D & R Commercial Pty Ltd and Flood (No 2) [2003] NSWIRComm 237

Industrial Relations Commission (NSW)|2003-07-01|Before: Wright J, Walton J, Peterson JJ

CITATION : D & R Commercial Pty Ltd and Flood (No 2) [2003] NSWIRComm 237 APPELLANT D & R Commercial Pty Ltd PARTIES : RESPONDENT Kathleen Margaret Flood FILE NUMBER: IRC 3169 of 2001 CORAM: Wright J President; Walton J Vice-President; Tabbaa C Practice and procedure - Costs - Appeal - Unfair dismissal - Appellant partially successful in unfair dismissal appeal - Leave to appeal granted - Appeal upheld in part - Whether costs order to be made in favour of respondent employee - Whether "gateway" to costs order opened - Resulting discretion - Exercise of discretion - No costs order made.

Costs - Practice and procedure - Appeal - Unfair dismissal - Appellant partially successful in unfair dismissal appeal - Leave to appeal granted - Appeal upheld in part - Whether costs order to be made in favour of respondent employee - Whether "gateway" to costs order opened - Resulting discretion - Exercise of discretion - No costs order made. CATCHWORDS : Appeal - Practice and procedure - Costs - Unfair dismissal - Appellant partially successful in unfair dismissal appeal - Leave to appeal granted - Appeal upheld in part - Whether costs order to be made in favour of respondent employee - Whether "gateway" to costs order opened - Resulting discretion - Exercise of discretion - No costs order made.

Unfair dismissal - Practice and procedure - Costs - Appeal - Appellant partially successful in unfair dismissal appeal - Leave to appeal granted - Appeal upheld in part - Whether costs order to be made in favour of respondent employee - Whether "gateway" to costs order opened - Resulting discretion - Exercise of discretion - No costs order made. Industrial Relations Act 1996 s 89 s 181 LEGISLATION CITED : Industrial Relations Commission Rules 1996 rule 213 Suitors' Fund Act 1951 s 6

Bankstown City Council v Paris (1999) 93 IR 209 CGEA Transport Ltd t/as Southtrans v Transport Workers' Union of Australia (2001) 110 IR 211 Clarence v Electricity Commission of New South Wales (1990) 20 NSWLR 1 D & R Commercial Pty Ltd and Flood (2002) 113 IR 344 Four Sons Pty Limited v Sakchai Limsiripothong (No 2) (2000) 100 IR 400 CASES CITED : Kelly v Foley (1993) 51 IR 331 Metropolitan Meat Industry Board v Australasian Meat Industry Employees' Union, New South Wales Branch [1973] AR (NSW) 231 Moama Bowling Club Ltd v Armstrong (No 2) (1995) 64 IR 264 Nordby v Barclays Australian Investment Services (No 2) (1994) 53 IR 342 Public Service Association of New South Wales and Department of Corrective Services (unreported, Hill and Peterson JJ and Murphy CC, 9 December 1994) Reid v Sydney County Council (1994) 35 NSWLR 719 Van Huisstede v Commissioner of Police (No 2) (2001) 106 IR 56, HEARING DATES: DATE OF JUDGMENT: 07/31/2003

APPELLANT Mr D D Knoll of counsel Marsdens, Solcitors (Mr Grant Butterfield) LEGAL REPRESENTATIVES: RESPONDENT Ms M A Kumar of counsel Walsh & Blair, Lawyers (Mr Tim Abbott)

FULL BENCH CORAM: WRIGHT J, President WALTON J, Vice-President TABBAA C Thursday 31 July 2003

D & R COMMERCIAL PTY LTD AND KATHLEEN MARGARET FLOOD

Application for leave to appeal and appeal against a decision of Commissioner Cambridge given on 11 April 2001 in Matter No IRC 3539 of 2000

DECISION OF THE COMMISSION [2003] NSWIRComm 237

1 The genesis of these proceedings was the application for leave to appeal and the appeal by the appellant, D & R Commercial Pty Ltd, against the decision and orders of Cambridge C given on 11 April 2001. The proceedings at first instance concerned an application brought pursuant to s 84 of the Industrial Relations Act 1996 by the respondent, Kathleen Margaret Flood, alleging that her dismissal by the respondent was harsh, unreasonable or unjust. Cambridge C had held that the dismissal was harsh, unreasonable and unjust and made consequential orders under s 89 of the statute. 2 The decision on the appeal is now reported: see D & R Commercial Pty Ltd and Flood (2002) 113 IR 344. The background to the proceedings are sufficiently set out in the opening paragraphs of the decision as follows: 2 The appellant conducted a real estate agency business in which the respondent was formerly employed as a real estate property officer. She had been employed by the appellant for some nine months prior to her being dismissed orally. On 30 June 2000, the appellant informed the respondent that her employment was to be terminated. One week's notice was given. The reasons given alleged, essentially, that she had been guilty of misconduct warranting dismissal. Three reasons were provided: the respondent had received six bottles of wine from a client for the provision of professional services free of charge by the appellant; the respondent's use of the appellant's work telephone for personal calls; and generally unsatisfactory behaviour which included denigrating the employer's business to clients and tradespeople and acting in a rude and abusive manner. 3 The application for relief was filed by the respondent on 20 July 2000. It was claimed that the dismissal was harsh, unjust and unreasonable as the decision to dismiss was made without the respondent having been given any warning nor an opportunity to respond to the reasons given; that the reasons for dismissal were not valid; and finally that the notice provided was not reasonable given her age and medical condition. 4 The application proceeded for conciliation on 18 August 2000 before Commissioner Cambridge . Conciliation proved unsuccessful and the matter proceeded to arbitration. The commissioner issued his decision on 11 April 2001 in which he found the dismissal to be harsh, unreasonable and unjust, and that reinstatement would be impracticable. He made consequential orders requiring the appellant to pay to the respondent an amount of $13,455 representing 23 weeks of the respondent's pre-dismissal remuneration. 5 There are two issues requiring determination on appeal. The first is the extent to which a Member of the Commission may have regard to statements made in conciliation proceedings, in subsequent arbitration proceedings presided over by that Member. The second relates to the extent to which a Member of the Commission is required to bring to the parties' attention, observations against the interest of a party on which the member intends to base relevant crucial findings. 3 As was noted in the decision of the Full Bench, the misconduct relied upon in the proceedings before the Commissioner was somewhat different to that identified at the time of dismissal. The misconduct ultimately relied upon centred around two issues. The first related to the alleged fraudulent production of payslips to assist in obtaining a loan and the second, to the production of lease documents for clients of the appellant at no charge and for which the respondent was said to have received a few bottles of wine. The Commissioner found against the appellant on both issues. As to the latter issue, the "lease fee work issue", the Commissioner relied upon certain matters disclosed in the conciliation conferences prior to proceeding to arbitration. The matters raised in conciliation were relied upon by the Commissioner in assessing the credit of one of the appellant's principal witnesses, Mr Raw. It was this reliance which was the subject of appeal (we note that the findings as to the payslips issue was not the subject of appeal). The appellant's challenge to the decision was essentially on three bases: the manner in which the Commissioner dealt with the evidence of Mr Raw relating to the provision of the lease documents, the findings of unfairness which flowed from that finding and the basis of the monetary orders. 4 In granting leave to appeal, the Full Bench made the following observations: 33 This appeal raises the proper manner in which a Member of this Commission should conduct an arbitration in proceedings under Part 6 of Chapter 2 of the Act alleging unfair dismissal. It also raises the question as to the regard which may be paid to matters raised in conciliation prior to arbitration and whether notions of fairness require members when sitting as the Commission to act in accordance with the rule of procedural fairness referred to as the rule in Browne v Dunn. Applications under the unfair dismissal provisions provide a significant proportion of the work of the Commission. We consider that the appeal raises matters of sufficient importance as to warrant the grant of leave to appeal. 5 The Full Bench, referring to Public Service Association of New South Wales and Department of Corrective Services and Anor (unreported, Hill and Peterson JJ and Murphy CC, 9 December 1994) and Kelly v Foley (1993) 51 IR 331, held that the Commissioner had erred, holding: 41 In this case, the commissioner plainly relied on matters disclosed in conciliation proceedings for the purposes of assessing the credit of Mr Raw. We consider that he thereby erred. The effect of this error will, however, consistent with the approach in Kelly v Foley, ultimately turn on whether the consideration of that material was such as to require appellate intervention, or the extent to which such intervention may be necessary. This will be considered in more detail subsequently. 6 As to the alleged denial of procedural fairness, said to have arisen from the Commissioner's failure to put the appellant on notice that the perceived inconsistency in the evidence of Mr Raw was going to be taken into account in the assessment of his credit, the Full Bench referred to CGEA Transport Ltd t/as Southtrans v Transport Workers' Union of Australia (2001) 110 IR 211 and other authorities, finding that the appellant had been denied procedural fairness, and said: 51 Whilst the Commission may inform itself on any matter before it in any manner it thinks just (see for example s 163(1)), and in so doing is not bound by the rules of evidence, the Commission must act according to "equity, good conscience and the substantial merits of the case". It was not open to the commissioner to take into account the perceived inconsistency arising from the conciliation proceedings without having put the parties on notice and allowing them an opportunity to deal with the matter. The Commission's obligation is to ensure that procedural fairness is accorded to the parties in the conduct of proceedings before it. It required the commissioner to put to the appellant his observations as to matters outside of the "legal evidence" which were said to ground an inconsistency so as to permit the appellant to respond to such matters. We note that this conclusion does not depend on the rule in Browne v Dunn which we consider is not applicable in the determination of this matter. 7 The issue then became whether the denial of procedural fairness relevantly affected the decision so as to warrant the intervention of the Full Bench on appeal. The conclusion of the Full Bench is in the following terms: 54 We consider that the denial of procedural fairness in this matter warrants appellate intervention. It is plain that the error affected the decision at first instance. It is also clear that the removal of that procedural unfairness would affect the result at first instance. It is, therefore, necessary to consider the effect the errors had on the disposition of the matter below and the way in which the matter should be dealt with on appeal: see, for example, Price v Box Valley Pty Ltd (1999) 90 IR 480 at 485. 55 Despite the findings made in favour of the appellant's submissions, we do not, however, consider that it is appropriate to set aside the decision in whole and to remit the matter for redetermination. Rather, we consider that the commissioner's finding that the dismissal was harsh, unreasonable or unjust is still available, albeit on a somewhat different basis. Having established appellable error warranting intervention, the general principle is that an appellate tribunal may be in as good a position as the trier of fact to decide the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings made. In deciding what inferences are to be drawn, the appeal body will give due weight to the conclusions at first instance, and, having reached its own conclusion, should not shrink from giving effect to it: for example, Burge at 327 - 328 in [7] and cf Warren v Coombes (1978) 142 CLR 531 at 551. 56 Having regard to the above findings of error, the situation which arises, is as follows. The claim by the respondent, successful at first instance, alleged that her dismissal was harsh, unreasonable or unjust on the basis of both procedural and substantive grounds. The appellant, at first instance, conceded (appropriately in our view) that the dismissal of the respondent occurred in a manner which denied her procedural fairness. The appellant resisted the claim by submitting that any procedural unfairness would be overcome by considerations of the dismissal having been warranted on the basis of alleged misconduct. The misconduct alleged was essentially the issues earlier identified as to the lease fee work issue and that relating to payslips. At first instance Cambridge C found that the appellant had not been guilty of misconduct as to either matter. The finding in respect of the second issue has not been challenged on appeal. 57 The appellant submits that the finding as to the lease fee work issue was plainly the most significant matter relied upon by the commissioner in making the finding that the dismissal was substantively unfair. The finding against the credit of Mr Raw, made as the result of error, was the basis of the commissioner's rejection of the alleged misconduct. The finding against credit was an important part of the consideration, which led to the rejection of the most significant misconduct allegation. The finding of unfair dismissal is therefore affected accordingly. 58 However, the appellant conceded both at first instance and again on appeal that the dismissal of the respondent was procedurally unfair. Indeed, on appeal counsel for the appellant, quite properly in our view, conceded that it was open for the Full Bench to find that the dismissal was harsh, unreasonable or unjust on the basis of procedural unfairness alone, although he strongly urged the Full Bench not to adopt that course. 59 That the adoption of an unfair process when making a decision to dismiss an employee may be the foundation for a finding of harsh, unreasonable or unjust is plain: see, for example, Antonakopoulos v State Bank of New South Wales (1999) 91 IR 385 and Wilson v Department of Education and Training . In our view, in the circumstances of this case, the failure to provide the respondent with an opportunity to respond to the allegations levelled against her was enough to warrant the dismissal being considered unreasonable and unjust. 8 The Full Bench also held, at [60], that dismissal was too harsh a penalty; referring to Metropolitan Meat Industry Board v Australasian Meat Industry Employees' Union, New South Wales Branch [1973] AR (NSW) 231. 9 The third and final matter raised by the appellant related to the quantum of the monetary orders. The decision of the Full Bench on this issue is to be found at [63] - [67], as follows: 63 Section 89 provides that where reinstatement is considered impracticable the Commission may order the payment of compensation " not exceeding the amount of remuneration of the applicant during the period of 6 months immediately before being dismissed". Section 89(6) provides for matters which the Commission "is to take into account" when determining the amount of compensation. The provision is expressed in mandatory language and requires there be taken into account in assessing compensation "whether the applicant made a reasonable attempt to find alternative employment and the remuneration received in alternative employment, or that would have been payable if the applicant had succeeded in obtaining alternative employment". 64 The power in the Commission to make a money order, subject to the limitation on the quantum of compensation and the matters required to be taken into account by s 89(6), is nevertheless within the Commission's discretion. Whilst the Commission is required to take into consideration the matters identified in s 89(6), those matters are not necessarily to be reflected in any particular, arithmetic or definitive way in the money order for compensation made. We would thus accept the submissions of the respondent to the extent that it was contended that the way in which, and the extent to which, those matters are in fact taken into account is ultimately a matter of discretion in the circumstances of the instant case. See, for example, the decision of the Full Bench in Sunny Queen Limited t/as Australian Quality Egg Farms v Reilly [2000] NSWIRComm 1128. 65 However, in the present circumstances, we accept the appellant's submission that it was not appropriate in the circumstances to make an order requiring the payment of 23 weeks remuneration. The respondent was dismissed from her position as a property consultant on 30 June 2000. The respondent's evidence at first instance was that she had obtained employment on 24 August 2000, some seven weeks after her dismissal by the appellant, with another real estate agent as a property manager. That employment was at a rate approximately $85 per week less than the rate she was receiving with the appellant. Due to the location of that agency the respondent sought other employment closer to home. The position she was then able to obtain, some two months later in November 2000, was with yet another real estate agency as a receptionist. Her remuneration in this position was again some $85 per week less than that received through her employment with the appellant. The respondent continued in that employment. 66 The commissioner's order was premised on a finding that the respondent "would have likely enjoyed many years further employment with the employer". This finding has not been challenged on the appeal and we consider it was open and thus an appropriate basis on which to found our orders. Indeed, having assumed that it failed on its primary submissions and that the finding of harsh, unreasonable or unjust was not disturbed by the Full Bench, the appellant conceded that the respondent ought be entitled to payment in an amount of $6,163. That figure approximates an amount that would have been received during the respondent's initial period of unemployment, had she remained employed with the appellant, and an amount equivalent to the difference between the remuneration received in her new employment and that received whilst employed by the appellant, for the period of six months following the dismissal. Section 89(5) does not, however, limit the compensation which may be awarded to the six month period after the employment is terminated. The provision limits the amount of money that may be ordered to a maximum sum calculated by reference to the payment "not exceeding the [respondent's] remuneration during the period of 6 months immediately before being dismissed". 67 We consider that in view of the unchallenged findings referred to, particularly those in relation to the likely longevity of the respondent's employment with the appellant and the respondent's continuing loss of earnings, the amount of $9,000 should be substituted for that awarded by Cambridge C. 10 The Full Bench granted leave to appeal and upheld the appeal to the extent identified in the decision. The orders of Cambridge C were varied to require the appellant to pay to the respondent an amount of $9,000 within 14 days. 11 Our decision on the appeal has been referred to in the way it has to show that both the appellant and the respondent had a measure of success on the issues that were raised in the appeal. 12 When the decision was delivered, the respondent foreshadowed an application for costs. The respondent was given leave to make an application for costs and directions were made for the filing of submissions in the event an application was made. The application filed sought orders in the following terms: 1. The appellant D & R Commercial to pay the respondent's costs of the application to extend time to appeal 2. Appellant to pay respondent's costs of the appeal pursuant to s 181(2)(c) 3. In the alternative to order (2), Appellant to pay respondent's costs of appeal from 7 September 2001 to date and the respondent is provided with a certificate under the Suitors' Fund Act 1951 for the costs incurred from 18 May 2001 to 6 September 2001. The grounds and reasons for the motion identified that the first order was being sought in reliance upon rule 213 of the Commission's rules; the second order on the basis of s 181(2)(c) of the statute and the third order on the basis of a Calderbank letter and the Suitors' Fund Act 1951. 13 The affidavit in support of the motion was sworn by the solicitor with the conduct of the matter. The affidavit includes evidence of an offer of settlement having been made by way of letter to the solicitors for the appellant which was relevantly in the following terms: We are instructed to put the following offer of settlement:

that the appellant pay the respondent the sum on $6162.68

that the appellant pay the respondent's costs and disbursements.

We advise that this offer will be relied upon by the respondent in seeking costs on an indemnity basis if your client is less successful in the appeal or equal to the above offer. 14 The evidence also includes the appellant's reply which was in the following terms: We find it unusual that you now see Calderbank as being an applicable principle, notwithstanding your comments in your letter of 4 September 2001.

Be that as it may, we note yesterday our Counsel made an offer to pay you the amount of $6,162.68 and that was rejected.

The hearing has not substantially concluded and the majority of your costs would have been made up following the hearing.

The offer that you make now is after the full bench have made it reasonably clear what their position is.

This was made abundantly clear in our appeal documents.

Our client understands its difficulty regarding costs against your client, however, of course we will make the offer and we will rely on our letter sent to you on 3 September 2001, two (2) days before the appeal. At a time before significant costs were incurred by your client.

We expect you have explained to your client that an offer made, such as yours 7 September 2001, is unlikely to succeed and that the costs that they have paid to date will be because of our appeal being successful and in line with our recent offer, it is unlikely that you will have a costs order against our client.

Our client was impelled to appeal because of an injustice. Despite our attempts to settle this matter on 3 September 2001, you chose to run the matter.

We think the above needs to be put on the record and we ask you consider it carefully when taking your client's instructions regarding the following offer of settlement.

That our client pay to your client a total sum on $6,162.68 (noting the monies already paid) in full and final settlement of the appeal. 2. Each party bear their own costs. Although you have put a time limit on this matter, unnecessarily in our view, we do not intend to put a time limit on this offer, but would suggest that next Thursday might be a reasonable time within which your client might provide you with instructions.

We will rely on this letter on the question of costs in addition to our letter of 3 September 2001 and your respondent 4 September 2001. 15 The respondent's reply was as follows: We have sought our client's instructions in relation to the matters raised and respond as follows: 1. With respect, your letter contains a number of inaccuracies and assumptions, in particular we note: (a) In respect of paragraph 4 it is incorrect for you to assume the majority of our client's costs have been incurred "following the hearing", indeed we find this a curious assumption for your client to make; (b) We do not agree that "full bench have [sic] made it reasonably clear what their position is". This is especially so given that the bench has directed the parties to file further submissions in reply; (c) We do not see how any position the bench may eventually take is 'abundantly clear' in [your] appeal documents; and (d) It is incorrect to contend that our client "chose to run the matter"; the appellant in this matter is your client. 2. The offer set out on page 2 of your letter is rejected for the following reasons: (a) As you are fully aware, your counsel acknowledged in open court that the respondent is entitled to $6,162.86. This concession was also made in your counsel's submissions. (b) As you are no doubt aware an offer to settle this matter for $6,162,86 exclusive of costs would leave our client in a position where she is out of pocket due to her own legal expenses. You will also note that if your client is successful our client can make an application under the Suitors' Fund. This letter will be relied upon by our client to seek indemnity costs should your client's appeal not succeed.

16 The respondent contends that an order for costs of the appeal should be made in its favour as it was prepared to settle for an amount of $6,162.86 plus costs, being an amount less than that which was finally ordered by the Full Bench on appeal: see Bankstown City Council v Paris (1999) 93 IR 209 and Four Sons Pty Limited v Sakchai Limsiripothong (No 2) (2000) 100 IR 400. 17 The appellant only succeeded completely in respect of one of the three errors alleged to have been found in the decision of Cambridge C. Further, the respondent contended that, even had the allegations of error been made out on the appeal, the dismissal was still harsh, unreasonable and unjust warranting relief. Although the Full Bench had identified error in the decision at first instance, it still found the dismissal both unreasonable and unjust such as to warrant relief, and of itself, harsh. 18 The respondent was successful on the appeal to the extent that the contended monetary remedy available under the Act was discretionary and not confined to an award of $6,162.86. 19 On the respondent's submission, given the small monetary value of the claim and the appellant's concession that the dismissal was procedurally unfair, the appellant should have actively encouraged settlement. This, in the respondent's submissions, the appellant failed to do because: 1. It made no offer of settlement prior to the hearing of the appeal; 2. The appellant's conduct was inconsistent with an intention to settle the proceedings on any reasonable basis. The offer of $6,162.86 made on the day of the hearing before the Full Bench, was not reasonable having regard to the legal costs associated with the claim (noting the appellant was aware of these costs). The costs as of the date of filing the written submissions in reply on the issue of costs were in the order of $9000. This will almost entirely consume the compensation ordered by the Full Bench for Mrs Flood's unfair dismissal. 3. The appellant's conduct more generally was relevant in that it has breached the orders of the Full Bench by failing to pay to the respondent the monies ordered within 14 days. These monies had not, as at the date of filing the submissions in reply, been paid to the respondent. 20 The appellant contended that it was substantially successful on the appeal. No costs were incurred unreasonably so as to activate s 181(2) of the Act. It should be noted that leave was granted because the issues on the appeal raised sufficient public interest as to warrant the appeal being heard. Most of the costs associated with the argument, preparation and incidental legal costs accrued upon the main issues on the appeal - all of which were decided in the appellant's favour. Little cost was associated with the discretionary monetary quantum issue on which the respondent was successful. Costs may be ordered by having regard to the findings made in the course of proceedings and in the time spent on each of the issues in the proceedings: Nordby v Barclays Australian Investment Services (No.2) (1994) 53 IR 342. 21 As to the application of the Suitors' Fund Act 1951, the appellant contended that both parties expended costs before Cambridge C in circumstances where the learned Commissioner clearly erred on critical matters. The Full Bench so found. It would be appropriate in these circumstances for a certificate under the Suitors' Fund to issue. Consideration 22 We consider that the issue of the respondent's application for costs for the hearing of the application for extension of time should be dealt with as part of the general consideration of the question of the costs of the appeal. Turning then to the costs issue generally, it should be emphasised that the power of the Commission to order costs when not sitting as the Commission in Court Session is substantially curtailed by s 181(2) of the Act. The power to award costs in proceedings alleging unfair dismissal under Part 6 of Chapter 2 of the Act is only available where the Commission forms the view that the proceedings were frivolous or vexatious or where the party against whom the costs are sought "unreasonably failed to agree to a settlement of the claim": see s 181(2)(a) and s 181(2)(c), respectively, of the Industrial Relations Act. 23 The principles as to the circumstances which are relevant to whether the criteria in s 181(2)(c) are satisfied are to be found in the decisions of the Full Bench in Bankstown City Council v Paris (1999) 93 IR 209 and Four Sons Pty Limited v Sakchai Limsiripothong (No2) (2000) 100 IR 400. In the former case the Full Bench held (at 218 - 219): Section 181(2)(c) on its face is a provision which is designed to apply only to unfair dismissal proceedings. It is the only provision designed to be applied specifically in that context. Also, when read in terms of the other provisions in the Act as to costs, it is one of only three provisions which may have application to unfair dismissal proceedings. The other provisions are paragraphs (a) and (b) of s 181(2). However, those provisions apply to many other proceedings before the Commission and, unlike the particular limb of s 181(2)(c) relied on in this application, they are designed to operate where the Commission considers either the application itself, or the institution of the proceedings, was affected by considerations which made it manifestly inappropriate for the proceedings to have been commenced. The relevant part of s 181(2)(c), on the other hand, does not require the Commission to focus upon the circumstances of the commencement of the proceedings, or to consider only the situation of the applicant. Instead the Commission is required to consider in a more general way, the conduct of the party in respect of which an application for costs is made; and, in that regard, to consider the conduct of the party in relation to the question of settlement of the claim. …

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. 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. 24 In those proceedings, one of the matters relied upon by the respondent (the applicant on the costs motion), was the failure of the appellant, with one exception (which the respondent considered was not genuine in the circumstances), to make any offer to settle the proceedings, despite numerous offers on behalf of the respondent to do so. As to such conduct the Full Bench observed in Paris, at 220: We emphasise that there will be many circumstances in which parties to litigation, including unfair dismissal proceedings, may appropriately take a firm position generally, including on the question of conciliation or settlement. Nevertheless, such a position runs significant risks in terms of the exercise of the power and discretion under s 181(2)(c). This is particularly so where such a position is assumed without due regard to the policy of the Act which requires parties to take seriously their obligation to attempt to settle the proceedings. That in turn involves an obligation to consider in an objective way the strengths or limits upon the case that they will be propounding should the matter proceed to arbitration. 25 Similar observations were made by the Full Bench in Four Sons, as follows: [11] The obligations imposed on parties to proceedings under s 84 of the Act, as identified in the Full Bench judgment in Bankstown City Council v Paris , require parties to such proceedings to undertake a responsible and careful assessment of the prospects of the litigation, in the absence of which an unsuccessful party may realistically face the prospects of a costs order being made against it. In those circumstances, it may often be appropriate for a party to consider making an offer to settle, even if the offer could be seen, either with the benefit of hindsight or otherwise, to be at a rather low level. However, the making of such an offer on "the low side" does not exhaust the responsibilities of a party to reasonably attempt to settle the claim. 26 In the circumstances of this case, the appellant had a real measure of success on the appeal. It is worthy of note that the matters against which the appeal was brought were of such significance as to warrant the grant of leave to appeal in the public interest. The errors found in the decision of the Commissioner went to the importance and significance of the conciliation processes mandated by the Act when dealing with an allegedly unfair dismissal and the resulting implications for questions of procedural fairness when the same Member of the Commission performs the dual functions of conciliation and arbitration. 27 Having regard to the decision of Walton J, Vice-President in Van Huisstede v Commissioner of Police (No 2) (2001) 106 IR 56, relying on, and applying, as it did, the judgment of the Full Bench of the Commission in Kelly v Foley, the appellant's case was one of some strength. There was a strong argument that it had been denied procedural fairness. Plainly, neither the proceedings at first instance nor the appeal could be characterised as frivolous or vexatious. However, whether the appellant had unreasonably failed to agree to a settlement of the claim requires further consideration. 28 As for the proceedings at first instance, there was no evidence of offers of settlement that were made during the conciliation conferences before Cambridge C, nor was there any evidence of any offers of settlement having been made throughout the course of proceedings at first instance. Both at first instance and on appeal the appellant was prepared to concede that Mrs Flood had been denied procedural fairness in the termination of her employment. 29 Whilst it should be noted that during the proceedings at first instance Mrs Flood was represented by her husband (with the exception of the conciliation proceedings at which Mrs Flood was represented by an industrial agent), the fact that a party is not legally represented is not, in our view, a sufficient reason to justify a failure of either party to turn its mind to a proper settlement of the proceedings. As was emphasised in both the Full Bench authorities referred to, the Act is plain in its policy of requiring parties to seriously consider their prospects of success in litigation surrounding a dismissal alleged to be unfair. In order to protect its position it may be necessary for a party to make at least an offer as was identified in Four Sons. This the appellant failed to do. Clearly, the remedy provided to a party aggrieved by the failure of the opposing side to turn its mind to the settlement of proceedings may be an order for costs. Although it is arguable, on the authorities, that the jurisdictional gateway under s 181(2)(c) to the power to order costs was "opened" as to the proceedings at first instance, we would not, in the light of the way in which the respondent was represented at first instance, exercise our discretion to make any order for costs in her favour for that part of the proceedings. 30 It must be emphasised that s 181(2)(c) merely provides the 'jurisdictional gateway' through which a party must pass before the Commission can exercise its discretion to order costs in accordance with s 181(1)(b). The resulting discretion is significant in these proceedings. 31 Both parties were, to an extent, successful on the appeal. The appeal raised issues that were of significance. However, given the concessions of the appellant both as to the denial of procedural fairness and the quantum of monies that Mrs Flood should have been entitled to, we are satisfied that there has been a failure to agree to a settlement of the claim within the meaning of s 181(2)(c), thereby enlivening the powers in s 181(1). However, we consider it would be inappropriate for the appellant to be required to pay the costs of the appeal having regard to its substantial success on the appeal. As such, we would exercise our discretion to decline the application for costs on behalf of the respondent, so far as it would require the appellant to pay the respondent's costs of the appeal. 32 The provision relevant to the application under the Suitors' Fund Act is s 6(1A). The sub-section empowers the Commission, "upon application made in that behalf", to grant a respondent to "an appeal against the decision of a court on a question of law [which] succeeds ..." an indemnity certificate in respect of the appeal. We have considerable doubt that the expression "court" in s 6(1A) is intended to be construed as applying to the situation of a single Member sitting in the Commission's arbitral jurisdiction so as to give the Full Bench power to grant a certificate under the sub-section when hearing an appeal from the arbitral decision; and particularly so when there is scope under s 7 of the Suitors' Fund Act to prescribe by regulation additional bodies or tribunals as a "court" for the purposes of the Act and no relevant regulation has been made: cf Clarence v Electricity Commission of New South Wales (1990) 20 NSWLR 1 at 14, 33 IR 94 at 104; Reid v Sydney County Council (1994) 35 NSWLR 719; Moama Bowling Club Ltd v Armstrong (No 2) (1995) 64 IR 264 at 268 - 269. We therefore decline the application for a certificate under the Suitors' Fund Act. 33 The Commission accordingly makes no orders as to the costs of these proceedings.

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.

[2000] NSWIRComm 1128

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