Bankstown City Council v Paris

CORAM: WRIGHT J, President WALTON J, Vice-President HARRISON DP CONNOR C Friday 14 May 2004

Matter No IRC 1097 of 2002 JACQUELINE YOUSSEF AND WESTERN SYDNEY AREA HEALTH SERVICE Application for costs pursuant to s 181 of the Industrial Relations Act 1996 DECISION OF THE COMMISSION (Extempore) [2004] NSWIRComm 124

1 Jacqueline Youssef, the appellant in these proceedings, today makes an application for costs pursuant to section 181(2)(c) of the Industrial Relations Act 1996. The application is made in respect of unfair dismissal proceedings before Sams DP (see Youssef and Western Sydney Area Health Service [2002] NSWIRComm 8) and the appellant's appeal to the Full Bench: Youssef and Western Sydney Area Health Service [2003] NSWIRComm 284. In the appeal, the Full Bench set aside the first instance decision and ordered the reinstatement of the appellant as a Social Worker with the respondent and held at para [22] and following of the decision:

We find a substantive miscarriage occurred in the conduct of the proceedings by the parties at first instance. The focus entirely upon the conduct of the appellant after the Norwood and Percival incidents completely overlooks the fact that she was the victim in those circumstances and that her conduct after those events was completely out of character and inconsistent with her exemplary service of the eight years prior thereto … The appeal is upheld and the orders of Deputy President Sams are set aside.

2 The reinstatement of the appellant without loss of continuity of service was ordered. However, an important gloss on the order for reinstatement, for practical purposes, was referred to in the Full Bench decision when it was said: "[t]he employer is of sufficient size and diversity to sensibly accommodate the reinstatement of the appellant".

Appellant's submissions 3 In seeking costs the appellant filed helpful submissions and her affidavit sworn on 24 March 2004. The application is made on the basis that the respondent failed to accept a reasonable settlement pursuant to s 181(2)(c) of the Industrial Relations Act. The appellant seeks an award of costs against the respondent in respect of the first instance proceedings and also in respect of the appeal before the Full Bench.

4 The appellant's submissions refer to the principles applicable to determining an application for costs pursuant to s 181(2)(c) of the Industrial Relations Act 1996 as discussed by the Full Bench in Bankstown City Council v Paris (1999) 93 IR 209 at 219 - 220. The Full Bench, it was submitted, there held that an affirmative conclusion regarding costs could be reached on two possible bases. The first, where there was a proposal put by a party which could be described as a reasonable settlement of the claim that was not agreed to by the other party. The second situation 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. The appellant submits that the second situation had been satisfied in these proceedings.

5 The appellant relies upon her affidavit and the reasons for the decision of the Full Bench of 8 September 2003. She submits that when regard is had to the respondent's conduct, viewed as a whole, it is open to find that " ... there has been a failure on the part of the other party to properly conciliate the proceedings to the extent that they have failed to reasonably facilitate a potential settlement of them".

6 The appellant claims that prior to the first conciliation hearing there was no real attempt by the respondent to enter into settlement discussions. At the initial conciliation hearing on 10 October 2000, the appellant offered to settle the matter on the basis that she be reinstated and the respondent refused the proposal. The appellant describes the respondent's approach at the conciliation hearing as inflexible as the respondent would not consider under any circumstances her reinstatement or re-employment. The same happened at a further conciliation hearing on 20 October 2000. The appellant contends that there was no real attempt by the respondent to make any counter offer of any substance.

7 No offers were made by the respondent in the period between the conciliation hearings and prior to the arbitration of the matter. On the first day of the arbitration hearing on 26 February 2001 the respondent suggested that the applicant "… come back to them with a small monetary amount that the [appellant] would be prepared to accept to finalise [her] case …". This proposal was made on the condition that she withdraw her application and submit a resignation. The appellant refused the proposal, maintaining her consistently held position of seeking reinstatement.

8 The appellant contends that at its highest the respondent's attempt to resolve the matter was effectively limited to the suggestion that the respondent may be prepared to consider "a small monetary amount" to settle the matter. However, no such offer was actually made. This is said to be consistent with the inflexible approach adopted by the respondent to settlement throughout the conduct of this matter.

9 The appellant submits that, as observed by the Full Bench in Bankstown City Council v Paris at 220, a respondent is required to consider in an objective way the strengths or limits of the case propounded by it should the matter proceed to arbitration. The respondent's settlement position was assumed without due regard to the policy of the Industrial Relations Act which requires the parties to take seriously their obligations to attempt to settle proceedings. Reliance was also placed on the decision of the Full Bench in IGA Distribution Pty Limited and Moses (No 3) [2003] NSWIRComm 230 by the appellant.

10 The appellant particularly relies on our earlier decision in these proceedings, where we considered that failures on the part of the respondent in managing the applicant in its decision-making processes led to a substantive miscarriage occurring in the conduct of the proceedings at first instance.

11 The appellant's submissions conclude: It is submitted that the Commission would be satisfied on balance that the Respondent failed to undertake a careful assessment of the prospects of litigation. Further, the Respondent failed to take reasonable steps to facilitate a potential settlement of the matter. The conduct of the Respondent was such as to amount to conduct inconsistent with an intention to settle the proceedings on any basis that could be considered reasonable. Therefore, the jurisdictional requirements of s 181(2)(c) have been made out, enlivening the power of the Commission to award costs under s 181 of the Act.

The appellant submits the Commission would order costs on a party/party basis in respect of the primary hearing and the appeal.

12 The affidavit of the appellant paints a similar picture. Seeking reinstatement as the primary remedy, her affidavit documents what is said to be the respondent's supposed intransigence having regard to reinstatement being the primary remedy provided by the statute: At the Conciliation, Mr Rafferty, on my behalf, advised the Deputy President that I was seeking reinstatement. Mr Murphy, on behalf of the Respondent, advised that reinstatement would not be considered.

In private discussions that were held on that date, Mr Rafferty and Mr Brown restated the Respondent's position that they would not consider reinstatement as an option, nor did the Respondent put any firm monetary Settlement Offer. There was some discussion regarding the possibility of myself, as a non-employed person, using the facilities of the hospital in order to enable me to finalise some accreditation for my studies. But other than that there was no offer of settlement made by the Respondent. ... On 20 October 2000, the matter was listed for further conciliation. On that occasion, Mr Rafferty, on my behalf, restated that I was seeking reinstatement as the basis for a resolution of the matter. The Respondent through its Counsel again indicated that it was not prepared to consider my reinstatement or re-employment. The Respondent did not make any formal offer in the course of the conciliation on that date. ... I do not recall there being any further settlement and discussions prior to the commencement of the Hearing of the Matter before President Sams [sic] on 26 February 2000. ... The matter was listed for Hearing before Deputy President Sams on 26 February 2001. On that occasion, I was represented by Mr Anthony Britt, of Counsel. The Respondent was represented by Mr Murphy of Counsel. At some point during the first day of the Hearing, Mr Britt said words to the effect: "I've had discussions with Mr Murphy, the barrister for the Respondent. Their position is that they will not reinstate you under any circumstances. They asked us to come back to them with a small monetary amount that you would be prepared to accept to finalise your case" I said: "What exactly are you offering?" Mr Britt said: "That you would withdraw the case and resign and you can apply at some point in the future for work again in Area Health Service. They also asked us to put a sum of money to them from zero to a couple of thousand dollars, excluding your entitlement to annual leave and long service leave. Mr Chris Brown [the Respondent's Employer Relations Manager] has offered an allocation place to allow you to finish your doctorate after your resignation." I said: "I would not be interested in settling for a few thousand dollars. All I want is my job back and my reputation." I do not recall any further settlement discussions occurring after the conversation with Mr Britt.

Respondent's submissions 13 The respondent also filed helpful submissions and an affidavit to maintain that the appellant made no offer to settle proceedings nor any offer to which the respondent unreasonably failed to agree. The submissions continued: From the initiation of these proceedings by the appellant it was made very clear on her behalf that she was seeking reinstatement to her former position as a social worker at the Westmead Hospital. At no stage was any alternative outcome acceptable to the appellant proffered by her for consideration by the respondent. On the other hand the respondent did, at the conciliation stage and prior to the commencement of arbitral proceedings, make an offer to the appellant to settle the proceedings. This offer was rejected by her.

The respondent, in attempting to settle the matter, put a proposal to the appellant which, if accepted, would have provided monetary compensation, although no precise amount was ever the subject of discussion between the parties, as well as the withdrawal of the dismissal of the appellant in exchange for her resignation, but in circumstances in which the respondent would facilitate the completion of the appellant's doctorate. This was the very matter which was raised at the outset by the appellant's solicitor as giving additional weight to the appellant's desire for reinstatement to her former position (see affidavit of the appellant sworn 24 March 2004 para 11). It is clear that throughout the entirety of these proceedings the appellant was not minded to settle for anything other than reinstatement to her former position at Westmead Hospital. At no stage did the appellant, or those acting on her behalf, make any offer whatsoever to settle the matter.

14 Mr Chistopher Brown, Deputy Director, Human Resources (Operations) of the respondent, deposed in the affidavit relied on by the respondent, that at all times the applicant insisted on being reinstated to her former position at Westmead Hospital and that the only concession made by the appellant as to orders sought was in the amended application for leave to appeal which sought reinstatement or re-employment or, alternatively, compensation. Mr Brown deposed that the applicant's position on this aspect was clarified by Mr Magee at the hearing before the Full Bench when he stated that the appellant sought reinstatement or in the alternative compensation.

15 Mr Brown deposed that during the hearing at first instance counsel for the respondent put to counsel for the appellant that should the appellant resign as an alternative to termination, the respondent would consider some payment to assist settlement of the matter. Mr Brown's affidavit continued: Following the decision of the Full Bench Ms Youssef maintained her position that reinstatement should only be to her former position at Westmead Hospital. The Area Health Service offered the Applicant a similar position but not at Westmead Hospital. ... Ultimately the Applicant chose not to return to any position at WSAHS. The Applicant has been employed by South Eastern Sydney Area Health Service since 19 November 2001 and remains so employed.

16 The respondent sought to distinguish the application of the Full Bench decision in Bankstown City Council v Paris on the basis that in that case the dismissed employee had, from the very beginning of the conciliation process, offered to the employer to settle the unfair dismissal application in a manner which would not involve the employee returning to the workplace. This offer was repeated on at least five separate occasions throughout the conciliation of the matter spanning a period of nine months. At the beginning of the arbitration in the Bankstown City Council matter the dismissed employee made a further offer which also involved him not returning to the employment of the employer. The employee succeeded in being granted reinstatement at first instance, a decision confirmed by the Full Bench on appeal.

17 The respondent maintains that, in this case on the contrary, no offer at all was made by the appellant at any stage to settle the matter. To the extent that any offer was made, it was made by the respondent and rejected by the appellant.

18 The respondent's evidence also showed that, pursuant to the orders of the Full Bench, the respondent proposed to employ the appellant in the position of social worker at Cumberland Hospital, North Parramatta, which is part of the Western Sydney Area Health Service. The appellant rejected this proposal maintaining her desire to be reinstated to her former position at Westmead Hospital.

19 On 27 January 2004, the appellant's solicitor advised the respondent that she would not be resuming her former position as she was employed elsewhere. It was advised that the appellant had been employed as a social worker by the South Eastern Sydney Area Health Service since 19 November 2001 and remains so employed.

20 The respondent further submits that the Full Bench found that the strained relationship between the appellant and the management of the respondent's social work department at Westmead Hospital was partly the result of the procedure adopted by the appellant to deal with her employer. Its submission continued: The ultimate determination of the appeal by the Full Bench left it open for the appellant to be employed in a position other than the one that she had previously occupied, an outcome which the appellant had resisted from the time of the initiation of her unfair dismissal application, and continued to resist after its ultimate determination by the Full Bench on appeal. In these circumstances, the respondent submits that it is not open for the Full Bench to find that it, at any time, unreasonably failed to agree to a settlement of the claim so that the respondent may now be made subject to an order for costs in favour of the appellant.

21 Further, the respondent submits that it should also be noted that the hearing of the application at first instance before Sams DP was considerably lengthened by the conduct of the appellant when giving answers to questions in cross-examination which referred to the conduct or statements of other persons, which in turn necessitated the calling by the respondent of those persons with whom the appellant worked. In each case the evidence of those witnesses, which was accepted by his Honour at first instance refuted earlier evidence given by the appellant. The respondent claims that this occurred with nine witnesses.

22 The respondent submits that the appellant has failed to make out a case for the grant of an order for costs in her favour and the application should be dismissed with the result that each party should bear its own costs.

Consideration 23 Section 181 of the Industrial Relations Act 1996 relevantly provides: 181 Costs (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 costs to be assessed on the basis set out in Division 6 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: ... (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 ... (4) In this section, costs includes: (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.

24 The applicable principles as to the awarding of costs in proceedings such as the present were laid down in Bankstown City Council v Paris where the Full Bench stated that an affirmative conclusion on costs may be reached in either of the following two circumstances. The first is 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 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. It is also clear from the decision of the Full Bench that notwithstanding the finding that the test in s 181(2)(c) has been satisfied the exercise of the power to actually award costs remains throughout discretionary.

25 It was held in Four Sons Pty Limited v Sakchai Limsiripothong (No 2) (2000) 100 IR 400 (at 402) that s 181(4) of the Act permits the Full Bench on appeal to deal with a costs application in relation to proceedings both at first instance and also on appeal.

26 Having examined all of the circumstances of the present application, we have concluded that the jurisdictional "gateway" for the award of costs in terms of s 181(2)(c) has not been "opened", to adopt the useful phraseology of the earlier Full Bench decisions. A proper analysis of the circumstances shows that the parties were, during their negotiations, in colloquial terms, "poles apart"; that is, consistently at opposite ends of the relevant negotiating spectrum. This factor is particularly significant in circumstances where we made clear in para [27] of our decision that the appellant's conduct was not without fault. The respondent's conduct cannot be described by either of the two propositions referred to in Bankstown City Council v Paris. Accordingly, there is no basis to find that the criterion in s 181(2)(c) of the Act has been satisfied. The appellant's application for costs should be dismissed. We order accordingly.

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