Bankstown City Council v Paris [2006] NSWIRComm 1082 | Case summary

There was then a claim for costs by the respondent and a counter claim by the applicant. (For ease of reference I will continue to refer to Ms Algeri as the applicant and to GGA Law Practice Pty Ltd t/as Galluzzo Golotta Andriano as the respondent.) 2 The respondent relied on a series of offers made prior to the arbitration of the substantive matter. While an offer of four weeks' pay had been made on 8 March 2006, a further offer equivalent to eight weeks' pay was said to have been made on 24 April, followed by an offer of 10 weeks made by telephone to the applicant's representative on 26 April. On each occasion the offer was rejected by the applicant. 3 An offer of reinstatement for four hours per day, three days per week, as per the relevant WorkCover certificate had been made by the respondent and rejected by the applicant. Because of my earlier finding that reinstatement or re-employment were impracticable, I cannot now conclude that the applicant's rejection of this offer was unreasonable. 4 A further offer was made by the respondent by fax delivered at 1pm on 26 April 2006 offering the applicant the equivalent of 12 weeks' wages. The letter read as follows: We refer to the above matter and make the following offer of settlement: 1. The respondent to pay the applicant the equivalent of 12 weeks' of wages agreed to total $6960.00. 2. Each party to pay their own costs. We advise that we will be seeking costs on an indemnity basis should this offer not be accepted by 3.30pm Thursday 27 April 2006. 5 Mr Sunna for the applicant said that he did not receive this message until late in the day and was unable to make contact with his client. When he did so, he wrote to the respondent's solicitor on 28 April, the first paragraph of which letter read as follows: We are instructed to put an offer of 12 weeks being $6960.00 payable within seven days. We note that your earlier offer for the same amount is incapable of acceptance, it is uncertain at best as it fails to include payment terms nor is it expressed to be subject to a Deed of settlement. Our client's offer is open until 9.15am Monday 1 May 2006, failing which we shall produce this letter in support of our application for indemnity costs. 6 The respondent failed to agree to the applicant's offer because the applicant did not respond to their earlier offer by the indicated time of 3.30pm on 27 April and because the respondent had already incurred a further cost of briefing counsel in preparation for the hearing. 7 File notes provided in evidence by Mr Patch show that when the offer of eight weeks' settlement was put on 24 April, the applicant countered with 12 weeks. Those notes also show that the offer of 10 weeks on 26 April was rejected. 8 Mr Sunna submitted that neither the eight week offer or the 10 week offer were genuine offers since they had not been reduced to writing and did not involve terms. In my view it is not necessary for parties in negotiations to put every offer in writing. It is appropriate that there are verbal discussions and that if an offer is made without terms, then the person responding to that offer may seek whatever terms they wish as a condition of acceptance. 9 Similarly, the offer of 12 weeks set out in writing on 26 April by the respondent could have been accepted on particular terms such as a time for payment and the applicant requiring a Deed of Settlement. I find it unusual that Mr Sunna suggested that the respondent's offer was uncertain because it was not expressed to be subject to a Deed of Settlement when he himself put an offer which also did not refer to a Deed. The usual terms of settlement are well known and may be expected to follow an offer, particularly when made by a party via their legally qualified representative. In any case, any question about terms could have been put to the respondent's solicitor at any time. 10 In short, I am satisfied that the offers of eight weeks, 10 weeks and 12 weeks were made by the respondent to the applicant on 24 April, 26 April and later on 26 April respectively. 11 I am satisfied that the offer of 12 weeks' pay made on 26 April did not provide the applicant with sufficient time to consider the offer and respond in a meaningful way. However the same does not apply for the earlier offers of eight weeks and 10 weeks. 12 Section 181(2) of the Industrial Relations Act 1996 reads relevantly as follows: 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 ... 13 Section 181(2)(c) allows the Commission to order costs against a party in proceedings such as these if there was an unreasonable failure to agree to a settlement of the claim. This is the basis on which the claim and the counter claim were made. 14 I do not believe the failure by the applicant to agree to the offer of 12 weeks was unreasonable because of the very short time limitation on that offer. 15 To determine whether the applicant unreasonably failed to agree to a settlement of the claim on the basis of the earlier offers of eight or 10 weeks, it is necessary to look at the Orders made on 16 May which were in regard to an amount equal to eight weeks' pay. It is also necessary to look at how that amount was derived. 16 Having found the termination of the employment to be unjust it was noted that the limit of the Commission's jurisdiction would result in a small if not negligible payment because Ms Algeri continued to receive workers' compensation benefit from the time of the termination of her employment through to the time of the hearing. In determining the amount of the Order and accepting Mr Sunna's submission that reinstatement or re-employment would be impracticable, I noted the following at [23]: 23 I must reject Mr Sunna's submission that the workers' compensation benefit should not be taken into account in determining the amount of compensation. I must also reject the notion that the respondent carries a higher onus than would otherwise apply, It follows that the applicant must bear the consequences of both the statutory limitation and her own desire not to return to the workplace. 17 Taking into account all possible losses accruing from the termination of the employment, eight weeks' pay was ordered. In all of the circumstances no greater amount could have been expected. Because Ms Algeri continued to receive workers' compensation benefit at the same weekly amount as her previous income, there was little loss for which compensation could be ordered. The Orders made were based on the principles established by the Commission and bound primarily by the limitations set out in section 89. 18 It follows from an objective assessment of the losses sustained by the applicant that the outcome could not have been greater than the amount ordered. It follows that it is available to me to issue a costs order against the applicant. 19 Sub-section (1) of section 181 of the Act reads as follows: 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. 20 In all cases, as set out in s 181(1)(b), costs are at the discretion of the Commission. 21 In determining whether or not to exercise discretion in this regard, I am guided by the decision in Bankstown City Council v Paris (93 IR 209). In particular, I note the following statement by the Full Bench (at 220): We emphasis e 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. 22 An understanding of the principle as set out by the Full Bench may have caused the applicant in the substantive proceedings to give strong consideration to the offers put forward by the respondent in the week prior to hearing. 23 However, the Full Bench also stated (at 219): Construing the relevant part of s181(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. 24 Arguably, the offers by the respondent to settle the claim prior to arbitration may be described as reasonable. However, the offers were put in the context of the respondent having filed an Employer's Reply to Application for Relief in Relation to Unfair Dismissal on 16 February and giving every indication that the claim would be disputed until the morning of the hearing. Following an unsuccessful application to have the Hearing adjourned, counsel for the respondent at the Hearing submitted that the respondent does not dispute that the termination of the applicant's employment was unjust. Until the day of the Hearing, no such concession had been made. 25 Ms Algeri is entitled to feel that a finding that the termination of her employment by the respondent was unjust was of some value to her, in addition to the monetary amount that she was awarded. There is, after all, a relatively small difference between the eight weeks' pay ordered and the 10 weeks' pay offered to her. 26 In all the circumstances, I am not convinced that there is sufficient reason to exercise discretion in favour of either party. 27 I decline to order costs. The matter is concluded.

Bankstown City Council v Paris

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