Szabo v St MICHAEL'S Association Inc
[2018] FCCA 3656
•17 December 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SZABO v ST MICHAEL'S ASSOCIATION INC | [2018] FCCA 3656 |
| Catchwords: INDUSTRIAL LAW – Application for costs – whether the applicant instituted proceedings without reasonable cause – whether the applicant acted unreasonably and caused the respondent to incur the costs – application for costs dismissed. |
| Legislation: Fair Work Act 2009 (Cth), ss.340, 343, 361, 368, 570 Federal Circuit Court of Australia Act 1999 (Cth), s.17A Federal Circuit Court Rules 2001 (Cth), sch.1 Workplace Relations Act 1996 (Cth), s.824 |
| Cases cited: Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879 |
| Applicant: | CHRISTINE SZABO |
| Respondent: | ST MICHAEL'S ASSOCIATION INC |
| File Number: | LNG 71 of 2016 |
| Judgment of: | Judge Baker |
| Hearing dates: | 10 August 2018, 9 November 2018 |
| Date of Last Submission: | 9 November 2018 |
| Delivered at: | Hobart |
| Delivered on: | 17 December 2018 |
REPRESENTATION
| Counsel for the Applicant: | Self-Represented |
| Solicitors for the Applicant: | N/A |
| Counsel for the Respondent: | Craig Green |
| Solicitors for the Respondent: | Dobson Mitchell Allport |
ORDERS
THE COURT ORDERS THAT:
There be no orders as to costs.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT HOBART |
LNG 71 of 2016
| CHRISTINE SZABO |
Applicant
And
| ST MICHAEL'S ASSOCIATION INC |
Respondent
REASONS FOR JUDGMENT
Introduction
On 26 June 2018, the applicant’s claim against the respondent was dismissed. Her claim was essentially that, in contravention of s.340(1) of the Fair Work Act 2009 (Cth) (‘the FW Act’), the respondent dismissed her for having workplace rights; exercising workplace rights; proposing to exercise workplace rights; and to prevent her from exercising various workplace rights. She also claimed coercion by the respondent pursuant to s.343.
The respondent has sought costs as a consequence of the dismissal of the applicant’s claim. The respondent claimed that the costs incurred by it on a party-party basis amount to $21,587 pursuant to sch.1 of the Federal Circuit Court Rules 2001 (Cth). However, the respondent has sought costs in the sum of $14,180, the amount incurred by it on a solicitor-client basis.
The applicant, who was self-represented throughout the proceedings, opposed a costs order.
Section 570 of the FW Act provides that:
570 Costs only if proceedings instituted vexatiously etc.
(1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A.
(2) The party may be ordered to pay the costs only if:
(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b) the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or
(c) the court is satisfied of both of the following:
(i) the party unreasonably refused to participate in a matter before the FWC;
(ii) the matter arose from the same facts as the proceedings.
An award of costs can therefore be made if the requirements of s.570(2) are satisfied.
In Ryan v Primesafe,[1] Mortimer J noted that the discretion conferred by the confined terms of s.570(2) should be exercised cautiously, and the case for its exercise should be clear, citing Saxena v PPF Asset Management Ltd.[2] Her Honour stated at [64]:
The reason for caution is the potential for discouraging parties’ pursuit in a complete and robust way of the claims for contravention which they seek to make under the Fair Work Act, or the defence of such claims. The policy behind s 570 is to ensure that the spectre of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular, in my opinion) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings. It is an access to justice provision…
[1] [2015] FCA 8.
[2] [2011] FCA 395.
Background to the proceedings
The application was commenced on 16 November 2016. In her Form 2 claim, the applicant asserted that she was dismissed for having workplace rights; exercising workplace rights; proposing to exercise workplace rights; and to prevent her from exercising workplace rights.
On 19 January 2017, directions were made by a registrar for the filing of a response and the matter was referred to mediation.
On 5 April 2017, a registrar made directions by consent for the filing of affidavits and the matter was listed for final hearing (with an estimated hearing time of 2 days).
The matter was heard in February 2018. There were two witnesses, the applicant and Mr John Gilpin, a witness for the respondent. On the first day of the hearing, the applicant was cross-examined for approximately one and a half hours by the respondent’s counsel. Mr Gilpin was cross-examined for approximately two hours by the applicant. The hearing lasted for one hour on day two.
Discussion
The respondent’s case is that the applicant instituted the proceedings without reasonable cause, and her unreasonable acts caused the respondent to incur costs.
Did the applicant institute proceedings without reasonable cause?
In the decision of Fair Work Ombudsman v ValuairLimited (No.3),[3] Buchanan J discussed the institution of a proceeding without reasonable cause and cited the following decisions at [8]–[10]:
[3] [2014] FCA 1182.
In Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275 (“Kangan”), a Full Court said (at [60]), in relation to similar requirements in the earlier Workplace Relations Act 1996 (Cth):
60 … A party does not institute proceedings without reasonable cause merely because that party fails in the argument put to the Court: R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia (1978) 140 CLR 470 per Gibbs J at 473. The section reflects a policy of protecting a party instituting proceedings from liability for costs, but that protection may be lost. Although costs will rarely be awarded under the section and exceptional circumstances are required to justify the making of such an order (see Heidt v Chrysler Australia Ltd (1976) 26 FLR 257; 13 ALR 365 per Northrop J), a proceeding will be instituted without reasonable cause if it has no real prospects of success, or was doomed to failure: see Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 per Wilcox J; see also Bostik (Australia) Pty Ltd v Gorgevski (No 2) (1992) 36 FCR 439; and Nilsen v Loyal Orange Trust (1997) 76 IR 180.
In Kanan v Australian Postal & Telecommunications Union (1992) 43 IR 257, in the passage to which the Full Court in Kangan was obviously referring, Wilcox J said (at 264-5):
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.
More recently, Jessup J said in Clarke v Dixie Cummings Enterprises Pty Ltd [2013] FCA 987 at [14]:
It is true that I have found that the applicant’s resistance to the respondent’s privilege claim was without substance, and it might even be said that I regard this as a clear case. On the other hand, I think there is a danger of the exceptions in s 570(2) being used in circumstances in which the most that one can say is that the losing party had a self-evidently weak case. In my opinion, that is not the kind of situation to which s 570(2) is addressed. There must be a higher level of criticism or disapprobation which the court is able to express about a losing party’s case if the bars in paras (a) and (b) of s 570(2) are to be crossed by a party which succeeds on the application concerned.
Justice Buchanan then stated at [11]:
None of the observations cited above, may be substituted for the text of s 570(2), but they each sufficiently indicate (as does s 570 itself) that an award of costs in a matter arising under the FW Act is an exceptional, rather than a usual order. That is an explicit legislative restriction which must be recognised and implemented. Furthermore, where the case turns on an arguable question of law, rather than incontestable facts, it will be rare that the test can be met.
It was submitted by counsel for the respondent that at the time the applicant filed her application, she did so without any arguable points of law and the proceedings were therefore instituted without reasonable cause. It was submitted that the number and array of arguments that were raised by the applicant had no substance and had no proper legal basis.
The applicant submitted that the proceedings arose from the same facts as those raised with the Fair Work Commission, and there was no challenge that the facts were different. She was not advised by the Fair Work Commission that her application did not have a reasonable prospect of success as per s.368(3)(b). The Fair Work Commission certified that ‘it is satisfied that all reasonable attempts to resolve the dispute have been, or are likely to be, unsuccessful.’[4] As such, she submitted that her claim was not vexatious or without a reasonable cause, and she was of the belief that she had a reasonable prospect of success.
[4] Exhibit A2.
Adverse action was taken by the respondent against the applicant when it dismissed her. The applicant claimed that she had been dismissed because she had exercised workplace rights, as conceded by the respondent. I refer to [141] of the reasons set out in Szabo v St Michael’s Association Inc,[5] dated 26 June 2018. There was no issue that she had exercised a workplace right when she made enquiries about her second year pay rise, one having been made in April 2016, prior to the investigation about the medication error, and two others in June 2016. This issue was on foot when she was dismissed. It was not in dispute that the applicant was paid outstanding wages after she was dismissed, and after she had gone to the Fair Work Commission. There was also no issue that she had exercised workplace rights when she made complaints about health and safety issues and bullying, and had made a workers compensation claim. She had been certified unfit for work on 16 June 2016. She was in receipt of workers compensation payments until 13 July 2016, the day on which the Workers Compensation Tribunal determined that there was an arguable claim to answer and the day on which her employment was terminated. She claimed was that she was terminated to prevent her from receiving further benefits under the Workers Rehabilitation and Compensation Act 1988 (Tas).
[5] [2018] FCCA 1547.
After hearing the evidence at the hearing, I accepted Mr Gilpin’s evidence of his reason for the applicant’s termination, and I accepted his denials about a connection between the applicant’s claims and her dismissal. However, I do not accept the submission of the respondent’s counsel that the conclusions that I reached should have been apparent to the applicant from the outset.
Although I accept the submission of counsel for the respondent that the applicant had no proper case regarding the claim of coercion, this took little time in the proceedings, and does not provide a sufficient basis for consideration of an award of costs.
The respondent did not seek summary judgment pursuant to s.17A of the Federal Circuit Court of Australia Act 1999 (Cth) in respect of the claim. I do not consider that such an application, namely that the proceeding was hopeless or bound to fail, would have succeeded.
I do not consider the applicant’s claim was without reasonable cause. I am not persuaded that ‘on the applicant’s version of the facts at the time of instituting the proceeding, it was clear that the proceeding must fail.’[6]
[6] Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257, 265.
Did the applicant’s unreasonable acts cause the respondent to incur costs?
In respect of the claim by the respondent that the applicant’s unreasonable acts caused the respondent to incur costs, counsel for the respondent relied on the decision of the Full Court of the Federal Court in Construction, Forestry, Mining and Energy Union v Clarke.[7] The Full Court held that whether a party has engaged in an ‘unreasonable act or omission’ for the purposes of s.824(2) (the previous provision to s.570 in the earlier Workplace Relations Act 1996 (Cth)) will depend on the particular circumstances of the case. The Full Court noted that there is a distinction between a party who pursues arguments which are ultimately abandoned or rejected by the Court and a party who commences a proceeding which is misconceived in the sense of being incompetent or unsupportable. The Full Court held that the respondent was entitled to meet the appeal and stated:
…The mere fact that it could have done so in a different or timely fashion is not sufficient, in itself, to warrant the making of an adverse costs order against it, particularly where the usual practice in litigation arising from the WR Act is to make no orders as to costs.[8]
[7] [2008] FCAFC 143.
[8] Ibid [30].
Counsel for the respondent cited the decision of Australian and International Pilots Association v Qantas Airways Ltd (No.3).[9] In this decision Tracey J held that the applicant acted unreasonably, by persisting with pleadings inconsistent with the court’s reasoning for striking out a further amended statement of claim, and by failing to comply with the court’s directions. Tracey J also held that the prosecution of any incompetent or hopeless case can be regarded as ‘an unreasonable act’ within the meaning of s.824(2). Conversely, the pursuit of a contentious and ultimately unsuccessful argument is not.
[9] [2007] FCA 879.
It was submitted by counsel for the respondent that ‘there was an unreasonable act or omission in relation to the applicant’s conduct of the proceedings.’ It was submitted that, after receiving the material filed by the respondent, the applicant pursued a claim that contained numerous repetitive arguments and caused the respondent to have to meet a wide range of allegations, none of which bore upon the decision to terminate. It was submitted that, although during the hearing the respondent conceded that in making complaints or enquiries, the applicant had exercised workplace rights, it was clear that in considering whether the applicant’s employment ought to have been terminated, Mr Gilpin, the sole decision-maker, only considered matters that were contained in the letter written on 8 June 2016.
I do not consider that the applicant’s pursuit of her claim at the hearing was an unreasonable act, or that the findings which I made should have been apparent to the applicant. Because of the presumption in s.361 of the Act, the onus was on the respondent to prove that it had not acted for a prohibited reason. If Mr Gilpin’s evidence had been found not to be reliable after his cross-examination, the respondent may not have been able to discharge the burden imposed on it.
It was submitted by counsel for the respondent that the way the applicant conducted the hearing amounted to an unreasonable act. It was submitted that repetitive questions in cross-examination unreasonably extended the length of the hearing of the application, causing the respondent to incur greater costs than would have ordinarily been the case.
The applicant submitted that she had no intention of extending the length of the proceedings, and pointed out that the matter was listed for two days, but ran for one and a half days.
I accept that the applicant was repetitive in her questioning of Mr Gilpin. However, her cross-examination of him was only approximately half an hour longer than the cross-examination of the applicant by counsel for the respondent. I do not consider that this was an unreasonable amount of time for the applicant to cross-examine the sole decision-maker for the respondent.
I do not accept that the applicant’s conduct of the litigation amounted to an unreasonable act or omission. In Clarke v Dixie Cummings Enterprises Pty Ltd,[10] Jessup J stated:
…There must be a higher level of criticism or disapprobation which the court is able to express about a losing party’s case if the bars in paras 9(a) and (b) of s 570(2) are to be crossed by a party which succeeds on the application concerned.
[10] [2013] FCA 987.
I do not consider that this matter falls within this description, so that the respondent crosses the bars in s.570(2).
In conclusion, the above authorities indicate that the discretion conferred by the terms of s.570(2) should be exercised cautiously and the case for its exercise should be clear.[11] I am not persuaded the proceedings were instituted without reasonable cause or that the applicant acted unreasonably to cause the respondent to incur costs. I am therefore not persuaded that either of the matters in s.570(2)(a) or (b) have been established.
[11] Ryan v Primesafe [2015] FCA 8; Saxena v PPF Asset Management Ltd [2011] FCA 395.
There will be no order for costs made against the applicant.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Judge Baker
Associate:
Date: 17 December 2018
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