[2018] FWC 1642

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.365—General protections

Yaping Li
v
Vazza Pty Ltd T/A Total Cover Australia Financial Services
(C2017/5366)

DEPUTY PRESIDENT KOVACIC

CANBERRA, 20 MARCH 2018

Request to stay consideration of an application for costs and an application to dismiss the costs application – request declined.

[1] Ms Yaping Li made an application which was received by the Fair Work Commission (the Commission) on 27 September 2017 under s.365 of the Fair Work Act 2009 (the Act) alleging that she had been dismissed by Vazza Pty Ltd T/A Total Cover Australia Financial Solutions (Vazza) on 18 September 2017 in contravention of the general protections provisions in the Act.

[2] In her general protections application, Ms Li contended that Vazza took adverse action against her for the reason, or for reasons including, that she exercised a number of workplace rights and her Asian heritage. Vazza, on the other hand, contended that it had not taken adverse action against Ms Li in contravention of the Act but that her dismissal was a matter of genuine redundancy.

[3] Following a conciliation conference which failed to resolve the matters in dispute, the Commission on 3 November 2017 issued a certificate under s.368 of the Act certifying that it was satisfied that all reasonable attempts to resolve the dispute had been, or were likely to be, unsuccessful.

[4] In subsequent developments:

● on 16 November 2016 Ms Li filed a general protections court application in the Federal Circuit Court 1;

● on 17 November 2017 Vazza lodged with the Commission an application for costs (the costs application) under ss.375B and 611 of the Act; and

● on 5 December 2017 Ms Li made an application (the dismissal application) under s.587(1) of the Act seeking to have Vazza’s costs application dismissed.

[5] The costs and dismissal applications were listed for a mention and directions hearing on 6 December 2017. At that hearing permission was granted for both Ms Li and Vazza to be represented by a lawyer. Also at the hearing, Vazza’s representative suggested that both applications be stayed pending the Federal Circuit Court’s determination of Ms Li’s general protections court application. However, Ms Li’s representative pressed for the dismissal application to be determined. The hearing concluded on the basis that the Commission would issue directions for the filing of submissions regarding the stay proposal. Directions to that effect were issued on 7 December 2017, with revised Directions issued on 2 January 2018 following a request from Vazza’s representative.

[6] For the reasons set out below, I decline to stay consideration of Vazza’s cost application and Ms Li’s dismissal application. The applications will now be listed for mention and directions.

Vazza’s submissions

[7] Vazza contended that consideration of the applications be stayed for the following reasons:

• determination of the costs application would require the Commission to make findings of fact on identical factual disputes that would need to be determined by the Federal Circuit Court, noting that were the Commission to stay the applications it would avoid the prospect of inconsistent findings and that the applications would be able to proceed with the benefit of the Court’s judgement;

• it would be prejudiced by having to simultaneously participate in two proceedings which involved overlapping factual allegations, adding that this may provide Ms Li with a forensic advantage in the Federal Circuit Court proceedings by providing her with advance notice of how it intended to approach the disputed factual allegations;

• if the applications were not stayed it would be onerous on witnesses who would be required to give evidence on the same issues into proceedings simultaneously; and

• staying the applications would allow for them to be dealt with more efficiently and enable the parties to reconsider their respective positions with the benefit of the Federal Circuit Court’s decision.

[8] In support of its submissions, Vazza drew on the decision of Deputy President Gostencnik in Sharon Bowker; Annette Coombe: Stephen Zwarts V DP World Melbourne Limited T/A DP World; Maritime Union of Australia, The – Victorian Branch and Others 2 (Bowker).

[9] In its submissions in reply Vazza submitted inter alia that contrary to Ms Li’s submissions the decision in Corcoran v Gamma Business Solutions Pty Ltd 3 (Corcoran) supported its stay application and that the Commission should not conclude that granting the stay would increase the prospect of inconsistent findings. With regard to Ms Li’s submissions in support of her application to dismiss the costs application, Vazza rejected each of the grounds relied upon by Ms Li. Vazza also submitted that were the Commission minded to reject Ms Li’s application to dismiss at this juncture that it would support such a course.

Li’s submissions

[10] In her submissions, Ms Li acknowledged that the Commission had a broad discretionary power to grant a stay under s.589 of the Act. Ms Li further submitted that in deciding whether to exercise its discretion to grant a stay the Commission would be guided by the factors outlined by Justice Lockhart in Sterling Pharmaceuticals Pty Limited v With the Boots Company (Australia) Pty Limited 4 (Sterling Pharmaceuticals). More specifically, Ms Li submitted that the circumstances in this case clearly did not support the granting of a stay because the costs application could be determined and dismissed summarily.

[11] In her submissions Ms Li set out a number of reasons as to why the costs application should be dismissed. Those reasons included the following:

• in issuing a certificate the Commission did not, as required by s.368(3)(b) of the Act, advise the parties that it considered based on the materials before it that a general protections Court application would not have a reasonable prospect of success and that as such the Commission had already turned its mind to the issue of reasonableness and decided in her favour;

• her general protections Court application had a reasonable prospect of success;

• the costs application was made without reasonable cause and was “so obviously untenable that it cannot possibly succeed” 5; and

• dismissing the costs application would save the parties and the Commission the cost and inconvenience of dealing with the application.

[12] As to why the stay application should not be granted, Ms Li submitted that:

• there was no potential for judicial embarrassment requiring a stay of proceedings as there was no prospect that the Commission and the Federal Circuit Court could make inconsistent findings;

• given the non-particularised nature of the allegations made by Vazza she would not receive any additional forensic advantage in the Federal Circuit Court proceedings; and

• her general protections Court application rendered the costs application frivolous or vexatious and/or not made in accordance with the Act particularly as, consistent with the decision in Corcoran, the Commission had no power to determine the merits of her general protections application.

[13] In summary, Ms Li submitted that the Commission should exercise its discretion to refuse to grant a stay and instead dismiss the costs application.

Consideration of the issues

[14] Section 589(1) of the Act provides that the Commission “may make decisions as to how, when and where a matter is to be dealt with.” Gostencnik DP in Bowker considered the Commission’s power to grant a stay pursuant to s.589 in the context of an application for an order to stop bullying and observed as follows:

“[5] In considering whether to exercise the discretion to make a decision with the effect that the applications would not be dealt with until after judgement is delivered in the Federal Court proceeding, it seems to me appropriate that I have regard to the relevant considerations that are taken into account by the courts in considering applications of this kind. Conveniently, in Sterling Pharmaceuticals Pty Limited v The Boots Company (Australia) Pty Limited, a case concerning an application to stay a proceeding because another proceeding involving related entities operating with a degree a common management and control, were involved in earlier commenced proceeding in New Zealand, Lockhart J set out a number of considerations his Honour said were relevant to the question whether a stay ought be granted:

“In my opinion relevant consideration is to be taken into account in the present case includes the following:

• Which proceeding was commenced first.

• Whether the termination of one proceeding is likely to have a material effect on the other.

• The public interest.

• The undesirability of two courts competing to see which of them determines common facts first.

• Consideration of circumstances relating to witnesses.

• Whether work done on pleadings, particulars, discovery, interrogatories and preparation might be wasted.

• The undesirability of substantial waste of time and effort if it becomes a common practice to bring actions in two courts involving substantially the same issues.

• How far advanced the proceedings are in each court.

• The law should strive against permitting multiplicity of proceedings in relation to similar issues.

• Generally balancing the advantages and disadvantages to each party”.

[6] The approach in Sterling Pharmaceuticals has been adopted in a number of subsequent decisions but it is to be noted that the list of considerations set out in Sterling Pharmaceuticals is not exhaustive and is not intended to be applied as a strictly prescriptive checklist of preconditions. Furthermore, considerations of case management are also relevant, as is the fact that decisions considering whether to grant a stay are often enmeshed in the facts and circumstances of the case the subject of decision and ultimately each case must be addressed having regard to its own circumstances.

[7] The MUA submitted that relevant matters to be considered included whether a stay of the applications is in the interests of justice and the desirability of avoiding inconsistent findings and the inconvenience and embarrassment that might be caused by allowing actions involving the same questions of liability to proceed contemporaneously. I agree that these are relevant considerations and for my part the collection of considerations identified in Sterling Pharmaceuticals speak to the more general consideration of the interests of justice, while the undesirability of inconsistent findings consideration finds expression in the non-exhaustive list.” 6 (Endnotes not included)

[15] I will deal with the issue of staying the costs application and staying the dismissal application separately.

Staying the costs application

[16] Having regard to considerations set out in Sterling Pharmaceuticals I note that:

• Ms Li’s general protections court application was filed prior to Vazza’s cost application;

• a search of the Commonwealth Courts Portal regarding Ms Li’s general protections court application indicates that the matter is listed for mediation on 28 June 2018 and a further directions hearing on 3 August 2018 7;

• by virtue of s.361 of the Act the onus rests with Vazza to satisfy the Court that it did not take adverse action against Ms Li in contravention of Part 3-1 of the Act;

• determining the costs application would require the Commission to determine whether Ms Li’s application was made vexatiously or without reasonable cause or had no reasonable prospects of success (s.611(2) of the Act) and whether Ms Li caused Vazza to incur costs because of an unreasonable action or omission on her part in connection with the conduct or continuation of the dispute (s.375B of the Act);

• determining those issues would necessarily involve traversing the facts of the matter but would not require the Commission to determine the merits of Ms Li’s general protections application; and

• dismissal of Vazza’s costs application is unlikely to have any material impact on Ms Li’s general protections court application, though the granting of Vazza’s costs application may cause Ms Li to reconsider her general protections court application and/or to the extent that the Commission’s decision involved findings of fact those findings may be referred to/sought to be relied upon by Vazza.

[17] The meaning of the terms “vexatiously” and “without reasonable cause” in s.611(2)(a) of the Act were considered by the Full Bench in Church v Eastern Health 8(Church) in the following terms:

“[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.

[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

(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 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 costsand 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 TrustNorth 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”.” 9 (Citations not included, underlining added)

[18] The meaning of the terms “should have been reasonably apparent” and “no reasonable prospect of success” in s.611 of the Act were considered by the Full Bench in Baker v Salva Resources Pty Ltd 10(Baker) which stated:

“[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.” 11 (Endnotes not included)

[19] As previously alluded to, Ms Li’s general protections court application is not well advanced at this stage. Further, that application was only made one day before Vazza’s cost application. As such, there is in my view little, if any, prospect that Vazza would be required to simultaneously participate in two proceedings which involved overlapping factual allegations or that witnesses would be required to give evidence on the same issues in two proceedings simultaneously. In addition, I consider it likely that any material prepared by Vazza in support of its costs application could subsequently be drawn upon for the purposes of the general protections court application.

[20] While I acknowledge that there is likely to be some factual overlap in respect of the Commission’s consideration of the costs applications and the Court’s consideration of Ms Li’s general protections court application, the issues to be determined by the Commission in respect of Vazza’ costs application differ from those which the Federal Circuit Court will need to determine in respect of Ms Li’s general protections court application. For instance, the issues to be determined by the Commission in respect of the costs application include whether or not Ms Li’s substantive application was made vexatiously or whether she caused Vazza to incur costs because of an unreasonable action or omission on her part in connection with the conduct or continuation of the dispute. These are not issues which go to the merits of her general protections court application, i.e. whether she was dismissed in contravention of Part 3-1 of the Act. Further, drawing on the decisions in Baker and Corcoran, determining whether Ms Li’s general protections application was made “without reasonable cause” and/or had “no reasonable prospect of success” will require the Commission to form a view as to whether or not her application is arguable as opposed as to whether or not it is made out. In those circumstances, the potential for inconsistent findings is limited in my view.

[21] With regard to Vazza’s contention that hearing the costs application prior to Ms Li’s general protections court application being determined may provide Ms Li with a forensic advantage in respect of the Court proceedings, I note that the reverse also applies. In other words, there are potential advantages and disadvantages for both parties in the Commission determining the costs application at this stage though not such to advantage/disadvantage one party to a greater or lesser extent than the other.

[22] Finally, determination of the cost and dismissals application is in my view unlikely to have any material effect on the Federal Circuit Court proceedings regarding Ms Li’s general protections court application, though as previously noted depending on the outcome it may see one or both parties reconsider their respective positions.

[23] The above considerations, when taken together, do not support a finding that, drawing on the language in Bowker, the interests of justice are served by staying consideration of the costs application.

Staying the dismissal application

[24] Ms Li submitted that Vazza’s costs application should be dismissed as it had been made vexatiously and without reasonable prospect of success. Vazza rejected each of the grounds relied upon by Ms Li in support of her dismissal application and indicated that it would support the Commission dismissing the dismissal application were it minded to do so.

[25] Section 587(1) of the Act provides that the Commission may dismiss an application if the application is not made in accordance with the Act, is frivolous or vexatious or has no reasonable prospects of success. Consideration of whether the costs application is not made in accordance with the Act or is frivolous or vexatious is very unlikely to traverse the factual matrix associated with Ms Li’s general protections court application. While consideration of whether the costs application has no reasonable prospects of success is likely to require some regard to that factual matrix, for the reasons outlined above I consider that:

• it will not result in Vazza being required to simultaneously participate in two proceedings which involve overlapping factual allegations or in witnesses being required to give evidence on the same issues in two proceedings simultaneously;

• has limited potential for inconsistent findings; and

• is unlikely to advantage/disadvantage one party to a greater or lesser extent than the other.

[26] Accordingly, for the reasons outlined above these considerations do not favour the Commission staying consideration of Ms Li’s dismissal application.

Conclusion

[27] Having regard to the decisions in Sterling Pharmaceuticals, Church and Baker and for the reasons given above, I decline to stay consideration of Vazza’s cost application and Ms Li’s dismissal application. The applications will now be listed for mention and directions to establish a timetable for their consideration.

Appearances:

A. McDonald for the Applicant.

S. Tsapepas for the Respondent.

Telephone Hearing details:

2017.

Canberra and Melbourne:

December 6.

1 MLG271/2017

2 [2014] FWC 7326

3 [2015] FWC 7438

4 (1992) 34 FCR 287

5 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 129

6 [2014] FWC 7326 at [5]-[7]

7 [2014] FWCFB 810

9 Ibid at [21]-[33]

10 [2011] FWAFB 4014

11 Ibid at [10]

Printed by authority of the Commonwealth Government Printer

Yaping Li v Vazza Pty Ltd T/A Total Cover Australia Financial Services