[2011] FWA 3767 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Ms Dianne Ross-Davis
v
JD Pty Ltd T/A Daniel Lightfoot Studios
(U2010/10209)
Ms Megan Diprose
V
JD Pty Ltd T/A Daniel Lightfoot Studios
(U2010/10214)
COMMISSIONER ASBURY |
BRISBANE, 15 JUNE 2011 |
Application for unfair dismissal remedy - Application for costs - Case law - Applications withdrawn after conciliation conference and before substantive steps taken by respondent - Application for costs dismissed.
Overview
[1] Applications have been made under s.611 of the Fair Work Act 2009 (the Act), by J D Pty Ltd for costs against Ms Dianne Ross-Davis and Ms Megan Diprose, in relation to unfair dismissal applications withdrawn by Ms Ross-Davis and Ms Diprose prior to hearing.
[2] Directions for the hearing and determination of the costs applications required the parties to file submissions and statements of evidence within a specified time frame, and the matter was listed for hearing. Both parties filed submissions and documentary material to be relied on in the hearing. Neither party filed witness statements.
Legislation
[3] Section 611 of the Act provides:
(1) A person must bear the person’s own costs in relation to a matter before FWA.
(2) However, FWA may order a person (the first person) to bear some or all of the costs of another person in relation to an application to FWA if:
(a) FWA is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or
(b) FWA is satisfied that it should have been reasonably apparent to the first person that the first person’s application, or the first person’s response to the application, had no reasonable prospect of success.
Note: FWA can also order costs under sections 376, 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).”
[4] The power to award costs under s.611 of the Act is discretionary, as was the case with earlier versions of the legislation. An order for costs first involves determining whether the situation is one in which there is a power to award costs, and if so, a determination as to whether an award of costs is appropriate in all of the circumstances. 1 The general statement in s.611(1) that a person must bear the person’s own costs in relation to a matter before FWA, reflects the longstanding principle that costs will not be awarded against parties in industrial proceedings, other than in exceptional circumstances.
[5] The Objects of the unfair dismissal provisions include establishing quick, flexible and informal procedures, addressing the needs of employers and employees and ensuring that a “fair go all round” is afforded to the employer and the employee concerned. Parties in unfair dismissal applications may not be represented by lawyers or paid agents other than with permission of FWA, and where circumstances relating to efficiency and fairness are found to exist.
[6] Parties to applications for unfair dismissal remedies before FWA often have limited financial means - applicants are frequently unemployed. Respondents may be small businesses struggling in the current economic environment. Many parties cannot afford representation and have no option but to be self-represented, often under great difficulty, given the complexities of the legislation. Parties should not be deterred from bringing proceedings, or responding to them, by the risk of a costs order, and are entitled to their “day in court”. 2
[7] The grounds upon which costs can be awarded against an applicant under s.611(2)(a) relate to the point at which the application in respect of which costs are sought, is made. FWA must be satisfied that at the point the application was made, it was made vexatiously or without reasonable cause. Unreasonable or vexatious conduct on the part of an applicant which occurs after the application is made, may be relevant to determining what the position was at the point the application was made, but it cannot of itself, constitute grounds for an award of costs against an applicant.
[8] For example, the late withdrawal of an application or the refusal of a reasonable offer of settlement, will not of itself justify an award of costs against the applicant. However, such conduct may be indicative of an application made vexatiously or without reasonable cause. Such conduct may also be relevant in circumstances where there is a power to award costs and consideration is being given to whether there are discretionary grounds to make such an award or to refrain from doing so.
[9] This approach is consistent with the approach taken in cases dealing with previous provisions relating to costs, containing terms such as “instituted proceedings”, “made an application” or “began proceedings”. It has been held that such provisions require an investigation of the position at the date of the application. 3
[10] Similarly, the use of the past tense in s.611(2)(b), is indicative that the reference point for considering when it should have been reasonably apparent that the application had no reasonable prospects of success, is the point at which the application was made. However, it is also arguable that events occurring while an application is being progressed, can be a reference point against which an assessment can be made that an application had no reasonable prospects of success. For example, persisting with an application in circumstances where, on the applicant’s own version of events, there are no reasonable prospects of success, may result in a finding that it should have been reasonably apparent that this was the case and that costs should be awarded.
[11] The limitations associated with the requirement to consider circumstances at the point an application or response is made was not of major significance under the provisions of the Workplace Relations Act 1996 and earlier versions of the legislation, because of the additional power to make an award of costs on the basis of unreasonable acts or omissions in connection with pursuing or defending an application, including unreasonably failing to discontinue or settle a matter. However, s.611 of the Act does not allow an order for costs to be made in such circumstances, and this is a significant change.
Case Law
[12] Consideration of whether an application was made vexatiously requires an examination of the motive of the applicant. 4 An application is made vexatiously when:
[13] In relation to s.611(2)(b), the meaning to be given to the term “without reasonable cause” was considered by Wilcox J in Kanan v Australian Postal and Telecommunications Union 9. After reviewing a number of cases, his Honour formulated a test in the following terms:
“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.” 10
[14] His Honour went on in that case to hold that there was no discretionary reason to withhold an order for costs observing that:
“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.” 11
[15] With respect to the third limb in s.611(2)(b), the terms “reasonably apparent” and “no reasonable prospects of success” have appeared in earlier versions of the legislation, and I can see no basis for departing from the principles established in cases dealing with those earlier versions. The question of whether something is reasonably apparent must be objectively determined, rather than determined on the basis of what the person making the application or responding to it believed. The test is that FWA be satisfied that it should have been reasonably apparent that an application or a response had no reasonable prospects of success. 12 The conclusion that an application had no real prospects of success: “should only be reached with extreme caution and where the application is manifestly untenable or groundless”.13 Further, as Whelan C observed in Darcy v Megan Fitzgerald & Associates Pty Ltd14:
“We are dealing in this case with new legislation, the parameters of which have not been tested by the Courts. ... In my view, great care should be exercised in coming to a conclusion that a party either instituted proceedings ‘without reasonable cause’ or in circumstances where it should have been reasonably apparent that the application had ‘no reasonable prospects of success’ where the facts and the law have not been tested in a hearing.” 15
The background to the costs application
[16] It is not in dispute that Ms Ross-Davis was employed by JD Pty Ltd. It is variously contended that Mr Ross, the husband of Ms Ross-Davis, was employed and/or engaged as a contractor by JD Pty Ltd. Nothing turns on this point given that Mr Ross is not a party to the proceedings in FWA. There is a dispute about whether or not Ms Diprose was employed by JD Pty Ltd.
[17] The following series of events is not in dispute and is evidenced in correspondence tendered by the parties and filed in FWA:
• conduct engaged in by Ms Ross-Davis and Ms Diprose was the subject of proceedings in the Supreme Court of Queensland;
• objecting to both applications on the basis that the appropriate jurisdiction to deal with the matters was the Supreme Court of Queensland; and
• objecting to Ms Diprose’s application on the basis that she was not at any time an employee of JD Pty Ltd.
[18] The Claim and Statement of Claim filed in the Supreme Court of Queensland by JD Pty Ltd, and the Notice of intention to defend and counter-claim, were also tendered in these proceedings.
Submissions
JD Pty Ltd
[19] The grounds for the costs applications are that the unfair dismissal applications to which they relate were made vexatiously and without reasonable cause. In the case of Ms Ross-Davis, it is contended that the unfair dismissal application was made knowing that she was dismissed for serious misconduct and that proceedings against her to recover funds misappropriated had been foreshadowed by Solicitors for JD Pty Ltd. With respect to the unfair dismissal application by Ms Diprose, the grounds for the costs application are said to be that Ms Diprose made the application vexatiously knowing that she was not at any stage, an employee of JD Pty Ltd and that proceedings against her to recover monies misappropriated by her parents, had been foreshadowed by Solicitors for JD Pty Ltd.
[20] Even after Supreme Court proceedings were instituted, Ms Ross-Davis and Ms Diprose continued to prosecute their unfair dismissal applications at a conciliation conference and obtained a hearing date. It was contended that Ms Ross-Davis and Ms Diprose had two proceedings on foot at the same time seeking the same relief, and decided to withdraw the unfair dismissal applications in the knowledge that at a hearing, they would have been required to go into evidence to establish the factual basis of the applications, and to be cross-examined.
[21] It was also contended that Ms Ross-Davis did not have to counter-claim in the Supreme Court and could have elected to prosecute and have her unfair dismissal application heard well before any Supreme Court hearing. Accordingly the reason given by Ms Ross-Davis for withdrawing her application was disingenuous. The same contention was made in relation to Ms Diprose. However, there is no indication that Ms Diprose counter-claimed in the Supreme Court.
[22] In both cases it is contended that the applications for unfair dismissal remedies were discontinued on the basis that Ms Ross-Davis and Ms Diprose knew that there were no reasonable prospects of success.
Ms Ross-Davis and Ms Diprose
[23] It is submitted on behalf of Ms Ross-Davis that she denied engaging in serious misconduct, and considered her dismissal to be unfair on the ground that she was not given an opportunity to respond to allegations prior to the termination of her employment. Ms Diprose maintains that she was employed by JD Pty Ltd between October 2003 and February 2004 and from August 2005 until June 2010. Ms Diprose also maintains that the correspondence of 21 June 2010 constituted a constructive dismissal.
[24] The costs application was not served on Ms Ross-Davis or Ms Diprose, and for this reason alone, the application for costs should be dismissed. Ms Ross-Davis and Ms Diprose only became aware of the costs applications when FWA issued directions for them to be heard and determined.
[25] There is no evidence, and no matter has been pointed to which might suggest that the unfair dismissal applications were made for the purpose of harassing or embarrassing JD Pty Ltd or gaining a collateral advantage. No improper purpose existed, and both applicants genuinely believed that they were unfairly dismissed from their employment. In relation to the submission that the applications constituted an abuse of process because JD Pty Ltd had foreshadowed legal action against Ms Ross-Davis and Ms Diprose, it was contended that no such proceedings had commenced when the unfair dismissal applications were made. Further, in order to obtain a remedy for unfair dismissal, the applications were required to be made within fourteen days.
[26] There is no evidence or material before the Tribunal to indicate that the applications were made without reasonable cause or lacked merit. At all times Ms Ross-Davis has denied engaging in serious misconduct, and Ms Diprose has maintained that she was employed. Neither applicant has maintained a version of events inconsistent with that position, and notwithstanding the discontinuance of the unfair dismissal applications, there are legal and factual disputes which effectively remain in issue in the Supreme Court.
[27] In order to enliven the discretion of FWA to award costs, it is necessary for JD Pty Ltd to point to some form of improper conduct at the time of making the applications. Matters pointed to in the submissions for JD Pty Ltd relate to events and conduct that occurred after the applications were made. In any event, Ms Ross-Davis and Ms Diprose deny that their conduct has been improper. There was no abuse of process resulting from the FWA proceedings and Supreme Court proceedings being ongoing at the same time. FWA has jurisdiction under the Act to determine unfair dismissal disputes, and the Supreme Court has jurisdiction to determine monetary and other claims maintained by JD Pty Ltd and Ms Ross-Davis by counterclaim. Further, Ms Ross-Davis does not seek the same relief by counterclaim in the Supreme Court as was sought in her unfair dismissal application. Remedies for unfair dismissal are reinstatement or compensation. By way of counterclaim Ms Ross Davis sought orders for the payment of accrued annual leave.
[28] While there are common factual and legal issues in dispute in the FWA applications and the Supreme Court proceedings, there is no abuse of process by reason of those matters co-existing. Ms Ross-Davis and Ms Diprose discontinued their FWA applications for the proper purpose of avoiding the cost and inconvenience to both parties of having common disputes of fact and law being determined in more than one forum. JD Pty Ltd had earlier expressed its view that the matters should be dealt with solely in the Supreme Court, and now complains that the FWA applications have been discontinued.
[29] At the point the applications were discontinued, the parties were not required to take any substantive steps in FWA. The FWA Directions did not require JD Pty Ltd to take any steps prior to 10 September 2010, at which time it was required to lodge material in relation to its jurisdictional objections. The unfair dismissal applications were discontinued on 23 August 2010.
[30] Costs were sought by Ms Ross-Davis and Ms Diprose in relation to the costs applications, on the ground that there was no basis for those applications to be made. If FWA granted costs in favour of JD Pty Ltd they should be halved on the basis that the two applications have effectively been run in tandem.
Conclusions
[31] I am unable to accept that Ms Ross-Davis or Ms Diprose made their unfair dismissal applications vexatiously. Ms Ross-Davis was aware of the allegations made against her, when she made her unfair dismissal application, and had indicated that the allegations were denied. It is also clear that, regardless of the validity of the allegations or otherwise, Ms Ross-Davis was dismissed by email, without having had an opportunity to respond to the allegations.
[32] The unfair dismissal application and the defence and counter claim filed on behalf of Ms Ross-Davis in the Supreme Court of Queensland, also contain denials of the allegations. There is no indication, on the basis of the material in these proceedings, that Ms Ross-Davis’ unfair dismissal claim was untenable or manifestly groundless so as to be utterly hopeless.
[33] At the time Ms Diprose made her unfair dismissal application, she was aware that it was asserted that she had never been employed by JD Pty Ltd, on the basis of the letter forwarded to her by email and mail on 21 June 2010. Ms Diprose contested this assertion, and indicated as much in the defence in relation to the Supreme Court application.
[34] The fact that it had been foreshadowed that JD Pty Ltd would institute court proceedings against Ms Ross-Davis and Ms Diprose before they filed their unfair dismissal applications is not relevant to the question of whether the unfair dismissal applications were made vexatiously. The Supreme Court proceedings were instituted some two weeks after the unfair dismissal applications were made. There is nothing to indicate that the unfair dismissal applications were made in response to the foreshadowed Supreme Court proceedings, or with the intention to harass or embarrass JD Pty Ltd or to gain some collateral advantage in proceedings, which at that point, were not instituted.
[35] Further, the fact that both applications were withdrawn, is not of itself, grounds for finding that they were made vexatiously. This is so, even if the unfair dismissal applications were withdrawn as a response or reaction to the initiation of the Supreme Court proceedings. It is also the case that the applications were withdrawn shortly after the conciliation conference, and before any substantive step had been required to be taken by JD Pty Ltd in relation to its jurisdictional objections.
[36] JD Pty Ltd initiated the Supreme Court proceedings at or around the time that it filed its response to the unfair dismissal applications and before the conciliation conference. The claim and statement of claim filed in the Supreme Court was annexed to the response to the unfair dismissal applications filed by JD Pty Ltd. In short, the material filed in response to the unfair dismissal application, and which was doubtless referred to at the conciliation conference, had already been prepared for other proceedings. Further, both unfair dismissal applications were dealt with at the same conciliation conference.
[37] Indeed it is difficult to understand the basis of the jurisdictional objection on the ground that the appropriate jurisdiction to deal with the subject matter of the unfair dismissal applications is the Supreme Court of Queensland. While it is true that the determination of both sets of proceedings may have required some common findings of fact and law to be made, the proceedings are otherwise not related. The counterclaim by Ms Ross-Davis is similarly not related to the unfair dismissal applications, given that it is a claim for unpaid annual leave.
[38] The unfair dismissal applications advanced by Ms Ross-Davis and Ms Diprose depended for their success upon the resolution in their favour of one or more arguable points of law. Had the version of facts advanced by Ms Ross-Davis and Ms Diprose, as evidenced by the defence in the Supreme Court matter, been accepted by FWA, their unfair dismissal applications may have succeeded. These are not cases where, on the version of events advanced by the applicants, the proceedings must fail.
[39] There is also no evidence or material upon which I could be satisfied that it should have been reasonably apparent to Ms Ross-Davis or Ms Diprose that their unfair dismissal applications had no prospects of success. There is nothing manifestly untenable or groundless about the applications. Rather, there is evidence of contested facts which have not been tested at a hearing.
[40] Accordingly, the applications by JD Pty Ltd for costs in U2010/10209 and U2010/10214 are dismissed.
[41] I am also of the view that the application for costs on behalf of Ms Ross-Davis and Ms Diprose, should be dismissed. While I have determined that the unfair dismissal applications subject of these proceedings were not made vexatiously or without reasonable cause or in circumstances where there were no reasonable prospects of success, the fact remains that the applications were withdrawn at some cost and inconvenience to JD Pty Ltd.
[42] I am also unable to accept that the costs application was made vexatiously or without reasonable cause, or that it should have been reasonably apparent that the costs application had no reasonable prospects of success.
[43] An Order giving effect to this Decision will be released with the Decision.
COMMISSIONER
Appearances:
P. Hackett on behalf of the Respondent.
A. Macpherson on behalf of the Applicants.
Hearing details:
2010.
Brisbane:
October 22.
1 McKenzie v Meran Rise Pty Ltd t/as Nu Force Security Services Dec 375/00 M Print S4962 Per Giudice J, Watson SDP and Whelan C at [7].
2 Zhang v The Royal Australian Chemical Institute Inc. (No.2) [2004] FCA 1626 (10 December 2004) per Finkelstein J; Hatchett v Bowater Tutt Industries (1991) 39 IR 31.
3 Howard v Cummins [1988] 27 IR 109; Zhang v The Royal Australian Chemical Institute Inc. (No.2) [2004] FCA 1626 (10 December 2004) at [5].
4 Nilsen v Loyal Orange Trust IRCA Decision No: 267/97 per North J.
5 ibid.
6 Nilsen v Loyal Orange Trust op.cit; Attorney-General v Wentworth (1988) 14 NSWLR 481.
7 Ibid at 491.
8 Re Cameron (1996) 2 Qd R 218 at 220 per Fitzgerald P.
9 (1992) 43 IR 277.
10 Ibid at 283-4.
11 Ibid at 284.
12 Wodonga Rural City Council v Lewis PR956243 4 March 2005 at [6] per Watson SDP, Lloyd SDP and Gay C.
13 Wright v Australian Customs Service PR926115, 23 December 2002 at [23]-[27] and [32]; Deane v Paper Australia Pty Ltd [PR 932454, 6 June 2003] at [7]-[8] and Papunya Community Council Inc. V Hanley
15 Ibid at [27] - [28].
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