Bankstown City Council v Paris

LEGISLATION CITED: Industrial Relations Act 1996

Bankstown City Council v Paris (1999) 93 IR 209 Copperart v Martin (1996) 68 IR 58 Four Sons Pty Ltd v Sakchai Limsiripothong (No.2)(2000)NSWIRComm 131 CASES CITED: Humphries and Cootamundra Ex-Services and Citizens Sadler and Ors v Queensland Cotton Corporation Ltd (No2) (2003) 130 IR 33 Memorial Club Limited [2003] NSWIRComm 211 South West Security Pty Ltd v Baker (1993) 34AILR227 Tuholi Pty Ltd v Caltex Australia Petroleum Pty Ltd (2001) 103 IR 329 Youssef v Western Sydney Area Health Service (No. 3) (2004) NSWIRComm 124

HEARING DATES: N/A - (Written Submissions)

APPLICANT Ms K Ridge Solicitor LEGAL REPRESENTATIVES: RESPONDENT Mr D Groundwater Solicitor

DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Jeanie Marie Parsons and Katungal Aboriginal Corporation Medical and Community Services

Application by Jeanie Marie Parsons for costs arising out of unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996

1 This Decision concerns an application for costs by an employee against her employer.

The costs application is made in the context where it is asserted that the employer unreasonably failed to settle the unfair dismissal proceedings. The order for costs is sought pursuant to s.181(2)(c) of the Industrial Relations Act 1996 (" the Act ").

BACKGROUND 2 The employee (Jeanie Marie Parsons) filed an unfair dismissal application against her then former employer (Katungal Aboriginal Corporation Medical and Community Services), pursuant to section 84 of the Act. 3 At the first listing for Conciliation on 9 October, 2008, the employer's legal representative raised jurisdictional issues against the Industrial Relations Commission of New South Wales ("the Commission") being able to consider the unfair dismissal application. Although those jurisdictional issues were programmed for a Hearing on 27 November, 2008, the Commission subsequently received correspondence from the employer's legal representative, advising that the employer was not challenging jurisdiction, in order to avoid costs in challenging jurisdiction. 4 The Hearing on the unfair dismissal application took place in Moruya Court House on 17 and 18 February, 2009. 5 The Commission issued its Decision on 3 April, 2009, and found that the dismissal of the employee was unjust and made, inter alia, an order for reinstatement. The orders were to take effect within twenty-one (21) days from the date of the Decision. 6 The Decision of the Commission was not appealed. 7 Subsequent to that Decision, the Commission received documentation from the legal representatives of the parties, concerning compliance and non-compliance with the orders of the Commission. This dispute between the parties was resolved and the order for reinstatement was put into place. 8 Correspondence of 19 May, 2009, from the employee's legal representative (Ms Kathryn Ridge, solicitor), advised that the parties had agreed to a filing program on the issue of costs being sought by the employee. The correspondence advised that the parties agreed that the Commission would determine the costs issue "on the papers". A copy of the correspondence was to be forwarded to the employer's legal representative. 9 For the record, the Commission received two lots of nearly the same material from the employee's representative (Ms K Ridge), but bearing different filing dates: 22 May and 28 May. The filed material comprised a Notice of Motion, Affidavit, Submissions and supporting material. 10 The Notice of Motion sought: (a) costs on an indemnity basis for either of two specified time frames or costs on a party to party basis; and (b) costs of the Notice of Motion. 11 The reasoning set out in the Notice of Motion for the costs claim was twofold: (a) the employer had unreasonably failed to agree to a settlement of the claim; and (b) the employer failed to comply with the orders of the Court by 27 April, 2009.

For the Employee 12 Ms Ridge, solicitor for the employee, advised in her Affidavit and written Submissions, filed on 28 May, 2009, that: (a) The employee sought costs pursuant to s181(2)(c) of the Act . Specifically, costs were being sought on the ground that the employer unreasonably failed to agree to a settlement of the claim. (b) The employee sought indemnity costs. 13 As to the costs claim that the employer unreasonably failed to agree to a settlement of the claim, Ms Ridge advised that: (a) The employee had made an offer to settle at the Conciliation Conference of 25 November, 2008, but the Respondent made no counter offer. Further, this was conduct by the employer inconsistent with an intention to settle the proceedings. (b) The Commissioner had informed the employer's legal representative at this 25 November Conciliation Conference, of the cost implications of not replying to the employee's offer. (c) The failure of the employer to make an offer is unreasonable, and opened the jurisdictional gateway. (d) Once the jurisdictional gateway was enlivened, then the other matters for consideration were: (i) a careful assessment should be made by the parties as to the prospects of litigation as against assessing the offers of settlement; and (ii) the offers should be responded to in a timely manner. (e) The employer should have assessed their prospects of litigation as low given a careful consideration of the employer's claims that (i) the employee had resigned her employment; and (ii) the employee's conduct warranted summary dismissal. (f) The Commission ought, therefore, exercise its discretion to award costs and on an indemnity basis for the unfair dismissal application. In the alternative, the Commission should award costs. (g) The employee also sought costs for this costs application.

For the Employer 14 Mr Groundwater, solicitor for the employer, filed an Affidavit and accompanying Submissions on 30 June, 2009. 15 The Affidavit of Mr Groundwater went to the issue as to the length of employment of the employee. His Affidavit put that the employee's last period of employment with the employer was only a little over 3 months - and not some 19 months as claimed by the employee. 16 Attached to Mr Groundwater's Affidavit, was a copy of the transcript of proceedings for 25 November, 2008. 17 Mr Groundwater put the following in his written Submissions:

(a) For section 181(2)(c) to be invoked, the employer must have " unreasonably failed to agree to a settlement of the claim ".

(b) At no time did the employer unreasonably reject any reasonable offer made by the employee to settle the claim.

(c) The application for costs must fail because the employer's conduct cannot be described by either of the two principles laid down by the Full Bench in Bankstown City Council v Paris (1999) 93 IR 209.

(d) Even when the two principles are satisfied the award of costs remains discretionary and that discretion ought not be exercised in the circumstances of this case: Youssef v Western Sydney Area Health Service (No. 3) (2004) NSWIRComm 124 at para. 24.

(e) The employer had made a careful and reasonable assessment of the prospects of success or failure of its case.

(f) The employee's claim for any type of costs should be dismissed.

(g) The employee should pay the employer's costs for this cost proceeding. 18 Mr Groundwater's submissions included the transcript of proceedings before myself on 25 November, 2008, in support of the employer's position that it had not "unreasonably failed to agree to a settlement of the claim".

CONSIDERATION 19 This Decision concerns an application for costs by the employee against the employer.

The costs application is based on one statutory ground only: one party (the employer) failed to agree to a settlement.

In the event that the Commission finds that the employer failed to agree to a settlement, the employee then seeks that the Commission grant its costs application for an order for indemnity costs. In the alternate the employee seeks an order for costs on a party to party basis. 20 In considering the foregoing, the Commission will firstly set out the applicable statutory law and the case law on the meaning of unreasonably failure to settle. Then the Commission will consider the respective offers of the parties in order to determine whether the employer has unreasonably failed to settle. Only if there is an affirmative answer to that last point, will the Commission then consider whether to exercise its discretion as to whether costs should be awarded.

21 The power to award costs in proceedings before the Commission is found in s. 181 of the Act. The relevant parts of that provision are:

"181(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.

181(2) However, the Commission when it is not in Court Session may award costs only in the following cases: (a) the Commission may award costs against an applicant if it considers that the application to it was frivolous or vexatious, or (b) the Commission may award costs against a party to proceedings who, in the opinion of the Commission, instituted proceedings without reasonable cause, or (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 (c1) ...

22 Paragraphs (a), (b) and (c) of s 181(2) are exhaustive as to the powers of the Commission when not in Court Session to order costs in unfair dismissal proceedings: Bankstown City Council v Paris (1999) 93 IR 209 at 218. The Ground of Unreasonably Failed to Settle The employee sought costs against the employer on the ground that the employer had " unreasonably failed to agree to a settlement of the claim ...": s 181(2)(c).

An analysis of what constituted an unreasonable failure to settle was considered by a Full Bench of this Commission in Bankstown City Council v Paris . The relevant passage is found at page 219: "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 the 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." This Full Bench decision sets out authoritative guidelines on the approach to be adopted to the consideration of any alleged unreasonable failure to agree to a settlement. Those guidelines require the Commission to consider whether: (a) there was a rejection by a party of a reasonable offer to settle the claim; or (b) there was conduct by a party (over a relevant period) that is found to be inconsistent with an intention to settle the unfair dismissal claim. 23 In respect of paragraphs (a) and (b) above, the Full Bench decision makes it clear that the overall statutory context of s181(2)(c), places an emphasis on the parties being encouraged to settle an unfair dismissal claim lodged by a dismissed employee against his/her former employer. 24 The Full Bench decision makes it clear that in considering whether a party unreasonably failed to settle, the Commission must ask itself whether an offer that was put was reasonable and if so, whether the other party failed to agree to that reasonable offer. 25 Further to the foregoing consideration as to whether a party's offer was reasonable and the other party's offer unreasonable, the Full Bench has stated that such consideration of an offer and rejection must be objectively measured against the strengths or limits of the case that a party will be propounding should the matter proceed to arbitration: Bankstown City Council v Paris (at 220). Thus, each party is required to undertake a realistic assessment of their respective prospects of success of their litigation whenever making an offer or rejecting an offer. 26 It is also clear that the Commission is required to consider all relevant circumstances in deciding whether there has been an unreasonable failure to agree to a settlement.

27 Finally, costs do not follow the event in unfair dismissal proceedings. This was made clear in the Full Bench decision in Copperart v Martin(1996) 68 IR 58 at 64: "It is clear, that in a scheme where costs are not the usual regime, the part of the Act contemplates and apprehends two distinct propositions: · that costs are not the automatic outcome of a refusal to settle;

· that under certain circumstances costs are appropriate ."

Chronology of Offers - Counter Offers 28 The Commission will now set out the chronology of offers and counter offers made by the legal representatives for both parties.

29 The written submissions of both parties, contain attachments being correspondence between the parties. These items of correspondence make references to settlement offers. It appears from those items of correspondence that the following offers and counter-offers were made:

(a) Employee to Employer The employee sought reinstatement

(b) Employer to Employee By letter of 16 September, 2008, the employer advised that reinstatement was not appropriate.

The Applicant filed her unfair dismissal application on 19 September, 2008.

The first Conciliation was held on 9 October, 2008. The employer challenged the jurisdiction of the Commission to entertain the unfair dismissal application.

(c) Employee to Employer. Following the Conciliation, the employee wrote on 10 October, 2008 and sought reinstatement and payment of an amount equivalent to the employee's wages for the period between 21 August, 2008 and the date of the employee's reinstatement. This offer remained open until 6 November, 2008.

(d) Employer to Employee The employer wrote on 5 November, 2008, that it was not prepared to reinstate the employee. The reasons for that response would be set out in the Employer's Reply to the unfair dismissal application. This letter also advised that the employer would not be challenging the jurisdiction of the Commission to entertain the unfair dismissal application .

(e) By letter of 13 November, 2008, the employer stated that the employee had either resigned or abandoned her employment. On that basis, the employer put the offer for the employee to be provided with a reference indicating that she had resigned her employment and the employee would then discontinue her unfair dismissal application. This offer was to remain open for 7 days.

(f) Employee to Employer? It seems to the Commission (based on 13 November, 2008 correspondence from the employer) that there was some communication from the employee to the employer about the employer's last offer. The communication may not have been an offer but merely an enquiry about the employer's offer.

(g) Employer to Employee The correspondence of 13 November, 2008 from the employer is not an offer to settle. It merely advises that the employee will not be provided with a written reference. The chief executive officer is given as the designated contact point for any potential employer enquiry. No disparaging remarks will be made about the employee. Nor any statements made which hinders her employment prospects.

On 17 November, 2008, the employer filed the Employers Reply. Offers and counter-offers were made at the second Conciliation Conference, before myself, held on 25 November, 2008. Those offers and counter-offers are set out below.

(h) Employee to Employer The employee sought reinstatement, payment for lost wages and no break in continuity of employment. (Tr 25/11/08 - p2)

(i) Employer to Employee The employer rejected that offer of reinstatement as an option for the employer and gave reasons in support. (Tr- p2 to 3).

The Commission asked of Mr Groundwater if the employer wished to put anything on the table at all, in terms of settling the matter.

Mr Groundwater responded: "but I've got no instruction at this stage to put any offer, but I'm all ears as far as the applicant wanting to make an offer". (Tr - p3)

(j) Employee to Employer The employee put the offer of the maximum compensation of 26 weeks. (Tr - p2)

(k) Employer to Employee Mr Groundwater responded that an offer of 26 weeks to settle was "not a compromise Commissioner", given that the employee was seeking the maximum compensation available in the New South Wales jurisdiction. (Tr - p7)

The Commission responded that it could not comment on Mr Groundwater's response as to "not a compromise". The Commission stated that it was a matter for the employer as to whether it responded to the employee's alternate offer of compensation. (Tr - p7)

Mr Groundwater responded: "…(not transcribable)…situation Commissioner is if a party that believes it has no case…(not transcribable)…(Tr - p7)

The Commission then put on the record a commentary on the issue of costs, including that both parties needed to be mindful of the ground of unreasonably failed to settle, in respect of any potential costs application and the value of settling a matter in order to avoid further costs.

(l) Employee to Employer Ms Ridge responded that if the employer provided more details upon the issues the employer said are relevant, then she would be in a better position to advise her client, because it was thought that this matter can reasonably be either conciliated or settled. Ms Ridge requested that information prior to the filing of evidence.

The Commission then programmed the matter for a Hearing in Moruya, in February, 2009. It is clear from a reading of the transcript that I went off record to work out the dates for the filing of evidence with the parties. The date for the employee to file her material was several days away from today's Conciliation (25 November). She was to file by 1 December.

After setting the filing program, the Commission asked the parties if they wanted the matter set down for further conciliation.

(m) Employer to Employee Mr Groundwater said that his client was willing to participate in conciliation. (Tr p9)

(n) Employee to Employer Ms Ridge responded that conciliation had not been particularly satisfactory but that she would try and settle the matter when the parties exchanged some correspondence, hopefully after this conciliation. (Tr - p9)

(o) Employer to Employee Mr Groundwater said: "..(not transcribable)..on the record Commissioner that the respondent (the employer) is willing to continue further conciliation and see if we can…(not transcribable)…" The Commissioner responded: "Well you said it, so it's on record". (Tr - p9 to 10) 30 The Commission will now consider the submissions of the parties on the cost issues against the backdrop of the foregoing chronology of offers and counter-offers. 31 The employee has claimed costs on the two grounds available under s181(2)(c), given the interpretation of that sub-section by the Full Bench in Bankstown City Council v Paris.

First Ground for Costs 32 The first ground is that there was a rejection by a party of a reasonable offer to settle the claim. In this case, the employee asserts that the employer failed to respond at all to the offer of compromise made by the employee at the Conciliation Conference of 25 November, 2008. The compromise offer came about at that Conciliation Conference, when she put initially an offer to settle of reinstatement (and payment for lost wages) - but then when that offer was rejected by the employer - then put an offer to settle for an amount of money equivalent to six month's pay. The employee submitted that the failure of the employer to respond at all to the offer is unreasonable, and opens the jurisdictional gateway. 33 It is certainly correct that the employer made no counter-offer but there was a response to this "compromise" offer. The employer responded that the employee's offer was not a compromise as she sought the maximum compensation. Further, the employer put in issue the length of employment of the employee - in the context of the employee seeking the maximum compensation. (Tr p6, line 7 to p7, line 13). 34 In its written Submissions, the employer said that the employee's six month's offer to settle was unreasonable because: (a) the employee sought the maximum compensation available (six months) but she had only been employed for 3 months; and (b) the employer had already put in issue, prior to the 25 November Conciliation Conference, the employee's length of employment. (See Annexure D to the Affidavit filed by Mr Groundwater, solicitor for the employer. Thus, the employer was submitting that it was unreasonable for the employee to seek 26 weeks to settle, after having been put on notice by the employer that her service was about 12 weeks. 35 Given the foregoing scenario of offer to settle and no counter offer, the Commission will now objectively assess that scenario against the first ground for costs: the employer unreasonably failed to settle. 36 The first step is to ask if the employee's offer to settle was a reasonable offer? The Commission answers that question in the affirmative, for the reasons set out below: (a) The principal remedy sought by the employee was reinstatement. This was put and rejected by the employer and no counter offer was made by the employer. (b) The employee then put an offer of 26 weeks to settle. This represented a compromise by the employee as her primary remedy was reinstatement, without loss of earnings. Further, it was a compromise because the employee was prepared to accept a monetary settlement where monetary settlement represented a disadvantage to her. That is, she lives in a small coastal town where job opportunities for the unemployed is an issue of concern. 37 For the foregoing reasoning, and despite the employee seeking 26 weeks pay to settle in circumstances where arguably she only had some 12 weeks service, her second offer to settle was a reasonable offer. 38 In finding that way, the Commission is cognizant of the employer's argument, with reference to case law, that the employee was unreasonable in seeking 26 weeks when she had only been engaged for a period of, arguably, 12 weeks: Sadler & Ors v Queensland Cotton Corporation Ltd (No2) (2003) 130 IR 33 at para 50.

In rejecting that submission, the Commission took into account that employee's unfair dismissal application stated, as far as remedy is concerned, that her primary remedy was reinstatement and not compensation. This reinstatement remedy was also maintained in settlement discussions. As the primary remedy sought was reinstatement, then the employer's argument that the employee was seeking a monetary offer greater than her length of service, did not then have merit. It is also to be noted that it would be incorrect to submit that even if the employee was reinstated, then the maximum amount of money the Commission could award is three months - in these particular circumstances. The amount of money awarded would be greater than three months in reality. This is due to the time duration from the date of dismissal - to the decision to reinstate. This duration is greater than the three months service and accordingly the monetary amount awarded by the Commission greater than the three months pay being offered to settle - should the employee be successful in their reinstatement application.

If the employee had only sought compensation as her remedy, the employer's argument (that the employee was restricted in a legal sense as to how much she could seek to settle) would then have had merit. Section 89(5) of the Act makes that position clear. There is also Full Bench authority on the point: South West Security Pty Ltd v Baker (1993) 36 AILR 227. 39 The next question is whether the employer's response to that offer was one that could be characterised as unreasonably failed to settle? The Commission answers that question in the affirmative. The employer unreasonably failed to settle for the following reasons: (a) The employer's response that the employee's offer was not a compromise has been rejected by the Commission for the reasons set out above. (b) The employer made no counter offer for the employee to consider. There is no statutory obligation that demands that parties make offers to each other. A party is entitled to not make any offer but "adopting such a position runs significant risks" given that the evident purpose of s.181(2)(c) in its overall statutory context, is to encourage settlement of proceedings: Bankstown City Council v Paris (pp219 to 220). The risk was that the Commission would find that the employee's offer was a reasonable offer and did so find. (c) The failure of the employer to make a counter offer, left the employee (whose primary remedy was reinstatement and not a monetary settlement), with no option but to continue her unfair dismissal claim. (The Commission notes that the employer's statements during the 25 November Conciliation Conference, that it was all ears as to the employee making an offer and that it was prepared to engage in conciliation, is not evincing an intention, per se, that it is prepared to put an offer on the table. To say that one is prepared to engage in conciliation is not the same as saying that one is prepared to engage in conciliation and make an offer. In any event, the foregoing observation by the Commission is not determinative of the question being asked by the Commission: was the employer unreasonable in failing to agree to a settlement of the employee's 26 weeks offer to settle). 40 In concluding that the employer unreasonably failed to settle, the Commission also had to consider the employer's position of not putting an offer, against that other Bankstown City Council v Paris criterion: did the employer carefully assess the strengths and limits of its case when not putting a response to the employee's offer? 41 The Commission has formed the view that the employer did not make such a careful assessment of its case having regard to the procedural and substantive issues before the Commission. 42 The Commission sets out below the relevant aspects of the case going to the procedural unfairness adopted by the employer in dismissing the employee and which, prime facie, presented a significant onus for the employer to bear in defending its method of dismissal: (a) The employee claimed that she had been unfairly dismissed. (b) The chief executive officer, Mr Matcham, effected the dismissal by letter of 28 August, 2008. (c) The dismissal letter was delivered to the employee at her home address - on a day that she was not rostered to work. The dismissal letter came as a complete surprise to her. She was given no notification that her job was on the line. (d) The dismissal letter gave no reason for the dismissal. (e) The employee was denied procedural fairness given the foregoing chronology. There is case law authority of this Commission that a denial of procedural fairness can lead to a finding that a dismissal is unfair: Humphries and Cootamundra Ex-Services and Citizens Memorial Club Limited [2003] NSWIRComm 211 at para 118. 43 The Employer's Reply to the employee's unfair dismissal, set out the reasons for dismissal. The Employer's Reply pre-dates the 25 November Conciliation Conference. Thus, the employer was aware of the issues it would pursue to defend the dismissal - at the time that the employer responded to the employee's offer to settle with no counter offer. That is, the employer was aware of the substantive issues and hence the strengths and limits of its case, when the employer made no counter-offer. 44 The Employer's Reply set out three reasons to support the dismissal: (a) the employee had resigned her employment; (b) the employee had disobeyed a reasonable and lawful order of the chief executive officer; and (c) the employee's conduct over time. 45 The first reason in the Employer's Reply was that the employee had resigned or abandoned her employment. At first glance, there was a difficulty for the employer's case in making that assertion, given that the letter couriered to the employee's home address said "that your services are no longer required effective immediately". (Letter attached to unfair dismissal application).

Thus, there was a resignation or abandonment of employment asserted on the one hand but a dismissal stated in the cessation of services letter couriered to the employee. 46 The employer's written submissions sets out its case on this issue and in particular draws attention to two matters: (a) an email authored by the employee on 28 August, 2008; and (b) Mr Cooley's version of events of 28 August, 2008. 47 The Commission's Decision of 3 April, 2009 deals with the issue of alleged resignation. (paras 26 to 47) In particular, the Commission found, on its reading of the 28 August, 2008 email, that it did not constitute a resignation because the relevant wording spoke of future conduct, rather than that the employee had just repudiated her contract of employment. 48 More importantly on this point, is what then followed. The employee was directed to come to a meeting on that same day (28 August) with Mr Matcham who later issued the termination letter on that same day.

Despite the employee and Mr Matcham being face to face, there was no evidence that Mr Matcham asked the employee if her email represented a resignation. (see para 31 of 3 April, 2009 Decision) Given that the email (and alleged resignation contained therein) was the cause for Mr Matcham calling a meeting with the employee, then why did he not raise with her, this alleged resignation? This would also be a relevant question for the employer's legal representatives, during the preparation of their case, given the claim that the email represented a resignation. 49 The Commission finds that this email/resignation claim had little, if any, prospects of success as an issue in the proceedings. 50 The employer also "relied heavily on Mr Cooley's version of events, in particular his recollection that the Applicant (the employee) returned her uniform on 28 August, 2008", to support its resignation-abandonment of employment scenario. 51 In rejecting this employer argument in support of its defence to the costs claim, the Commission will firstly make a general observation about the employer's (Mr Matcham's) investigatory approach. 52 The Commission appreciates that the employer's business is not a large one that requires an industrial relations manager or human resources department to oversee matters pertaining to each employee's contract of employment. In this instance, the business is a small concern and Mr Matcham has included in his role that of the specialist industrial relations manager or human resources manager. Be that as it may, there would still be a requirement for Mr Matcham to check out an allegation(s) that say, an employee has resigned or abandoned his/her employment. After all, he has a business to run and one less employee (all of a sudden) is likely to impact on the running of the business. Hence, there is a need to ascertain the correctness or otherwise of what is being alleged. 53 In this instance Mr Cooley is relied upon heavily for his eye witness account that the employee returned her uniform to the Moruya office where she worked, after her meeting with Mr Matcham in the town of Narooma. The employee denied this and the Commission comprehensively rejected this claim of Mr Cooley. (see para 45 of 3 April, 2009 Decision) 54 Apart from that comprehensive rejection of all of the evidence surrounding the employee's alleged resignation, the Commission simply notes in respect of this costs application, that Mr Matcham did not contact (by telephone) the employee and confirm the hearsay that she had resigned or abandoned her employment. He, instead, had a letter of termination couriered to her home address. 55 When assessing the strengths and limits of this resignation-abandonment of employment claim by Mr Cooley, the employer knew that procedural fairness had been denied to the employee by not contacting her and confirming she had brought her contract of employment to an end by her own conduct. This meant that the employer ran its case, knowing that the employee had not been asked if she agreed she had resigned or abandoned her employment.

Accordingly, the Commission finds that the employer can not rely upon this resignation-abandonment of employment issue, as one showing that the employer had reasonable prospects of success on this issue. 56 The second ground relied upon by the employer to support the dismissal, was that the employee had disobeyed a reasonable and lawful order of the chief executive officer. 57 This second ground arose out of the meeting between Mr Matcham and the employee on 28 August, 2008, to discuss her email of the same date. He deposed in his affidavit that the employee's conduct during that meeting constituted a failure to obey the lawful directions he had given her at that meeting. No explanation was offered in his affidavit as to what lawful directions he had given to her. 58 Prior to the making of the affidavit, was the termination letter. It has already been stated that this letter did not set out any reason for termination and hence made no reference to the employee disobeying any lawful direction(s). 59 Given that Mr Matcham's termination letter is silent on the point and his affidavit offers no explanation as to what reasonable/lawful direction(s) was given by him and disobeyed, then how can the employer advance an argument that its case on this issue, had reasonable prospects of success? 60 The Commission's Decision of 3 April, 2009 deals with the reason(s) for termination. (para 59 to 78) That Decision records that Mr Matcham raised in the witness box, for the first time, as to what he meant when he said she had disobeyed his direction. Thus, she had allegedly stormed out of their meeting and he then allegedly directed her to return to the office. This "return to the office" was the direction she allegedly disobeyed. As recorded in my Decision, this issue was not even put to the employee in the witness box. 61 Accordingly, the Commission finds that the employer did not have reasonable prospects of success on this issue. 62 The third ground relied upon to support the dismissal, was the employee's conduct over time. The Employers Reply to the unfair dismissal application, set out single sentence statements on the alleged conduct over time. (paras (a) to (g) inclusive) 63 The termination letter of 27 August, 2008, gives no reason(s) for termination and hence there is no reference to these alleged historical incidents concerning the employee's conduct at work. 64 The Commission's Decision of 3 April, 2009, deals in detail with these alleged incidents. (paras 79 to 84 inclusive) The Commission made a finding about each of the alleged incidents (a) to (h). In summary the Commission found that none of the alleged incidents constituted a ground for dismissal. Specifically, the Commission found that the incidents constituted no ground for a dismissal or had no weight or had no evidence to support. 65 In terms of this costs claim criterion, the perspective as to the reasonable prospects of success, is not my findings but what the employer had as evidence at the time to support its dismissal. But in this case, my findings give a clear insight into what evidence existed to support these alleged incidents, at the time the employer had to consider whether it had reasonable prospects of success, concerning these alleged incidents. 66 Upon reflection of the issue now before the Commission for determination, the Commission finds that the employer did not have any evidence or where evidence existed, it was of little or no weight, or there was no ground for making the allegation - in respect of allegations (a) to (h) inclusive. This would have been known to the employer prior to the Hearing of the unfair dismissal claim.

Summary of First Ground for Costs 67 Having considered all of the evidence, the Commission finds that the employee has made out its claim, that a careful and reasonable assessment of the evidence known at the time, would have established in the employer's mind, that the prospects of success of its case was low.

Second Ground for Costs 68 The second ground claimed for costs, given the interpretation of s181(2)(c) by the Full Bench in Bankstown City Council v Paris, is that the employer exhibited conduct inconsistent with an intention to settle the unfair dismissal claim. 69 Another Full Bench decision of this Commission indicates the criterion by which it is to be determined if a party (in this case, the employer) exhibited conduct inconsistent with an intention to settle an unfair dismissal claim: Four Sons Pty Ltd v Sakchai Limsiripothong (No 2) (2000) NSWIRComm131 Thus, the Full Bench said: "Rather the evidence as to further negotiations makes plain that the appellant (that is, the employer) had no realistic intention to make an offer which was likely to settle the proceedings…" 70 In that case, the Full Bench sets out the chronology of offers by both parties and which clearly show that the employer made offers to settle in that case but which were held by that Full Bench as showing "no realistic intention" to settle. 71 In the present case, the employer made no offer to settle during the second Conciliation Conference of 25 November. The employer said on the record that it was "all ears as far as the Applicant wanting to make an offer" but the employer's solicitor advised in the same breath that "I've got no instruction at this stage to put any offer". (Tr 25/11/08-p3, line 35 to 41)

72 Towards the end of the second Conciliation Conference of 25 November, the employee's solicitor said on the record that conciliation had not been particularly satisfactory but that she would try and settle the matter when the parties exchanged some correspondence, hopefully after this conciliation. (see para 29(n) above)

This last comment by the employee's solicitor indicates that something of an offer may have been forthcoming. There was no further offer by the employee at all. 73 The employer then emphasised on the record that it was prepared to engage in further conciliation. But there was no further conciliation - no further offer or counter-offer to settle. 74 From the foregoing, the Commission finds that the employer exhibited conduct inconsistent with an intention to settle. Thus, during the time frame of the second Conciliation Conference to the Hearing, the employer made no offer to settle. To say that the employer is "all ears" is not the same as making an offer. It is merely an intention to listen rather than settle the proceedings.

To say that the employer would engage in further conciliation, is not the same as actually doing so and making an offer to settle, let alone a realistic offer to settle. As it was, the employer's solicitor made it clear that he had no instructions to settle as at the second Conciliation Conference - and no offer to settle was forthcoming then or at any time later. 75 It is not a defence to say that the employee's solicitor indicated she would try and settle the matter when the parties exchanged correspondence - and therefore the employer was awaiting some initiative from the employee's solicitor. The employer needed to step back and see the big picture as to the state of the negotiations arising out of the second Conciliation Conference: the employee had made two offers to settle and the employer had made no offer to settle. That remained the state of the negotiations until my Decision of 3 April, 2009.

Summary of Second Ground for Costs 76 Having considered all of the evidence, the Commission finds that the second ground for costs, has been made out by the employee. The employer made no offer to settle and showed no realistic intention to make an offer which was likely to settle the proceedings. Costs - The Commission's Discretion 77 The awarding of costs is a two stage process. Firstly, a party seeking costs must establish that one of the grounds contained in s 181(2)(c) has been made out.

Only if one of those grounds has been made out, does the second stage come into play. That second stage is the exercise of the Commission's discretion as to whether costs should be awarded section 181(1)(b).

The Commission has found in this costs application matter, that both grounds have been made out, and the Commission has decided to exercise its discretion to award costs. 78 The employee seeks an Order for indemnity costs (all costs incurred by the employee for the unfair dismissal proceeding). In the alternate, the employee seeks an Order for costs on a party to party basis. 79 A judgement of Wright J of this Commission sets out the relevant principles as to the application of indemnity costs: Tuholi Pty Ltd v Caltex Australia Petroleum Pty Ltd (2001) 103 IR 329 at 335 to 339. The essence of those principles, as to the application of indemnity costs, is that there must be some special or unusual feature in a case to justify a court in departing from the ordinary practice of only awarding costs on a party to party basis. The relevant principles cited by Wright J, provided an explanation of what circumstances would qualify as "special or unusual feature": for example - a party had a wilful disregard of known facts; and a party should have known that their case had no chance of success. 80 The employee put forward a number of matters to support its claim for indemnity costs being awarded. That is, these matters, it was submitted, made this case one in which there was some special or unusual feature to justify departing from the ordinary practice of only awarding costs on a party to party basis. 81 The employer opposed the granting of indemnity costs and set out its argument in its written submissions. 82 Having considered the submissions of both parties, the Commission declines to grant the indemnity costs application and will make an Order for costs on a party to party basis only. 83 One of the grounds relied upon in the employer's case, was that the employee had resigned or abandoned her employment. The Commission has held that the employer did not carry out a proper investigation as to this employer claim. Thus the employer did not know the true facts but there was not, in consequence, a wilful disregard of known facts.

84 Accordingly, the Commission rejects the employee's claim for indemnity costs. 85 The employer made a claim in its written Submissions for costs of the employee's notice of motion for costs, and that is rejected by the Commission. 86 The Commission sets out below the Order of the Commission in respect of the employee's successful application for a costs order - but on a party to party basis.

The party to party costs will apply from 26 November, 2008 (the day after the last Conciliation Conference) to and including 18 February, 2009.

The party to party costs will also apply to the costs of the preparation of the Submissions for this Decision On Costs. 87 The Commission rejects the employee's application for costs arising out of any delay in the implementation of the Commission's Decision of 3 April, 2009.

For the reasons set out above, the Commission orders that:

(a) The employer (Katungal Aboriginal Corporation Medical and Community Services) is to pay the employee's (Jeanie Marie Parsons) costs, on a party to party basis, as agreed or as assessed for all work carried out in respect to the unfair dismissal proceedings from 26 November, 2008 to 18 February, 2009 and for the preparation of the Submissions as to the employee's notice of motion for a costs application.

(b) Unless assessment of the amount of costs as provided for in the above Order is required, then the employer shall pay the costs, as ordered, within 28 days from the date of this Decision On Costs.

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