Fair Work Act 2009

s.394 - Unfair dismissal

• [1] On 4 September 2023, I heard Ms Alicia English's unfair application against Tee Ink Pty Ltd (Tee Ink). On 12 September 2023, I decided that Ms English had been unfairly dismissed by Tee Ink and ordered that she be paid compensation in the sum of $3,846.15 plus $423.08 in superannuation.[1]

• [2] On 24 September 2023, Ms English filed an application for costs against Tee Ink and Mr Pete De Gail, founder of Tee Ink.

• [3] Ms English incurred legal costs and disbursements in the sum of $14,509 in connection with her unfair dismissal case against Tee Ink. Those costs and disbursements were incurred in the period from 21 July 2023 to 2 September 2023.

• [4] On 30 August 2023, Ms English's lawyer filed a Notice of Representative Ceasing to Act because Ms English could not afford to have her lawyer represent her at the hearing of her unfair dismissal case before the Fair Work Commission (Commission). Notwithstanding this, Ms English engaged and paid for her lawyer to assist her to prepare for her unfair dismissal hearing, including by preparing cross examination questions for Tee Ink's witnesses, and preparing opening and closing statements for use at the hearing.

• [5] I have determined Ms English's costs application on the basis of the submissions, documents and witness statements filed by the parties in accordance with the directions I made after Ms English filed her application for costs.

• [6] Ms English seeks payment of her legal costs pursuant to s 400A and s 611 of the Fair Work Act 2009 (Cth) (Act).

• [7] Ms English's primary contentions in support of her costs application are as follows:

• Tee Ink's case had no reasonable cause or reasonable prospect of success.

• Tee Ink knew, or ought to have known from the outset, that Ms English was covered by a modern award and due to Tee Ink's admitted failure to consult with Ms English in accordance with that award, Tee Ink would ultimately be unsuccessful at the hearing.

• Tee Ink conducted its case unreasonably in that it:

• repeatedly rejected all reasonable opportunities to engage in conciliation from 17 July 2023 to 4 September 2023 inclusive, notwithstanding that Tee Ink was represented by an experienced employment lawyer;

• failed to engage in any reasonable attempt to settle the matter outside of a conciliation process, thereby failing to minimise the costs and time incurred by both parties and the Commission; and

• did not respond to Ms English's offer to settle the case for $19,230.77 (10 weeks' pay) on 15 August 2023, or make any reasonable counter offer for Ms English to consider. The fact that Ms English had already received her contractual entitlement to 4 weeks' pay in lieu of notice was irrelevant to the 10 week settlement offer she made on 15 August 2023.

• Tee Ink failed to provide any prior notice to Ms English that Mr de Gail would not be called as a witness for Tee Ink. Ms English disputes that it was made clear during the MS Teams trial run on 1 September 2023 that Mr de Gail may not be available to attend the hearing. It is contended that the failure to provide prior notice that Mr de Gail would not be called as a witness was an unreasonable act or omission which caused Ms English to incur legal costs in the matter because Ms English paid for her lawyer to review Mr de Gail's witness statement and respond in her outline of argument in reply. In addition, Ms English paid her lawyer to prepare cross-examination questions and prepare her to cross examine Mr de Gail during the hearing.

• [8] Tee Ink's primary contentions in opposition to the application for costs are as follows:

• There is no basis in this case to depart from the usual principle that each party must bear their own costs in proceedings under the Act.

• Just because a party was unsuccessful in its defence of an unfair dismissal claim does not mean that it was unreasonable of the party to defend the case.

• Ms English's success in her unfair dismissal case was limited. Ms English's primary case was that her role was not made redundant because it still existed. Ms English was not successful on that argument. Ms English succeeded in her argument that her dismissal was not a genuine dismissal within the meaning of the Act, but only on the limited basis that Tee Ink did not consult with her because it was unaware that she was covered by an award. Tee Ink ultimately conceded the failure to consult point.

• Tee Ink did not act unreasonably in failing to accept Ms English's offer, not making a counter offer, or not participating in conciliation. There was no guarantee that the matter could or would have settled. Ms English's offer of 10 weeks was unrealistic in the circumstances, including where Tee Ink had paid Ms English 4 weeks' in lieu of notice. Further, Tee Ink is a small business and was defending Ms English's unfair dismissal case in circumstances where it had suffered a serious downturn in sales which led to the decision to make Ms English's role redundant. Tee Ink's decision not to make a settlement offer to Ms English in those circumstances was not unreasonable.

• It was clear from paragraph two of Mr de Gail's witness statement, together with information provided at the MS Teams trial on 1 September 2023, that he may not be available to attend the hearing. In addition, the substantive evidence of Mr de Gail was four paragraphs in length and there was an overlap between his evidence and other evidence adduced on behalf of Tee Ink.

• The costs sought by Ms English are out of proportion to the jurisdiction of the Commission and any award of compensation that Ms English may have obtained.

• Tee Ink's defence was not without reasonable cause and ultimately the evidence adduced by Tee Ink's witnesses was accepted in relation to a number of contentious matters.

• [9] Section 611(1) of the Act establishes a general rule that parties in proceedings before the Commission must bear their own costs. There are a number of provisions in the Act which operate as exceptions to this general rule and allow costs to be awarded in specific circumstances. Sections 400A and 611(2) of the Act are two such exceptions.

• [10] Section 400A of the Act provides as follows:

(1) The Fair Work Commission 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 Fair Work Commission 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 Fair Work Commission 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 Fair Work Commission's power to order costs under section 611."

• [11] Section 400A(1) of the Act establishes two preconditions for the making of an order for costs:

(a) First, the Commission must be satisfied that the party engaged in an unreasonable act or omission in relation to the conduct or continuation of a matter; and

(b) Secondly, such act or omission caused the other party to the matter to incur costs.

• [12] If these two preconditions are satisfied, a discretionary power to order the payment of such costs is enlivened.

• [13] Section 611(2) of the Act provides as follows:

"(2) However, the Fair Work Commission 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 Fair Work Commission if:

(a) the Fair Work Commission 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 Fair Work Commission 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."

• [14] The relevant principles concerning the interpretation and application of s 611(2)(a) were comprehensively stated in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing[2] and may be summarised as follows:

• An application is made vexatiously when the predominant motive or purpose of the applicant is to harass or embarrass the other party or to gain a collateral advantage.

• An application is not made without reasonable cause simply because the application did not succeed.

• Whether an application is made without reasonable cause may be tested by asking, on the facts apparent to the applicant at the time the application was made, whether there was no substantial prospect of success.

• If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to characterise the application as having been made without reasonable cause.

• In relation to an appeal, the question becomes whether the appeal has no substantial prospect of success. The prospect of success must be evaluated in the light of the facts of the case, the judgment appealed from and the points taken in the notice of appeal. If there was not insubstantial prospect of the appeal achieving some success, it cannot fairly be described as having been made without reasonable cause.

• An application will have been made without reasonable cause if it can be characterised as so obviously untenable that it cannot possibly succeed, is manifestly groundless, or discloses a case where the tribunal is satisfied it cannot succeed.

• [15] In relation to s 611(2)(b), the relevant principles were summarised by the Full Bench in Baker v Salva Resources Pty Ltd [3] as follows (footnotes omitted):

"[10] The concepts within s.611(2)(b) 'should have been reasonably apparent' and 'had no reasonable prospect of success' have been well traversed:

• 'should have been reasonably apparent' must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis, rather than a subjective test; and

• a conclusion that an application 'had no reasonable prospect of success' should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable."

• [16] I found that Ms English's dismissal was not a genuine redundancy within the meaning of the Act because Tee Ink failed to consult with her. Had such consultation occurred, I found on that balance of probabilities that Ms English would have been employed for a further period of two weeks but her employment would have come to an end at the conclusion of such a consultation process. These findings, together with the fact that Tee Ink failed to afford Ms English procedural fairness in the process leading to her dismissal, led to my evaluative assessment that Ms English's dismissal was unfair and my decision to award Ms English compensation for two weeks' lost wages (during what should have been the consultation period) plus superannuation.[4]

• [17] Although Tee Ink failed on the consultation point, which it conceded at the hearing, it did succeed on the significant question of whether Ms English's substantive position was that of Head of Design. Had Ms English succeeded on that point, I would have found that her position continued to exist and there was no sound or defensible reason for her dismissal. In those circumstances, I would have awarded a significant amount of compensation to Ms English because I would have been satisfied that her dismissal was unfair and she would have remained in her role for an extended period of time.

• [18] True it is that Tee Ink did not make a settlement offer, did not agree to participate in conciliation before the Commission, and did not seek to engage in settlement discussions with Ms English outside any conciliation process. But it was not unreasonable of Tee Ink to act in that manner in circumstances where Ms English was pursuing her contention that her substantive position was that of Womenswear Designer, not Head of Design, Ms English had made a relatively high offer of almost $20,000 to settle the matter, and Tee Ink had made Ms English's position redundant to address a significant decline in its sales. The situation would have been different if Ms English had made an offer to settle for two weeks (or less), having regard to the fact that Tee Ink failed to consult with her under the applicable award. In those circumstances, I would have been satisfied that Tee Ink engaged in an unreasonable act or omission by failing to accept the offer.

• [19] Tee Ink filed and served a short witness statement made by Mr de Gail as part of its evidentiary material prior to the hearing on 4 September 2023. In paragraph two of his witness statement, Mr de Gail said, "Unfortunately, when this matter will be listed for hearing, I will be on a delayed honeymoon in Italy and may not be available for the hearing". The remaining five paragraphs of Mr de Gail's short witness statement set out matters that were largely consistent with the more substantive witness statements already filed and served by Tee Ink. Having regard to those circumstances, I do not consider that it was unreasonable of Tee Ink not to call Mr de Gail to give evidence at the hearing or to provide advance notice of the certainty (as opposed to the likelihood) that Mr de Gail would not be available to attend the hearing. I did not admit the witness statement of Mr de Gail into evidence because it would have been unfair to Ms English to do so in circumstances where she did not have an opportunity to cross examine him on its contents.

(a) I am satisfied that Tee Ink did not engage in an unreasonable act or omission in connection with the conduct or continuation of the matter;

(b) I am satisfied that Tee Ink did not respond to Ms English's unfair dismissal application vexatiously or without reasonable cause; and

(c) I am not satisfied that it should have been reasonably apparent to Tee Ink that its response to Ms English's unfair dismissal application had no reasonable prospect of success.

• [21] Accordingly, I decline to exercise my discretion to award costs in favour of Ms English against Tee Ink or Mr de Gail. Ms English's costs application pursuant to s 400A and/or s 611 of the Act is dismissed.

[1] English v Tee Ink Pty Ltd [2023] FWC 2328 (Merits Decision)

[2] [2014] FWAFB 810 at [23]- [33]

[3] [2011] FWAFB 4014; (2011) IR 174

[4] [2023] FWC 2328

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