| [2022] FWC 2192 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Dimitrios Perdikaris
v
KLF Holdings Pty Ltd
(U2021/9868)
DEPUTY PRESIDENT EASTON |
SYDNEY, 18 AUGUST 2022 |
Application for an unfair dismissal remedy – application for costs – proceedings dismissed under s.399A – directions made in preparation for hearing – inadequate, incomplete and dubious material filed – unreasonable acts or omissions – causal link - unreasonable acts caused the Respondent to incur costs – indemnity costs – whether the Commission has a general discretion to award indemnity costs in unfair dismissal claims – s.403 of the Fair Work Act – Fair Work Regulations, Schedule 3.1 – restriction on costs for certain items – the Applicant’s conduct in proceedings delinquent – indemnity costs order appropriate within limits of s.403.
[1] On 3 November 2021 Mr Dimitrios Perdikaris made an application to the Fair Work Commission alleging he had been unfairly dismissed from his employment. For the reasons given in Perdikaris v KLF Holdings Pty Ltd [2022] FWC 384 I dismissed Mr Perdikaris’ application under s.399A of the Fair Work Act 2009 (Cth) (“FW Act”).
[2] The Respondent, KLF Holdings Pty Ltd (“KLF Holdings”), has applied for orders for costs and relies on both s.400A and s.611 of the FW Act.
[3] For the reasons that follow I have decided that s.400A applies but s.611 does not, and that a partial costs order should be made. I have further decided that it is appropriate and available to award costs on an indemnity basis, subject to limitations imposed by s.403.
The Proceedings
[4] In Mr Perdikaris’ application filed on 3 November 2021 he indicated the following in answer to the question “Why was the dismissal unfair?”:
“1.Its not a part of my employment contract &/or industry award that requires me to accept medical conscription
2.stood down september 1st as required by govt mandates as employeyer made it clear the companys stance will be as required by the mandates 11/10/21 marked “freedom day” was advised that although not required by mandate the company has decided only double vaxed will be employed
3.my job description falls under tier 4 (lowest risk regarding covid). Specifically my role as a machine operator does not require close contact at all on any day. No consideration or attempt at following fwc advice regarding an employer being expected to find reasonable allowances before forcing an employee to vax as required by employer.
4.advised by employer to get vaccinated by 13/10/2021 or termination of employment will take effect.contacted employer advising them i will sending my certified,valid medical exemption but advised it wont be accepted.”
[5] At a telephone direction hearing on 3 December 2021 Mr Perdikaris appeared for himself and Mr Theodoropoulos of Konstan Lawyers appeared with Mr Scarlis (Director) on behalf of the employer, KLF Holdings. A program was set to prepare the matter for hearing on 1 February 2022.
[6] Mr Perdikaris was to file his evidence and submissions on 24 December 2021. On that day Mr Perdikaris filed one single-page document, being a purported medical contraindication certificate signed by Dr John Evans of 51 Balcolyn Street, Balcolyn. Dr Evans described the medical contraindication as “Covid-19 Vaccine Major Anxiety.” Mr Perdikaris lives in Belmore in Sydney, which is approximately 120km from Balcolyn – a small suburb on the shore of Lake Macquarie, north of Sydney.
[7] No further material was filed by Mr Perdikaris to support his claim, in fact there has been no contact from Mr Perdikaris at all since 24 December 2021.
[8] KLF Holdings filed materials in response that included media reports suggesting that Dr Evans came out of retirement at aged 84, issued invitations for those interested in vaccine exemptions to “call and ask” and their “paperwork will ... be processed”, that Dr Evans allegedly issued hundreds of exemptions for Covid-19 vaccinations “without proper medical consultation”, and that Dr Evans’ medical registration was suspended not long after Mr Perdikaris’ contraindication certificate was issued.
[9] Mr Perdikaris did not attend the hearing on 1 February 2022. Mr Konstantinidis and Mr Scarlis appeared for KLF Holdings at the hearing. Despite several attempts to contact Mr Perdikaris by telephone, text message, and by email, he could not be reached.
[10] On 2 February 2022 KLF Holdings filed a Form F1 – application pursuant to s.399A of the FW Act to dismiss Mr Perdikaris’ application for unfair dismissal remedy. Mr Perdikaris had the opportunity to defend the strike out application but did not respond to any correspondence or messages.
[11] My reasons for dismissing Mr Perdikaris’ application under s.399A included the following:
“[12] Section 399A(2) is obviously satisfied by the Respondent’s application. Similarly s.399A(1)(a) and (b) are satisfied by Mr Perdikaris’ failure to attend the hearing on 1 February 2022 and then his failure to comply with the subsequent procedural directions referred to the above. The jurisdictional pre-requisites are met for Mr Perdikaris’ application to be dismissed and it is a matter of discretion whether I do so.
…
[15] Mr Perdikaris did file something in accordance with the initial directions – being a purported contraindication certificate signed by the apparently now-suspended Dr Evans. Dr Evans operated in a locality far away from Mr Perdikaris’ home.
[16] Mr Perdikaris might have filed the purported contraindication certificate in answer to the assertion made in KLF Holdings in its Form F3 Response that he had told his employer that he was trying to obtain a “fake” certificate. Mr Perdikaris’ filing was met with a barrage of material that suggests that the contraindication certificate was forensically worthless even if it was actually provided by Dr Evans (prior to Dr Evans’ suspension by the Medical Council). Although I do not need to speculate, it is possible that Mr Perdikaris decided to abandon his claim rather than attend the hearing and answer questions on how the purported contraindication certificate was obtained.
[17] In any event KLF Holdings, like every respondent, is entitled to ask for finality. Mr Perdikaris has not taken up the opportunity to advance his case. In the circumstances I see no utility in allowing Mr Perdikaris’ claim to continue, and I therefore grant KLF Holdings’ application under s.399A.”
The costs provisions of the FW Act
[12] The relevant provisions of the FW Act are sections 400A and 611:
“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.
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).”
[13] The following general principles are well established in the authorities:
(a) in the ordinary course of litigation costs follow the event. The purpose of a costs order is not to punish the unsuccessful party but to compensate the successful party against the expense to which he or she has been put by reason of the legal proceedings (per Latoudis v Casey (1990) 170 CLR 534 at 543, [1990] HCA 59 at [13];
(b) in the ordinary course of litigation under the FW Act, costs do not follow the event and each party bears their own costs. The purpose or policy of the cost provisions in the FW Act are to free parties from the risk of having to pay their opponents’ costs in matters arising under the Act, while at the same time protecting parties who are forced to defend proceedings that have been instituted vexatiously or without reasonable cause (per Australian Workers Union v Leighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428, [2013] FCAFC 23 at [7] citing Khiani v Australian Bureau of Statistics [2011] FCAFC 109);
(c) to the extent that the cost provisions of the FW Act provide a protection against costs orders, that protection can be lost by certain conduct (per Kangan Batman Institute of Technology and Further Education v AIRC (2006) 160 IR 405 at 419, [2006] FCAFC 199 at [60]);
(d) the costs provisions provide a deterrent against unreasonable conduct during proceedings, discourage frivolous and speculative claims and assist in the efficient resolution of claims by encouraging all parties to approach proceedings in a reasonable manner (per the Explanatory Memorandum to the Fair Work Amendment Bill 2012, p 7); and
(e) there is a need to scrutinise the manner in which proceedings under the FW Act are conducted to ensure that costs are not unreasonably incurred and that the public interest in the orderly and cost-effective administration of justice is not too readily placed to one side (per Tomvald v Toll Transport Pty Ltd [2017] FCA 1208 at [315]).
[14] Section 611 is directed to the commencement of proceedings. Section 611 applies to all proceedings in the Commission under the FW Act and is in similar terms to s.570 that applies to proceedings in a Court under the FW Act. As such many of the authorities concerning s.611 are actually decisions of the Federal Court applying the same terms from s.570.
[15] Section 611(1) provides the rule, that parties bear their own costs, and s.611(2) provides two exceptions to the rule.
[16] The first exception, s.611(2)(a) arises when an application is made vexatiously or without reasonable cause. In Tracey v BP Refinery (Kwinana) Pty Ltd [2021] FWCFB 4970 at [20] (Tracey) the Full Bench identified the following principles to be applied in relation to s.611(2)(a):
(a) an application is made vexatiously when the predominant motive or purpose of the applicant is to harass or embarrass the other party or to gain a collateral advantage;
(b) an application is not made without reasonable cause simply because the application did not succeed;
(c) whether an application is made without reasonable cause may be tested by asking, on the facts apparent to the applicant at the time the application was made, whether there was no substantial prospect of success;
(d) if success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to characterise the application as having been made without reasonable cause; and
(e) an application will have been made without reasonable cause if it can be characterised as so obviously untenable that it cannot possibly succeed, or manifestly groundless, or discloses a case where the tribunal is satisfied cannot succeed.
[17] The second exception, s.611(2)(b) arises when, at the commencement of the proceedings, it should have been reasonably apparent to an applicant or respondent, that their application or response had no reasonable prospect of success. The Full Bench in Gugiatti v SolarisCare Foundation Ltd [2016] FWCFB 2478 at [23] (Gugiatti) recited the principles to apply in relation to s.611(2)(b):
(a) that it ‘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
(b) 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.
[18] Section 400A only applies to unfair dismissal claims in the Commission. Section 400A is concerned with unreasonable acts or omissions in connection with the conduct or continuation of a matter already instituted, not whether it was reasonable to have instituted a matter in the first place (per Gugiatti at [43]). The following principles apply in relation to s.400A:
(a) there are two pre-conditions for the making of a costs order:
i. that a party engaged in an unreasonable act or omission in relation to the conduct or continuation of a matter; and
ii. that the act or omission caused the other party to the matter to incur costs (per Gugiatti at [43]);
(b) whether an act is “unreasonable” is informed by its context and requires an evaluative assessment of all the circumstances (per Celand v Skycity Adelaide Pty Ltd (2017) 274 IR 420, [2017] FCAFC 222 at 171);
(c) the continuation of a matter after arbitration has commenced might be an unreasonable act if, on the facts apparent to the applicant at the relevant time, there was no substantial prospect of success (per Tracey at [24]);
(d) a failure to inform another party of an inability to attend proceedings would be, if intentional, unreasonable and if accidental, an unreasonable omission (per Roy Morgan Research v Baker [2014] FWCFB 1175 at [10] (Roy Morgan) citing Goffet v Recruitment National Pty Ltd [2009] AIRCFB 626 at [35], see also Emma Sidney v Employsure Pty Ltd [2016] FWC 2659 at [28]); and
(e) a failure to advise the other party of the first party’s intentions, such as the intention to maintain a jurisdictional objection, if deliberate or reckless would be unreasonable and if an omission could be equally unreasonable (per Roy Morgan at [10]).
[19] Even when a condition under s.400A or s.611 is satisfied, the power to award costs is discretionary.
[20] On 3 December 2021 directions were made for the filing of evidence in preparation for a hearing scheduled for 1 February 2022. In the directions made Mr Perdikaris was required to file evidence and submissions by 24 December 2021.
[21] On 7 December 2021 KLF Holdings’ solicitor sent an email to Mr Perdikaris, noting that his application referred to him having a medical exemption from receiving a COVID-19 vaccine, and asked Mr Perdikaris to “kindly confirm at the earliest: Have you received a formal and certified Medical Exemption?”. The email also asked Mr Perdikaris to provide a copy of the exemption “if you answer in the affirmative”.
[22] Mr Perdikaris’ reply email on the same day included the following:
“Im happy to submit my covid19 vaccine medical contraindication certificate, although i dont understand the urgency in your request to forward it to you at the earliest possible time. If however there is an avenue, of which im not aware of, that doing so could be mutually beneficial, I am open to considering forwarding my contraindication certificate immediately following your response.
Alternatively, i will do so in line with the timeframe given by [Deputy] President Easton.”
[23] What Mr Perdikaris meant by “mutually beneficial” is a mystery, however in early December he did not provide a copy of the medical contraindication certificate (dated 13 October 2021) as requested. I should note for the avoidance of doubt that there was no legal compulsion upon for Mr Perdikaris to provide a response to the request at that stage. That said, if Mr Perdikaris thought that the contraindication certificate supported his case then there is little reason not to provide it.
[24] This exchange is said to be important to the costs application because KLF Holdings relies on Mr Perdikaris’ decision to delay providing the contraindication certificate as evidence of unreasonableness.
[25] On 21 January 2022 KLF Holdings filed submissions and evidence in accordance with the directions. KLF Holdings describes the material it filed as “persuasive evidence that the Medical Contra-Indication Certificate was obtained improperly if not falsely.”
[26] I do note that KLF Holdings’ filed evidence and submissions were only directed to attacking the contraindication certificate. That is, KLF Holdings filed no positive evidence going to the dismissal itself, such as evidence of valid reason, procedural fairness, and the like. With the benefit of hindsight, the time and expense of preparing such material would have been wasted, but KLF Holdings was not to know that when it filed its material. KLF Holdings’ forensic decision to address only the single document filed by Mr Perdikaris means it is harder to accept that Mr Perdikaris knew or reasonably ought to have known that his case was hopeless upon receipt of the material filed by KLF Holdings, because its filed evidence only went to one aspect of the case.
[27] The point in time at which Mr Perdikaris acted unreasonably must be identified with some precision. The Commission must be satisfied, for the purposes of s.400A, that there was a causal link between the unreasonable actions of a party and the costs incurred by the other party.
[28] There is no further evidence or information that might explain Mr Perdikaris’ absence from the hearing and the fact that he has ignored every communication from the Commission since 24 December 2021.
[29] If Mr Perdikaris’ unreasonable conduct occurred or began when he filed only a single page of evidence (and took no further part in the proceedings) then I can more readily accept that Mr Perdikaris’ conduct “caused” KLF Holdings to incur whatever legal costs were incurred after that time.
[30] If Mr Perdikaris’ unreasonable conduct was his failure to withdraw his application after KLF Holdings filed its “persuasive evidence”, then that unreasonable conduct could only have caused KLF Holdings to unnecessarily incur the legal costs of preparing and attending the hearing.
[31] This distinction is important. Mr Perdikaris’ conduct in the proceedings was grossly unsatisfactory however I must be cautious to ensure that any cost order made is properly within my power to do so.
[32] KLF Holdings’ primary submission on costs seems to be that Mr Perdikaris acted unreasonably in concealing (for a time) his contraindication certificate and not withdrawing his application “upon being presented with persuasive evidence”.
[33] There are some difficulties with this submission. The most that could be said about the material filed by KLF Holdings on 21 January 2022 is that it seriously called into question the authenticity of the medical contraindication certificate. I have described the filed material above, and it does not necessarily follow that the medical contraindication certificate from Dr Evans was “false”. Even if I could wholly rely on the news reports as the truth of the allegations described, the most that could be said is that Mr Perdikaris consulted a medical practitioner who practised a very long way from Mr Perdikaris’ home, whose practice was suspended at around this same time, who was apparently known to be prepared to issue contraindication certificates to people who do not otherwise have a proper medical contraindication (before being suspended), and who issued a contraindication certificate to Mr Perdikaris on NSW Health’s approved form.
[34] I accept that the contraindication certificate was unlikely to survive even the lightest of scrutiny at hearing, and that Mr Perdikaris’ case was likely to unravel quickly. However I do not accept that the media material filed by KLF Holdings conclusively established that the certificate was “false”.
[35] The contraindication certificate itself does not appear to record a legitimate medical contraindication, leaving aside the circumstances in which it seems to have been obtained. The specified medical contraindication described on the document by Dr Evans is “Covid-19 Vaccine Major Anxiety” - which does not seem to be a legitimate basis for granting the contraindication.
[36] The more persuasive argument advanced by KLF Holdings is that Mr Perdikaris acted unreasonably in filing only one document in answer to the directions made, and then taking no further part in the proceedings.
[37] On any view Mr Perdikaris did not comply with the directions made on 3 December 2021. The directions themselves included the following note that contained a hyperlink to various template documents, and also referred the parties to the Commission’s Unfair Dismissals Benchbook:
“The parties may find the Fair Work Commission’s template documentation for preparing outlines of argument, statements of evidence and document lists of use in preparing their material. In preparing their submissions, parties should also refer to the criteria in s.387 of the Fair Work Act 2009 (Cth).”
[38] The Commission can and should be flexible in its procedures, particularly when parties represent themselves. The Commission must exercise its powers in a manner that is quick, informal and avoids unnecessary technicalities (per s.577), it can inform itself in relation to matters in such manner as it sees fit (per s.590), it is not bound by the rules of evidence and procedure (per s.591) and the normal position recognised by s.596 is that a party will appear on their own behalf unless permission is otherwise granted. In this context, the filing of imperfect material by self-represented applicants would not, of itself, be a trigger for a costs order.
[39] The medical contraindication certificate filed by Mr Perdikaris in purported compliance with the directions was, on its face, dubious. The little that is known of the circumstances in which this certificate was obtained raise even more doubts and suspicions about its legitimacy.
[40] Mr Perdikaris did not file any other documentary materials, any witness statements or an outline of submissions as directed.
[41] The filing of the dubious certificate without any accompanying witness statement or written submissions was unreasonable. Section 400A refers to “an unreasonable act or omission.” In context the filing of only the certificate was an unreasonable act, and the failure to file evidence or submissions was an unreasonable omission.
[42] At best Mr Perdikaris’ conduct was speculative, perhaps done in the hope that KLF Holdings might return to the negotiating table. At worst the filing of only the certificate was a try on – an attempt to rely upon the certificate without any proper evidence upon which it could be tested. At this time Mr Perdikaris was already on notice of KLF Holdings’ allegation that he had been attempting to obtain a ‘fake’ certificate. Either way Mr Perdikaris’ conduct was unreasonable.
[43] I am satisfied that Mr Perdikaris’ unreasonable act and omissions caused KLF Holdings to incur legal costs, being the costs of preparing and filing material in answer to the contraindication certificate.
[44] Mr Perdikaris did not file any evidence or submissions in response to the materials filed by KLF Holdings. Mr Perdikaris did not attend the hearing or give any warning that he was not going to attend, and he did not provide any explanation for his absence.
[45] In short, after filing one dubious document Mr Perdikaris abandoned his case without telling KLF Holdings or the Commission. Absent any satisfactory explanation, these omissions by Mr Perdikaris were unreasonable.
[46] I am also satisfied that Mr Perdikaris’ failure to take steps to discontinue his application, his failure to attend the hearing and his failure to advise KLF Holdings that he would not be attending the hearing were unreasonable and caused KLF Holdings to incur legal costs.
[47] As such, I am satisfied that I have the power to make an order for costs. I am also satisfied that, as a matter of discretion, a costs order should be made in relation to the costs incurred by KLF Holdings because of Mr Perdikaris’ unreasonable acts and omissions identified above.
[48] KLF Holdings also submits that the application was commenced without reasonable cause. I am not satisfied that it was.
[49] The application was filed on 3 November 2021. At that time there were very few, if any, decisions of the Commission addressing the fairness of company policies requiring employees to be vaccinated and dismissals arising from the enforcement of those policies.
[50] Separate to the assertion that he had a proper medical contraindication, Mr Perdikaris’ initial application asserts that his “role as a machine operator does not require close contact at all on any day. No consideration or attempt at following fwc advice regarding an employer being expected to find reasonable allowances before forcing an employee to vax as required by employer”. The reference to “fwc advice” is to guidelines issued by the Fair Work Ombudsman.
[51] Importantly, it could not be said that on the information known to Mr Perdikaris when he lodged his application that his apparent challenge to the reasonableness of KLF Holdings’ vaccination policy had no substantial prospect of success. His case may not have been strong, it was certainly vulnerable to attack, but it was not completely hopeless.
[52] As such, there is no basis to make a costs order that applies to the whole of the proceedings.
[53] KLF Holdings seeks an order for costs to be paid on an indemnity basis. As the Full Bench in Post v NTI Limited t/as NTI [2016] FWCFB 6765 at [26] helpfully summarised:
“Costs can usually be divided into party/party and solicitor/client costs. An ordinary costs order refers to party/party costs, which are those costs which naturally follow from the issue of and defence of proceedings. Solicitor/client costs are also incurred because of the issue of and defence of proceedings, but may be less directly connected with or arising from the court processes and are more focused on the service of a client. As a rule of thumb party/party costs can often be about two thirds of the total account to a client. Indemnity costs orders involve the payment of the total of both party/party and solicitor/client costs. However, the costs ordered to be paid as a result of an indemnity costs order must not be unreasonably incurred or be of an unreasonable amount. The High Court in Oshlack v Richmond River Council (Oshlack) stated:
“Indemnity Costs are all costs including fees, charges, disbursements, expenses and remuneration incurred by a party provided they have not been unreasonably incurred or are not of an unreasonable amount. They involve a larger proportion of the legal costs than that of party-party costs, which only involve legal costs that are deemed necessary and reasonable. Indemnity costs may be ordered when there has been an element of misconduct or delinquency on the part of the party being ordered to pay costs.”
[Footnotes omitted].
[54] In earlier cases there appears to be an assumption that once a gateway to costs is open then the Commission has an unfettered discretion to order indemnity costs where appropriate. For unfair dismissal proceedings this assumption does not sit easily with s.403 of the FW Act.
[55] Section 403 is in the following terms:
“403 Schedule of costs
(1) A schedule of costs may be prescribed in relation to items of expenditure likely to be incurred in relation to matters that can be covered by an order:
(a) under section 611 in relation to a matter arising under this Part; or
(b) under section 400A or 401;
including expenses arising from the representation of a party by a person or organisation other than on a legal professional basis.
(2) If a schedule of costs is prescribed for the purposes of subsection (1), then, in awarding costs under section 611 in relation to a matter arising under this Part, or awarding costs under section 400A or 401, the FWC:
(a) is not limited to the items of expenditure appearing in the schedule; but
(b) if an item does appear in the schedule--must not award costs in relation to that item at a rate or of an amount that exceeds the rate or amount appearing in the schedule.”
[56] Clause 3.08 of the Fair Work Regulations 2009 (“the Regulations”) prescribes the schedule of costs set out in Schedule 3.1 of the same Regulations. Schedule 3.1 contains various items, some of which specify a set “charge” and some items allow for charges to be determined by the FWC. When conferring a discretion upon the Commission, Schedule 3.1 uses formulations such as “at the discretion of the FWC”, or “an amount that the FWC considers reasonable in the circumstances” or “an amount that the FWC considers appropriate, having regard to [stated factors]”.
[57] In Goffett v Recruitment National Pty Ltd (2009) 187 IR 262 at 273, [2009] AIRCFB 626 at [48] (“Goffett”) a Full Bench of the AIRC considered comparable provisions in the Workplace Relations Act and found:
“Query whether the Commission has power to award costs on an indemnity basis. Its power to award costs under s.658(3) is discretionary. The discretion is limited to some extent by s.658(9). Section 658(7) makes provision for a schedule of costs to be prescribed. Schedule 7 to the WR Act is just such a schedule. Section 658(9) provides that if a schedule of costs is prescribed the Commission must not award costs in respect of an item appearing in the schedule at a rate or an amount in excess of that item. The amount that may be allowed for counsel is entirely a matter of discretion under the schedule. It would seem therefore that the Commission has discretion to award indemnity costs, sometimes expressed as solicitor and client costs.”
[Emphasis added].
[58] In Goffett all the costs claimed and awarded at first instance were counsel fees (at [54]). In the schedules of the respective regulations counsel fees are a kind of cost over which the charge is not confined to a set amount but is a matter of discretion for the Commission. The Full Bench’s conclusion above that “the Commission has discretion to award indemnity costs” must be understood in the context that only counsel fees were in play.
[59] In Stanley v QBE Management Services Pty Limited T/A QBE [2012] FWA 10164 at [23] (“Stanley”) Commissioner Jones considered the provisions of s.403, Schedule 3.1 and the above passage from Goffett, and concluded that:
“I am satisfied that s.611 of the Act is a broad discretion given to FWA to award costs, provided it is satisfied as to certain circumstances. Taking into account the operation and effect of s.403 of the Act, Schedule 3.1 and Regulation 3.08, I am satisfied that this broad discretion includes the discretion to award costs on a party-party or indemnity basis. Of course, the exercise of discretion and the basis on which costs should be awarded will be conditioned by the approach taken by relevant authorities.”
[60] In Stanley Commissioner Jones ultimately made orders that “costs be awarded on a party-party basis from 28 February 2012 to 20 May 2012; and on an indemnity basis from 21 May 2012 to 21 June 2012” (at [38]).
[61] Commissioner Jones’ decision has since been cited many times as authority for the proposition that indemnity costs are generally available (see Post v NTI Limited t/a NTI [2016] FWC 1059 at [162]-[163] and Post v NTI Limited t/a NTI [2016] FWCFB 6765 where no issue was taken regarding the Commission’s capacity to award indemnity costs).
[62] However, in my view Commissioner Jones overstated the Full Bench’s finding in Goffett, applied it too broadly to unfair dismissal proceedings and did not properly recognise the effect of s.403.
[63] For some items in Schedule 3.1 of the Regulations the charges set are fixed amounts or rates. For some items, the charges are set and Schedule 3.1 itself allows for higher amounts to be awarded at the Commission’s discretion, and for some items no amount or rate is set and Schedule 3.1 states that the Commission must determine the amount or rate.
[64] Goffett is properly understood to recognise that where Schedule 3.1 allows the charges for certain items to be at the discretion of the Commission, then the Commission has the discretion to award indemnity costs. The Full Bench found no more than that, because it was only dealing with counsel fees.
[65] Section 403(2)(b) of the FW Act specifically prohibits the Commission from awarding costs in excess of those provided in Schedule 3.1. This limitation is academic for charge items in Schedule 3.1 where the Commission has a discretion to award higher amounts, but for items where there is no discretion the limitation is immutable.
[66] In my view indemnity costs can be awarded in unfair dismissal proceedings in appropriate circumstances, but s.403 of the FW Act and Schedule 3.1 of the Regulations restrict the amounts that can be awarded for some activities and legal services.
[67] In summary:
(a) for the charge items listed in Schedule 3.1 of the regulation that do allow sums to be awarded at the discretion of the Commission: costs can be awarded on an indemnity basis for those items at the Commission’s discretion;
(b) for the charge items that specify a certain sum or a certain hourly rate and do not confer a discretion upon the Commission to award a higher amount: the amount of costs that can be ordered for such items is limited to the amounts or rates in Schedule 3.1 and there is no general discretion to make orders for indemnity costs regarding these items; and
(c) for charges that are not listed in Schedule 3.1: there is no limitation under s.403 and indemnity costs can be awarded.
[68] In different unfair dismissal matters the practical effect of this distinction will have differing consequences. For example, charges for counsel fees and fees for a solicitor who “appears as counsel … when it would be appropriate to brief counsel” (items 1301 and 1302 in Schedule 3.1) are at the Commission’s discretion and therefore could be awarded on an indemnity basis. However, solicitor fees incurred attending a hearing with counsel (item 1109) are capped and there is no discretion to award amounts higher than the hourly and daily charges in Schedule 3.1.
[69] Recognising the Commission’s more limited capacity to make orders for indemnity costs, I shall now consider whether KLF Holdings should be awarded indemnity costs.
[70] The relevant principles were recently summarised by Wigney J in Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (No 5) [2021] FCA 246 at [7]-[12] as follows:
“7 The discretion to award costs on a basis other than as between party and party, including on an indemnity basis, is “unfettered, save that it must be exercised judicially and not arbitrarily or capriciously”: Australian Competition and Consumer Commission v The Construction, Forestry, Mining and Energy Union (No 4) [2018] FCA 684 at [96]. The discretion must also be exercised in light of the requirement that the Court consider any failure by a party to comply with the overarching purpose of the civil practice and procedure provisions to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible: see ss 37N(4), 37M(1) of the FCA Act; LFDB v SM (No 2) [2017] FCAFC 207 at [7].
8 The discretion to depart from an order for party and party costs will not be exercised unless there is some special or unusual feature or the justice of the case so requires: Cirillo v Consolidated Press Property Ltd (formerly known as Citicorp Australia Ltd) (No 2) [2007] FCA 179 at [3]; Seven Network Ltd v News Ltd (2009) 182 FCR 160; [2009] FCAFC 166 at [1102]; Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116 at [5].
9 The purpose of a costs order is to compensate the successful party, not to punish the unsuccessful one: King v Yurisich (No 2) [2007] FCAFC 51 at [19], citing Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534; Seven Network at [1099]. An award of indemnity costs is to “serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs”: Hamod v New South Wales (2002) 188 ALR 659; [2002] FCAFC 97 at [20]; see also Kazal v Independent Commission Against Corruption and Ors (No 2) [2020] NSWSC 17 at [60]- [62]; Cirillo at [4]-[5]; Melbourne City Investments at [5].
10 The circumstances in which it may be found to be unreasonable for the successful party to be subjected to the expenditure of any costs are not fixed or closed, but have been found to include, relevantly: where “the applicant, properly advised, should have known that he had no chance of success” (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 at 401; De Alwis v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 77 at [7]); where the moving party “persists in what should on proper consideration be seen to be a hopeless case” (J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) [1993] FCA 70; (1993) 46 IR 301 at 303); where the applicant’s case was “always clearly foredoomed to fail” and “they ought to have known this to be so” (Smolle v Australian and New Zealand Banking Group Ltd (No 2) [2007] FCA 1967 at [25]); where an application is “wholly untenable and misconceived” (Henke v Carter [2002] FCA 492 at [22]); and where an applicant persists in prosecuting a proceeding without regard to the evidentiary difficulties in the case (Yates Property Corporation Pty Ltd v Boland (No 2) [1997] FCA 760; (1997) 147 ALR 685 at 693): see generally Melbourne City Investments at [5]; Seven Network at [1102]; Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at 233.
11 Two things should perhaps be noted about these descriptions of the types of cases in which an indemnity costs order may be warranted. First, they use expressions which suggest a high degree of certainty concerning the deficiencies in the losing party’s case. It would appear not to be enough that the losing party’s case was simply weak or tenuous. Second, and relatedly, the deficiencies must be sufficiently manifest and clear such that it can be inferred that the losing party would or should have appreciated them when the action was commenced or continued, at least if they had given proper consideration to, or been properly advised about, the merits of their case.
12. In assessing whether a case can be said to “have no chance of success”, or to be “hopeless” or “foredoomed to fail”, and that the losing party should have known that to be the case, it is also necessary to be wary of reasoning with the benefit of hindsight. As Goldberg J said in Re Kingsheath Club of the Clubs Ltd (in liq) [2003] FCA 1589 at [5], it is “easy with hindsight to make an observation that an action has no chance of success, after the matter has been fully argued and has enjoyed considered attention of experienced solicitors and senior and junior counsel”
[71] Many decisions of the Commission have also adopted the observation from Goffett at [52] that:
“It seems almost axiomatic that an unreasonable act or omission that causes a party to incur costs in a proceeding should be regarded as ‘some relevant delinquency’.”
[72] In Goffett the Full Bench described the Appellant’s conduct as “high handed and reckless to the consequences for the [other party]” (at [52]) which is an apt description of Mr Perdikaris’ conduct in this matter. Mr Perdikaris was opposed to vaccinations against COVID-19. Like many, his views on vaccination cost him his job. He chose to commence unfair dismissal proceedings which engaged the powers of the Commission to potentially make orders against his former employer. As a participant in legal proceedings under the FW Act Mr Perdikaris’ conduct was delinquent. The precise moment that Mr Perdikaris decided to abandon his case is not important, but the way in which Mr Perdikaris walked away from his case (without advising anybody of his intention to do so) caused KLF Holdings to incur legal fees unnecessarily.
[73] As I have found, he acted unreasonably in filing only the dubious medical contraindication certificate on 24 December 2021. By the legislative scheme he lost the protection against a potential cost order at that time. In all the circumstances I am satisfied that it is appropriate to award costs on an indemnity basis to the extent possible within the limitations of s.403(2)(b).
[74] Mr Perdikaris did not ever discontinue his application – he simply stopped responding to any communication from the Commission.
[75] At the scheduled hearing on 1 February 2022 KLF Holdings asked for the matter to be struck out there and then. I declined this application in order to afford Mr Perdikaris procedural fairness. In adopting the approach set by the Full Bench in Lockyear v Graeme Cox [2021] FWCFB 875 at [57], I put KLF Holdings to the task of preparing a formal application under s.399A of the FW Act.
[76] The costs incurred by KLF Holdings in preparing and pursuing its application under s.399A were caused by Mr Perdikaris’ unreasonable conduct and are recoverable.
[77] Attachment A to this decision is the Bill of Costs filed by KLF Holdings. As can be seen from the Bill of Costs, KLF Holdings claims $9,450 on an indemnity basis.
[78] The claimed costs have been calculated at the solicitors’ retainer rate of $500 per hour. Mr Konstantinidis is the solicitor who appeared as counsel in the proceedings. Schedule 3.1 of the Regulations allows for a charge of “an amount that the FWC considers to be fair and reasonable according to the circumstances of the case and the seniority of the solicitor”. Mr Konstantinidis’ hourly rate appears to be in the range of fair and reasonable, albeit at the high end of the range. That said, I note that Schedule 3.1 refers to “an amount” rather than a rate and the amounts charged for items generally (being of course the time billed for each task multiplied by the hourly rate) are very fair and reasonable.
[79] KLF Holdings included in its s.400A application the costs of its costs application and such costs are recoverable.
[80] The following adjustments/reductions are nonetheless required:
(a) Only the costs incurred after 24 December 2021 are payable, therefore all costs incurred up to that date ($3,450) must be removed;
(b) Items 17, 18 and 19 (drafting, sending and receiving of short emails to and from the Commission regarding the s.399A application) are limited in Schedule 3.1 to $24, $34 and $24 respectively and the $200 claimed in total for these three items must be reduced by $112 to $82; and
(c) Item 22 (drafting and sending an email to the Commission regarding the s.400A application) is limited in Schedule 3.1 to $24 and so the $50 claimed must be reduced by $26 to $24.
[81] I have taken item 21 of the Bill of Costs, being the two hours spent obtaining instructions and preparing the costs application, to fall under Item 102 of Schedule 3.1 (instructing to make or oppose any other proceeding relating to an application under [s.394]) and not Item 1111 (attend on taxation of costs). If it were the latter the charges would be limited to $135 per hour.
[82] The costs claimed must therefore be reduced by $3,588, leaving the total otherwise payable to be $5,862.
[83] Ultimately the making of a costs order is a matter of discretion, assuming there is power to do so.
[84] Mr Perdikaris represented himself. One very unlikely scenario is that Mr Perdikaris did not understand that his conduct in the litigation was unreasonable or that it would cause KLF Holdings to incur legal fees unnecessarily. Mr Perdikaris was provided with ample information and warnings about his conduct in the litigation but in any event he has chosen not to engage with the Commission in relation to KLF Holdings’ costs application.
[85] The observations of Justice Buchanan in Kennedy v Secretary, Department of Industry (No 2) [2015] FCA 884 are apposite. In that matter his Honour accepted that it may not have been apparent to the Applicant that his application had no reasonable prospects of success (at [9]), but found that “on the facts known to the applicant, there was no objective merit at all in the proceedings instituted by him in this Court [and] the applicant is not protected from an order of costs by s 570 of the FW Act” (at [10]). His Honour found at [11]-[12]:
“It remains the case, even under s 570 of the FW Act, that costs are discretionary…
The applicant was self-represented in the present case. However, that is not a circumstance which relieves an unsuccessful, self-represented litigant from an obligation to pay costs if they are otherwise justified. In Ogawa v The University of Melbourne (No 2) [2004] FCA 1275, Kenny J adopted the following statement by Hodgson CJ in Eq. in Bhagat v Royal & Sun Alliance Life Assurance Australia Ltd [2000] NSWSC 159 at [13] (which I also adopt as a statement of the relevant principle):
... I accept that a court does have to make allowances for the position of litigants in person, and to try to ensure that such a litigant does not lose out because of lack of expertise; although there is a limit to what the Court can do in that regard, while still remaining an impartial determinant of a dispute. The Court may in those circumstances refrain from making orders against litigants in person for conduct that might be considered as justifying orders for costs against represented litigants. By the same token, litigants in person can cause great hardship and expense to other parties, through making allegations and claims that lawyers would recognise as allegations and claims that could not reasonably or even properly be made, and through making proceedings much longer and much more expensive than they otherwise would be, by not focusing accurately on the real issues in the case. Conduct of that nature by legally represented parties would often lead to orders for indemnity costs. Litigants in person may escape the consequence of indemnity costs, but I do not think that the circumstance that a party is a litigant in person is a ground for displacing the ordinary result that costs follow the event.”
[86] In this matter it is not necessary or appropriate to make any further downward adjustments to KLF Holdings’ claimed costs. Assuming Mr Perdikaris can be found, and the ordered costs recovered from him, KLF Holdings will still be out of pocket at least $3,588.
[87] As such I will make an order requiring Mr Perdikaris to pay $5,862 in costs to KLF Holdings within 21 days.
[88] An order giving effect to this decision will be issued separately. 1
DEPUTY PRESIDENT
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