//
[136]
[2018] FWC 1766
General information, not legal advice.
Fair Work Commission
2018-03-26
Original judgment source is linked above.
s.394 - Unfair dismissal
PGG Wrightson Seeds (Australia) PTY LTD T/A PGG Wrightson Limited
Application for costs - costs awarded pursuant to s.401(1A).
[1] On 9 October 2017, Mr Anthony Christensen made an application to the Fair Work Commission (the Commission) for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the Act) in relation to the termination of his employment by PGG Wrightson Seeds (Australia) PTY LTD T/A PGG Wrightson Limited (PGG).
[2] Mr Christensen was represented by a paid agent, Australian Dismissal Services (ADS).
[3] On 5 December 2017, ADS filed a Form F50 - Notice of Discontinuance on Mr Christensen's behalf.
[4] PGG now seeks an order for costs against both Mr Christensen and ADS pursuant to sections 400A, 401 and 611 of the Act.
[5] Mr Christensen alleged his dismissal on 6 October 2017 was not a genuine redundancy and lacked procedural fairness.
[6] In its Form F3 - Employer Response to Unfair Dismissal Application (Form F3) filed on 23 October 2017, PGG raised jurisdictional objections to Mr Christensen's application. It asserted Mr Christensen was not dismissed within the meaning of the Act. In the alternative, it asserted Mr Christensen's dismissal was a case of genuine redundancy. Further, it asserted Mr Christensen did not meet the minimum employment period because his employment as a casual employee was not on a regular and systematic basis and he did not have a reasonable expectation of continuing employment.
[7] At this time, PGG also asserted the unfair dismissal application was frivolous or vexatious and had no reasonable prospects of success.
[8] The matter did not resolve at conciliation on 31 October 2017 so the matter was then referred to Deputy President Dean for determination of the jurisdictional objections raised by PGG.
[9] On 9 November 2017, Deputy President Dean's chambers sent the following email to ADS:
"We note the jurisdictional objections raised by the respondent in the attached form F3 Employer's Response.
The Deputy President has asked for your response in relation to the objection that the applicant was not employed on a regular and systematic basis and has therefore not met the minimum employment period.
Please provide your response to this objection by no later than close of business on Thursday, 16 November 2017." (emphasis in original)
[10] Subsequently Mr Christensen was granted an extension until 4:00pm on 27 November 2017 due to his representative Ms Amanda Millar of ADS being overseas from 12-21 November 2017. When this was not complied with, PGG's lawyers, Logie-Smith Lanyon (LSL), requested the unfair dismissal application be dismissed in a letter to the Deputy President's Associate dated 30 November 2017 and copied to ADS. This prompted a response email from Ms Millar two hours later, which stated:
"It appears that there may have been some miscommunication during my time away. Our client has instructed us that he wishes to discontinue this matter. We apologise if this has not been formally notified - which I have only realised on seeing Ms Wallis' correspondence this morning.
If not done to date - a notice of discontinuance will be filed today."
[11] A notice of discontinuance was subsequently filed, but not until 11:42am on 5 December 2017.
[12] On 19 December 2017, PGG filed its Form F6 - Application for costs (Form F6) against both Mr Christensen and ADS.
[13] Directions from Deputy President Dean made on 20 December 2017 required PGG to file its submissions by 4:00pm on 11 January 2018, Mr Christensen and ADS by 4:00pm on 25 January 2018 and reply submissions from PGG by 4:00pm on 1 February 2018.
[14] PGG seeks costs against:
(a) Mr Christensen pursuant to ss. 400A(1), 611(2)(a) and (b) of the Act; and
(b) ADS pursuant to ss.401(1A)(a) and (b) of the Act.
[15] In terms of sections 611(2)(a) and 611(2)(b) of the Act, PGG contends that Mr Christensen (which it referred to as the "First Costs Respondent") acted unreasonably by instituting his unfair dismissal application (which it described as "the Proceeding") against PGG "vexatiously and/or without reasonable cause and/or in circumstances in which it should have been reasonably apparent to him that his application had no reasonable prospects of success".
[16] In this regard, PGG asserted it has been "put to considerable expense to meet a case that was without substance",[1] further submitting that even on Mr Christensen's own version of the facts "it was clear that the Proceeding should fail".[2] As such, PGG claimed that the application brought by Mr Christensen was "obviously untenable and manifestly groundless".[3] In this respect, it was submitted by PGG that, among other things:
"(A) The First Costs Respondent was not dismissed. The First Costs Respondent stated in his Application that he was told there were "no prospects past next week". The First Costs Respondent made no attempt to assert there was a dismissal within the meaning of section 386 of the FW Act. The Costs Applicant maintains it did not offer the Applicant further shifts/engagements, due to insufficient work and consistent with the casual nature of the employment.
(B) The First Costs Respondent stated in the Application that being told there were "no prospects past next week" was (according to the First Costs Respondent) a "redundancy situation".
(C) The Application conceded the First Costs Respondent was employed on a casual basis and made no attempt to assert that the employment was on a regular and systematic basis or that the First Costs Respondent otherwise satisfied the eligibility requirements to make the Application.
(D) The First Costs Respondent was well aware that he was offered shifts/engagements on irregular days which did not follow a set pattern, was not provided with significant advance notice of the request to work shifts/engagements, worked highly variable hours in different weeks, ranging from 10 to 40 hours, refused the Respondent's offer of shifts/engagements on numerous occasions and worked in a role which is inherently seasonal/variable by its nature and subject to significant changes in the availability of work (of which the Applicant was/is well aware). The Applicant also expressly agreed, pursuant to the written contract of employment dated 1 September 2016, that the employment would end at the end of each shift and that there was no commitment, promises or warranties that the First Costs Respondent would be engaged on a regular and systematic basis or that the First Costs Respondent would be provided with ongoing employment." (references omitted)
[17] In terms of s.400A(1) of the Act, PGG submitted the matters outlined in [15] and [16] above also constituted unreasonable acts or omissions by Mr Christensen that caused it to incur costs.
[18] PGG contends that ADS (which it referred to as the "Second Costs Respondent") caused it to incur costs by encouraging Mr Christensen to continue with his application in circumstances where it should have been reasonably apparent that it had "no reasonable prospect of success". PGG further asserted that ADS encouraged Mr Christensen to continue with the Proceeding when it should have been apparent that it had no reasonable prospect of success and its failure to advise Mr Christensen that his application had no reasonable prospects of success constituted unreasonable acts or omissions and caused it to incur costs in defending the claim.
[19] In this regard, it was asserted that throughout the Proceedings both Mr Christensen and ADS were put on notice of PGG's position in relation to the application. In particular, PGG referred to its Form F3 filed on 23 October 2017 outlining its jurisdictional objections, together with two letters sent by Ms Rima Newman of LSL to ADS on 27 October and 30 November 2017[4]. PGG asserted these letters from Ms Newman put ADS and Mr Christensen on notice that PGG would reserve its right to seek an order for costs incurred in respect of the application.
[20] In the letter dated 30 November 2017,[5] LSL referred to Mr Christensen's failure to comply with directions to file material, asserting that in light of this it appeared his application could not proceed and that PGG's "legal costs will increase if the matter is not withdrawn immediately". It was submitted that in the circumstances, a reasonable representative would have formed the view that Mr Christensen's application did not have strong prospects of success and that its continuation was unreasonable.
[21] As such, PGG contended that ADS' subsequent failure to file a notice of discontinuance on Mr Christensen's behalf in a timely manner constituted an unreasonable act or omission which caused PGG to incur additional costs.
[22] On 25 January 2018, ADS filed submissions on behalf of itself and Mr Christensen and contended that the costs application has no merit and should be dismissed, on the basis that Mr Christensen was "eligible to bring a claim and seek to have it determined by the Commission (even if he subsequently made the decision to not see this all the way through to arbitration)."
[23] ADS challenged the PGG assertions that Mr Christensen was ineligible to bring a claim and his substantive application was weak, submitting that this was "not a case where the application was fundamentally misconceived and destined to fail because the person was 'ineligible' to apply".
Jurisdictional objection - not meeting the minimum employment period
[24] Referring to the jurisdictional objection of PGG that Mr Christensen did not meet the minimum employment period required under s.384 of the Act, ADS submitted payslips which it contended showed Mr Christensen had worked regular and systematic hours across his period of service with PGG and also alleged he had been involved in forward planning.
[25] ADS refuted PGG's assertion that because Mr Christensen's employment was "casual" in nature, he could not claim the text message he received from PGG informing him that there were "no prospects past next week" constituted a dismissal under the Act. It submitted that for over thirteen months, excluding a period of workcover incapacity, Mr Christensen had worked in excess of 30 hours per week on average. As such, ADS contended that the "sudden decision" of PGG to inform him that he was no longer required, made without any prior consultation or discussion, clearly constituted a termination "on the employer's initiative".
[26] ADS submitted that at the time of his termination other employees on site were unable to undertake the manual handling aspects of Mr Christensen's job due to their pre-existing medical conditions. It also alleged there was a lack of consultation regarding the redundancy, and with PGG employing 155 employees, discussion of redundancy could have involved redeployment options.
[27] Ultimately, ADS submitted all four jurisdictional objections were without substance and it was open to Mr Christensen to seek for his unfair dismissal application to be heard and determined. Submitting that whether or not he would have succeeded involved a discretionary assessment of whether, in all the circumstances, the dismissal was harsh, unjust or unreasonable, ADS stated:
"[T]he clear lack of any procedural fairness being afforded to the Firsts Costs Respondent - including no opportunity to respond (see section 378(c)), no valid reason being notified (see section 378(b)), no ability to bring a support person as no meeting was conducted (see section 387 (d)) etc - makes it clear that the First Costs Respondent's case was not without a prospect of success."
[28] In relation to the claim that Mr Christensen brought his unfair dismissal application vexatiously, ADS submitted PGG produced no evidence in support of this. Instead, ADS asserted Mr Christensen was eligible to bring an application and noted he was distressed by the termination of his employment, strongly believing it to be "harsh, unjust or unreasonable".
[29] ADS rejected the claim of PGG that it had "caused" PGG to incur costs by way of an "unreasonable act or omission" related to its conduct in encouraging Mr Christensen to continue the matter. Asserting that "[Mr Christensen] ultimately made all of the decisions of the conduct of the matter after receiving sound and professional guidance from ADS on the risks and issues involved", it submitted that on the basis the application was withdrawn prior to arbitration, there was no evidence to support PGG's claim that it had encouraged Mr Christensen to continue.
[30] In this regard, the following was submitted by ADS in relation to the operation of s.401 of the Act:
"Section 401 does not empower the making of a costs order simply for costs incurred whilst a person is being represented, but only if the representative has caused those costs. The costs sought to be recovered are simply those involved in defending the proceeding: they have not been "caused" by ADS in any meaningful sense, as would be the case of a representative raising frivolous arguments or seeking unnecessary adjournments. The necessary causal link is simply not present. There is no evidence that ADS "encouraged" the continuation of the matter, as is necessary to make out section 401(1A)(a), nor of the "unreasonable act or omission" of ADS under section 401(1A)(b). One cannot conflate the claim that the proceeding should not have been brought with the claim that ADS is responsible for some unreasonable act or omission.
The point is brought into sharp focus by the extraordinary sums which the Costs Applicant has apparently incurred in legal fees (noting the early stage at which this claim was discontinued), as detailed in their itemised schedule of costs. The costs claimed do not, on any construction, conform to the methodology or sums specified in schedule 3.1 of the Fair Work Regulations 2009. But to extrapolate out from the sums claimed for defending the proceeding over particular periods of time, a contention that such costs have been caused by the conduct of ADS is missing the point of the operation of section 401. It is not sufficient to show that a party was represented and the other side unreasonably incurred costs. One must show that the unreasonable costs where (sic) incurred because of that representation."
[31] ADS also provided a witness statement of Ms Amanda Millar, who stated Mr Christensen made the decision to not proceed with his claim while she was travelling overseas between 12 and 21 November 2017. Ms Millar stated that she had sought and was granted an extension of time to file submissions on behalf of Mr Christensen until 27 November 2017 prior to her period of absence and did not speak with him while she was away. She said that it was only after she received the email from LSL on 30 November 2017, that she realised a Notice of Discontinuance had not been filed. Ms Millar said that she then "immediately contacted all parties in writing to advise that the Applicant (Mr Christensen) had decided to discontinue his claim."
[32] PGG provided submissions in reply on 1 February 2018, contending that as there is no requirement under the Act for matters to proceed to arbitration in order for a costs application to be brought, the fact that no decision was handed down or dates set for arbitration "does not have any bearing on this costs application". Further, PGG maintained its contention that Mr Christensen was not eligible to make an unfair dismissal claim, "due to not having completed the minimum employment period specified in section 383 of the FW Act".
[33] In this regard, PGG asserted that Mr Christensen's employment was not "regular and systematic"[6] as he was well aware of what it submitted was the "seasonal and fluctuating nature" of his employment. Submitting Mr Christensen was not given a "reasonable expectation of continuing employment by the employer on a regular and systematic basis"[7], PGG contended the following:
"The First Costs Respondent was not provided with advanced notice of his shifts/engagements, he worked highly variable hours, and he refused shifts on numerous occasions and worked in a role that was inherently variable in its nature due to its industry wide seasonality. He also entered into a written contract dated 1 September 2016 (Written Contract) which specifically addressed these features of the employment."
[34] PGG submitted that due to the casual nature of Mr Christensen's employment, there was additionally no requirement for it to discuss redundancy with him as the seasonal and unpredictable nature of the industry meant it was "impossible to foresee when there will be a downturn in business". It was submitted that in these circumstances, PGG did not offer Mr Christensen further shifts or engagements because, due to insufficient work and the casual nature of his employment, there was "no work for the First Costs Respondent to be completing and the position was no longer required to be filled". PGG also asserted there was inconsistency in hours per fortnight worked by the First Costs Respondent (20 to 100 hours) and submitted that despite the length of his overall employment, there was "no reasonable expectation of continuing employment on a regular and systematic basis".[8]
[35] As to the question of whether there was a genuine redundancy, PGG submitted there were no longer any duties or functions to be undertaken by Mr Christensen, the work was seasonal and his position was no longer required.
[36] PGG maintained that the application brought by Mr Christensen was vexatious as he was "well aware of the basis of his employment, voluntarily entered into the relevant casual arrangement and accepted a higher rate of pay due to the unpredictable and fluctuating nature of the employment" and yet had proceeded to make an unfair dismissal application, which he knew could not succeed given those factors.
[37] As to its claim against ADS, PGG contended that ADS caused it to incur costs by encouraging Mr Christensen to continue to pursue the application even after being put on notice of its position in relation to costs throughout. With regards to the witness statement of Mr Anderson, PGG submitted that ADS caused it to incur costs by:
"(a) encouraging the First Costs Respondent to continue the Proceeding, when it should have been apparent that the Application had no reasonable prospect of success; and
(b) failing to advise the First Costs Respondent that the Unfair Dismissal Application had no reasonable prospects of success, or further was ineligible."
[38] PGG again referred to the two letters it sent to ADS, which it submitted put it on notice of its position regarding the unfair dismissal application having no reasonable prospect of success, such that it should be immediately discontinued. In this regard, PGG submitted:
"...It is clear that the Second Costs Respondent "caused" the costs to be incurred by the Costs [Applicant] because of an "unreasonable act or omission". There was a significant delay between:
(a) the First Costs Respondent informing the Second Costs Respondent that he wanted to discontinue the Proceeding; and
(b) the Second Costs Respondent informing the Commission/the Costs Applicant that Proceeding was to be discontinued.
8.7 There was a further delay in the Second Costs Respondent eventually filing the Notice of Discontinuance.
8.8 During this period, the Costs Applicant incurred costs unnecessarily. The costs were in respect of necessary work performed by the Costs Applicant's solicitors, including preparing letters to the Commission and the Second Costs Respondent, and advising the Costs Applicant in relation to the ongoing Proceeding. This work would clearly not have been carried out (and the costs would not have been incurred) had Second Costs Respondent promptly notified the Commission/the Costs Applicant that the First Costs Respondent wished to withdraw the Proceeding. The Second Costs Respondent's conduct in this regard is clearly an "unreasonable act or omission".
8.9 The Second Costs Respondent has not provided any reason or mitigating circumstances for its conduct."
[39] Section 611(1) of the Act establishes a general rule that parties in proceedings before the Commission must bear their own costs. Sections 400A, 401 and 611(2) of the Act operate as exceptions to this general rule and allow costs to be awarded in specific circumstances.
(1) The FWC may make an order for costs against a party to a matter arising under this Part (the first party) for costs incurred by the other party to the matter if the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter.
(2) The FWC may make an order under subsection (1) only if the other party to the matter has applied for it in accordance with section 402.
(3) This section does not limit the FWC's power to order costs under section 611.'
[41] Section 400A was inserted into the Act by virtue of the Fair Work Amendment Act 2012. The Explanatory Memorandum to the Fair Work Amendment Bill 2012 states:
"Parts 3 and 4 of Schedule 6 to the Bill enhance the FWC's ability to order costs against a party and/or their representative in unfair dismissal matters. The new 'party costs' provision applies where a party to an unfair dismissal matter (either an employee or employer) has caused the other party to incur costs by an unreasonable act or omission. Under section 401 of the FW Act, lawyers and paid agents may currently be exposed to costs orders if FWA has granted permission for a person to be represented in an unfair dismissal matter. The Bill will provide for the FWC to order costs against a lawyer or paid agent whether or not the FWC has given permission for a person to be represented.
The amendments strike a balance between the need to protect workers from unfair dismissal, and to provide a deterrent against unreasonable conduct during proceedings. The amendments will enable costs orders to be more easily made in the case of unreasonable conduct but will not prevent genuine claims from being pursued. They will discourage frivolous and speculative claims and assist in the efficient resolution of claims by encouraging all parties to approach proceedings in a reasonable manner. These measures are reasonable and proportionate to address the time and expense that an unreasonable conduct by a participant and/or their representative may cause another party to incur"[9] (my emphasis).
"168. Item 4 inserts a new section 400A to enable the FWC to order costs against a party to an unfair dismissal matter (the first party) if it is satisfied that the first party caused the other party to the matter to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the matter.
169. As with the new power to dismiss applications under section 399A, the power to award costs under section 400A is not intended to prevent a party from robustly pursuing or defending an unfair dismissal claim. Rather, the power is intended to address the small proportion of litigants who pursue or defend unfair dismissal claims in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.
170. The FWC's power to award costs under this provision is discretionary and is only exercisable where the first party (whether the applicant or respondent) causes the other party to incur costs because of an unreasonable act or omission. This is intended to capture a broad range of conduct, including a failure to discontinue an unfair dismissal application made under section 394 and a failure to agree to terms of settlement that could have led to the application being discontinued.
171. However, the power to award costs is only available if the FWC is satisfied that the act or omission by the first party was unreasonable. What is an unreasonable act or omission will depend on the particular circumstances but it is intended that the power only be exercised where there is clear evidence of unreasonable conduct by the first party."[10]
[42] The Full Bench of the Commission said in Gugiatti v SolarisCare Foundation Ltd[11] (Gugiatti) that s.400A "is concerned with unreasonable acts or omissions in connection with the "conduct or continuation" of a matter already instituted, not with whether it was reasonable to have instituted a matter in the first place."[12]
[43] The Full Bench also stated:
"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)). 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 a matter. The second is that such act or omission caused the other party to the matter to incur costs. Once these preconditions are satisfied, a discretionary power to order the payment of such costs is enlivened."[13]
[44] Section 400A of the Act provides that costs may be awarded to PGG if I am satisfied that the costs it claims were incurred as a result of an unreasonable act or omission of Mr Christensen in connection with the conduct or continuation of the unfair dismissal application. However, even if I am satisfied that the relevant circumstances exist, I am not obliged to order costs. It is a discretionary decision. The legislative intent behind s.400A was that the power to award costs is to be exercised only in clear cases of unreasonable conduct.
[45] Section 400A was further considered by Commissioner Bissett in Emma Sidney v Employsure Pty Ltd (Sidney).[14] The Commissioner extrapolated the following from various authorities considered in Roy Morgan Research Ltd v Baker (Roy Morgan)[15] in the following manner:
"[28] The authorities relevant to a consideration of the phrase 'unreasonable act or omission' were considered in the decision of the Full Bench in Roy Morgan Research v Baker. I do not repeat those provisions here but note the following can be taken from those authorities:
[46] 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.[16]
[47] Section 401(1A) provides as follows:
"401(1A) The FWC may make an order for costs against the representative for costs incurred by the other party to the matter if the FWC is satisfied that the representative caused those costs to be incurred because:
(a) the representative encouraged the person to start, continue or respond to the matter and it should have been reasonably apparent that the person had no reasonable prospect of success in the matter; or
(b) of an unreasonable act or omission of the representative in connection with the conduct or continuation of the matter."
[48] In Rohan Veal v Sundance Marine Pty Ltd[17], a Full Bench of the Commission stated (at [15]):
"... 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."
[49] The Explanatory Memorandum to the Fair Work Amendment Bill 2012 provided as an example of where the Commission may award costs against a representative, where the representative knows his or her client's unfair dismissal claim is dishonest or without foundation but still actively encourages them to proceed with the claim to try and extract a remedy such as a financial settlement from the employer.[18]
[50] Having regard to the wording of s.400A, the references to it in the Explanatory Memorandum to the Fair Work Amendment Bill 2012 and consistent with Gugiatti, I do not consider the costs in items [1]-[19] and [21] in the Schedule of Legal Costs attached to the Form F6 fall within the scope of s.400A. I note these items relate to legal costs incurred up to and including the filing and service of the Form F3. While I note Rule 19 of the Fair Work Commission Rules 2013 requires a respondent to an unfair dismissal application to lodge its response within 7 calendar days after it was served with the application, it seems to me that s.400A was intended to cover costs incurred that are caused by the other party to a matter once it is further progressed, that is, beyond the initial requirement to file a Form F3 - Employer Response to Unfair Dismissal Application in direct response to a Form F2 - Unfair Dismissal Application.
[51] In particular, I have had regard to the statement in the Explanatory Memorandum, "[t]he amendments strike a balance between the need to protect workers from unfair dismissal, and to provide a deterrent against unreasonable conduct during proceedings."[19] It seems to me that the costs incurred in the preparation and lodgement of a Form F3 - Employer Response to Unfair Dismissal Application, if claimed against Mr Christensen, are more appropriately sought through an application made pursuant to s.611 of the Act.
[52] As for whether there should be an order for costs made against ADS in relation to these items ([1]-[19] and [21]), I am not persuaded there should be. At the time he made his application, Mr Christensen had discussed his circumstances with Mr Anderson of ADS. Notwithstanding his status as a casual employee, Mr Christensen relied on 10 months of his payslips for the evidence of his hours worked, his belief there was ongoing work and there having been no prior indication that his employment was at risk. In these circumstances, I am not persuaded that ADS encouraged Mr Christensen to start the matter when it should have been reasonably apparent that he had no reasonable prospects of success.
[53] I am also not satisfied the costs in items [20] and [22]-[39] in the Schedule of Legal Costs attached to the Form F6 fall within the scope of s.400A such that Mr Christensen should be ordered to pay them.
[54] These items concern legal costs associated with the conciliation conference that took place on 31 October 2017. On 23 October 2017, the Commission wrote to the lawyers for PGG, stating:
"Please confirm your participation in conciliation. Participating in conciliation does not preclude the objection(s) being pursued. Should the matter not resolve at conciliation, the matter may then be referred to formal proceedings in order to consider any objections raised in the Form F3 Employer's Response.
If you do not intend to participate in the conciliation, please contact the Commission to discuss the matter further.
In the absence of any response from you, this matter will remain listed for conciliation at 11:15 am on Tuesday, 31 October 2017..."
[55] A follow-up letter was sent by the Commission to the lawyers for PGG on 26 October 2017, again inviting PGG to advise whether it did not intend to participate in the conciliation. PGG elected to participate in the conciliation. It could have chosen not to. In these circumstances, I am not persuaded that PGG incurred legal costs because of an unreasonable act or omission of Mr Christensen. For the same reason, I am not persuaded that ADS caused PGG's legal costs associated with the conciliation conference to be incurred.
[56] I am not persuaded that the legal costs outlined in items [40] and [41] in the Schedule of Legal Costs attached to the Form F6 concerning the request for and granting of an extension of time for the filing of Mr Christensen's submission on the jurisdictional objections raised by PGG should be awarded to PGG pursuant to s.400A(1) as I do not consider them to be costs incurred because of an unreasonable act or omission of Mr Christensen. The extension sought was due to his representative's impending absence overseas.
[57] I do not consider that ADS should be ordered to pay the legal costs outlined in items [40] and [41] either because I do not consider the request made was unreasonable.
[58] The legal costs outlined in items [42] - [50] in the Schedule of Legal Costs attached to the Form F6 concern the attendances flowing as a result of no submissions having been filed on Mr Christensen's behalf by the due time of 4.00pm on 27 November 2017.
[59] The Full Bench in Gugiatti had considered the legislative history lying behind s.400A. In this regard, it was prepared to infer "...that the legislative intention in the enactment of s.400A of the FW Act was to re-introduce the costs provision in s.170CJ(3) of the WR Act as it was after the Workplace Relations Amendment (Termination of Employment) Act 2001..."[20]
[60] The phrase "unreasonable act or omission" was used in s.170CJ(3) of the Workplace Relations Act 1996 (the WR Act). Sections 170CJ(1), (2) and (3) of the WR Act provided:
(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.
(2) If the Commission is satisfied that a party (first party) to a proceeding relating to an application under section 170CE has acted unreasonably in failing:
(b) to agree to terms of settlement that could lead to the discontinuance of the application;
the Commission may, on an application under this section by the other party to the proceeding, make an order for costs against the first party.
(a) that a party (first party) to a proceeding relating to an application made under section 170CE caused costs to be incurred by the other party to the proceeding; and
(b) that the first party caused the costs to be incurred because of the first party's unreasonable act or omission in connection with the conduct of the proceeding;
the Commission may, on an application by the other party under this section, make an order for costs against the first party." (my emphasis)
[61] As was noted by the Full Bench in Roy Morgan, the unreasonable act or omission phrase in s.170CJ(3) of the WR Act was considered in Goffet v Recruitment National Pty Ltd[21] (Goffett), which concerned a failure by a party to attend conciliation proceedings, followed by a further failure to take steps to inform the other party of its intentions immediately after the issue of the notice of listing. In respect of that further failure, the Full Bench of the Australian Industrial Relations Commission in Goffett stated:
"[47] The Respondent's failure to take steps to inform the Appellant of its intentions immediately after the issue of the notice of listing was either a deliberate or reckless act that could not be regarded as anything other than unreasonable. Alternatively, to the extent that the failure might be regarded as an omission, it was equally unreasonable. That those unreasonable acts or omissions caused the Appellant to incur the costs in connection with the conduct of the proceeding is unquestionable. We are satisfied that the Respondent must be ordered to pay the Appellant's costs of and incidental to the submissions and preparation for arbitration. We allow also the costs on an indemnity basis in respect of the costs application."
[62] The question for me to determine for the costs application that is made pursuant to s.400A, is whether Mr Christensen's failure to communicate his intention to discontinue his unfair dismissal application was an unreasonable omission in relation to the conduct or continuation of the unfair dismissal application. It might be said that he should have communicated this before his material was due at 4:00pm on 27 November 2017. He had the ongoing opportunity until this time to assess his position in light of the Form F3 that had been filed by PGG and the conciliation conference. The Form F3 outlined the basis of each jurisdictional objection PGG intended to make and responded to allegations made by Mr Christensen in his Form F2 - Unfair Dismissal Application.
[63] It is unclear as to when Mr Christensen decided to discontinue his unfair dismissal application or:
(a) whether Mr Christensen communicated his decision to discontinue to ADS before Ms Millar returned from overseas on 21 November 2017; or
(b) whether Mr Christensen communicated his decision to discontinue to Ms Millar or anyone else at ADS between 21 and 27 November 2017; or
(c) why there was no action from Mr Christensen or Ms Millar or anyone else at ADS to notify the Commission or PGG until 30 November 2017.
[64] On 30 November 2017, Ms Millar's advice to the Commission was:
"It appears that there may have been some miscommunication during my time away. Our client has instructed us that he wishes to discontinue this matter. We apologise if this has not been formally notified - which I have only realised on seeing Ms Wallis' correspondence this morning.
If not done to date - a notice of discontinuance will be filed today."
[65] There are no particulars that fully explain the nature of this "miscommunication."
[66] In the circumstances of this case, I am satisfied the responsibility for the failure to advise PGG of Mr Christensen's intentions in relation to the unfair dismissal application prior to 30 November 2017 should lie with ADS and it is an "omission" capable of being regarded as unreasonable. The inference I draw is that Mr Christensen instructed ADS before 27 November 2017 that he intended to discontinue but this was not acted upon until 30 November 2017.
[67] I am also satisfied items [42] - [50] in the Schedule of Legal Costs, attached to the Form F6, were costs incurred because of this omission. Had PGG been informed about Mr Christensen's intention to discontinue before 4.00pm on 27 November 2017, the costs associated with these items would not have been incurred.
[68] I therefore must decide whether I should exercise my discretion to order that ADS pay these costs.
[69] It would appear PGG is claiming costs on an indemnity basis because in itemising its claims with reference to the Schedule 3.1 - Schedule of Costs in the Fair Work Regulations 2009, the amounts claimed for each item are, with one exception, in excess of the rates or amounts appearing in the Schedule. The sum of $939.00 is claimed by PGG for items [42] - [50] in the Schedule of Legal Costs attached to the Form F6. PGG has subsequently stated the total should be $1,059.00 plus GST.
[70] It is open to me to order indemnity costs. They were awarded in Goffett[22] with the Full Bench of the Australian Industrial Relations Commission justifying them as follows: "It seems almost axiomatic that an unreasonable act of omission that causes a party to incur costs in a proceeding should be regarded as "some relevant delinquency".[23]
[71] However, I am of the view that the costs of PGG should not, in this case, be awarded on an indemnity basis. I consider there was simply a breakdown in communication and that the nature of PGG's legal representative's attendances were, almost exclusively, "administrative" in nature.
[72] As such, I have assessed Items [42] - [50] in the Schedule of Legal Costs attached to the Form F6 against the rates and amounts appearing in the Schedule 3.1 - Schedule of Costs in the Regulations. My assessment is as follows:
Item [42]: $34. This attendance was capable of being made by a clerk (Item 1101).
Item [43]: $56. I do not assess the amount of $195 claimed as reasonable and assess this item at the amount in the Schedule (Item 1103).
Item [44]: $34. This attendance was capable of being made by a clerk (Item 1101).
Item [45]: $150. I reviewed and assessed both letters as special letters (Item 804), with the letter to ADS assessed at $100 (Item 804(a)) and the letter to the Commission at $50 (Item 804(b)).
Item [46]: $32. It was unclear what was perused so I exercised my discretion (Item 601(b)).
Item [47]: Nil. No amount was claimed.
Item [48]: Nil. I did not consider this claim necessary or reasonable.
Item [49]: $16. This document was short and the item is assessed at the amount in the Schedule (Item 601(a)(i)).
Item [50]: $24. I did not consider a further review of the 30 November 2017 email from ADS reasonable or necessary and consider the email from LSL to PGG would come within Item 802.
General Care and Conduct for these Items is allowed at 15%.
[73] I have therefore assessed the claim for the costs incurred from 28 November 2018 - 30 November 2018 (inclusive) at $397.90 ($346.00 plus 15%).
[74] I will order ADS pay the amount of $397.90 to PGG for the costs incurred during the period 28 November 2017 - 30 November 2017 (inclusive).
(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."
[76] The determination of the s.611(2) part of the Costs Application requires me to consider the following questions:
Was Mr Christensen's unfair dismissal application made vexatiously or without reasonable cause (s.611(2)(a))?
[77] In Church v Eastern Health t/as Eastern Health Great Health and Wellbeing (Church),[24] the Full Bench considered the approach to be taken in determining whether proceedings have been instituted vexatiously or without reasonable cause and stated:
"[28] We now turn to the exceptions to the general rule expressed in s.611(1) and the meaning of the expression 'vexatiously or without reasonable cause'.
[29] The question of whether an application was made 'vexatiously' looks to the motive of the applicant in making the application. It is an alternative ground to the ground that the application was made 'without reasonable cause' and may apply where there is a reasonable basis for making the application. In Nilsen v Loyal Orange Trust (Nilsen) North J observed that this context requires the concept of vexatiousness to be narrowly construed. His Honour went on to state that an application will be made vexatiously 'where the predominant purpose ....is to harass or embarrass the other party, or to gain a collateral advantage'. Deane and Gaudron JJ made a similar observation in Hamilton v Oades in which they said:
"The terms 'oppressive' and 'vexatious' are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are 'seriously or unfairly burdensome, prejudicial or damaging' and 'productive of serious and unjustified trouble and harassment'."
[30] We now turn to the expression 'without reasonable cause'. A party cannot be said to have made an application 'without reasonable cause', within the meaning of s.611(2)(a), simply because his or her argument proves unsuccessful. The test is not whether the application might have been successful, but whether the application should not have been made. In Kanan v Australian Postal and Telecommunications Union Wilcox J put it this way:
"It seems to me that one way of testing whether a proceeding is instituted 'without reasonable cause' is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being 'without reasonable cause'. But where, on the applicant's own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause." " (references omitted)
[78] In Keep v Performance Automobiles Pty Ltd (Keep),[25] the Full Bench summarised the principles relevant to when an application is made without reasonable cause as follows:
"[17] The proper construction of s.611(2)(a) was recently considered by a Full Bench in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing (Church).[26] Church is authority for the following propositions:
(i) The power to order costs pursuant to s.611(2) should be exercised with caution and only in a clear case.[27]
(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.[28]
(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.[29]
(iv) The test imposed by the expression "without reasonable cause" is similar to that adopted for summary judgment, that is, "so obviously untenable that it cannot possibly succeed", "manifestly groundless" or "discloses a case which the Court is satisfied cannot succeed."[30] (references from Church included)
[79] As to whether Mr Christensen made his unfair dismissal application vexatiously, I am not persuaded he did. The facts of this case are not such that I am satisfied the predominant purpose of Mr Christensen was to harass or embarrass PGG, or to gain a collateral advantage and nor am I satisfied the unfair dismissal application was seriously or unfairly burdensome, prejudicial or damaging.
[80] As to whether Mr Christensen made his unfair dismissal application "without reasonable cause", I have considered whether upon the facts known to Mr Christensen at the time of instituting the unfair dismissal application, there was no substantial prospect of success.
[81] At the time he made his application, Mr Christensen had discussed his circumstances with Mr Anderson of ADS. Notwithstanding his status as a casual employee and the terms of the written contract, Mr Christensen relied on the amount of work he had performed, the 10 months of payslips for the evidence of his hours worked, his belief there was ongoing work and there having been no prior indication that his employment was at risk. I am not persuaded that on Mr Christensen's own version of the facts, it was clear to him that the proceeding would fail and nor am I persuaded that his case was so obviously untenable that it could not possibly succeed.
Should it have been reasonably apparent to Mr Christensen that his unfair dismissal application had no reasonable prospects of success (s.611(2)(b))?
[82] As to s.611(2)(b), the issue I have to determine is whether I am satisfied that in all the circumstances it should have been reasonably apparent to Mr Christensen that his claim he had been unfairly dismissed had no reasonable prospect of success.
[83] In Keep, [31] the Full Bench also summarised the principles relevant to s.611(2)(b) of the Act:
"[18] 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."
[19] 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[32] 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".[33]
[84] More recently, when considering the meaning of s.611(2)(b), despite referencing it as s.611(1)(b), the Full Bench in Health Services Union - Victoria No.1 Branch v Sanli[34] stated:
"[113] The observations of the High Court in Spencer v The Commonwealth[35] as to the meaning of the expression 'no reasonable prospect' in s.31A of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act), are apposite to the matter before us:
'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.'[36]
[114] Section 31A of the Federal Court Act is a power to enter summary judgment and accordingly is not directly relevant to the matter before us. However, the High Court's observation (in Spencer) that full weight must be given to the expression as a whole and that descriptors such as 'frivolous', 'untenable', 'groundless' or 'faulty' do not provide a sufficient chart of the metes and bounds of the power, are also applicable to s.611(1)(b)."
[85] Having regard to these authorities, I am required to exercise caution in determining whether to exercise the power to order costs pursuant to s.611(2)(b) and consider whether it would have been apparent to a reasonable person that Mr Christensen's application "had no reasonable prospect of success", giving full weight to this expression as a whole.
[86] I am not persuaded that it should have been reasonably apparent to Mr Christensen at the time he made his application for unfair dismissal remedy that his application had no reasonable prospects of success. As outlined in paragraph [81] above, notwithstanding his status as a casual employee and the terms of the written contract, Mr Christensen relied on the amount of work he had performed, the 10 months of his payslips for the evidence of his hours worked, his belief there was ongoing work and there having been no prior indication that his employment was at risk.
[87] However, this does not necessarily end the consideration under s.611(2)(b). I agree with the views of Deputy President Gostencnik in Galea v Billabong Custom Caravans Pty Ltd T/A Billabong Custom Caravans,[37] 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 and "[k]nowledge 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."[38]
[88] With PGG having filed its Form F3, its intention to rely on Mr Christensen's Written Contract signed on 1 September 2016 in order to assert he had not completed the minimum employment period and the view it took on the question of whether he had been dismissed within the meaning of s.386 of the Act would have become apparent to Mr Christensen. Nonetheless, I am not persuaded that it should have been reasonably apparent to Mr Christensen then that his application had no reasonable prospects of success. What can be said is that at this point in time, it became clear that there was a factual dispute on the nature of Mr Christensen's employment as a casual employee at the time he was dismissed, that required resolution based on evidentiary findings. This dispute required testing. Things may have changed once the parties had filed their full materials ahead of a determination of the jurisdictional objections, however this does not require consideration because the application was discontinued prior to this occurring.
[89] Having regard to the circumstances and the submissions of the parties, I decline to order that Mr Christensen should bear some or all of the costs incurred by PGG in the preparation and lodgement of its Form F3 or at any time afterwards pursuant to either s.611(2)(a) or s.611(2)(b) of the Act.
[90] For the reasons outlined above, I will exercise my discretion and order that ADS pay PGG for legal costs incurred during the period 28-30 November 2017 (inclusive), which I have assessed at $397.90. An order to this effect will be issued separately.
[1] In this respect, PGG relied on Walker v Mittagong Sands Pty Ltd T/A Cowra Quartz [2011] FWA 2225 at [77].
[2] Zornada v St John Ambulance Australia (Western Australia) Inc. (2013) 237 IR 48 at [35].
[3] General Steel Industries Inc v Commissioner for Railways [1964] HCA 69; (1964) 112 CLR 125, 129; cited in Walker v Mittagong Sands Pty Limited T/A Cowra Quartz (2011) 210 IR 370 at [17].
[4] Exhibits ZMB 1 and ZMB 2 to the Affidavit of Zoe Brick sworn on 11 January 2018.
[5] Exhibit ZMB 2 to the Affidavit of Zoe Brick sworn on 11 January 2018.
[8] Mr Cori Ponce v DJT Staff Management Services Pty Ltd T/A Daly's Traffic [2010] FWA 2078.
[9] Explanatory Memorandum to the Fair Work Amendment Bill 2012, page 7.
[16] Explanatory Memorandum to the Fair Work Amendment Bill 2012 at paragraph [180].
[18] Explanatory Memorandum to the Fair Work Amendment Bill 2012 at paragraph [184].
[19] Explanatory Memorandum to the Fair Work Amendment Bill 2012, page 7.
[23] Ibid at [52], drawing on Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 44.
[29] See Kanan v Australian Postal and Telecommunications Union [1992] FCA 539; (1992) 43 IR 257, cited with approval in Church at [30].
[30] Heidt v Chrysler Australia Limited (1976) 26 FLR 257 at [272 - 273]; Geneff v Peterson (1986) 19 IR 40 at [87-88]; Hatchett v Bowater Tutt Industries Pty Ltd [1991] FCA 188; (1991) 28 FCR 324 at 327; Re Ross and others, Ex Parte Crozier [2001] FCA 1665; (2001) 111 IR 282 at [12]; Re Australian Education Union (NT Branch) (No.2) [2011] FCA 728 at [30]. Also see Wright v Australian Customs Service, PR926115, 23 December 2002 per Giudice J, Williams SDP and Foggo C and Church at [33].
[33] Ibid at [8], also see Baker v Salva Resources Pty Ltd [2011] FWAFB 4014 at [10]; and Metecno Pty Ltd T/A Bondor v Cameron [2014] FWCFB 2128 at [16].
[36] Ibid at [59]-[60] per Hayne, Crennan, Kiefel and Bell JJ.
Printed by authority of the Commonwealth Government Printer
Anthony Christensen
PGG Wrightson Seeds
(2011) 210 IR 370
(1998) 193 CLR 72
(1991) 28 FCR 324
(2001) 111 IR 282
(2013) 237 IR 48
(1992) 43 IR 257
(1976) 26 FLR 257
(1964) 112 CLR 125
(1986) 19 IR 40
(2010) 241 CLR 118