Rusha Sharma v Business Institute of Australia Pty Ltd

[2019] FWC 4869

[2019] FWC 4869

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.365—General protections

Rusha Sharma
v
Business Institute of Australia Pty Ltd; Quyen Ly
(C2018/5784)

DEPUTY PRESIDENT KOVACIC CANBERRA, 12 JULY 2019

Application for against the Costs Respondent and her legal representative – application dismissed.

[1] Mrs Rusha Sharma (the first Costs Respondent) was employed by the Business Institute of Australia Pty Ltd (BIA – the Costs Applicant) as a trainer/assessor on a casual basis. On 15 October 2018 Mrs Sharma lodged an application under s.365 of the Fair Work Act 2009 (the Act) alleging that she had been dismissed on or around 24 September 2018 in contravention of the general protections provisions of the Act. Specifically, Mrs Sharma contended in her application that BIA and Ms Ly, who was cited as the second Respondent in Mrs Sharma’s application, had contravened ss.340 (Protection), 345 (Misrepresentation), 357 (Misrepresenting employment as a contracting arrangement) and 358 (Dismissing to engage as an independent contractor) of the Act.

[2] Mrs Sharma’s application was the subject of a conciliation conference on 20 November 2018 convened by one of the Fair Work Commission’s (the Commission) conciliators. That conference failed to resolve the dispute. On 29 November 2018 Mrs Sharma discontinued her application.

[3] In subsequent developments, on 10 December 2018 BIA made an application for costs under ss.375B (Costs against parties in general protections matters), 611 (General provision in relation to costs) and 376 (Costs against lawyers and paid agents in relation to a general protections matter) of the Act. The application sought costs against both Ms Sharma and her legal representative, Anderson Gray Lawyers (AGL – the second Costs Respondent).

[4] The costs application was the subject of a telephone mention and directions hearing on 11 February 2019 at which it was agreed that the application would be determined on the papers.

[5] For the reasons set out below, I have determined that it is not appropriate to make the costs orders sought by BIA as I am not satisfied that the requirements in ss.375B, 611 and 376 of the Act have been made out by the Costs Applicant. The costs application is therefore dismissed.

Background

[6] The alleged general protections contraventions were described in Mrs Sharma’s application in the following terms:

“Sham Contracting and Misrepresentation

1. In or about 2016, the Applicant commenced work for the First Respondent as a contractor.

2. On or around 3 July 2017, after the Applicant complained about her conditions of engagement, the Applicant commenced a contract as a casual employee of commenced the First Respondent, and;

(a) was paid Award wages as an employee;

(b) received an employment contract;

(c) received superannuation; and

(d) leave entitlements.

Attachment A is the Applicant’s initial complaint.

Attachment B is copy of a Letter of Offer from the First Respondent, dated 3 July 2017.

3. On or around 21 July 2017, the Applicant issued – and received a response to - a written complaint to the Chief Executive Office of ‘Times Education’, of which the First Respondent is a member. This complain concerned, but was not limited to, a claim of underpayment, and unpaid superannuation.

Attachment C is a copy of the abovementioned letter of complaint, and response.

4. On or around 24 September 2018, the First Respondent and the Applicant exchanged e-mails with words to the following effect:

(a) The First Respondent (through the Second Respondent) contacted the Applicant to propose a change of conditions of employment from 2019 that required the Applicant to become an independent contractor with reduced remuneration.

(b) The Applicant made reasonable inquiries by way of e-mail and/or telephone, challenging the First Respondent’s proposed degradation of employment conditions, with reference to existing contractual obligations to not lower the hourly wage, and;

(c) The First Respondent (through the Second Respondent) responded by way of email and/or telephone, with words to the effect that, unless the Applicant accepted conditions requiring her to become an independent contractor with reduced remuneration, the Applicant would either receive no work, or receive a lower hourly rate as an employee.

Attachment D comprises a series of e-mails relating to the abovementioned exchange of communication.

5. The Applicant contends that she was an employee for the Respondent for the reasons set out in paragraph 3 and;

(a) the Respondent controlled and directed the Applicant’s work;

(b) the Applicant was not responsible for her own insurance;

(c) the Applicant was not able to sub contract her services to any other businesses;

(d) the Applicant was not operating her own business; and

(e) the Applicant could not delegate her services.

Workplace Rights and Adverse Action.

6. During the course of her employment the Applicant exercised her workplace rights to make complaints or enquiries in relation to her employment.

7. On or around 24 September 2018.

a. the Applicant made reasonable inquiries about the availability of work, and her employment conditions, such as wages, and

b. The First Respondent responded by way of e-mail, with words to the effect that it would not offer the Applicant ongoing work unless the Applicant accepted conditions requiring her to become an independent contractor with reduced remuneration.

8. The Applicant has not received a letter of termination, nor received confirmation of ongoing employment, pending her acceptance of conditions requiring her to become an independent contractor with reduced remuneration.” (Attachments not included)

[7] In its Form F8A – Response to general protections application, which was received by the Commission on 6 November 2018, BIA raised a jurisdictional objection, contending that Mrs Sharma had not been dismissed. In its response BIA also:

•  acknowledged that Mrs Sharma had historically made certain complaints and/or inquiries but stated that there was no causal link between her 2017 complaints and the events of September 2018 which formed the basis of her general protections application, adding that the decision to only engage daily rate contractors moving forward was made and conveyed to Mrs Sharma prior to any the inquiries or complaints she made in September 2018;

•  contended that based on Mrs Sharma’s own case her allegations in respect of ss.345, 357 and 358 of the Act were misconceived or vexatious and without reasonable prospects of success; and

•  foreshadowed its intention to seek a costs order against Mrs Sharma and her representatives pursuant to ss.375B and 376 of the Act.

[8] Attached to Mrs Sharma’s submissions were copies of various emails exchanged between her and Ms Ly in September 2018. I set out below several of those emails dated 20 September 2018 to provide further context.

1. Email from Ms Ly to Mrs Sharma at 3:24 pm on 20 September 2018

“Hi Rusha,

...

My previous email regarding the day rate of $275 per day plus superannuation, is the offer. If you do choose to accept it I can send you the contract. As a day rate contract, your 2 shifts at both BIA and WIA will remain unchanged.

...

If you could please advise me of your decision ...” 1

2. Response from Mrs Sharma to Ms Ly at 4:32 pm on 20 September 2018

“Dear Quyen

...

The current offer given to me is a very significant reduction and the management should have let me go a year back when I made myself clear about not willing to work as a contractor for AP and with underpayment.

...

I am not prepared to accept the unilateral variation to my employment contract. If Warwick and BIA is not prepared to honour the terms of my existing employment agreement and is terminating my employment then I should receive two weeks notice with pay as mentioned in my existing contract as clause 9.1. in my agreement.

Please let me know what management decides.” 2

3. Response from Ms Ly to Mrs Sharma at 6:31 pm on 20 September 2018

“Hi Rusha,

...

I have spoken to Management and they have agreed to continue keeping you at the current rate for another term at BIA.

However, as of 2019 the colleges will not be able to offer the same hourly rate but is happy to honour the day rate contract offer, plus superannuation.

Please advise me on your decision for 2019, in the coming term.” 3

The statutory framework

[9] The provisions of the Act relied upon by BIA in respect of its cost application are set out below together with s.377 of the Act which sets out the timeframe within which a costs application in relation to a general protections application made under either s.365 or s.372 of the Act must be made.

375B 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.

376 Costs orders against lawyers and paid agents

(1) This section applies if:

(a) an application for the FWC to deal with a dispute has been made under section 365 or 372; and

(b) a person who is a party to the dispute has engaged a lawyer or paid agent (the representative) to represent the person in the dispute; and

(c) under section 596, the person is required to seek the FWC’s permission to be represented by the representative.

(2) The FWC may make an order for costs against the representative for costs incurred by the other party to the dispute 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 dispute and it should have been reasonably apparent that the person had no reasonable prospect of success in the dispute; or

(b) of an unreasonable act or omission of the representative in connection with the conduct or continuation of the dispute.

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

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

377 Applications for costs orders

An application for an order for costs in relation to an application under section 365 or 372 must be made within 14 days after the FWC finishes dealing with the dispute.

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).”

[10] BIA’s costs application was made within 14 days of the Commission having finished dealing with Mrs Sharma’s general protections application. Accordingly, s.377 is satisfied.

The Costs Applicant’s case

[11] BIA submitted that both Mrs Sharma and her legal representative, AGL, unreasonably omitted to allege any facts in the application that could reasonably be considered to give rise to the alleged contravention of ss.340, 345, 357 or 358 of the Act. BIA further submitted that Mrs Sharma’s application was based on irrelevant facts, which even if proven, did not give rise to the alleged contraventions.

[12] Specifically, BIA sought costs against:

•  Mrs Sharma under s.375B of the Act on the basis that she caused it to incur costs because of the unreasonable act or omission in connection with the conduct or continuation of her application and under s.611 of the Act on the basis that her application had been made without reasonable cause, or it should have been reasonably apparent to her, with the benefit of legal advice, that her application had no reasonable prospects of success; and

•  AGL under s.376 of the Act on the basis that it encouraged Mrs Sharma to file her application and it should have been a reasonably apparent that Mrs Sharma had no reasonable prospects of success.

[13] BIA submitted that between 15 October and 29 November 2018 it incurred legal costs and disbursements of $2,928.75.

The First Costs Respondent’s case

[14] Mrs Sharma submitted inter alia that:

•  she did not hide any facts in making her general protections application;

•  the factual statements made in her application were all true, positing that the chronology of conversations submitted by BIA in its Form F8A supported the statements made in her general protections application;

•  she did not make the application without reasonable cause as BIA wanted to change her existing employment contract to a much lesser pay rate when her legally binding contract stated clearly that her pay should not go down, adding that the alternative option provided to her was to consider working for a third party, an agency called Absolute Personnel, as a contractor; and

•  her application was made in good faith with a view to resolving the dispute through conciliation, however as BIA refused to negotiate in the conciliation and she was unemployed at the time she could not afford legal help for court proceedings and as such had no other option but to discontinue her general protections application.

[15] Beyond this, Mrs Sharma highlighted several issues, including the following, in her submissions:

•  on 26 September 2018 Ms Ly sent her an email which stated among other things as follows:

“As previously mentioned, your contract is a casual contract

Clause 1.2. Your employment will be on a casual basis, as required. As a casual employee, there is no guarantee of ongoing or regular work. Thus, employment is not guaranteed, shifts are offered to trainers if there are enough students enrolled to keep a full class opened.

…

Aside from the option of signing over to the Day Rate Contract, you were also advised of a second option, signing a contract with Absolute Personnel to which you have chosen not to opt for. From the college’s perspective, Management have offered at least the best two (2) options for Casual Trainers.”

•  in 2016 she made a complaint about sham contracting arrangements on the basis that she was being paid based on an Australian Business Number (ABN), adding that she only realised this was a sham arrangement around May 2017 when her employer decided to move over all trainers’ contracts to Absolute Personnel;

•  as to the adverse action taken against her, her job was being changed to her disadvantage by lowering her pay and also by not offering her back pay from 2016 to which she was entitled to under the Educational Services (Post-Secondary Education) Award 2010 4 (the Award);

•  Absolute Personnel is a labour hire business from which BIA hires staff, adding that Ms Ly works in human resources for BIA and is also a Liaison Officer for Absolute Personnel; and

•  the application was not made without any reason as there were a series of incidents, correspondence and unclear directions from BIA which led to her general protections application.

The Second Costs Respondent’s case

[16] AGL opposed the granting of the costs order on the basis that:

•  Mrs Sharma’s application had been filed with reasonable cause;

•  it was not reasonably apparent to Mrs Sharma or it that the application had no reasonable prospects of success;

•  it did not encourage Mrs Sharma to start, continue or respond to the dispute; and/or

•  it did not cause the costs to be incurred because of an unreasonable act or omission.

[17] AGL also contended that the application filed by Mrs Sharma complied, or at the very least, substantially complied with the Act and the Fair Work Commission Rules 2013, adding that a party cannot be said to have made an application ‘without reasonable cause’ within the meaning of s.611(2)(a) of the Act simply because the application omitted particularised facts and/or the alleged workplace right(s).

[18] As to the basis for Mrs Sharma’s application, AGL highlighted among other things that:

•  with regard to s.340 of the Act, Mrs Sharma had a “workplace right” to make complaints and/or enquiries in relation to her employment, namely between 19 and 27 September 2018 relating to her employment and specifically her wages, as she was entitled to the benefit of a workplace instrument which entitled her to an hourly rate of pay of $49.57 in accordance with clauses 10.4(a), 14.3 and 14.5 of the Award;

•  at the time of making the application Mrs Sharma had reasonable cause to allege that BIA had contravened s.345 of the Act on the basis that it had knowingly represented to her that the contract of employment which she had executed on or around 10 July 2016 and under which she performed work as an independent contractor between 10 July 2016 and 2 July 2017 was a contract for services; and

•  Mrs Sharma’s application in respect of ss.357 and 358 of the Act was premised on BIA’s action between 19 and 27 September 2018 when it represented to Mrs Sharma that unless she signed a new employment contract accepting a lesser wage then she would have to provide services to it but as an independent contractor engaged by Absolute Personnel rather than as a direct employee of BIA.

[19] AGL further contended that BIA had failed to provide any meaningful submissions relating to ss.375B, 611 and/or 376 of the Act. In its submissions, AGL drew on the decisions in E. Church v Eastern Health t/as Eastern Health Great Health and Wellbeing 5, A Baker v Salva Resources Pty Ltd6 and Rahman v Commonwealth of Australia as represented by the Australian Taxation Office7.

[20] AGL posited that having considered the facts and circumstances of this matter, the Commission could not be persuaded that:

•  Mrs Sharma continued her application in circumstances where it should have been reasonably apparent to her that the application had no reasonable prospects of success;

•  any unreasonable act or omission by Mrs Sharma and/or it had been identified in connection with the conduct or continuation of the dispute;

•  it encouraged Mrs Sharma to start, continue or respond to the dispute; and

•  it displayed any unreasonable act or omission in connection with the conduct or continuation of the dispute.

[21] In conclusion, AGL submitted that the application for costs be dismissed and that the Costs Applicant pay the second Costs Respondent’s costs in this matter. 8

Consideration

[22] The application of ss.375B and 611 of the Act were considered by the Full Bench in Neil Keep v Performance Automobiles Pty Ltd (Keep) 9 which observed as follows:

“[11] Section 375B was inserted into the FW Act by the Fair Work Amendment Act 2013 (Cth). The new provision came into effect on 1 January 2014 and applies to dismissals which took effect from that date.

[12] The Supplementary Explanatory Memorandum to the Fair Work Amendment Bill 2013 (Cth)states as follows:

‘New section 375B allows the FWC to order costs against a party to a general protections dismissal dispute (the first party) if it is satisfied that the first party caused the other party to the dispute to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the dispute. New section 375B is similar to the costs orders that are available against parties in relation to unfair dismissal matters (see section 400A).

57. This power to award costs is in relation to the dispute before the FWC and does not include costs associated with a general protections court application.

58. The power to award costs under new section 375B is not intended to prevent a party from robustly pursuing or defending a general protections dispute before the FWC. Rather, the power is intended to address the small proportion of litigants who pursue or defend disputes in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.

59. The FWC’s power to award costs under subsection 375B(1) 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.

60. 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.

61. New subsection 375B(2) provides that the power to award costs against one party in these circumstances is only exercisable if the other party to the dispute makes an application in accordance with section 377. New subsection 375B(3) makes it clear that the new power to award costs under subsection 375B(1) operates in addition to subsection 611(2), which enables the FWC to make costs orders against a person in certain circumstances, such as where an application is made vexatiously or without reasonable cause.’

[13] It is apparent from the Supplementary Explanatory Memorandum that the legislature intended that the power to order costs provided by s.375B only be exercised where there is clear evidence of unreasonable conduct. Such an approach is entirely consistent with the jurisprudence relating to the other costs provisions in the FW Act (such as s.611).

...

[16] The FWC’s power to order that a person bear some or all of the costs of another person in relation to an application is only enlivened if the FWC is satisfied as to the matters set out in either s.611(2)(a) or s.611(2)(b).

[17] The proper construction of s.611(2)(a) was recently considered by a Full Bench in Church v Eastern Health t/as Easter Health Great Health and Wellbeing (Church). 4 Church is authority for the following propositions:

(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’. 

[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”.” 10 (Endnotes not included)

[23] BIA’s costs application needs to be considered against the background of s.611(1) of the Act which provides that “[a] person must bear the person’s own costs in relation to a matter before the FWC.”

[24] As noted by the Full Bench in Keep, “the legislature intended that the power to order costs provided by s.375B only be exercised where there is clear evidence of unreasonable conduct.” BIA contended that Mrs Sharma unreasonably omitted to allege any facts in the application that could reasonably be considered to give rise to the alleged general protections contraventions of the Act. However, an objective assessment of Mrs Sharma’s application does not support that contention. The extracts from Mrs Sharma’s application set out above suggest that her application was not completely devoid of merit. While I accept that some of Mrs Sharma’s contentions might have been better articulated in her application, this of itself does not in my view amount to unreasonable conduct. I note also that in its Form F8A BIA referred to its “decision to only engage daily rate contractors” (see paragraph [7] above, underlining added), which if anything suggests that there is some basis to Mrs Sharma’s contentions in respect of ss.357 and 358 of the Act. Against that background, I am not satisfied of the existence of unreasonable conduct as required by ss.375B or 376(2)(b) of the Act.

[25] As to s.611 of the Act, BIA submitted that Mrs Sharma’s application had been made without reasonable cause and that it should have been reasonably apparent to her, with the benefit of legal advice, that her application had no reasonable prospects of success. My previously expressed the view that an objective assessment of Mrs Sharma’s application does not point to her application being completely devoid of merit does not support a finding that Mrs Sharma’s application was, drawing on the language of the Full Bench in Deane v Paper Australia Pty Ltd as cited in Keep, “manifestly untenable or groundless.” In other words, I do not consider that BIA’s submissions regarding s.611 of the Act have been made out.

[26] Beyond that, I note that BIA produced no evidence to support its contention that AGL encouraged Mrs Sharma to file her general protections application as per s.376 of the Act.

[27] The above analysis does not support a finding that the grounds in ss.375B, 611 and 376 of the Act have been made out by the Costs Applicant.

Conclusion

[28] For all the above reasons, I have determined that it is not appropriate to make the costs orders sought by BIA as I am not satisfied that the requirements in ss.375B, 611 and 376 of the Act have been made out by the Costs Applicant. The costs application is therefore dismissed. An Order to that effect will be issued in conjunction with this Decision.

Printed by authority of the Commonwealth Government Printer

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 1   Witness Statement – Rusha Sharma at Appendix 4

 2   Ibid

 3   Ibid

 4   MA000075

 5   [2014] FWCFB 810

 6   [2011] FWAFB 4014

 7 [2013] FCCA 388

 8   No application for costs has been received from AGL

 9   [2015] FWCFB 1956

 10   Ibid at [11]-[19]