FWC 5770
FAIR WORK COMMISSION
Fair Work Act 2009
R I Brown Pty Ltd
MELBOURNE, 21 AUGUST 2013
Application for costs
 This decision concerns an application for an order for costs by R I Brown Pty Ltd in respect of an application by Mr Stephen Mowlam pursuant to s.394 of the Fair Work Act 2009 (the Act). After hearing the matter the Commission found that the Applicant was terminated for serious misconduct and the application for unfair dismissal remedy was dismissed.
 Mr Gray continued to appear, with permission of the Commission, for R I Brown Pty Ltd, the respondent in the initial application and the applicant in the subsequent application for costs. Mr Mowlam continued to represent himself. Mr Mowlam was the applicant in the initial application and the respondent in the subsequent application for costs.
 The application for costs arises under s.400A and s.611 of the Fair Work Act 2009 (the Act). The relevant provisions of the legislation state as follows
(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.
(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.
(3) A person to whom an order for costs applies must not contravene a term of the order.
 Section 400A is a new provision that took effect in January 2013.
 Mr Gray, in his submissions, points out that the new provision is very board whereas s.611 is connected to the instituting of proceedings and whether the matter is vexatious.
 Mr Gray concedes, on a point made by Mr Mowlam, that the new provision came into effect in January 2013. Mr Gray accepts that he is certainly not seeking costs from prior to January 2013.
 Mr Gray then further states that although s.400A is broad, the first part of his submissions is that the costs order ought to cover the whole matter because Mr Mowlam had an unarguable case or, in other words, it should have been apparent that he had no reasonable prospect of success from the outset.
 Mr Gray refers to the decision in Ron Lever v Australian Nuclear Science and Technology Organisation [ AIRC 784], a decision of Senior Deputy President Drake. Mr Gray states that that is the principal case that deals with the question of dismissal in relation to an employee accessing confidential information and that it is absolutely plain and totally reflects the views that the Commission originally expressed in the initial application, that accessing confidential financial information is unarguably grounds for summary dismissal.
 The Commission in response and in exchange with Mr Gray, states at PN1623 of transcript, as follows:
“THE COMMISSIONER: But isn’t that slightly different here. I mean Mr Mowlam gets a letter terminating his services on the basis that the company assumes that he wants to go, he doesn’t want to work for them anymore because he contacted the Fair Work Ombudsman. Then he becomes aware in the employer’s response that there’s other reasons and then the respondent refuses to participate in conciliation and if they had participated in conciliation Mr Mowlam might have become a lot more clearer on what the actual grounds were for him being terminated but that didn’t happen. Now if, for instance, conciliation had occurred and it had become abundantly clear that he was terminated for accessing confidential information and he continued to press his claim, surely you would have a much more arguable case for costs.”
 Mr Gray then refers to a letter dated 16 November 2012, which was sent to Ms Soteriou, of Fair Work Australia, which states as follows:
“Dear Ms Soteriou,
We are writing to formally decline the conciliation scheduled on the Thursday 22nd November. On the following grounds:
1) Mr Mowlam’s employment was terminated in accordance with “Small Business Fair Dismissal Code” Summary dismissal. Refer to Form F3 item 2 and the reasons for Mr Mowlam’s termination. Mr Mowlam accessed my company’s confidential financial information (unauthorized) and disclosed such information to third parties; this includes his immediate family, his father and R I Brown Pty Ltd staff, without authorization. The nature of this misconduct is serious and irreparable.
2) The reason as to why we did not state the above clearly in our termination notice letter to Mr Mowlam was (a) to protect Mr Mowlam’s reputation from association of misconduct; (b) to avoid future disclosure of our reasons for termination to his future employer and (c) to avoid face to face confrontation with Mr Mowlam himself. I thought it would be much more graceful if Mr Mowlam walked out of the job by his own accord, rather than been sacked. It is clear my good intention did not service my own interests.”
 The Commission believes that at this point it should actually set out what has actually occurred in terms of the initial application by Mr Mowlam:
 Mr Mowlam lodged an application under s.394 of the Act on 3 November 2012.
 The application was in response to a letter from his employer dated 3 October 2012 terminating his services. That letter states as follows:
Following our conversation last Tuesday and from conversations previously, I formed the view that you have a desire to leave the firm and that your actions in going to the Fair Workplace Ombudsman also confirms this from my perspective. Therefore I believe that this document should be treated as notification and that after a four week period, last day 2/11/12 you would no longer be working for this office.
I believe this is in fact the only way in which the matters that have been discussed can be finalised in a fair and reasonable manner. At the end of the four weeks and/or earlier by mutual consent your long service leave entitlement will be part of your final payment.”
 It is noted that that letter does not refer to serious misconduct. The respondent in the initial matter lodged their form F3 (Employer’s Response to Application for Unfair Dismissal Remedy) on 14 November 2012.
 In the form F3 there are six reasons provided for Mr Mowlam’s termination of employment. They are as follows:
“1. Business down turn. Business has been trading at a loss since April 2012. Moving forward, the business has to downsize and reduce its wage cost. (supporting documents marked “A” - monthly profit/loss statement).
2. Mr Mowlam accessed company’s confidential financial information (unauthorized) and disclosed such information to third parties, this includes his immediate family, his father and R.I. Brown Pty Ltd staff member, without authorization. The nature of this misconduct is serious and irreparable.
3. Unsatisfactory performance. Over March to September period, the projects managed by Mr Mowlam were at a loss of average 21.5%. (supporting documents marked “B”).
4. Untruthful entry or manipulation of time-sheet. Mr Mowlam was always been paid by the hours he entered into his time sheet. There were many Job No. entries either job that do not exist or past jobs no longer current. (supporting documents marked “C”).
5. R.I. Brown Pty Ltd is a small business employs less than 10 people. It is unattainable when the relationship between Mr Mowlam and the business owner is irreversibly broken down.
6. Mr Mowlam expressed to us that he would like to have a redundancy package.”
 Item 2 referred to in the reasons for Mr Mowlam’s termination refers to him accessing company’s confidential financial information but there are other issues: business downturn for example, which Mr Mowlam acknowledged; unsatisfactory performance, which Mr Mowlam states was never raised; untruthful manipulation of time sheets, which Mr Mowlam states, again, was never raised; an assertion that given that the respondent is a small business it is unattainable when the relationship between the applicant in the initial matter and the business owner is irreversibly broken down; and an expression by Mr Mowlam that he would like to have a redundancy package, which he does not deny but states that it was in the context of assisting the company in the period of downturn.
 There is also the subsequent letter dated 16 November 2012 , as referred to above, which attempts to clarify that the reasons why the initial respondent did not refer to the serious misconduct. They stated that it was to protect Mr Mowlam’s reputation from association of misconduct to avoid future disclosure of the initial respondent’s reasons for termination to Mr Mowlam’s future employers and to avoid face to face confrontation with Mr Mowlam himself.
 After having filed the form F3, the initial respondent then refuses to attend conciliation. So, Mr Mowlam has a letter of termination which does not refer to serious misconduct; he has a document, the form F3, setting out six reasons for his termination; and then a letter dated 16 November 2012 to Fair Work Australia stating that the initial respondent will not attend conciliation.
 A further exchange occurred between the Commission and Mr Gray, at PN1624 of transcript, as follow:
“THE COMMISSIONER: I note that both parties quote me at a certain point when I got a bit frustrated I think with what I thought to be Mr Mowlam’s naivety, but if you recall I did say that if that was the sole purpose then he wouldn’t have a case, but I said that there were other matters that had to be determined as well. So why wouldn’t Mr Mowlam be entitled to at least ascertain whether in fact there was merit to those other reasons that were proffered by the employer. I mean the termination had occurred, this is an afterthought, this letter is an afterthought and they to say in the second paragraph, “the reasons as to why we did not state the above clearly in our termination notice and letter to Mr Mowlam was a) to protect Mr Mowlam’s reputation from association with misconduct and b) to avoid a future disclosure of our reasons for termination to his future employer and c) to avoid face to face confrontation with Mr Mowlam himself.”
MR GRAY: Yes.
THE COMMISSIONER: All of that is an afterthought, after the termination had occurred. So why wasn’t Mr Mowlam entitled, because conciliation did not occur. If it had occurred, as I said before if had occurred a) it probably would have settled, but secondly it would have given Mr Mowlam a very clear picture that the real purpose of the termination was his serious misconduct in disclosing confidential information.
MR GRAY: It wouldn’t have settled, Commission, because even after - even at the very end of the case in the written submissions Mr Mowlam was seeking $15,000 in compensation.
THE COMMISSIONER: Even if it didn’t settle?
 In a further exchange between the Commissioner and Mr Gray occurred as follows at PN1633 to 1650 of transcript, as follows:
“MR GRAY: Commissioner, what was the other matters were the legal questions raised by the employer's lawyers and raised by - - -
THE COMMISSIONER: No, no, the termination letter made mention of Mr Mowlam contacting the Fair Work Ombudsman and the company took it upon themselves to deem that Mr Mowlam wanted to leave. He could have easily pursued an application under section 365, whether it would have been successful is another matter because they did refer to him contacting the Fair Work Ombudsman and that could possibly have been in breach of the general protections provisions. It could have been.
MR GRAY: Yes, Commissioner, but - - -
THE COMMISSIONER: So the question then that I have to look at was were there any other reasons because the issue of serious misconduct arose after the termination and the explanation that is provided by the employer as to why they didn't make mention of that in paragraph 2 of the letter dated 16 November is an afterthought.
MR GRAY: Commissioner, I would say as you found it in the decision in this matter, in fact it's more the other way around. The letter of termination did not disclose the full reason for termination. The primary reason for dismissal was the serious misconduct.
THE COMMISSIONER: But that was something that I determined.
MR GRAY: Correct, based on your accurate assessment of the intentions of the employer. They were questioned at length by you, by me and by Mr Mowlam and your - Russell Brown's wife Yan said - I think she said that the serious misconduct she couldn’t forgive it and Mr Brown, well again I think he used words that were less emotionally based but indicated something similar.
THE COMMISSIONER: Yes.
MR GRAY: You accepted in the decision that the serious misconduct was the primary reason for the dismissal.
THE COMMISSIONER: But I had to come to that conclusion based on the testing of the witnesses and their evidence, but that is a conclusion I come to. Why wasn't Mr Mowlam entitled to press his point so as he could properly understand what the real reason was for his termination?
MR GRAY: He was, indeed, but what I'm saying is when he received the form F3, and when he received this letter dated 16 November. F3 I think was filed earlier in November. They both refer to the serious misconduct.
THE COMMISSIONER: Which he didn't think it was.
MR GRAY: He didn't but what I'm saying is, when you put yourself in the shoes of an applicant behaving reasonably, what they should be doing at that point is saying there's several reasons listed for my dismissal, is one of them fatal on its own to my claim? And then when you go to see Job Watch who are very experienced in advising people, they would have no problems at all of digging out this case of Ron Lever v. ANSTO and then - - -
THE COMMISSIONER: The reasons for Mr Mowlam's termination according to the F3, business downturn, number two, he assessed access, confidential documentation, number three, unsatisfactory performance which he denies, he says never any discussion about that, untruthful entry or manipulation of time sheets which he denies and then he says at number six, "Mr Mowlam expressed to us that he would like to have a redundancy package." Why isn't Mr Mowlam entitled to have all those points tested and the mere fact that at the end of it the Commission said no, no, it wasn't for any of those reasons, it was because of serious misconduct but in coming to that conclusion it had to assess the arguments on all those other points. So why wasn't he entitled to press those?
MR GRAY: Because the Commission is not a lab where you can test out your theories about things. What the applicant has to do is he has to look at those and say, well even if - I've got - there's five on the list, if I succeed on one, three, four and five but two remains, am I going to succeed, can I succeed? No. Why? Because accessing confidential information and accusing the owners of major fraud is excellent grounds for summary dismissal.
THE COMMISSIONER: In isolation, if that was the only reason, you would be right.
MR GRAY: But each reason has to be assessed independently.
THE COMMISSIONER: On its own, right, and that's exactly what the Commission did. It looked at each and every one of those reasons and disregarded it and said, the reason was serious misconduct, you accessed documentation that you weren't entitled to access. Why wasn't Mr Mowlam entitled to have that as a finding to clarify within his own mind that there was no other reason other than that? He denies, and he still has in some of his submissions, that he did anything wrong and that goes to the issue, and I've said it twice, about Mr Mowlam's naivety. But surely he was entitled, given the lack of conciliation, to say well, I've got all these reasons that they've put in F3 as to why I've been terminated, some of them I deny emphatically because they just never occurred, for instance the issue of the unsatisfactory performance and the time sheets issue. Surely he is entitled to press his point as to the validity of those claims? The Commission bases its decision on his argument, your agreement and the statements that have been provided in the evidence and then disregards all those points and says no, the real reason, he then understands what the real reason is.”
 There were further exchanges between Mr Gray and the Commission regarding the issue of whether not Mr Mowlam was entitled to have his case heard and for the Commission to determine whether or not in fact there had been a breach of the Act.
 During submissions there was an issue of whether or not Mr Mowlam sought the sum of $15,000 to settle. Mr Mowlam denies emphatically that he claimed $15,000 but at the commencement of the hearing to deal with the initial s.394 application, the Commission asked the parties to have some discussions during the break. It was at that point, Mr Gray alleged, that he provided Mr Mowlam with a written offer to settle, for $1,450. Mr Gray asserts that Mr Mowlam read the offer and handed it back.
 Mr Mowlam states at PN1725 of transcript:
“He gave me the piece of paper, I turned to Mr Gray and said to him, because there was nothing in there about a letter of redundancy and I went to speak to him and he gestured to me to be quiet and asked me to come into the conference room which was right next door. When I went into the conference room I said to Mr Gray, "What about the letter of redundancy as well?" And he said, "Under no circumstances would Russell or Yan give you a letter of redundancy," took the piece of paper out of my hand and walked back into the conference room”
 On that issue I find, on the balance of probability that, after several exchanges between Mr Mowlam, Mr Gray and the Commission, Mr Mowlam’s version of events are to be believed.
 The Commission rejects any assertion made by Mr Mowlam that Mr Gray may have doctored the document after Mr Gray alleges that Mr Mowlam rejected the settlement offer.
 There was an exchange between Mr Gray and the Commission relating to whether or not Mr Mowlam had made a counter offer to settle the matter. The Commission believes that the outcome of that exchange between Mr Gray and the Commission is best clarified in PN1767 and PN1768 of transcript, as follows:
“MR GRAY: All right. But in any case the only part of my client's offer discussion or conduct that is relevant to this question is the written offer. If he had made a counter-offer it would have been here in black and white and it’s not. You can't just allow him to clutch at straws here and give this sort of flimsy, pathetic evidence from the bar table, Commissioner.
THE COMMISSIONER: I can tell you now my more than 20 years experience in dealing with parties in conciliation, whether it be through unfair dismissal applications, general protections applications, enterprise bargaining, there are offers and counter-offers that are made verbally, and it's when they reach a point of acceptance that it's then put in writing. We don't go to the process of saying, here is my offer, which you have done in writing, you give me a counter-offer in writing, it doesn't work that way. A counter-offer can be verbal, which he says it was.”
 The Commission does not intend to deal with the submissions of Mr Mowlam in this decision. The Commission has read them and understands them.
 In looking at the issue of costs and s400A(1) of the Act, with the importance being place upon the words “unreasonable act or omission of the first party in connection with the conduct or continuation of the matter” I am satisfied that Mr Mowlam did not act unreasonably in pursuing his matter under s.394 of the Act.
 The Commission does so because it has made it abundantly clear that if Mr Mowlam had been made aware that the sole reason for his termination was serious misconduct then the applicant in the costs matter would have a very strong argument; but there were other reasons. Again, in referencing the form F3, the Commission had to determine whether or not those reasons made up any part of the termination of Mr Mowlam and, due to the respondent in the initial application refusing to attend conciliation, Mr Mowlam, in the Commission’s view, was entitled to pursue his application and have it clarified by the Commission whether or not there were other valid reasons for his termination.
 Ultimately, the Commission found that there was a valid reason for the termination but it only did so after dealing with all the other issues that the form F3 had raised. Some of those were never put to Mr Mowlam. Mr Mowlam, in the Commission’s view, was entitled to continue with his application as stated above, to ascertain the exact reason for his termination and he was entitled to conduct it in the manner that he did.
 It would be an absurd position to have an employer simply say that “serious misconduct has occurred” and that’s the reason for the termination and expect an employee to simply accept that, if the employee believed that no such conduct occurred. They, in the Commission’s view, are entitled to run their argument.
 Members of the Commission, in a number of decisions, have found misconduct has occurred but found that the termination of employment was harsh, unjust and unreasonable as the termination was out of proportion to the misconduct.
 The Commission, therefore, rejects the application for costs.
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