Subeg Singh v Sydney Trains

[2019] FWC 6620

[2019] FWC 6620

FAIR WORK COMMISSION

DECISION

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

Subeg Singh
v
Sydney Trains
(U2016/12864)

DEPUTY PRESIDENT SAMS SYDNEY, 30 SEPTEMEBER 2019

Application for relief from unfair dismissal – breaches of safety policies and procedures - substantive application dismissed – application for costs – whether costs incurred because of an unreasonable act or omission – whether application had no reasonable prospects of success – indemnity costs refused – unreasonable act established – costs ordered from that date – party to party costs – further quantification adjourned until appeal outcome known.

[1] On 21 June 2019, I published a decision in Singh v Sydney Trains [2019] FWC 182 (the ‘Decision’). Briefly stated, I determined that Mr Singh’s dismissal by Sydney Trains as a Team Leader on 30 November 2016 was neither ‘harsh, unjust or unreasonable’, within the meaning of s 387 of the Fair Work Act 2009 (the ‘Act’) and dismissed his application for orders for reinstatement, continuity of employment and lost remuneration. I note that the Decision is subject to an appeal lodged by Mr Singh, which is listed before the Full Bench of the Commission in November 2019.

[2] On 4 July 2019, through its lawyers, Bartier Perry Lawyers, Sydney Trains filed an application for costs against Mr Singh, pursuant to ss 400A and 611 of the Act. This decision will determine that application (the ‘costs application’). On 16 July 2019, I listed the costs application for a directions hearing and conference. Both parties retained their legal representation for which permission was granted in the substantive proceedings, pursuant to s 596 of the Act. To the extent necessary, I continue the permission granted in 2017 for both parties to be represented by lawyers. Ms Amber Sharp, Solicitor with Ms Rachel Miller appeared for Sydney Trains and Mr Oshie Fagir, of Counsel, appeared for Mr Singh. For present purposes, I shall adopt the parties’ preferred approach to continue to refer to Sydney Trains as the respondent and Mr Singh as the applicant. Directions (subsequently amended) were issued and the parties agreed that the Commission should determine the costs application ‘on the papers’.

SUBMISSIONS

For the respondent

[3] An order for costs against the applicant in these proceedings, is sought on the following alternative bases:

(a) the applicant caused the respondent to incur costs because of an unreasonable act or omission in connection with the conduct or continuation of the matter: s 400A of the Act; and

(b) further, or in the alternative, it should have been reasonably apparent to the applicant that the application had no reasonable prospects of success: s 611(2)(b) of the Act.

[4] It was submitted that at all times following the filing of the original application, and in the two year period since, the respondent had made repeated, genuine and concerted efforts to resolve the proceedings. Reliance was had on an affidavit of Ms Amber Sharp, to which was annexed various, without prejudice, offers of settlement, including the following:

(a) Re-employment in a non-rail safety critical role while maintaining the applicant’s pay rate as a Team Leader (email dated 16 February 2017; letter dated 7 April 2017 and letter dated 12 May 2017);

(b) Payment of the sum of $50,339.33, being equivalent to 7 months of the applicant’s base rate of pay, and in excess of the maximum compensation cap under section 392(5) of the Act (by letter dated 3 November 2017);

(c) Payment of the sum of $69,450, being a sum equal to the maximum compensation cap under section 392(5) of the Act, which roughly equated to almost 10 months of the applicant’s base rate of pay (by letter dated 23 March 2018); and

(d) Payment of the sum of $70,000, being a sum in excess of the maximum compensation cap under section 392(5) of the Act, equal to 26 weeks’ pay at the applicant’s total remuneration, including overtime; plus provision of a Gold Travel Pass, and treatment of the termination as a resignation (in the conciliation conference on 9 April 2018).

It was noted that the final settlement offer remained open during the eight days of hearing, but has at all times been rejected by the applicant.

[5] The respondent relied on my comments in dismissing the substantive application at [346] and [348] as follows:

‘[346] Even if these ‘harshness’ elements tipped the balance in favour of an unfairness finding, Mr Singh seeks a remedy nothing short of full reinstatement. Reinstatement, in my view, would be utterly unthinkable in circumstances where he refuses to accept any responsibility at all for the incidents of 1 August 2015 and casts the entire blame on Sydney Trains and his fellow employees. There was not a skerrick of remorse - no regret for his actions - no apology - no contrition.

…

[348] Given Mr Singh’s own evidence, I could not be at all confident that he would not act in a similar way in similar circumstances, or take a similar cavalier approach to his responsibilities as Team Leader. He ignored his responsibilities as a PO4 for which he had been trained. He disregarded the cardinal safety policies and procedures of Sydney Trains, notwithstanding he claimed he had a good knowledge and awareness of them. His belligerent denial of any wrongdoing is so gravely concerning, that I am satisfied the employer’s trust and confidence in him has been permanently destroyed.’

Further, it was observed that I found, inter alia:

(a) the applicant failed to accept responsibility for his actions and sought to blame others;

(b) the applicant expressed no regret, remorse or contrition;

(c) the applicant was not a witness of truth;

(d) the applicant reconstructed events to meet the evidence filed by the respondent; and

(e) the manner in which the applicant gave evidence prolonged the hearing.

[6] It was submitted that the applicant’s ‘dogged refusal’ to accept anything short of reinstatement was an unreasonable act or omission in connection with the conduct or continuation of the proceedings, or it would have been reasonably apparent to the applicant that his reinstatement application had no reasonable prospects of success.

[7] The respondent identified seven alternative points in time from which the Commission could properly exercise its discretion to award costs. These were:

(a) 27 January 2017, being the date the respondent filed its evidence and submissions; or, in the alternative;

(b) 16 February 2017, when the parties settled in principle (according to the respondent); or, in the alternative;

(c) 3 November 2017, when the respondent offered to settle for a sum in excess of the compensation cap (having regard to the applicant’s base rate of pay) under section 392(5) of the Act and outlined, by reference to the evidence filed, the reasons why reinstatement was not appropriate; or, in the alternative;

(d) 7 March 2018, being the date upon which the respondent filed its evidence in reply and submissions; or, in the alternative;

(e) 23 March 2018, being the date upon which the respondent made an open offer to settle for an amount equal to the compensation cap, being equivalent to approximately 10 months of the applicant’s base rate of pay; or, in the alternative;

(f) 6 April 2018, being the first day of the hearing when the respondent indicated that its settlement offer of 23 March 2018 remained open for acceptance; or, in the alternative;

(g) 9 April 2018, being the second day of hearing following the Commission-directed conciliation at which the respondent increased its settlement offer and left it open for acceptance.

[8] The respondent’s submission then set out a detailed chronology of events from 24 October 2016 when the application was first filed. It was said that the issue of the inappropriateness of reinstatement was well known to the applicant from Mr Bugeja’s evidence filed on 27 January 2017. There then followed the offer of settlement on 13 February 2017, which essentially provided re-employment to a non-safety critical role with the same rate of pay. This became the subject of various exchanges between the applicant’s then legal representatives and his subsequent representative by Mr Michael Lawler, (which itself became the subject of some controversy and other proposed proceedings). Further settlement offers were made, over a number of months during 2017, and other proceedings about the settlement were the subject of appeal. On 7 November 2017, the applicant rejected the most recent offer of settlement (7 months’ salary) and said:

(a) ‘I am confident that the evidence will show that I did not commit the misconduct alleged against me and that [sic] I am confident that I will be reinstated’

(b) ‘I want my job back, and I want to clear my name. For those reasons I will not accept a purely monetary settlement’

(c) ‘I would be happy to discuss further compromise involving reinstatement’.

[9] On 19 January 2018, the applicant filed his reply evidence and submissions and the respondent filed its evidence in reply on 7 March 2018, which included evidence contradicting the applicant’s version of events. After the first day of the hearing, I formed the view that a Member Assisted Conciliation by Commissioner Riordan may be of some utility. This proved unsuccessful. The hearing continued and the respondent’s final offer remained open throughout the hearing.

[10] The respondent highlighted the passages from my decision in which I found the applicant was not a witness of truth and had reconstructed events to meet the evidence of the respondent, I set out these extracts below:

‘(c) the applicant was not a witnesses of truth:

‘[320] In my opinion, there were many examples in Mr Singh’s evidence which were very concerning and satisfies me, his ‘spin’ on the incidents of 1 August 2015, is simply not believable. I do not intend to record all of this evidence, but highlight some of the difficult to reconcile and implausible examples to demonstrate the point.

…

[332] I reject Mr Singh’s evidence as to his minimal role in the incidents on 1 August 2015. His evidence is not credible or believable. His testimony is riddled with unsubstantiated bravado, inconsistencies and improbabilities, rather than a full, frank and honest account of the events that day.’

(d) the applicant reconstructed events to meet the evidence filed by the respondent:

‘[318] Regrettably, but perhaps understandably, the entirety of the applicant’s evidence was designed and constructed to support his steadfast trope in this case; namely, he had done nothing wrong on 1 August 2015; Sydney Trains was responsible for the systemic failings on the day and all the other members of the Team, except himself, were culpable and responsible for any individual personal failings. Indeed, not only had he done no wrong, but he claimed his actions in moving from his Lookout position to warn of another safety breach, averted a more serious incident.

…

[321] It seems to be that these examples (and others) of non-explanations were in response to Sydney Trains’ evidence which had been filed first in these proceedings. Mr Singh had to reconstruct his case in order to fit the narrative of his insistence of innocence and in light of compelling corroborative evidence which did not help his case.

(e) the manner in which the applicant gave evidence prolonged the hearing:

‘[316] Mr Singh’s viva voce evidence spanned almost three days. He had the assistance of a Punjabi interpreter. Having observed him in the witness box and from an objective review of the transcript, the length of Mr Singh’s cross examination, in my opinion, was in large part due to his meandering, deflective and numerous argumentative or unresponsive answers, despite Mr Seck’s valiant, but often futile attempt to get him to give a straight answer.

[317] While I accept Mr Singh was in unfamiliar and likely stressful surroundings in court, I have trouble reconciling his performance in the witness box with the facts that he had 34 years of service, risen to the rank of Team Leader and had the most senior rail protection level training; all of which must require good communication skills and more than just a basic understanding of English. I also found Mr Singh’s oral evidence a far cry from his statement of evidence which was carefully laid out, well expressed and meticulously detailed. His statement evidence raised for the first time, numerous issues and explanations which had not been raised in his interactions with Ms Walker, the Regulator or in his ‘Show Cause’ response. More about this shortly.

…

[319] Mr Singh’s dogged refusal to accept any responsibility for the events that day entirely coloured his approach to answering questions which even hinted he might have had some culpability. His answers were deflected by either focussing on criticising the part played by other members of the Team or avoided entirely, by him giving an answer completely unrelated to the question. Given the circumstances, it is little wonder Mr Seck’s cross examination was long, detailed and probing. The applicant would concede nothing, even including his own Counsel’s submission that at its highest, he may have made an ‘error of judgment’ in the Allawah incident.’’ (emphasis as per submissions, footnotes omitted)

[11] The respondent’s submissions set out the relevant statutory provisions of s 400A, the Explanatory Memorandum to the Fair Work Amendment Bill 2012 and the authorities of the Commission, which have dealt with the section; see: NSW Trains v Ayub [2017] FWCFB 4801; Trustees of the Roman Catholic Church for the Diocese of Wagga Wagga v Roche[2019] FWCFB 4684 (‘Roche’); Blagojevch v Australian Industrial Relations Commission [2000] FCA 483; and Ferry v GHS Regional WA Pty Ltd t/a GHS Solutions [2016] FWC 3120.

[12] Turning to the respondent’s alternative proposition under s 611(2)(b) of the Act, reliance was had on Salama v Transport for NSW t/a Sydney Trains & Ors [2018] FWC 5756; Church v Eastern Health t/as Eastern Health Great Health and Wellbeing [2014] FWCFB 810 and Kennedy v Australian Taxation Office [2011] FWA 7469 and Baker v Salva Resources Pty Ltd [2011] FWAFB 4014.

[13] The respondent submitted that this was a case where the ordinary outcome of each party bearing its own costs, should be departed from. It fell in the small category of cases which s 400A was designed to address, being where litigants pursue, or defend unfair dismissal claims in an unreasonable manner. It was further submitted that this case fell in the rare category of cases where indemnity costs would be awarded; see: Stanley v QBE Management Services Pty Limited t/a QBE [2012] FWA 10164. Finally, the respondent put that in the event its costs application was successful, it would seek leave to file further submissions as to the quantum of costs.

For Mr Singh

[14] Mr Fagir set out a background to the applicant’s dismissal in which he noted:

(a) Mr Singh had been dismissed after 34 years of unblemished service following an incident in which another Team member failed to observe a train, resulting in a ‘near miss’.

(b) Mr Singh has not worked since and will never work again.

(c) At the time, Mr Singh had volunteered to work overtime.

(d) The investigation into the incident took over a year. These proceedings spanned 3 years, the hearing occupied 8 days and the Commission’s decision ran to 350 paragraphs.

[15] Mr Fagir put that Sydney Trains’ costs submission is devoid of any compelling reason for a costs order and the true position is that the case was ‘well arguable’. It did not fall into the exception to the ordinary rule that each party should pay their own costs; see: Zornada v St John Ambulance Australia (Western Australia) Inc. (2013) 237 IR 48. Further, a finding that an application has no reasonable prospects of success should only be reached with extreme caution and only where a case is ‘manifestly untenable or groundless’; see: Baker v Salva Resources Pty Ltd [2011] FWAFB 4014 and Deane v Paper Australia Pty Ltd PR932454 (AIRCFB, Giudice J, Williams SDP, Simmonds C, 6 June 2003).

[16] Further, costs should only be ordered on the basis of an ‘unreasonable act’ where there is clear evidence of unreasonable conduct; see: Explanatory Memorandum to the Fair Work Amendment Bill 2012, [171]. Mr Fagir identified seven features of the case relevant to the costs application.

(1) The case did not involve any patent jurisdictional or legal defects.

(2) Given the length of the investigation and the hearing, the matter involved substantial questions of fact.

(3) The volume and nature of the evidence demonstrate that there were many difficult factual questions to be resolved.

(4) These factual questions might have been determined differently, meaning it could not be said that any party could have, or should have known they might resolve in favour of one party or another.

(5) The subjective circumstances of Mr Singh’s age, length of service, perfect conduct and performance record and the improbability he would never work again (matters of harshness), involved balancing and weighing these matters, was a question of degree about which minds might reasonably differ.

(6) It was apparent that many of Sydney Trains’ employees shared Mr Singh’s view that the events of the day were not out of the ordinary. This would explain Mr Singh’s view of his prospects of success and desire for vindication.

(7) Sydney Trains’ case at trial had little in common with the original justification for dismissal. Some reasons were factually wrong. Ultimately, the case was advanced on evidence which did not exist at the time (e.g. Mr Lynn and Mr Bonatesta’s evidence and the Allawah footage). Therefore, it could not said that the success of Sydney Trains’ case was a forgone conclusion.

(8) Much of Sydney Trains’ case was not accepted, Mr Singh was portrayed as a ‘rogue who contumeliously breached safety rules’. It was said the CCTV footage of his conduct was ‘shocking, incomprehensible and outrageous’. This was to be contrasted with Sydney Trains’ failure to advert to the possibility of any deficiency in Sydney Trains’ own practices and that the work was carried out consistent with longstanding practice. Further, Sydney Trains withheld patently relevant evidence, such as the Level 3 Report and the ONSR Regulator reports which disclosed as follows:

(a) Sydney Trains withheld patently relevant evidence including most of its own Level 3 Report as well as the report of the industry safety regulator, both of which describe the incident in terms incompatible with Sydney Trains’ witness evidence;

(b) Sydney Trains’ procedures for ‘lookout working’ were defective, and were substantially revised after the incident after criticism by the safety regulator;

(c) there was significant confusion and disagreement among Sydney Trains’ own management about the rules on ‘lookout working’;

(d) ‘lookout working’ was not prohibited in the relevant areas;

(e) track measurement under ‘lookout working’ in the relevant areas was the norm;

(f) Mr Singh did not plan or supervise work, and had no obligation to check the Hazardous Locations Register (unlike the Team Manager, Mr Kinder and Work Group Leader, Mr Lynn);

(g) Mr Singh should never have been placed in the situation he was in at Allawah;

(h) the CCTV footage which so shocked Mr Bugeja did not reveal any breach of safety rules (per Mr Lynn’s) or showed breaches for a total of 2.5 minutes (per Mr Polias’);

(i) Mr Bugeja, despite his shock and outrage, failed to respond at all to various safety breaches by persons, other than Mr Singh, including for example, the failure of Mr Kinder and Mr Lynn to check the Register in breach of express requirement; and

(j) Mr Singh’s obligations in respect of safety were contained in a byzantine and lengthy set of procedures, the interpretation of which required some constructional skill;

It followed Sydney Trains case was seriously overstated and bears on Mr Singh’s legitimate desire to correct the record.

(9) The Commission did not find Mr Singh was dishonest.

[17] Mr Fagir submitted that Mr Singh was never interested in money or working in a job, which contributes nothing. It could not be said that his pursuit of reinstatement was unqualified or manifestly untenable. Just because he failed in getting his job back, it does not follow a refusal to accept a monetary offer was unreasonable. The fact his case failed did not mean it was unarguable; in fact it was well arguable.

[18] Mr Fagir addressed the discretionary considerations the Commission would take into account, if the costs jurisdiction was enlivened, which included the following:

(a) Mr Singh had a long and unblemished career with Sydney Trains;

(b) it is apparent that Mr Singh had a strong attachment to this work at Sydney Trains and regarded it as a matter of personal pride and identity; a matter which influenced his strong desire to regain his job;

(c) Mr Singh is an elderly man who has been unemployed for several years and is unlikely to ever be employed again; and

(d) a significant portion of the costs incurred in the proceeding were the product of Sydney Trains’ overstatement of its case, which required a significant expenditure of time and effort in correcting the record (including significant effort to obtain the Level 3 and Regulator’s Report which should properly have been addressed in evidence).

[19] As to indemnity costs, this was not a case where there has been substantial misbehaviour in the conduct of a case and there was nothing in Mr Singh’s conduct which approaches misconduct, or delinquency of a kind sufficient to justify indemnity costs. Lastly, the Commission should not give the respondent a blank cheque for costs and if the Commission is considering an order for costs, Sydney Trains should properly quantify its costs and what it asks the Commission to order.

Reply Submission

[20] The respondent submitted that the applicant’s submission appears to be premised on his case theory deployed at the hearing, rather than the reasons of the Commission for dismissing his application. It was said that the applicant’s submission adopts an overly simplistic approach to the costs application. It was not merely about the applicant’s refusal to accept a monetary settlement. The evidence in the proceedings supported a conclusion that reinstatement to a safety critical role was neither reasonable nor tenable; see: the Decision at [356] and [348].

[21] The respondent submitted that this was a case where Mr Singh could, or should have known that his application for reinstatement had no reasonable prospects for success. This put the case squarely within the category of rare, or exceptional cases in which a costs order is warranted. The respondent put that Sydney Trains was not seeking an indemnity costs order for the entirety of the proceedings, or seeking to have the Commission ‘write a blank cheque for costs’.

CONSIDERATION

Commission’s power to award costs and relevant principles

[22] This costs application is brought under both ss 400A and 611 of the Act. Section 400A expressly relates to unfair dismissal matters. It reads:

‘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.’

[23] The Commission’s general powers to award costs are grounded in s 611 of the Act which reads:

‘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 of the 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).

[24] The starting point in relation to costs of proceedings before the Commission is that each person involved in a matter, must bear their own costs; often known as the ‘general rule’. This statutory imperative is derived from the policy imperative that a person is entitled to make, or defend an application made under the Act, without the risk that a costs order may be made against them.

[25] As mentioned, s 611 of the Act sets out the general rule, but subsection (2) makes obvious that there are exceptions to that rule in certain circumstances; see: Explanatory Memorandum to the Fair Work Bill 2008 [2353]-[2356]. Those circumstances arise if the Commission is satisfied that:

(a) a person made an application, or responded to an application vexatiously or without reasonable cause; or

(b) it should have been reasonably apparent to a person that their application or a person who responded to an application had no reasonable prospects of success.

[26] There is no doubt that (a) above is directed to a consideration of the circumstances when an application is made, or responded to. Whereas satisfaction of (b) above may be established at various points of time during the progress of a matter before the Commission, when it becomes reasonably apparent that the person’s application, or response to the application, has no reasonable prospects of success. It is important to note that even if one or both of the legs of s 611 are enlivened, the Commission retains an overall discretion as to whether an order of costs should follow.

[27] Sections 577 and 578 of the Act is also relevant and states:

‘577 Performance of functions etc. by the FWC

The FWC must perform its functions and exercise its powers in a manner that:

(a) is fair and just; and

(b) is quick, informal and avoids unnecessary technicalities; and

(c) is open and transparent; and

(d) promotes harmonious and cooperative workplace relations.

Note: The President also is responsible for ensuring that the FWC performs its functions and exercises its powers efficiently etc. (see section 581).

578 Matters the FWC must take into account in performing functions etc.

In performing functions or exercising powers, in relation to a matter, under a part of this Act (including this Part), the FWC must take into account:

(a) the objects of this Act, and any objects of the part of this Act; and

(b) equity, good conscience and the merits of the matter; and

(c) the need to respect and value the diversity of the work force by helping to prevent and eliminate discrimination on the basis of race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer's responsibilities, pregnancy, religion, political opinion, national extraction or social origin.’

[28] It follows from ss 577 and 578 that in exercising the discretion to order costs, the Commission must exercise its powers in a manner which is ‘fair and just’ and takes into account ‘equity, good conscience and the merits of the matter’. The broad nature of these considerations suggests that the factors which are relevant to the exercise of the discretion are not confined.

[29] Section 611 contains no positive indication of the considerations which the Commission must take into account in deciding how to exercise its discretion. The discretion conferred is expressed in general, unqualified, terms. As the High Court observed in O’Sullivan v Farrer [1989] HCA 61; (1989) 168 CLR 210 (‘O’Sullivan’) at [216]:

‘Where a power to decide is conferred by statute, a general discretion, confined only by the scope and purposes of the legislation, will ordinarily be implied if the context (including the subject matter to be decided) provides no positive indication of the considerations by reference to which a decision is to be made.’

[30] But, of course, the discretion conferred by s 611(2) must be exercised judicially; that is to say not arbitrarily, capriciously or so as to frustrate the legislative purpose. Further, consistent with O’Sullivan, the discretion is also confined by the subject matter, legislative context and purpose.

Meaning of ‘without reasonable cause’

[31] In Hamilton James and Bruce Pty Limited v Gray[2011] FWAFB 9235, a Full Bench of Fair Work Australia, (as the Commission was then styled), said at [18]-[19]:

‘[18] The phrase “without reasonable cause” was considered in Kanan v Australian Postal and Telecommunications Union (‘Kanan’). 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.”

[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] HCA 51; (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] FCA 166; (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.’

[32] Similarly, the Full Bench of the Commission in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing[2014] FWCFB 810 said at [30]-[33]:

‘[30] We now turn to the expression ‘without reasonable cause’. A party cannot be said to have made an application ‘without reasonable cause’, within the meaning of s.611(2)(a), simply because his or her argument proves unsuccessful. The test is not whether the application might have been successful, but whether the application should not have been made. In Kanan v Australian Postal and Telecommunications Union., Wilcox J put it this way:

“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.”

[31] In the context of an appeal the question becomes whether, having regard to the arguments available to the appellant at the time of instituting the appeal, there was no substantial prospect of success. As Wilcox CJ (with whom Madgwick J agreed) observed in Imogen Pty Ltd v Sangwin:

“The prospect must be evaluated in the light of the facts of the case, the judgment appealed from and the points taken in the notice of appeal. If having regard to those matters, there was not insubstantial prospect of the appeal achieving some success, albeit not necessarily complete success, then it would seem to me it cannot be fairly described as having been instituted ‘without reasonable cause’. This is so even if, in the result, the appeal proved unsuccessful.”

[32] In the same matter Ryan J said:

“The existence of ‘‘reasonable cause’’ within the meaning of s 347 falls to be determined at the time when the relevant proceedings were instituted. The fact that the party instituting the proceedings later discontinues them is therefore not a matter to be taken directly into account in the application of the section. However, an appeal stands in somewhat different case from proceedings at first instance in that discontinuance may bear indirectly on the discretion conferred by s 347 by tending to confirm an impression derived from the grounds of appeal and the reasons for judgment below that the prospects of success on the appeal were slight.

Not without significance to an assessment of the reasonableness of the institution of an appeal are the amount at issue and the nature of the points raised by the notice of appeal. Where, as here, the appeal is essentially against findings of fact made by the trial judge after a two day hearing resulting in a judgment for $16,900 and raises no important or distinctive point of law or principle, the Court may more readily conclude that it was not reasonable in the circumstances to have instituted it. On a fairly fine balance of the relevant considerations and not without hesitation, I have been led to reach that conclusion in this case and agree with the Chief Justice and the orders which he has proposed.”

[33] In construing s.570 and its legislative antecedents courts have observed that the test imposed by the expression ‘without reasonable cause’ is similar to that adopted for summary judgement, that is ‘so obviously untenable that it cannot possibly succeed’, ‘manifestly groundless’ or ‘discloses a case which the Court is satisfied cannot succeed.’ (citations omitted)

[33] For completeness, I refer to the final two paragraphs in Kanan, where Wilcox J said:

‘29. 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. That is the situation in the present case. The qualification of s.347 applies. The Court has power to order costs against the applicant.

30. I see no discretionary reason to withhold such an order. 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. I propose to order that the principal proceeding be dismissed with costs. The costs of the motion will be costs in the principal proceeding and so covered by that order.’

Meaning of ‘no reasonable prospects of success’

[34] The High Court in Spencer v Commonwealth of Australia (2010) 241 CLR 118 considered the meaning of the phrase ‘no reasonable prospects of success’, albeit in the context of s 31A of the Federal Circuit Court of Australia Act 1976. The plurality (Hayne, Crennan, Kiefel and Bell JJ) said:

‘59 In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like "clearly", "manifestly" or "obviously") as "frivolous", "untenable", "groundless" or "faulty". But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word "reasonable", in the phrase "no reasonable prospect", be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a "frivolous", "untenable", "groundless" or "faulty" claim.

60 Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is "no reasonable prospect" of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to "no reasonable prospect" can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase "just and equitable" when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.’

[35] In Baker v Salva Resources Pty Ltd[2011] FWAFB 4014, the Full Bench said at [10]:

‘[10] 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 as to be not reasonably arguable.’

See also: Qantas Airways Limited v Carter[2013] FWCFB 1811.

[36] In practical terms, a person may gain knowledge in the lead up to proceedings (when the opposing party’s evidence is filed) or during the proceedings (e.g. after the cross examination of a crucial witness) which, when viewed objectively, would satisfy the test of the person’s case having no reasonable prospects of success. It would be from that point that costs may be awarded, if the person did not take steps to recognise that their case was frivolous, untenable, groundless or faulty. For an applicant, this may mean discontinuing the matter and for a respondent it may mean making offers to settle a matter.

[37] There has been some recent tension in the Commission’s approach to the meaning of s 611 and whether the grounds of whether an application has ‘no reasonable prospect of success’ applies only at the point the application was made (or filed); see: discussion in Sharkey v Life Without Barriers [2019] FWC 2287. However, I need not enter this debate, as I have decided to rely on s 400A in determining this matter. At this juncture, I shall dispose of the indemnity costs application.

Indemnity Costs

[38] It is trite to observe that the principles to be applied to costs applications on an indemnity basis, involve a considerable degree of caution. Such costs orders are rare and unusual.

[39] In Dye v Commonwealth Securities Limited (No 2) [2012] FCA 407, Buchanan J identified one of the foundations for an order of indemnity costs may be on the basis of the findings made in the earlier judgment that the applicant’s case was, in all relevant aspects, based on a falsehood.His Honour said at [5]:

‘[5] Each of these foundations appears to me to provide a sufficient basis for the award of indemnity costs from the dates specified. As to the first basis upon which indemnity costs have been sought, it is well-established that indemnity costs are not awarded as a punishment against an unsuccessful litigant. However, they will be awarded in appropriate cases to protect a respondent from the financial burden of proceedings which were unjustified and should not have been commenced. Each of the proceedings commenced by the applicant falls, in my view, into this category. In the present case, the lack of merit in each of the proceedings is so marked, and the claim for protection by the respondents against unwarranted financial burden is so well-founded, that there is a sufficient justification for the award of indemnity costs with respect to the whole of each of the proceedings, subject to an issue to which I will return concerning the basis on which the Supreme Court proceedings were transferred to this Court. It is not necessary for me to repeat here the findings which were made in the earlier judgment. The proceedings were, in each case, based on falsehood and were without any legal substance. The respondents are entitled to claim that they should be relieved, so far as an order for costs would achieve this, from the financial burden of defendi ng them.’ (my emphasis)

[40] I would add to this the comments at Pembroke J in Zepinic v Chateau Constructions (Aust) Limited [2017] NSWSC 582 at para 46:

‘46. In this case, and in many similar such cases, the litigant’s enthusiasm and passionate engagement in his quest for supposed justice, obscures the essential unreality of his expectations; blinds him to the chaos that his pursuit has created; and renders him oblivious to the waste and expense that he has generated or the disproportionate court time that he has consumed. Such a litigant’s level of pre-occupation, ruminative thinking, pedantic attention to the minutiae of his case and dogged persistence, serve only to hinder the efficient administration of justice ...’.

However, I do not accept that this case falls in one of those rare and exceptional cases warranting indemnity costs. I accept Mr Singh did not wilfully conduct himself dishonestly, or engage in conduct which might be described as reprehensible or based on falsehoods. Sydney Trains application for indemnity costs is refused.

Unreasonable act in connection with the continuation of the matter

[41] At the outset, I accept unreservedly that offers of a monetary settlement where an applicant is seeking nothing less than reinstatement, does not make a refusal to accept a monetary settlement inherently unreasonable; see Roche. After all, the primary remedy for an unfair dismissal finding under the Act is reinstatement. However, this case it not ‘on all fours’ with Roche.

[42] Offers of settlement here included re-employment (albeit, not in a safety critical role), and with no loss of Team Leader earnings. As I found in the Decision, it would have been entirely inappropriate to reinstate the applicant to a safety critical role, given his complete lack of acceptance, or comprehension of his role in the incidents of 1 August 2015 and his identified failures in this regard, as I accepted from the Level 3 Report and ONSR Report. I should say that I find somewhat condescending that the applicant considered an alternative position in Head Office would mean he could ‘contribute nothing’. Nevertheless, this is a matter going to the exercise of my discretion, and not in my view, to the enlivening of the Commission’s costs jurisdiction.

[43] In this respect, and in my judgment, it would have been reasonably apparent to Mr Singh when he received the Level 3 Report and ONSR Report, under a Notice to Produce, that he could not maintain his absolute insistence that he was entirely blameless, had done nothing wrong and had complied with the method of taking of track measurements, which had always been undertaken as a common practice. I accept of course, that Mr Singh was not provided these reports, until Sydney Trains was forced to do so.

[44] As I said in granting the Notice to Produce, both these reports were relevant to Mr Singh’s case and he was entitled to obtain them and rely on them. However, the reports became a ‘double edged sword’. Mr Singh maintained that he agreed with the reports where they were critical of Sydney Trains’ practices, culture or other employees, but utterly rejected any of the reports’ criticisms of him, and his role in the incidents of 1 August 2015. As I said in the Decision at [320]:

‘(1) Perhaps the most concerning of all, in a classic worst case of ‘cherry picking’, was Mr Singh’s ‘enthusiastic embrace’ of the Level 3 Report where it was critical of systemic failures, or of others in the Team, but his complete rejection of any comment or finding which was critical of him. He justified this by saying Ms Walker was not there and when he said: ‘she’s not God’. I simply do not understand how it could seriously be suggested that the Commission would accept this selective, illogical and incoherent reading of the Level 3 Report.’

[45] In my opinion, this was the crucial turning point in the case. It was this inconsistency which I find to be an unreasonable act in connection with continuing his matter. It would have been abundantly obvious to any objective observer that pursuing a case, based on an absolute conviction he had done nothing wrong and had no culpability, or responsibility for what occurred on 1 August 2015, could not sustained when the very evidence he selectively relied on was to the contrary.

[46] I am also conscious of the fact that in Mr Singh’s initiating application, he did not insist on complete innocence of any wrongdoing. He said that even if there were errors on his behalf, (admittedly not accepted), they were minor, insignificant or inconsequential. I hardly think the errors of that day could be so described when I found, there was a ‘near miss’ in the Allawah incident.

[47] Mr Singh was under the misapprehension that accepting a settlement offer amounted to findings of guilt and culpability which were contrary to his conscience and his religious convictions. It may well be that Mr Singh was not advised, or if he was, was not convinced that settlement terms include no admissions of liability by either party. Mr Singh would have been perfectly entitled with ‘hand on heart’, to explain to his family, friends and parishioners that his legal proceedings were settled, without any findings of guilt or culpability. So much was clear from the various letters of settlement sent by Sydney Trains’ solicitors. To ‘plough on’ in these circumstances, was a very high risk strategy.

[48] For these reasons, I find that Mr Singh engaged in an unreasonable act in connection with the continuation of his matter, pursuant to s 400A of the Act, when he refused to consider the implications of the findings of the Level 3 and ONSR Reports he received on, or about the 3 November 2017. Coincidently, it was around this date that the respondent made an offer to settle the matter in excess of the compensation cap. In light of the Level 3 and ONSR Reports it should have been reasonably apparent to Mr Singh that complete exoneration and full reinstatement, in these circumstances, was most unlikely. A settlement amount in excess of the compensation cap, even assuming he was wholly successful, should have been an active consideration for Mr Singh at that point.

[49] Accordingly, I find that the Commission’s power to order costs is enlivened and costs should be payable by Mr Singh to Sydney Trains, on a ‘party to party’ basis from that date. In view of the pending appeal of the substantive Decision, I shall not put the parties to the added costs and time in preparing further submissions, at this time, as to the quantum of costs and their calculations according to the schedule of costs as set out in the Act’s Regulations. Presumably, there will be an amended appeal in light of the above costs finding and any outcome of the Full Bench appeal proceedings will determine whether further submissions are necessary.

DEPUTY PRESIDENT

Final written submissions:

For the respondent: 30 July 2019

For the applicant: 23 August 2019

Reply for the respondent: 4 September 2019

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