Royal Bay International Pty Ltd v Pedro Vannea
[2015] FWCFB 1040
•19 FEBRUARY 2015
| [2015] FWCFB 1040 |
| FAIR WORK COMMISSION |
COSTS DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
v
Pedro Vannea
(C2014/1823)
VICE PRESIDENT HATCHER | SYDNEY, 19 FEBRUARY 2015 |
Application for costs.
Introduction and background
[1] Mr Pedro Vannea has made an application for costs against Royal Bay International Pty Ltd (Royal Bay) in relation to an appeal instituted by Royal Bay but subsequently discontinued prior to the scheduled hearing. The costs application, as pressed, is made pursuant to s.611(2) of the Fair Work Act 2009 (Act), which provides:
(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.
[2] Mr Vannea contends that Royal Bay instituted the appeal without reasonable cause, and that it should have been apparent to Royal Bay that the application had no reasonable prospects of success.
[3] The basic facts of this matter may be summarised as follows:
(1) Mr Vannea worked as a chicken boner at a chicken processing plant operated by Baiada Poultry Pty Ltd (Baiada).
(2) His engagement at the plant was terminated on 28 December 2013.
(3) Mr Vannea initially lodged an unfair dismissal remedy application against Baiada. Baiada contended in response to the application that it was not Mr Vannea’s employer.
(4) Mr Vannea then lodged an application for an unfair dismissal remedy against Royal Bay on 13 June 2014. That application was lodged out of time. In a decision issued by Senior Deputy President O’Callaghan on 27 June 2014, Mr Vannea was granted an extension of time to file his application. 1
(5) In its response to the application, Royal Bay contended that Mr Vannea was an independent contractor rather than an employee because, among other things, payments for his labour were not made to him personally but to a company owned and operated by Mr Vannea named Pedro Vannea Pty Ltd.
(6) In a decision issued on 18 September 2014 2 (UD Decision) Senior Deputy President O’Callaghan determined that Mr Vannea was an employee of Royal Bay and that his dismissal was harsh, unjust and unreasonable. The Senior Deputy President issued an order3 that Mr Vannea be reinstated to his employment, that his continuity of service be maintained, and that he be restored the remuneration lost between the date of his dismissal and his reinstatement.
(7) On 1 October 2014 Royal Bay filed a notice of appeal against the UD Decision. One of the grounds of appeal was that there was no employment relationship between Mr Vannea and Royal Bay. Royal Bay sought a stay of the UD Decision pending the hearing and determination of the appeal.
(8) Royal Bay’s stay application was heard on 8 October 2014 by Deputy President Smith. In a decision announced at the conclusion of the hearing and subsequently published on 16 October 2014 together with the reasons therefor 4 (Stay Decision), the Deputy President stated that “I am not satisfied on the material before me that an arguable case exists with a reasonable prospect of success in relation to the appeal for leave in the appeal”. The Deputy President refused the stay, but made a “consequential order” that the payment for lost remuneration be paid into an interest-bearing account controlled by Royal Bay’s lawyers.
(9) On 6 November 2014 Royal Bay discontinued the appeal.
[4] In relation to the costs application, Royal Bay’s General Manager, Mr Alex Lin, made an affidavit in which he explained the basis upon which the appeal was instituted and subsequently discontinued. The following sequence of events may be gleaned from the affidavit (including its annexures):
(1) On 24 September 2014 Royal Bay sought legal advice from Minter Ellison Lawyers concerning the prospects of appealing the UD Decision.
(2) Consistent with a recommendation from Minter Ellison, Mr Lin on 25 September 2014 instructed them to brief counsel to advise as to the prospects of an appeal and obtaining a stay of the judgment.
(3) On 29 September 2014 Mr Lin was sent a written opinion from Mr Rick Manuel of counsel (which was annexed to Mr Lin’s affidavit). Mr Manuel concluded that there was “a viable chance to overturn the decision”. His advice in that respect was based primarily on the proposition that the Senior Deputy President had misdirected himself on a jurisdictional question, namely whether there was in existence any contract between Mr Vannea and Royal Bay (as distinct from a contract between Mr Vannea and Pedro Vannea Pty Ltd). Mr Manuel also advised that obtaining a stay would be difficult but there was a viable argument.
(4) On 30 September 2014 Mr Lin instructed Minter Ellison to institute the appeal based on Mr Manuel’s advice.
(5) After the Stay Decision, Mr Lin requested Minter Ellison to advise “on whether there would be an 80% or greater chance of successfully appealing the Decision”. On 29 October 2014 Minter Ellison advised Mr Lin in writing that the chances of success of the appeal would be likely to be less than 80%.
(6) On the basis of this advice Mr Lin instructed Minter Ellison to discontinue the appeal.
Consideration
[5] There is a considerable conceptual overlap between the “without reasonable cause” criterion in s.611(2)(a) and the “reasonably apparent ... that ... no reasonable prospect of success” criterion in s.611(2)(b). In relation to the former criterion (as it appeared in s.824(1) of the Workplace Relations Act 1996), Moore J in Dowling v Fairfax Media Publications Pty Ltd 5 said:
“[52] The words of 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) 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.”
[6] The principles applicable to the construction and application of s.611(2)(b) were summarised by the Full Bench in Baker v Salva Resources Pty Ltd6 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.”
[7] On the material before us, we are not satisfied that Royal Bay instituted the appeal without reasonable cause or that it should have been apparent to Royal Bay that the appeal had no reasonable prospect of success. As the affidavit of Mr Lin discloses, he instructed the institution of the appeal in reliance on advice from counsel that he had a viable argument that the UD Decision was subject to jurisdictional error and that there was a viable, but difficult, argument for a stay to be obtained. We read “viable argument” in Mr Manuel’s advice as meaning an arguable case. The provision of that advice to Mr Lin provided an objectively reasonable basis for his institution of the appeal. In the face of that advice, it could not be said that it was reasonably apparent to Mr Lin that his appeal would have no reasonable prospect of success.
[8] Nor could it be said that the appeal was misconceived to the extent that it was instituted without reasonable cause. It was an established fact that Mr Vannea’s working arrangement involved the payment of his remuneration to a company owned and operated by him. On that basis, we consider that it was not unarguable that Royal Bay’s contractual relationship was with that company, which in turn contracted to Mr Vannea, so that there was no employment or other contractual relationship between Royal Bay and Mr Vannea that could be the subject of an unfair dismissal remedy application under Part 3-2 of the Act. That is not to say of course that such an argument would have been successful before us; to the contrary, we consider on the material before us (albeit without the benefit of the full argument we would have received if the appeal had proceeded) that the conclusion reached by the Senior Deputy President on this issue in the UD Decision was correct. But we do not consider the argument to have been unworthy of consideration.
[9] Mr Vannea’s costs application did not actually identify the costs (if any) that were incurred by him in the conduct of the appeal, but we presume that any such costs were primarily if not wholly associated with the engagement of senior counsel for the conduct of the stay hearing. Mr Vannea, understandably, relies upon the conclusion of the Deputy President in the Stay Decision that he was not satisfied that, in relation to the appeal, an arguable case existed with a reasonable prospect of success. However any such assessment for the purpose of the determination of a stay hearing is necessarily preliminary in nature in that it is based on an analysis of the appeal with the benefit of only limited argument, and cannot be regarded as foreclosing the outcome of the appeal. 7 For the different purpose of the consideration of Mr Vannea’s costs application, we are not satisfied that the appeal was misconceived so as to have been commenced without reasonable cause. And, in relation to the stay application considered as a discrete matter, it cannot be said that it was hopeless either. Indeed, even though in formal terms Royal Bay did not obtain a full stay of the UD Decision, it was partially successful in that, in practical terms, the requirement to pay the lost remuneration to Mr Vannea was stayed on the basis that it was paid into an interest-bearing account.
[10] In conclusion therefore, the jurisdictional prerequisites for the making of a costs order under s.611(2) have not been satisfied. Mr Vannea’s costs application must therefore be dismissed.
VICE PRESIDENT
Final written submissions:
27 November 2014 - Pedro Vannea
11 December 2014 - Royal Bay International Pty Ltd
1 [2014] FWC 4270
2 [2014] FWC 6416
3 PR55454
4 [2014] FWC 7270
5 (2009) 182 IR 28
6 [2011] FWAFB 4014 at [10], followed in Qantas Airways Limited v Carter[2013] FWCFB 1811 at [19] and Clothier v Ngaanyatjarra Media [2012] FWAFB 6323 at [15]
7 Lend Lease Project Management and Construction (Australia) Pty Limited v CFMEU[2015] FWCFB 799 at [4]
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