A V Jennings Holdings Limited v. Dean, ex parte Pecotic [2008] NSWIRComm 1121

Industrial Relations Commission (NSW)|2008-12-11

CITATION: A V Jennings Holdings Limited v. Dean, ex parte Pecotic [2008] NSWIRComm 1121

APPLICANT A V Jennings Holdings Limited PARTIES: RESPONDENT Robert Dean

CATCHWORDS: costs - unfair dismissal claim rejected - appeal withdrawn - settlement reached - application for costs directed against agent as confirmed by the terms of the settlement of the appeal - jurisdiction found - responsibility of advocates in unfair dismissal proceedings explained - the "cab rank" rule - supplementary decision issued - application for costs dismissed

LEGISLATION CITED: Industrial Relations Act 1996

A V Jennings Holdings Limited v. Dean; ex parte Pecotic [2008] NSWIRComm 1057 Attorney General v. Wentworth (1988) 14 NSWLR 491 Bankstown City Council v. Paris (1999) 93 IR 209 Busways v. Johnson (1994) 55 IR 255 Copperart Pty Limited v. Martin (1996) IR 58 Deluux Pty Limited v. Mini-Tankers Pty Limited [2007] NSWIRComm 101 Di Battista v. Motton (1971) VR 565 Elizabeth Drive Nursing Home Case - unreported CASES CITED: General Steel Industries Inc v. Commissioner for Railways (1964) 112 CLR 125 Luke v. Handicapped Children's Centre - unreported Ogston v. Laurieton United Servicesmen's Club - unreported Pecotic v. A V Jennings Holdings Limited [2007] NSWIRComm 1001 Pedlow v. Cini (1976) AR 177 Perkins v. Grace Worldwide (Australia) Pty Limited (1997) 72 IR 186 Phillips v. Industrial Relations Commission of New South Wales (2006) 154 IR 96 Steel v. Mirror Newspapers Limited (1975) 2 NSWLR 48 Wehner v. Chakra Holdings Pty Limited - unreported

APPLICANT Bryce Cross Rigby Cooke, Lawyers LEGAL REPRESENTATIVES:

DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

A V Jennings Holdings Limited and Robert Dean; ex parte Elma Mary Pecotic

Application for costs under S.181 of the Industrial Relations Act, 1996

1 On Wednesday, 6 June, 2007 I handed down my decision on an application by Mrs Elma Pecotic under Part 6, Unfair Dismissals, of Chapter 2, Employment [Ss.83 to 90] of the 1996 Industrial Relations Act. Mrs Pecotic had been employed as service manager with A V Jennings Holdings Limited. She commenced employment on Friday, 22 March, 2002 and her services were terminated on Monday, 31 May, 2004 for misconduct, essentially the circulation of a damaging and distressing rumour that an employee whom she directly supervised (Mrs Dianne Buhagiar) had threatened to physically harm another employee under her supervision (Ms Belinda Simonetta-Burrows), viz:

"I will knock her down and believe me she will not get up."

That comment was allegedly made by Mrs Buhagiar to Mrs Pecotic on Friday, 10 October, 2003 and ultimately communicated to Ms Simonetta-Burrows by Mrs Pecotic (and Mr Barry Wheatland, at that time a fellow employee) some six months later.

2 Mrs Pecotic denied the allegations against her but in my decision of Wednesday, 6 June, 2007 (at pp.106 to 111) I commented as follows:

"...Despite the extensive evidence before me, I still do not know the reason why Mrs Pecotic was so antagonistic to Mrs Buhagiar - or why Mrs Buhagiar was so antagonistic to Mrs Pecotic, for that matter... The antagonisms in the workplace ran too deep for any really effective working relationship between Mrs Pecotic and Mrs Buhagiar to be restored... The disturbing conflict in the evidence before me in this hearing means that this case must ultimately turn on the credibility of the witnesses and, in particular, Mrs Pecotic...

It would seem to me from the evidence led in this hearing that it was highly likely that Mrs Buhagiar actually did make the alleged threat on Friday, 10 October, 2003 as Mrs Pecotic asserted, notwithstanding Mrs Buhagiar's denials that she had not done so. If the allegation was to be taken as serious, on the basis of Mrs Pecotic's own evidence in this hearing - which, in any event, on balance and in the light conflicting version of events advanced...in this hearing, I am not prepared to accept - Mrs Pecotic did not make the alleged threat by Mrs Buhagiar known to representatives of A V Jennings management until twelve days later. I am satisfied that Mrs Pecotic did not immediately communicate that threat to A V Jennings management for the simple reason that it was no more than a figure of speech on Mrs Buhagiar's part. It was an off-the-cuff remark which was not meant to be taken seriously - and which, more importantly, Mrs Pecotic did not take seriously until later when she decided to use it as a weapon to bring Mrs Buhagiar's employment to an end.

It appears to me that Mrs Pecotic was prepared to use Ms Simonetta-Beddows as a pawn in her attempts to undermine Mrs Buhagiar. I assessed Ms Simonetta-Beddows from her demeanour when she gave evidence to be a woman of somewhat sensitive disposition and highly open to any suggestion made to her. It was wrong for Mrs Pecotic to involve her in her campaign to get rid of Mrs Buhagiar and stir up trouble in the workplace at Mrs Buhagiar's expense... As the Full Bench of the Federal Court indicated in Perkins v. Grace Worldwide (Australia) Pty Limited (1997) 72 IR 186 at p.191, trust and confidence is a necessary ingredient in any employment relationship, '...provided that such loss of trust and confidence is soundly and rationally based...'. That is particularly the case for a person occupying a supervisory role, as was the case of Mrs Pecotic. Whilst a senior employee is still entitled to be treated fairly in her employment and in the termination of her services, as McLelland J of the former Commission indicated in his unreported decision of Friday, 8 December, 1978 in the Elizabeth Drive Nursing Home Case [Matter No.537 of 1978 at p.7] "...different rules apply to chiefs than to mere indians...". A V Jennings' lack of trust and confidence in Mrs Pecotic has been due to her own conduct and I am satisfied that it is based on reasonable grounds.

I believe that Mrs Pecotic has no one other than herself to blame for the situation in which she found herself. I am satisfied that A V Jennings management did everything it could to resolve the workplace dispute amicably in everybody's interests but it appears to me that Mrs Pecotic ignored efforts by A V Jennings in that respect and chose instead to simply throw petrol on a fire that was smouldering away. Ultimately, Mrs Pecotic's dismissal became an unfortunate inevitability, in my opinion..."

In those circumstances, I dismissed Mrs Pecotic's Part 6 application. I reserved to the parties their position with respect to costs.

3 And on Thursday, 20 December, 2007 solicitors representing A V Jennings in the proceedings filed an application for costs - directed not against Mrs Pecotic but the agent (Mr Robert Dean) who had represented her in the hearing and limited to certain issues which it was alleged had unnecessarily complicated and delayed the proceedings. Mr Dean wrote to the solicitors for A V Jennings on Tuesday, 29 January, 2007, forwarding a copy to me of the correspondence at the same time. In his letter Mr Dean sought further and better particulars of the claim against him, asserted that the application may well be frivolous or vexatious, giving notice that he would himself make an application for costs with respect to that application and inviting A V Jennings to withdraw the application for costs - which it declined to do.

4 Mrs Pecotic had, in fact, lodged an appeal against my decision of Wednesday, 6 June, 2007 dismissing her Part 6 application but that appeal was subsequently withdrawn and the matter was settled by a deed of release which contains the following provisions:

"...Upon entering into this agreement, the employer hereby releases and discharges forever the employee from all costs incurred as a result of the application and appeal. For the avoidance of doubt, this agreement does not preclude in any capacity the company or the employee from initiating any proceedings (includuing but not limited to an application for costs) against Robert Dean (the advocate representing the applicant) ..."

5 On Friday, 7 March, 2008 A V Jennings had provided an outline of its submissions on the question of costs against Mr Dean, accompanied by an affidavit of Ms Cassandra Williams, a solicitor engaged by A V Jennings in the proceedings before me. Mr Dean challenged the jurisdiction for a costs order against him, however, and that matter was heard as a threshold issue by me on the written submissions of the parties. Mr Thompson had provided written submissions on behalf of Mr Dean. Mr Cross, who had represented A V Jennings in the original proceedings, provided written submissions on behalf of A V Jennings. Mr Dean subsequently provided further submissions in reply to Mr Cross' submissions.

6 In my decision of Wednesday, 6 June, 2007 I had commented adversely on Mr Dean's conduct of the hearing. Among other things, I indicating (at p.78) that I regarded Mr Dean as primarily responsible for the delays in the matter proceeding. In my decision, I commented (at p.97) that:

"...the approach taken by Mr Dean in this hearing was no doubt always open to him to pursue on behalf of his client, Mrs Pecotic. But that approach has been unhelpful to me and, ultimately, to Mrs Pecotic. If there was ever any possibility of Mrs Pecotic's claims being conciliated - and most unfair dismissal claims are disposed of in that manner in the best interests of both parties - that possibility of conciliation was clearly lost with Mr Dean 's approach and his attitude to his opponents. The result has been unnecessary delay and complications. Delay and complications have been Mrs Pecotic's enemies for an amicable resolution of this matter.

As I indicated to Mr Dean several times during the course of this hearing, the unfortunate delay in resolving this matter acts primarily against Mrs Pecotic's interests. It certainly makes her reinstatement after this length of time considerably more difficult for her to achieve. And, if the fault primarily rests with Mr Dean for the delay in the matter - and I believe that it does - then any claim under S.89(3) for recompense for remuneration that would have been earned between the date of the dismissal and the date of this decision would be lost..."

7 For instance, it had become necessary for me to vacate the hearing of the matter for final submissions on Wednesday, 21 February, 2007 and set the matter down for those submissions on Thursday, 29 March, 2007 (and subsequently Friday, 27 April, 2007) essentially because of Mr Dean's conduct. Mr Dean had on Tuesday, 30 January, 2007 provided written submissions - some 20 pages in length - to me and to Mr Cross in support of his argument that Mrs Pecotic's dismissal by A V Jennings was unfair (although he did not address the fundamental issue of the remedy Mrs Pecotic would be seeking, which I understood to be primarily reinstatement in employment). Mr Cross' written submissions, provided to me and Mr Dean on Wednesday, 14 February, 2007, was 16 pages in length and it did address the question of the appropriate remedy. On Monday, 19 February, 2007 Mr Dean filed his written response to Mr Cross' written submissions but that document was 142 pages long.

8 In my decision (at p.14), I described that approach by Mr Dean as "...an eccentric procedure...", commenting further that:

"...I do not accept that a reply to written submissions of fairly modest proportions would permit such a lengthy document in response. It seems clear to me that Mr Dean has simply held his primary submissions back to inconvenience Mr Cross , giving him only two days to address the issues in that lengthy document. I do not propose to rely on it. It would appear that, although Mr Dean has conceded in written submissions he supplied to me, the onus of proof rests on him to establish the unfairness of Mrs Pecotic's dismissal, he has adopted an approach where, in fact, he is expecting A V Jennings to really advance a case that it has not acted unfairly.

Written submissions are provided to assist the parties - and the Commission - in the preparation of their respective cases. They are not designed to provide some tactical advantage by one party over another. And since the process of proceeding with written submissions has created this problem, I rejected any further written submissions and indicated that I proposed to proceed instead only with oral submissions..."

9 Directions had been made by O'Neill C (to whom Mrs Pecotic's Part 6 application had initially been allocated) and subsequently by me (when the matter was reallocated to me) for Mrs Pecotic to provide to A V Jennings access to her personal computer on which much A V Jennings work was apparently carried out by Mrs Pecotic out of hours. In the written submissions provided to me in support of the application for costs, A V Jennings argue that:

"....the respondent incurred significant unnecessary cost as a result of Mr Dean's disregard for the directions of O'Neill and Connor CC and ignoring rules. Mr Dean went to significant and unreasonable lengths to ensure that the respondent did not have access to his client's computer. This is despite a specific direction by O'Neill C to produce the computer. Eight mentions were held that dealt with the respondent's notice to produce...that requested access to the applicant's computer...

It is submitted that Mr Dean's conduct in this regard was a wilfull attempt to avoid the respondent obtaining material on that computer that showed that Mrs Pecotic had produced hard copies of purported diary statements in discovery that were inconsistent with versions subsequently found on the computer. It is submitted that Mr Dean's extraordinary lengths to adopt different tactical approaches to try to avoid or limit access to the hard drive was designed to prevent the Commission and the respondent from becoming aware of these different versions of the diary entries. Much was made from the commencement of the case by the applicant and her repesentative of particular diary entries from October, 2003 being strong evidence justifying her conduct in relation to Mrs Buhagiar - which was the central issue in the case..."

With respect to Mrs Pecotic's computer records, I had this to say in my decision of Wednesday, 6 June, 2007 (at pp.41 and 42):

"...Mr Cross has submitted that Mrs Pecotic's computer records are self-serving and that she has simply fabricated the computer records to support her claims in this hearing. To my mind, that is especially the case since she has actually conceded in her evidence that she has altered some of the computer entries - '...tidied them up...' - after her dismissal. What reason would she have to do that other than to prop up her arguments before me in this hearing? The tampering with evidence in any litigation in that manner is, of course, a serious matter - an offence for which Mrs Pecotic is open to prosecution. There is insufficient evidence to support such a prosecution, in my opinion. But, as Mr Cross has asserted in his submissions, it would certainly be unsafe for me to accept the computer entries as in any way corroboration of Mrs Pecotic's evidence..."

10 Mr Dean had also amended Mrs Pecotic's Part 6 application on a number of occasions after it had been lodged, adding to it other unrelated applications for relief. That scatter gun approach had the effect of creating unnecessary complications for the representatives of A V Jennings to pin Mrs Pecotic's claim down and provide a suitable response to it. I commented in my decision (at p.6) as follows:

"....Mr Dean also sought to amend Mrs Pecotic's Part 6 application to take up other remedies he believes were possibly available to her. The amendments concerned a claim that she may properly be regarded as a worker injured in the course of her employment within the terms of (the former) Part 7, Protection of Injured Employees [S.91 to 100] of Chapter 2, Employment, a claim relating to issues of occupational health and safety and an argument that Mrs Pecotic's dismissal actually involved her being victimised for making a complaint about a workplace matter she considered unsafe [S.210(1)(j)]. Ultimately, whilst I informed Mr Dean that he may raise these issues in the proceedings as grounds for a claim that Mrs Pecotic had been unfairly dismissed, at this stage in the proceedings, I was not prepared to permit him to amend Mrs Pecotic's Part 6 application. Indeed, I believe that amendment to the Part 6 application was, in all the circumstances, unnecessary and irrelevant to the issues in dispute... "

Those other applications were essentially red herrings.

11 One other issue which unnecessarily delayed the proceedings was the written statement which had been prepared by Ms Simonetta-Beddows, whom Mr Dean had called in the hearing to give evidence in reply. That written statement contained much fresh material of highly questionable relevance and Mr Cross objected to it. With respect to that written statement I commented (at pp.9 and 10):

"...The second issue of concern ventilated in the hearing on Thursday, 1 June, 2006 and later in more detail on Friday, 1 September, 2006 centred on the written statement of Ms Simonetta-Beddows, whom Mr Dean called to give evidence in the hearing. That written statement was provided in reply in response to the material already adduced from A V Jennings and Mr Cross asserted that it contained material which was fresh evidence. He is correct in that assertion, in my opinion. There is a substantial amount of material contained in Ms Simonetta-Beddows' statement which is fresh material (and which, in any event, may also not be particularly relevant to the issue before me - whether or not Mrs Pecotic's dismissal was unfair). In that respect I indicated in the hearing on Thursday, 1 June, 2006 that, if Ms Simonetta-Beddows' written statement was provided in response to the evidence adduced on behalf of A V Jennings, I would not be prepared to accept into evidence anything that was not properly responsive to the evidence already led on behalf of A V Jennings... That is the only fair way to proceed in this hearing in the interests of both parties. The other alternative, to adjourn the proceedings to permit A V Jennings to respond to the fresh material contained in Ms Simonetta-Beddows' written statement, was not an attractive option for either Mrs Pecotic or A V Jennings, in my view. Or me for that matter. Neither Mr Dean nor Mr Cross advocated that course of action..."

12 In my interlocutory decision of Wednesday, 9 July, 2008 I concluded that there was jurisdiction for me to entertain an application for costs against Mr Dean. The question of costs in the State industrial jurisdiction falls under S.181, viz:

"(1) Subject to the rules of the Commission and any other Act or law:

(b) costs are in the discretion of the Commission, and

(d) the Commission may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act, 1987 or on any other basis. (2) However, the Commission when it is not in Court Session may award costs only in the following cases: (a) the Commission may award costs against an applicant if it considers that the application to it was frivolous or vexatious, or (b) the Commission may award costs against a party to proceedings who, in the opinion of the Commission, instituted proceedings without reasonable cause, or (c) the Commission may award costs against a party to proceedings under Part 6 of Chapter 2 (Unfair dismissals), who, in the opinion of the Commission, unreasonably failed to agree to a settlement of the claim or whose application was frivolous or vexatious, or (c1) the Commission may award costs against an industrial agent representing an applicant or employer in proceedings under Part 6 of Chapter 2 if:

(i) the industrial agent fails to file a certificate as required by S.90A, or

(ii) the Commission finds that the industrial agent has filed a certificate under that section certifying that the agent has reasonable grounds for believing, on the basis of provable facts, that the applicant's claim or employer's response to the claim had reasonable prospects of success when the agent did not have reasonable grounds for believing, on the basis of provable facts, that it had reasonable prospects of success; or (d) the Commission may award costs in proceedings for a breach of an industrial instrument or the recovery of money under Chapter 7, as provided by Ss.357 and 373.

(3) The Commission in Court Session may not award costs in proceedings for a contravention of a dispute order in proceedings under Division 2 of Part 4 of Chapter 5 (Rules of industrial organisations).

(a) costs of or incidental to proceedings in the Commission; and

(b) in the case of an appeal to the Commission, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal."

"(1) Where costs are incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default, and it appears to the Commission that a barrister, solicitor or agent is responsible, the Commission may, after giving the barrister, solicitor or agent reasonable opportunity to be heard:

(a) disallow the costs as between the solicitor or agent and the solicitor's or agent's client;

(b) disallow the costs as between the barrister and the barrister's instructing solicitor or as between the barrister and the client;

(c) direct the barrister, solicitor or agent to repay to the client costs which the client has been ordered to pay to any other party;

(d) direct the barrister, solicitor or agent to indemnify any party other than the client against costs payable by the party indemnified.

(2) Without limiting the generality of subrule (1), a barrister, solicitor or agent is responsible for default for the purposes of that subrule where any proceedings cannot conveniently proceed, or fail or are adjourned without useful progress being made, because of the failure of the barrister, solicitor or agent:

(a) to attend in person or by a proper representative;

(b) to file any document which ought to have been filed;

(d) to be prepared with any proper evidence or account; or

(3) The Commission may, before making an order under subrule (1), refer the matter to the Registrar for enquiry and report.

(4) The Commission may order that notice of any proceedings or order under this Rule must be given to the client in such manner as may be specified in the order under this subrule.

(5) The term solicitor in this Rule includes the solicitor's agent."

13 In my interlocutory decision of Wednesday, 9 July, 2008 on the question of jurisdiction to make an order against Mr Dean (as distinct from Mrs Pecotic), I recognised (at pp.3 and 4) that, as the opening words to S.181(2) suggested - "...the Commission...may award costs only in the following cases..." - applications for costs before a single members of the Commission are confined to the specified situations described therein and Rule 209 does not add to that jurisdiction but had to be read within that statutory context. I also noted (at p.5) that it was not customary for a legal representative or agent to incur costs in any proceedings but that S.181(2)(c) and Rule 209 contemplated that occurring.

14 Nevertheless, in the interlocutory decision, I concluded (at p.9) that the application for costs mounted by A V Jennings against Mr Dean was jurisdictionally competent. In that respect I relied on the reasoning of Cambridge C in his unreported decision of Tuesday, 24 April, 2008 in Ogston v. Laurieton United Servicemen's Club [Matter No.IRC 4606 of 1997. Cambridge C commented in that respect on an application for costs against a representative of a party in proceedings (at p.12) as follows:

"...Therefore it seems that the construction of S.181 of the Act may allow the Commission to award costs against a party to unfair dismissal proceedings pursuant to S.181(2)(c) and make a subsequent order by virtue of S.181(1)(c) specifying by whom and to what extent costs are to be paid in accordance with the award.

This application of the provisions of S.181 is further supported by examination of the Rules. In particular, consideration of Rule 209 is relevant. The practical application of that Rule, in particular Rule 209(1)(c), when considered in the context of S.181 of the Act, would support the prospect for the Commission awarding costs against a party to unfair dismissal proceedings, and then specifying in a subsequent order that a particular barrister, solicitor or agent be determined as the person or entity who should pay on behalf of the party against whom the award of costs was made..."

And I commented in my interlocutory decision (at p.9) that:

"...The terms of Ss.181(1)(a) and (c) suggest to me, as it did to Cambridge C in Ogston v. Laurieton United Servicemen's Club , that the appropriate course of action would be to make any order for costs nominally against Mrs Pecotic and then extend such an order, by virtue of S.181(1)(c), against Mr Dean . Quite clearly, the provision in the deed of release exempting Mrs Pecotic but authorising an application for costs against Mr Dean is perfectly consistent with S.181(1)(c) and Rule 209. The jurisdiction of the Commission for the award of costs against Mr Dean by A V Jennings in this hearing is not dependent upon the terms of the deed of release Mrs Pecotic signed with A V Jennings but on the legislative provisions themselves. Such arrangements as A V Jennings choses to enter into with Mrs Pecotic does not in anyway undermine any claim for costs against Mr Dean ..."

15 On that basis, I adjourned the proceedings for further programming of the matter on Friday, 8 August, 2008. At that time I made directions for the further written submissions from Mr Dean in response to the earlier submissions provided for and on behalf of A V Jennings and for A V Jennings to be given the further opportunity for a reply.

The History of the Negotiations to Settle the Claim

16 Ms Williams indicated in her affidavit that A V Jennings has taken the view that offers of settlement made to Mrs Pecotic, and to Mr Dean representing her, had been unreasonably refused and she traces the history of those attempts to settle the matter which are essentially unchallenged by Mr Dean. Early attempts to settle Mrs Pecotic's Part 6 claim with a sum of money were poles apart - $15,000.00 on the part of Mrs Pecotic and $3,000.00 on the part of A V Jennings - and as the negotiations continued, with Mrs Pecotic's legal costs increasing, the parties were never able to achieve a position where conciliation was really an option, viz:

on Monday, 25 October, 2004 Mr Dean wrote proposing to settle the Part 6 proceedings on behalf of Mrs Pecotic for the sum of $20,000.00: earlier Mrs Pecotic had proposed a settlement of $25,000.00 but reduced it as a compromise;

that proposal was rejected by A V Jenning in a reply letter to Mr Dean on Monday, 1 November, 2008 but an offer was made to settle the proceedings for the sum of $3,000.00;

on Tuesday, 2 November, 2004 Mr Dean wrote indicating that he was instructed to reject that offer but to offer to settle the claim for $19,000.00 instead, requiring acceptance within two days;

on Friday, 5 November, 2004 A V Jennings rejected that offer and reaffirmed its earlier offer of $3,000.00 which would remain open only until Wednesday, 10 November, 2004;

on Monday, 8 November, 2004 Mr Dean wrote proposing to settle the matter for $15,000.00; and

on Wednesday, 10 November, 2004 A Jennings rejected that proposal and confirmed its earlier offer of $3,000.00.

But by the middle of 2006 the parties were even further apart:

on Monday, 5 June, 2006 Mr Dean wrote with a proposal to settle Mrs Pecotic's Part 6 application for the sum of $25,000 plus costs ;

in a letter dated Monday, 5 June, 2006 A V Jennings sought clarification of the costs purportedly incurred by Mrs Pecotic;

on Tuesday, 6 June, 2006 Mr Dean wrote to outline that his costs to date were in the vicinity of $80,000.00 but "...in the spirit of attempting to resolve this matter and ensure that no further costs are incurred by either party..." he indicated that Mrs Pecotic would accept the sum of $60,000.00 for those costs, ie a total sum of $85,000.00.

naturally enough, A V Jennings rejected that proposal, describing it in a letter of Tuesday, 20 June, 2006 as "outrageous" and threatening costs against Mrs Pecotic;

on Friday, 30 June, 2006 Mr Dean proposed to settle Mrs Pecotic's claim for the sum of $22,500.00 plus costs "...as assessed or agreed...";

on Friday, 7 July, 2006 A V Jennings rejected that proposal but in a further letter of Monday, 30 July, 2006 it indicated its preparedness to offer the sum of $20,000.00 in full and final settlement of all claims; and

on Tuesday, 1 August, 2006 Mr Dean 's response was to reject that proposal but propose to settle Mrs Pecotic's Part 6 application for the sum of $18,000.00 "...subject to costs as agreed or assessed..."

17 In the letter of Friday, 7 July, 2006 forwarded to Mr Dean on behalf of A V Jennings there is reference to an earlier offer of settlement for the sum of $10,000.00, viz:

"...This is a case which could have settled for $10,000.00 as initially offered by our client. This matter has been dragged through one unsuccessful application by your client after another. This, and breaches of directions and failures to act in accordance with the Act, has caused great costs to our client, and our client should not have to entertain offers relating to your client's high costs caused by your client's approach in this matter..."

There is no earlier evidence before me of this offer of $10,000.00 from A V Jennings. I can only conclude that the offer was made sometime between the middle of 2004 to the middle of 2006.

18 Mr Dean's letter of Tuesday, 1 August, 2006 was not particularly conciliatory:

"...It is noted that a further offer in the sum of $15,000.00 in full satisfaction was made to your conclave on Monday, 8 November, 2004. Such offer was formally rejected by you...In the interim period of 21 months your conclave has engaged in a deliberate and perverse campaign to delay these proceedings and cause my client as much expense as is possible. As a consequence, my client has incurred considerable expense in attending to your perverse and demonstrably outrageous conduct. Such conduct has clearly opened the door for a costs order... Your ulterior motives have been transparent and disgraceful...

Should my client accept your offer, the consequences to my client will be as follows:

(i) She will not have the benefit of a public judgement setting the record straight as to the conduct of A V Jennings and/or not have her good name publicly restored.

(ii) She would have a substantial debt to pay in relation in obtaining a settlement that could have been accepted by your conclave in November, 2004.

(iii) On the above basis, my client would walk away with nothing to show for the last 24 months of immense distress you and your client have caused.

My client takes the view that if she is to have a substantial debt, she would prefer to have a public judgment of the Commission restoring her good name as part compensation for incurring such expense. She is of the opinion that she will obtain justice from the Commission and receive a judgment in her favour, such judgment will publicly restore her good name and provide for an amount that may approximate any offers she has made: that she will then be able to make application for a costs order and thereby minimise the debt that she has in relation to prosecuting this matter..."

19 The Part 6 proceedings before me were to determine only whether or not Mrs Pecotic's dismissal was harsh, unreasonable or unjust [Busways v. Johnson (1994) 55 IR 255]. It does not automatically follow that any decision by me would "...clear her good name..." and, ultimately my decision did nothing of the sort. I think Mr Dean should have made that position clear to her from the outset: I believe he had a responsibility to do so. As I pointed out in my decision of Wednesday, 6 June, 2007 on the claim (at p.2):

"....This is clearly a case where from the outset, in the interests of everybody - and certainly Mrs Pecotic - the matter should have been settled by conciliation, especially in view of the fact that any remedy which Mrs Pecotic could ultimately receive from an arbitration of her Part 6 application was bound to come nowhere near the legal costs she has actually incurred, and the inconvenience to her, to achieve it. But all attempts at conciliation have fallen on stony ground..." The Claim for Costs by A V Jennings

20 Mr Cross's application for costs is confined to specific issues which he asserts produced unnecessary delays and complications in the Part 6 proceedings and which he attributes (in my opinion correctly) to Mr Dean in the conduct of the case, viz:

the statements provided by Mr Dean to support the evidence of Ms Simonetta-Beddows;

the frequent amendments made to Mrs Pecotic's Part 6 application;

a notice to produce from Mr Dean on Wednesday, 1 December, 2004; and

Mr Dean 's alleged failure to comply with the directions made by me (and earlier by O'Neill C).

21 A V Jennings argue in their written submissions that:

"....numerous proposals were put by the respondent which could be described as amounting to a reasonable settlement of the claim and they were not agreed by the applicant. In particular..., the applicant rejected offers to settle the matter, at a very early stage in proceedings, for $3,000.00... Those offers, particularly in the light of the fact that the application was eventually dismissed, can only be described as reasonable.

Further, three days before the hearing commenced, the respondent provided the applicant an opportunity to avoid proceeding to hearing, by the offer of an all inclusive sum of $20,000.00, such offer made on Monday, 30 July, 2006. That offer was not accepted by the applicant, who on Tuesday, 1 August, 2006 was requiring $18,000.00 plus costs, such costs having been quantified a few weeks earlier at approximately $80,000.00.

The course of conduct of the applicant over the period from Monday, 5 June, 2006 was conduct inconsistent with an intention to settle the proceedings on any basis that could be considered reasonable. In particular, the applicant from that date sought settlement on a basis including costs that far exceeded in quantum the amount sought in settlement of the application... That such offers were proffered in a jurisdiction where costs are allowable in only limited circumstances, and after the conclusion of proceedings, was unreasonable and was inconsistent with an intention to settle the proceedings."

22 There was, in my opinion, a significant delay in A V Jennings making its application for costs. My initial decision declining any remedy to Mrs Pecotic (and reserving costs to the parties) was made on Wednesday, 6 June, 2007 but the application for costs by A V Jennings was not lodged until Thursday, 20 December, 2007 - a delay of over six months. I expect that a party making an application for costs would move with some diligence to pursue its claim and unnecessary delay on the part of any party making a costs application may actually serve to defeat such a claim on that basis alone, in my opinion. But it would be natural that any application for costs on a matter would have awaited the conclusion of any appeal and Mrs Pecotic's appeal was not concluded until Thursday, 16 August, 2008 - three months before the application for costs was lodged.

23 It must be appreciated that costs are not an automatic outcome for a successful party, certainly as far as Part 6 proceedings are concerned [Copperart Pty Limited v. Martin (1996) IR 58 at p.64]. There is no inherent power in the Commission to award costs [Pedlow v. Cini (1976) AR 177]. As I indicated earlier in this decision, any application for costs arising out of a Part 6 application is confined to S.181(2)(c) - a general provision - and S.181(2)(c1) - a provision relating expressly to agents.

24 As far as S.181(2)(c1) is concerned, there are two conditions necessary for a cost application, viz:

(i) that the agent failed to file a certificate under S.90A that he believed there to be a reasonable prospect of success for the Part 6 application: or

(ii) where such a S.90A certificate was, in fact, filed but the agent did not really believe, on reasonable grounds and provable facts, that there was a reasonable prospect of success.

25 Mr Dean had filed a S.90A certificate and the question of whether or not he genuinely believed that there was a reasonable prospect of success for Mrs Pecotic's Part 6 application is really unanswerable on the evidence before me. As I suggested in my interlocutory decision of Wednesday, 9 July, 2008 (at p.7) on the question of jurisdiction for this cost application, "...the onus resting with Mr Cross to establish Mr Dean's beliefs in that respect is a very onerous one...". As I perceive the application for costs by A V Jennings before me, it is not, in fact, relying on S.181(2)(c1).

26 That leaves the cost application by A V Jennings as falling entirely under S.181(2)(c) which the parties have both described in their written submissions, as the "...jurisdictional gateway..." for the application for costs in these proceedings. That means there are two grounds for a cost application against Mrs Pecotic (or by virtue of Rule 209, Mr Dean, her agent), viz:

(i) where, I conclude that there was an unreasonable failure to settle the matter; or

(ii) where the Part 6 application was frivolous or vexatious. 27 A vexatious action is one where the party bringing it is not acting in good faith and one which is not designed to produce any practical result, ie if it was instituted with the intention of annoying or embarrassing a respondent or was brought for collateral purposes and not for having the court adjudicate on the actual issues in dispute [Attorney General v. Wentworth (1988) 14 NSWLR 491]. In order to bring a case within the description of frivolous and vexatious it is not sufficient merely to say that the applicant has no cause of action. It must appear that the cause of action was, on the face of it, clearly one which no reasonable person could properly treat as bona fide and contend that the grievance was such as to justify action in court. The language supported by Barwick CJ of the High Court in General Steel Industries Inc v. Commissioner for Railways (1964) 112 CLR 125 at p.129 was:

"…'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; discloses a case which the court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'so manifest that to allow them (the pleadings) to stand would involve useless expense'. At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or 'so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument': 'so to speak apparent at a glance'…"

Mrs Pecotic's Part 6 application cannot be considered as frivolous or vexatious in those circumstances and, as I understand the position, A V Jennings does not base its cost application on any such allegation. Nor do I believe that, whilst they were many unnecessary, and ultimately time wasting, applications Mr Dean made during the course of the proceedings before me (and before O'Neill C) those applications did not reach the level that I would be prepared to regard as frivolous or vexatious for the purposes of S.181(2)(c).

28 The question remains whether Mrs Pecotic's failure to settle the Part 6 application was unreasonable for the purposes of S.181(2)(c) and, more importantly for current purposes, whether Mr Dean, in fact, contributed to any unreasonable conduct on the part of Mrs Pecotic in failing to settle the matter. In Bankstown City Council v. Paris (1999) 93 IR 209 the Full Bench of the Commission (Wright J - President, Peterson J and Bishop C) expressed the view (at p.219) that:

"....Construing the relevant part of S.181(2)(c) in its overall statutory context, we conclude that the evident purpose of the provision is to encourage the settlement of proceedings to which it applies. The criterion set out in the provision is to be applied objectively and requires a consideration of the whole of the conduct of the party against whom the order is sought, or some discrete part of that party's conduct with a view to ascertaining whether it unreasonably failed to agree to a settlement of the claim. We also consider that on the proper construction of the provision, an affirmative conclusion may be reached on at least two bases. First, where there was a proposal put by a party which could be described as a reasonable settlement of the claim and that was not agreed by the other party. The second situation in which the criterion could be satisfied is where the course of conduct of the party over a relevant period could be said to amount to conduct inconsistent with an intention to settle the proceedings on any basis that could be considered reasonable..."

29 And in Phillips v. Industrial Relations Commission of New South Wales (2006) 154 IR 96 the Court of Appeal of the State Supreme Court (Spigelman CJ, Mason P and Beazley JA) commented (at pp.19 and 20) that:

"...when the Full Bench in Paris spoke of applying the statutory criterion 'objectively' it was correctly discerning that the standard of unreasonable failure was to be applied by reference to the hypothetical yardstick of the fictional '...man on the Clapham omnibus...' or his Australian, gender-neutral counterpart. This does not mean that this hypothetical personage is placed anywhere other than in the context of the party in question (here the party against whom costs are sought). Nor does it mean the reasonableness assessment may commit hindsight error. But it does mean that the standards of the actor in question are not determinative. Thus, in the realm of negligence law, a person's conduct may be held unreasonable even though he or she was ignorant of the circumstances calling for a particular response or even if he or she lacked the capacity to discern or provide a correct response in the circumstances.

Under S.181(2)(c) costs may be awarded against the employer or the employee, depending on who has failed to agree to a settlement and done so unreasonably. The reference to the opinion of the Commission emphasises, if emphasis were required, that the criterion is to be decided by the Commission applying its own perception of what was unreasonable, as distinct from the perception (if any) of the party. This does not permit the Commission to ignore the standpoint or standards of the party concerned, but the Commission must not be captive to those matters. Were it otherwise, the costs discretion could not be invoked against a pig-headed litigant blinded by self-absorbed stupidity or malice..."

30 With the benefit of hindsight, the offer of $20,000.00 which A V Jennings ultimately advanced in an attempt to settle Mrs Pecotic's Part 6 application was an offer which she should have accepted. But, it is inappropriate to determine a costs application with the benefit of hindsight. That is a luxury which the Commission now has but which would have been denied the parties prior to and during the hearing. And, in my opinion, an order for costs on the grounds of an unreasonable failure to settle a matter should be contemplated having particular regard to the right that any litigant has to have her case presented in court without compromising it.

31 As I indicated in my unreported supplementary decision of Wednesday, 4 May, 1994 in Luke v. Handicapped Children's Centre [Matter No. IRC 2586 of 1994 at p.5]:

"…an order for costs on the grounds of an unreasonable failure to settle the matter should be contemplated only where there is such an obdurate refusal to participate in the discussions that there has been a total frustration of the conciliation process…"

Again in my unreported decision of Thursday, 25 February, 1999 by in Wehner v. Chakra Holdings Pty Limited [Matter No. IRC 1617 of 1998], I commented (at p.22) that a party:

"…was always entitled to press its position in arbitrated proceedings and should not be penalised for doing so…"

32 Whilst the $20,000.00 offer made to Mrs Pecotic by A V Jennings was a reasonable one in all the circumstances, particularly in light of the outcome of the proceedings before me, it must be appreciated that it came very late in the negotiations. Initially the offer made by A V Jennings was a very modest one in the circumstances - $3,000.00. At that time - on Monday, 25 October, 2004 - Mrs Pecotic would no doubt have been prepared to accept an offer of $20,000.00 in settlement of her Part 6 application. Indeed, through Mr Dean she had proposed that amount as a settlement of her claim. But by Friday, 7 July, 2006 when A V Jennings was finally prepared to make the offer of $20,000.00 to Mrs Pecotic to settle her claim, she would no doubt have incurred significant costs and inconvenience, making that sum no longer attractive for her. In my opinion, in determining an application for costs for Part 6 applications, the reasonableness or unreasonableness of an offer of settlement should always be considered in the context of the history of the negotiations and not confined to the actual offer ultimately made. Looked at in that light, I do not believe that a costs application has been made out on the basis of an unreasonableness on the part of Mrs Pecotic (or Mr Dean) to settle the matter.

33 But were I to conclude in this case that there had, in fact, been an unreasonable failure to accept an offer of settlement, I believe that there remains an even more fundamental reason why I should reject the cost application made by A V Jennings in these proceedings against Mr Dean. I have no doubt that Mr Dean's conduct and behaviour during the hearing contributed substantially and unnecessarily to the difficulties A V Jennings had throughout the proceedings and complicated and delayed them: I have concluded that already in my initial decision on the matter on Wednesday, 6 June, 2007 and I am aware that the Full Bench in Bankstown City Council v. Paris spoke (at p.219) of a "...course of conduct of the party over a relevant period..." as constituting "...conduct inconsistent with an intention to settle the proceedings on any basis that could be considered reasonable..." and, as such, grounds for a cost application. But I still do not believe that I am empowered to punish Mr Dean with a cost application against him for his conduct and behaviour. 34 As I indicated in my interlocutory decision on the question of jurisdiction for this cost application (at p.5):

"...it is not ordinarily the legal representative or agent of a party who incurs costs, notwithstanding that the conduct of that legal representative or agent may have, in fact, either contributed to the unreasonable failure to settle a claim, behaved in a frivolous or vexatious manner or contributed to the delay and unnecessary expense of the litigation [ Di Battista v. Motton (1971) VR 565]. In Steel v. Mirror Newspapers Limited (1975) 2 NSWLR 48 Samuels JA of the Court of Appeal of the State Supreme Court commented in that respect (at p.55) that: '...it is important, in my opinion, to stress that it is not right to use an order for costs as a means of punishing counsel's transgressions. It would be quite unfair to do so, because it is the client and not the counsel who must satisfy the penalty. It would, of course, be unrealistic to ignore the effect that stringent use of the power to make such orders may have in deterring counsel from indulging in the kind of reckless extravagance that may abort a trial. But that is not its purpose: it is intended merely to distribute loss...'..." The fact that A V Jennings was prepared to excuse Mrs Pecotic from any application for costs against her as part of the settlement of the appeal proceedings does not mean that Mr Dean is automatically liable to meet any such costs. 35 Such a conclusion, of course, seems to fly in the face of the strict wording of Rule 209 which is in very wide terms and, at least, appears to be suggesting that costs may be awarded for instances where: "....costs are incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default, and it appears to the Commission that a barrister, solicitor or agent is responsible..." But, as Marks J indicated in his unreported decision of Tuesday, 29 May, 2007 in Deluux Pty Limited v. Mini-Tankers Pty Limited [Matter No.4640 of 2005 at p.8 that:

"....the Rules cannot expand upon or be inconsistent with anything which is contained in the Act, they having been created in effect by delegation..."

36 The costs application against Mr Dean therefore is confined to determining whether or not he actually contributed in any way to an unreasonable refusal to accept a settlement on the part of his client, Mrs Pecotic. On the state of the evidence before me, it remains unclear what role Mr Dean had in Mrs Pecotic's decision to reject the offers of settlement made to her. It should be matter of public policy in any litigation that an advocate represents such clients as seek him to represent them - the so-called "cab rank" rule for advocacy - and consequently be free from any threat of a costs application where it subsequently to emerge that the client he so represents has a hopeless case or is being obstructive in any attempt to settle the matter. No doubt, every advocate has the responsibility to explain the prospects of success for any litigation that his client is contemplating but he must ultimately obey such instructions as are given to him by his client. He has a duty to do so. There is nothing before me to suggest that Mr Dean was not at all times acting on Mrs Pecotic's instructions.

37 I therefore, reject the application for costs made against Mr Dean by A V Jennings in these proceedings.

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