Moore v North Sydney Council

Industrial Relations Commission (NSW)|2019-01-21

DECISION

On 18 October 2018 I handed down my decision in the matter of Moore v North Sydney Council [2018] NSWIRComm 1062. In that decision I dismissed the application for relief filed pursuant to s 84 of the Industrial Relations Act 1996 (NSW) ("the Act") on 6 April 2018 by Ms Isobel Moore, the applicant (the respondent to this motion) ("the Application") on the basis that the Industrial Relations Commission lacked jurisdiction to hear the Application.
North Sydney Council, the respondent, now seeks an order for costs.

Respondent's evidence and submissions in support of a costs order

On 8 November 2018, the respondent filed an affidavit of Mr Andrew Finlay Yahl, a solicitor employed by Bartier Perry Pty Ltd ("Bartier Perry"). The respondent's solicitor on the record is Mr Darren Gardner, a partner of Bartier Perry, and Mr Yahl's affidavit states that he assists Mr Gardner.
Annexed to Mr Yahl's affidavit are, amongst other things, copies of the following: 1. a letter from Mr Gardner to the applicant dated 1 May 2018 which: 1. refers to "the jurisdictional prerequisite for the Commission to entertain an application under s 84 of the Act is … that an employee has been 'dismissed'" and the "long line of authority which establishes what a 'dismissal' is"; and 2. alleges the applicant exercised a voluntary decision to resign thus there was no dismissal and the Commission has no jurisdiction to hear the applicant's application; 1. a letter from Mr Gardner dated 7 May 2018 enclosing the Employer's Response. The Employer's Response sets out the respondent's position that there was no dismissal and referred to the relevant authorities on constructive dismissals. The letter from Mr Gardner includes the following: …. having considered the circumstances of your resignation, including reference in your application to you seeking legal advice before filing, you ought be aware that you elected to commence proceedings with risk that the Commission may dismiss your claims and order costs against you under ss 181(2)(a) or (b) of the Industrial Relations Act 1996 (NSW) ("Act"). Noting your decision to persists with this litigation, and should this matter continue to the conciliation and directions hearing on 22 May 2018, our client also reserves its rights to costs pursuant to s 181(2)(c) of the Act; 1. an email from the applicant in response to Mr Gardner's letter of 7 May 2018 which stated: …. Mr Gardner's letter has certainly left me concerned; 1. a letter from Mr John Cheng of Berrigan Doube Lawyers, the applicant's solicitors, dated 7 May 2018 to Mr Gardner sent on a "without prejudice save as to costs" basis which: 1. asserts that the applicant's employment was a constructive dismissal as the respondent's conduct in forcing the applicant to choose between her employers left the applicant no option than to resign; and 2. offers to resolve the applicant's claims on terms including payment of 12 weeks' pay; 1. a letter from Mr Gardner dated 20 June 2018 to Mr Cheng sent on a "without prejudice save as to costs" basis ("the Respondent's June 2018 Offer") which: 1. reiterates the respondent's denial that the termination of the applicant's employment was a constructive dismissal; and 2. offers to resolve the claim on terms including payment by the applicant of the respondent's costs of $11,238.16; 1. emails between Mr Gardner to Ms Elli Lemmetty of Berrigan Doube Lawyers sent on 13 August 2018 regarding cross-examination of witnesses; and 2. email exchanges between Ms Lemmetty and Mr Gardner in the period 28 September 2018 to 24 October 2018 regarding a costs application.

The Application was frivolous or vexatious and/or instituted without reasonable cause

The respondent submits that the contents of the Application and the applicant's evidence during cross-examination revealed that the applicant had intended to resign from her employment well before 5 March 2018 (and she was not forced to do so) and that she did resign. Consequently, the Commission determined that the Application did not reach the jurisdictional threshold for an application pursuant to s 84 of the Act.
The respondent acknowledges the Full Bench comments in Dr A v Health District (No 4) [2014] NSWIRComm 56 at [15]: The mere fact that an applicant was unsuccessful in its application does not, of itself, make the application frivolous or vexatious or one that is pursued without reasonable cause.
The respondent does not rely on only the outcome in the jurisdictional proceedings, but also relies on the fact that, if the Application had met the jurisdictional threshold, the Application disclosed no grounds upon which it could be shown that any purported dismissal of the Applicant was "harsh, unreasonable or unjust" for the purposes of s 84 of the Act. The Application was always misconceived, frivolous, groundless and hopeless.
The respondent submits, the Application was also vexatious because: 1. the applicant prioritised her other employment and, was not honest with the respondent about the scope of that other employment; 2. in February 2018, the applicant had discussions with the respondent, in which she said "If you don't approve the change in hours, I would have to consider leaving to take up the new aerial teaching role" and said to the respondent "My first priority is myself and my aerial job is my real passion"; 3. the applicant had already made up her mind to leave and do a hand-over at least by 28 February 2018; 4. the applicant resigned on 5 March 2018, giving the two weeks' notice she intended; 5. after her resignation, the applicant had a discussion with Ms Shery Demian in which she said: I would like to come in to discuss the matter and negotiate with Council before I take it to the Industrial Relations Commission ... Given what has happened no, I don't think I could come back and work at Council. I would like to be paid out the rest of my contract. 1. by 6 April 2018, the applicant filed the Application and booked an overseas holiday for May despite asserting she had no choice but to resign because she could not have afforded not to work in her other employment.
The circumstances illustrate that the Application was orchestrated with a view to extract financial gain from the respondent.

Unreasonable failure to agree to a settlement of the claim or application frivolous: s 181(2)(c)

The respondent submits that s 181(2)(c) of the Act requires the Commission to consider the applicant's conduct in a more general way in relation to the question of settlement of the claim and that the Full Bench in Bankstown City Council v Paris [1999] 93 IR 209 ("Paris") at 219 found that an affirmative conclusion can be reached on two bases for the purposes of s 181(2)(c): 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.
The question of reasonableness is to be "decided by the Commission applying its own perception of what was unreasonable, as distinct from the perception (if any) of the party": Phillips v Industrial Relations Commission of NSW & Anor [2006] NSWCA 183 at [20].
The respondent submits that the following conduct of the parties is relevant for the Commission to consider in relation to exercising its discretion pursuant to s 181(2)(c): 1. the Application sought monetary compensation equivalent to the remainder of her contract, being from 16 March 2018 to 11 July 2018; 2. the correspondence of 1 May 2018 and 7 May 2018 from Mr Gardner to the applicant and the Employer's Reply to the Application which placed the applicant on notice of the groundless and hopeless nature of the Application and the jurisdictional difficulties the applicant faced; 3. the applicant's expressed concern regarding the jurisdictional issues raised by the respondent, in her email of the same date; 4. on 18 June 2018, the applicant, on notice of the difficulties with her case, unreasonably offered to settle the proceedings for 12 weeks' pay; 5. on 20 June 2018, the respondent offered to settle the proceedings for payment of its legal costs incurred up to that date. The applicant did not reply to the offer and this was unreasonable in the circumstances; 6. after the respondent was successful in the jurisdictional hearing, the applicant unreasonably refused to engage in any discussions regarding a settlement of a costs claim leading to the respondent incurring further unnecessary and wasted costs.

Exercise of discretion

The respondent submits that the applicant instituted the proceedings with no basis in law or fact and she was repeatedly placed on notice of the hopeless nature of her case. This conduct and the unnecessary expense that it caused to the respondent, weighs in favour of exercising the discretion in this matter.
The respondent acknowledges that the Application being dismissed is not necessarily determinative of whether the Application was frivolous or vexatious or instituted without reasonable cause but notes that the applicant was not even successful in the jurisdictional hearing.
The way the applicant chose to prosecute the proceedings caused unnecessary expense and delay for the respondent, including: 1. in filing and serving a summons to produce rather than seeking voluntary production or issuing an inter-parte notice to produce, and engaging in other conduct in respect of the Summons which resulted in costs thrown away by the respondent; 2. initially requiring all four of the respondent's witnesses for cross-examination despite the matter being listed for only one day and being on a discreet jurisdictional issue (and giving less than the required notice for cross examination); and 3. the applicant's solicitor not being in a position to make closing submissions on 21 September 2018, putting the respondent to further expense of drafting written closing submissions.

Applicant's evidence and submissions in defence of a costs order

The applicant relies on an affidavit of Elli Rebecca Lemmetty affirmed 21 January 2019.
The applicant denies that the Application was frivolous or vexatious or instituted without reasonable cause and submits that the applicant being unsuccessful in her unfair dismissal application is not determinative of whether the application was frivolous. A claim will only be considered to be either frivolous or vexatious or instituted without reasonable cause if, for example, the proceedings were brought to annoy or embarrass an opposing party, if they were brought for purposes other than court adjudication, or if they were so obviously untenable or hopeless that there was no prospect of success.
The applicant submits that this matter required a great degree of adjudication from the Commission and was instituted with the highest degree of reasonable cause. The Application was underpinned by an alleged ultimatum given to the applicant by Ms Amanda Dobson. Whether or not this ultimatum occurred was strongly disputed between the parties at all times of the proceedings. The applicant vehemently submitted that she did not orchestrate this ultimatum in order to try and advance her claim, but rather she genuinely, albeit mistakenly believed it to have occurred.
Although the Commission determined that no such ultimatum had occurred, this was a heavily disputed issue of fact which required the Commission's adjudication.
At the time of the first hearing date, there had been, to the applicant's knowledge, no similar cases which dealt with this specific issue, a constructive dismissal based on that reduction of working hours. The issue, therefore, fell into an area in which the application of constructive dismissal principles was relatively untested. It was only after the first hearing date that a similar case was heard, that being the case of Bromley-Hoult v Belgravia Health & Leisure Group Pty Ltd T/A Ascot Vale Leisure Centre [2018] FWC 4979 (27 August 2018). It cannot follow that the testing of such a grey area could amount to a frivolous or vexatious claim, nor one that was brought without reasonable cause.
Therefore, the applicant submits her claim does not fall within either of those first two scenarios in which costs can be awarded, as it was a claim that clearly required the adjudication from the Commission to resolve an issue of fact and it also set to test that unchartered application of law.
The applicant rejects the submission that there were offers made that were unreasonably rejected. There were two offers of settlement. The first at conciliation on the basis that the applicant discontinue the Application and both parties bear their own costs.
The second was the offer in the letter dated 20 June 2018 that the applicant pay the respondent the sum of $11,238.16. The applicant asserts this offer was not a reasonable offer from the respondent to settle the matter, as to accept it would have put the applicant at a huge financial loss at a time when the issues in contention that needed adjudication had not been resolved.
The applicant, therefore, was not acting unreasonably in rejecting either offer, as neither was a genuine attempt put towards her to attempt to settle the matter. Thus meaning that the potential costs scenario is also not applicable.
The applicant submits that this matter does not fall within any of the three situations in which the Commission can award costs against the applicant.
The applicant submits that the procedural matters in relation to the issuing of a summons to produce rather than a notice to produce and the circumstances in relation to the filing of written submissions were not properly matters that weigh in favour of the Commission exercising its discretion to make a costs order against the applicant.

Determination of the respondent's application for a costs order

The legislative scheme

The Commission's jurisdiction to award costs is contained in 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 the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis. (2) However, the Commission may award costs only in the following cases: (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.
The terms of s 181 of the Act make it clear that the Commission's power to award costs is discretionary. It is a discretionary power which is rarely exercised in unfair dismissal cases.
The Full Bench recently reiterated the Commission's general approach to s 181 in Colefax v Secretary, Department of Education (No 4) [2019] NSWIRComm 1017 ("Colefax (No. 4)") as follows: 22. The approach to be taken by the Commission to s 181 was described by the Full Bench in Re Operational Ambulance Officers (State) Award (No 2) [2011] NSWIRComm 85 as follows: "[28] The exercise of the Commission's discretion to award costs involves a two stage process: see Bankstown City Council v Paris [1999] NSWIRComm 585; (1999) 93 IR 209 and Four Sons Pty Ltd v Sakchai Limsiripothong (No 2) [2000] NSWIRComm 131; (2000) 100 IR 400. The first stage requires a determination as to whether s 181(2) of the Act is enlivened. The second stage of the process requires the Commission to exercise its discretion whether to award costs under s 181(1) of the Act." 23. In Dr A v Health District (No 4) [2014] NSWIRComm 56 Boland JA, with whom Stanton and Newall CC agreed, made the following findings: [8] The Commission's jurisdiction (as distinct from the Commission in Court Session) is essentially a non-costs jurisdiction. There are limited exceptions, which are prescribed in s 181(2) of the IR Act. If one or more of the tests required by s 181(2) are met in any particular case it then becomes a matter for the Commission's discretion whether to award costs: s 181(1)(b)."
The Full Bench in Paris considered the differences between the Commission's power in sub-s 181(2)(c) which applies only to unfair dismissal matters and the Commission's powers pursuant to sub-ss 181(2)(b) and 181(2)(c) and said at 218: Section 181(2)(c) …is one of only three provisions which may have application to unfair dismissal proceedings. The other provisions are paras (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.
Consistent with Paris and Colefax (No. 4), I will consider whether the Application itself was frivolous or vexatious or instituted without reasonable cause; and then consider the conduct of the applicant in relation to the question of settlement of the Application. If a jurisdictional gateway for an order for costs is established pursuant to sub-s 181(2), I will then consider whether this is a matter in which the Commission should exercise its discretion.

Was the Application frivolous or vexatious or instituted without reasonable cause?

In Tapia v Emibarb Pty Ltd t/as Lagoon Seafood Restaurant [2005] NSWIRComm 232 Justice Backman considered the relevant authorities in relation to an application for costs on the grounds of "frivolous" and/or "vexatious" and "instituted without reasonable cause" and said at [116]-[122] 116 In Peden v Lake Macquarie Refrigeration Pty Ltd (2003) 134 IR 149 the Full Bench of the Commission examined the meanings of "frivolous" and "vexatious" in the context of s181(2)(c) of the Act. At [19] and [20] of the decision, the Full Bench said in relation to the meaning of "frivolous": We note that "frivolous" is defined by the Oxford English Dictionary as "of little or no weight, value, or importance; paltry, trumpery; not worthy of serious attention; having no reasonable ground or purpose". In light of the well established line of authority, and the ordinary meaning of the word "frivolous", we are satisfied that an application under s84 will be frivolous if, on its face, it cannot possibly succeed, if it is manifestly groundless or if it is a paltry or trifling matter. 117 The Full Bench in Peden v Lake Macquarie also considered whether the application to the Commission under s84 of the Act was vexatious. At [28] - [30] the Full Bench made the following observations: There is an absence of any discussion as to the nature of the test to be applied to determine whether an application is vexatious for the purpose of s181(2)(c). Counsel for the appellant submitted that the following definition of "vexatious" in Attorney General v Wentworth (1988) 14 NSWLR 481 per Roden J at 487 is "generally regarded in the Commission as useful": It seems then that litigation may properly be regarded as vexatious for present purposes on either objective or subjective grounds. I believe that the test may be expressed in the following terms: 1. Proceedings are vexatious if they are instituted with the intention of annoying or embarrassing the person against whom they are brought. 2. They are vexatious if they are brought for collateral purposes, and not for the purpose of having the court adjudicate on the issues for which they give rise. 3. They are also properly to be regarded as vexatious if, irrespective of a motive of a litigant they are so obviously untenable or manifestly groundless as to be utterly hopeless. The basis of counsel's observations as to Attorney General v Wentworth was its adoption by Sams DP in Stephan v RL Whyburn and Associates [2000] NSWIRComm 154 and by Harrison DP in Fairweather v Ladehai Pty Ltd T/as North Star Holiday Resort [2002] NSWIRComm 367. In our view, there is nothing in the findings in the decision on costs that supports the conclusion that the s84 application was vexatious. In particular, we note that the findings in paragraphs [25] and [26] of the decision under appeal do not assist in the determination of that question. 118 In Attorney-General v Wentworth, Roden J considered whether the appropriate test of whether proceedings are vexatious should be assessed on either subjective or objective grounds, or a combination of both. As the passage extracted by the Full Bench in Peden v Lake Macquarie Refrigeration above illustrates, Roden J held that it was a combination of both. 119 Whether proceedings are instituted by a party without reasonable cause has received much judicial comment. In R v Moore; Ex Parte Federated Miscellaneous Workers Union of Australia (1978) 140 CLR 470 Gibbs J said at 473: ...a party cannot be said to have commenced a proceeding 'without reasonable cause', within the meaning of that section, simply because his argument proves unsuccessful. 120 In Kanan v Australian Postal and Telecommunications Union of Australia (1992) 43 IR 257 at 264-265, Wilcox CJ said: It seems to me that one way of testing whether a proceeding is instituted 'without reasonable cause' is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being 'without reasonable cause'. But where, on the applicant's own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause. 121 In Imogen Pty Ltd v Sangwin (1996) 70 IR 254 Wilcox CJ at 257 dealing with a submission that there was no substantial difference in meaning between "vexatious" and "without reasonable cause" said: I doubt that this is correct; if the two expressions were intended to mean the same thing, there would have been no need for Parliament to use both of them. If there is a difference in meaning, "without reasonable cause" is the lower standard. 122 There is some overlap in various meanings adopted above. An application, for example, brought by the applicant could be both frivolous and vexatious, on the objective test for vexatiousness, if it is manifestly groundless.
Noting the comments of Chief Justice Wilcox in Imogen Pty Ltd v Sangwin about the overlap between "vexatious", "frivolous" and "without reasonable cause" and the comparative standards of "vexatious", and "without reasonable cause", I will deal initially with whether the Application meets the standard of "vexatious" by reference to the three grounds articulated by Justice Roden in Attorney-General v Wentworth at 457 as set out above. I will then consider whether the Application was commenced "without reasonable cause" or is otherwise "frivolous".
There was no evidence that the proceedings were brought to annoy or embarrass an opposing party, such as to make the Application "vexatious" on this basis.
The respondent submits that the proceedings were commenced in order to extract financial gain from the respondent in circumstances where the applicant had been put on notice of the jurisdictional difficulties which it says made her case so obviously untenable or hopeless that there were no prospects for success.
The applicant sought to negotiate a settlement of her matter prior to commencement of the proceedings, following which the respondent put the applicant on notice of the jurisdictional issues it intended to press in resisting her claim. Despite this, the applicant filed the Application.
I am not persuaded that the Application was commenced for a collateral purpose or a purpose other than having the Commission adjudicate on the issues for which they give rise simply because the applicant sought to negotiate settlement of her claim prior to filing. In order for me to make a finding that the applicant's actions in trying to resolve her claim prior to filing the Application made the Application "vexatious" requires a finding as the respondent submits that the Application was so obviously untenable or hopeless that there were no prospects for success.
The third ground on which proceedings may "properly to be regarded as vexatious" as set out by Justice Roden, is "if, irrespective of a motive of a litigant they are so obviously untenable or manifestly groundless as to be utterly hopeless". This ground for determining that a matter is "vexatious" significantly overlaps with the determination of whether the Application has been instituted without reasonable cause.
The applicant submits in defence of this application for costs that she genuinely, albeit mistakenly, believed Ms Dobson had issued the ultimatum and that this matter required a great degree of adjudication from the Commission; consequently the proceedings were not vexatious and were instituted with cause.
I agree that the question of whether an ultimatum had been given by Ms Dobson was strongly disputed between the parties and required the Commission to consider a substantial amount of oral and written evidence. I do not agree that it follows automatically that this level of adjudication is sufficient evidence to establish that the proceedings were instituted with the highest degree of reasonable cause.
I determined that no ultimatum to choose between her primary and secondary employer had been given to the applicant by Ms Dobson and I stated at paragraph [65]: at the time that the applicant resigned, she had determined that her secondary employment took priority over her employment with the respondent, and as the Proposed Hours were declined, she decided to end her employment with the respondent.
In order to establish whether the proceedings were so obviously untenable or manifestly groundless as to be utterly hopeless, requires consideration of whether the facts that: 1. the applicant knew that her secondary employment took priority over her employment with the respondent; and 2. she intended to resign if her "Proposed Hours" were not approved are sufficient to establish that, on the applicant's own version of the facts, it was clear that the Application would fail at the jurisdictional hurdle, or whether the determination of the jurisdictional question required resolution by me of one or more arguable points of law in addition to this determination of the facts: Kanan v Australian Postal and Telecommunications Union of Australia (1992) 43 IR 257 at 264-265.
Although the conflict of evidence as to the events of 5 March 2018 was resolved in favour of the respondent, the decision required a determination as to whether the respondent's denial of the applicant's request for a variation of the hours amounted to a constructive dismissal. At the time of the first hearing date, there had been no similar cases which dealt with the issue of an asserted constructive dismissal based on the reduction of working hours.
I rejected the argument that the respondent's refusal to allow the variation of the applicant's hours was the effective initiator of the termination of employment. However, I am not satisfied that on the applicant's own version of the facts it was clear to her when she commenced the proceedings that the Application was doomed to fail. Applying the approach of Wilcox J in Kanan v Australian Postal and Telecommunications Union [1992] 43 IR 257 (at 264-265) it was at least an arguable point of law that the termination of the applicant's employment was due to the respondent's refusal of the variation of the applicant's hours and was therefore a termination of employment at the initiative of the employer and was subject to a determination pursuant to s 84 of the Act that it was harsh, unreasonable or unjust.
In these circumstances, I am not persuaded that the Application was so obviously untenable or manifestly groundless as to be utterly hopeless such as to have been commenced without reasonable cause.
In Peden v Lake Macquarie Refrigeration Pty Ltd the Full Bench stated that proceedings would be regarded as "frivolous" if "on its face, it cannot possibly succeed, if it is manifestly groundless or if it is a paltry or trifling matter". There was no evidence presented to the Commission that the proceedings were a paltry or trifling matter such as to meet the jurisdictional gateway of "frivolous".

Did the applicant unreasonably fail to agree to a settlement offer?

The principles for determining an application for costs pursuant to s 181(2)(c) were considered in Paris and Four Sons Pty Limited v Sakchai Limsiripothong (No 2) (2000) 100 IR 400 ("Four Sons (No 2)").
The Full Bench in Paris at 219 expressed the relevant test in respect of s 181(2)(c) in these terms: Construing the relevant part of s 181(2)(c) in its overall statutory context, we conclude that the evident purpose of the provision is to encourage the settlement of proceedings to which it applies. The criterion set out in the provision is to be applied objectively and requires a consideration of the whole of the conduct of the party against whom the order is sought, or some discrete part of that party's conduct, with a view to ascertaining whether it unreasonably failed to agree to a settlement of the claim. We also consider that on the proper construction of the provision, an affirmative conclusion may be reached on at least two bases. First, where there was a proposal put by a party which could be described as a reasonable settlement of the claim and that was not agreed by the other party. The second situation in which the criterion could be satisfied is where the course of conduct of the party over a relevant period could be said to amount to conduct inconsistent with an intention to settle the proceedings on any basis that could be considered reasonable. We emphasise that, although the legislature has clearly intended that there be strict limits on the power of the Commission to award costs in unfair dismissal proceedings, the legislature has also evinced a clear intention that costs orders be available in circumstances where there has been a failure on the part of a party to properly conciliate proceedings to the extent that they have failed reasonably to facilitate a potential settlement of them. Further, the Commission is obliged to consider all relevant circumstances in deciding whether such failure has occurred. Once the statutory criterion has been met, the Commission's broad powers and discretions under s 181(1) are available for exercise.
A party may be found on one of two bases to have unreasonably failed to agree to a settlement of the claim: firstly, by not accepting a reasonable settlement offer put by the other party; or, secondly, by engaging in conduct inconsistent with an intention to settle the proceedings on any basis that could be considered reasonable.

First basis in Paris: rejecting a reasonable settlement offer

On the first limb identified in Paris, the respondent relies on the Respondent's June 2018 Offer that the applicant pay to the respondent $11,238.16 representing the respondent's costs to that date, an offer to which the respondent received no response.
In Phillips v Industrial Relations Commission (NSW) (2006) 154 IR 96 Mason P, with whom Spigelman CJ and Beazley JA agreed, stated that the proper test under s 181 (2)(c) required the Court to consider the response of the reasonable person.
I am not persuaded that the applicant unreasonably failed to agree to the Respondent's June 2018 Offer. In coming to this conclusion I have applied my own assessment of what constitutes an unreasonable failure to agree to settle the Application and considered the standpoint of the applicant to the circumstances. Particularly relevant to my assessment are that: the question of whether the respondent's refusal to agree to the variation of hours triggered the resignation in a manner which would found a constructive dismissal was a matter which had not previously been considered by the Commission; and the Respondent's June 2018 Offer was an offer to settle proceedings in a jurisdiction in which costs orders are rare, on a basis which involved the payment of the respondent's costs of an amount which was significant to the applicant.
Although there was no evidence tendered on this point, in oral submissions the applicant and respondent noted that an offer for both parties to "walk away" was put to the applicant at conciliation on 22 May 2018 ("the Respondent's May 2018 Offer") and that this offer was made after the respondent notified the applicant of its position regarding what it considered were the difficulties with the applicant's case.
The respondent did not submit that the applicant's failure to accept the Respondent's May 2018 Offer at conciliation amounted to the applicant rejecting a reasonable settlement offer. Accordingly, it is not a matter that requires my determination.

Second basis in Paris: conduct inconsistent with an intention to settle the proceedings on any reasonable basis

This leads me to the second limb in Paris, namely whether the applicant engaged in conduct which was inconsistent with an intention to settle.
As the Full Bench in Colefax (No. 4) recently reiterated, and as the Full Bench in Four Sons (No 2), stated at [11] the obligation imposed on parties is "to undertake a responsible and careful assessment of the prospects of the litigation".
The Full Bench in Paris, recognised at p 220 that parties may appropriately take a firm position on the question of conciliation and/or settlement but that such a position runs significant risks in terms of the exercise of the power and discretion under s 181(2)(c)… particularly … 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.
The respondent put the applicant on notice of the jurisdictional and substantive issues of the Application as early as 1 May 2018, and reiterated these issues in correspondence dated 7 May 2018 enclosing the Employer's Reply.
A notice of appearance was filed by John Cheng of Berrigan Doube Lawyers on 21 May 2018. The applicant was legally represented from at least this date and should, from that point on, have been aware of her obligations as set out by the Full Bench in Paris referred to at paragraph [58] above.
The material before me in this matter establishes that the respondent made two offers of settlement and the applicant made one offer of settlement. The respondent's first offer was made at conciliation on 22 May 2018. The respondent's second offer, the Respondent's June 2018 Offer, was made two days after the applicant offered to settle the matter for an amount representing a small compromise from the amount claimed in the Application of approximately four weeks' pay.
On its face, the lack of any response by the applicant to the Respondent's June 2018 Offer appears inconsistent with an intention to settle. The Full Bench determined in Colefax (No. 4) at [47] that in that matter: It is unreasonable for [the applicant] to leave it to the respondent to effectively "bargain against itself". Looked at another way, it was reasonable for the respondent to conclude that in the absence of a response from her, the appellant had no interest in negotiating a settlement.
However, the applicant's conduct in this instance must be considered in the context that the Respondent's June 2018 Offer was an offer for the applicant to pay a not insignificant sum to the respondent for its costs, and it did not compromise the respondent's position despite the applicant having put on an offer compromising the quantum of her claim two days earlier.
In all of the circumstances, including the clear limitations in the applicant's case, I am not satisfied that the applicant's conduct could be said to amount to conduct inconsistent with an intention to settle the proceedings on any basis that could be considered reasonable.
I am therefore not persuaded that the applicant unreasonably failed to agree to settlement of the Application or that the Application was frivolous or vexatious. Accordingly, the jurisdictional gateway pursuant to sub-s 181(2)(c) has not been opened.

Determination of the respondent's application for a costs order

As I determined that the jurisdictional gateways pursuant to sub-ss 181(2)(a), 181(2)(b) or 181(2)(c) to the exercise of my discretion to award costs have not been opened in this case the respondent's application for a costs order must be refused.
I so order. N J Constant Commissioner

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 April 2019

[1999] NSWIRComm 585

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Judgment (14 paragraphs)

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Cases Cited (20)

Cited By (4)