Eptesam Al Bankani v Western Sydney Migrant Resource Centre Ltd [2024] FWC 3363 | Case summary | Zoe

CTHFWC

Eptesam Al Bankani v Western Sydney Migrant Resource Centre Ltd [2024] FWC 3363

[2024] FWC 3363

Fair Work Commission|2024-12-03

At a glance

AI case summary

Result

respondent. Application for costs under s 400A dismissed; no order for costs made (costs application rejected) (see [46]–[47]).

Key principles

The Commission's enquiry under s 400A is whether a party 'caused those costs to be incurred because of an unreasonable act or omission ... in connection with the conduct or...
Whether a party's rejection of a settlement offer is 'unreasonable' under s 400A requires an evaluative assessment of all the circumstances, including but not limited to timing...
Where parties have actively exchanged settlement offers and the respondent has made its own settlement proposals, it will often be difficult for the applicant to establish that...
On the facts of this case, although the applicant's final offer involved a material compromise and the respondent's substantive case was weak, the combination of the late timing...

Issues before the court

Whether a costs order under s 400A of the Fair Work Act 2009 should be made against the respondent because it unreasonably rejected the applicant's...
What is the role of Calderbank v Calderbank offers in proceedings under the Fair Work Act, specifically under s 400A?

Plain English Summary

The applicant won her unfair dismissal claim but sought $20,000 in costs after the employer rejected settlement offers made shortly before hearing. The Commission held that Calderbank-style offers do not automatically satisfy the statutory test for costs under s 400A. After examining the timing of offers, negotiation history, the extent of compromise, and the respondent's incurred costs and its own offers, the Commission concluded the respondent's rejection of the applicant's last-minute offer was not unreasonable in the statutory sense. The costs application was dismissed.

AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.

Deep Dive

1,903 words · generated 29/06/2026

What happened

This decision concerns a post‑hearing application for costs under s 400A of the Fair Work Act 2009 (FW Act) by Ms Eptesam Al Bankani, who had previously succeeded on the merits of an unfair dismissal claim against Western Sydney Migrant Resource Centre Ltd (WSMRC). The underlying unfair dismissal decision was recorded in an earlier FWC decision in which the Commission ordered reinstatement and awarded 75% of lost remuneration to Ms Al Bankani ([1], [3]). After that merits victory, Ms Al Bankani sought $20,000 in costs, asserting that WSMRC had acted unreasonably by rejecting settlement offers made shortly before the hearing, including a Calderbank‑style letter ([4], [17]–[20]).

Chronology of negotiations in short:

Approximately one month before hearing: WSMRC offered 10 weeks' pay to settle the unfair dismissal claim ([6], [42]).
Applicant countered with 16 weeks' pay; respondent asked for justification ([6]–[8]).
Two working days pre‑hearing: WSMRC made a 'global' 16 week offer to resolve both the unfair dismissal and the applicant’s separate underpayment claim ([9]).
Last business day pre‑hearing: applicant made a final offer, 12 weeks' pay to settle the unfair dismissal claim alone, or 24 weeks' pay to settle both matters ([10]).
The matter was heard, the applicant succeeded on the merits, and then applied for costs under s 400A. The Commission refused the costs application ([46]–[47]).

Deputy President Easton considered whether the respondent's rejection of the applicant's final offer constituted an "unreasonable act or omission" within the meaning of s 400A and whether that act caused the applicant to incur costs, warranting an award. The application was dismissed ([46]–[47]).

Why the court decided this way

Two core legal points determined the outcome.

First, the statutory test under s 400A is not automatically met by a Calderbank‑style offer being unbettered by litigation. The Commission emphasised the text of s 400A: it requires satisfaction that a party “caused those costs to be incurred because of an unreasonable act or omission ... in connection with the conduct or continuation of the matter” ([30]). The Deputy President rejected the applicant's heavy reliance on Calderbank principles: Calderbank does not equate to or displace the s 400A test. The Commission therefore applied s 400A directly rather than treating Calderbank principles as determinative ([28]–[31]).

Second, assessing whether a rejection of an offer is “unreasonable” requires an evaluative assessment of a list of factors drawn from Full Court and Federal Court authorities. The Commission adopted the factors articulated in Patrick Stevedores and related authorities: stage of proceedings when the offer was made, time afforded to consider, extent of compromise, the offeree's prospects of success as at the date of the offer, clarity of terms, and whether the offer foreshadowed an indemnity costs application ([33]). Applying these to the facts, the Deputy President found a mix of factors cutting both ways:

For the applicant: the offer was a material compromise (12 weeks vs a claim for reinstatement) and the respondent's substantive case was weak ([34]–[36]).
For the respondent: the final offer was made late (the business day before hearing), the respondent had already incurred significant costs preparing for hearing, and the respondent had itself made settlement overtures (10 weeks initially, then a 16‑week global offer) ([39]–[41]).

Taking the entire context, negotiation history, timing, the respondent's costs already incurred, and the mutual settlement activity, the Commission was not persuaded the respondent acted unreasonably in rejecting the late final offer. The costs protection under the FW Act therefore remained intact; no order was made ([44]–[46]).

The Court also noted, obiter, that had the proceedings been in a traditional costs jurisdiction, the applicant might have had a strong Calderbank claim for indemnity costs, an observation intended to show why Calderbank offers are powerful in other forums but do not displace the FW Act test ([45]).

Before and after state of the law

Before this decision practitioners knew the following strands of law:

The FW Act creates a general regime that costs do not ordinarily follow the event; s 400A creates a statutory exception for unreasonable conduct during the conduct or continuation of a matter ([14]–[16]).
Calderbank offers are an established tool in ordinary (indemnity costs) jurisdictions; the rejection of a Calderbank letter can attract indemnity costs in those forums if not bettered at trial.
Federal Court and Full Court authorities had developed a suite of factors relevant to whether a party’s conduct in rejecting offers is “unreasonable” in statutory contexts (see Stratton Finance, Celand, Patrick Stevedores, Melbourne Stadiums, as summarised at [31]–[33]).

This decision reiterates and clarifies two important propositions:

Calderbank principles, while relevant for tactical reasons and persuasive in ordinary costs jurisdictions, are not a substitute for the statutory test in s 400A. The Commission must apply s 400A's language and framework rather than assume a Calderbank rejection equates to the statutory “unreasonable act or omission” ([28]–[31]).
The established multi‑factor inquiry (timing, opportunity to consider, extent of compromise, prospects at date of offer, clarity and foreshadowing of indemnity costs) is to be applied in s 400A cases. How those factors balance will be context specific; the presence of mutual offers and late timing can outweigh other factors such as the apparent weakness of the defendant’s case ([33], [34], [39]–[46]).

Thus, the decision aligns with and applies the authorities (Stratton, Celand, Patrick Stevedores) and makes explicit that Calderbank offers do not automatically import indemnity‑style consequences into s 400A proceedings.

Key passages with plain-English translation

Passage (statutory test, [30]):
- Court text: "The Commission's only inquiry in an application under s.400A is whether a party 'caused those costs to be incurred because of an unreasonable act or omission ...' The rejection of a Calderbank styled offer that is not bettered ... is not assumed to be ... 'an unreasonable act or omission' under s.400A."
- Plain English: You cannot simply point to a rejected Calderbank offer and expect an automatic costs order under s 400A. The FWC must independently decide whether the rejecting party's conduct was unreasonable and caused the other to incur costs.
Passage (factors to consider, [33]):
- Court text: The court lists six ordinary matters to consider (stage, time to consider, extent of compromise, prospects of success at offer date, clarity, foreshadowing indemnity costs).
- Plain English: To decide if rejecting an offer was unreasonable, the Commission looks at when the offer was made, how long the other side had to think about it, how big the compromise was, how likely success was when the offer was made, whether the offer was clear, and whether the offer warned it would lead to a claim for indemnity costs.
Passage (outcome reasoning, [39]–[46]):
- Court text: The court balances the late timing and respondent costs against the applicant’s compromise and weak substantive case, concluding not unreasonable.
- Plain English: Even though the employee gave up a lot by offering 12 weeks instead of seeking reinstatement, the employer had already spent a lot getting ready for the hearing and had also tried to settle. Given these facts, rejecting the last‑minute offer was not unreasonable under the law.
Passage (obiter on costs jurisdictions, [45]):
- Court text: "With the benefit of hindsight WSMRC was imprudent ... if the proceedings were in a costs jurisdiction Ms Al Bankani would have a very strong claim for indemnity costs under Calderbank principles."
- Plain English: If this were a normal court where costs usually follow the loser, the applicant might well have succeeded on a Calderbank claim. But the FW Act's special costs rules change that dynamic.

What fact patterns trigger this precedent

This decision is instructive where:

An employee (or other FW Act applicant) makes a late, Calderbank‑style offer shortly before hearing; and
The respondent (employer) has already incurred substantial costs preparing for hearing; and
Both parties have previously exchanged offers and the respondent has itself made settlement offers; and
The applicant seeks a s 400A costs order solely on the ground that the respondent rejected the offer.

In such patterns, the court will apply the multi‑factor test. Late offers and significant prior expense will strongly weigh against finding the respondent acted unreasonably, particularly if the respondent had itself made offers and there is no other misconduct on record ([33], [39]–[44]).

Conversely, patterns where offers were made early, afforded adequate time for consideration, involved little compromise for the offeree or where the offeree's prospects of success were clearly negligible, will be more susceptible to a finding of unreasonableness under s 400A.

How later courts have treated it

The decision itself primarily applies and synthesises existing authority (Stratton Finance, Celand, Patrick Stevedores, Melbourne Stadiums). It does not report subsequent appellate treatment or later citation (the decision is dated 3 December 2024). Practitioners should therefore treat this decision as an application of settled principles to a close factual case: it reinforces the need to apply s 400A's statutory language and the established multi‑factor test rather than treating Calderbank offers as a shortcut to costs in the FWC.

Users should check later published decisions and citators to see whether this decision has been followed or distinguished in subsequent FWC or court decisions after December 2024.

Still-open questions

Precision of the "unreasonable" standard under s 400A: This decision applies the established multi‑factor approach but does not define a precise threshold of unreasonableness. The relative weighting of factors (timing v. extent of compromise v. prospects at date) remains context dependent ([33], [34]–[46]).
Quantifying causation of costs: The decision assumes that costs were caused by continuation of the matter, but does not articulate a granular causation test; for example, how to apportion costs saved by earlier settlement from those necessarily incurred regardless of the defendant's rejection. That remains an area for future elucidation ([14], [16], [39]).
Interaction between Calderbank letters and statutory foreshadowing: The judgment instructs the court to avoid equating Calderbank rejection with s 400A unreasonableness, but it leaves open how explicit a Calderbank letter (for example by foreshadowing indemnity costs) must be to carry weight in a s 400A assessment ([30], [33]).
Role of subsequent events: The Commission held later resignation by the employee (after an order for reinstatement) was not particularly relevant to the reasonableness at the time of the offer, but this raises questions about how post‑offer events should be factored into causation or mitigation of loss arguments if disputes about costs arise later ([35], [24]).
Evidentiary standard regarding internal advice: The decision observed absence of evidence about legal advice given to the respondent; how much and what quality of evidence about the advice and decision‑making process should a costs applicant lead to prove unreasonableness, remains somewhat open ([36]–[37]).

Practical takeaways for practitioners:

When representing FW Act clients, do not assume a Calderbank‑style letter will automatically produce a s 400A costs remedy; contextual factors matter.
Offer early, be clear about terms, allow adequate time for consideration, and if seeking costs, ensure evidence supports both unreasonableness and causation.
Where you are respondent, document advice and cost exposure; when making settlement offers, consider timing and communicate reasons where appropriate to reduce later exposure to costs claims.

This decision is a reminder that costs under the FW Act require a statutory demonstration of unreasonable conduct and causation, and that the comparative force of Calderbank offers depends on forum and statutory context (see particularly [30], [33], [45]).

Judgment (79 paragraphs)

[1]

Eptesam Al Bankani v Western Sydney Migrant Resource Centre Ltd [2024] FWC 3363 (3 December 2024)

[2]

[2024] FWC 3363

[3]

Fair Work Act 2009

[4]

s.394 - Unfair dismissal

[5]

Application for unfair dismissal remedy - application for costs - Calderbank offer made prior to hearing - alleged unreasonable conduct in failing to accept an offer of settlement - application of Calderbank principles to unfair dismissal proceedings - settlement offers made by both parties - respondent did not engaged in unreasonable conduct - costs application rejected.

[6]

[1] Ms Eptesam Al Bankani was successful in her unfair dismissal claim against Western Sydney Migrant Resource Centre Ltd, as recorded in my earlier decision: Eptesam Al Bankani v Western Sydney Migrant Resource Centre Ltd [2023] FWC 557. Ms Al Bankani has applied for an order that WSMRC pay $20,000 in costs.
[2] Before the original application was heard the parties exchanged without prejudice settlement offers. Ms Al Bankani's best (lowest) offer made shortly before the first day of hearing was either 12 weeks' pay to settle the unfair dismissal claim or 24 weeks' pay to settle both the unfair dismissal claim and an underpayment claim that Ms Al Bankani had commenced in the Federal Circuit and Family Court.
[3] Ms Al Bankani's offer was rejected, the matter was heard and I found that Ms Al Bankani had been unfairly dismissed. I ordered WSMRC to reinstate Ms Al Bankani and to pay her 75% of her lost remuneration - which was a result significantly greater than Ms Al Bankani's offer of 12 weeks' pay.

[7]

[4] Ms Al Bankani has applied for an order for costs and relies on s.400A of the Fair Work Act 2009 (the FW Act). Ms Al Bankani also relies heavily on Calderbank v Calderbank principles.

[8]

[5] For the reasons that follow I have decided not to award costs.

[9]

[6] One month before the hearing WSMRC offered 10 weeks' pay to settle the unfair dismissal claim. This offer was rejected and Ms Al Bankani made a counter offer of 16 weeks' pay to settle unfair dismissal claim. This offer was met with a "request" from WSMRC's solicitors in the following terms:

[10]

"... To enable our client to consider your client's offer to resolve the Proceedings for (amongst other things) 16 weeks' pay, our client requires confirmation as to why it is said that your client will receive a more favourable result than the Further Offer at Hearing."

[11]

[7] At best this "request" was puerile, at worst it was an attempt to bleed Ms Al Bankani's costs. Both parties were legally represented and, by the time of this request, both parties had filed their evidence and submissions. Fortunately Ms Al Bankani's solicitor's response was appropriately brief, viz:

[12]

"As we trust you can appreciate, we are not in the business of justifying modest settlement offers, particularly when

[13]

1. Reinstatement is the primary remedy under the FW Act

[14]

2. When your client's conduct appears to be vulnerable to criticism and

[15]

[8] Negotiations then appeared to stall for several weeks before Ms Al Bankani's solicitors tried again to revive discussions. Quite reasonably Ms Al Bankani did not bid against herself. In a phone call between solicitors her offer of 16 weeks' to settle the unfair dismissal claim was restated. The phone call seems to have ended suddenly, which caused Ms Al Bankani's solicitors to write to WSMRC's solicitors in terms including the following:

[16]

"... I will assume that you accidentally hung up on me today. Or perhaps there was a bad connection.

[17]

We confirm we put in an offer of 16 weeks pay (et cetera) and you rejected it and did not provide a further offer despite being encouraged to do so.

[18]

Anyway we await your client's offer - particularly as we are all wise enough to know that parties do not typically bid against their own offers..."

[19]

[9] The next day, being two working days before the hearing was due to commence, WSMRC's solicitors wrote to Ms Al Bankani's solicitors reminding them that the unfair dismissal claim was "hopeless", that the claims made by Ms Al Bankani in her underpayment claim were not genuine and that no more than $3500 was recoverable in those proceedings "at best". WSMRC made a "global" offer of settlement "on a commercial basis only" of 16 weeks' pay to settle both the unfair dismissal and the underpayment claim.

[20]

[10] On the last business day before the hearing commenced, Ms Al Bankani made a final offer as described above, being either 12 weeks' pay to settle the unfair dismissal claim or 24 weeks' pay to settle both the unfair dismissal claim and the underpayment claim.

[21]

[11] There were other settlement terms in the parties' offers but they are not material to the costs application.

[22]

[12] Ms Al Bankani was a refugee with a traumatic history (known to the parties because it was detailed in her filed evidence), she was dismissed from her work of providing specialised and intensive services to support other refugees classified by the Commonwealth as having high or complex needs, and assessed objectively the reasons for her dismissal were somewhat flimsy. Ms Al Bankani was so shocked and upset on the day she was told of her dismissal that someone called the police to attend Ms Al Bankani's home to do a welfare check.

[23]

[13] The attempts to bludgeon Ms Al Bankani's case by hostile lawyer letters in the weeks before the hearing was unproductive. Fortunately for Ms Al Bankani, her solicitors did not waste her legal fees by responding in kind.

[24]

[14] Ms Al Bankani's costs application relies on s.400A of the FW Act:

[25]

(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.

[26]

(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.

[27]

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

[28]

[15] The following general principles are well established in the authorities:

[29]

(a) in the ordinary course of litigation costs follow the event. The purpose of a costs order is not to punish the unsuccessful party but to compensate the successful party against the expense to which he or she has been put by reason of the legal proceedings (per Latoudis v Casey [1990] HCA 59 at [13], [1990] HCA 59; (1990) 170 CLR 534 at 543);

(b) in the ordinary course of litigation under the FW Act, costs do not follow the event, and each party bears their own costs. The purpose or policy of the cost provisions in the FW Act are to free parties from the risk of having to pay their opponents' costs in matters arising under the Act, while at the same time protecting parties who are forced to defend proceedings that have been instituted vexatiously or without reasonable cause (per Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23 at [7], [2013] FCAFC 23; (2013) 232 FCR 428 citing Khiani v Australian Bureau of Statistics [2011] FCAFC 109);

(c) to the extent that the cost provisions of the FW Act provide a protection against costs orders, that protection can be lost by certain conduct (per Kangan Batman Institute of Technology and Further Education v AIRC at , ; at 419);

[30]

[16] Section 400A applies to unfair dismissal claims in the Commission. Section 400A is concerned with unreasonable acts or omissions in connection with the conduct or continuation of a matter already instituted, not whether it was reasonable to have instituted a matter in the first place. The following principles apply in relation to s.400A:

[31]

(a) There are two pre-conditions for the making of a costs order. Firstly that a party engaged in an unreasonable act or omission in relation to the conduct or continuation of a matter; and secondly that the act or omission caused the other party to the matter to incur costs (per Gugiatti, v SolarisCare Foundation Ltd [2016] FWCFB 2478 at [43]);

(b) whether an act is "unreasonable" is informed by its context and requires an evaluative assessment of all the circumstances (per Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222 at 171[2017] FCAFC 222; , (2017) 274 IR 420);

(c) the continuation of a matter after arbitration has commenced might be an unreasonable act if, on the facts apparent to the applicant at the relevant time, there was no substantial prospect of success (per Tracey at [24]); and

(d) if the requirements of s.400A are satisfied, the awarding costs is nonetheless discretionary.

[32]

[17] Ms Al Bankani submitted that her final offer was a significant compromise made to WSMRC and WSMRC's failure to accept the offer of settlement represents an unreasonable act or omission which caused Ms Al Bankani to incur significant further costs.

[33]

[18] Ms Al Bankani said that at the time WSMRC rejected her offer it had sufficient information from the filed evidence and submissions to make an informed assessment of Ms Al Bankani's case. Ms Al Bankani suggested that her offer presented no adverse consequences to WSMRC.

[34]

[19] WSMRC's refusal to accept her offer was said to constitute an unreasonable act in the circumstances and was contrary to the principles upheld in Calderbank v Calderbank.

[35]

[20] Ms Al Bankani submitted that there was a causal link between WSMRC's unreasonable action and the additional costs incurred by Ms Al Bankani - being that Ms Al Bankani incurred the additional legal costs that arose from conducting the hearing.

[36]

Respondent's submission on the cost application.

[37]

[21] In response WSMRC submitted that the costs application was 'misconceived'. WSMRC made several attempts to settle the matter in the weeks and months before the hearing. WSMRC submitted that its rejection of Ms Al Bankani's final offer was not unreasonable, particularly given that the offer was only made "7 business hours prior to the commencement of the final hearing" and by then WSMRC had already incurred significant legal costs.

[38]

[22] WSMRC submitted that it was relevant that Ms Al Bankani's offer was more than WSMRC's counsel's fees and also submitted that it was relevant that WSMRC's final offer of settlement was higher than the figure Ms Al Bankani now claims as costs.

[39]

[23] WSMRC submitted that it would be against public interest and out of step to impose a financial penalty on WSMRC for defending the proceedings when there was, on its face, a reasonable basis for it to do so.

[40]

[24] WSMRC submitted that it was relevant to the costs application that after WSMRC was ordered to reinstate Ms Al Bankani that she resigned her employment four days before she was due to return to the workplace. In this regard WSMRC submitted that if Ms Al Bankani had not intended to return to work, it was incumbent upon Ms Al Bankani to notify the Commission.

[41]

[25] WSMRC submitted that the Commission should find that Ms Al Bankani has not acted reasonably and take her conduct into account in determining the costs application.

[42]

[26] WSMRC submitted that there are no special circumstances in the proceedings that warrant the departure from the ordinary course that each party bear their own costs, and that therefore the Costs Application should be dismissed.

[43]

[27] I accept the possibility that a party's rejection of a settlement offer could be an unreasonable act or omission that could remove the cost protections that otherwise apply under the FW Act. That is not to say that any rejection of a settlement offer could trigger an eligibility for costs.

[44]

[28] Ms Al Bankani relied heavily on Calderbank principles. This reliance was misplaced.

[45]

[29] "Calderbank" offers derive their name from the English Court of Appeal decision in Calderbank v Calderbank [1975] 3 WLR 586; [1975] 3 All ER 333. In short, the rejection of a Calderbank offer exposes a party to the risk of an indemnity costs order if the rejected offer is not bettered (for the offeree) by the litigated outcome. In general terms indemnity costs can be ordered when there has been some misconduct or delinquency on the part of the party being ordered to pay costs. The presumed delinquency in rejecting a Calderbank offer is putting the offeror to the expense of continuing the litigation when the offeree could have achieved a better result by accepting the offer. In the present case Ms Al Bankani argued that for WSMRC the offer (12 weeks' pay) was not bettered by the litigated outcome (reinstatement plus more than 12 weeks' backpay) and so it was unreasonable for WSMRC to put Ms Al Bankani to the expense of running her case.

[46]

[30] The reliance on Calderbank principles is misplaced because it diverts inquiry away from the terms of s.400A. The Commission's only inquiry in an application under s.400A is whether a party "caused those costs to be incurred because of an unreasonable act or omission ... in connection with the conduct or continuation of the matter." The rejection of a Calderbank styled offer that is not bettered in the litigated outcome is not assumed to be or even equated with "an unreasonable act or omission" under s.400A.

[47]

[31] As the Full Court in observed in Stratton Finance Pty Limited v Webb [2014] FCAFC 110 at [80]:

[48]

"Caution should be exercised as to how a Calderbank offer, even a generous one, is viewed in such circumstances. Calderbank letters presuppose what might be called a 'costs jurisdiction', in contrast to the usual rule in FW Act claims. To group together contractual and FW Act claims in an offer may permit the conclusion that the refusal of the offer was unwise, even unreasonable, but it does not follow that such is an unreasonable act or omission, for the purposes of s 570(2)."

[49]

[32] Similarly, Justices Bromberg and Charlesworth observed in Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222 at 165[2017] FCAFC 222; , (2017) 274 IR 420 at 165:

[50]

"In the context of justifying an order for indemnity costs in favour of a person who has made a Calderbank offer, the rejection of the offer need not be "plainly unreasonable" and an "especially high standard of unreasonableness" is not to be adopted because that would operate to diminish the effectiveness of the Calderbank offer as an incentive to settlement: Black v Lipovac [1998] FCA 699 at [218] (Miles, Heerey and Madgwick JJ); Alexander v Australian Community Pharmacy Authority (No 3) [2010] FCA 506 at [22] (Bromberg J). Accordingly, in that context the word "unreasonable" may be used synonymously with "imprudent": Alpine Hardwood (Aust) Pty Ltd v Hardys Pty Ltd (No 2) [2002] FCA 224 at [11] (Weinberg J). It denotes an act which is not guided by or based upon good sense or sound judgment. In the context of the use of the word "unreasonable" in s 570(2)(b), taking into account the underlying purpose of that provision which includes the promotion of access to justice (Trustee for the MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8] (Siopis, Collier and Katzmann JJ)), a higher standard of unreasonableness is to be adopted. It has been said that the fact that a party has conducted litigation inefficiently or adopted a misguided approach will be relevant to, but not conclusive of, the party having acted unreasonably in a sense relevant to s 570(2)(b): at (Bromberg J); (2008) 170 FCR 574 at [29] (Tamberlin, Gyles and Gilmour JJ). The difference in the standards of unreasonableness which are applicable in the two contexts in question needs to be appreciated before the rejection of a reasonable offer of settlement is characterised as an "unreasonable act or omission"

[51]

[33] The terms of s.400A of the FW Act are not materially different to the terms of s.570(2)(b) of the FW Act. In Patrick Stevedores Holdings Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union (No.5) [2021] FCA 1645 at [6] Justice Lee summarised the principles applied to s.570(2)(b) by the Federal Court:

[52]

"[6] The relevant principles are not in doubt and can be summarised as follows:

[53]

(2) Subsection 570(2)(b) of the FWA relevantly provides that a "party may be ordered to pay the costs only if ... the Court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs".

[54]

(3) The Court has adopted the following principles in connexion with this provision:

[55]

(a) a failure to accept a reasonable offer of compromise is capable of constituting an unreasonable act or omission for the purposes of s 570(2) and its predecessors: see Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; (2015) 317 ALR 665 (at 697 [166] per Tracey, Gilmour, Jagot and Beach JJ);

[56]

(b) "unreasonable" does not equate to "exceptional": Australian Workers Union v Leighton Contractors Pty Limited (No 2) [2013] FCAFC 23; (2013) 232 FCR 428 (at 430 [7] per Dowsett, McKerracher and Katzmann JJ); and

[57]

(c) whether an act is "unreasonable" is informed by its context and requires an evaluative assessment of all the circumstances: Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222; (2017) 256 FCR 306 (at 342 [164] per Bromberg J, and at 344 [171] per Charlesworth J).

[58]

(4) In considering whether it is unreasonable for a settlement offer to be rejected, the following matters are should ordinarily be considered:

[59]

(a) the stage of the proceeding when the offer was made;

[60]

(b) the time afforded to the offeree to consider the offer;

[61]

(d) the offeree's prospects of success, assessed as at the date of the offer;

[62]

(e) the clarity with which the terms of the offer were expressed; and

[63]

(f) whether the offer foreshadowed an application for indemnity costs in the event of refusal, Veda Advantage Ltd v Malouf Group Enterprises Pty Ltd (No 2) [2016] FCA 470; (2016) 118 IPR 156 (at [31] per Katzmann J)."

[64]

[34] Drawing from these authorities, there are a number of matters that support a conclusion that WSMRC acted unreasonably in rejecting Ms Al Bankani's final offer. Although WSMRC submitted that the final offer was made "7 business hours prior to the commencement of the final hearing", the offer made at 10:25am on the Friday before the hearing commenced on the following Monday. In this context WSMRC had ample time to consider Ms Al Bankani's offer.

[65]

[35] Ms Al Bankani's offer represented a material compromise. At the time the offer was made Ms Al Bankani was seeking reinstatement. The offer of 12 weeks' pay was a significant compromise compared to Ms Al Bankani's stated claim. I do not think it is relevant that Ms Al Bankani later resigned her employment rather than returning to work - WSMRC was not to know this at the time the offer was made. I am not satisfied that later events are particularly relevant. Before the hearing WSMRC carried a material risk that a reinstatement order could be made. Compared to that risk Ms Al Bankani's offer of 12 weeks' pay was a sizable compromise.

[66]

[36] WSMRC's case in the substantive proceedings was weak from the start. WSMRC's solicitors and counsel should have recognised this and advised WSMRC accordingly long before the hearing commenced, in fact long before both parties had incurred the expense of preparing evidence and submissions. There was no evidence led about the information or advice provided to WSMRC at the time that it rejected Ms Al Bankani's final settlement offer.

[67]

[37] Hopefully WSMRC received objective advice on its prospects of success at the time, despite the posturing adopted in its correspondence. However I strongly suspect that WSMRC took legal advice and had legal assistance during the dismissal process. The correspondence to Ms Al Bankani before her dismissal, for example, included inane defined terms such as "Dear Ms Al Bankani, We refer to our letter dated 20 January 2022 (20 January Letter) ... and we acknowledge receipt of your letter dated 28 January 2022 (Response)". This letter conveyed a pre-litigious warmth often found in correspondence drafted by lawyers. If I am right about this then it is unlikely that the legal advice to WSMRC after the dismissal was critical of the decision to dismiss Ms Al Bankani or of the process undertaken to effect the dismissal.

[68]

[38] Although some offers exchanged between the parties included a component to resolve an underpayment claim, the final offer was clear in its terms.

[69]

[39] However there are number of matters that do not support a conclusion that WSMRC acted unreasonably. The final offer relied upon by Ms Al Bankani was made relatively late in the proceedings, being the business day before the hearing commenced. At the time the offer was made WSMRC had already incurred a significant portion of its legal expenses in preparing its evidence and written submissions and preparing for hearing. By this point in time there was very little commercial imperative for WSMRC to fully compromise its case. Even though some of WSMRC's costs would have been saved, a significant amount of costs would have been lost.

[70]

[40] More importantly WSMRC made some offers to resolve the matter, including and offer made the day before Ms Al Bankani's final offer. WSMRC's final offer was 16 weeks' pay to settle both the unfair dismissal and the underpayment claim. It is unfortunately a little imprecise to compare the competing final offers. Ms Al Bankani's final offer was expressed as alternate offers: 12 weeks' pay to settle the unfair dismissal claim or 24 weeks' pay to settle the unfair dismissal claim and the underpayment claim. In comparing like for like WSMRC's 16-week offer should be compared to Ms Al Bankani's 24-week offer (so that the release from the underpayment claim is a constant). However this comparison introduces a confounding problem: I would need to make an objective assessment of the strength of the underpayment claim in order to assess whether WSMRC acted unreasonably in rejecting the 24-week offer.

[71]

[41] Comparing the 16-week offer to Ms Al Bankani's 12-week offer is obviously just as problematic. Ms Al Bankani does not claim that WSMRC acted unreasonably in making its final offer in a form that included a release from Ms Al Bankani's underpayment claim and nor could such a claim be properly made.

[72]

[42] Approximately one month before the hearing WSMRC had offered 10 weeks' pay to resolve the unfair dismissal claim. It is not clear whether WSMRC knew about Ms Al Bankani's underpayment claim at that stage. If Ms Al Bankani's final offer of 12 weeks' pay to settle the unfair dismissal claim was compared to WSMRC's earlier offer 10 weeks' pay to settle the unfair dismissal claim, then it cannot be said that only WSMRC acted unreasonably in failing to reach an agreement to resolve the unfair dismissal claim.

[73]

[43] It is not apparent to me how Ms Al Bankani could establish that WSMRC offering only 10 weeks' pay was so unreasonable that the costs provisions are triggered, but if WSMRC had offered two more weeks, or of course accepted Ms Al Bankani's offer of 12 weeks, then WSMRC would not have acted unreasonably. Just to add to the imprecision of these considerations: at the time that WSMRC offered 10 weeks' pay, Ms Al Bankani was offering 16 weeks' pay to settle the unfair dismissal claim not 12 weeks.

[74]

[44] All of these permutations show that if both parties take active steps to try to resolve the claim by agreement, but do not ultimately reach agreement, then it is difficult for one party to say that the other was acting unreasonably in failing to resolve the matter by agreement. Unsurprisingly, the closer the parties come to reaching an agreement before settlement negotiations fail, the less likely it is that only one party has acted unreasonably.

[75]

[45] With the benefit of hindsight WSMRC was imprudent in not taking further steps to bridge the gap between the parties and if the proceedings were in a costs jurisdiction Ms Al Bankani would have a very strong claim for indemnity costs under Calderbank principles.

[76]

[46] However I am not satisfied that WSMRC acted unreasonably when it rejected Ms Al Bankani's final offer.

[77]

[47] Ms Al Bankani does not claim any other basis for an order for costs. Ms Al Bankani's costs application is therefore rejected.

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