IGA Distribution Pty Limited and Moses (No 3) [2003] NSWIRComm 230

Unfair dismissal - Appeal - Costs - Appellant unsuccessful in unfair dismissal appeal - Leave to appeal granted in part - Application dismissed - Consideration of complex and unique circumstances - Whether costs order be made in favour of successful respondent employee - Indemnity costs - Application for indemnity costs declined - Order for costs otherwise made LEGISLATION CITED : Industrial Relations Act 1996 s 84 s 86 s 89 s 93 s 181 Australian Workers Union, New South Wales Branch v Pioneer Concrete (New South Wales) Pty Ltd (unreported, Hill J, 30 July 1991) Bankstown City Council v Paris (1999) 93 IR 209 Commonwealth Steel Company Limited v Ward (unreported, IRC93/3144, 16 December 1994) Dorothy Jonns Total Beauty and Slimming Centres Pty Limited and Goode (2001) 103 IR 117 Effem Foods Pty Ltd t/as Uncle Bens of Australia v Urban (1977) 81 IR 431 CASES CITED : Four Sons Pty Limited v Sakchai Limsiripothong (No 2) (2000) 100 IR 400 IGA Distribution Pty Ltd and Moses [2001] NSWIRComm 235 IGA Distribution Pty Ltd and Moses (No 2) (2002) 114 IR 307 Little v Commissioner of Police (2001) 112 IR 212 M Moses & IGA Distribution Pty Ltd [2001] NSWIRComm 1053 Van Huisstede and the Commissioner of Police (No 2) (2001) 106 IR 56 HEARING DATES: DATE OF JUDGMENT: 07/30/2003

APPELLANT: Mr R S Warren of counsel Acuiti Legal (Mr M Easton) LEGAL REPRESENTATIVES: RESPONDENT: Mr R Reitano of counsel Slater & Elias, Solicitors (Mr P P Elias)

CORAM: WRIGHT J, President WALTON J, Vice-President REDMAN C

Wednesday, 30 July 2003 Matter No IRC 6002 of 2001

IGA DISTRIBUTION PTY LIMITED AND MICHAEL JOSEPH MOSES

Application for leave to appeal and appeal against a decision of Commissioner Cambridge given on 20 August 2001 in Matter No IRC 1550 of 2001

DECISION OF THE COMMISSION [2003] NSWIRComm 230

1 These proceedings commenced with an application by the appellant, IGA Distribution Pty Limited, for leave to appeal and appeal against a decision and orders of Commissioner Cambridge given on 20 August 2001: M Moses & IGA Distribution Pty Ltd [2001] NSWIRComm 1053. The decision determined an application by the respondent, Michael John Moses, pursuant to s 84 of the Industrial Relations Act 1996. Cambridge C found that the dismissal of the respondent was harsh, unreasonable and unjust and made orders for reinstatement and related relief. 2 The Full Bench having heard the parties on the application for leave to appeal and the appeal delivered its decision on 15 May 2002: IGA Distribution Pty Ltd and Moses (No 2) (2002) 114 IR 307. Leave to appeal was granted in part and the appeal was dismissed. 3 Upon the delivery of that decision, the respondent's solicitor raised two matters. The first was the question of costs (both at first instance and on appeal) and the second was the resolution of a related set of proceedings, Matter No IRC 7621 of 2001, involving an alleged threatened dismissal. For present purposes it is sufficient here to note the following orders were made in respect of the matters raised: 1. The question of costs in Matter No IRC 6002 of 2001 was reserved 2. The parties in Matter No IRC 7621 of 2001 were directed to confer as soon as practicable; and 3. Liberty to apply on short notice was granted. 4 The respondent subsequently exercised the liberty granted. An urgent relisting was sought of both proceedings and foreshadowed that applications would be made by the respondent in relation to the progress of the threatened dismissal proceedings, the question of costs of the proceedings at first instance and on appeal, and an allegation of contempt of the Commission for repeated failure to comply with the orders of the Commission. 5 The circumstances concerning the proceedings and in particular the progress of proceedings following the delivery of the decision of Cambridge C (and indeed the decision on the appeal), are complex and require detailed analysis properly to assess the respondent's application for costs. Many of the difficulties which arose following the delivery of the decision were subsequently resolved by agreement between the parties. Part of the agreement of those issues involved the resolution of the outstanding costs issues on the papers filed. Directions were made and the relevant material was received. We now determine the issue of costs. 6 The power of the Commission to award costs is provided by s 181 of the Act which is relevantly in the following terms: 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 of 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

(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. 7 For the purpose of the costs application, the parties filed a number of affidavits and detailed written submissions. The respondent filed three affidavits. One affidavit of the respondent and two affidavits of the respondent's solicitor, Mr Paul Elias, the first of which had annexed to it some 55 pieces of correspondence between the parties over the course of the proceedings. The evidence for the appellant comprised an affidavit of Mr Gary O'Shea, the appellant's Warehouse Operations Manager at the Blacktown premises, and Mr Michael Easton of Acuiti Legal, the appellant's firm of solicitors. Mr Easton was one of the solicitors who acted for the appellant. 8 Each of the affidavits provided a detailed historical analysis of the proceedings from the perspective of each deponent. There does not appear to be any significant factual controversy on the evidence filed. As such, the following narrative of the proceedings is drawn from all the evidence referred to above. Background 9 The respondent, a member of the National Union of Workers, commenced employment with the appellant as a storeworker in November of 1987. Reference was made in the evidence of a dispute in the federal jurisdiction in 1998 between the appellant and the National Union of Workers, the resolution of which required, inter alia, the appellant to maintain the respondent's employment. However, the dispute does not pertain to the issues in these proceedings and need not be further referred to. 10 The first affidavit of Mr Elias outlined the course of communication between the parties from a time prior to the proceedings before Commissioner Cambridge through to communication following the determination of the proceedings on appeal. Similarly, the affidavit of the appellant's solicitor, Mr Easton, set out in considerable detail the course of proceedings and annexed a number of relevant documents. 11 The starting point for the narrative of the background of this matter is the "preliminary hearing" conducted by O'Neill C on 21 March 2001 as required by s 86 of the statute. 12 Whilst there are minor differences in the evidence as to precisely what transpired during the conciliation, the differences are, in our view of little significance to the present issues. They may be sufficiently stated by reference to the version most favourable to the appellant, contained within the evidence of Mr Easton. He said that during the course of the proceedings on that day the solicitor acting for the respondent said words to the following effect to Mr Easton: This is an unusual case. He wants reinstatement - he doesn't want money at all. You could offer him six months pay and he won't take it.

In response, the appellant's solicitor offered to settle the proceedings on the basis that the appellant would be entitled to re-apply for his former position in three months time if he had recovered from his injury. 13 Whilst Mr Easton considered that this was a "genuine attempt to settle the matter", Mr Elias considered that this was no offer at all, given that under s 93 of the Act, the respondent could have applied for his pre-injury position at any time within two years following the termination of employment. 14 It is not in issue that no other offer of settlement was made by the appellant either during or at any time after the conciliation conference of 21 March 2001; nor is there any issue that the respondent made a number of offers to settle the proceedings; although each offer involved either the reinstatement or the re-employment of the respondent. 15 Mr O'Shea, the appellant's manager at the Blacktown warehouse, was present at the time of the preliminary hearing. He gave the following evidence as to what transpired at the conciliation: I attended a preliminary hearing conference on 2 March 2001 (sic) in relation to Mr Moses' unfair dismissal claim. Michael Easton ("Easton") solicitor, spoke privately with Mr Moses' solicitor. We then had a conversation in words to the effect of:

Easton: "Mr Moses' isn't interested in a financial settlement, he wants his job back - even if you offered him six months pay he wouldn't take it, are you prepared to reinstate him?"

O'Shea: "No. We may as well run our case if he is not going to consider any offers except reinstatement". 16 His justification for adopting such an approach to the conciliation was stated in his affidavit as follows: I formed the view that to allow Mr Moses to return to his workplace was fundamentally at odds with IGA's rehabilitation program. That is, if Mr Moses was reinstated to his duties in the Repack Centre, which were provided to him only temporarily for the purpose of rehabilitation, would become a 'permanent' arrangement.

In considering what could be a reasonable settlement of Mr Moses' claim we examined a range of factors. We considered the likely time and expense involved in hearing the matter, as well as the possibility that we could be unsuccessful at hearing. Our anticipated costs were substantial and, whilst confident of our prospects of success, were always mindful of the possibility that we could lose. We were always prepared to consider a reasonable settlement offer that involved the payment of money to Mr Moses.

However, IGA did not make any counter offer because of the very clear statements from Mr Moses' solicitors that he would only accept a settlement offer that involved returning to work at Blacktown.

The more times that Mr Moses stated that he would only accept reinstatement the clearer it became in my mind that there was no likelihood of reaching a settlement that did not involve reinstatement. 17 A similar position was reiterated by Mr O'Shea as to why no counter offers were made. IGA did not make any counter offer because Mr Moses' position had not changed from that taken at the preliminary hearing and IGA again thought that any offer of a financial settlement would be rejected and futile. 18 Mr O'Shea considered that any offer made by the respondent which involved him returning to the workplace was the company's "worst case scenario" and instructed their solicitors to "make it clear to Mr Moses that we were not prepared to make any offers to settle the matter that allowed him to return to work". 19 Reference to the correspondence annexed to the affidavits of the two solicitors in the proceedings shows that the first offer of settlement following the conciliation conference before O'Neill C appears to have been contained in a letter dated 6 June 2001 from the respondent's solicitors to the appellant's solicitors, in the following terms: Our client has instructed us that he is prepared to settle these proceedings on the basis that he is re-instated to his position in the repack centre at Blacktown site and receives an amount of $3,230.00, representing the difference between his gross pay and current workers' compensation payment for the 17 week period since the termination of his employment. 20 The reply from the appellant's solicitors, also dated 6 June 2001, was in the following terms: We are in receipt of your facsimile received earlier today and your client's offer of settlement.

I am instructed that any offer of settlement that includes reinstatement will not be accepted. You are welcome to make any further offers that do not require our client to reinstate Mr Moses. 21 The next offer, again from the respondent's solicitors, was contained in a letter dated the next day which was in the following terms: We refer to your letter dated 6 June 2001.

Your client's persistent refusal to consider reinstatement of the Applicant in any settlement is, in all the circumstances, unreasonable.

In a further attempt to settle these proceedings, our client has instructed us that: (a) He does not press for payment of $3,230.00 referred to in our letter dated 6 June 2001; and (b) He is now prepared to accept re-instatement to his position in the repack centre at the Blacktown site or redeployment to any other suitable position with the respondent with continuity of employment preserved. We again would be obliged if you could seek your client's urgent instructions and advise us by tomorrow whether or not our client's revised settlement offer is accepted. 22 On Mr Easton's evidence, it would appear the next communication between the parties was on 12 June 2001, in which he and Mr Elias had a discussion over the telephone to the following effect: Elias: Have you received our offer?

Elias: We might be able to talk about the backpay but he wants reinstatement. He doesn't want [a] money [settlement]?" 23 This was followed by a letter from the respondent's solicitors to those appearing for the appellant, dated 14 June 2001: We refer to our "without prejudice" correspondence of 6 and 7 June 2001 and our telephone conversation on 12 June 2001 in which you advised us of your client's instructions to reject our client's further settlement offer of reinstatement.

As you will appreciate, we have made several offers since the commencement of these proceedings in an attempt to settle our client's claim.

We note that all of those offers have been rejected out of hand and no counter-offers have been made.

In the event that our client is successful in these proceedings, we place you on notice that we intend to seek an order that your client pay our client's costs on the basis that your client has unreasonably failed to agree to a settlement of our client's claim. 24 The appellant's reply, also dated 14 June 2001, was relevantly in the following terms: As indicated in our correspondence of 6 June 2001, any offer of settlement that includes reinstatement will not be accepted by our client. On the basis of your representations our client has not made any offers of settlement.

From the very first occasion that conciliation was discussed in this matter on Wednesday 21 March 2001 through to our last telephone discussion on 12 June 2001, you have indicated that your client would not accept any financial offer that our client would consider making because of his insistence that he be reinstated to employment. We recall that on both occasions that you indicated that "if you offered him 6 months he wouldn't take it".

Accordingly, on the basis of these representations it was unproductive for our client to make any offer which did not include an offer of reinstatement.

The conclusion you draw in your facsimile, we would respectfully suggest, is not available to you and it would be inappropriate for you to attempt to use your previous offers to the end you suggest. 25 The decision of Commissioner Cambridge was delivered on 20 August 2001. The contentions of the parties before Cambridge C were set out by the Full Bench in IGA Distribution Pty Ltd and Moses (No 2) in the following terms: [6] The respondent's case at first instance was, in essence, that he had been injured some time before and had been working on a vocational rehabilitation program involving reduced duties for some time. The respondent was capable of being safely and gainfully employed in the "Repack Centre" as he had been for the previous 12 months. It was submitted that in the absence of any changed circumstance, the failure of the appellant to properly consider whether the respondent could be deployed elsewhere in its operations amounted to the decision to dismiss which was harsh, unjust and unreasonable. It was unjust to terminate the respondent on the basis of incapacity where there had not been demonstrated some adverse impact on the employer.

[7] The appellant, at first instance, resisted the application on two primary grounds. Firstly, the appellant had been subject to an order of the Federal Court, made during the aforementioned dispute, which required it to refrain from terminating the employment of 53 of its employees until further order of that Court. The terms of that order, so it was submitted, gave rise to a "fiction" in which the respondent should no longer have been properly considered an employee of the appellant. As such, so it was contended, the respondent could not bring an application alleging that he had been unfairly dismissed from his employment.

[8] The appellant contended, in the alternative, that the dismissal was justified in that, despite the extensive efforts at rehabilitation and job re-evaluation, the respondent was not able to perform essential lifting tasks associated with his pre-injury employment. It was contended, contrary to the submissions of the respondent, the appellant had considered the personal circumstances of the respondent. Further, it was contended before the commissioner that should he determine that reinstatement was the appropriate remedy, he would be denying opportunities for graded rehabilitation and return to work to other members of the appellant's workforce. 26 It is also instructive, given the conduct of the appellant, to have regard to the way in which the Commissioner considered the question of remedy: [56] The applicant sought Orders involving reinstatement as remedy for his unfair dismissal. It is clear that reinstatement represents the primary remedy provided by section 89 of the Act. Alternatives such as re-employment or compensation arise when some impracticality of reinstatement has been established.

[57] Given that the consideration regarding the substantive basis provided for the applicant's dismissal has been found to be fallacious, it would seem to follow that there could be little prospect of establishing any impracticality in reinstatement. That is to say that, the finding that the applicant's incapacities were not translated into any failure to enable useful and efficient employment as comprehended within the position of Storeworker, then an absence of evidence of any changed circumstances would logically overcome any suggestion of impracticality to reinstatement.

[58] In the absence of any evidence of changed circumstances regarding the capacity for the employer to continue to provide modified duties comprehended by the Storeworker position, a question of impracticality of reinstatement must be treated in similar fashion to the underlying substantive reason provided for the dismissal. There being no changed circumstances, the fallacious basis for the dismissal must also represent an absence of impracticality for reinstatement to the position. Expressed simply, the modified work provided to the applicant before dismissal is, in the absence of any evidence regarding altered circumstances, capable of being provided upon reinstatement.

and the question of unfairness: [64] The issue of the fairness or otherwise of the dismissal of the applicant principally involved the substantive basis that was provided as reason for the applicant's dismissal. The applicant was dismissed because he had certain physical incapacities which meant that he could not complete 100% of the tasks comprehended by the position that he occupied of Storeworker. In the absence of demonstrable adverse impact of the applicant's incapacities, I conclude that it was unreasonable and unjust to dismiss the applicant for reason of the established incapacities per se.

[65] I conclude that it is fundamentally unreasonable to adopt a policy that anything less than 100% fitness for all duties comprehended by the employment can provide justifiable basis for dismissal without first establishing the practical effect of the incapacities.

[66] The approach adopted by the employer is also harsh and unjust. In many respects the approach is consistent with a procedure which might be appropriately applied to a piece of machinery rather than a human being. It is acceptable for someone to discard a piece of machinery if one part of that machine is worn or not performing to optimum level. However women and men are not machines. Fundamental human rights and dignities demand that proper inquiry be made of the effect of any incapacity and the means to mitigate or overcome any established deficiency, before dismissal becomes available.

[67] Consequently I conclude that the substantive basis for dismissal was harsh, unreasonable and unjust. Further procedural deficiencies identified in the implementation of the dismissal of the applicant, including; the absence of proper consultation; lack of consideration of the applicant's length of service, and other personal circumstances; and the pre-determination of the dismissal some three months before the date of implementation, all provide further elements of harshness and unreasonableness.

[68] In respect to appropriate remedy for the applicant's unfair dismissal, I am compelled to provide for Orders of reinstatement. The nature of the findings made regarding the substantive basis for dismissal, coupled with the absence of any evidence of changed circumstances, provides a compelling basis to conclude that reinstatement would not be impracticable.

[69] Consequently I provide Orders for reinstatement of the applicant to the position of Storeworker as appropriate remedy for the applicant's unfair dismissal.

[70] Further I am prepared to provide for Orders of remuneration for the intervening period between dismissal and reinstatement of the applicant. The quantum of such remuneration should be the subject of discussion between the Parties, and in the absence of agreement as to quantum I am prepared to provide for Settlement of Minutes of Order proceedings to resolve any contest. 27 The Commissioner made the following orders: 1. The Commission Orders that the employer reinstate the applicant to his former position as Storeworker on terms not less favourable to the applicant than those that would have been applicable if the applicant had not been dismissed. The applicant is to be reinstated as soon as practicable, and within twenty one days from the date of this Decision.

2. The Commission Orders that the employer pay to the applicant an amount which equates with the remuneration that the applicant would, but for being dismissed, have received in the intervening period between dismissal and reinstatement, less any amounts received as payments in respect of workers compensation or derived from alternative employment. This amount is to be paid as soon as practicable and within twenty one days from the date of this Decision, but may be subject to Settlement of Minutes of Order proceedings initiated by written request of either Party within twenty one days from the date of this Decision

3. The Commission Orders that the period of employment of the applicant with the employer shall be taken not to have been broken by the dismissal. The intervening period between dismissal and reinstatement of the applicant shall be counted for all purposes as a period of employment. 28 The correspondence following the decision refer to the giving effect to the orders made and the issue of costs which was reserved. For present purposes it is sufficient to note that the 21 days identified in the first order was to expire on 10 September 2001. The material annexed to Mr Elias' affidavit included a notice to the appellant, dated Friday 7 September 2001, to the effect that the respondent would be attending upon the appellant's premises on 10 September 2001 (the following Monday), to commence work in accordance with the orders of the Commissioner. 29 The respondent's evidence went essentially to his attempts to return to work at the appellant's premises following the decision of Cambridge C and the appeal. He attended upon the appellant's premises, in accordance with the notice served on the appellant's solicitors, to commence work at 6.40am on Monday 10 September. He was not permitted to start, nor was he able to speak to the relevant manager, Mr O'Shea. He was ordered off the premises and told the company would contact him in due course. 30 This prompted a letter to be sent from the respondent's solicitors to the appellant's, noting what had occurred that morning and indicating that the failure to comply with the orders put the appellant "prima facie in contempt". The appellant's response, dated 10 September, noted that an application for leave to appeal and appeal had been filed and that a stay was being sought. Proposals were put forward in relation to the payment of money ordered by the Commissioner, into a trust fund in joint names and concluded in these terms: In light of your rejection of that offer please note that our client intends to pay your client as if he had worked today and will continue to do so pending the determination of our client's stay application to ensure that there is no financial prejudice to your client. We confirm that, pending the hearing and determination of the stay application, your client is not required to attend for work.

We reserve the right to rely on this correspondence on the question of costs should your client chose to commence any proceedings prior to the determination of our client's stay application. 31 The respondent again attended upon the appellant's premises on 11 September to commence work. Once again he was ordered home. On this occasion, he briefly met with Mr O'Shea. He was informed that he would be paid, in accordance with the reinstatement order but that he was not required at the premises to perform work. He should return home and await further contact from the appellant. He was escorted from the premises. 32 Mr Elias' evidence shows that what followed was a series of communications between the respective solicitors; the respondent's alleging "flagrant breaches" of the Commission's orders by the appellant for a failure to permit the respondent to recommence work, and a denial of such conduct by the appellant's. It is significant that the correspondence on behalf of the respondent often reiterates his view that the mere payment of money, as though the respondent had attended the premises and performed work, was "less favourable" to him than the performance of work. 33 The appellant's replies took issue with the assertion that the payment of wages without the performance of work was somehow less advantageous to Mr Moses and asserted that such an arrangement would have more benefit to the respondent than allowing him to return to the workplace. 34 The communications between the parties continued until the application for a stay of the orders at first instance was heard by the President: IGA Distribution Pty Ltd and Moses [2001] NSWIRComm 235. In his Honour's decision, reference was made to the appellant's contentions that should the respondent be permitted to return to the workplace, his health and safety, on the medical evidence in the appellant's possession, be placed at risk. His Honour accepted the genuineness of the concerns expressed by Mr O'Shea on behalf of the appellant, but stated (at [34]): While accepting the genuineness of Mr O'Shea's evidence as to the respondent's concern as to health or safety, it has to be seen in the perspective of its limited basis and that the respondent had worked in that area for a significant period of time prior to the termination of his employment. 35 His Honour continued: [38] For two main reasons I consider that the factual matters which I should act on for the purposes of the stay application are the Commissioner's findings. First, because there is no presumption in the filing of a Notice of Appeal, even where the appeal has arguable prospects of success, that the first instance decision was wrong or that it would be set aside. Secondly, and which must be seen to be relevantly cumulative upon the first consideration, the respondent had worked in the relevant area without criticism of his personal performance or the satisfactory nature of his work for a period in excess of one year. In those circumstances I do not consider that it would be appropriate to find that it is not possible for the respondent to return to that area of work until the determination of the appeal.

[41] In reaching these conclusions, I should make plain that I am not unmindful that there may be said to be some practical difficulties in the stay not being granted. However, I have determined that, on an analysis of the whole of the material or evidence in its appropriate circumstances, the basis upon which the stay has been argued by the appellant has not demonstrated those difficulties exist.

[42] That, of course, does not mean that the appellant can ignore its responsibilities to its employees under the important health and safety laws which govern employers and employees in the State: see for example the judgment of the Full Bench of this Commission in Re New South Wales Department of Community Services Community Living and Residential (Interim) (State) Award (2000) 100 IR 447 at 466-467 where, in making an award and having regard to workplace safety and health as a relevant consideration, the Full Bench said: In granting the variation to the award it is to be stressed that its making in no way diminishes the [employer's] responsibilities under the Occupational Health and Safety Act or under the common law ...

Nor does it mean that the findings made at first instance do not remain relevant as to the work performed by the respondent pending the outcome of the appeal.

The stay was refused. 36 That day, the appellant wrote to the respondent's solicitors in the following terms:

Further to our conversation after proceedings before President Wright today we write to advise that our client is considering its position following the refusal of the President to grant our Stay Application.

We shall advise you very shortly as to our client's proposed course of action.

We confirm that whilst our client is considering its position your client is not required to attend for work but will be paid as if he had performed work. 37 The respondent's reply, of the same day, indicated that the respondent would, in light of the decision as to the stay application, attend upon the premises on the following Monday to commence work. The letter is in the following terms: Our client has instructed us that he will be attending work on Monday in accordance with the Orders of Commissioner Cambridge and in view of the Decision today by the President declining your client's application for a stay of those Orders.

In the event that your client continues with its refusal to abide by the orders of the Commission and declines our client entry into the workplace on Monday, then bearing in mind that there is no stay in place, our client would appear to have no alternative but to have the matter re-listed before the President for appropriate relief.

We trust that this will be unnecessary as your client's irrational attitude and vindictive conduct towards our client since the Decision of Commissioner Cambridge has unfairly caused him and his family considerable distress and frustration. 38 Mr Moses gave evidence of having, as foreshadowed, attended upon the Blacktown premises to commence work. Upon arrival he was directed to see Mr O'Shea who once again ordered him to leave. Having earnestly requested with Mr O'Shea to permit him to perform some useful work, he was again told to refer the matter to his solicitors and escorted from the premises. 39 That same day the appellant's solicitors wrote to the respondent's solicitors in the following terms: Further to our correspondence of 21 September we have been asked by our client to inform your client that he is not, until further notice, required to attend for work and he will be paid as if he had attended for work.

In reply to your (letter) facsimile of 21 September, received in our office the same date but not received by the writer until this morning, Monday 24 September 2001, our client's position is as follows: · We have canvassed in earlier correspondence our client's position as to our compliance with Commissioner Cambridge's orders. · We do not see that the President's refusal of our stay application affects this position. · As the President indicated, our appeal has a reasonable prospect of success. · Our client's course of action does not impose any harm or financial disadvantage upon your client.

We do not see anything irrational or vindictive in this position. By contrast, and despite the numerous correspondences between us, we hope that this matter can continue to be progressed in a sensible manner. 40 In response to a letter forwarded by the respondent to the Commission, the matter was brought back before his Honour. The respondent sought to reagitate matters raised on behalf of the appellant in the Notice of Motion earlier discussed, alleging contempt in refusing Mr Moses' return to work. Following the parties being heard on that day, it became unnecessary for further steps to be taken by the Commission and the matter was adjourned with leave to apply to have the matter relisted on condition that the parties confer before such an application be made. 41 The next relevant step in the course of events occurred when the appellant wrote to the respondent's solicitor with an "offer" permitting the respondent to return to the appellant's workplace pending the outcome of the appeal, on certain conditions. Those conditions included the respondent undertaking further medical examinations. The respondent accepted this proposal by letter dated 27 September and attended the medical examinations with Dr Hynes and Dr Ly on 18 October 2001. 42 On 1 November 2001, the appellant's solicitors wrote to advise that the respondent the functional assessments undertaken by him indicated that he was unfit for any duties at the appellant's premises and would not be permitted to return to work. The letter, having set out relevant parts of the report and having invited the respondent to furnish any medical evidence he considered was contradictory, concluded in the following terms: In the absence of compelling evidence to the contrary, our client is inclined to abandon its application for leave to appeal and appeal in the above proceedings and reconsider Mr Moses' … ongoing employment in light of this new medical evidence. 43 Mr O'Shea's affidavit referred to the advice received from Doctors Hynes and Ly, indicating that each of these doctors had attended upon the appellant's premises "regularly" and that they were "familiar with and understand the manual handling requirements of both the main warehouse area and the Repack centre". It was for this reason that he was not prepared to permit the respondent to return to the appellant's premises, despite having the medical certificate of Dr La Hood (the respondent's treating doctor) indicating that the respondent was fit to return to duties. 44 His evidence continued: Given that Mr Moses was no longer fit for duties in the Repack Centre (which [had] different restrictions to those that were applicable at the time of the hearing before Commissioner Cambridge) I considered that the Appeal proceedings listed for 12 December 2001 may not resolve the matters between the parties.

The matters would have concluded if IGA was wholly or partly successful on appeal. If the Full Bench overturned Commissioner Cambridge's order to reinstate Mr Moses' then the conflict between the medical opinions of Drs Hynes and Ly and Dr La Hood would become irrelevant.

However, if IGA was not successful in its appeal then the leave in medical evidence would, on its face, prevent Mr Moses from continuing employment. One option available to IGA was to terminate Mr Moses (if he could not provide a satisfactory reason why his employment should continue) and withdraw the Appeal proceedings. 45 The situation reflected in the evidence filed on behalf of the appellant, does not give any significant weight or effect to the decision at first instance and that on the stay application. It may in part explain the approach the appellant adopted to the appeal and in particular the absence of any offer of settlement being made by it. 46 Mr Easton gave evidence of two conversations which took place on 1 November 2001 between the solicitors for the parties: On 1 November 2001, I had a conversation with Peter Elias in words to the following effect:

Easton: "[Doctors Hynes and Ly's report] says that he is not fit for anything. Our client can't provide him any work even if it wanted to."

Easton: "Regardless of Doctor La Hood's report, we can't put him back on the job if we have [Doctors Hynes and Ly's] report."

Elias: "What about a deal? Can we roll up all the litigation at once?"

Easton: "That's probably the only way to fix this. But who pays?"

Easton: "Well our client is not going to pay for the workers compensation liability - that's up to the insurer. I can understand you asking for an additional settlement amount for the unfair dismissal."

Elias: "Michael [Moses] doesn't care. If we can roll up the workers compensation and this, then we'll all walk away. I'm not doing Michael's workers compensation matter. I don't do workers compensation. I don't know very much about it."

Easton: "I don't know very much about workers compensation either. I can talk to our clients insurance company and find out where the matter is up to."

Elias: "I've got the name of Michael's workers compensation solicitor. I'll do the same."

At 3.35pm on 1 November 2001, I had a further conversation with Peter Elias in words to the following effect:

Easton: "IGA has spoken to their insurer and they are putting a package together. I will get [IGA's workers compensation solicitor] to put it to the other solicitor and keep us in the loop. I will write to the President to tell him where we are up to."

Elias: "Excellent. Lets keep our fingers crossed." 47 The following day the appellant spoke to the solicitors for the respondent and obtained their agreement to a letter sent to the Commission requesting, by consent, that the timetable earlier fixed be vacated as, following discussions between the parties, there was the possibility the matter might settle. The letter indicated that were the Commission not prepared to adopt that course, it was, in the appellant's respectful view, not necessary to impose formal directions as the parties were able to agree on an abridged timetable. 48 The respondent's solicitors then wrote to the appellant, referring to the letter sent to the Commission and proposing an abridged timetable. 49 The correspondence from the appellant which followed, was in the following terms: We refer to your correspondence received in the afternoon of Friday 2 November 2001 in the above matter. Unfortunately your last correspondence seems to have regressed from the pragmatic and co-operative tenor of recent discussions between the parties.

Our client is of the view that the medical and Functional Assessment conducted on 17 October 2001 and forwarded to you on 1 November 2001, and associated correspondence also forwarded to you on 1 November 2001, is new and different information to that available either at the time of your client's termination or the proceedings before Commissioner Cambridge.

We restate that our client, in accordance with Commissioner Cambridge's orders of 20 August 2001, regards your client as a reinstated and current employee.

Accordingly, any termination of his current employment based upon this new information would be separate to the current proceedings before the Commission.

If your client is of the view that his termination in February 2001 is reliant on the same material as that provided on 1 November 2001, then our client will consider continuing their appeal based on that assumption.

Failing that, unless your client is in a position to provide other medical evidence which our client is asked to consider, our client would be likely to terminate your clients employment and withdraw its Application for Leave to Appeal and Appeal. 50 On 15 November the matter came again before the Commission on the application of the respondent. The application was made because of non-compliance with the timetable set on 26 September 2001. The directions were varied and the hearing date previously set of 12 December 2001 was maintained. 51 The tenor of the communications then seem to take on a different tone with the parties making certain allegations and reference to possible costs orders. The appellant again referred to the possibility of the termination of the respondent's employment on the basis of the medical assessments from Doctors Hynes and Ly and the respondent continued to assert his right to return to the appellant's workplace in accordance with the terms of the reinstatement order of the Commissioner. 52 On 20 November 2001, the appellant's Human Resources Manager, Mr Robert Hodgson, wrote to the respondent directing him to attend a meeting to discuss his future employment with the company:

In accordance with the decision of Commission Cambridge in matter IRC 1550 of 2001, your employment was reinstated on 10 September 2001.

On 17 October 2001, Doctors Hynes and Ly conducted a Medical and Functional Assessment for the purpose of assessing your fitness to perform a number of different duties at the Blacktown site, including work in the repack centre, storeman/assembly, cleaner and mailroom assistant.

The report indicates that you are not fit to safely perform any of these functions.

We are now reviewing your employment in light of this assessment. You are required to attend a meeting at the Blacktown site to review your employment. At this meeting you will be given the opportunity to respond to the matters we have raised and will be given the opportunity to tell us anything you would like us to consider in relation to whether or not your employment should be continue[d].

If you would like your union or another witness to attend the meeting please arrange for that person to be available.

The meeting proposed was scheduled for 2.30pm the following day. 53 The respondent, by letter of the same date dated 20 November, requested the date be postponed to permit counsel's advice to be obtained and indicated that the respondent had been advised not to attend any such meeting until in receipt of such advice. This request was acceded to by the appellant in a letter dated 21 November 2001, the time for the meeting being moved to 2.30pm Thursday 22 November 2001. The letter concluded "should you client not wish to avail himself of that opportunity our client will review your client's employment in his absence". 54 This letter led to the respondent, on 22 November 2001, commencing proceedings in Matter No IRC 7621 of 2001 seeking relief from threatened dismissal, which application was filed together with a notice of motion seeking an expedited hearing. Those proceedings came before the Commission that day to deal with the application for expedition. The matter was adjourned to the next day to permit the appellant to obtain instructions and properly consider the new application. The appellant gave an undertaking to the respondent that his employment would not be terminated until the matter again came before the Commission. 55 During the course of proceedings the next day, the parties outlined their concerns as to timing of the letters from the appellant to the respondent, and the concerns of the appellant that it could not seek to interview its employee. The details of what occurred at that time need not be set out. It is sufficient to note that the threatened dismissal proceedings were referred to the Full Bench which was due to hear the appeal on 12 December 2001. Directions were made as to filing of submissions as to the appropriate manner to proceed on the day of the hearing and for the filing of material to be relied upon. The appellant gave an undertaking that no action would be taken with respect to the termination of the respondent's employment prior to the hearing without providing forty-eight hours notice thereof to his solicitors. 56 At the hearing the parties agreed that the threatened dismissal proceedings should await the determination of the appeal proceedings and the Commission accepted that course should be adopted. As such, the appeal proceedings went forward and the appellant made an application for fresh evidence, in the form of the medical reports from Doctors Hynes and Ly to be admitted on the appeal. Prior to that determination being made, the appeal proceedings adjourned into conciliation to permit a final attempt at resolving the dispute between the parties. 57 The conciliation took place before Walton J, Vice-President. The conciliation was, however, unsuccessful. The evidence tendered on the present application for costs, of behalf of both parties, indicated that during the conciliation conference, the appellant did not make any offers of settlement and would not entertain the possibility of reinstating the respondent to the repack centre or re-employing him in some other capacity. The evidence on behalf of the appellant of what occurred during the conciliation is in the affidavit of Mr Easton in the following terms: On 12 December 2001 Vice President Walton assisted the parties in a further attempt to reach an agreed resolution.

His Honour Vice President Walton conducted private conferences with the parties together and separately.

Mr Warren, Counsel for IGA ("Warren"), said to His Honour words to the following effect:

Warren: "IGA can look at a commercial arrangement. If it is helpful we can incorporate his workers compensation claim by getting everybody together".

After meeting with Mr Moses and his representatives His Honour met again with Mr Warren, and Mr Hodgson and Mr O'Shea of IGA and myself. His Honour indicated words to the effect of:

His Honour: "I have pursued the prospect of a generous settlement of either his workers compensation and/or his employment claim with Mr Moses and his representatives. His position is that he truly wants employment."

The attempted conciliation was unsuccessful and at the conclusion His Honour said to the parties words to the following effect:

His Honour: "As a result of trying to move both parties we have ultimately been unable to make any headway either way. Mr Moses wants some form of re-employment - which he pursues above any other alternative. The company is not prepared to take him back in any way shape or form. The company is prepared to negotiate on a commercial basis." (emphasis in original).

At the conclusion of the first day hearing, the proceedings were stood over part heard to 20 March 2002 when the Full Bench reserved its decision. 58 In its decision the Full Bench noted that there was some difficulty with the decision at first instance in that it was somewhat imprecise in its terms; it did "not specify the provision under which the Commissioner acted nor the specific issues which arose for consideration depending upon the applicable sub-section and the form of the order made". Having recognised that it was "understandable" the submissions on appeal largely focussed on s 89(2), the Full Bench at [16] held that the Commissioner in fact decided the matter under s 89(1) and continued: [19] At the time of his termination, the respondent was engaged as a storeworker with the appellant. He did not perform a full range of duties but rather, as is observed in the earlier extracts from the commissioner's decision, due to an injury sustained by him, he was engaged in modified duties in the "Repack Centre" of the appellant's operations. This centre was used from time to time as part of the appellant's rehabilitation programme.

[20] During the appeal, we received helpful submissions, as to the proper construction of s 89(1) of the Act from Mr R S Warren of counsel, who appeared for the appellant and Mr R Reitano of counsel, who appeared for the respondent. Much of the debate concerned whether the commissioner could have made an order under s 89(1) reinstating the applicant to his former position, having regard to the fact that he was engaged on light duties immediately prior to his dismissal. It was contended by the appellant that the words "the former position" in the sub-section concerned the actual position held by the respondent prior to his termination namely, the position of storeworker involving the entirety of duties encompassed within that position when fully occupied (whether specified by award or otherwise).

[21] However, it is unnecessary to determine that question in the present matter. We consider that the appeal should be resolved on the slightly different and more specific basis and ultimately, we think, on a basis commensurate with the decision made at first instance as this provides the appropriate basis upon which the appeal should be dismissed.

[22] If it were to be accepted that the former position of the respondent was that of a storeworker carrying out the full range of duties for that position, it is within the power of the Commission under s 89(1) to make an order reinstating the respondent to that position but, having regard to the provisions of s 89(8) of the Act, upon terms and conditions that would place him within the "Repack Centre" upon light duties. This is, in our view, the true effect of the decision at first instance. It is also entirely consistent with the manner in which the appellant treated the respondent prior to his dismissal. That is, the appellant engaged the respondent as a storeworker, albeit on terms which did not require, for a lengthy period of time, the respondent to perform the full range of duties.

[23] Further, we consider that in the light of this finding, the conclusions of the commissioner that the dismissal was harsh, unjust or unreasonable were open to him on the facts and circumstances of the case, as was the relief granted. Leave to appeal should be refused as to those matters. We consider it appropriate, however, to grant leave to appeal in this matter to the extent that it raises consideration of the operation of s 89 of the Act. 59 The Commission then dealt with the construction of s 89 of the Industrial Relations Act, indicating (at [26]) the decision of the Full Bench in "Commonwealth Steel Company Limited v David Alfred Ward (unreported, IRC93/3144, 16 December 1994) is to be preferred to the decision in Effem" and continued: [27] In Effem , the Full Bench found that s 89(2) limited an order for re-employment to the re-employment of an applicant "in another position" which the employer had available. It was found that the section required the existence of an available and suitable position and did not authorise the Commission to require an employer to create a position "tailored to the abilities of the applicant" (at 346).

[28] Submissions were made during these proceedings as to whether a substantive or actual position was required for an order under s 89(2) to be made. We consider that the view of the Full Bench in Effem, was that the proper interpretation of the words "available position" in Effem involved, in substance, the reading of the words of the provision as requiring the position to be vacant, in the sense that there must be a pre-existing, specified position designated by the employer which was vacant. Consistent with the approach adopted in Commonwealth Steel, we consider this is an unduly restrictive construction of the section which may, in an appropriate case, require more substantial reconsideration.

[29] However, in the circumstances of these proceedings and if it had been necessary to deal with the matter on the basis of s 89(2), we would doubt the correctness of the appellant's submission that the commissioner would have erred in ordering re-employment of the respondent under s 89(2) since the position in the "Repack Centre" could be said to constitute, for all relevant purposes, an available position, the suitability of the respondent for that position being determined by his prior employment in the area.

Leave to appeal was granted in part (that is, as to the construction of s 89 of the Industrial Relations Act ) and otherwise refused. The appeal was dismissed. 60 Following the decision, the proceedings again took an unusual course. Mr Elias' second affidavit, sworn 5 June 2002, detailed the correspondence between the parties following the decision of the Full Bench, as does the affidavit of the respondent, Mr Moses. The respondent deposed that his understanding of the Full Bench decision was that he could now recommence work at the Blacktown premises in the Repack Centre. He instructed his solicitors to indicate that he would be attending on the appellant's premises the following day, 16 May 2002, for that purpose. A letter was forwarded to the solicitors for the appellant, inter alia, to that effect. 61 The respondent attended upon the premises on 16 May 2002 at approximately 7.00am. He was again instructed to meet with Mr O'Shea. After having waited for some 15 minutes Mr O'Shea met the appellant and again instructed him to leave the premises. The conversation contained within the respondent's affidavit is in the following terms: O'Shea: "What are you doing here?"

Moses: "The Commission gave its judgment yesterday allowing me to return to work. My solicitors wrote to your solicitors yesterday telling them that I would be turning up today at 7.00am. Have you read the judgment? I have a copy with me."

O'Shea: "I've read it but you can't start without a further medical examination by our doctors".

Moses: "Dr La Hood has stated many times that I am fit to work in the repack centre".

O'Shea: "Please leave. Get your solicitors to contact our solicitors". 62 The appellant's evidence does not contest this account of the conversation. The respondent then attended upon his treating doctor, Dr La Hood, and obtained a further medical certificate indicating that he was fit to return to duties in the repack centre of the appellant's premises (that is, on restricted duties). 63 The refusal by Mr O'Shea led to a letter being forwarded by the respondent's solicitors to the appellant's solicitors in the following terms: We refer to our letter faxed to you at 11:36am yesterday.

We note that at the time of preparing this letter to you (11:55am), we have not received any response from you.

You will recall that in our letter to you yesterday, we advised you that Mr Moses would resume his duties at the usual time of 7:00am today and assumed that he would not be prevented from returning to work.

We were astonished to learn from Mr Moses that once again, he was refused a start by Mr Gary O'Shea of IGA Distribution Pty Limited. In particular, we were instructed as follows: s Mr Moses attended the Blacktown premises of IGA at 7:00am today. s He was forced to wait for about 15 minutes before Gary O'Shea came down and asked Mr Moses what he was doing there. s Mr Moses said that the Commission gave its judgment yesterday allowing him to return to work and that Slater & Elias had written to IGA's solicitors yesterday informing them that he would be turning up for work at 7:00am. s Mr Moses had a copy of the judgment with him and offered to show it to Mr O'Shea. s Mr O'Shea said that he had read the judgment but would not allow Mr Moses to start without further medical examination by IGA's doctors. s Mr Moses replied that that his treating doctor had repeatedly advised IGA that he was fit to work in the repack centre. s Mr O'Shea then told Mr Moses to leave and suggested that Slater & Elias should contact IGA's Solicitors.

We presume that you have read the judgment delivered by the Full Bench yesterday. There is no ambiguity in the judgment. Mr Moses was entitled to resume his duties today in the repack centre of your client's Blacktown premises. There were no conditions attached to the Commission either in the first instance of on appeal to Mr Moses' reinstatement order.

Please advise us urgently and by no later than 3.00pm today, why your client is not in contempt. If you client is acting on advice, we reserve the right to call upon the production of that advice in respect of any contempt proceedings.

We await your reply. In the meantime, we have advised Mr Moses to return to work again at 7:00am tomorrow. 64 It would appear that following the receipt of this letter the respective solicitors discussed the matter, prompting a second letter from the respondent. This second letter emphasised the respondent's frustration at being denied a return to work until the appellant had conferred with its counsel (who, apparently, was not available for a period in excess of one week). The letter noted that the reinstatement order was not conditional upon the appellant seeking counsel's advice and reiterated that Mr Moses would be attending for work at 7:00am the following morning. 65 The appellant's solicitor replied by letter dated 16 May 2002 in the following terms: We refer to your correspondences of 15 and 16 May 2002.

We note that our Application for Leave to Appeal and Appeal was partially granted and otherwise refused. We note that Commissioner Cambridge's decision of 20 August 2001 (based on medical evidence now more than 12 months old) has been complied with by our client. To this end we refer you to our correspondences of September 10 (2), 11, 12, 21, 24 and 27th, October 12th and November 14th in which we have indicated that our client does not require your client to attend for work but he will be paid as if he had performed his work.

Our client is currently reviewing yesterday's decision of the Full Bench of the Industrial Relations Commission.

Our office was notified at approximately 3.30pm on Tuesday May 14th that the Full bench were delivering their decision at 10.00am the next morning.

At proceedings before His Honour President Wright at 10.00am yesterday you requested that the matters be stood over for further directions to allow the parties to consider the judgment of the Full Bench.

At 11.36am (approximately 75 minutes after his Honour President Wright announced the Full Bench's decision) you wrote to us demanding that our client allow your client to attend work. Your subsequent correspondence today is equally unhelpful.

As you are well aware this matter is not straightforward.

Our client has previously raised significant concerns with you about its occupational health and safety obligations, as recognised by his Honour the President in his judgment of 20 September 2001. This concern arises from medical advice (received some significant time after the conclusion of proceedings before Commissioner Cambridge) indicating that your client was unfit for any work at our client's premises.

It is in this context that our client wishes to consider its position.

As indicated to Mr Elias of your office today our client's view is not in any way concluded as to whether Mr Moses will be asked to attend for work. As also indicated to Mr Elias at approximately 12.30pm today, we were not in an position to confirm our indications in writing prior to your 3pm deadline contained in today's ultimatum.

We note your further correspondence received at 3:55pm and your reference to Rule 237. Any application under Rule 237 would be premature and, on any view of it, vexatious. Your client will continue to be paid by our client for this brief interim period until our client makes a properly informed decision.

Our client anticipates being able to advise you early next week of its proposed course of action.

In the meantime we ask you client to allow our client reasonable time to consider this difficult issue. 66 It would appear the respondent's solicitors received this letter at 5.02pm on 16 May and immediately forwarded a reply annexing a copy of the medical certificate of Dr La Hood obtained earlier that day. The appellant was again placed on notice that Mr Moses would be attending for work the following morning. 67 On the respondent's evidence, he again attended the premises on 17 May and was once again met by Mr O'Shea and another employee of the appellant. They were shown the medical certificate obtained the previous day. The following conversation then took place: O'Shea: "We are paying you. You should go home. We are waiting on further advice."

Moses: "All I want to do is work. Why can't I work?"

O'Shea: "You should go home until you hear further from us." 68 This resulted in a letter from the respondent's solicitor, alleging contempt on the part of the appellant. The appellant's solicitor replied reiterating the difficult situation presented by the medical reports it had obtained, asserting no firm view had been reached by its client as to a way forward and restating its view that any allegations of contempt at this stage would be vexatious. 69 The exchange of correspondence continued between the parties' solicitors. However, on Mr Moses' evidence, the next communication he received was a letter from the appellant's State Manager dated 22 May 2002 directing him to attend upon a doctor's appointment with an orthopaedic specialist, Dr Cummine, the following day. The letter stated that "this is a formal direction to attend the appointment. We regard this direction as reasonable and lawful". 70 Notice that the respondent would be required to attend that medical examination was provided to the respondent's solicitors by letter dated 21 May. The respondent's solicitors replied by letter of the same date, indicating the respondent would not attend. A copy of the letter from the State Manager was provided to the respondent's solicitor under a covering letter dated 22 May 2002. A further letter of that date was sent to the respondent's solicitor indicating a list of materials that were to be provided to Dr Cummine and requesting urgent details of any additional material thought relevant by them. 71 On 28 May, the respondent received a letter from Mr O'Shea, indicating that he had been made aware of the respondent's failure to attend upon the appointment with Dr Cummine. The letter concluded in the following terms: We are currently waiting for a report from Dr Cummine.

In the meantime please advise us why we should not re-consider you employment in light of your failure to follow a reasonable and lawful direction. 72 The respondent's solicitors sent a letter to the Commission briefly outlining the history of the matter, including the repeated refusals on behalf of the appellant to permit Mr Moses to return to work, and requesting an urgent relisting of the "matters" for the following purposes: 1. To address the Commission further in relation to the above matters and for the Commission to determine whether in all the circumstances, the Registrar ought to be directed to instruct the Crown Solicitor to initiate contempt proceedings. 2. To address the issue of threatened dismissal contained in the enclosed letters from IGA Distribution Pty Ltd to Mr Moses. 3. To give directions in relation to our client's foreshadowed application for costs in the proceedings. 73 The matter came before the Commission on 29 May 2002 and the parties set out their respective positions. Directions were made and the proceedings were stood over to proceed for hearing before the Full Bench on 5 June 2002. In the meantime, the appellant received a report from Dr Cummine as to the respondent's fitness for work dated 29 May 2002. The report was forwarded to the respondent's solicitors under a covering letter dated 4 June 2002. As noted earlier the hearing before the Full Bench was to occur the next day. The report from Dr Cummine resulted not from an examination by him of the respondent but rather from Dr Cummine's consideration of earlier medical reports and radiological material. 74 Dr Cummine observed in the report: [I]n regard to the report of Doctors Hynes and Ly, and in particular their report of 8/12/01, I consider their interpretation of the clinical and radiological information to be pessimistic in the extreme ... I have not seen any evidence on radiological grounds that deterioration has been "clearly mapped" and I am not certain what the "accurate objective measurements and percentages mirroring a predictable deterioration in such a degenerative condition" are.

Accordingly, on the evidence that I have seen, it appears that this man sustained a soft tissue injury to his back and/or buttock, and imaging has shown the most minimal degenerative changes in his lumbosacral spine consistent with his age.

On those grounds, having recovered from the pain of the acute attack, I think this man is fit to return for all forms of normal duties and I would not impose any specific restrictions on him . (emphasis added) 75 The evidence of Mr Easton indicated that his firm received the facsimile copy of the report "late in the evening on 3 June 2002". The covering letter to the report was in the following terms: Our client has, since 1 November 2001, instructed your client not to attend for work on the basis of the medical controversy canvassed with you in numerous previous correspondences.

Following the judgment of the Full Bench of the Industrial Relations Commission of New South Wales delivered on 15 May 2002, our client sought to resolve this medical controversy by seeking the advice of Dr Cummine, an orthopaedic surgeon.

Your client refused to attend an examination arranged by our client with Dr Cummine.

Despite this refusal our client provided certain written medical material to Dr Cummine (as foreshadowed to you in our correspondence of 22 May 2002) for his opinion.

We received Dr Cummine's report by facsimile late yesterday (attached). Clearly, according to Dr Cummine, there is no physical impediment to your client resuming full duties at our client's premises.

The remaining medical issue now appears to be whether or not your client is fit to perform normal duties as a storeman.

Our client is prepared to provide your client with restricted duties in accordance with the limitations stated by Dr La Hood on an interim basis pending your client's examination by Dr Cummine.

Our client will require your client to undergo this further medical examination as a matter of priority …

In light of the views expressed by Dr Cummine our client will make work available to your client from tomorrow morning. As indicated above, this work will conform with the restrictions advise[d] by Dr La Hood in his report of 16 May 2002 until your client has been examined by Dr Cummine and a further report received. 76 As noted earlier, the parties presented a consent position as to the future conduct of the litigation, which included the question of costs being determined on the papers (the costs issue concerned both the costs at first instance and on appeal). Respondent's Submissions 77 The respondent filed detailed written submissions on the application for costs. The submissions set out in detail the matters of fact and law upon which he relied. The substance of the submissions may be shortly stated. The respondent's application for costs is brought in reliance upon both s 181(2)(b) and (c) of the Industrial Relations Act. He contends the appellant instituted the appeal proceedings "without reasonable cause" and "unreasonably failed to agree to a settlement of the claim". 78 The respondent submits that it was made clear to the appellant from the outset that he was pursuing the primary remedy available to him under the Act; that is, reinstatement. He wanted a job. Throughout the proceedings the respondent made a number of offers to settle the proceedings on the basis of reinstatement or re-employment; the final offer being reinstatement without any payment for lost earnings. The appellant, also from the outset of proceedings, had taken a firm position that it would not accept the respondent back to work, whether by way of reinstatement or by way of re-employment under any circumstances. 79 In the respondent's submission, the relevant principles to determine an application under s 181(2) of the Act are those set out in Bankstown City Council v Paris (1999) 93 IR 209 and Four Sons Pty Limited v Sakchai Limsiripothong (No 2) (2000) 100 IR 400. The respondent contended that no real offer, nor any reasonable offer, was made by the appellant. The appellant's conduct over the entire course of the litigation, from the date of the notice of termination, was inconsistent with any intention to settle the proceedings on any basis that could be considered reasonable. The only offer made by the appellant was for the respondent to withdraw his proceedings and reapply for a position after he had demonstrated that he was fit for work. This was not a genuine offer to settle the proceedings. This purported offer, in reality, did not offer the respondent anything that was not already available to him. Reliance was placed on s 93 of the Industrial Relations Act. No other offer was made by the appellant at any stage of the proceedings, despite repeated attempts at settlement on behalf of the respondent. 80 The appellant failed to assess, it was said, in an objective way, the strengths and weaknesses of its case, or to undertake a careful assessment of its prospects in litigation. There was a complete failure on behalf of the appellant to properly conciliate proceedings, in complete disregard for the policy of the Industrial Relations Act, which requires parties to take seriously their obligations to attempt to settle proceedings. 81 As to the costs at first instance, the respondent submitted the rigid position of the appellant, and the reasonableness of the offers made by the respondent, were to be measured against the outcome of the proceedings before Cambridge C. The respondent was successful in receiving reinstatement with backpay and the preservation of his entitlements. He was willing to settle for less. Further, regard should be had to the lengthy and costly hearings which were required both before the Commissioner and the Full Bench to resolve the proceedings. 82 It was submitted that the position of the respondent on the costs of the appeal was even stronger than at first instance. The conduct of the appellant, following the decision of the Commissioner and indeed following the stay decision of the President, was in complete disregard of its obligations under the statute and was consistent with a refusal to make an offer of settlement on any basis that could be considered reasonable. 83 On the evidence it was open, contended the respondent, for the Commission to determine that the appeal was instituted without reasonable cause: Dorothy Jonns Total Beauty and Slimming Centres Pty Limited and Goode (2001) 103 IR 117. 84 Further, it was submitted, in reliance upon Bankstown City Council, that the conduct of the appellant throughout the course of proceedings, and particularly following the decision of the Commissioner and the Full Bench, was a relevant matter to the determination of costs. Following the decision of Cambridge C, the appellant refused to let the respondent return to work. It maintained this position despite the refusal of a stay of the orders at first instance and even following the Full Bench decision. The respondent's approach led to a significant expenditure of costs on interlocutory proceedings and resulted to conduct inconsistent with any intention to agree to settle proceedings on any basis, let alone one that was reasonable. 85 In submissions in reply, the respondent emphasised that from the commencement of proceedings, he had sought what was identified in Commonwealth Steel v Ward to be the primary remedy under the Act, that is, reinstatement, or failing that, re-employment. This was not a matter which should count against him on the question of costs. Appellant's Submissions 86 The appellant accepted that the relevant principles for the determination of an application for costs are to be found in the judgment of the Full Bench in Bankstown City Council v Paris. That is, costs would be awarded where: 1. There was a proposal put by a party which could be described as a reasonable settlement of the claim and that was not agreed to by the other party; or 2. 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. 87 The appellant submitted that, from the commencement of the proceedings, the respondent adopted a "rigid bargaining position". As was indicated by the solicitors for the applicant at the "preliminary hearing" on 21 March 2001, the appellant could have offered six months remuneration and it would have been refused. Whilst it was conceded that the appellant had not made any formal offers of settlement, it was, on the appellant's submissions, not unreasonable given the rigid position of the respondent. Mr O'Shea's evidence makes it plain that no offers of settlement were made because of "the very clear statements from Mr Moses' solicitors that he would only accept a settlement offer that involved returning to work at Blacktown". The appellant was actively discouraged from making any financial settlement offers by representations made on behalf of the respondent. 88 Further, the appellant contended that the purported offers of settlement from the respondent were no more than an offer to completely capitulate. It was, in the appellant's submission, open to the Commission to conclude the respondent in his continually uncompromising adherence to his position, acted contrary to the policy considerations of the Act. The door to negotiations had been closed by the respondent. 89 The second basis identified by the Full Bench in Paris went to whether the conduct of a party can be considered to amount to conduct inconsistent with an intention to settle proceedings on any reasonable basis. When viewed objectively, the position advanced by the appellant, that is a refusal to settle the proceedings if such a settlement were to include reinstatement, was not unreasonable. 90 Mr O'Shea's evidence makes it clear that the appellant was always prepared to consider a reasonable settlement. In correspondence between the parties, whilst not having provided some counter offer, the appellant continually invited the respondent to put forward some offer other than reinstatement or re-employment. Further, the appellant took a number of steps including making inquiries with their insurer and meeting medical expenses incurred in determining suitable duties, which are consistent with an intention to facilitate an objectively reasonable settlement. 91 The appellant at all times acted in accordance with the Commissioner's order of reinstatement by paying the respondent from the date of the order, even though he was not required for work: Australian Workers Union, New South Wales Branch v Pioneer Concrete (New South Wales) Pty Ltd (unreported, Hill J, 30 July 1991 at 54). In light of the medical evidence obtained in October and November of 2001, the actions of the appellant were prudent, having regard to the obligations of the appellant under the Occupational Health and Safety Act 1983. Consideration 92 As noted earlier, it has been necessary to set out in detail the history of the proceedings to illustrate the particular and exceptional circumstances that pertain to this matter. The costs that have been incurred in the conduct of the proceedings to date have, no doubt in light of the history, been significant. 93 The principles as to the grant of costs in unfair dismissal proceedings under s 181 of the Industrial Relations Act are now well settled: see, for example, the decisions of the Full Bench in Bankstown City Council v Paris and Four Sons Pty Limited v Sakchai Limsiripothong (No 2). 94 In Bankstown City Council v Paris, the Full Bench held (at 218-219): Section 181(2)(c) on its face is a provision which is designed to apply only to unfair dismissal proceedings. It is the only provision designed to be applied specifically in that context. Also, when read in terms of the other provisions in the Act as to costs, it is one of only three provisions which may have application to unfair dismissal proceedings. The other provisions are paragraphs (a) and (b) of s 181(2). However, those provisions apply to many other proceedings before the Commission and, unlike the particular limb of s 181(2)(c) relied on in this application, they are designed to operate where the Commission considers either the application itself, or the institution of the proceedings, was affected by considerations which made it manifestly inappropriate for the proceedings to have been commenced. 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. 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. 95 In those proceedings, one of the matters relied upon on behalf of the respondent (the applicant on the costs motion), was the failure of the appellant, with one exception, to make any offer to settle the proceedings, despite numerous offers on behalf of the respondent. The Full Bench observed as to that situation (at 220): We emphasise that there will be many circumstances in which parties to litigation, including unfair dismissal proceedings, may appropriately take a firm position generally, including on the question of conciliation or settlement. Nevertheless, such a position runs significant risks in terms of the exercise of the power and discretion under s 181(2)(c). This is particularly so where such a position is assumed without due regard to the policy of the Act which requires parties to take seriously their obligation to attempt to settle the proceedings. That in turn involves an obligation to consider in an objective way the strengths or limits upon the case that they will be propounding should the matter proceed to arbitration. 96 There were two features of that case which were considered by the Full Bench as warranting an order for costs in the respondent's favour. The conduct of the employer in failing to properly investigate what were most serious allegations prior to determining to dismiss, and "the failure and thus apparent unwillingness of the appellant, to respond to the various offers of compromise and settlement made on behalf of the respondent". 97 See also Four Sons Pty Limited v Sakchai Limsiripothong (No 2) where this was said: [11] 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. 98 These proceedings, however, involve a very unusual set of circumstances and it is appropriate to note that we are satisfied the appellant had, throughout the course of proceedings, some real concerns as to the appropriateness of the respondent returning to the appellant's workplace. Whilst we would not express any concluded view, in light of the medical evidence received from Dr Hynes and Dr Ly, there is some substance in the appellant's contention that refusing to permit the respondent to perform work may have been prudent in light of health and safety concerns. Indeed, the appellant's view seems to have changed following the receipt of the opinion of Dr Cummine. 99 Further, there is equally some merit in the contention of the appellant that the position of the respondent, expressed on numerous occasions, as being desirous of a remedy involving an assurance of employment, may give rise to some reluctance in putting monetary offers of settlement. Nevertheless, we are not satisfied that the position adopted by the appellant was sufficient to discharge the obligation it bore, in accordance with Paris and Four Sons (No 2), to properly turn its mind to the settlement of proceedings. We are not satisfied that the approach of the respondent to the proceedings made it futile for the appellant to put forward an appropriate offer of settlement. 100 The position adopted by the appellant essentially amounted to a demand that the respondent bargain against himself in a way which would require him to step back from his primary remedy under the Act. In the absence of any offer from the appellant, it is in our view, inappropriate to conclude that the respondent's stance was unreasonable. The appellant did not take the necessary steps to deal with its situation in the litigation as discussed in Paris and Four Sons (No 2). Certainly it gave little or no weight to the fact that reinstatement is the primary remedy under the statute: Little v Commissioner of Police (2001) 112 IR 212 at 243. 101 The position adopted here is reminiscent of that adopted by the respondent in Van Huisstede and the Commissioner of Police (No 2) (2001) 106 IR 56. As Walton J, Vice-President observed at [61] - [70], the only offer to settle made by the applicant in those proceedings was tantamount to "an abandonment of the respondent's case in its entirety". His Honour then held: [64] On the evidence, the only communication that could be said to have amounted to an offer in reply to this offer of settlement was that referred to by Mr Madden in cross-examination. His evidence as to this reply was somewhat unclear. However, it essentially involved the respondent offering to revoke the order on the condition that the applicant would immediately resign. No other concessions were offered by the respondent in that reply.

[65] Aside from that matter, the only reply to the applicant's offer of settlement was that the respondent would consider "any other proposal".

[66] Mr Willis submitted that the applicant's approach should be characterised as 'inflexible'. However, I consider that it was the respondent's approach to settlement which was, in fact, flawed. It was incumbent upon the respondent to make a clear offer of settlement in response to the applicant's initiative, even if that offer of settlement was nominal, as was discussed in Four Sons. This was a fortiori the case where the respondent's prospects in the matter were relatively weak.

[67] The respondent's invitation to the applicant to simply make a further offer of settlement represented a complete failure by the respondent to make any counter offer and was, of itself, an abrogation of the respondent's obligation in relation to the settlement process.

[68] The 'resignation' proposal advanced by the respondent offered no material advantage to the applicant, either in terms of the restitution of his position or monetary compensation. It effectively represented an invitation for the applicant to abandon his claim. On the basis of this offer, he could leave the Police Service of his own accord but what was offered was by no means truly in the nature of a voluntary discharge of his service. In the circumstances of this matter, such a proposal by the respondent did not represent any attempt to settle the matter in a serious manner.

These observations are equally applicable to the present proceedings. 102 The appellant contended that there was evidence that it was prepared to consider putting a "commercial settlement of the claim"; that is, in relation to the investigations it made with its insurer and the like. A similar observation may be made as to the approach the appellant adopted in the conciliation before the Vice-President. Whilst these steps may well have been done with an intention to settle proceedings, they are not of themselves sufficient. There was lacking a fundamental element or ingredient in this situation. That is, an offer, indeed any offer, actually communicated to the respondent for his consideration. In any event, the nature of a "commercial settlement" in contemplation fell well short of that required to meet the appellant's obligation as described in Paris at the time that it was raised with the respondent. This is to be contrasted with the repeated offers of the respondent, albeit with the continued desire for reinstatement. 103 We consider the conclusion is even clearer in respect of the appeal proceedings having regard to the relatively poor prospects for success of the appellant and its failure to factor into its approach the policy of the statute as to relief and the particular form of the order for reinstatement made by Cambridge C are very significant. 104 Thus the appellant, both at first instance and on appeal, did not have adequate regard to its obligations as a party to proceedings under s 84 to attempt reasonably to make an offer to settle the proceedings. The unusual nature of these proceedings and the respondent's position as to reinstatement or re-employment did not relieve the appellant from its obligations in accordance with the policy of the statute as considered in the cases earlier referred to. 105 The jurisdictional gateway of s 181(2)(c) having thus been opened, it remains for the Commission to exercise its discretion under the statute and, if relevant, to determine the nature of the costs order to be made. In our view, given the partial success of the appellant on the issue of leave to appeal and the circumstances of the conciliation processes before the Commission, this is not an appropriate case in which to grant indemnity costs, despite the continued approach of the appellant complying with the orders of the Commission in a token way. The approach adopted by the respondent in the settlement of the claim also militates against an award of indemnity costs. We consider that the circumstances of this matter should result in costs being awarded in the ordinary way; that is an amount as agreed or, failing agreement, as assessed. 106 The Commission accordingly orders that the appellant is to pay the respondent's costs of, and incidental to, the proceedings both before Cambridge C and on appeal, in an amount as agreed or, failing agreement, as assessed. _________________

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