Attorney General v Wentworth

JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP

Matter No IRC01/5380 GABRIEL WEISSER AND SPUR GROUP PTY LIMITED Application by Gabriel Weisser re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION ON NOTICE OF MOTION (as to costs) [2002] NSWIRComm 116

1 On 14 February, 2002, the Commission published its decision, [2002] NSWIRComm 15, upon an application pursuant to s84 of the Industrial Relations Act 1996 ("the Act") filed by Gabriel Weisser ("the respondent" to the notice of motion), seeking relief in respect to his alleged unfair dismissal by Spur Group Pty Ltd ("the applicant" to the notice of motion).

2 The earlier proceedings dealt with both the merits of the dismissal and an application by the respondent pursuant to s85(3) of the Act, requesting the Commission to exercise its discretion to accept his application "out of time". The Commission dismissed the application, having not been satisfied that the respondent had established a "sufficient reason" for accepting the "out of time application". No findings were made as to the merits of the dismissal.

3 A notice of motion seeking costs was filed by the applicant on 28 February 2002 and listed for directions on 21 March 2002. Mr Coleman of Counsel appeared for the applicant and Mr Greenstein (Solicitor) appeared for the respondent. Directions were issued for the filing of affidavit material and the notice of motion was listed for hearing on 7 May 2002. The following persons filed affidavits in the proceedings: Mr Ivan Posniak Executive Director, Spur Group Mr Gabriel Weisser Respondent to notice of motion Mr Anton Duc former employee of Greenstein Shakenovsky Solicitiors Mr David Greenstein Solicitor, Greenstein Shakenovsky The affidavits were admitted without objection. The deponents of the affidavits were not required for cross-examination.

4 Mr Coleman addressed the Commission on the relevant provisions of s181 of the Act and sought costs against the respondent on a number of grounds. He submitted that the respondent's claim of unfair dismissal was vexatious; the respondent had instituted proceedings without reasonable cause; and the respondent had unreasonably failed to settle his claim after an offer of $25,000 was made at the first conciliation conference.

5 Mr Coleman relied on the principles discussed in Bankstown City Council v Paris, 93 IR 209, in that the respondent had a rejected a reasonable offer of settlement and the respondent's conduct was inconsistent with an intention to settle the claim.

6 Mr Coleman traced the history of the proceedings at conciliation and the offer of $25,000 plus the company owned motor vehicle (valued at $7,500). This offer was put at the initial conciliation conference on 23 August 2001. He said the respondent maintained a claim to an amount for redundancy which he knew he was not entitled to and which the Commission found he was not entitled to. The Commission did not accept that the respondent believed he was made redundant and would therefore be entitled to twenty weeks' redundancy pay. Notwithstanding the Commission's findings against the respondent, he now seeks to cavil with the Commission's decision.

7 Mr Coleman submitted that the question of statutory entitlements, raised in the affidavits of the respondent and Mr Duc, was flawed. He said that making a last ditch effort to settle the claim two days before the hearing, for an amount the respondent knew would be rejected, was not reasonable.

8 Mr Coleman referred to the conduct of the respondent in refusing to settle his claim knowing that he was not made redundant, that he received 3.5 months notice of dismissal and had secured alternative employment shortly thereafter. Mr Coleman also relied on the failure of the applicant to address the "out of time" issue in the original proceedings.

9 Mr Coleman cited the judgment of Roden J in Attorney General v Wentworth (1998) 14 NSWLR 48 in regard to the definition of "vexatious". He submitted that the respondent instituted the proceeding to cause annoyance and embarrassment to the applicant and were designed for collateral purposes.

10 Mr Coleman tendered an itemised schedule of the applicant's costs to date totalling $38,154.58 and a letter of compromise offering to settle the costs application for $32,000. The offer of settlement was not accepted.

11 Mr Greenstein also referred to the statutory basis for the awarding of costs in unfair dismissal proceedings. He submitted that the applicant's offer of settlement was not reasonable in the context of the respondent's belief that he was made redundant and entitled to certain statutory entitlements and redundancy pay. He noted that the claims to statutory entitlements were ultimately resolved through settlement negotiations.

12 Mr Greenstein submitted that there was no evidence that the applicant's conduct was inconsistent with an intention to settle the matter. The respondent had participated in the conciliation conferences in good faith and genuinely believed the offer was significantly short of what he was entitled to. There was no deliberate attempt to frustrate a settlement (see Barbara Sparks v Fred Hoskings Pty Ltd (unreported Sams DP, Matter IRC3939 of 1998, 5 March 1999).

13 Mr Greenstein said that the evidence was that the respondent had reduced his claim and this indicated his willingness to compromise.

14 Mr Greenstein referred to my comments in Sparks v Hoskings concerning the test of 'vexatious'. He said that if the respondent wished to cause annoyance and costs to his brother in law ("the applicant") he could have done it in other ways. The applicant had itself put on a significant amount of evidence which demonstrated the seriousness with which it viewed the matter.

15 In reply, Mr Coleman said that Mr Greenstein could not seriously put that the respondent had participated in good faith during the negotiations. He knew he was not made redundant, but initiated proceedings anyway. Moreover, Mr Coleman said the applicant put very little before the Commission on the "out of time" application.

16 In response to Mr Greenstein's argument that the applicant had treated the proceedings seriously, so the claim was not vexatious, Mr Coleman submitted that if an employer did not put a proper case, it would risk the outcome. This argument could not be put against the applicant.

17 From the outset, I would observe that the respondent's affidavit and Mr Greenstein's submissions appeared to cavil with the findings and conclusions made in my earlier decision; specifically, maintaining the respondent's stance that he generally believed he was made redundant.

18 There was no appeal from my decision. Decisions of the Commission are final (save for any appeal) and may not be called into question by any Court or tribunal (s179 of the Act). It was inappropriate and improper to cavil with the Commission's decision in these proceedings.

19 For the purposes of this decision, I am satisfied that the relevant evidence is not seriously in contention. It is sufficient for the Commission to trace the chronology of events leading to the arbitration hearing on 14 and 15 November 2001. 14 March 2001 - Respondent is given 3.5 months notice' of dismissal. 30 June 2001 - Respondent ceased employment. 20 July 2001 - Respondent claims entitlements to annual leave, pro rata long service leave and redundancy pay totalling $49,483. 10 August 2001 - Respondent files unfair dismissal claim. 23 August 2001 - Directions and Conciliation proceedings were held before the Commission. Applicant makes an offer of $25,000 and retention of the vehicle (estimated value $7500) to settle all claims. Offer was rejected. 29 August 2001 - Applicant's offer not renewed at second conciliation. Directions issued for hearing. 9 November 2001 - Respondent makes an offer of $39,000 14 and 15 November 2001 - Arbitration hearing 14 February 2002 - Decision of the Commission.

20 Before turning to the particular set of facts and circumstances of this case, I propose to refer to the relevant authorities on this subject matter.

21 The Commission's power to award costs in Pt 6 ch 2 proceedings is exercised by undertaking a two staged inquiry under the specific provisions of s181(2)(c): The Commission may award costs against a party to proceedings under Part 6 of Chapter 2 (Unfair dismissal) who, in the opinion of the Commission, unreasonably failed to agree to settlement of the claim or whose application was frivolous or vexatious. and the Commission's general powers to award costs under s181(1): Subject to the rules of the Commission and any other Act or law: a) The Commission may award costs, and b) Costs are in the discretion of the Commission, and c) The Commission may determine by whom and to what extent costs are to be paid, and d) The Commission may order 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.

22 A Full Bench in Four Sons Pty Limited v Sakchai Limsiripothong (No 2), 100 IR 400, described s181(2)(c) as the "jurisdictional gateway" to the Commission's general discretionary powers to award costs.

23 Both Mr Coleman and Mr Greenstein correctly relied upon the consideration of costs applications in Pt 6 ch 2 proceedings in Bankstown City Council v Paris, 93 IR 209. The relevant passage is found at p218: The relevant part of s 181(2)(c), on the other hand, does not require the Commission to focus upon the circumstances of the commencement of the proceedings, or to consider only the situation of the applicant. Instead the Commission is required to consider in a more general way, the conduct of the party in respect of which an application for costs is made; and, in that regard, to consider the conduct of the party in relation to the question of settlement of the claim.

An understanding of the meaning and purpose of s 181(2)(c) is assisted by reference to the particular provisions in Pt 6, Unfair Dismissals, of Ch 2 of the Act, which relate to conciliation or settlement of unfair dismissal applications. Section 86 for example, provides: "The Commission must endeavour, by all means it considers properly necessary, to settle the applicant's claim by conciliation."

Section 87(1) is also relevant. Its effect is to preclude the Commission from proceeding to determine the claim by arbitration until "all reasonable attempts to settle the applicant's claim by conciliation have been made but have been unsuccessful". Section 87(2) continues the statutory emphasis upon conciliation by specifying that the earlier provisions do not prevent further conciliation from being attempted at any time before the Commission makes an order in the proceeding.

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.

We emphasise that, although the legislature has clearly intended that there be strict limits on the power of the Commission to award costs in unfair dismissal proceedings, the legislature has also evinced a clear intention that costs orders be available in circumstances where there has been a failure on the part of a party to properly conciliate proceedings to the extent that they have failed reasonably to facilitate a potential settlement of them. Further, the Commission is obliged to consider all relevant circumstances in deciding whether such failure has occurred.

Once the statutory criterion has been met, the Commission's broad power and discretions under s 181(1) are available for exercise. 24 The Full Bench decision identified two bases upon which the Commission might make findings on the criterion "unreasonably failed to agree to a settlement". Firstly, the rejection by a party of a reasonable settlement of the claim; and secondly, the conduct of the party that is found to be inconsistent with an intention to settle the claim.

25 As will later become evident, the Commission relies on the first proposition discussed in Bankstown City Council v Paris.

26 The Commission has also taken account of the comments of Moore J in Blagoveocj v Australian Industrial Relations Commission [2000] FCA 483, 98 IR 32, in particular the following observation of His Honour: However in a situation where an offer was made which was not fanciful and no counter offer was made by the opposing party to bring the negotiations into the range the opposing party thought was reasonable, the failure to make any counter offer could, depending on the circumstances, constitute acting unreasonably in failing to agree to terms of settlement

27 The Commission does not believe it necessary for the purposes of this notice of motion, to make findings as to whether the application for unfair dismissal was 'vexatious'. I am satisfied that the notice of motion for costs can be decided on whether the respondent unreasonably refused to settle the claim.

28 However, in my opinion, this matter raises an important consideration in costs applications in Pt 6 ch 2 proceedings. If a rejected offer of settlement is close to, or exceeds, the maximum amount of compensation the Commission could award in an arbitral proceeding, it would almost certainly meet the test of an unreasonable refusal to settle the claim, if the Commission subsequently finds against the applicant.

29 In this case, the respondent's salary was $58,800. The offer of settlement on 23 August 2001 was $25,000 and the value of a Toyota Hi Ace van ($7,500). It follows then, that even if the applicant had successfully contested his claim and been awarded the maximum compensation of six months, the amount so ordered would have been $29,400. In other words, less than the total value of the offer of 23 August 2001 of $32,500.

30 While I accept that Mr Weisser claimed $49,483 based on outstanding entitlement to pro rata long service leave, annual leave and redundancy pay, this claim must be understood in the following context: a) There was no legal entitlement to pro-rata long service leave.

b) There was no basis for any claim of redundancy pay (see my decision of 14 February 2002).

c) There was no application for alleged underpayments initiated prior to the arbitration of this matter for alleged underpayments. (An amount of $11,571.83 was later offered and accepted as an amount in settlement of the annual leave and long service leave claim.)

d) The settlement offer was made early in the conciliation phase in order to avoid further protracted and expensive proceedings.

e) The offer was made in addition to the respondent retaining a company owned motor vehicle, the value seemingly not disputed as $7,500.

f) The respondent had secured alternative employment shortly after his dismissal.

g) Arbitral proceedings involved both jurisdictional and merit arguments. h) The applicant had placed the respondent on notice at the conciliation conference on 23 August 2001, that should it be successful, it would be pursuing a costs application.

31 In this context, I am satisfied the offer on 23 August 2001 was more than reasonable. Viewed another way, it was unreasonable for the respondent to refuse to settle the claim on that basis. The applicant is entitled to its costs from this date and including the costs associated with this notice of motion.

32 Accordingly, I am satisfied that the orders sought in the notice of motion should be made.

33 Pursuant to s 181(2)(c) and s 181(1) of the Act, the Commission orders that: 1) The applicant, Mr Gabriel Weisser (the respondent to the notice of motion) in Matter IRC 5380 of 2001 is to pay the respondent's costs of, and incidental to the proceedings after 23 August 2001 and this notice of motion.

2. Such costs are to be as agreed or assessed and payable with twenty-eight (28) days. Peter Sams Deputy President

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