IGA Distribution Pty Limited and Moses (No 3) [2003] NSWIRComm 230 - NSWIRComm 1991 case summary — Zoe

NSWNSWIRComm

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

[2003] NSWIRComm 230

Industrial Relations Commission (NSW)|1991-07-30|Before: Wright J, Walton J, Hill J, Mr P

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Source facts

Court

Industrial Relations Commission (NSW)

Decision date

1991-07-30

Before

Wright J, Walton J, Hill J, Mr P

Source

Original judgment source is linked above.

Judgment (133 paragraphs)

[1]

CITATION : IGA Distribution Pty Limited and Moses (No 3) [2003] NSWIRComm 230 APPELLANT: IGA Distribution Pty Limited PARTIES : RESPONDENT: Michael Joseph Moses FILE NUMBER: IRC 6002 of 2001 CORAM: Wright J President; Walton J Vice-President; Redman C Practice and Procedure - Costs - Appeal - Unfair dismissal - 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

[2]

Costs - Appeal - Unfair dismissal - 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 CATCHWORDS : Appeal - Costs - Unfair dismissal - 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

[10]

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

[11]

(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.

[40]

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.

[41]

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.

[52]

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.

[76]

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.

[116]

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.

[126]

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. …

[127]

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.

[132]

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. _________________