Dr Leong Fook Ng v North Coast Area Health Service

Four Sons v Limsiripothong (2000) 100 IR 400 Tuholi v Caltex Australia (2001) 103 IR 329 CASES CITED: Bankstown City Council v Paris (1999) 93 IR 209 R v Moore and Others; Ex Parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 Heyman and Anor v Darwins Limited [1942] AC 356

Mr A Rogers of Counsel LEGAL REPRESENTATIVES: RESPONDENT

• 15 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

LEONG FOOK NG AND NORTH COAST AREA HEALTH SERVICE AND ANOTHER

Application re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996

1 This matter was subject to arbitration proceedings on 19 June 2007 which resulted in an ex tempore Decision in which the application for relief from unfair dismissal was dismissed. Reasons for the Decision were issued on 18 July 2007. 2 It is useful to restate here the consideration and conclusions from that Decision. It was held: CONSIDERATION 29 It is not necessary to determine whether the contract of employment was ended by frustration. 30 The correct enquiry is whether or not there was a termination of employment at the initiative of the employer in the terms of sending away against the employee's will as described in Smith, or a constructive dismissal initiated by the employer as described in Allison v Bega Valley Council (1995) 63 IR 68. 31 The evidence is that it was the initiative of Dr Ng which brought the employment relationship to an end. 32 Dr Ng's evidence that he no longer wished to practice medicine or work as a medical practitioner in New South Wales, conveyed to the NSW Medical Registration Board on 20 September 2006, brought an effective end to his employment. 33 The contract of employment is in accordance with the Award, which provides exclusively for employment of qualified medical practitioners. 34 The suggestion that re-registration or acceptance as a medical practitioner pursuant to the Mutual Recognition Act as an avenue of automatic recognition is fanciful, and ignores the need for an application and the exercise of discretion of the Medical Registration Board to grant or deny registration.

CONCLUSION 35 I find that Dr Ng was not dismissed from his employment by the Respondent. 36 It cannot be held that the Respondent's standing down of Dr Ng from duty on full pay whilst an enquiry was being undertaken into concerns expressed by colleagues was a termination or intention to terminate employment so as to be a constructive dismissal. The enquiry was not complete, no conclusion had been reached and Dr Ng continued to be paid. 37 The action of Dr Ng to remove himself from the New South Wales Medical Register brought to an end his ability to continue in a contract of employment with the Respondent in circumstances which do not give rise to jurisdiction of the Commission to entertain an application for relief from unfair dismissal. 38 The application is dismissed.

3 The Respondent, North Coast Area Health Service (NCAHS), subsequently instituted proceedings by correspondence to the Industrial Registrar seeking an Order of costs pursuant to s 181(2) of the Industrial Relations Act 1996 ("the Act"). Directions were issued for filing and service of material to be relied upon, and the matter subject to Hearing of Submissions re Costs on 25 October 2007. 4 Mr S Benson of Counsel continued his appearance on behalf of NCAHS. 5 Mr A Rogers of Counsel continued his appearance on behalf of Dr Ng. 6 Mr Benson tendered the affidavit of Ms Sophie Anderson, Solicitor of McKenzie Cox Solicitors (Exhibit 7, as amended), the instructing Solicitors on behalf of NCAHS in this matter. 7 Exhibit 7 gives a chronology of events and correspondence between the parties in respect of proceedings initiated by the application pursuant to s 84 of the Act. 8 Mr Benson tendered an outline of submissions (Exhibit 8), which sets out the factual background in the following terms: (i) On 19 December 2006, the Applicant sought to invoke the jurisdiction of the Commission when he filed an Application for Relief (being IRC 3680 of 2006) in which the Applicant sought reinstatement to his former position; or re-employment to another position; or monetary compensation.

(ii) The finding of his Honour in Ng v North Coast Area Health Service [2007] NSWIRComm 173 was that the contract of employment had been brought to an end at the initiative of Dr Ng. In particular at [32] his Honour found that "Dr Ng's evidence that he no longer wished to practice medicine or work as a medical practitioner in New South Wales, conveyed to the NSW Medical Registration Board on 20 September 2006, brought an effective end to his employment."

(iii) The evidence showed that Dr Ng did not inform the Respondent at the time that he had taken unilateral action that at law brought the contract of employment to an end and it was left to the Respondent subpoenaing the production of the records of the NSW Medical Registration Board to clearly expose that state of affairs.

(iv) On 12 January 2007, 1 February and 8 February 2007 conciliation conferences were held by Commissioner Murphy. At those initial conferences the North Coast Area Health Service was represented by a member of management.

(v) On 9 March 2007 the North Coast Area Health Service retained McKenzie Cox Solicitors to act on their behalf.

(vi) On 20 March 2007, McKenzie Cox appeared on behalf of the North Coast Area Health Service in a further conciliation conference before Commissioner Murphy at Byron Bay Court.

(vii) At the conciliation hearing on 20 March 2007 there were further negotiations between the parties on a without admission of liability basis. The issue of jurisdiction was alive in the conciliation conference and influenced the Respondent's position. Indeed, the Respondent viewed the application as mischievous at that stage and communicated that opinion to the Applicant. As events transpired, it is the Respondents view that it it's assessment at that time was validly grounded.

(viii) The difficulty facing the Respondent in formulating an Offer of Settlement arose from the negotiating position of the Applicant wherein he was seeking to use the Unfair Dismissal Claim for the collateral purpose of persuading the Respondent to review continuing the position taken in relation his unprofessional conduct.

(ix) On 2 April 2007, Commissioner Murphy issued a Statement in Chambers to program a jurisdictional challenge to the Application for Relief in relation to unfair dismissal that had instituted the proceedings. The Commissioner made directions ordering the Applicant and Respondent to file and serve evidence by particular dates which necessarily involved the incurring of additional costs by the Respondent as well as preparing for the jurisdictional argument.

(x) On 20 April 2007, McKenzie Cox sent a letter to Dr Ngs Solicitors submitting an offer that Dr Ng discontinues proceedings in the Industrial Relations Commission, or any other relevant Jurisdictions where proceedings were not yet commenced and each party pay their own costs. A copy of that letter is attached to the Affidavit of Sophie Anderson.

(xi) On 24 April 2007, Dr Ng's Solicitors indicating that they no longer acted for Dr Ng. The Respondent assumed that that Firm would have forwarded this Offer to Dr Ng.

(xii) The Respondent issued seven summonses for production of documents to (inter alia) the NSW Medical Board. Those summonses were returnable on 30 May 2007 at the Industrial Relations Commission before Registrar Grimson. Due to the opposition of the Applicant to access to those documents the proceedings before the Registrar were adjourned until 6 June 2007 for argument at which counsel appeared.

(xiii) On 6 June 2007 Registrar Grimson granted access to all documents (except those from Ballarat Hospital where privilege was claimed).

(xiv) On 19 June 2007 the jurisdictional challenge to the proceedings was heard before Deputy President Harrison at Ballina Court House, and given the nature of the issues raised, counsel appeared for the Respondent instructed by McKenzie Cox.

(xv) At the end of the proceedings on 19 June 2007 his Honour, Deputy President Harrison gave an extempore judgment in which he dismissed the application for want of jurisdiction and indicated he would hand down his reasons at a later stage.

(xvi) On 18 July 2007 Deputy President Harrison handed down his "Reasons for Decision" in [2007] NSWIRComm 173 which, it is submitted, clearly demonstrated the lack of prospects of the application based on the information that was at all material times available to the Applicant.

9 Mr Benson submitted that the relevant statutory provisions on which the NCAHS relies are set out in s 181 of the Act, which is in the following terms: (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

… … (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 … … 10 The present application is founded upon s 181(2)(c) and is pressed on the basis of the assertion that Dr Ng unreasonably failed to agree to a settlement of the claim; and that the application was frivolous and vexatious. 11 Counsel were in comity that an application for costs in first instance proceedings in an unfair dismissal application is not available pursuant to s 181(2)(b) of the Act "without reasonable cause". This aspect was not pursued further. 12 The NCAHS seeks an award of costs against Dr Ng on an indemnity basis, or in the alternative on a party/party basis as assessed. 13 Mr Benson submitted that it is self evident that the Commission would not uphold the application in this matter based upon Dr Ng's choice to have his name removed from the NSW Medical Register. 14 Mr Benson submitted that Dr Ng's failure to inform the NCAHS that he had communicated to the NSW Medical Registration Board that he no longer wished to practice medicine or work as a medical practitioner in New South Wales provides the "exceptional circumstances" which warrant the awarding of costs again Dr Ng: see Tuholi v Caltex Australia (2001) 103 IR 329 at 341-342) which sets out the principles for consideration of an award of costs on an indemnity basis. In Tuholi the Hon. Justice Wright, President, said: I consider that it is possible to deduce the following propositions for the present matter from the more general authorities earlier referred to:

It is only in exceptional cases where a court would make a costs order other than on the usual party/party basis.

The grant of indemnity costs is to be seen as an unusual and exceptional course and would only occur where there is some special or unusual feature of the case to justify the Court in departing from the usual practice.

Nevertheless, the grant of indemnity costs is, as with any exercise of judicial discretion, one to be exercised in all the circumstances of the case and, provided regard is had to the "exceptional" nature of such an order, the primary consideration with all such discretionary orders is that it will occur "as and when the justice of the case might so require".

Although most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of facts which would be capable, if they existed, of warranting a departure from the usual rule, nevertheless "the categories in which the discretion may be exercised are not closed".

Further, a too rigid or narrow approach may lead to error in the exercise of discretion.

Although there are a number of recent judgments to the effect that there should be an increased tendency towards the awarding of indemnity costs, such statements should be applied with great caution in the light of the existence and operation of the general approach as to the usual way in which costs orders will be made.

It is also important to ensure that considerations such as mere "fierce opposition to the claim" or the conduct of a respondent which might justify the grant of the substantive application are not matters which, in themselves, would lead to the grant the costs on an indemnity basis. 15 It is Mr Benson's submission that, having regard to the circumstances preceding the filing of Dr Ng's application, the factual foundation had been laid for the Commission to find Dr Ng's application for relief from unfair dismissal both "frivolous and vexatious". 16 Mr Benson put that, in the alternative, the facts surrounding the settlement negotiations provide that basis on which an appropriate costs order ought be awarded in favour of the NCAHS pursuant to s 181(2)(c) of the Act. 17 Mr Benson relied on Ms Anderson's affidavit (Ex 7) which he said supported the submission that the NCAHS was prepared to settle the proceedings on the basis that each party pay their own costs. It is Mr Benson's contention that Dr Ng's rejection of that offer indicated that he failed to undertake a responsible and careful assessment of his prospects in the matter at that time, or indeed at any time during the course of the proceedings (see Bankstown City Council v Paris (1999) 93 IR 209 at 219; Four Sons v Limsiripothong (2000) 100 IR 400 at 403). Mr Benson put that Dr Ng's failure in this regard was attributable to his motivation to use the proceedings for a collateral purpose. 18 Mr Benson relied upon communication from Dr Ng by email to McKenzie Cox Solicitors on 20 March 2007, copied to Commissioner Murphy's assistant, in which Dr Ng says (Ex 7, attach. F): Further to this morning's hearing I do not know whether it sank in that I will vehemently defend myself to restore my reputation. It is clear that some individuals at the Tweed Hospital had set out to conduct a malicious campaign against me, to harm my career and reputation - and that this has been reasonably successful. This was deliberate, it was planned and orchestrated and conducted over a period of time. But, further damage is unlikely at this stage. Further evidence has now emerged that this was well orchestrated and continuing.

It is now my turn to seek justice by legal remedies and it follows that unless a reasonable settlement can be negotiated instead of the 'lean' one suggested by the Commissioner, I will be unrelenting in my pursuit of justice through all Courts possible for as long as it will take. I will continue to reveal the truth and uncover the past cover ups and this is likely to lead to serious implications for the NCAHS and some individuals within it. 19 Mr Benson asserts that the final paragraph of the communication conveys a threat and reveals the intention of Dr Ng to use legal process in retaliation for the actions of his employer and former colleagues he perceived as detrimental to himself. 20 Mr Rogers rejects this analysis, submitting that Dr Ng was in the first instance rejecting a proposition advanced by Commissioner Murphy in conciliation for consideration by the parties; and in the final paragraph doing no more than seeking to improve his bargaining position. 21 Mr Benson submitted that the jurisdictional imperatives for the making of an order for costs had been satisfied, i.e. the Commission could be satisfied that Dr Ng unreasonably failed to agree to a settlement of the claim or make a finding that the application was frivolous or vexatious. 22 Mr Rogers submitted that the jurisdiction to award costs in an unfair dismissal case is limited to the circumstances of a case being frivolous or vexatious; or where a party has unreasonably failed to agree to a settlement. Mr Rogers characterised these circumstances as firstly where a case is unarguably bad; or secondly where one party has made an offer it would be unreasonable to reject. 23 Mr Rogers relied upon R v Moore and Others; Ex Parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 to support his submission that a case is not unarguably bad because it is weak or even extremely weak. The principle relied upon is found at 473 in the following terms: … However the present dispute, in so far as it relates to cl. 5 of the log of claims, is not as to whether contractors should be engaged, but as to whether, if they are engaged, their employees should be entitled to the benefits of the award, assuming that one is made. The evidence has failed to show that in the circumstances prevailing in the industry in question such a clause could not be capable of being regarded as merely incidental to the settlement of the dispute as to the conditions of employment of workers in or in connexion with metaliferous mining. I agree with Jacobs J. that this question should not be finally determined until the facts are fully explored.

The respondent, the Australian Workers' Union, has applied for costs on the ground that the proceeding was instituted by the prosecutor "without reasonable cause" within the meaning of s. 197A of the Act. In my opinion a party cannot be said to have commenced a proceeding "without reasonable cause", within the meaning of that section, simply because his argument proves unsuccessful. In the present case the argument presented on behalf of the prosecutor was not unworthy of consideration and it found some support in the two decisions of this Court to which I have referred. The fact that those decisions have been distinguished, and that the argument has failed, is no justification for ordering costs in the face of the prohibition contained in s. 197A. 24 Mr Rogers put that the applicable test is that a case is only unarguably bad when, on no view of the facts or law, could an applicant ever have succeeded. 25 Mr Rogers submitted that Dr Ng did have an arguable case. Mr Rogers set out the support for this position at page 3 of his written submissions (Exhibit 9): (i) Applications under section 84 of the Industrial Act are available where an employer dismisses an employee.

(ii) Dismissal occurs where a person is removed from his employment without his consent: Ryde-Eastwood Leagues Club v Taylor (1994) 56 IR 385 at 391-2.

(iii) Whether there has been a dismissal is measured at the time - subsequent events do not affect whether there has been a dismissal.

(iv) Frustration of a contract (as alleged by the employer) is an event which makes it impossible to fulfil the contract of employment.

(v) Whether a contract is frustrated may depend upon the actions of the parties.

(vi) If a contract is terminated by one party - even for reason of frustration - the termination is a dismissal: Walsh v Police Association [2000] VSC 292.

(vii) It was uncontroversial that the employer ended Dr Ng's employment (see letter of 28 November 2006).

(viii) Dr Ng was, or was arguably, entitled to registration in NSW by virtue of his Queensland registration.

(ix) The Respondent's behaviour in terminating the contract of employment without warning meant that Dr Ng could not take advantage of his rights under the Mutual Recognition Act. 26 Mr Rogers further contended that the Commission's finding that Dr Ng had brought an effective end to his own employment by his positive request to be removed from the NSW Register of Medical Practitioners opened the following considerations: (i) Is it arguable that a person who declares to his employer that he no longer intends to perform his duties has not ended his employment?

(ii) If so, is it arguable that a person who declares to a third party (and not to his employer) that he no longer intends to perform his duties has not ended his employment?

If the answer to either question is in the affirmative, then there is no jurisdiction to award costs under section 18 1(1)(b) or (c). 27 Mr Rogers submitted that by discontinuing his practicing certificate Dr Ng placed the employer in a position of either accepting that position and assigning other duties; or terminating the employment. In the latter event the employment is terminated by the employer so enlivening the unfair dismissal jurisdiction and affording Dr Ng an arguable case which, while not successful, does not attract an order of costs.

28 Mr Rogers relied upon the Decision in Heyman and Anor v Darwins Limited [1942] AC 356 at 361 to ground his submission that a contract is not concluded by repudiation until that repudiation is accepted by the party not in breach. 29 Mr Rogers submitted that on this principle it was strongly arguable that the advice by Dr Ng to the NSW Medical Registration Board did not end his contract of employment. Unreasonably Failed to Agree to a Settlement 30 Mr Rogers submitted that the contention that Dr Ng had unreasonably failed to agree to a settlement of the claim was fatally flawed having regard to the nature of the offer made to Dr Ng. 31 The offer relied upon to support this application for costs was made on 20 April 2007 in the following terms (Ex 7, attach. G): We are instructed at this stage until otherwise advised of your client's position to make the following offer:

1. Your client to discontinue proceedings in the Industrial relations Commission, or any other relevant jurisdiction where proceedings are not yet commenced; and

2. Each party to pay their own costs. 32 Mr Rogers submitted that the offer gave nothing to Dr Ng and is incapable of quantification as there is no basis to determine the value of the other proceedings to be foregone. 33 Mr Rogers submitted that refusal to accept a "walk away" offer is not sufficient to support an application for costs. Allegation of "Collateral Purpose" Abuse of Process

34 Mr Rogers submitted that the allegation is not substantiated, and that there is nothing to support any suggestion that Dr Ng's proceedings were other than bona fide. 35 Mr Rogers put his argument in the following terms: (i) A proceeding brought for a collateral purpose if that is the predominant purpose of bringing the proceedings (i.e. if the proceedings are brought not for the purpose of obtaining relief): see the comments in the High Court in Williams v Spautz (1992) 107 ALR 635 at 648 line 45 - 649 line 10.

(ii) If a party brings a matter intending to obtain relief, it is not an abuse even there are collateral consequences to his advantage (see the example cited at lines 35 - 45 of page 646 in Williams v Spautz).

(iii) A finding of abuse of process cannot be lightly made. The onus of proof on a respondent alleging such an abuse of process is "a heavy one" which falls upon the party asserting abuse of process (see Williams v Spautz (at 649 line 11)).

(iv) Dr Ng gave evidence at the hearing of the preliminary application. It was not put to him that his purpose in commencing proceedings was other than to obtain the relief he sought.

5.5 In the above circumstances a collateral purpose cannot now be imputed to him. 36 Mr Rogers further submitted that at all times during the proceedings the employer defended its termination of Dr Ng's employment and, while the matter was otherwise decided, the employer cannot now assert that Dr Ng should have examined his own case and reached the conclusion that his employment had not been terminated by the employer. CONSIDERATION

37 The facts of this matter compel a finding that the application was frivolous and vexatious. 38 The terms of s 84 of the Act make it plain that re-instatement or re-employment are the primary remedies and that compensation is only available where the Commission considers these to be impractical. 39 It cannot be said that Dr Ng had an arguable case for re-instatement or re-employment when he, by his own actions, removed the foundation for any employment relationship by deliberately and purposefully removing himself from the NSW Register of Medical Practitioners. 40 There is no basis for any argument that the employer could have, or could be compelled by this Commission, to re-employ Dr Ng in any position other than in accordance with his original contract of employment. As noted in the substantive decision Dr Ng was employed pursuant to the Staff Specialists (State) Award (2006) 152 IR 405 which does not contemplate employment in any capacity other than qualified medical practitioner. 41 Mr Rogers' submission that in discontinuing his certificate to practice medicine in New South Wales Dr Ng placed the employer in the position of accepting this and employing him elsewhere or terminating his employment is worthy of analysis as it is consistent with the finding in the substantive matter that Dr Ng was the initiator of the conclusion of his employment. 42 The facts are that the employer chose not to offer alternative employment. If it were that the employer chose to terminate the employment, which on Mr Rogers' argument was an option created by the actions of Dr Ng, it cannot be held that the employer, pressed to such an option in the circumstances described, acted in a harsh, unreasonable or unjust manner as those terms are expressed in s 84(1) of the Act. In short, the termination of employment could not be regarded as unfair. 43 On either analysis the application for relief from unfair dismissal was utterly without merit or prospect of success. 44 In consideration of whether the application was also vexatious, regard must be had to the comments of Dr Ng in his email of 20 March 2007, set out above. 45 The conclusion that Dr Ng was simply trying to improve his bargaining position is open and is supported by him sending a copy to Commissioner Murphy's Assistant. I note that this was most inappropriate and could also be regarded as an improper attempt to influence the Commission. Whilst this may have been a purpose there is also a threat to the NCAHS and individual personnel which has nothing to do with the merit or otherwise of the conclusion of Dr Ng's employment. 46 Dr Ng had a public duty to report any genuine concern to the appropriate authorities for investigation. His threat to do this unless he was compensated amounts to a communication that he will fail to undertake this public responsibility in circumstances favourable to himself. 47 Dr Ng was clearly unhappy with his former employer and colleagues. 48 I am led to the conclusion that Dr Ng instituted these utterly hopeless proceedings with the intent to cause inconvenience and embarrassment to those with whom he was aggrieved. 49 I find that the application was frivolous and vexatious and that Dr Ng unreasonably failed to agree to a settlement, and accordingly the gateway provided by s 181(2)(c) of the Act to an award of costs is open. 50 I further conclude that Dr Ng unreasonably failed to agree to a settlement of the matter. 51 It is not in every case that a "walk away offer" as it was described by Mr Rogers will be held to be reasonable. Every matter must be considered on its merits, however, it must be held that a walk away offer in proceedings which have no basis is a reasonable offer by the employer, unreasonably rejected by Dr Ng in this case. 52 The principles for an award of indemnity costs found in Tuholi are helpful in this matter. 53 I find that these proceedings meet the unusual and distinct criteria for attraction of an award of indemnity costs. ORDER

Dr Leong Fook Ng is ordered to pay the North Coast Area Health Services' costs on an indemnity basis as agreed or as assessed in accordance with the Commission's Rules. oo0oo

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