Muller v Health Services Union NSW

[2013] FCCA 1987

FEDERAL CIRCUIT COURT OF AUSTRALIA

MULLER v HEALTH SERVICES UNION NSW [2013] FCCA 1987

Catchwords:
COSTS – Whether an unreasonable act or omission before the commencement of proceedings is relevant for the purposes of s.570(2)(b) of the Fair Work Act 2009 (Cth) considered.

Legislation:

Fair Work Act 2009 (Cth), s.570

Applicant: KIM MULLER

Respondent: HEALTH SERVICES UNION NSW

File Number: SYG 1933 of 2013

Judgment of: Judge Driver

Hearing date: Decided on the papers

Date of Last Submission: 18 November 2013

Delivered at: Sydney

Delivered on: 2 December 2013

REPRESENTATION

Counsel for the Applicant: Ms P Lowson

Solicitors for the Applicant: Konstan Lawyers

Counsel for the Respondent: Mr M Gibian

Solicitors for the Respondent: Maurice Blackburn

ORDERS

1. The applicant’s application for costs, pursuant to s.570(2)(b) of the Fair Work Act 2009 (Cth) is dismissed.

2. There shall be no order as to the costs of the costs application.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1933 of 2013

KIM MULLER

Applicant

And

HEALTH SERVICES UNION NSW

Respondent

REASONS FOR JUDGMENT

Introduction and background

1. The applicant, Kim Muller, seeks an order for costs in relation to proceedings instituted by application filed on 19 August 2013 under the Fair Work Act 2009 (Cth) (Fair Work Act). Those proceedings were resolved without the need for a hearing when Ms Muller discontinued the proceedings. Ms Muller contends that the Court ought to award costs because of acts of the respondent, the Health Services Union (Union), namely:

   a)on 6 August 2013 threatening to reduce Ms Muller’s salary from $109,181 to $65,000 gross per annum on two week’s notice; and

   b)having threatened to reduce Ms Muller’s salary on two weeks’ notice, refusing to agree to delay the implementation of the salary reduction, thus causing Ms Muller to commence the substantive proceedings and seek urgent interlocutory relief to allow her more time to consider her position in relation to her superannuation entitlements.

2. The Union opposes the application and, I understand, would have opposed the substantive proceedings if they had been pursued.

The legislation

1. Section 570 of the Fair Work Act provides as follows:

   (1)  A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.

   Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A.

   (2)    The party may be ordered to pay the costs only if:

   (a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or

   (b)  the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or

   (c)   the court is satisfied of both of the following:

   (i)     the party unreasonably refused to participate in a matter before the FWC;

   (ii)    the matter arose from the same facts as the proceedings.

2. In the present case, Ms Muller contends that the Union’s unreasonable act or omission caused her to incur the costs by instituting the substantive proceedings.

Consideration

1. The Union advised Ms Muller by letter dated 6 August 2013 that an anomaly had been identified in relation to her salary.  In short, the Union believed that she had been overpaid for a substantial period.  Ms Muller resisted a reduction in her salary.  She also sought an extension of time to deal with the issues arising.  The Union refused that extension of time request and Ms Muller commenced the substantive proceedings.  The matter came before me for directions on 19 August 2013, at which time the Union agreed to defer implementing the decision to reduce Ms Muller’s salary until 3 September 2013.  It subsequently agreed to defer the reduction in salary until 20 September 2013. 

2. By letter dated 20 September 2013 the Union wrote to Ms Muller advising that her contract of employment would cease on 18 October 2013 and offered her a new contract of employment at the reduced salary.  Ms Muller’s employment was terminated on 18 October 2013.

3. It is apparent that Ms Muller’s concern was that she was approaching retirement and that the reduction in salary would have adverse consequences upon her superannuation entitlements.  She instituted the proceedings in this Court because of the short notice of the salary reduction given to her.  She contends that the short period of notice of the intended salary reduction was unreasonable and she is entitled to her costs of the legal proceedings. 

4. I obtained the agreement of the parties to deal with the issue of costs on the papers.  On 25 October 2013, I ordered the parties to file submissions in relation to costs with any evidence in support.  Both parties filed written submissions and, in addition, the Union filed an affidavit by Michael John Doherty, the solicitor for the Union.  Ms Muller provided submissions in reply on 18 November 2013 (for which no leave was given) objecting to the Union relying upon parts of the affidavit of Mr Doherty which detail without prejudice communications between the parties.  At least some of that correspondence was marked “without prejudice save as to costs”.  Ms Muller contends that, even if otherwise admissible, the without prejudice communications which took place after the institution of the proceedings are irrelevant to her claim, which relates to conduct prior to the commencement of the proceedings.  I agree and pay no regard to those parts of Mr Doherty’s affidavit.  I also take into account that, pursuant to orders of the Court, proceedings were referred for conciliation before the Fair Work Commission.  The parties participated in conciliation on 6 September 2013 before Vice President Watson.  It is, in my view, important that discussions between the parties as part of, or related to, a conciliation process such as that ordered by the Court remain confidential, save in exceptional circumstances.

5. The Union contends that s.570(2)(b) of the Fair Work Act does not apply to acts or omissions by a party prior to the institution of legal proceedings. The section is not, in its terms, limited to acts or omissions post dating the institution of legal proceedings, but, if the section applies to pre-litigation acts or omissions, it would have to be an exceptional case which warranted an award of costs. Legal proceedings provide a remedy for a dispute which is unable to be resolved otherwise. An aggrieved applicant may consider that the act or omission which in their mind has led to the institution of proceedings is unreasonable. Hypothetically, in a matter that goes to trial, the Court may agree and might make a costs order compensating the aggrieved applicant for the costs incurred in the proceedings. But if a respondent acts promptly in order to resolve the proceedings once instituted, it would be hard to justify making an order for costs against the respondent.

6. In the present case, Ms Muller’s central allegation that the Union acted precipitately to reduce her salary is untested, because she discontinued the proceedings.  Secondly, it is common ground that the Union gave Ms Muller the extension of time she sought, albeit after the legal proceedings had commenced.  The Union later provided a further extension of time.  In doing so, the Union made no admission of fault on its part.  The Union believed that Ms Muller had been overpaid for a significant period, but ultimately agreed to grant her time to deal with the circumstances.

7. On the facts of this case, there is no basis upon which an award of costs against the Union could be justified. 

Conclusion

1. I will order that the application for costs be dismissed and order that there be no order as to costs.

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Judge Driver

Associate: 

Date: 2 December 2013