[2014] FWC 2280



Fair Work Act 2009

s.394 - Application for unfair dismissal remedy

Sun Health Foods Pty Ltd
Ms Suman Verma


Sun Health Foods Pty Ltd
Just Relations - Consultants



Application for costs orders against party involved in an application for an Unfair Dismissal Remedy.

[1] This decision concerns an application made by Sun Health Foods Pty Ltd (Sun Health Foods) for a costs order to be made in relation to Ms Suman Verma’s application for an unfair dismissal remedy against the company.

[2] I have previously found that Ms Verma was not unfairly dismissed, because she was not dismissed 1. The decision in the matter was published on 4 December 2014.

[3] The Fair Work Act 2009 (the Act) provides in s.400A that costs may be awarded against a party to an application for unfair dismissal remedy; s.401 provides for costs to be awarded against a lawyer or paid agent; and s.402 provides when an application is to be made. The respective provisions are as follows;

402 Applications for costs orders

[4] The application for costs was originally made by Sun Health Foods when it filed an application for costs on 26 September 2013, which is prior to the hearing of the substantive matter on 14 November 2013.

[5] The 26 September 2013 application for costs was prepared on a version of the Form F6 (Application for Costs) made under the Fair Work Australia Rules 2010, which in its preamble refers to it being an “Application for Costs Fair Work Act 2009 – ss.376, 401, 611, 780”. While the form does not refer to it being an application made under s.400A, because of all the circumstances of this matter, I take the application to be one made for costs not only in respect of Ms Verma’s paid agent representative, Just Relations, but also in respect of Ms Verma herself.

[6] Having received the Commission’s decision dismissing Ms Verma’s application for an unfair dismissal remedy, Sun Health Foods wrote to the Commission on 18 December 2013 referencing its earlier submission of a Form F6 Application for Costs, and enquired “how we can claim costs incurred by our company for the resolution this matter”. This correspondence was within a period of 14 days after the determination of the substantive matter.

[7] The Applicant’s representative, Just Relations, argues that there is no competent application for costs before the Commission, for the reason that the Sun Health Foods costs application was made on 26 September 2013 and not after the FWC determined the matter. 2 It was argued there is no capacity for the Commission to entertain applications made in advance for matters. This submission overlooks the correspondence received by the Commission on 18 December 2013 from Sun Health Foods, which plainly reagitates the desire of Sun Health Foods to apply for and obtain costs pursuant to the Act.

[8] In forming my view in relation to this aspect of the matter, I have had regard to s.577 which requires the Commission to perform its functions and exercise its powers in a manner that is fair and just, and s.578 which requires the Commission to take into account equity, good conscience and the merits of matter. Very plainly, Sun Health Foods saw Ms Verma’s application as unmeritorious at an early stage and wished to pursue costs against her if she proceeded. While the original application was certainly filed early, there is nothing about the correspondence to the Commission on 18 December 2013 that could give rise to a reading other than it being an endeavour by Sun Health Foods to enliven the jurisdiction of the Fair Work Commission for consideration of the recovery of costs.

[9] Because of the way the matter has progressed, with the first application having been made before the hearing, and not after determination of the substantive matter, and the second application being in the form of an email, I accept the second application as being a valid application pursuant to s.400A, s.401 and s.611. To the extent that the second application is not in accordance with the Commission’s procedural rules or forms, I waive compliance with the Fair Work Commission Rules in accordance with s.586 of the Act.

[10] Having received this application, the Commission issued directions for the provision of written submissions from both parties and proposed to them that the matter would be determined by me on the papers, unless either party requested a hearing. Both parties provided submissions in accordance with the Directions and neither party requested a hearing. A perusal of the submissions does not indicate that the question now before me involves disputed fact and so I am of the opinion I am not required, because of s.397, to conduct a conference or hearing in relation to the matter.

[11] The first issues to be considered are the threshold tests set out within s.400A (cost orders against parties) and s.401 (cost orders against lawyers and paid agents), which are respectively;

[12] In addition to ss.400A and 401, s.611 provides a cost remedy as well (which is preserved for applications such as this through ss.400A(3) and 401(3)). The section provides the following;

[13] The language and tests of the section are different to the provisions of ss.400A and 401, and especially so in relation to the consideration that an action may have been taken “vexatiously or without reasonable cause”.

[14] Sun Health Foods submissions in relation to its costs application are brief. They consist of the following paragraphs taken from the original Form F6 lodged on 26 September 2013;

[15] No additional submissions were received from Sun Health Foods in response to the Commission’s directions given on 14 January 2014 that the company was to file a copy of its written submissions by 29 January 2014. The only additional material to that referred to above received from the company close to that time was the following quantification of its claim for costs;

[16] As a result of the foregoing, and in the absence of well-formed submissions on the subject by Sun Health Foods, I discern the company to argue the following as the basis of its application for costs;

[17] Ms Verma and Just Relations’ submissions in relation to costs include that there was a course of conduct relied upon by Ms Verma as being the basis of her application. In this regard Ms Verma refers to 10 elements which reinforce an overall deteriorating relationship between Ms Verma and her employer by the time she came to resign. In this regard, Ms Verma and Just Relations submit the following;

[18] As was noted at paragraph [12] of the substantive decision, the admitted and relevant evidence on these matters is limited, comprising the evidence of Ms Verma, Mr Andriopoulos and several short documents. The substantive decision also noted that the circumstances of Ms Verma’s employment were that her working relationship had been deteriorating for some time which had resulted in the issuance of a warning to Ms Verma with accusations made to her about her timekeeping. There was also uncorroborated evidence to the effect that a manager had spoken to her which led her to believe she was being asked to take a pay cut. 6

[19] Sections 400A and 401 were introduced to the Act by the Fair Work Amendment Act 2012 (No. 174 of 2012) and the Explanatory Memorandum introduced with the Bill containing the amendments included the following;

[20] For the reason that Sun Health Foods was unrepresented in the substantive proceedings, its claim for costs is properly described as a claim for indemnity costs. Such costs have been defined as including fees, charges, disbursements, expenses and remuneration, incurred by a party as long as they have not been unreasonably incurred or are not of an unreasonable amount. 8 Indemnity costs stand in distinction to party-party costs, being the legal costs that are deemed necessary and reasonable.9 It has been held that indemnity costs are capable of being awarded as part of the Commission’s broad discretion to award costs, provided it is satisfied as to certain circumstances, and that such broad discretion includes the discretion to award costs either on a party–party basis or indemnity basis.10

[21] The Federal Court of Australia has approached the meaning of the phrase “without reasonable cause” on the basis that a “proceeding is not to be classed as being launched "without reasonable cause" simply because it fails” 11 and, further, that;

[22] The Full Bench has further indicated on this subject;

[23] It is necessary for me to have regard to whether there was an unreasonable act or omission of Ms Verma in connection with the conduct or continuation of the matter (which is the test relevant to s.400A). Regard must also be had to whether Ms Verma’s representative, Just Relations, encouraged her to start, continue or respond to the matter when it should have been reasonably apparent to them there was no reasonable prospect of success, or whether there may have been an unreasonable act or omission of Just Relations in connection with the conduct or continuation of the matter (which are the tests relevant to s.401). Finally, regard must be had to whether any part of the proceedings may have been taken “vexatiously or without reasonable cause” (which are the tests laid out in s.611).

[24] My consideration of these matters has taken into account the following;

[25] In addition to the above material, I have had regard to written statements filed by Sun Health Foods and which the company sought to rely upon in the substantive proceedings. These statements are from employees who worked with Ms Verma and knew something about the circumstances of her employment. These statements were referred to in the substantive decision as follows;

[26] Although these witness statements were not tendered as evidence in the substantive proceedings, it is appropriate I give regard to their content in relation to this application for costs for the reason that the documents are part of the material that was known to Ms Verma and Just Relations prior to the formal hearing.

[27] None of these statements meaningfully rebut the fundamental proposition advanced in Ms Verma’s submissions or witness statement that she was forced into resignation. After consideration of all of this material, I am not satisfied that, at the time it was made, Ms Verma’s application for unfair dismissal remedy had no reasonable prospect of success or that its commencement or continuation amounted to an unreasonable act or omission either on the part of Ms Verma or her representative, Just Relations. Ms Verma plainly felt that the employment relationship at the time she resigned was untenable. That she submitted a resignation as a result was admitted by her both in her originating application and also in her evidence. She sought advice as to her rights upon resignation.

[28] It is not inconceivable based upon the assertions and facts as set out in her application, outline of submission and witness statement that her case could have been within the criteria set out in O’Meara v Stanley Works Pty Ltd and found to be a termination at the initiative of the employer. In the end, there was insufficient evidence that would assist her case, and no corroborating evidence before the Commission that would allow a finding to be made, on the balance of probabilities, that she had no effective or real choice but to resign. However that is not to say that her case, at the time it was commenced, had no reasonable prospect of success because it was manifestly groundless or that it could not possibly succeed.

[29] The material and evidence provided to the Commission by Sun Health Foods both in respect of the substantive proceedings and also in relation to the costs proceedings has been insufficient to compellingly illustrate that Ms Verma’s application had no reasonable prospect of success. Aside from the relevance of this observation to the finding made so far, I note that the absence of cogent submissions from the employer on this matter means that I am unable to be satisfied that, at any stage after the commencement of Ms Verma’s application for an unfair dismissal remedy and prior to the determination by me of the matter in the substantive proceedings, it should have been reasonably apparent to Ms Verma or her representative, because of submissions or material brought forward by Sun Health Foods, that her application lacked a reasonable prospect of success and that it would be an unreasonable act of either to continue the application. My view on this may well have been different if the material filed by the employer, and available to Ms Verma and Just Relations prior to the hearing, cogently articulated evidence that would lead to the view there was no termination at the initiative of the employer.

[30] In all the circumstances, I am not satisfied that either Ms Verma or Just Relations caused costs to be incurred by Sun Health Foods because of an unreasonable act or omission in connection with the conduct or continuation of the matter; or because it should have been reasonably apparent that Ms Verma had no reasonable prospect of success in her application; or that the application was made or maintained vexatiously or without reasonable cause.

[31] For the foregoing reasons I dismiss the application by Sun Health Foods for a costs order in relation to Ms Verma’s application for unfair dismissal remedy.


 1   Verma v Sun Health Foods Pty Ltd [2013] FWC 9520, at [26]

 2   S Verma and Just Relations, First Cost Submissions, 12 February 2014

 3   Sun Health Foods, Costs Application, 26 September 2013

 4   Sun Health Foods, Costs Submissions, 28 January 2014

 5   S Verma and Just Relations, Second Costs Submissions, 14 February 2014

 6   Verma v Sun Health Foods Pty Ltd [2013] FWC 9520, at [22]

 7   Explanatory Memorandum to the Fair Work Amendment Bill 2012, pp 37-38

 8   Butterworths Australian Legal Dictionary, 1997, p 586

 9   Ibid, p 853

 10   See Goffett v Recruitment National Pty Ltd [2009] AIRCFB 626, at [47] - [52]; and Stanley v QBE Management Services Pty Ltd [2012] FWA 10164, at [21] - [23]

 11   Kanan v Australian Postal and Telecommunications Union, 43 IR 257, p 264

 12   Ibid, p264-265

 13   Church v Eastern Health [2014] FWCFB 810, at [31], in Roy Morgan Research Ltd v K Baker [2014] FWCFB 1175, at [34]

 14   Application for Unfair Dismissal Remedy, item 2

 15   O’Meara v Stanley Works Pty Ltd, (2006) 58 AILR 100, at [23].

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