[2012] FWAFB 8109 |
FAIR WORK AUSTRALIA |
REASONS FOR DECISION |
Fair Work Act 2009
s.604—Appeal of decision
SENIOR DEPUTY PRESIDENT KAUFMAN |
MELBOURNE, 20 SEPTEMBER 2012 |
Appeal - costs - vexatious or without reasonable cause - public interest.
[1] On 23 December 2011 Ms Joanna Macdougall lodged an application under s.394 of the Fair Work Act 2009 (the Act) seeking an unfair dismissal remedy against Health Axis Pty Ltd, alleging that the termination of her employment by it had been unfair. The respondent responded by a letter which was received by Fair Work Australia on 6 February 2012, well beyond the 14 days provided by rule 14A of the Fair Work Australia Rules 2010. In its letter by way of response the respondent asserted that the applicant was not a person protected from unfair dismissal because she had not been an employee at the time of her alleged dismissal. It contended that “her company Retro Skins” had been providing services to it as an independent contractor. What transpired thereafter is recorded in the decision of Commissioner Roe whereby he determined that the applicant was a person protected from unfair dismissal, inter alia, because she had at that time been employed by the respondent. We set out the relevant passages of the Commissioner’s decision:
“[2] The matter was not resolved through conciliation on 31 January 2012. On 6 February 2012 the Respondent provided a response to the Application. In that response the Respondent made a jurisdictional objection that the Applicant was at all times an independent contractor and not an employee. Fair Work Australia issued directions to determine the jurisdictional objection on 13 February 2012. Those directions required the Respondent to provide any submissions and evidence by 24 February 2012. The Respondent did not provide any material despite a number of follow up communications between Fair Work Australia and the Respondent. The Applicant provided detailed submissions, a witness statement from the Applicant and supporting evidence.
[3] The Respondent failed to attend the proceedings on 30 March 2012. I granted leave for Mr Hulls to appear for the Applicant. A Notice of listing was sent on 9 March 2012 and 23 March 2012. My Associate had spoken to Mr Oppy for the Respondent on 29 March 2012 and was advised that he would be in attendance at the hearing the next day. When he failed to attend my Associate again contacted Mr Oppy who seemed unaware of the time and said he was unable to attend due to work pressures. After further conversation he said someone else would attend. In a subsequent conversation the Respondent advised no one was available to attend. I decided to proceed with this matter and the Respondent was advised prior to the commencement of the proceedings.
[4] I issued the following Directions at the conclusion of the proceedings:
1. “The transcript of today’s proceedings will be provided to the Respondent and the Applicant. This is expected to be some time on Monday 2 April 2012. The transcript is brief.
2. The Respondent is given the opportunity to provide any submission in to the Applicant’s case it may wish to provide within 24 hours of the transcript being provided to the Respondent by the fax and email addresses which have been successfully used for communication with the Respondent throughout the processes of this matter.
3. The Applicant will be given the opportunity to provide any reply within 24 hours of the Respondent’s material. The Applicant has liberty to apply for an extension should the material of the Applicant be substantial.
4. This material will be the basis on which a decision in respect to the jurisdictional objection of the Respondent will then be made.”
[5] On 30 March 2012 the Applicant gave sworn evidence and I heard some brief supplementary submissions.”
[2] The Commissioner then referred the matter for allocation for a hearing on the merits.
[3] Following that decision, on 17 April 2012, the applicant sought costs against the respondent pursuant to s.611 of the Act. With the consent of the parties that matter was dealt with on the basis of written submissions, and on 22 May 2012 the Commissioner dismissed the application for costs.
[4] The applicant has appealed against the decision of the Commissioner not to award her costs. The appeal was heard by this Full Bench on 19 July 2012.
Appeal Principles
[5] An appeal under s.604 of the Act involves an appeal by way of rehearing, with the powers of the Full Bench being exercisable only if there is error on the part of the primary decision-maker: see Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission. 1 The majority of the High Court in that case explained in the following passage how error may be identified where a discretionary decision is involved:
“Because a decision-maker charged with the making of a discretionary decision has some latitude as to the decision to be made, the correctness of the decision can only be challenged by showing error in the decision-making process (see Norbis v Norbis (1986) 161 CLR 513 at 518-519). And unless the relevant statute directs otherwise, it is only if there is error in that process that a discretionary decision can be set aside by an appellate tribunal. The errors that might be made in the decision-making process were identified, in relation to judicial discretions, in House v The King in these terms:
‘If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.’ 2
[6] An appeal under s.604 of the Act may only be pursued with the permission of Fair Work Australia. This would normally require an Applicant to demonstrate an arguable case of appealable error and to refer to other considerations which would justify the granting of permission to appeal. Although s.604(2) requires Fair Work Australia to grant permission to appeal if it is satisfied that it is in the public interest to do so, there is a note following the subsection to the effect that this does not apply in relation to an application to appeal from an unfair dismissal decision (see s.400). The effect of s.400 of the Act is that the general approach to dealing with appeals is varied in two significant respects in relation to appeals from unfair dismissal decisions. First, permission to appeal may only be granted where Fair Work Australia considers it is in the public interest to do so (s.400(1)). Second, where an appeal is based on error of fact, the appeal can only be made on the ground that the decision involved a significant error of fact (s.400(2)).
[7] The meaning to be given to “public interest” in s.400(1) of the Act was considered in GlaxoSmithKline Australia Pty Ltd v Makin, 3 where the Full Bench said that:
“Appeals have lain on the ground that it is in the public interest that leave should be granted in the predecessors to the Act for decades. It has not been considered useful or appropriate to define the concept in other than the most general terms and we do not intend to do so. The expression ‘in the public interest’, when used in a statute, classically imports a discretionary value judgment to be made by reference to undefined factual matters, confined only by the objects of the legislation in question.
Although the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters, it seems to us that none of those elements is present in this case.”
Consideration of the issues
[8] Section 611 of the Act relevantly reads:
(1) A person must bear the person’s own costs in relation to a matter before FWA.
(2) However, FWA may order a person (the first person) to bear some or all of the costs of another person in relation to an application to FWA if:
(a) FWA is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause;
or
(b) FWA 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.
[9] The Commissioner found that the conduct of the respondent was egregious and demonstrated a contemptuous attitude towards the proceedings and indeed to Fair Work Australia. He appears to have accepted that that conduct resulted in the applicant incurring additional costs because she had to “cover the field in preparing material to defend the jurisdictional objection”. However, he dismissed the application for costs.
[10] In discussing the application for costs, the Commissioner ruled:
“[8] I cannot be satisfied that at the time the objection was made that it should have been reasonably apparent that the jurisdictional objection had no reasonable prospect of success. In my decision I made it clear that there were some indicators that suggested a contractor rather than an employment relationship.
“The contractor service document signed at that time would normally be an important indicator of an independent contractor arrangement however, the accompanying letter and the surrounding evidence provided by the Applicant makes it clear that the arrangement was in fact an employment relationship.”
[9] Given that there was at least some basis for the jurisdictional objection, even though I found the basis was not a strong one, I could not conclude that, at the time it was made, the jurisdictional objection was made without reasonable cause. Even if the Respondent had doubts about the strength of its arguments that the Applicant was a contractor, as suggested by the Applicant and as demonstrated by the Respondent’s behaviour in failing to effectively prosecute the case, the fact that there was a weak basis for the argument means that the Respondent had “reasonable cause” to raise it.
[10] The Applicant correctly argues that the behaviour of the Respondent after making the Application can be considered in making a judgement as to whether or not the application was made vexatiously. In the circumstances of this case there is some evidence which supports an inference that the jurisdictional objection was pursued vexatiously. This includes the failure to follow directions and the lack of attendance at the proceedings. The Applicant also argues I should have regard for the fact that the Respondent produces detailed legal submissions to combat the costs Application but made no effort at all to prosecute the jurisdictional objection.
[11] In looking at whether the Application was made vexatiously the Applicant correctly argues that I should look at the “real reason” behind the objection or its predominant purpose. I accept that the circumstances and conduct of the Respondent suggest the possibility that the jurisdictional objection was made for the collateral purpose of discouraging the Applicant from proceeding and causing the Applicant to incur additional costs. The Applicant argues that the indicators of an independent contractor arrangement are in fact indicators of a sham arrangement at the instigation of the Respondent rather than evidence of a basis for genuine belief that there was a contractor relationship. The failure of the Respondent to comply with the Directions issued by FWA on 13 February for it to put forward its case or even to provide any advice of difficulties in complying with the directions is the strongest indicator of this lack of a genuine belief that there was a contractor relationship. The Applicant argues that I should find the Respondent’s explanation for this failure to be totally unconvincing.
[12] I find the matter of whether the Application was made vexatiously to be finely balanced. I am concerned at the costs incurred by the Applicant and I believe that the actions of the Respondent in failing to comply with the Directions issued by FWA were reprehensible. I do not find the reasons for that failure given by the Respondent to be particularly convincing. However, on balance I cannot find that the real reason behind the jurisdictional objection was to cause the Applicant to incur costs in the hope that it would dissuade the Applicant from further pursuit of her Application. Incompetence and negligence are equally plausible explanations for the behaviour of the Respondent.”
[11] We discern no error in the Commissioner’s reasons.
[12] Mr P Hull, solicitor, who appeared for Ms Macdougall, submitted that the conduct of the respondent after it filed its response can itself constitute part of the response. We disagree. Section 611(2)(a) of the Act deals with the making of the application and the response to that application. It does not deal with the conduct of either party after those events. Indeed, it is hard to see how an application or response that, at the time of its making, is not vexatious or made without reasonable cause can be transformed into one having either or both of those attributes by conduct occurring thereafter. Mr Hull sought to rely on Dickason v Endeavour Industries Pty Ltd and others 4 to support his submission that conduct by a respondent in the course of proceedings cannot be excised totally from the ordinary meaning of what might be a vexatious response. We doubt that Dickason stands for that proposition, with which, in any event, we do not concur.
[13] As it transpired, the Commissioner had regard to the respondent’s post filing conduct. He did so, because such conduct can, in some circumstances, assist in determining whether the application or response, at the time it is made, falls within the scope of s.611.
[14] The Workplace Relations Act 1996 (WR Act) included a broader range of exceptions to the no-costs regime. Sections 658(2) and (3) provided:
658 Commission may order payment of costs
(2) If the Commission is satisfied that a party (first party) to a proceeding relating to an application under section 643 has acted unreasonably in failing:
(a) to discontinue the proceeding; or
(b) to agree to terms of settlement that could lead to the discontinuance of the application;
the Commission may, on an application under this section by the other party to the proceeding, make an order for costs against the first party.
(3) If the Commission is satisfied:
(a) that a party (first party) to a proceeding relating to an application made under section 643 caused costs to be incurred by the other party to the proceeding; and
(b) that the first party caused the costs to be incurred because of the first party’s unreasonable act or omission in connection with the conduct of the proceeding;
the Commission may, on an application by the other party under this section, make an order for costs against the first party.
[15] Ms Macdougall may have had a good argument under s 658(3) of the WR Act. However, that argument is not available under the Act. Had the Parliament intended it to be available it would no doubt have enacted a provision in similar terms.
[16] Another ground of the appeal was that the Commissioner denied the applicant procedural fairness because he relied on the respondent’s written assertions of fact as to the reasons for its conduct, without acceding to a request by Mr Hull that he should have had an opportunity to test the assertions. The relevant passage of the Commissioner’s decision is at [12] where he said: “I do not find the reasons for that failure by the Respondent to be particularly convincing.”
[17] In our view, on a proper contextual reading of the Commissioner’s decision, he did not take into account the alleged motivation of the respondent in failing to award costs to the applicant.
[18] In our view there is nothing raised in the appeal which is of such a nature as to attract the public interest and therefore to warrant granting permission to appeal. In particular, we do not consider that the appeal raises issues of importance or general application.
[19] For the above reasons, we decline permission to appeal and dismiss the appeal.
SENIOR DEPUTY PRESIDENT
Appearances:
Mr P. Hull, solicitor, appeared on behalf of the Applicant.
Ms A. Forsyth, of counsel, appeared on behalf of the Respondent.
Hearing details:
2012
Melbourne
July 19
1 (2000) 203 CLR 194 at 205.
2 55 CLR 499 at 505.
3 [2010] FWAFB 5343 at paras [26]-[27].
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