Nathan Perry v Manning Partners

[2015] FWC 2603

[2015] FWC 2603

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Nathan Perry
v
Manning Partners
(U2015/106)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 15 APRIL 2015

Application for costs.

[1] Mr Nathan Perry alleged that the termination of his employment by Manning Partners (Manning) was unfair. In his application, Mr Perry advised that he commenced employment on 1 July 2014 and his employment was terminated on 3 January 2015.

[2] In the employer response filed on 15 February 2015, Manning stated that Mr Perry commenced employment on 8 July 2014 and objected to Mr Perry’s application on the basis that he had not served the minimum period of employment. It advised that Manning had two employees.

[3] The date when Mr Perry started employment was critical because if Manning were correct, Mr Perry had not served the six months minimum period of employment which applied before any employee is protected from unfair dismissal. If Mr Perry is correct, then the issue was whether Manning was a small business, because there is no issue that Mr Perry had not been employed for one year.

[4] The matter was referred to me and on 25 February 2015, I wrote to the parties noting the discrepancy in the information provided by the parties about the starting date of Mr Perry’s employment.

[5] Manning were directed to file material in support of its objection by close of business on 11 March 2015.

[6] On 4 March 2015, a statutory declaration of Mr Manning was filed in which he declared that Mr Perry commenced employment on 8 July 2014 and that at the date of the dismissal Manning had three employees.

[7] On 11 March 2015, Mr Perry discontinued his application.

[8] On 12 March 2015, Manning filed an application for costs directed to Mr Perry and his representative.

[9] A telephone conference in relation to the costs application was held on 13 April 2015 and permission was given to Mr Perry to be represented by a paid agent and for Manning to be represented by a legal practitioner.

[10] At the hearing, with the consent of the parties, witness statements of Mr Manning and Mr Perry were tendered and neither witness was required for cross examination.

The Legislative Framework

[11] The Commission has the discretion to award costs against a party if certain preconditions are met.

[12] Section 611 of the Fair Work Act 2009 (the Act) provides as follows:

(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.

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.

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

(c) under section 596, the person is required to seek the FWC’s permission to be represented by the representative.

(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.

(2) The FWC may make an order under this section 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.

Submissions of Manning

[13] Manning’s application for costs was made pursuant to sections 400A, 401 and 611(2) of the Act.

[14] It submitted that Mr Perry knew that Manning only employed three people and he should have been aware that he had only been employed for approximately six months. It was submitted that therefore Mr Perry and his representative should have been aware that he was not protected from unfair dismissal as he had not served the minimum employment period.

[15] It was submitted that it was incumbent on both Mr Perry and his representative to make reasonable enquires to determine if Mr Perry had been employed for the minimum employment period. It was submitted that filing an application without making those enquiries was an unreasonable act in connection with the conduct of the matter.

[16] As a result, it was submitted that the application was made without reasonable cause and as a result, Manning incurred legal and other costs.

[17] It was submitted that Mr Perry had the full 21 days to lodge his application and that one of the purposes of the 21 days is to enable an applicant to prepare his or her case. Part of the preparation should involve ensuring that the employee met the statutory prerequisites.

[18] It was submitted that given Mr Perry’s instructions to his representative were that he had worked since about 1 July 2014 and could not say exactly when he commenced employment, it was incumbent on Mr Perry’s representative to make further enquires before issuing proceedings.

[19] It was submitted that Mr Perry’s own bank records could have been examined as well as his pay slips. Further, Mr Perry knew that he completed a time book of hours and those records could have been sought from Manning during the 21 day period. If those enquiries had been made, the true starting date of Mr Perry’s employment would have become known and there would have been no need to make enquiries as to whether the business was a small business because Mr Perry had not been in employment for six months when the dismissal took effect.

[20] That Mr Perry was leaving on holidays the day after he consulted his representative did not prevent his representative from making further enquiries.

[21] It was submitted that Mr Perry’s representative could have made enquiries of Mr Manning prior to the conciliation conference to verify Mr Perry’s commencement date and to clarify if Manning was a small business.

Submissions of Mr Perry and Mr Mullally

[22] In his statement tendered at the hearing, Mr Perry stated that he was employed from 1 July 2014 to 3 January 2015. He contacted Mr Mullally on 6 Janaury 2015 and told him he was aggrieved at his dismissal. He stated that at that time, he had no knowledge of how many employees Manning had. He said that Manning had large farming interests in WA and it employed family members as well as outside labour.

[23] The next day, after instructing Mr Mullally to file his application, he went on a prebooked three week cruise. On 5 March 2015, having been told by Mr Mullally that Mr Manning had filed a statutory declaration stating he had three employees, he instructed Mr Mullally to discontinue the application.

[24] Mr Mullally submitted that he filed the application on instructions from Mr Perry. The matter was to go to conciliation on 17 February 2015. Prior to the conciliation conference, Manning had not served the employer response form. It was provided by Manning after the conciliation conference. On 20 February 2015, Manning’s solicitors filed a notice of representative commencing to act and Mr Mullally sought copies of pay slips from the employer. It was said that the pay slips did not provide any verification of the start date of employment.

[25] Once Mr Perry was served with Manning’s material on 5 March 2015 and it was clear that Manning was a small business, advice was provided to Mr Perry and the application was discontinued.

[26] It was submitted that until Manning provided evidence that it was a small business, it was not apparent that the application was bound to fail and should not have been made. It was submitted that Mr Perry had no way of knowing the size of Manning’s work force.

Did Mr Perry make his application vexatiously?

[27] North J said “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 collateral damage.” 1

[28] I do not accept that Mr Perry made his application vexatiously. There is no evidence to support such a finding.

Did Mr Perry make his application without reasonable cause?

[29] Manning’s complaint was that Mr Perry should have known that Manning was a small business and he should have known that given he commenced employment on 8 July 2014, he had not served six months employment and therefore was not protected from unfair dismissal. It further submitted that even if Mr Perry did not know when he commenced employment, at the time he was dismissed, he could have found out this information if he had made reasonable enquires during the 21 days he had to file his application.

[30] It was submitted that Mr Perry knew that it was a small business.

[31] I do not accept this submission. The Act provides that in addition to the direct employees of Manning, employees of any associated entities, if any, are included in the calculation of the number of employees. I accept that Mr Perry was not in a position to know whether Manning was or was not a small business.

[32] However, Manning did not need to prove it was a small business for Mr Perry’s claim to fail as on Mr Manning’s evidence, Mr Perry had not been employed for six months. The complaint of Manning was that given Mr Perry’s instructions were equivoval about his starting date, enquires should have been made to ascertain his starting date.

[33] It was submitted that given the short period that there is to file an application, it cannot be expected that an investigation of these matters would occur prior to filing. It was submitted that Mr Perry’s absence also made progressing this matter difficult.

[34] It was put that the delay of Manning in serving its employer response did not alert either Mr Perry or Mr Mullally to the disputed facts.

[35] At the costs hearing, neither representative sought to challenge the evidence of the other party about the starting date of Mr Perry’s employment. In that case, I am left with conflicting evidence and no documentary evidence to support either position.

[36] In those circumstances, I am not satisfied that Mr Perry knew at the time he made his application that he did not commence employment until 8 July 2014.

[37] Given this finding, I am unable to find that Mr Perry made his application without reasonable cause.

Should it have been reasonably apparent to Mr Perry that his claim had no reasonable prospects of success?

[38] In Baker v Salva Resources Pty Ltd 2a Full Bench summarised the approach to be taken in relation to section 611(2)(b) of the Act as follows:

"[10] 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 [Wodonga Rural City Council v Lewis, PR956243, at para 6]; 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 [Deane v Paper Australia Pty Ltd,PR932454, at paras 7 and 8] or so lacking in merit or substance as to be not reasonably arguable. [A Smith v Barwon Regional Water Authority, [2009] AIRCFB 769 at para 48]."

[39] Mr Perry’s claim could be said to have no reasonable prospects of success if it could be established that Mr Perry knew that he commenced employment on 8 July 2014. However, given my findings above, that has not been established. Mr Perry even at the hearing gave evidence that he commenced on 1 July 2014. I also find that Mr Perry could not have known until the evidence was produced that Manning was a small business. In those circumstances, I am unable to find that it should have been reasonably apparent to him that his application had no reasonable prospects of success.

Was there an unreasonable act or omission which caused Manning to incur costs?

[40] Given I am unable to conclude that Mr Perry knew that he did not commence employment until 8 July 2014, I am unable to conclude that Mr Perry knew he did not have six months service and that his application was bound to fail. In those circumstances, Mr Perry was not unreasonable in instructing his representative to file the application.

[41] Once the evidence of Mr Manning was filed, Mr Perry took advice and discontinued his application. I do not consider that the filing of the application was an unreasonable act.

Did Mr Mullally encourage Mr Perry to start this proceeding when it should have been reasonably apparent that Mr Perry’s claim had no reasonable prospect of success?

[42] There is no evidence that Mr Mullally encouraged Mr Perry to make or continue with the application.

[43] Mr Mullally took instructions from Mr Perry and acted on those instructions. Mr Mullally sought pay slips from Manning after the directions were issued. Mr Mullally considered that these pay slips did not resolve the dispute between the parties about the date Mr Perry commenced employment. Mr Mullally, after being served with the statutory declaration of Mr Manning, advised his client further and the matter was discontinued.

Did any unreasonable act or omission of Mr Mullally in connection with the conduct of the matter cause Manning to incur costs?

[44] I do not accept that Mr Mullally’s conduct in filing Mr Perry’s application was unreasonable. Mr Mullally received certain instructions from Mr Perry. He was entitled to rely upon them. Even had Mr Perry told Mr Mullally that there were only three employees at the farm when he was employed, this would not have enabled Mr Mullally to conclude that Manning was a small business. It is for the respondent to put forward the evidence that it relies upon to establish that it is a small business as it knows if it has associated entities. I do not consider it was unreasonable in those circumstances for Mr Mullally to lodge the application.

[45] It was also not unreasonable for Mr Mullally to accept his client’s instructions that he commenced employment around 1 July 2014. While that information may have alerted Mr Mullally to the issue of whether Mr Perry had served the minimum employment period, given that the next day Mr Perry went on a cruise for three weeks, it is not surprising that to protect Mr Perry’s rights, the application was lodged. Given that Mr Mullally did not find out until after 17 February 2015 that there was a dispute about the starting date, I do not consider he was unreasonable in filing the application.

[46] Further, he sought to clarify the issue but it became moot when Manning filed its material that it had less than 15 employees.

[47] It was put that both Mr Mullally and Mr Perry should have made enquires prior to filing the application to ensure Mr Perry was protected from unfair dismissal. I do not accept this submission. An applicant is given 21 days to make an application. Mr Perry was able to obtain advice shortly before going on a preplanned holiday and based on that advice he instructed his representative to file his application. Given his absence for the next three weeks, it was incumbent on his representative to file the application as instructed to protect Mr Perry’s legal position.

[48] I do not consider in these circumstances it was incumbent on either party to make further enquires prior to lodging the application.

Conclusion

[49] If the necessary conditions for awarding costs exist, the decision to award costs is discretionary. In this case, I have not found that the necessary preconditions existed for the awarding of costs. Therefore the costs application is dismissed.

DEPUTY PRESIDENT

Appearances:

Mr P Mullally for the Applicant.

Ms J Corkhill for the Respondent.

Hearing details:

2015.

Melbourne and Perth via telephone:

13 April.

 1   Nilsen v Loyal Orange Trust (1997) 76 IR 180 at 181.

 2   [2011] FWAFB 4014 at [10]

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