DECISION

Fair Work Act 2009
s 394 - Application for unfair dismissal remedy

Dino De Giusti
v
NSW Trains t/a NSW Trainlink
(U2017/4325)

Application for an unfair dismissal remedy – application dismissed pursuant to s 399A of the Act – application for costs against applicant – application under s 400A and s 611 of the Act – ‘general rule’ as to costs – exceptions to ‘general rule’ – no case to answer – principles considered – whether application instituted without reasonable cause – prospects of success – numerous unreasonable acts or omissions – failure to attend proceedings or comply with directions – application a rare example where ‘general rule’ does not apply – costs application granted.

[1] This decision will determine a costs application filed by NSW Trains t/a NSW Trainlink (NSW Trains), pursuant to ss 400A and 611 of the Fair Work Act 2009 (the ‘Act’). Filed on 21 December 2017, the application seeks orders for costs against Mr D De Giusti, an applicant in unfair dismissal proceedings which were dismissed by the Commission on 15 December 2017 pursuant to s 399A of the Act; De Giusti v NSW Trains [2017] FWC 6742 (the ‘s 399A Decision’). The application also seeks costs in respect to an earlier decision on 8 November 2017 in which NSW Trains was granted permission to be represented by a lawyer, pursuant to s 596 of the Act; Dino De Giusti v NSW Trains [2017] FWC 5710 (the ‘s 596 Decision’). In accordance with s 402 of the Act, the costs application was filed within 14 days after the originating unfair dismissal application was dismissed.

[2] The costs application was listed for Mention and Directions on 16 January 2018. Mr T Woods and Mr A Battagello appeared for NSW Trains. There was no appearance for, or on behalf of Mr De Giusti (Solicitors, Lander & Rogers). I note the listing was directed to the email address Mr De Guisti and his partner/representative, Ms Fiona Nash, had previously used to communicate with the Commission. There was no automatic ‘not received’ reply.

[3] In order to ensure Mr De Giusti was provided with a reasonable opportunity to respond to the costs application, I issued further directions as follows:

‘Pursuant to the directions hearing in this matter today, the Fair Work Commission (the ‘Commission’) directs:

1. The applicant (Mr Dino De Giusti) to file in the Commission, and serve on the respondent, an outline of submissions, witness statements (if any) and any other documentary evidence on which he seeks to rely on in opposition to the respondent’s application that the applicant pay its costs, pursuant to ss 400A and/or 611 of the Act, by no later than COB on 30 January 2018.

2. The respondent to file in the Commission, and serve on the applicant, an outline of submissions, witness statements (if any) and any other documentary evidence on which it seeks to rely on in reply to the applicant’s material by no later than COB on 6 February 2018.

Either party may request a hearing of the above application. If no such request is made, it will be determined ‘on the papers’.

The applicant is advised that should he fail to comply with the directions, the respondent’s application for costs will be determined based on the material already filed in the Commission and without further recourse to him.’

[4] Mr De Giusti filed no submissions or any material in opposition to NSW Trains’ costs application. Neither he, or Ms Nash have had any communication with Chambers about this matter. In addition, I note there was no appeal of either of my earlier decisions. Accordingly, I propose to determine the costs application ‘on the papers’; being the application and submissions of NSW Trains.

[5] Solicitors for NSW Trains relied on my two earlier decisions referred to above in submitting that Mr De Giusti’s conduct since filing his unfair dismissal application in April 2017, was such as to establish exceptional circumstances, warranting the Commission to exercise its discretion to make an order for costs against Mr De Giusti. To make good this proposition, NSW Trains set out the relevant extracts from the s 596 Decision and the s 399A Decision:

‘2.2.4 In its s 596 decision, the Commission made the following relevant comments regarding Mr De Giusti’s conduct following the filing of his unfair dismissal application:

“[1] Mr Dino De Giusti (the ‘applicant’) was dismissed from his employment as a Passenger Service Supervisor by NSW Trains (the ‘respondent’) on 7 April 2017. His dismissal for alleged serious misconduct followed an investigation of nine allegations - the majority of which concerned the alleged sexual harassment or inappropriate conduct towards a number of female colleagues and the travelling public. An investigation concluded that all of the allegations were substantiated. On 21 April 2017, Mr De Giusti filed with the Fair Work Commission (the ‘Commission’) an application for an unfair dismissal remedy, pursuant to s 394 of the Fair Work Act 2009 (Cth) (the ‘Act’); namely that NSW Trains’ decision to dismiss him be ‘overturned’ and he be reinstated to his former position.

[2] This matter has had some history. The application was originally allocated to Commissioner Johns. At two earlier listings of the matter for mention/directions (11 July and 26 July 2017), there was no appearance, for or on behalf of the applicant at this conference. On 14 July 2017, the Rail Tram and Bus Union (the ‘Union’) filed a notice of representative ceasing to act for the applicant. At the second listing (26 July 2017), NSW Trains made an application to have the application dismissed under s 399A(2) of the Act, for want of prosecution. This application was withdrawn after the Commissioner was alerted to problems with the notice of listing being received by the applicant.

[3] The matter was remitted to me in early September 2017 and listed for hearing on 27 October 2017. In accordance with my usual practice, I also listed a conference with the parties on 25 September 2017. There was no appearance for, or on behalf of the applicant. On 27 September 2017, NSW Trains filed a further application seeking the dismissal of the unfair dismissal application under s 399(1)(b) of the Act. That application was listed for mention/directions on 5 October 2017 and all the extant directions were dissolved. The applicant was also directed to provide an explanation for his non-attendance at the conference on 26 September 2017. On 3 October 2017, Ms Nash, the applicant’s partner, advised that she had been unwell prior to the listing and had been in hospital when my Associate phoned the applicant for the conference on 25 September 2017.

[4] At the conference on 5 October 2017, the applicant objected to NSW Trains being represented by a lawyer. Directions were issued seeking submissions as to why permission should be granted for NSW Trains to be represented by a lawyer, pursuant to s 596 of the Act. The directions required the applicant to file his submission by 19 October 2017 (NSW Trains had filed its submissions on 11 October 2017).

[5] On 26 October 2017, I had cause to direct the following email be sent to the applicant:

“Dear Mr De Giusti

…

His Honour notes that you have not complied with the direction to file and serve submissions by COB 19 October 2017 as to your objection to NSW Trains being represented by a lawyer in your unfair dismissal case.

Unless you provide a submission by COB Monday 30 October 2017, His Honour will proceed to determine the application by NSW Trains to be represented by a lawyer on the basis of NSW Trains’ submissions an the material already filed by both parties.

You are reminded that a continuing pattern of non-compliance with the Commission’s directions, may result in your unfair dismissal application being dismissed. …”

[6] Ms Nash sent my Chambers an email at 4.50pm on 30 October 2017 stating that the material was almost complete, but not ready to be filed. Although she did not specifically explain what the cause of the delay had been, she said it was as a result of a ‘number of circumstances, situations and unexpected issues’ beyond their control. She said the submissions would be filed the following morning, Tuesday 31 October 2017. At 9.29am the following morning, Ms Nash emailed my Chambers a document with several pages of text. However, it was in an ineligible font ‘Wingdings’. Once the text had been converted to a legible font, it was apparent the document was a totally irrelevant academic essay entitled, ‘The Cutting Edge: Educational Innovation, Disability Law, and Civil Rights’ by E Moore and P Grossman of the University of Colorado and United States Department of Education respectively. At 9.55am that morning, my Associate emailed Ms Nash asking whether that was the document she intended to file. She responded the following day at 4.13pm advising that she did not know how that material had been filed and that she would try to send the relevant material the following day (2 November 2017). To date, no further material has been provided.”

2.2.5 In the s 399 decision, the Commission made the following further comments regarding Mr De Giusti’s conduct subsequent to the s 596 decision:

“[2] On 10 November 2017, the Commission listed the matter for mention and/or directions. There was no appearance for, or on behalf of, the applicant. Attempts at calling him (which had been successful on 5 October 2017) were unsuccessful and it seemed the phone number previously advised by the applicant had been disconnected. As I was satisfied that the applicant was aware of this listing through email advice, it is regrettable that if the phone number had been disconnected, the Commission was not informed, nor alternative arrangements made. On that occasion, NSW Trains was represented by a solicitor, Mr A Battagello, and Mr P Thompson.

[3] On 13 November 2017, the Commission issued the following direction by email to the parties:

‘The applicant, Mr Dino De Giusti, is to file in the Commission and serve on the respondent, an outline of submissions, witness statements (if any) and any other documentary evidence on which he seeks to rely in opposition to respondent’s application, pursuant to s 399A of the Fair Work Act 2009 and filed in 27 September 2017, for the Commission to dismiss the applicant’s substantive unfair dismissal application by no later than 4.00pm on Monday, 27 November 2017.’

This direction was not complied with. There have been no communication from the applicant or his representative, Ms Nash, since 1 November 2017, when she explained in respect to the nonsense email sent on 30 October 2017 that it was the wrong document and she would send the correct one the following day. Nothing was sent; see: para [6] quoted in para [1] above.

[4] On 28 November 2017, Mr Battagello sent the following email to Chambers:

‘Dear Associate

We refer to the telephone mention/directions before his Honour on 10 November 2017. The Applicant failed to attend those directions by phone, despite his Honour being satisfied that the Applicant had been made aware of the listing.

Subsequent to this mention, his Honour made the attached Order, requiring the Applicant to file and serve any material in response to the Respondent’s s 399A application filed 27 September 2017 by 4:00 pm, 27 November 2017. No such material has been received by the Respondent.

In light of the Applicant’s further failures to attend directions and comply with the Commission’s orders, the Respondent respectfully requests that his Honour now determine this matter on the papers on the material before him. For your assistance, we attach a copy of the Respondent’s s 399A application as previously filed.’

[5] In light of the above narrative, I have decided to dismiss this application for want of prosecution and a failure to comply with the Commission’s directions…

…

[8] That said, s 587 of the Act does not limit the grounds on which the Commission, of its own motion, may dismiss an application. In the present case, the applicant has demonstrated a persistent unwillingness to properly engage with the Commission in respect to his application. Despite an earlier, unsuccessful s 399A application, where the applicant was given the benefit of the doubt as to incorrect email addresses, he continues to ignore the Commission’s directions and has now failed on two occasions to file any material or submissions in respect to the earlier s 596 application by the respondent, and more lately, its s 399A application. The applicant has made no attempt to explain these failures, despite being warned of the possible consequences. Given this history, I have little confidence that the applicant will, at some future point, seek to desist from this conduct.

…

[10] In my view, it is unfair and unreasonable that the respondent should be put to more time and cost in defending a matter which is not properly, or at all, being prosecuted by the applicant.’

[6] NSW Trains submitted that from Mr De Giusti’s unfair dismissal application and NSW Trains F3 employer response to his application, it should have been reasonably apparent to Mr De Giusti that his application had no reasonable prospects of success, pursuant to s 611(2)(b) of the Act; see Baker v Salva Resources Pty Ltd [2011] FWCFB 4014.

[7] It was said that at the time of making his application Mr De Giusti had available to him a ‘final decision’ letter in which it was made perfectly clear that serious allegations against him had been substantiated. These were:

(a) ‘engaged in inappropriate conduct of a sexual nature towards his co-workers (allegations 1, 2, 3, 4 and 7);

(b) engaged in inappropriate conduct of a sexual nature towards members of the travelling public (allegations 6 and 8);

(c) facilitated the unaccompanied departure of a female passenger at an unscheduled, unmanned stop in the middle of the night between Coffs Harbour and Grafton Stations (allegation 5); and

(d) allowed Ms Fiona Nash to travel unaccompanied and unsupervised in the luggage brake van (containing passenger luggage) of a train service on several occasions (allegation 9).’

[8] It was pointed out that rather than denying the allegations, Mr De Giusti sought to argue that NSW Trains investigation was procedurally unfair, due to a number of entirely irrelevant factors to the question of whether the conduct had occurred. These included:

1. ‘Ongoing police investigation and advised by legal representative not to respond until police investigation finalised.

2. Being treated for anxiety and depression.

3. Medication given by treating doctors caused side effects eg drowsiness, memory lapses and unable to remember dates and incidents.

4. Medical certificates provided to NSW Trainlink advising not fit for work and requested investigation to be put on hold until Mr De Giusti was well enough to clearly respond to allegations.

5. NSW Trainlink continued with the investigation when Mr De Giusti was unable to respond to the allegations.’

[9] NSW Trains submitted that Mr De Giusti’s failure to rebut the substance of the very serious allegations against him, and about which he was well aware, rendered his application manifestly untenable, or so lacking in merit, as to have no reasonable prospects of success and this would have been reasonably apparent to him.

[10] Further, NSW Trains submitted that it had established exceptional circumstances which would warrant the Commission exercising its discretion to award costs because of a number of unreasonable acts or omissions for which Mr De Giusti was solely responsible, in connection with the conduct or continuation of the matter, under s 400A(1) of the Act, over an eight month period. These included:

‘(a) On 11 July 2017, the Commission issued a Notice of Listing, listing the substantive matter for Mention/Directions by telephone before Commissioner Johns on 18 July 2017. Among those notified, the Notice was sent to Mr De Giusti’s then representatives at the Rail Tram and Bus Union (RTBU), at the email address [address omitted]. A copy of this Notice of Listing is attached to this application and marked “Attachment C”.

On 14 July 2017, Mr De Giusti’s representatives at the Rail Tram and Bus Union emailed the Commission and filed a notice of representative ceasing to act for Mr De Giusti. Copied into this email was the address [address omitted], being the email address subsequently used by Mr De Giusti in the substantive proceedings…

Despite the RTBU’s Notice being sent to Mr De Giusti, he failed to take the reasonable step of contacting the Commission to make enquiries as to the next steps in pursuing his own unfair dismissal application. Such action would have made him aware of the telephone conference listed for 18 July 2017. On 18 July 2017, NSW Trains incurred costs attending the telephone directions before Commissioner Johns, which could not proceed due to Mr De Giusti’s non-attendance, owing directly from to his unreasonable omission in failing to contact the Commission.

(b) On 18 July 2017, the Commission issued a further Notice of Listing, listing the matter for Mention/Directions by telephone before Commissioner Johns on 26 July 2017. On this occasion, the Notice was sent directly to the postal address provided by Mr De Giusti in his unfair dismissal application, being [address omitted]…

Despite the Notice being sent to the address provided in his own application, and Mr De Giusti being aware since 14 July 2017 that he would now be required to take steps personally to prosecute his claim, no attempt was made by Mr De Giusti to contact the Commission regarding the status of his application. On 26 July 2017, NSW Trains incurred costs attending further telephone directions before Commissioner Johns, which could not proceed due to Mr De Giusti’s non-attendance, again owing directly to his failure to contact the Commission regarding his own application.

(c) On 4 August 2017, the Commission issued directions requiring Mr De Giusti to file and serve an outline of argument and evidence by 24 August 2017. Direction 5 required that any request for an extension of time to file material must be made prior to the compliance date...

No outline of argument or evidence was served by Mr De Giusti by 24 August 2017, nor was any request for an extension of time to file made prior to the compliance date. On 28 August 2017, after the date for filing and/or requesting an extension had passed, Ms Fiona Nash emailed the Commission on behalf of Mr De Giusti from the address [address omitted] seeking an extension for the filing of evidence. Ms Nash indicated that her own ill health had been the cause of Mr De Giusti’s failure to meet the deadline of 24 August 2017, but provided nothing by way of medical evidence to allow the Commission to assess this claim.

On 28 August 2017, NSW trains incurred costs as a result of needing to:

•  Consider Mr De Giusti’s request for an extension and amendment to the pre-existing timetable caused by his unreasonable failure to file material or seek an extension in accordance with the Commission’s directions of 4 August 2017;

•  Assess the availability of NSW Trains’ representatives in light of the timetable amendment which would now be required; and

•  Instruct its representatives to respond to the Commission regarding Mr De Giusti’s request for an extension of time.

(d) On 7 September 2017, the Commission issued fresh directions for the filing and service of evidence. These directions required NSW Trains to file its material (outline of submissions, witness statements and any documentary evidence on which NSW Trains sought to rely) prior to Mr De Giusti, by 4:00 pm, 28 September 2017…

On 12 September 2017, NSW trains’ representatives sent an email addressed to Mr De Giusti to [address omitted], seeking a response to a number of questions to allow NSW Trains to better understand the nature of Mr De Giusti’s claim. In particular, Mr De Giusti has not made clear in his unfair dismissal application whether he denied the conduct alleged, or admitted the conduct alleged with the qualifier that procedural factors rendered the dismissal unfair. Clarification on these matters was crucial, given NSW trains was now required to file its material first in accordance with the directions of 7 September 2017, as it directly affected what evidence NSW trains would be required to prepare, file and serve in the matter, and by extension the costs that would be incurred in doing so…

Mr De Giusi never responded to the email from NSW trains’ representatives on 12 September 2017. As a result, NSW Trains was required to prepare its case on the basis that all factual elements of the allegations would be contested by Mr De Giusti, despite him never making this point clear.

As a result of Mr De Giusti’s unreasonable act in failing to clarify the basis of his claim, NSW Trains incurred costs as a result of all its representatives being required to contact, interview and prepare draft witness statements for 10 witnesses in support of NSW Trains’ case.

(e) On 11 September 2017, a Notice of Listing was issued, listing the matter for conference before Deputy President Sams on 25 September 2017. A copy of the notice was sent to [address omitted]…

On 25 September 2017, NSW Trains incurred costs a result of its representatives attending the Mention/Directions before Deputy president Sams, which could not proceed due to Mr De Giusti’s non-attendance, in circumstances where the Notice was sent to the email address in use by him.

(f) On 5 October 2017, the Commission issued Directions requiring that Mr De Giusti file and serve submissions by 19 October 2017 as to why NSW Trains’ request to be legally represented should be refused….

No submissions were filed by Mr De Giusti on 19 October 2017. On 23 October 2017, NSW trains incurred costs as a result of Mr De Giusti’s unreasonable failure to file any submissions, by emailing the Commission to provide an update as to the status of the matter…

(g) On 31 October 2017, Ms Nash on behalf of Mr De Giusti, filed a document said to be Mr De Guisti’s response to NSW Trains’s 596 application. The document was several pages of ineligible font “Wingdings”…

On 31 October 2017, NSW Trains incurred costs scanning the ultimately irrelevant document filed by Ms Nash.

(h) On 8 November 2017, the Commission issued a Notice of Listing, listing the matter for Mention/Directions by telephone before Deputy President Sams on 10 November 2017. A copy of this Notice was sent to the email [address omitted]….

On 10 November 2017, NSW Trains incurred costs as a result of attending the Mention/Directions by telephone before Deputy President Sams, which could not proceed due to Mr De Giusti’s non-attendance, in circumstances where the Notice was sent to the email address in use by him.

(i) On 13 November 2017, the Commission issued Directions requiring Mr De Giusti to file and serve an outline of submissions, witness statements, and any other evidence in response to NSW Trains s 399A application by 4:00 pm on 27 November 2017…

No material was filed by Mr De Giusti on 27 November 2017, nor was any explanation provided as to reason for this failure. As a result of this unreasonable failure, NSW Trains incurred costs due to the need to email the Commission on 28 November 2017 regarding the status of the matter…’

[11] Finally, NSW Trains submitted as follows:

‘Mr De Giusti is squarely responsible for substantive unreasonable acts or omissions in this matter. Mr De Giusti repeatedly failed to attend conferences, mentions and directions before the Commission and always failed to provide a reason or explanation for non-attendance prior to doing so, if ever. Mr De Giusti repeatedly failed to lodge materials in accordance with the directions of the Commission, despite being provided extensions allowing him to do so. Such conduct has previously been regarded by the Commission as justifying an order for costs pursuant to s400A (Gary Hathaway v Visy Primary Packaging T/A Visy Industries Australia Pty Ltd [2015] FWC 8801). NSW Trains has incurred significant costs as a result of these failures by Mr De Giusti and has been required to see this matter to conclusion with effectively no indication from Mr De Giusti that he had any interest in seriously prosecuting his claim. Such circumstances justify the Commission exercising its discretion to make an order pursuant to s 400A of the FW Act.’

[12] NSW Trains provided an itemised Schedule of Costs totalling $25,849.30, plus GST based, where relevant, on the Commission’s Schedule 3.1 of the Fair Work Regulations 2009.

CONSIDERATION

Commission’s power to award costs and relevant principles

[13] This costs application is brought under both s 400A and 611 of the Act. Section 400A expressly relates to unfair dismissal matters. It reads:

400A Costs orders against parties

(1)  The FWC may make an order for costs against a party to a matter arising under this Part (the first party) for costs incurred by the other party to the matter if the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter.

(2)  The FWC may make an order under subsection (1) 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.

[14] The Commission’s general powers to award costs are grounded in s 611 of the Act which reads:

611 Costs

(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 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.

Note: The FWC can also order costs under sections 376, 400A, 401 and 780.

(3) A person to whom an order for costs applies must not contravene a term of the order.

Note: This subsection is a civil remedy provision (see Part 4 1).

[15] The starting point in relation to costs of proceedings before the Commission is that each person involved in a matter, must bear their own costs; often known as the ‘general rule’. This statutory imperative is derived from the policy purpose that a person is entitled to make, or defend an application made under the Act, without the risk that a costs order may be made against them.

[16] As mentioned, s 611 of the Act sets out the general rule, but sub section (2) makes obvious that there are exceptions to that rule in certain circumstances; see: Explanatory Memorandum to the Fair Work Bill 2008 paras [2353]-[2356]. Those circumstances arise if the Commission is satisfied that:

(a) a person made an application, or responded to an application vexatiously or without reasonable cause; or

(b) it should have been reasonably apparent to a person that their application or a person who responded to an application had no reasonable prospects of success.

[17] There is no doubt that (a) above is directed to a consideration of the circumstances when an application is made, or responded to. Whereas satisfaction of (b) above may be established at various points of time during the progress of a matter before the Commission, when it becomes reasonably apparent that the person’s application, or response to the application, has no reasonable prospects of success. It is important to note that even if one or both of the legs of s 611 are enlivened, the Commission retains an overall discretion as to whether an order of costs should follow.

[18] Sections 577 and 578 of the Act is also relevant and states:

577 Performance of functions etc. by the FWC

The FWC must perform its functions and exercise its powers in a manner that:

(a)  is fair and just; and

(b)  is quick, informal and avoids unnecessary technicalities; and

(c)  is open and transparent; and

(d)  promotes harmonious and cooperative workplace relations.

Note: The President also is responsible for ensuring that the FWC performs its functions and exercises its powers efficiently etc. (see section 581).

578 Matters the FWC must take into account in performing functions etc.

In performing functions or exercising powers, in relation to a matter, under a part of this Act (including this Part), the FWC must take into account:

(a)  the objects of this Act, and any objects of the part of this Act; and

(b)  equity, good conscience and the merits of the matter; and

(c)  the need to respect and value the diversity of the work force by helping to prevent and eliminate discrimination on the basis of race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer's responsibilities, pregnancy, religion, political opinion, national extraction or social origin.

[19] It follows from ss 577 and 578 that in exercising the discretion to order costs the Commission must exercise its powers in a manner which is ‘fair and just’ and takes into account ‘equity, good conscience and the merits of the matter’. The broad nature of these considerations suggests that the factors which are relevant to the exercise of the discretion are not confined.

[20] Section 611 contains no positive indication of the considerations which the Commission must take into account in deciding how to exercise its discretion. The discretion conferred is expressed in general, unqualified, terms. As the High Court observed in O’Sullivan v Farrer [1989] HCA 61; (1989) 168 CLR 210 (‘O’Sullivan’) at [216]:

‘Where a power to decide is conferred by statute, a general discretion, confined only by the scope and purposes of the legislation, will ordinarily be implied if the context (including the subject matter to be decided) provides no positive indication of the considerations by reference to which a decision is to be made.’

[21] But, of course, the discretion conferred by s 611(2) must be exercised judicially, that is to say not arbitrarily, capriciously or so as to frustrate the legislative purpose. Further, consistent with O’Sullivan, the discretion is also confined by the subject matter, legislative context and purpose.

Meaning of ‘without reasonable cause’

[22] In Hamilton James and Bruce Pty Ltd v Gray [2011] FWAFB 9235, a Full Bench of Fair Work Australia, (as the Commission was then styled), said at paras [18]-[19]:

‘[18] The phrase “without reasonable cause” was considered in Kanan v Australian Postal and Telecommunications Union (‘Kanan’). Section 347(1) of the then Industrial Relations Act 1988 (Cth) provided that:

“A party to a proceeding (including an appeal) in a matter arising under this Act shall not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause.” (Underlining added)

[19] In Kanan’s case, Justice Wilcox said in respect of the phrase that:

“A proceeding is not to be classed as being launched ‘without reasonable cause’ simply because it fails. As Gibbs J said in R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia [1978] HCA 51; (1978) 140 CLR 470 at 473, speaking of the Conciliation and Arbitration Act equivalent of s 357 (s 197A):

‘... a party cannot be said to have commenced a proceeding “without reasonable cause”, within the meaning of that section, simply because his argument proves unsuccessful. In the present case the argument presented on behalf of the prosecutor was not unworthy of consideration and it found some support in the two decisions of this court to which I have referred. The fact that those decisions have been distinguished, and that the argument has failed, is no justification for ordering costs in the face of the prohibition contained in s.197A.’

In Standish v University of Tasmania [1989] FCA 166; (1989) 28 IR 129 at 139 Lockhart J applied the qualification in ordering costs against an applicant whose case he thought ‘misconceived’, rather than simply unsuccessful. But, as the Full Court pointed out in Thompson v Hodder (1989) 29 IR 339 at 342, ‘there may be cases which could not be described properly as “misconceived” but which would nevertheless be held to have been instituted without reasonable cause’.

It seems to me that one way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, 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 stigmatise the proceeding as being ‘without reasonable cause’. But where it appears that, on the applicant's own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.’

[23] Similarly, the Full Bench of the Commission in Church v Eastern Health t/a Eastern Health Great Health and Wellbeing FWCFB 810 said at [30]-[33]:

‘[30] We now turn to the expression ‘without reasonable cause’. A party cannot be said to have made an application ‘without reasonable cause’, within the meaning of s.611(2)(a), simply because his or her argument proves unsuccessful.  The test is not whether the application might have been successful, but whether the application should not have been made. In Kanan v Australian Postal and Telecommunications Union., Wilcox J put it this way:

“It seems to me that one way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, 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 stigmatise the proceeding as being ‘without reasonable cause’. But where, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.”

[31] In the context of an appeal the question becomes whether, having regard to the arguments available to the appellant at the time of instituting the appeal, there was no substantial prospect of success. As Wilcox CJ (with whom Madgwick J agreed) observed in Imogen Pty Ltd v Sangwin: 

“The prospect must be evaluated in the light of the facts of the case, the judgment appealed from and the points taken in the notice of appeal. If having regard to those matters, there was not insubstantial prospect of the appeal achieving some success, albeit not necessarily complete success, then it would seem to me it cannot be fairly described as having been instituted ‘without reasonable cause’. This is so even if, in the result, the appeal proved unsuccessful.” 

[32] In the same matter Ryan J said:

“The existence of ‘‘reasonable cause’’ within the meaning of s 347 falls to be determined at the time when the relevant proceedings were instituted. The fact that the party instituting the proceedings later discontinues them is therefore not a matter to be taken directly into account in the application of the section. However, an appeal stands in somewhat different case from proceedings at first instance in that discontinuance may bear indirectly on the discretion conferred by s 347 by tending to confirm an impression derived from the grounds of appeal and the reasons for judgment below that the prospects of success on the appeal were slight.

Not without significance to an assessment of the reasonableness of the institution of an appeal are the amount at issue and the nature of the points raised by the notice of appeal. Where, as here, the appeal is essentially against findings of fact made by the trial judge after a two day hearing resulting in a judgment for $16,900 and raises no important or distinctive point of law or principle, the Court may more readily conclude that it was not reasonable in the circumstances to have instituted it. On a fairly fine balance of the relevant considerations and not without hesitation, I have been led to reach that conclusion in this case and agree with the Chief Justice and the orders which he has proposed.” 

[33] In construing s.570 and its legislative antecedents courts have observed that the test imposed by the expression ‘without reasonable cause’ is similar to that adopted for summary judgement, that is ‘so obviously untenable that it cannot possibly succeed’, ‘manifestly groundless’ or ‘discloses a case which the Court is satisfied cannot succeed.’ [citations removed]

[24] For completeness, I refer to the final two paragraphs in Kanan, where Wilcox J said:

‘29. It seems to me that one way of testing whether a proceeding is instituted "without reasonable cause" is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, 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 stigmatise the proceeding as being "without reasonable cause". But where it appears that, on the applicant's own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause. That is the situation in the present case. The qualification of s.347 applies. The Court has power to order costs against the applicant.

30. I see no discretionary reason to withhold such an order. It is not a matter of the applicant's motives but, rather, that he has put the respondent to the expense of resisting a claim which was always doomed to failure. There is no question of punishing the applicant for his unreasonable course of action. The rationale for making a costs order is that a measure of indemnity should be conferred upon the respondent for the costs it has been obliged to incur in responding to the unreasonably instituted proceeding. I propose to order that the principal proceeding be dismissed with costs. The costs of the motion will be costs in the principal proceeding and so covered by that order.’

Meaning of ‘no reasonable prospects of success’

[25] The High Court in Spencer v Commonwealth of Australia (2010) 241 CLR 118 considered the meaning of the phrase ‘no reasonable prospects of success’, albeit in the context of s 31A of the Federal Circuit Court of Australia Act 1976. The plurality (Hayne, Crennan, Kiefel and Bell JJ) said:

‘59 In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like "clearly", "manifestly" or "obviously") as "frivolous", "untenable", "groundless" or "faulty". But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word "reasonable", in the phrase "no reasonable prospect", be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a "frivolous", "untenable", "groundless" or "faulty" claim.

60 Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is "no reasonable prospect" of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to "no reasonable prospect" can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase "just and equitable" when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.’

[26] In Baker v Salva Resources Pty Ltd [2011] FWAFB 4014, the Full Bench said at [10]:

‘[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.’

See also: Qantas Airways Ltd v Cater [2013] FWCFB 1811.

[27] In practical terms, a person may gain knowledge in the lead up to proceedings (when the opposing party’s evidence is filed) or during the proceedings (e.g. after the cross examination of a crucial witness) which, when viewed objectively, would satisfy the test of the person’s case having no reasonable prospects of success. It would be from that point that costs may be awarded, if the person did not take steps to recognise that their case was frivolous, untenable, groundless or faulty. For an applicant, this may mean discontinuing the matter and for a respondent it may mean making offers to settle a matter.

[28] It is telling, I think, that the Union (the RBTU), which had filed Mr De Giusti’s original unfair dismissal application on 21 April 2017, filed a Notice of Representative Ceasing to Act on 14 July 2017. This was shortly after there was a telephone conciliation of the application on 20 June 2017 and a few days before the first listing of the matter for directions before Commissioner Johns on 18 July 2017 (at which Mr De Giusti did not appear). It can safely be assumed that the Union was fully aware of the seriousness of the allegations found to have been substantiated against Mr De Giusti and had received instructions from him before, and after the filing of the application.

[29] That said, the RTBU has a long and proud history of defending its members interests, particularly in disciplinary matters, including in unfair dismissal cases, even when they are in the wrong. In my experience, this Union (like many others) has an honourable and practical policy of not wasting Union resources and spending members’ money on defending the indefensible.

[30] Given that Mr De Giusti had been a long standing employee (42 years of service) and may have been a Union member for a considerable period of time, there must have been a very good reason why the Union decided to cease representing him before formal Commission proceedings even commenced. While I have no evidence as to the reason/s, in my view, a reasonable inference to draw was that the union considered Mr De Giusti’s case to be one with little, or no prospects of success. While these assumptions are, of course, speculative and therefore not determinative of whether this costs application should be granted, I consider this matter to be background to the larger picture painted by NSW Trains in its submissions on the costs application.

[31] Section 400A of the Act was passed by the Federal Parliament as part of a package of amendments to the Act in 2013. The statutory purpose of the amendment was plainly set out in the Explanatory Memorandum to the Fair Work Act Amendment Bill 2012 at Item 171 where it said:

‘However, the power to award costs is only available if the FWC is satisfied that the act or omission by the first party was unreasonable. What is an unreasonable act or omission will depend on the particular circumstances but it is intended that the power only be exercised where there is clear evidence of unreasonable conduct by the first party.’

[32] In my view, this application is one of the rare and exceptional examples of cases contemplated by s 400A of the Act in which there should be a departure from the ‘general rule’, that parties to proceedings under the Act, should pay their own costs.

[33] I make this finding based on three primary bases:

1. Mr De Giusti has made no submissions and put no evidence opposing NSW Trains’ costs application;

2. At no time, including in the unfair dismissal application itself, has Mr De Giusti denied the very serious allegations against him; and

3. Over an eight month period since filing his unfair dismissal application, there have been numerous acts and omissions by Mr De Giusti , including failures to comply with directions, which would satisfy the conditions precedent in s 400A(1) of the Act.

[34] I will develop each of these bases in turn.

Mr De Giusti has made no submissions and put no evidence opposing NSW Trains costs application.

[35] There is no doubt that Mr De Giusti and/or his partner, Ms Nash were aware of this costs application and received a copy of NSW Trains application on 21 December 2017. It was sent to the email address they had both previously used when communicating with the Commission. There was no evidence Mr De Guisti and/or Ms Nash had not received the costs application.

[36] There was no appearance for, or on behalf of Mr De Giusti at the mention and directions for the costs application on 16 January 2018. There was no explanation for Mr De Giusti’s non-attendance. Indeed, there has been no communication, at all, from Mr De Giusti or Ms Nash with the Commission since 1 November 2017.

[37] For abundant caution I issued further directions on 16 January 2018, the gist of which was to provide Mr De Giusti with an opportunity to file and serve any submissions and/or evidence in opposition to the costs application. Nothing was filed (and has not been since). Given the history of the matter, Mr De Giusti was expressly warned of the consequences of failing to comply with my directions when he was advised:

‘The applicant is advised that should he fail to comply with the directions, the respondent’s application for costs will be determined based on the material already filed in the Commission and without further recourse to him.’

[38] Regrettably, this dilatory conduct is entirely consistent with Mr De Giusti’s approach to these proceedings, including when in July 2017, he was given the benefit of the doubt as to a computer problem for not attending the telephone conference convened by Commissioner Johns.

[39] It is unclear why Mr De Giusti has failed to prosecute his claim with due diligence (resulting in its dismissal, pursuant to s 399A of the Act) or respond to a costs application which must have serious financial implications for him. Prima facie, Mr De Giusti’s further failure to again comply with directions of the Commission and not attend Commission directed proceedings, without any explanation for not doing so, is a sufficient basis for the Commission to conclude that these were ‘unreasonable acts or omissions’ in respect to this matter, such as to warrant an exercise of the Commission’s discretion to award costs.

[40] Mr De Giusti has been provided with all reasonable opportunities to oppose this application and has failed to do so. The Commission can do no more than afford him with that opportunity. It cannot force him to take up that opportunity. As Kirby J said in Allesch v Maunz (2000) 173 ALR 648 at [35] to [39]:

‘It is a principle of justice that a decision-maker, at least one exercising public power, must ordinarily afford a person whose interests may be adversely affected by a decision an opportunity to present material information and submissions relevant to such a decision before it is made.’

…

…it is worth emphasising that the principle just described does not require that the decision-maker actually hear (or receive the submissions of) the party potentially liable to be adversely affected. Sometimes, through stubbornness, confusion, misunderstanding, fear or other emotions, a party may not take advantage of the opportunity to be heard, although such opportunity is provided. Affording the opportunity is all that the law and principle require.

Decision-makers, including the courts, cannot generally force people to protect their own rights, to adduce evidence or other materials, to present submissions or to act rationally in their own best interests.’

At no time, including in the unfair dismissal application itself, has Mr De Giusti denied the very serious allegations against him.

[41] It would be difficult to imagine more profoundly serious allegations against an employee which would justify summary dismissal for gross misconduct, than those that were found by NSW Trains to have been substantiated against Mr De Giusti. This was not some ‘one off’ explicable incident; it involved a number of similar incidents of appalling and offensive conduct against female work colleagues and customers of NSW Trains over a three year period between 2013 and 2016. At least one of these persons filed a Police complaint, although I am not aware of any criminal charges having been laid against Mr De Giusti, or if he was ever convicted.

[42] All of those persons named in the allegations had prepared witness statements and were presumably willing to give evidence in open court and be subject to cross examination.

In this context, Mr De Giusti has never denied the conduct or that the incidents occurred, even in his unfair dismissal application. Rather, he raises a number of procedural unfairness issues and a medical reason for not remembering past events. I should observe that the Commission has never been provided with such medical evidence. In any event, even if there was some procedural deficiencies in the investigatory or disciplinary process (which I very much doubt), or any mitigating factors going to the ‘harshness’ of the dismissal (which I also doubt), it is difficult to comprehend how these factors would be sufficient, either singularly or in combination, to outweigh the gravely serious allegations Mr De Giusti has never denied.

[43] In my view, any reasonable objective bystander, in the face of all the relevant background, would conclude that Mr De Giusti’s prospects of success with his unfair dismissal application were hopeless, manifestly untenable and without any merit. This is a conclusion I agree with.

Over an eight month period since filing his unfair dismissal application there have been numerous acts and omissions by Mr De Giusti , including failures to comply with directions which would satisfy the conditions precedent in s 400A(1) of the Act.

[44] At paragraph [10] of this decision, I set out NSW Trains list of acts or omissions, on behalf of Mr De Giusti, which is said to justify the exercise of the Commission’s discretion to award costs against him, pursuant to s 400A.

[45] There was no contradictor to this chronology of events. In any event, to my mind, the chronology was not able to be disputed. It was a statement of facts. Nevertheless, I agree with the conclusions NSW Trains asked the Commission to draw from these events, in the context of a costs application.

[46] For the reasons herein expressed, I am satisfied that this case fits neatly within the rubric contemplated by ss 400A(1) and 611(2)(a) and (b) of the Act. It is one of those rare cases, identified by the Parliament, as justifying a costs order in the Commission’s unfair dismissal jurisdiction.

[47] Accordingly, NSW Trains costs application is granted. The Schedule of Costs included in the application shall be referred to the Commission’s internal processes for assessment and final orders.

DEPUTY PRESIDENT

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