Bankstown City Council v Paris

JUDGMENT: - 5 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP

4 November 2004 Matter No IRC02/6816 Allen Staal and Western Sydney Area Health Service

Matter No IRC02/6817 Matu Tupene and Western Sydney Area Health Service Applications re unfair dismissal pursuant to s84 of the Industrial Relations Act 1996 DECISION (on costs) [2004] NSWIRComm 325

1 In a decision of 10 March 2004 [2004] NSWIRComm 27, the Commission as presently constituted, made orders pursuant to s89(1), (3), (4) and (6) of the Industrial Relations Act 1996 ('the Act') in favour of nine dismissed security officers ('the applicants') formerly employed by Western Sydney Area Health Service ('the respondent'). The effect of those orders was to reinstate the nine applicants to their former positions without loss of continuity of service and with the payment of lost remuneration.

2 During submissions in the substantive proceedings, Ms Howell of counsel, foreshadowed an application for costs, pursuant to s181(2)(c) of the Act, would be made in the event her two clients, Mr Matu Tupene and Mr Allen Staal were successful in the proceedings. I observe that the remaining seven applicants were represented by their Union, the Health and Research Employee's Association (as it was then known). No application for costs was made by the Union subsequent to the decision of the Commission.

3 In the orders made on 10 March 2004, the Commission directed that any application for costs should be made by way of notice of motion within 21 days.

4 Solicitors for Mr Staal and Mr Tupene, Geoffrey Edwards and Co, subsequently filed a notice of motion and accompanying affidavit on 30 March 2004. The notice of motion was expressed as follows: 1. An order pursuant to s181(2)(c) of the Industrial Relations Act 1996 that the Respondent pay the Applicant's costs, including Counsel's fees, on an indemnity basis.

5 The uncontested affidavit of John Justin Hendry, Solicitor for the applicants was in the following terms: 1. I am the Solicitor on record for the Applicant. 2. The Applicant filed the Application for Relief in Relation to Unfair Dismissal on 29 November 2002. In that Application, the Applicant provided details of his legal representative, Geoffrey Edwards & Co. 3. The Respondent filed a Reply to the Application for Relief in Relation to Unfair Dismissal on 10 January 2003. 4. On 14 February 2003 the matter was listed for Directions and Conciliation before Deputy President Sams. 5. I attended the Directions and Conciliation on 14 February 2003 on behalf of the Applicant. 6. The Respondent was represented by advocate Christopher Brown and the other Applicants apart from Matu Tupene and Allen Staal were represented by Dennis Ravlich of the Health & Research Employees Association of New South Wales (HREA). 7. Deputy President Sams was advised in Conciliation that Mr Tupene was seeking reinstatement. The Respondent took the position in Conciliation that it was not prepared to reinstate Mr Tupene or was it prepared to make any financial offers of settlement. As a result of this the parties reported back to DP Sams that there was no prospect of settlement. 8. The matter was then set down for hearing and after hearing the matter Deputy President Sams gave Judgment in favour of the Applicant on 10 March 2004. 9. The Respondent thereafter made no offer of settlement at any time. 10. I have been instructed by the Applicant to make an application for costs.

6 The notice of motion was listed for directions on 2 April 2004. Counsel for both parties (Ms Howell and Mr Murphy for the respondent) filed written submissions and spoke to the submissions at a hearing on 25 June 2004.

7 Ms Howell identified the well known principles for the Commission's consideration of s181(2)(c) by reference to the lead case in Bankstown City Council v Paris (1999) 93 IR 209. She also referred to Four Sons Pty Limited v Sakchai Limsiripothong (2000) 100 IR 400, IGA Distribution Pty Ltd and Moses No. 3 [2003] NSWIRComm 230, Youssef v Western Sydney Area Health Service No. 3 [2004] NSWIRComm 124, and Justin Thomas and Christie Direct Pty Ltd [2003] NSWIRComm 25.

8 Ms Howell submitted that the respondent's overall conduct during the relevant period amounted to conduct inconsistent with an intention to settle the proceedings on any basis whatsoever. There is an obligation on both parties to make reasonable endeavours to settle unfair dismissal applications. By making no offers whatsoever, in circumstances where the applicants were ultimately reinstated, it was clear the respondent had failed to properly and reasonably conciliate the claims. Thus the jurisdictional 'gateway' was opened for the Commission to award costs against the respondent.

9 Ms Howell added that the conduct of the respondent, as found by the Commission in the substantive proceedings, clearly demonstrated that it acted unreasonably. Mr Staal and Mr Tupene were dismissed in circumstances where their alleged unauthorised absences were found to be tolerated by management as a custom and practice. It was in this context that the respondent refused to enter into any settlement negotiations.

10 Ms Howell submitted that the respondent either knew, or should have known, its prospects of succuss in the litigation were extremely poor. The Commission found that the conduct of the respondent's inquiry was inadequate in numerous respects and the respondent merely ignored evidence it had, or failed to properly evaluate it. Moreover at the time, the respondent had the evidence of a supervisor, Mr Gladwell, and the other security officers about the practice of collecting food while on patrol and it should have known its prospects of success were extremely poor.

11 Mr Staal and Mr Tupene had incurred very substantial legal costs as a result of a lengthy hearing vigorously, but pointlessly, contested by the respondent.

12 Ms Howell submitted that the Commission has the power to award indemnity costs and should do so in this case. Such a power would only be exercised in unusual cases and this was one such case. See Bankstown City Council v Paris, Van Huisstede v Commissioner of Police (No 2) (2001) 106 IR 56, Tuholi Pty Ltd v Caltex Australia Petroleum Pty Limited [2001] NSWIRComm 7 and Justin Thomas and Christie Direct Pty Ltd.

13 She put that the following matters take this case out of the ordinary and justify an order for indemnity costs: i. The conduct of the respondent in accusing the applicants of, inter alia, theft and dishonesty, and corrupt conduct. It found the applicants guilty of all these allegations. ... These are obviously extremely serious allegations and made proper inquiry and investigation all the more important. ii. In light of the findings of the Commission set out above it can only be concluded that the respondent made serious allegations of dishonesty and corruption when it knew, or should have known (and some of its managerial employees certainly did know) that what employees were doing was actually a management sanctioned practice. iii. The wilful disregard of the respondent for any exculpatory material including facts that were known to the respondent, as discussed above and in the decision: see for example par.481 of the decision and point 2 in particular: " Mr Brown chose not to find out "; iv. The multiple failures of the respondent's inquiry process, also referred to at par.281 is all the more important when the allegations of theft and corruption are considered. The respondent is a large and well resourced statutory body. It could be expected to complete a moderately competent investigation before depriving employees of their livelihood on grounds including theft and corruption. It totally failed to do so. v. The respondent's careless or wilful disregard for its obligations under the Workplace Surveillance Act (see decision pars. 466 - 471) in the conduct of a so called investigation of the security officers is a significant aggravating factor in the respondent's conduct. vi. The respondent's admitted and deliberate disregard for the safety of patients and staff during the investigation process (par. 448-449) aggravates the unreasonableness of its conduct. Safety issues were one of the matters the respondent purported to rely upon in dismissing the applicants, yet the respondent was prepared to deliberately put safety at risk to secure evidence. vii. The hypocrisy and unfairness of the respondent in dismissing employees for a management sanctioned act of leaving the campus to pick up food is staggering when measured against the respondent's own conduct.

14 After referring to the relevant authorities, Mr Murphy submitted that the applicants had insisted on nothing short of a demand for reinstatement with full back pay. This created a position where the parties were 'poles apart.' See Youssef v Western Sydney Area Health Service No. 3.

15 In this case, it was only the conduct of the parties over the relevant period which must be considered, as there was no offer by the respondent which could be described as unreasonable.

16 Mr Murphy distinguished the circumstances in Paris, Four Sons, IGA Distribution and Youssef with those in the present case. Each case needed to be considered on its own facts. He said that here, there were allegations of serious misconduct. The respondent's position, in not offering a settlement of the claims, had to be seen in that context.

17 Mr Murphy put that there were a number of unusual features of this case, which would lead the Commission to the view that the respondent had not acted unreasonably or inconsistently with an intention to settle the claims.

18 These features were: i. At the time of conciliation of these matters the respondent was faced not only with the application filed by the two applicants but also with a further seven applications from other dismissed security officers whose employment had been terminated in similar circumstances to those that led to the termination of the applicants' employment. It was clear at the outset that any consideration of settlement offers, had they been made, would necessarily involve consideration of the facts and circumstances arising in each of the nine applications. ii. Six of the nine applications had been filed out of time and were therefore, prima facie, incapable of being heard and determined by the Commission unless the Commission was persuaded to, in the circumstances of each such application, in effect, waive the 21 day time limitation for the filing of applications pursuant to Section 84 (Section 85). iii. In addition, three of the applications which were filed out of time involved applicants who had resigned their employment. Therefore, at the time of conciliation and throughout the hearing of the applications, there was no certainty that, in relation to at least six of them, that the Commission would accept the applications out of time and, in relation to three of them, rule that the resignations did not preclude the Commission dealing with them as dismissals by the employer. Had these rulings been made in favour of the respondent in relation to those six applications then there would have been no need to deal with any of them on the merits. In this regard it should be noted that the respondent proposed that the jurisdictional matters be determined on a preliminary basis, but this proposal did not find favour with the Commission. iv. As was the case in Youssef , even though reinstatement of the two applicants was ultimately ordered, the Commission was not entirely uncritical if the conduct of the two applicants. In relation to Mr Tupene, the Commission noted that he agreed in the proceedings that he had been evasive with Mr Brown during Mr Brown's investigation of the allegations (para 119). He also conceded that at no time in the process did he admit to the employer that he often picked up a meal while on patrol (para120). In relation to Mr Starr (sic), the Commission noted that he believed that he didn't have to answer the allegations because management had got the name of the hospital wrong (para 105). In his letter to Mr Brown he did not explain whether he was off the campus (para107). He said he was confused during the interview and refused to answer Mr Brown's questions, although he accepted that the employer was entitled to ask questions about what he was doing and that he was obliged to answer (para 110). v. Had these two applicants (and the other applicants) been more cooperative with their employer at the investigation stage of these allegations it may well have been the case that these matters could have been resolved without the necessity for unfair dismissal applications to be filed and heard. vi. The Commission noted that as the chain of events unfolded the applicants became their own worst enemies and it would appear that they may well have panicked and decided, either collectively or independently, to frustrate the disciplinary process. The Commission also noted that this behaviour by the applicants understandably antagonised the respondent and that by not cooperating the applicants may well have contributed to the employer's belief that there was a serious and wilful breach of policy (para 441). vii. The Commissioner (sic) also noted that the "Yes we were off site - getting a meal" defence only came much later in the investigation. Had this been explained from the outset the respondent might well have reacted very differently. (para 443). viii. The Commission also noted that by compounding the problem and refusing to cooperate with the investigation, the applicants opened themselves up to serious disciplinary action (para 444). Ultimately, the relief ordered by the Commission in relation to both applicants was a less favourable outcome then that which had been pursued on their behalf from the very outset, in that neither of them was awarded full back pay. ix. Both the applicants were members of the Health and Research Employees Association and, as such, could have been represented in the proceedings by Mr Ravlich, as were the other seven applicants. Had this been done no legal costs would have been incurred by them. x. ... xi. The respondent's case suffered badly as a result of its inability to call Mr Colgan to give evidence. This was something over which it had no control and could not have foreseen at the conciliation stage of the proceedings, or even well into the arbitration stage.

19 Mr Murphy submitted that the question of indemnity costs does not arise in this case. There was nothing here which made the case special or unusual or took it out of the ordinary. There should be a cautious approach to indemnity costs, particularly in unfair dismissal cases.

20 Ms Howell said that Mr Murphy was wrong to suggest that the applicants were intransigent. At the time, nothing had been said about back pay. They had merely said "we are seeking reinstatement," but were cut off by the respondent who said there would be no offer at all.

21 Ms Howell said that while the allegations were said to be serious, ultimately they were proven to be wrong. Ms Howell said the respondent had an obligation to consider each employee's circumstances. Even more so in the cases of Mr Tupene and Mr Staal, where no jurisdictional hurdle affected their applications.

22 Ms Howell noted that Mr Tupene and Mr Staal had already received some sanction for their non-cooperation in the investigation by not receiving full back pay. Moreover, those who had co-operated were ignored. Non-cooperation must also be seen in the context of the suspicious phone calls to the officers and the observations regarding suspicious cars.

23 Ms Howell put that the applicants were entitled to be legally represented and thought the matter was serious enough to do so. Union representation was not a relevant consideration.

24 The principles for determining an application for costs in unfair dismissal proceedings were considered in Bankstown City Council v Paris, Four Sons Pty Limited v Sakchai Limsiripothong and reaffirmed in Van Huisstede v Commissioner of Police (No 2), IGA Distribution Pty Ltd and Moses No. 3 and Weisser v Spur Group Pty Ltd [2003] NSWIRComm 79.

25 It is readily seen from these decisions that determination of a costs application under Pt 6 ch 2 of the Act requires a two staged process. Firstly, the Commission must make a finding under the discrete provisions of s181(2)(c) of the Act: However, the Commission when it is not in Court Session may award costs only in the following cases: (a) …

(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. This stage is referred to as the 'jurisdictional gateway.'

26 Secondly, if a positive finding is made under this section, the Commission may then move to the general discretionary powers to award costs available in 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 costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on any other basis.

27 This two stage process was explained by the Full Bench in Bankstown City Council v Paris: 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 powers and discretions under s 181(1) are available for exercise.

28 The Full Bench emphasised the risks which a party runs if it adopts a firm position or inflexible approach towards the settlement of the case, observing at p 220: Far from indicating any retreat from the inflexible approach adopted by the appellant, its approach in relation to settlement on this occasion, served only to emphasise the consistent position that had been adopted. We emphasise that there will be many circumstances in which parties to litigation, including unfair dismissal proceedings, may appropriately take a firm position generally, including on the question of conciliation or settlement. Nevertheless, such a position runs significant risks in terms of the exercise of the power and discretion under s 181(2)(c). This is particularly so where such a position is assumed without due regard to the policy of the Act which requires parties to take seriously their obligation to attempt to settle the proceedings. That in turn involves an obligation to consider in an objective way the strengths or limits upon the case that they will be propounding should the matter proceed to arbitration. On the material before us, we consider that the appellant failed to give appropriate consideration to such matters before it adopted its inflexible position. We consider that, in the circumstances of this matter, the criterion in the relevant provision has been made out. It has been met as to the proceedings both at first instance and on appeal.

In Four Sons Pty Limited v Sakchai Limsiripothong (No 2) the Full Bench considered the issue of 'nominal offers' of settlement and observed at p 403 - 404: The obligations imposed on parties to proceedings under s 84 of the Act, as identified in the Full Bench judgment in Bankstown City Council v Paris , require parties to such proceedings to undertake a responsible and careful assessment of the prospects of the litigation, in the absence of which an unsuccessful party may realistically face the prospects of a costs order being made against it. In those circumstances, it may often be appropriate for a party to consider making an offer to settle, even if the offer could be seen, either with the benefit of hindsight or otherwise, to be at a rather low level. However, the making of such an offer on "the low side" does not exhaust the responsibilities of a party to reasonably attempt to settle the claim. It is conceivable that if the respondent had responded to those offers in a more timely way, the proceedings may have settled. We doubt, however, that that is the appropriate finding on the evidence before us. Rather, the evidence as to further negotiations makes plain that the appellant had no realistic intention to make an offer which was likely to settle the proceedings before McKenna C. However, it would be inappropriate not to take into account the lack of a timely response from the respondent to the nominal offers of settlement which were made by the appellant in August and September 1999.

29 The principles concerning the order of indemnity costs are now well settled and it is appropriate that I refer in some detail to them.

30 A convenient starting point is the discussion in Bankstown City Council v Paris. At p224 the Full Bench said:

We consider that the following principles should be applied in relation to the application for indemnity costs made in circumstances where the Commission has held that the first criterion in s181(2)(c) has been held to be satisfied, and an application for costs is made. The Commission can properly, in the appropriate exercise of its discretion, make an order for indemnity costs. The power to make a costs order of that kind is clearly available because of the terms of s 181(1)(b). It must, however, be recognised that the exercise of discretion is being called for in the context of circumstances which are out of the usual. That, is the discretion is only available in non-Court Session matters where one or more of specified criteria are met. Secondly, although the finding that a relevant criterion has been met may, in some circumstances, be satisfaction of circumstances which might lead to the award of indemnity costs, and although the existence of such circumstances is relevant to the grant of costs on that basis, the Commission should exercise the discretion in full recognition of the caution that should be exercised before making a costs order on a basis other that that costs should simply follow the event, since that is the way in which a discretion to order costs would be exercised "regularly and judicially": see, for example, Moama Bowling Club Ltd v Armsrong (No 2) (1995) 64 IR 264 at 267 per Cahill Deputy CJ and Peterson J.

Nevertheless, and thirdly, provided such caution is exercised, where the circumstances clearly fall within those where the courts have recognised that indemnity costs should, or may, be granted, then the Commission should consider, in the exercise of its discretion, whether costs should be awarded on that basis. Nevertheless, even at that stage of the exercise of the discretion, the Commission is to recognise that, as the authorities in relation to indemnity costs make clear, the categories in which the discretion may be exercised are not closed and the exercise of the power in relation to indemnity costs remains throughout discretionary. The discretion must be exercised judicially. We have paid regard to the detailed discussed of principles set out in the judgment of Sheppard J in Colegate-Palmolive Co v Cussons Pty Ltd , particularly to the distillation of authority set out therein at 232-234. On a consideration of those authorities it is clear that, for example, a court (or this Commission) ought not usually make a payment of costs on a basis other than the party and party basis; and there must be circumstances which would warrant a court (or this Commission) departing from the usual course.

31 In Tuholi Pty Ltd v Caltex Australia Petroleum Pty Limited [2001] NSWIRComm 7, Wright J undertook a detailed analysis of the relevant authorities on the principles to be applied when awarding indemnity costs and summarised the principles as follows: I consider that it is possible to deduce the following propositions for the present matter from the more general authorities earlier referred to: 1. It is only in exceptional cases where a court would make a costs order other than on the usual party/party basis. 2. The grant of indemnity costs is to be seen as an unusual and exceptional course and would only occur where there is some special or unusual feature of the case to justify the Court in departing from the usual practice. 3. Nevertheless, the grant of indemnity costs is, as with any exercise of judicial discretion, one to be exercised in all the circumstances of the case and, provided regard is had to the "exceptional" nature of such an order, the primary consideration with all such discretionary orders is that it will occur "as and when the justice of the case might so require".

4. Although most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of facts which would be capable, if they existed, of warranting a departure from the usual rule, nevertheless "the categories in which the discretion may be exercised are not closed".

5. Further, a too rigid or narrow approach may lead to error in the exercise of discretion. 6. Although there are a number of recent judgments to the effect that there should be an increased tendency towards the awarding of indemnity costs, such statements should be applied with great caution in the light of the existence and operation of the general approach as to the usual way in which costs orders will be made. 7. It is also important to ensure that considerations such as mere "fierce opposition to the claim" or the conduct of a respondent which might justify the grant of the substantive application are not matters which, in themselves, would lead to the grant the costs on an indemnity basis.

32 His Honour's conclusions were adopted by Walton VP in Van Huisstede and the Commissioner of Police and more recently in Timothy Fox v GIO Australia [2002] NSWIRComm 318. In the later case, his Honour made this observation at para 108: As I noted in Van Huisstede v the Commissioner of Police (No.2) (2001) 106 IR 56 the granting of indemnity costs is a matter for the discretion of the Court, and does not involve considerations of a punitive nature.

33 Haylen J, in Cornell v Titley [2002] NSWIRComm 326, also relied upon the principles discussed in Tuhohli and observed as follows: The President, Wright J, also referred to the judgment of Hill J in Bonner v Anderson (No.2) (1993) 50 IR 406 and his Honour's expressed view that there should be an increased tendency to the awarding of indemnity costs, and the caution expressed by a Full Bench to that approach in Australian Mutual Providence Society v Avis ( Bauer, Peterson and Marks JJ, unreported, IRC96/5473 and 96/5941, 18 December 1997). In Bonner , it was noted that generally speaking an order for costs on an indemnity basis was justified in a case in which there are special or unusual features of an unmeritorious or improper nature surrounding the case of one party which makes it unreasonable and unfair that the successful party should be put out of pocket as a result of the proceedings. See also my consideration in Passas v Skouloudis Group Pty Ltd t/as O'Kosmos [2001] NSWIRComm 124.

34 I turn now to the facts and circumstances of this case. Let me firstly respond to the valiant submissions of Mr Murphy to the effect that this case involved some unusual features as would result in a finding that the respondent had not acted unreasonably.

35 Mr Murphy suggested that the respondent had nine claims for unfair dismissal, six of which had jurisdictional hurdles to overcome. It was in that context that the respondent's unwillingness to offer a settlement should be seen. Two things can be said about this submission.

36 Firstly, neither Mr Tupene's nor Mr Staal's claim had jurisdictional hurdles to overcome. There was, in my opinion, a greater obligation to consider their particular circumstances when no jurisdictional problems were attached to their applications. Secondly, the respondent was obliged to consider the individual circumstances of each of the applicants. It failed to do so. I described it at para 479 as a "one size fits all" approach.

37 Mr Murphy sought to highlight the lack of co-operation of the applicants during the investigation. True it is that this non co-operation was adversely commented on by the Commission. However, Mr Murphy's emphasis fails to have regard firstly, for the explanations offered by a number of the applicants which the respondent chose to ignore, and secondly, that both Mr Staal and Mr Tupene received a sanction for their conduct by a lesser amount of back pay. The Commission's criticism about this matter in no way derogates from the inherent unfairness of their dismissals.

38 The general circumstances in this case are akin to those in IGA Distribution Pty Ltd and Moses No. 3. There the employee insisted on reinstatement, was ultimately reinstated and the employer had made no offer to settle the claim on any basis. The Full Bench said at paras 99-100: Further, there is equally some merit in the contention of the appellant that the position of the respondent, expressed on numerous occasions, as being desirous of a remedy involving an assurance of employment, may give rise to some reluctance in putting monetary offers of settlement. Nevertheless, we are not satisfied that the position adopted by the appellant was sufficient to discharge the obligation it bore, in accordance with Paris and Four Sons (No 2), to properly turn its mind to the settlement of proceedings. We are not satisfied that the approach of the respondent to the proceedings made it futile for the appellant to put forward an appropriate offer of settlement. The position adopted by the appellant essentially amounted to a demand that the respondent bargain against himself in a way which would require him to step back from his primary remedy under the Act. In the absence of any offer from the appellant, it is in our view, inappropriate to conclude that the respondent's stance was unreasonable. The appellant did not take the necessary steps to deal with its situation in the litigation as discussed in Paris and Four Sons (No 2). Certainly it gave little or no weight to the fact that reinstatement is the primary remedy under the statute: Little v Commissioner of Police (2001) 112 IR 212 at 243.

39 In my opinion, the particular circumstances of this case invite only one conclusion. By making no offers at all - let alone any offer of reinstatement on terms - demonstrated a rigid and inflexible attitude, which the Full Bench warned against in Bankstown City Council v Paris. Such a stance places a party at risk of a finding of unreasonableness. I have no hesitation in so finding. Thus the 'jurisdictional gateway' is opened. I now turn to the question of whether costs should be awarded as a matter of discretion and if so, on what basis.

40 In my assessment, Ms Howell put a persuasive and potent argument that costs should be awarded on an indemnity basis. I agree that this was a most unusual case and one whose circumstances take it "out of the ordinary." On any view, it fits the description of being exceptional. A few observations serve to highlight this conclusion.

41 The respondent had alleged that the applicants were guilty of theft and corruption. Even if the misconduct had been proven, it was to draw a very long bow indeed, to categorise their conduct as theft or corruption.

42 It is not every day that the Commission makes such damming and critical findings against an employer or refers its decision to the appropriate authorities based upon breaches of the Workplace Video Surveillance Act 1998. I note that, notwithstanding the Commission expressed serious concerns with the video evidence during the course of the proceedings, the respondent ploughed on regardless. Rather, at that time, it should have made a very serious assessment of its potential risk at losing the case.

43 Moreover, I agree with Ms Howell that, even at the time the respondent was aware of Mr Gladwell's evidence corroborating the security officers' explanations for their absences, it simply ignored that evidence and maintained a rigid, inflexible approach to settlement.

44 Further, I would observe that the respondent's conduct in knowingly and deliberately putting the safety of patients and staff at risk so as to catch the security officers 'red handed' and charge them with exactly the same thing, must be one of the matters which takes this case "out of the ordinary." Indeed, it takes it almost to the point of incredulity.

45 For the aforementioned reasons, I intend to order costs on an indemnity basis on favour of Mr Staal and Mr Tupene.

46 Pursuant to s181(2)(c) and s181(1) of the Industrial Relations Act 1996, the Commission orders that: 1. The respondent, Western Sydney Area Health Service, shall pay the costs of Mr Matu Tupene and Mr Allen Staal in respect to the substantive proceedings in Matter IRC02/6816 and IRC02/6817 and the costs associated with this notice of motion. 2. Costs shall be paid on indemnity basis as agreed or assessed. 3. These proceedings are now concluded.

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