Yarra City Council v Rubicon Compensation Lawyers
[2022] FWC 52
•14 JANUARY 2022
| [2022] FWC 52 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Yarra City Council
v
Rubicon Compensation Lawyers
(U2020/16088)
| DEPUTY PRESIDENT CLANCY | MELBOURNE, 14 JANUARY 2022 |
Application for costs by employer respondent to unfair dismissal claim – costs order sought against lawyers for the applicant pursuant to s.401 of the Fair Work Act 2009 – application for costs against lawyers for the applicant dismissed.
On 17 December 2020, Ms Lisa Steere applied to the Commission under s.394 of the Fair Work Act 2009 (the Act) for an unfair dismissal remedy against Yarra City Council (Yarra). Rubicon Compensation Lawyers (Rubicon) acted for Ms Steere and the matter was heard on 23 March 2021 and 3 and 4 May 2021 (Unfair dismissal hearing).
In a decision made on 1 July 2021 (Decision), [1] I dismissed Ms Steere’s unfair dismissal application having determined her dismissal was not harsh, unjust or unreasonable, and therefore not unfair.
On 15 July 2021, Yarra made an application for an order for costs against both Ms Steere (pursuant to s.400A and s.611 of the Act) and Rubicon (pursuant to s.401 of the Act). On 20 October 2021, the Commission was advised by email that Yarra had settled its costs application against Ms Steere and a Form F50 – Notice of Discontinuance confirming this was filed on 21 October 2021. This left the application for an order for costs against Rubicon. The consequent costs hearing was conducted on 5 November 2021 (Costs hearing).
The Act provides the general rule that parties must bear their own costs in proceedings before the Commission.[2]
However, s.401 of the Act outlines the following:
“401 Costs orders against lawyers and paid agents
(1) This section applies if:
(a) an application for an unfair dismissal remedy has been made under section 394; and
(b) a person who is a party to the matter has engaged a lawyer or paid agent (the representative) to represent the person in the matter; and
(c) under section 596, the person is required to seek the FWC’s permission to be represented by the representative.
(1A) The FWC may make an order for costs against the representative for costs incurred by the other party to the matter if the FWC is satisfied that the representative caused those costs to be incurred because:
(a) the representative encouraged the person to start, continue or respond to the matter and it should have been reasonably apparent that the person had no reasonable prospect of success in the matter; or
(b) of an unreasonable act or omission of the representative in connection with the conduct or continuation of the matter.
(2) The FWC may make an order under this section only if the other party to the matter has applied for it in accordance with section 402.
(3) This section does not limit the FWC’s power to order costs under section 611.”
Subsections 401(1) and 401(1A) were inserted into the Act by the Fair Work Amendment Act 2012. In relation to them, the Explanatory Memorandum for the Fair Work Bill 2012 outlined the following:
“• “The amendments strike a balance between the need to protect workers from unfair dismissal, and to provide a deterrent against unreasonable conduct during proceedings. The amendments will enable costs orders to be more easily made in the case of unreasonable conduct but will not prevent genuine claims from being pursued. They will discourage frivolous and speculative claims and assist in the efficient resolution of claims by encouraging all parties to approach proceedings in a reasonable manner. These measures are reasonable and proportionate to address the time and expense that an unreasonable conduct by a participant and/or their representative may cause another party to incur.”;[3]
“• “180. New subsections 401(1) and 401(1A) will provide a stronger deterrent for lawyers and paid agents from encouraging parties to bring or continue speculative unfair dismissal claims, particularly claims they know have no reasonable prospect of success. The provision will also deter lawyers or paid agents from unreasonably encouraging a party to defend a claim or make a jurisdictional argument where there is no prospect of the argument succeeding. It will act as a stronger deterrent than the current provision as it will make lawyers and paid agents subject to the possibility of adverse costs orders even if they are not granted, or do not seek, permission to represent the party in the matter before the FWC”;[4] and
“• “184. An example of where the FWC may award costs against a representative under new item 401(1A) is where the representative knows that his or her client’s unfair dismissal claim is dishonest or without foundation but still actively encourages them to proceed with the claim to try and extract a remedy such as a financial settlement from the employer”.[5]
In considering s.401 of the Act, the Full Bench in Sharkey v Life Without Barriers[6] was guided by the principles outlined in Barkhazen v Conair Australia Pty Ltd (No 2),[7] in which Justice Bromwich found that the Federal Court’s power to make a costs order against a lawyer is well established and opined that it is a power that must be exercised with care and discretion and only in a clear case. His Honour went onto say:
“• “The relevant principles were helpfully summarised by Wigney J in Mitry Lawyers at [44] as follows:
1. Instituting or maintaining a proceeding on behalf of a client which has no, or substantially no, prospect of success will not, without more, invoke the jurisdiction to make a costs order against a lawyer.
2. Something which involves “unreasonable conduct” is required.
3. What constitutes unreasonable conduct will depend on the circumstances of the particular case.
4. The element of acting unreasonably involves some deliberate or conscious decision taken by reference to circumstances unrelated to the prospects of success, with either a recognition that there is no chance of success, or an intention to use the proceeding for an ulterior purpose, or to abuse the processes of the court, or with a disregard of any proper consideration of the prospects of success.
5. The circumstances must involve or result in a serious dereliction of duty owed to the court, or serious misconduct in promoting the course of, and the proper administration of, justice.
6. An ulterior purpose or an abuse of process cannot be assumed simply because the case is hopeless.
7. The reason that the mere pursuit of an unmeritorious case is not so sufficient to invoke the jurisdiction to make a costs order against a lawyer is that a party is entitled to have a practitioner act for him or her in an unmeritorious case. The court is concerned to avoid the risks of a practice developing whereby lawyers endeavour to browbeat their opponents into abandoning clients, or particular issues or arguments, for fear of personal costs orders being made against them.”
The provisions of Part 3-2 of Chapter 3 of the Act make clear that determining whether or not a person has been unfairly dismissed requires the Commission to be satisfied, inter alia, that the dismissal was harsh, unjust or unreasonable and this in turn involves determining, inter alia, whether there was a valid reason for the dismissal related to the person’s capacity or conduct. It is trite to say that reaching these levels of satisfaction requires the Commission to make its own findings, as opposed to simply applying a rubber stamp to the conclusions of an investigation report produced by a Respondent employer.
Having conducted the Unfair dismissal hearing, I concluded that Ms Steere was not a convincing witness when it came to prosecuting her case that the changing of the expiry date of her First Aid qualification to 3 October 2020 was a mistake.[8] Examining the two separate electronic footprints that recorded the changes made to Ms Steere’s CPR and First Aid qualifications on 15 October 2019 was fundamental to my reaching the conclusion in the Decision that Ms Steere’s changing of the expiry date of her First Aid qualification was not a mistake and constituted a valid reason for the termination of her employment.[9] I then considered the criteria outlined in ss.387(b)-(g) and my conclusion was that none of them weighed in favour of a finding that the dismissal was unfair.[10] I then weighed the various matters raised by the parties in relation to s.387(h) of the Act. While Yarra now seeks to downplay these matters in pressing for costs against Rubicon, I was required to consider them and I ultimately concluded that the matters raised by Ms Steere were not sufficient to render her dismissal harsh, unjust or unreasonable.[11] Having considered each of the matters specified in s.387 of the Act, I was satisfied the dismissal of Ms Steere was not harsh, unjust or unreasonable.
Yarra’s propositions that it should have been apparent to Rubicon that Ms Steere had no reasonable prospect of success and that there were actions and/or omissions of Ms Riggs related to two offers of settlement that were unreasonable rest heavily on a charge that Rubicon blindly placed their ‘head in the sand’ by accepting the instructions of Ms Steere that she had made a mistake, despite the conclusions in the investigation report relied upon by Yarra as the basis for her dismissal.[12]
Yarra submitted that Ms Steere was provided with the investigation report on 24 November 2020 and that it referenced the two separate electronic footprints from 15 October 2019.[13] Yarra relies on the notes from the investigation meeting held on 11 November 2020 to submit that the electronic footprints were shown to Ms Steere at that time. However, those notes indicate that the only electronic footprint from 15 October 2020 shown to Ms Steere at the investigation meeting held on 11 November 2020 was that which related to the First Aid Qualification.[14] I had to call for production of copies of both electronic footprints at the unfair dismissal hearing and they were produced after its conclusion.[15] As I have outlined above, the two separate electronic footprints were of significant assistance because they disclosed the detail of the different expiry dates that were entered for Ms Steere’s CPR and First Aid Qualifications on 15 October 2019. This was central to my being satisfied that the change to the First Aid qualification was not a result of a mistake on the part of Ms Steere.
As it has not been established to my satisfaction that Ms Riggs was shown both electronic footprints at the investigation meeting held on 11 November 2020, I am not prepared to conclude it was unreasonable for Ms Riggs to accept her client’s instructions that she did not deliberately alter the First Aid Qualification expiry date.
In written submissions, Yarra asserts that the actions of Rubicon from the time of commencement of Ms Steere’s unfair dismissal application until the end of the arbitration hearing falls “fairly and squarely” within the ambit of the purpose for which s.401 was inserted into the Act. In support of this broad contention, Yarra submits:
(i) Ms Steere’s lack of credibility and the inherent improbability of much of her evidence (which was often inconsistent and/or contradictory, as clearly identified in the Decision), particularly her attempted explanation as to why the expiry date of her First Aid qualification had been changed in the Deputy System, should have been patently obvious to any reasonable legal representative. Accordingly, Rubicon should not have “turned a blind eye” or “buried their heads in the sand”, in relation to their client’s lack of honesty and candour, instead of actively and aggressively prosecuting her claim;
(ii) Rubicon should also not have presented a case on behalf of their client which was designed to deflect the Commission’s attention away from the real issues in this case and the reasons for Ms Steere’s termination; and
(iii) Rubicon should also have carefully considered “Offer-1” and “Offer-2” and advised their client of the folly and high risk of not accepting either offers when they were made and of the fact that she would be exposed to an order for costs from the Commission for failing to accept these offers.
The second of these arguments appears to be an attack on a number of the forensic decisions in connection with the conduct of the matter, on the basis that they were unreasonable. I made it clear during the Unfair dismissal hearing when I considered evidence and submissions to be of doubtful relevance and my views were reflected in the Decision. On the whole, I am satisfied the case presented on behalf of Ms Steere was one squarely aimed at establishing her dismissal was unfair. In seeking costs, Yarra effectively seeks to all forensic decisions to Rubicon and Ms Riggs alone. I am not satisfied that this was the case. This argument has been propagated despite evidence and material before me establishing the role played by Ms Jardine of Counsel and some of her advice. In these circumstances and having regard to my conclusion regarding the nature of the case presented, I am not persuaded there were unreasonable acts by Rubicon in relation to the conduct and/or continuation of Ms Steere’s application that caused additional costs to be incurred, particularly in circumstances where Ms Jardine was retained to advise and appear at the unfair dismissal hearing. I reject the second argument.
The first argument is not articulated in a particularly helpful manner because it does not engage with the terms of s.401(1A) of the Act. I will however make a number of observations in the paragraphs that follow.
As outlined above, a pillar of Yarra’s application for costs against Rubicon was that throughout the matter, Ms Riggs simply accepted the instructions of Ms Steere. I do not accept this. Ms Riggs was extensively cross-examined at the Costs hearing and consistently stated that she asked questions of Ms Steere, challenged her responses and sought clarification. This was borne out in the contemporaneous file notes she kept. Having observed Ms Riggs as a witness, I consider her to be a witness of credit. She was frank about her approach and the advice she gave Ms Steere. One of the many answers she was required to give when cross-examined encapsulated the approach she had adopted with Ms Steere:
“She provided instructions and I sought numerous times to clarify those to her. I put them to her. I accept the findings of the Deputy President. I believe that the evidence at court is how it ran at court and I accept the findings - I should say the Tribunal, the Commission - I accept the findings of the Commission. But did I make inquiries of her? Did I seek her instructions? Yes. And I was told repeatedly by her on numerous occasions that it was a mistake. And I was given reasons and explanations for that being a mistake and not deliberate. I put those explanations to numerous witnesses and I asked them to read the employer's position and provide responses. She gave me instructions and I sought to clarify them. She then insisted that it was a mistake and that she did not do it. She had not seen the reminders. I followed her instructions and I did not to it blindly.”[16]
Yarra also charges Ms Riggs with encouraging Ms Steer to start the matter. It seeks to implicate Ms Riggs in this way on account of her involvement in the disciplinary process prior to Ms Steer’s termination. I have considered the actions and advice of Ms Riggs during this period. I am satisfied that part of Ms Riggs’ initial advice and proposed strategy for Ms Steere at that stage was directed at saving her job. This is borne out by a particular piece of early advice from Ms Riggs to Ms Steere that she should try and resolve her dispute with Yarra herself, without getting a lawyer involved. Whereas Yarra criticised the correspondence Rubicon sent to Yarra on 24 November 2020, I consider Rubicon re-calibrated after sending it. This is evident from the subsequent Rubicon letters to the Yarra CEO dated 25 November 2020 and 30 November 2020. In the latter piece of correspondence, Ms Riggs wrote “I invite you to contact me as to working out how the relationship can be repaired and/or amicably ended in a manner that compensates Ms Steere for the loss of her employment.” I have also noted that having drafted the Form F2 – Unfair dismissal application form on the basis of Ms Steere’s instructions, a copy was sent to Ms Steere so that the veracity of the contents could be checked before it was lodged on 17 December 2020. This followed two earlier discussions over the period following the dismissal on 4 December 2020. These actions and events do not support a finding that there was in this case a “vigorously started” application, particularly when the 21-day time period within which to make an unfair dismissal application is taken into account.
Further, where there was said to have been a conflict regarding the description Ms Riggs gave to the strength of Ms Steere’s claim, I prefer the account of Ms Riggs that the descriptor she used was “good” as opposed to “strong” and that it was accompanied by the sort of appropriate caveats one would expect from a litigation lawyer adopting a measured approach. At the Costs hearing, Ms Steere provided an account to the best of her recollection however she was less convincing when it came to recalling the descriptor used by Ms Riggs, as the following extract from the transcript demonstrates:
“You say in paragraph 8 that, at that initial meeting or initial discussion with Ms Riggs, she said you had a very strong case, is what you said?‑‑‑Yes.
Did you make a note of that at the time, or are you just going on this recollection?‑‑‑Look, I'm sure I would have. I'm a prolific note-taker, so I would have written it, but, I mean it's just embedded in my brain I knew I had a strong case - well, it was always told that I had a strong case.
Ms Riggs says that she believes she didn't use those words, she might have said a 'good case' or a 'good unfair dismissal claim', but she wouldn't have used the term 'very strong case'. Do you have any recollection to the contrary?‑‑‑Look, she may not have used those exact terms, but that's certainly what I, you know, felt, but if she used the term 'good case', for me that would still - good, strong, it was the same thing to me, it's positive.
You have said in inverted commas in paragraph 8 'very strong case'?‑‑‑Well, that's my recollection that that's - - -
Yes?‑‑‑ - - - (indistinct). I mean I - - -
But you might have - I'm sorry, I didn't mean to interrupt?‑‑‑No, no, she may have said 'good'. I don't disagree with you, but, you know, for me, that's how I - that's how it sits in my brain.
Okay, but it might have been different words?‑‑‑It might have been 'good', but, regardless, it was positive, yes.”
I also prefer the account of Ms Riggs that she did not tell Ms Steere that she was confident Ms Steere would be successful in getting six months’ compensation as an outcome. I have had regard to what was said by Ms Steere at the costs hearing in reaching this conclusion.[17]
Moreover, I hold no concerns about the role Ms Riggs played in her overall representation of Ms Steere in the case before me. The advice given by Ms Riggs about the litigation process and prospects of success was invariably measured and appropriate. Even when she described the prospects of Ms Steere as “very strong” on 4 March 2021, it was a description made on the back of the written advice received from Ms Jardine on 3 March 2021 and Ms Riggs added the caveat “but all litigation has risks”. I also accept the evidence of Ms Riggs that her advice to Ms Steere regarding prospects was premised on the evidence of Ms Steere being accepted by the Commission. Finally, where Yarra sought to focus on the fee arrangement between Ms Steere and Rubicon, I accept the evidence from Ms Riggs and in particular her observations that there was no financial incentive for Rubicon to prolong the matter and run it to hearing.
As such, Yarra has not persuaded me that Rubicon encouraged Ms Steere to start or continue the matter and that it should have been reasonably apparent to Rubicon that Ms Steere had no reasonable prospect of success.
The third argument of Yarra criticises Rubicon for its approach to both “Offer-1” (conveyed by letter dated 27 January 2021) and “Offer-2” (conveyed by letter dated 4 March 2021) and goes to allegations made in relation to Rubicon’s role in the continuation of the matter.
As to Offer 1, I note it makes reference to the two separate electronic footprints that recorded changes made to Ms Steere’s CPR and First Aid qualifications on 15 October 2019 but as covered earlier, copies of both had not been provided to Rubicon and it was left to me to call for production of copies of both electronic footprints at the Unfair dismissal hearing. Further, it may be observed that the First Offer, which did not include any financial compensation in circumstances where Ms Steere was seeking reinstatement and had been working in an industry impacted by the COVID-19 pandemic, was hardly the most attractive proposition for Ms Steere to consider.
Offer 2 included a financial component of 7 weeks’ salary and was made at a point in time when 13 weeks had passed since the dismissal. While Yarra levelled criticism at Rubicon for not having forwarded a copy of Offer 2 to Ms Steere, I do not consider this to be significant. The components of the offer were the same as those which had been communicated in an offer made by Yarra during a Member Assisted Conciliation on 3 March 2021 and it was the subject of written advice from Ms Jardine on 3 March 2021. The terms of Offer 2 were not complicated and I consider them capable of having been easily explained.
Having regard to the terms of Offer 2 and the particular circumstances of Ms Steere, her determination to pursue reinstatement at that point in time was unsurprising. Ms Steere had enjoyed working at Yarra. She wanted to clear her name and had found it challenging to find new employment in the industry in which she had worked for many years. A pandemic was ensuing. Offer 2 was made at a time when Ms Steere maintained a claim for reinstatement. The following observations of Jessup J in Sperandio v Lynch (No 3)[18] are pertinent:
“For employees who have been dismissed, reinstatement has a qualitative value which, I consider, would always be difficult to measure in money terms. The strength of considerations such as this will vary from case to case, and I would not want these observations to be construed as in effect formulating a proposition that reinstatement will always be more valuable than any sum of money. I do consider, however, that, where claims for reinstatement are involved, the reasonableness of an applicant’s insistence on litigation, rather than accepting an offer of settlement, will generally involve issues beyond those which are capable of calculation in dollars and cents.”[19]
Ms Steere received robust advice from Counsel regarding her risk profile and prospects. Upon receipt of Offer 2, Ms Riggs did not seek to rush Ms Steere into a decision either way. She recommended that Ms Steere think about the Offer 2 overnight. It was then discussed having regard to:
a)Counsel’s advice;
b)some of the factual disputes; and
c)the costs Ms Steere had already incurred.
I am satisfied that Ms Riggs appropriately cautioned that all litigation has risks and in all the circumstances, I do not consider Rubicon or Ms Riggs acted unreasonably in relation to Offer 2.
Conclusion
As outlined above, it was explained in the Explanatory Memorandum for the Fair Work Bill 2012 that the insertion of subsections 401(1) and 401(1A) into the Act was intended to address unreasonable conduct on behalf of lawyers and the specific example was given of where “a party’s representative knows that his or her client’s unfair dismissal claim is dishonest or without foundation but still actively encourages them to proceed with the claim to try and extract a remedy such as a financial settlement”. I have not been persuaded the matter before me is such a case or that it falls within the category contemplated by s.401 of the Act.
I have outlined earlier that I have not been persuaded that Rubicon encouraged Ms Steere to start the matter and I have not been persuaded to make any finding that implicates Rubicon in relation to the continuation of the matter in the manner contemplated by s.401(1A) of the Act.
I consider the Federal Court decisions in Mitry Lawyers v Barnden[20] and Barkhazen v Conair Australia Pty Ltd (No 2),[21] together with the Full Bench decision in Sharkey v Life Without Barriers,[22] provide authority for the proposition that the Commission’s power to make a costs order against a lawyer pursuant to s.401(1A) of the Act should be exercised with care and discretion and only in a clear case. In this case, I have not been persuaded that Rubicon engaged in unreasonable conduct. Drawing upon the principles articulated by Justice Wigney in Mitry Lawyers v Barnden,[23] drawn from a line of Federal Court authorities, I have not been persuaded there were any “deliberate or conscious” decisions taken by Rubicon and in particular, Ms Riggs:
a) by reference to circumstances unrelated to the prospects of success, with either a recognition that there was no chance of success, or an intention to use the proceeding for an ulterior purpose; or
b) to abuse the processes of the Commission; or
c) with a disregard of any proper consideration of the prospects of success.
Yarra has failed to persuade me that the jurisdictional prerequisites in s.401(1A) of the Act have been satisfied and therefore, its application for costs against Rubicon must be dismissed. An order to this effect will be issued with this decision.
DEPUTY PRESIDENT
Appearances:
Mr G Katz, Solicitor, on behalf of Yarra City Council.
Mr R Millar of Counsel on behalf of Rubicon Compensation Lawyers.
Hearing details:
2021.
Melbourne:
November 5 (via Microsoft Teams).
[1] [2021] FWC 3781.
[2] Fair Work Act 2009 (Cth) s 611(1).
[3] Fair Work Amendment Bill 2012 – Explanatory Memorandum at page 7.
[4] Ibid at page 38.
[5] Ibid at page 39.
[6] [2019] FWCFB 7644.
[7] [2018] FCA 992.
[8] [2021] FWC 3781 at [57].
[9] Ibid at [55]-[61].
[10] Ibid at [62]-[68].
[11] Ibid at [69]-[78].
[12] DCB from the unfair dismissal hearing at p.373.
[13] Ibid at p.378.
[14] Ibid at p.542.
[15] The parties were invited to make submissions in relation to the electronic footprints but elected not to do so.
[16] Transcript of the Costs hearing at PN 3122.
[17] Transcript PN 2756-2758.
[18] [2007] FCA 1243.
[19] Ibid at [11].
[20] [2014] FCA 918 at [42].
[21] [2018] FCA 992 at [16].
[22] [2019] FWCFB 7644 at [92].
[23] [2014] FCA 918 at [42].
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