Stan Kunce v Deliver Australia Pty Ltd
[2012] FWA 6203
•27 JULY 2012
[2012] FWA 6203 |
|
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Stan Kunce
v
Deliver Australia Pty Ltd
(U2012/6097)
COMMISSIONER BISSETT | MELBOURNE, 27 JULY 2012 |
Application for unfair dismissal remedy - application for costs.
[1] Mr Kunce (the Applicant) lodged an application with Fair Work Australia (FWA) for unfair dismissal remedy on 15 March 2012. That application was subject to conciliation on 3 April 2012 where it did not settle.
[2] On 6 July 2012 I issued a decision on transcript in which I found that Mr Kunce had been unfairly dismissed from his employment with Deliver Australia Pty Ltd (the Respondent) and an order [PR526021] that he be paid compensation.
[3] During the hearing the Applicant made an application for an order for costs against the Respondent pursuant to s.611(2)(a) and (b) of the Fair Work Act 2009 for all costs incurred. As the Respondent clearly was not prepared to deal with a costs application on the day and had received no advance notice of it I issued directions for the Applicant and Respondent to lodge written submissions as to the application for a costs order.
[4] Mr Kunce has been represented by Fisher Cartwright Berriman Pty Ltd t/a ARA Employment Relations since 22 March 2012. The Respondent has been self represented.
[5] The background to this matter can be found in the transcript of the hearing and my decision issued on transcript. Evident from that material is that the Respondent failed to call witnesses even though witness statements had been filed, failed to cross examine the Applicant on his evidence and made the most cursory of submissions to the tribunal at the hearing.
[6] In respect of costs the Act states:
611 Costs
(1) A person must bear the person’s own costs in relation to a matter before FWA.
(2) However, FWA may order a person (the first person) to bear some or all ofthe costs of another person in relation to an application to FWA if:
(a) FWA is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or
(b) FWA 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: FWA can also order costs under sections 376, 401 and 780.
(3) A person to whom an order for costs applies must not contravene a term of the order.
[emphasis added]
[7] There are, in effect, therefore three grounds on which an application for a costs order might be granted:
i. If the response to the application was made vexatiously;
ii. If the response was made without reasonable cause; or
iii. If it should have been reasonably apparent that the response had no reasonable prospect of success.
[8] Each of these matters is considered below.
Submissions
Submissions of the Applicant
[9] The Applicant submits that the Respondent continued to resist the Applicant’s application despite:
(a) changing the reasons it relied on for the termination between the letter of termination and its response to and defence of the Applicant’s application;
(b) electing not to produce to FWA any evidence in defence of the application, and therefore in support of the reasons its [sic] relied on for the termination of the Applicant’s employment;
(c) electing not to cross examine Mr Kunce in relation to the evidence he provided to FWA, and thereby accepting his uncontested evidence; and
(d) providing no, or only very limited, submissions in defence of the application. 1
[10] The Applicant submits that FWA is entitled to view the fact that the Respondent chose not to argue its defence at the hearing of the application as acceptance by it that its defence had no reasonable prospect of success.
[11] Alternatively the Applicant submits that the Respondent’s response was made vexatiously. Whilst acknowledging the difficulty in making such a finding, the Applicant submits that the tribunal should take into account the behaviour of the Respondent in seeking to require the Applicant to sign a deed of release to access his statutory and contractual entitlements and those matters outlined above.
[12] The Applicant submits that it should have been apparent to the Respondent that its response to the application was made without reasonable cause. In this respect the Applicant submits that the tribunal should ask itself:
i. if the Respondent’s response to the application 2 was made without reasonable cause, considering that the reason for termination provided to the Applicant in the termination letter was different to the reasons included in the response to the application?
ii. if the Respondent’s response and defence 3 to the application was made without reasonable cause given its decision not to put forward any witness evidence or cross examine the Applicant?
[13] The Applicant says the answer to both of these questions is yes and this, along with its other behaviour, indicates that the Respondent responded to the claim without reasonable cause.
[14] The Applicant seeks an order in relation to all costs incurred by him in pursuing relief from unfair dismissal.
Submissions of the Respondent
[15] The Respondent’s submissions were received, in accordance with the directions, on 13 July 2012.
[16] The Respondent submits that the tribunal should accept that each party to the proceedings should meet its own costs. 4 Should the tribunal not decide so then it refutes that its response was frivolous, vexatious or made without reasonable cause.
[17] The Respondent submits that its written submission was ‘genuine and valid in all the commercial circumstances.’ The Respondent submits that it sought to resolve the matter without legal representation and while this may have resulted in its processes not being procedurally sound this does not make its response ‘frivolous, vexatious or made without reasonable cause or without any prospect of success.’ 5
[18] The Respondent submits that it did not fundamentally change its reasons for termination of the Applicant’s employment but rather expanded on these in its written submissions; it did provide evidence at the hearing in its submissions which was not considered because of the Respondent’s inexperience in such proceedings, assuming as it did that two signed witness statements would be accepted, and that no cross examination of the Applicant occurred because of the Respondent inexperience with protocols of the tribunal. 6
[19] The request that the Applicant sign a deed of release was made in the context of the Applicant having possession of highly confidential material which was the property of the Respondent. On receiving an assurance from the Applicant, payment was made without the need to sign the deed of release.
[20] Whilst the Respondent made a number of further submissions these go to errors the Respondent says are evident in the transcript of the proceedings of 6 July 2012 and do not go to the question of costs.
Consideration
Reasonably apparent that the response had no reasonable prospect of success
[21] I shall first consider if I can be satisfied that it should have been reasonably apparent to the Respondent that the response had no reasonable prospect of success.
[22] A conclusion that an application has no reasonable prospect of success was considered in Deane v Paper Australia Pty Ltd, 7where the Full Bench found:
[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.
[underlining added]
[23] In Smith v Barwon Region Water Authority, 8 a Full Bench of the Australian Industrial Relations Commission considered the phrase ‘no reasonable prospect of success’ in the context of s.650 of the Workplace RelationsAct 1996 (WR Act) concerning AIRC advice to the parties about an application for relief in respect of termination of employment and 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.
[24] The question of whether something is reasonably apparent must be objectively determined, rather than determined on the basis of what the person making the application or responding to it thought. The test is that FWA must be satisfied that it should have been reasonably apparent that an application or response had no reasonable prospect of success. 9
[25] As is relevant in this matter the appropriate consideration is if, upon the facts available to the Respondent at the time it responded to the application, the response was manifestly untenable or groundless. If this is so then the response must have no reasonable prospect of success.
[26] That an application does not succeed is not evidence that the response had no reasonable prospect of success.
[27] A legitimate question arises as to at which point in time such an assessment should be made. In an unfair dismissal matter there are a number of points in time at which a response is required to material submitted by the Applicant. These are at the time the Form F3 (employer response form) is filed in response to the initial application; during the conciliation proceedings; at the time of filing submissions and witness statements in accordance with the directions issued for the hearing of the matter and in response to the material filed by the Applicant; and in the hearing of the application. Section 611(2) of the Act is framed in the past tense - but this is not unexpected as a costs application will be made after the result of the application is made.
[28] In deciding if the response had any reasonable prospect of success it is appropriate that I consider the totality of the material submitted by the Respondent and its conduct in the hearing of the application. However this does not, in my opinion, preclude a consideration of the matters posed in s.611(2) of the Act at the various points in time identified above or from making my findings with respect to events following such points in time. Over the normal course of an unfair dismissal application the material of the both the Applicant and Respondent will develop as more detail is provided and more knowledge is gained of the case to answer. It is not implausible that a Respondent only becomes aware that it has no reasonable prospect of success when it sees the totality of the evidence intended to be brought by the Applicant. That this information was not known earlier cannot then expose the Respondent to a costs application when it had grounds to consider that it did have a chance of success in its defence of its actions.
[29] The Applicant suggests that FWA can reach a conclusion based on the failure of the Respondent to argue its defence in the hearing of the application, indicating acceptance by it that its defence had no reasonable prospect of success.
[30] The Respondent lodged not insubstantial material with the tribunal in response to the Applicant’s material in accordance with the directions issued for the hearing of the matter. On its face, and if it were competently prosecuted, there is nothing in this material to suggest that the defence was manifestly untenable or groundless.
[31] Considered objectively, the Respondent had reason to believe it had grounds for the termination of the Applicant’s employment that went to the effect of the Applicant’s work performance on the financial viability of the Respondent and the Applicant’s breach of policy. The Respondent considered it had evidence of this conduct. Whether this material would ultimately be accepted by the tribunal as sufficient evidence to support the decision is not the relevant consideration.
[32] However, having provided its material the Respondent made a conscious decision the day before the hearing to not call witnesses for whom it had lodged witness statements. When asked whether the witnesses would be attending Ms Appleby, appearing for the Respondent, said ‘yesterday it was decided they wouldn’t appear.’ 10 Ms Appleby also failed to cross examine the Applicant on his evidence. When questioned on the decision to not cross examine, Ms Appleby said ‘I don’t really have any questions because I haven’t got witnesses. So I can’t substantiate these allegation [sic]’11 and ‘I have this as evidence but I can’t back it up with witnesses. So I don’t believe there’s anything I can ask.’12 When asked if the Respondent intended to make any submissions Ms Appleby said:
The company’s position is they stand by their submission. In relation to their submission they’re relying on section 15.3 of his employment contract where he has failed to – if there is continued neglect by the employee of the employee’s duties. So on those grounds they stand by their submission. Apart from that I don’t have anything further to say. Thank you. 13
[33] Whilst the Respondent now pleads naivety and inexperience with tribunal procedures, no such matter was brought to the tribunal’s attention during or prior to the hearing. Whilst the employer has about 40 employees (at the time of the dismissal of the Applicant) it was represented in the hearing by its HR manager. It had the opportunity to seek advice and/or assistance prior to the hearing.
[34] The only motive that can be attributed to the Respondent for its behaviour in the hearing is that it maintained its opposition to the claim of the Applicant when, on some reflection in the days prior to the hearing, it was apparent that its position was not defensible. Having reached such a view it made a conscious decision to not make its witnesses available and to not mount any cogent argument in defence of its decision to dismiss the Applicant. Having so decided the Respondent maintained its opposition to the application throughout the hearing. It was only after the decision was made and the order for compensation was issued did the Respondent seek to engage in dialogue with the Applicant on some other basis for settling the claim.
[35] I accept that the Respondent may not have put its best case in the hearing. I do not know of the experience or otherwise of Ms Appleby (who represented the Respondent) but I note that she is the HR manager for the company. I note however that the Respondent had, until the time of the hearing, submitted not insubstantial material in defence of its decision to dismiss the Applicant. By the time of the hearing this material had, for reasons not explained, been thrown by the wayside.
[36] In these circumstances I am satisfied that it must have been reasonably apparent to the Respondent in the time immediately before and at the time of the hearing that its response to the application had no reasonable prospect of success.
Vexatiously or without reasonable cause.
[37] In Mokomoko 14Asbury C considered a number of authorities that dealt with the circumstances in which proceedings may be considered vexatious. From these it can be seen that, in determining if proceedings are vexatious, the appropriate considerations are:
i. to look at the motives in instituting the proceedings;
ii. if the predominant purpose in instituting the proceedings is to harass or embarrass the other person;
iii. if the proceedings are brought for collateral purposes and not for the purpose of having the Court adjudicate;
iv. if the proceedings are obviously untenable;
v. the existence or lack of reasonable grounds to institute the proceedings.
[38] In Dey v Commissioner for Railways, 15 Dixon J cited the view of O’Connor J who said in Burton v Shire of Bairnsdale:16
Prima facie every litigant has a right to have matters of law as well as fact decided according to the ordinary rules of procedure, which give him full time and opportunity for the presentation of his case to the ordinary tribunals and the inherent jurisdiction of the court to protect its process from abuse by depriving a litigant of these rights and summarily disposing of an action as frivolous and vexatious will never be exercised unless the plaintiff’s claim is so obviously untenable that it cannot possibly succeed.
[39] In Attorney General v Wentworth 17 Roden J observed that litigation may be considered vexatious on subjective or objective grounds.
[40] It is difficult in this matter to find that the Respondent engaged in the process in a vexatious manner. It responded to an application, as it should, and filed material albeit late generally in accordance with the directions issued. To the time of hearing the response lodged was not apparently untenable nor was it ever apparent that the Respondent did not want the tribunal to deal with the matter.
[41] In all of the circumstances I find that the Respondent was not vexatious in its response to the application.
[42] The meaning of the phrase ‘without reasonable cause’ was considered in Kanan v Australian Postal and Telecommunications Union, 18 where Wilcox J formulated an approach in the following terms:
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.
It is not a matter of the applicant’s motives but, rather, that he has put the respondent to the expense of resisting a claim which was always doomed to failure. There is no question of punishing the applicant for his unreasonable course of action. The rationale for making a costs order is that a measure of indemnity should be conferred upon the respondent for the costs it has been obliged to incur in responding to the unreasonably instituted proceeding. 19
[footnotes omitted]
[43] Whilst this is remarkably similar to the relevant considerations of ‘no reasonable prospect of success’, that phrase and ‘without reasonable cause’ are in different paragraphs of s.611(2) and therefore must be given separate consideration. No guidance on the distinction between the two is to be found in the Explanatory Memorandum to the Fair Work Bill 2009.
[44] The Applicant suggests that there are two questions to be answered in determining if the Respondent responded without reasonable cause to the application. These two questions are set out above and go to the alleged alteration of the reasons for dismissal from the dismissal letter to the Form F3 and the failure of the Respondent to call witnesses and put forward a defence to the dismissal at the hearing of the matter.
[45] I do note that the Respondent put into its response form 20 to the application a reason for termination slightly different to that contained in the letter of termination. Whilst this may indicate some inconsistency it does not demonstrate that the response had no reasonable prospect of success. In any case it appears to me that the reasons for termination given on the employer response form do attempt to expand on the letter of termination - as such the reasons in the response form are not diametrically opposed to those in the letter.
[46] For these reasons I do not consider that the Respondent, in completing the Form F3, altered the reasons for termination in the Form F3, rather I consider that the Form F3 was intended to be more detailed and expansive than the letter of termination. It is not a ground on which to find that the response was made without reasonable cause.
[47] Whilst I accept that the failure to prosecute its case at the hearing, objectively considered, indicates that at the time of hearing it was apparent to the Respondent that its response had no reasonable prospect of success, I am not convinced that the Respondent acted without reasonable cause to the point of hearing. It appears that at the hearing the Respondent gracefully effectively withdrew from proceedings. Perhaps it could have done more to stop the proceedings ‘on the door step’ so to speak but I am prepared to accept the failure to do so as naivety and leave it at that.
[48] I am therefore not satisfied that the Respondent responded to the application vexatiously or without reasonable cause.
Conclusion
[49] Having found that I am satisfied that it should have been reasonably apparent to the Respondent at the time of the hearing that its response had no reasonable prospect of success I have the discretion to order that the Respondent bear some or all of the costs of the Applicant. There is no requirement that I make such an order but the discretion exists.
[50] The Applicant has sought all of the costs incurred in the matter.
[51] I am mindful of the Respondent’s apparent lack of knowledge of the tribunal procedures. I am also mindful however that having withdrawn its witnesses the Respondent was aware, by its response to questions by the tribunal, that without its witnesses it could not substantiate its allegations. Ignorance however can be no satisfactory defence against the claim for costs. The Respondent, by its actions, did cause the Applicant to incur costs when it knew that the withdrawal of its witnesses would not allow it to substantiate its allegations. Suffice it to say I do not accept as valid reasons for its behaviour written submissions from the Respondent on this point.
[52] The Applicant prepared well for the hearing and presented a clear and concise case in defence of its claim that the Applicant’s termination of employment was harsh, unjust or unreasonable. It is apparent that appropriate time and effort went into preparation for the hearing.
[53] I have taken into account my finding above with respect to the behaviour of the Respondent up to the time of and during the hearing.
[54] I have therefore decided to award the Applicant costs incurred relevant to the proceedings the day before and on the day of the hearing taking into account the schedule of costs in the Fair Work Regulations 2009 (the Regulations).
[55] The Applicant is directed to provide to me a breakdown of costs for this period with reference to the schedule of costs in the Regulations within seven days of the issue of this decision. A copy of the breakdown should also be forwarded to the Respondent. The Respondent will have seven days from the date of receipt of the Applicant’s costs to provide any response as to the reasonableness or otherwise of the costs breakdown. Following receipt of the material I will make a decision on the payment of costs and issue an order accordingly.
COMMISSIONER
Final written submissions:
Submissions of the Applicant, 10 July 2012.
Submissions of the Respondent, 13 July 2012.
1 Submissions of Applicant on costs received 10 July 2012, paragraph 8.
2 That is, in the Form F3.
3 In the form of its submissions and witness evidence lodged in accordance with the directions of FWA and evidence adduced and submissions made at the hearing.
4 Section 611(1) of the Fair Work Act 2009.
5 Submissions of the Respondent dated 13 July 2012, paragraph 2.
6 Submissions of the Respondent dated 13 July 2012, paragraph 2(a)-(c).
7 AIRC, Print PR932454 (6 June 2003)
8 [2009] AIRCFB 769.
9 Mokomoko v Zennforce Protection Group Pty Ltd, [2011] FWA 1217, [18].
10 Transcript PN10.
11 Transcript PN61.
12 Transcript PN63.
13 Transcript, PN87.
14 [2011] FWA 1217.
15 (1940) 78 CLR 62.
16 (1908) 7 CLR 76 at 92.
17 (1988) 14 NSWLR 481.
18 (1992) 43 IR 277.
19 (1992) 43 IR 277 at 283-4.
20 Respondent’s F3.
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