N Dut v Caterfare Pty Ltd

[2014] FWC 4106

[2014] FWC 4106

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal
s611—Application for costs

N Dut
v
Caterfare Pty Ltd
(U2014/4724)

SENIOR DEPUTY PRESIDENT WATSON MELBOURNE, 27 JUNE 2014

Application for relief from unfair dismissal - Application for costs - no reasonable prospect of success - application granted in part.

[1] Mr N Dut made an application under s.394 of the Fair Work Act 2009 (the Act) in respect of the termination of his employment effective on 17 January 2014, citing Caterfare Pty Ltd (Caterfare) as the respondent employer.

[2] Caterfare has raised two jurisdictional objections to the application:

● First, Caterfare contended that it was not the employer of Mr Dut and did not terminate his employment – there was no dismissal within the meaning of s.386 of the Act by Caterfare. This objection was brought on the basis that Mr Dut was an employee of Flexi Personnel Pty Ltd (Flexi), placed at Caterfare subject to a commercial labour hire arrangement between Caterfare and Flexi.

● Secondly, Caterfare argued that the application was made beyond the 21 day period prescribed in s.394(2)(a) of the Act and there are no exceptional circumstances for allowing a further period for the application to be made under s.394(2)(b) of the Act.

[3] The jurisdictional objections were determined in a decision of 1 May 2014 [2014] FWC 2859. In that decision, I declined to extend the period for the making of the application by Mr Dut, finding that there were no exceptional circumstances under s.394(3) of the Act. Given that decision, it was unnecessary to determine the first objection – that Caterfare was not the employer of Mr Dut and did not terminate his employment and there was no dismissal within the meaning of s.386 of the Act by Caterfare.

[4] In declining to extend the period for the making of the application, I found that the consideration of the merit of Mr Dut’s application “militates strongly against allowing Mr Dut a further period for his application to be made”. 1 In this respect, I found:

“[28] . . . the evidence in relation to whether Caterfare employed and dismissed Mr Dut is not in dispute. Mr Hedley, the Human Resources Manager of Caterfare gave evidence that Mr Dut was never engaged or employed by Caterfare and that Mr Dut undertook work at Caterfare subject to a commercial arrangement with Flexi to provide staff to carry out work for Caterfare.

[29] In his evidence, Mr Dut accepted that there was no employment contract between him and Caterfare, that there was an employment contract between him and Flexi, that he was paid by Flexi, and that his employment commencement was organised by Flexi.

[30] There is no dispute as to the evidence in relation to whether Caterfare employed (and dismissed) Mr Dut. He was not employed (or dismissed) by Caterfare. His application against Caterfare cannot succeed (s.385(a)).” [Endnotes omitted]

[5] On 14 May 2014, within 14 days after the decision of 1 May 2014, 2 Caterfare made an application for an order for costs, pursuant to s.611 of the Act.

[6] Section 611 provides:

“(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 ofthe 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.”

[7] The application relied on s.611(2)(b) of the Act. Caterfare contended that it should have been reasonably apparent to Mr Dut that his application had no reasonable prospect of success on the basis that Caterfare had not employed him or dismissed him from his employment and that his application was beyond jursidiction.

Relevant background

[8] Mr Dut was employed by Flexi, undertaking work at Caterfare subject to a commercial arrangement with Flexi to provide staff to carry out work for Caterfare.

[9] On 16 January 2014, Mr Dut received a telephone call from a Flexi manager or employee advising him that Caterfare no longer required him to continue the job at Caterfare.

[10] Mr Dut filed a s.394 application, directed against Caterfare, on 14 February 2014.

[11] On 13 March 2014, Caterfare filed a Form F4, objecting to the application on the basis that it was not the employer of Mr Dut, identifying Flexi as Mr Dut’s employer.

[12] On 19 March 2014, the matter was listed for Conference/Hearing on 24 April 2014 in respect of the extension of time and jurisdiction (not the employer) issues.

[13] On 31 March 2014, the Australian Industry Group (Ai Group), representing Caterfare, wrote a letter to Mr Dut headed “Recovery of Costs Under the Fair Work Act”. The letter indicated that Ai Group had been instructed to oppose the extension of time, indicating that the reasons advanced by Mr Dut in his application fell “woefully short” of establishing exceptional circumstances and advising that there was an additional jurisdictional issue, contending that Mr Dut was never an employee of Caterfare but a labour hire employee of Flexi. The letter advised that Mr Dut cannot be “dismissed” by an employer when he was never employed by that employer.

[14] In its letter, Ai Group urged Mr Dut to obtain legal advice on the issue.

[15] The letter put Mr Dut on notice that should he continue with his application following the letter, it was instructed to recover all professional fees associated with the defence of Mr Dut’s application, pursuant to s.611(2) of the Act, citing s.661(2) and indicating that a costs application would be brought on the basis that Mr Dut’s application was without reasonable cause and had no reasonable prospect of success.

[16] Mr Dut proceeded with his application, directed against Caterfare. The matter was heard on 16 June 2104, resulting in the decision of 1 May 2104.

Caterfare submissions

[17] Caterfare submitted that on the facts known to Mr Dut and made clear to him in the Ai Group letter of 31 March 2014, Mr Dut’s application had no reasonable prospect of success on the basis that Caterfare had not employed him or dismissed him from his employment and that his application was beyond jurisdiction. In this respect it relied on the evidence of Mr Dut in which he acknowledged that there was no employment contract between him and Caterfare, that he was paid by Flexi and that there was an employment contract between Mr Dut and Flexi 3 and my conclusion that:

“There is no dispute as to the evidence in relation to whether Caterfare employed (and dismissed) Mr Dut. He was not employed (or dismissed) by Caterfare. His application against Caterfare cannot succeed (s.385(a)).” 4

[18] Caterfare submitted that an order should be made that Mr Dut pay the professional costs incurred by Caterfare, subsequent to its letter of 31 March 2014 associated with the drafting of its outline of submissions, drafting of a witness statement and preparation and attendance at the 24 April 2014 hearing. It submitted that these costs amounted to $4,436.50 and that an order should be made for the payment of these costs in full, although Caterfare would consent to a reasonable repayment schedule.

[19] In addition to this amount the respondent seeks that the applicant make a contribution of $2,000 in respect of fees incurred by the respondent associated with its costs application.

Mr Dut’s submissions

[20] Mr Dut submitted that there was no evidence in the Ai Group letter of 31 March 2014 that he was not employed by Caterfare and that he was employed by Flexi. He submitted that he pursued his application because there was no investigation of the circumstances leading to the termination of his employment and the he was unaware that as a labour hire employee of Flexi that he was unable to bring an application against Caterfare.

Consideration

[21] A decision to award costs under s.611 of the Act is discretionary. As noted, in the context of s.170CJ of the Workplace Relations Act 1996 in McKenzie v Meran Rise Pty Ltd 5it involves a two stage process:

“In the first place it is necessary to ascertain whether the situation is one in which there is a power to award costs. If the Commission decides it is such a situation, it will then have to consider whether in all of the circumstances an order for costs is appropriate.”

[22] As noted in Baker v Salva Resources Pty Ltd:

“The concepts within s.611(2)(b) ‘should have been reasonably apparent’ and ‘had no reasonable prospect of success’ 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.” 6 [references omitted].

[23] From the time of the receipt of the Ai Group letter of 31 March 2014, Mr Dut was made aware that Caterfare contended that it was not his employer, he was an employee of Flexi and that Caterfare had not dismissed him from his employment and that no jurisdiction existed for making an application under s.394 against it. However, my observation of Mr Dut is that his english language skills were limited and he had no real comprehension of the legal position in relation to his employment. The Ai Group letter of 31 March 2014 did not provide the evidentiary material as to his employment by Flexi provided in its materials in the jurisdictional hearing. I am not satisfied that upon receipt of the 31 March 2014 letter that it should have been reasonably apparent to Mr Dut that his application against Caterfare had no reasonable prospect of success.

[24] However, I am satisfied that upon receipt of Caterfare’s materials for the jurisdictional hearing on 16 April 2014, including documentation from Flexi confirming that it was his employer, Mr Dut should have understood at that time that Caterfare was not his employer, had not dismissed him and his application directed against Caterfare was untenable. The evidence of Mr Dut in the hearing of 24 April 2014 establishes that he was aware of the fact that Caterfare had not been his employer. On the facts known to him, Mr Dut should have been aware that his application against Caterfare had no reasonable prospect of success. I am satisfied that upon consideration of the materials filed by Caterfare on 16 April 2014, it should have been reasonably apparent to Mr Dut that his application against Caterfare had no reasonable prospect of success. I am satisfied that jurisdiction for the making of an order for costs against Mr Dut exists in respect of those costs incurred after materials of Caterfare were served on Mr Dut on 16 April 2014 – costs associated with preparation for and attendance at the 24 April 2014 hearing.

[25] On the basis of the breakdown of costs provided by Caterfare on 16 June 2014, the costs incurred after the filing and service by Caterfare of its materials are those incurred in collating and copying cases referred to in submissions, preparing for arbitration, and attendance at the Fair Work Commission and associated costs. These costs totalled $1,010.

[26] As a matter of discretion, I am satisfied that a costs order should be made against Mr Dut for the costs incurred after the filing and service by Caterfare of its materials. Whilst I understand and accept that Mr Dut was motivated in proceeding with his application against Caterfare on the basis of his view that there had been no fairness within Caterfare in that it did not fairly investigate a performance issue which led to its advice to Flexi that it no longer required Mr Dut to perform his work at Caterfare, 7 the decision by Mr Dut to continue his action directed against Caterfare, following the receipt of Caterfare’s materials for the hearing, caused Caterfare to incur further costs in defending an application which the materials demonstrated and Mr Dut accepted in the hearing, could not be brought against it. Mr Dut was delinquent in continuing his application directed against Caterfare upon his receipt of Caterfare’s materials. The decision by Mr Dut to proceed with his application against Caterfare after the receipt of Caterfare’s materials and thereby impose additional costs upon Caterfare in defending the application in the hearing warrants the making of an order for costs.

[27] I am not satisfied that Mr Dut had no reasonable prospect of success in contesting the costs application.

[28] I am satisfied that the costs sought by Caterfare beyond the filing and service of the materials for the jurisdictional hearing on 16 April 2014 reflect costs reasonably necessary to defend Mr Dut’s application against it from that point. In the circumstances, I am satisfied that an order for costs, at the level of $1,010 should be made. Payment of the costs will be phased over five equal monthly instalments of $202.00, payable on 1 July, 1 August, 1 September, 1 October and 1 November 2014.

An order for payment of costs is published in PR552509.

SENIOR DEPUTY PRESIDENT

Appearances:

N Dut on his own behalf.

J O’Brien for Caterfare Pty Ltd.

Hearing details:

2014.

Melbourne:

June 16.

 1   [2014] FWC 2859, at para 31.

 2 Section 412 of the Fair Work Act 2009.

 3   Transcript, at para 163.

 4   [2014] FWC 2859, at para 30.

 5   Print S4692, at para 7.

 6   [2011] FWAFB 4014, at para 10; citing Deane v Paper Australia Pty Ltd PR932454, at para 7.

 7   Transcript, at para 164.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR552245>