Tamer Selcuk v Epworth Foundation T/A Epworth Hospital

[2015] FWC 4367

[2015] FWC 4367

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Tamer Selcuk
v
Epworth Foundation T/A Epworth Hospital
(U2014/8741)

COMMISSIONER RYAN MELBOURNE, 30 JUNE 2015

Application for relief from unfair dismissal - application for costs.

[1] This matter involves an application for costs orders arising from an appeal against the decision of Ryan C in U2014/8741 1.

[2] The appeal was heard by a Full Bench comprising Ross J, Gostencnik DP and Johns C on 31 March 2015.

[3] The Applicant in this matter, who was also the applicant in the initial unfair dismissal matter, has applied for two costs orders, one against the Respondent in the unfair dismissal matter and the other against the respondent’s legal representative. The application for a costs order against the Respondent’s legal representative has been dealt with and a decision 2 has been issued.

[4] In the present matter the Applicant has sought an order that the Respondent “pay the costs of the Applicant with respect to the application for permission to appeal”.

[5] The parties filed written submissions and witness statements in support of their respective positions and all parties agreed that the Commission determine the costs applications on the papers.

The Full Bench Decision Refusing Permission to Appeal

[6] The decision 3 of the Full Bench to refuse to grant permission to appeal identified the correct approach to be taken in relation to unfair dismissal appeals as follows:

“[4] The decision the subject of this appeal was made under Part 3-2 – Unfair Dismissal – of the FW Act. Section 400(1) provides that permission to appeal must not be granted from such a decision unless the Commission considers that it is in the public interest to do so. Further, in such matters appeals on a question of fact may only be made on the ground that the decision involved a ‘significant error of fact’ (s.400(2)). In Coal & Allied Mining Services Pty Ltd v Lawler and others, Buchanan J (with whom Marshall and Cowdroy JJ agreed) characterised the test under s.400 as ‘a stringent one’. The Commission must not grant permission to appeal unless it considers that it is ‘in the public interest to do so’.

[5] The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment. In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest:

“... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters.” 

[6] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error. However, the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.” 4

[citations omitted]

[7] The Full Bench then dealt with the many appeal grounds under the four categories of error said to have been made by the Commissioner. The Full Bench decisively found against the Appellant in relation to three of the categories of error said to have been made by the Commissioner. In relation to one of the categories of error said to have been made by the Commissioner the Full Bench found an error in the Commissioner’s decision.

[8] The Appellant contended that the Commissioner had taken into account an irrelevant consideration namely that the Commissioner’s “consideration of the practice of employees of the appellant using wash up time to leave work early in the assessment whether the respondent’s dismissal was harsh unjust or unreasonable was also irrelevant.”  5

[9] Of this identified error in the decision at first instance the Full Bench said:

“[30] As to the final matter under this category, we agree that the Commissioner’s consideration of the practice of employees of the appellant using wash up time to leave work early was not relevant to the assessment whether the respondent’s dismissal was harsh unjust or unreasonable was not relevant. In our view the circumstances of the wash up time practice and that the misconduct found to have been engaged in by the respondent are materially different and did not warrant consideration whether by reason of differential treatment or because of any condoning of particular behaviour by the respondent.

[31] However, it does not follow that the identification of this error results in the grant of permission to appeal. This is so for two reasons. First, it is clear from the Commissioner’s decision that the existence of the practice was a factor that he took into account in determining that the dismissal was unreasonable. The Commissioner had already and separately concluded that the dismissal was harsh because, the penalty of dismissal would operate harshly on him, having regard to the respondent’s circumstances. The Commissioner had also already and separately concluded that the dismissal was unjust by reason of the appellant’s failure to provide the respondent with relevant material which might have enabled him to better respond to the allegations before it dismissed him.

[33] The Commissioner’s conclusion that the dismissal was harsh, or his conclusion that the dismissal was unjust, were each a sufficient basis for the Commissioner’s ultimate conclusion that the dismissal was unfair. It was not strictly necessary for the Commissioner to also conclude that the dismissal was unreasonable. Thus even if the appellant’s appeal was upheld on this ground the result would be the same. On that basis the appeal on this ground has no utility.

[34] Secondly, the Commissioner concluded that the dismissal was unreasonable on two separate not cumulative bases. .......

[35] It is therefore tolerably clear that the Commissioner concluded that the dismissal was unreasonable by reason of the disproportionate disciplinary action and separately because of the appellant’s tolerance of the custom and practice. For all these reasons it follows that an appeal on this ground, even if successful, would be of no utility.”

[citations omitted]

[10] The Full Bench disposed of the whole of the application for permission to appeal as follows:

“[40] For the reasons given the appellant has not made out an arguable case for any appealable error. Moreover there is nothing in the appellant’s submissions made during the hearing of the application for permission to appeal that would suggest that some issue of importance or general application is to be agitated in the appeal; or that there is a diversity of decisions at first instance such that guidance from a full bench is required; or that the decision at first instance manifests an injustice; or the result is counter intuitive; or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters. The appellant’s appeal is no more than an indication of its dissatisfaction with the result at first instance. The public interest is therefore not enlivened.”

Relevant Statutory provisions

[11] The Fair Work Act deals with the issue of costs in two separate parts of the Act. Part 3-2 - Unfair Dismissal contains s.400A and s.402 and Part 5-1 The Fair Work Commission contains s.611. The relevant provisions of the Act are set out 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.”

“402 Applications for costs orders

An application for an order for costs under section 611 in relation to a matter arising under this Part, or for costs under section 400A or 401, must be made within 14 days after:

(a) the FWC determines the matter; or

(b) the matter is discontinued.”

“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).”

[12] In the present matter the application for costs has been made within 14 days of the decision of the Full Bench to refuse to grant leave to appeal. The application for costs therefore meets the requirements of s.402 of the Act.

[13] The Applicant contends that for the purposes of s.611 the Respondent acted both vexatiously and without reasonable cause in relation to filing and pursuing an appeal against the decision of the Commission at first instance.

[14] The Applicant contends that the Respondent acted vexatiously because at the conclusion of the hearing of the matter at first instance the Respondent’s Senior HR Advisor was allegedly heard to say, “even if you win, we’ll appeal the decision. And if we lose that we’ll appeal the appeal and go to the Federal Court”.

[15] The Applicant contends that the Respondent acted without reasonable cause because the Respondent continued with the appeal even after the Applicant’s legal representative had written to the Respondent on 11 March 2015 and “clearly outlined the grounds in which the application for permission to appeal would fail, which were ultimately preferred by the Full Bench”.

[16] The Applicant contends that for the purpose of s.400A the Respondent acted unreasonably in refusing to settle the matter when the Applicant twice offered to accept a lesser amount than had been ordered by the Commission if the Respondent would withdraw the appeal application.

Applicant’s reliance on s.400A

[17] The Applicant has sought to rely on s.400A as enabling the Applicant to apply for a costs order under that section. The relationship between the various costs provisions in the Fair Work Act has been commented on by the Commission in other matters. In Church v Eastern Health t/as Eastern Health Great Health and Wellbeing 6(Church)a Full Bench said:

“[16]…. At the outset it is important to appreciate that the Commission, as a statutory tribunal, has no inherent power to make costs orders. Its powers to make such orders must be derived from the FW Act. Depending on the circumstances the Commission can order costs under ss 376, 400A, 401 611 and 780 of the FW Act. The scope of these provisions and the circumstances in which they operate vary.

[17] Section 376 deals with costs orders against lawyers and paid agents in relation to general protections applications made under ss 365 or 372. Section 780 is in similar terms and applies to applications under s.773 for the Commission to deal with a dispute alleging that the employer has terminated an employees’ employment in contravention of s.772.

[18] Section 400A provides that the Commission may make a costs order against a party to a matter arising under Part 3-2, if satisfied that the first party caused those costs to be incurred because of their unreasonable act or omission in connection with the conduct or continuation of the matter. Part 3-2 of the FW Act deals with ‘Unfair Dismissal’. Section 401 deals with costs orders against lawyers and paid agents in relation to applications for an unfair dismissal remedy under s.394.

[19] The costs application before us arises from an appeal under s.604 of the FW Act. No party contended that ss 376, 400A, 401 or 780 had any application in the present circumstances and, on their face, they do not. The costs application is brought under s.611(2)(a).”

[18] In the present matter the costs applications relate to appeal proceedings and therefore s.400A has no application to such proceedings. Appeal proceedings arise under Part 5-1 of the Act and even though the appeal may be about a decision issued under Part 3-2 of the Act (the Unfair Dismissal provisions) the appeal is not a matter arising under Part 3-2 and s.400A only relates to a matter arising under Part 3-2. To the extent that the Applicant relies on s.400A such reliance is misplaced and the Applicant cannot seek a costs order against the Respondent pursuant to s.400A.

Applicant’s Contentions as to Vexatious Conduct of the Respondent

[19] In its written submissions the Applicant contended as follows:

“16. The primary evidence that the First Respondent’s application for permission to appeal was vexatious or brought for an ulterior purpose is found in the Applicant’s supporting witness statement, which refers to comments made by Cate Morris, the First Respondent’s Senior HR Advisor:

“[e]ven if you win, we’ll appeal the decision. And if we lose that we’ll appeal the appeal and go to the Federal Court”.

17. The above comments were made before Commissioner Ryan issued his decision and directly meets the first definition of vexatious: the proceeding was continued with the intention of harassing the Applicant and causing him to incur unnecessary legal costs.

Did the Respondent act vexatiously in appealing the decision at first instance?

[20] The Applicant asserts in his witness statement filed in this matter that at the end of the proceedings at first instance he overheard Ms Cate Morris, the Respondent’s Senior HR Advisor say, “even if you win, we’ll appeal the decision. And if we lose that we’ll appeal the appeal and go to the Federal Court”. The Respondent’s Senior HR Advisor specifically denies making the remarks attributed to her by the Applicant.

[21] In the present matter the Commission has two unsworn witness statements and it is not possible to definitively determine what happened at the conclusion of the hearing at first instance and after the Commission had adjourned.

[22] However, for the purpose of the costs application, I am prepared to proceed on the basis that on 17 December 2014 the Respondent’s Senior HR Advisor did say, “even if you win, we’ll appeal the decision. And if we lose that we’ll appeal the appeal and go to the Federal Court”.

[23] This statement alone is insufficient to satisfy the Commission that the Respondent initiated the appeal proceedings vexatiously.

[24] As the evidence before the Commission in the matter at first instance made very clear the Respondent’s Senior HR Advisor was not the key decision maker in relation to the dismissal of the Applicant but, as her title indicates, she was an advisor only. Even if the Respondent’s Senior HR Advisor had very strong views as to the need or desire for an appeal to be initiated against the decision of the Commission at first instance there is nothing before the Commission to suggest that the decision to initiate the appeal was made by the Respondent’s Senior HR Advisor.

[25] In the present matter both Ms Cate Morris, the Respondent’s Senior HR Advisor and Mr Simon Benedict, the Respondent’s Human Resources Manager assert that the decision to appeal was made by senior management at the hospital. Respectively the witness statements filed in this matter contain the following:

Mr Simon Benedict:

“2. During the course of the proceedings at first instance I gave evidence on behalf of the respondent. I also had over all carriage and responsibility for the process and Ms Morris who was acting as the instructor for Mr Addison was responsible to me. As a consequence of that both Ms Morris and Mr Addison regularly spoke to me about the proceedings etc.

3. I was not present in the courtroom when the events described by Mr Selcuk are said to have occurred. However, Ms Morris does not have the authority to determine if an appeal was to be lodged for a decision made against Epworth Healthcare. Such a notion is fanciful. Such a decision is made by senior management of the hospital, including myself.

7. In relation to the various offers put forward by the respondent to the appeal I discussed those matters with Mr Addison when they were received. Following the discussions with Mr Addison in which we discussed the prospects of success, the risks and other matters of principle etc I conveyed instructions to Mr Addison so that he could respond to Mr Vasilaras.”

Ms Cate Morris:

“6. In relation to the appeal itself the decision was handed down on 16 January 2015. Following the publication of the decision conversations occurred internally with senior management of Epworth and between me, Simon Benedict and Maurice Addison. As a result of those discussions a decision was made to appeal 16 January decision. The decision was not lightly entered into and it was the view of the collective that the decision was wrong and that an appeal could potentially be successful in overturning the decision.

8. The decision was taken by senior management at Epworth that they would not settle the matter rather that there would have the matter determined by the full bench.”

[26] There is nothing before the Commission which suggests that the decision to initiate an appeal and to continue the appeal was not made by senior management of the Respondent.

[27] The decision of the Commission in the matter at first instance was issued on 16 January 2015 and the appeal was filed electronically on 26 January 2015. The temporal link between a statement made on behalf of the Respondent on 17 December 2014 and the filing of an appeal on 26 January 2015 is so tenuous as to be almost non-existent. A substantive link between a statement made on behalf of the Respondent on 17 December 2014 and the filing of an appeal on 26 January 2015 is completely non-existent.

[28] The Commission could not be satisfied that the Respondent acted vexatiously in appealing the decision at first instance.

Applicant’s contentions as to “without reasonable cause” and “no reasonable prospect of success”

[29] In its written submissions the Applicant contended as follows:

“18... the Applicant submits the First Respondent made the application for permission to appeal without reasonable cause.

19. The question of what constitutes “without reasonable cause” was considered by Wilcox J in Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264-2; [1992] FCA 366 at [29]. :

[i]t 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.

20. Section 611(2)(b) – the question of whether it should have been reasonably apparent to the First Respondent that its application for permission to appeal had no reasonable prospect of success was considered in the Full Bench decision of Baker v Salva Resources Pty Ltd[2011] FWAFB 4014.

a. “should have been reasonably apparent” must be objectively determined; directed to a belief formed on an objective basis rather than a subjective one;
b. a conclusion that an application “had no reasonable prospect of success” can be reached in circumstances where the application is manifestly untenable or groundless.

21. Section 611(2)(b) does not appear to be constrained to the time at which the application was made but rather can include a consideration of what should have been reasonably apparent to the First Respondent at the time the Applicant responded to the merits of the application for permission to appeal.

22. By way of letter to the Second Respondent dated 11 March 2015, the writer clearly outlined the grounds in which the application for permission to appeal would fail, which were ultimately preferred by the Full Bench. A copy of the writer’s letter to the Second Respondent dated 11 March 2015 is attachedto these submissions.”

The Respondent’s contentions as to “without reasonable cause” and “no reasonable prospect of success”

[30] In its Outline of Submissions filed with the Commission on 3 May 2015 the Respondent contended as follows:

“8.......... The decision to appeal was taken in an attempt to have the decision at first instance set aside and the remedy awarded set aside.

10. In relation to the second proposition that the application was brought without reasonable cause this proposition should also be rejected. The quotation from the decision of Wilcox J in Kanan v Australian Postal and telecommunications Union sets out the correct approach in relation to this head. As his honour says the test is that upon the facts apparent to the applicant (in this case appellant) at the time of instituting the proceedings there was no substantial prospect of success. The test set out is a high bar to get over. It requires that the applicant’s case at the time of instituting the proceedings is absolutely hopeless. It is submitted that was not the case when the appellant filed its application on 26 January 20 15.

11. It is submitted on the facts apparent to the appellant on 26 January 2015 there was a prospect of success in the appeal. The decision of the full bench itself found in favour of the appellant on at least 1 point. It is submitted that there were arguable grounds for the appeal and that the appeal was not brought when it was clear that there was no prospect of success.

12. Further, as is set out in paragraph 20 of the applicants outline of submissions the decision of the full bench in Baker v Salva Resources Pty Ltd sets out the test as described above that is where an application is” manifestly untenable or groundless” it will be without reasonable cause. That was not the case on 26 January when Epworth healthcare filed its application.

13. It is submitted that the applicant’s proposition set out in paragraph 21 of the outline of submissions is in error. The test as set out above is not at some later time after the application has been filed. Section 61 1 (2) (b) is clearly confined to the time the application is lodged. The very language of the section makes that clear and the authorities relied on by the applicant also made it clear that it is at the time of application that the test applies. It is submitted however that even if the applicant is correct in the characterisation of section 611 (2) (b) the fact that the applicant put an alternative view of the decision of the Commissioner at 1st instance on 11 March 2015 does not make the appellant’s case hopeless or untenable.

14. Whilst it is true that the full bench did not grant permission to appeal the appellant argued its position before the full bench. As said above the general principle is that parties bear their own costs. The FWC is not a jurisdiction where costs follow the event and it is submitted that the applicant’s out line of submissions suggests that this is the case. The applicant’s outline of submissions is incorrect in that approach.”

[31] In Supplementary Submissions filed by the Respondent on 12 May 2015 the Respondent further contended as follows:

“3. It is submitted that the application to appeal was taken in good faith and in accordance with the principals set out in the Act. Further, at the time of the application it was the view of the first Respondent that there were grounds for the application and that there was reasonable chance that the appellant would be successful. Even if the Commission is against us in relation to the chances of success the application was arguable and the application was not so hopeless as to fall foul of the principals that govern the consideration of ‘without reasonable cause”. The consideration of those matters as submitted previously are to be determined at the point that the First Respondent made its application per Qantas Airways Limited v Mr Paul Carter [2013] FWCFB 1811. In that case the bench said at paragraph 20:-

“It is clear from the terms of s.611 of the Act that the point at which the Commission must determine whether or not Qantas’ application to appeal was vexatious, without reasonable cause or had no reasonable prospect of success, is when Qantas made the application to appeal.”

7. The question of an award of costs is highly discretionary if the Commission finds that one of the grounds required as a jurisdiction prerequisite is made out. It is submitted that the jurisdictional prerequisites are not made out in this particular case. Therefore in the submission of the respondents the application should be dismissed.

8. If the commission is against us in relation to that matter the costs application should be confined to the costs of the actual appearance at the full bench hearing of the appeal. It is abundantly clear on the applicants own materials that the applicant claims the unreasonable act is the refusal to accept the offer of 11 March 2015. Whilst the respondents maintain that they were prepared to negotiate a commercial settlement and therefore their refusal to accept the offer put by the applicant was not an unreasonable act, on the materials filed by the applicant this seems to be the point at which the applicant says the respondents engaged in unreasonable conduct. Given that at this point in time the application had been lodged and the applicant’s representatives had read the application and prepared responses to the application then the only costs that could be incurred by the applicant because of the refusal to accept the offer (the purported unreasonable act) were the actual costs of the hearing of the appeal.

9. It is therefore submitted that the scope of any costs order be confined to the costs incurred in the 2 hour hearing before the full bench.

10. In relation to the applicants contention that costs should be awarded because the applicant was substantially successful in defending the application to appeal it is submitted that this is not a basis for the awarding of costs in this jurisdiction. The authorities all refer to costs being awarded only rarely, carefully and in circumstances where there is clear warrant for the awarding of the costs. In other words, costs do not follow the event in this jurisdiction and to award costs on the basis of the applicant’s success would not be a proper application of the principles.”

Relevant Authorities on Costs

[32] For the purposes of s.611 the point of time at which the Commission must review the conduct of the Respondent is when the Respondent made the application for permission to appeal. (Qantas Airways Ltd v Carter 7).

[33] In Church a Full Bench gave a detailed consideration of s.611. It is necessary, within the context of the present matter, to set out what the Full Bench said:

“[21] Ascertaining the meaning of s.611 necessarily begins with the ordinary and grammatical meaning of the words used. These words must be read in context by reference to the language of the Act as a whole and to the legislative purpose.3

[22] There are some similarities between s.611 and s.570 of the FW Act. Section 570 deals with the circumstances in which a party to proceedings in a court in relation to a matter arising under the FW Act may be ordered to pay costs incurred by another party to the proceedings. Section 570 states:

“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.”

[23] Given the similarities between ss 611 and 570, in particular the common use of the expression ‘vexatiously or without reasonable cause’, judgements which have construed s.570 and its legislative antecedents are relevant to our consideration of s.611.

[24] In Heidt v Chrysler Australia Ltd 4 Northrop J said of s.197A of the Conciliation and Arbitration Act 1904 (Cth), a predecessor provision to s.570 of the FW Act;

“The policy of s.197A of the Act is clear. It is designed to free parties from the risk of having to pay the costs of an opposing party. At the same time the section provides a protection to parties, defending proceedings which have been instituted vexatiously or without reasonable cause. This protection is in the form of conferring a power in the court to order costs against a party who, in substance, institutes proceedings which in other jurisdictions may constitute an abuse of the process of a court.”

[25] The application of these observations to the construction of s.611 requires some qualification. Section 570 deals with the ordering of costs in court proceedings in relation to matters arising under the FW Act. In court proceedings the usual practice is that an order for costs follows the outcome of the substantive proceedings. As we have mentioned the Commission context is different. The Commission’s power to order costs only arises in the context of ss.376, 400A, 401, 611 and 780 of the FW Act. There is no general practice of cost following the event. Despite these differences the observations of Northrop J in Heidt are apposite to s.611.

[26] Section 611 sets out a general rule - that a person must bear their own costs in relation to a matter before the Commission (s.611(1)) - and then provides an exception to that general rule in certain limited circumstances. The Explanatory Memorandum confirms this interpretation of the section, it is in the following terms:

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.

[27] In the context of s.570 and its legislative antecedents courts have observed that an applicant who has the benefit of the protection of a provision such as s.570(1), (ie the general rule that parties bear their own costs), will only rarely be ordered to pay costs and that the power should be exercised with caution and only in a clear case. In our view a similarly cautious approach is to be taken to the exercise of the Commissions powers in s.611 of the FW Act.

[28] We now turn to the exceptions to the general rule expressed in s.611(1) and the meaning of the expression ‘vexatiously or without reasonable cause’.

[29] The question of whether an application was made ‘vexatiously’ looks to the motive of the applicant in making the application. It is an alternative ground to the ground that the application was made ‘without reasonable cause’ and may apply where there is a reasonable basis for making the application. In Nilsen v Loyal Orange Trust 7(Nilsen) North J observed that this context requires the concept of vexatiousness to be narrowly construed. His Honour went on to state that an application will be made vexatiously ‘where the predominant purpose ....is to harass or embarrass the other party, or to gain a collateral advantage’. Deane and Gaudron JJ made a similar observation in Hamilton v Oades in which they said:

“The terms ‘oppressive’ and ‘vexatious’ are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are ‘seriously or unfairly burdensome, prejudicial or damaging’ and ‘productive of serious and unjustified trouble and harassment’.”

[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]

[34] The matter before the Full Bench in Church concerned an appeal against a decision of the Commission under s.596 of the Act where the appeal was brought under s.604 but without the constraints of s.400 of the Act which apply in relation to the appeal brought by the Respondent in the present matter.

[35] The decision in Church makes clear that the bar against achieving a costs order is quite high.

Consideration

[36] In the present matter the high bar against a costs order is matched by a high bar against getting permission to appeal an unfair dismissal decision.

[37] The relationship between and the differences between an appeal against an unfair dismissal decision and other decisions is clearly identified in the Explanatory Memorandum to the Fair Work Bill 2009. Relevantly the Explanatory Memorandum says of s.611:

Clause 604 – Appeal of decisions

2320. Clause 604 provides for an appeal to a Full Bench, with the permission of the Full Bench, in relation to certain decisions of FWA. This provision is modelled on the appeal provisions contained in the WR Act and its predecessors, and is intended to maintain the existing jurisprudence in relation to AIRC appeals, in particular the decision of the High Court in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194.

2321. An appeal under clause 604 involves an appeal by way of rehearing. Although an appeal can and usually will be conducted by reference to the original evidence, the Full Bench is not limited to the evidence before the primary decision-maker and can admit further evidence (see subclause 607(2)).

2322. Regardless of the nature of the decision being appealed, the powers of the Full Bench may only be exercised if it identifies some error on the part of the primary decision-maker.

2323. Where the original decision has involved the exercise of a significant level of discretion, the Full Bench should only intervene on the limited grounds set out in House v The King (1936) 55 CLR 488, namely that the decision-maker has:
acted upon a wrong principle;
been guided by irrelevant factors;
mistaken the facts; or
failed to take some material consideration into account.

2325. In some cases the number of potential persons aggrieved by a decision could be large – e.g., where the decision has been to amend an award. The requirement for FWA to grant permission will prevent frivolous or vexatious appeals.

2327. The concept of permission in the Bill is intended to replace the concept of leave currently in the WR Act, using more modern terminology. Other than in the special case of subclause 604(2), the grounds for granting permission to appeal are not specified. It is intended that this would call up all the existing jurisprudence about granting leave to appeal – see e.g., Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (1998) 89 FCR 200; and Wan v Australian Industrial Relations Commission (2001) 116 FCR 481.

2328. Subject to the appellant demonstrating an arguable case of appealable error, it is intended that FWA should have a broad discretion as to the circumstances in which it can grant permission to appeal. Some examples of considerations which have traditionally been adopted in granting leave and which would therefore usually be treated as justifying the grant of permission to appeal include:
that the decision is attended with sufficient doubt to warrant its reconsideration; and that substantial injustice may result if leave is refused.

2329. However, subclause 604(2) requires FWA to grant permission to appeal the decision if FWA is satisfied that it is in the public interest to do so.

2330. A note following this subclause clarifies that the public interest requirement in subclause 604(2) does not apply in relation to an application to appeal from an unfair dismissal decision under Part 3-2. Clause 400 also requires that an appeal on a question of fact in relation to unfair dismissal can only be made on the grounds that the decision involved a significant error of fact.

[38] Relevantly the Explanatory Memorandum says of s.400:

Clause 400 – Appeal rights

1604. The primary provisions dealing with appeal of decisions are in the FWA provisions in Part 5-1 (Fair Work Australia). The effect of clause 400 is to make the process for permitting appeals for unfair dismissal decisions different from the general grounds in clause 604 in two respects. Firstly, the general provisions do not require public interest as a prerequisite for permitting appeals, whereas clause 400 provides that only appeals in the public interest can be permitted for unfair dismissal matters.

1605. Secondly, subclause 400(2) limits appeals based on an error of fact to only allow an appeal where that error is a significant error of fact. This subclause is intended to limit FWA’s discretion to permit an appeal under 604(1).

[39] In applying the decision of the Full Bench in Church to the present matter it is appropriate to keep in mind that the concepts of “without reasonable cause” and “no reasonable prospect of success” relate to the request by the Respondent for permission to appeal in circumstances where s.400 of the Act is predicated upon the Commission not granting permission to appeal an unfair dismissal decision of the Commission “unless FWC considers that it is in the public interest to do so”.

[40] For the purpose of considering the costs application in the present matter s.611(2) needs to be applied as if it read as follows:

(2) However, the FWC may order the Respondent to bear some or all ofthe costs of the Applicant in relation to the Respondent’s application for permission to appeal an unfair dismissal decision if:

(a) the FWC is satisfied that the Respondent made the application for permission to appeal an unfair dismissal decision without reasonable cause; or

(b) the FWC is satisfied that it should have been reasonably apparent to the Respondent that Respondent’s application for permission to appeal an unfair dismissal decision had no reasonable prospect of success.

[41] In Imogen Pty Ltd v Sangwin, 8 which was relied on by the Full Bench in Church, the appeal before the Full Court of the Industrial Relations Court was able to be made without the need for permission being granted by the Court. The appellate jurisdiction of the Industrial Relations Court was able to be accessed without such a significant restriction as is found in s.400 of the Fair Work Act.

[42] The decision in Church (and the cases cited therein) must be applied in the present matter having regard to the finding of the Full Bench in the present matter on the permission to appeal issue:

“[40] For the reasons given the appellant has not made out an arguable case for any appealable error. Moreover there is nothing in the appellant’s submissions made during the hearing of the application for permission to appeal that would suggest that some issue of importance or general application is to be agitated in the appeal; or that there is a diversity of decisions at first instance such that guidance from a full bench is required; or that the decision at first instance manifests an injustice; or the result is counter intuitive; or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters. The appellant’s appeal is no more than an indication of its dissatisfaction with the result at first instance. The public interest is therefore not enlivened.”

[43] The Respondent commenced its application for permission to appeal in the full knowledge of the case law on permission to appeal, including the decision in GlaxoSmithKline Australia Pty Ltd v Makin. 9

[44] The strength of the language used by the Full Bench in refusing permission to appeal in the present matter is directly relevant to the consideration of a costs order.

[45] On the basis of the material available to the Respondent at the time it initiated an application for permission to appeal an unfair dismissal decision it should have been reasonably apparent to the Respondent that it had no reasonable prospect of success in being granted permission to appeal. Given the decision at first instance and the case law on permission to appeal under s.400 the Commission could reasonably conclude that the Respondent made the application for permission to appeal without reasonable cause.

[46] Whilst a failure to get permission to appeal could not of itself establish the criteria necessary for a costs order under s.611 the language used by the Full Bench in the present matter to dismiss the request for permission to appeal is telling and supports a conclusion that the Respondent had no reasonable prospect of success in making the application for permission to appeal.

[47] The Commission is satisfied that the Respondent made the application for permission to appeal an unfair dismissal decision without reasonable cause.

[48] The Commission is satisfied that it should have been reasonably apparent to the Respondent that the Respondent’s application for permission to appeal an unfair dismissal decision had no reasonable prospect of success.

[49] The Commission orders that the Respondent pay the Applicant’s costs, on a party-party basis, in respect of the application for permission to appeal in matter C2015/1417. The parties are to confer as to the terms of the order and file a draft order within 7 days. The Commission will settle the terms of the order.

COMMISSIONER

 1   [2015] FWC 437.

 2   [2015] FWC 4390.

 3   [2015] FWCFB 2085.

 4   Ibid at para 4 to 6.

 5 Ibid at [13].

 6   [2014] FWCFB 810.

 7   [2013] FWCFB 1811.

 8 (1996) 70 IR 254.

 9   [2010] FWAFB 5343.

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