Fair Work Act 2009_

s.394 - Application for unfair dismissal remedy

[1] On 7 April 2015 I issued a decision which dealt with an application for an unfair dismissal remedy made by Mr G Camille (the applicant) pursuant to section 394 of the Fair Work Act 2009 (the Act). In that decision I determined that the applicant had been unfairly dismissed by Berala on the Park HR Pty Ltd trading as Berala on the Park (Berala or the respondent). I also determined that I should award a remedy and ordered an amount of compensation of $14,249.56 gross which represents 13 weeks' pay. The order was made on 16 April 2015.

[2] On 15 April 2015 Berala made an application for orders for costs against both the applicant and his legal representative. The application in respect of the applicant is made under section 400A of the Act and the application against the legal representative is made under section 401(1A)(a) and (b). The application was made within the 14 day period required by section 402.

[3] Directions were issued for the filing and exchange of evidence and submissions and the matter was heard on 29 September 2015.

[4] The application in large part relies on the dealings between the parties prior to the arbitration of the matter and, in particular, the applicant's failure to accept settlement offers made by Berala. In order to understand the submissions it is necessary to set out the relevant chronology which, as I understand it, is largely agreed.

[5] The applicant's claim was filed on 22 September 2014. At point 2.1 of the claim the applicant stated that he was seeking reinstatement. On 30 October 2014 Berala entered into contracts for the sale of the aged care facility at which the applicant had been employed. This is dealt with at paragraph 53 of my earlier decision.

[6] A conciliation conference was held by a Fair Work Commission (FWC) Conciliator on 25 November 2014 but the matter did not settle. On 5 December legal counsel for the new owner of the facility sent correspondence to the applicant's legal representative noting that its staffing requirements were satisfied and that it would be unable to offer employment to the applicant. The sale of the business took effect on 10 December 2014. These issues are dealt with at paragraph 54 of the earlier decision.

[7] On 12 December 2014 the applicant's material for the arbitration was filed and served. In correspondence dated 14 January 2015 Berala's then legal representatives put an offer of settlement to the applicant. The correspondence is marked as being without prejudice save as to costs. It is at Tab 12 of the applicant's folder of documents and also at pages 2 and 3 of Annexure A to the witness statement of Mr Sheargold, Exhibit Respondent 25.

[8] The offer referred to in the previous paragraph was for the payment of an amount of money to the applicant and requirements that the applicant discontinue his claim and the parties enter into a deed of release. That deed was to include terms of confidentiality, mutual non-disparagement and mutual release save as to claims under relevant workers' compensation legislation and claims alleging fraud or criminal conduct on the applicant's part. The applicant's release was expressed to be in respect of Berala, related bodies corporate, directors and employees etc.

[9] On 15 January 2015 the applicant rejected the above offer, Tab 13 of the applicant's folder and page 4 of Annexure A to Mr Sheargold's statement.

[10] On 16 January 2015 Berala's then legal representative made a further offer of settlement. This is at Tab 14 of the applicant's folder and pages 5 and 6 of Annexure A to Mr Sheargold's statement.

[11] The monetary amount of this offer was $27,300 gross which was said to represent 26 weeks' earnings and the maximum compensation which the applicant could be awarded if successful in his claim. The other suggested terms were the same as in the previous offer. The correspondence put the applicant on notice that, if the matter proceeded to arbitration, a costs application would be made by Berala.

[12] This offer was expressed as being open until 5pm on the same day, 16 January. Following discussions between the respective legal representatives Berala agreed to extend the offer until 5pm on 19 January 2015. It is unclear whether this offer lapsed at that time or whether it was expressly rejected by the applicant.

[13] On 19 January 2015 Berala engaged new representatives. In correspondence dated 23 January the new representatives invited the applicant to make a settlement offer by 4pm that day, Tab 18 of applicant's folder. The applicant's representative responded noting that the conditions of Berala's previous offers were not reasonable and that, if they had not changed, the applicant rejected them.

[14] The letter noted that the applicant's refusal to make an offer did not mean he was not open to settlement discussions. It also noted that any settlement could only be on the basis of Berala's "willingness and genuineness to settle the matter on the basis of justice and fairness".

[15] As with the arbitration of the substantive application, the applicant was represented in the costs hearing by Mr Vuong, solicitor and the respondent by Mr Boyce of counsel.

[16] Berala provided a written outline of submissions and submissions in reply. Mr Boyce made oral submissions.

[17] As noted earlier, Berala has made its claim against the applicant under section 400A of the Act and against the applicant's representative under section 401(1A). Several submissions are made in relation to each part of the claim.

[18] Berala submits that the applicant's rejection of its offer of 16 January 2015, or alternatively allowing that offer to lapse, was an unreasonable act or omission within the meaning of section 400A. It submits that it is well established that a failure to accept a reasonable offer of compromise may amount to an unreasonable act for the purposes of section 570(2) of the Act: Melbourne Stadiums Ltd v Saunter [2015] FCAFC 20 @ 166 and Tsilibakis v Transfield Services (Australia) Pty Ltd [2015] FCA 1048. It notes that the relevant test is the same under that section as under section 400A.

[19] Berala submits that the question of whether the applicant's act or omission in not accepting its offer was unreasonable is to be determined on an objective basis. It also submits that the question is to be decided having regard to the particular circumstances of the case: Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879; (2007) 162 FCR 392 @ paras 27/8. It says there are five factors which are relevant to such an exercise.

[20] The first is whether there was sufficient time provided for consideration of the offer and the second, whether the offeree had adequate information in order to make a decision. Berala notes that the only difference between the offers of 14 January and 16 January was the monetary amount. It submits that this, together with its agreement to keep the second offer open until 19 January, provided the applicant with sufficient time. It also submits that, from the date of his receipt of the letter referred to at paragraph 6 above, the applicant had been aware that reinstatement was not possible. As of 16 January he knew that 26 weeks was the maximum amount of compensation which could be awarded at arbitration.

[21] The third factor is whether the conditions in the offer were reasonable. Berala submits that its suggested conditions were standard clauses. It notes that there was no suggestion that the applicant had been engaged in any fraudulent activity and further notes that any such deed could not circumvent criminal claims in any event. Berala also notes that nothing was put to it by the applicant as to why any of the proposed clauses were unreasonable.

[22] The fourth factor is the prospects of success of the applicant's case. Berala submits that "prospects of success" in this instance concerns the applicant's chance of obtaining a monetary award from the arbitration greater than the offer. It submits that the legislative cap prevented such an outcome.

[23] The fifth factor relates to public policy considerations as to the settlement of litigation. Reference is made to the decision in Leichhardt Municipal Council v Green [2004] NSWCA 341 @ paras 11-14. Berala submits similar considerations are relevant to unfair dismissal proceedings.

[24] Berala submits that there is no doubt that the applicant's failure to accept the offer caused it to incur costs as, up until that time, it had not expended money preparing for the arbitration. Its costs are set out in Annexure C to Exhibit Respondent 25.

[25] In its claim under section 401(1A) Berala submits that "prospects of success" is to be read through the prism of its offer rather than in a global sense. It submits that the test is an objective rather than subjective one: Baker v Salva Resources Pty Ltd [2011] FWAFB 4014 @ para 10. Berala submits that, in this case, the application was manifestly untenable as it was not possible for the applicant to have obtained more than the amount of the offer.

[26] Berala refers to the Legal Profession Uniform Law Application Act 2014, an Act of the New South Wales Parliament, and in particular to section 62 and Schedule 2 thereof which deal with costs in civil claims where there are no reasonable prospects of success. Berala submits that these provisions are analogous to the considerations in this limb of its claim.

[27] It notes that there had been no evidence from the applicant or his representative to demonstrate that the representative encouraged the applicant to settle. Berala submits this should lead to a conclusion that the representative had encouraged the applicant to continue the matter. It also submits that it should have been reasonably apparent to the applicant and his representative that he had no prospect of success greater than what had been offered.

[28] Berala submits that the representative's action was unreasonable and caused Berala to incur costs.

SUBMISSIONS ON BEHALF OF THE APPLICANT AND THE APPLICANT'S LEGAL REPRESENTATIVE

[29] An extensive written outline of submissions was provided prior to the hearing on 29 September and further material was tendered at that time. Mr Vuong also made oral submissions. In large part the submissions are common in response to both parts of Berala's claim.

[30] It is submitted that Berala's case is without any proper foundation and is based on its confusion between the regime dealing with costs under the Act and that which applies in a commercial jurisdiction. It is argued that Berala's letters of offer are akin to offers of compromise under the Uniform Civil Procedure Rules 2005 (UCPR) and are different to the terms of settlement which are envisaged under sections 400A and 401 of the Act. It is submitted that the latter are formal documents reflecting the agreed outcome of a conciliation conference. There was no such outcome in this matter and consequently there could be no terms of settlement.

[31] It is submitted that the concepts of offers of compromise and the UCPR regime are only for litigation in relevant courts and are not appropriate for matters before the FWC.

[32] It is submitted that Berala's submissions concerning "reasonable prospects of success" are misguided in that they focus on money whereas section 390 of the Act makes it clear that compensation is only relevant if there has been a finding that reinstatement is inappropriate. The question of whether an application has reasonable prospects of success is to be answered by having regard to the likelihood or otherwise of a decision that the dismissal was harsh, unjust or unreasonable rather than the possible remedy which might follow from such a decision.

[33] The fact that the decision of 7 April 2015 was in the applicant's favour demonstrates that his claim was not speculative but had real substance. It is submitted that the applicant needed to robustly fight his dismissal in order to restore his reputation and dignity. The claim is said to have been a matter of life and death to the applicant and it would not have been appropriate for his representative to have interfered in his right to pursue his matter.

[34] The applicant and his representative submit that it was an abuse of process for Berala to have made an offer of 26 weeks' compensation when it did rather than using the conciliation process to attempt to resolve the matter. It is further submitted that the suggested settlement put by Berala would not have been a just outcome in the circumstances.

[35] It is submitted that Berala's actions in responding to the claim and its non-compliance with the Rules of the Fair Work Commission and directions issued in the matter indicated a lack of respect towards the tribunal. It is further submitted that Berala had not complied with the order of 16 April 2015.

[36] Several submissions are made about the offer of compromise in addition to those already outlined above about its flawed foundation. It is submitted that the time for acceptance of the offer was not reasonable. Further, at the time the offer was made Berala's then legal representatives had not filed a notice of commencing to act and consequently the applicant was not aware whether the offer was properly authorised.

[37] It is submitted that the offer was internally illogical. Berala had maintained that it would successfully defend the applicant's claim yet had offered an amount of $27,300 to settle it.

[38] It is submitted that the proposed offer was not just or reasonable. Berala had failed to inform the applicant that there was no possibility of reinstatement and the offer contained threatening statements that costs would be sought regardless of the outcome of any arbitration.

[39] It is also submitted that the offer itself was both illegal and unethical. It was made with an ulterior motive and for the collateral purpose of preventing information about the running of the facility being brought into evidence.

[40] It is submitted that, contrary to Berala's position, the applicant had consistently indicated that he was seeking reinstatement as he wanted to serve out his 50 years in his profession and retire with honour. It was not unreasonable that he continue to pursue his application to achieve such a result, to clear his name and restore his standing in the community.

[41] It is also submitted that there were, in effect, public policy reasons for it being reasonable for the applicant to pursue his claim. These included the interests of employees in the aged care industry as well as the Department of Health and the general public.

[42] It is noted that the default position under the Act is for parties to bear their own costs. This is to be disturbed only if there is clear evidence of unreasonable conduct which is not the situation in this matter.

[43] Berala's submissions as to the evidence, or lack thereof, of the representative's encouragement to settle should be rejected. It is submitted that encouragement requires a positive act on the part of a representative not just an absence of discouragement.

[44] The applicant and his representative relied upon several cases in support of their submissions: Church v Eastern Health t/as Eastern Health Great Health and Wellbeing [2014] FWCFB 810; Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322; Brazilian Butterfly Pty Ltd v Charalambous (PR968915); Bradshaw v BHP Coal Pty Ltd [2014] FWC 4871; SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323; Dodds v Premier Sports Australia (No 2) [2004] NSWSC 389; Khammaneechan v Nanakhon Pty Ltd [2011] FWA 651 (Khammaneechan); Selcuk v Maddison & Associates Pty Ltd [2015] FWC 3965; and, Attorney-General v Wentworth (1988) 14 NSWLR 481.

[45] It is submitted in conclusion that Berala's applications should be dismissed and the applicant and his representative be awarded costs on the basis that Berala's claims are frivolous and vexatious.

● Berala agreed to extend the time for the acceptance of the offer of 16 January and the applicant did not ask for further time;

● There have been no suggestions that the applicant had any other claim against Berala which may have caused the proposal of a mutual release to be unreasonable;

● There were no submissions by the applicant at the substantive hearing which urged reinstatement as a remedy;

● The applicant's right to robustly pursue his claim falls away in the face of an offer of 26 weeks;

● There is no evidence or any indication in the correspondence that the reason for the applicant's rejection of the offer was his desire to clear his name. In any event the findings of this tribunal are not relevant to matters being dealt with in other forums such as the Health Complaints Commission;

● This case is an exceptional one where costs should be awarded.

[47] As indicated earlier in this decision the application for costs against the applicant is brought under section 400A of the Act. That section is as follows:

"(1) The FWC may make an order for costs against a party to a matter arising under this Part (the first party) for costs incurred by the other party to the matter if the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter.

(2) The FWC may make an order under subsection (1) only if the other party to the matter has applied for it in accordance with section 402.

(3) This section does not limit the FWC's power to order costs under section 611."

[48] In its decision in Roy Morgan Research Ltd v Baker [2014] FWCFB 1175 a Full Bench provided a detailed analysis of the provisions of section 400A and similar provisions in predecessor legislation. I adopt and follow the approach of the Full Bench in dealing with the present application.

[49] In this matter the unreasonable act or omission which is complained of is said to be the applicant's failure to agree to the offer of settlement put by Berala's then representatives on 16 January 2015 in circumstances where the amount of compensation which could be awarded is capped at the amount contained in the offer.

[50] In many instances where an offer of settlement is equal to the statutory maximum failure to accept such an offer may be considered to be an unreasonable act or omission. However each case turns on its own facts and this one contains particular and unusual circumstances such that I do not consider the applicant's actions, or omissions, in relation to the conduct or continuation of his claim to be unreasonable.

[51] As will be apparent from my decision of 7 April 2015 the applicant's dismissal followed from a very serious allegation concerning his conduct towards an elderly dementia patient who, at the relevant time, was in his care. As a consequence of the allegation, the applicant has been facing an ongoing investigation by the New South Wales Health Care Complaints Commission (HCC) as well as restrictions being placed upon his professional registration as an Enrolled Nurse.

[52] In my earlier decision I found that, on the basis of what was before me, it was highly unlikely that the applicant had behaved in the manner alleged. I accept that this finding is not binding on the HCC or on the Nursing and Midwifery Council of New South Wales which is dealing with the applicant's professional registration. Nevertheless it is a finding on the public record which may be of relevance in those forums.

[53] In the circumstances I do not consider that the applicant's obvious desire to restore his professional reputation and standing could or should be discounted simply because he could not obtain a greater award of compensation than that which was on offer.

[54] It is true that reinstatement was not strongly pressed during the arbitration of the substantive application. However, it had been sought initially and submissions on the applicant's behalf were that he should be reinstated so that he could serve out 50 years in his profession and retire with dignity. Nevertheless, it appeared to be accepted that, because of the sale of the business and related issues, by the time of the arbitration reinstatement was not practicable. In my view, in the light of the unusual circumstances of this case, this does not render the applicant's failure to agree to the settlement proposal unreasonable.

[55] I reject the application for costs against the applicant on the basis of there being no unreasonable act or omission on his part in connection with the conduct or continuation of his claim.

[56] The application for costs against the applicant's legal representative is brought under both section 401(1A)(a) and (b). Those provisions are as follows:

"(1A) The FWC may make an order for costs against the representative for costs incurred by the other party to the matter if the FWC is satisfied that the representative caused those costs to be incurred because:

(a) the representative encouraged the person to start, continue or respond to the matter and it should have been reasonably apparent that the person had no reasonable prospect of success in the matter; or

(b) of an unreasonable act or omission of the representative in connection with the conduct or continuation of the matter."

[57] It should be noted that the prerequisites in subsection (1) of section 401 are made out.

[58] There are two limbs to paragraph (a) of subsection (1A). The first is that the representative encouraged the applicant to, in this case, continue the matter. The second is that it should have been reasonably apparent that the applicant had no reasonable prospect of success in the matter.

[59] I note the provisions of the Legal Profession Uniform Law Application Act 2014 relied on by Berala in its submissions and comments in the Full Bench decision in Livingstones Australia v ICF (Australia) Pty Ltd T/A I C Frith & Associates [2014] FWCFB 1276 about the responsibilities and ethical duties of lawyers and paid agents. Nevertheless, I agree with the conclusion of Bartel DP in Khammaneechan that the phrase "encouraging a person to … continue … the matter" requires a positive act on the part of a representative not merely an absence of discouragement.

[60] There is no evidence that Mr Vuong encouraged the applicant to continue with his claim after receipt of the 16 January offer. I consider that the first limb of paragraph (a) has not been made out. It follows that I do not need to consider the second limb. However for abundant caution I shall do so.

[61] As noted earlier Berala submits that "prospect of success in the matter" relates to the possible remedy and the applicant's prospect of obtaining more by way of an order for compensation than it had offered. I consider that the phrase has a wider meaning than the monetary amount which may be awarded. In this case the applicant achieved a finding that he had been unfairly dismissed and a further finding that it was highly unlikely that he had engaged in the alleged serious misconduct. In the circumstances of this particular case that was success for the applicant. I reject the application against Mr Vuong under paragraph (a).

[62] I also reject the claim insofar as it is made under paragraph (b). As with its claim against the applicant, Berala submits that the unreasonable act or omission is the failure to agree to its offer. I reject this submission for the same reasons as set out at paragraphs 49-55 above.

[63] The application for costs against both the applicant and his legal representative is dismissed.

[64] As noted in paragraph 45 above, there was a suggestion by the applicant's representative that Berala's claim was frivolous and vexatious. It should be noted that, although I have dismissed Berala's claim, I do not consider it was frivolous or vexatious. If it was not for the very particular circumstances of this case a claim such as this may very well have been granted.

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