DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Donnalyn Sharkey
v
Life Without Barriers
(U2018/11109)

Application for costs against party and lawyer – indemnity costs awarded - s 400A - s 401 - s 611(2)(b) - that the point at which the Commission determines whether or not an application had no reasonable prospect of success

[1] On 28 October 2018, Ms Donnalyn Sharkey made an application to the Fair Work Commission (the Commission) for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (Cth) (the Act) in relation to her dismissal on 25 October 2018.

[2] Ms Sharkey alleged that she was forced to resign due to the conduct of Life Without Barriers (LWB), 1 and that the dismissal was therefore harsh, unjust or unreasonable. LWB refuted that the dismissal was at its initiative, maintaining Ms Sharkey had voluntarily resigned. On that basis, it said, the Commission had no jurisdiction to determine Ms Sharkey’s application.

[3] On 13 February 2019, I issued an Order dismissing Ms Sharkey’s application. 2 My reason for the Order was that Ms Sharkey had not been dismissed; it followed that the Commission did not possess the necessary jurisdiction to determine Ms Sharkey’s application.

[4] In the course of giving my decision, I observed that it will often be a narrow line that distinguishes conduct that leaves an employee no real choice but to resign from employment, from conduct that cannot be held to cause a resultant resignation to be a termination at the initiative of the employer. 3 I concluded that there was no such narrow line in Ms Sharkey’s case.

[5] It is from these initial proceedings that the application for costs was made. The general position in relation to unfair dismissal applications is that each party bears its own costs in proceedings before the Commission. 4 The Act provides for exceptions to the general rule, and premised on those exceptions, LWB sought costs against:

a) Ms Sharkey under ss 400A(1), and 611(2)(a) and (b) of the Act; and
b) Mr Mullally under s 401(1A) of the Act.

[6] Mr Mullally was the paid agent representing Ms Sharkey at the unfair dismissal hearing. Working under the auspices of Workclaims Australia, he again represented her on the matter of costs. At the commencement of the costs hearing I questioned whether there was a conflict concerning Mr Mullally’s representation of Ms Sharkey. Ms Sharkey and Mr Mullally confirmed they were content with their arrangements.

[7] The questions to be determined in these proceedings are:

Jurisdictional pre-requisites

a) Did Ms Sharkey cause LWB to incur costs due to an unreasonable act or omission in connection with the conduct or continuation of the matter? 5

b) Did Ms Sharkey make the application vexatiously, or without reasonable cause? 6

c) Was it reasonably apparent to Ms Sharkey that her application had no reasonable prospects of success? 7

d) Did Mr Mullally encourage Ms Sharkey to start and/or continue the matter, and it should have been reasonably apparent that Ms Sharkey had no reasonable prospect of success in the matter? 8

e) Did Mr Mullally commit an unreasonable act and/or omission in connection with the conduct or continuation of the matter? 9

The appropriateness of an order

f) If one or more findings are made in the affirmative concerning the preceding questions then the Commission will determine whether the award of costs is appropriate in all the circumstances.

[8] With regard to the above questions, I have determined that Ms Sharkey did cause LWB to incur costs due to an unreasonable act in connection with the continuation of her application. In light of this conclusion, it was not necessary for me to consider whether Ms Sharkey made the application vexatiously or without reasonable cause.

[9] Further, it was not necessary for me to consider whether it should have been reasonably apparent to Ms Sharkey that her case had no reasonable prospect of success; but, I did. My reasons for doing so will become clear. In short, I am unable to follow the decision of Qantas Airways Limited v Mr Paul Carter, 10 which appears to be the authority one has reference to when interpreting s 611(2)(b) of the Act. The decision of Qantas Airways Limited v Mr Paul Carter11 sets out that the point at which the Commission must determine whether an application had no real prospects of success, is when the application was made. However, I do not consider that the words of s 611(2)(b) are so limiting, such that they limit the ‘test’, for want of a better word, to the time of making the application. In Ms Sharkey’s case it should have been reasonably apparent to her that her application had no reasonable prospects of success when in receipt of LWB’s outline of submissions, witness statements and materials. It would be from this point that costs are to be awarded.

[10] I have additionally determined that Mr Mullally committed an unreasonable act in connection with the continuation of the matter. As I have observed in the final paragraph of this decision, I am satisfied that Mr Mullally encouraged Ms Sharkey to persist with the proceedings at first instance, or rather, to continue with the matter, when it should have been reasonably apparent that Ms Sharkey had no reasonable prospect of success in the matter once the materials of 17 December 2018 had been received. Namely, LWB’s outline of submissions, witness statements and other materials.

[11] Given the above, it follows that the award of costs is appropriate in these circumstances. I will exercise my discretion and order that Ms Sharkey and Mr Mullally pay the costs LWB incurred by engaging Ai Group as its legal representative from 17 December 2018 up until the preparation of its costs application, which relevantly includes the conduct of the costs arbitration on 8 April 2019.

[12] I consider it appropriate to apportion the costs to be paid such that 67% are to be paid by Mr Mullally and 33% by Ms Sharkey. This apportionment of costs recognises that both, by their own actions but in different ways, contributed to the costs incurred by the LWB.

[13] In the decision at first instance, it was said that Ms Sharkey had acted on the advice of her solicitor (paid agent). The advice was misguided if she had not intended to bring her employment to an end, but rather assert she had been dismissed. Against that backdrop Mr Mullally and Ms Sharkey pressed on with the application, notwithstanding the receipt of LWB’s submissions, witness statements, and documentary material that unravelled the contentions Ms Sharkey was so reliant upon. On any objective basis, it was apparent that not only had Ms Sharkey’s ‘repudiatory’ argument faltered, but the negation of choice was going to be difficult, if not near futile, to press.

[14] The strategy adopted concerning the conduct and continuation of the case appeared to be one devised by Mr Mullally, and the apportionment reflects this. But, it is recognised Ms Sharkey was, at all times, free to exercise a choice to continue or discontinue her matter.

[15] When awarding costs under either s 400A or s 401(1A) there is discretion to award costs on either a party-party or indemnity basis. 12 In this case, I am satisfied that an order for costs on an indemnity basis is warranted.

[16] An order in the following terms is published concurrently with this decision:

•  Pursuant to ss 400A and 401(1A) of the Act respectively, I order that Ms Sharkey and Mr Mullally are to pay the LWB’s costs incurred after 17 December 2019 and until 8 April 2019 on an indemnity basis, apportioned on the basis that Mr Mullally incurs 67% of the total costs and Ms Sharkey 33%.

•  LWB is to provide a written itemised assessment of the costs to Ms Sharkey and Mr Mullally within 14 days of this Order, having regard to items that are mentioned in the Schedule of Costs in Schedule 3.1 of the Fair Work Regulations 2009 (Cth).

•  The parties are then directed to confer and seek to reach agreement on the quantum of the costs. If the costs are not agreed within 14 days of the receipt of the assessment by Ms Sharkey and Mr Mullally, LWB is to file the itemised assessment with my Chambers for the purposes of taxing the costs. Further directions will then be issued.

•  The costs are to be paid within 28 days of the date of this Order (if the quantum is agreed) or the date the costs are taxed by the Commission, whichever is the latter. 13

BACKGROUND TO THE COSTS APPLICATION

[17] Given the issues requiring consideration, it is necessary to set out in some detail the context in which the costs application is made. However, from the outset it is important to observe that the time limits for a costs application were met. 14

[18] Ms Sharkey had worked in the role of a Care Coordinator at the Miami Lane Respite Home, a facility operated by LWB, since 19 August 2013. For the most part, her employment history appeared uneventful.

[19] However, on 4 September 2018, she submitted a complaint to Ms Jennie Burns, State Director WA of LWB. In short, her complaint detailed her discontent with:

a) her removal from the on call roster, which she asserted had resulted in an approximate 20% reduction in pay (and was accompanied by the absence of consultation);

b) removal of ‘restrictive practices’ at Miami Lane, which LWB said had been implemented and maintained absent endorsement;

c) a lack of support from management when subjected to a violent incident;

d) a lack of support from management regarding treatment for a suspected cardiac problem; and

e) removal of one of the Miami Lane vehicles.

[20] In response to Ms Sharkey’s email, Ms Burns offered Ms Sharkey the opportunity to discuss her concerns with Ms Meyers, who at the time was acting in the position of State Director. Ms Meyers sent an email to Ms Sharkey on 5 September 2018 noting that she would be happy to arrange a meeting to discuss Ms Sharkey’s concerns with both her, and Ms Sharkey’s Manager, Ms Hill.

[21] However, Ms Sharkey took a period of personal leave commencing 6 September 2018. She remained on personal leave until her resignation from her employment, effective 9 October 2018. During that period of personal leave she did not respond to either the correspondence of Ms Burns or that of Ms Meyers. At the hearing on jurisdiction, when Ms Sharkey was asked why she had not communicated with any representative of LWB, her evidence was that she was advised by her solicitor not to do so. 15

[22] Ms Sharkey provided her Manager with a letter of resignation on 8 October 2018. 16 Ms Crawford, Senior People, Safety, and Culture Advisor, gave her view that the resignation was framed as a ‘forced resignation’,17 and it appeared clear to Ms Crawford that Ms Sharkey was positioning herself to pursue an unfair dismissal claim on that basis.18 Ms Crawford stated that she was aware that LWB sought the assistance of Ai Group, of which LWB is a member.19

[23] Ms Crawford gave evidence that having considered Ms Sharkey’s letter of resignation, she consulted with Ms Meyers, who usually occupied the position of Regional Manager WA Disability and Aged Care, and a written response to the letter was prepared. On 28 October 2018, LWB was said to have placed Ms Sharkey on notice as to the unmeritorious nature of the application by way of its response letter of 28 October 2018.

[24] The application for relief in respect of the alleged unfair termination of employment was made on 28 October 2018. 20

[25] Prior to this, on 26 October 2018, Workclaims Australia lodged a claim in the Industrial Magistrates Court claiming that LWB had failed to comply with the Social, Community, Home Care and Disability Services Industry Award 2010 (Award) and contravened, or failed to comply with the Act. The Orders sought were for the payment of $4017.00, pre-judgment interest, and a penalty.

[26] Instructions were provided to Ai Group to prepare an employer response (Form F3) and associated annexures, 21 which were subsequently filed with the Commission and served on 6 November 2018.

[27] On 21 November 2018, the parties participated in a conciliation facilitated by the Commission. The dispute remained unresolved.

[28] On or around 3-4 December 2018, LWB provided a written offer to Ms Sharkey to settle the matter for a financial sum. The sum amounted to $5400 (gross). The offer noted that if the matter could not be resolved, then Ai Group was instructed to proceed to prepare statements and submissions in accordance with the directions of the Commission, and press the matter to arbitration. Ms Sharkey did not accept the offer. The offer extended to the settlement of the application before this Commission, and to any other work-related claims.

[29] On 6 December 2018, Ms Sharkey provided a counteroffer to LWB.

[30] On 17 December 2018, Ms Crawford instructed Ai Group to file LWB’s outline of submissions and associated witness statements; and come 17 January 2019, LWB had also filed its submissions in reply.

[31] On 29 January 2019, Ms Sharkey made a further offer to settle all matters for the amount of $7500. LWB rejected the offer.

[32] On 1 February 2019, Ms Crawford stated that she attended the jurisdictional hearing and instructed Ai Group throughout the proceedings. Ms Sharkey did not seek reinstatement. Ms Crawford gave evidence that she was aware that Ms Sharkey found alternative employment some four weeks after her resignation. 22

NATURE OF THE COSTS CLAIMED

[33] In itemising its application for costs in its Form F6, LWB appeared to be claiming the costs of its legal representative who performed the work involved in:

a) preparation for, and representation at conciliation – includes taking of instructions, perusal of documents, preparation of necessary documents, service, attendances, and general care and conduct; and

b) preparation for, and representation at arbitration – including taking of instructions, perusal of documents, preparation of necessary documents, service, attendances, and general care and conduct.

[34] On its Form F6, LWB stated that costs and disbursements were to be itemized. At the hearing, LWB tendered into evidence a spreadsheet that was said to outline a description of the work done for the proceedings, and the costs attributed to that work (Exhibit A3). The objections of Mr Mullally were duly noted; he questioned the authenticity of the document because there was a lack of evidence as to who authored the document. Ms Crawford, who had not authored the document, professed to have provided the instructions that had resulted in the work which was itemised.

[35] Having taken into consideration Ms Crawford’s evidence, I was content to admit into evidence Exhibit A3 insofar as it showed that legal costs had been incurred. However, I am not satisfied that the document can be relied upon to determine the items of expenditure that could be covered by an order made.

ITEMS OF EXPENDITURE THAT CAN BE COVERED BY AN ORDER FOR COSTS

[36] From my review of Exhibit A3, it would appear that LWB is claiming costs on an indemnity basis because in itemising its claims, there is no with reference to Schedule 3.1 - Schedule of Costs in the Fair Work Regulations 2009 (Cth) (the Regulations), and the amounts claimed appear in excess of the rates or amounts appearing in the Schedule.

[37] Section 403 sets out the provisions concerning a Schedule of Costs. Of particular relevance is s 403(2), which states:

(2) [Restrictions imposed by schedule of costs]

If a schedule of costs is prescribed for the purposes of subsection (1), then, in awarding costs under section 611 in relation to a matter under this Part, or awarding costs under section 400A or 401, the FWC:

(a) is not limited to the items of expenditure appearing in the schedule; but

(b) if an item does appear in the schedule – must not award costs in relation to that item at a rate or of an amount that exceeds the rate or amount appearing in the schedule.

[38] In Stanley v QBE Management Services Pty Limited T/A QBE, 23 the Commission’s power to award indemnity costs was considered in light of s 403. It was observed that s 403 expressly provided that the Commission was not limited to the items of expenditure in any schedule. Further, Schedule 3.1 to Regulation 3.08 of the Regulations contemplated that in relation to a number of items specified, the Commission should exercise discretion in determining the amounts to be awarded.24 In Shaun Welsh v Just Fine Food T/A Vanilla Slice Pty Ltd,25 Deputy President Clancy concluded that when awarding costs under either s 400A or s 611, there is discretion to award costs on either a party-party, or indemnity basis.26 The same approach is therefore followed, and in this case, an order for costs on an indemnity basis will be made.

SHOULD COSTS BE AWARDED AGAINST MS SHARKEY – UNDER S 400A?

Submissions of LWB

[39] LWB submitted that Ms Sharkey’s decision to resign was made on a voluntary basis, and alternative pathways had been available to her to voice her opinion about the reasonable management steps that LWB took.

[40] LWB submitted that Ms Sharkey had taken a number of unreasonable acts following the conclusion her employment that caused LWB to incur significant costs related to defending the initial proceedings. This was despite Ms Sharkey being placed on notice as to the futility of her claim, at multiple junctures. LWB said those unreasonable acts were:

a) filing the initiating application when already on notice as the unmeritorious nature of the claim by way of correspondence from LWB dated 28 October 2018 (Unreasonable Act 1);

b) failing to discontinue the application subsequent to receiving LWB’s response to the application on 6 October 2017 (Unreasonable Act 2);

c) failing to discontinue the application subsequent to the conciliation held on 21 November 2018 (Unreasonable Act 3);

d) failing to accept the offer of settlement from LWB dated 4 December 2018 (Unreasonable Act 4);

e) failing to discontinue the application subsequent to having received LWB’s outline of submissions and associated witness statements, dated 17 December 2018 (Unreasonable Act 5);

f) failing to disclose the application subsequent to having received LWB’s submissions in reply dated 17 January 2019 (Unreasonable Act 6); and

g) failing to discontinue the application before or during the proceedings on 1 February 2019 (Unreasonable Act 7).

[41] LWB stated that an order for costs must be made against Ms Sharkey under s 400A of the Act, consistent with the principles espoused in Nissan Casting Plant (Australia) Pty Ltd v Just Relations. 27

Submissions of Ms Sharkey

[42] Mr Mullally contended that the Commission is a tribunal with a ‘no costs’ jurisdiction to enable litigants to ventilate their grievances without the fear of a costs order against them should they be unsuccessful.

[43] In respect of the application under s 400A, attention was directed to LWB’s offer to resolve the dispute on 3 December 2018. Mr Mullally submitted that they, presumably referring to himself and Ms Sharkey, rejected the offer of $5400 because it was in full and final settlement of the unfair dismissal application and any other work-related claims. At the relevant time Ms Sharkey had commenced proceedings in the Industrial Magistrate’s Court for breaches of the Award. Therefore, acceptance of the offer would have been in resolution of the action for recovery of a first aid allowance under the Award, in addition to the application.

[44] Mr Mullally continued that LWB had not disclosed in its case that Ms Sharkey, while rejecting the offer of 3 December 2018, had made a counteroffer of $10,000 in full and final settlement of all matters. Mr Mullally reported the counteroffer was ignored, notwithstanding it was not an unreasonable offer in all the circumstances. Ms Sharkey proffered a further offer to settle all matters on 29 January 2019. It was rejected.

[45] It was against this factual matrix that the conduct of Ms Sharkey must be examined. When that examination is undertaken, it cannot be said, according to Mr Mullally, that Ms Sharkey engaged in an unreasonable act or omission. Further, he contended that the restoration of the employee’s good name is often more important than the settlement offer. 28

The legislative framework for costs under s 400A

[46] Part 3-2 of the Act sets out its objects in the following terms:

(1) [Object]

The object of this Part is:

(a) to establish a framework for dealing with unfair dismissal that balances:

(i) the needs of business (including small business); and

(ii) the needs of employees; and

(b) to establish procedures for dealing with unfair dismissal that:

(i) are quick, flexible and informal; and

(ii) address the needs of employers and employees; and

(c) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.

(2) [“Fair go all round” to be accorded]

The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a “fair go all round” is accorded to both the employer and employee concerned.

[47] At s 400A, the Act provides:

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

[48] Section 400A(1) establishes two pre-conditions for the making of an order for costs under the subsection (in addition to the requirement in s 400A(2)). 29 The first is that the Commission must be satisfied that a party engaged in an unreasonable act or omission in relation to the conduct or continuation of the matter, and the second is that such act or omission caused the other party to the matter to incur costs.30

[49] It can therefore be reasoned that s 400A concerns matters already instituted, not whether it was reasonable to have instituted a matter in the first place. 31

[50] When interpreting the words of the Act, the starting point is to accord the words their ordinary meaning, having regard to their context and legislative purpose. Context includes the existing state of the law and the mischief the legislative provisions were intended to remedy, 32 and the legislative history.33

[51] Sections 400A and 401 derive from a policy purpose to balance the need to protect workers from unfair dismissal, and to provide a deterrent against unreasonable conduct during proceedings. 34 The power to award costs under s 400A is not, it is said, intended to prevent a party from robustly pursuing or defending an unfair dismissal claim.35 The power is, however, intended to address the small proportion of litigants who pursue or defend unfair dismissal claims in an unreasonable manner.36

[52] In Roy Morgan Research Ltd v K Baker (Roy Morgan), 37 the Full Bench considered the phrase ‘unreasonable act or omission’ as referred to in s 170CJ(1) of the Workplace Relations Act 1996 (Cth) (WR Act). The Bench’s analysis remains relevant to the consideration of s 400A.38 In Roy Morgan, the Full Bench referred to the decision in Goffet v Recruitment National Pty Ltd (Goffet),39 where it was clarified that unreasonable conduct is either an unreasonable act, where the act was intentional, or if unintentional, it would follow that it would be an unreasonable omission.

[53] In respect to settlement offers, in Roy Morgan the Full Bench referred to the decision in Brazilian Butterfly Pty Ltd v Charalambous (Brazilian Butterfly), 40 where the Full Bench said that when a reasonable person is confronted with an offer of settlement from the other party, it will determine whether, and, how to respond to such an offer after considering all the circumstances of the case.41 The following circumstances, which are relevant to this decision, but which are not exhaustive, are:

a) the terms of the settlement offered in relation to the relief sought;

b) the relative strengths of the parties’ cases (and thus their relative prospects of success) in relation to both ‘liability’ and the relief sought;

c) the likely length and cost of proceeding to a hearing if the matter does not settle; and

d) any adverse consequences that will accrue to a party if they accept a settlement on particular terms rather than successfully prosecute or defend the primary application.

[54] Inevitably most cases arise from contested facts, or contested interpretations of particular facts. In Brazilian Butterfly the Full Bench asked the question what knowledge was to be attributed to the reasonable person considering whether, and if so, how to respond to an offer of settlement. 42 Adopting what was expressed by the Full Bench in Kangan Batman TAFE v Hart (Kangan Batman TAFE),43 the Full Bench agreed that a party could not simply disregard matters that should have been reasonably apparent, and then claim that such matters were not apparent to them.44

[55] Therefore, consideration must always be had to the particular circumstances of the case at hand. While a case may have very strong prospects of success this may not justify a failure to participate in settlement negotiations initiated by a serious settlement offer from the other party. 45 While a party may offer the statutory cap on compensation, it may be entirely reasonable for a person to decline that offer and insist upon a withdrawal of the dismissal and acceptance of a resignation.

[56] Commissioner Bissett considered the operation of s 400A in Sidney v Employsure Pty Ltd. 46 The Commissioner, drawing upon the various authorities that the Full Bench had considered in Roy Morgan, summarised that:

a) a failure to inform another party of an inability to attend proceedings would be, if intentional, unreasonable and if accidental, an unreasonable omission;

b) a failure to advise the other party of the first party’s intentions, if deliberate or reckless, would be unreasonable and if an omission could be equally unreasonable;

c) very strong prospects of success will not always justify a failure to participate in settlement negotiations; and

d) a reasonable person will determine if and how to respond to an offer of settlement after considering all of the circumstances of the case, including the terms of settlement in relation to the relief sought, the relative strength of the parties cases, the likely length and cost of proceeding to hearing if the matter does not settle, and adverse consequences of the acceptance of a settlement rather than prosecuting or defending the primary application. 47

[57] If satisfied that costs were incurred as a result of Ms Sharkey’s unreasonable act or omission in connection with the conduct or continuation of the unfair dismissal application, I am not obliged by the Act to order costs. It remains a discretionary decision. It is evident that the legislative intent behind s 400A is such that the power to award costs is to be exercised only in clear cases of unreasonable conduct. 48

Consideration

[58] In respect of Unreasonable Act 1, that is, the commencement of proceedings, I have considered the approach taken in Matthew Gugiatti v SolarisCare Foundation Ltd. 49 I agree that s 400A concerns matters already instituted, not whether it was reasonable to have instituted a matter in the first place.50 I therefore find that the initiation of the application, was not unreasonable.

[59] Unreasonable Act 2 referred to Ms Sharkey’s failure to discontinue her application when in receipt of LWB’s Employer Response. LWB’s response was comprehensive and outlined its objections to Ms Sharkey’s assertions in some detail. However, as of 6 November 2018, Ms Sharkey had not been privy to the evidence LWB would adduce, and was not yet cognisant of the meticulous submissions it would provide that thwarted the lines of argument she would pursue. Ms Sharkey’s continued pursuit of her application at this stage cannot be cast as an act that was unreasonable. It is primarily for this reason that I find that Unreasonable Act 4 was not unreasonable. However, attention turns first to Unreasonable Act 3.

[60] Unreasonable Act 3 was said to be a failure to discontinue the application following the conciliation held on 21 November 2018. LWB submitted that, at this point, Ms Sharkey had received a response from it concerning her resignation, in addition to the Employer Response. Ms Sharkey was clearly on notice regarding the futility of her application, and the clear lack of jurisdiction. LWB contended that in practical terms, her failure to appropriately appraise herself that her position was untenable and was akin to an unreasonable act. However, for the reasons I have already given regarding the absence of an outline of submissions and evidence, I do not consider in the circumstances of this case that Ms Sharkey’s continuation with her application at this point constituted an unreasonable act.

[61] During the course of proceedings LWB made an offer of settlement on 3-4 December 2018 in the amount of $5400 (gross). The offer extended to the settlement of the application before this Commission, and to any other work-related claims, which in this case included the claim for an unpaid first aid allowance. Through this offer, LWD noted that if the matter remained unresolved then instructions would be given to its legal representatives to prepare statements and submissions. Ms Sharkey declined the offer. In Roy Morgan it was expressed that a reasonable person will determine if and how to respond to an offer of settlement after considering all of the circumstances of the case and so forth. To appreciate all of the circumstances, it is therefore necessary to return to the decision at first instance.

[62] Ms Sharkey had prosecuted her case on the basis that she had resigned from her employment because she was forced to do so because of conduct, or a course of conduct, engaged in by her employer.

[63] Relevantly, section 386 sets out that a person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer. 51

[64] As observed in the decision at first instance, the definition of ‘dismissal’ has two elements. In Bupa Aged Care Australia Pty Ltd t/a Bupa Aged Care Mosman v Shahin Tavassoli, the Full Bench clarified the operation of the two elements. Concerning the second element, s 386(1)(b), it was said:

… resignation that is “forced” by conduct or a course of conduct on the part of the employer will be a dismissal within the second limb of the definition in s.386(1)(b). The test to be applied here is whether the employer engaged in the conduct with the intention of bringing the employment to an end or whether termination of the employment was the probably [sic] result of the employer’s conduct such that the employee had no effective or real choice but to resign. Unlike the situation in (1), the requisite employer conduct is the essential element. 52

[65] Therefore, it can be seen that the question is not merely whether the act of the employer, which must be a principal contributing factor, 53 resulted directly or consequentially in the termination of employment, but whether, on an objective analysis of the employer’s conduct, the employee’s effective or real choice was so negated that resignation was inevitably the only recourse.

[66] In her outline of submissions filed on 23 November 2018, Ms Sharkey submitted that the most significant impact upon her was the unilateral removal of her from the on-call system for Miami Lane; resulting in a reduction of salary by about $12,000 per annum. Ms Sharkey in addition relied upon the persistent refusal of her Line Manager, Ms Hill, to communicate with her personally, the lack of response from Ms Hill concerning two workplace incidents, and a unilateral decision to remove restrictive practises at Miami Lane.

[67] On 6 December 2018, Ms Sharkey provided a written offer to LWB to settle, for a financial sum, the application before this Commission and the other work related claim concerning breach of the Award. Mr Mullally, writing on behalf of Ms Sharkey stated:

…Our client wishes to point out that there is overwhelming evidence of repudiatory conduct and conduct and behaviour of the employer which forced her to resign. She has also initiated a claim for breach of the Award regarding the failure of your client to pay a first-aid allowance to her during the period of her employment. This claim alone exceeds $4,000.

Accordingly then your client’s offer is rejected. In a spirit of continuing conciliation our client is however prepared to compromise in all the circumstances and proposed that in exchange for discontinuing both actions our client be paid the sum of $10,000 gross…

[68] Mr Mullally had attributed in excess of $4000 for a claim commenced within another jurisdiction concerning breach of an Award. Given that this claim does not sit within the jurisdiction of the Commission and was unrelated to application at first instance, I am not placed to evaluate the relative strength of that claim.

[69] I have observed that Mr Mullally saw fit to attribute approximately $4000, if not more, to the claim in respect of the alleged Award breach. One can conservatively deduce that approximately $6000 may have been attributed to the application for an unfair dismissal remedy. LWB’s offer of $5400 (gross) appears manifestly reasonable given the equivalence in value to Ms Sharkey’s counteroffer of 6 December 2018.

[70] On making the counteroffer, LWB submitted that Ms Sharkey should have known, or ought to have known:

a) she had not been forced to resign such that it could be rightfully characterised as a dismissal for the purposes of the Act;

b) there was no contractual right to the on-call allowance;

c) there was no contractual right to the additional car at Miami Lane;

d) LWB was not obliged to consult with her, as alleged; and

e) she had not been subject to bullying or harassment.

[71] However, at the time the offer of 3-4 December 2018 was made, and the counteroffer of 6 December 2018, Ms Sharkey had not yet received LWB’s outline of submissions or the evidence it would seek to rely upon. At this juncture Ms Sharkey and her representative were clearly relying on the repudiatory conduct of LWB as the basis for Ms Sharkey’s application. At paragraph 15 of the outline of submissions, it was stated:

[I]n all the circumstances the applicant could not reasonably be expected to continue under management which treated her in this way. She was entitled to accept the repudiation which she did in her resignation letter of 8 October 2018.

[72] In the absence of LWB’s evidence and outline of submissions, an assessment of the relative strength of Ms Sharkey’s case in comparison to that of LWB, could have been considered, on any reasonable basis, a premature exercise, and one that may not have provided reliable guidance for the purpose determining whether to settle the matter.

[73] However, on receipt of LWB’s outline of submissions, witness statements, and documentary material, that all changed. Ms Sharkey had before her LWB’s case, presented in forensic fashion. Nothing was undisclosed. LWB’s narrative was laid bare, and it unravelled the contentions that Ms Sharkey was so reliant upon. On any objective basis, it was apparent that not only had Ms Sharkey’s ‘repudiatory’ argument faltered, but the negation of choice was going to be difficult, if not near futile, to press.

[74] In her submissions, Ms Sharkey suggested that the ‘factual disputes between parties cannot be resolved until hearing when the evidence is on oath and the witness statement are tested under cross examination’. That submission must be rejected in the circumstances of this matter. The evidence of Ms Hill, Ms Crawford and Ms Riordan was uncontroversial; the documents annexed to their witness statement providing a cogent account of the narrative LWB would rely upon.

[75] When settlement proposals are made, the context is inevitably one where sworn evidence has not yet been traversed. And yet, a party is called to evaluate the relative strengths of both its, and another’s case. The evaluation of relative prospects of success, as referred to in the decision of the Full Bench in Brazilian Butterfly, is simply an exercise where the possibility or likelihood of being successful with one’s case is considered.

[76] While at the time of receiving LWB’s outline of submissions and evidential material Ms Sharkey was not called to consider a settlement offer from LWB, the materials clearly placed her in the position where the evaluation of her case from a prospects of success perspective was conceivable, if not obligatory. And yet her dilatory response was to proffer a settlement offer over a month later on 29 January 2019 in the amount of $7500 to resolve all matters.

[77] At hearing Mr Mullally elected to rely upon section 386(1)(b) of the Act and confirmed that Ms Sharkey no longer sought to rely upon the repudiatory conduct argument. An apt concession, as the gravamen of Ms Sharkey’s argument had been cast out. Ms Sharkey was left to contend that her resignation was brought about by her having no effective or real choice but to resign, because of the conduct of LWB. It was, however, Ms Sharkey who took personal leave from 6 September 2018 until 8 October 2018 and then resigned; all the while choosing not to communicate with LWB management about her grievances. This was despite the prompt invitation from LWB management to do so.

[78] When Ms Sharkey received LWB’s submissions and evidential materials on 17 December 2018, she did so against a backdrop of knowing that her silence during the period of 6 September 2018 through 8 October 2018 was a deliberate act on her behalf. She had, after all, conceded at the first instance hearing that she had followed the advice of her solicitor regarding her silence. On receipt of the materials from LWB on 17 December 2018, Ms Sharkey could not ‘simply disregard matters that should have been reasonably apparent’, to borrow the turn of phrase adopted in the decision of Kangan Batman TAFE. 54 By then a reasonable person would have appreciated the failings of the repudiatory conduct argument and have appreciated that she faced insurmountable difficulties were she to press that there had been no real choice but to resign.

[79] Ms Sharkey submitted, referring to the decision in Camille v Berala on the Park HR Pty Ltd (Camille), 55 that the restoration of the employee’s good name is often more important than the settlement offer. However, it was not the case, as were the circumstances in Camille that Ms Sharkey had been explicitly dismissed. Ms Sharkey resigned from her position and therefore it is problematic to discern how her persistence in the proceedings related to the restoration of her name. The contention is unconvincing.

[80] At the point of receiving LWB’s materials on 17 December 2018, Ms Sharkey’s failure to discontinue at this juncture was an unreasonable act as contemplated by s 400A of the Act. I am not satisfied that Exhibit A3 can be relied upon at this stage to determine the precise items of expenditure that could be covered by an order made. However, I am satisfied, in light of Ms Crawford’s evidence, that Exhibit A3 showed legal costs had been incurred.

SHOULD COSTS BE AWARDED AGAINST MS SHARKEY – UNDER S 611(2)(B)?

Observation concerning the application of s 611(2)(b) to this matter

[81] LWB also premised its costs application on Ms Sharkey’s application having been made vexatiously or without reasonable cause, or in circumstances where it should have been reasonably apparent to her, on an objective basis, her application had no prospects of success.

[82] Whist consideration of these contentions is redundant in light of my determination concerning s 400A, I have provided a somewhat detailed consideration of s 611(2)(b), albeit not exhaustive. My reason for doing so will shortly become obvious. I do, however, acknowledge that such lengthy analysis may not assist or be of interest to Ms Sharkey who regrettably now faces a costs order against her under s 400A.

[83] Were I required to make a determination as to whether Ms Sharkey’s application had been made vexatiously, or without reasonable cause, I would conclude that at the time of making the application, that was not the case.

Submissions of LWB

[84] LWB submitted that Ms Sharkey had ample opportunity, at multiple junctures, to consider the fundamental failings of her claim. However, she either ignored that there were no reasonable prospects of success when making the application, or chose to be ignorant of the unmeritorious nature of her claim. With respect to the former, LWB advanced that the Commission should exercise its discretion and award costs. If the latter, costs should still be awarded consistent with the principle espoused by the Deputy President in Dino De Giusti v NSW Trains t/a NSW Trainlink. 56

Submissions of Ms Sharkey

[85] There were limited submissions made by Ms Sharkey with regard to the operation of s 611(2)(b) in respect of the circumstances of her case. While some principles were traversed, which were said to have emerged from authorities, no authorities were referenced. Further, it was proposed that ‘the test (in this case) is to be applied when the application is commenced’. A proposition which, as will be seen, appears both supported and unsupported by decisions within the Commission.

The legislative framework for costs under s 611

[86] The Commission’s general powers to award costs are grounded in s 611, which states:

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. 57

[87] Section 611(1) sets out the starting point in relation to costs of proceedings before the Commission. Each person involved in a matter, must bear their own costs. This statutory imperative is said to have derived from the policy purpose that a person is entitled to make, or defend an application made under the Act, without the risk that a costs order may be made against them. 58

[88] There are exceptions to each party bearing their own costs. Those exceptions arise if the Commission is satisfied that:

(a) a person made an application, or responded to an application vexatiously or without reasonable cause; or

(b) it should have been reasonably apparent to a person that their application or a person who responded to an application had no reasonable prospects of success.

[89] Section 611 contains no indication of the considerations which the Commission must take into account in deciding how to exercise its discretion. 59 The discretion conferred is expressed in general, unqualified, terms.60 In Dino De Giusti v NSW Trains t/a NSW Trainlink, the Deputy President referred to the observation of the High Court in O’Sullivan v Farrer:

Where a power to decide is conferred by statute, a general discretion, confined only by the scope and purposes of the legislation, will ordinarily be implied if the context (including the subject matter to be decided) provides no positive indication of the considerations by reference to which a decision is to be made. 61

[90] The objects of the Act are set out in s 3; I do not intend to repeat them here.

[91] Relevant are ss 577 and 578 of the Act, which state respectively:

577 Performance of functions etc. by the FWC

The FWC must perform its functions and exercise its powers in a manner that:

(a) is fair and just; and

(b) is quick, informal and avoids unnecessary technicalities; and

(c) is open and transparent; and

(d) promotes harmonious and cooperative workplace relations.

Note: The President also is responsible for ensuring that the FWC performs its functions and exercises its powers efficiently etc. (see section 581).

578 Matters the FWC must take into account in performing functions etc.

In performing functions or exercising powers, in relation to a matter, under a part of this Act (including this Part), the FWC must take into account:

(a) the objects of this Act, and any objects of the part of this Act; and

(b) equity, good conscience and the merits of the matter; and

(c) the need to respect and value the diversity of the work force by helping to prevent and eliminate discrimination on the basis of race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer's responsibilities, pregnancy, religion, political opinion, national extraction or social origin.

The meaning of ‘no reasonable prospects of success’

[92] In Baker v Salva Resources Pty Ltd, 62 the Full Bench stated the concepts ‘should have been reasonably apparent’ and ‘had no reasonable prospect of success’ within s 611(2)(b) had been well traversed, noting:

•  ‘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; 63 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, 64 or so lacking in merit or substance as to be not reasonably arguable.65

[93] Although considering the phrase in the confines of a different statute, in Spencer v Commonwealth of Australia the High Court said:

In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like "clearly", "manifestly" or "obviously") as "frivolous", "untenable", "groundless" or "faulty". But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word "reasonable", in the phrase "no reasonable prospect", be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a "frivolous", "untenable", "groundless" or "faulty" claim.

Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is "no reasonable prospect" of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to "no reasonable prospect" can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase "just and equitable" when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes. 66

Consideration

[94] In Qantas Airways Limited v Mr Paul Carter (Qantas), 67 the Full Bench stated that it was clear from the terms of s 611 that the point at which the Commission must determine whether or not an application was vexatious, without reasonable cause or had no reasonable prospect of success, was when the application was made. In Qantas the application was one with regard to an appeal.68

[95] An application for costs was made in Harbour City Ferries Pty Ltd v Maritime Union of Australia, The; Australian Maritime Officers’ Union, The (Harbour City Ferries). 69 The initiating application was under s 418 of the Act. In Harbour City Ferries, the Commissioner formed the view that when one of the parties closed the evidentiary case in the proceedings on 19 March, having earlier redacted the only evidence upon which any reliance could have been placed for the making of orders, it became obvious that the application had no reasonable prospect of success insofar as it was taken against the Australian Maritime Officers’ Union. The Commissioner considered that as of 19 March 2014, s 611(2)(b) of the Act had been satisfied. However, the Commissioner’s reasoning regarding s 611(2)(b) is telling:

It would appear therefore, that as the exception to the rule established by subsection 611(2)(b) of the Act had been met, a costs Order in respect of all costs from that point in time should be made against HCF. I would be inclined to make such an Order but I believe I am unable to do so because of the Full Bench authority established for the interpretation of s 611.

A Full Bench of the Commission in the matter of Qantas Airways Limited v Mr Paul Carter interpreted the provision of s.611 of the Act and in respect to the particular point in time at which the exceptions to the general rule found in subsections 611(2)(a) and (b) are to be contemplated stated:

[2] It is clear from the terms….. 70

[96] The Commissioner concluded that the general rule on costs established by s 611 of the Act operated in a fashion which confined the exemptions in ss 611(2)(a) and (b) to be determined in respect to the circumstances at the time when the application was made. 71

[97] The reasoning of the Full Bench in Qantas was subsequently adopted in the decision of Helen Miles v Colmar Brunton Pty Ltd (Miles). 72 In Miles, an application for costs was made under s 611 in circumstances where an initiating application for a remedy for unfair dismissal had been made. In that decision, the Commissioner considered the Full Bench decision of Qantas and thereafter expressed with respect to s 611(2)(b):

Considering the wording of s 611(2)(b) and the above Full Bench decision it is clear that I need only consider whether it should have been reasonably apparent to Ms Miles, on an objective basis, that her application had no reasonable prospects of success at the time of lodgement of her application on 4 December 2015. The test is an objective test of what should have been reasonably apparent to Ms Miles, not to other parties to the proceedings.

[98] The approach adopted in Qantas, Harbour City Ferries and Miles has not been unquestioningly accepted, however, with alternative interpretations of s 611(2)(b) being broached by Members of this Commission.

[99] In Sharn Stanley v QBE Management Services Pty Limited T/A QBE, 73 the Commissioner voiced that it was clear from the express terms of s 611(2)(a), which spoke of the person who ‘made the application’, that the reference point for deciding whether s 611(2)(a) was satisfied was the point at which the application was made. However, the Commissioner opined that s 611(2)(b) was not so constrained. In this respect the Commissioner stated:

…Whilst the subsection refers to a person who ‘should have been’, this use of past tense is a reference to the steps in the proceeding up until the matter is determined or discontinued. The words of 611(2)(b) do not limit the test to the making of the application. The subsection includes in the conduct to be examined a ‘response to the application’. Clearly, s.611(2)(b) cannot be limited to the time at which the application is made but applies in the course of proceedings until the time at which the matter is determined by FWA or discontinued.

[100] In the matter before me, Counsel for LWB directed me in written submissions to the opinion shared by the Deputy President in Dino De Giusti v NSW Trains t/a NSW Trainlink (De Giusti); who expressed with respect to s 611(2)(b) that:

[I]n practical terms, a person may gain knowledge in the lead up to proceedings (when the opposing party’s evidence is filed) or during the proceedings (e.g. after the cross examination of a crucial witness) which, when viewed objectively, would satisfy the test of the person’s case having no reasonable prospects of success. It would be from that point that costs may be awarded, if the person did not take steps to recognize that their case was frivolous, untenable, groundless or faulty. For an applicant, this may mean discontinuing the matter and for a respondent it may mean making offers to settle a matter. 74

[101] In Mr Ruben Galea v Billabong Custom Caravans Pty Ltd T/A Billabong Custom Caravans (Galea), 75 it was said that an assessment of whether the circumstance in s 611(2)(b) existed was not limited to the time at which a person make an application or response, although it may arise at that time.76 Similar to the decision in De Giusti, the Deputy President expressed that knowledge gained by a person during the course of a proceeding and after making an application or response might lead to a conclusion that it should have been reasonably apparent to a person that the person’s application or response had no reasonable prospect of success.77

[102] The Deputy President in Shaun Welsh v Just Fine Food T/A Vanilla Slice Pty Ltd agreed with the views that the Deputy President expressed in Galea that an assessment of whether the circumstance described in s 611(2)(b) existed is not limited to the time at which a person makes an application. 78

[103] While the Full Bench in Qantas expressed it was clear from the terms of s 611 that the temporal point of evaluation with regards to s 611 was when the application was made there is clearly some divergence with regard to that interpretation, albeit at a first instance level.

[104] There is an observation to be made about the reasoning of the Full Bench in the Qantas decision. A paucity of detail regarding the interpretative steps taken is evident. Subsections 611(2)(a) and (b) are clearly worded differently, and yet the Bench did not distinguish between the two, encompassing both in its ‘global’ interpretation. The question as to whether post lodgement conduct more generally is relevant to the issues raised by s 611(2)(b) of the Act, remains at the very least, questionable. 79

[105] Turning to the statutory interpretation of s 611, in E. Church v Eastern Health t/as Eastern Health Great Health and Wellbeing (Church), 80 the Full Bench stated that ascertaining the meaning of s 611 necessarily begins with the ordinary and grammatical meaning of the words used.81 These words must be read in context by reference to the language of the Act as a whole and to the legislative purpose.82

[106] In Church the Full Bench drew upon the similarities between s 611 and s 570 of the Act. Section 570 includes the expression ‘vexatiously or without reasonable cause’ in the context of cost orders in court proceedings. Noting that judgments that had construed s 570 and its antecedents were relevant to its consideration, the Full Bench traversed the Explanatory Memorandum and the authorities which had considered the expressions within the confines of s 570.

[107] The Explanatory Memorandum is in the following terms:

Clause 611 - Costs

2353. Subclause 611(1) provides that generally a person must bear their own costs in relation to a matter before FWA.

2354. However, subclause 611(2) provides an exception to this general rule in certain limited circumstances. FWA may order a person to bear some or all of the costs of another person where FWA is satisfied that the person made an application vexatiously or without reasonable cause or the application or response to an application had no reasonable prospects of success.

2355. A note following subclause (2) alerts the reader that FWA also has the power to order costs against lawyers and paid agents under clauses 376, 401 and 780 which deal with termination and unfair dismissal matters.

2356. Subclause 611(3) provides that a person to whom a costs order applies must not contravene a term of the order.

[108] When considering the expression ‘vexatiously’ in Church, the Full Bench stated that the question of whether an application was made ‘vexatiously’ looked to the motive of the applicant making the application. 83 Citing North J in Nilsen v Loyal Orange Trust,84 the Full Bench repeated that ‘an application will be made vexatious “where the predominant purpose … is to harass or embarrass the other party, or to gain a collateral advantage”’.85

[109] Attention thereafter turned to the expression ‘without reasonable cause’ and the Full Bench in Church referred to the decision in Kanan v Australian Postal and Telecommunications Union, 86 where it was said by Wilcox J that it seemed to him ‘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’.87

[110] What is evident from the Full Bench’s consideration of s 611(2) in Church is that it was limited to construing s 611(2)(a), a section that expressly refers to the first person having ‘made the application’ or ‘responded to the application’. The abovementioned authorities cited within Church confirm the approach that the relevant time to evaluate whether an application was made vexatiously, or without reasonable cause, is when proceedings were instituted.

[111] Following on from Church, in Neil Keep v Performance Automobiles Pty Ltd (Keep), 88 the Full Bench confirmed that the proper construction of s 611(2)(a) had been considered in Church, and subsequently set out that the decision was authority for four propositions, two of which included:

…

(ii) 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.

(iii) One way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether upon the facts known to the applicant at the time of instituting the proceeding, there was no substantial prospect of success.

(underlining my emphasis)

[112] With regard to its interpretation of s 611(2)(b) the Full Bench stated:

As to s 611(2)(b), the FWC may make a costs order against a person if satisfied that ‘it should have been reasonably apparent’ to that person that their application had ‘no reasonable prospect of success’. The expression ‘should have been reasonably apparent’ in s.611(2)(b) imports an objective test, directed to a belief formed on an objective basis as opposed to the applicant’s subjective belief.

There is Full Bench authority for the proposition that the Commission should exercise caution before arriving at the conclusion that an application had ‘no reasonable prospects of success. In Deane v Paper Australia Pty Ltd a Full bench made the following observation about this expression in the context of enlivening a power to award costs under s.170CJ(1) of the Workplace Relations Act 1996:

“unless upon the facts apparent to the applicant at the time of instituting the [application], the proceeding in question was manifestly untenable or groundless, the relevant requirement in s.170CJ(1) is not fulfilled and the discretion to make an order for costs is not available”. 89

Footnotes omitted.

[113] The Full Bench observed that in Deane v Paper Australia Pty Ltd, 90 the expression ‘no reasonable prospects of success’ was considered in the context of s 170CJ(1) of the Workplace Relations Act 1996 (Cth) (WR Act). Section 170CJ(1) of the WR Act concerned costs orders in the context of applications made under s 170CE, which dealt with terminations of employment. Section 170CJ(1) provided:

(1) If the Commission is satisfied:

(a) that a person (first party);

(i) made an application under section 170CE; or

(ii) began proceedings relating to an application; and

(b) the first party did so in circumstances where it should have been reasonably apparent to the first party that he or she had no reasonable prospect of success in relation to the application or proceeding;

the Commission may, on application under this section by the other party to the application or proceeding, make an order for costs against the first party.

[114] As observed, s 170CJ(1) was not a general costs provision, and the language of the provision included ‘made an application’ and ‘began proceedings’. It is apparent that the Full Bench interpreted s 170CJ(1) such that consideration of the section was limited to an evaluation of the facts apparent to the applicant at the time when an application was instituted.

[115] However, unlike s 170CJ(1) of the WR Act and s 611(2)(a) of the Act, s 611(2)(b) includes no similar temporal reference to the word ‘made’. The focus of the consideration appears unbounded, save that it should have been reasonably apparent to the first person that his or her application, or response to the application, had no reasonable prospect of success.

[116] The predecessor to s 611 insofar as a general cost provision is concerned, appears to have been s 824 of the WR Act, which relevantly does not include an equivalent provision to that of s 611(2)(b). Under s 824(1), The Commissions was required to consider whether proceedings had been instituted vexatiously, or without reasonable cause. There is no reference to the ‘no prospects of success’ provision.

[117] What becomes apparent is that when the legislature wants to set a temporal reference is does so by reference to ‘made an/the application’, 91 ‘began proceedings’,92 or, for example, ‘instituted proceedings’.93 Section 611(2)(b) includes no such temporal reference. In Construction, Forestry, Mining and Energy Union v Collinsville Coal Operations, the Full Bench noted that where the legislature intended that a particular state of affairs be apparent at a particular time, it has expressly said so by use of a temporal connection.94

[118] That an evaluation of a ‘reasonable prospect of success’ is confined to the one point of time when the application is made or otherwise lodged, as expressed by the Full Bench in Qantas, appears at odds with the matters the Commission is obliged to take into account in performing its functions. Namely, equity, good conscience and the merits of the matter. As the Commissioner observed in Harbour City Ferries, he was inclined to make an order for costs under s 611(2)(b) at a particular point in time, because at that point in the proceedings he was satisfied that the test within the section ‘had been met’. The making of a costs order that would operate from that point in the proceedings was evidently warranted given the evidence before the Commissioner.

[119] The Deputy President in De Giusti captured the matter of merits well. Discerning that the point in time where a person may gain knowledge which, when viewed objectively, would satisfy the test of the person’s case having no reasonable prospects of success may occur during the lead up to proceedings, such as when evidential material is filed, or even during the course of the proceedings when cross examination of a crucial witness has occurred. The Deputy President expressed that it would be from that point that costs may be awarded if the person did not take steps to recognise their case was untenable, groundless, or faulty.

[120] Regard is had to the context and purpose of the statute in interpreting its terms. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected. 95

[121] Similar to what has been said with regard to s 400A, the general costs provision under the Act can be seen as one that balances the protection of persons by limiting exceptions when costs can be sought, whilst providing a deterrent against unreasonable conduct during proceedings. To limit the operation of s 611(2)(b) such that its utility arises only where it must have been reasonably apparent to the person that he or she had no prospects of success at the time when the application was made, curtails the deterrent mechanism of the section and is quite contrary to equity, good conscience, and the merits of a matter.

[122] In a jurisdiction where the Commission must perform its functions and exercise its powers in a manner that is fair and just, it is difficult to conceive how adherence to the statutory interpretation adopted by the Full Bench in Qantas achieves compliance with that responsibility.

[123] The fixity of the interpretation of s 611(2)(b) remains disquieting. On an occasion it would seem that the Full Bench has itself had considerable sympathy for a costs applicant, in circumstances where legal costs had been incurred, which should not have occurred. 96 Yet, the Bench observed it was required to apply the considerations in s 611 as at the time the appeal was made.97

[124] In an oft cited passage, the Full Bench has acknowledged the Commission generally follows Full Bench decisions relating to the issue to be determined on the basis of policy and the sound administration of justice:

Although the Commission is not, as a non-judicial body, bound by principles of stare decisis, as a matter of policy and sound administration it has generally followed previous Full Bench decisions relation to the issue to be determined, in the absence of cogent reasons for not doing so. In another context three members of the High Court observed in Nguyen v Nguyen:

When a court of appeal holds itself free to depart from an earlier decision it should do so cautiously an only when compelled to the conclusion that the earlier decision is wrong. The occasions upon which the departure from previous authority is warranted are infrequent and exceptional and post no real threat to the doctrine of precedent and the predictability of the law: see Queensland v The Commonwealth (1977) 139 CLR 585 at 620 et seq, per Aickin J. 98

[125] The Full Bench in Yasmin S.B. Cetin v Ripon Pty Ltd t/as Parkview Hotel (Cetin) 99 has said that while the Commission is not a court, the public interest considerations underlying the observations set out above, have been applied with similar if not equal force to appeal proceedings in the Commission.

[126] With respect to single members, the Full Bench summarised the position in Re Dalrymple Bay Coat Terminal Pty Ltd as follows:

There is not a developed system of stare decisis in this jurisdiction. However, it is clearly desirable for members of the Commission sitting alone to adhere to Full Bench decisions which are relevant to the matter being determined. Such a policy aids consistent decision making which in turn provides the parties to Commission with great certainty. 100

[127] Confronted by a Full Bench decision which adopts an interpretation of s 611(2)(b) which appears at odds with matters I am to take into account, and a policy approach of the Commission, where conformity with previous decisions relevant to the matter being determined is clearly desirable, a conflict arises. Nevertheless, there remains a binding obligation upon this Commission, not derived from policy, but the Act - that the Commission must perform its functions and exercise its powers in a manner that is fair and just.

[128] I am satisfied that on any objective basis it was reasonably apparent to Ms Sharkey that her application had no reasonable prospect of success at the time she was in receipt of LWB’s outline of submissions, witness statements, and documentary material.

[129] Although on this occasion I have ordered costs under s 400A of the Act, were that section of no avail, I would find myself compelled to depart from the authority of Qantas. The objects of the Act, the obligation set out in s 577(a), the matters I am to take into account under s 578 of the Act, and the conclusion that the earlier decision in Qantas is wrong, while not exhaustive, are cogent and sufficient reasons for such departure. Appreciative of the factors of policy and the sound administration of justice, which make adherence with past decisions of this Commission desirable, I nevertheless hold the view that the departure from Qantas remains warranted.

SHOULD COSTS BE AWARDED AGAINST MR MULLALLY – UNDER S 401?

Submissions of LWB

[130] LWB submitted that as an industrial advocate with over 30 years’ experience, it should have been abundantly clear that the manufactured circumstances, and subsequent claim, were unmeritorious and had no reasonable prospects of success. Referring to the decision at first instance, LWB continued that unlike the vast majority of unfair dismissal applications involving a forced resignation, there was no narrow line in these circumstances. 101 LWB stated that Mr Mullally knew, or ought to have known, that the claim by Ms Sharkey was pursued with no reasonable prospect of success.

[131] With knowledge that the claim was without reasonable prospects of success, LWB submitted that Mr Mullally clearly encouraged the Ms Sharkey to commence and continue her application. In this respect LWB pointed the Commission to the following evidence:

(a) Ms Sharkey engaged Mr Mullally before resigning; 102

(b) Mr Mullally encouraged Ms Sharkey to refrain from communicating with LWB during the period of her personal leave; 103

(c) provided advice to LWB which was misguided and intended to bring about the end of the employment relationship so to enliven the unfair dismissal regime; 104 and

(d) prepared Ms Sharkey’s resignation based upon plainly unmeritorious grounds.

[132] According to LWB, Mr Mullally’s conduct caused it to incur significant cost as he encouraged Ms Sharkey to pursue a claim when it should have been reasonably apparent to him that it had no reasonable prospects of success, as contemplated by s 401(1A)(a) of the Act.

[133] There were, in LWB’s view, several unreasonable acts committed by Mr Mullally during the conduct and/or continuation of the matter; some of which included:

(a) encouraging Ms Sharkey to refrain from communicating with LWB during the period of her personal leave and prior to her resignation; 105

(b) provided advice to Ms Sharkey which was misguided and intended to bring about the end of the employment relationship so to enliven the unfair dismissal regime, without merit; 106

(c) alleged LWB had repudiated Ms Sharkey’s contract of employment within the resignation, application and his written submissions, only to withdraw that position at a late stage in proceedings; 107

(d) asserted that the decision to remove the on-call allowance was made without consultation in contravention of the Award within the resignation, application and written submissions, only to fail to support this assertion with any cogent argument; and 108

(e) alleged that LWB had failed to consult with Ms Sharkey, even though LWB had no such obligation, and even if it did, could not consult due to the advice provided by Mr Mullally. 109

[134] LWB submitted that there was clear causation between the numerous unreasonable acts and the incurring of costs as contemplated by s 401(1A)(b) of the Act, and therefore an order for costs against Mr Mullally under s 401 of the Act should be made.

[135] LWB noted that neither Ms Sharkey nor Mr Mullally had seen fit to adduce any witness evidence in support of its contentions with respect to s 401 of the Act, or for that matter, s 611. LWB submitted that the Commission should be rightfully suspicious of Ms Sharkey’s refusal to give evidence or to call Mr Mullally to do the same – a step which would have been reasonable, logical and predictable in this matter. For this reason LWB stated that the Commission should draw a negative inference consistent with the principles espoused in Jones v Dunkel. 110

Submissions of Mr Mullally

[136] The submissions of Mr Mullally were limited. Noting that LWB had made a single offer of settlement, which was to cover both the unfair dismissal application and the claim in the Industrial Magistrates Court, the offer was, according to Mr Mullally, rejected and a counteroffer made. Mr Mullally contended that the factual matrix which could be seen from the circumstances in which Ms Sharkey conducted the litigation and dealt with the conciliation process, could not be seen to constitute unreasonable acts or omissions.

[137] Mr Mullally submitted that factual disputes between parties could not be resolved until hearing, when evidence is on oath and the witness statements have been tested under cross examination. He said that the fact that Ms Sharkey lost her case does not of itself point to unreasonable acts or omissions.

Costs against paid agent – relevant legislative provisions

[138] Section 401 of the Act applies where an unfair dismissal application has been made, a person has engaged a lawyer or paid agent to represent him or her, and the person is required to seek the Commission’s permission to be represented by the representative. It makes a lawyer or paid agent subject to the possibility of adverse costs orders even if they are not granted, or do not seek permission to represent the person. 111

[139] Section 401(1A) of the Act provides as follows:

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.

Consideration

[140] In Rohan Veal v Sundance Marine Pty Ltd, 112 a Full Bench of the Commission stated:

…because the section applies to the actions taken or not taken by a legal representative of a party it seems to us to follow that these actions or omissions by legally qualified and trained people should be measured against a higher standard than that which would apply to an unrepresented party, by virtue of the representative’s training and expertise.

[141] In the decision at first instance I made some pointed observations with regard to Ms Sharkey’s course of action, and her representative’s involvement in the same. These observations included:

[65] Upset by the 4 September Email, Ms Sharkey sent an email to Ms Burns expressing her umbrage, the result of which was Ms Burns suggested a meeting with Ms Hill to discuss, which Ms Meyers would facilitate. Ms Meyers followed up with Ms Sharkey to set up a meeting to no avail. Quite clearly, Ms Sharkey ceased all communications; and did so, according to her evidence, on the advice of her solicitor…

[71] Ms Sharkey’s course of action, according to her, followed the advice of her solicitor. What passed between Ms Sharkey and her solicitor is unable to be confirmed on the evidence. However, is such advice was given then one can only conclude that the advice was misguided and the action taken by Ms Sharkey was unwise if she had not intended to bring her employment to an end but rather assert that she had been dismissed.

[142] At the commencement of the costs hearing, I asked Ms Sharkey whether she was content to have Mr Mullally represent her. I did so because it appeared at first instance, that if Ms Sharkey been advised to take the course of action she did, then it was the case the advice was misguided. However, both Ms Sharkey and Mr Mullally expressed to the effect that they were satisfied with their arrangements and elected to proceed.

[143] It is a generous observation to state that Mr Mullally’s submissions with respect to his liability regarding costs were limited. Mr Mullally and Ms Sharkey chose not to give evidence.

[144] The Respondent invited the Commission to draw a Jones v Dunkel inference because, in its submission, the Commission should be rightfully suspicious of Ms Sharkey’s refusal to give evidence or to call Mr Mullally to do the same – a step which would have been reasonable, logical and predictable in this matter. 113

[145] A breach of the rule in Jones v Dunkel may lead to the drawing of an adverse inference. The inference that may be drawn is ordinarily an inference that the uncalled evidence would not have helped the party's case: not an inference that the uncalled evidence would have been positively unfavourable to the party's case, or positively favourable to the opposing party's case. 114 A breach of the rule in Jones v Dunkel may also result in a more ready acceptance of the opposing party's evidence on the fact in question.115

[146] Section 591 provides that the Commission is not bound by the rules of evidence and procedure and, pursuant to s 590, the Commission ‘may inform itself in relation to any matter before it in such manner as it considers appropriate’. Further, s 577(a) provides that the Commission must perform its functions and exercise its powers in a manner that ‘is fair and just’. The ‘rule’ in Jones v Dunkel is said to be fundamentally concerned with issues of fairness, and therefore the Commission will give consideration to its application in an appropriate case. 116

[147] In the circumstances, and while noting that I am in a position to reliably find facts, draw conclusions from them, and determine issues, I nevertheless will draw the inference sought that the uncalled evidence would not have helped Mr Mullally’s case given that Mr Mullally provided no explanation for his or Ms Sharkey’s failure to give evidence. Particularly when one may have reasonably expected Mr Mullally to do so.

[148] With regard to s 401(1A)(b), my findings are equivalent to those made with respect to Ms Sharkey and s 400A(1). However, it is important to acknowledge that while Mr Mullally did not profess to be a legal representative, he was a paid agent with extensive industrial relations experience. Understandably then, a higher standard applies when considering the actions taken, or not taken, by him.

[149] When LWB’s submissions and evidential materials were received on 17 December 2018, their receipt was against a backdrop of irrefutable evidence that Ms Sharkey had knowingly and deliberately maintained silence during the period of 6 September 2018 until 8 October 2018. It was Ms Sharkey’s own evidence that she had been advised to take that course and, it is more likely than not, that it was Mr Mullally who provided that advice. There was no evidence adduced to suggest otherwise, and Mr Mullally was abreast of what had occurred in the hearing at first instance, having been present for its duration. At no time did Mr Mullally confute the evidence of Ms Sharkey in this respect.

[150] As noted with regard to Ms Sharkey’s involvement, on receipt of the materials from LWB on 17 December 2018, Mr Mullally could not ‘simply disregard matters that should have been reasonably apparent’. By then, a reasonable person, particularly one with the training and experience of Mr Mullally, would have appreciated the failings of the repudiatory conduct argument and should have appreciated the insurmountable difficulties were Ms Sharkey to press that there had been no real choice but to resign; and yet, there was no notice of discontinuance received. Instead the dilatory response was to proffer a settlement offer, over a month later, on 29 January 2019 in the amount of $7500 to resolve all matters.

[151] At the point of receiving LWB’s materials on 17 December 2018, Mr Mullally’s failure to advise Ms Sharkey to discontinue at this juncture was an unreasonable act as contemplated by s 401(1A)(b) of the Act, as was the sending of his email proposing a further settlement offer a month later on 29 January 2019. This is particularly the case when, some two months prior, LWB had proposed an offer to settle the matter for $5400, which was rejected in the email Mr Mullally sent to LWB. There is no evidence before me to show that Mr Mullally gave advice to the contrary or took alternative action to that outlined, and I consider that I am permitted to infer that Mr Mullally’s untendered evidence would not have helped him in this respect.

[152] In light of my findings regarding s 401(1A)(b), it is unnecessary for me to consider s 400(1A)(a). However, with regard to s 400(1A)(a), on the evidence before me, I am satisfied that Mr Mullally encouraged Ms Sharkey to persist with the proceedings at first instance, or rather, to continue with the matter, when it should have been reasonably apparent that Ms Sharkey had no reasonable prospect of success in the matter once the materials of 17 December 2018 had been received.

DEPUTY PRESIDENT

Appearances:

R McMahon for the costs Applicant

P Mullally for the costs Respondents

Hearing details:

Monday 8 April 2019, in Perth.

Printed by authority of the Commonwealth Government Printer

<PR706596>

 1   Fair Work Act 2009 (Cth) s 386(1)(b).

 2   PR704853.

 3   Doumit v ABB Engineering Construction Pty Ltd, Print N6999.

 4   Fair Work Act 2009 (Cth) s 611(1).

 5   Ibid s 400A(1).

 6   Ibid s 611(2)(a).

 7   Ibid s 611(2)(b).

 8   Ibid s 401(1)(a).

 9   Ibid s 401(1)(b).

 10   [2013] FWCFB 1811.

 11   Ibid.

 12   [2018] FWC 6077 [25].

 13   PR709621

 14   Fair Work Act 2009 (Cth) s 402.

 15   Sharkey v Life Without Barriers [2019] FWC 569 [38].

 16   Witness Statement of Gemma Crawford dated 11 March 2019 (Crawford Statement) [7].

 17   Ibid [7]; Annexure GC-2.

 18   Crawford Statement [8].

 19   Ibid.

 20   Ibid [11]; Annexure GC-4.

 21   Crawford Statement [12].

 22   Ibid [20].

 23   [2012] FWA 10164 [15] – [23].

 24   Ibid [21].

 25   [2018] FWC 6077 [25].

 26   Ibid.

 27   [2016] FWC 5099 [24] – [28].

 28   Camille v Berala On the Park HR Pty Ltd [2015] FWC 6938.

 29   Matthew Gugiatti v SolarisCare Foundation Ltd [2016] FWCFB 2478 [43].

 30   Ibid.

 31   Ibid.

 32   See Alcan (NT) Alumina Pty Ltd v Commissioner for Territory Revenue (Northern Territory) (2009) 239 CLR 27 [4]; CIC Insurance Ltd v Bankstown Football Club Ltd (1997 187 CLR 384 [408].

 33   See Construction, Forestry, Mining and Energy Union v Mammoet Australia Pty Ltd (2013) 248 CLR 619 [59]; Peabody Moorvale Pty Ltd v Construction, Forestry, Mining and Energy Union [2014] FWCFB 2042 [26]-[37].

 34   Explanatory Memorandum, Fair Work Amendment Bill 2012 (Cth) [7].

 35   Ibid [169].

 36   Ibid.

 37   [2014] FWCFB 1175.

 38   Matthew Gugiatti v SolarisCare Foundation [2016] FWCFB 2478 [39].

 39   [2009] AIRCFB 626.

 40   (2006) 155 IR 36.

 41   Ibid [43].

 42   Ibid [45].

 43   PR958003 [85].

 44   Brazilian Butterfly (2006) 155 IR 36 [45].

 45   Ibid.

 46   [2016] FWC 2659.

 47   [2014] FWCFB 1175 [28].

 48   Shaun Welsh v Just Fine Food T/A Vanilla Slice Pty Ltd [2018] FWC 6077 [34].

 49   [2016] FWCFB 2478 [43].

 50   Ibid.

 51   Fair Work Act 2009 (Cth) s 386(1).

 52   [2017] FWCFB 3941.

 53   A.S Doumit v ABB Engineering Construction Pty Ltd Print N6999.

 54   PR958003.

 55   [2015] FWCFB 2303.

 56   [2018] FWC 1843

 57   Fair Work Act 2009 (Cth) s 611 (emphasis added).

 58   Dino De Giusti v NSW Trains t/a NSW Trainlink [2018] FWC 1843 [15].

 59   Dino De Giusti v NSW Trains t/a NSW Trainlink [2018] FWC 1843 [20].

 60   Ibid.

 61   (1989) 168 CLR 210, 216.

 62   [2011] FWAFB 4014 [10]

 63   Wodonga Rural City Council v Lewis, PR956243 [6].

 64   Deane v Paper Australia Pty Ltd (2003) 121 IR 362 [7], [8].

 65   A Smith v Barwon Region Water Authority [2009] AIRCFB 769 [48].

 66   (2010) 241 CLR 118 [59] – [60].

 67   [2013] FWCFB 1811 [20].

 68   Ibid.

 69   [2014] FWC 6695.

 70   Ibid [34] – [35].

 71   Ibid [36].

 72   [2015] FWC 4787.

 73   [2012] FWA 7165.

 74   [2012] FWA 10164.

 75   [2017] FWC 2943 [26].

 76   Ibid.

 77   [2017] FWC 2943 [26].

 78   [2018] FWC 6077 [60].

 79   Ms Fiona Fox v Wilderness Escape Outdoor Adventures Pty Ltd [2011] FWA 8803 [17].

 80   [2014] FWCFB 810 [21].

 81   Australian Education Union v Department of Education and Children’s Services (2012) 248 CLR 1 [26].

 82   Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 369.

 83   [2014] FWCFB 810 [29].

 84   (1997) 76 IR 180, 181.

 85   [2014] FWCFB 810 [29].

 86   (1992) 43 IR 257.

 87   E. Church v Eastern Health t/as Eastern Health Great Health and Wellbeing [2014] FWCFB 810 [30].

 88   [2015] FWCFB 1956.

 89   Keep [2015] FWCFB 1956.

 90   (2003) 121 IR 362.

 91   WR Act ss 170CJ(1), 658; Fair Work Act 2009 (Cth) s 611(2)(a).

 92   WR Act ss 170CJ(1), 658.

 93   Ibid s 824.

 94   [2014] FWCFB 7940 [34].

 95   SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362.

 96   Ms Raylene Oui v Townsville Aboriginal & Torres Strait Islander Corporation Health Services [2013] FWCFB 5541 [14].

 97   Ibid.

 98   Yasmin S.B. Cetin v Ripon Pty Ltd t/as Parkview Hotel (2003) 127 IR 205 [48].

 99   Ibid [49].

 100   Modern Awards Review 2012 [2012] FWAFB 5600 [87].

 101   Sharkey v Life Without Barriers [2019] FWC 569 [77].

 102   Ibid [38].

 103   Ibid.

 104   Ibid [71].

 105   Ibid [38].

 106   Ibid [71].

 107   Ibid [46].

 108   Ibid [68].

 109   Ibid [69] – [70].

 110   (1959) 101 CLR 298.

 111   Explanatory Memorandum, Fair Work Amendment Bill 2012 (Cth) [180].

 112   [2013] FWCFB 8960 [15].

 113   (1959) 101 CLR 298.

 114   Hyde v Serco [2018] FWCFB 3989.

 115   Ibid.

 116   Ibid [103].