Cross v Secretary of the Department of Education

"Frivolous", "vexatious" and "without reasonable cause"

1. In Peden v Lake Macquarie Refrigeration Pty Limited [2004] NSWIRComm 66 the Full Bench considered the meaning of the word "frivolous". The Full Bench observed: "20. In light of the well established line of authority, and the ordinary meaning of the word 'frivolous', we are satisfied that an application under s 84 will be frivolous if, on its face, it cannot possibly succeed, if it is manifestly groundless or if it is a paltry or trifling matter."
2. In Operational Ambulance Officers, the Full Bench (at [33]) considered the question as to whether proceedings were brought "frivolously" by reference to whether "they were brought thoughtlessly or flippantly or…the applicants' intention in bringing the proceedings was not serious".
3. As to whether proceedings are brought "vexatiously", in Attorney-General v Wentworth (1988) 14 NSWLR 481 Roden J observed (at 491): "It seems then that litigation may properly be regarded as vexatious for present purposes on either objective or subjective grounds. I believe that the test may be expressed in the following terms: 1. Proceedings are vexatious if they are instituted with the intention of annoying or embarrassing the person against whom they are brought. 2. They are vexatious if they are brought for collateral purposes, and not for the purpose of having the court adjudicate on the issues for which they give rise. 3. They are also properly to be regarded as vexatious if, irrespective of a motive of a litigant they are so obviously untenable or manifestly groundless as to be utterly hopeless."
4. As to the phrase "without reasonable cause", in Dr A v Health District Boland AJ made the following observations: "14. In Re Operational Ambulance Officers, the Full Bench, at [31]-[32], also referred with approval to what Wilcox J said in Kanan v Australian Postal & Telecommunications Union [1992] FCA 366; (1992) 43 IR 257 at 264-265 in respect of the phrase 'without reasonable cause': 29. It seems to me that one way of testing whether a proceeding is instituted 'without reasonable cause' is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceedings, there was no substantial prospect of success. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being 'without reasonable cause'. But where it appears that, on the applicant's own version of the facts, it is clear that the proceedings must fail, it may properly be said that the proceedings lacks a reasonable cause. 15. The mere fact that an applicant was unsuccessful in its application does not, of itself, make the application frivolous or vexatious or one that is pursued without reasonable cause. Additionally, it is to be noted that s 181(2)(b) requires that in considering the applicability of the phrase 'without reasonable cause', as Wilcox J pointed out in Kanan, it is to be done 'upon the facts apparent to the applicant at the time of instituting the proceedings'."
5. A party cannot be said to have commenced a proceeding "without reasonable cause" simply because their argument proves unsuccessful: R v Moore; Ex parte Federated Miscellaneous Workers Union of Australia (1978) 140 CLR 470 at 473 (Gibbs J); Dr A v Health District at [15].
6. There is some overlap between the concepts of "frivolous", "vexatious" and "without reasonable cause": Moore v North Sydney Council at [34]; Tapia v Emibarb Pty Ltd t/as Lagoon Seafood Restaurant [2005] NSWIRComm 232 at [122]. In so far as there is a difference in meaning between "vexatious" and "without reasonable cause", the latter is the lower standard: Imogen Pty Ltd v Sangwin (1996) 70 IR 254 at 257.

Unreasonable failure to agree to a settlement of the claim

1. In Bankstown City Council v Paris the Full Bench made the following observations (at 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 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."

The parties' position in overview

1. The arguments advanced by Ms Cross in support of the Costs Application are set out in two sets of written submissions dated 14 and 25 November 2022 respectively. The Secretary also relies on two sets of written submissions, dated respectively 22 November and 9 December 2022. I will provide an overview of the parties' submissions, but I will not rehearse them at length.
2. I will assume familiarity with the Decision. However, to put the submissions into context, I observe that through the Motion, the Secretary sought an order that Ms Cross's unfair dismissal be dismissed on the following alternative grounds: 1. Ms Cross was not dismissed, but resigned from her employment on 28 March 2022. As a consequence, the Commission has no jurisdiction to hear the matter as Ch 2 Pt 6 of the IR Act applies only to the dismissal of an employee ("Ground 1"); or 2. if there was a dismissal, it occurred on 28 March 2022 when Ms Cross tendered her resignation (and not on 1 July 2022 when her employment came to an end). The unfair dismissal application was consequently made outside the 21 day period referred to in s 85(1) of the IR Act and there are no grounds under ss 85(2) or 85(3) which would warrant the Commission accepting the application out of time ("Ground 2").

Ms Cross

1. Ms Cross asserts that this case meets the tests set out in each of s 181(2)(a), (b) and (c). Her submissions traverse the basis on which the Secretary pressed Grounds 1 and 2, and the findings in respect of each in the Decision, to contend that the Motion was brought frivolously, vexatiously and/or without reasonable cause.
2. In relation to Ground 1, Ms Cross's submissions include the following contentions: 1. it was "clear and apparent" on the face of the Secretary's own evidence that Ms Cross would never have resigned at any time except that the Secretary, at all times, threatened her with dismissal; 2. the Secretary "could never have been successful" in asserting the termination was anything other than at the direction of the respondent; and 3. there were "never any reasonable prospects" of the Secretary succeeding on the Motion and it ought not to have proceeded with the jurisdictional objection.
3. In relation to Ground 2, Ms Cross submits that it was "manifestly groundless" for the Secretary to claim that she had been dismissed on the day that she tendered her resignation as opposed to the date on which the resignation took effect. She contends that "the date of termination was never arguable by reference to well and long established principles".
4. In a submission made in the alternative, Ms Cross claims that a proportionate or pro rata award of costs should be made. Her submissions of 25 November 2022 contain the following contentions: "11. Secondly, even if the Commission were to find the constructive dismissal was reasonably arguable, the date of termination was never arguable by reference to well and long established principles as set out in the Earlier Submissions and it is notable that the Respondent has not pointed to any matters of fact or law that allowed it to run this point given the facts of this case. In that case the Applicant is entitled to at least three-quarters of her costs of the Respondent's jurisdictional application, for the reasons set out further below and including that the majority of the evidence filed by the respondent went to the discretion to allow an application out of time, such as the prospects of success of the case. … 15. Further, the costs were avoidable costs within the meaning of Sangwin, in particular the costs associated with responding to evidence in relation to the discretionary matters that were only raised if the Applicant was out of time were avoidable. Indeed, the majority of the affidavit of Mr Anderson traversed the substantive merits of the case and the exhibit to his affidavit was around 500 pages resulting in significant costs being incurred by the Applicant in addressing those matters. In addition, the summonses issued by the respondent were, in the main, aimed at the discretionary matters that were only relevant if the claim was out of time. Further they could have been issued earlier by the Respondent, but were not, a factor that ultimately led to the adjournment of the first hearing date and a rescheduled hearing resulting in further costs. In addition, there was no need to cross­ examine Ms Fleet on the out of time issue. Nor the Applicant on whether she freely gave her resignation when it was apparent from her Application that she did not." (Footnotes omitted)
5. In so far as Ms Cross invokes s 181(2)(c), she relies on the second limb in Bankstown City Council v Paris referred to above, namely engaging in conduct "inconsistent with an intention to settle the proceedings on any basis that could be considered reasonable". She argues that the "taking of a baseless jurisdictional point" falls into that category.
6. Ms Cross asserts that the circumstances of the case warrant the awarding of costs on an indemnity basis. The grounds on which she relies in this regard include the contention that, in bringing the Motion, the Secretary had failed to conduct herself in accordance with the Model Litigant Policy for Civil Litigation.

The Secretary

1. In summary, the Secretary contends that a proper reading of the Decision does not support a finding that the Commission considered that the Motion had been brought frivolously, vexatiously or without reasonable cause. The Secretary argues that while the Commission had not been persuaded by the arguments that she had advanced on the Motion, the Decision demonstrated that the grounds on which she relied were only rejected after a consideration of the evidence and law. In this regard, the Secretary submitted: "28. While the Commission ultimately concluded that the evidence did not demonstrate that there were genuine negotiations between the parties, the Respondent's position was clearly arguable and required the Commission to make a factual finding by way of an orthodox application of principles and testing of evidence. Ultimately, the Respondent's application depended upon the resolution in the Respondent's favour of one or more arguable points of law, and therefore it is inappropriate to stigmatise the proceeding as being 'without reasonable cause'. … 30. In relation to the second ground set out in the Respondent's Notice of Motion, which concerned whether the Applicant's application for unfair dismissal remedy had been made within time, paragraphs 39 to 60 of the Decision also reflect that the Commission found against the Respondent only after assessing the Respondent's arguments against relevant legal principles and having regard to relevant factual matters, including the fact that the Applicant's application for unfair dismissal stated the relevant date of dismissal as 23 March 2022, which supported the relevant ground in the Respondent's Notice of Motion." (Footnote omitted)
2. The Secretary disputes that there is any basis on which the circumstances described in s 181(2)(c) would be relevant to this case.

Consideration

1. The Costs Application is premised on a number of (unstated) assumptions: that the Secretary is an "applicant", and the Motion is an "application", for the purposes of s 181(2)(a); that in filing the Motion the Secretary "instituted proceedings" within the meaning of s 181(2)(b); and, that the Motion is an "application" within the meaning of s 181(2)(c). None of these assumptions was challenged by the Secretary. Her case was that the circumstances of this case did not meet the conditions set out in those provisions.
2. To my mind, there is at least the possibility of debate as to whether, in the context of the provision as a whole, the reference to "application" in s 181(2)(c) encompasses interlocutory proceedings such as the Motion. However, as the Secretary did not take issue with the potential for that provision to apply to the Motion, and given the basis on which I have otherwise determined to dismiss the Costs Application, it is not necessary that I express any conclusions in this regard.
3. Ms Cross's submissions in support of the Costs Application are couched in strong terms as to whether the Secretary could ever have expected to succeed on the Motion. In many ways, these submissions fall into the category of equating her success in the Decision as necessarily indicative of the Motion having been brought frivolously, vexatiously or without reasonable cause. I note in this regard the observations at [14] above.
4. The contention in Ground 1 that Ms Cross was not dismissed, but resigned from her employment on 28 March 2022, was arguable. As the Secretary observed in her submissions on the Costs Application, the rejection in the Decision of Ground 1 followed an analysis of the facts and the application of relevant law to those facts. I was not persuaded by the Secretary's case in respect of Ground 1. That is not to say that there was no case to consider.
5. The Decision reveals that the arguments advanced by the Secretary in respect of Ground 1 were not dismissed out of hand. It could not be said on a proper reading of the Decision that the arguments fell within the category of cases referred to at [10]-[13] above. While I did not accept the Secretary's case, her arguments were not "so obviously untenable or manifestly groundless as to be utterly hopeless". Her success on the Motion "depended upon the resolution in [her] favour of one or more arguable points of law".
6. There were factual contentions arising in respect of Ground 2 that needed to be addressed, particularly that in her application Ms Cross had given 28 March 2022 as her date of dismissal. However, this seemed more a case of the Secretary taking advantage of an error on Ms Cross's part than advancing a cogent argument in support of Ground 2. The fact that the Decision entailed an assessment of Secretary's arguments "against relevant legal principles and having regard to relevant factual matters" does not of itself add substance to those arguments. It was necessary that the Secretary's contentions be addressed. The Decision revealed that Ground 2 rested on an exceptionally weak basis. I consider that Ground 2 was pressed without reasonable cause. I am not persuaded that it was advanced frivolously or vexatiously.
7. However, it does not follow that Ms Cross is entitled to an order for costs on the pro rata or proportionate basis for which she contends. Section 181(2)(a) allows for costs to be awarded if "the application" was frivolous or vexatious. Section 181(2)(b) refers to "proceedings" that are instituted without reasonable cause. The language of these provisions does not readily allow for an apportionment of costs between the grounds on which the application or proceedings are brought, based on whether those grounds are separately to be regarded as having been advanced frivolously, vexatiously or without reasonable cause.
8. That is, to pass the gateways in s 181(2)(a)-(c), it would seem to be necessary that the application or proceedings, as the case may be, must be capable of being impugned in their entirety. If a ground is advanced that is at least arguable and which would, if accepted, allow the Commission to grant the relief sought, I do not see how "the application" could be frivolous or vexatious or how the "proceedings" could be said to have been instituted without reasonable cause. In the present case, had Ground 1 been resolved in the Secretary's favour, Ms Cross's unfair dismissal application would necessarily have been dismissed. Ground 2 only came to be considered if Ground 1 failed.
9. Ms Cross's submissions in support of a pro rata award of costs are premised on the Commission finding that Ground 1 "was reasonably arguable": see par 11 of Ms Cross's submissions reproduced at [22] above. On that premise, the Motion itself cannot be said to have been brought entirely frivolously, vexatiously or without reasonable cause. Consequently, I do not consider that costs could be awarded on the proportionate basis sought by Ms Cross.
10. The observations that I have already made in large part address the question as to whether costs should be awarded on the basis that the Secretary had "unreasonably failed to agree to a settlement of the claim". The Motion, whilst unsuccessful and certainly in so far as Ground 1 is concerned, did not involve the taking of a "baseless jurisdictional point". For that reason, I do not accept Ms Cross's contention that in bringing the Motion the Secretary was engaging in conduct inconsistent with an intention to settle the proceedings on any basis that could be considered reasonable.
11. Further in this regard, there is no evidence before me as to the settlement positions of either of the parties. There is no basis on which I could find that either party was amenable to settlement on a basis "that could be considered reasonable".
12. For all of these reasons, I am not persuaded that the tests required by s 181(2) have been met in this case. It follows that it is unnecessary to explore whether I should exercise the discretion to award costs conferred by s 181(1), including whether costs ought to be awarded on an indemnity basis.
13. I order that the Costs Application be dismissed. Damian Sloan Commissioner

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 December 2022