Ryan Zosel v The Grace Freeman Nelson Trust T/A Landsculpture Design & Construction Pty Ltd T/A Landsculpture

[2016] FWC 6513

[2016] FWC 6513

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal
ss.400A, 401—Costs

Ryan Zosel
v
The Grace Freeman Nelson Trust T/A Landsculpture Design & Construction Pty Ltd T/A Landsculpture
(U2016/5111)

DEPUTY PRESIDENT KOVACIC MELBOURNE, 9 SEPTEMBER 2016

Application for costs against the Costs Respondent and his legal representative.

[1] On 3 March 2016 Mr Ryan Zosel (the Costs Respondent) made an application under s.394 of the Fair Work Act 2009 (the Act) alleging that he had been dismissed by The Grace Freeman Nelson Trust T/A Landsculpture Design & Construction Pty Ltd T/A Landsculpture (the Costs Applicant) on 9 February 2016 and that the dismissal was unfair. In its Form F3 – Employer Response to Unfair Dismissal Application the Costs Applicant raised two jurisdictional objections, contending that Mr Zosel was not employed by it as he was an independent contractor and that his application had been lodged outside the 21 day timeframe specified in s.394(2) of the Act as Mr Zosel finished his subcontracting arrangement with it in November 2015. Those jurisdictional objections were heard by the Fair Work Commission (the Commission) on 10 June 2016.

[2] In its decision 1 issued on 1 August 2016, the Commission determined that Mr Zosel was not dismissed as per s.386 of the Act and that as his application did not meet the requirement set out in s.394(1) of the Act it was therefore incompetent and must be dismissed. An Order to that effect2 was issued in conjunction with the Commission’s decision.

[3] On 15 August 2016 the Costs Applicant made an application for costs under ss.400A and 401 of the Act which respectively deal with costs orders against parties and costs orders against lawyers and paid agents. The Commission emailed the parties on 16 August 2016 seeking an indication as to whether they were open to the costs application being dealt with on the papers, with both parties advising that they were amenable to that approach. Against that background, the Commission issued Directions on 19 August 2016 regarding the filing of submissions concerning the costs application.

[4] For the reasons outlined below, I am not satisfied the grounds in either s.400A(1) or s.401(1A) of the Act have been made out. Accordingly, the costs application will be dismissed.

The Statutory framework

[5] As mentioned above, the costs application is made under ss.400A and 401 of the Act which provide 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.

401 Costs orders against lawyers and paid agents

(1) This section applies if:

(a) an application for an unfair dismissal remedy has been made under section 394; and
(b) a person who is a party to the matter has engaged a lawyer or paid agent (the representative) to represent the person in the matter; and
(c) under section 596, the person is required to seek the FWC's permission to be represented by the representative.

(1A) The FWC may make an order for costs against the representative for cost incurred by the other party to the matter 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 matter and it should have been reasonably apparent that the person had no reasonable prospect of success in the matter; or
(b) of an unreasonable act or omission of the representative in connection with the conduct or continuation of the matter.

(2) The FWC may make an order under this section 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.”

[6] Section 400A(2) and 401(2) both refer to s.402 of the Act which is set out below:

“402 Applications for costs orders

An application for an order for costs under section 611 in relation to a matter arising under this Part, or for costs under section 400A or 401, must be made within 14 days after:

(a) the FWC determines the matter; or
(b) the matter is discontinued.”

The Costs Applicant’s case

[7] The grounds on which costs are sought were set out in the costs application and can be summarised as follows:

• Mr Zosel’s application was in all the circumstances not just wanting but groundless;



• it should have been apparent to Mr Zosel and his paid agent, Mr Garry Dircks, that his application was manifestly untenable;



• it ought to have been reasonably apparent to Mr Dircks that Mr Zosel’s application had no reasonable prospect of success; and



• Mr Dircks should have advised Mr Zosel in the strongest possible terms to discontinue his application, adding that it was not clear whether Mr Dircks did this and that it could be assumed that Mr Zosel was advised to continue.

[8] The Costs Applicant elected not to provide any submissions in reply to the Costs Respondent’s written submissions.

The Costs Respondent’s case

[9] The Costs Respondent submitted that:

• the costs application should be dismissed as it is was incompetent because it had not been served upon the Costs Respondent as required by the Fair Work Commission Rules 2013 (the Rules) which require that service must be effected “As soon as practicable after lodgment with the Commission” 3;

the scope of the costs application in respect of Mr Zosel related to “costs incurred … because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter”;

in not relying on s.611 of the Act the Costs Applicant had abandoned any possible claim or decision based on Mr Zosel’s application having been made vexatiously, without reasonable cause or having no reasonable prospect of success;

• having regard to relevant authorities, Mr Zosel’s application could not be found to have no reasonable prospect of success as there were clear evidentiary, factual and legal issues in dispute;



• no relevant issue or event had been identified by the Costs Applicant regarding “an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter”;



• there was no evidence or assertion to support that Mr Dircks had encouraged Mr Zosel to start, continue or respond to the matter, adding that the Costs Applicant in the costs application noted in effect that it had no evidence of any wrongdoing or encouragement by Mr Dircks when it stated:

“Mr Dircks advice to Mr Zosel, in the strongest possible terms, should have been to discontinue his application. It is not clear as to whether or not Mr Dircks did this, as we were not privy to those conversations. However one can assume that Mr Zosel was being advised to continue.” 4 (Underlining as per the Costs Respondent’s submissions);

• there can be no claim that Mr Dircks did anything other than robustly pursue the claim on behalf of his client;



• no decision could be made under s.401(1A)(b) as the Costs Applicant had not identified any “unreasonable act or omission of the representative in connection with the conduct or continuation of the matter”; and



• the costs application ought to be dismissed.

Consideration of the issues

[10] Sections 400A(2) and 401(2) of the Act respectively provide that the Commission may only make a costs order under s.400A(1) or s.401 if the other party to the matter has applied for such an order in accordance with s.402. In this case it was not disputed that the costs application had been made in accordance with s.402 of the Act, i.e. within 14 days after the Commission had determined the matter. Accordingly, the requirement in ss.400A(2) and 401(2) is satisfied.

[11] Section 400A(1) of the Act provides that the Commission may make an order for costs against a party (the first party) to a matter arising under Part 3-2 – Unfair Dismissal of the Act if it 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.” The Costs Applicant in its application did not point to any such unreasonable act or omission by Mr Zosel in pursuing his unfair dismissal application. Rather, the Costs Applicant appeared to contend in its costs application that Mr Zosel’s application had been made vexatiously or without reasonable cause and had no reasonable prospect of success. While those considerations may have been relevant had the costs application been made under s.611 of the Act, as previously noted the costs application was made under s.400A. Against that background and in the absence of any submissions pointing to “an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter”, the Commission cannot be satisfied that the grounds in s.400A(1) have been made out.

[12] Section 401(1A) provides that the Commission may make an order for costs against the representative for costs incurred by the other party to the matter if it is satisfied that the representative caused those costs to be incurred because the representative encouraged the person to start, continue or respond to the matter and it should have been reasonably apparent that the person had no reasonable prospect of success in the matter or because of an unreasonable act or omission of the representative in connection with the conduct or continuation of the matter. With particular regard to those considerations, I note that the Costs Applicant:

• provided no material that would support a finding that Mr Dircks encouraged Mr Zosel person to start, continue or respond to the matter, indeed the Costs Applicant acknowledged in its application it was not clear to it whether or not Mr Dircks advised Mr Zosel to discontinue his unfair dismissal application as it was “not privy to those conversations”; and



• did not point to any such unreasonable act or omission by Mr Dircks in connection with the conduct or continuation of Mr Zosel’s unfair dismissal application.

[13] As to whether it should have been reasonably apparent that the person had no reasonable prospect of success in the matter as per s.401(1A)(a), a Full Bench of the then Australian Industrial Relations Commission in Wright v Australian Customs Service (Wright) 5explored the circumstances in which a finding that an application had no reasonable prospect of success may be warranted, observing that:

“We reiterate that, in our view, in considering whether the requisite conclusion should be drawn, the Commission should proceed with exceptional caution and only draw that conclusion where, on all the materials before the member, the substantive application is manifestly untenable or groundless. Where, on those materials, there is a real issue of fact to be determined and that issue is relevant to the resolution of the substantive application, it would be unlikely that a conclusion could be formed that the application has “no reasonable prospect of success at arbitration”.” 6

[14] As previously noted, in this case the Costs Applicant raised two jurisdictional objections to the application, i.e. that Mr Zosel was not employed by it as he was an independent contractor and that his application had been lodged outside the 21 day timeframe specified in s.394(2) of the Act as Mr Zosel finished his subcontracting arrangement with it in November 2015. While ultimately the Commission was not required to determine either issue, the latter issue involved the Commission determining when Mr Zosel had ceased working for the Costs Applicant and whether he had been dismissed at the initiative of the employer. Drawing on the language in Wright, determining these issues involved real issues of fact, i.e. whether any act of the Costs Applicant directly or consequentially resulted in the termination of Mr Zosel’s employment and whether Mr Zosel’s use of the term “break” meant an interruption to the continuation of work as opposed to a cessation of the employment relationship. Against that background, it cannot be said that Mr Zosel’s unfair dismissal application was manifestly untenable or groundless such that it had no reasonable prospect of success.

[15] Based on the above analysis, the Commission cannot be satisfied that the grounds in s.401(1A) have been made out. For reasons of completeness and with regard to s.401(1)(c) of the Act, I note that Mr Dircks was granted permission in accordance with s.596 of the Act to represent Mr Zosel in the matter 7.

[16] In summary, the Commission cannot be satisfied that the grounds in either s.400A(1) or s.401(1A) have been made out. Accordingly, the costs application will be dismissed.

[17] In those circumstances it is not necessary for the Commission to deal with the Costs Respondent’s submission that the costs application should be dismissed as it was incompetent because it had not been served upon it as required by the Rules. Suffice to say, in circumstances where the Costs Applicant was represented, it is inexplicable that his representative failed to comply with such a fundamental requirement.

[18] Finally, I would note that the scheme of the Act as set out in s.611(1) is that “A person must bear the person’s own costs in relation to a matter before the FWC.”

Conclusion

[19] For all the above reasons, I am not satisfied the grounds in either s.400A(1) or s.401(1A) have been made out. Accordingly, the costs application will be dismissed. An order to that effect will be issued in conjunction with this decision.

 1   [2016] FWC 5183

 2   PR583502

 3   Fair Work Commission Rules 2013 at Schedule 1

 4   Form F6 – Application for costs at Item 3.2

 5 (2002) 120 IR 346

 6   Ibid at [32]

 7   [2016] FWC 5183 at [4]

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