Four Sons Pty Limited v Sakchai Limsiripothong [2000] NSWIRComm 131 | Case summary

On 20 March 2000 the Full Bench heard the appeal in the present matter, and delivered its extempore decision, granting leave to appeal and dismissed the appeal. In the light of an application for costs foreshadowed by the respondent, the Full Bench reserved the question of costs of the proceedings and made directions for the making of any application which the respondent might make, and also as to the filing and service of any evidence and submissions in connection therewith. The substantive part of the decision of 20 March 2000 was in the following terms: 23. We have therefore concluded that the appeal should be dismissed prior to dealing with the question of leave to appeal. We have also provided reasons for our conclusions, which is not a usual course in relation to matters where leave is being considered and refused. We have taken this course, a course unlikely to be repeated, because of the ingenuity of the appellant's submissions, and the fact that they raise a number of matters which have not arisen before, or have not arisen in the same form. For that reason we consider that we should grant leave since it is appropriate that these matters be the subject of consideration and decision at Full Bench level. 24. It should be clearly stated, however, that novelty or ingenious arguments do not of themselves demonstrate either significant error or a basis for the grant of leave. Although we grant leave it is not on a basis which involves any finding that there was any arguable error in the decision of McKenna C. The application now made by the respondent was accompanied by a detailed affidavit sworn by Ms Anna Frances Cody, a solicitor employed by the Kingsford Legal Centre who was at relevant times the solicitor for the respondent. In light of the submissions that the Full Bench has received on the question of costs it is convenient to set out certain parts of that affidavit (omitting annexures and references thereto): 2. I … am informed that at the Preliminary Hearing in this matter before Commissioner Connor there was an offer of settlement made verbally by the Appellant to the Respondent of 1 week's pay in lieu of notice. This offer was rejected. The Appellant further offered $500 in settlement of the case. This offer was rejected verbally by the Respondent. 3. On 9 August 1999 an offer of settlement in writing was received by the Respondent. The Appellant offered to settle the matter for the amount of $750.00. … 4. On 20 September 1999 the Appellant sought an urgent reply to their offer of settlement made on the 9 August 1999. … 5. On 21 September 1999 the Respondent rejected the offer of $750.00 in writing. … 6. On 8 October 1999 the Respondent offered to accept $5600 in settlement of his claim. This offer was in writing. … 7. On 8 October 1999, in a conversation between myself and Mr Doug Lawman of Peter Murphy and Co, solicitors for the Appellant, the Appellant rejected the offer of $5600 verbally. The Appellant offered verbally to settle the matter for $1000. 8. On the 12 October 1999 at the hearing before Commissioner McKenna, the Respondent offered to accept 3 months wages (approximately $4200) in settlement of the matter. The Appellant offered to pay one month's wages in settlement of the matter. Neither offers were accepted and the hearing went ahead. 9. On the 11 November 1999 Commissioner McKenna handed down her judgment in favour of the Respondent ordering the Appellant to pay $6,000 (17 weeks) compensation. On the basis of that material, the respondent makes an application for the costs of the proceedings at first instance pursuant to s 181(2)(c) of the Industrial Relations Act 1996 (the Act). On additional and alternative grounds, the respondent makes an application for the costs of the appeal both in terms of that provision and also in terms of s 181(2)(b). It is convenient to set out the relevant parts of s 181 of the Act: 181 Costs (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 (d) the Commission may order costs to be assessed on the basis set out in Division 6 Part 11 of the Legal Profession Act 1987 or on any other basis. (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 (d) the Commission may award costs in proceedings for a breach of an industrial instrument or the recovery of money under Chapter 7, as provided by sections 357 and 373. (3) … (4) In this section, costs includes: (a) costs of or incidental to proceedings in the Commission, and (b) in the case of an appeal to the Commission, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal. It is to be observed that, as a result of the terms of s 181(4), the Full Bench may deal with costs applications not only in relation to proceedings before it but also in relation to proceedings at first instance. As to his application pursuant to s 181(2)(c), the respondent relies upon the recent decision of the Full Bench of the Commission in Bankstown City Council v Paris (1999) 93 IR 209 at 219. The appellant opposes the application for costs made by the respondent in every respect. As to the application concerning the proceedings at first instance, the appellant submits: 1. The respondent's application for the costs of the proceedings at first instance should be refused. No such order was made at first instance. The respondent brought no appeal against the Commissioner's failure to do so. As a result, none of the questions posed by sub-section 181(2) of the Industrial Relations Act 1996 were before the Full Bench. None of the conclusions of the Full Bench address those questions. Accordingly, no order for the costs of the proceedings at first instance is available on appeal, and it would not be justified even if it was available. We consider that this submission is misconceived. It is clear from the terms of s 181(4) of the Act that a costs application in relation to proceedings at first instance may be made, where an appeal is lodged and determined, to the Full Bench hearing the appeal and the Full Bench may determine that application. The chronology in relation to this matter, although we do not set it out in this decision, demonstrates that although the respondent foreshadowed that a costs application would be made to McKenna C, that application was not made in the light of the subsequent appeal lodged by the appellant of the appeal. We can understand why, in those circumstances, the foreshadowed application was not in fact made. Further, it is not to the point in those circumstances that no order as to costs was made at first instance. McKenna C was not asked to do so. It cannot therefore be said by way of criticism of the respondent's position that he brought no appeal against the Commissioner's failure to do so. We do not accept the consequent submission that no order for the costs of the proceedings at first instance is available on appeal. We now turn to the merits of the respondent's application for costs of the proceedings at first instance in light of the statement of the Full Bench in Bankstown City Council v Paris at 219 which was in these terms: 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. It is thus necessary to consider the course of events which the evidence shows how the parties dealt with the considerations relevant to the question of the costs of the proceedings at first instance. The chronology earlier set out from the affidavit of Ms Cody regrettably shows significant tardiness and lack of appropriate response on the part of the respondent when the appellant made a number of offers to settle the matter between 9 August and 21 September 1999. Although the offers made could be described as nominal, it was certainly appropriate that the appellant, in the circumstances revealed, made offers to settle the proceedings even if they could be described as rather nominal. 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. It is conceivable that if the respondent had responded to those offers in a more timely way, the proceedings may have settled. We doubt, however, that that is the appropriate finding on the evidence before us. Rather, the evidence as to further negotiations makes plain that the appellant had no realistic intention to make an offer which was likely to settle the proceedings before McKenna C. However, it would be inappropriate not to take into account the lack of a timely response from the respondent to the nominal offers of settlement which were made by the appellant in August and September 1999. Returning to the question of whether the test which s 181(2)(c) requires to be met before a costs order can be made, we consider that the evidence before us leads inevitably to the conclusion that the statutory test was satisfied. Accordingly, although we consider that the jurisdictional "gateway" for the making of an order for costs at first instance has been satisfied, there still remains the exercise of the discretion appropriately as to what costs order should be made. For the reasons which we have adverted to as to what occurred between the parties between August and September 1999, and the lack of timely response from the respondent, we do not consider that it is appropriate for a costs order to be made in the respondent's favour for that period. However, the circumstances set out in the evidence of Ms Cody as to what occurred on and from 8 October 1999 lead to quite a different situation as to that period. Those circumstances should result in the appellant paying the respondent's costs of the proceedings at first instance on and from 8 October 1999 to their conclusion. We now deal with the application made as to the costs of the appeal which, as we have noted, is made not only pursuant to s 181(2)(c) but also by reference to s 181(2)(b). The appellant also resists that application and submits, inter alia, that the respondents' reliance upon the decision in Bankstown City Council v Paris is misplaced. In that regard, it is submitted that the extraordinary set of factual circumstances which persuaded the Commission to make orders for costs in that case are not present here. The appellant submits that the respondent incorrectly states the principle enunciated in Imogen Pty Ltd v Sangwin (1996) 70 IR 254, a judgment relied upon by the respondent. It submits that the judgment of Wilcox CJ in that case should be understood on the basis that his Honour made it plain that an order for costs was warranted in that case because points raised on appeal were doomed to fail. Further, that his Honour observed (at 257) the proceedings will be instituted without reasonable course if they "must fail" but not if they had "a not insubstantial prospect of … achieving some success". The appellant resists the respondent's application as to the costs on appeal pursuant to s 181(2)(c) on the basis that the factual circumstances concerning offers made in the course of that appeal do not warrant the grant of the application. Because we do not consider it necessary to decide the application on that basis, it is unnecessary to refer to those submissions further. We consider that the respondent should also have his costs as to the appeal on two bases. First, as was held in Bankstown City Council v Paris (at 220), a finding as to one part of the proceedings (that is either as to the appeal or as to the proceedings at first instance) may have a "knock on" effect on the other. See also Department of Community Services v Bragg (No 2) [2000] NSWIRComm 28 at 10, where a finding that the jurisdictional "gateway" under s 181(2)(c) had been met in the proceedings at first instance resulted in the Full Bench having power to award the costs of the appeal. Further, applying the approach by Wilcox CJ in Imogen Pty Ltd v Sangwin , we consider that the test set out in s 181(2)(b) has been satisfied in these proceedings on the basis of our findings as to the proceedings at first instance set out in paragraph 2 above. Those findings also provide the appropriate basis to exercise our discretion to award costs. We consider that the exercise of the discretion under both s 181(2)(b) and s 181(2)(c) should, in the light of those findings, lead to the grant of the respondent's costs application as to the proceedings on appeal. Orders We therefore make the following orders: 1. That the appellant pay the respondent's costs of the proceedings at first instance on and from 8 October 1999 to the conclusion of those proceedings in a sum as agreed or as assessed. 2. That the appellant pay the respondent's costs of these appeal proceedings in a sum as agreed or as assessed.

Four Sons Pty Limited v Sakchai Limsiripothong

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