Paola Marafioti v Gonzalez Pty Ltd T/A Mac's Crafts

[2018] FWC 2873

[2018] FWC 2873

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Paola Marafioti
v
Gonzalez Pty Ltd T/A Mac’s Crafts
(U2017/7263)

COMMISSIONER BISSETT MELBOURNE, 1 JUNE 2018

Application for an unfair dismissal remedy – s.400A and s.611 application for costs against a party - s.401A application for costs against a lawyer or paid agent – costs awarded.

[1] On 26 October 2017 I issued a decision 1 in which I found that Ms Paola Marafioti (Applicant) had been unfairly dismissed from her employment with Gonzalez Pty Ltd T/A Mac’s Crafts (Respondent). I ordered that compensation be awarded to the Applicant.

[2] On 9 November 2017 the Applicant made an application for costs against the Respondent pursuant to ss.400A and 611 of the Fair Work Act 2009 (FW Act) and for costs against the lawyer acting for the Respondent pursuant to s.401 of the FW Act.

[3] Directions were issued for the filing of submissions and any witness evidence by the parties with respect to the costs application. The application was heard on 9 April 2018.

[4] The parties were given permission in hearing the unfair dismissal matter to be represented by lawyers. Such representation continued for the hearing on costs.

Submissions

Applicant

[5] The Applicant seeks costs for the period following the conciliation conference convened by the Fair Work Commission (Commission) on 31 July 2017.

The application for costs against the Respondent

[6] The Applicant submitted that the Respondent put two jurisdictional objections in its outline of argument filed with the Commission in relation to the unfair dismissal application. The first was that the dismissal was a case of genuine redundancy and the second that it relied on and had complied with the Small Business Fair Dismissal Code (Code).

[7] With respect to the Code, the Applicant said that the Respondent, in its submissions, suggested that if it was able to answer “Yes” to Part 3 of the Code then it had complied with the Code. Further, it submitted that, in the witness statements filed on behalf of Ms Melissa Clegg and Mr John Clegg of the Respondent, no evidence was given that the Code had been considered let alone complied with.

[8] With respect to whether the dismissal was a genuine redundancy, the Applicant submitted that the Respondent:

•  Confirmed that the Storage Services and Wholesale Award 2010 2(SSW Award) applied but then submitted that clause 9 of the SSW Award did not apply in the circumstances in which the Applicant’s employment was terminated;

•  Said it was not aware of the requirements of clause 9 of the SSW Award but if it had a human resources manager it most likely would have been aware of such provisions and consulted;

•  Did not provide any evidence of any consultation with the Applicant prior to her dismissal;

•  In its closing submissions submitted it was a clear case of redundancy but was not aware of the requirement to consult.

[9] With respect to s.400A of the FW Act the Applicant submitted the Commission should rule in her favour in circumstances where the Respondent engaged in unreasonable acts and/or omissions by:

•  Raising and relying on both jurisdictional objections in circumstances where none of the evidence supported the objections;

•  Arguing that clause 9 of the SSW Award did not apply in the same document where it conceded the SSW Award did apply to the Applicant’s employment;

•  Maintaining jurisdictional objections in circumstances where the Applicant’s reply submissions with respect to the objections clearly articulated the basis on which the objections could not be maintained;

•  Maintaining the objections at the commencement of the hearing; and

•  Failing to concede each objection was flawed in closing submissions and hence forcing the Commission to determine the points in the decision.

[10] Further, the Applicant submitted that it should have been reasonably apparent to the Respondent at the time it filed its submissions as to the merits of the case that the jurisdictional objections had no reasonable prospects of success (s.611(2)(b)):

•  There was no objective basis to support any contention that the consultation requirements of the SSW Award had been complied with. Objectively there was no prospect of the Respondent succeeding in its contention that the dismissal was a genuine redundancy;

•  The contention that clause 9 of the SSW Award did not apply could not be maintained, particularly in circumstances where the Respondent conceded the Applicant was covered by the SSW Award;

•  The Commission could be satisfied that subjectively the Respondent ought to have appreciated that its objections were without merit;

•  Contending that the dismissal was a genuine redundancy was inconsistent with a contention that the Code applied.

The application for costs against the lawyers

[11] The Applicant submitted that the preconditions for the award of costs against the lawyer engaged to represent the Respondent are met.

[12] In relation to the requirements of s.401(1) of the FW Act the Applicant said that Mr Robert King, lawyer for the Respondent, caused costs to be incurred by the Applicant for the reasons given with respect to ss.400A and 611 above.

[13] Further, the Applicant submitted that the purpose of paid representatives seeking and being given permission to appear in a matter is, in part, to ensure a matter is dealt with more efficiently and in consideration of issues of fairness. The Applicant submitted that “by virtue of the training and expertise” of Mr King, it would be expected that a reasonable representative would have formed a view that the jurisdictional objection had no prospect of succeeding and the continuation of such a position would constitute an unreasonable act or omission.

[14] The Applicant submitted that, “whether viewed from a factual, legal, objective or subjective perspective” the objections could not have succeeded.

The Respondent

[15] The Respondent acknowledged in its submissions on costs that, whilst it raised the jurisdictional objections of genuine redundancy and the application of the Code, its case was always put on the basis that the dismissal was due to operational requirements. Further, the Respondent submitted that the evidence of Mr and Ms Clegg addressed the operational requirements of the business to reduce overheads so it could continue to employ a sales representative and meet associated costs of the position. The oral evidence, it submitted, was consistent with this.

[16] The Respondent submitted that it considered that the provisions of clause 9 of the SSW Award did not apply in circumstances where it was not introducing “major changes in production, program, organisation, structure or technology” of the business but rather was terminating the employment of a single employee because of its inability to maintain the position because of reduced sales. The Respondent considered this a live issue heading into the hearing of the application.

[17] The Respondent submitted that during the hearing of the unfair dismissal application (which covered both jurisdictional matters and the merits) no evidence was led or emphasis given to the Code but rather the Respondent’s case was “advanced upon the basis that the Applicant’s dismissal was a “legitimate” dismissal for operational reasons when the Respondent’s business could not afford a full-time sales representative”. The Respondent conceded that, “with hindsight” it should have advised the Commission at the commencement of proceedings that it no longer sought to rely on the Code as the basis for a jurisdictional objection but reiterated that “virtually no time” was occupied in dealing with this ground of objection. In this respect, the Respondent submitted that the Applicant’s case was that her dismissal was harsh, unjust or unreasonable based on the Respondent’s failure to consult.

[18] The Respondent submitted that the “reasons for the Applicant’s dismissal and how that dismissal was effected were intrinsically linked to the Commission’s consideration of the matter as a whole, whether upon jurisdictional or merit considerations.”

[19] Mr King submitted that he is a sole practitioner “working from a serviced office with no support staff.” He said that his research for the case was conducted the day before the hearing, that he received the authorities on which the Applicant intended to rely at 16:42 on 27 September 2017 (the day before the hearing) and sent his own list of authorities to the Applicant’s representative at 18:42 on 27 September 2017 and at 01:32 on 28 September 2017.

[20] In its submissions on costs the Respondent said:

With hindsight, in the conduct of the Respondent’s case at the hearing on 28 September, the Commission should have been expressly informed at the commencement of the hearing that the Respondent no longer relied upon its two jurisdictional objections. However, the Respondent maintains that virtually no time was occupied in dealing with the fair dismissal code objection and that the evidence relating to the “redundancy” was necessary in support of the ground of dismissal of the Applicant relevant under Section 387(h). 3

[21] The Respondent submitted that, in the circumstances, the Commission should not exercise its discretion to award costs against either the Respondent or Mr King.

Legislation

[22] The power to award costs in a matter involving an application for relief from unfair dismissal is found in three sections of the FW Act. Sections 400A and 401 of the FW Act are both specific to unfair dismissal applications. The third source of power is the general power to award costs found at s.611 of the FW Act.

[23] Section 401 of the FW Act is a specific power to award costs against a lawyer or paid agent.

[24] Section 400A of the FW Act states:

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.

[25] Section 401 of the FW Act states:

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.

[26] Section 611 of the FW Act states:

611 Costs

(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.

Note: This subsection is a civil remedy provision (see Part 4-1).

Relevant authorities and guidance

[27] Section 611(1) of the FW Act establishes that in all matters before the Commission that each party should bear its own costs.

[28] In Church v Eastern Health t/as Easter Health Great Health and Wellbeing 4 (Eastern Health) the Full Bench of the Commission stated:

[27] …courts have observed that an applicant who has the benefit of the protection of a provision such as s.570(1), (i.e. the general rule that parties bear their own costs), will only rarely be ordered to pay costs and that the power should be exercised with caution and only in a clear case. In our view a similarly cautious approach is to be taken to the exercise of the Commissions powers in s.611 of the FW Act.

[endnotes omitted]

Section 611(2)

[29] In Keep v Performance Automobiles Pty Ltd 5(Keep), the Full Bench of the Commission cited the decision of the Full Bench in Eastern Health as authority in relation to whether a party had made an application without reasonable cause (s.611(2)(a)) as follows:

(i) The power to order costs pursuant to s.611(2) should be exercised with caution and only in a clear case.

(ii) A party cannot be said to have made an application ‘without reasonable cause’ within the meaning of s.611(2)(a), simply because his or her argument proves unsuccessful.

(iii) One way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether upon the facts known to the applicant at the time of instituting the proceeding, there was no substantial prospect of success.

(iv) The test imposed by the expression ‘without reasonable cause’ is similar to that adopted for summary judgment, that is, ‘so obviously untenable that it cannot possibly succeed’, ‘manifestly groundless’ or ‘discloses a case which the Court is satisfied cannot succeed’ 6

[endnotes omitted]

[30] As to whether it should have been reasonably apparent to a party that its application, or response to an application, had no reasonable prospect of success (s.611(2)(b)) the Full Bench in Keep summarised the relevant principles as follows:

[18] As to s.611(2)(b), the FWC may make a costs order against a person if satisfied that ‘it should have been reasonably apparent’ to that person that their application had ‘no reasonable prospect of success’. The expression ‘should have been reasonably apparent’ in s.611(2)(b) imports an objective test, directed to a belief formed on an objective basis as opposed to the applicant’s subjective belief.

[19] There is Full Bench authority for the proposition that the Commission should exercise caution before arriving at the conclusion that an application had ‘no reasonable prospects of success’. In Deane v Paper Australia Pty Ltd a Full Bench made the following observation about this expression in the context of enlivening a power to award costs under s.170CJ(1) of the Workplace Relations Act 1996;

“unless upon the facts apparent to the applicant at the time of instituting the [application], the proceeding in question was manifestly untenable or groundless, the relevant requirement in s.170CJ(1) is not fulfilled and the discretion to make an order for costs is not available”.

[endnotes omitted]

[31] In Baker v Salva Resources Pty Ltd 7(Baker) the Full Bench of the Commission said of the application of s.611(2)(b) of the FW Act:

[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; 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.

[endnotes omitted]

Section 400A

[32] In Construction, Forestry, Mining and Energy Union v Clarke 8the Full Court of the Federal Court considered an application for costs pursuant to s.824 (1)-(2) of the Workplace Relations Act 1996 (WR Act). Section 824(2) of the WR Act provides that the court may award costs if it was satisfied that a party “by an unreasonable act or omission” had caused another party to incur costs. In considering the provisions of s.824(2) of the WR Act the Full Court said:

28. ...The first criterion is that one party must have engaged in “an unreasonable act or omission”…[W]hether a party has conducted itself or its litigation in such a way as to cross this threshold will depend on the particular circumstances of the case. The second criterion is that the act or omission of one party must have “caused another party to the proceeding to incur costs in connection with the proceeding”. Once both criteria are satisfied, then the Court “may” in its discretion order the party which has engaged in the unreasonable act or omission to pay some or all of the costs of the other party.

29. In our view, the respondent has not engaged in “an unreasonable act or omission”. As the authorities indicate, there is a distinction between a party who pursues arguments which are ultimately abandoned or rejected by the Court and a party who commences a proceeding which is misconceived in the sense of being incompetent or unsupportable…Simply because a party does not conduct its litigation in the most efficient way does not mean that the Court should exercise its discretion in s 824(2) of the WR Act to make a costs order...

[33] The Explanatory Memorandum for the Fair Work Bill 2012, in relation to what is now s.400A of the FW Act, states as follows:

169. …the power to award costs under section 400A is not intended to prevent a party from robustly pursuing or defending an unfair dismissal claim. Rather, the power is intended to address the small proportion of litigants who pursue or defend unfair dismissal claims in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.

170. The FWC’s power to award costs under this provision is discretionary and is only exercisable where the first party (whether the applicant or respondent) causes the other party to incur costs because of an unreasonable act or omission. This is intended to capture a broad range of conduct, including a failure to discontinue an unfair dismissal application made under section 394 and a failure to agree to terms of settlement that could have led to the application being discontinued.

171. However, the power to award costs is only available if the FWC is satisfied that the act or omission by the first party was unreasonable. What is an unreasonable act or omission will depend on the particular circumstances but it is intended that the power only be exercised where there is clear evidence of unreasonable conduct by the first party.

[34] The Applicant referred me to a decision of Commissioner Ryan in Barkhjo v Dairy County 9 in which the Commissioner posed the relevant questions to be answered in considering a costs application under ss.400A and 611 of the FW Act.

Section 401

[35] Subsections 401(1) and 401(1A) were inserted into the FW Act by virtue of the Fair Work Amendment Act 2012. The Explanatory Memorandum for the Fair Work Bill 2012 said:

180. New subsections 401(1) and 401(1A) will provide a stronger deterrent for lawyers and paid agents from encouraging parties to bring or continue speculative unfair dismissal claims, particularly claims they know have no reasonable prospect of success. The provision will also deter lawyers or paid agents from unreasonably encouraging a party to defend a claim or make a jurisdictional argument where there is no prospect of the argument succeeding. It will act as a stronger deterrent than the current provision as it will make lawyers and paid agents subject to the possibility of adverse costs orders even if they are not granted, or do not seek, permission to represent the party in the matter before the FWC.

[36] I have applied the relevant principles arising from these decisions and the Explanatory Memorandum in the determination of the application before me.

Consideration

[37] The Applicant’s case is, primarily, that by maintaining its jurisdictional objections to the Applicant’s case when it was not reasonable for it to do so, the Respondent and/or the Respondent’s representative caused costs to be incurred by the Applicant and that her costs would have been less had she not had to respond to the jurisdictional objections.

Submissions and decision on unfair dismissal matter

[38] The Applicant was terminated from her employment with the Respondent on 16 June 2017. Her employment was terminated because the Respondent could “no longer sustain the cost of having a paid representative in Victoria” based on the Applicant’s sales figures. 10

[39] The Applicant made an application for relief from unfair dismissal on 5 July 2017 and the Respondent filed its response to that application (Form F3) on 17 July 2017. In its Form F3 the Respondent indicated that it had two jurisdictional objections to the applications. Firstly, it said the dismissal was a case of genuine redundancy and secondly that the dismissal was consistent with the Code. The Respondent also acknowledged in the Form F3 that the Applicant was covered by the SSW Award.

[40] On 28 July 2017 the Commission received a notice that Mr Robert King (a lawyer) had commenced to act for the Respondent.

[41] On 31 July 2017 the application was subject to conciliation where it did not settle (it is from this date that the Applicant seeks costs). Directions were therefore issued for the Applicant and Respondent to file outlines of arguments with respect to the two jurisdictional objections maintained by the Respondent and with respect to the merits of the case. The Respondent filed its submissions and evidence as required on 31 August 2017 (including its arguments as to merit) and the Applicant filed her material as required on 7 September 2017.

[42] In its outline of arguments with respect to the objection the Respondent said that it was a small business and had complied with the Code. Specifically it said:

The Applicant was informed on numerous occasions in the six months leading to her dismissal that the sales figures for Victoria were disappointing and that if they didn’t improve the Respondent would have to consider its options regarding her employment.

The Respondent considers that being a Small Business and being able to answer “Yes” to Part 3 of the Small Business Fair Dismissal Code that it complied with the code”

[43] The Respondent also said in that submission that the dismissal was a case of genuine redundancy. Whilst indicating that the SSW Award did require it to consult about redundancy and acknowledging the requirements of clause 9.1(a) and (b) of the SSW Award, the Respondent said that:

The Respondent does not consider that clause 9 of the SSW Award applied to the circumstances in which the Applicant’s employment was terminated. The Applicant’s termination was the termination of a single employee based upon the Respondent’s inability to maintain the Applicant’s position due to reduced sales figures. It was not brought about because of a decision “to introduce major changes in production, program, organisation, structure or technology” as referred to in clause 9(1)(a) of the SSW Award.

Further, or in the alternative, no amount of consultation with the Applicant could have altered the inevitable decision that the Respondent had to make, namely, that the position of a salaried and full expenses paid employee was no longer sustainable based upon the Victorian sales and that the Applicant’s employment had to be regrettably terminated.

[44] The written evidence filed on behalf of the Respondent (statements of Mr Clegg and Ms Clegg) did not mention any consideration by either of them of the Code or of the requirements of SSW Award prior to effecting the dismissal of the Applicant.

[45] In her submissions with respect to the jurisdictional objections of the Respondent, the Applicant indicated that she did not consider the Respondent had complied with the Code because it had not complied with the requirements to consult under the SSW Award, she was not dismissed for serious misconduct or for any reason justifying summary dismissal, she had not been warned she might be dismissed if her performance did not improve, she was not provided with training to assist her performance and she was not given an opportunity to respond to any concerns of the Respondent.

[46] As to whether the dismissal was a genuine redundancy, the Applicant highlighted the relevant clauses of the SSW Award and submitted that:

The Applicant’s termination should be considered a “change in structure” as per clause 9.1(a)(i) of the Award which would be “likely to have a significant effect on [the] employee”. As per clause 9.1(a)(ii) of the Award, a significant effect includes termination of employment and/or major changes in composition, operation or size of the employer’s workforce or in the skills required.

[47] In the decision in relation to the application, I considered in the first instance the jurisdictional objections of the Respondent. As to whether the dismissal was a genuine redundancy, I found that:

[40] In the matter before me I am satisfied that there was no consultation with the Applicant. She was advised of the decision to make her position redundant and engage an agent and when she enquired as to whether she could take on the role of agent was told that it would not be fair to her. This does not amount to consultation but, in any event, it was a one way process. The decision had been made; the Applicant would be made redundant; no discussion was to be had. As Mr Clegg said in his evidence, the phone conversation of 15 June 2017 with the Applicant was to relay the decision to her; it was not to have a discussion with her about the decision. I would also observe that the Respondent did not provide anything to the Applicant in writing as is required under clause 9.1(b)(iii) of the SSW Award and, in this respect, failed to meet the consultation requirements.

[48] The decision acknowledged a concession by the Respondent that it was not aware of the requirement to consult placed on it by the SSW Award. This, however, needs to be balanced against the submissions it made that clause 9 of the SSW Award placed no obligation on it to consult in the circumstances of this case.

[49] As to whether the dismissal complied with the Code, I found:

[44] The Applicant in this matter was not summarily dismissed. Further, there is no submission that the Applicant was dismissed for reasons associated with her conduct or capacity to do the job. Her capacity was not in question (nor was her conduct), a fact emphasised by the Respondent and its witnesses. In these circumstances it is difficult to see how the “other dismissal” provisions of the Code would apply.

The costs matter

[50] It is apparent that the Respondent had no reasonable basis to maintain its objection that it had complied with the Code as it did in its submissions. The Respondent said that as it had answered ““Yes” to Part 3 of the Small Business Fair Dismissal Code that it complied with the code.” In reviewing the Code provided on the Commission’s website it would seem that the reference to “Part 3” can only be a reference to question 3 in the Code Checklist 11 (Checklist). No other reference makes sense.

[51] The Checklist says, in bold, at the beginning:

The Checklist is a tool to help small business employers comply with the Small Business Fair Dismissal Code. Completing the check list does not mean that the Code has been complied with…

[underlining added]

[52] Question 3 of the Checklist asks:

Did you dismiss the employee because you didn’t require the person’s job to be done by anyone because of changes in the operational requirements of the business?

It allows for a Yes/No answer. If the answer is “Yes” it then asks:

Did you comply with any requirements to consult about the redundancy in the modern award, enterprise agreement or other industrial instrument that applied to the employment?

[53] The Respondent put no evidence before the Commission of its consideration of the Code and in what way it considered it had complied with its provisions. That it might have answered “Yes” to any one question on the Checklist, without any evidence of the Checklist before the Commission, does not go anywhere near the required standard of demonstrating that it had complied with the Code. Objectively viewed, the Respondent must have known that its objection based on compliance with the Code was lacking in both merit and substance such that it had no reasonable prospect of success.

[54] In its submission on the jurisdictional objection the Respondent said it did not comply with the requirements to consult under clause 9 of the SSW Award because it did not consider it “applied to the circumstances”. It is, however, not clear if the Respondent answered “Yes” on the Checklist because it had carefully considered the obligations under the SSW Award and determined that, in these particular circumstances, it placed no obligation on it to consult or, if it was just ignorant of the requirement.

[55] There is a serious question as to the basis of the objection that the dismissal was a genuine redundancy. The Respondent knew the SSW Award applied to the Applicant. A consideration of the requirements of clause 9 of SSW Award indicates an obligation on the employer to discuss major change where this has a significant effect on employees. “Significant effects” 12 include the termination of employment. Major change includes changes in the organisation. The position of the Respondent until the time of hearing, as reflected in its written submissions in relation to the jurisdictional objections, was that the SSW Award placed no obligation on it in the given circumstances. It maintained this view despite submissions to the contrary put by the Applicant.

Section 400A

[56] Section 400A of the FW Act requires first of all a determination of whether there was an unreasonable act or omission by the Respondent by its conduct in relation to the application and then whether this act or omission caused costs to be incurred by the Applicant.

[57] The Applicant’s case is that the Respondent maintained its objections when it was not reasonable for it to do so.

[58] I do consider it unreasonable for the Respondent to have maintained its objections on the grounds that it had complied with the Code when it provided no evidence of having done so. There was no evidence before the Commission on how the Respondent answered any other questions on the Checklist or why, given the caution on the Checklist, it considered one answer of “Yes” to be sufficient to demonstrate compliance with the Code.

[59] If I am wrong and the “Part 3” referred to by the Respondent is not a reference to the Checklist then there is even less information before the Commission that could possibly suggest that the claim of compliance with the Code as the basis of a jurisdictional objection had any merit and was therefore unreasonable.

[60] There is nothing before the Commission to suggest that the maintenance of a jurisdictional objection based on compliance with the Code was reasonable. To maintain the objection in such circumstances was an unreasonable act by the Respondent. To do so caused costs to be incurred by the Applicant in preparing her material for the Commission and her approach to the matters at hearing.

[61] As to the jurisdictional objection of the Respondent that the dismissal was a genuine redundancy the Respondent put multiple positions: that there was no requirement to consult under the SSW Award in the particular circumstances, or that there was generally no requirement to consult, or that the dismissal was a “legitimate” redundancy.

[62] A party to a matter has a right to pursue a position even if that proves ultimately unsuccessful. The Respondent did put a view as to the application of the SSW Award. The Applicant did not agree with the Respondent’s interpretation the SSW Award provisions. It was a contest on the interpretation of the SSW Award. I do not consider it an unreasonable act by the Respondent to continue to press its view as to obligations arising under the SSW Award in the particular circumstances. Further, I do not consider it unreasonable for the Respondent to have put forward an alternative proposition (that the redundancy was, nonetheless, “legitimate”) should its jurisdictional objection fail.

Section 611

[63] The test under s.611 of the FW Act is different to that under s.400A of the FW Act. The test under s.611 of the FW Act is if the application was responded to without reasonable cause or it should have been reasonably apparent that the response had no reasonable prospect of success.

[64] Whether it should have been reasonably apparent that the response had no reasonable prospect of success is an objective test.

[65] Whilst a conclusion that an application (or response) had no reasonable prospect of success is a decision that should only be reached with extreme caution, it is apparent that this is a circumstance where the jurisdictional objection that the dismissal had complied with the Code was manifestly untenable and groundless.

[66] For the reasons given above in relation to the Respondent’s explanation as to its compliance with the Code and given the lack of evidence to support that proposition, I am satisfied that it should have been reasonably apparent to the Respondent that its jurisdictional objection on that basis had no reasonable prospect of success. It is therefore open to me to require the Respondent to meet some or all of the costs sought by the Applicant.

[67] The Respondent, on the evidence of Mr Clegg and Ms Clegg, had decided that the only sales position (and employee) it had in Victoria could no longer be supported. The Respondent had decided to enter into an agency arrangement. This was finalised prior to the dismissal of the Applicant and without discussion with her. This was a major change in the organisation. The Respondent was moving from direct employment of its only employee in Victoria (and one of only 14 nationally) to an agency arrangement, a major change by any measure but even more so in circumstances where the Applicant had worked for the Respondent in the directly employed sales role for over 10 years. In this respect, the reliance of the Respondent on the decision in Salisbury v McKay Drilling Pty Ltd 13 was misplaced with that decision being clearly distinguishable on the facts.

[68] However, I do not consider reliance on the jurisdictional objection that the dismissal was a case of genuine redundancy to be so “obviously untenable” or “manifestly groundless” for the reasons given in paragraphs [61]-[62] above.

Section 401

[69] The test under s.401 of the FW Act is not different in effect to that under ss.400A and 611 of the FW Act except that the focus of enquiry shifts to the Respondent’s representative.

[70] Mr King is a lawyer. At the commencement of the hearing of the application for relief from unfair dismissal I granted permission to both the Respondent and Applicant to be represented on the grounds of fairness.

[71] Permission is not specifically required for the purpose of filing written material for the parties. Mr King gave notice that he represented the Respondent on 28 July 2017. He filed the submissions and witness statements on behalf of the Respondent on 31 August 2017.

[72] With respect to s.401(1A) of the FW Act there is nothing before the Commission to suggest that Mr King encouraged the Respondent to respond to the application or continue in its response in any particular way. The use of the word “encouraged” in s.401(1A) of the FW Act suggests a representative took active steps to positively influence his or her client to set or continue its jurisdictional objection on a particular course.

[73] In this case it seems that the Respondent set the course of its objection in its Form F3 response to the application and that Mr King continued this course when he became the Respondent’s representative. This cannot be taken to suggest he encouraged the continuation of a particular course already determined.

[74] Mr King submitted that he did no more than act on instructions as to the submissions and evidence put by the Respondent before the Commission and that this is his duty as a lawyer. Further, he said that, absent his client (the Respondent) waiving privilege, there is no basis on which to conclude he acted unreasonably. Mr King submitted that s.401(1A)(b) of the FW Act is otherwise only enlivened in circumstances where a representative failed in some administrative requirement e.g. filing material or attending proceedings.

[75] Mr King did concede in the costs hearing and written submissions on costs that he should have advised the Commission at the commencement of the unfair dismissal hearing that the Respondent no longer relied on either of its jurisdictional objections. This was an unreasonable act and an omission by him. The structure of the hearing would have altered and the matters subject to evidence would have changed was it known by the Applicant that the Respondent intended to pursue the merits arguments (a “legitimate” redundancy) only and not the jurisdictional arguments.

[76] Whilst I accept that the Respondent has not waived privilege, I find it difficult to accept that the instructions given to Mr King changed at the time of hearing such that he could not have advised prior to the hearing that the Respondent no longer intended to press its jurisdictional objections. This conclusion is supported by the submissions of the Respondent in this matter that “[t]hroughout the hearing the Respondent’s case was advanced upon the basis that the Applicant’s dismissal was a “legitimate” dismissal for operational reasons…” It is difficult to accept that the Respondent changed its defence in the five minutes prior to the commencement of the hearing, given that its entire case at hearing was that the dismissal was a legitimate redundancy, such that it could not have advised such a change in advance of the hearing. Mr King said that he prepared the day before the hearing. It could be inferred from this that the decision to not pursue the jurisdictional objections was determined the day before the hearing or at least the night before as Mr King prepared for the hearing. Had Mr King advised of the abandonment of the jurisdictional objections early on the day of hearing the Applicant would have had an opportunity to recast her approach to the hearing, possibly saving time and money. There is no discernible reason for Mr King not to have advised the Applicant or the Commission that the jurisdictional objections were no longer relied on.

[77] The failure to advise the Commission and the Applicant in such circumstances is an omission on the part of Mr King. The Applicant was required to prepare and proceed at hearing on the basis that the jurisdictional issues continued to be pressed.

[78] In such circumstances it is reasonable to consider an award of costs against Mr King as the lawyer for the Respondent.

Conclusion

Should I award costs?

[79] As is apparent from the provisions of the FW Act the general presumption is that parties will bear their own costs and the Commission should be cautious in making an order otherwise.

[80] Given my findings with respect to ss. 401 and 611 of the FW Act in particular as set out above I am satisfied that I should award some of the costs of the Applicant.

[81] This is not to say that the totality of the Respondent’s response to the application was without reasonable cause. There were other avenues in its response it could pursue (and did) but by continuing with its objections and not advising it no longer relied on those objections the Applicant was required to consider and respond to these and the Commission was required to deal with them in the decision on the application.

[82] For these reasons, I consider that the Respondent and the Respondent’s representative should meet some of the costs of the Applicant.

How much should I award?

[83] The Applicant seeks costs of $5,796.60 (plus some amount for general care and conduct) as set out in the itemised costs attached to the application for costs.

[84] I do not consider this matter to have been particularly complex. The jurisdictional objection of the Respondent was not complex, difficult or novel. They are objections routinely encountered in the Commission and the defence of them should not require highly specialised knowledge or intense research on the part of the Applicant. For this reason, I have included an amount of 10% for general care and conduct. This brings the costs sought by the Applicant to $6,376.26.

[85] The Respondent, in the event that costs are awarded, seeks some apportionment of costs so that it is only required to meet those costs directly attributable to the jurisdictional arguments. The Respondent points to some clearly defined items in the schedule of costs of the Applicant and acknowledges that these are directly attributable to the jurisdictional arguments. See for example Item 1102 on 31 August 2017 in relation to “care and skill and knowledge in considering the law on the objections raised…” and Item 203 on 7 September 2017 relating to “Outline of argument (Objection)”.

[86] On other items (for example Item 1102 on 7 September 2017 and Item 1302 on 28 September 2017) the Respondent submits each item should be apportioned by some assessment of how much time would have been taken up by arguments in relation to the jurisdictional objection.

[87] The Applicant objects to such an approach and says that the jurisdictional arguments were so intertwined with the merits case that it is not possible to apportion in any way. The Applicant argues that it is not possible to know how the case would have been run and what evidence would have been required had the Respondent properly abandoned its objection. For example, the Applicant says that if the jurisdictional objections had not been run by the Respondent, the Applicant would have been required to file its submissions and evidence first which may have elicited a different approach from the Respondent. The Applicant therefore says that if apportionment is considered reasonable by the Commission it should be done on a global basis of the total costs sought.

[88] The Respondent put forward no objection to the calculation of costs claimed by the Applicant in her application but rather to the amount of any costs it should be required to meet.

[89] The process of apportionment is complex and, to any extent, is far from an exact science, more so when the jurisdictional matters and merits were heard together. I accept that it is not possible to fully disentangle the jurisdictional objections from the merits of the application. I do accept that the matter would have been run differently had the Respondent abandoned its jurisdictional objections prior to the hearing. I have considered that over half of the costs of the Applicant were incurred on the day before and day of hearing.

[90] I do not consider that all of the costs sought by the Applicant should be met by the Respondent or its representative. I do however consider it appropriate that some of the costs be met. I have decided that the Respondent and the Respondent’s representative should meet a total of 30% of the costs inclusive of the amount for general care and conduct.

[91] The total costs to be met by the Respondent and Respondent’s representative is therefore $1,912.88. I consider that this amount should be apportioned such that 50% of it is paid by the Respondent ($956.44) and 50% by the Respondent’s representative ($956.44). This apportionment of costs between the Respondent and the Respondent’s representative recognises that both, by their own actions but in different ways, contributed to the costs incurred by the Applicant.

[92] An order 14 to this effect will be issued with this decision.

COMMISSIONER

Appearances:

P. Tatti for the Applicant.

R. King for the Respondent.

Hearing details:

2018.

Melbourne via video link to Sydney:

April 20.

Printed by authority of the Commonwealth Government Printer

<PR607306>

 1   [2017] FWC 5484.

 2   MA000084.

 3   Respondent written submission of 15 December 2017, paragraph 16.

 4   [2014] FWCFB 810.

 5   [2015] FWCFB 1956.

 6 Ibid at [17].

 7   [2011] FWAFB 4014.

 8 [2008] FCAFC 143.

 9   [2016] FWC 3111.

 10   [2017] FWC 5484 at [2].

 11     MA000084, cl.9.1(a)(ii).

 13   [2014] FWC 5275.

 14   PR607652.