Application by Carlton and United Beverages Limited for leave to appeal and appeal against a decision of Commissioner Macdonald given on 26.8.2003 in matter no. IRC 175 of 2005
DECISION ON NOTICE OF MOTION
[2007] NSWIRComm 135
1 This appeal was determined by a Full Bench of the Commission on 9 June 2006: Carlton and United Beverages Limited and Phillip Brunt [2006] NSWIRComm 98. Thereafter the respondent, Mr Brunt, by a notice of motion filed on 10 April 2007, sought an order for the costs of the appeal (and the related stay proceedings) against the appellant, Carlton and United Beverages Ltd, pursuant to s187 and s188 of the Industrial Relations Act 1996 ('the Act').
2 We intend to outline the lengthy background to the present proceedings in order to appreciate the context in which this notice of motion was brought.
3 The respondent was dismissed by the appellant for misconduct on 23 December 2004, after 18 years service. The misconduct related to the unauthorised consumption of alcohol at the applicant's warehouse distribution site at Botany and the theft of the applicant's product; namely the alcohol. The misconduct was not denied, but was said to have been as a result of the stress the respondent was experiencing at work as a consequence of his occupational health and safety duties and apparent conflict with a supervisor.
4 Following unfair dismissal proceedings filed by the respondent, pursuant to Pt 6 Ch 2 of the Act, Macdonald C reinstated the respondent to his former position, but without his occupational health and safety duties: Phillip Brunt v The Continental Spirits Company [2005] NSWIRComm 1133..
5 On 7 September 2005, the respondent sought leave to appeal and appeal of the Commissioner's decision and a stay of the decision. A conditional stay was granted by Schmidt J on 19 September 2005: see Carlton and United Beverages Limited v Phillip Brunt [2005] NSWIRComm 338. The subsequent appeal was successful in part. Leave to appeal was granted and the reinstatement orders of the Commissioner were quashed. However, the finding of the Commissioner that the respondent's dismissal was harsh was not disturbed on appeal. As a result, the issue of what remedy, if any, should be ordered by the Commission, pursuant to s 89 of the Act, was remitted to Sams DP for further hearing. On 13 February 2007, his Honour published a decision and issued orders reinstating the respondent on conditions: Phillip Brunt and Carlton and United Beverages Ltd - Fosters People Limited [2007] NSWIRComm 17.
6 The issue of costs was foreshadowed during these proceedings and Sams DP directed that any application for costs be filed by way of notice of motion within 28 days. As a result, the solicitors for the respondent filed a notice of motion and accompanying affidavit on 14 March 2007. The notice of motion sought costs for the entire proceedings; that is the first instance proceedings before Macdonald C, the stay proceedings before Schmidt J, the appeal proceedings before the Full Bench, the remittal proceedings before Sams DP and the costs of the motion.
7 The notice of motion was listed before Sams DP for directions on 28 March 2007 at which time His Honour raised with the parties whether the Commission, sitting alone, had the power to determine the costs application in so far as it related to the appeal and stay proceedings before the Full Bench and Schmidt J. After consulting with the Full Bench his Honour re-listed the matter and informed the parties that any application for costs relating to the appeal proceedings must be made to the Full Bench within 7 days. The balance of the costs application to be dealt with by Sams DP was programmed and listed for hearing on 22 May 2007 (later changed to 11 June 2007).
8 Solicitors for the respondent subsequently filed the aforementioned notice of motion seeking the following orders:
A. On A DATE TO BE FIXED, the Respondent will seek the following orders:
1. An Order that the Appellant pay the Respondent's legal costs and disbursements incurred in the Stay proceedings and the Appeal proceedings since the date of commencement of the Appeal proceedings, or from such other date as the Commission shall determine, on an indemnity basis.
2. An Order that the Appellant pay the Respondent's legal costs and disbursements incurred in the Stay proceedings and since the date of commencement of the Appeal proceedings, or from such other date as the Commission shall determine on a party-party basis.
3. An Order that the Appellant pay the Respondent's legal costs and disbursements of the Motion.
4. Such further or other Order as to (sic) the Commission may see fit.
9 The motion was listed for hearing before the Full Bench on 23 April 2007. Mr S Schmitke, for the appellant, sought an adjournment of the notice of motion, citing the short notice of the hearing and the inability of the appellant to obtain detailed instructions. Mr W Szekely, for the respondent, consented to the adjournment. While the Full Bench expressed some reluctance in granting the adjournment, directions were issued for the filing of submissions and to establish whether there existed any factual contest between the parties relevant to the issue of costs. If no contest of the facts was identified the matter might then be determined on the papers. On 21 May the parties advised that the matter should be dealt with on the papers. We proceed to do so on that basis, thereby determining the question of costs of the appeal and stay proceedings.
SUBMISSIONS
For the respondent
10 Mr Szekely outlined the statutory framework for costs applications in unfair dismissal matters and submitted that the leading authorities in which the provisions of s181(2)(c) of the Act were considered were: Bankstown City Council v Paris (1999) 93 IR 209; Four Sons Pty Ltd v Sakchai Limsiripothong (No 2) (2000) 100 IR 400 and Phillips v Industrial Relations Commission of NSW (2006) 154 IR 96.
11 Mr Szekely said it was noteworthy that in the proceedings before the Full Bench at the conciliation stage and given the nature of the offers being exchanged between the parties, that no offer was couched in terms of an offer of compromise as contemplated by Part 23 of the Industrial Relations Commission's Rules.
12 It was submitted that the respondent was entitled to his costs having regard to the nature of the offers made and the substantially successful outcome of the appeal. He said the offers from the appellant had become increasingly less attractive to the respondent.
13 Mr Szekely said that costs were sought on an indemnity basis from the date of the commencement of the hearing having regard to the rejection of the offers by the respondent which, whilst not in Calderbank form, nor in an offer of compromise, nevertheless merit consideration on the basis that the respondent obtained a more favourable outcome than what the appellant had offered. In addition, Mr Szekely submitted that the respondent sought costs on a party to party basis in relation to the stay application before Schmidt J.
14 Mr Szekely acknowledged that, while the appellant had been successful on the technical issue of the operation of s 89(2) of the Act, the respondent was successful in other significant respects. In particular, the finding that the respondent's dismissal was harsh was not disturbed on appeal and leave to appeal was refused on that matter. The only question remitted for further consideration was the issue of remedy. Mr Szekely said the appellant's submissions in the appeal primarily dealt with the 'harshness' question.
15 In support of his submissions the respondent relied on paras 18 to 26 (particularly 23 to 25) of Exhibit 'WMS 1', an affidavit of William Mark Szekely dated 5 April 2007 which had been filed in the costs proceedings before Sams DP. These paragraphs are as follows:
18. On 8 September 2005 I submitted draft Orders to the Commission's Registry in order to "take out" those Orders. The Orders were sealed on 9 September 2005 and uplifted from the Registry and served by Licensed Commercial Agent upon:
(a) the Proper Officer, The Continental Spirits Company Pty Ltd;
(b) the Proper Officer, Carlton & United Beverages Ltd;
(c) the representative of the Appellant, Employers First.
Later, on the morning of 9 September 2005, I received a telephone call from a Registry officer who said to me words to the following effect:
" An Appeal has been filed in these proceedings and is returnable for mention on 13 September 2005 before her Honour Justice Schmidt ."
Later again, on 9 September 2005 I received a letter from the representative of the Appellant enclosing the Application for Leave to Appeal and Appeal. A copy of that letter is annexed hereto and marked "O".
19 To date the Appellant has not complied with the Orders of Commissioner McDonald (sic) made 26 August 2005.
20. On 13 September 2005 I caused to be sent to the representative of the Appellant a letter a copy of which is annexed hereto and marked "P".
21. On 14 September 2005 I received a letter from the Appellant's representative serving an affidavit of David Cunneen sworn 14 September 2005. None of what Mr Cunneen deposed to in paragraphs 6 to 10 of his affidavit was put before Commissioner McDonald (sic) and no evidence of such nature was led by the Appellant before Commissioner McDonald (sic) from any of its witnesses as to whether re-instatement or re-employment (in a role with less responsibility) was not practicable. It was always open to the Appellant to lead such evidence.
22. The Respondent in the subject proceedings, filed an Application for a Stay of the Order of Commissioner MacDonald (sic), pending the outcome of the Appeal Proceedings. On 19 September 2005 Her Honour Justice Schmidt gave her decision and Orders relating to the Application Stay of Proceedings and granted a stay upon the certain terms which involved payments to the Applicant in the subject proceedings.
23. On 23 November 2005 Counsel for the Appellant submitted a "without prejudice" offer by email to Counsel for the Respondent. A copy of the said email is annexed hereto and marked "Q".
24. On or about 8 February 2006 the Counsel for the Respondent contacted Counsel for the Applicant (the Respondent in the appeal proceedings) and made an offer in the following terms:
(i) Respondent to pay Applicant the equivalent of twelve (12) months remuneration plus $25,000.00 towards costs; and
(ii) Applicant is to retain all monies paid to date by the Respondent. No reference was made by Counsel for the Respondent in relation to the issue of redundancy or any consequential retrospective effect on superannuation.
25. On or about 15 February 2006 prior to the Appeal Proceedings having heard, there was Conciliation attempted before Deputy President Sams. The Respondent (the Appellant in the appeal) through its Counsel initially offered two (2) months remuneration on a redundancy basis plus $25,000.00 towards Costs. This was rejected by the Applicant and the Respondent through its Counsel then put an offer of three (3) months remuneration on a redundancy basis plus $10,000.00 towards costs. Both offers made on this date by the Respondent made no reference to the Defined Benefits Superannuation issue. Both offers were rejected by the Applicant.
26. After hearing on 15, 20 and 22 February 2006, on 9 June 2006 the Full Bench in proceedings No. IRC 4689 of 2005, delivered its decision and orders.
16 The offer in Annexure Q referred to in para 23 was:
The respondent is to pay to the applicant the balance of the back pay to the date of the settlement less amounts already paid pursuant to the conditional stay;
Upon the settlement, consent orders will be filed dismissing the appeal with no order as to costs, the stay is to be dissolved and effect is to be given to the terms of the orders of Commissioner McDonald (sic).
Shortly after the reinstatement takes effect (1 to 2 days) the applicant will accept a redundancy offer and be paid a redundancy payment of 66 weeks' pay (based on the average weekly pay earned in the twelve months preceding the dismissal which gave rise to the proceedings).
Upon the redundancy, the Trustees of the applicant's superannuation find (sic) will be advised that the applicant's employment came to an end by reason of redundancy on the date of the redundancy above and the respondent will do all things necessary to ensure that the trustees will treat the reason for the cessation of the applicant's employment upon redundancy as a redundancy.
The respondent will pay to the applicant an amount equal to his costs as agreed of (sic) assessed (an indication of costs in the range of $35,000).