[2018] FWC 6717

FAIR WORK COMMISSION

DECISION

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

Ms Natalie Sommer
v
Healthcare Australia Pty Ltd T/A Healthcare Australia
(U2016/2825)

DEPUTY PRESIDENT ASBURY

BRISBANE, 31 OCTOBER 2018

Application in relation to costs.

1. OVERVIEW

[1] On 14 June 2016, Ms Natalie Sommer made an application to the Fair Work Commission (the Commission) under s.394 of the Fair Work Act 2009 (the Act) for an unfair dismissal remedy. The Respondent objected to the application alleging that the Applicant’s dismissal was a genuine redundancy. On 17 March 2017, I issued a Decision 1 and Order2 in which I dismissed the Respondent’s jurisdictional objection, found that Ms Sommer’s dismissal was unfair and awarded compensation in the amount of $13,842 in respect of wages and $1,315.38 in respect of superannuation. In the Decision I was critical of the approach that the Respondent took in defending the application and dealing with persons who proposed to or gave evidence on behalf of Ms Sommer.

[2] On 31 March 2017, Ms Sommer filed a Form F6 Application seeking indemnity costs, or in the alternate party and party costs, against the Respondent and the Respondent’s legal representatives. Ms Sommer applies for costs under ss. 400A, 401, 611 and 780 of the Act. In the Form F6 Application Ms Sommer states that she seeks costs in the amount of $15,535.60 including a disbursement of $68.60 in respect of the filing fee for her unfair dismissal application. Annexed to the Application for costs is an itemised schedule totalling $15,302.00. I have not considered the application for costs insofar as it relates to s. 780 of the Act on the basis that the section does not apply to unfair dismissal applications.

[3] The itemised schedule of costs tendered by Ms Sommer in the costs application appears to refer to items in Schedule 3.1 to the Fair Work Regulations 2009 and lists amounts allowed in that Schedule for each item. The schedule of costs tendered by Ms Sommer does not include the actual costs incurred by Ms Sommer. Ms Sommer did not tender actual accounts received by her from her legal representative or receipts to indicate that the accounts had been paid. The itemised schedule of costs filed by Ms Sommer and the material tendered by her in the hearing of her costs application does not contain sufficient information to enable a calculation of indemnity costs to be undertaken. If indemnity costs were to be awarded, it would be necessary to obtain further evidence. For reasons which will become apparent, this is not necessary.

[4] In summary, Ms Sommer applies for costs on the basis that she asserts that the Respondent has responded to the application vexatiously or without reasonable cause and has engaged in unreasonable acts causing Ms Sommer to incur costs. Ms Sommer also contends that the legal firm representing the Respondent encouraged the Respondent to take various actions that were unreasonable and that the firm engaged in unreasonable acts in connection with the conduct of the matter.

[5] Ms Sommer filed a considerable amount of material about the conduct of the Respondent and its legal representative upon which her costs application was based. Much of that material was not relevant. Further, Ms Sommer did not clearly articulate the section of the Act to which each incident of conduct on which she based her application for costs, related. At the commencement of the costs hearing I sought to clarify with Ms Sommer what conduct she relied upon in support of her application. For ease of reference I have categorised the conduct relied on by Ms Sommer as the basis for her costs application as follows:

• The pursuit by the Respondent of the jurisdictional objection on the grounds of genuine redundancy;

• Failure by the Respondent to make financial offers in conciliation before the Commission and to respond reasonably to offers of settlement made by Ms Sommer;

• Correspondence sent to Ms Sommer after her dismissal in relation to allegations that she had breached contractual provisions with respect to restraint of trade;

• The allegations of misconduct made after Ms Sommer made her unfair dismissal application;

• The conduct of the Respondent and its representative in relation to its dealings with witnesses for Ms Sommer, namely Mr McCombes and Mr Harding. 3

[6] The Respondent objects to the application for costs contending that Ms Sommer has failed to make out her case for an award of costs. In the alternative, the Respondent submits that the itemised schedule of costs tendered by Ms Sommer would only support an order of $2,647.00.

[7] Ms Sommer’s unfair dismissal application filed on 14 June 2016 stated that she was represented by Mr Benedict Coyne of Anderson Fredericks Turner Solicitors. Mr Coyne also filed a Form F53 Notice of representative commencing to act on the same date. On 16 September 2016 Mr Coyne filed a Form F54 Notice of representative ceasing to act. The hearing of Ms Sommer’s unfair dismissal application was conducted over three days from 8 to 10 November 2016 and Ms Sommer was not represented at the hearing. It is clear from the schedule of costs that Anderson Fredericks Turner continued to undertake work in connection with Ms Sommer’s application.

[8] The Respondent was granted permission to be legally represented in the unfair dismissal hearing. In seeking to be represented the Respondent provided an undertaking to the Commission that it would not make an application for costs against Ms Sommer if its jurisdictional objection and its defence of Ms Sommer’s application succeeded and the application was dismissed. That undertaking was provided in response to a question from me about what the Respondent’s position would be in relation to seeking its costs if permission was granted for the Respondent to be legally represented and the jurisdictional objection succeeded. Counsel for the Respondent confirmed the undertaking and did not seek a reciprocal undertaking from Ms Sommer or seek to qualify its position in any way.

2. LEGISLATION AND PRINCIPLES IN RELATION TO COSTS

[9] 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 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…”

[10] The general statement in s.611(1) of the Act that persons must bear their own costs in matters before the Commission reflects the longstanding rule that costs will not be awarded against parties in industrial proceedings, subject to the qualification in s.611(2). The approach generally taken by the Commission to considering whether an application has been made vexatiously, is to adopt the meaning given to that term by Justice North in Nilsen v Loyal Orange Trust 4 who said about a similar provision in the former Workplace Relations Act:

“The next question is whether the proceeding was instituted vexatiously. This looks to the motive of the applicant in instituting the proceeding. It is an alternative ground to the ground based on lack of reasonable cause. It therefore may apply where there is a reasonable basis for instituting the proceeding. This context requires the concept to be narrowly construed. A proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party, or to gain a collateral advantage.” 5

[11] For the purposes of s. 611(2)(a) the term “vexatiously” does not require an element of malice. 6 The existence of reasonable cause is determined at the time the relevant proceedings were instituted and the fact that a party later discontinues those proceedings is not a matter to be taken directly into account in determining that question.7 In Kanan v Australian Postal and Telecommunications Union8 Justice North held that a proceeding is not to be classed as being without reasonable cause simply because it fails. His Honour went on to propose a test for determining whether a proceeding is instituted without reasonable cause, as follows:

“…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 on 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

[12] Section 400A of the Act provides:

“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...”

[13] Section 401 of the Act provides:

“401 Costs orders against lawyers and paid agents

(1) This section applies if:

(a) an application for an unfair dismissal remedy has been made under section 394; and

(b) a person who is a party to the matter has engaged a lawyer or paid agent (the representative) to represent the person in the matter; and

(1A) The FWC may make an order for costs against the representative for costs incurred by the other party to the matter if the FWC is satisfied that the representative caused those costs to be incurred because:

(a) the representative encouraged the person to start, continue or respond to the matter and it should have been reasonably apparent that the person had no reasonable prospect of success in the matter; or

(b) of an unreasonable act or omission of the representative in connection with the conduct or continuation of the matter…”

[14] The power to award costs under s.400A and s.401(1A) are in similar terms. Section 400A applies where a party to an unfair dismissal matter has caused another party to incur costs by an unreasonable act or omission. The Commission is empowered to award costs under the provisions whether or not the Commission has granted permission for a person to be represented in an unfair dismissal matter. As the Explanatory Memorandum stated in relation to the provisions:

“The amendments strike a balance between the need to protect workers from unfair dismissal, and to provide a deterrent against unreasonable conduct during proceedings. The amendments will enable costs orders to be more easily made in the case of unreasonable conduct but will not prevent genuine claims from being pursued. They will discourage frivolous and speculative claims and assist in the efficient resolution of claims by encouraging all parties to approach proceedings in a reasonable manner. These measures are reasonable and proportionate to address the time and expense that an unreasonable conduct by a participant and/or their representative may cause another party to incur.” 10

[15] And in relation to s. 400A the Explanatory Memorandum states:

“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.
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.
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.” 11

[16] The concept of the Commission awarding costs against parties who have made applications vexatiously or without reasonable cause or parties who have acted unreasonably in connection an application, is not new. Section 170CJ(1) of the former Workplace Relations Act 1996 (WR Act) provided for costs to be awarded where the Commission was satisfied that a party had made an application vexatiously or without reasonable cause. Section 170CJ(2) of the WR Act further provided that the Commission could award costs against a party if satisfied that that the party has “acted unreasonably” by failing to discontinue a matter or to agree to terms of settlement that could lead to discontinuance of an application. In Stagno v Frews Wholesale Meats, 12a Full Bench of the Commission observed:

“That there is a different formula is clear but we are of the view that the formulations are based on the stage of proceedings at which they occur. Section 170CJ(1) relates to the initiation of proceedings. Section 170CJ(2) relates to the failure to discontinue or the discontinuance of the matter. In each case what attracts the discretion to award costs is unreasonable action or the absence of sufficient reason for the action taken. What is considered to be without reason is determined by reference to the stage that the proceeding has reached. We note that this leaves open the possibility that proceedings may commence which are with reasonable cause but may, in particular circumstances at a later stage, be further prosecuted unreasonably.” 13

[17] In Brazilian Butterfly Pty Ltd and Charalambous 14 a Full Bench of the Commission was considering whether a party had acted unreasonably in rejecting a settlement offer for the purposes of s. 170CJ(2). The Full Bench rejected the approach in earlier decisions where it had been held that the focus in these provisions was on the facts known or apparent to the party at the relevant time. The Full Bench in Brazilian Butterfly held that the references to unreasonableness in the costs provisions of the WR Act introduced a reasonable person test. The Full Bench went on to state that the test in s. 170CJ(2) is determined by reference to, whether in all of the circumstances, a reasonable person in the position of the party against whom the costs application was made, would not have failed to agree terms of settlement that may have led to the discontinuance of the application and that:

“[43] A reasonable person, who is a party to proceedings pursuant to s.170CE, when confronted with an offer of settlement from the other party, will determine whether, and if so, how to respond to such an offer after considering all the circumstances of the case, including:

- the terms of the settlement offered in relation to the relief sought;
- the relative strengths of the parties’ cases (and thus their relative prospects of success) in relation to both ‘liability’ and the relief sought;
- any assessment of the merits in the certificate issued by the Commission pursuant to s.170CF(2);
- the likely length and cost of proceeding to a hearing if the matter does not settle; and
- any adverse consequences that will accrue to a party if they accept a settlement on particular terms rather than successfully prosecute or defend the primary application, as the case may be.

[44] This list is not intended to be exhaustive. All of the circumstances are relevant and, as is made clear in the joint judgment in Blagojevch, there is no basis in the Act for giving primacy to any particular factor in every case.

[45] In many, if not most, cases there will be contested facts or contested interpretations of particular facts. What knowledge in this regard is to be attributed to the reasonable person considering whether, and if so, how to respond to an offer of settlement? … The Full Bench in Kangan Batman TAFE observed, we think correctly, that:

‘A party cannot simply disregard matters that should have been reasonably apparent and then claim that such matters were not apparent to them.’ ” 15 [references omitted]

[18] The Full Bench in Brazilian Butterfly also observed that genuine perception is not necessarily the same as actual perception and a person may not be able to assert the that perception is genuine if compelling evidence to the contrary is disregarded and the party ought to have known that the facts were other than as that person asserts. 16

[19] In Goffet v Recruitment National Pty Ltd 17 a Full Bench of the Commission was considering an application for costs under s. 658(3) of the WR Act which at that time provided:

“If the Commission is satisfied:

(a) that a party (first party) to a proceeding relating to an application made under section 643 caused costs to be incurred by the other party to the proceedings; and

(b) that the first party caused the costs to be incurred because of the first party’s unreasonable act or omission in connection with the conduct of the proceeding;

the Commission may, on application by the other party under this section, make an order for costs against the first party.”

[20] In that case, the Full Bench was considering whether conduct of the Respondent at first instance should attract an award of costs. The Full Bench held that the conduct of the party against whom costs are sought, should be considered in the context of the proceeding as a whole. In considering the various conduct engaged in by the Respondent, the Full Bench held that failure of the Respondent to inform the Applicant or the Commission of the inability to attend a conciliation conference prior to the scheduled commencement time of the conciliation or at all, represented conduct which caused the Appellant and her representative an unnecessary attendance at the Commission for which she should have her costs. The Full Bench observed in respect of that conduct that:

“The failure to initiate contact with the Commission and/or the Appellant prior to the scheduled start time for the conciliation to inform it or them of the non-attendance of the Respondent was unreasonable. If the act was intentional it would be an unreasonable act. If unintentional it would be an unreasonable omission.” 18

[21] The Full Bench also observed that failure on the part of the Respondent to take steps to inform the Applicant of its intentions not to attend the conciliation was either deliberate or reckless or if such conduct was an omission, it was equally unreasonable. Further the Full Bench held that failure by the Respondent to file its material in the time required and to alert the Applicant to the fact that it maintained a jurisdictional objection was:

“…either a deliberate or reckless act that could not be regarded as anything other than unreasonable. Alternatively, to the extent that the failure might be regarded as an omission, it was equally unreasonable.” 19

[22] Section 401(1A) of the Act allows the Commission to make costs orders against lawyers and paid agents who have been granted permission to appear, in circumstances where:

• The lawyer or paid agent has caused the other party to the matter to incur costs because they encouraged the commencement or continuation of a matter when is should have been reasonably apparent that there was no reasonable prospect of success; and

• Where the lawyer or paid agent caused the other party to incur costs because of an unreasonable act or omission in conducting or continuing the matter.

[23] In relation to these sections, the Explanatory Memorandum states:

“Section 401 currently enables FWA to award costs against a lawyer or paid agent in certain circumstances, but only where FWA has granted permission under section 596 for them to represent a party in unfair dismissal proceedings. Item 9 replaces subsection 401(1) with new subsections 401(1) and 401(1A), under which this power will no longer depend on the FWC having granted permission under section 596.
New subsections 401(1) and 401(1A) will provide a stronger deterrent for lawyers and paid agents from encouraging parties to bring or continue speculative unfair dismissal claims, particularly claims they know have no reasonable prospect of success. The provision will also deter lawyers or paid agents from unreasonably encouraging a party to defend a claim or make a jurisdictional argument where there is no prospect of the argument succeeding. It will act as a stronger deterrent than the current provision as it will make lawyers and paid agents subject to the possibility of adverse costs orders even if they are not granted, or do not seek, permission to represent the party in the matter before the FWC.
…
The addition of the words ‘or respond to’ in new subsection 401(1A)(a)) makes clear that costs are also available against employer representatives who encourage an employer to defend a claim where there is no reasonable prospect of the defence succeeding.
An example of where the FWC may award costs against a representative under new item 401(1A) is where the representative knows that his or her client’s unfair dismissal claim is dishonest or without foundation but still actively encourages them to proceed with the claim to try and extract a remedy such as a financial settlement from the employer. 20
[24] Cases where costs have been awarded against a lawyer or a paid agent have involved an inference being drawn that the lawyer or paid agent knew that a claim made by a client was dishonest and that the dishonesty was likely to be made out in a hearing, but nonetheless continued to attempt to extract a settlement or a finding that a reasonable representative would have formed a view that a case did not have strong prospects of success. In cases where costs have been awarded under both ss. 400A and 401, the costs have been assessed and either an order made that the party and the representative are jointly and severally liable for those costs 21 or the costs have been apportioned between the party and the representative.22

[25] It has been held that the Commission has the power to award indemnity costs. Generally this power will be exercised in cases where there is some special or unusual feature – for example where allegations of fraud are made that are known to the party making the allegation to be false or where such allegations are irrelevant to the issues between the parties – or where there is delinquency on the part of a party. In Goffett v Recruitment International Pty Ltd a Full Bench of the Commission awarded indemnity costs on the basis of conduct that was high handed and reckless to the consequences for the other party. 23

[26] It must also be noted that in respect of the provisions relied upon by the Applicant in relation to her application for costs, a decision about whether an Order for costs should be made is a discretionary one involving a two stage process. First, it is necessary to ascertain whether the situation is one in which there is a power to award costs under the relevant provision. If the Commission decides it has power to award costs, it is then necessary to consider whether in all of the circumstances an Order for costs is appropriate 24.

3. THE MATERIAL AND OBJECTIONS

[27] Attached to Ms Sommer’s application was a lengthy Affidavit 25 and annexures. Due to the extent of the material filed by Ms Sommer, it was necessary at the hearing in relation to her costs application, to have Ms Sommer identify and confirm the material that she relied on in support of her application for costs. The material and Ms Sommer’s reliance upon it is as follows:

• Documents relating to a QSuper query – not relied upon; 26

• Documents produced by Mr McCombes – relied upon; 27

• Letter produced by Mr Harding from Turks lawyers dated 4 October 2016 – relied upon; 28

• Applicant’s submissions in reply on costs (undated) filed by email of 31 May 2017 – relied upon; 29

• Bundle of documents being the annexures to the Applicant’s submissions in reply:

o Annexure 1 (position material, redundancy estimate, PAYG summary) – struck out on grounds of relevance; 30

o Annexure 2 (letter of 20 October 2016 from Piper Alderman) - relied upon; 31

o Annexure 3 (a bundle of letters dated 23 June, 1 July and 4 July 2016) – relied upon; 32

o Annexure 4 (letter dated 9 August 2016) – relied upon; 33

o Annexure 5 (extract of transcript of 2 November 2016 proceedings) – relied upon; 34

o Annexure 6 (portion of a letter to Mr Harding dated 4 October 2016) – relied upon; 35

o Annexure 7 (extract of transcript of Hearing) – relied upon; 36

o Annexure 8 (LinkedIn extract) – not relied upon; 37

• Form F6 application, schedule of costs and affidavit of Ms Sommer (and annexures) – relied upon; 38

• Submissions in reply being a 12 page document attached to the email of 31 May 2016 at 5.43pm – relied upon; 39

• Further document titled “Applicant’s submissions in reply on costs”, being a 40 page document – not relied upon; 40

• Statement of Mr McCombes – relied upon; 41

[28] A number of objections were made to Ms Sommer’s material on which I ruled at the hearing. Those objections, my rulings and reasons are as follows. In relation to Ms Sommer’s affidavit 42:

• Paragraphs 30 to 35 – struck out as hearsay and evidenced by other documents; 43

• Last 2 sentences of paragraph 53 – struck out as beyond Ms Sommer’s knowledge and irrelevant; 44

• Second half of paragraph 56 – struck out as irrelevant; 45

• Paragraph 58– struck out as irrelevant and could be dealt with in Mr McCombes’ evidence; 46

• Paragraph 59 – not struck out but will be dealt with as a question of weight; 47

• Paragraphs 73 to 78 – objection reserved and not dealt with, to be addressed in the evidence of Mr McCombes; 48

• Paragraphs 80 to 82 – struck out as Mr Harding was not present for cross-examination and as Mr Harding’s letter was tendered; 49

• Paragraphs 88 to 89 – not struck out but will be dealt with as a question of weight; 50

• Paragraphs 90 to 91 – struck out as Mr McCombes was giving evidence directly; 51

• Paragraph 106 – struck out as hearsay; 52

• Email from Mr Harding to the Applicant at Annexure M – struck out as irrelevant; 53

• Email of Ms Phillips at Annexure N – not struck out and will be dealt with as a question of weight. 54

[29] In relation to the document that is entitled “Applicant’s submissions in reply on costs”, filed 31 May 2017:

• Part 1, paragraphs (iii) to (v) were not pursued by Ms Sommer; 55

• Part 3 was struck out in its entirety as relating to those allegations not being pursued in Part 1; 56

• Part 7 was struck out as not relevant to the costs matter; 57

• Part 8 was struck out as not being relevant to the costs matter; 58

• Annexure 1 –struck out on grounds of relevance. 59

• Annexure 8 – struck out on grounds of relevance and not relied upon by Ms Sommer (see above). 60

[30] The Respondent objected to the tender by Ms Sommer of a letter from Turks Lawyers dated 4 October 2016 produced by Mr Harding (a proposed witness for Ms Sommer in the substantive proceedings) in response to an Order for production issued at the request of Ms Sommer. 61 The letter was sent by Turks Lawyers on instructions from the CEO of the Respondent, Mr Cartwright. I allowed Ms Sommer to tender the letter in the costs application on the basis that the letter was sent on behalf of the CEO of the Respondent to a person who was at the relevant time a potential witness for the Applicant in the unfair dismissal hearing before the Commission.

[31] In my view, such correspondence is part of the general context of the Respondent’s response to Ms Sommer’s application and is a matter that can properly be taken into account in the application for costs. The letter speaks for itself and the fact that it was sent by a different legal representative from that acting for the Respondent in Ms Sommer’s application, and that it was sent on behalf of the CEO of the Respondent purportedly in a personal capacity, does not mean that the letter is not part of the conduct of the Respondent that can be taken into account in the costs application. I supressed a portion of the letter on the grounds that it set out allegations against Mr Cartwright which were not tested at the substantive hearing due to the inability of Mr Harding to attend that hearing. Mr Harding’s grounds for not attending the hearing justified setting aside the attendance notice. 62

[32] In relation to the documents produced by Mr McCombes 63 being admitted, a number of objections were raised by the Respondent and dealt with as follows:

• The document titled “Important Notice Regarding the Information on Your LinkedIn Profile” – struck out as irrelevant; 64

• Email dated 20 October 2016 at 12:13pm, with a heading “FW: Performance Discussion – Request for Formal Intervention” – struck out as irrelevant; 65

• Email trail commencing with an email dated 28 July 2016 at 3:31pm, with a subject “Performance Discussions”, and ending with an email dated 2 November 2016 at 12:35pm, with a heading “Re: Performance Discussion – Request for Formal Intervention” – emails dated between 28 July 2016 and 29 July 2016 struck out as irrelevant (and previously struck out where they have already appeared) but the remaining emails in the trail were retained. 66

[33] It is unfortunate that a significant amount of irrelevant material was placed before the Commission by Ms Sommer in respect of this costs application particularly given that the schedule of costs tendered by Ms Sommer includes costs for legal advice in relation to the costs application. 67

[34] At the commencement of her evidence in the costs application, Ms Sommer referred to further documents that were not filed in the Commission but appeared to have been provided to the Respondent in response to a request for proof that Ms Sommer had actually incurred costs. The Respondent did not seek to tender that material and proceeded on the basis that the costs in the schedule of costs tendered by Ms Sommer are the costs incurred. Ms Sommer was not able to provide an explanation about the material or explain why it could not have been included in her application for costs. Accordingly I have dealt with the application for costs on the basis that the costs items set out in the Schedule tendered by Ms Sommer are the items in respect of which costs were incurred by Ms Sommer.

[35] The Respondent, and its legal representative relied upon the following material in defence of the costs application:

• Respondent’s outline of submissions dated 28 April 2017 (with annexures);

• Affidavit of Mr James Cartwright, Chief Executive Officer of the Respondent.

[36] Following the costs hearing I made an Order 68 prohibiting or restricting publication of the transcript and audio recording of Mr Cartwright’s evidence at the costs hearing on the basis that the evidence dealt inter alia with allegations made against Mr Cartwright by Mr Harding which were not able to be tested due to the inability of Mr Harding to attend the hearing for personal reasons, justifying an attendance notice issued at the request of Ms Sommer being set aside.

4. CONSIDERATION

4.1 The costs sought by Ms Sommer

[37] As previously noted the amount claimed in Ms Sommer’s costs application did not match the total of the itemised schedule of costs filed by Ms Sommer. Ms Sommer gave oral evidence asserting that her costs exceeded those in the itemised schedule however it was not clear whether Ms Sommer was referring to a family law matter which was also apparently handled by her legal representative. Ms Sommer also tendered correspondence indicating that her costs in respect of the unfair dismissal application as set out in the schedule of costs had been capped by her legal representative at $11,000.00. It is not necessary for me to determine the full quantum of costs incurred by Ms Sommer in respect of her unfair dismissal application.

[38] Generally Ms Sommer’s evidence about the total amount of the costs she incurred in connection with her unfair dismissal application was unsatisfactory. Ms Sommer was not assisted by the apparent inability of her former legal representative to provide a comprehensive itemised schedule of costs incurred in connection with that application. It is also apparent that, to use the vernacular, Ms Sommer’s former legal representatives made a meal out of her unfair dismissal application. This is a matter to which I will return.

[39] Further, some of the legal costs claimed by Ms Sommer are for advice received from her legal representative after 19 September 2016 when the representative filed a notice indicating that he no longer acted for Ms Sommer. Ms Sommer accepted at the hearing of her costs application that she understood that at the commencement of the hearing into her unfair dismissal application, the Respondent had provided an undertaking to the Commission that it would not seek costs against Ms Sommer if its jurisdictional objection was successful. Ms Sommer agreed that she had given no indication to the Commission at that time that she continued to have the assistance of lawyers and that there were costs in her itemised schedule relating to the period after 19 September 2016. Ms Sommer denied that she had misled the Commission in relation to this matter.

[40] I accept that Ms Sommer did not intend to mislead the Commission by failing to advise that she continued to incur legal costs at the point the Respondent gave an undertaking not to pursue costs against her. However, an award of costs is discretionary and this is a matter to which I have had regard. In my view it would be unfair in the circumstances of this case, to award costs to Ms Sommer incurred after 2 November 2016 when the Respondent gave an undertaking not to pursue costs against her, in circumstances where Ms Sommer’s representative had filed a notice that he had ceased to act for her and the Respondent was not on notice that she continued to incur legal expenses.

[41] I also note that the Respondent did not put to the Commission that a reciprocal undertaking should be required from Ms Sommer. Prior to that date, the Respondent had been represented by a solicitor in preliminary proceedings on the basis that permission would be required to be sought if the matter proceeded beyond preliminary stages. The undertaking was given on 2 November in the context of the Respondent seeking permission to be represented by Counsel instructed by the solicitor who had been involved in the matter from the outset. When the undertaking was given on 2 November 2017 it was given in the knowledge that Ms Sommer had been legally represented prior to the hearing.

[42] I turn now to consider each of the bases upon which Ms Sommer seeks costs and whether that conduct triggers the discretion to award costs under each of ss. 611, 400A. I deal separately with the application for costs against the Respondent’s lawyer Mr Capelin and the claim for costs to be awarded on an indemnity basis.

4.2 The Respondent’s jurisdictional objection

[43] The jurisdictional objection advanced by the Respondent in the substantive proceedings was that the dismissal was a case of genuine redundancy. The jurisdictional objection did not succeed. In the costs application, Ms Sommer contends that the fact that the Respondent mounted a jurisdictional objection at all is a matter that should attract an award of costs against the Respondent and its representative, Mr Capelin of Piper Alderman Lawyers.

[44] The term “genuine redundancy” is defined in s. 389 of the Act for the purpose of determining whether a particular dismissal is excluded from the unfair dismissal regime by virtue of s. 385(a) of the Act.

[45] It is possible that the Commission may be satisfied for the purposes of s. 389(1)(a) that a dismissal was for the reason that the employer no longer required the job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise but not be satisfied that the dismissal was a case of “genuine redundancy” because the other considerations in s. 389 are not met. However a finding that a dismissal is not a case of genuine redundancy as defined in s.389 does not prevent a finding for the purposes of s. 387(a) of the Act that there was a valid reason for that dismissal on the ground of redundancy. In such a case the dismissal may or may not be found to be unfair on the basis of the remaining considerations in s. 387 of the Act to the extent of the relevance of those considerations given that such a dismissal is usually not based on the conduct or capacity of the dismissed employee.

[46] In the present case, Ms Sommer’s dismissal was found not to be a case of genuine redundancy within the meaning in s. 389 of the Act. However the dismissal was found to be for a valid reason on the basis that I was satisfied that the dismissal was for the reason that the position held by Ms Sommer was redundant because the employer no longer required the job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.

[47] It was also a case where I found that there was no obligation for the Respondent to consult Ms Sommer for the purposes of s. 389(1)(b) of the Act on the basis that a Modern Award did not cover Ms Sommer in respect of her employment with the Respondent. However, the Respondent’s jurisdictional objection failed on the basis that I was satisfied that it would have been reasonable in all of the circumstances for Ms Sommer to have been redeployed within the employer’s enterprise. In this regard I found that while the Respondent took some steps in relation to redeployment, they were not sufficient to satisfy the exception in s. 389(2).

[48] It is also the case that Ms Sommer met the jurisdictional objection by contending that she was covered by a Modern Award, in circumstances where this was demonstrably not the case. In all of the circumstances, I am not satisfied that the jurisdictional objection was made vexatiously – ie. for the predominant purpose of harassing or embarrassing Ms Sommer or gaining a collateral advantage. The jurisdictional objection failed, but this is not a case where, upon the facts known to the Respondent at the time of instituting the objection, there was no substantial prospect of success. The success of the jurisdictional objection depended on an arguable question of law and on the Respondent’s own version of the facts. Accordingly the discretion to order costs against the Respondent under s. 611 of the Act is not triggered.

[49] I am also satisfied that the discretion to award costs against the Respondent under s. 400A(1) does not arise simply because a jurisdictional objection, which was arguable, failed. The Respondent raising the jurisdictional objection in all of the circumstances of the case was not an unreasonable act in connection with the conduct or continuation of the matter. It follows that there is also no basis for costs to be awarded under s.401(1A)(a) of the Act

4.3 Conciliation and offers of settlement

[50] This ground can be described as conduct of the Respondent at conciliation and in relation to offers of settlement made by Ms Sommer. In respect of this conduct Ms Sommer gave evidence about a conciliation conference in relation to her unfair dismissal application conducted by a Fair Work Commission Conciliator on 13 July 2016. 69 Ms Sommer accepted that the conciliation conference was conducted on the basis that it was “confidential without prejudice”70. Ms Sommer was represented at that conference by Mr Stephen Mackie of Counsel instructed by Mr Coyne. The Respondent was represented by Mr Capelin. Ms Sommer states that at the conciliation conference an offer of 15 weeks’ remuneration to resolve the matter was put on her behalf.71

[51] Ms Sommer states that this offer took into account the “7 weeks’ redundancy package which I received and the 4 weeks’ payment I received in lieu of notice” 72. Ms Sommer states it is her belief that this offer was “reasonable” and could have “easily resolved the dispute at the conference”. 73 The Respondent rejected this proposal and the Conciliator conveyed the Respondent’s position that it would put “no money on the table”74 but that it was interested in a non-disparagement agreement only75.

[52] Ms Sommer states that she instructed her representatives that she would have been prepared to accept an offer of 6 weeks’ pay but accepts that no offer in these terms was made to the Respondent. 76 Ms Sommer further states that given the unwillingness of the Respondent to settle the matter she instructed her Counsel to inform the Respondent that she was not interested in a “mere non-disparagement agreement” and was not willing to settle the matter on that “unreasonable and limited basis.”77 After the conciliation conference Ms Sommer forwarded correspondence to the Respondent’s solicitors dated 13 October 2016 headed “Without Prejudice Save as to Costs” stating that:

“Whilst I am confident in taking this matter to an arbitration hearing and I think there would be substantial public and media interest in it, in an endeavour to avoid the costs and uncertainties of litigation, I make the following offer as full and final settlement of this matter subject to the signing of a deed between the parties…”

[53] The letter went on to set out the financial amount which Ms Sommer sought being 21 weeks’ salary and 75% of a “Rural Transition Bonus” of three months’ salary alleged by Ms Sommer to have been verbally offered to her before her employment was terminated. The letter concluded by stating that:

“If your client does not accept the offer and I obtain a judgment that is no less favourable than the amount of the offer, I intend to rely on this letter on the issue of costs and to seek my costs on an indemnity basis.” 78

[54] Ms Sommer said that she drafted the letter of 13 October 2016 using a template provided by her legal representative and sent it to the Respondent herself. The Respondent’s solicitor sent a letter to the Applicant dated 20 October 2017 rejecting her settlement offer. The Respondent did not make a financial offer to settle the matter but indicated that it would provide the Applicant with a Statement of Service and would not pursue her for the Respondent’s costs, in return for the Applicant executing a deed of settlement that released and indemnified the Respondent, its associated entities and officers, agents, directors or employees of those entities from all claims relating to Ms Sommer’s employment and the cessation of her employment. The letter further indicated that the Respondent’s costs at that point were in the order of $50,000.00. Ms Sommer rejected the Respondent’s offer.

[55] In Ms Sommer’s submissions in reply in relation to the costs application she states the following in relation to the post-conciliation offer to resolve her application:

“As this offer would seek settlement to and avoid public (sic) for the Respondent and Representative’s behaviour, protecting their respective businesses HCA and Piper Alderman I increased the settlement amount, in exchange for what I considered my silence. The increased the (sic) offer sought would cover my costs (this response seeks to confirm) in full and position myself better financially to effectively move on from the matter. Astoundingly, the Respondent replied to this (Annexure 1 dated 20.10.17) offer in their usual, aggressive manner, not only rejecting the offer but again threatening me, now with the costs accrued by the respondent (sic) incurred for services rendered by the Respondent’s Representative (sic). The costs their legal fees to date, noted in correspondence (Annexure 1 were approximated (for emphasis) at $50 000.00, further noting that this figure will likely increase (for emphasis) should the matter continue to Hearing (already, scheduled in approx. two weeks’ time 08.1.16 (sic)). With the threat of covering legal costs, equating to near three times that of my accrued costs to date and the potential loss of all witnesses fearful of hanging threats from the Respondent and facing Hearing with Respondent Representative, Tim Capelin it was all too much… 79

[56] In response to a proposition under cross-examination that this was an inappropriate basis for an offer to settle, Ms Sommer said that she thought that the Respondent and its legal representative were “playing dirty from the outset” and that she was reacting to what she believed to be unlawful conduct in relation to her witnesses. Ms Sommer accepted in cross-examination when she sent the letter she anticipated being able to embarrass the Respondent and said that she would do this by telling the truth about the behaviours that she had witnessed in relation to its conduct in her case. 80

[57] I decline to take into account the refusal of the Respondent to accept the settlement offer made by Ms Sommer at the conciliation conference on 13 July 2016 in determining Ms Sommer’s costs application. It is not disputed that the settlement offer made at conciliation was made on a without prejudice basis and was not subsequently repeated on an open basis. As a Full Bench of the Commission held in McKenzie v Merin Rise Pty Ltd 81 it is inappropriate in such circumstances for an offer of settlement made in conciliation proceedings to be taken into account in a costs application. This was so notwithstanding that the offer has been referred to by both parties in the costs hearing.82 That principle applies to all applications for costs including under s. 400A and s. 611. I also note that Ms Sommer was represented by Counsel at the conference and there is no reason why an offer of settlement made at the conference could not have been repeated on an open basis outside the conference.

[58] I am also not satisfied that failure on the part of the Respondent to agree to the offer made in Ms Sommer’s letter of 13 October 2016 was an unreasonable act or omission for the purposes of a costs application under s. 400A of the Act. On any view, that offer was well in excess of what was put at the conciliation conference and also exceeded the amount Ms Sommer could have obtained by way of on order for compensation had her unfair dismissal application succeeded and the Commission determined that reinstatement was not appropriate. In this regard I note that Ms Sommer did not seek reinstatement and in her Form F2 unfair dismissal application indicated that she was seeking compensation. Further, I am not satisfied, for the reasons above, that the refusal to accept that offer constituted a vexatious or unreasonable response to Ms Sommer’s unfair dismissal application for the purposes of s. 611 of the Act.

[59] Section 401(1A)(a) of the Act is not relevant to this aspect of Ms Sommer’s application for costs as the conduct about which Ms Sommer complains is not a response to the application of the kind contemplated in that section. In relation to s. 401(1A)(b), I do not accept that the rejection of Ms Sommer’s settlement offer made on 13 October 2016 was an unreasonable act or omission on the part of the Respondent’s representative Mr Capelin, and if Mr Capelin advised that the offer should be refused, it would be entirely understandable. Accordingly the discretion to award costs against the Respondent under ss. 611 or 400A(1) or against the Respondent’s representative under s. 401(1A)(b) of the Act is not triggered.

4.4 Allegations of breach of contract

[60] On 23 June 2016, a letter was emailed to Ms Sommer under the hand of Mr Capelin. 83 That email stated:

“We act for Care Services Administration Pty Ltd, which is a wholly owned entity of Healthcare Australia Pty Ltd (HCA).

We are instructed as follows:

1. You commenced employment with HCA on 7 January 2013, and your employment ended on 25 May 2016.

2. The terms and conditions of your employment with HCA were governed by your contract of employment, dated 1 January 2014 (the Contract).

3. In your role as Business Manager, you had regular contact with clients and key stakeholders of HCA.

4. Since leaving your employment with HCA:

4.1 The mobile phone that you used during your employment has rarely rung, which is unusual given that your mobile phone was used by you in a business development role;

4.2 One of HCA’s clients is now no longer contactable, without explanation; and

4.3 You have been heard speaking on the phone with a client of HCA, being Ms Valda Mathewson from the South West Hospital & Health Service, Queensland Government.

Your ongoing obligations to HCA

As you would be aware, your Contract includes detailed provisions that relate to:

• The protection of HCA’s client connections, which are set out in clause 15 of your Contract (which amongst other things, prevent you from soliciting, canvassing, approaching or accepting any approach, or performing any work for any Client with whom you had dealings, in the 6 month period following the termination of your employment, within a 50 kilometre radius from the office you last worked at);

• The protection of HCA’s Confidential Information, which are set out in clause 14 of your Contract; and

• The protection of HCA’s Intellectual Property, which are set out in clause 16 of your Contract.

To avoid doubt, these obligations are separate and in addition to any equitable duties of confidence that you owe to HCA, as well as your obligations under the Corporations Act 2001 (which prevent you from misusing your position or HCA’s information in order to gain an advantage for yourself or someone else, or to cause any detriment to HCA).

Your potential breaches of contract

It follows from the above that it is unreasonable for HCA to assume that you are not fulling complying with your post-employment obligations.

You will appreciate that in accordance with clause 15.4 of the Contract, the restraints imposed upon you are reasonable and necessary for the protection of HCA’s goodwill and the protection of its legitimate interests.

Action required by you

In light of your obligations and the information of which HCA has become privy, HCA requires you to provide the undertakings that are set out in the Schedule to this letter, within 7 days of the date of this letter.

Should you fail to give these undertakings within 7 days from the date of this letter and comply with them, our client reserves its right to seek any other remedy to which it may be entitled in respect of your breach of your post-employment obligations, including but not limited to any injunctive relief to prevent any current or future breach of Contract, and/or damages resulting from such breach.

If our client is required to commence proceedings to enforce its right, our client intends to rely on this letter in relation to the question of costs.”

[61] Attached to that letter was a schedule of undertakings in relation to confidentiality.

[62] On 30 June 2016, Mr Coyne responded to Mr Capelin’s letter on behalf of Ms Sommer denying all allegations in the letter and stating that Ms Sommer was under no obligation to sign the requested undertakings and that the letter disclosed no reasonable basis for the request. 84

[63] A further letter was sent to Mr Coyne on 1 July 2016 85, under the hand of Mr Capelin, which stated:

“We refer to your letter dated 30 June 2016.

We note that despite your client’s broad denial of the allegations set out in our letter dated 23 June 2016, your client provides no basis for those denials.

Just as concerning, your client has failed to provide the undertakings sought which, amongst other things, seek confirmation that she is not, nor will she in the future, act contrary to her post-employment obligations.

In the circumstances, our client is very concerned that Ms Sommer has breached her post-employment obligations, and will continue to do so in the future.

Ms Sommer could easily allay our client’s concerns by providing the undertakings sought in our letter dated 23 June 2016. To this end we again ask that the undertakings be provided by no later than…

Should we not receive the signed undertakings by this time, our clients reserves its rights to take further action including filing proceedings without further notice to you.”

[64] On 4 July 2016, Mr Coyne responded on Ms Sommer’s behalf reiterating that there was no basis to demand an undertaking and Ms Sommer declined to do so. Mr Coyne also stated that Ms Sommer was under no obligation to provide a basis for her denials in a situation where Ms Sommer asserted that the Respondent had not provided any details of the alleged breaches. 86

[65] Ms Sommer’s evidence is that she found these emails to be “impolite, offensive, intimidating and threatening and completely lacking in fact and their requests rude, assumptive and unreasonable”. 87 Ms Sommer also stated that she found the letters to be “bullying”88, made her stressed and anxious and that she was aware that this was the Respondent’s “usual tactic”89 in dealing with former employees.

[66] In these proceedings, Ms Sommer denied she had breached the covenants in her contract of employment, and maintained that the Respondent had provided no evidence of any breach (despite requests) and that the allegations eventually came to nothing. Ms Sommer submits that these actions show a “trend of bullying and intimidation that motivated HCA and their lawyers to keep unreasonably pursuing and [prolonging] the resolution of this matter and wasting significant time and money of everyone involved” 90.

[67] The Respondent submits that it had a reasonable basis to “assume” 91 that Ms Sommer was not complying with her post-employment obligations; that it made specific allegations regarding her conduct; Ms Sommer refused to respond to those allegations; “erroneously”92 suggested that no specific allegations had been made; and Ms Sommer did not attempt to refute the allegations. The Respondent further submits that the conduct in seeking that Ms Sommer comply with her post-employment obligations is not related to the unfair dismissal proceedings and so cannot have caused her to incur costs “in relation to” the application (see s.611) or costs “in connection with the conduct…of the matter” (see s.400A) or was not an unreasonable act of the lawyer “in connection with the conduct…of the matter” (see s.401).

[68] I do not accept the Respondent’s submission on this matter for the following reasons. Ms Sommer’s dismissal took effect on 25 May 2016 and her unfair dismissal application was made on 14 June 2016. It seems more than coincidental that the letter alleging breach of post-employment obligations was sent after Ms Sommer’s unfair dismissal application was made. It is more probable than not that if the Respondent was concerned that the mobile telephone previously issued to Ms Sommer had stopped ringing, or a client was uncontactable, those concerns would have emerged shortly after Ms Sommer was dismissed and not almost one month after Ms Sommer’s dismissal and one week after she had filed an unfair dismissal application. Further, if Ms Sommer was overheard speaking to a client by another employee of the Respondent this can only have occurred prior to her employment ceasing and it is unusual that the Respondent would have waited until after Ms Sommer filed her unfair dismissal application to raise this issue. This is particularly so given that the decision that Ms Sommer’s position was redundant was made some time before her employment ended, and the termination of Ms Sommer’s employment was being considered well before it was effected. It is also the case that no further action was taken in relation to the alleged breaches of Ms Sommer’s post-employment restrictions when she refused to sign the undertakings sought.

[69] Ms Sommer asserts that the allegations were made to bully her and prolong proceedings in relation to her unfair dismissal application. No evidence to the contrary was put to the Commission by the Respondent. An assertion was made in the Respondent’s submissions in the costs application that it had a reasonable basis upon which to assume that Ms Sommer was not complying with post-employment obligations and that this is apparent from its correspondence setting out those allegations. I do not agree.

[70] The letters sent to Ms Sommer and to her legal representative contain allegations that are at best vague and at worst spurious, and the criticism of Ms Sommer for failing to respond to them or to give the undertakings has no reasonable basis. It is unclear how Ms Sommer could reasonably be required to respond to allegations including that a mobile telephone supplied by the Respondent which had been assigned to her during her employment and remained in the Respondent’s possession after Ms Sommer ceased employment, had stopped ringing. Quite simply there was nothing of any substance for Ms Sommer to respond to and the response provided on her behalf pointed this out. Rather than desisting or providing particulars of the allegations, the Respondent’s legal representative sent a further letter accusing Ms Sommer of failing to respond appropriately to its previous letter.

[71] Mr Cartwright who gave evidence in the costs proceeding did not give evidence in relation to this matter. Mr Cartwright did give evidence that the Respondent had pursued legal action against another employee it believed had breached post-employment obligations and obtained undertakings from that employee. The Respondent is a very large employer in a sales type environment. In my view it is more probable than not that if the Respondent genuinely had concerns about Ms Sommer’s conduct post-employment, it would have pursued the matter further.

[72] On the basis of the timing of the allegations, their lack of substance and the failure on the part of the Respondent to pursue them, I am satisfied that they related to Ms Sommer’s unfair dismissal application and were intended at least in part to make her reconsider proceeding with that application. I am also satisfied that there was no reasonable basis for the allegations and that Ms Sommer incurred costs seeking advice about them and responding.

[73] I accept that employers who reasonably believe that employees are breaching post-employment obligations are entitled to correspond with those employees in order to remind them of their obligations and the implications of failure to comply. In the present case, I do not accept that the belief was reasonable and in the context of Ms Sommer having made an unfair dismissal application the correspondence to Ms Sommer alleging breach of post-employment obligations was an unreasonable act in connection with the conduct of Ms Sommer’s unfair dismissal case designed to discourage her from proceeding. Accordingly, the discretion to award costs against the Respondent under s. 400A(1) of the Act is triggered on the basis that the correspondence is an unreasonable act in connection with the Respondent’s conduct of the matter.

[74] I do not accept that the other sections of the Act under which Ms Sommer seeks costs are relevant in relation to the allegations of breach of restraint of trade. Those allegations were not an application as contemplated by s.611. To the extent that the allegations are said to be a response to Ms Sommer’s unfair dismissal application, while it is arguable that they were made for the predominant purpose of discouraging Ms Sommer from pursuing her unfair dismissal application those matters can be addressed by an award of costs under s. 400A(1) of the Act if it is determined that such an order should be made. I am also of the view that in circumstances where Mr Cartwright the CEO of the Respondent gave evidence in the costs proceeding and was not cross-examined in relation to this issue, there is insufficient evidence upon which I could be satisfied that the allegations were made vexatiously or without reasonable cause.

[75] Further, there is insufficient evidence upon which I could be satisfied that the allegations about restraint of trade were encouraged by Mr Capelin or that Mr Capelin engaged in an unreasonable act or omission in writing to Ms Sommer setting out the allegations such that the discretion under s. 401(1A) is triggered. It is sufficient that the unreasonable act of sending the correspondence to Ms Sommer in relation to the allegations of breach of restraint of trade can be addressed by making an order under s. 400A of the Act if it is found to be appropriate in all of the circumstances to make such an order.

[76] The itemised schedule of costs tendered by Ms Sommer indicates that the costs incurred by Ms Sommer in relation to the allegations with respect to breach of restraint of trade are set out in items 9 – 13, 19, 25, 26, 35 – 43, 49, 54 -56, 59 – 72, 77 – 87, 110, 196 and 392-393 of the schedule of costs.

[77] In all of the circumstances I am satisfied and find that the making of allegations against Ms Sommer in relation to an alleged breach of her obligations with respect to restraint of trade was an unreasonable act of the Respondent in connection with Ms Sommer’s unfair dismissal application and that it caused her to incur costs so that the power to award costs under s. 400A is triggered. I am also satisfied that Ms Sommer should have her costs in relation to this matter.

Allegations of serious misconduct

[78] On 24 June 2016 the Respondent filed a Form F3 Employer Response to Unfair Dismissal Application (the Form F3 Response). The Form F3 Response raised a jurisdictional objection on the basis that the dismissal was a case of a genuine redundancy. The Respondent did not, at this time, raise issues concerning Ms Sommer’s performance or conduct. On 9 August 2016 a letter was sent to Mr Coyne by Mr Capelin on behalf of the Respondent making allegations about Ms Sommer’s conduct during her employment and asserting that had these matters been known to the Respondent prior to Ms Sommer’s redundancy, Ms Sommer’s employment would have been summarily terminated. It is sufficient to state that the allegations were such that any reasonable person would conclude that they would be extremely distressing to Ms Sommer.

[79] Ms Sommer’s legal representative dealt with the letter of 9 August on the basis that it was a further response to the application by the Respondent. The Respondent’s legal representative conducted several telephone conversations with Ms Sommer’s representative as evidenced by the itemised schedule of costs filed by Ms Sommer in relation to the allegations. On 12 August 2016, Ms Sommer’s legal representative corresponded with the Commission, attaching the 9 August letter from the Respondent’s legal representative and seeking an extension of time in which to file material in response to the allegation. That letter was copied to the Respondent’s legal representative who was thereby informed that the Applicant intended to call evidence in response to those allegations. Ms Sommer filed the following material on 18 August 2016:

• Outline of submissions;

• Statement of Ms Sommer; and

• Statement of Mr Jamie Harding dated 14 August 2016 and referred to above.

[80] Mr Harding’s statement responded to the misconduct allegations made against Ms Sommer and made similar allegations about certain conduct by Mr Cartwright. It appears from correspondence tendered in the costs application, that Mr Cartwright took great umbrage at the allegations made against him by Mr Harding to the extent that on 4 October 2016, Mr Cartwright caused a legal letter to be written to Mr Harding by Turks Lawyers, warning him that he would face defamation proceedings if he repeated those allegations outside the Commission proceedings. Such was the nature of the allegations that the Respondent’s legal representative also sought to have the references to the contents of Mr Harding’s statement as set out in the defamation letter, suppressed. In those circumstances it is surprising that Mr Cartwright would not appreciate the impact of similar allegations made against Ms Sommer in correspondence to her legal representative dated 9 August 2016.

[81] On 12 September 2016, the Respondent filed a number of documents in reply to Ms Sommer’s merits case including statements by two witnesses repeating the allegations of misconduct set out in the letter to Ms Sommer’s legal representative dated 9 August 2016. On 8 November 2016, the first day of the hearing, the Respondent’s legal representative indicated that the Respondent would not press the allegations regarding Ms Sommer’s conduct which were contained in the statements of the two witnesses and set out in its letter of 9 August 2016. 93

[82] The Respondent submits in the costs application that it took this position in response to Ms Sommer’s position that her witnesses would not be in attendance to give evidence in relation to the allegations. The Respondent also submits that it withdrew the allegations because of a comment I made at the commencement of the Hearing about the timing of the allegations and the difficulties Ms Sommer had calling witnesses to refute them and whether it was necessary to deal with such allegations in a hearing relating to a jurisdictional objection on the grounds of genuine redundancy. 94

[83] I do not accept this submission. The manner in which the allegations were raised left much to be desired. The allegations were raised by way of correspondence with Ms Sommer’s legal representative. It is apparent from the itemised schedule of costs filed by Ms Sommer that the allegations were also raised in telephone discussions between Mr Capelin and her legal representative. As previously noted the allegations should reasonably have been foreseen to cause distress to Ms Sommer. It is also more probable than not that raising the allegations was intended, at least in part, to deter Ms Sommer from proceeding with her unfair dismissal application by expanding the scope of matters for consideration. I do not accept that the Respondent decided not to press the allegations at the hearing of Ms Sommer’s unfair dismissal application for altruistic reasons including concerns about fairness to Ms Sommer.

[84] I also do not accept that the Respondent’s decision not to press the allegations at hearing was unduly influenced by views I expressed. At the point the allegations were withdrawn the Respondent was represented by Counsel and well equipped to respond to any views I expressed about relevance. If the allegations were relevant I do not doubt that they would have been pursued. Quite simply they were not. The Respondent’s case was that Ms Sommer’s dismissal was a case of genuine redundancy and in such circumstances conduct allegedly discovered after her employment was terminated was irrelevant, particularly given that Ms Sommer did not seek reinstatement. In all of the circumstances I am satisfied that the correspondence to Ms Sommer’s legal representative setting out the allegations of misconduct was an unreasonable act in connection with the conduct or continuation of her unfair dismissal application. Accordingly the Commission has power to award costs under s. 400A.

[85] Ms Sommer was cross-examined about the costs incurred by her in relation to responding to these allegations and agreed that she had filed no witness statements in this regard other than making a brief reference to the allegations in her witness statement. Ms Sommer also agreed under cross-examination that she had incurred no costs in relation to the allegations at the hearing because she was not legally represented. 95 However, it is apparent from the itemised schedule of costs filed by Ms Sommer that she did incur costs in relation to the correspondence. It is not necessary that those costs be incurred in a hearing.

[86] The costs are set out in items 129 – 132 and 133 – 138 of the schedule of costs. Ms Sommer also incurred costs associated with a request for an extension of the time in which to file her material to enable a response to be made to the allegations.

[87] The costs with the extension of time are set out in 139-143, 147, 148, 151, 159, 161-163, 167-170, 173 and 186.

[88] In all of the circumstances I am satisfied and find that the making of allegations of serious misconduct against Ms Sommer was an unreasonable act of the Respondent in connection with Ms Sommer’s unfair dismissal application and that it caused her to incur costs so that the power to award costs under s. 400A is triggered. Further, the making of the allegations was a response to Ms Sommer’s application that was made without reasonable cause. I am also satisfied that Ms Sommer should have her costs in relation to this matter. I am not satisfied that the Respondent’s legal representative encouraged the Respondent to make the allegations such that the power to award costs against the legal representative should be exercised.

4.6 Dealings with witnesses

Mr Jamie Harding

[89] As previously noted, Mr Harding provided a witness statement in support of Ms Sommer’s unfair dismissal application dated 18 August 2016. At the time Ms Sommer’s application was heard, Mr Harding sought to be excused from giving evidence for emergent personal reasons and was excused. In her evidence in relation to the costs application, Ms Sommer asserted that Mr Harding had received a legal letter threatening him with defamation proceedings in relation to his witness statement in her unfair dismissal application. Ms Sommer further asserted that her legal representatives had been required to provide advice to Mr Harding to address his concerns arising from that correspondence about giving evidence on her behalf.

[90] By Orders issued on 11 July 2017 at the request of Ms Sommer, Mr Jamie Harding was required to attend the Fair Work Commission to give evidence at the costs hearing and by separate order, to produce a number of documents from managers or employees of the Respondent or legal representatives of either those persons or the Company, in relation to Ms Sommer’s unfair dismissal application and Mr Harding’s evidence in that matter.

[91] In response to the Order, Mr Harding produced a letter sent to him by email on 4 October 2016, by Turks Legal on behalf of the CEO of the Respondent. On 3 August 2017, Mr Harding applied to the Commission to be excused from the requirement to attend the costs hearing. Mr Harding gave a number of reasons set out in a statutory declaration made on that date. After hearing from the parties on the matter I caused the parties to be informed that it was my preliminary view that Mr Harding should be excused and the notice requiring him to attend the costs hearing set aside on the basis that the statutory declaration made on 3 August 2017 in support of his application to be excused and a covering email would not be admitted into evidence, but that I would allow Ms Sommer to tender the email of 4 October 2016 sent to Mr Harding by Turks Lawyers on behalf of Mr Cartwright, in the costs hearing. The parties were further advised that if they wished to object to this course of action they should do so prior to the costs hearing to enable the issue to be dealt with. There was no objection to this course of action other than those relating to some of the contents of the 4 October 2016 email, dealt with above. That email is in the following terms:

“Dear Mr Harding

Jason Cartwright

Care Services Administration Pty Ltd (t/as Healthcare Australia Pty Ltd) ats Natalie Sommer

Fair Work Commission (‘Commission’) Proceedings U2016/2825 (‘Proceedings’)

I act on behalf of Mr Jason Cartwright, CEO of Healthcare Australia Pty Limited.

My client has provided me with a copy of a statement dated 18 August 2016 that you made in the Proceedings (‘Statement’).

At paragraph 68 of your Statement, you state:

[suppressed by order of the Commission] 96

I have been instructed that your assertion is entirely false and dishonest. My client vigorously denies [the allegations subject of the suppression order]. Your statement is therefore defamatory.

You may be aware that defamation occurs when one person communicates material (including by words) which has the effect or tendency of damage the reputation of another. As your assertion was without foundation, it clearly has the effect of damaging my client’s reputation.

However, because your assertion was published in the course of Proceedings in the Statement filed with the Commission, it is protected by absolute privilege from any defamation action.

Absolute privilege does not extend to statements made outside of the Proceedings. For this reason, if you have already disclosed or should you disclose the contents of your Statement (and in particular, paragraph 68) outside of the Proceedings, you will not have the benefit of the protection offered by absolute privilege.

Accordingly, my client reminds you to exercise due care and caution in relation to your communications outside of the Proceedings.

Should you fail to do so, my client reserves his rights to take action against you to recover any losses or damages suffered by him arising from any damage to his reputation on account of your communication of any false and defamatory statements against him outside of the Proceedings and to seek his costs of doing so.”

[92] As previously noted, Ms Sommer states that Mr Harding received guidance from her legal representative as a result of receiving the letter, resulting in costs being incurred by Ms Sommer. Ms Sommer also states that it was necessary for her to make this advice available to Mr Harding because his initial reaction to receiving the letter of 4 October 2016 was to seek to withdraw his statement and refuse to attend the hearing of her unfair dismissal application. After gaining that advice Mr Harding confirmed that he would attend the hearing but was then excused from doing so for personal reasons.

[93] I am satisfied that in causing the letter to be sent by Turks Lawyers to Mr Harding, the Respondent engaged in an unreasonable act in connection with the conduct of Ms Sommer’s unfair dismissal application. Mr Cartwright is the CEO of the Respondent. Notwithstanding that Mr Cartwright engaged separate legal representation to send the correspondence to Mr Harding, he did so in his capacity as CEO of the Respondent. Mr Harding’s statement was filed on 18 August 2016. All of the Respondent’s material in relation to merit was filed on 12 September 2016 including the statements going to the misconduct allegations and the letter from the Respondent’s lawyers setting out those allegations was sent on 9 August 2016. When Mr Cartwright caused the defamation letter to be written he knew or should reasonably have known that similar (but worse) allegations had been made against Ms Sommer and that Mr Harding’s statement was responsive to those allegations. It is also my view that it is passing strange that Mr Cartwright would wait until 4 October to raise concerns about a statement which was filed on 18 August. It is probable that the letter of 4 October 2016 was motivated in part by the fact that Ms Sommer’s unfair dismissal hearing was approaching and that Mr Harding still intended to give evidence on her behalf at least as much as it was about concerns in relation to defamation.

[94] I am also satisfied that this unreasonable conduct caused Mr Harding to rethink giving evidence in support of Ms Sommer’s case in circumstances where he had previously voluntarily provided a witness statement. This in turn caused Ms Sommer to incur costs associated with obtaining legal advice for Mr Harding in an attempt to ensure that he understood his rights in relation to giving evidence in support of her case. While I accept that the defamation letter from Turks Lawyers purports to set out the legal position, it is hardly surprising that Mr Harding would seek independent verification in this regard. I am also of the view that these costs were reasonably incurred notwithstanding that Mr Harding did not give evidence at the hearing. Mr Harding’s inability to give evidence was due to emergent personal circumstances shortly before the hearing and but for these circumstances, Mr Harding would have attended the hearing and given evidence.

[95] The costs in the itemised schedule in respect of Mr Harding are set out in items 144 – 146, 150, 155, 158, 164 and 165, 179, 182 – 183, 194, 374 and 375. In all of the circumstances I am satisfied and find that in dealing with Mr Harding the Respondent engaged in an unreasonable act in connection with Ms Sommer’s unfair dismissal application and that it caused her to incur costs so that the power to award costs under s. 400A is triggered. I am also satisfied that Ms Sommer should have her costs in relation to this matter. I am not satisfied that the Respondent’s legal representative encouraged the Respondent to engage in this conduct. Further, Turks Lawyers was not a party to these proceedings and it is not appropriate that an order be made against Turks Lawyers in those circumstances.

Mr Shane McCombes

[96] Mr Shane McCombes was Ms Sommer’s direct manager during her employment with the Respondent. Mr McCombes gave evidence for Ms Sommer in her unfair dismissal hearing pursuant to an attendance notice. In my decision dealing with Ms Sommer’s unfair dismissal application I noted that Mr McCombes communicated with the Commission before giving his evidence expressing concern that the Respondent was placing pressure on him in relation to his evidence and further communicated with the Commission after he had given his evidence stating that a redundancy payment that the Respondent had agreed to pay to him was not paid.

[97] This issue was dealt with at a number of hearings. On 10 November 2016, I outlined my concerns about the manner in which the Respondent had dealt with Mr McCombes as evidenced by correspondence Mr McCombes had forwarded to my chambers. At the hearing on 10 November 2016 I provided a bundle of that correspondence to Counsel for the Respondent and indicated that I was considering whether I would seek advice in relation to whether there was a breach of s. 676 of the Act. After an adjournment, Counsel for the Respondent provided an undertaking that Mr McCombes would be paid the redundancy payments on that date. The undertaking was given without admission of any inappropriate conduct on the part of the Respondent or its legal representatives and Counsel stated that the payment was being made to remove further distraction in the proceedings.

[98] After considering the correspondence tendered by Mr McCombes I determined that I would take no further action in relation to the allegations made by Mr McCombes with respect to referring the matter to the relevant authorities. Notwithstanding my decision in this regard, I am of the view that conduct on the part of the Respondent’s legal representative in relation to Mr McCombes was unnecessary and a case of complete overkill, which complicated the hearing of Ms Sommer’s unfair dismissal application. 97

[99] Ms Sommer now seeks costs in respect of the conduct of the Respondent and/or its legal representative in relation to Mr McCombes giving evidence on her behalf. By Order issued on 11 July 2017, Mr McCombes was ordered to attend the Fair Work Commission to give evidence in relation to Ms Sommer’s costs application, and by separate Order, to produce a number of documents in the schedule to that Order. Mr McCombes produced a bundle of documents which included the documents he had previously forwarded to my Chambers during the hearing of Ms Sommers’ unfair dismissal application. A number of objections to the documents produced by Mr McCombes were dealt with at the costs hearing as discussed above and certain documents were not admitted.

[100] Relevantly the documents tendered by Mr McCombes and his evidence in the costs hearing establish the following facts. Mr McCombes’ employment ended following the dismissal of Ms Sommer, by way of redundancy and Mr McCombes entered into a “Deed of Exit” with the Respondent in which it was agreed that Mr McCombes would be on “gardening leave” until 2 November 2016 at which point his employment would cease. The Deed was not tendered but Mr McCombes’ evidence was that it provided for him to be paid an amount of money in respect of his redundancy and also contained a confidentiality term. That amount was to be paid after the date on which it had been agreed that Mr McCombes’ employment would end. On 14 September 2016, Mr McCombes sent an email to Mr Rick Taylor, the Chief Financial Officer and a Director of the Respondent, stating that he had been issued with an attendance notice by Ms Sommer in relation to her unfair dismissal application. The email sought confirmation that the Respondent would not use this as a basis to withhold Mr Harding’s redundancy payments.

[119] Mr Sullivan responded, also on 20 October 2016, advising that he would “revert in due course”. Mr McCombes wrote to Mr Sullivan again on 27 October 2016 stating:

“As mentioned, I received correspondence that HCA may or may not honour this settlement payment following the completion of my contract on November 1st, 2016, and I was advised and threated with the fact that they may terminate my employment prior to November 1st, 2016 and therefore withhold all identified payments as per the settlement deed….

I have sent formal email request for information and confirmation that HCA will honour the settlement payments post November 1st, 2016 to Tim Caplin - HCA Legal Representative on a number of occasions with the last correspondence sent on Wednesday October 19th, 2016, however all responses that I have sent to the HCA Legal Representatives, have been ignored without response.”

[120] Mr Sullivan responded to Mr McCombes on 27 October, stating he would “get back to [Mr McCombes] tomorrow”. Mr McCombes again wrote to Mr Sullivan on 2 November 2016 and stated:

“Unfortunately all requests for confirmation of payments associated with my exit from HCA have continued to go without response, and I have now been left with no other option than to escalate these concerns via formal channels in the interest of protecting myself and my ability to provide for my family.”

[121] On 8 November 2016, Mr Sullivan responded to Mr McCombes stating:

“I have considered your various communications and obviously made enquiries internally.

I am satisfied that yours and Ms Sommer’s matters are being handled appropriately. I also believe it entirely correct that HCA continues to consistently require of its employees and past employees, strict compliance with their contractual and other legal obligations. Further, if unmeritorious claims are brought, HCA should vigorously defend those claims…

You have again admitted to breaching the confidentiality obligations pursuant to your settlement agreement and I would expect that you would take more care in your future actions.

…

I would caution you that your disparaging remarks about HCA, its Management team and our CEO are bordering on slander & defamation & you should be very careful about how you conduct yourself from here.

Given the foregoing, I do not propose to further correspond with you and suggest all future correspondence be via our legal team at Piper Alderman.”

[122] On 21 October 2016, Mr McCombes sent an ex-parte communication by email to my Chambers seeking advice in relation to the notice he had received requiring him to attend the hearing of Ms Sommer’s unfair dismissal application to give evidence. In that email, Mr McCombes made a number of allegations including:

“I am now finding myself in a very difficult situation as a potential witness for this case as I have been contacted by Healthcare Australia and instructed that I meet with Mr. Tim Caplin to provide statements. I attended this meeting under duress as I was advised that if I failed to cooperate I would lose all entitlements due in November as Healthcare Australia would deem me as 'uncooperative' and therefore terminate my employment (as I am on Garden Leave) and therefore withhold the sum of approximately $64k that makes up 11 week redundancy pay and my annual leave balances. As a single father of two children, I simply cannot afford to risk this sum of money.

Following this meeting, I have provided the statements Healthcare Australia were seeking, and identified that many of the statements that were presented to me were in fact false and not a true account of events. I have now been advised that Healthcare Australia have concluded that I was in breach of my settlement deed due to the fact that I advised Ms. Sommer's lawyer that I was under a restraint deed when he first contacted me seeking a statement, and my preference was to remain as far away from this case as possible. I have now received ongoing threats to withhold all entitlements based on my 'willingness to cooperate with Healthcare Australia' in relation to this case, and been advised that my employment will be terminated while on Garden Leave and that will provide the justification Healthcare Australia need to withhold my settlement payments. I am identifying the existence of this deed to you as the deed identifies that I can disclose the existence of it in the interest of any legal requirements…

…

Any information you can offer me in relation to understanding my legal rights as a witness within these proceeding would be greatly appreciated. As mentioned, I do not believe that a company should be able to punish me financially and threaten me with the intent to withhold payments for providing evidence in this case.”

[123] As a result of a number of matters, including the correspondence I had received from Mr McCombes, I convened a Mention of this matter on 2 November 2016. That Mention was transcribed and I made the following statement to the parties.

THE DEPUTY PRESIDENT: Firstly, I am in receipt of a number of pieces of ex parte communication from witnesses for the applicant. Now Ms Sommer, it is inappropriate while I understand why the communications have been occurring and I understand that you are unrepresented, it is completely inappropriate and my Associate has told you this on numerous occasions, it is completely inappropriate for you or your witnesses to communicate with the Commission without copying the communication to the other side. So I can indicate to you that the pieces of communication I have received, I will disregard, okay?

MS SOMMER: Yes, Deputy President.

THE DEPUTY PRESIDENT: I am not taking those into account. I have not had regard to them. Mr Capelin, the communications essentially allege that witnesses for the applicant are being contacted by the respondent by another law firm and by officers of the respondent and that inappropriately those witnesses are being told not to participate in these proceedings, or that there will be some adverse consequences for them if they do.

Now without accepting the validity of those allegations, I am putting you on notice they have been provided. I am also making it clear that if any witness turns up in this Commission and gives evidence that that has been occurring, I will not hesitate to refer it to the appropriate authorities. It is a breach of the provisions of the Act, section 676 of the Act to intimidate witnesses as I am sure you are aware, Mr Capelin, and I am not finding or making any finding that that has occurred. I am noting for the applicant's benefit particularly, that if that allegation is being made it is a serious allegation. If any witness wants to make that allegation they need to make it in writing to me, copy to the other side and I will deal with it accordingly. I will not deal with any allegation that is not copied to the other side. Is that clear, Ms Sommer?

MS SOMMER: Understood, Deputy President. 98

[124] Following the Mention, I caused correspondence to be sent from my Chambers by email to all parties and witnesses who had contacted my Chambers. For purposes of confidentiality the persons to whom the correspondence was sent were blind copied. In that correspondence I stated that a Mention had been held that morning and the parties informed that a number of witnesses had corresponded with the Commission raising concerns about contact they had received from the Respondent’s legal representative in relation to giving evidence to the Commission at the request of Ms Sommer. The email stated that both parties had been informed that it was an offence under s. 676 of the Act to threaten, intimidate, coerce or prejudice a witness in a matter before the Commission. The email further stated that I had not made any findings about the alleged conduct complained of by witnesses, and had not identified witnesses who had raised this issue, but that if the witnesses wished to press the matter then the emails they had sent to the Commission would need to be provided to the Respondent. The witnesses were informed that if they wanted the Commission to take the matter further they should advise of this by 5.00 pm on 3 November 2016. The email concluded by advising the witnesses that no further communication should be sent to the Commission unless the Commission was authorised to provide it to the Respondent and that if this request was not complied with then any further correspondence from witnesses would be provided to the Respondent without further notice.

[125] Mr McCombes gave evidence to the Commission on 9 November 2016. During the course of his evidence, Mr McCombes requested clarity about the impact on payments he claimed had been agreed to be made to him by the Respondent, if he gave evidence to the Commission. Mr McCombes was informed that it was not a breach of any deed of settlement that he had signed for him to answer questions relevant to matters in dispute before the Commission and that no adverse action could be taken against him for giving his evidence.

[126] On 10 November 2016 at 5:43am, Mr McCombes sent a further ex-parte communication to my Chambers stating that settlement amounts agreed to be paid to him by the Respondent by 9 November 2016 had not been paid and that the outstanding amount was in excess of $64,000.00. Mr McCombes also pointed to the fact that all requests for clarification about whether he would be paid made to the Respondent and its legal representative had been ignored or not answered. Mr McCombes stated that he was aware that a copy of his email would be provided to Ms Sommer and the Respondent’s legal representative and that he was willing to provide copies of the numerous emails he had received seeking clarity around the matter, which remained unanswered.

[127] Ms Sommer’s unfair dismissal application was listed for a final day of hearing on 10 November 2016. At the outset it was necessary to adjourn for a period while Ms Sommer removed her children from the hearing room and made arrangements for them to be taken to school. On the previous day Ms Sommer had expressed concern about the number of persons present in the hearing room who were supporting the Respondent. I informed Ms Sommer that she had been permitted to have her mother sit with her at the bar table as a support person and that if she wished to bring additional support persons to the hearing that was a matter for her. On 10 November Ms Sommer brought her children to the hearing at which point I informed her that I would not allow children who were aged 10 and 12 years at the time to sit in the hearing room and witness Ms Sommer conducting her case given the distress that she had been displaying during the past two days of the hearing. I further informed Ms Sommer that I did not share her view that sitting in an unfair dismissal hearing during school time was an appropriate educational experience for children and that they were not appropriate support persons.

[128] When the hearing eventually commenced, I raised the issue of the email correspondence received from Mr McCombes that morning and expressed my views about the apparent failure of the Respondent to pay Mr McCombes his redundancy payment. I further stated that if the matter was not addressed immediately I would seek advice about whether I should forward all relevant correspondence to the appropriate authorities and leave it them to determine whether an offence under the Act had been committed in relation to Mr McCombes’ evidence.

[129] Following an adjournment where Counsel for the Respondent took some instructions, an undertaking to pay the amount to Mr McCombes was given. Counsel further stated that the Respondent and its solicitors disputed that any form of intimidation had been engaged in with respect to Mr McCombes. I then caused my Associate to obtain from Mr McCombes copies of all emails said by Mr McCombes to be relevant to his allegations of intimidation, and provided those emails to the Respondent’s representative. Ms Sommer did not seek to be provided with a copy of these documents and I did not think it necessary to provide them to her. I further informed the parties that notwithstanding that the Respondent had agreed to pay the redundancy amount to Mr McCombes, I would review the correspondence provided by him to determine whether I should refer it to the appropriate authorities.

[130] The hearing of Ms Sommer’s unfair dismissal application concluded and my Decision was reserved in the matter on 10 November 2016. After reviewing the material provided to me by Mr McCombes, I directed my Associate to correspond with the parties by email advising that on the material before me I had determined that I would not be taking any further action in respect of the allegations. While I did not take steps to refer the matter of the Respondent’s dealings with Mr McCombes to the appropriate authorities, I did form a view that the conduct of the Respondent and its legal representative in relation to Mr McCombes was completely inappropriate and a case of overkill which further complicated the hearing of Ms Sommer’s unfair dismissal application. This view was stated in the Decision dealing with Ms Sommer’s unfair dismissal application, 99 and it is a view that I maintain. This conduct is relevant to Ms Sommer’s costs application.

[131] In dealings with Mr McCombes the Respondent engaged in unreasonable acts. There would have been no issue had the Respondent or its legal representative approached Mr McCombes to ascertain whether he would provide a statement in relation to Ms Sommer’s unfair dismissal application or to seek information from Mr McCombes in relation to statements Ms Sommer had made in material she had filed in the Commission. However the Respondent does not appear to have shown any interest in Mr McCombes until 14 September 2016 when he informed the CFO Mr Taylor that he had been issued with an attendance notice at the request of Ms Sommer and that he would give evidence in the unfair dismissal hearing. Mr McCombes’ request for reassurance that this would not affect his redundancy payment was not answered in the response to his email, and instead Mr McCombes was requested to attend a meeting with the Respondent’s legal representative to discuss any evidence he might give.

[132] When Mr McCombes refused to attend a meeting with the Respondent’s legal representatives, he was directed to do so. Thereafter, no meaningful response to Mr McCombes’ request for confirmation that he would be paid his redundancy entitlements was provided either by the Respondent or its legal representative. The correspondence between Mr McCombes, the Respondent and its legal representative speaks for itself. On 14 October 2016 when Mr McCombes made clear that he did not agree with the propositions set out in the 13 October 2016 email from Mr Capelin, the Respondent and its legal representatives knew, or reasonably should have known that Mr McCombes’ evidence would be directed to supporting Ms Sommer’s case and that it would not assist the Respondent’s case.

[133] This should also have been apparent from Ms McCombes’ 19 October 2016 responses to the propositions in Mr Capelin’s email of 13 October 2016. The Respondent and its legal representative would have been in no doubt from those responses that Mr McCombes evidence would not be of assistance in advancing its jurisdictional objection or in defending Ms Sommer’s unfair dismissal application. The Respondent and its legal representative knew, or should reasonably have known that Mr McCombes was increasingly concerned that his redundancy entitlements would not be paid as a result of Mr McCombes giving evidence in response to the attendance notice issued by Ms Sommer. There is no reasonable basis for ignoring Mr McCombes’ request for the confirmation he was seeking and no reason why that confirmation could not have been provided.

[134] Mr McCombes’ uncontested evidence is that the payment set out in the settlement agreement that he signed comprised redundancy payments and accrued leave entitlements. These payments are statutory entitlements due on termination of employment. Mr McCombes was on gardening leave. Whatever the arrangement in regard to such leave it could not have offset his statutory entitlements under the NES. Further, if the Respondent and its legal representatives believed that Mr McCombes had breached his obligations under a deed of settlement the appropriate course would have been to take civil action in a court for the breach. I do not accept that statutory entitlements could have been properly withheld even if Mr McCombes had breached the deed. Mr McCombes employment ended on 9 November 2016 and he was thereby entitled to receive these amounts.

[135] Payment to Mr McCombes was due on 9 November 2016 and he was not paid on that date. Mr McCombes was not paid until I intervened in the matter and there is no indication that Mr McCombes would have been paid if I had not done so. The Respondent had no right to withhold statutory entitlements from Mr McCombes much less to threaten to do so. The communication with Mr McCombes on 17 October 2016 is particularly concerning. In that communication it is asserted that Mr McCombes has admitted to breaching the agreement he had entered into with respect to his redundancy entitlements. Mr McCombes maintains that the Respondent took the position that he had breached the agreement simply because he conceded that he had informed Ms Sommer’s legal representative that he had entered into a deed of settlement in respect to his own redundancy entitlements and that it contained a confidentiality term.

[136] If the Respondent asserts that Mr McCombes was in breach of the settlement agreement, then it has not established a basis for this assertion. The terms of the deed of settlement were not tendered and there is no evidence about whether Mr McCombes disclosure of the fact that he had entered into a deed of settlement breached those terms.

[137] Of most concern is the fact that the directions in relation to the substantive unfair dismissal application required the Respondent to file and serve its material by 12 September 2016. The Respondent filed its material in two tranches on 15 August and 12 September 2016. That material included an outline of submissions, a further outline of submissions and witness statements from all witnesses the Respondent intended to rely on at hearing.

[138] As I have previously observed, Mr McCombes did not initiate contact with the Respondent about Ms Sommer’s case until 14 September 2016 and the email correspondence and the meetings with Mr McCombes in relation to his evidence took place after the Respondent’s material had already been filed. This suggests that the Respondent was not seeking to obtain evidence from Mr McCombes but rather was attempting to ascertain what his evidence would be and to place pressure on him in relation to that evidence.

[139] The conduct of the Respondent in relation to Mr McCombes was totally inappropriate. It constituted a series of unreasonable acts in connection with the conduct of Ms Sommer’s unfair dismissal application. The Respondent walked a very fine line to the point where I was put in the difficult position of having to consider whether I should seek advice as to whether the conduct should be referred to the appropriate authorities as a possible breach of s. 676 of the Fair Work Act. While I ultimately considered that the conduct was not sufficient to warrant such advice being sought, I am of the view that it is unreasonable conduct for the purposes of Ms Sommer’s costs application.

[140] The unreasonable acts of the Respondent in respect of Mr McCombes caused Ms Sommer to incur costs and I am satisfied that the discretion to award costs under s. 400A of the Act is triggered and that Ms Sommer should have her costs in respect of that conduct. The schedule of costs filed by Ms Sommer contains items in relation to Mr McCombes commencing in August 2016 indicating that a witness statement was drafted for Mr McCombes. Ultimately Mr McCombes did not provide a witness statement and gave evidence as a result of being issued with an attendance notice. This is not surprising given the manner in which Mr McCombes was dealt with by the Respondent. It is clear from the schedule of costs that a significant amount of time was expending dealing with the evidence of Mr McCombes and I have determined to award costs in respect of that time.

[141] The costs entries in relation to Mr McCombes are itemised in the Schedule as items 174 – 177, item 191, item 198, item 200, items 213 – 214, items 216, items 218 – 220, items 225 – 226, item 254, item 256, items 301 – 305, items 328 – 330, items 346 – 356, item 380 – 382 and items 388 – 390. Notwithstanding that the Respondent’s legal representative was an active participant in the dealings with Mr McCombes, I do not intend to make an order under s.401(1A) of the Act.

5. CONCLUSION

[142] I have determined that the Respondent has engaged in unreasonable acts in connection with Ms Sommer’s unfair dismissal application and has thereby caused costs to be incurred by Ms Sommer. I have also determined that aspects of the Respondent’s response to Ms Sommer’s unfair dismissal application have been vexatious and without reasonable cause. While I accept that a Respondent is entitled to vigorously defend an application for an unfair dismissal remedy, the conduct of a Respondent should be reasonable. In the present case, the Respondent has crossed the line between a vigorous defence and unreasonable resistance and has taken the defence of the application to the point where the conduct of the Respondent is unreasonable, and aspects of its response are vexatious, and were advanced without reasonable cause.

[143] Accordingly the Commission has the power to award costs under s.400A of the Act and I am of the view that the power should be exercised in favour of Ms Sommer. In coming to this conclusion, I make a number of observations. The extent of the costs incurred by Ms Sommer in relation to this matter are surprising, particularly given that Ms Sommer was not represented at the hearing of her application. Some of the items Ms Sommer has been charged for appear to be inappropriate – for example, item 435 is a telephone call made by Ms Sommer’s legal representative to congratulate her presumably after the release of the Decision in relation to Ms Sommer’s unfair dismissal application. It is surprising that Ms Sommer would have been charged for such a call. It is more surprising that the costs for this item as set out in the schedule are based on a requirement for a managing clerk and involving the exercise of skill or legal knowledge.

[144] As previously noted, the schedule of costs filed by Ms Sommer is based on the items set out in Schedule 3.1 of the Regulations. The schedule of Costs sets in the Regulations sets out in tabular form various items, being matters for which charge may be made and the ‘charge’. The ‘charge’ for each item is expressed in different forms. In some cases a particular dollar amounted is specified. In some cases the charge refers to a specific dollar amount or an amount ‘at the discretion of FWC’. In other cases, the charge is specified as ‘an amount FWC considers reasonable in the circumstances’. Section 403 of the Act expressly provides that the Commission is not limited to the items of expenditure in any schedule. Moreover, Schedule 3.1 and Regulation 3.08 of the Regulations contemplates, in relation to a number of items specified, the exercise of discretion by the Commission as to amounts to be awarded.

[145] The costs claimed by Ms Sommer as they relate to the items in Schedule 3.1 of the Regulations include items where the Commission has discretion with respect to the amount to be awarded. It is also clear that in respect of some matters Ms Sommer’s legal representative briefed Counsel. I accept that on some occasions this was necessary given the complexity of some of the issues and the nature of the conduct that Ms Sommer was confronted with. In all of the circumstances I have determined to award costs in the amount of $4,000.00 to Ms Sommer. I do so on the basis that I am satisfied that discretion should be extended to ensure that the costs awarded to Ms Sommer go some way to meeting the total of the costs she expended in dealing with the unreasonable acts of the Respondent.

[146] There is insufficient evidence upon which to base a finding that the Respondent’s legal representative advised or encouraged the Respondent to engage in unreasonable conduct. It is also the case that Ms Sommer has been compensated for reasonable costs incurred as a result of the Respondent’s unreasonable conduct, by the Order I intend to make.

[147] I do not consider this to be an appropriate case for an award of indemnity costs. An Order requiring the Respondent in this matter to pay to Ms Sommer the amount of $4,000.00 in relation to her unfair dismissal application within 21 days of this Decision will issue.

DEPUTY PRESIDENT

Appearances:

Ms N. Sommer appeared on her own behalf.

Mr A. James of Counsel instructed by Piper Alderman for the Respondent.

Hearing details:

Brisbane.

9 August.

2017.

Printed by authority of the Commonwealth Government Printer

1 [2017] FWC 1564.

2 PR591112.

3 PN148 to PN273.

4 (1997) 76 IR 180.

5 Ibid at 181.

6 Holland v Nude [2012] 224 IR 16 at 21.

7 Imogen Pty Ltd v Sangwin [1996] 70 IR 254 at 261 per Ryan J.

8 [1992] 43 IR 257.

9 Ibid at 264.

10 Fair Work Amendment Bill 2012 - Explanatory Memorandum at p. 7.

11 Fair Work Amendment Bill 2012 Explanatory Memorandum at page 37-38.

12 (1998) 84 IR 270.

13 Ibid at 274.

14 PR968915.

15 Ibid at [41] – [45].

16 Ibid at [46].

17 [2009] AIRCFB 626.

18 [2009] AIRCFB 626 at [35].

19 Ibid at 47.

20 Fair Work Amendment Bill 2012 Explanatory Memorandum at page 38-39.

21 G Dircks v JimRoy Pty Ltd [2009] AIRCFB 679.

22 Rainshield Roofing Pty Ltd T/A Rainshield Roofing v Peter Paerau and Gary Dircks [2014] FWC 3946.

23 [2009] AIRCFB 626 at [53].

24 McKenzie v Meran Rise Pty Ltd t/a Nu Force Security Services Dec 375/00 M Print S4962 at [7].

25 Exhibit A1.

26 PN192 to PN193.

27 PN194 to PN199.

28 PN200 to PN201.

29 PN202 to PN205.

30 PN204 to PN205.

31 PN206 to PN209.

32 PN210 to PN217.

33 PN218 to PN219.

34 PN220 to PN223;

35 PN224.

36 PN224.

37 PN224 to PN227.

38 PN228 to PN253.

39 PN254 to PN257.

40 PN258 to PN267.

41 PN270 to PN271.

42 Exhibit A1 Affidavit of Natalie Ann Sommer.

43 PN285 to PN294.

44 PN295 to PN296.

45 PN297 to PN300.

46 PN301 to PN310.

47 PN315.

48 PN316 to PN326.

49 PN328 to PN329.

50 PN330 to PN331.

51 PN332 to PN333.

52 PN334 to PN337.

53 PN338 to PN345.

54 PN315.

55 PN347 to PN355.

56 PN357 to PN360.

57 PN364.

58 PN364.

59 PN365 to PN366.

60 PN367 to PN370.

61 PN375 to PN379.

62 PN387 to PN390.

63 Exhibit A3.

64 PN400 to PN408.

65 PN412 to PN419.

66 PN422 to PN432,

67 See items 437 to 441 of the itemised schedule of costs – Exhibit A2.

68 PR595436.

69 Exhibit A1 at paragraphs 10 to 18.

70 Exhibit A1 at 10.

71 Exhibit A1 at 12.

72 Ibid.

73 Ibid.

74 Exhibit A1 at 14.

75 Exhibit A1at 16.

76 PN688 to PN694.

77 Exhibit A1 – Statement of Natalie Sommer paragraph 17.

78 Exhibit A1 – Annexure I.

79 Applicant’s submissions in reply on costs at paragraph 5.11.

80 PN696 and PN702 to PN705.

81 Print S4692 [2000] AIRC 1118.

82 Ibid at [12].

83 Exhibit A1, Annexure C.

84 Exhibit A1, Annexure E.

85 Exhibit A1, Annexure D.

86 Exhibit A1, Annexure E.

87 Exhibit A1 at 20.

88 Exhibit A1 at 22.

89 Exhibit A1 at 22.

90 Exhibit A1 at 28.

91 Respondent’s outline of submissions at 3.3.

92 Ibid at 3.4.

93 Transcript of 8 November 2016 at PN134.

94 Transcript of 8 November 2016 at PN39.

95 Transcript of 9 August 2017 PN157, 161 and 162.

96 PN387 to PN390.

97 [2017] FWC 1564 at [5].

98 Transcript of 2 November 2016 PN7 to PN11.

99 [2017] FWC 1564.

Ms Natalie Sommer v Healthcare Australia Pty Ltd T/A Healthcare Australia

[2018] FWC 6717

31 OCTOBER 2018

DECISION

1. OVERVIEW

3. THE MATERIAL AND OBJECTIONS