Nicholas Gaite is a Senior Firefighter with Fire and Rescue NSW ("FRNSW"). On 15 January 2019 Mr Gaite's employment with FRNSW was terminated with immediate effect due to misconduct. He subsequently commenced proceedings pursuant to s 84 of the Industrial Relations Act 1996 (NSW) ("Act") alleging that his dismissal was harsh, unreasonable or unjust.
On 23 September 2019 I handed down my decision in Gaite v Commissioner of Fire and Rescue NSW [2019] NSWIRComm 1070 ("my earlier decision"). I found that the dismissal was harsh, unreasonable and unjust and ordered that Mr Gaite be reinstated. I declined to make an order under s 89(3) of the Act that Mr Gaite be paid the remuneration he would have received in the period from the dismissal until the date of reinstatement.
Mr Gaite now seeks an order for costs.
Mr Gaite's outline of submissions on costs included the following:
"2. The applicant relies in particular on s.182(2)(c) of the Industrial Relations Act 1996 (NSW) (the Act).
3. In Bankstown City Council v Paris (1999) 93 IR 209 at [219] the Full Bench observed regarding construing s.182(2)(c) of the Act, inter alia, that:
'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.'
4. lt is this second limb and construction of s.182(2)(c) that the applicant relies on in this application. There was no formal exchange of offers in the proceedings, although the parties did attend a mandatory conciliation conference in February 2019, during which settlement of the application was discussed. In this regard, in support of his application for costs the applicant does not rely on the rejection of any offers made; rather he contends that on an examination of the Commission's findings and the overall conduct of the respondent, the Commission can be comfortably satisfied that s.182(2)(c) of the Act can be sensibly engaged in the applicant's favour.
5. Further to the above, an examination of the Commission's findings is instructive, and the following matters are relied on in support of the submission that the respondent in all probability would not have resolved the matter in any circumstance. The applicant submits so much can be gleaned from:
(a) The absence of providing the applicant with a 'fair go all around' because of the manner in which the allegations were formulated.
(b) The consolidation of numerous allegations into Allegation 2, which the Commission found was inherently unfair.
(c) Bringing an allegation with multiple overlapping elements such that there was uncertainty as to the case that had to be met.
(d) The fact that at the time the allegations were laid against the applicant there was nothing to suggest that he had engaged in any conduct of a sexual nature.
(e) The fact there were serious flaws in Commissioner Baxter's reasoning but for which a different outcome was warranted on the facts.
6. The concerns regarding Commissioner Baxter's reasoning, as found by the Commission, included:
(a) An incorrect characterisation of the training the applicant received.
(b) An incorrect reference to the purpose of the training, with Commissioner Baxter erroneously asserting that it was for the purposes of a 'mayday drag'. That was found to be contrary to all available evidence at the hearing.
(c) A reference to the fact that the Commissioner could not rule out that the female recruits were targeted because of their gender.
(d) An incorrect assertion that the applicant lacked any insight into his conduct.
(e) An incorrect conclusion that there were ongoing safety issues for, in particular, female recruits, all of which was found to be without substance.
7. When considered in its entirety and supported by the Commission's findings, it seems readily apparent that the respondent's conduct was wholly inconsistent with any intention to settle the proceedings on any basis that could be considered reasonable. Respectfully, it is submitted that in the circumstances the Commission should exercise its discretion and make a costs order in favour of the applicant.
8. When exercising its discretion, it is relevant to consider the fact that the costs incurred by the applicant were significant. Not only has the applicant been deprived of in excess of 8 months' income from the respondent due to his wrongful termination, he has also expended in excess of $70,000.00 in bringing the application for review of the decision. While this is not determinative it does, respectfully, illustrate the not insignificant burden placed on the applicant following his termination.
9. There was no new evidence that came to light in the application that was not, at all times, available to the respondent. The applicant provided two written responses to the allegations and participated in a lengthy face to face meeting with Commissioner Baxter prior to the decision to terminate him. It is contended that the respondent deliberately chose to characterise and approach the available evidence in a manner that was inconsistent with common sense and sound judgment. lt remains open for the Commission to conclude that it did so because FRNSW were wedded to a particular outcome and would not countenance any other punishment but termination." (Footnotes omitted)
At the hearing Mr Hyde, who appeared for Mr Gaite, placed emphasis on the grounds set out in par 6 of Mr Gaite's outline of submissions and the reasoning adopted by Commissioner Baxter of FRNSW to dismiss Mr Gaite in the first place. He submitted that the erroneous factual basis which underpinned that reasoning effectively precluded the Commissioner from ever considering a settlement of these proceedings on any reasonable basis.
Mr Hyde further submitted that it was always Mr Gaite's position that he would accept redeployment. This was evidenced, it was said, by representations made by Mr Gaite in the process that ultimately culminated in his dismissal that he would accept redeployment to an alternative role. My attention was also drawn to the Application for Relief in relation to Unfair Dismissal filed by Mr Gaite pursuant to s 84 of the Act ("Application"), in which under the heading "Refief Sought" he had ticked the box marked "re-employment to another position". There was finally a suggestion that re-employment may have been offered at the conciliation conference conducted by the Commission on 13 February 2019, although no evidence was led in this respect.
FRNSW opposed any order for costs. It read affidavits of Nina Williams and John Andreallo, both employees of FRNSW. The effect of Ms Williams' evidence was that at the conciliation of the proceedings on 13 February 2019 Mr Gaite was unwilling to settle his claim for anything other than reinstatement. Mr Andreallo deposed that prior to the commencement of the arbitration on 26 August 2019 FRNSW had made an offer to settle the proceedings for the payment to Mr Gaite of an amount equal to two weeks' pay, which Mr Gaite rejected on the basis that he "was not prepared to negotiate anything other than full reinstatement".
In its Outline of Submissions on costs FRNSW rejected "any suggestion that it engaged in conduct that was inconsistent with an intention to settle on any reasonable basis". FRNSW contended that to the extent that Mr Gaite made offers of settlement - at conciliation and on 26 August 2019 - they did not involve any element of compromise of his claim, and in particular did not suggest that back pay was excluded from his claim. As such, the offers were little more than an "invitation to [FRNSW] to capitulate", as referred to in Carlton and United Beverages Limited & Brunt [2007] NSWIRComm 135 at [36]. The fact that the Commission ordered reinstatement is not determinative on the question of costs. Indeed, the "final outcome fell well short of [Mr Gaite's] offer of settlement".
[2]
Relevant legal principles
The Commission's power to award costs is provided by s 181 of the Act, which relevantly provides as follows:
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 the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis.
(2) However, the Commission may award costs only in the following cases:
…
(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…
The principles for the award of costs by the Commission are now well established. The Commission's jurisdiction is essentially a "non-costs" jurisdiction: Dr A v Health District (No 4) [2014] NSWIRComm 56 at [8]. The exercise of the discretion to award costs is a two stage process involving the determination of whether s 181(2) has been enlivened and, if so, the Commission is required to consider the exercise of the discretion pursuant to s 181(1): Re-Operational Ambulance Officers (State) Award (No 2) [2011] NSWIRComm 85 at [28].
As is apparent from the extract of his submissions reproduced above, Mr Gaite's application for costs rests on s 181(2)(c) of the Act. He relied on the Full Bench decision in Bankstown City Council v Paris (1999) 93 IR 209. In addition to, but incorporating the passage from the judgment on which Mr Gaite relied, the Full Bench made the following observations at pp 218-219:
"…The relevant part of s 181(2)(c), on the other hand, does not require the Commission to focus upon the circumstances of the commencement of the proceedings, or to consider only the situation of the applicant. Instead the Commission is required to consider in a more general way, the conduct of the party in respect of which an application for costs is made; and, in that regard, to consider the conduct of the party in relation to the question of settlement of the claim.
…
Construing the relevant part of s 181(2)(c) in its overall statutory context, we conclude that the evident purpose of the provision is to encourage the settlement of proceedings to which it applies. The criterion set out in the provision is to be applied objectively and requires a consideration of the whole of the conduct of the party against whom the order is sought, or some discrete part of that party's conduct, with a view to ascertaining whether it unreasonably failed to agree to a settlement of the claim. We also consider that on the proper construction of the provision, an affirmative conclusion may be reached on at least two bases. First, where there was a proposal put by a party which could be described as a reasonable settlement of the claim and that was not agreed by the other party. The second situation in which the criterion could be satisfied is where the course of conduct of the party over a relevant period could be said to amount to conduct inconsistent with an intention to settle the proceedings on any basis that could be considered reasonable."
[3]
Consideration
At the heart of Mr Gaite's submissions is the contention that the decision by FRNSW to robustly defend the proceedings evinces an intention not to settle them on any basis that could be considered reasonable, particularly in light of the adverse findings that were made against FRNSW (and Commissioner Baxter's reasoning) in my earlier decision. The adverse but erroneous basis on which FRNSW decided to dismiss Mr Gaite effectively precluded the possibility of the relevant decision-makers ever turning their minds to a settlement on reasonable terms.
However, this cuts both ways. Mr Gaite prosecuted his case as robustly as FRNSW defended it. He also came in for some adverse comment in my earlier decision, most particularly at [150]. He was found to have engaged in misconduct, even if I did not consider that such misconduct warranted the termination of his employment. As already stated, I declined to make an order pursuant to s 89(3) of the Act for the reasons set out at [152] of my earlier decision.
As noted by the Full Bench in Paris referred to above, the "evident purpose" of s 181(2) is to encourage the settlement of proceedings to which it applies. This in turn involves an obligation on the parties to consider in an objective way the strengths or limits upon the case that they will be propounding should the matter proceed to arbitration: Paris at p 220. In Four Sons Pty Limited v Sakchai Limsiripothong (No 2) [2000] NSWIRComm 131 the Full Bench, relying on Paris, stated at [11] that the obligation imposed on parties is "to undertake a responsible and careful assessment of the prospects of the litigation".
While it is not entirely clear from the evidence, it can be inferred from FRNSW's submissions that it understood that the only negotiated outcome that Mr Gaite would accept was reinstatement with back pay (and presumably continuity of service). The only offer made by FRNSW was the incredibly modest amount of two weeks' pay, which was made on the proverbial "steps of the court".
I have considered the submissions that Mr Gaite would have considered re-employment. It is correct that in his Application, under the heading "Relief Sought", he had ticked the box marked "re‑employment to another position", but he had also ticked the boxes marked "reinstatement to your former position" and "monetary compensation". Rather than evidencing a willingness to "accept redeployment" as submitted, he might just as well have been "keeping his options open", having regard to the Commission's jurisdiction under s 89 of the Act.
More particularly, there is no evidence before me that Mr Gaite ever proposed, or indicated to FRNSW a willingness to accept, an outcome other than reinstatement. If ticking a box on the Application is evidence of his willingness to accept re-employment, it could just as easily be said he would have accepted monetary compensation. There is no suggestion that this is the case. The Application does not go far enough to establish a preparedness by Mr Gaite to compromise on his primary position.
In all of the circumstances, including but not confined to the ultimate outcome, there is a question as to what extent either party undertook a "responsible and careful assessment" of the prospects of his or its case.
Mr Gaite impugns the conduct of FRNSW as demonstrating an unwillingness to settle on any basis that "could be considered reasonable". However, for such conduct to enliven the Commission's discretion Mr Gaite must be able to demonstrate that he was open to such a settlement. It is apparent that there was little effort made by the parties to resolve the proceedings through conciliation or negotiation, and there is force to FRNSW's submissions that Mr Gaite's "settlement" position was no more than an invitation to FRNSW to capitulate. Nothing has been put to me that would allow me to draw the conclusion that a reasonable settlement offer, had it been made, would have been accepted. FRNSW cannot be criticised for not making an offer that would not have been accepted.
I am not satisfied that Mr Gaite has made out his claim that s 181(2)(c) of the Act has been enlivened. It follows that it is not necessary to consider whether the Commission should exercise its discretion under s 181(1) of the Act.
[4]
Order
The application for costs is dismissed.
Damian Sloan
Commissioner
[5]
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Decision last updated: 29 November 2019