Yichen Liu v The Trustee for Yang Family Trust
[2022] FWC 3058
•23 NOVEMBER 2022
| [2022] FWC 3058 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.365—General protections
Yichen Liu
v
The Trustee for Yang Family Trust
(C2022/4088)
| COMMISSIONER MIRABELLA | MELBOURNE, 23 NOVEMBER 2022 |
Application for costs – general protections.
On 13 July 2022, Mr Yichen Liu filed an application under s.365 of the Fair Work Act 2009 (Act) for the Fair Work Commission (Commission) to deal with a contravention involving dismissal (s.365 application). Mr Liu alleged that he was dismissed by The Trustee for Yang Family Trust (The Trustee) because he exercised a workplace right; that is, his right to inquire about his pay to his employer. The Trustee raised a jurisdictional objection to Mr Liu’s application and alleged that Mr Liu was not dismissed by The Trustee.
On 9 September 2022, The Trustee filed an application for costs against Mr Liu under several sections of the Act. Subsequently, the application was limited to an application for costs against Mr Liu under s.611 of the Act and against Mr Liu’s legal representative under s.376 of the Act. Directions were issued and a hearing into this matter was held on 21 November 2022. In summary, in support of its application, The Trustee submits that:
· Mr Liu’s application was made vexatiously and without reasonable cause. The Trustee says that Mr Liu’s s.365 application was filed with the intention of harassing and compelling The Trustee to accept and pay the amount Mr Liu demanded in alleged unpaid wages or face penalties before an authority. The Trustee says that, as a result, it incurred unnecessary costs in the filing of a response to the s.365 application in circumstances where it could have used those funds to respond to Mr Liu’s concerns regarding pay.
· Mr Liu’s application was made without reasonable cause or prospects of success because Mr Liu had not been dismissed, that it should have been reasonably apparent to Mr Liu’s representative that this was the case by 4 August 2022 and that Mr Liu should have been made aware of this through advice from his representative.
· The Trustee says that Mr Liu’s representative engaged in an unreasonable act or omission by providing an incorrect translation of one of the WeChat messages which should not have been included as part of Mr Liu’s materials.
The Trustee seeks the making of an order for costs for the period from when the s.365 application was lodged up to and including the hearing for costs and any further orders the Commission sees fit. As at 9 September 2022, these costs were calculated to be $9,615.81. At the hearing, these costs were updated to $14,003.00.
A table prepared comparing these costs sought as at 9 September 2022 and the rates contained in the schedule of costs in the Fair Work Regulations 2009 is attached to this decision in Annexure A.
Background
The substantive dispute between the parties concerned alleged underpayment and whether Mr Liu was dismissed from his employment.
Since 27 August 2021, Mr Liu had worked for The Trustee, which trades as Bottlemart on Rathdowne, on a verbal contract and he did not receive regular pay slips. There is disagreement between the parties as to the number of pay slips Mr Liu received. For most of his employment with The Trustee, Mr Liu says that he did not know what his pay rate was or whether he was being paid appropriate hourly or penalty rates. He says he ascertained his hourly rate by dividing the salary received by the hours worked.
On 24 May 2022, Mr Liu asked for an increase to his pay and was informed that his hourly rate up to 6:00pm would be $20.33 and $25.00 thereafter.
On 14 June 2022, Mr Liu contacted the Fair Work Ombudsman and says he was advised that he was classified as a Retail Employee Level 1 under the General Retail Industry Award 2020 and was provided with the relevant minimum rates of pay.
The following discussions between Mr Liu and Mr Yang, who is the Director of The Trustee, were conducted via the social media platform WeChat. The accuracy of the WeChat printouts provided by The Trustee and translated by a NAATI certified translator is not in dispute.
On 21 June 2022, Mr Liu contacts Mr Yang informing him that he had contacted Fair Work and received confirmation regarding his hourly rate and tells Mr Yang that he has been underpaying him and advises that he has calculated this underpayment to be $7,336.83. He goes on to say that:
“Fair work has advised me to speak to you first in the hope that you will pay me the unpaid wages so that they will not intervene and there will be no record of you or your business. If you refuse to pay, they can help me collect the unpaid wages from you, as your conduct is subject to hefty fines and a possible criminal offence under the Fair Work Act and Victoria’s Wage Theft Act. I hope you can get back to me as soon as possible today, thank you!”[1]
The discussion continues with a suggestion from Mr Liu to Mr Yang to “go to Fair Work and use the pay calculator to calculate.”
On 22 June 2022, Mr Liu is still pursuing the alleged underpayment of $7,336.83 and sends a message at 9:58am to Mr Yang:
“Hi Boss, could you give me definite answer? Do you agree to pay me the unpaid wages of $7336.83? Thank you, boss.”
Mr Liu does not receive a response and at 8:45pm, he sends the following:
“Good evening Boss. If I do not hear from you with a definite answer, or receive your transfer [by] midday tomorrow, I will contact Fair Work again and ask them to intervene. You should have heard that Fair Work investigated a bottle shop in one of the western suburbs some time ago regarding its employees’ wages and imposed a huge penalty. I hope you can discreetly think that over and give me a reply as soon as possible. Thank you!”
Mr Yang responds in the early hours of 23 June 2022, advising Mr Liu that:
“I need time to get professional advice … Ethan, tomorrow you don’t have to come for the moment. Let’s settle the wage issue first.”
Mr Liu’s translation varies slightly in its wording, but it was conceded by Mr Liu at the hearing that both versions are essentially the same. Mr Liu’s translation says:
“Ethan, you don’t need to come and work tomorrow, let us solve the wage issue first.”
By the afternoon of 23 June 2022, Mr Liu responds to Mr Yang informing him, “[o]kay, I don’t intend to continue working in the future either…” and that he wanted to be paid the alleged underpayment to resolve the dispute between the parties, saying that:
“…if we are unable to resolve it, [the Fair Work Ombudsman] may carry out a joint investigation with ATO and the Police. At that point, you will then not only have to pay me $7336.83, but may also have to pay other employees the wages that you have not paid correctly, as well as paying the fines that Fair Work will impose on you, which will be far higher than $7336.83…”
Mr Liu’s version of the first sentence is:
“Ok. I don’t plan to continue working in the future.”
On 24 June 2022 at 12:45am, Mr Liu sends an ultimatum to Mr Yang. That is, if Mr Liu does not receive the underpayment amount by midday, he will be contacting Fair Work asking them to intervene. A few minutes later, Mr Yang informs Mr Liu that a solicitor will be responding to him.
Mr Liu responds by saying that he would contact Fair Work and the ATO. By that evening, Mr Liu had received a phone call from The Trustee’s solicitor. He says to Mr Yang “…I had something today so I didn’t contact Fair Work, and I will not contact them if you pay off the outstanding wages of $7336.83 to me by Monday…”.
The Trustee’s solicitor, Ms Celia Chan, sent a letter dated 27 June 2022 to Mr Liu. The letter stated:
“This communication is a formal caution that on a repeat of your conduct, we hold firm instructions to apply for a personal safety intervention order against you (IVO).”[2]
On 13 July 2022, a Form F8 “General protections application involving dismissal” (Form F8) was filed by Ms Oanh Tran, principal solicitor at the Young Workers Centre, on behalf of Mr Liu. It alleged that “[t]he employer took the adverse action of terminating Mr Liu’s employment because he made an enquiry in relation to the Fair Work Act 2009 (Cth) and General Retail Industry Award 2020.”
On 21 July 2022, the Form F8 and separate letter of demand titled “Notice to Provide Compensation for Unpaid Wages” was served on The Trustee.
On 4 August 2022, a Form F8A “Response to general protections application” (Form F8A) was filed on behalf of The Trustee, claiming, amongst other things, that Mr Liu had not been dismissed.
The s.365 application was allocated to me on 22 August 2022. I subsequently listed the matter for mention which took place on the morning of 26 August 2022. That afternoon, Mr Liu’s solicitor filed a Form F50 “Notice of discontinuance” (Form F50) on Mr Liu’s behalf. Chambers that same day informed the parties that as a result of receiving the Form F50, the Commission’s file in the matter would be closed.
The Trustee sought costs against Mr Liu on an indemnity basis commencing on 1 July 2022, the date they submit when an offer of settlement was made.
Relevant legal principles
Section 611(1) of the Act establishes a general rule that parties in proceedings before the Commission must bear their own costs.
There are a number of provisions in the Act which operate as exceptions to this general rule and allow costs to be awarded in specific circumstances. Sections 376 and 611(2) of the Act are two such exceptions.
Section 376 provides as follows:
“376 Costs orders against lawyers and paid agents
(1) This section applies if:
(a) an application for the FWC to deal with a dispute has been made under section 365 or 372; and
(b) a person who is a party to the dispute has engaged a lawyer or paid agent (the representative) to represent the person in the dispute; and
(c) under section 596, the person is required to seek the FWC’s permission to be represented by the representative.
(2) The FWC may make an order for costs against the representative for costs incurred by the other party to the dispute 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 dispute and it should have been reasonably apparent that the person had no reasonable prospect of success in the dispute; or
(b) of an unreasonable act or omission of the representative in connection with the conduct or continuation of the dispute.
(3) The FWC may make an order under this section only if the other party to the dispute has applied for it in accordance with section 377.
(4) This section does not limit the FWC’s power to order costs under section 611.”
While s.611(1) of the Act provides for each party to bear their own costs in matters before the Commission, s.611(2) of the Act provides as follows:
“(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.”
Principles governing s.611(2) were discussed in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing[3] and are relevantly summarised as follows:
· An application is made vexatiously when the predominant motive or purpose of the applicant is to harass or embarrass the other party or to gain a collateral advantage.
· An application is not made without reasonable cause simply because it failed.
· Whether an application is made without reasonable cause may be tested by asking, on the facts apparent to the applicant at the time the application was made, whether 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 characterise the application as having been made without reasonable cause.
· An application will have been made without reasonable cause if it can be characterised as so obviously untenable that it cannot possibly succeed, or is manifestly groundless, or discloses a case where the tribunal is satisfied it cannot succeed.
Principles relevant to the interpretation of s.611(2)(b) of the Act were summarised by the Full Bench in Baker v Salva Resources Pty Ltd[4] as follows (footnotes omitted):
“[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.”
Consideration
Making an order for costs against a party under either s.611 or s.376 of the Act is a two-step process. Firstly, I must be satisfied that one of the limbs of either s.611 or s.376 have been met. Secondly, I must consider it appropriate to exercise my discretion to make an order for costs.
Section 611 of the Act
Was the s.365 application made vexatiously (s.611(2)(a))?
The Trustee is asking me to find that Mr Liu’s s.365 application was vexatious and without reasonable cause.
The Trustee says that the s.365 application was made vexatiously because having failed in WeChat communications to have the unpaid wages paid to him, Mr Liu sent Mr Yang a letter of demand for his unpaid wages and at the same time, filed the s.365 application in the Commission and that the purpose of this was to harass Mr Yang into paying him the alleged unpaid wages.
In supporting the submission that he was harassed, The Trustee submits that:
· The s.365 application caused a delay in addressing the letter of demand and this required The Trustee to incur legal costs; and
· The s.365 application could not settle the issue of the alleged unpaid wages and was a tactic to pressure Mr Yang into payment of same.
I do not find these submissions convincing. In my view, the primary purpose of Mr Liu’s s.365 application was to seek satisfaction on the issues that arise out of the application and not to harass Mr Yang. It is not unreasonable for an employee who believes they have been underpaid to request that they receive the correct minimum rates of pay. It is not disputed that Mr Liu did not receive pay slips regularly, with Mr Liu claiming he only received one pay slip. He contacted the Fair Work Ombudsman to better understand what wages he should be receiving. Having ascertained what he believed was an amount owing to him arising out of an alleged underpayment of wages, Mr Liu informed Mr Yang that he made inquiries regarding underpayment and asked for payment of the unpaid wages. That Mr Liu mentioned the possible involvement of the Australian Tax Office or the Commission or even Victoria Police does not render Mr Liu’s demand for wages vexatious as submitted by The Trustee. Mr Liu’s employer told him not to return to work, purportedly until the issue of the correct rate of pay was determined and within days had his solicitor contact Mr Liu threatening a personal safety intervention order (IVO).
It is not unreasonable for a person in Mr Liu’s position to file a time-sensitive application like general protections applications involving dismissal with the Commission whilst issuing a separate letter of demand for unpaid wages. The s.365 application relates to a purported dismissal and matters arising thereof. The s.365 application did not seek as a remedy unpaid wages. The outcome sought in that s.365 application was “Compensation for breach of general protections, resulting in loss of income, hurt, humiliation and distress” and the imposition of civil penalties for contravention of the Act.
In all the circumstances, I do not find that Mr Liu made the s.365 application vexatiously to harass Mr Yang and I find that it was reasonable for Mr Liu to make an application under s.365 of the Act and have his solicitor issue a letter of demand for unpaid wages.
Was the s.365 application made without reasonable cause (s.611(2)(a)) or with no reasonable prospect of success (s.611(2)(b))?
The Trustee submits that Mr Liu should have been aware that his application was made without reasonable cause because:
· On 4 August 2022, The Trustee’s Form F8A stated that Mr Liu had not been dismissed; and
· That “through legal advice and competency”, he should have been made aware that he had not been dismissed.
The Trustee submits that a reasonable person would have concluded that Mr Liu had not been dismissed and, therefore, that the s.365 application had no prospect of success. This would appear to turn on the interpretation of the words in the WeChat messages. That is, The Trustee submits that it did not dismiss Mr Liu when Mr Yang said:
“Ethan, tomorrow you don’t have to come for the moment. Let’s settle the wage issue first.”
Mr Liu’s translation of this WeChat message is essentially the same:
“Ethan, you don’t need to come into work tomorrow, let us solve the wage issue first.”[5]
Mr Liu had not been provided with regular pay slips and he was told that he did not need to attend work until the issue of wage underpayment had been resolved. A few days later, his employer sent him a letter from a solicitor. The letter included an allegation that Mr Liu sent inappropriate WeChat messages to Mr Yang and that if repeated, an application for an IVO would be made against him. The letter also disputed that Mr Liu had been paid incorrectly but did not provide details.
Although The Trustee robustly denies that Mr Liu was dismissed, on the facts in front of Mr Liu in this matter, it was open for him to submit that he was dismissed within the meaning of the Act. The s.365 application was at least arguable in relation to whether adverse action was taken against Mr Liu for a prohibited reason. Mr Liu’s case was arguable, and it was not so devoid of merit that it must fail. It was not made without reasonable cause.
As Mr Yang had declined to participate in a conference listed for 24 August 2022, the conference arising out of the mention on 26 August 2022 in the substantive matter had been the first opportunity to engage in a conference at the Commission. Mr Liu’s s.365 application was withdrawn after the mention in the substantive matter on 26 August 2022 but that does not mean the s.365 application was made without cause.
The Trustee’s submissions on this point rely on its assertion that Mr Liu was not dismissed and that because he was not dismissed, he should have been made aware “through legal advice and competency” that he had no prospect of success. In the alternative, The Trustee submits that Mr Liu should have been aware by 4 August 2022, when it filed its Form F8A in which it disputed that Mr Liu had been dismissed, that his s.365 application had no reasonable prospect of success. The issue of whether Mr Liu had been dismissed was an issue in dispute and arguable on the facts and it could not be reasonably concluded that Mr Liu had no reasonable prospects of success.
For the reasons above, the criteria for costs under s.611(2)(a) and s.611(2)(b) have not been demonstrated.
Costs against Mr Liu’s solicitor
The Trustee is claiming costs against Mr Liu’s solicitor under s.376 of the Act. They submit that the application for costs under s.376 has not been made in accordance with s.377 of the Act. Section 377 is as follows:
“377 Applications for costs orders
An application for an order for costs in relation to an application under section 365 or 372 must be made within 14 days after the FWC finishes dealing with the dispute.”
The Form F6 “Application for costs” (Form F6) asks at 2.1 for an indication of the sections under which the application is being made.
The Trustee’s application, filed on 9 September 2022, has marked the first three of four options, being sections 375B, 400A and 611. The Trustee’s response to question 2.2 of the Form F6 includes a summary of the law and concludes that it is seeking orders for costs pursuant to sections 376, 400A and 611 of the Act.
Part 3 of the Form F6 is headed “Costs against a lawyer or paid agent”. The Trustee has not ticked any of the three options to seek costs from Mr Liu’s legal representative as provided for in the Form F6. The Trustee says that an error had caused the Form F6 not to be correctly marked at section 3 to indicate that costs were also being sought from Mr Liu’s representative.
In subsequent written submissions filed on 27 September 2022 and at the hearing on 21 November 2022, any claims under sections 375B and 400A were not pressed and were abandoned.
The written submissions of 27 September 2022 seek costs orders under sections 611 and 376 of the Act and these remained the submissions at the costs hearing.
Mr Liu’s solicitors submit that The Trustee can only apply for costs under sections 375B and 611 because these are the boxes that were marked in the Form F6 that The Trustee filed with the Commission and that having been filed within time, the application under these sections has been made in accordance with s.377. They further submit that the Commission does not have jurisdiction to deal with the costs application under s.376 in this matter and that the application for costs under s.376 was made in the written submissions of 27 September 2022, being in excess of the 14 days after the Commission has dealt with the dispute. They submit that the application has not been made in accordance with s.377 of the Act.
The Form F6 was purportedly completed by The Trustee’s legal representative, Ms Chan of Austin Haworth & Lexon. As described above, the Form F6 is unclear and confusing. The relevant boxes that have been ticked on the Form F6 do not include s.376. That is, section 3 of the Form F6 that makes for specific reference to costs against lawyers in enlarged bold print has been left blank. The application does, however, mention at paragraph 29 of the response to question 2.2 that orders are being sought under sections 376, 400A and 611. The submissions to support orders for costs contained therein clearly include references to Mr Liu’s legal representative. Mr Liu’s legal representative at the hearing conceded that the Form F6 did put them on notice regarding a claim for costs against them.
In all the circumstances where Mr Liu’s representative was on notice in the required 14-day period that a claim for costs would be made against the representative, it is appropriate that I exercise my discretion under s.586 to correct the technical omission in the Form F6 that would otherwise not allow The Trustee to seek an order for costs under s.376.
Mr Liu’s solicitor further submits that an application under s.376 requires permission to be represented to have been granted under s.596 (s.376(1)(c)) and that no formal permission was granted as no substantive steps had been taken nor had they been required to be taken in the s.365 application. I do not accept this interpretation of s.376(1)(c). That section defines the class of representatives as being the representatives who are “required to seek the FWC’s permission” as per s.596, not that this class of representatives needs to have successfully made an application under s.596. Section 376(1)(c) is identical to s.401(1)(c) which covers costs orders against lawyers and paid agents in unfair dismissal matters. In relation to this provision, the Explanatory Memorandum of the Fair Work Amendment Bill 2012 explains that the amended s.401 will no longer depend on the Commission having granted permission under s.596.[6]
Having found that the preconditions for s.376 have been satisfied, I turn to The Trustee’s submissions for costs under this section.
Section 376(2)(a)
The Trustee submits that it should have been reasonably apparent to Mr Liu’s representative that there was no reasonable prospect of success. The Trustee submits that this should have been obvious because it disputed Mr Liu’s claim that he had been dismissed and that the s.365 application was about the underpayment of wages. The Trustee relies on four dates: 21 June 2022 when Mr Yang first approached a solicitor and started incurring costs, 21 July 2022 when Mr Liu served the Form F8 and the letter of demand, the 4 August 2022 filing of the Form F8A and the mention on 26 August 2022. The Trustee submits that Mr Liu’s representative in completing the Form F8, drafting the 21 July 2022 letter, and representing Mr Liu in Commission proceedings caused costs to be incurred by The Trustee and that Mr Liu’s representative should have known there was no reasonable prospect of success for the s.365 application because the matter in dispute was about the underpayment of wages.
For the reasons above in paragraphs [42] to [45], I am not of the view that the s.365 application had no reasonable prospect of success. I am satisfied that Mr Liu had an arguable case and his legal representative assisted him in his s.365 application.
Section 376(2)(b)
At the hearing, The Trustee stated that the submissions for costs under s.376(2)(b) were not heavily relied upon because the costs specifically relating to the act or omission were difficult to carve out from the total costs and that, in any case, the Commission’s discretion was enlivened by the satisfaction of s.376(2)(a).
The Trustee’s written submissions referred to “false and disingenuous evidence”, but a concession was made at the hearing that the evidence was only “false”. The alleged false evidence was an incomplete transcript of one of the WeChat messages sent by Mr Liu to Mr Yang. The omitted matter is not material and the substance of the message, including alleged underpayment of wages, is repeated in other messages. Accordingly, I am not persuaded that Mr Liu’s legal representative engaged in unreasonable acts or omissions in connection with the conduct or continuation of the s.365 application.
For the reasons above, the criteria for costs under sections 376(2)(a) and 376(2)(b) have not been demonstrated.
Conclusion
For the reasons set out above, I am not satisfied that The Trustee’s application for costs can or should be granted. The application is dismissed.
COMMISSIONER
Appearances:
Mr C. Pym for the costs Applicant
Ms O. Tran for the costs Respondent
Hearing details:
2022
Melbourne
21 November 2022
Annexure A
[1] Form F6 “Application for costs” (Form F6) filed 9 September 2022, annexure DY-1.
[2] Form F6, annexure DY-3B.
[3] [2014] FWCFB 810 at [23]-[33].
[4] [2011] FWAFB 4014.
[5] Form F8 “General protections application involving dismissal” filed 13 July 2022, attachment 1.
[6] Explanatory Memorandum, Fair Work Amendment Bill 2012 (Cth), 38.
Printed by authority of the Commonwealth Government Printer
<PR748033>
0
1
0