Nissan Casting Plant (Australia) Pty Ltd v Just Relations

[2016] FWC 5099

[2016] FWC 5099

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.401 - Application for costs orders against lawyers and paid agents

Nissan Casting Plant (Australia) Pty Ltd
v
Just Relations
(U2016/8024)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 27 JULY 2016

Application for costs orders against lawyers and paid agents.

[1] On 15 June 2016, I dismissed Mr Cresp’s application for an unfair dismissal remedy because I determined that he was not employed by Nissan Casting Plant (Australia) Pty Ltd.

[2] On 28 June 2016 Nissan sought an order under sections 400A and 611 for costs against Mr Cresp and under section 402 against his representative Just Relations.

Submissions of Nissan

[3] Nissan submitted that Mr Cresp’s failure to discontinue his application when he received Nissan’s employer response form in which it raised its objection was unreasonable. It submitted that it attached a copy of the Mr Cresp’s employment contract as well as payslips to the response to support its objection. Further it submitted that he should have discontinued his application after he received Nissan’s letter dated 25 May 2016. By this date Nissan had filed its witness statements and submissions in relation to the objection.

[4] In that letter Mr Cresp was put on notice that there was no basis for his claim that Nissan was his employer and it put him on notice that unless he discontinued his application Nissan would seek an order for costs.

[5] Further it submitted that his application was made without reasonable cause and it should have been reasonably apparent to Mr Cresp that his application had no reasonable prospects of success.

[6] Nissan submitted that Just Relations should have advised Mr Cresp to discontinue either once the employer response form was served or when it received the letter dated 25 May 2016. It submitted that its failure to do so was an unreasonable omission.

Submissions of Mr Cresp

[7] Mr Cresp filed submissions. He stated that it was his genuine belief that his actual employer was Nissan. He said that Mr Fluder, not Mr Reddy, made alterations to his individual flexibility agreement and he did not consult with Mr Reddy. He said he was introduced to Mr Reddy after Mr Fluder had given him the document to be signed. That was his only involvement with Mr Reddy until he was dismissed. He said it was his experience that other labour hire companies had more involvement and professionalism in their relationships with staff. He said he was unaware of the tender process and asserts contrary to my findings that involvement of Mr Reddy was a bogus.

[8] Mr Cresp submitted that he was entitled to have the issue determined because of the contradictory statements and actions of Nissan. In this he relies on his allegation that a supervisor told him that Nissan was his employer. He asked his supervisor who he should be answering to and he said “you answer to me – you work for Nissan.” He said he was surprised at the decision made in this case.

Submissions of Just Relations

[9] It submitted that it was directed to lodge the application. Its instructions were that:

• Mr Cresp was offered employment by the HR manager of Nissan after interviews with senior management of Nissan;



• The HR manager printed the key employment documents;



• There was no suggestion that the HR manager was acting as an agent for the employer;



• Line management confirmed that Mr Cresp was employed by Nissan;



• The employer was not in the business of being a labour hire company;



• The interactions between Mr Cresp and his employer were superficial;



• The names on the payslip changed;



• Mr Cresp advised that he was employed by Nissan;



• There was conflicting witness evidence at the hearing;

[10] It submitted that had Mr Cresp’s evidence been accepted then he would have succeeded in defeating the jurisdictional objection.

[11] It submitted that it was not unreasonable for it to have accepted the facts as represented to it by its client.

[12] It further submitted that it was not put on notice that costs would be sought against it.

The Legislative Framework

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

[14] Section 611 of the Fair Work Act 2009 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.

[15] Section 400A 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.

[16] Section 401 provides as follows:

(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.

[17] In its claim against Just Relations Nissan rely on subparagraph 401(1A)(b) namely that Just Relations did not advise Mr Cresp to discontinue his application.

Did Mr Cresp make his application without reasonable cause?

[18] I am not satisfied that Mr Cresp made his application without reasonable cause. The question is “whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is in appropriate to stigmatise the proceedings as being “without reasonable cause”. But where it appears that, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may appropriately be said that the proceeding lacks a reasonable cause.”¹

[19] I am not satisfied that Mr Cresp, was at the time of making his application, aware that his application was bound to fail. At that time he did not have the benefit of the position put by Nissan. It is not surprising that labour hire employees who work side by side with the directly employed employees of the host, who are subjected to the same supervision and rules are confused as to the true identity of their employer. In Mr Cresp’s case this was accentuated by the fact that he was interviewed by Nissan employees and his only meeting with his employer was organised by Nissan.

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

[20] In Baker v Salva Resources Pty Ltd² 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]."

[21] I do not accept Mr Cresp’s submission that it was reasonable for him to have the matter determined because there were contradictory statements made by Nissan. The only statement he relies on is the statement of his supervisor referred to in paragraph 8. Putting aside the hearsay nature of this evidence, this is not a statement that Mr Cresp was employed by Nissan. Of course labour hire employees answer to the supervisor who is often employed by the host employer. Further there is no doubt that Mr Cresp was performing work for Nissan however he was not doing it as an employee of Nissan. Mr Cresp further relied upon the fact that Nissan’s HR manager provided him with the contract of employment and the individual flexibility agreement. He said he was a bit baffled by the documents. He did not question them at the time. He knew that being employed by the labour hire company was a condition of obtaining the work so he accepted it. There was no evidence that Nissan had ever represented to Mr Cresp that it was his employer.

[22] Once Mr Cresp made his application he was provided with documentation from Nissan which should have raised serious concerns in both his mind and his advisor’s mind about the prospects of success of his case. Once he saw the evidence of Nissan he was on notice that unless he established that the arrangement between Reddy’s and Nissan was a sham or as he described it bogus, his claim was bound to fail. By this time he was aware of the tender process. He was in possession of his contract of employment as well as his payslips. He knew that he had been provided with a uniform by Reddy’s and while he didn’t wear it he dressed in conformity with it rather than in conformity with the uniforms worn by Nissan employees. Mr Cresp had previously been a labour hire employee engaged at Nissan so this was not a new experience for him. He did not call any evidence beyond his own statement to support his contention that this was a sham arrangement. He did not seek to summons documents held by either Nissan or Reddy’s that may have supported his claim that Reddy’s did not perform any other labour hire functions for any other employer or that it merely provided a payroll function for Nissan. Once he filed his material in response to the objection he should have been aware that he did not have sufficient evidence to establish that the arrangement was a sham.

[23] In those circumstances it is difficult to see how Mr Cresp’s claim had any reasonable prospects of success.

Was there an unreasonable act or omission by Mr Cresp in connection with the conduct or continuation of the matter?

[24] Mr Cresp did not discontinue his application. He was on notice that Nissan was contending that it was not his employer. It was not enough, at this time, for Mr Cresp to rely upon his “belief.” He knew that his contract of employment was not with Nissan. He knew that payslips were not issued by Nissan. He knew that he had been advised of his dismissal by Mr Reddy and not Nissan. He knew that Mr Reddy had supplied him with a uniform, albeit he didn’t wear it, he did wear clothing in the same colours as those worn by Reddy employees. He knew he had been told by Mr Reddy of the decision made by Nissan that he would not be offered work.

[25] Mr Cresp properly advised should have been aware that it would require more than his belief to establish that Nissan was his employer. Labour hire is a common feature in Australia. Mr Cresp had worked at Nissan before albeit for another labour hire company.

[26] Mr Cresp has not made any submissions that he relied on professional advice provided to him by Just Relations in continuing his claim.

[27] Mr Cresp was provided with an offer to settle his claim. Nissan proposed that he discontinue his claim and it would not pursue him for costs. Mr Cresp did not respond to the letter put by Nissan to him. That conduct was unreasonable.

[28] I am satisfied that Mr Cresp acted unreasonably in not discontinuing his claim once he received Nissan’s material. By not discontinuing his claim, Nissan was put to the expense of attending the hearing on 9 June 2016.

[29] Having found that the necessary prerequisite for the making of an order of costs has been met, I am required to consider whether I should exercise my discretion to award costs.

Costs against Just Relations

[30] It was submitted that Just Relations’ failure to advise Mr Cresp that he should discontinue his claim was an unreasonable act on the part of Just Relations.

[31] The difficulty with this submission was that there was no evidence of the advice provided to Mr Cresp by Just Relations. Mr Cresp did not in his material say that he sought his advice from Just Relations in relation to the letter sent by Nissan and they advised him not to discontinue. Nissan did not seek to summons evidence to support its submission nor did it seek to examine either Mr Cresp or Mr Cresp’s representative.

[32] In those circumstances I cannot be satisfied that Just Relations gave Mr Cresp advice not to discontinue his application and the claim against Just Relations must fail.

Costs against Mr Cresp

[33] The starting point is that each party bears their own costs.

[34] I have found that Mr Cresp unreasonably failed to discontinue his application and caused costs to be incurred by Nissan and that his claim had no reasonable prospects of success.

[35] This is not a case where Mr Cresp has come before me and argued that he received bad advice from his representative. Mr Cresp did not put forward any reasons why, if I found against him, I should exercise my discretion not to award costs. In those circumstances I am not persuaded that I should exercise my discretion in Mr Cresp’s favour.

[36] I will therefore order Mr Cresp to pay Nissan’s costs in accordance with Schedule 3.1 of the Fair Work Regulations 2009. Those costs will include costs incurred by Nissan calculated from 25 May 2016 being the date Mr Cresp could have accepted Nissan’s offer to resolve the matter.

[37] Unless the parties reach an agreement within 7 days of this decision as to the amount of costs to be paid, Nissan is to file and serve a schedule of costs in accordance with the Regulations within 14 days of the date of this decision. Mr Cresp is then directed to file and serve any objection to the schedule of costs within 7 days of service of the schedule. The parties are to advise my chambers if they are then content for the quantum of costs to be determined on the papers.

DEPUTY PRESIDENT

Appearances:

A Maher for the Applicant.

A Dircks for the Respondent.

Hearing details:

2016.

Melbourne.

25 July.

1 Kanan v Australian Postal Telecommunications Union (1992) 43 IR 257 at [29]

2 [2011] FWAFB 4014

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