Olsen v Wellard Feeds Pty Ltd (No.2)
[2008] FMCA 447
•11 April 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| OLSEN v WELLARD FEEDS PTY LTD (No.2) | [2008] FMCA 447 |
| INDUSTRIAL LAW – Alleged breach of award – whether award applied to employment of Mill Manager. COSTS – Meaning of without reasonable cause – whether proceedings issued without reasonable cause. |
| Federal Magistrates Act, 1999 (Cth) s.79(3) Federal Magistrates Court Rules 2001 (Cth) r.13.10 Workplace Relations Act, 1996 (Cth) ss.719(6), 720, 722, 824(1), 824(3) |
| AFMEPKIU v Nestle Australia Ltd [2005] FCA 717 Carpenter v Corona Manufacturing (2002) 122 IR 387 Envotech Pty Ltd (trading as Australian Envelopes) v Goldie (2006) 157 IR 395 Ferrazza v Unimin Australia Limited [2004] AIRC 346 Geneff v Peterson (1986) 19 IR 40 Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 Matthews v Australian Postal Corporation [2007] FMCA 1174 Olsen v Wellard Feeds Pty Ltd [2007] FMCA 1885 Olsen v Wellard Feeds Pty Ltd [2008] FMCA 320 R v Moore; Ex parte Federated Miscellaneous Workers Union of Australia (1978) 140 CLR 470 Spotless Services Australia Ltd v Marsh [2004] FCAFC 155 Standish v University of Tasmania (1989) 28 IR 129 Thompson v Hodder (1989) 29 IR 339 |
| Applicant: | CHELSEA OLSEN |
| Respondent: | WELLARD FEEDS PTY LTD (ACN 009248195) |
| File Number: | PEG 170 of 2007 |
| Judgment of: | Lucev FM |
| Hearing date: | 26 March 2008 |
| Date of Last Submission: | 26 March 2008 |
| Delivered at: | Perth |
| Delivered on: | 11 April 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr McCann |
| Solicitors for the Applicant: | Sparke Hellmore |
| Counsel for the Respondent: | Mr Jackson |
| Solicitors for the Respondent: | DLA Phillips Fox |
ORDER
The Applicant pay the Respondent’s costs of these proceedings, except as otherwise ordered by the Court on 7 November 2007, to be agreed, and if not agreed, to be taxed by a Registrar of this Court.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 170 of 2007
| CHELSEA OLSEN |
Applicant
And
| WELLARD FEEDS PTY LTD (ACN 009248195) |
Respondent
REASONS FOR JUDGMENT
Application
By an application made on 22 August 2007 the Applicant sought:
a)a declaration that the Respondent breached clause 29.3.8 of the Award[1] by not paying unused accrued sick leave to Ronald West, an employee of the Respondent, at the date of termination of his employment with the Respondent;
b)an order under s.720 of the Workplace Relations Act, 1996 (Cth)[2] for the Respondent to pay to Mr West as at the date of termination of his employment all unused accrued sick leave owing under clause 29.3.8 of the Award, plus interest under s.722 of the WR Act from the date of termination of Mr West’s employment; and
c)the imposition of a penalty against the Respondent under s.719(6) of the WR Act.
[1] The Award being the Milling Industry – General – Award.
[2] “WR Act”.
The issues that arose in respect of the application were as follows:
a)whether the Respondent was bound by the Award; and
b)if the Respondent was bound by the Award, whether the Award applied to Mr West’s employment.
In Olsen v Wellard Feeds Pty Ltd[3] (delivered on 14 March 2008) this Court held that:
a)the Respondent was a party bound by the Award;[4]
b)Mr West was a managerial employee, the principal purpose of his employment being to manage the Respondent’s mill, and that as such he was not an Award employee, and that the Award did not therefore apply to him as an employee of the Respondent.[5]
[3] [2008] FMCA 320 (“Wellard Feeds”).
[4] Wellard Feeds at para 5 per Lucev FM.
[5] Wellard Feeds at para 18 per Lucev FM.
The Respondent now seeks the costs of the hearing on the basis that the Applicant instituted the proceedings without reasonable cause.[6]
[6] WR Act, s.824(1).
Issue
The issue to be determined is whether costs ought to be awarded because the proceedings were instituted by the Applicant without reasonable cause.
The law
Section 824(1) of the WR Act provides as follows:
“A party to a proceeding (including an appeal) in a matter arising under this Act (other than an application under s.663) must not be ordered to pay costs incurred by any other party to the proceeding unless the first mentioned party instituted the proceeding vexatiously or without reasonable cause.”
Section 824(3) of the WR Act defines “costs” as follows:
“costs includes all legal and professional costs and disbursements and expenses of witnesses.”
What does or does not constitute reasonable cause has been considered in a variety of cases, including cases concerning workplace relation matters, as follows:
a)whether a proceeding has been commenced without reasonable cause is relevantly established as a matter of fact, and “there is no warrant for applying ‘an exceptional circumstances test’ to consider whether a proceeding has been commenced without reasonable cause”;[7]
b)a proceeding is not without reasonable cause simply because it failed;[8]
c)an unsuccessful case may have been one worthy of consideration, even where judgments relied upon by the unsuccessful party are distinguished, and therefore not without reasonable cause;[9]
d)may be without reasonable cause if the case was misconceived;[10]
e)may be without reasonable cause even if not properly described as misconceived;[11]
f)may be without reasonable cause if “upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success”, that is “it is clear that the proceeding must fail”;[12]
g)will not be without reasonable cause if it requires the resolution in favour of the applicant of one or more arguable points of law;[13]
h)to be without reasonable cause a case must be bound to fail in the sense that it is obviously untenable and bad beyond argument;[14] and
i)that in determining whether proceedings were instituted without reasonable cause the focus must be on the institution of the proceedings, and not unduly on the outcome.[15]
[7] Spotless Services Australia Ltd v Marsh [2004] FCAFC 155 at para 13 per Wilcox, Marshall and Jacobson JJ (“Spotless Services”), applied in AFMEPKIU v Nestle Australia Ltd [2005] FCA 717 at para 4 per Marshall J (“Nestle Australia”).
[8] R v Moore; Ex parte Federated Miscellaneous Workers Union of Australia (1978) 140 CLR 470 at 473 per Gibbs J; Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264 per Wilcox J (“Kanan”).
[9] Moore at 473 per Gibbs J.
[10] Standish v University of Tasmania (1989) 28 IR 129 at 139 per Lockhart J.
[11] Thompson v Hodder (1989) 29 IR 339 at 342 per Keely, Gray and Ryan JJ.
[12] Kanan at 264-265 per Wilcox J; see also Matthews v Australian Postal Corporation [2007] FMCA 1174 at para 27 per Smith FM.
[13] Kanan at 264 per Wilcox J.
[14] Spotless Services at para 14 per Wilcox, Marshall and Jacobson JJ; Nestle Australia at para 5 per Marshall J citing Hatchett v Bowater Tutt Industries Pty Ltd (1991) 28 FCR 324 at 327 per von Doussa J.
[15] Geneff v Peterson (1986) 19 IR 40 at 88 per Gray J.
Submissions
The Respondent argues that:
a)on the Applicant’s own evidence the proceedings were bound to fail. It says that all the nature and circumstances of the employment pointed to the fact that Mr West was not employed under the Award, including that:
i)his employment was as Mill Manager;
ii)his employment was on a salary;
iii)at the time of termination, the salary was $92,000.00 per annum, which was almost three times the relevant Award rate for the classification of employee under the Award that the Applicant said applied to Mr West; and
iv)he was provided with a fully paid vehicle for both private and business use;
b)it was found that the position of Mill Manager was recognised by the Award, but not included in the Award as a separate classification or category of employee, and is used in contradistinction to the “employees” covered by the Award,[16] and says that this factor alone meant that the proceedings were untenable and issued without reasonable cause because it is impossible, given the nature of what is set out in the Award, for a person working as the Mill Manager to be employed under the Award;
c)the Court found that Mr West had none of the typical qualifications of a Stock Feed Milling Level 7 employee, no milling qualifications and was not a miller,[17] and that these are factors indicating that the proceedings were instituted without reasonable cause;
d)the authorities referred to in Wellard Feeds[18] all involved a similar factual matrix to this matter, and that in each case the Australian Industrial Relations Commission found the employment to be managerial in nature and not covered by the Award in question. The Respondent says that the Applicant did not seek to distinguish those decisions, and therefore the current proceedings were untenable and instituted without reasonable cause;
e)the fact that the Court found that it was “in no doubt” that Mr West was a managerial employee and that the principal purpose of his employment was to manage the mill indicated that the proceedings were instituted without reasonable cause;[19] and
f)on 6 March 2007, more than five months before the application was filed, the Respondent’s solicitors wrote to the Applicant pointing out, in some detail, the reasons why Mr West was a managerial employee, including the nature of his functions and duties and rate of salary, and referred to a relevant authority which supported the Respondent’s position, thereby effectively putting the Applicant on notice of the relevant issues and the Respondent’s case.
[16] Wellard Feeds at para 14(a) per Lucev FM.
[17] Wellard Feeds at para 17 per Lucev FM.
[18] Carpenter v Corona Manufacturing (2002) 122 IR 387; Ferrazza v Unimin Australia Limited [2004] AIRC 346; Envotech Pty Ltd(trading as Australian Envelopes) v Goldie (2006) 157 IR 395.
[19] Wellard Feeds at para 18 per Lucev FM.
The Applicant submits in response to the Respondent’s costs application that:
a)no submissions were made by the Respondent during the course of the hearing in relation to the Applicant having commenced the proceedings “vexatiously” or “without reasonable cause”;
b)the Reasons for Judgment in Wellard Feeds make no reference to the Applicant having commenced the proceedings “vexatiously” or “without reasonable cause”;
c)the Reasons for Judgment do not express the view that the Court was satisfied that the Applicant had, by an unreasonable act or omission, cause the Respondent to the proceeding to incur costs in connection with the proceeding;
d)there is no evidence on which it can be objectively found that the Applicant commenced the proceedings vexatiously or without reasonable cause;
e)the decision to litigate involved a potential breach of the Award, and a significant alleged underpayment of accrued sick leave (exceeding $48,000.00);
f)affidavits were filed by Mr West and Ms Olsen providing information in relation to the alleged breach of the Award;
g)the hearing of the case involved substantial evidence concerning the principal purpose of Mr West’s employment, and substantial cross-examination of the witnesses who gave evidence in that regard;
h)the Respondent did not make, at the conclusion of the Applicant’s case, or at any other time in the proceedings, an application for judgment on the basis that there was no prime facie case, or invite the Court to otherwise dispose of the matter, for example, under Rule 13.10 of the Federal Magistrates Court Rules, 2001 (Cth);[20] and
i)the Court did not express a view at any time in the proceedings that there was no reasonable cause of action, the proceeding was frivolous or vexatious or an abuse of process of the Court.
[20] “FMC Rules”.
The Applicant therefore submits that the application was not “so obviously untenable that they could not possibly succeed”, “manifestly groundless” or “bad beyond argument”, and, therefore, there ought to be no order as to costs.
The Applicant also submits that in light of an existing costs order against the Respondent no further costs orders are required.
The Applicant refers to the order made on 7 November 2007 in Olsen v Wellard Feeds Pty Ltd[21] where the Court ordered that the Respondent pay the Applicant’s costs fixed at $1,455.00.[22]
[21] [2007] FMCA 1885 (“Wellard Feeds - Particulars”).
[22] Wellard Feeds – Particulars at para 18 per Lucev FM.
The Applicant cites the following comments of the Court in Wellard Feeds – Particulars in support of its submission that no further costs orders ought be made in this matter. Those comments were as follows:
The Court notes that the time and effort of the parties, the cost that the parties have clearly incurred, and the Court resources that have been expended in the determination of this issue, are completely disproportionate to any benefit which might be gained by either the parties or the Court. This is a classic but small example – or example on a small scale – of the sort of litigious and procedural one-upmanship which this Court was set up to, and should avoid, and which has been much criticised, particularly in recent times, both judicially and extra-judicially, by various courts and judges.[23]
[23] Wellard Feeds – Particulars at para 17 per Lucev FM.
Consideration
In Wellard Feeds the Court:
a)set out an extensive list of findings concerning Mr West’s employment.[24]All twenty-one of those factors were consistent with Mr West being a managerial employee and not an Award employee;
b)contrasted some of its findings as to the nature and circumstances of Mr West’s employment with Award entitlements and provisions in critical areas such as hours, supervisory responsibility, the provision of entitlements (including salary), the nature of the remuneration and the recognition by the Award of the position of Mill Manager not as a classification or category of employee within the Award but one used in contradistinction to the employees covered by the Award, so as to highlight the distinction between an Award employee and an employee in Mr West’s position;[25] and
c)examined Mr West’s duties and qualifications as against those for an Award employee concluding that his duties were managerial and that he did not have the typical qualifications of the relevant classification of employee.[26]
[24] Wellard Feeds at para 13 per Lucev FM.
[25] Wellard Feeds at para 14 per Lucev FM.
[26] Wellard Feeds at paras 15-17 per Lucev FM.
Those findings are not conclusive on the costs issue because the focus must be on the issuance of the proceedings. The findings are however relevant because the great majority of them are matters proof of which came from the Applicant’s own witnesses (particularly Mr West) and most of the evidence necessary to make those findings was contained, in whole or in part, in the affidavits filed by those witnesses. The evidence of the Respondent reinforced proof of those matters. Thus, it appears to the Court that this was an application which was bound to fail. In that regard the Court observed, in an exchange with Counsel for the Applicant in the costs hearing, that the Court considered that properly instructed no barrister experienced in industrial law would have advised the commencement of these proceedings, and that that was a thought which the Court had first had during the hearing of the application proper. Counsel for the Applicant said that advice had been obtained: but there is no evidence as to the nature of the advice, when it was obtained or from whom it was obtained. The Court adheres to the view it expressed in the costs proceedings.
The Respondent’s letter of 6 March 2007 is especially relevant in the circumstances of these proceedings. It highlighted several critical issues, and relevant authority, which if properly analysed at that time, ought to have led the Applicant to the conclusion that this was a case which was bound to fail, and therefore an application which ought not to have been made, as it ultimately was more than five months later.
In relation to the Applicant’s submissions (except for the submission based on the earlier award of costs) the Court considers that:
a)the fact that no submissions were made in the substantive hearing as to the proceedings being instituted without reasonable cause, and that no reference was made to the matter by the Court in Wellard Feeds is irrelevant, because the proceedings being instituted without reasonable cause was not a matter which the Court was then considering or obliged to consider;[27]
b)for reasons set out above[28] there is evidence on which it can be objectively found that the proceedings were instituted without reasonable cause;
c)a recitation of the procedural history of the application (the nature of the application, the affidavits filed by the Applicant, and the length of the hearing) does not address or assist in addressing the issue, especially where:
i)the proceedings being instituted without reasonable cause was not a matter which was previously in issue; and
ii)there is evidence - in the very affidavits referred to by the Applicant - on which it can be objectively found that the proceedings were instituted without reasonable cause.
[27] Spotless Services at para 15 per Wilcox, Marshall and Jacobson JJ.
[28] See paras 16-17 above.
The Applicant correctly says that that the Respondent did not make application to have the case dismissed, at any stage, on the basis that there was not a prima facie case (or other like basis), but once again that does not address the actual question as to whether there was reasonable cause to institute proceedings. It might often be a very strong indicator, but it is not conclusive, and ought not prevent an award of costs in an appropriate case.
The Applicant’s argument that costs ought not be awarded in relation to the substantive hearing because there is a prior costs order with respect to the Respondent’s application for particulars, which application was dismissed and costs awarded against the Respondent, is misconceived entirely. The costs there awarded related to an application in the case for particulars which the Court refused to grant because:
a)sufficient particulars were already contained in the statement of claim or the affidavit evidence read as a whole;
b)in any event, those were matters, generally speaking, which were properly dealt with on the evidence and Counsel properly instructed would have been able to deal with them in evidence and subsequently in submissions; and
c)it was not appropriate in this Court in a case of this type, which was a simple workplace relations claim, to necessarily order particulars.[29]
[29] Wellard Feeds – Particulars at para 16 per Lucev FM.
The application by the Respondent for particulars and the resultant Reasons for Judgment by the Court in Wellard Feeds – Particulars are utterly irrelevant to the issue of costs: they in no way go to the question of whether or not the proceedings were instituted without reasonable cause.
Conclusion
In all the circumstances the Court has come to the conclusion that these proceedings were instituted without reasonable cause because on the facts appearing at the time the application was instituted it had no substantial prospect of success and was bound to fail.
The Court has a discretion under s.824(1) of the WR Act as to whether to order costs, and given the finding in the previous paragraph the Court considers that this is an appropriate case in which to exercise the discretion by the making of a costs order in favour of the Respondent, such that the Applicant is to pay the Respondent’s costs of the proceedings, except as otherwise ordered by the Court in the costs order made on 7 November 2007.
Section 79(3) of the Federal Magistrates Act, 1999 (Cth) provides that the award of costs is in the discretion of the Court “[e]xcept as provided by the Rules of Court or any other Act”.
The non-exhaustive definition of “costs” in s.824(3) of the WR Act includes a wider range of costs, disbursements and expenses than the Court would ordinarily be able to award under Schedule 1 of the FMC Rules. In those circumstances it is appropriate that the parties be left to agree costs if they can, and if they cannot, then the costs must be taxed by a Registrar of this Court.
I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Lucev FM
Deputy Associate: S Gough
Date: 11 April 2008
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