Sonia Ustinov v Adrian Gordon T/A Gordon Consulting Engineers

[2013] FWC 3492

[2013] FWC 3492

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Sonia Ustinov
v
Adrian Gordon T/A Gordon Consulting Engineers
(U2012/12638)

COMMISSIONER LEE MELBOURNE, 10 JULY 2013

Application for unfair dismissal remedy - costs application - ss. 400A, 401, 611 Fair Work Act 2009.

Introduction and Background

[1] On 28 February 2013, I issued a decision 1 dismissing an application for unfair dismissal remedy made by Ms Sonia Ustinov (Ms Ustinov). Adrian Gordon T/A Gordon Consulting Engineers (Gordon Consulting) has sought an order for costs against Ms Ustinov.

[2] In its application for costs, Gordon Consulting states that Ms Ustinov’s claim was frivolous and vexatious and had no reasonable prospect of success. Further, Gordon Consulting claims that it “incurred substantive costs preparing for telephone conferences and a hearing all of which were not attended by [the Applicant]”.

Directions and filing

[3] Upon receipt of the application for costs, I issued directions for the filing of submissions and evidence. The directions were for Gordon Consulting to file materials in support of the application by Thursday 28 March 2013. Ms Ustinov was directed to file materials in opposition to the costs application by 11 April 2013. The directions indicated that a hearing would be scheduled if requested by any party. It was directed that such a request was to be received by Friday 12 April 2013. The directions indicated that if no request was received, the matter would be determined on the papers.

[4] Gordon Consulting filed documents in support of their application for costs as directed. Ms Ustinov did not file any materials. Neither party sought a hearing in relation to the matter.

[5] I note Ms Ustinov did not file materials. Prior to the issuing of my directions, Ms Ustinov contacted my chambers to discuss the application. My associate explained that directions would be issued and explained that Ms Ustinov could file materials in defence of the application. A telephone number for chambers was provided to Ms Ustinov for further information. The directions issued were sent to Gordon Consulting by email and to the Applicant by email and express post. No returned to sender notifications were received in relation to Ms Ustinov.

Law to be applied

[6] The Fair Work Act 2009 (the Act) contains a number of provisions in relation to costs. Part 3-2 of the Act includes the following in relation to costs in unfair dismissal matters;

“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 costs 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.”

[7] Part 5-1 of the Act contains the following in relation to costs generally;

“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.

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).”

[8] Section 400A of the Act was inserted into the Act through the Fair Work Amendment Act 2012. Item 12 of Schedule 11 of the Fair Work Amendment Act 2012 states as follows;

“12 Part 3 of Schedule 6 to the amending Act

The amendments made by Part 3 of Schedule 6 to the amending Act (which is about costs orders against parties) apply in relation to dismissals that take effect after the commencement of that Part.”

[9] The commencement date for the amendments to Part 3 of Schedule 6 in noted in the Fair Work Amendment Act 2012 as 1 January 2013. The dismissal of Ms Ustinov took effect on 23 August 2012. As such, section 400A does not apply in relation to this dismissal and there is no power to award costs under that section.

[10] Section 401 relates to costs orders against lawyers and paid agents. Both parties were self represented in this matter and this section does not apply.

[11] Moving to the general power to order costs under section 611 of the Act, for the application to be deemed vexatious (section 611(2)(a)), the Commission must be satisfied that the main purpose of the application was to harass, annoy or embarrass the other party. 2 Alternately, the Commission must be satisfied that there was another purpose for the application other than the settlement of the issues arising in the application.3

[12] The test for “without reasonable cause” (section 611(2)(b)) was discussed in General Steel Industries Inc v Commissioner for Railways (N.S.W) and Others  4as follows;

“The test to be applied has been variously expressed; "so obviously untenable that it can· not possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow them" (the pleadings) "to stand would involve useless expense ". 5

[13] It is inappropriate to find that an application was without reasonable cause if success depends on the resolution of an arguable point of law. 6

[14] Whether it should have been reasonably apparent that an application had no reasonable prospect of success is an objective test. 7 A finding that an application has no reasonable prospects of success should be reached with extreme caution and should only be reached when an application is “manifestly untenable or groundless”8 or where the applicant does not have an arguable case.9 Section 611 of the Act can only be awarded in relation to the making of an application and response to that action. Costs cannot be awarded for conduct after filing which cause a party to incur additional costs.10

Consideration

[15] As discussed above, if costs are to be awarded in this matter, it can only be done so on the basis of the application of section 611 of the Act. This depends on me being satisfied that the application was made vexatiously or without reasonable cause or that it should have been reasonably apparent to Ms Ustinov that the application had no reasonable prospect of success.

[16] As already indicated, Ms Ustinov did not attend the hearing of the substantive application for unfair dismissal remedy. I must rely on documents filed by Ms Ustinov and Gordon Consulting prior to the hearing as a basis to determine whether the application was vexatious, without reasonable cause or whether it should have been reasonably apparent that the application had no reasonable prospect of success.

[17] Ms Ustinov was employed by Gordon Consulting for approximately two and a half years. 11 In the application filed, Ms Ustinov claimed that the only reason given to her for the dismissal was that she had used Gordon Consulting’s printer for unofficial or personal papers without the consent of management.12 She did not deny using the printer for private purposes, but claimed that she had never been told that consent was needed as it had been common practice throughout her employment.13

[18] Ms Ustinov claimed that she was verbally abused by a manager and called a liar. 14 She subsequently met with “the boss” who also called her a liar.15 Ms Ustinov claimed she offered to reimburse the costs of paper and ink used but she stated this was not accepted and she was dismissed.16 Ms Ustinov claimed that she had tolerated a lot of “inappropriate behavior” throughout her employment. She claimed that her dismissal was unfair because she wasn’t given a warning and because it may be related to being the only female employed at Gordon Consulting.17

[19] Gordon Consulting in their Form F3 - Response to Application for Unfair Dismissal Remedy claimed that Ms Ustinov had received 2 written warnings for mobile phone use while at work as well as “at least” 6 verbal warnings about using the mobile phone. 18 Gordon Consulting referred to the private use of the printer by Ms Ustinov on 23 August 2012. It is claimed by Gordon Consulting that when asked about the use of the printer Ms Ustinov initially denied the allegation causing Gordon Consulting to lose trust in her.19

[20] Gordon Consulting claimed that Ms Ustinov’s conduct was inconsistent with the terms of the “Personnel Manual” where under the heading “CONDUCT” it is stated, “Do not misuse the computers and don’t abuse the trust that is held in you as an employee”. The reason for dismissal was stated by Gordon Consulting as, “…the unauthorized use of the computer, Multi Function Centre, the misuse of time whilst being paid to do work tasks and the theft of paper and the breach of TRUST (sic)”. There were clearly other issues covered by written and verbal warnings that weighed up to make the scale tip against her”. 20

[21] In the materials filed by Gordon Consulting in accordance with the directions issued, Gordon Consulting claimed that the reason for the dismissal was theft (both of paper and through fraudulently filling out a timesheet to be paid for work whilst doing personal activities), misuse of the computer in breach of the Internet, Email and Computer Use Policy within the Personnel Manual, an accumulation of both written and verbal warnings and breach of trust. 21

[22] A copy of the “Personnel Manual” was annexed to Gordon Consulting’s submissions. The “Personnel Manual” included an Addendum that dealt with use of Internet, Email and Computers. The policy allows for “limited and reasonable personal use provided it does not impact on work performance; impact on resources; violate policy; interfere with efficient operations or relates to a personal business of the user”. The material filed makes clear that Gordon Consulting disputes Ms Ustinov’s version of the facts surrounding the dismissal as outlined in her Form F2 - Application for unfair dismissal remedy.

[23] Having considered the materials in this matter, there is no evidence support the notion that the application was made vexatiously. I cannot discern that Ms Ustinov’s main purpose for filing the application was to harass or annoy or embarrass Gordon Consulting or that there was another purpose for the action other than the settlement of the issues arising. I am not satisfied the application was made vexatiously.

[24] I have considered whether the application was made without reasonable cause. There were clearly disputed facts surrounding the circumstances of the dismissal. On Ms Ustinov’s own version of the facts, she was using the computer and printer for personal use. However, whether that use breached Gordon Consulting’s computer use policy is arguable. Whether she had been warned about doing so previously is a contested fact. Overall, the circumstances of the case indicate that there are a number of events and facts relevant to the criteria to be considered in section 387 of the Act as to whether the dismissal was harsh, unjust or unreasonable that are arguable. In these circumstances, I am not satisfied that the application was made without “reasonable cause”.

[25] It is also clear from the materials filed, that the application that was made was neither manifestly untenable nor groundless. Ms Ustinov had at least an arguable case. In these circumstances, I am not satisfied that the application had no reasonable prospects of success when it was made.

[26] Gordon Consulting in their submissions regarding the application for costs, refer to paragraphs [2] - [9] of my decision 22 dismissing the application as clearly stating the history of the application. Those paragraphs detail the failure of Ms Ustinov to prosecute the application.. Gordon Consulting’s submission that the application was frivolous and vexatious and had no reasonable prospect of success is based largely on the conduct of the Ms Ustinov in failing to attend various conciliations and hearings of the Fair Work Commission. As described above however, costs under section 611 can only be awarded in relation to the making of the application (or response to that application) and costs under section 611 cannot be awarded for conduct after filing.23

[27] I note that there may well be, in light of the conduct of Ms Ustinov subsequent to her filing her application, a good argument for the awarding of costs under section 400A of the Act. However, that argument is not available for this application given the date of the effect of the termination and the operation of the Fair Work Amendment Act 2012.

Conclusion

[28] As I am not satisfied that the requirements of section 611(a) or (b) of the Act are made out, the application for costs is refused.

COMMISSIONER

 1   [2013] FWC 1293

 2   Nilsen v Loyal Orange Trust (1997) 76 IR 180, 181

 3   Nilsen v Loyal Orange Trust (1997) 76 IR 180, 181

 4 (1964) 112 CLR 125

 5   General Steel Industries Inc v Commissioner for Railways (1964) CLR 125 at 129

 6   R v Moore and Others; Ex Parte Federated Miscellaneous Workers’ Union of Australia (1978) 140 CLR 470, 473

 7   Baker v Salver Resources Pty Ltd [2011] FWAFB 4014, [10]

 8   Baker v Salver Resources Pty Ltd [2011] FWAFB 4014, [10]

 9   Lisa Holland v Nude Pty Ltd T/A Nude Delicafe, [2012] FWAFB 6508

 10   Joanna Macdougall v Health Axis Pty Ltd T/A Raymond Hader Clinic, [2012] FWAFB 8109, [12]

 11   See Form F3 - Employer’s Response to Application for Unfair Dismissal Remedy, lodged 3 September 2012 at paragraph 1, page 1.

 12   See Form F2 - Application for unfair dismissal remedy, lodged on 23 August 2013, see question 2.

 13   See Form F2 - Application for unfair dismissal remedy, see question 2.

 14   See Form F2 - Application for unfair dismissal remedy, see question 3.

 15   See Form F2 - Application for unfair dismissal remedy, see question 3.

 16   See Form F2 - Application for unfair dismissal remedy, see question 3.

 17   See Form F2 - Application for unfair dismissal remedy, see question 3.

 18   See Form F3 - Employer’s Response to Application for Unfair Dismissal Remedy, at paragraph 2,page 1.

 19   See Form F3 - Employer’s Response to Application for Unfair Dismissal Remedy, at paragraph 2, page 2.

 20   See Form F3 - Employer’s Response to Application for Unfair Dismissal Remedy, at paragraph 2, page 3.

 21   See letter to Unfair Dismissal Rosters dated 01 November 2012 from Mr Adrian Gordon, page 1.

 22   [2013] FWC 1293

 23   Joanna Macdougall v Health Axis Pty Ltd T/A Raymond Hader Clinic, [2012] FWAFB 8109, [12]

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