Sunnyhaven Disability Services Ltd T/A Sunnyhaven Ltd v Effective Legal Solutions Pty Ltd
[2021] FWC 4774
•4 AUGUST 2021
| [2021] FWC 4774 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.401 - Application for costs orders against lawyers and paid agents
Sunnyhaven Disability Services Ltd T/A Sunnyhaven Ltd
v
Effective Legal Solutions Pty Ltd
(U2020/15109)
DEPUTY PRESIDENT CROSS | SYDNEY, 4 AUGUST 2021 |
Application by respondent for costs arising from dismissal of unfair dismissal application. Application for costs orders against lawyers and paid agents.
Factual Background
[1] An unfair dismissal application was filed on 17 August 2020 (the UD Application), by Ms Salvanah Bennie, pursuant to s.394 of the Fair Work Act 2009 (Cth) (the Act), following her dismissal on 28 July 2020.
[2] On 15 September 2020, directions were issued to program the manner in which the UD Application was to proceed to hearing (the Directions). The Directions were as follows:
1. Salvanah Bennie (the Applicant) is directed to file with the Fair Work Commission, and serve on Sunnyhaven Disability Services Ltd (the Respondent), an outline of submissions, witness statements and other documentary material the Applicant intends to rely on in support of his application in this matter by 4pm on 28 September 2020.
2. The Respondent is directed to file with the Fair Work Commission, and serve on the Applicant, an outline of submissions, witness statements and other documentary material the Respondent intends to rely on in opposition to the application in this matter by 4pm on 12 October 2020.
3. The Applicant is directed to file with the Fair Work Commission, and serve on the Respondent, any reply material, that is, any witness statements and other documentary material in reply to the Respondent’s witness statements and documents by 4pm on 19 October 2020.
[3] At the time the Directions were made Ms Bennie was represented by Brydens Lawyers Pty Ltd, however that firm ceased to act for Ms Bennie on 22 September 2020, at 5.35 pm.
[4] On 25 September 2020, Effective Legal Solutions Pty Ltd (Effective Legal)notified the Fair Work Commission (the Commission) and Sunnyhaven Disability Services Ltd (Sunnyhaven) that it had commenced to act on behalf of Ms Bennie.
[5] On 28 September 2020, at the request of Ms Bennie, the Commission varied the Directions (the Varied Directions) to allow Ms Bennie to file and serve her evidence and submissions by 5 October 2020. The request made by Ms Bennie was for a further three weeks to provide her materials, however the Varied Directions only allowed a further week.
[6] On 12 October 2020, Effective Legal confirmed that Ms Bennie was anticipating filing her evidence and submissions (due on 5 October 2020) by 14 October 2020.
[7] On 15 October 2020, Sunnyhaven wrote to Effective Legal about the filing of Ms Bennie’s evidence and submissions. Effective Legal did not respond to Sunnyhaven’s correspondence.
[8] On 16 October 2020, Sunnyhaven wrote to the Commission confirming that it had not received Ms Bennie’s evidence and submissions and was not in a position to reply in accordance with the Varied Directions.
[9] On 19 October 2020, the Commission wrote to Effective Legal asking it to advise the Commission by 4.00pm that day as to whether or not Ms Bennie was pursuing her UD Application. Neither Effective Legal nor Ms Bennie responded to the Commission by 4pm on 19 October 2020.
[10] On 19 October 2020 at 4:19pm, Sunnyhaven wrote to the Commission requesting that the UD Application be dismissed pursuant to s.399A(1)(b) of the Act (the s.399A Application).
[11] On 19 October 2020 at 4:30pm, Effective Legal emailed the Commission and Sunnyhaven seeking a further extension for the filing of materials pursuant to the Varied Directions until 2 November 2020 and an adjournment of the hearing dates.
[12] On 20 October 2020, in response to the s.399A Application, the Commission vacated the Varied Directions and made directions for the hearing of the s.399A Application.
[13] On 2 November 2020, one week prior to the hearing of the s.399A Application, Ms Bennie filed an Outline of Submissions, a statement of Ms Bennie, and statements from Ms Malia Salt, Ms Sharon Farah and Ms Jessica Reid, that related primarily to the UD Application and the Varied Directions, but also addressed the s.399A Application.
[14] On 9 November 2020, the s.399A Application was heard. At that hearing, the Commission as presently constituted delivered a decision dismissing the s.399A Application. Further directions for the filing of materials in the UD Application were made.
[15] On 23 November 2020, Sunnyhaven filed a Form F6 Application for costs with the Commission against Effective Legal pursuant to s.401 of the Act (the Costs Application).
The Hearing of the s.399A Application
[16] An important concession was made on Ms Bennie’s behalf by Effective Legal in the hearing of the s.399A Application. That was the following, where Mr Eaton of Effective Legal submitted: 1
“I fail to see, and I put to your Honour, that I don’t see how there’s any deleterious effect on the respondent that at least couldn’t be mitigated by some sort of costs. The argument basically is, I think, from my colleague’s point of view, that they’ve been put to unnecessary costs.”
[17] Further, foreshadowing the Costs Application, Mr Eaton of Effective Legal submitted:
“But in any event, the level of non-compliance was so much greater in that case (Shankar v Fairmont Resort and Spa) than it is in this present case and I think I should finish - I assume, depending on what your Honour’s view about the application is that we have a separate argument about the costs, in the event the application isn’t upheld. But I’ll just finish, I suppose, with where I started, and that is that the level of delay and egregious behaviour by the applicant is not so sufficient, not so deleterious, as to warrant her missing out on her rights of a day in court to hear her complaint.”
The Decision in the s.399A Application
[18] The decision in the s.399A Application is relevant to the consideration of the Costs Application because the remedial effect of possible costs orders was, as outlined above, at least alluded to by Effective Legal. In that decision it was noted that the principles in relation to the disposition of applications pursuant to s.399A were considered by Deputy President Clancy in Adrian Whittaker v Total Harvesting Pty Ltd, 2(Whittaker) where the Deputy President summarised the relevant principles, drawing upon a decision of the Full Bench of the Australian Industrial Relations Commission in A Ghalloub v Aon Risk Services Australia Limited.3 Whittaker outlined the following principles:
1. the starting point of any consideration an application to dismiss is that an applicant is entitled to have his or her case heard;
2. directions play an important role in case management;
3. accepting the importance of case management principles, only in extreme circumstances should a party be shut out from litigating an issue which is fairly arguable;
4. the circumstances of each case is central;
5. a history of non-compliance with directions indicating an inability or an unwillingness to have the matter ready for trial within an acceptable period of time is relevant;
6. continuing non-compliance which causes unnecessary delay, expense or prejudice to the other party is relevant.
[19] The decision in the s.399A Application also noted that the objects of the Act at s.391 focused on quick, flexible and informal dealing with unfair dismissals, and that the Act provides for a fair go to both employees and employers.
[20] In the decision in the s.399A Application:
(a) I did not accept that there was, as claimed by Ms Bennie and her representatives, a significant inability or inconvenience provided by the inability to obtain the Ms Bennie’s file from her former solicitors until 6 February 2021. I noted that the matter had only just commenced, and there would quite obviously have been only a small amount of documentation in that file, primarily consisting of the form F2 and form F3 in Commission form, and possibly a draft statement from Ms Bennie. 4
(b) I noted the lack of diligence by Ms Bennie’s legal representatives in responding to enquiries as to where the materials were, or upon approaching or expiring time limits occurring, and not taking appropriate steps to contact either the Commission or Sunnyhaven’s representatives to explain such non-compliance and provide some future timetable for compliance. 5
(c) I noted that in an attempt to cure the errors of the non-compliance by Ms Bennie, she had taken the step of filing the statements that she intends to rely on in the UD Application.
(d) Notwithstanding what were a number of unacceptable and unexplained absences and failures by Ms Bennie, I did not consider the delays so egregious that Ms Bennie should be shut out from pursuing her case, particularly where the fault for all of those failures has been conceded to fall at the feet of the Ms Bennie’s representatives and not at the feet of Ms Bennie. Sunnyhaven had foreshadowed an application for costs and that could be heard in the appropriate course and with the appropriate directions.
(e) I did not think that applying the principles outlined in Whittaker the matter should be dismissed. I therefore dismissed the section 399A Application.
The Costs Application
[21] The Costs Application was heard on 8 June 2021. Each party was previously directed to file the evidence and submissions upon which they sought to rely.
(a) Sunnyhaven’s Evidence and Submissions
[22] Sunnyhaven relied on a brief statement of Mr Thomas Du. That statement referred to the Hearing of the s.399A Application, the observations in that hearing regarding costs, and to correspondence subsequent to that hearing in which costs were sought from Effective Legal.
[23] Sunnyhaven submitted that:
(a) The first condition required to enliven the Commission’s discretion in the Costs Application is satisfied because Ms Bennie made a s.394 application (s. 401(1)(a));
(b) Secondly, the Commission granted permission under s.596 of the Act for Ms Bennie to be represented by Effective Legal in the UD Application, and so the second and third conditions of s.401(1)(b)(c) were satisfied; and
(c) Finally, s.401(1A)(b) of the Act enabled the Commission to make an order for costs against the representative of a party for costs incurred by the other party to the matter if the Commission is satisfied that the representative caused those costs to be incurred because of an unreasonable act or omission of the representative in connection with the conduct or continuation of the matter.
[24] Sunnyhaven submitted that the findings of the Commission in the decision in the s.399A Application established that Effective Legal had:
(a) Failed to communicate with the Commission and the Applicant; and
(b) Failed to comply with the Directions and Varied Directions.
[25] That conduct constituted an unreasonable course of conduct as contemplated by s.401(1A)(b) of the Act. Accordingly, the Commission is empowered to make an order that the Respondent pay the Applicant’s costs as identified in the itemised schedule of costs in the Form F6.
(b) Effective Legal’s Evidence and Submissions
[26] Effective Legal relied on a brief statement of Mr Douglas Eaton. The Full text of that statement was as follows:
1. I am the principal solicitor of Effective Legal Solutions Pty Ltd.
2. The evidence was delayed in this matter by the failure of the Ms Bennie to sign our costs agreement and to pay the funds required under the costs agreement.
3. She only signed and returned the costs agreement on 23 October 2020.
4. She only paid $1000 into our trust account on 26 October and a further $1000 on 29 October 2020. Annexed hereto and marked “A “ is a copy of our trust ledger for this matter.
5. As a result of this delay although we had draft statements and evidence ready for settling by counsel we could not engage counsel until we had received funds and Ms Bennie was fully aware of this requirement.
6. Mr Wathukarage of Counsel had initially required $3500 in advance but agreed to proceed to settle the documents on the basis of the $2000 held by us and Ms Bennie’s promise to pay the balance which she eventually did complete by 6 November 2020.
7. As we did not have further funds for counsel, I was obliged to appear at the s399A hearing on 7 November 2020.
8. Ms Bennie has not paid my firm any other moneys and we have received nothing for our work. She owes this firm some $8000.
9. If Ms Bennie had not been in breach of the costs agreement then the revised timetable would have been met.
10. Once we had money for counsel fees the evidence was finalised in days.
[27] Regarding submissions, Effective Legal made the following submission:
1. S 401 of the FWA only applies to applications for unfair dismissals under s 394. The costs being sought are for the s399A application and there is no legislative authority for such a claim.
2. S401(1A) requires for the first part Effective Legal to have encouraged Ms Bennie to start or continue her claim. As we took over her claim this is not applicable.
3. The second part that the applicant relies upon requires an UNREASONABLE act or omission on behalf of the costs respondent. Whist there was a delay that is not an omission nor is it an act.
4. An omission is to completely fail to do something that is required not merely to be late in doing something.
5. In the alternative if delay is omission then the delay was as set out in the statement of Mr Eaton due to matters outside the control of the costs respondent.
6. Further any such delay was not UNREASONABLE in the terms of the Act as the evidence was reasonably required to be settled by Counsel and this could not happen until funds were provided by Ms Bennie.
7. The costs sought are unreasonable and excessive. They relate almost exclusively to the s399A application. By 2nd November 2020 the evidence had been filed and it was obvious that the s399A application had little to no prospects of success and should properly have been withdrawn at that time.
8. The cost respondent put the costs applicant on notice that this was the proper course of action but the costs applicant elected at its own risk to engage counsel and run the application.
9. At the hearing of the 399A application , counsel for the costs applicant all but conceded the application could not succeed given the evidence filed and that there was clearly a case to be argued.
10. In all the circumstances the cost application should be rejected.
Consideration
[28] The Act provides in s.400A that costs may be awarded against a party to an application for unfair dismissal remedy, and s.401 provides for costs to be awarded against a lawyer or paid agent. The respective provisions are as follows:
400A Costs orders against parties
(1) The FWC may make an order for costs against a party to a matter arising under this Part (the first party) for costs incurred by the other party to the matter if the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter.
(2) The FWC may make an order under subsection (1) only if the other party to the matter has applied for it in accordance with section 402.
(3) This section does not limit the FWC’s power to order costs under section 611.
401 Costs orders against lawyers and paid agents
(1) This section applies if:
(a) an application for an unfair dismissal remedy has been made under section 394; and
(b) a person who is a party to the matter has engaged a lawyer or paid agent (the representative) to represent the person in the matter; and
(c) under section 596, the person is required to seek the FWC’s permission to be represented by the representative.
(1A) The FWC may make an order for costs against the representative for costs incurred by the other party to the matter if the FWC is satisfied that the representative caused those costs to be incurred because:
(a) the representative encouraged the person to start, continue or respond to the matter and it should have been reasonably apparent that the person had no reasonable prospect of success in the matter; or
(b) of an unreasonable act or omission of the representative in connection with the conduct or continuation of the matter.
(2) The FWC may make an order under this section only if the other party to the matter has applied for it in accordance with section 402.
(3) This section does not limit the FWC’s power to order costs under section 611.
[29] Sunnyhaven relies solely upon s.401 in its pursuit of costs against Effective Legal.
[30] I reject Effective Legal’s submission that s.401 of the Act does not apply to the s.399A Application (Paragraph 1 of their submission). Both s.394 and 399A of the Act are contained in Division 5 of Part 3 – 2 of the Act, titled “Procedural Matters.” They are both procedural provisions relating to applications for orders under Division 4 of Part 3 – 2 of the Act.
[31] I reject Effective Legal’s submission that the delay in filing materials pursuant to the Directions and the Varied Directions does not constitute an omission for the purposes of s.401 of the Act (Paragraphs 2 to 4 of their submission). The repeated failure to comply with directions clearly constituted an omission to comply with those directions.
[32] Regarding the explanation for delay now proffered by Effective Legal (Paragraphs 5 and 6 of their submission), I find it simply extraordinary that the explanation differs from that put in response to the s.399A Application regarding the same events. The differing explanations were put to Mr Eaton in the hearing of the Costs Application, where the following exchange occurred:
THE DEPUTY PRESIDENT: But the explanation put forward at the 399A was the delay was occasioned principally because of the failure to obtain the file from the previous legal representatives which is a different concept completely to Ms Bennie failing to deposit funds into your trust account.
MR EATON: Your Honour, with respect
THE DEPUTY PRESIDENT: I raise it with you and I’d want to give you a good chance to explain this to me because it does seem to me to be a different explanation.
MR EATON: The only - that was only part of the explanation. That certainly led the delay in the early part of the matter was in getting the file and while I’m not totally aware of the circumstances, I assume there was difficulties in terms of Ms Bennie paying possibly the costs of the previous lawyers in terms of getting that file and seeing what was in the file.
[33] I reject that either of the vastly different and irreconcilable explanations for delay provided by Effective Legal, and I seriously doubt the veracity of those reasons. Whether such delays were caused by an inability to obtain a file from a previous solicitor, or issues of payments by Ms Bennie to Effective Legal, at all relevant times Effective Legal were acting for Ms Bennie. I consider that the failures to comply with the Directions and the Varied Directions can be solely attributed to Effective Legal.
[34] Additionally, I do not accept that Mr Eaton could accurately describe himself as “…not totally aware of the circumstances” of the delay. Mr Eaton represented Effective Legal in the hearings of both the s.399A Application and the Costs Application, and provided a statement for the Costs Application
[35] The Directions and the Varied Directions were disregarded by Effective Legal. While on 12 October 2020, Effective Legal took the positive step to advise that the materials that were at that date a week late would be filed by 14 October 2020, thereafter they were non-responsive to the Commission and Sunnyhaven. In those circumstances it was unremarkable that Sunnyhaven pursued the s.399A Application, and the costs of that s.399A Application were caused to be incurred by those omissions.
[36] Insofar as Effective Legal submit that the costs sought are unreasonable and excessive (Paragraphs 7 and 8 of their submission), I reject that submission. Sunnyhaven seeks payment of $4,633.00, of which $3,795.00 related to Counsel’s fees. I consider that amount, for the drafting, presentation and conduct of a contested s.399A Application, is at the lower end of the scale of expected fees for such work, and it is readily apparent that Sunnyhaven relied heavily on Counsel preparing the matter, thereby significantly reducing any Solicitor’s fees.
[37] On 2 November 2020, one week prior to the hearing of the s.399A Application, Ms Bennie filed her materials relating primarily to the UD Application and the Varied Directions, but which also addressed the s.399A Application. I accept that from that time, Sunnyhaven became aware that Ms Bennie would be seeking to progress the UD Application if the s.399A Application were unsuccessful.
[38] While I do not accept that from 2 November 2020 it was obvious that the s399A Application had little to no prospects of success and should properly have been withdrawn, or that Counsel for Sunnyhaven all but conceded the application could not succeed given the evidence filed (Paragraphs 7 and 9 of Effective Legal’s submission), the filing of the material on 2 November 2020 cured to an extent the existing omissions of Effective Legal. The costs incurred after that date were incurred by Sunnyhaven in full knowledge that the omission to comply with the Varied Directions had, finally, been cured. While it is correct to observe that the UD Application was no longer the issue before the Commission and the relevant application was the s.399A Application, Sunnyhaven would have been aware that the strength of their s.399A Application had been reduced by the filing of the material on 2 November 2020.
[39] In conclusion I find that Sunnyhaven incurred costs in pursuing the s.399A Application between 19 October 2020, and 1 November 2020 (inclusive). Those costs were caused by the unreasonable omission of Effective Legal in connection with the conduct of the matter, specifically the failure to file materials relating to the UD Application and the Varied Directions.
[40] The amounts payable shall be:
(a) Items 2 and 5 of the Schedule of Costs to the Form F6. | $194.00 |
(b) Counsel’s Fees - | $990.00 (incl. GST) |
_______ |
[41] Pursuant to s.402 of the Act, the Respondent (Effective Legal) shall pay to the Applicant (Sunnyhaven) the amount of $1,184.00. That payment shall be made within 21 days of the date of this decision.
DEPUTY PRESIDENT
Appearances:
Ms M Chalak, for the Costs Applicant.
Mr D Eaton, for the Costs Respondent.
Hearing details:
2021.
Sydney.
June 8.
Final Written Submissions:
2021.
Via email to Chambers.
July 1.
Printed by authority of the Commonwealth Government Printer
<PR732497>
1 Transcript PN 75.
2 [2018] FWC 1583.
3 Print PR956665, 21 March 2005, Giudice J, Hamilton DP and Larkin C.
4 Transcript PN 105.
5 Transcript PN 106.
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