Santosheema Pty Ltd T/A Cardiac Care Centre v Marianne Alexander

[2016] FWC 1541

[2016] FWC 1541

FAIR WORK COMMISSION

DECISION

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

Santosheema Pty Ltd T/A Cardiac Care Centre
v
Marianne Alexander
(U2014/16217)

DEPUTY PRESIDENT SAMS SYDNEY, 10 MARCH 2016

Application for costs – whether original claim frivolous, vexatious or instituted without reasonable cause – no submissions from applicant – principles involved with costs applications – unrepresented parties – application for costs of witness expenses granted – order made on limited basis.

[1] In a decision published on 17 December 2015, I dismissed an application lodged with the Fair Work Commission (the ‘Commission’) by Ms Marianne Alexander (the ‘applicant’), under Chapter 3, Part 3-2 of the Fair Work Act 2009 (the ‘Act’); See: Marianne Alexander v Santosheema Pty Ltd t/as Cardiac Care Centre [2015] FWC 8709 (the ‘primary decision’). The applicant had sought compensatory orders in respect to an alleged unfair dismissal by Santosheema Pty Ltd t/as Cardiac Care Centre (the ‘respondent’) on 26 November 2014.

[2] In a summary of findings at para [77] of the primary decision, I concluded as follows:

‘1. The respondent is a Small Business Employer, as defined by s 23 of the Act;
2. The applicant’s dismissal was covered by the Small Business Unfair Dismissal Code;
3. As the applicant refused to attend a meeting to discuss her punctuality and conduct on 7 November 2014, and refused to engage with the respondent except by email, the issue of a support person does not arise;
4. The applicant was verbally warned on many occasions, and finally, in writing, on 11 November 2014, that her punctuality and conduct needed to improve or her employment may be terminated;
5. The applicant received the warning letter on 11 November 2014.
6. The applicant’s conduct and performance did not improve and, arguably, became worse;
7. Where the evidence of the applicant conflicts with that of Ms Brahmbhatt, Ms Monwara and Ms Gurabiovska, it is their evidence which I prefer;
8. There was a valid reason for the applicant’s dismissal;
9. The respondent complied with its obligations under the Code in respect to the applicant’s dismissal. Her dismissal was consistent with the terms of the Code;
10. Given the above finding at (9), the applicant cannot have been unfairly dismissed (s 385 of the Act);
11. Accordingly, it is unnecessary to determine whether the applicant’s dismissal was ‘harsh, unjust or unreasonable’, within the meaning of s 387 of the Act; and
12. The applicant’s claim for an unfair dismissal remedy must be dismissed.’

[3] On 5 January 2016, the respondent filed an application for costs against the applicant, pursuant to ss 400A and 611 of the Act. The application was filed within the time limits set out at s 402 of the Act. That application was listed for mention on 22 January 2016 and directions were issued for the filing of submissions by both parties. Submissions were filed by Ms Sheema Brahmbhatt, the Practice Manager and Director of the respondent. Perhaps not surprisingly, no submissions were filed by the applicant. On 23 February 2016, my Associate advised the applicant that as no submissions had been filed by her and no explanation was provided as to her reasons for not doing so, the Commission would determine the costs application without further reference to her. I note that, as at the date of this decision, there has been no communications with the Commission by the applicant. I propose then, to deal with the costs application by decision.

Respondent’s submissions

[4] Ms Brahmbhatt submitted that the applicant’s unfair dismissal application was ‘frivolous and vexatious’ and that she had ‘fabricated evidence to make a false claim against us and was probably hoping to extort financial compensation under false pretences.’ In support of the respondent’s submissions, Ms Brahmbhatt relied on a number of adverse comments and findings by me in the primary decision. These included:

• At para [72]: ‘The applicant claimed she only received the warning letter dated 11 November 2014 on 21 November 2014. However, there is unequivocal email evidence that this was untrue.’



• At para [65]: ‘In my view, her evidence in this respect was inconsistent, unconvincing and implausible. Regrettably, I found the applicant to be an unreliable witness of little credit.’



• At para [69]: ‘…I found the applicant’s evidence on both of these matters to be inconsistent, confusing and more than likely made up for the sole purposes of this case. Wherever she was asked a question inconvenient for her own purposes, she answered that she could not recall.’



• At paras [70]-[71]: ‘Here the applicant’s evidence was ‘all over the place’ and even changed from question to question. … Such evidence is nonsense.’



• At para [75]: ‘In any event, I am satisfied, on the balance of probabilities, that the applicant received the warning letter on 11 November 2014 and that she clumsily fabricated her evidence to give the impression she was unaware of it to bolster her argument that she had no notice of the allegations against her and that the Code had therefore not been followed.’

[5] Ms Brahmbhatt further submitted that the application for unfair dismissal was made to harass herself and her colleagues. It was a waste of time and resources and had cost the respondent time and money in preparing for the case and attending the Commission’s hearings. Ms Brahmbhatt attached an estimate of scheduled costs for her own time of $9,211.02, based on her base rate of pay of $50.61 per hour and the respondent’s witnesses (Ms Sonja Gurabiovska and Ms Nargis Monwara) of $455.47 each, based on $25.30 an hour. I accept the base hourly rates of pay of Ms Brahmbhatt, Ms Gurabiovska and Ms Monwara as disclosed by the respondent’s pay records.

Statutory provisions and applicable principles

[6] Section 400A of the Act is set out 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.

[7] Section 402 sets out the time limits for applying for costs (which was met in this case):

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.

[8] Section 611 of the Act is expressed as follows:

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 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.

(3) A person to whom an order for costs applies must not contravene a term of the order.

[9] The approach to be adopted by the Commission in costs application under s 611 of the Act was set out by the Full Bench in Qantas Airways Limited v Carter[2013] FWCFB 1811, where it was said at paras [17]-[19]:

‘[17] We refer to the approach we have taken to considering if the provisions of s.611(2)(a) or s.611(2)(b) are established. We first deal with the application made on the basis that Qantas has made its appeal vexatiously. The approach generally taken by members of the Commission as to the meaning to be ascribed to the word “vexatiously” in s.611(2)(a) is to adopt the comments of Justice North in Nilsen v Loyal Orange Trust  8 (Nilsen). Nilsen was decided in 1997 when the then Workplace Relations Act 1996 applied however the relevant provision considered by his Honour was in terms similar to s.611(2)(a) being whether an applicant “instituted the proceeding vexatiously or without reasonable cause”. About this provision his Honour said:

“The next question is whether the proceeding was instituted vexatiously. This looks to the motive of the applicant in instituting the proceeding. It is an alternative ground to the ground based on a lack of reasonable cause. It therefore may apply where there is a reasonable basis for instituting the proceeding. 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.”

[18] The approach we have taken to whether Qantas instituted its appeal without reasonable cause, is to consider whether at the time of instituting the appeal there was no substantial prospect of success. 

[19] We now turn to s.611(2)(b). The approach to be taken to considering whether such a finding should be made is summarised in the decision of the Full Bench in Baker v Salva Resources Pty Ltd (Baker). The relevant extract is 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 [endnotes omitted].”’

[10] In Hamilton James and Bruce Pty Limited v Michelle Gray [2011] FWAFB 9235, a Full Bench of Fair Work Australia (as the Commission then was) said at paras [18]-[21]:

‘[18] The phrase “without reasonable cause” was considered in Kanan v Australian Postal and Telecommunications Union. Section 347(1) of the then Industrial Relations Act 1988 (Cth) provided that:

“A party to a proceeding (including an appeal) in a matter arising under this Act shall not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause.” (Underlining added)

[19] In Kanan’s case, Justice Wilcox said in respect of the phrase that:

“A proceeding is not to be classed as being launched ‘without reasonable cause’ simply because it fails. As Gibbs J said in R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 at 473, speaking of the Conciliation and Arbitration Act equivalent of s 357 (s 197A):

‘... a party cannot be said to have commenced a proceeding “without reasonable cause”, within the meaning of that section, simply because his argument proves unsuccessful. In the present case the argument presented on behalf of the prosecutor was not unworthy of consideration and it found some support in the two decisions of this court to which I have referred. The fact that those decisions have been distinguished, and that the argument has failed, is no justification for ordering costs in the face of the prohibition contained in s.197A.’

In Standish v University of Tasmania (1989) 28 IR 129 at 139 Lockhart J applied the qualification in ordering costs against an applicant whose case he thought ‘misconceived’, rather than simply unsuccessful. But, as the Full Court pointed out in Thompson v Hodder (1989) 29 IR 339 at 342, ‘there may be cases which could not be described properly as “misconceived” but which would nevertheless be held to have been instituted without reasonable cause’.

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 it appears that, 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.”

[20] The phrase “no reasonable prospect of success” in the context of costs applications was considered by a Full Bench of the Australian Industrial Relations Commission (AIRC) in Deane v Paper Australia Pty Ltd. In that decision the Full Bench said:

“[5] It was not disputed that for the purposes of s.170CJ(1)(a)(ii) the appeal instituted by the applicant was a proceeding begun by him. The question is whether he did so in circumstances where it should have been reasonably apparent to him that there was no reasonable prospect of success. If that question is answered in the affirmative the Commission is able to make an order for costs against him. Whether it should do so is a separate although closely related question which requires a separate exercise of discretion.

[6] We were taken to a number of authorities which were said to bear upon the construction of s.170CJ. None of those authorities deals with the operative expression which now appears in s.170CJ(1)(b), namely: ‘no reasonable prospect of success’.

[7] The expression ‘no reasonable prospect of success' also appears in ss.170CF(2)(d), 170CF(3)(b) and 170CF(4). Section 170CF(4) provides for the summary dismissal of an application for relief pursuant to s.170CE, by the issue of an appropriate certificate, if the Commission concludes that the application has no reasonable prospect of success. The construction of the expression in that context was considered by a Full Bench of the Commission in Wright v Australian Customs Service. In that case the Full Bench, drawing upon relevant authority relating to summary dismissal of proceedings in various jurisdictions, held that a conclusion that an application had no reasonable prospect of success should only be reached with extreme caution and where the application is manifestly untenable or groundless.

[8] Making due allowance for the caution which must attend the exercise of a discretion to summarily dismiss an application, it appears to us that the approach in Wright is one we should follow. In other words, unless, upon the facts apparent to the applicant at the time of instituting the appeal, 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.” (Endnote omitted)

[21] In Smith v Barwon Region Water Authority, a Full Bench of the AIRC in considering the phrase “no reasonable prospect of success” in the context of s.650 of the Workplace RelationsAct 1996 (Cth) (WR Act) concerning AIRC advice to the parties about an application for relief in respect of termination of employment said:

“[48] Having regard to the authorities ... it seems to us that an application will have no reasonable prospects of success if it is so lacking in merit or substance as to be not reasonably arguable.”’

CONCLUSION

[11] Given my findings and conclusions in the primary decision (see para [2]), the valid reason for her dismissal and the history of her indifference to and disdain for her responsibility to comply with the Commission’s directions, I am satisfied that her purpose in lodging the unfair dismissal application was to cause annoyance and disruption to the respondent’s business and use the Commission’s processes to improperly and unfairly discredit the respondent’s witnesses. In my view, such conduct is ‘vexatious’ within the meaning of s 611(2)(a) of the Act. I am further satisfied that it should have been reasonably apparent to the applicant, from her appalling attendance record (See Annexure A to the primary decision), for which she was warned, that her unfair dismissal application had no reasonable prospects of success. Moreover, there is some force to the respondent’s submission that her application was designed to ‘extort’ money from the respondent on the false pretext of an unfair dismissal application; in other words, ‘to gain a collateral advantage’ (supra above).

[12] Having made the necessary jurisdictional finding required by s 611 of the Act, the Commission still has a discretion as to whether to make an order for costs and on what basis. It is a discretion which I am prepared to exercise in this case. However, the more difficult question is, on what basis should costs be ordered in this case?

[13] Schedule 3.1 to the Fair Work Regulations 2009 (the ‘Regulations’) sets out a schedule of costs which may be considered in cases where costs orders are made by the Commission. As might be expected, the costs identified in Schedule 3.1 relate almost entirely to costs incurred by legal practitioners in preparing for, and attending Commission proceedings. However, Item 1402 provides for witness expenses and is expressed as follows:

Item	Matter for which charge may be made	Charge
1402	For the attendance of a witness, other than a witness covered in item 1401:
(a) who is not remunerated in his or her occupation by wages, salary or fees	$93 to $149 per day
(b) who is remunerated in his or her occupation by wages, salary or fees	The amount lost by attendance at the FWC

[14] It is evident that the Regulations contemplate wages lost by attendance at the Commission. As there is no exclusion in the Act or the Regulations as to witnesses’ costs in matters arising in the unfair dismissal jurisdiction, I see no reason why such considerations should not apply in appropriate cases, where the requirements of ss 400A or 611, have been satisfied.

[15] In this respect, I am mindful of a recent decision of Hatcher VP in Hill v L E Stewart Investments Pty Ltd T/A Southern Highlands Taxis and Coaches & Ors [2014] FWC 5588 (‘Hill’). In that case, His Honour considered a costs application arising from an anti-bullying claim filed under s 789FC of the Act. The application was made by the respondents in that case in circumstances where the respondents were not legally represented and were intending to be witnesses in the proceeding. At para [11] of the Decision, His Honour noted that:

• the word ‘costs’ is not defined in the Act;



• costs are usually those fees and services which are paid for professional legal services and other permissible out of pocket expenses; and



• costs do not include time spent by a litigant in person in preparing for, and conducting his or her case.

[16] On this last point, His Honour relied on a judgement of the High Court in Cachia v Haines [1994] HCA 14; (1994) 179 CLR 403, where the plurality Mason CJ, Brennan, Deane, Dawson and McHugh JJ said at para [6]:

‘It is fundamental to the appellant’s argument that the time he lost in preparing and conducting his case constitutes “costs” within the meaning of this rule. He is, however, unable to sustain that proposition. The “costs” provided for in the Rules do not include time spent by a litigant who is a not a lawyer in preparing and conducting his case. They are confined to money paid or liabilities incurred for professional legal services. It is only in that sense that the Rules speak of “costs”.’

[17] Like in this case, the respondent/s in Hill were self-represented and were therefore unable to claim costs for time spent in preparing for or attending the hearing as parties. His Honour then went on to say:

‘[12] However each of the personal respondents was a witness in his own case as well as that of the first respondent (L E Stewart Investments Pty Ltd), the entity which had actually engaged Mr Hill. Each of them made and filed what may be characterised as a witness statement in accordance with the Commission’s directions, and presumably would have given evidence if the hearing had proceeded. A litigant who qualifies as a witness is entitled to the ordinary witness’s fees. Therefore I consider it appropriate to award costs in the nature of witness fees for the attendance by Mr Stewart, Mr Carnachan and Mr Matinca at the court in Wollongong on 10 July 2014.

[13] I will take into account the schedule of costs in Schedule 3.1 of the Fair Work Regulations 2009 for the purpose of quantifying costs (even though Schedule 3.1 does not appear to be prescribed for the purposes of s.611(2)). Part 14 item 1402 of Schedule 3.1 allows for the expense of witnesses who are remunerated in their occupation by wages or salary or fees to be awarded “The amount lost by attendance at the FWC”. There is no evidence before me that Mr Stewart, Mr Carnachan or Mr Matinca actually lost any pay because of their attendance. However, I consider that to the extent that L E Stewart Investments Pty Ltd paid wages to any of the three while they attended without getting any work performed in return, that constitutes an out-of-pocket witness expense to it. The respondents’ submissions stated that Mr Matinca is a part-time employee only who does not usually work during the day, so there could not have been any expense with respect to him. However, taking into account attendance time and travel time, I consider that four hours pay, at the rates identified in the respondents’ submissions, should be awarded to L E Stewart Investments Pty Ltd for Mr Stewart’s and Mr Carnachan’s wages [endnote omitted].’

[18] I respectfully agree with, and intend to apply the approach adopted by His Honour in Hill. Accordingly, the respondent is entitled to the costs associated with Ms Brahmbhatt:

● attending the conciliation on 4 February 2015	$50.61
● attending the non-compliance hearing on 20 March 2015	$50.61
● attendance at the primary hearing on 6 November 2015	$303.66
Total:	$404.88

[19] It is noted that on 30 September 2015, the respondent attended an appeal hearing it had initiated against a procedural decision of Gooley DP. That decision related to a s 399A application to have Ms Alexander’s application dismissed for non-compliance with directions. As both the s 399A application and the appeal were dismissed, I do not consider the costs of attending those hearings should be compensated for.

[20] There was no evidence that the three witnesses actually lost pay in attending the primary hearing described above. In that circumstance, I am assuming that Ms Gurabiovska and Ms Monwara were paid for their time spent in attending their hearing and giving evidence on 6 November 2015. If this is so, the respondent is entitled to be reimbursed for their wages on that day, being $151.82 each ($303.64). If, in the unlikelihood of the witnesses not being paid, these amounts should be reimbursed to the persons concerned.

[21] It follows that I propose to order that Ms Marianne Alexander shall pay to Santosheema Pty Ltd t/as Cardiac Care Centre an amount of $708.52 for costs associated with these proceedings. The amount so ordered shall be payable within 21 days of today. An order to this effect will accompany the publication of this decision.

DEPUTY PRESIDENT

Final written submissions:

Santosheema Pty Ltd t/as Cardiac Care Centre: 4 February 2016.

No submissions for Ms Marianne Alexander.

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