Ms Louise Nesbitt v Dragon Mountain Gold Limited

[2015] FWC 7980

[2015] FWC 7980 [Note: a correction has been issued to this document]

FAIR WORK COMMISSION

DECISION

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

Ms Louise Nesbitt
v
Dragon Mountain Gold Limited
(U2014/285)

COMMISSIONER CLOGHAN PERTH, 2 DECEMBER 2015

Application for relief from unfair dismissal - application for costs.

[1] This is an application by Dragon Mountain Gold Limited (DMG or Employer) for a costs order against Ms Louise Nesbitt (Ms Nesbitt or Employee).

[2] The costs application arises out of Ms Nesbitt’s application to the Fair Work Commission (Commission) alleging that she was unfairly dismissed from her employment with DMG.

[3] Ms Nesbitt’s application alleging unfair dismissal has been the subject of three decisions of the Commission: [2014] FWC 5383; [2015] FWC 779 and [2015] FWCFB 3505.

[4] The Employer’s application is made pursuant to s.400A of the Fair Work Act 2009 (FW Act).

RELEVANT LEGISLATIVE FRAMEWORK

[5] Section 400A of the FW Act provides the circumstances in which the Commission can make an order requiring one person to be accountable for all or part of the costs incurred by another party in relation to an unfair dismissal application to the Commission.

[6] Section 400A reads as follows:

“400A Costs orders against parties

(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.”

[7] The general powers referred to in s.400A(3) relating to s.611 of the FW Act are as follows:

“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) ...”

COSTS SOUGHT BY THE EMPLOYER

[8] The Employer is seeking that Ms Nesbitt:

1. pay DMG’s costs on a full indemnity basis of $36 566.00;

Alternatively:

2. costs to 30 October 2014 pursuant to the schedule of costs contained in the Fair Work Regulations 2009 (FW Regulations) and on a full indemnity basis from 31 October 2014;

Alternatively to 1 and 2:

3. an amount to be fixed by the Commission;

Alternatively to 1 and 3:

4. costs on a full indemnity basis from 31 October 2014;

Alternatively to 1 and 4:

5. costs from 31 October 2014 to be assessed and fixed by the Commission;

6. in the alternative to 1-5, costs it considers appropriate in all the circumstances.

REASON FOR EMPLOYER SEEKING COSTS

[9] DMG submits that it incurred costs because of multiple unreasonable acts by Ms Nesbitt when she failed to accept its repeated offers of settlement prior to the final hearing of her application.

SUMMARY OF OFFERS OF SETTLEMENT

[10] In her application, Ms Nesbitt sought, in lieu of reinstatement, the maximum compensation of $64 650.

[11] On 25 April 2014, Ms Nesbitt communicated to Mr Hemery, “for the purpose of continuing towards a settlement of this matter, I once again offer to settle this matter in the sum of $35,000”. The communication does not set out the basis or logic to the sum of $35 000.

[12] Ms Nesbitt’s “once again” comment above refers to an identical offer of $35 000 in a communication to Mr Platel dated 14 April 2014.

[13] The Employer put an offer to Ms Nesbitt to settle in September 2014 by way of a payment of $15 000. DMG increased this offer to $16 000 in October 2014. Both offers were on a commercial basis and subject to normal taxation provisions. On 5 November 2014, Ms Nesbitt made a counter proposal to settle for $25 000 net of tax.

[14] On 26 November 2014, DMG made an offer to settle by way of a payment of $25 000 to be taxed according to law.

[15] On 5 December 2014, Ms Nesbitt sought a payment of $27 000 net of tax, to settle the matter.

[16] On the morning of the arbitral hearing, DMG offered to settle the matter with a payment of $15 000 to be taxed according to law. At the time of making the offer, the Employer explained that the amount had been reduced from the previous offer of $25 000, because of costs incurred by DMG in preparing and defending the application at hearing. 1 Ms Nesbitt maintains that the proposal was $8 000. This disparity will be discussed further in this Decision.

OUTCOME OF MS NESBITT’S UNFAIR DISMISSAL APPLICATION

[17] The Commission dismissed Ms Nesbitt’s originating application that she was unfairly dismissed.

[18] Ms Nesbitt made application to a Full Bench of the Commission seeking permission to appeal the decision at first instance.

[19] A Full Bench of the Commission refused Ms Nesbitt permission to appeal the decision at first instance.

PROCEEDINGS FOLLOWING EMPLOYER’S APPLICATION FOR AN ORDER FOR COSTS

[20] In the first instance, I set down DMG’s costs application for a conference.

[21] DMG’s representatives provided to the Commission and Ms Nesbitt, an extensive submission setting out the facts, legislation and case law as to why it was seeking an order for costs.

[22] DMG’s submission states that it has incurred legal costs of more than $50 000.

[23] In view of the lateness of the submission (received the day before the conference), I commenced the conference, but adjourned it to enable Ms Nesbitt to consider the submission and discussions in an effort to resolve the costs application, without the necessity of the Commission determining the matter.

[24] The parties were not able to resolve the costs application without determination by the Commission.

[25] Directions were issued and I have now received the respective submissions of the parties which are referred to as DMG1 (23 October 2015) and DMG2 (20 November 2015) and Ms Nesbitt’s submission of 6 November 2015 (A1).

RELEVANT LEGISLATIVE BACKGROUND

[26] As can be seen at paragraph [7] of this Decision, the general rule is that parties will bear their own costs in proceedings before the Commission. However, there are exceptions both at s.611(2) and s.400A of the FW Act. This application is made pursuant to s.400A of the FW Act.

[27] Section 400A of the FW Act enables the Commission to award costs against a party. Section 400A requires the Commission to determine whether there was an unreasonable act or omission and, secondly, whether that act or omission caused the other party to incur costs in connection with the conduct or continuation of the application.

[28] The Explanatory Memorandum (EM) to the Fair Work Amendment Bill 2012 provides assistance to an understanding of s.400A. The EM reads at paragraphs 168-171 as follows:

“168. Item 4 inserts a new section 400A to enable the FWC to order costs against a party to an unfair dismissal matter (the first party) if it is satisfied that the first party caused the other party to the matter to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the matter.

169. As with the new power to dismiss applications under section 399A, the power to award costs under section 400A is not intended to prevent a party from robustly pursuing or defending an unfair dismissal claim. Rather, the power is intended to address the small proportion of litigants who pursue or defend unfair dismissal claims in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.

170. The FWC’s power to award costs under this provision is discretionary and is only exercisable where the first party (whether the applicant or respondent) causes the other party to incur costs because of an unreasonable act or omission. This is intended to capture a broad range of conduct, including a failure to discontinue an unfair dismissal application made under section 394 and a failure to agree to terms of settlement that could have led to the application being discontinued.

171. However, the power to award costs is only available if the FWC is satisfied that the act or omission by the first party was unreasonable. What is an unreasonable act or omission will depend on the particular circumstances but it is intended that the power only be exercised where there is clear evidence of unreasonable conduct by the first party.” (my emphasis)

[29] Clearly, the Parliament envisaged that s.400A is intended to “capture a broad range of conduct” including “failure to agree to terms of a settlement that could have led to the application being discontinued”.

CONSIDERATION

[30] The costs application can, in my view, be divided into three parts. The first part can be put in the form of a question, and that is: can the Commission be satisfied that Ms Nesbitt caused costs to be incurred because of an unreasonable act or omission in connection with the conduct or continuation of her application? If having determined the answer to such a question is in the affirmative, the next part requires the Commission to consider whether an order should be made. Should the Commission determine that an order is appropriate, the third part addresses the content of the order.

Is the Commission satisfied that Ms Nesbitt caused costs to be incurred because of an unreasonable act or omission in connection with the conduct or continuation of the application?

[31] The concept of reasonable or unreasonable conduct implies a standard of, or expected, conduct.

[32] The Australian Concise Oxford Dictionary (ACOD) defines “reasonable” as “having sound judgement; sensible, moderate, not expecting too much, ready to listen to reason…not greatly less or more than might be expected…tolerable, fair”.

[33] The concept of reasonable or unreasonable behaviour is not something asserted in the abstract but within a context. The context, in this case, is an application in which Ms Nesbitt alleges, but DMG denied, that she was unfairly dismissed. It is within this context, the Commission must be satisfied whether Ms Nesbitt’s actions were reasonable or unreasonable in relation to the conduct or continuation of the matter.

[34] When an applicant makes an application to the Commission alleging unfair dismissal, there is no certainty of outcome. It is for this reason that the Commission attempts to conciliate a resolution in the first instance. Instead of the uncertainty of an arbitrated outcome, legislation and good practice encourages the parties to take power into their own hands and settle the matter with certainty. In doing so, the parties avoid cost, time, effort and the emotional anxiety that goes with preparing and being involved in an arbitral hearing.

[35] In view of Ms Nesbitt’s actions having to be considered in context, it is necessary to consider what features, or criteria, should be considered to determine whether Ms Nesbitt’s actions were unreasonable, as alleged by DMG. These features or criteria may include:

• Was the “first party” [Ms Nesbitt] made aware by the other party of the reasons why it resisted the allegation of unfair dismissal, and if so, when?



• Was the “first party” advised by the other party that it would seek costs in the event that the “first party” rejected an offer which was more favourable than an outcome determined by the Commission?



• When did the parties engage in settlement discussions? Was it made early enough to minimise or mitigate costs which are now being claimed?



• Was the offer made by a party reasonable and intended to encourage settlement? Put differently, was there a reasonable basis for the offer?



• If an offer was rejected by the “first party”, was there a reasonable basis for rejecting that offer?



• Frequency of offers to the “first party”.



• Whether the “first party” was represented or took advice on the offers made to settle the matter.



• The outcome of the application.



• Any other matters the Commission considers relevant.

When did Ms Nesbitt become aware of the reasons why DMG opposed her allegation that she was unfairly dismissed?

[36] The application was made on 3 February 2014. The Employer provided a response to the application on 10 March 2014. In the Employer’s response, it states very plainly:

“The conduct for which the Applicant was dismissed was the sending of a text message on 12 January 2014 to the chairman [and only other employee] of the Respondent, Mr Robert Gardner, describing him as “a complete dick”.

[37] Following Directions, the above reason in paragraph [36] was further set out and expanded upon in DMG’s Statement of Facts and Submissions dated 12 May 2014. The additional comments state that the Chairman regarded Ms Nesbitt’s comments “as highly derogatory and offensive given the tensions in the working relationship between them and the applicant’s resistance to lawful and reasonable directions by Gardner [Chairman]”.

[38] The reasons for the Employer dismissing Ms Nesbitt were plainly set out early in her application. Further, I am satisfied that, notwithstanding the various jurisdictional issues, Ms Nesbitt clearly understood the primary reason why DMG opposed her claim of alleged unfair dismissal.

Was Ms Nesbitt advised that DMG would seek costs, and if so, when?

[39] On 24 April 2014, Ms Nesbitt sent an email to Mr Hemery, and copied to the Commission, which concludes:

“I would like to draw your attention [Mr Hemery] to the following passage drawn for (sic) the FWC overview of the Unfair Dismissal law. I suggest Mr Gardner may well find himself paying my costs should he proceed with this.” (my emphasis)

[40] The passage Ms Nesbitt attached to her email reads:

“Who pays my costs?

An employee and employer involved in an unfair dismissal case before the Fair Work Commission must generally meet their own costs.

The Fair Work Commission may order an employee or employer to bear pay some or all of the costs of the other party if the unfair dismissal application or response to it:

• was frivolous, vexatious or made without reasonable cause, and/or



• had no reasonable prospect of success.

In certain circumstances, the Fair Work Commission may also order costs against a lawyer or paid agent representing a party in an unfair dismissal case.”

[41] On 31 October 2014, Mr Hemery set out in further detail why DMG believed Ms Nesbitt’s application was likely to fail. Notwithstanding DMG’s view on the likely outcome of the application at hearing, it put a proposal to settle the matter without the necessity of a hearing. Further, the Employer put Ms Nesbitt on notice that, if the Commission makes an order, if any, less favourable, DMG would “seek an order that you pay our costs from the date of this letter onwards on an indemnity basis”. The correspondence refers to the enabling legislative basis (s.400A of the FW Act) for its statement of intention. 2

[42] I am satisfied that Ms Nesbitt knew from, on or around 24 April 2014, that an application for an order for costs could be made and, ironically, indicated to DMG that she may take such action herself against the Employer.

[43] I am satisfied that Ms Nesbitt clearly knew that the Employer intended to pursue costs on 31 October 2014.

When did the parties make an offer(s) to settle? Was it early enough to minimise or mitigate costs which are now being claimed?

[44] It appears that the offers to settle the application came in two phases. Firstly, from Ms Nesbitt almost immediately after the application was made and conciliation before a Conciliator had failed. Secondly, after the jurisdictional challenge by the Employer as to whether the Commission had the jurisdiction to hear and determine the matter pursuant to Ms Nesbitt’s contract of employment.

[45] It is not uncommon for applicants, no matter what the strengths and weaknesses of their applications, to seek the maximum amount of compensation as a remedy for alleged unfair dismissal. Whether, as a result of seeking advice or for other reasons, the claim for the maximum amount of compensation is generally revised downwards by applicants.

[46] After seeking an initial amount of $64 650 in January 2014, Ms Nesbitt sought $35 000 to settle the application on 14 April 2014.

[47] Ms Nesbitt, at this point, appears to have assumed that the strength of her case was sufficient for the Employer to agree to an amount of $35 000. The Employer saw matters differently and did not engage in attempting to settle the matter by way of a monetary payment.

[48] While I am not entirely convinced that Ms Nesbitt’s offer of $35 000 to conclude her application was to minimise or mitigate costs incurred in proceeding to arbitration, I am certain that she was aware that payment of costs could potentially become a “live” issue should the application proceed to arbitration. Clearly, by highlighting to Mr Hemery the content of the Commission website, Ms Nesbitt had informed herself about the potential issue of costs in any such application.

Were the offers made by the parties reasonable and intended to encourage settlement?

[49] It is not in dispute that in September 2014, as part of Commission proceedings, an offer of settlement was put by DMG for $15 000. The Employer describes the outcome of the offer as being “rejected” by Ms Nesbitt. Ms Nesbitt characterised the outcome as “there was no settlement reached”.

[50] On 31 October 2014, DMG’s legal adviser sent to Ms Nesbitt, detailed correspondence which commences:

“Our client denies that it has unreasonably, harshly or unfairly dismissed you from your employment…For the reasons detailed below, in our opinion, your application for an unfair dismissal remedy is likely to fail.” 3

[51] In the following 13 paragraphs, Mr Hemery sets out the reasons why DMG considered that Ms Nesbitt’s application would fail. Mr Hemery referred to three (3) decisions of the Commission in support of the view that Ms Nesbitt’s application would fail.

[52] In the 31 October 2014 correspondence, DMG made an offer of $16 000 (taxed according to law) in full and final settlement. The offer was open for acceptance until 1 December 2014.

[53] DMG further state:

“14. This offer is intended to have costs consequences. We note the recent Fair Work Commission decision of Barker v Roy Morgan Research Ltd [2014] FWC 1856 where Deputy President Gooley awarded costs against the respondent after the Deputy President decided in all the circumstances of the case that it is appropriate to order costs against Roy Morgan after it had refused to accept a reasonable offer of settlement.

15. Our client’s offer is made as a genuine attempt to settle the proceedings prior to the matter progressing to a final hearing and each party having to incur additional costs and inconvenience. We also note you (sic) refusal to accept an offer on similar terms to this offer at the Conference before Commissioner Cloghan at hearing on 11 September 2014.

16. If you reject this offer and the Commission determines, makes an order or award in terms that are no less favourable that this offer, our client will seek an order that you pay our client’s costs from the date of this letter onwards on an indemnity basis. Our client will rely on this letter in support of such an application.” 4

[54] Ms Nesbitt was invited, should she wish, to discuss the offer with DMG’s representatives.

[55] On 5 November 2014, Ms Nesbitt replied to Mr Hemery and calculated according to the Sprigg formula that “[if] the Commissioner is minded to make an award of compensation” 5, on certain assumptions it would be $51 894 subject to taxation. However, Ms Nesbitt made a counter offer of $25 000 net of tax and that the counter offer would expire on 14 November 2014.

[56] On 26 November 2014, DMG put a “without prejudice save as to costs” offer of $25 000 (taxed according to law) without any admission of liability. Each party was to bear their own legal costs. 6

[57] The offer of $25 000 was open for acceptance until 8 December 2014.

[58] On 8 December 2014, Ms Nesbitt rejected the offer of $25 000 and would not “accept a termination payment less than $27,000 (net of tax). All other terms and conditions remain negotiable.” 7

[59] The parties completed documentation for the hearing to take place on 15 January 2015. Prior to the commencement of the hearing, I again facilitated a conference in an endeavour to settle the application without the necessity of a hearing. At the conference, DMG put a reduced offer of $15 000 (which is denied by Ms Nesbitt) because of expenses it had incurred in preparation of the hearing. DMG’s offer was rejected and the matter proceeded to a final hearing.

[60] The test in s.400A (1) of the FW Act is reasonableness in connection with the continuation of a matter. The test is not solely concerned with the amount involved in any “monetisation” of the settlement. The “driving force” in settling a matter is not entirely the amount involved but that any settlement is reasonable, sensible and has sound judgement in the overall context of the application.

Frequency of offers

[61] As can be seen, there were frequent offers to settle the application without continuing to hearing. The offers were in two phases and followed, it appears, an assessment by the parties of their respective positions including, for the Employer, costs.

Advice on offers made to Ms Nesbitt

[62] Ms Nesbitt submits that she “had studied the FWC website with regard to possible outcomes”. However, Ms Nesbitt “Understood that a compensation payment in the sum I [Ms Nesbitt] had calculated was uncommon. But there are cases where awards are made in excess of $40,000. I firmly believed that the circumstances of my case put me in the same category as those cases.” 8

[63] Further, Ms Nesbitt submits:

“During 2014 I spoke extensively with a friend who has 30 years’ experience as a Company Secretary and Company Director of an ASX listed company. He had previously had unfair dismissal matters before the Commission. I gave him a copy of the offers from the Respondent and associated documents and upon review, his advice was that I had a strong case. He was of the opinion I should not settle for the sum of money offered. I was convinced that the Commissioner would find that I was unfairly dismissed and I would receive a compensation payment in excess of the offer.” 9

[64] I am satisfied that Ms Nesbitt acquainted herself from the time she made her application with materials on the Commission website regarding her dismissal. Ms Nesbitt particularly referred in communication to the Employer, the “Sprigg” formula.

[65] In referring to the Commission website, Ms Nesbitt presumably would have read that compensation only becomes a consideration after a finding that she had been unfairly dismissed and reinstatement is inappropriate. Further, if compensation is appropriate, the Commission is required to take into account all the circumstances, including the provisions of s.392(2) of the FW Act.

Outcome of originating application

[66] Ms Nesbitt’s application alleging unfair dismissal was dismissed. Ms Nesbitt was denied leave to appeal the originating application by the Full Bench of the Commission.

Any other matters the Commission considers relevant

[67] The Applicant submits:

“Costs can only be awarded against me if I was made aware of the facts prior to rejecting the offer and it was apparent to me that, based on those facts, that there was no substantial prospect of success. Costs will only be awarded provided both parties agree on the facts. This was not the case. Commissioner Cloghan was presented [with] two conflicting sets of facts and he was required to use his discretion to chose to believe one set of facts and not the other. At the time of rejecting the offers I believed that Commissioner Cloghan would find in my favour.” 10

[68] The Applicant relies upon Polynyl Plastics (Aust) Pty Ltd v Moss Print T2112 (Polynyl) in support of the above submission in paragraph [67]. The Applicant concludes, “so, if it can be shown that a party was told the facts in advance of the hearing and a reasonable offer to settle was then made and rejected, then the failure to settle would be a proper basis to award costs provided the party did not disagree as to those facts.” 11

[69] Polynyl was determined pursuant to s.170CJ (1) and s.170CJ (2) of the Workplace Relations Act 1996.

[70] Irrespective of the different legislative regime, in my view, the apposite summation of the Polynyl costs application can be found at paragraph [26] as follows:

“A consideration of all the material that was before the Commissioner in the hearing of the substantive application satisfies us that this was a case in which the final determination was a finely balanced exercise. It was clearly a case in which the Commission could have gone either way. The employee's perception of the likelihood of success of his application was justifiable and reasonable. Given the reasonableness of that perception, there is no warrant for accepting the proposition that the offer of settlement that was made was of sufficient magnitude that the employee should have been deterred from pursuing the prosecution of his claim. In our view, in all the circumstances of this case, we are not satisfied that there is any basis for finding that s.170CE application was made vexatiously or without reasonable cause or that the employee has acted unreasonably in failing to discontinue his application or in failing to agree to terms of settlement proposed by the employer.”

[71] A reading of the originating decision ini P Moss v Polynyl Plastics (Aust) Pty Ltd Print S6743 indicates a substantial conflict regarding a number of facts surrounding the dismissal of Mr Moss. However, the Commission found that Mr Moss was not dismissed harshly, unfairly or unreasonably as a result of derogatory language directed towards a person who appears to be the owner of the business.

[72] It is notable that it was Ms Nesbitt, who first proposed a monetary settlement to conclude the application. Presumably, Ms Nesbitt saw utility in a proposal without the need for an arbitral hearing. That utility attaches to both parties.

[73] Further, in addition to the utility of monetary settlement, Ms Nesbitt put her former Employer on notice that, if Mr Gardner did not agree to a monetary settlement, he “may well find himself paying my costs should he proceed with this”. 12

[74] Secondly, whether relevant or not, the fundamental facts in her application were not in dispute. As the Full Bench observed at paragraph [40]:

“In the proceedings before us Ms Nesbitt was asked what needed to be investigated given that it was not disputed that the derogatory text message had been sent by her. Ms Nesbitt responded that she did not consider that the text message of itself warranted her dismissal and that the context in which it was sent needed to be understood.”

[75] The fundamental fact as set out in the text messages were known to both parties. Further, text messages from Ms Nesbitt read, “I am so so so sorry” and “I am very very sorry”. Ms Nesbitt could not have expressed these sentiments without realising that her comments to her Employer were derogatory and, as she put in an email to the other non-executive directors, brought “to a head” her relationship with the Employer.

[76] The “context” of the derogatory text message from the perspective of both parties was considered at the substantive hearing. The conflict was essentially concerning the subjective context and not the objective facts.

[77] I consider, as early as 24 April 2014, Ms Nesbitt was sufficiently aware of the fundamental facts to be able to put a proposition to settle the matter with the Employer and did so.

[78] Ms Nesbitt further states in opposing the costs application:

“I agreed to accept the offer of $25,000 put to me by the Respondent on 26 November 2014, on the condition it was paid to me as a redundancy payment. The reason I made the offer was that it was a solution where both parties where (sic) able to achieve the result they wanted…the Respondent had not employed anyone to replace my role my termination qualified as a genuine redundancy and an amount could have been paid to me as a redundancy payment without incurring any tax at all. The offer I made was a genuine attempt to settle the proceedings.” 13 (my emphasis)

[79] The simple fact is that Ms Nesbitt was dismissed – she was not made redundant. The fact that the Employer did not fill her role after she had been dismissed does not, post dismissal, make her dismissal a genuine redundancy.

[80] If Ms Nesbitt’s offer was a genuine offer, it had as its basis commercial negotiation; it was not a genuine redundancy. Further, the genuineness of the offer is questionable, because after being rejected by the Employer, Ms Nesbitt, without any explanation, increased her “offer” to not accepting anything less than $27 000 net of tax.

[81] In summary, there was no credibility to the assertion that her dismissal was a genuine redundancy nor was any explanation given, or can be contemplated at the time, to increase the amount by $2 000 within a matter of days.

[82] Ms Nesbitt commenced employment with another employer on 22 April 2014 and two (2) days later (24 April 2014) sent an email to the Employer’s legal counsel which states, “before you proceed” then lists four (4) persons and states, “I will subpoena them” and “I will also subpoena [name], Nuclear IT, the many tradesman who…” The email concludes with, as I have already stated, that the Employer may find itself paying Ms Nesbitt’s costs. 14

[83] The approach of applicants to settle a matter varies. All are directed towards persuading the respondents to agree to an outcome. In April 2014, I consider it fair to say that Ms Nesbitt’s approach was a combination of the unknown at hearing, the threat of additional witnesses being subpoenaed and costs being awarded against the Employer.

[84] The email message containing the offer and threat, not unexpectedly, given the circumstances, met with no response from the Employer.

[85] During this period of negotiations, the most fundamental fact was that she called her boss a “complete dick”. Other elementary facts are not in dispute. Broadly, in relation to the dismissal, it was a matter for Ms Nesbitt of context. The Employer was not persuaded by Ms Nesbitt’s argument regarding the context – it was not credible, it was not persuasive. Put shortly, the Employer did not believe Ms Nesbitt’s version of the context.

[86] In my view, the settlement process changed significantly in nature on 31 October 2014.

[87] On 25 September 2014, the Commission issued Directions for a hearing on 15 January 2015. The Employer was required, by 31 October 2014, to provide Ms Nesbitt with any supplementary material which had not already been provided.

[88] The Employer provided its final submission, but on the same day, its legal representative put an offer to settle the matter on a commercial basis of $16 000 with each party bearing its own costs. In putting the offer to Ms Nesbitt, the provisions of s.400A of the FW Act were clearly set out and the Employer states, “Dragon will rely on both these sections (s.400A and 611) in support of any application for your costs if necessary”. 15

[89] Ms Nesbitt responded to DMG’s offer, with a counter proposal of $25 000 net of tax. The Employer was prepared to agree to $25 000 but taxed according to law. The proposal also included that each party would bear its own legal costs. The Employer’s representative states that the offer is “intended to have cost consequences” should it be rejected. In particular, if Ms Nesbitt was not successful in obtaining an order from the Commission more favourable than the Employer’s offer, “our client will seek and order from the Commission that you pay our client’s costs from the date of this email on a full indemnity basis”. Ms Nesbitt rejected the Employer’s counter proposal and responded by stating, on 8 December 2014, that she would not “accept a termination payment less than $27,000 (net of tax)”. 16

[90] It would appear, for a number of reasons, that settlement of the application would have been self-evident to Ms Nesbitt.

[91] Ms Nesbitt submits that, in the event of a successful application to the Commission that she was unfairly dismissed, the correct calculation of compensation using the Sprigg formula was approximately $52 000. This approximate amount followed her “extensive investigation of the FWC website including application of the formula in case law”.

[92] Two aspects of Ms Nesbitt’s calculation of approximately $52 000 are noticeable.

[93] Firstly, any assessment has to take into consideration all the circumstances of the dismissal. In this respect, there is a particular statutory provision which the Commission must take into account concerning the employee’s conduct, if it contributed to the dismissal.

[94] It should have been reasonably apparent to Ms Nesbitt that describing the DMG’s Managing Director, and only other employee, a “complete dick” did not augur well in a claim that she had been unfairly dismissed. This derogatory comment was not in dispute – it was a fact.

[95] Secondly, Ms Nesbitt makes the assumption in her calculations that, if it was not for the dismissal, she would have remained in employment with DMG for a further three (3) years. Such an assumption is contrary to the facts of the case.

[96] For example, Ms Nesbitt, on 13 January 2014 emailed two non-Executive Directors of the Employer seeking a meeting to discuss “a situation with Rob. The situation is serious and causing me a good deal of stress. Events have brought things to a head…” When the non-Executive Directors declined to meet with Ms Nesbitt, she replied in part, “Rob did advise me when I requested a pay review some time ago that I was lucky not to be sacked for approaching the non-Executive Directors (odd because Rob expressly told me to include all directors)”, and further, the employment relationship had reached a stage “[where it] is at a point where I do not feel safe to be alone with him”.

[97] These comments by Ms Nesbitt were set down by her before she was dismissed. For these reasons, I am of the view that her assumption that she would remain in employment with DMG for a further three (3) years, when constructing the Sprigg formula calculation, was misplaced and at odds with any reasonable appreciation of what was occurring in the workplace.

CONCLUSION

[98] The Employer’s case against Ms Nesbitt should have been manifestly transparent by the 31 October 2014 letter to her and the interlocutory jurisdictional proceedings.

[99] In addition to knowing the basis of the Employer’s resistance to Ms Nesbitt’s claims, DMG did not conceal its intention to pursue costs should it be successful in resisting her application.

[100] In not concealing its intentions to pursue costs should Ms Nesbitt be unsuccessful in her application, the Employer was both encouraging a settlement, as well as alerting her to the “pain” which goes with the consequences of not reaching a settlement. In this respect, the provisions of s.400A of the FW Act are both a “carrot and stick” to those matters which could reasonably be settled.

[101] The provisions of s.400A of the FW Act are not intended to prevent a party from pursuing an unfair dismissal application but to make obvious, in an uncertain arbitral hearing, that parties should be cautious, sensible and avoid unreasonable actions which lead to the continuation of a matter which could and should be discontinued.

[102] The policy position is clearly to deter the party who continues to pursue or defend an application irrespective of its merits.

[103] It could be contended that Ms Nesbitt’s rejection of the Employer’s offer of 31 October 2014 was not unreasonable because subsequently DMG increased that offer. There is a validity to such an argument. However, I am satisfied that all elements of reasonableness disappeared on 26 November 2014 when Ms Nesbitt rejected the Employer’s offer of $25 000 taxed according to law.

[104] The Employer’s offer to pay $25 000 (taxed) to avoid further continuation of the application, I consider reasonable, and similarly, Ms Nesbitt’s rejection, unreasonable.

[105] I do not accept Ms Nesbitt’s reason for rejecting the offer because it would not be paid as a redundancy. The simple fact is that Ms Nesbitt was not made redundant, she was dismissed.

[106] Finally, the unreasonableness of the rejection of the $25 000 offer is further demonstrated by Ms Nesbitt “upping” the amount to $27 000 without any reason or explanation to the Employer at the time.

[107] For the reasons set out above, I am satisfied that Ms Nesbitt caused costs to be incurred by the Employer because of her unreasonable act of failing to agree to the terms of a settlement that could have led to the application being discontinued. In doing so, I am satisfied that it is appropriate that an order should be made. However, I am not prepared to order that Ms Nesbitt pay all costs from 31 October 2014.

[108] I consider it appropriate that Ms Nesbitt pay all costs pursuant to the Commission scale of costs (including preparation of the email dated 26 November 2014) to the date of my Decision on 26 March 2015.

[109] The Employer is to file and serve an itemised schedule of costs pursuant to the Decision by no later than 4:00 pm Monday 7 December 2015.

COMMISSIONER

Final written submissions:

Ms Nesbitt: 6 November 2015.

Dragon Mountain Gold: 23 October and 20 November 2015.

 1   DMG1 paragraph 16

 2   DMG1 (LFGS-1)

 3   DMG1 (LFGS 1)

 4   DMG1 (LFGS-1)

 5   DMG1 (LFGS-2)

 6   DMG1 (LFGS-3)

 7   DMG1 (LFGS-4)

 8   A1 paragraph 52

 9   Ibid – paragraph 54

 10   A1 paragraph 4

 11   Ibid – paragraph 2

 12   24 April 2014 email

 13   A1 paragraph 6

 14   24 April 2014 email

 15   DMG1 (LFGS-1)

 16   DMG1 (LFGS-3)

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