to it to protect it from needless vexation.”

[11] In relation to costs, it is relevant that the nature of a proceeding is such that, even if successful, an order for costs might not be made or might be limited. The inability of a party to meet the costs of an unsuccessful proceeding, or the risk that a cost order will not be satisfied is also relevant to the exercise of the discretion. Other related considerations are that a party is, or is likely to be absent from the jurisdiction when a decision is made and has no, or few assets within the jurisdiction.

[12] There may also be aspects of public interest which are relevant to the exercise of the discretion to make an order for security for costs, such as an application raising matters of general public importance, quite apart from the interests of the parties. Other matters that have been considered relevant are that a hearing of the proceedings is close at hand, or the party seeking the order has delayed its application for such an order. It may also be relevant that the parties, or some of them, are legally aided.

(original references omitted)

…

[35] We agree with the summary provided by her Honour. We further note that costs orders in this jurisdiction are extraordinary, and security for costs orders even more so. This is because the Act reflects the longstanding principle that costs will not be awarded against parties in industrial proceedings, other than in exceptional circumstances. Costs are limited to circumstances where the proceedings have been commenced vexatiously, without reasonable cause, or in circumstances where it should have been reasonably apparent that the application had no reasonable prospect of success. It should be noted that a proceeding is not to be classed as being instituted without reasonable cause simply because it fails, but rather in circumstances where the applicant’s own version of the facts, it is clear that the proceeding must fail.

(original references omitted)

[36] Accordingly, the Commission should award security for costs only in the rarest of circumstances, once the Commission has balanced the merits of the application, the financial position of the parties, and what is just in the circumstances.”

Consideration

[4] The application begins from the mistaken premise that costs will follow once the substantive unfair dismissal application has been determined and assumes that the only issue is who should bear those costs. As the Full Bench confirmed in Zornada, the Commission is generally a ‘no costs jurisdiction’ and costs orders are a rare, as opposed to certain, outcome of unfair dismissal proceedings.

[5] The Respondent is currently an unemployed dependant with no source of income. She has a physical injury that in the months prior to her employment ceasing, appears to have prevented her from working. Her application for workers’ compensation has been rejected and according to the Respondent the decision to reject her claim is under appeal. On the material before me, her financial position is not strong and her capacity to meet any order for security of costs is likely to be similarly limited. She should not be denied access to justice simply because she cannot afford it. The Respondent’s financial capacity weighs against the making of an order for security for costs.

[6] The Applicant says that the Respondent’s substantive application has little merit or chance of success. However, the merits of the case have not yet been heard, as the matter is only at the interlocutory stage. On the material filed to date I cannot agree that the Respondent’s case is so obviously hopeless that it is bound to fail. The application and supporting documentation suggest that the Respondent was dismissed by letter for “not having full capacity to work”, after having not worked for approximately 2.5 months. The surrounding circumstances leading to the issue of that letter are not readily apparent from the materials, including the extent of any communication between the parties prior to the letter being issued. Whether procedural fairness was afforded to the Respondent appears likely to be a central matter in issue, including because it is likely to be relevant to whether the Applicant complied with the Small Business Fair Dismissal Code. Matters of procedural fairness are resolved having regard to the particular facts of the case. In this case, it appears to me to be at least an arguable point in circumstances where only limited detail of communication between the parties is disclosed on the face of the record. This weighs against an order for security for costs.

[7] There is no obvious matter of general importance or the public interest arising on the material before me. Issues in contention include the minimum employment period and the Respondent’s period of service as a casual employee; whether there was compliance with the Small Business Fair Dismissal Code; and whether there was a valid reason for dismissal, related to whether the Respondent was able to perform the inherent requirements of her position at the time of dismissal. These are all matters about which there are established legal principles. As I have earlier indicated, the application is only at an interlocutory stage and things may change if and when additional evidence is introduced. As things presently stand, however, nothing novel or of wider import emerges and the nature of the issues in dispute does not weigh in favour of an order for security for costs.

[8] Both parties are located in Victoria and appear to me to have actively participated in the proceedings to date. No concern as to lack of connection or submission to the jurisdiction is apparent.

[9] While a further interlocutory hearing in the matter is listed for Friday this week, in accordance with the usual practice of the Commission, listing of the substantive application has not yet occurred because there remains a threshold jurisdictional objection to resolve. In the meantime, the parties have made one attempt at conciliation of the matter. If the parties are concerned about the time and resources being taken up in dealing with the matter, there is no reason why a further attempt at conciliation could not be made. Each party has liberty to apply in this respect.

[10] Finally, the Applicant does not yet appear to have incurred any costs in the matter and while the Respondent has incurred a relatively small amount of costs to date, she is now unrepresented. The Applicant has since chosen to engage a representative of its own, but the terms of that engagement are not clear. The prospect of incurring actual costs (separate to its time and effort in responding to the substantive application) appears to me to be only speculative at this stage. This limits the utility of an order for security for costs.

[11] As set out above, the overarching principle is what is just in the circumstances of the case. In the circumstances of this case, I am not satisfied that it is in the interests of justice that the Respondent be prevented from prosecuting her claim, which is the likely practical consequence of any order, because the Applicant seeks comfort that it will not be left ‘out of pocket’ as a result.

Disposition

[12] For the above reasons, the application for security of costs is refused.

COMMISSIONER

Appearances:

P Hill for the Applicant

J McLennan on her own behalf

Hearing details:

2019.

Melbourne and Echuca (by telephone):

September 9.

Printed by authority of the Commonwealth Government Printer

<PR712439>

 1   [2013] FWCFB 8255