[2013] FWC 4280

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FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s.394—Unfair dismissal

Rebecca Jones
v
Brite Services
(U2013/6001)

DEPUTY PRESIDENT GOSTENCNIK

MELBOURNE, 5 JULY 2013

Application for costs.

Introduction

[1] On 29 May 2013 I issued a decision concerning an application by Ms Rebecca Jones under s.394 of the Fair Work Act 2009 (Act) (UFD Application) in which I decided that the termination of Ms Jones’ employment by Brite Services on 17 January 2013 was not harsh, unjust or unreasonable. On 5 June 2013, Brite Services (Costs Applicant) applied for an order under s.611 of the Act that Ms Jones (Costs Respondent) bear some or all of the costs of the Costs Applicant in relation to the UFD Application.

The costs application

[2] The Costs Applicant applies for a costs order on the following bases. First it is said that the UFD Application for a remedy under s.394 of the Act had no reasonable prospects of success at the outset and should not have been filed. The UFD Application had no reasonable prospects of success because the Costs Respondent had made a number of misrepresentations to the Costs Applicant about matters central to the reason for dismissal of the Costs Respondent and there was extensive evidence against the Cost Respondent’s version of events.

[3] Secondly, the Costs Applicant submits that the UFD Application was made vexatiously as it was based on misrepresentations made to the Costs Applicant about whether any telephone conversation took place between the Costs Applicant and Mr Kelly on 21 December 2012. Thirdly, the Costs Applicant argues that the Costs Respondent acted unreasonably in failing to discontinue or to withdraw the UFD Application at each or one of the stages of the proceeding. Finally it is submitted that as the Costs Respondent was aware that she had a telephone conversation with Mr Kelly on 21 December 2012, would have been well aware of the substance of that conversation, and knew that she had misrepresented the fact of the telephone conversation in her file note given to Mr Tant, the UFD Application was made without reasonable cause. This is because upon the facts apparent to the Costs Respondent, the UFD Application had no substantial prospect of success and would, on her own version of the facts, fail.

Costs orders under section 611

[4] Section 611 of the Act sets out some of the circumstances in which an order for costs might be made in relation to a matter before the Fair Work Commission (Commission) 1. The primary position in relation to costs of a matter before the Commission is that each person involved in a matter must bear their own costs2. The policy which underpins this provision seems clear. It is designed to enable a person to make or defend an application without being burdened with the risk that an order for costs might be made against the person. However, the legislature has recognised that there will be circumstances in which an order for costs directed to a person might be appropriate. Therefore, the Commission may exercise discretion to make an order that a person bears some or all of the costs of another person in relation to an application to the Commission if the Commission is satisfied that:

[5] Before the Commission begins to consider whether to exercise its discretion to make an order for costs it must first be satisfied that one of the circumstances set out in the preceding subparagraphs are engaged in relation to an application or a response. Subparagraph (a) above is directed to an examination made of the circumstance at the time the application or response is made, while the existence of a circumstance in subparagraph (b) above may be discerned at various points in time during the conduct of a matter before the Commission and is not confined to the time at which a person makes, or responds to an application.

Vexatiously

[6] A person will make or respond to an application vexatiously if the person’s predominant purpose or motive is to harass or embarrass another person, or to gain a collateral advantage 4. The issue which must be examined in determining whether a person acted vexatiously in making, or responding to, an application, is the person’s purpose or motive. In my view, it is not sufficient to point to a weakness in a person’s application or response and to conclude from this weakness that the application or response was made vexatiously. Evidence must be led or elicited which is directed to the person’s purpose and from which it can be concluded that a person was motivated to make, or respond to, an application by an intention or desire to harass or embarrass another person, or to gain some collateral advantage.

Without reasonable cause

[7] An application or response will not have been made without reasonable cause simply because it fails or is not accepted 5. Considering whether an application or response was made without reasonable cause requires an examination of the nature and strength of the application or response. In Hatchett v Bowater Tutt Industries Pty Ltd (No 2)6 von Doussa J described the test that is imposed by the expression “without reasonable cause” as similar to that applied by a court on an application for the exercise of summary power to stay or to strike out a proceeding. His Honour said that to illustrate the test in that context, expressions such as “frivolous”, “so obviously untenable that it cannot possibly succeed”, “manifestly groundless” and “bad beyond argument” had been used7. In my opinion these expressions are also apt to describe the test to determine whether an application or response has been made “without reasonable cause” within the meaning of s.611(2)(a) of the Act, but the test is by no means limited to these expressions.

[8] The phrase “without reasonable cause” has been engaged to support costs orders against an applicant whose application was “misconceived” 8, although an application or response need not be properly described as “misconceived” for it to have been made without reasonable cause9. In Kanan v Australian Postal and Telecommunications Union10, Wilcox J considered that one way of testing whether a proceeding is instituted without reasonable cause is to ask:

[9] I respectfully adopt His Honour’s formulation as an appropriate means by which to determine whether an application or response has been made “without reasonable cause” for the purposes of s.611(2)(a) of the Act. Fundamentally the decisions, to which I have referred, show that careful scrutiny is required by the Commission of an application or response in order to ascertain whether that application or response was made without reasonable cause. Ultimately “it is a matter of judgment, sometime of fine judgment, in all the circumstances of a particular case whether a proceeding is brought without reasonable cause” 12.

It should have been reasonably apparent to a person

[10] An assessment of whether the circumstance described in s.611(2)(b) existed is not limited to the time at which a person makes an application or response, although it may arise at that time. Knowledge gained by a person during the course of a proceeding and after making an application or response might lead to a conclusion that it should have been reasonably apparent to a person that the person’s application or response had no reasonable prospect of success. This knowledge could be gained, for example at a time after the person has received an opposing party’s evidentiary material, or during the course of the hearing.

[11] Section 611(2)(b) directs attention to that which should have been “reasonably apparent to a person”. In this context whether something should have been “reasonably apparent to a person” is not to be determined by reference to the subjective views of the person. Rather, the question must be objectively determined 13.

No reasonable prospects of success

[12] Section 611(2)(b) also directs attention to the substance of an application or response. A conclusion that a particular application or response “had no reasonable prospect of success” is one that should only be reached with extreme caution in circumstances where the application or response is manifestly untenable or groundless or so lacking in merit or substance so as to be not reasonably arguable 14.

Consideration

Did the Costs Respondent make the UFD Application vexatiously?

[13] As I have indicated earlier, the question whether the Costs Respondent made the UFD Application vexatiously requires an examination of the Costs Respondent’s purpose or motive in making the application. The Cost Applicant argues that as the Costs Respondent knew:

the UFD Application “can now only be viewed … as having been a vexatious application based on the continued misrepresentation by the Costs Respondent” 15.

[14] The matters relied upon by the Costs Applicant are not matters which evidence purpose or motive in making the UFD Application. Consequently the Costs Applicant’s submission requires purpose or motive to be entirely inferred. The Costs Applicant did not seek to lead any evidence about the Costs Respondent’s purpose or motive, nor did it cross-examine the Costs Respondent about her purpose or motive in making the UFD Application during the substantive hearing. There is no evidence that the Costs Respondent was anything other than genuinely aggrieved by the manner of her dismissal. Specifically there is no evidence of an intention to harass or embarrass the Costs Applicant by making the UFD Application, nor is there any evidence of the Costs Respondent having some other collateral purpose or was seeking some collateral advantage. I do not suggest that, in an appropriate case, purpose or motive may not be inferred from the substantive factual matrix of a matter, but this is not such a case.

[15] Even accepting the state of the Costs Respondent’s knowledge about the telephone conversation with Mr Kelly and the contradictory file note provided to Mr Tant, it does not follow that one should readily infer an improper motive or purpose on the part of the Costs Respondent. It must be remembered that the Costs Respondent did not only complain about the absence of a valid reason. Much of her case, as outlined in the UFD Application, relied upon alleged procedural deficiencies on the part of the Costs Applicant in investigating the allegations and in effecting the dismissal. Consequently, the matters to which the Costs Applicant points to support its submission do not provide a proper basis from which to infer the Costs Respondent’s purpose or motive in making the UFD Application extended beyond seeking a remedy in relation to a dismissal about which she was aggrieved.

[16] The Costs Applicant also submitted that once the Costs Respondent had reviewed the witness statements filed by the Costs Applicant, it should have been apparent to the Costs Respondent that she could not continue to maintain the fact that the telephone call to Mr Kelly on 21 December 2012 did not occur. It follows, in the Costs Applicant’s submission, that from this point the Costs Respondent “proceeded to the hearing in hopes that her version of the substance of the telephone call would be believed over that of the other witnesses” 16, and consequently the UFD Application was vexatious. For similar reasons to those given above, I do not accept this submission. Again this submission requires inferences to be drawn about purpose or motive which are not supported by cogent evidence and which ignores other aspects of the UFD Application. Furthermore, as set out above, whether an application is made vexatiously is to be judged by reference to the purpose or motive at the time an application is made. This aspect of the Costs Applicant’s submission focusses on the Cost Respondent’s purpose or motive at some later point and not at the time the UFD Application was made.

[17] Consequently, for the reasons given above I am not satisfied that the Costs Respondent made the UFD Application vexatiously.

Did the Costs Respondent make the application without reasonable cause?

[18] The Costs Applicant submits that based on the facts known to the Costs Respondent at the time that she made the UFD Application, it was made without reasonable cause. As discussed above, a consideration of whether the Costs Respondent made the UFD Application without reasonable cause requires me to consider whether, on the Costs Respondent’s own version of the facts, it was clear that the UFD Application would fail. It seems to me the Costs Applicant’s submission might be correct if the only consideration in determining whether the Costs Respondent’s dismissal was harsh, unjust or unreasonable was whether the Costs Applicant had a valid reason for the dismissal. But even this proposition must be cautiously approached as one of the reasons relied upon by the Costs Applicant, namely the misrepresentation about the telephone call to Mr Kelly, was not a reason given to the Costs Respondent by the Costs Applicant as founding a ground for dismissal at the time it was effected.

[19] However, consideration of whether a dismissal was harsh, unjust or unreasonable is not confined to whether there was a valid reason for the dismissal. So much is clear from the enumeration of factors that must be considered by the Commission in determining whether or not a dismissal was harsh, unjust or unreasonable 17. The Costs Respondent’s UFD Application not only alleges the absence of a valid reason, but also alleges a failure to accord procedural fairness. This aspect of the Cost Respondent’s application was not without merit. Indeed I determined as much, at least insofar as the Costs Applicant relied upon the ‘misrepresentation’ ground as a valid reason for dismissal18. It is not infrequently the case, that a dismissal will be found to have been harsh, unjust or unreasonable on the basis that there was some procedural irregularity even though there was a valid reason. Indeed as the High Court observed in Byrne v Australian Airlines Ltd19, a dismissal:

[20] The substance of the Costs Applicant’s submission is that because the Costs Respondent knew at the time that she had made the UFD Application that the Costs Applicant had a valid reason for her dismissal, the UFD Application was made without reasonable cause. This is an overly simplistic analysis. True it is that the Costs Respondent was well aware of the fact and nature of her telephone discussion with Mr Kelly on 21 December 2011. She was also well aware that this telephone discussion founded a reason for her dismissal. But the Costs Respondent also complained about the lack of procedural fairness in conducting the investigation and in effecting her dismissal. It is also clear, on the face of the UFD Application, that the Costs Respondent was alleging that insufficient regard was paid to her “impeccable employment record” and that those effecting the dismissal did not have authority to do so. This latter point required the determination of the legal question which was disputed by the Costs Applicant. In the circumstances I am not satisfied that the UFD Application was bound to fail or was so obviously untenable that it could not proceed. It follows that I am not satisfied that the Costs Respondent made the UFD Application without reasonable cause.

Should it have been reasonably apparent to the Costs Respondent that the UFD Application had no reasonable prospect of success?

[21] Inasmuch as the Costs Applicant says that it should have been reasonably apparent to the Costs Respondent at the time that she made the UFD Application that it had no reasonable prospect of success, I reject that submission for substantially the same reasons given above. It cannot be said that at the time the Costs Respondent made the UFD Application it was manifestly untenable or groundless or so lacking in merit or substance so as to be not reasonably arguable.

[22] In the alternative the Costs Applicant submits that after the Costs Respondent had reviewed the Costs Applicant’s witness statements, it should then have been reasonably apparent to the Costs Respondent that the UFD Application had no reasonable prospect of success. At this point, so the Costs Applicant submits, it should have been reasonably apparent to the Costs Respondent that the Costs Applicant was aware that she had misrepresented the fact of making a telephone call to Mr Kelly. Further the Costs Respondent should also have been aware of the “extensive evidence” that the Costs Applicant intended to lead which contradicted the Costs Respondent’s version of events. Consequently it should reasonably have been apparent to the Costs Respondent that the UFD Application had no reasonable prospect of success.

[23] The Costs Applicant also relies on a letter sent to the Costs Respondent on 22 April 2013 by the Costs Applicant’s solicitors, in which the Costs Respondent is put on notice that having regard to the evidence in the Costs Applicant’s witness statements it was unlikely that the UFD Application had any reasonable prospect of success. The letter invited the Costs Respondent to withdraw the UFD Application and notified the Costs Respondent in the event that the UFD Application was unsuccessful, an application for costs would be made. In that correspondence and in proceedings before me the Costs Applicant relied upon the decision of Commissioner Deegan in Achieng v Commonwealth of Australia 21.

[24] I am not pursuaded by these submissions. Each of the “Costs Respondent’s knowledge of the true facts”, the “misrepresentation” and the “extensive evidence” points raised by the Costs Applicant’s submission only advance its argument so far. Even if I accepted that once the Costs Applicant had provided it’s witness material to the Costs Respondent, combined with the Costs Respondent’s knowledge and earlier misrepresentation, it would have been objectively clear that the Costs Applicant had a valid reason for the dismissal, that remains my view, an insufficient basis to conclude that it should have been reasonably apparent to the Costs Respondent that the UFD Application had no reasonable prospect of success. As I have indicated earlier, the consideration of whether a dismissal is harsh, unjust or unreasonable is multifactorial. The presence of a valid reason is but one factor and by itself is not conclusive.

[25] The evidentiary materials provided by the Costs Applicant to the Costs Respondent, did not on their face “knockout” the Costs Respondent’s allegation that she was denied procedural fairness. The materials did not overcome the Cost Respondent’s allegation that the Costs Applicant’s lacked authority to terminate her employment, nor did they not “knockout” the Cost Respondent’s allegation that the dismissal was harsh taking into account the Cost Respondent’s unblemished employment record. Although the Cost Applicant raised issues in the materials about the Costs Respondent’s conduct and performance, knowledge of which was said to have been acquired after the Costs Respondent’s dismissal, the truth of these allegations remained in dispute. The determination of each of these matters required an assessment and resolution of both legal and factual disputes and a consideration of the weight that should be given to the Costs Respondent’s employment record. The resolution of these matters turns on matters of impression or interpretation. The fact that the Costs Applicant wrote to the Cost Respondent and asserted that based on its evidentiary material the UFD Application had no reasonable prospect of success, adds little to an assessment that needs to be objectively made about that which ought reasonably have been apparent to the Costs Respondent.

[26] The Costs Applicant devoted a considerable part of its submissions to the decision in Achieng. In particular the Costs Applicant submitted that there were a number of similarities between Achieng and the circumstances in this case. Whilst I note that there are similarities I am not persuaded that the decision in Achieng is of any assistance in resolving this costs application. It is apparent on the face of the decision that the Commissioner did not give consideration to the impact that the totality of the matters that must be taken into account in determining whether a dismissal was harsh, unjust or unreasonable, would have on an assessment whether it should have been reasonably apparent to a person that their application had no reasonable prospects of success. In the present circumstances and for the reasons given above I am not persuaded that once the Costs Applicant’s evidentiary material had been provided, it should have been reasonably apparent to the Costs Respondent that the UFD Application had no reasonable prospect success.

Letter from Costs Applicant’s solicitors to Cost Respondent dated 22 April 2013

[27] As I indicated above the Costs Applicant placed some reliance on its solicitor’s letter to the Costs Respondent dated 22 April 2013. The Costs Applicant suggests that at this point a reasonable person in the Costs Respondent’s position would have taken the opportunity to seek legal advice as to the consequences of the letter. I do not accept this submission and agree with the Costs Respondent submission that to do so would undermine the object of Part 3–2 of the Act. Indeed it is expected that parties appearing before the Commission will generally represent themselves and permission to be represented by a legal practitioner would only be given in limited circumstances 22.

[28] The Costs Respondent also submits that the Act does not contain a provision similar to s.170CJ of the Workplace Relations Act 1996. It is correct that the Act does not contain in express terms a costs provision which allows the Commission to award costs if a party has acted unreasonably in failing to discontinue proceedings or agree to terms of settlement. However s.400A of the Act permits the Commission to order costs against a party to a matter arising under Part 3–2 of the Act if it is satisfied that the party caused costs to be incurred by the other party to a matter because of an unreasonable act or omission in connection with the conduct or continuation of the matter 23. It seems to me that this provision is broad enough to allow an order for costs in circumstances of an unreasonable refusal or failure to discontinue an unfair dismissal proceeding. The Costs Applicant’s submission concerning the solicitor’s letter and the failure of the Costs Respondent to discontinue the UFD Application seem to be directed to the matters which might support an order for costs under s.400A.

[29] An order under s.400A of the Act may only be made if a party has applied for such an order in accordance with s.402 of the Act. The Costs Applicant has not made an application costs under s.400A as required by s.402. This was accepted by the Costs Applicant 24. Consequently no order under that section may be made.

Conclusion

[30] For the reasons given above the application for costs made under s.611 is dismissed.

DEPUTY PRESIDENT

Appearances:

E. Saw for R. Jones.

N. Dastan for Brite Services.

Hearing details:

2013.

Melbourne:

June 27.

 1   The Commission may also make an order for costs under sections 376, 400A, 401 and 780

 2   Section 611(1)

 3   Section 611(2)(a) and (b)

 4   See Qantas Airways Limited v Carter [2013] FWCFB 1811; Nilson v Loyal Orange Trust (1997) 76 IR 180 at 181

 5   See R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia (1978) 140 CLR 470 at 473

 6   (1991) 28 FCR 324

 7   (1991) 28 FCR 324 at 327

 8   See Standish v University of Tasmania (1989) 28 IR 129

 9   See Thompson and Ors v Hodder and Ors (1989) 31 IR 300

 10   (1992) 43 IR 257

 11   (1992) 43 IR 257 at 264 – 265

 12   See Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission and Anor (2006) 156 FCR 275 at 290.

 13   See Baker v Salva Resources Pty Ltd (2011) 211 IR 374; Wodonga Rural City Council v Lewis (2005) 142 IR 188

 14   See Baker v Salva Resources Pty Ltd (2011) 211 IR 374; Smith v Barwon Region Water Authority (2009) 187 IR 276 at [48]

 15   Cost Applicant’s submissions [9]

 16   Cost Applicant’s submissions [40]

 17   See section 387

 18   [2013] FWC 3392 at [68]

 19   (1995) 185 CLR 410

 20   (1995) 185 CLR 410 at 465

 21   [2011] FWA 2111

 22   See section 596

 23   See section 400A

 24   Transcript PN 1651 - 1656.

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