ParkTrent Properties Group Pty Ltd t/as Parktrent Properties v Marylou George

[2014] FWC 935

[2014] FWC 935

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s 611 - Costs application

ParkTrent Properties Group Pty Ltd t/as Parktrent Properties
v
Marylou George
(U2013/1559)

DEPUTY PRESIDENT SAMS SYDNEY, 13 FEBRUARY 2014

Application for relief from unfair dismissal - application for indemnity costs - without reasonable cause - no reasonable prospects of success - credit of applicant - facts known at the time the application was filed - application granted.

[1] On 8 November 2013 Commissioner MacDonald published a Jurisdictional Decision (See: Ms Marylou George v Parktrent Properties Group Pty Ltd t/as Parktrent Properties [2013] FWC 7447) in respect to an application filed by Marylou George (the ‘applicant’) under s 394 of the Fair Work Act 2009 (the ‘Act’). In his decision, the learned Commissioner upheld two jurisdictional objections arising under s 382 of the Act, taken by the respondent, Park Trent Properties Group Pty Ltd t/as ParkTrent Properties.

[2] Section 382(b) provides that for an employee to be a person protected from unfair dismissal, at least one of the following pre-conditions must be met:

‘(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

Note: High income threshold indexed to $129,300 from 1 July 2013’

[3] Shortly stated, the respondent contended that the applicant had not been covered by a modern award or an enterprise agreement and her annual rate of earnings exceeded the then statutory high income threshold of $123,000. The applicant had submitted that she may have been employed under one of three modern awards; namely,

● Clerks - Private Sector Award 2010 [MA000002]

● Banking, Finance and Insurance Award 2010 [MA000019]

● Real Estate Industry Award 2010 [MA000106]

[4] In the alternative, the applicant argued that her annual rate of earnings was only $30,000, although the monies she received included:

(a) Base salary of $30,000;

(b) Consultancy fee of $65,000; and

(c) Bonus of $20,000.

[5] Directly relevant to the learned Commissioner’s decision, it was not disputed that income tax was not paid on either the consultancy fee or the bonus. The applicant also argued that non-monetary benefits should not be included in the total annual rate of earnings and nor should the bonus, as it was a contingency payment.

The Commissioner’s decision

[6] The learned Commissioner firstly found that the applicant was not covered by any modern award as her role as Chief Financial Officer (CFO) reporting directly to the Chief Executive Officer (CEO), was a senior management position. As such, it fell outside of any award coverage.

[7] Secondly, in respect of the applicant’s annual rate of earnings, the learned Commissioner relied on a decision of Williams C in Atkinson v Midway [2010] FWA 2907 and concluded that the tax saving to the applicant of $22,570 on the consultancy fee should be added to the $115,000 (Base salary + consultancy + bonus). Obviously, the result ($142,516) is substantially higher than the high income threshold. He observed that it would be even higher when superannuation, GST and non-monetary benefits were taken into consideration.

[8] Thus, the learned Commissioner upheld both of the respondent’s jurisdictional objections and dismissed the applicant’s application for relief from alleged unfair dismissal. Following Commissioner Macdonald’s retirement, the respondent filed an application for costs pursuant to s 611 of the Act. This application was referred to me for determination. The parties agreed that my determination should be made ‘on the papers’. On 5 December 2013 directions for the filing of submissions were issued.

SUBMISSIONS

For the respondent

[9] Mr I Latham of Counsel set out the factual matrix of the applicant’s remuneration. He noted that with the addition of the tax benefit applied to the consultancy, this put her well over the high income threshold. He also noted the applicant’s admission that she had told Centrelink she was a low income employee on an income of $30,000. Mr Latham submitted that the applicant knew her income was not properly taxed and as a result her unfair dismissal application was made ‘without reasonable cause’ and would have had ‘no reasonable prospect of success’.

[10] As to award coverage, Mr Latham put that the applicant’s arguments were found to be without merit and that the Commissioner found she had downplayed the significance of her role in order to slot it into middle management award coverage.

[11] Mr Latham submitted that the facts of this case fit within the tests under s 611 of the Act and the definitions of the terms ‘without reasonable cause’ and ‘no reasonable prospects of success’as discussed in the relevant authorities; See: Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 (‘Kanan’) and Kennedy v Australian Taxation Office[2011] FWA 7469 (‘Kennedy v ATO’) Mr Latham said that it was clear, on the applicant’s own version of the facts, that her case would fail. This opens the door to the exercise of discretion to award costs against the applicant. In addition, the applicant had either put in place, or agreed to an arrangement, which was a fraud on the Australian Tax Office (ATO) and Centrelink (see Commissioner MacDonald’s comments at para [85]-[87]). As a result the applicant knew, or should have known, that if these amounts were properly accounted for, she would have been well over the high income threshold.

[12] Mr Latham further submitted that costs should be ordered on an indemnity basis; See: Goffett v Recruitment National Pty Ltd [2009] AIRCFB 626(‘Goffett’)and Dye v Commonwealth Securities (No 2) [2012] FCA 407 (‘Dye’). He said that this case fell squarely within the category of a proceeding which was unjustified. It was not simply a case of the applicant’s evidence not being preferred. Her evidence was false and she knew it to be so, as found by the Commissioner at para [84]. He noted the respondent had been forced to pay very substantial legal costs in a case that should have never commenced. It should be relieved of the financial burden of defending the claim.

[13] The respondent relied on a statutory declaration of Mr Mark Willis, Solicitor and an attached schedule of costs totalling $38,643.00.

[14] Mr Latham sought the following orders from the Commission:

‘(i) The applicant shall pay the respondent’s costs in respect to the whole of the proceedings, including any associated interlocutory proceedings and this application.

(ii) Costs shall be fixed in the sum of $38,643.’

For the applicant

[15] Ms George said that it was the respondent who decided to engage a solicitor from the beginning. There had been no attempt by the respondent to contact her directly to address any of the Company’s concerns. She noted that she had objected to the respondent having legal representation, but her objection had been overruled by the Commissioner.

[16] Ms George sought to re-argue her case as to award coverage and said that the Office of State Revenue had been of the same view as herself; namely, that she was covered by the Clerks - Private Sector Award 2010 or the Banking, Finance and Insurance Award 2010. Ms George claimed that while her role was titled CFO, her predecessor in the role for nearly 10 years, had had no accounting qualifications. In addition, she said that her remuneration of $95,000 p.a. + $20,000 bonus was way below what a real CFO would be paid. In any event, she had no authority, her accounting qualifications were irrelevant and she reported to an external accountant. She said she was not involved in strategic planning and made no independent decisions.

[17] Ms George put that her ‘strong accounting background’ informed her to appeal the Commissioner’s decision concerning the salary components. However, she decided to respect his decision. She said the Commissioner was wrong to ignore payments to individuals compared to payments to a Company. It is the Company which is liable for the tax, not the individual. This was a well known practice of the respondent.

[18] Ms George sought a reversal of the Commissioner’s decision. She said the allegation she had stolen money from the respondent was false and she had been threatened by the respondent that more serious charges would follow. If the respondent had any proof, the Police should have been involved. She concluded by saying she was not a thief and the costs application should not be granted.

[19] In reply, Mr Latham put that nowhere in the applicant’s submissions had she dealt with the issue of the costs application. Rather, she questioned whether the Commissioner’s decision was correct. If this was what was sought, she should have appealed the decision.

[20] Mr Latham added that the respondent has referred a number of matters to the Police.

[21] Postcript: On 24 January 2014, the applicant emailed my Chambers to advise she had been questioned by Police as to a fraud allegation of $166,000 and personal expenses being charged on the respondent’s credit card. She had explained the $166,000 as a consultancy fee and that her expenses on the credit card had been authorised by Mr Ron Cross. It remains unclear as to what further action is contemplated by the Police.

CONSIDERATION

Statutory provisions and applicable principles.

[22] Section 611 of the Act is expressed 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 of the 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).’

[23] The respondent seeks costs against the applicant on the basis that the application for an unfair dismissal remedy was made ‘without reasonable cause’ and ‘had no reasonable prospects of success’. See: ss 611(2)(a) and (b).

[24] The general principles to be applied in costs applications under the Act, were recently reaffirmed by the Full Bench of the Commission in Qantas Airways Ltd v Paul Carter[2013] FWCFB 1811 at paras [17] and [19]:

‘[17] We refer to the approach we have taken to considering if the provisions of s.611(2)(a) or s.611(2)(b) are established. We first deal with the application made on the basis that Qantas has made its appeal vexatiously. The approach generally taken by members of the Commission as to the meaning to be ascribed to the word “vexatiously” in s.611(2)(a) is to adopt the comments of Justice North in Nilsen v Loyal Orange Trust  (Nilsen). Nilsen was decided in 1997 when the then Workplace Relations Act 1996 applied however the relevant provision considered by his Honour was in terms similar to s.611(2)(a) being whether an applicant “instituted the proceeding vexatiously or without reasonable cause”. About this provision his Honour said:

“The next question is whether the proceeding was instituted vexatiously. This looks to the motive of the applicant in instituting the proceeding. It is an alternative ground to the ground based on a lack of reasonable cause. It therefore may apply where there is a reasonable basis for instituting the proceeding. This context requires the concept to be narrowly construed. 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 a collateral advantage.”

...

[19] We now turn to s.611(2)(b). The approach to be taken to considering whether such a finding should be made is summarised in the decision of the Full Bench in Baker v Salva Resources Pty Ltd (Baker). The relevant extract is as follows:

“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 to be not reasonably arguable.” [footnotes omitted]’

[25] The two phrases ‘without reasonable cause’ and ‘no reasonable prospects of success’ were discussed in Hamilton James and Bruce Pty Ltd v Michelle Gray [2011] FWAFB 9235 where a Full Bench of Fair Work Australia (FWA)said at paras [18]-[21]:

‘[18] The phrase “without reasonable cause” was considered in Kanan v Australian Postal and Telecommunications Union. Section 347(1) of the then Industrial Relations Act 1988 (Cth) provided that:

“A party to a proceeding (including an appeal) in a matter arising under this Act shall 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.” (Underlining added)

[19] In Kanan’s case, Justice Wilcox said in respect of the phrase that:

“A proceeding is not to be classed as being launched ‘without reasonable cause’ simply because it fails. As Gibbs J said in R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 at 473, speaking of the Conciliation and Arbitration Act equivalent of s 357 (s 197A):

‘... a party cannot be said to have commenced a proceeding “without reasonable cause”, within the meaning of that section, simply because his argument proves unsuccessful. In the present case the argument presented on behalf of the prosecutor was not unworthy of consideration and it found some support in the two decisions of this court to which I have referred. The fact that those decisions have been distinguished, and that the argument has failed, is no justification for ordering costs in the face of the prohibition contained in s.197A.’

In Standish v University of Tasmania (1989) 28 IR 129 at 139 Lockhart J applied the qualification in ordering costs against an applicant whose case he thought ‘misconceived’, rather than simply unsuccessful. But, as the Full Court pointed out in Thompson v Hodder (1989) 29 IR 339 at 342, ‘there may be cases which could not be described properly as “misconceived” but which would nevertheless be held to have been instituted without reasonable cause’.

It seems to me that one way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask 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 inappropriate to stigmatise the proceeding 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 properly be said that the proceeding lacks a reasonable cause.”

[1] The phrase “no reasonable prospect of success” in the context of costs applications was considered by a Full Bench of the Australian Industrial Relations Commission (AIRC) in Deane v Paper Australia Pty Ltd. In that decision the Full Bench said:

‘[5] It was not disputed that for the purposes of s.170CJ(1)(a)(ii) the appeal instituted by the applicant was a proceeding begun by him. The question is whether he did so in circumstances where it should have been reasonably apparent to him that there was no reasonable prospect of success. If that question is answered in the affirmative the Commission is able to make an order for costs against him. Whether it should do so is a separate although closely related question which requires a separate exercise of discretion.

[6] We were taken to a number of authorities which were said to bear upon the construction of s.170CJ. None of those authorities deals with the operative expression which now appears in s.170CJ(1)(b), namely: ‘no reasonable prospect of success’.

[7] The expression ‘no reasonable prospect of success' also appears in ss.170CF(2)(d), 170CF(3)(b) and 170CF(4). Section 170CF(4) provides for the summary dismissal of an application for relief pursuant to s.170CE, by the issue of an appropriate certificate, if the Commission concludes that the application has no reasonable prospect of success. The construction of the expression in that context was considered by a Full Bench of the Commission in Wright v Australian Customs Service. In that case the Full Bench, drawing upon relevant authority relating to summary dismissal of proceedings in various jurisdictions, held that a conclusion that an application had no reasonable prospect of success should only be reached with extreme caution and where the application is manifestly untenable or groundless.

[8] Making due allowance for the caution which must attend the exercise of a discretion to summarily dismiss an application, it appears to us that the approach in Wright is one we should follow. In other words, unless, upon the facts apparent to the applicant at the time of instituting the appeal, 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.” (Endnote omitted)

[2] In Smith v Barwon Region Water Authority, a Full Bench of the AIRC in considering the phrase “no reasonable prospect of success” in the context of s.650 of the Workplace Relations Act 1996 (Cth) (WR Act) concerning AIRC advice to the parties about an application for relief in respect of termination of employment said:

“[48] Having regard to the authorities ... it seems to us that an application will have no reasonable prospects of success if it is so lacking in merit or substance as to be not reasonably arguable.” [footnotes omitted]’

[1] In Kanan (referred to above), Wilcox J also made these observations:

‘29. It seems to me that one way of testing whether a proceeding is instituted "without reasonable cause" is to ask 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 inappropriate to stigmatise the proceeding 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 properly be said that the proceeding lacks a reasonable cause. That is the situation in the present case. The qualification of s.347 applies. The Court has power to order costs against the applicant.

30. I see no discretionary reason to withhold such an order. It is not a matter of the applicant's motives but, rather, that he has put the respondent to the expense of resisting a claim which was always doomed to failure. There is no question of punishing the applicant for his unreasonable course of action. The rationale for making a costs order is that a measure of indemnity should be conferred upon the respondent for the costs it has been obliged to incur in responding to the unreasonably instituted proceeding. I propose to order that the principal proceeding be dismissed with costs. The costs of the motion will be costs in the principal proceeding and so covered by that order.’

[2] In a very recent decision of a Full Bench of the Commission - Church v Eastern Health t/a Eastern Health Great Health and Wellbeing [2014] FWCFB 810 - consideration was given to the expression ‘without reasonable cause’ under s 611(b) of the Act. There the Full Bench said at paras. [30]-[33]:

‘[30] We now turn to the expression ‘without reasonable cause’. 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. The test is not whether the application might have been successful, but whether the application should not have been made. In Kanan v Australian Postal and Telecommunications Union, Wilcox J put it this way:

“It seems to me that one way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask 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 inappropriate to stigmatise the proceeding as being ‘without reasonable cause’. But where, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.”

[31] In the context of an appeal the question becomes whether, having regard to the arguments available to the appellant at the time of instituting the appeal, there was no substantial prospect of success. As Wilcox CJ (with whom Madgwick J agreed) observed in Imogen Pty Ltd v Sangwin:

“The prospect must be evaluated in the light of the facts of the case, the judgment appealed from and the points taken in the notice of appeal. If having regard to those matters, there was not insubstantial prospect of the appeal achieving some success, albeit not necessarily complete success, then it would seem to me it cannot be fairly described as having been instituted ‘without reasonable cause’. This is so even if, in the result, the appeal proved unsuccessful.” 

[32] In the same matter Ryan J said:

‘The existence of ‘‘reasonable cause’’ within the meaning of s 347 falls to be determined at the time when the relevant proceedings were instituted. The fact that the party instituting the proceedings later discontinues them is therefore not a matter to be taken directly into account in the application of the section. However, an appeal stands in somewhat different case from proceedings at first instance in that discontinuance may bear indirectly on the discretion conferred by s 347 by tending to confirm an impression derived from the grounds of appeal and the reasons for judgment below that the prospects of success on the appeal were slight.

Not without significance to an assessment of the reasonableness of the institution of an appeal are the amount at issue and the nature of the points raised by the notice of appeal. Where, as here, the appeal is essentially against findings of fact made by the trial judge after a two day hearing resulting in a judgment for $16,900 and raises no important or distinctive point of law or principle, the Court may more readily conclude that it was not reasonable in the circumstances to have instituted it. On a fairly fine balance of the relevant considerations and not without hesitation, I have been led to reach that conclusion in this case and agree with the Chief Justice and the orders which he has proposed.” 

[33] In construing s.570 and its legislative antecedents courts have observed that the test imposed by the expression ‘without reasonable cause’ is similar to that adopted for summary judgement, that is ‘so obviously untenable that it cannot possibly succeed’, ‘manifestly groundless’ or ‘discloses a case which the Court is satisfied cannot succeed [footnotes omitted].’

[3] Similar wording was to be found under the costs provisions of the former Workplace Relations Act 1996 (the ‘WR Act’) and the authorities under that Act do not evince any different historic approach to the meaning of the two expressions ‘without reasonable cause’ and ‘no reasonable prospects of success’.

[4] In Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission [2006] FCAFC 199, the Full Court of the Federal Court when considering the term ‘without reasonable cause’ in the general costs provisions (s 347) of the WR Act stated:

“60. The question therefore arises whether, as contended by counsel for Ms Hart, the plaintiff instituted the proceeding vexatiously or without reasonable cause. A party does not institute proceedings without reasonable cause merely because that party fails in the argument put to the Court: R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia (1978) 140 CLR 470 at 473 per Gibbs J. The section reflects a policy of protecting a party instituting proceedings from liability for costs, but that protection may be lost. Although costs will rarely be awarded under the section and exceptional circumstances are required to justify the making of such an order (see Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 per Northrop J), a proceeding will be instituted without reasonable cause if it has no real prospects of success, or was doomed to failure: see Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 per Wilcox J; see also Bostik (Aust) P/L v Gorgevski (No 2) (1992) 36 FCR 439; and Nilsen v Loyal Orange Trust (1997) 76 IR 180.

...

63. It is a matter of judgment, sometimes of fine judgment, in all the circumstances of a particular case whether a proceeding is brought without reasonable cause.”

[5] In Dowling v Fairfax Media Publications Pty Ltd [2009] FCA 339, Moore J considered the term ‘without reasonable cause’ within the context of the same general costs provisions of the WR Act and stated:

‘52. The words of the s 824(1) of the WR Act require me to consider whether the proceeding was instituted vexatiously or without reasonable cause. In answering the question posed by s 824(1), I am required to undertake a qualitative assessment of the proceeding in its entirety, focussing of course on the party that ‘instituted’ the proceeding (see Australian Workers’ Union of Employees, Queensland v Etheridge Shire Council (No 2) [2009] FCA 58 at [27] per Spender J).

53. In considering whether a proceeding was instituted vexatiously or without reasonable cause for the purpose of s 824(1) it is necessary to distinguish between the situation where an applicant has merely been unsuccessful on the case he or she has sought to propound and the situation where the applicant’s case was entirely misconceived. In relation to the former category, an application is not commenced without reasonable cause simply because the applicant’s arguments are rejected by the Court: R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia [1978] HCA 51; (1978) 140 CLR 470 at 473 per Gibbs J. However, in relation to the latter category it is likely that it can be said that the proceeding was instituted without reasonable cause such that a costs award is appropriate: Standish v University of Tasmania (1989) 28 IR 129 at 139 per Lockhart J. The comments of Wilcox J in Kanan v Australian Postal & Telecommunications Union (1992) 43 IR 257 at 264-265 are also useful in ascertaining whether a proceeding was instituted without reasonable cause. As his Honour said:

‘It seems to me that one way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask 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 inappropriate to stigmatise the proceeding as being ‘without reasonable cause’. But where, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.’

In Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 at 274-275 Northrop J said the following in respect of s 197A of the then Conciliation and Arbitration Act 1904-1975 (Cth), which was substantially in the same terms as s 824(1) of the WR Act:

‘‘In considering this matter the court must have regard to all the material properly before it. The test is not subjective to the party instituting the proceedings as at the time of the institution of the proceedings. The conduct of the opposing party prior to the institution of the proceedings may be relevant in deciding whether the proceedings were instituted vexatiously or without reasonable cause. The conduct of the opposing party both prior and subsequent to the institution of proceedings may be relevant to the discretion remaining in the court. It may be difficult to satisfy the test where disputed questions of fact arise and the proceedings eventually are dismissed because the court finds facts adverse to the party instituting the proceedings. Where the test is satisfied, having regard to the general policy of the section, the court may, nevertheless, in the exercise of its discretion, make no order as to costs.’’’

Costs on an indemnity basis

[6] The Commission is mindful of the principles to be applied to costs applications on an indemnity basis and the obvious caution the Commission must exercise in this regard. Such indemnity costs orders are rare and unusual and would only be available where exceptional circumstances are disclosed.

[7] In Dye, Buchanan J identified one of the foundations for an order of indemnity costs may be on the basis of the findings made in the earlier judgment that the applicant’s case was, in all relevant aspects, based on a falsehood.His Honour said at para [5]:

‘Each of these foundations appears to me to provide a sufficient basis for the award of indemnity costs from the dates specified. As to the first basis upon which indemnity costs have been sought, it is well-established that indemnity costs are not awarded as a punishment against an unsuccessful litigant. However, they will be awarded in appropriate cases to protect a respondent from the financial burden of proceedings which were unjustified and should not have been commenced. Each of the proceedings commenced by the applicant falls, in my view, into this category. In the present case, the lack of merit in each of the proceedings is so marked, and the claim for protection by the respondents against unwarranted financial burden is so well-founded, that there is a sufficient justification for the award of indemnity costs with respect to the whole of each of the proceedings, subject to an issue to which I will return concerning the basis on which the Supreme Court proceedings were transferred to this Court. It is not necessary for me to repeat here the findings which were made in the earlier judgment. The proceedings were, in each case, based on falsehood and were without any legal substance. The respondents are entitled to claim that they should be relieved, so far as an order for costs would achieve this, from the financial burden of defending them.’

CONCLUSIONS

[8] Notwithstanding the applicant represented herself, it seems pellucidly clear that the learned Commissioner had serious reservations about her credibility and aspects of her evidence in the context of revelations about her CFO role and income arrangements; so much so that he took the highly unusual step of referring his decision and the transcript of the proceeding to the ATO and the Department of Human Services. I refer to paras [83]-[87] of his decision as follows:

‘[83] Secondly, evidence arose in the proceedings that raised the issue of the Applicant’s credit.

[84] The Applicant has a son who went to Canada to study. She went guarantor for him and filled in a guarantor’s form that she earned probably $140,000 per year. (The Applicant was denying that she earned above the high income threshold of $123,300). She said she increased her income so that her son could qualify. The following question was then put to the Applicant:

“I see; so is your income a figure that you can change as you wish? ... Well, yes”. (PN 297)

[85] Further questioning elicited that the Applicant was claiming Centrelink payments for her son. Centrelink payments are a child care subsidy for low income employees. The Applicant declared that her income was $30,000 for the purpose of claiming Centrelink payments That is, she did not consider that she should declare the Consultancy figure of $60,000 and the Bonus of $20,000 because income tax was not paid on the Consultancy and the Bonus was tax free (“otherwise deductible rule”).

[86] The Applicant also received a child care fee reduction because her income was only $30,000.

[87] I do not pronounce on the legality of the foregoing arrangement but it is a matter for referral to government bodies for investigation.”

[9] The following extract from transcript is also relevant:

Mr Latham:

See, so this is really just a mechanism whereby your tax status is changed so that you do not have to pay income tax on the $65,000?--

Ms George:

Yes, but I pay company tax instead

...

Latham:

Just so we’ve got this right, you have been saying to Centrelink that you are a low-income employee?---

George:

Since this year only.

[10] As to her former position with the respondent, the learned Commissioner was also critical of the applicant’s evidence. At Paras [76]-[82], his decision records the following:

‘[76] The Employer submitted that even if the Banking etc Award applied, the Applicant’s executive position of Chief Financial Officer was beyond a middle managerial role. The Applicant’s denial of that assertion was to downplay the job title of Chief Financial Officer which she had given to herself. The problem with that argument is that I then wonder whether that downplay argument is made in the full knowledge of the Applicant that the downplay argument is necessary in order to gain award coverage for the purpose of maintaining her unfair dismissal application.

[77] I raise that issue because of the matters set out below as to acceptance of the Applicant’s downplay argument.

[78] Firstly, the Applicant was questioned by myself on the job description devised by herself and to which she gave herself the now allegedly misleading title of Chief Financial Officer.

[79] Her job description (Ex 5) comprises a front page with the heading of Chief Financial Officer and a summary of tasks/functions under three headings and then three pages setting out her “Accountabilities”. Under that broad heading is a number of “Key Result Areas”. One of those is Cost Control and has already been referred to in this Decision.

[80] Of relevance is a “Key Result Area” called “Budgeting/Business Plans”. I questioned the Applicant as to how the job description (she drafted) for the position of Chief Financial Officer, was different to the job (covered by the state award) that she accepted. The Applicant responded that she did not do the work of Business Plans (PN 660-678).

[81] The problem I have with this response is that the Applicant is denying that she carried out Business Plans which is listed in part of the three page document attached to her summary page. True it is, that this three page document has the look of a template that she has not prepared and she can then say that parts of that template do not apply to her new job promotion of “Chief Financial officer”. But that argument is not available for the summary front page document she prepared. In that summary, under the heading “Key Result Areas” is the first dot point of:

“ Business Plan and Budgets”.

[82] Given that the Applicant was the author of that entry and then states that it did not form part of her “Chief Financial Officer” role, then I was inclined to the view that the Applicant was downplaying the significance of her role in order to slot into middle management award coverage.’

[11] Unfortunately, the applicant’s submissions do not address the costs application in any way, save as to say that it should be dismissed. Her submission went wholly to arguments that the Commissioner’s decision was wrong and that her inclination was to have appealed, but she decided not to do so. It is trite to observe that a costs application cannot be used as a means of claiming the decision of the Commissioner was wrong and it should be reversed. If the applicant felt so strongly about her position, then the appeal avenue was plainly open to her. Not doing so out of respect for the Commissioner’s decision is irrelevant. That said, I will confine myself to the issues to be determined in this costs application and make no observations on the correctness of the Commissioner’s decision, except to note that I agree with it.

[12] In my opinion, Mr Latham’s brief and pointed submissions on this application, are compelling. It seems obvious that the applicant was not an unsophisticated, unskilled employee. She described herself as the Chief Financial Officer of a group of companies. She has accounting qualifications and wrote her own job description. She set up her own company and self-managed superannuation fund and arranged her own dubious remuneration outcomes. To portray herself as some innocent, insignificant and unsophisticated employee is to belie the truth.

[13] Given this reality, the applicant’s claim that her remuneration was just $30,000 p.a. is just not credible. I would conclude that the applicant knew full well, and most certainly when she lodged her claim of unfair dismissal, that her annual earnings were significantly above the remuneration threshold. In the words of Buchanan J in Dye, the proceedings were based on a falsehood.

[14] In addition, I am also satisfied that the applicant had never really believed she was an award covered employee and given the learned Commissioner’s finding that she had downplayed her role when it suited her purpose, this was a matter which must go to her claim having ‘no reasonable prospects of success’. I agree with the Commissioner that she deliberately and falsely downplayed her role in order to satisfy the jurisdictional hurdle she faced in having her claim of unfair dismissal accepted.

[15] It follows that the applicant’s claim of unfair dismissal was made both ‘without reasonable cause’ and ‘with no reasonable prospects of success’. The respondent is entitled to the relief it seeks from the financial burden it has incurred in defending the claim.

[16] Having established the jurisdictional gateway to the awarding of costs in this case, the focus then turns to the discretionary question of on what basis should costs be awarded. The respondent seeks its costs on an indemnity basis. In the absence of any submissions to the contrary and given the unusual findings of the learned Commissioner, inter alia, going to the credit of the applicant, I consider this to be a rare and exceptional case, which warrants a departure from the usual course of costs on a party/party basis.

[17] In these circumstances, I see no good reason why the respondent should not be entitled to its costs on an indemnity basis. That said, I do not intend to make final orders as to the quantum of costs identified in Mr Willis’ statutory declaration. I shall remit the schedule of costs for internal review through the Commission’s processes.

[18] The parties will be advised in due course as to final orders in this matter.

DEPUTY PRESIDENT

Final written submissions:

Applicant (respondent for costs) - 13 December 2013, 23 January 2014.

Respondent (applicant for costs) - 6 January 2014.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR547542>