Yelda Kara v Pearl Street Childcare Centre

[2015] FWC 2435

[2015] FWC 2435

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Yelda Kara
v
Pearl Street Childcare Centre
(U2014/10541)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 8 APRIL 2015

Application for costs.

[1] Ms Yelda Kara alleged that the termination of her employment by Pearl Street Childcare Centre (Pearl Street) was unfair.

[2] On 6 August 2014, Ms Kara’s lawyers advised that Ms Kara was overseas for personal reasons and would not be able to participate in the conciliation listed for 25 August 2014. That correspondence advised that she was expected to return in mid October 2014.

[3] On 7 August 2014, Pearl Street lodged an objection to Ms Kara’s application. It said that as Pearl Street employed fewer than 15 employees and Ms Kara had not been employed for 12 months, she was not protected from unfair dismissal.

[4] In Ms Kara’s application, she had stated that she commenced employment in July 2013 and her employment was terminated on 12 June 2014. Assuming she commenced on 1 July 2013, if Pearl Street was a small business, she did not have one year’s service when her employment was terminated.

[5] On 8 August 2014, the objection was served on Ms Kara’s representatives. Pearl Street advised that if Ms Kara failed to withdraw her application, Pearl Street would seek to recover costs if the objection was upheld.

[6] Directions were issued on 28 August 2014 and the matter was set down for hearing of the objection on 26 September 2014.

[7] Pearl Street filed its material in support of its objection on 8 September 2014. Included was a sworn affidavit by Ms Jones, the owner of Pearl Street, in which she attested that Pearl Street was a small business. Ms Jones stated that Ms Kara commenced employment on 24 July 2014 and that Pearl Street had at the date of Ms Kara’s dismissal 12 employees plus two employees (including Ms Kara) who were suspended.

[8] On 12 September 2014, Ms Kara’s lawyers again advised that Ms Kara was overseas and that they could not obtain her instructions. They sought an adjournment to a date not before 10 November 2014 and sought an extension of time to 3 November 2014 for Ms Kara to respond to the objection.

[9] In accordance with that request, an amended notice of listing requiring Ms Kara to file her material by 3 November 2014 and adjourning the hearing until 14 November 2014 was issued.

[10] On 31 October 2014, Ms Kara’s lawyers again wrote to the Fair Work Commission advising that Ms Kara was still overseas because of her mother’s illness. They advised that Ms Kara was not expected to return until at least January 2015. They said that they were unable to contact their client. They asked that the application be adjourned indefinitely.

[11] That application was listed for a mention on 13 November 2014.

[12] New directions were issued for Ms Kara to file material by 11 December 2014 and the matter was listed for hearing on 19 December 2014.

[13] On 11 December 2014, Ms Kara discontinued her application.

[14] On 24 December 2014, Pearl Street applied for costs against Ms Kara. It submitted that it should have been reasonably apparent to Ms Kara’s representative that her claim had no reasonable prospects of success.

[15] Pearl Street submitted that Ms Kara’s had had leave approved for 1 September 2014 to 26 September 2014 and 8 December 2014 to 9 January 2015.

[16] It submitted that Ms Kara flew overseas seven days after her representative filed the application and there was no reference in that application to her unavailability.

[17] It was only two days after the conciliation Notice of Listing was dispatched that the Commission and Pearl Street were advised that she was unavailable because she was overseas.

[18] It was submitted that Ms Kara’s representatives were able to obtain sufficient instructions to continue to seek to have the matter delayed, but not to receive instructions in relation to the substantive jurisdictional claim.

[19] Pearl Street submitted that given Ms Kara knew she was going to be overseas that the Commission should find that the application was vexatious, the main purpose of which was to harass, annoy or embarrass Pearl Street.

[20] On 5 January 2015, directions were issued to Ms Kara to respond to the costs application.

[21] On 12 January 2015, Ms Kara’s lawyer replied advising that they no longer acted for Ms Kara and they had forwarded the costs application and correspondence to Ms Kara.

[22] To assist the Commission they submitted that contrary to Pearl Street’s application, Ms Kara did not leave Australia until 17 days after she lodged her application. Further, they denied that they were able to obtain instructions from Ms Kara whilst she was overseas. They submitted that the requests for adjournments were not based on instructions by Ms Kara to delay the matter. It submitted that it was not able to make direct contact with Ms Kara due to her personal circumstances, her limited English and her lack of access to the internet and the remoteness of her location overseas. It submitted that the application was not lodged vexatiously or without reasonable cause.

[23] In reply, Pearl Street submitted that no regard should be had to the submissions of Ms Kara’s lawyers as they were made without instructions.

[24] On 14 January 2015, a letter was sent to Ms Kara’s address as listed on the application form and her email address noting that her lawyers no longer represented her and giving her until 29 January 2015 to file material in opposition to the costs application. No response was received from Ms Kara and the letter was returned as she had left the address.

The Legislative Framework

[25] The Commission has the discretion to award costs against a party if certain preconditions are met.

[26] Section 611 of the Fair Work Act 2009 (the Act) provides as follows:

(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 ofthe 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.

[27] In this matter, Pearl Street objected to Ms Kara’s application because she had not served the minimum period of employment.

[28] Ms Kara said she commenced employment in July 2013 and her employment ended on 12 June 2014. The success of Pearl Street’s objection rested on its claim that it was a small business. In its objection filed on 7 August 2014, it provided documents to support its contention that it had 14 employees at the date of Ms Kara’s dismissal. On 8 September 2014, it provided sworn evidence to support its claim that it was a small business.

Did she make the application vexatiously?

[29] I do not accept that Ms Kara’s decision to go overseas meant that her application was made vexatiously.

[30] As North J said, “a proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party or to gain collateral damage.” 1

[31] There is no evidence before me which could support such a finding. On Pearl Street’s own evidence, Ms Kara had planned to go overseas well before she was dismissed.

Should it have been reasonably apparent to Ms Kara that her claim had no reasonable prospects of success?

[32] In Baker v Salva Resources Pty Ltd, 2a Full Bench summarised the approach to be taken in relation to section 611(2)(b) of the Act as follows:

"[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 [Wodonga Rural City Council v Lewis, PR956243, at para 6]; 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 [Deane v Paper Australia Pty Ltd,PR932454, at paras 7 and 8] or so lacking in merit or substance as to be not reasonably arguable. [A Smith v Barwon Regional Water Authority, [2009] AIRCFB 769 at para 48]."

[33] I do not consider that once Ms Kara received the objection from Pearl Street she should have been aware that her application had no reasonable prospects of success. While I accept that it raised a serious issue to be considered by Ms Kara, she was entitled to take advice in relation to that objection. For example, it was not clear on this material whether Pearl Street had any associated entities.

[34] However, once Pearl Street filed the affidavit of Ms Jones, the owner of Pearl Street, in which she gave evidence that Pearl Street was a small business it should have been reasonably apparent to Ms Kara that her application had no reasonable prospects of success.

[35] The power to award costs is discretionary. In this case, Ms Kara made an application for an unfair dismissal remedy and then failed to take any steps to prosecute her case. While she was not in Australia during this time, there is no evidence before me that she was unable to communicate with her lawyers. As she knew she was going to be outside of the country, the onus was on her to ensure she could comply with her obligations to both the Commission and Pearl Street.

[36] I therefore consider that Pearl Street is entitled to costs from the day it filed its material in support of its objection. From that date on, any objective assessment of Ms Kara’s case was bound to fail as she was not protected from unfair dismissal.

[37] I will therefore order that Ms Kara pay Pearl Street’s costs from 9 September 2014. Pearl Street is directed to file and serve a schedule of costs claimed by noon on 20 April 2015. Ms Kara is directed to file and serve a response to the schedule of costs by noon on 4 May 2015.

DEPUTY PRESIDENT

 1   Nilsen v Loyal Orange Trust (1997) 76 IR 180 at 181.

 2   [2011] FWAFB 4014 at [10].

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