| [2016] FWC 8491 [Note: An appeal pursuant to s.604 (C2017/890) was lodged against this decision and order - refer to Full Bench decision dated 27 February 2017 [[2017] FWC 1126] for result of appeal.] |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Lindy Smith
v
Ecolab Pty Ltd
(U2016/7804)
COMMISSIONER BISSETT |
MELBOURNE, 25 NOVEMBER 2016 |
Application for relief from unfair dismissal – s.400A application for costs against a party - s.401A application for costs against a lawyer or paid agent – application granted.
[1] On 20 June 2016 Ms Lindy Smith made an application for relief from unfair dismissal pursuant to s.394 of the Fair Work Act 2009 (FW Act). The matter was subject to conciliation where it did not settle and was subsequently referred for arbitration.
[2] The matter was due to be heard by me on 8 and 9 September 2016. On the morning of 8 September 2016 my chambers was advised that the matter had settled and the hearing could be vacated. Chambers was advised that a notice of discontinuance would be provided.
[3] On 8 September 2016 Ecolab (the Respondent to the unfair dismissal application) made an application for costs pursuant to s.400A of the FW Act against Ms Lindy Smith and s.401A against Mr Gary Dircks t/as Just Relations Consultants (the Respondents to the costs application). Directions were issued for the filing of a Form F6 application and submissions from both parties in relation to the costs application.
[4] Ecolab subsequently filed a Form F6 particularising its application on 16 September 2016 and submissions on 23 September 2016. The Respondents to the costs application filed submissions and materials on 28 September 2016. In that submission the Respondents argued that the application for costs made by Ecolab on either (or both) 8 and 16 September 2016 was not competent because of the operation of s.402 of the FW Act.
[5] Section 402 of the FW Act states:
402 Applications for costs orders
An application for an order for costs under section 611 in relation to a matter arising under this Part, or for costs under section 400A or 401, must be made within 14 days after:
(a) the FWC determines the matter; or
(b) the matter is discontinued.
[6] The Respondents to the costs application submitted that, at the time the application for costs was made the matter (the unfair dismissal application) had not been determined and neither had it yet been discontinued.
[7] On receipt of this submission Ecolab sought permission to file materials in reply, which was granted. The reply materials were filed on 6 October 2016. In those submissions Ecolab advised that Ms Smith was due to file a notice of discontinuance of her matter by 7 October 2016. Once the discontinuance was filed it said that it gave notice that it would make an application for costs seeking the same orders as it had sought in the application of 16 September 2016. It advised that the Commission could then rely on the submissions and evidence already filed by the parties. Ms Smith subsequently filed a notice of discontinuance with the Commission on 7 October 2016.
[8] Both parties advised that the costs application could be determined on the basis of the written submissions filed.
[9] Section 401 of the Act states:
(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.
401 Costs orders against lawyers and paid agents
…
(1A) The FWC may make an order for costs against the representative for costs incurred by the other party to the matter if the FWC is satisfied that the representative caused those costs to be incurred because:
(a) the representative encouraged the person to start, continue or respond to the matter and it should have been reasonably apparent that the person had no reasonable prospect of success in the matter; or
(b) of an unreasonable act or omission of the representative in connection with the conduct or continuation of the matter.
(2) The FWC may make an order under this section 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.
[10] Ecolab says that Mr Dircks caused Ecolab to incur costs by engaging in an unreasonable act in connection with the conduct of the matter by refusing Ecolab’s offer of 5 August 2016 to settle the matter of four weeks’ pay. Further, it says that Mr Dircks caused Ecolab to incur costs by engaging in an unreasonable act or omission in that he failed to have produced Ms Smith’s contract of employment with Suez in response to an Order to Produce dated 9 August 2016 that was returnable on 12 August 2016.
[11] Ecolab says that, in the alternative, Ms Smith caused Ecolab to incur costs by engaging in an unreasonable act, namely the refusal of Ecolab’s offer to settle the matter of 5 August 2016 of four weeks’ pay. Further it says that she caused Ecolab to incur costs by an unreasonable act or omission, namely the failure to produce her contract of employment with Suez in response to the Order Produce dated 9 August 2016 and returnable on 12 August 2016.
[12] As is apparent the applications for costs are complementary. Ecolab says that the costs sought against Ms Smith are made in the alternative and are only sought if costs are not awarded against Mr Dircks.
[13] Ms Lucienne Gleeson, a solicitor of Baker & McKenzie (who have represented Ecolab in the matter) filed a witness statement on 8 September 2016 in which she stated that:
● On 4 August 2016 she had a phone conversation with Mr Dircks in which she advised a without prejudice offer to settle the matter of four weeks’ pay. Mr Dircks replied that the offer would not be accepted and that Ms Smith was seeking six months’ pay in compensation and reinstatement;
● On 5 August 2016 Mr Dircks sent Ms Gleeson an email in which he advised that Ms Smith rejected the offer;
● On 9 August 2016 the Commission issued Orders returnable on 12 August 2016 for Ms Smith to produce (amongst other things):
● At a mention in relation to the Order on 16 August 2016 Mr Dircks advised that Ms Smith had no documents relating to mitigation to be produced. Mr Dircks did not produce any documents in the specific category on the return date.
● On 7 September 2016 Mr Dircks emailed the Commission and Ecolab and advised that Ms Smith no longer sought reinstatement. Attached was a copy of a contract of employment. [The contract is dated 29 July 2016 and signed by Ms Smith on 3 August 2016];
● Late on 7 September 2016 Ecolab made an offer of four weeks’ pay to Ms Smith to settle the matter. This was accepted on the morning of 8 September 2016
● Had she received the contract on 12 August 2016 in response to the Order to Produce she would have received instructions to offer four weeks’ pay to resolve the matter.
[14] By letter dated 23 September 2016 Ecolab advised that the phone conversation between Ms Gleeson and Mr Dircks was on 5 August 2016 and not 4 August 2016 as in her statement. 1
[15] Ecolab submits that Mr Dircks engaged in unreasonable act by refusing the offer to settle the matter made on 5 August 2016 in circumstances where he knew or should have made enquiries to discover that Ms Smith had, at that time, signed an employment contract with Suez (the Suez contract) and was due to commence in her employment with them on 15 August 2016. Further it says he engaged in an unreasonable act or omission in not producing the contract signed by Ms Smith in response to the Order to Produce.
[16] Ecolab submits that in Ms Smith’s witness statement filed in the unfair dismissal proceedings dated 1 August 2016 she said that she was ‘currently looking for work.’ Ms Smith did not produce any documents in relation to this part of the Order by the return date of 12 August 2016.
[17] On 5 August 2016 lawyers for Ecolab put forward an offer to settle which Mr Dircks dismissed out of hand prior to consulting his client. Mr Dircks sought six months’ pay and reinstatement.
[18] Whilst that offer was made on a without prejudice basis Ecolab says that I can and should admit those discussions pursuant to s.131(2)(h) of the Evidence Act 1995 which provides an exception to the general rule that without prejudice communications cannot be admitted into evidence.
[19] Ecolab says that Mr Dircks refusal of the offer of 5 August 2016 was ‘imprudent’ because Ms Smith’s economic loss was likely to be four weeks’ pay (taking into account that she had received four weeks’ pay in lieu of notice and she would commence her new employment on 15 August 2016). Mr Dircks should have understood this or sought instructions from Ms Smith before rejecting the offer.
[20] Further it says that Mr Dircks refusal of the offer was imprudent in circumstances where he did not seek instructions or place some counter offer on the table but rather repeated his request for six months’ pay and reinstatement.
[21] It says that Mr Dircks conduct was not ‘endowed or guided by reason or good sense’. 2
[22] Further, Ecolab says that the failure of Ms Smith to produce the contract of employment when required to was unreasonable. It says that she must, on 12 August 2016, have had possession, custody or control of the document as she signed it on 3 August 2016. Either that or Mr Dircks was in possession of the contract and refused to produce it. If Mr Dircks was not aware of the contract Ms Smith was and she did not advise Deputy President Clancy at the mention with respect to the Order of its existence.
[23] By not producing the document Mr Dircks or Ms Smith acted unreasonably.
[24] Mr Dircks filed submissions and related documents on his own and Ms Smith’s behalf on 28 September 2016.
[25] Those submissions indicated that neither Mr Dircks nor Ms Smith filed a witness statement as ‘there is no serious factual dispute that would warrant a hearing.’ 3
[26] Mr Dircks submits that Ms Gleeson’s statement does not contain a verbatim or contemporaneous record of the discussion between them. He does not agree that the record is ‘necessarily’ accurate. His submission is that he indicated that he did not believe an offer of four weeks’ pay would settle the matter but is sure that he ‘sought to tease out whether a more substantial offer was available.’ 4 He says this is standard practice in negotiations.
[27] Mr Dircks says that it is his practice to put any offer made to his client and ‘it is not common practice for experienced representatives to make or reject offers without instructions.’ 5
[28] Mr Dircks submits that Ms Gleeson’s statement of the conversation, at its highest, does not suggest he ‘was capable of rejecting the offer or that I did reject the offer without instructions.’ 6
[29] Mr Dircks submits that Ms Smith’s decision to refuse the offer of 5 August 2016 was a rationale decision in circumstances where she was seeking reinstatement and lost wages and when she had no current employment. In the circumstances that existed on 7 September 2016 (when she did have employment) it was rational for her to accept the offer of settlement.
[30] Mr Dircks says that Ms Smith ‘received and accepted a job offer ultimately dated 15 August 2016 by Suez.’ 7 Mr Dircks submits that Ms Smith did not receive the document until ‘after 15 August 2016.’8 The footer on the letter of offer says ‘Smith, Lindy FPC Ltr 15AUG2016.’ Mr Dircks says that given the date in the footer it is not plausible that the document was created prior to that date. Mr Dircks submits that it is ‘inevitable that this is the date the document was printed out.’9
[31] Mr Dircks says that the Suez contract was not provided to him by Ms Smith until 7 September 2016.
[32] Mr Dircks says, of the Order to Produce, that as the representative of Ms Smith he simply put forward all the material sent to him by the Applicant that she assumed needed to be submitted.
[33] Mr Dircks submits that the Suez contract was not in existence on 12 August 2016 so could not be produced in response to the Order to Produce and there is no basis on which to assert that the document was unreasonably withheld.
[34] Mr Dircks says that there is no evidence that he did anything other than follow instructions he received from Ms Smith. He says that the submissions of Ecolab suggest that he was in a position to accept or refuse the offer of 4 or 5 August 2016 without instructions. Further, he says that claims he had the Suez contract and withheld it are speculative and untrue.
[35] On 7 October 2016 Mr Dircks filed a statutory declaration (the declaration) in which he declared that the factual statements he made in the submission he knew to be true and that he made various factual statements that he was informed by Ms Smith were true.
[36] In Wintle v Foothills Administration Centre T/A Jim’s Group 10 I found that there must be a necessary link between the costs incurred (and hence sought to be recovered) and the unreasonable act or omission that is found to have occurred.11
[37] In Rainshield Roofing Pty Ltd T/A Rainshield Roofing v Peter Paerau and Anor 12 Commissioner Wilson observed that the determination of whether something is an unreasonable act or omission is an objective test.13
[38] In Goffett v Recruitment National Pty Ltd 14 the Full Bench was concerned with a failure to attend conciliation proceedings. The Full Bench concluded that if the act was intentional it would be an unreasonable act and if unintentional it would be an unreasonable omission.15 The Full Bench found in that matter that failure to advise the other party of its intentions not to attend conciliation was ‘either a deliberate or reckless act that could not be regarded as anything other than unreasonable’ or, to the extent that that it was an omission it was equally unreasonable.16
[39] In Construction, Forestry, Mining and Energy Union v Benegalla Mining Company Pty Limited (No 2) 17 Katzman J found that if the conduct could ‘be characterised as not endowed or guided by reason or good sense, or not based on or in accordance with reason or sound judgment, it would be unreasonable…’18
[40] In Roy Morgan Research Ltd v Baker (Roy Morgan) 19 the Full Bench considered the circumstances in which Roy Morgan Research Ltd put an offer to Ms Baker to settle the matter. The Bench observed that Roy Morgan was entitled to engage in hard bargaining but ultimately concluded that the failure to put a reasonable offer, given the lack of strength in its case, was unreasonable.20
[41] In Brazilian Butterfly Pty Ltd v Charalambous 21 the Full Bench considered the costs provisions of s.170CJ(2)(b) of the Workplace Relations Act 1996. In considering the ‘reasonableness’ of the actions it found:
[42] By referring to a party who “unreasonably” fails to agree to terms of settlement, the legislature has adopted the standard of the reasonable person. That is, the test in s.170CJ(2) is determined by reference to whether, in all the circumstances, a reasonable person in the position of the party against whom the costs application has been made would not have failed to agree terms of settlement that may have led to the discontinuance of the application.
[43] A reasonable person, who is a party to proceedings pursuant to s.170CE, when confronted with an offer of settlement from the other party, will determine whether, and if so, how to respond to such an offer after considering all the circumstances of the case, including:
[44] This list is not intended to be exhaustive. All of the circumstances are relevant and, as is made clear in the joint judgment in Blagojevch, there is no basis in the Act for giving primacy to any particular factor in every case.
[42] The Full Bench also affirmed the observation in Hart v Kangan Batman TAFE 22 that:
A party cannot simply disregard matters that should have been reasonably apparent and then claim that such matters were not apparent to them. 23
[43] I have had regard to the principles arising from these decisions in reaching my conclusion in this matter.
[44] I reject the submissions of Mr Dircks that the Suez contract did not come into existence until 15 August 2016. I am satisfied that it existed well before that date. A date in a footer of a document does not mean that is the date the document as generated. Anything can be placed in a footer. It follows that I do not accept the reason given as to why it was not produced in compliance with the Order of the Commission.
[45] The Suez contract is dated 29 July 2016. It was digitally signed by Kurt Roughley (for Suez) on 29 July 2016. It was signed by Ms Smith on 3 August 2016. If it was not created until 15 August 2016 as suggested I am not sure how Mr Roughley or Ms Smith signed it on or before 3 August 2016. This is not addressed in the submissions of the Respondents. The contract indicates that Ms Smith was to commence employment on 15 August 2016. This perhaps explains the reference of ‘15AUG2016’ in the footer of the letter. Given the other dates on the signed contract I accept this as a more plausible explanation than that proffered by Mr Dircks.
[46] It is of concern that, in relation to such an important matter in the context of the costs application, neither Mr Dircks nor Ms Smith has filed a witness statement that might be subject to examination, despite the fact that they filed further material on 12 October 2016.
[47] I am satisfied that an offer of employment had been made prior to, and was accepted by, Ms Smith on 3 August 2016. The documentary evidence is clear. The submissions otherwise cannot be accepted as evidence where it is contested by the document itself.
[48] The Order to Produce required that Ms Smith produce:
Records of any contracts of employment, letters of offer of employment, or contracts for services offered to and, or, entered into by Ms Lindy Smith from 17 June 2016 to present.
[underlining added]
[49] There is no doubt that, even if Ms Smith had not signed or accepted the Suez contract on 3 August 2016 (which I have found she did), she at least had a ‘letter of offer’ by the return date and the Order required that it be produced.
[50] Mr Dircks evades the question of his responsibility in producing the Suez contract in accordance with Order by saying that, as the representative, he ‘simply forwarded all the materials sent to me by the Applicant that she assumed needed to be submitted.’ 24 He does indicate that he took any other action to ensure the Order was complied with. Mr Dircks seems to suggest he is a passive player in the matter and all that went with it; that he was a mere courier of information. He was Ms Smith’s representative. He had an obligation to her to provide appropriate and timely advice. This must extend to more than sending the Order to her so she could forward to him what she ‘assumed’ was needed.
[51] Mr Dircks is an experienced practitioner in the Commission in the unfair dismissal practice area. He is no stranger to orders to produce, being an applicant for them and a receiver of them on behalf of his clients. No cogent explanation is given as to why he did not properly seek instructions from his client in this case or why his client failed to produce a document which she had signed and certainly of which she was aware and. In this respect I note the entreaty on the signed contract to ‘remember to make a photocopy for your records’. 25
[52] It can be taken from this contract that Ms Smith had been offered and had accepted a position with Suez by 3 August 2016. She apparently, on the basis of the contract, commenced that employment on 15 August 2016. In such circumstances a lack of evidence from Ms Smith as to why the Suez contract was not produced or that explains the date of her signature leaves the Commission with little choice as to the conclusions to be drawn.
[53] For this I am satisfied that it was an unreasonable omission by Mr Dircks to not ensure the production of the contract. I am equally satisfied that it was an unreasonable act by Ms Smith not to provide the Suez contract in reply to the Order to Produce.
[54] On 5 August 2016 Ecolab made an offer to Mr Dircks to settle the dispute. That offer was of four weeks wages. This was rejected.
[55] Whilst the conversation between Ms Gleeson and Mr Dirks occurred on a without prejudice basis I am satisfied that I can take account of the content of that conversation. 26
[56] The first matter that must be decided is when the offer was rejected (in the phone conversation between Ms Gleeson and Mr Dircks or after Mr Dircks obtained instructions from Ms Smith), and, whenever it did occur, whether it was unreasonable.
[57] The determination of this question is impacted by the failure of Mr Dircks or Ms Smith to provide any evidence beyond the statutory declaration (which I discuss below).
[58] In their submissions the Respondents say that they had ‘not provided witness statements because there is no serious factual dispute that would warrant a hearing in the circumstances. We respond to minor matters in Ms Gleeson’s statement.’ 27 Mr Dircks submits that it can be concluded that the record of conversation was not verbatim or a contemporaneous record and then sets out, in a submission, what he says occurred in that conversation.
[59] The Respondents had, at the time they made this submission, access to the witness statement of Ms Gleeson. Ms Gleeson, in her statement, raised substantial factual matters that went to the conduct of Mr Dircks in the telephone conference on 5 August 2016 when the offer to settle was put on the table.
[60] Even the most inexperienced advocate in the Commission would recognise that a disagreement over what was said in a conversation where that is directly relevant to the matter to be determined is a ‘serious factual dispute’ that ought to be resolved by evidence that can be tested. Mr Dircks has chosen to give no such evidence.
[61] On 7 October 2016 Mr Dircks did file the declaration in which he said:
1. In the matter of U2016/7804, Smith, Lindy v Ecolab Pty Ltd, in the Fair Work Commission, I made written (sic) titled “Submissions Regarding Costs Application” dated 28 September 20126 and comprising 84 paragraphs and 3 attachment (“the submission”).
2. In the submissions I made various factual statements that I know from my personal knowledge to be true.
3. In the submission I made various factual statements that I was informed by my client, Ms Smith, were true.
4. … 28
[62] The declaration was signed by Mr Dircks and appropriately witnessed.
[63] In a covering note to the declaration Mr Dircks states that the declaration does not cover new ground and, in the event that the Respondents’ submissions were not challenged, the Commission could take those submissions as evidence and to the extent that they were challenged by Ecolab’s reply he ought to be permitted to admit the declaration.
[64] Ecolab submits that I should not accept the declaration as it is in an improper form; does not identify the ‘factual statements’ said to be true; does not explain why Ms Smith cannot give direct evidence and does not state that Mr Dircks believes the statement of Ms Smith to be true to the best of his knowledge, which is the usual form of putting hearsay evidence before the Commission.
[65] On 12 September 2016 the Commission issued directions for dealing with the application for costs. Those directions required Ecolab to file and serve its submissions and evidence by 16 September 2016 and Mr Dircks and Ms Smith to file submissions and evidence by 30 September 2016. On application of Ecolab the directions were varied to enable it to file a submission in reply by 6 October 2016. Mr Dircks then filed his declaration on 7 October 2016.
[66] As a result of receipt of the reply submission of Ecolab my chambers sent an email to the parties on 10 October 2016 in which confirmation was sought from Ecolab that its material constituted an application. The email asked of the Respondents that ‘Given the views of [Ecolab] that it considers the Commission can rely on the material filed [do they] have any further to say on the matter.’ 29 Mr Dircks took this as a general invitation to file further material and did so but, despite what Ecolab said of his declaration, chose not file any witness statements.
[67] I find it curious that Mr Dircks chose to file a statutory declaration in the form he did, at the time he did and with the apparent rider in the covering email to the declaration, but did not take the opportunity seek to have any direct evidence admitted.
[68] The declaration is curious to put it at its best. Ecolab is correct when it says that Mr Dircks does not say which of his ‘various factual statements’ in his submission are true or provide any helpful direction to the Commission. Rather he makes a broad statement that I should take his submissions to be true. The declaration is of very little probative value to the Commission. It is not something that can be tested. It is not appropriate practice in the Commission for an experienced party or representative to make a submission and then say oh, by the way, any of the facts claimed in that submission are true.
[69] I have decided to accept the evidence of Ms Gleeson over that (as it is) of Mr Dircks as to the content of the conversation that occurred on 5 August 2016. That evidence is that she had a conversation with Mr Dircks ‘to the effect of’ what she then sets out. Her evidence is not that it was a verbatim account or contemporaneous but there is no other version of the conversation before me.
[70] I have considered the evidence of Ms Gleeson with respect to the offer to settle put in the conversation with Mr Dircks. On Ms Gleeson’s evidence Mr Dircks’ response to the offer was ‘If that is the offer you want to proceed with it is not going to be accepted…my client is seeking six months compensation and reinstatement…’ 30
[71] I take this as evidence of an indication by Mr Dircks of the likely reaction of Ms Smith to the offer. I am comfortable that he made this statement on the basis of the instructions he had previously received from Ms Smith as her likely reaction. Ms Gleeson’s account of the conversation does not indicate that Mr Dircks rejected the offer outright. If Mr Dircks had done so there is no explanation as to why he later emailed a rejection from his client.
[72] Ms Gleeson concluded from the statement made by Mr Dircks that the offer was rejected but I do not agree.
[73] For this reason I am not prepared to find that Mr Dircks acted unreasonably in rejecting the offer to settle the matter on 5 August 2016.
[74] I am satisfied that Mr Dircks put the offer to Ms Smith.
[75] Given my findings above in relation to the Suez contract, Ms Smith knew at this time that she had signed a contract on-going employment that provided her with a salary greater than that she had received with Ecolab. In submissions Mr Dircks suggests that Ms Smith rejected the offer at that time ‘because she had no employment and was seeking reinstatement.’ 31 I do not accept that she did not have employment. Whilst I accept that having employment does not preclude an applicant for unfair dismissal seeking reinstatement it does seem unusual where the new employment pays more than the lost employment. It also seems unusual in this case given the matters associated with the dismissal.
[76] I am satisfied that a reasonable person would have rationally assessed the situation and recognised that the settlement offer was, in all of the circumstances, a fair and equitable outcome. I am satisfied that Ms Smith therefore acted unreasonably in refusing to accept the offer of 4 or 5 August 2016. I do not repeat what I have said above of Mr Dircks’ conduct in not making appropriate enquiries of Ms Smith.
[77] There must be some causal link between the unreasonable act or omission and the costs incurred by Ecolab.
[78] The directions issued in the substantive application required the Applicant (Ms Smith) to file and serve her submissions and witness evidence by 1 August 2016.
[79] Ecolab was required to file and serve its submissions and witness evidence by 25 August 2016.
[80] Ms Smith apparently commenced her employment with Suez on 29 August 2016. No explanation is given as to why she did not commence on 15 August 2016 as stipulated in the Suez contract. I give little weight to the statement of the commencement of her employment on 29 August 2015 as no evidence was produced or witness statement made.
[81] The matter settled on 7 September 2016.
[82] I am therefore satisfied that the actions of Ms Smith and Mr Dircks each contributed to the costs incurred by Ecolab. Had Ms Smith accepted the offer of 4 or 5 August 2016 Ecolab would not have proceeded to prepare extensive materials for the Commission. However, had Mr Dircks taken appropriate steps to ensure documentation was produced in accordance with the Order, whilst Ecolab may already have commenced the preparation of its materials, it could have ceased that work to allow further settlement discussions to occur.
[83] The award of costs is a discretionary decision. The FW Act is predicated on the basis that parties should meet their own costs in matters before the Commission.
[84] The Explanatory Memorandum to the Fair Work Amendment Bill 2012 (Explanatory Memorandum) says of costs applications against a party (i.e. Ms Smith):
[169] ...the power to award costs under section 400A is not intended to prevent a party from robustly pursuing or defending an unfair dismissal claim. Rather, the power is intended to address the small proportion of litigants who pursue or defend unfair dismissal claims in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.
[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.
[171] However, the power to award costs is only available if the FWC is satisfied that the act or omission by the first party was unreasonable. What is an unreasonable act or omission will depend on the particular circumstances but it is intended that the power only be exercised where there is clear evidence of unreasonable conduct by the first party.
[85] Of s.401 it says:
[180] New subsections 401(1) and 401(1A) will provide a stronger deterrent for lawyers and paid agents from encouraging parties to bring or continue speculative unfair dismissal claims, particularly claims they know have no reasonable prospect of success. The provision will also deter lawyers or paid agents from unreasonably encouraging a party to defend a claim or make a jurisdictional argument where there is no prospect of the argument succeeding. It will act as a stronger deterrent than the current provision as it will make lawyers and paid agents subject to the possibility of adverse costs orders even if they are not granted, or do not seek, permission to represent the party in the matter before the FWC.
[86] Whilst I accept, on its face, that Ms Smith engaged in an unreasonable act in not accepting the 5 August 2016 offer in circumstances where she had accepted employment with Suez, and it is inevitable that Ecolab did incur cost as from this date because of her actions, I do not intend to award costs for this action. Ms Smith had not commenced her new employment, she had just signed the Suez contract and it may be that she wanted to enter into further negotiations with Ecolab.
[87] In any event the non-acceptance of the 5 August 2016 offer was quickly subsumed by the failure to produce the Suez contract in response to the Order of the Commission.
[88] I have decided that both Mr Dircks by his unreasonable omission and Ms Smith by her unreasonable act in not producing the Suez contract in response to the Order of the Commission did cause costs to be incurred by Ecolab. Further, I am satisfied that for this reason, they should meet some of these costs as detailed below.
[89] The documentary evidence before the Commission with respect to the signing of the Suez contract is clear. No submissions or evidence has been put forward by Ms Smith to counter the document itself. On the basis of the evidence, Mr Dircks’ submissions as to the creation of the document are not sustainable.
[90] No submissions are made (or evidence given) by Mr Dircks as to what enquiries he made of Ms Smith as to the existence of any offer of employment or contract of employment that might exist such that the Order to Produce could have been complied with. Whilst I do not think that Mr Dircks had the Suez contract in his control at this time he did fail to make proper inquires of his client. For this reason I am satisfied that Mr Dircks, by this unreasonable omission, caused costs to be incurred by Ecolab from 13 August 2016 until the date the matter was settled.
[91] Ms Smith is not blameless in this matter. She had signed the Suez contract on 3 August 2016. She knew of its existence and it must have been reasonably within her control yet she failed to comply with an Order of the Commission and produce it or advise of its existence by the return date on the Order. Her action in not producing the Suez contract was foolish. I am satisfied that Ms Smith, by this unreasonable act, caused costs to be incurred by Ecolab from 13 August 2016 until the date the matter was settled.
[92] I have carefully considered the scheme of the Act. I have also carefully considered the evident purpose of ss.400A and 401(1A) as outlined in the Explanatory Memorandum as set out above.
[93] In this case I am satisfied that both Mr Dircks and Ms Smith should severally be required to meet some of the costs of Ecolab incurred after the failure to disclose the Suez contract through the return of the documents ordered to be produced by the Commission. I am not going to require that all costs from this date until the date the hearing was vacated on 8 September 2016 be paid by the Respondents.
[94] To be clear I make no finding that Mr Dircks or Ms Smith engaged in an unreasonable act or omission by not putting a reasonable counter off to Ecolab’s offer of 4 or 5 August 2016.
[95] I have decided that the total costs payable to Ecolab should be those incurred in the two weeks prior to the scheduled hearing date (that is, on and from 25 August 2016). Ms Smith and Mr Dircks t/as Just Relations Consultants should be responsible each for 50% of the amount. While I note that Ecolab puts in application against Ms Smith in the alternative to that against Mr Dircks, I am satisfied that each, by their actions, caused costs to be incurred. If either had acted reasonably those costs might not have been incurred.
[96] I am not satisfied with the itemised schedule of costs provided by Ecolab in the Form F6 submitted on 11 October 2016 properly particularises the costs (with reference to the Fair Work Regulations 2009) such that a proper assessment of those costs can be made.
[97] Ecolab is therefore required to file an itemised schedule of costs, description of work performed and basis for costs sought. Following receipt of this information, relevant orders will be issued.
COMMISSIONER
Appearances:
Mr G Dircks for Ms L Smith.
Ms L Gleeson for Ecolab.
Final written submissions:
Respondent (to costs application): 12 October 2016.
Applicant (to costs application): 11 October 2016.
1 Mr Dircks does not say on which date the conversation occurred. I have referred to the conversation and offer in the remainder of this decision as 5 August 2016.
2 Ecolab’s submissions dated 23 September 2016, paragraph 31.
3 Respondent’s (to the costs application) submissions dated 28 September 2016, paragraph 4.
4 Ibid, 8.
5 Ibid, 9.
6 Ibid, 7.
7 The Suez contract attached to the witness statement of Ms Gleeson is the same as the copy of the contract provided to the Commission by Mr Dircks on 7 September 2016.
8 Mr Dircks and Ms Smith’s submissions, 12 October 2016, paragraph 36.
9 Ibid, 39.
11 Ibid, at [10].
13 Ibid, at [33].
15 Ibid, at [35].
16 Ibid, at [47].
17 [2013] FCA 362
18 Ibid at [25].
20 Ibid, at [25]-[28].
21 PR968915. Also cited in Roy Morgan.
23 Ibid, at [85].
24 Mr Dircks and Ms Smith’s submissions dated 28 September 2016, paragraph 15.
25 Ibid, attachment GD2.
26 Section 131(2)(h) of the Evidence Act 1995.
27 Mr Dircks and Ms Smith’s submissions dated 28 September 2016, paragraph 4.
28 Statutory Declaration of Mr Dircks dated 7 October 2016.
29 Email sent from chambers dated 10 October 2016.
30 Witness statement of Ms Gleeson dated 8 September 2016, paragraph 4.
31 Mr Dircks and Ms Smith’s submissions, dated 28 September 2016, paragraph 34.
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