Riley Larsen v NthStar Constructions Pty Ltd

[2022] FWC 2388

[2022] FWC 2388

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.365—General protections

Riley Larsen
v

NthStar Constructions Pty Ltd

(C2022/1491)

DEPUTY PRESIDENT LAKE BRISBANE, 21 SEPTEMBER 2022

Application for costs – Application refused.

Introduction

1. On 9 May 2022, I heard Mr Larsen’s application for unfair dismissal against NthStar Constructions Pty Ltd (NthStar Constructions). On 14 June 2022, I decided that Mr Larsen’s application was out of time.[1]

1. On 24 June 2022, NthStar Constructions filed an application for costs against Mr Larsen.

1. Both parties consented to my determination of the costs application on the papers.

1. In determining the costs application, I have had regard to NthStar Constructions Form F6, and further submissions dated 15 August 2022 and Mr Larsen’s submissions dated 8 July 2022.

Basis for costs application

1. NthStar Constructions seeks payment of its legal costs pursuant to section 375B and section 611 of the Fair Work Act2009 (Cth) (the Act). Submissions were sought from both parties regarding the Costs Application.

1. NthStar Constructions’ primary contentions in support of its costs application are as follows:

• Mr Larsen’s commencement of his General Protections Application was unreasonable because it was ought to have been apparent that the Application had no prospects of success because the Application was brought out of time, that he made no submissions that exceptional circumstances existed, and that he was not dismissed.

• In the alternative, NthStar Constructions argues that the matter was not brought without reasonable cause, no prospect of success was advised by Mr Larsen’s representative.

• That the application was bought vexatiously because it was brought for an ulterior motive to ameliorate Mr Larsen’s position regarding monies owed from abortive resignation and made unsubstantiated claims of illegal conduct.

• The Costs Applicant is seeking $4,545.00 in costs.

1. Mr Larsen has provided a response to the submissions of NthStar Constructions. His primary contentions in opposition to the application for costs are as follows:

• Mr Larsen submits that an unreasonable act in conducting or continuing proceedings has not been demonstrated. Mr Larsen argues that the General Protections Application was brought in good faith.

• Mr Larsen states that there must be no substantial prospect of success at the time the proceeding was initiated, and this advice was provided after the application was initiated.

• He submits that a party must bear their own costs to a proceeding and that any decision to move away from this position ought to be done with caution.

• Mr Larsen asks that no costs be awarded.

Relevant legal principles

1. Section 611(1) of the Act establishes a general rule that parties in proceedings before the Commission must bear their own costs. There are a number of provisions in the Act which operate as exceptions to this general rule and allow costs to be awarded in specific circumstances. Sections 375B and 611(2) of the Act are two such exceptions.

1. Section 375B of the Act provides as follows:

“Costs orders against parties

(1) The FWC may make an order for costs against a party (the first party) to a dispute for costs incurred by the other party to the dispute if:

(a)   an application for the FWC to deal with the dispute has been made under section 365; and

(b)     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 dispute.

(2) The FWC may make an order under subsection (1) only if the other party to the dispute has applied for it in accordance with section 377.

(3) This section does not limit the FWC’s power to order costs under section 611.”

1. Section 375B(1)(b) of the Act establishes two preconditions for the making of an order for costs:

(a)   First, the Commission must be satisfied that the party engaged in an unreasonable act or omission in relation to the conduct or continuation of a matter; and

(b)   Secondly, such act or omission caused the other party to the matter to incur costs.”

1. If these two preconditions are satisfied, a discretionary power to order the payment of such costs is enlivened.

1. Section 611(2) of the Act provides as follows:

“(2) However, the Fair Work Commission 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 Fair Work Commission if:

(a)     the Fair Work Commission 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 Fair Work Commission 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.”

1. 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[2] and may be summarised as follows:

·   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 was 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.

1. In relation to section 611(2)(b), the relevant principles were summarised by the Full Bench in Baker v Salva Resources Pty Ltd[3]as follows (footnotes omitted):

“[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.”

Consideration

1. Mr Larsen brought a General Protections matter involving dismissal against the Costs Applicant in this matter following the Costs Applicant demanding the paying back of monies owed for a sign on bonus and for training. An examination of the employment contract confirms that Mr Larsen had an obligation to pay these monies back in the circumstance where he resigned within the two-year period. The making of firstly an Unfair Dismissal – which was discontinued when it was clear that he had not reached the Minimum Employment Period – and then a General Protections claim – which was out of time – the Costs Applicant asserts that Mr Larsen was adopting a defensive posture against the Company pursuing the monies that he owed. By making these claims he would make the pursuing of the monies owed unpalatable for the Company to pursue. The Costs Applicant maintains that his claim is vexatious.

1. There is something to be said of this contention, Mr Larsen’s General protection claim on the evidence before me was weak, however without a fulsome hearing on the merits a considered view is not possible and so my finding in my jurisdictional decision was a neutral one on this factor.

1. In considering the notion of vexatious I note Asbury C’s (as she was then) comments in Mokomoko v Zenforce Protection group Pty Ltd:[4]

[13] The circumstances in which an application will be found to have been
made vexatiously were discussed by Justice North in Nilsen v Loyal Orange
Trust as follows:

“The next question is whether the proceeding was instituted vexatiously. This
looks to the motive of the applicant in instituting the proceedings. It is an
alternative ground to the ground based on lack of reasonable cause. It therefore
may apply where there is a reasonable basis for instituting the proceedings.
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.”
[14] In Attorney-General v Wentworth Roden J observed that litigation may be
regarded as vexatious on objective or subjective grounds and that the test could
be expressed as follows:
“1. Proceedings are vexatious if they are instituted with the intention of
annoying or embarrassing the person against whom they are brought;
2. They are vexatious if they are brought for collateral purposes, and not for the
purpose of having the Court adjudicate on the issues to which they give rise.
3. They are also properly to be regarded as vexatious if, irrespective of the
motive of the litigant, they are so obviously untenable or manifestly groundless
as to be utterly hopeless...”
[footnotes omitted]

1. The Fair Work Commission is to be generally regarded as a no cost jurisdiction to enable access to justice for applicants without representation and for the tribunal to operate efficiently and effectively in resolving issues in the workplace. The awarding of costs may act as a disincentive for applicants to bring matters forward for fear of costs should they lose and for this reason the bar is set very high in the Commission for an award of costs.

1. Mr Larsen may have indeed initiated this application as a response to the company demanding he pay back his sign on bonus and training subsidy. However, whether he did act in a manner to seek to place pressure on the company to drop their claim in a vexatious manner is not one that I am prepared to make on the evidence provided.

Conclusion

1. For the reasons provided I am not minded to award costs and dismiss the matter.

DEPUTY PRESIDENT

[1] Riley Larsen v NthStar Constructions Pty Ltd [2022] FWC 1498.

[2] Church v Eastern Health t/as Eastern Health Great Health and Wellbeing [2014] FWCFB 810

[3] A Baker v Salva Resources Pty Ltd [2011] FWAFB 4014 [10].

[4] [2011] FWA 1217, [13]–[14].

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