Costs sought against applicant - Dismissal - Termination of employment - Section 108 application dismissed - Dismissal not found harsh unjust or unreasonable - Whether applicant clearly acted unreasonably - Recommendation and assessment following conciliation proceedings considered - Whether recommendation to a party relevant to assessment - Offers made - Matter not settled - Conduct considered - Principles discussed - Findings in principal decision considered - Credibility of applicant critical - Whether arguable case - Beyond reasonable argument that conduct unreasonable - Whether discretion should be exercised - Costs application granted - Instalments - S.110(1) Industrial and Employee Relations Act 1994.

Bevan v. Dairy Vale Metro Co-Op Ltd. (1989) 56 S.A.I.R. 398.

West v. 24 Carat Nominees Pty. Ltd. (1994) 61 S.A.I.R. 255.

Elton Jerome Hermans v. Anton Schmidt/Racketeers Club Print I.1/1998.

Hall v. Movie Warehouse Pty. Ltd. (1993) 60 S.A.I.R. 470.

This is an application pursuant to Section 110 of the Industrial and Employee Relations Act 1994, (`the Act'), by General Motors-Holden's Automotive Ltd, (`the respondent'). The respondent seeks an award of costs against Loris Anthony Ruf, (`the applicant').

The principal application pursuant to Section 108 of the Act was determined by me on 14 April 1998 by way of a decision published as Print I.5/1998. I do not propose to canvass the basis of that decision, but indicate at this juncture that I found that the applicant had not been dismissed unfairly within the meaning of Section 108, and accordingly, the principal application was dismissed.

The application for costs was made shortly after the handing down of the decision, however at the request of the applicant it was not heard by me pending the outcome of an appeal that had by that time been lodged. On 1 June 1998, the Full Commission dismissed the appeal for reasons that were outlined in Print I.55/1998.

I have now heard the submissions of both counsel and considered the evidence in relation to this costs application.

It was argued by Mr. Stanley (of counsel), who appeared for the respondent, that the applicant had clearly acted unreasonably in failing to discontinue the application prior to it being determined by the Commission. In particular, it was argued that the applicant had continued with the matter in the face of an explicit recommendation to the contrary from the member of the Commission hearing the conference pursuant to Section 107 (then S.106) of the Act. In addition it was submitted that the applicant had made and continued with the application knowing that it was based upon an untrue premise and had deliberately attempted to mislead the employer and subsequently, this Commission. It was also argued by the respondent, that the applicant was on notice as to costs, and that he had not accepted certain offers made by it to settle the matter before such was heard by the Commission. In this respect, I note that the offers were not insignificant, but related to all matters between the parties including certain outstanding worker's compensation issues. In this respect, I am not in a position to assess the consideration that those offers would represent given that I am not privy to the nature or extent of the worker's compensation issues between the parties. Having raised this position with counsel, Mr. Stanley confirmed that the respondent was primarily relying upon the failure to discontinue the application as the basis for the costs award.

The applicant, who was represented by Mr. Hyde (of counsel), sought the rejection of the costs application by the Commission, and argued that he had not acted unreasonably in failing to discontinue the matter. In that context, the applicant argued that the application raised serious issues and was not a clear-cut case. In addition, it was argued that the applicant's perspective was formed, at least in part, by a perception of the different treatment afforded to him in comparison with another employee of the respondent dismissed at about the same time. In conclusion, Mr. Hyde correctly confirmed the requirement for the respondent to demonstrate that the applicant had clearly acted unreasonably, and argued that the legislative intention of the Act was not to unnecessarily punish a worker with costs merely due to them being unsuccessful in their application.

Having regard to the evidence before the Commission, I find the following facts of relevance to this application:-

* The application pursuant to Section 105 of the Act was filed on 3 April 1997 and sought re-employment as the remedy.

* The conference pursuant to Section 106 (now S.107) of the Act was held before a member of the Commission on 18 April 1997. The Commissioner `signed the matter off' for arbitration, however a written assessment and recommendation was issued to the parties in the following terms:-

The Commission has prepared this recommendation pursuant to Section 106(3), Rule 20(9), following a conference conducted on Friday 18th April 1997:

1. THAT in the Commission's view the Applicant can not succeed with his application.

2. THAT the Applicant should withdraw his application by lodging a Notice of Discontinuance in the Registry of the Commission within 14 days.'

* On 26 May 1997, the solicitors for the respondent wrote to the applicant's solicitors advising of the Commission's recommendations and confirming that as the application had not been withdrawn, costs would be sought in the event that the applicant was ultimately unsuccessful.

* The hearing of the application took place on 10, 11 and 19 November 1997 and was determined by me on 14 January 1998 in Print I.5/1998.

Section 110 of the Act establishes the basis of an application for costs in these circumstances, in the following terms:-

**`**S.110(1) If an application under this Part proceeds to a hearing and the Commission is satisfied that a party to the proceedings clearly acted unreasonably in failing to discontinue or settle the matter before the hearing concluded, the Commission may, on the application of the other party to the proceedings, make an order for costs (including - if relevant - the costs of representation) against the party.'

The basis of the assessment as to whether a party has clearly acted unreasonably is well established by the relevant authorities including Bevan v. Dairy Vale Metro Co-Op Ltd. (1989) 56 S.A.I.R. 398 and subsequently in West v. 24 Carat Nominees Pty. Ltd. (1994) 61 S.A.I.R. 255. On this basis, it is necessary for the Commission to be satisfied beyond reasonable dispute that the applicant has acted unreasonably in failing to discontinue this application prior to it being determined by the Commission. In making this assessment, the prospects of success in the case and the bona fide's of the applicant are relevant. In this respect, I would respectfully agree with and adopt the summary of the position as advanced by Huxter C. in Elton Jerome Hermans v. Anton Schmidt/Racketeers Club Print I.1/1998. In that decision, the Commissioner indicated as follows (p.4):-

`A party that proceeds to trial on the basis of false evidence, to my way of thinking, clearly acts unreasonably as well as unlawfully. In those circumstances, an order for costs is axiomatic, in my view.'

I would also note that the approach of the Full Commission in Hall v. Movie Warehouse Pty. Ltd. (1993) 60 S.A.I.R. 470 at p.471, whilst in the context of a failure to `settle', is in general terms, relevant to the assessment of a party's conduct in the case of a dismissal based upon serious and wilful misconduct.

The conciliation and related proceedings before the Commission, and any assessments or recommendations issued in that context, are particularly important in making the assessment of a party's conduct, given the construction of the Act. As to the Section 106 proceedings in this matter, the Commissioner made an unequivocal recommendation to the applicant to discontinue the application.

I have carefully considered the implications arising from my findings as to the credibility of the parties in the principal application. I found that there were elements of the applicant's evidence that were `not believable' and that I held `significant reservations regarding critical elements of his evidence'. In the various findings that led to the application being dismissed, I also found that the applicant deliberately and repeatedly misled and deceived his employer regarding the `pass-out' request, and that elements of his case were not true.

As to the perception of the inconsistent treatment of employees by the respondent, this issue was discussed in detail in the principal decision. There is some superficial substance to this as an element impinging upon the applicant's conduct in continuing the matter. However, the applicant had the capacity to validate the factual basis of the other employee's case, as he is a member of the same Union that represented that employee, and the applicant must have known that his own `pass-out' application was based upon a totally false premise. The issue of the reasonableness of the dismissal in the context of the employment relationship, was the subject of detailed consideration by me, however I note that this was put forward as a secondary argument, and that the application was in fact primarily based on the existence of an actual appointment with his solicitor, confirmed by a phone call, all of which was not true.

It is also significant that the Commissioner in the Section 106 conference, having heard from the parties on the relevant issues, had informed the applicant that he could not succeed and should withdraw his application. That conference was not a substitute for the hearing of the application, however, such recommendations are not made lightly and should be given credence by the parties, and by the Commission in any subsequent costs applications.

Having regard to the evidence, submissions of counsel, and the authorities touching upon this matter, I am satisfied that the applicant has clearly acted unreasonably in failing to discontinue the matter prior to its determination by the Commission. I accept the concluding proposition advanced by Mr. Hyde as to the legislative intent of the Act with respect to costs. However, the decision to continue with the application in the face of the Commissioner's clear recommendation, and in the knowledge that a substantial platform of the case could not be demonstrated, was clearly unreasonable. The applicant was also clearly on notice that costs would be sought by the respondent in the event of the application failing. I do accept that the applicant is not a sophisticated person, however he had access to quality legal advice, and was very well represented in the proceedings. As subsequently found by the Full Commission, the applicant was to a large extent, `the author of his own fate'. In the context of the case advanced at the relevant time and the circumstances applying following the Section 106 proceedings, I find beyond reasonable dispute that the respondent has acted unreasonably.

Having made that finding I must consider whether the Commission should exercise its discretion to award costs against the applicant. In making this judgement, the approach advanced in Bevan v. Dairy Vale (supra) remains relevant, in that having made a finding of unreasonable conduct, the Commission should be reticent to refuse to exercise that discretion other than in exceptional circumstances.

Mr. Hyde appropriately raises the desirability of not discouraging workers from making applications by the prospect of costs being awarded. Mr. Stanley also correctly points to the `balancing' policy intent inherent in the costs provisions, that is, unmeritorious claims are to be discouraged.

I have considered the circumstances now facing the applicant including the fact that he will not be returning to his employment with the respondent, and that an award of costs would not be insignificant in his present circumstances. Notwithstanding my general reticence to award costs against an applicant in this context, these circumstances are however not exceptional in this jurisdiction, and such have directly flowed from the conduct of the applicant, and more particularly, the pursuit of an application which relied upon an exceptionally dubious factual basis.

I am accordingly satisfied that the discretion to award costs to the respondent in this matter, should be exercised. The personal circumstances of the applicant will however be taken into account in terms of the precise orders to follow.

1. THAT the applicant, Loris Anthony Ruf, is to pay the reasonable costs of General Motors-Holden's Automotive Ltd in this matter. Such costs will include the costs of representation in relation to the Section 108 proceedings as agreed or taxed by the Acting Industrial Registrar.

2. THAT unless agreed to the contrary by the parties, the costs shall be payable in equal monthly instalments commencing three months from the date of agreement or taxation and concluding twelve months from that date. In default of payment, the remaining costs will become due and payable forthwith.

3. THAT in order to give effect to order 2 hereof, and to the extent that it is necessary, I grant a stay of the execution of this costs order, and direct the Acting Industrial Registrar not to issue a certificate to allow for enforcement provided the applicant complies with order 2. In default, the stay will be lifted forthwith and the respondent will be at liberty to apply for a certificate for the balance remaining.