Ms Lorraine Kerr v Peacock Films Pty Limited

[2011] FWA 3766

[2011] FWA 3766

FAIR WORK AUSTRALIA

DECISION

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

Ms Lorraine Kerr
v
Peacock Films Pty Limited
(U2010/6223)

COMMISSIONER ASBURY BRISBANE, 15 JUNE 2011

Application for an unfair dismissal remedy - Application for costs - Unfair dismissal application withdrawn prior to hearing - Case law - Application for costs dismissed.

Background

[1] This is an application under s.611 of the Fair Work Act 2009 (the Act), by Peacock Films Pty Ltd, for an order that Ms Lorraine Kerr pay its costs in relation to her application for an unfair dismissal remedy.

[2] The background can be briefly stated. Ms Kerr filed her application for an unfair dismissal remedy on 16 February 2010. On 16 March 2010 Peacock Films Pty Ltd filed a response to the application, and raised a jurisdictional objection that the applicant abandoned or resigned her employment, and on that basis, was not eligible to make an unfair dismissal application. The response also asserted that the application was frivolous, vexatious or had no reasonable prospects of success.

[3] A conciliation conference was conducted on 30 March 2010 and the matter was not resolved. On 8 June 2010, a Notice of Representative Ceasing to Act (Form F54) was filed indicating that Aitken and Wilson Lawyers no longer acted for Ms Kerr. A Directions Conference was conducted on 9 June 2010 for the purpose of listing the matter for Jurisdiction Hearing and issuing necessary directions for the conduct of that hearing.

[4] On 25 June 2010, a Notice of Representative Commencing to Act (Form F53) was filed indicating that A Whole New Approach Pty Ltd now acted for Ms Kerr. Directions were issued on 17 June 2010 requiring the parties to exchange witness lists by 23 June 2010 and for submissions and witness statements to be filed and served by 28 July 2010 (by Peacock Films Pty Ltd) and 1 September 2010 by Ms Kerr. Material in reply was to be filed and served by 8 September 2010, and the Jurisdictional Hearing was listed for 21 October 2010.

[5] On 28 July 2010, material in support of the jurisdictional objection on behalf of Peacock Films Pty Ltd, was filed and served in accordance with the Directions. On 1 September 2010, a Notice of Discontinuance (Form F50) was filed on behalf of Ms Kerr by A Whole New Approach.

[6] In accordance with the Directions Order for the determination of the costs application, written submissions were filed by both parties. Peacock Films Pty Ltd also indicated that it sought to rely on the witness statements filed in the unfair dismissal application. Neither party sought to cross-examine witnesses and as foreshadowed in the Directions Order, this Decision is made on the basis of material on the file.

Legislation

[7] Section 611 of the Act provides:

“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).”

[8] The power to award costs under s.611 of the Act is discretionary, as was the case with earlier versions of the legislation. An order for costs first involves determining whether the situation is one in which there is a power to award costs, and if so, a determination as to whether an award of costs appropriate in all of the circumstances. 1 The general statement in s.611(1) that a person must bear the person’s own costs in relation to a matter before FWA, reflects the longstanding principle that costs will not be awarded against parties in industrial proceedings, other than in exceptional circumstances.

[9] The grounds upon which costs can be awarded against an applicant under s.611(2)(a) relate to the point at which the application in respect of which costs are sought, is made. FWA must be satisfied that at the point the application was made, it was made vexatiously or without reasonable cause. This requires an investigation of the position at the date of the application. 2

[10] Similarly, s.611(2)(b) requires FWA to be satisfied that, at the point the application was made, it should have been reasonably apparent that the application had no reasonable prospects of success. It is arguable that events occurring while an application is being advanced, can be a reference point against which an assessment can be made that an application had no reasonable prospects of success. For example, costs may be awarded against an applicant who persists with an application, which on the basis of his or her own version of the facts, is untenable, and who is told this by a Conciliator.

[11] However, where there are disputed facts, and the success of an application depends on the resolution of arguable questions or law or fact in the applicant’s favour, an award of costs is less likely to be made against an applicant.

[12] The limitations associated with the requirement to consider circumstances at the point an application or response is made was not of major significance under the provisions of the Workplace Relations Act 1996 and earlier versions of the legislation, because of the additional power to make an award of costs on the basis of unreasonable acts or omissions in connection with pursuing or defending an application, including unreasonably failing to discontinue or settle a matter. However, s.611 of the Act does not allow an order for costs to be made in such circumstances, and this is a significant change.

Case Law

[13] Consideration of whether an application was made vexatiously requires an examination of the motive of the applicant. 3 An application is made vexatiously when:

• The predominant purpose is to harass or embarrass the other party;  4



• They are brought for a collateral purpose and not for the purpose of having the court adjudicate on the issues to which they give rise; 5



• Irrespective of the motive of the applicant they are so obviously untenable or manifestly groundless as to be utterly hopeless; 6 or



• There is disregard of the Court’s processes or an attempt to circumvent its decisions or other abuse of process. 7

[14] In relation to s.611(2)(b), the meaning to be given to the term “without reasonable cause” was considered by Wilcox J in Kanan v Australian Postal and Telecommunications Union 8. After reviewing a number of cases, his Honour formulated a test in the following terms:

“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 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.” 9

[15] His Honour went on in that case to hold that there was no discretionary reason to withhold an order for costs observing that:

“It is not a matter of the applicant’s motives but, rather, that he has put the respondent to the expense of resisting a claim which was always doomed to failure. There is no question of punishing the applicant for his unreasonable course of action. The rationale for making a costs order is that a measure of indemnity should be conferred upon the respondent for the costs it has been obliged to incur in responding to the unreasonably instituted proceeding.” 10

[16] With respect to the third limb in s.611(2)(b), the terms “reasonably apparent” and “no reasonable prospects of success” have appeared in earlier versions of the legislation, and I can see no basis for departing from the principles established in cases dealing with those earlier versions. The question of whether something is reasonably apparent must be objectively determined, rather than determined on the basis of what the person making the application or responding to it believed. The test is that FWA be satisfied that it should have been reasonably apparent that an application or a response had no reasonable prospects of success. 11 The conclusion that an application had no real prospects of success: “should only be reached with extreme caution and where the application is manifestly untenable or groundless”.12 Further, as Whelan C observed in Darcy v Megan Fitzgerald & Associates Pty Ltd13:

“We are dealing in this case with new legislation, the parameters of which have not been tested by the Courts. ... In my view, great care should be exercised in coming to a conclusion that a party either instituted proceedings ‘without reasonable cause’ or in circumstances where it should have been reasonably apparent that the application had ‘no reasonable prospects of success’ where the facts and the law have not been tested in a hearing.” 14

The Costs Application

[17] The grounds upon which the costs application is made are that:

• Prior to the costs application being discontinued Peacock Films has continually asserted that the application is frivolous and vexatious;



• Despite these assertions Ms Kerr has continually elected to pursue the unfair dismissal application through to completion;



• Given Ms Kerr’s stubbornness in this matter, Peacock Films has continued to incur unnecessary and substantial legal costs;



• The applicant was made vexatiously and without reasonable cause; and



• It should have been reasonably apparent to Ms Kerr that her application had no reasonable prospects of success.

[18] Peacock Films is a small business as defined in the Act and is subject to the Small Business Fair Dismissal Code (the Code). The material advanced by Peacock Films in its jurisdictional objection, and submissions in the costs application, outlines an interaction between Ms Kerr and her supervisor, on 29 January 2010, during which Ms Kerr is alleged to have said: “I’m leaving”; “I’ve had enough, and I’m out of here”; and “I’m fucking leaving” before collecting her possessions and voluntarily leaving the workplace. Ms Kerr made no contact with Peacock Films between 29 January and 1 February 2010, and when she attempted to return to the workplace on 1 February 2010, was turned away. It is contended that Ms Kerr resigned her employment.

[19] Material filed by Ms Kerr in relation to the jurisdictional objection and in these proceedings, indicates that Ms Kerr left the workplace on 29 January 2010 in distress, after a disciplinary conversation about conduct which she believed should not have given rise to a disciplinary process. When Ms Kerr attempted to resume work on her next shift on Monday 1 February 2010, there was a refusal on the part of Peacock Films to allow her to commence work.

[20] It is submitted on behalf of Ms Kerr that a mere assertion by Peacock Films that it has constantly said that the unfair dismissal application is vexatious, is not a basis for an award of costs against her. The evidence as set out in witness statements for both parties in relation to the unfair dismissal application is untested and should not be treated as fact. The words attributed to Ms Kerr on 29 January 2010 do not amount to a resignation.

Conclusions

[21] I am unable to accept that Ms Kerr made her application for an unfair dismissal remedy vexatiously, or without reasonable cause. There is no evidence upon which I could reasonably be satisfied that Ms Kerr’s purpose in making an unfair dismissal application was to harass or embarrass Peacock Films, or for a collateral purpose. Ms Kerr contended that she was dismissed, and there is no basis upon which I could reasonably find that on Ms Kerr’s version of the facts, her unfair dismissal application must fail. Indeed, if Peacock Films proved that Ms Kerr made the comments alleged when she left the workplace on 29 January 2010, and failed to communicate her intentions between that date and 1 February 2010, it would not automatically follow that there would be a finding that Ms Kerr resigned her employment.

[22] All of the material indicates that there are disputed facts, and that the outcome of the proceedings would have depended on findings about those facts, and resolution of a number of arguable points of law, including:

• Whether Ms Kerr was dismissed; and



• If Ms Kerr was dismissed, whether the dismissal was consistent with the Code; and



• If the dismissal was not consistent with the Code, whether it was otherwise unfair on the grounds that it was harsh, unjust or unreasonable.

[23] That Ms Kerr chose to discontinue her application in the face of a jurisdictional objection by Peacock Films, is not a sufficient basis to justify a finding that the application was made vexatiously, in circumstances where the facts upon which the jurisdictional objection was based were disputed.

[24] For the same reasons, I am unable to be satisfied that it should have been reasonably apparent to Ms Kerr that her application had no reasonable prospects of success.

[25] The application by Peacock Films Pty Ltd for an order that Ms Lorraine Kerr pay costs of her application for an unfair dismissal remedy in U2010/6223 is dismissed and an Order to that effect will issue with this decision.

COMMISSIONER

Final written submissions:

2010.

Brisbane:

November 5.

 1   McKenzie v Meran Rise Pty Ltd t/as Nu Force Security Services Dec 375/00 M Print S4962 Per Giudice J, Watson SDP and Whelan C at [7].

 2   Howard v Cummins [1988] 27 IR 109; Zhang v The Royal Australian Chemical Institute Inc. (No.2) [2004] FCA 1626 (10 December 2004) at [5].

 3   Nilsen v Loyal Orange Trust IRCA Decision No: 267/97 per North J.

 4   ibid.

 5   Nilsen v Loyal Orange Trust op.cit; Attorney-General v Wentworth (1988) 14 NSWLR 481.

 6   Ibid at 491.

 7   Re Cameron (1996) 2 Qd R 218 at 220 per Fitzgerald P.

 8 (1992) 43 IR 277.

 9   Ibid at 283-4.

 10   Ibid at 284.

 11   Wodonga Rural City Council v Lewis PR956243 4 March 2005 at [6] per Watson SDP, Lloyd SDP and Gay C.

 12   Wright v Australian Customs Service PR926115, 23 December 2002 at [23]-[27] and [32]; Deane v Paper Australia Pty Ltd [PR 932454, 6 June 2003] at [7]-[8] and Papunya Community Council Inc. V Hanley

 13   [2009] FWA 1547.

 14   Ibid at [27] - [28].

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