MTM Contractors Pty Ltd v Ben Beaumont

[2019] FWC 4077

[2019] FWC 4077

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
ss.400A and 611 — Application for costs

MTM Contractors Pty Ltd
v
Ben Beaumont
(U2019/3272)

COMMISSIONER PLATT ADELAIDE, 17 JUNE 2019

Application for costs pursuant to ss.400A and 611 of the Fair Work Act 2009 (Cth) – costs not awarded.

Introduction

[1] This is an application by MTM Contractors Pty Ltd (MTM) seeking an order for costs against Mr Ben Beaumont pursuant to ss.400A and 611 of the Fair Work Act 2009 (the Act).

[2] The application is made in the context of an application made pursuant to s.394 of the Act on 22 March 2019 by Mr Beaumont in relation to a remedy for an alleged unfair dismissal which occurred on 1 March 2019. The application suggests that Mr Beaumont commenced employment on 2 March 2018.

[3] The Form F3 lodged by MTM on 12 April 2019 raised a number of jurisdictional objections, including:

•  that the application was made out of time;

•  the minimum employment period had not been served; and

•  MTM was a small business employer and had complied with the Small Business Fair Dismissal Code.

[4] On 17 April 2019 MTM declined to participate in Conciliation.

[5] On 18 April 2019 MTM corresponded with Mr Beaumont and suggested he could not meet the MEP (at either a 6 or 12 month level), and suggested that the application be discontinued. The letter also put Mr Beaumont on notice as to costs.

[6] The matter was then allocated to my Chambers. A Directions Hearing was conducted on 3 May 2019. Directions were issued on 6 May 2019.

[7] With respect to the out of time objection, the Commission advised that its file indicated that the application had been lodged on 22 March 2019, and based on a dismissal date of 1 March 2019, the application appeared to have been made within the time permitted.

[8] With respect to the remaining jurisdictional objections; Mr Beaumont contended 15 persons were employed at the time of the dismissal and MTM contended there were 11 employees.

[9] The obligation with respect to establishing the jurisdictional objection rests with MTM in this case. Directions were issued with MTM required to file on 10 May 2019, Mr Beaumont to file reply material on 17 May 2019 and any reply by MTM on 22 May 2019. A Hearing was scheduled on 27 May 2019 if there was a dispute as to the facts.

[10] MTM filed its material in accordance with the Directions on 10 May 2019. This included a witness statement by Mr Mark Beenham who provided inter alia statements of payment to employees for the months of March and April 2019 which identified that twelve persons were employed in the month of March 2019. The statement also attached a large number of employment records which provided clarity on the recruitment process and the commencement of employment.

[11] On 17 May 2019 Mr Beaumont discontinued the proceedings.

[12] The costs application was lodged by MTM on 24 May 2019.

[13] A Directions Hearing was conducted on 28 May 2019. MTM advised that it relied on the information contained in the Form 6 – Application for costs.

[14] The Form 6 application contends that:

•  Mr Beaumont was untruthful about his commencement date and that it was not an honest mistake.

•  MTM had provided Mr Beaumont a copy of his first payslip (for the period 13/9/18) on 18 April 2019.

•  MTM had put Mr Beaumont on notice as to costs.

•  The false allegation as to the commencement date establishes that the application was vexatious and without proper cause.

•  Indemnity costs should be awarded in line with the authority in Stanley v QBE Management Services Pty Ltd 1.

[15] The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) filed written submissions, and a statutory declaration made by Mr Beaumont dated 6 June 2019. These documents are relevantly summarised as follows:

•  Mr Beaumont’s representative (the CEPU) made an error in the Form F2 as to the date the employment commenced.

•  The error was not deliberate.

•  Mr Beaumont believed that he commenced employment on 31 August 2018 but accepted that his first day of work was on 3 September 2019.

•  It was not unreasonable to require MTM to establish the basis of its jurisdictional objection before discontinuing the matter.

•  MTM had made a jurisdictional objection (with respect to the EOT) which it ceased after the Directions Hearing.

•  The payslip and induction sheet produced on 18 April 2019 was not conclusive evidence in determining the start date.

•  Mr Beaumont had the belief that MTM employed more than 15 employees, and put MTM on notice as to a dispute over the number of employees engaged at the Directions Hearing. MTM did not disclose the conclusive evidence as to the number of employees employed at the date of termination until 10 May 2019. Mr Beaumont stated that he did not realise some of the persons who worked for MTM were contractors.

•  Upon reviewing the documentation provided on 10 May 2019, Mr Beaumont accepted that he did not have 12 months service and instructed the CEPU to discontinue his application.

•  There was reasonable cause to make the application, and at the time of it being made it is not true to say that Mr Beaumont knew it had no reasonable prospects of success.

•  Mr Beaumont’s new employment requires him to work 12 hour shifts at a location without mobile coverage and this contributed to the delay between receiving Mr Beenham’s statement and discontinuing the matter (7 days).

[16] MTM provided its submission in reply on 11 June 2019. MTM advised inter alia that it did “not propose to challenge the evidence offered by Mr Beaumont or his representative… 2”, and “does not challenge the assertion that Mr Beaumont genuinely misunderstood his start date”3. MTM conceded that Mr Beaumont should not be liable for costs prior to 18 April 2019.

[17] The balance of the submissions reiterated the basis upon which the Commission should award cost, suggesting that Mr Beaumont should have withdrawn prior to the Directions Hearing, and that his behaviour in not doing so was “delinquent”.

The Power to Award Costs

[18] The power to award costs is discretionary and subject to specified statutory prerequisites. The presumption under the Act is that each party bears their own costs.

[19] 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.

Note: The FWC can also order costs under sections 376, 400A, 401 and 780.

(3) A person to whom an order for costs applies must not contravene a term of the order.

Note: This subsection is a civil remedy provision (see Part 4-1).”

[20] Section 400A of the Act provides as follows:

“400A Costs orders against parties

(1) The FWC may make an order for costs against a party to a matter arising under this Part (the first party) for costs incurred by the other party to the matter if the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter.

(2) The FWC may make an order under subsection (1) only if the other party to the matter has applied for it in accordance with section 402.

(3) This section does not limit the FWC's power to order costs under section 611.”

[21] Section 400A was inserted into the Act by virtue of the Fair Work Amendment Act 2012. The Explanatory Memorandum to the Fair Work Bill 2012 states:

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

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

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

[22] Commissioner Bissett usefully summarised the applicable law in Sidney v Employsure Pty Ltd:⁴

“[28]The authorities relevant to a consideration of the phrase ‘unreasonable act or omission’ were considered in the decision of the Full Bench in Roy Morgan Research v Baker. I do not repeat those provisions here but note the following can be taken from those authorities:

•  A failure to inform another party of an inability to attend proceedings would be, if intentional, unreasonable and if accidental, an unreasonable omission;

•  a failure to advise the other party of the first party’s intentions, if deliberate or reckless, would be unreasonable and if an omission could be equally unreasonable;

•  very strong prospects of success will not always justify a failure to participate in settlement negotiations;

•  a reasonable person will determine if and how to respond to an offer of settlement after considering all of the circumstances of the case including the terms of settlement in relation to the relief sought; the relative strength of the parties cases; the likely length and cost of proceeding to hearing if the matter does not settle; and adverse consequences of acceptance of a settlement rather than prosecuting or defending the primary application.”

[23] A decision to award costs pursuant to s.400A of the Act requires a consideration of whether Mr Beaumont, by some unreasonable act or omission, caused MTM to incur costs.

[24] The approach to be taken to an application for costs made pursuant to s.611 of the Act was considered by a Full Bench of the Commission in Keep v Performance Automobiles Pty Ltd⁵, where it was held:

“[16] The FWC’s power to order that a person bear some or all of the costs of another person in relation to an application is only enlivened if the FWC is satisfied as to the matters set out in either s.611(2)(a) or s.611(2)(b).

[17] The proper construction of s.611(2)(a) was recently considered by a Full Bench in Church v Eastern Health t/as Easter Health Great Health and Wellbeing h (Church). Church is authority for the following propositions:

(i) The power to order costs pursuant to s.611(2) should be exercised with caution and only in a clear case.

(ii) A party cannot be said to have made an application ‘without reasonable cause’ within the meaning of s.611(2)(a), simply because his or her argument proves unsuccessful.

(iii) One way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether upon the facts known to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. 

(iv) The test imposed by the expression ‘without reasonable cause’ is similar to that adopted for summary judgment, that is, ‘so obviously untenable that it cannot possibly succeed’, ‘manifestly groundless’ or ‘discloses a case which the Court is satisfied cannot succeed’.

[18] As to s.611(2)(b), the FWC may make a costs order against a person if satisfied that ‘it should have been reasonably apparent’ to that person that their application had ‘no reasonable prospect of success’. The expression ‘should have been reasonably apparent’ in s.611(2)(b) imports an objective test, directed to a belief formed on an objective basis as opposed to the applicant’s subjective belief.

[19] There is Full Bench authority for the proposition that the Commission should exercise caution before arriving at the conclusion that an application had ‘no reasonable prospects of success’. In Deane v Paper Australia Pty Ltd a Full Bench made the following observation about this expression in the context of enlivening a power to award costs under s.170CJ(1) of the Workplace Relations Act 1996;

“unless upon the facts apparent to the applicant at the time of instituting the [application], the proceeding in question was manifestly untenable or groundless, the relevant requirement in s.170CJ(1) is not fulfilled and the discretion to make an order for costs is not available”.” (citations omitted)

[25] Whether proceedings or a response to proceedings may be vexatious was considered in Holland v Nude Pty Ltd (t/as Nude Delicafe).⁶A 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.⁷

[26] The test is whether the application should not have been made. In Kanan v Australia Postal and Telecommunications Union 8, Justice Wilcox described the test as:

“whether upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success…..where on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may be properly said that the proceeding lacks a reasonable cause”.

[27] The meaning of the terms “should have been reasonably apparent” and “had no reasonable prospect of success” were considered by a Full Bench in Baker v Salva Resources Pty Ltd 9 who said:

“[10] The concepts within s.611(2)(b) have been well traversed:

•  “should have been reasonably apparent” must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis, rather than a subjective test; and

•  a conclusion that an application “had no reasonable prospect of success” should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable.”

Consideration

[28] I have considered the material submitted in respect of the jurisdictional objection, the conduct of the Directions Hearing, and the statement and the submissions as to the costs application.

[29] The evidence of Mr Beaumont and his representative is uncontested. Accordingly, I must accept that the date of commencement nominated on the Form F2 was a mistake, and that Mr Beaumont held a genuine belief that he commenced employment on 31 August 2018.

[30] The burden of proof rests on the party which makes a jurisdictional objection. In this case, (based on the erroneous belief of Mr Beaumont as to his start date) the key issue was if MTM was a small business within the meaning of s.23 of the Act or not. There was a dispute in relation to this, as was discussed at the Directions Hearing. Upon Mr Beaumont reviewing the material submitted by MTM he came to the realisation that he did not have 6 months service which meant his service fell short of that which was required, regardless of the number of persons employed by MTM. I accept Mr Beaumont’s submission that the factual dispute was not resolved until 10 May 2019. I accept Mr Beaumont’s reason why it took a further 7 days for him to discontinue the matter.

Was the application made vexatiously (s.611(2)(a))?

[31] A genuine mistake or belief made by a representative or a party cannot be properly characterised as a vexatious act. I am unable to accept that the mistake made by the CEPU or the erroneous belief held by Mr Beaumont was intended to harass, embarrass, or to gain some collateral advantage over MTM.

[32] Accordingly, I do not accept that the application was madevexatiously.

Was the application made without reasonable cause (s.611(2)(a)); or had no reasonable prospects of success (s.611(b))?

[33] The dispute over the number of persons employed at the relevant time was ventilated before me at the Directions Hearing, this issue was crucial to determine the length of the MEP.

[34] Mr Beaumont’s held the erroneous belief that he had 6 months service. On that basis I accept that he had an arguable case that he completed the MEP until 10 May 2019 when he became aware of the evidence contained in Mr Beenhams’ statement and attachments.

[35] Noting that MTM has accepted Mr Beaumont’s belief as to his start date, I cannot accept that Mr Beaumont would have (or should have) known that his case had no prospects of success (and thus made without reasonable cause) until that 10 May 2019. I do not believe that Mr Beaumont has behaved in a “delinquent” manner.

[36] I am unable to accept that the application was made without reasonable cause.

Did Mr Beaumont engage in an unreasonable act or omission (s.400A)?

[37] MTM suggest that having received the correspondence of 18 April 2019 that Mr Beaumont should have discontinued the matter as he could not meet the MEP (at either level). This assertion appears to have been based on the contention that Mr Beaumont did not complete his Safety Induction until 3 September 2018. The letter requested that Mr Beaumont provide any evidence of an earlier commencement, which suggests that MTM (at that point in time) accepted that it was possible that the employment could have commenced earlier.

[38] Mr Beaumont contends (and MTM concedes) that he had a belief that he commenced employment on 31 August 2019, but now accepts he did not commence employment until 3 September 2018.

[39] I do not accept that the continuation of the application beyond 17 or 18 April 2019 was an unreasonable act.

[40] In my view, the critical date to discontinue occurred after the receipt of the information on 10 May 2019. It is reasonable to allow Mr Beaumont some time to digest the facts and seek advice. I suspect that the fact that he was working in a location without mobile coverage did not assist. I do not believe that his discontinuance being made 7 days later (when his submissions were due) was an unreasonable act or omission. In any event, it does not appear as if MTM incurred any additional costs in that period.

[41] It is possible that had a Conciliation been conducted, the parties may have been able to exchange information which would have allowed the factual disputes to be resolved and this matter may have been discontinued earlier. This would be a relevant consideration in the exercise of my discretion to award costs had the legislative preconditions been met

[42] Having made the above findings, I dismiss the application for costs and so order.

COMMISSIONER

Written submissions:

Mr Peter Jackobsen on behalf of MTM Contractors Pty Ltd Form 6 Application 24 May and Submissions in Reply 11 June 2019.

Ms J Rogers, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia Submissions 6 June 2019.

Printed by authority of the Commonwealth Government Printer

<PR709279>

 1   [2012] FWA 10164 at [24]-[27].

 2   Submission dated 11 June 2019 Paragraph. 1

 3   Submission dated 11 June 2019 Paragraph. 4

4 [2016] FWC 2659.

5 [2015] FWCFB 1956.

6 (2012) 224 IR 16.

7 See Attorney General v Wentworth (1988) 14 NSWLR 481 at 491.

 8 [1992] FCA 539.

 9   [2011] FWAFB 4014.