| [2016] FWC 1059 [Note: An appeal pursuant to s.604 (C2016/4800) was lodged against this decision - refer to Full Bench decision dated 18 December 2016 [[2016] FWCFB 6765] for result of appeal.] |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Steven Post
v
NTI Limited T/A NTI
(U2014/14956)
COMMISSIONER WILLIAMS |
PERTH, 4 MARCH 2016 |
Application for costs.
[1] On 23 October 2014, Mr Steven Post’s (the applicant or Mr Post) employment was terminated by NTI Limited T/A NTI (the respondent or NTI) for serious misconduct.
[2] On 10 November 2014 the applicant, through his then industrial advocate filed an application for an unfair dismissal remedy (U2014/14956). The application stated the remedy sought was “Compensation”.
[3] After failed conciliation Mr Post’s application was heard on 22 and 23 April 2015 and on 9 July 2015 the Commission’s decision was issued. 1 The Commission found that Mr Post had engaged in serious misconduct and his dismissal was not harsh, unjust or unreasonable. Consequently Mr Post’s application for an unfair dismissal remedy was dismissed2.
[4] On 23 July 2015 the respondent filed an application in the Commission under section 402 of the Fair Work Act 2009 (the Act) for an order for costs against Mr Post pursuant sections 400A and 611 of the Act.
[5] Mr Post then lodged an appeal pursuant to section 604 of the Act (C2015/4978). A Full Bench of the Commission in its decision dated 16 October 2015 3 dismissed Mr Post’s appeal finding there was no significant error in the findings made by the Commission at first instance and that there was no other public interest ground for granting permission to appeal.
[6] Subsequently Mr Post commenced proceedings (WAD649/2015) in the Federal Court of Australia for a judicial review seeking to set aside the order of the Full Bench in C2015/4978 which had dismissed Mr Post’s appeal. On 2 February 2016 Mr Post discontinued this application for a judicial review by filing a Notice of Withdrawal of Application in the Federal Court of Australia.
[7] This decision concerns the respondent’s application for an order for costs filed on 23 July 2015 and so is limited to consideration of costs incurred by the respondent in responding to the substantive unfair dismissal remedy application not subsequent applications by Mr Post such as his application appealing to the Full Bench of the Commission.
[8] This is an application under section 402 of the Act for an order for costs against the applicant:
(a) pursuant to section 400A(1); or
(b) in the alternative, pursuant to section 611 of the Act.
[9] The respondent seeks an order that the applicant pay to the respondent all costs it incurred in connection with his unfair dismissal remedy application:
(a) from 10 November 2014;
(b) in the alternative to (a), from 5 December 2014;
(c) in the alternative to (b), from 16 December 2014;
(d) in the alternative to (c), from 24 January 2015;
(e) in the alternative to (d), from 15 February 2015; or
(f ) in the alternative to (e), from 17 February 2015.
[10] The basis of this costs application, is that the respondent incurred costs because of a number of unreasonable acts or omissions of the applicant in connection with the conduct or continuation of the proceeding, namely:
(a) commencement of the proceeding on 10 November 2014;
(b) the rejection of a settlement offer and threatening of unfounded claims against the respondent at the conciliation conference on 5 December 2014;
(c) the rejection of a settlement offer of 5 weeks’ wages on 16 December 2014;
(d) the rejection of a settlement offer of 3 months’ wages on 24 January 2015;
(e) the rejection of a settlement offer of 6 months’ wages on 15 February 2015; and/or
(f) the rejection of a settlement offer of 6 months’ wages on 17 February 2015.
[11] In the alternative, the respondent seeks an order:
(a) under section 611(2)(a) of the Act, that the proceeding was commenced vexatiously or without reasonable cause, including as evidenced by the applicant’s failure to accept an offer of the maximum compensation payable in this jurisdiction; and/or;
(b) under section 611(2)(b) of the Act, that the proceeding was commenced in circumstances where it ought to have been reasonably apparent to the applicant that the proceeding had no reasonable prospects of success, having regard to the case against him.
[12] The respondent seeks its costs on an indemnity basis.
[13] The respondent seeks an order for costs from 10 November 2014 on the basis that:
(a) the proceeding was made without reasonable cause; or
(b) it should have been reasonably apparent to the applicant that the proceeding had no reasonable prospects of success; or
(c) the commencement of the proceeding was an unreasonable act that caused the respondent to incur costs.
[14] On 23 October 2014, the applicant’s employment was terminated by the respondent for serious misconduct.
[15] On 10 November 2014 the applicant, through his then industrial advocate filed an application for an unfair dismissal remedy.
[16] Significantly, the applicant did not seek reinstatement.
[17] The applicant’s unfair dismissal application asserted that his dismissal was unfair. Other than submitting that the process followed by the respondent was “grossly unfair”, that he was denied a reasonable opportunity of defending himself and that he had not misconducted himself, the application contained no particulars in support of the applicant’s claim. Further, the cover email filing the application indicated that the correspondence notifying the applicant of his dismissal was “too voluminous” to be attached.
[18] The application omitted the extensive correspondence exchanged between the applicant and the respondent during the show cause process (particulars of which are set out in Exhibit R5).
[19] The respondent contends that, when regard is had to:
(a) the allegations that were put to the applicant in the comprehensive show cause process;
(b) the abundance of supporting evidence put to the applicant during the show cause process, specifically some 158 pages of material, including emails, calendar entries, and extracts of alleged misuse of confidential information;
(c) the multiple opportunities afforded to the applicant to respond prior to any decision being made (including to provide responses through the applicant’s then legal representatives, MDC Legal); and
(d) the applicant’s own admissions during the show cause process, it should have been apparent to the applicant that the proceeding had no reasonable prospects of success.
[20] Further, the applicant’s assertions in his application that the process followed by the respondent was “grossly unfair” and he was denied a reasonable opportunity to respond was a gross distortion of the paper-trail and show cause process (during which, as flagged, the applicant was afforded multiple opportunities to respond and indeed did so).
[21] The respondent refers to Exhibit R5 at JB-4 and particularly JB-6 in which the applicant, through his solicitors, makes admissions in relation to the use of the respondent’s information but asserts that the information was not confidential (an assertion which had no basis and which was rejected in the Commission’s decision). See also Exhibit R5 at JB-4 to JB-9.
[22] The test is whether the proceeding had reasonable prospects of success at the time it was instituted.
[23] The relevant test was described by Wilcox CJ in Kanan v Australian Postal and Telecommunications Union 4 as follows:
“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.” (Emphasis added)
[24] Further, in Imogen Pty Ltd v Sangwin 5, Ryan J said (at 261-262):
“The existence of “reasonable cause” within the meaning of s 347 falls to be determined at the time when the relevant proceedings were instituted. The fact that the party instituting the proceedings later discontinues them is therefore not a matter to be taken directly into account in the application of the section. However, an appeal stands in somewhat different case from proceedings at first instance in that discontinuance may bear indirectly on the discretion conferred by s 347 by tending to confirm an impression derived from the grounds of appeal and the reasons for judgment below that the prospects of success on the appeal were slight.
Not without significance to an assessment of the reasonableness of the institution of an appeal are the amount at issue and the nature of the points raised by the notice of appeal. Where, as here, the appeal is essentially against findings of fact made by the trial judge after a two day hearing resulting in a judgment for $16,900 and raises no important or distinctive point of law or principle, the Court may more readily conclude that it was not reasonable in the circumstances to have instituted it. On a fairly fine balance of the relevant considerations and not without hesitation, I have been led to reach that conclusion in this case and agree with the Chief Justice and the orders which he has proposed.” (Emphasis added)
[25] The respondent submits that, on review the unfair dismissal remedy application and the information known to the applicant at the time of commencing the proceeding, it is evident that the proceeding was made without reasonable cause.
[26] As described by Senior Deputy President Richards in Collins v STL Holdings Pty Ltd 6, the respondent submits that before making the application, based on the information before him at the time, the applicant must have appreciated, ‘with abundant clarity, the difficult of maintaining [his] position going forward’.
[27] In particular, in light of the abundance of supporting material that was put before the applicant in the show cause process it was readily apparent that the applicant:
(a) had engaged in substantial activity for Transafe, which was contrary to clear directions given to him;
(b) had failed to comply with directions from managers;
(c) had misused confidential information;
(d) had placed himself in a position of conflict between his personal interests and his duties to his employer.
[28] It is submitted that conduct such as that outlined above, provides a valid reason for dismissing an employee.
[29] Further, it was apparent, by reference to the show cause process and responses provided by the applicant (including through his solicitors), that he understood the nature of the allegations against him and was afforded multiple opportunities to respond to those allegations.
[30] There could not therefore, contrary to the submissions in the application, be any legitimate basis to challenge the process implemented by the respondent or to assert that the applicant was denied procedural fairness.
[31] The applicant’s claim reflected his continued defiance of directions given to him and failure to accept that it was not part of his role to determine what was in the respondent’s best interests. The applicant cannot legitimately assert that he was under a mistaken but well-founded belief about the scope of his role and what was in the respondent’s interests, as he was given contrary directions by the respondent which were ignored.
[32] Therefore at the time of making the application it was apparent that it had no reasonable prospects of success and was made without reasonable cause.
[33] In the alternative, for similar reasons to those outlined above, the Respondent asserts that the proceeding was commenced in circumstances where it should have been reasonably apparent to the Appellant that it had no reasonable prospects of success.
[34] In A Baker y Salva Resources Pty Ltd 7, the Full Bench summarised the approach to be taken in relation to subsection 611(2)(b) of the Act as follows:
“[10] The concepts within s.611(2)(b) 'should have been reasonably apparent' and 'had no reasonable prospect of success' have been well traversed:
• ‘should have been reasonably apparent’ must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis, rather than a subjective test; and
• a conclusion that an application ‘had no reasonable prospect of success’ should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable.”
[35] The respondent repeats and relies on its submissions above in support of its application for costs under this limb.
[36] Section 400A of the Act was introduced by the Fair Work Amendment Bill 2012 (the Bill). The Explanatory Memorandum to the Bill provides:
“170, The FWC’s power to award costs under this provision is discretionary and is only exercisable where the first party (whether the applicant or respondent) causes the other party to incur costs because of an unreasonable act or omission. This is intended to capture a broad range of conduct, including a failure to discontinue an unfair dismissal application made under section 394 and a failure to agree to terms of settlement that could have led to the application being discontinued.”
It further says:
“The amendments strike a balance between the need to protect workers from unfair dismissal, and to provide a deterrent against unreasonable conduct during proceedings. The amendments will enable costs orders to be more easily made in the case of unreasonable conduct but will not prevent genuine claims from being pursued. They will discourage frivolous and speculative claims and assist in the efficient resolution of claims by encouraging all parties to approach proceedings in a reasonable manner. These measures are reasonable and proportionate to address the time and expense that an unreasonable conduct by a participant and/or their representative may cause another party to incur.” (Emphasis added)
[37] The respondent contends that commencing the proceeding was an unreasonable act for the same reasons that it can be characterised as “without reasonable cause” or devoid of prospects of success.
[38] That is, the respondent asserts that filing the application, in light of the abundance of evidence relied on by the respondent to support its decision which had been put to the applicant and the thorough process and opportunities to respond that were provided to the applicant, was an unreasonable act for the purposes of section 400A of the Act.
[39] For those reasons, the respondent further contends that the application pursued by the applicant is a paradigm example of the prosecution of a frivolous and speculative claim that section 400A seeks to discourage.
[40] The making of a costs order against the applicant from 10 November 2014 is therefore consistent with the objectives of section 400A of the Act and the respondent urges that such an order be made.
[41] If the Commission is not minded to award costs against the applicant from 10 November 2014 as sought above, the respondent seeks an order for costs from 5 December 2014 for reasons set out below.
[42] On 5 December 2014, a conciliation conference was held.
[43] The respondent made an offer to the applicant to resolve the proceeding and all claims in relation to his employment, pursuant to which the respondent would pay to the applicant 5 weeks’ wages.
[44] The applicant rejected the respondent’s offer and threatened to bring claims against the respondent including n relation to defamation and discrimination on the basis of political opinion. The basis for such claims was not particularised.
[45] Importantly (for reasons considered later in these submissions), while at the conference the respondent expressed a willingness for any hearing of the application to be private, the applicant sought a public hearing.
[46] By letter to the applicant’s then representative Mr Edwards dated 15 December 2014 (see HC- 5), the respondent again confirmed the basis for its position and repeated its offer to resolve the proceeding and all claims for 5 weeks’ wages.
[47] By email of 16 December 2014 (see HC-6), the applicant:
(a) rejected the offer of 5 weeks’ wages;
(b) threatened bringing claims in relation to payment in lieu of notice and long service leave, defamation, discrimination, and breaches of the Competition and Consumer Act 2010 ;
(c) did not propose a counter-offer to the respondent’s offer of 5 weeks’ wages.
[48] As outlined above, the words “unreasonable act or omission” in section 400A of the Act are intended to capture a broad range of conduct. However, it is clear that section 400A of the Act specifically contemplates the making of a costs order in circumstances where an offer of settlement is rejected.
[49] As submitted above, the proceeding was made without reasonable cause and/or had no reasonable prospects of success.
[50] The applicant’s employment was terminated summarily for serious misconduct. It follows that the respondent’s offer to the applicant of 5 weeks’ wages represented his notice entitlement (if his conduct did not amount to serious misconduct) and was therefore a reasonable compromise and legitimate attempt to resolve the proceeding and other claims. This was explained to the applicant again by letter to his then representative at the conciliation conference on 5 December 2014 and again by letter dated 15 December 2014 (rejected by the applicant on 16 December 2014).
[51] In December 2014 (see HC-5), the applicant was put on notice for costs, including under section 400A of the Act.
[52] Having regard to the case against him, the applicant’s failure to accept the offer of 5 weeks’ wages was an unreasonable act which caused the respondent to incur costs, namely in preparing to proceed to a hearing to deal with the application.
[53] Further, the applicant’s conduct in threatening unfounded and un-particularised claims, some of which fell outside the jurisdiction of the Commission, was unreasonable. Such conduct went, in the respondent’s submission, beyond a course of “hard bargaining” by the applicant and into a realm of the applicant failing to act reasonably in assessing the case against him (see Roy Morgan Research Ltd 8).
[54] The fact that the applicant has never commenced such claims nor properly articulated any basis for those claims (considered further below) supports a conclusion that threatening those claims was an unreasonable act that was intended to harass and prejudice the respondent.
[55] Support for the assertion that the applicant’s conduct was intended to harass and prejudice the respondent can be found in his email to the respondent’s solicitors (See HC-6) in which the applicant says:
“any attempt to have the matter discharged will be challenged and will only be seen as a tactic to prevent debate on the issue and to obstruct justice.”
[56] The respondent submits that by his conduct, the applicant displayed an unwillingness to compromise and was set on pursuing his claim without reasonably assessing the case against him or the respondent’s attempts to resolve the proceeding. It further evidenced an intention to force the respondent into litigation.
[57] Such conduct is, in the respondent’s submission, a proper basis for the making of an order of costs against the applicant under section 400A of the Act.
[58] The respondent further contends that the applicant’s failure to make a counter offer to that outlined in its letter of 15 December 2014 is an unreasonable act for the purposes of section 400A of the Act.
[59] Support for that proposition can be found in the decision of Brazilian Butterfly Pty Ltd v Charalambous 9 where the Commission said:
“In a situation where an offer was made which was not fanciful and no counter offer was made by the opposing party to bring negotiations into the range the opposing party thought was reasonable, failure to make a counter offer could, depending on the circumstances, constitute acting unreasonably in failing to agree to terms of settlement.”
[60] As outlined above, the respondent’s offer of 5 weeks’ wages, put on 5 and 15 December 2014, was a legitimate offer and attempt to compromise in circumstances where it had fairly and reasonably terminated the applicant’s employment. In that context, the applicant’s conduct in not only failing to propose a counter offer, but rather threatening claims and indicating that settlement would not be considered, was unreasonable and an order for costs under section 400A of the Act should be made.
[61] If the Commission is not minded to award costs against the applicant from 5 December 2014 as sought above, the respondent seeks an order for costs from 24 January 2015 for reasons set out below.
[62] On 5 January 2015, the respondent, through Clayton Utz, wrote to the applicant expressing concerns in relation to the applicant’s position. The respondent confirmed its willingness to have the proceeding held in a private conference and disputed taking any steps to damage the applicant’s reputation (See HC-7).
[63] By letter of 11 January 2015 (which appears at HC-8), the applicant wrote to Clayton Utz making an offer of settlement on the following terms:
(a) payment by the respondent of 52 weeks’ pay on the basis of redundancy, plus leave loading, car allowance and superannuation, plus any pro rata long service leave;
(b) request for a mediation process to resolve a claim of defamation.
[64] On 12 January 2015, this Commission issued directions in the proceeding (Directions) for the:
(a) Applicant to file any witness statements and submissions by 2 February 2015;
(b) Respondent to file any witness statements and submissions by 23 February 2015.
[65] On 16 January 2015, Clayton Utz, on the respondent’s instructions, wrote to the Applicant (see HC-9):
(a) indicating that the applicant’s offer to settle (as outlined in his letter of 11 January 2015) was beyond the jurisdiction of the Commission and any relief the applicant could obtain in this proceeding;
(b) making a further offer of settlement of 3 months’ wages, to resolve the proceeding and claims in relation to the applicant’s employment before the parties incurred costs complying with the Directions;
(c) foreshadowing that the respondent would seek to recover costs from the applicant if the offer was rejected, including on the basis that rejection of the offer constituted an unreasonable act for the purposes of section 400A of the Act.
[66] By letter of 24 January 2015 (see HC-10), the applicant rejected the respondent’s offer and indicated he would be prepared to consider an offer closer to that outlined in his letter of 11 January 2015. He did not however, make any counter offer capable of acceptance by the respondent.
[67] The scope and rationale for section 400A of the Act have been outlined above.
[68] Further, the reasons relied on above by the respondent in respect of the unreasonableness of the applicant’s rejection of the offer of 5 weeks’ wages not only apply in respect of the offer of 3 months’ wages, but they carry greater weight, given the increased quantum of the respondent’s offer.
[69] The respondent’s offer of 3 months’ wages was extremely generous in light of the applicant’s conduct and the fact that the application on any rational basis be considered a ‘maximum compensation’ case. The nature of the respondent’s offer must be considered in light of:
(a) the fact that the applicant only sought compensation, not reinstatement and therefore the best case scenario for him was 6 months’ wages;
(b) the applicant’s ongoing failure to consider any reasonable settlement offer;
(c) the ongoing costs that the respondent would incur (and did incur) in continuing to defend the proceeding and complying with the Directions; and
(d) importantly, the strength of the respondent’s case against the applicant, including in light of the abundance of supporting evidence already provided to the applicant.
[70] Further, more needs to be said about the applicant’s offer of 11 January 2015. First, it cannot be considered as a legitimate attempt at compromise, given:
(a) the applicant’s employment was not terminated due to redundancy and it was not legally possible for the respondent to tax any payment to the applicant as a genuine redundancy, as to do so would defraud the Australian Taxation Office and breach its legislative obligations; and
(b) the amount the applicant sought was twice the maximum compensation payable in the unfair dismissal jurisdiction.
[71] As to the applicant’s failure to legitimately engage in any settlement discussion and compromise, the respondent relies on the decision of Vice President Lawler in Abbey v Daycare Management Pty Ltd 10:
“…a reasonable person approaching settlement does so on the basis that, by definition, settlement involves some compromise. It involves accepting less than the full remedy that is expected in the event of complete success in order to obtain certainty of outcome and to avoid the possibility of loss.”
[72] The applicant’s offer of 11 January 2015 not only exhibits a complete disregard for compromise or reasonable assessment of the case against him, the amount sought exceeded that to which he was entitled, even assuming he did have an entitlement to notice and pro rata long service leave (which he did not, given his employment was terminated for serious misconduct).
[73] Therefore, the applicant’s rejection of the offer of 3 months’ wages and indication that he may consider settlement closer to the terms of 11 January 2015:
(a) evidenced the applicant’s failure to reasonably assess the case against him, bearing in mind, as outlined above, the nature of the allegations him and the supporting evidence put to him;
(b) reflected his unwillingness to compromise and settle in good faith; and
(c) as a result, is an unreasonable act that caused the respondent to incur costs (including complying with the Directions) justifying an order of costs under section 400A.
[74] If the Commission is not minded to award costs against the applicant from 5 December 2014 as sought above, the respondent seeks an order for costs from 15 or 17 February 2015 for reasons set out below.
[75] On 2 February 2015, the applicant provided witness statements and submissions in accordance with the Directions.
[76] After considering the applicant’s material, on 13 February 2015, Clayton Utz wrote to the applicant again putting forward an offer of settlement (see HC-12). The letter of 13 February 2015:
(a) contained an offer of settlement of 6 months’ wages (being $63,891.58 (gross)), to resolve the proceeding and claims in relation to the applicant’s employment before the respondent incurred further costs complying with the Directions;
(b) confirmed that under the offer, the applicant would be given an opportunity to resign and there would be agreed statements in the event of enquiry from prospective employers, to assist to protect the applicant’s reputation;
(c) informed the applicant that the respondent was offering the maximum compensation payable in the unfair dismissal jurisdiction (being the remedy sought in the proceeding);
(d) foreshadowed that the respondent would seek to recover costs from the Applicant if the offer was rejected, including on the basis that rejection of the offer constituted an unreasonable act for the purposes of section 400A of the Act.
[77] By letter of 15 February 2015 (see HC-13), the applicant:
(a) rejected the offer of 6 months’ wages;
(b) said he would not enter into any “dishonest agreement that requires him to resign”;
(c) said he would accept the offer if the respondent withdrew the allegation of serious misconduct, as this would allow him to seek remedies for other matters;
(d) said in the alternative that he would accept the offer outlined in his letter of 11 January 2015.
[78] By letter of 16 February 2015, Clayton Utz wrote to the applicant (see HC-14):
(a) clarifying the terms of the offer of 13 February 2015;
(b) stating that the respondent considered any claim for defamation had no prospect of success including because the applicant had not particularised any publication of defamatory material;
(c) again making an offer of 6 months’ wages to resolve the proceeding and claims in relation to the applicant’s employment;
(d) putting the applicant on notice that the respondent was concerned that the applicant’s continuance of the matter in circumstances where he had been offered the maximum compensation indicated that the proceeding was for a collateral purpose and was frivolous/vexatious;
(e) foreshadowing that the respondent would seek to recover costs from the applicant if the offer was rejected, including on the basis that rejection of the offer constituted an unreasonable act for the purposes of section 400A of the Act.
[79] By letter of 17 February 2015 (see HC-15), the applicant:
(a) rejected the offer of 6 months wages’ put on 15 February 2015;
(b) made an offer on the following terms:
(i) withdrawal by the respondent of the allegations of serious misconduct;
(ii) payment of 26 weeks’ wages for unfair dismissal;
(iii) payment of 5 weeks’ notice in lieu;
(iv) payment of pro rata long service leave;
(v) payment of accrued sick leave; and
(vi) payment of legal fees ($28,602.80).
[80] The scope and rationale for section 400A of the Act have been outlined above, and it is clear that section 400A of the Act was introduced to make it easier for the Commission to make costs orders in some circumstances, including where settlement offers are rejected.
[81] The reasoning in relation to the unreasonableness of the applicant’s actions in rejection the offers of 5 weeks’ and 3 months’ wages also applies here.
[82] However, the respondent contends that there are further considerations in support of its application for costs which arise by virtue of its offer of 6 months’ wages. In light of these matters, this is a paradigm example of unreasonable conduct by an applicant which section 400A of the Act seeks to address.
[83] First, as outlined, the applicant did not seek reinstatement in the proceeding but specified compensation as the remedy, so the respondent’s offer of 13 February 2015 was equivalent to the statutory cap and the ‘best case outcome’ for the applicant.
[84] As to offers of this nature, in considering an application under section 170CS of the Workplace Relations Act 1996, which is in similar terms to section 400A of the Act, Marshall J in Sallehpour v Frontier Software Pty Ltd 11:
“The Court sees no reason why it should not view as unreasonable conduct, the failure of a party to agree to a settlement offer in circumstances where he was incapable of achieving a better result by continuing with the proceeding. That is expressly so, where the legislature, albeit in the context of a proceeding before the Commission, has shown that it considers that failure to agree to reasonable settlement offers may, in certain circumstances, lead to adverse costs orders.”(Emphasis added)
[85] More recently, the Full Bench of this Commission in Roy Morgan Research Ltd 12 referred to the following extract from Brazilian Butterfly Pty Ltd v Charalambous:
“Very strong prospects of success will not always justify a failure to participate in settlement negotiations initiated by a serious settlement offer from the other party. For example, where reinstatement is not sought and the amount offered by a respondent is equivalent to the statutory cap on compensation that can be ordered pursuant to s.170CH, it will likely be unreasonable for an applicant to fail to agree to a settlement on those terms, irrespective of how strong the applicant's case is. Of course, even then, it is possible to conceive of circumstances where a failure to agree terms of settlement on the basis of such an offer would not be unreasonable. For example, depending upon the circumstances, it may be entirely reasonable for an applicant to insist upon a withdrawal of the dismissal and acceptance of a resignation in its stead if this were necessary to repair substantial damage done to an applicant's professional reputation and future professional job prospects as a result of the dismissal.” (Emphasis added)
[86] The applicant contends that his failure to accept the maximum compensation offer was not reasonable because, among other things:
(a) he “jealously guarded his good name” and restoration of his good name was a paramount consideration; and
(b) the respondent’s offer was to resolve all claims arising from the applicant’s employment, not just the proceeding.
[87] The applicant further seeks to rely on the decision of Camille v Berala on the Park HR Pty Ltd 13 (Camille), where the Commission considered it was not unreasonable for an employee there to reject a maximum compensation offer. The applicant’s submissions on this point have very little force when regard is had to the circumstances.
[88] First, the decision in Camille is distinguishable on the basis that:
(a) the employee in that decision was found to have been unfairly dismissed; and
(b) the employee there sought reinstatement.
[89] Neither of those factors is present here. Further, as to the applicant’s assertions that he wanted to protect his reputation, that submission carries little, if any weight, in circumstances where:
(a) he sought a public hearing, and the respondent was agreeable to a private determination;
(b) the terms of the respondent’s offer, including as put on 13 February 2015, contained:
(i) an opportunity for the applicant to resign from his employment;
(ii) agreed statements in the event of enquiries from prospective employers, to the effect that the applicant resigned for personal reasons; and
(iii) confidentiality.
[90] Objectively therefore, the applicant’s interests and reputation were best served by accepting the respondent’s offer.
[91] In relation to the respondent’s offer being to resolve all claims, a number of considerations are pertinent. First, an offer of settlement on the basis of resolving all claims from the employment is a standard practice, and is in fact consistent with the draft terms of settlement proposed by the Commission in conciliation conferences.
[92] Second, it was reasonable for the respondent to insist on resolution of all claims given it was offering to pay the statutory cap, notwithstanding the strength of its case against the applicant.
[93] Third, while the applicant has threatened bringing claims for:
(a) defamation;
(b) discrimination;
(c) breach of the Competition and Consumer Act 2010; and
(d) payment in lieu of notice and pro rata long service leave,
no such claims have been commenced as at the date of these submissions. Further, in respect of those claims:
(a) the basis for any defamation claim has never been particularised, despite requests for the applicant to do so, and it has now been more than 12 months since the applicant was dismissed from his employment;
(b) the basis for any discrimination claim has never been particularised and it is now more than 12 months since the applicant was dismissed;
(c) it is not clear on what basis the applicant would have standing to bring proceedings under the Competition and Consumer Act 2010; and
(d) the applicant has no entitlement to notice or pro rata long service leave in circumstances where his employment was terminated for serious misconduct.
[94] Finally, as outlined above, the applicant has failed to engage in any reasonable settlement discussion or compromise which may legitimise his conduct in not agreeing to settle all claims. Rather, by his letter of 15 February 2015, the applicant expressed his willingness to resolve only the proceeding for 6 month’s wages. This is a clear failure to “seek something less than the full remedy that is expect in the event of complete success” and a failure accept the hopelessness of his own case. By his letter of 17 February 2015, the Applicant made an offer to settle which was made on the basis that the respondent would pay to the Applicant everything he alleged he was owed (now including legal fees in the amount of approximately $28,000). To accept the applicant’s position on this point would undermine the policy rationale and intent behind section 400A of the Act, such that employees could resist adverse costs orders (even when they are offered the maximum compensation payable) merely by asserting a right to bring other claims, even in circumstances where those claims are un-particularised and devoid of merit.
[95] In the alternative, the respondent submits that it is open to the Commission to conclude that the proceeding was being continued for a collateral purpose (given the applicant rejected a maximum compensation offer) which was to harass the respondent and put it to expense. It is open to the Commission to make a costs order against the applicant on this basis.
[96] For the reasons outlined above, the respondent submits that the applicant’s acts or omissions were unreasonable and caused the respondent to incur considerable costs in defending the proceeding.
[97] Accordingly, the respondent seeks an order that the applicant pay to the respondent, all costs it incurred in connection with this proceeding:
(a) from 10 November 2014;
(b) in the alternative to (a), from 5 December 2014;
(c) in the alternative to (b), from 16 December 2014;
(d) in the alternative to (c), from 24 January 2015;
(e) in the alternative to (d), from 15 February 2015; or in the alternative to (e), from 17 February 2015.
[98] The respondent has incurred considerable costs in defending the proceeding. This includes costs for:
(a) attempting to resolve the proceeding;
(b) preparing witness statements;
(c) briefing Counsel;
(d) attending the hearing; and
(e) travel for witnesses and legal representatives, to Perth.
[99] The respondent is concerned to protect the confidentiality of these matters at this time.
[100] The Commission has a broad discretion and can make an order for costs in a range of ways including requiring the successful party to have its costs assessed or requesting the parties agree on an amount of costs. The respondent submits that it is appropriate in this matter for the Commission to make an order for the respondent to have it costs assessed. The respondent submits that the costs should be assessed on an indemnity basis, or in the alternative on a party-party basis.
[101] Accepting that it is a high threshold before the Commission will make an order for indemnity costs, the respondent submits that such an order would be properly made here, given the submissions above in respect of the unreasonableness of the applicant’s conduct.
[102] If the Commission is not minded to make an order that the respondent’s costs be assessed, the respondent seeks an order that it be permitted to provide further evidence substantiating its costs, following which the Commission should determine the amount of costs to be paid by the applicant.
[103] The respondent has applied for a costs order against the applicant. The costs application relies upon section 400A and section 611 of the Act. The costs application is deficient in that it does not stipulate what costs are sought, the items in the scale of costs in the schedule to which the costs claimed relate and there is no disclosure of what costs the respondent employer has incurred.
[104] The applicant’s position overall is that taking all matters into consideration the Commission ought not to exercise its discretion to award costs to the employer.
[105] The applicant analyses the grounds of the application for costs and which if any of the above sections of the Act have been triggered by the actions or conduct of the applicant.
[106] This ground relies upon a series of offers which the respondent made in an endeavour to reach a settlement of the application with Mr Post.
[107] The respondent in addition relies upon the commencement of the application itself as being an unreasonable act.
[108] The respondent also relies upon the circumstances of the conciliation conference as grounding an unreasonable act.
[109] The parties did exchange offers and the material with respect to those offers and those exchanges described as Offer 1, Offer 2, Offer 3, Offer 4, Offer 5 and Offer 6 (the Offers).
[110] The factual matrix which can be seen from the circumstances in which those offers were made is as follows.
[111] Mr Post was suffering a great deal of stress and anxiety from the circumstances of his dismissal such that he needed medical attention and was also pursuing a workers’ compensation claim.
[112] Mr Post jealously guarded his good name with the employer and in the broader transport community and the restoration of his good name was a paramount consideration.
[113] Mr Post did not consider the extensive terms and legal parameters of the proposed deed of settlement put up to him by the respondent as being an appropriate document for the resolution of the matter and embracing all issues between the parties and asked that the settlement deed be “simple” on at least one occasion.
[114] All the offers made by the respondent embraced all of the contemplated actions open to Mr Post and however much the respondent wanted to discredit his belief in those actions he had the right to ventilate those actions in other jurisdictions. Had the respondent seen fit to exclude all other matters from the settlement negotiations and preserve those for Mr Post and make the offer relevant to the Commission proceedings only, then it could be asserted by the respondent that Mr Post was acting unreasonably, but not before they adopted that approach and it never did.
[115] None of the refusals of the offers can be properly construed as being acts or omissions in connection with the continuation of the proceedings which is the threshold position the respondent much reach to enliven the jurisdiction let alone obtain the Commission’s exercise of its discretion to award costs.
[116] On all the exchanges the respondent was seeking to close off all issues that existed or might arise between the parties out of the employment relationship. There can be no criticism of an employer seeking to do that. However, when seeking to obtain costs it must point to unreasonable acts or omissions in connection with the proceedings. Each party was endeavouring to secure a settlement which discharged all liabilities. It was not reached, but the failure to agree cannot then be raised as an unreasonable act or omission on the part of Mr Post in connection with the Commission proceedings.
[117] The legal principles as to what falls to be considered as unreasonable acts have been set out in Dunne v Repipe Pty Ltd 14 and the decision of Senior Deputy President Drake in that matter was preserved on appeal. See also Maleknia v University of Sydney15 and Mark Jackson Racing v Samantha McAlpine.16
[118] The restoration of the employee’s good name was more important than the settlement offer 17. It was not unreasonable to refuse to settle even for the maximum compensation where the clearance of the reputation was the target.
[119] That the application was commenced vexatiously or made in circumstances where it ought to have been reasonably apparent that the application had no prospects of success.
[120] This ground relies upon section 611(2) (a) and (b) of the Act and on the authorities the time when this applies is at the filing of the application. A Full Bench of the Commission has considered this provision on a number of occasions. In E. Church v Eastern Health t/as Eastern Health Great Health and Wellbeing 18 a Full Bench considered the exceptions to the general rule and the meaning of the expression “without reasonable cause”. The Full Bench said:
“[30] We now turn to the expression ‘without reasonable cause’. A party cannot be said to have made an application ‘without reasonable cause’, within the meaning of s.611(2)(a), simply because his or her argument proves unsuccessful. The test is not whether the application might have been successful, but whether the application should not have been made. In Kanan v Australian Postal and Telecommunications Union, Wilcox J put it this way:
“It seems to me that one way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being ‘without reasonable cause’. But where, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.”
[31] In the context of an appeal the question becomes whether, having regard to the arguments available to the appellant at the time of instituting the appeal, there was no substantial prospect of success. As Wilcox CJ (with whom Madgwick J agreed) observed in Imogen Pty Ltd v Sangwin:
“The prospect must be evaluated in the light of the facts of the case, the judgment appealed from and the points taken in the notice of appeal. If having regard to those matters, there was not insubstantial prospect of the appeal achieving some success, albeit not necessarily complete success, then it would seem to me it cannot be fairly described as having been instituted ‘without reasonable cause’. This is so even if, in the result, the appeal proved unsuccessful.”
[32] In the same matter Ryan J said:
“The existence of ‘‘reasonable cause’’ within the meaning of s 347 falls to be determined at the time when the relevant proceedings were instituted. The fact that the party instituting the proceedings later discontinues them is therefore not a matter to be taken directly into account in the application of the section. However, an appeal stands in somewhat different case from proceedings at first instance in that discontinuance may bear indirectly on the discretion conferred by s 347 by tending to confirm an impression derived from the grounds of appeal and the reasons for judgment below that the prospects of success on the appeal were slight.
Not without significance to an assessment of the reasonableness of the institution of an appeal are the amount at issue and the nature of the points raised by the notice of appeal. Where, as here, the appeal is essentially against findings of fact made by the trial judge after a two day hearing resulting in a judgment for $16,900 and raises no important or distinctive point of law or principle, the Court may more readily conclude that it was not reasonable in the circumstances to have instituted it. On a fairly fine balance of the relevant considerations and not without hesitation, I have been led to reach that conclusion in this case and agree with the Chief Justice and the orders which he has proposed.”
[33] In construing s.570 and its legislative antecedents courts have observed that the test imposed by the expression ‘without reasonable cause’ is similar to that adopted for summary judgement, that is ‘so obviously untenable that it cannot possibly succeed’, ‘manifestly groundless’ or ‘discloses a case which the Court is satisfied cannot succeed’.” (References omitted)
[121] These concepts have been well traversed as was noted by Senior Deputy President Watson in Dut v Caterfare Pty Ltd 19:
“As noted in Baker v Salva Resources Pty Ltd:
“The concepts within s.611 (2)(b) ‘should have been reasonably apparent’ and ‘had no reasonable prospect of success’ have been well traversed:
[122] For the respondent to succeed on the section 611(a) ground it must establish on the evidence that Mr Post’s application was made by him as its main purpose to harass, annoy or embarrass the respondent or that there was another purpose of the application other than to settle the issues arising in the application 20. There is simply no evidence to even suggest an ulterior motive from the applicant.
[123] The principles which emerge from the authorities then in the application of section 611(2)(b) of the Act are these:
[124] Application of those principles to the facts of Mr Post’s application ought with respect result in the following findings:
[125] The applicant submits the ground for claiming costs that the application was made vexatiously or made in circumstances where it ought to have been reasonably apparent that the application had no prospects of success is not made out.
[126] In this application the respondent has no basis to excite jurisdiction for any of the costs provisions it relies upon. Viewed in full context the failure by the applicant to reach a settlement with the respondent cannot be classified as an unreasonable act or omission within the meaning of section 400A of the Act. Furthermore the claim was not without merit, frivolous or vexatious and the respondent did not apply under section 587 of the Act to have it dismissed.
[127] If it could be said that there is any aspect of the conduct of the applicant which enlivens jurisdiction within the provisions (which is denied), there is then still remaining the exercise of discretion whether to grant an order for costs. In the exercise of the discretion ,the Commission with respect ought to have regard to the following:
[128] In all of the circumstances this, the applicant says, is not a case where the spirit of the legislation set out in section 611(1) of the Act should not be followed.
[129] The costs application is made pursuant to section 400A and section 611 of the Act.
[130] Section 400A of the Act provides as follows:
“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.”
[131] Section 611 of the Act is as follows:
“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).”
[132] Section 611(1) of the Act sets out that parties should usually bear their own cost in relation to matters before the Commission. However costs may be ordered against a party in the circumstances set out in section 611(2) of the Act. In addition for unfair dismissal matters section 400A(1) of the Act provides the Commission may also order costs against a party who has caused costs to be incurred because of an unreasonable act or omission in connection with the conduct or continuation of a matter.
[133] The particular expressions used in the Act to describe circumstances in which the making of a costs order might be appropriate have been the subject of prior consideration before the Commission and the Courts.
[134] The expression “unreasonable act or omission” found in section 400A of the Act was previously found in section 658(3) of the Workplace Relations Act 1996. A Full Bench of the Commission in Goffett v Recruitment National Pty Ltd 21 considered the conduct of the respondent throughout the proceedings to determine whether there had been “deliberate or reckless” acts or omissions on its part which could be regarded as unreasonable and which caused the other party to incur costs in connection with the conduct of the proceedings.
[135] The case law is clear that an assessment of whether an application was made “vexatiously or without reasonable cause” or had “no reasonable prospect of success” should be undertaken with caution, particularly where there are disputed issues of fact or questions of law involved.
[136] In Nilsen v Loyal Orange Trust 22, North J considered the meaning of “vexatious” as follows:
“The next question is whether the proceeding was instituted vexatiously. This looks to the motive of the applicant in instituting the proceeding. It is an alternative ground to the ground based on a lack of reasonable cause. It therefore may apply where there is a reasonable basis for instituting the proceeding. This context requires the concept to be narrowly construed. A proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party, or to gain a collateral advantage: see Attorney General v Wentworth (1988) 14 NSWLR 481 at 491.”
[137] A Full Bench of the Commission in E. Church v Eastern Health t/as Eastern Health Great Health and Wellbeing 23 considered where proceedings are instituted “without reasonable cause”. The Full Bench said:
“[30] We now turn to the expression 'without reasonable cause'. A party cannot be said to have made an application 'without reasonable cause', within the meaning of s.611(2)(a), simply because his or her argument proves unsuccessful. The test is not whether the application might have been successful, but whether the application should not have been made. In Kanan v Australian Postal and Telecommunications Union, Wilcox J put it this way:
“It seems to me that one way of testing whether a proceeding is instituted 'without reasonable cause' is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being 'without reasonable cause'. But where, on the applicant's own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.”
...
[33] In construing s.570 and its legislative antecedents courts have observed that the test imposed by the expression 'without reasonable cause' is similar to that adopted for summary judgement, that is 'so obviously untenable that it cannot possibly succeed', ‘manifestly groundless' or 'discloses a case which the Court is satisfied cannot succeed’.” (References omitted)
[138] The test of “no reasonable prospect of success” found in section 611(2) of the Act is an objective test. A Full Bench of the Commission in Baker v Salva Resources Pty Ltd said that a finding of “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. 24
[139] The respondent in support of its order for costs application has provided evidence by way of an affidavit sworn by Ms Hedy Cray (Ms Cray) a partner of Clayton Utz who acted for the respondent in the unfair dismissal remedy proceedings. That evidence details the interactions between the respondent and Mr Post following the filing of his application and importantly details a series of offers of settlement made to Mr Post by the respondent. Each of these offers made by the respondent and the response of Mr Post is documented in the parties’ respective correspondence attached to Ms Cray’s affidavit. The applicant has not contested the evidence of Ms Cray and I accept her evidence in full.
[140] If find the series of offers of settlement and the responses or counter offers in summary were:
[141] The evidence is that the respondent incurred costs flying three witnesses to Perth to give evidence at the hearing of Mr Post’s unfair dismissal remedy application.
[142] The Commission’s decision on Mr Post’s unfair dismissal remedy application with respect to whether there was a valid reason for his dismissal was as follows:
“Valid reason
[106] Mr Post ignored directions from NTI’s Managers that his involvement with Transafe must be managed to avoid any conflict between the interests of NTI and the interests he was pursuing on behalf of Transafe and to ensure that he was complying with the obligations in his employment contract. Other than a disclaimer referring to Transafe found in some emails sent by Mr Post the evidence is he took no action to comply with his Managers’ directions in this regard. Instead he continued to pursue his interests in Transafe contrary to the interests of NTI and in ways that were in conflict with his employment obligations to NTI.
[107] Specifically Mr Post used NTI’s email and computer systems for Transafe activities without authority over an extended period.
[108] A significant amount of email traffic relating to Transafe was sent from and to Mr Post’s email address much of that during normal working hours at NTI. Much of this occurred after he had been specifically told by Mr McAleese in May 2014 that he should get a personal email address for Transafe matters and not use NTI’s email.
[109] Emails were sent by Mr Post to NTI clients and other businesses he was dealing with on behalf of NTI encouraging attendance at Transafe events and sending Transafe promotional material.
[110] Mr Post saved on his H drive material relating to Transafe including membership lists, rules of association, business plans, agendas and minutes of meetings in a folder titled “Transafe”.
[111] In pursuing his Transafe interests Mr Post misused confidential NTI information. He sent emails to his personal email address attaching NTI property/confidential information. Mr Post used confidential NTI information to create the Potential Members List with the intention that the list be used by Transafe to assist it recruit new members.
[112] On numerous occasions Mr Post received and accepted meeting invitations by email for Transafe meetings or events, many during normal NTI working hours. He attended a number of these without permission for him to attend to non-NTI business during working hours.
[113] Mr Post, without permission from NTI, attended a full day Transafe conference which he chaired on a normal working day on which he was paid by NTI.
[114] Mr Post’s conduct detailed above gave rise to a conflict between his personal interest as Chairman of Transafe and his duties to his employer NTI.
[115] His actions were all deliberate and wilful and carried out in full knowledge that his employer believed there was a likely conflict of interest between his obligations to NTI as an employee and his involvement with Transafe and that he should take steps to avoid this. This was ongoing conduct over a lengthy period clearly inconsistent with the continuation of the employment contract.
I am satisfied that this conduct was serious misconduct. This conduct was a valid reason for the dismissal of Mr Post.”
[143] Turning then to considering section 611 of the Act and considering the evidence of the circumstances prevailing at the time Mr Post made his unfair dismissal remedy application, it is not in my view clear what Mr Post’s motives where when he made his application. Consequently I do not accept that there is evidence to support a conclusion that he made his unfair dismissal remedy application vexatiously or for a collateral purpose.
[144] Turning next to consider the question of making an application without reasonable cause or with no reasonable prospect of success, it is a relevant consideration that the actions of Mr Post which were found by the Commission to be valid reasons for his dismissal, were deliberate acts known to him at the time he made his application. It is also a relevant consideration that the show cause process which the respondent undertook before deciding to dismiss Mr Post was a comprehensive process. This involved the respondent detailing their allegations and complaints to Mr Post in writing and providing him with a large amount of written material which supported the respondent’s allegations or were examples of his actions of which the respondent complained and Mr Post assisted by his lawyers then responded in detail. 25
[145] Consequently at the time Mr Post made his application to the Commission for an unfair dismissal remedy he would have, or objectively should have, had a full understanding of why the respondent had dismissed him and he would have known, or should reasonably have known, that he had in fact misconducted himself as he had been accused of by the respondent. He also on the facts known to him, or that he should reasonably have known, understood that the process the respondent had undertaken prior to dismissing him was a considered one that afforded him natural justice. He had been given a full opportunity to defend himself and had done so with the assistance of his lawyers.
[146] Given these facts known to Mr Post, or that he should reasonably have known, at the time he made his unfair dismissal remedy application and considering these objectively he should have appreciated his application was groundless, could not possibly succeed and must fail. I am satisfied the application was made without reasonable cause.
[147] In addition given these facts known to Mr Post, or that he should reasonably have known before he made his application, the submission on his behalf that he was justified in making the application in order to restore his good name in the broader transport community is without merit.
[148] Notwithstanding the facts known to Mr Post, or that he should reasonably have known, he made the unfair dismissal remedy application. That application stated he had not misconducted himself seriously or at all and the process followed by the respondent was grossly unfair and he was denied a reasonable opportunity to defend himself. Throughout the hearing of his application Mr Post maintained this position and denied he had misconducted himself. Considered objectively it should have been reasonably apparent to Mr Post, knowing the above facts as he did, that his application was hopeless and was so lacking in merit as to not be reasonably arguable. I am satisfied the unfair dismissal remedy application made by Mr Post had no reasonable prospect of success.
[149] I am satisfied then that grounds for a costs order to be made have been made out by the respondent under each of sub-section 611 (2)(a) and (b) of the Act.
[150] For the same reasons outlined above that the application is properly characterised as having been made without reasonable cause the respondent submits making the application was “…an unreasonable act…” by Mr Post which caused the respondent to incur costs and because of this an order for costs should be made under section 400A of the Act.
[151] Section 400A (1) of the Act refers to costs being incurred where this results from “…an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter” (Emphasis added). The respondent here argues the unreasonable act was the making of the application in the first instance. In my view making an application cannot be said to be an act that was in connection with the conduct or continuation of the matter. Consequently I am not satisfied the making of the application, as unreasonable as it may have been, can be a basis for a costs order to be made under section 400A.
[152] Separately under section 400A of the Act the respondent submits that on each occasion Mr Post rejected one of the respondent’s offers of settlement between December 2014 and 17 February 2015 this rejection was an unreasonable act in connection with the continuation of the matter which caused the respondent to incur costs and consequently the Commission should make an order for costs against Mr Post.
[153] I accept that section 400A of the Act does allow the Commission to make an order for costs against a party where that party has unreasonably rejected an offer of settlement.
[154] On Mr Post’s behalf it is submitted that the respondent’s offers were seeking to close off all issues that existed or might arise between the parties out of the employment relationship. It is submitted that however much the respondent seeks to discredit other potential actions Mr Post had the right to ventilate these actions in other jurisdictions if he wished. Consequently it is submitted Mr Post should not be penalised by a costs order due to his failure to agree to any of the offered settlements that sought a global settlement of all potential actions arising out of his employment.
[155] The original offer of 5 weeks’ wages was put to Mr Post as representing the equivalent of his notice entitlement had he not been dismissed summarily for serious misconduct. This was apparently put forward as a settlement during the conciliation conference on 5 December 2014 and the offer was restated by letter on 15 December 2014.
[156] Mr Post’s rejection of this offer in his letter of 16 December 2014 also involved him threatening to initiate legal action for a number of reasons in other jurisdictions against both staff of the respondent and also Mr King, who is not an employee of the respondent. A threat of initiating new proceedings concerning other matters was also made in Mr Post’s correspondence of 11 January 2015. On this occasion it was positively stated that this action would be taken by Mr Post if the matter was not settled by 23 January 2015. The matter was not settled by this date and there is no evidence that Mr Post has ever initiated any other proceedings in any other jurisdiction as he had threatened. It seems these threats by Mr Post that he would initiate other proceedings were just that, they were idle threats which at best were a negotiating tactic. I do not accept that the reason Mr Post did not accept the respondent’s settlement offers was because he would be denied his right to initiate other unspecified proceedings in other jurisdictions. Mr Post did not counter offer at any time on the basis that he would accept an offer subject to the release being couched in more narrow terms. His failure to do so if this was the sole reason for rejecting those respective offers would have been an unreasonable omission. Should it be argued his offers of 11 and 17 January 2015 should be seen as such offers these offers were in my view entirely unreasonable involving no compromise on his unfair dismissal remedy application by claiming the maximum or twice the maximum possible compensation plus additional amounts. Consequently I reject the submission put on behalf of Mr Post that he should not now be criticised for failing to agree to offers of settlement put by the respondent that would have resolved all claims arising out of his employment. 26
[157] When making his application Mr Post did not seek reinstatement. Offers of settlement of 5 weeks’ wages were rejected by him and in early January 2015. He responded with a proposal that the respondent pay him 52 weeks’ wages on the basis of redundancy plus various other amounts. He had been offered an amount equivalent to the maximum compensation the Commission could order in any unfair dismissal remedy application, 6 months’ wages, and he had rejected this counter offering that he would accept this amount provided it was without any conditions, the allegation of serious misconduct was withdrawn and that he would seek remedy for other unspecified matters in appropriate jurisdictions or alternatively he would accept 52 weeks’ wages paid as redundancy and still pursue any so-called defamation breaches against NTI or its employees. A repeat of the respondent’s offer of settlement of all matters arising out of his employment for the payment of 6 months’ wages was responded to by Mr Post with a counter offer of 6 months’ wages, 5 weeks’ payment in lieu of notice, pro rata long service leave, payment of accrued sick leave and payment of legal fees amounting to over $28,000 and preserving his right to pursue the so-called defamation breaches.
[158] It is apparent from this sequence of events that Mr Post was unwilling to or unable to objectively assess the merits of his application. On the facts known to him at the time his rejection of each of these offers was reckless because he should have appreciated that he had a hopeless case. Rejecting the various offers as he did was an unreasonable act. There is no doubt that is the case when he was twice offered the equivalent of the statutory limit on compensation that this Commission can order. Mr Post’s responses demonstrated that not only was he not willing to settle for the maximum remedy he could theoretically enjoy in the event of completely succeeding with his application, he wanted more than this. Clearly Mr Post’s actions in rejecting each of the respondent’s offers was unreasonable and at each stage this caused the respondent to incur further costs.
[159] In all the circumstances of this case I am satisfied that under section 400A of the Act the applicant should be ordered to pay the costs the respondent incurred in connection with these proceedings from 5 December 2014. For the sake of certainty and completeness if I should be wrong in this judgement then I similarly find that alternatively Mr Post should be ordered to pay the respondent’s costs incurred from each of the following dates 16 December 2014, or alternatively 24 January 2015, or alternatively 15 February 2015 or alternatively 17 February 2015.
[160] I am satisfied that an order under section 611 of the Act should be made for Mr Post to pay all the costs of the respondent in relation to this application.
[161] I am separately satisfied that an order under section 400A of the Act should be made for Mr Post to pay the costs incurred by the respondent from 5 December 2014. This amount however would obviously be a component of any amount that would be ordered under section 611 of the Act. Mr Post of course is not required to pay any element of the respondent’s costs twice.
[162] An award of costs may be made on a party and party basis or an indemnity basis. The respondent submits the costs should be ordered on an indemnity basis.
[163] Commissioner Jones in Stanley v QBE Management Services Pty Limited discussed the particular circumstances in which this Commission may award indemnity costs. 27 Commissioner Jones helpfully reviewed the relevant authorities and the principles to be applied.28 Those principles are that generally costs orders are not made to punish an unsuccessful party however in a case involving some delinquency on the part of the unsuccessful party an order is made not for party and party costs but for costs on a “solicitor and client” basis or on an indemnity basis. Some circumstances which have been thought to warrant indemnity costs being ordered are making allegations of fraud knowing them to be false, the fact that proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law, the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions or an imprudent refusal of an offer to compromise.
[164] In this case Mr Post commenced the proceeding with wilful disregard of facts known to him. Consequently indemnity costs under section 611 of the Act are appropriate in this case.
[165] The above decision of Commissioner Jones was made prior to the amendment of the Act to include section 400A, which section had effect from 1 January 2013. I agree with the view of Justice Bolton, Senior Deputy President that it would seem almost axiomatic that an unreasonable act or omission, as referred to in section 400A of the Act, that causes a party to incur costs would provide a basis for an order being made not for party and party costs but rather for costs on a “solicitor and client” basis or on an indemnity basis. 29
[166] In the circumstances of this case I am satisfied that Mr Post’s failure to accept the offers of settlement after 5 December 2014 onwards was an imprudent refusal of an offer to compromise and this delinquent conduct warrants the Commission exercising its discretion to award indemnity costs from this date onwards under section 400A.
[167] Accordingly I intend to issue an order that the applicant pay the respondent’s costs on an indemnity basis.
[168] Directions will be issued requiring the respondent to submit a Bill of Costs in accordance with my decision above; following receipt of which the Commission will determine the amount of costs to be paid by the applicant.
COMMISSIONER
Final written submissions:
Applicant, 9 November 2015.
Respondent, 24 November 2015.
4 (1992) 43 IR 257.
5 (1996) 70 IR 254.
9 (2006) 155 IR 36 at [24].
11 [2005] FCA 663 at [12].
17 See Camille v Berala on the Park HR Pty Ltd [2015] FWC 6938.
20 See Nilsen v Loyal Orange Trust (1997) 76 IR 180,181.
22 (1997) 76 IR 180.
24 [2011] FWAFB 4014 at [10].
25 Exhibit R5, attachments JB-6 19 page letter from Mr Post’s lawyers & JB-8 a 3 page letter.
26 See clause 7 Release of the Deed of Separation and release attachment HC12.
28 Ibid, at [24] to [26].
29 [2015] FWC 996 at [42].
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