Nigel Barron v Daromi Pty Ltd T/A RMD Tankers

[2016] FWC 2711

[2016] FWC 2711

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Nigel Barron
v
Daromi Pty Ltd T/A RMD Tankers
(U2015/13870)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 3 MAY 2016

Application for relief from unfair dismissal - costs application.

[1] On 21 March 2016, I dismissed Daromi Pty Ltd’s objection to Mr Nigel Barron’s unfair dismissal application. 1 On 29 March 2016, Mr Barron applied for a costs order under s.400A and s.611 of the Fair Work Act 2009.

[2] Directions were issued for the parties to file material in relation to the costs application.

Submissions of Barron

[3] Daromi had objected to Mr Barron’s application on the basis that he had not served the minimum employment period of 12 months as it claimed that it was a small business. Further it objected on the basis that Mr Barron had resigned from his employment.

[4] A hearing was conducted on 21 December 2015 and the only witness for Daromi who was in attendance at the hearing was unable to address the contention that Mr Barron had resigned because he had not been employed at the time. He was also not able to provide evidence to support Daromi’s contention that it was a small business because he was not a director of the company and had no knowledge of any related entities. As a result, to ensure that Daromi had a fair opportunity to put its case to the Commission, directions were issued for further evidence to be provided to the Commission.

[5] At the first hearing, Mr Barron gave evidence on oath that he did not resign his employment.

[6] At the second hearing Daromi relied upon hearsay evidence to support its contention that Mr Barron resigned. I found that Mr Barron had not resigned and therefore he had served the minimum period of employment.

[7] Further, I found that Daromi failed to provide sufficient evidence to satisfy me that it had less than 15 employees.

[8] It was submitted that the onus was on Daromi to satisfy the Commission that it did not have the jurisdiction and it failed to do so. It said that as a result of Daromi’s conduct Mr Barron has incurred costs.

[9] Daromi submitted that it understood that it was the usual practice in Commission matters for each party to bear its own costs. It was submitted that the objection was not made vexatiously or without reasonable cause. Daromi submitted that “there were some casual employees that I would define as not being regular & systematic but accept that the FWC sees this differently. I also do believe that the employee, Mr Barron did resign from his position and did not meet the minimum employment period. I have signed statutory declarations from employees at the time declaring but again accept that the FWC sees this differently.”

[10] It was submitted that employers have a right to lodge a jurisdictional objection and it believed it had grounds to do so. Daromi then addressed the merits of Mr Barron’s claim.

[11] In its reply Mr Barron accepted that an employer has the right to lodge a jurisdictional objection. However a party that makes such an objection must process the objection efficiently. Mr Barron submitted that it incurred costs improperly due to the behaviour of the respondent namely:

1. Costs associated with the conciliation which was abandoned because Daromi kept asserting its jurisdictional objection.
2. The first jurisdictional hearing had to be effectively abandoned due to the porous nature of the evidence of Daromi and the lack of witness attendance.
3. Daromi failed to comply with the orders of the Commission which would have resolved the matter without the need for the second hearing.

The Legislative Framework

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

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

“(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.”

[14] In its employer response, Daromi set out Mr Barron’s employment history. He commenced employment as a casual employee on 20 February 2014 and commenced full time employment on 4 December 2015. It was said he resigned his employment on 11 December 2014, recommenced employment on 5 January 2015 and was employed until 15 October 2015. It submitted that when employed as a casual employee Mr Barron was employed on a regular and systematic basis. Daromi did not make any submission that Mr Barron did not, during this time, have a reasonable expectation of ongoing employment.

[15] Central to Daromi’s case, that Mr Barron had not met the minimum employment period, was that he resigned his employment on 11 December 2015. It submitted that the period of employment was 5 January 2015 to 15 October 2015 and because it was a small business the minimum employment period was one year.

[16] Daromi filed three witness statements in support of its objection. None of those statements addressed the issue of whether Mr Barron resigned his employment on 11 December 2015.

[17] At the hearing no witness was called by Daromi to contradict Mr Barron’s sworn evidence that he did not resign. Mr Brendan Hunt, who was Daromi’s only witness at the hearing, was not employed at the time Mr Barron was alleged to have resigned.

[18] At my suggestion, the hearing was adjourned and that proposal was not opposed by Mr Barron’s representative. He could have submitted that the matter proceed to judgement based on the material before the Commission.

[19] Daromi was directed to file further witness statements to support its claim that Mr Barron had not served the minimum employment period. Apart from Mr Robert Syned’s statutory declaration in relation to related entities no further witness evidence was called. None of the statutory declarations attached to Daromi’s submissions in this cost application were filed prior to the second hearing and none of those persons was available to give evidence at the second hearing.

[20] I accept Daromi’s submission that it is entitled to object to an application on reasonable grounds but it had to support its objection with evidence. Once it became apparent to Daromi that it was unable to support its objection with evidence it should have discontinued its objection but it did not. After the first hearing Daromi was on notice that it needed to put forward additional evidence to support its objections. Despite this it did not call any direct evidence about the alleged resignation and it did not provide sufficient evidence to support its contention that it was a small business. Its failure to do so was unreasonable.

[21] I find that its unreasonable conduct in not discontinuing its objection after the first hearing caused Mr Barron to incur the costs of the second hearing.

[22] Section 611 of 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.”

Did Daromi make its objection vexatiously?

[23] 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.” 2

[24] I do not accept that the objection filed by Daromi was made vexatiously. There is no evidence to support such a finding.

Did Daromi make its objection without reasonable cause?

[25] Daromi had two objections. I accept that given Mr Sneyd’s evidence that he was told that Mr Barron had resigned, it was not an unreasonable objection to make.

[26] The issue of whether a business is a small business may involve some complexity. Daromi was required to have regard to the employees of any associated entities. Further it was required to consider whether its casual employees were included in the count of employees. Further it needed to consider if there was any basis that persons it had engaged as contractors may be found to be employees. I do not accept that Daromi’s objection was bound to fail.

Should it have been reasonably apparent to Daromi that its objection had no reasonable prospects of success?

[27] In Baker v Salva Resources Pty Ltd 3 a 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].”

[28] I am satisfied that after the first hearing of this matter it would have been reasonably apparent to Daromi that its objection was bound to fail as it was not able to call any direct evidence to support its contention that Mr Barron had resigned. In those circumstances it would have been aware that the issue of whether or not it was a small business would not need to be considered as Mr Barron would have been employed for more than 12 months.

Conclusion

[29] Having found that Daromi unreasonably caused Mr Barron to incur costs and that it should have been reasonably apparent to Daromi that its objection arising from the alleged resignation of Mr Barron was bound to fail, it is necessary to determine if I should exercise my discretion to award costs.

[30] Daromi complains that the whole process was over shadowed by the jurisdictional objections. However this occurred because Daromi made those objections and persisted with those objections.

[31] The starting point in my deliberations is that each party bears their own costs. The necessary perquisites exist for the awarding of costs. I am satisfied that I should exercise my discretion to award the costs against Daromi because it was put on notice of the deficiency in its evidence and yet it persisted with the objection.

[32] Mr Barron is seeking costs incurred from the conciliation conference. Given my decision I am not prepared to issue costs from that date. I am prepared to order that Daromi pay Mr Barron’s costs incurred after the first hearing of the objection. However at this stage I am not prepared to order the amounts set out in items 7-15 as those costs have not been calculated in accordance with Schedule 3.1 of the Fair Work Regulations 2009. I am further not prepared to order Daromi pay item 16 as that hearing was adjourned due to the unavailability of video and those costs should not be borne by Daromi. I am prepared to order the payment of items 17 and 18.

[33] If Mr Barron wishes he can provide a revised claim for items 7-15 in accordance with the Schedule or provide submissions as to how the amounts claim conforms with the schedule, he should do so within seven days of the date of this decision. Otherwise an order requiring Daromi pay Mr Barron $924.00 will be issued.

DEPUTY PRESIDENT

 1   [2016] FWC 1756.

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

 3   [2011] FWAFB 4014

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