Steven Cadd v Millennium Cleaning (Vic) Pty Ltd

[2017] FWC 2473

[2017] FWC 2473

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.365—General protections

Steven Cadd
v
Millennium Cleaning (Vic) Pty Ltd
(C2017/1301)

COMMISSIONER RYAN MELBOURNE, 10 MAY 2017

Application to deal with contraventions involving dismissal - application for costs made under s.375B .

[1] An application for a costs order under s.375B of the Fair Work Act 2009 (the Act) has been made by Millennium Cleaning (Vic) Pty Ltd (Millennium) against Mr Cadd in relation to the s.365 application filed by Mr Cadd on 8 March 2017. Mr Cadd discontinued his s.365 application on 22 March 2017 and the Commission finished dealing with the s.365 application on that day. Millennium filed its application for a costs order under s.375B on 27 March 2017. The costs application has been made within the time specified in s.377.

[2] The costs application was made using Form F6 which is the form to be used when applying for costs orders under any of ss.375B, 376, 400A, 401, 611, 779A or 780. Form F6 requires the applicant for a costs order to identify the specific provision of the Act under which a costs order is sought. The Form F6 under section 2 of the Form deals with “Costs against a party to a dispute” and Section 3 deals with “Costs against a lawyer or paid agent”. In Section 2 Item 2.1 requires the applicant to identify the specific section or sections of the Act under which costs are sought. Item 2.1 is as follows:

“2.1 Under which section(s) of the Fair Work Act 2009 are you making this application?

[ ] s.375B—Costs against parties in general protections matters

[ ] s.400A—Costs against parties in unfair dismissal matters

[ ] s.611—General provision in relation to costs

[ ] s.779A—Costs against parties in unlawful termination matters”

[3] The application for costs in this matter only marked the box next to s.375B. The application did not seek costs orders against any lawyer or paid agent of Mr Cadd. The application was prepared and signed by Ms Annabelle Brooks, In House Counsel, Millennium Services Ltd.

[4] The language of Item 2.1 of the Form F6 clearly contemplates that an application for cost orders can be made under more than one section of the Act. An applicant could make an application for costs orders under both ss.375 and 611 at the one time and using the one form. This reflects the purpose behind s.375B(3) of the Act.

[5] At the hearing of the costs application Ms Brooks submitted to the Commission that she intended to mark the box next to s.611. 1 What Ms Brooks intended to do and what she did are two very different things. The Commission has no capacity, given the language of s.377, to accept an application for a costs order in relation to a s.365 matter that is made outside of the first 14 days after the Commission finishes dealing with the s.365 matter. Therefore, even though Ms Brooks intended to make an application under s.611 in relation to the s.365 matter, the fact that she did not do so within 14 days after the Commission finished dealing with the s.365 means that no application under s.611 could be considered by the Commission.

[6] The above discussion is necessary to make clear that the only matter before the Commission is an application for costs under s.375B of the Act.

[7] Ms Brooks contended that s.375B was sufficiently broad in its operation that it would permit the Commission to order costs in the present matter in relation to the costs incurred by Millennium in considering and responding to the s.365 application of the Mr Cadd in the 14 day period between 8 March 2017 (the date Mr Cadd filed his s.365 application) and 22 March 2017 (the date Mr Cadd discontinued his s.365 application). Ms Brooks contended that the making of an application under s.365 was in connection with the conduct or continuation of the dispute. 2

[8] The contention of Millennium requires careful consideration of the purpose and scope of s.375B.

The Costs Scheme in the Act

[9] There are 7 separate provisions in the Act relating to costs applications. They fall into 3 categories: (1) ss.375B, 400A and 779A which relate to applications for cost orders against a party to a proceeding under a specific provision of the Act; (2) ss.376, 401 and 780 which relate to applications for cost orders against representatives of a party to a proceeding under a specific provision of the Act; and (3) s.611 which is a general application for a costs order against a party to any proceeding before the Commission.

[10] Sections 376, 401, 780 and 611 were all introduced as part of the initial Fair Work Act in 2009. In 2012 s.400A was introduced into the Act and s.401 was amended to strengthen the costs provisions against representatives. In 2013 ss.375B and 779A were introduced into the Act and ss.376 and 780 were amended to strengthen the costs provisions against representatives. The 2013 amending legislation had the effect of copying s.400A which only applied in relation to unfair dismissal matters and repeating the provision so that it applied to general protection matters and to termination of employment matters. Any consideration of the operation and scope of s.375B will be assisted by having regard to the purpose and scope of operation of s.400A.

[11] The Act at its commencement in 2009 contained s.611 and s.376 in the following form:

“376. Costs orders against lawyers and paid agents

(1) If FWA has granted permission in accordance with section 596 for a person to be represented by a lawyer or paid agent in relation to an application under section 365 or
372, FWA may make an order for costs against the lawyer or paid agent if FWA is satisfied:

(a) that:

(i) the lawyer or paid agent caused costs to be incurred by another party to the dispute because the lawyer or paid agent encouraged the person to make the application; and
(ii) it should have been reasonably apparent that the application would have no reasonable prospect of success; or

(b) that the lawyer or paid agent caused costs to be incurred by another party to the dispute because of an unreasonable act or omission of the lawyer or paid agent in connection with the conduct or continuation of the dispute.

(2) FWA may make an order under this section only if the other party has applied for it under section 377.

(3) This section does not limit FWA's power to order costs under section 611.”

“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 of the 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.

Note: This subsection is a civil remedy provision (see Part 4-1).

[12] The Explanatory Memorandum 3 to the 2009 Act contained the following explanations in relation to s.376 and s.611:

“Clause 376 – Costs orders against lawyers and paid agents

1497. Subclause 376(1) allows FWA to make costs orders against lawyers and paid agents who cause costs to be incurred by another party in relation to an application under clause 365 or clause 372, because they encouraged a person to make the application when it should have been reasonably apparent there were no reasonable prospects of success, or because an act or omission by them in connection with the conduct or continuation of the dispute was unreasonable.

1498. These provisions are designed to deter lawyers and paid agents from encouraging others to make speculative applications, or make applications they know have no reasonable prospects of success.

1499. Subclause 376(1) operates in addition to subclause 611(2). Subclause 611(2) provides FWA with a general power to make costs orders against a person in the following circumstances:

where a person made an application, or responded to an application, vexatiously or without reasonable cause; or
where a person made an application, or responded to an application, and it should have been reasonably apparent to the person that their application, or response to an application, had no reasonable prospects of success.

1500. Subclause 376(2) provides that, in order for FWA to make a costs order against a lawyer or paid agent, an application by the person seeking the costs needs to have been made under clause 376.

1501. Subclause 376(3) clarifies that these provisions are not intended to limit FWA‘s power to order costs under clause 611.

Clause 611 – Costs

2353. Subclause 611(1) provides that generally a person must bear their own costs in relation to a matter before FWA.

2354. However, subclause 611(2) provides an exception to this general rule in certain limited circumstances. FWA may order a person to bear some or all of the costs of another person where FWA is satisfied that the person made an application vexatiously or without reasonable cause or the application or response to an application had no reasonable prospects of success.

2355. A note following subclause (2) alerts the reader that FWA also has the power to order costs against lawyers and paid agents under clauses 376, 401 and 780 which deal with termination and unfair dismissal matters.
2356. Subclause 611(3) provides that a person to whom a costs order applies must not contravene a term of the order.”

[13] From the foregoing it is clear that the trigger action for enlivening s.611 was either the making of an application or by responding to an application and that the two trigger actions for enlivening s.376 was either making an application or an unreasonable act or omission in connection with the conduct or continuation of the dispute. The 2013 amendments to s.376 expanded the first trigger action from “making an application” to “start, continue or respond to the dispute”. However the 2013 amendments did not alter the second trigger action.

[14] The 2013 amendments also introduced s.375B which is as follows:

“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.

[15] The Explanatory Memorandum to the 2013 amending legislation explains s.375B as follows:

“New Section 375B - Costs orders against parties

56. 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.”

[16] The trigger action to enliven s.375B is “an unreasonable act or omission of the first party in connection with the conduct or continuation of the dispute” and this is the same as the second trigger action identified in s.376. Given that s.375B and s.400A use exactly the same wording to identify the trigger action to enliven the section, namely, “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/matter, then it is appropriate to also look at the Explanatory Memorandum to the 2012 amending legislation which introduced s.400A. That Explanatory Memorandum included the following:

“170. The FWC’s power to award costs under this provision 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. This is intended to capture a broad range of conduct, including a failure to discontinue an unfair dismissal application made under section 394 and a failure to agree to terms of settlement that could have led to the application being discontinued.”

[17] The costs provisions of the Act clearly draw a distinction between actions which involve starting a matter and actions which involve the conduct of a matter or the continuation of a matter.

[18] The contrast between the language of s.375B and 376 couldn’t be clearer. Section 376 has two trigger actions which enliven the section and s.375B has only one trigger action to enliven the section. When compared with each other it is reasonable to conclude that Parliament intended s.375B not to have as wide an operation as does s.376. In particular s.375B does not include as a trigger action to enliven the section language similar to or to the same effect as s.376(2)(a). Similarly the contrast in the language between s.375B and s.611 is quite stark. Section 611 clearly is enlivened by a trigger action of making an application under either s.365 or 372. However the very language of s.375B does not include as a trigger action to enliven the section the act of making an application under either s.365 or 372. It is relevant to note that the two examples given in the Explanatory Memorandum to s.400A both relate to conduct occurring after the matter had commenced.

[19] It is reasonable to conclude that Parliament did not intend that s.375B would apply to costs incurred by a respondent solely arising out of the conduct of the applicant in filing an application under s.365 or s.372.

[20] The above analysis reaches a conclusion which was reached by another member of the Commission much more quickly. In Zosel v The Trustee for The Grace Freeman Nelson Trust  4 Deputy President Kovacic said:

“[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.”

[21] As has been noted earlier in this decision Mr Cadd filed his application in this matter on 8 March 2017 and discontinued the application on 22 March 2017. The Respondent was first notified of the application on 14 March 2017. Therefore the costs application relates to costs incurred by the Respondent between 14 March 2017 and 22 March 2017.

[22] In the present matter Mr Cadd filed an application under s.365 which was doomed to fail as Mr Cadd had previously filed an application under s.365 in relation to his dismissal and had settled that claim and had signed terms of settlement which prevented him from making further applications to the Commission in relation to his employment and to his dismissal. Mr Cadd had been represented in his first s.365 application but acted on his own in relation to the second s.365 application.

[23] An examination of the file in this matter shows that whilst Mr Cadd filed a Form F8 – General protections application involving dismissal – on 7 March 2017 that form was incomplete and could not be accepted. Staff at the Commission contacted Mr Cadd by email to advise him to file a completed application. On 8 March 2017 Mr Cadd filed a completed Form F8. On both 8 March 2017 and 9 March 2017 Mr Cadd forwarded 34 emails to the Commission attaching various documents which formed part of his application. On 10 March 2017 staff of the Commission contacted Mr Cadd by telephone to discuss with him his application in light of the many documents Mr Cadd had filed as part of his application. The file note of that conversation is illuminating:

“Spoke to Steven today. I advised him that his matter was still being processed as he sent in 40 e-mails. He asked about the waiver, if we received it. I explained that I did not see a waiver attached, rather more third party links to the waiver.

I did clarify if he was lodging the same application as back in August 2016, and he confirmed he was. He explained to me he is being discriminated against and he is not getting his long service leave. I told Steven that he cannot lodge the same application again and that his first matter was resolved into Terms of Settlement (TOS). I ensured I asked him to confirm this and he did. He told me he had a copy of the TOS. I explained that I was not aware of what his TOS said, however most deeds of settlement and release would finalise matters as a clause would specifically mention that it was “full and final” settlement. Explained he should get legal advice as taking things further may put him in breach of the TOS and there may be consequences to that. Steven responded that “they can try it on”, presumably meaning Millennium. I responded that they (the Respondent) just might and he needed to seek legal advice.

Steven explained to me he has spoken to JobWatch and they told him to put an application with us. I advised him that I found that peculiar, particularly if he had explained to JobWatch his matter had already resolved. He accused me of calling him “stupid” at this point. I explained to him that we never made a decision in his matter. A decision would be publishable on our website and made only by a member of the Commission. Rather, he put in an application and it was resolved prior to hearing at conciliation. No decision was made and it cannot be appealed. Steven insisted that JobWatch and CGU (via his WorkCover claim) both told him he can put in an application with us to appeal. He insisted he was being discriminated against and I pointed out that he had previously lodged an application with the Human Rights Commission.

At this stage, the call was becoming a little bit testy. He asked and I gave him my full name and he then ended the call.”

[24] On any view of Mr Cadd’s conduct in lodging the application in the present matter it was conduct that would have led to a costs order being made against him under s.611. However, Millennium only sought a costs order under s.375B.

[25] Whilst Mr Cadd acted without reasonable cause in making the application in the present matter and whilst it should have been reasonably apparent to Mr Cadd that his application in the present matter had no prospect of success, he nevertheless made the application. From his oral submissions to the Commission it appears that Mr Cadd acted on the suggestion from the Commission staff member as Mr Cadd sought advice from a “discrimination lawyer” only after he had lodged the application in the present matter and that the “discrimination lawyer” advised him to discontinue his application, which Mr Cadd did 14 days after lodging the application and 4 days after speaking to a staff member at the Commission. 5 The conduct of Mr Cadd in discontinuing his application when advised to do so was appropriate.

[26] A perusal of the file in this matter also identifies that the Commission sent a letter to Millennium on 14 March 2017 which advised Millennium of the application made by Mr Cadd and supplied Millennium with a copy of the application and all supporting material. Millennium filed a Form F8A – Response to general protections application – on 20 March 2017. Effectively the costs application in this matter relates to costs incurred by Millennium in the 7 day period from 14 March 2017 to 20 March 2017. As the above timeline shows any costs incurred by Millennium are only incurred in relation to their initial response to the application made by Mr Cadd. The only conduct of Mr Cadd which caused Millennium to incur any costs was the action of making an application under s.365. Once the application was made by Mr Cadd there is no other action by him nor is there any act of omission by him in connection with the conduct or continuation of the dispute until Mr Cadd emails the Commission at 7.34pm on 21 March 2017 to discontinue his application. The application was discontinued by the Commission on 22 March 2017.

[27] Apart from the making of the application on 8 March 2017 there is no other action and there is no act of omission by Mr Cadd, whether reasonable or unreasonable, in connection with the conduct or continuation of the dispute which would cause costs to be incurred by Millennium. Section 375B does not permit the Commission to make a costs order where the only costs incurred by Millennium was incurred in responding to the initial application and where there is no other act or omission by Mr Cadd in connection with the conduct or continuation of the dispute.

[28] The costs application under s.375B must fail. The costs application is dismissed.

COMMISSIONER

Appearances:

Ms A. Brooks for Millennium Cleaning (Vic) Pty Ltd.

Mr S. Cadd on his own behalf.

Hearing details:

2017.

Melbourne:

May 4.

 1   Transcript of proceedings at PN175 – PN188.

 2   Ibid at PN193 – PN197.

 3   Explanatory Memorandum to the Fair Work Bill 2008.

 4   [2016] FWC 6513.

 5   Transcript at PN162.

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