Phyllis Dodd v Thomas & Naaz Pty Ltd

[2021] FWC 1106

[2021] FWC 1106

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Phyllis Dodd
v
Thomas & Naaz Pty Ltd
(U2020/10882)

DEPUTY PRESIDENT BOYCE SYDNEY, 16 APRIL 2021

Application for costs.

Introduction

[1] On 11 August 2020, Mrs Phyllis Dodd (the Costs Respondent) filed an application for unfair dismissal remedy (the Originating Application) against Thomas & Naaz Pty Ltd (the Costs Applicant). The matter was programmed for hearing and was heard on 3 November 2020.

[2] On 18 December 2020, I dismissed the Costs Respondent’s Originating Application. I did so on the grounds that she was not “dismissed” within the meaning of s.386 of the Fair Work Act 2009 (Act).

[3] On 24 December 2020, the Costs Applicant made an application for costs pursuant to s.611 of the Act, on the grounds that the Originating Application was made vexatiously and/or without reasonable cause. Further, or in the alternative, the Costs Applicant argues that pursuant to s.400A of the Act, the assertion by the Costs Respondent in her Originating Application that she was forced to resign was an unreasonable act in connection with the conduct or continuation of the matter.

[4] Directions were issued on 7 January 2021 for the filing of submissions with respect to the costs application. Each of the parties agreed that a decision could be made on the basis of their written submissions.

Relevant legislation

[5] The power to award costs under s 611 of the FW Act is limited. The section provides:

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 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).

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

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.

Submissions of Costs Applicant

[7] The submissions of the Costs Applicant in relation to s.611 of the Act are as follows:

“3. As set out in its Application for Costs dated 24 December 2020, the Costs Applicant (Thomas & Naaz) seeks costs of the proceedings (in accordance with the Fair Work Commission Schedule of Cost) on the following grounds:

(a) The making of the unfair dismissal application was vexatious and without reasonable cause (s. 611(2)(a)), Fair Work Act 2009 (Cth) (FW Act)) and it should have been reasonably apparent to Mrs Dodd that her unfair dismissal application had no reasonable prospects of success (s. 611(2)(b)), in circumstances where she had resigned from her employment, and there was no reasonable basis for Mrs Dodd to contend that she had been forced to resign or that her employment had been terminated at the initiative of the employer.

(b) Further, or in the alternative, it was an unreasonable act for Mrs Dodd to bring her application in circumstances where she had resigned from her employment and there was no reasonable basis to contend that she had been forced to resign (s.400A).

(c) Further, or in the alternative:

(i) On 16 September 2020, Thomas & Naaz offered to settle the unfair dismissal application on the basis of a payment of 5 weeks’ pay, plus a reference, with the parties to enter into a Deed of Release with mutual releases;

(ii) On or around 21 September 2020, Ms Dodd offered to settle the proceedings on the basis of a net payment of $4,250, to which offer Thomas & Naaz agreed on the basis of a Deed of Release with mutual releases;

(iii) Agreement was reached between the parties with the exception of clauses to do with confidentiality and non-disparagement,

and it was an unreasonable act or omission for Mrs Dodd to not accept that offer, not make any reasonable counter offer in reply, and to continue her application after Thomas & Naaz had agreed to the settlement sum that she sought (s.400A).” 1

[8] Further, and/or in the alternative, the submissions of the Costs Applicant in relation to s.400A of the Act includes the following:

“39. Costs of a costs application have been awarded under s.400A, see Jason Thomas v MWS Pty Ltd[2019] FWC 7324 at [30], [33]. The Commission has also assumed jurisdiction to make an order as to the costs of a costs application under s.400A in Chen v Monash University[2015] FWC 2798 at [54], and seemingly under ss.400A, 611 and 401 in Rigby v BMS Retail Group Pty Ltd[2016] FWC 6846 at [37]. As such, pursuant to s.400A or s.611(2) of the FW Act, the FWC is entitled to award Thomas & Naaz the whole of its costs of the proceedings, including the costs associated with this application.” 2

Submissions of Costs Respondent

[9] A summary of the Costs Respondent’s submissions are as follows:

“8. The Costs Applicant’s Costs Application that the Costs Respondent be ordered to pay its costs involves three main issues:

a. Whether or not, pursuant to s.400A of the Fair Work Act 2009 (Cth) (FW Act) the Fair Work Commission (FWC) may make an order against Mrs Dodd on the basis that she had no reasonable basis to contend that she had been forced to resign or that her employment had been terminated;

b. Whether or not, the presumption at s.611(1) of the FW Act that a person must bear their own costs in relation to a matter before the FWC is rebutted, on the basis that Mrs Dodd’s application:

i. Was vexatious and without reasonable cause (s.611(2)(a)); or

ii. had no reasonable prospects of success (s.611(2)(b)).

c. Whether or not Mrs Dodd unreasonably refused to settle the matter, either at conciliation on 1 September 2020 or subsequently.” 3

[10] In relation to s.400A and that there was “no reasonable basis” for the Originating Application, the submissions of the Costs Respondent include, notably, that:

“12. The Costs Respondent accepts that, ultimately, Deputy President Boyce, was not persuaded by Mrs Dodd’s argument that the Costs Applicant’s conduct had the effect of bringing about the Mrs Dodd’s resignation. The fact that the Costs Respondent was ultimately unsuccessful in her Original Application is not, in itself, a basis upon which costs can be awarded under the FW Act.

13. Deputy President Boyce made no adverse comment as to Mrs Dodd’s credit nor any finding that Mrs Dodd’s evidence was not to be accepted, despite Mrs Dodd being cross-examined…

…

17. Further, there is no suggestion by Deputy President Boyce that any of the submissions with respect to the reasonableness of Mrs Dodd’s understanding or action were improperly put by counsel or wholly without foundation. It was open to Deputy President to observe that Mrs Dodd’s Original Application was without merit and wholly unreasonable, which he did not do. In the absence of any such decision it not sufficient for the Costs Applicant to argue that because Mrs Dodd did not make out her case, that she ought be made to pay its costs.” 4

[11] In relation to the Costs Applicant’s arguments, under s.611 of the Act, that the Originating Application was “vexatious or without reasonable cause”, the Costs Respondent argues that:

“20. Firstly, the Proceedings were not vexatious as Mrs Dodd’s motive for bringing her Original Application was (as set out at [10] above) that she believed that her employment was terminated by the Costs Applicant. As North K observed in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing [2014] FWCFB 810,

[29] The question of whether an application was made ‘vexatiously’ looks to the motive of the applicant in making the application. It is an alternative ground to the ground that the application was made ‘without reasonable cause’ and may apply where there is a reasonable basis for making the application. In Nilsen v Loyal Orange Trust (Nilsen) North J observed that this context requires the concept of vexatiousness to be narrowly construed. His Honour went on to state that an application will be made vexatiously ‘where the predominant purpose ....is to harass or embarrass the other party, or to gain a collateral advantage’. Deane and Gaudron JJ made a similar observation in Hamilton v Oades in which they said:

“The terms ‘oppressive’ and ‘vexatious’ are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are ‘seriously or unfairly burdensome, prejudicial or damaging’ and ‘productive of serious and unjustified trouble and harassment’. (Citations omitted).

21. Secondly, there is no suggestion in Deputy President Boyce’s decision that there was any evidence that the Cost Respondent sought to harass or embarrass the Cost Applicant. Whilst it was observed that the Costs Respondent might have been seen to be ‘disgruntled’ and ‘fed up’ with the Costs Applicant’s way of doing business, there is no finding that Mrs Dodd acted in a way (including in the bringing of her Application) that amounted to harassing or embarrassing the Costs Applicant.

22. Thirdly, with respect to the Cost Applicant’s assertion (Costs Applicant’s Submissions at [7]) that the Form 2 Initiating Application (Form 2) “attached an extraneous document”, the Costs Respondent submits:

a. as there are a number of documents attached to the Form 2 the Costs Respondent cannot properly respond to this assertion without knowing to which document it is referred; but

b. nonetheless, all the documents attached to the Form 2 were attached to demonstrate a pattern of behaviour indicative of management of the Cost Respondent’s workplace which were relevant to her understanding belief about the 21 July Email; and

c. if the document to which the Costs Applicant refers is the decision of the Health Care Complaints commission dated 26 June 2015, in our submission this document is not embarrassing because:

i. it is a matter of public record; and

ii. goes to establishing a pattern of behaviour of the Costs respondent’s employer.

23. As to the Costs Applicant’s assertion that certain documents attached to the Dodd Affidavit and withdrawn on the first day of the hearing (Cost Applicant’s Submissions at [8]),

a. those documents were withdrawn and not relied upon during the course of the hearing;

b. there was no substantial prejudice to the Costs Applicant by the withdrawal of those documents; and

c. the materials were originally included by the Costs Respondent to demonstrate a pattern of behaviour indicative of management of the Cost Respondent’s workplace which were relevant to her understanding belief about the 21 July Email.

…

27. As the Costs Applicant alludes at paragraph [17], it was open to Deputy President Boyce to conclude that Mrs Dodd’s Original Application was baseless, without merit or improperly brought, however, his Honour made no such finding, judgement or comment. There is simply no basis in the Proceedings judgement that could satisfy the FWC that the threshold for a vexatious case brought without reasonable cause can be met.” 5

[12] In relation to the Costs Applicant’s arguments, under s.611 of the Act, that the Originating Application had “no reasonable prospects of success”, the Costs Respondent argues that:

“31. Further, the Costs Respondent submits that pursuant to Baker v Salva Resources Pty Ltd[2011] FWAFB 4014 (cited at paragraph [19] of the Costs Applicant’s Submissions) a conclusion by the FWC that an Application has (at 10),

“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.” (Emphasis added).

32. The Costs Respondent submits that the decision of Deputy President Boyce does not go so far as to evidence or suggest that the Original Application, was manifestly untenable or groundless. For these reasons, the Costs Respondent submits that the FWC would not be satisfied to make a costs application on that basis.” 6

[13] Finally, in relation to the Costs Applicant’s arguments on the Costs Respondent’s “alleged unreasonable refusal to settle”, the Costs Respondent argues that:

“34. As stated at paragraph [31] of the Costs Applicant’s Submissions, Mrs Dodd made an offer to compromise her case on $4,250 ‘net of tax’. This demonstrated a willingness in Mrs Dodd to compromise her case and negotiate the proceedings in good faith. The offer was accepted by the Costs Applicant but unfortunately negotiations fell over around the terms of a non-disparagement and confidentiality clause.

35. Ultimately, the Costs Respondent refused to sign a non-disparagement and confidentiality agreement because she wished to reserve her rights to comment the actions of both Dr Thomas and/or Dr Naaz in respect of investigations that she understood to be underway into their behaviour at work; including an investigation by SafeWork into bullying, harassment and victimisation claims. In respect of this submission, the Costs Respondent relies on the undated Affidavit of Karen Herrington.

36. The Costs Respondent respectfully submits that she was well within her rights to do so. The Costs Respondent submits that the Commission ought not make an order for costs with respect to the outcome of settlement negotiations, where there is evidence that the Costs Respondent participated fully and in good faith in those negotiations. That unfortunately, the parties were not able to agree to terms to the satisfaction of each is not sufficient grounds for a costs order bearing in mind the objectives of the FW Act, the FWC and s.611(1).

37. For the reasons set out above, the Costs Respondent respectfully submits that the Costs Application be dismissed.” 7

Case law

[14] In Hansen v Calvary Health Care Adelaide Limited a Full Bench of this Commission said in relation to s 611 generally: 8

“[15] It is trite to observe that the statutory and policy imperative underpinning a costs application under the Act, is that a person in a matter before the Commission must bear their own costs. So much is plainly obvious by the precise and unambiguous language of s 611(1).

[16] However, the statutory scheme sets out the relatively circumscribed circumstances in which an order for costs might be found by the Commission to be appropriate in a particular case. It includes the exercise of discretionary power where the Commission is satisfied that one, or more of the circumstances set out in s 611(2), has been established. If such circumstances are established, the Commission, in the broad exercise of its discretion, may make an order that a person/s bear some, or all of the costs of another person, in relation to the application, including on an indemnity basis, or decline to make any order at all.”

[15] The relevant principles concerning the interpretation and application of s 611(2)(a) were comprehensively stated in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing. They may be summarised as follows: 9

•  An application is made vexatiously when the predominant motive or purpose of the applicant is to harass or embarrass the other party or to gain a collateral advantage.

•  An application is not made without reasonable cause simply because the application did not succeed.

•  Whether an application is made without reasonable cause may be tested by asking, on the facts apparent to the applicant at the time the application was made, whether 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 characterise the application as having been made without reasonable cause.

•  In relation to an appeal, the question becomes whether the appeal has no substantial prospect of success. The prospect of success 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 there is a not insubstantial prospect of the appeal achieving some success, it cannot fairly be described as having been made without reasonable cause.

•  An application will have been made without reasonable cause if it can be characterised as so obviously untenable that it cannot possibly succeed, is manifestly groundless or discloses a case where the tribunal is satisfied it cannot succeed.

[16] In relation to s 611(2)(b), the relevant principles were summarised by the Full Bench in Baker v Salva Resources Pty Ltd (footnotes omitted): 10

“[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.”

[17] Finally, the Explanatory Memorandum to the Fair Work Bill 2012 states the following with respect to s.400A of the Act:

“168. Item 4 inserts a new section 400A to enable the FWC to order costs against a party to an unfair dismissal matter (the first party) if it is satisfied that the first party caused the other party to the matter to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the matter.

169. As with the new power to dismiss applications under section 399A, 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.”

Consideration

[18] I do not consider that there is any proper basis to conclude, pursuant to s.611(2)(a) of the Act, that the Costs Respondent’s Originating Application was made vexatiously. In addition to arguments about the weakness of the Costs Respondent’s claim, which I address further below, the Costs Applicant has argued that the fact that the Costs Respondent filed erroneous or irrelevant materials with her Originating Application and submissions, and that she declined to settle the matter prior to hearing, are indicative of a desire to harass and embarrass them. 11

[19] I accept the arguments of the Costs Respondent that there was no vexatious motive nor a design to harass or embarrass the Costs Applicant, and note in particular that, in my view, the Costs Respondent appeared to have a genuine belief that her employment was terminated by the Costs Applicant, notwithstanding my finding that “[t]he Applicant either misread or wilfully ignored the information before her”. 12 The fact that the Costs Respondent’s application was not successful does not constitute a sufficient basis, in and of itself, upon which costs may be awarded.

[20] As is apparent from the authorities referred to in this decision, there is a considerable overlap between the concept of an application being “made … without reasonable cause” in s.611(2)(a); where it “should have been reasonably apparent” to an applicant that the application “had no reasonable prospect of success” under s.611(2)(b); and the phrase “unreasonable act or omission” referred to in s.400A. 13 I am equally not persuaded that any of these criteria are satisfied in this case.

[21] My decision to dismiss the Originating Application was, in a matter I considered to be “sufficiently complex” that it would be conducted in a more efficient manner with both parties being legally represented, that the Costs Respondent was not “dismissed” within the meaning of s.386 of the Act. A contention between the parties on the question of what conduct constitutes a “dismissal”, or whether conduct can be considered a resignation, or a “constructive dismissal” cannot, in my view, be characterised as manifestly untenable or groundless. The criteria in s.611(2)(a) and (b) must be satisfied on the basis of an assessment of the relevant application as a whole, and cannot be satisfied on a piecemeal basis with respect to the particular form of, or grounds contained in, an application. 14 Because I am not persuaded that the Originating Application was manifestly untenable or groundless and therefore inarguable, I cannot conclude that the Costs Respondent’s Originating Application was made without reasonable cause, or that it should have been reasonably apparent to the Costs Respondent that her application had no reasonable prospect of success, or that it was an unreasonable act to bring her claim (cf. s.400A of the Act).

[22] I am not satisfied that any of the jurisdictional preconditions to the making of a costs order under s.611(2) or s.400A of the Act have been made out. This means that Thomas & Naaz Pty Ltd’s costs application must be dismissed. An order to this effect will be issued with this decision.

DEPUTY PRESIDENT

Determined on the basis of written submissions.

Printed by authority of the Commonwealth Government Printer

<PR727396>

 1   Submissions of Costs Applicant dated 22 January 2021, 1-2.

 2   Ibid 7.

 3   Submissions of Costs Respondent dated 5 February 2021, 2-3.

 4   Ibid 3-4.

 5   Ibid 5-7.

 6   Ibid 8.

 7   Ibid 8-9.

 8   [2016] FWCFB 8162.

 9   [2014] FWCFB 810, 240 IR 377, at [23]-[33].

 10   [2011] FWAFB 4014, 211 IR 374.

 11   Submissions of Costs Applicant dated 22 January 2021, 2-3.

 12   Submissions of Costs Respondent dated 5 February 2021, 5.

 13   See also Compuworld Pty Ltd v On Ni Liu[2021] FWCFB 1048, [14].

 14   Ibid.