Fair Work Act 2009

s.394 - Unfair dismissal

• [1] On 5 June 2025, I dismissed the unfair dismissal application of Mr Felipe Martin against Jim Aitken & Partners No. 1 Pty Ltd t/as Aitken Real Estate (Aitken Real Estate) on the basis that Mr Martin was not dismissed (the Decision).[1]

• [2] Aitken Real Estate has applied for costs against Mr Martin under sections 400A and/or 611 of the Fair Work Act 2009 (Cth) (Act). In support of its application, Aitken Real Estate submits that:

1. on 21 February 2025, Mr Martin made his application vexatiously and without proper purpose, and/or

1. it should have been reasonably apparent to Mr Martin that his application had no reasonable prospects of success, and

1. in the alternative, Mr Martin acted unreasonably by failing to discontinue his application on and from 28 April 2025, once it should have been reasonably apparent to him that his application was not reasonably arguable. On this date, Mr Martin had the benefit of the submissions and evidence filed by Aitken Real Estate in response to the application.

• [3] Section 611(1) of the Act establishes a general rule that parties in proceedings before the Commission must bear their own costs. There are exceptions to this general rule that allow for costs to be awarded in specific circumstances, including those found in sections 400A and 611(2) of the Act.

• [4] Section 400A of the Act provides as follows:

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

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

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

• [5] In summary, section 400A(1) of the Act requires the Commission to be satisfied of two matters before making an order for costs against a party under that provision:

(a) Firstly, that the party engaged in an unreasonable act or omission in relation to the conduct or continuation of a matter; and

(b) Secondly, that such act or omission caused the other party to incur costs.

• [6] Satisfaction as to both matters enlivens the Commission's discretionary power to order the payment of costs under section 400A.[2]

• [7] While section 611(1) provides for each party to bear their own costs in matters before the Commission, section 611(2) of the Act provides as follows:

"(2) However, the FWC may order a person (the first person) to bear some or all of the costs of another person in relation to an application to the FWC if:

(a) the FWC is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or

(b) the FWC is satisfied that it should have been reasonably apparent to the first person that the first person's application, or the first person's response to the application, had no reasonable prospect of success."

• [8] Principles governing the interpretation and application of s.611(2)(a) were set out in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing[3] and may be summarised as follows:

1. An application is made vexatiously when the predominant motive or purpose of the applicant is to harass or embarrass the other party or to gain a collateral advantage.

1. An application is not made without reasonable cause simply because the application did not succeed.

1. Whether an application is made without reasonable cause may be tested by asking, on the facts apparent to the applicant at the time the application was made, whether there was no substantial prospect of success.

1. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to characterise the application as having been made without reasonable cause.

1. In relation to an appeal, the question becomes whether the appeal has no substantial prospect of success. The prospect of success must be evaluated in the light of the facts of the case, the judgment appealed from and the points taken in the notice of appeal. If there was not insubstantial prospect of the appeal achieving some success, it cannot fairly be described as having been made without reasonable cause.

1. An application will have been made without reasonable cause if it can be characterised as so obviously untenable that it cannot possibly succeed, or manifestly groundless, or discloses a case where the tribunal is satisfied cannot succeed.

• [9] Principles relevant to the interpretation of s.611(2)(b) were summarised by the Full Bench in Baker v Salva Resources Pty Ltd[4] as follows (footnotes omitted):

"[10] The concepts within s.611(2)(b) 'should have been reasonably apparent' and 'had no reasonable prospect of success' have been well traversed:

• 'should have been reasonably apparent' must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis, rather than a subjective test; and

• a conclusion that an application 'had no reasonable prospect of success' should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable."

• [10] In his application, Mr Martin claimed that he was constructively dismissed when he was told he was no longer wanted and then locked out of company systems before a formal termination process was initiated. The assertion was elaborated on in an outline of submissions later filed on Mr Martin's behalf, alleging that he was forced to resign for the purposes of s.386(1)(b) of the Act because of conduct, or a course of conduct, engaged in by Aitken Real Estate between 3 and 7 February 2025, involving:

1. An angry phone call from his boss, Mr Stephen Murphy, calling for his resignation,
2. Aitken Real Estate subsequently locking him out of its systems later that day,
3. A letter proposing his termination of employment on 5 February 2025, and
4. The meeting on 7 February 2025 which resulted in the termination of employment by mutual agreement.

• [11] The facts of the matter are set out in my earlier Decision. It is plain on those facts that Aitken Real Estate was an active moving party in the events that led to the termination of employment. An important difference between this case and others involving allegations of forced resignation, however, is the turnaround in discussions between the parties on 7 February 2025, whereby Aitken Real Estate proposed a way to 'save' their relationship and Mr Martin insisted that he be terminated instead.

Was the application made vexatiously and without proper purpose?

• [12] I accept the submission of Aitken Real Estate that one purpose of Mr Martin in making his application to the Commission was to seek the Commission's assistance in enforcing an agreement that there would be 'no repercussions'[5] after the termination of his employment, in response to the threat of court proceedings made by Aitken Real Estate for alleged breaches of duty and contractual post-employment restraints. Mr Martin believed that Aitken Real Estate was reneging on an agreement for the termination of his employment. He saw the allegations as retaliatory and unreasonable and wanted Aitken Real Estate to abandon its attempts to enforce his post-employment restraints. This was not a proper basis to apply to the Commission for an unfair dismissal remedy. The Commission's unfair dismissal jurisdiction does not extend to the enforcement or setting aside of contracts or to matters arising after the employment relationship has come to an end.

• [13] However, I do not accept that this was Mr Martin's only purpose in making the application to the Commission. Mr Martin also sought acknowledgment that he had been constructively dismissed. He alleged a course of conduct leading up to the termination of employment that made his ongoing employment untenable. He did so apparently on the basis of legal advice. Although the details of that advice are not available, it may be inferred from Mr Martin's Form F2 application that he was legally represented and that he had sought and was relying on legal advice in connection with the application. The same legal representatives prepared and filed submissions and evidence on his behalf on 11 April 2025 and 16 May 2025. In the circumstances, I am not satisfied that the application was made vexatiously and without proper purpose. Whether the legal advice Mr Martin relied upon was good advice is a separate question, and one that I am unable to answer on the materials.

• [14] I accept the submission that Mr Martin's application sought neither of the remedies available under s.390 of the Act for unfair dismissal (being reinstatement, or the payment of compensation), It is likely that neither would have been appropriate in the circumstances in any event. Mr Martin had found another job. He did not want to return to Aitken Real Estate, and the relationship had become acrimonious by the time the application was made. Mr Martin appears to have fully mitigated any loss that might otherwise have flowed from the termination of employment by accepting 4 weeks' wages in lieu of notice on termination and then commencing in the new role 2 weeks later (although at the hearing, there remained a dispute about commission said to be owed). As Aitken Real Estate submitted, this was not a case where the applicant pursued the application for the purpose of overturning a finding of misconduct which affected his prospects of employment.[6] However, it does not automatically follow that his motivation in bringing the application was improper. As noted above, one of the remedies Mr Martin sought was an acknowledgment of his 'constructive dismissal'. This was an outcome that might have been available, had Mr Martin been dismissed, by the issuing of a decision with no orders made.

• [15] In summary, I am not satisfied that the application was made vexatiously or without proper purpose. It follows that no order for costs can be made under s.611(2)(a) of the Act.

Should it have been reasonably apparent to Mr Martin that his application had no reasonable prospects of success?

• [16] In the Decision, I found that it was Mr Martin who ultimately pressed for the outcome of termination of employment in the meeting of 7 February 2025.[7] This was a fact known to Mr Martin at the time of his application to the Commission. The application itself confirms that there was an agreement to termination of the employment. Although the circumstances in which termination of employment came about were sufficiently at the hands of Aitken Real Estate to invite speculation about whether s.386(1)(b) of the Act was engaged, such speculation was readily answered by Mr Martin's knowledge of how things transpired on 7 February 2025, and the reasons why. Objectively, it should have been apparent to Mr Martin that he had not been dismissed on that day even without an understanding of the law in relation to 'forced resignation'.

• [17] I accept that Mr Martin held a genuine belief that he had been treated unfairly (both in the period before and after the termination of his employment). But his application to the Commission alleged both unfairness and dismissal. Mr Martin could not reasonably have believed he had been dismissed in circumstances where he was the one who insisted on the outcome of termination. In doing so, he was motivated at least in part by a competing offer of employment he had received the night before.[8] It must follow, given that Mr Martin's application was for a remedy for unfair 'dismissal', that it should have been reasonably apparent to Mr Martin that his application had no reasonable prospects of success.

• [18] Despite these circumstances, I do not consider the interests of justice to weigh in favour of an order for costs under s.611(2)(b) of the Act. Before he made the application, Mr Martin sought legal advice about his options. This followed the threat of separate court action by Aitken Real Estate on 19 February 2025 in relation to conduct from which Mr Martin believed he had been released (albeit by a 'handshake deal' rather than any formal contract). Without knowing more about the nature of the legal advice received, or the instructions it relied upon, I cannot exclude the possibility of representative error. Nor is this a case where Aitken Real Estate comes to the table with entirely clean hands. But for the agreement to terminate employment, Mr Martin would have been dismissed. It remains for the court to decide what the parties agreed in connection with his post-employment restraints, and whether Mr Martin's actions warranted the responsive steps taken by Aitken Real Estate in the weeks after termination. On balance, the interests of justice weigh in favour of a cautionary approach, and against an order for costs against Mr Martin.

• [19] The application for costs under s.611(2)(b) of the Act is refused.

Did Mr Martin act unreasonably by failing to discontinue his application on and after 28 April 2025?

• [20] Considering the conclusion at paragraph [17] above, I am satisfied that it was unreasonable for Mr Martin to continue his application after 28 April 2025 once the objection that Mr Martin had not been dismissed was squarely raised by Aitken Real Estate in its filed materials. I have found that Mr Martin either knew, or should have known, that his allegation of dismissal had no reasonable prospects of success. By 28 April 2025, he was on notice that Aitken Real Estate's defence to the claim relied on the absence of a dismissal. The continuation of the application caused Aitken Real Estate to incur further costs in defending the application. The conditions for an order under s.400A are met.[9] However, for the reasons above, I consider it appropriate to adopt a cautionary approach to the award of costs on this basis in the circumstances.

• [21] The application for costs under s.400A is refused.

• [22] The application for costs made by Aitken Real Estate is dismissed.

B Miles of Counsel for Aitken Real Estate Pty Ltd.

[1] [2025] FWC 1542

[2] James Francis Camenzuli v Companion Systems Pty Limited [2025] FWC 2166 at [6]- [9]

[3] [2014] FWCFB 810 at [23]- [33]

[4] [2011] FWAFB 4014; (2011) IR 174

[5] [2025] FWC 1542 at [14] and [16]

[6] Steven Post v NTI Limited t/as NTI [2016] FWCFB 6765 [45]

[7] [2025] FWC 1542 at [14]

[8] [2025] FWC 1542 at [12]

[9] Gugiatti v SolarisCare Foundation Ltd [2016] FWCFB 2478 at [43]

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