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[2020] FWC 2229
General information, not legal advice.
Fair Work Commission
2020-04-30
Original judgment source is linked above.
Section 394 - Application for unfair dismissal remedy
Application by employer for costs - order sought under section 611(2) FW Act against former employee - order sought under section 401(1A) against paid agent - application by dismissed employee not made without reasonable cause or without reasonable prospect of success - no costs order against dismissed employee - paid agent found to have engaged in unreasonable conduct - application for costs granted in part against paid agent - costs to be payable on indemnity basis - order and directions issued
[1] This decision concerns an application for costs made by SGA (1994) Pty Ltd (Stamford or the employer) on 6 January 2020. Stamford seeks two orders arising from unfair dismissal proceedings brought by a former employee Simon Lewis (Mr Lewis). Mr Lewis's unfair dismissal application was dismissed by the Commission on 23 December 2019 (Decision).[1]
[2] The orders sought are:
An order under section 611(2) of the FW Act that Mr Lewis pay Stamford's costs up to 30 October 2019 on a party to party basis on the ground that the unfair dismissal application was made without reasonable cause or that it should have been reasonably apparent to Mr Lewis that his application had no reasonable prospect of success; and
An order under section 401(1A) of the FW Act that Unfair Dismissals Australia Pty Ltd, being Mr Lewis's paid agent, pay Stamford's costs on and from 31 October 2019 on an indemnity basis (including costs associated with filing and relying on a statement of a witness Jamie Nicholls) on the ground that the paid agent engaged in unreasonable conduct in connection with the matter causing Stamford to incur significant costs.
[3] The costs application was filed on 6 January 2020. As Mr Lewis's application was a matter under Part 3-2 of the FW Act, the costs application was required to be filed within fourteen days of the Decision (section 402 FW Act). This costs application is within time.
[4] Stamford propose that quantum be assessed by a costs assessor.
[5] The costs application is opposed by Mr Lewis and by Unfair Dismissals Australia.
[6] The relevant facts (with two exceptions) are not in dispute.
[7] I make findings of fact based on a combination of uncontested facts, the evidence before me and material available to the parties on the Commission's unfair dismissal file including the evidence taken during proceedings conducted by the Commission in this matter including interlocutory proceedings, the merit proceeding and the costs proceeding. A relevant, but not exhaustive summary of those facts is set out below.
[8] Mr Lewis filed the primary proceedings on 21 June 2019, one week after dismissal. He did so under his own hand.[2]
[9] On 17 July 2019, Unfair Dismissals Australia lodged a Notice of representative commencing to act under the hand of its officer, Ms Both.[3] Thereafter, at all relevant times Mr Lewis was represented by a paid agent, Unfair Dismissals Australia.
[10] By decision on 25 September 2019,[4] and by consent, I granted permission for Mr Lewis to be so represented. Permission was also granted for Stamford to be represented by a lawyer. My decision to permit representation noted that "disputed issues of fact appear to arise, that matters of credit may be relevant, that the evidence may be detailed and require forensic consideration and that effective and efficient cross examination will contribute to the determination of factual issues in an orderly and structured manner." I concluded that:
"the hearing of this matter will be conducted more efficiently if the parties are able to utilise the representation they seek."
[11] At an earlier directions hearing on 8 August 2019 I listed Mr Lewis's application for a merits hearing on 28, 29 and 30 October 2019,[5] and required Mr Lewis to file materials (including statements of witnesses he intended to call) by 6 September 2019.
[12] Mr Lewis submitted statements of five persons including himself: Mr Lewis (primary statement filed 6 September 2019 and two supplementary statements produced during the merits hearing on 28 October 2019[6]); Mr Nicholls (statement filed 6 September 2019); Mr Demetriou (statement filed 23 October 2019); Ms Jamieson (statement filed 6 September 2019 and Mr Travers (statement filed 6 September 2019). Permission had not been granted for the late filing of the statement of Mr Demetriou or the supplementary statements of Mr Lewis. However, at the hearing I granted leave for their admission into evidence.
[13] My directions required Stamford to file statements of its witnesses by 4 October 2019 (which, by request, I extended to 8 October). Stamford complied with these directions (though additional attachments to the statement of Mr Knight were sent late[7] and the statement of Mr Donald was subsequently amended[8] and admitted by leave). Stamford filed statements by eight persons (Ms Collins, Mr Baggaley, Mr Knight, Mr Weeks, Mr Diaz de Rivera, Mr Harrington, Ms Binnie and Mr Donald).
[14] Pre-hearing, a further interlocutory matter arose. On the employer's application and by consent, I ordered[9] two former Stamford employees (Trieneke Collins and Andrew Baggaley) and a supplier of services (Lochlan Weeks) to give evidence. During the merits hearing I made a further order[10] (at the request of Mr Lewis) that another person (Mr Nicholls) be required to give evidence on his statement.
[15] The merits hearing (including remedy) was scheduled for 28, 29 and 30 October 2019. The matter did not conclude in three days. A final half day of hearing occurred on 19 November 2019. Circumstances whereby the hearing on the afternoon of the first day (28 October) was vacated are considered later in this decision.
[16] At the hearing, Mr Lewis gave evidence in his own right and called Mr Nicholls and Mr Demetriou. At the commencement of the hearing Ms Both advised that Mr Lewis would not call Ms Jamieson. Later in proceedings the Commission was advised that Mr Travers would not be called given the objections to his statement. Their statements were not admitted into evidence.
[17] Stamford called each of the eight persons for whom it had filed witness statements.
[18] A decision was reserved on 19 November 2019 with provision made for final written submissions on remedy.[11]
[19] The Decision was delivered on 23 December 2019.
[20] Stamford employed Mr Lewis as Chief Engineer at Stamford Adelaide until he was summarily dismissed for serious misconduct on 14 June 2019.
[21] I need not repeat the full factual matrix concerning Mr Lewis's dismissal. Those facts are set out in the Decision. Suffice for present purposes I note that nine allegations of serious misconduct were advanced against Mr Lewis:
Allegation 1: That Mr Lewis negotiated, demanded and received payments in the form of secret commissions, bribes and kick-backs;
Allegation 2: That Mr Lewis falsified a quote submitted by a contractor and failed to exercise care and diligence in decisions concerning that quote;
Allegation 3: That Mr Lewis removed copper piping from the premises of Stamford for the purposes of securing a private benefit;
Allegation 4: That Mr Lewis failed to disclose personal dealings with suppliers and failed to disclose conflicts and potential conflicts of interest;
Allegation 5: That Mr Lewis compromised the integrity of Stamford's tendering processes by providing competitor quotes to his preferred suppliers;
Allegation 6: That Mr Lewis failed to conduct due diligence on preferred or recommended suppliers;
Allegation 7: That Mr Lewis improperly novated work to his preferred suppliers.
Allegation 8: That Mr Lewis failed to conduct due diligence when recommending the scope of works; and
Allegation 9: That Mr Lewis inflated a progress payments to a supplier, Mr Weeks.
[22] I found allegations 2, 4, 5 and 6 proven.
[23] I found allegations 1, 3, 7, 8 and 9 not proven.
[24] I concluded that the conduct comprising allegations 2, 4 and 5 were serious failures of duty and valid reasons for dismissal in their own right. I concluded that the conduct which formed allegation 6 was less serious, warranting sanction but not dismissal though collectively with other conduct formed a valid reason for dismissal.[12]
[25] On valid reason I concluded:[13]
"These were multiple failures, all significant but some more serious than others, which directly arose from Mr Lewis's responsibilities as Chief Engineer and head of department. They directly breached his duty of fidelity and duty to exercise due care and diligence. Each directly eroded the necessary trust and confidence that underpinned his role in the management and oversight of the procurement process at the Stamford."
[26] I found that whilst Mr Lewis was provided a limited opportunity to explain, he was, in part, denied procedural fairness.[14]
[27] On whether the dismissal was harsh, unjust or unreasonable I concluded:
"[313] I weigh these procedural failures against the other factors I take into account, including the multiple and serious failures of duty by Mr Lewis. Whilst some of the most serious of the allegations made against Mr Lewis have not been sustained (kickbacks and theft), the falsification allegation has been sustained and others are serious in the context of an employer/employee relationship where Mr Lewis was the head of the engineering department and entrusted significant procurement responsibilities.
[315] In all the circumstances, I do not conclude that the procedural failings by Stamford were of such a fundamental nature so as to render the dismissal harsh, unjust or unreasonable having regard to the serious misconduct and performance failures."
[28] I issued directions on the costs application[15] and heard the matter by telephone on 4 March 2020. With permission, Stamford continued to be represented by counsel and Ms Both continued to represent Mr Lewis and also represented Unfair Dismissals Australia. Mr Lewis attended the hearing.
[29] In advance of the costs hearing I received written submissions from Stamford including statements from its instructing solicitor, Mr Payard.[16] Those statements were admitted without objection. I also received a joint written submission from Mr Lewis and Unfair Dismissals Australia.[17]
[30] I reserved my decision.
[31] Following the costs hearing, I received an unsolicited email from Mr Lewis re-stating his opposition to a costs order and indicating that "my representative never made me aware I could make and submit a statement and I was never sent what was submitted till after it was submitted".[18]
[32] I caused a response to be sent to this email indicating that if no objection was advised, I would receive the unsolicited email of Mr Lewis as part of his written submission and permit a response to it.[19] No objection to this course or response was advised.
[33] With respect to the order sought against Mr Lewis, Stamford submit that at the time of commencing the proceedings, Mr Lewis knew or ought to have known that he had engaged in multiple instances of serious misconduct, that he had been dismissed for engaging in such conduct and that as an investigation by forensic accountants into his conduct was continuing he knew or ought to have known that further instances of serious misconduct were likely to be uncovered.
[34] Stamford argues that, in these circumstances, it would have been apparent to an ordinary person that an application for unfair dismissal was untenable and so lacking in merit as to not be reasonably arguable.
[35] In filing his application, Stamford says that Mr Lewis knew or ought to have understood that he was knowingly putting Stamford to proof with respect to misconduct he knew or ought to have known he had committed, thus compelling Stamford to incur significant and unnecessary costs.
[36] Stamford also says that Mr Lewis knew or ought to have known that, having been provided an investigation letter and then a dismissal letter, any minor issues of procedural unfairness (which were denied) could not have resulted in a conclusion that his application had a reasonable prospect of success.
[37] Stamford also relies on the fact that it put Mr Lewis on early notice that it considered his application vexatious. Stamford's F3 response under the hand of Stamford's internal legal officer[20] asserted:
"The Applicant does not disclose any genuine contention to support his application. In the Hotel's view this application is made vexatiously and ought to be struck out. The Hotel will be making submissions on this at the appropriate juncture."
[38] Finally, Stamford says that Mr Lewis unreasonably failed to accept a settlement offer it made by letter to his representative dated 10 October 2019.[21]
[39] In summary, Stamford submits that the unfair dismissal application was made without reasonable cause (section 611(2)(a)) and that it should have been reasonably apparent to Mr Lewis that his application had no reasonable prospect of success (section 611(2)(b)).
[40] With respect to the order sought against Unfair Dismissals Australia, Stamford submit that the paid agent engaged in unreasonable conduct as the representative of Mr Lewis, and in so doing caused additional witness statements to be prepared and for the merits hearing to be extended beyond its third scheduled day (30 October 2019) into an additional half day hearing on 19 November 2019, putting Stamford to additional cost and expense.
[41] In particular, Stamford relies on the following:
Unfair Dismissals Australia filing a statement of Mr Nicholls which Stamford says contained irrelevant hearsay and disparaging allegations against Stamford employees, requiring it to file response statements of Mr Baggaley and Ms Binnie (which it would not have otherwise done) and to seek an order requiring Mr Baggaley to attend (as he was no longer employed by Stamford at the hearing date), only to find that at the hearing the paid agent conducted little or no cross examination of those persons;
Unfair Dismissals Australia filed a statement of Mr Demetriou late, in contravention of directions issued by the Commission;
Prior to the hearing and the commencement of his cross examination, Unfair Dismissals Australia failed to file and provide Stamford and the Commission two lengthy supplementary witness statements of Mr Lewis which their client had prepared pre-hearing;
The disclosure and production of these supplementary statements during cross examination was prejudicial to Stamford and caused the cross examination of Mr Lewis to be adjourned immediately after lunch on the first day of hearing (28 October 2019). Further, Unfair Dismissals Australia did not have any other witnesses available that afternoon, despite Stamford indicating a willingness to interpose other evidence whilst it examined the supplementary statements. This resulted in proceedings being adjourned and the loss of half a scheduled day of hearing. Had this delay not occurred, proceedings would have concluded, according to Stamford, by 30 October 2019 without the cost and expense of a further half day; and
Prior to the hearing and the commencement of his cross examination Unfair Dismissals Australia failed to provide its client Mr Lewis a copy of a witness statement of Mr Diaz de Rivera which had been filed by Stamford on 8 October 2019 and upon which Mr Lewis was being cross examined. This caused the cross examination to be adjourned and the hearing delayed until Mr Lewis had read the statement, contributing also to proceedings not being concluded within the three scheduled days.
[42] Stamford submits that this conduct, in combination, delayed the hearing, put it to unnecessary cost and expense and was unreasonable within the meaning of section 400(1A)(b) of the FW Act.
[43] Finally, Stamford says that baseless and disparaging allegations advanced in Mr Nicholls's statement against Ms Binnie and Mr Baggaley (that they instructed others to forge documents and engaged in fraudulent and dishonest conduct), and which were then not cross examined on, warrant a costs order on an indemnity basis.
[44] Mr Lewis opposes the costs order on the ground that his unfair dismissal claim was not untenable and so lacking in merit as to not be reasonably arguable. In particular he refers to:
A genuine belief that he had committed no wrongdoing or no wrongdoing that warranted dismissal, and his willingness to give evidence and be cross examined on his conduct;
A genuine belief that he had been denied a fair process prior to dismissal;
The Commission's finding that allegations 1, 3, 7, 8 and 9 were not proven, and in particular that the Commission did not find (what Mr Lewis considered to be the most serious allegation) that he had negotiated, demanded or received payments in the form of secret commissions, bribes and kick-backs; and
The Commission's finding that he had been, in part, denied procedural fairness.
[45] Mr Lewis also says that his rejection of Stamford's offer of 10 October 2019, when seen in context, was not unreasonable. In particular he refers to the following:
He participated in conciliation before a Commission-appointed conciliator on 29 July 2019 where he put forward a negotiable offer of settlement which was rejected. He did not receive a counter-offer;
He indicated a willingness at the directions hearing on 8 August 2019 to participate in Member Assisted Conciliation but Stamford declined to do so;
Six weeks after filing his unfair dismissal application, on 2 August 2019 Stamford sent him a letter of demand claiming $392,608.96 in damages and when this was rejected on 12 September 2019 Stamford filed a civil claim against him in the District Court for this sum (admission of these alleged facts and their relevance to the costs application is contested by Stamford; I deal with this matter below); and
Due to error on Stamford's part, its settlement proposal of 10 October 2019 was not received by Mr Lewis's representative until 24 October 2019 thereby providing only two hours for his consideration before the offer lapsed.
[46] In addition, Mr Lewis, in his email of 6 March 2020, submits as follows:
"I made the application because I didn't do any of the things I was terminated for and if I had ever been told it was against Stamford's policy's and it was something I could be terminated for I also would not of shown contractors quotes to other contractors. I felt I was doing the right things and getting the best price and quality job for my employer. You also see companies advertising in the media and social media things like "bring in a competitors quote and we will beat it by 10%" if I honestly felt I had done the wrong thing I would of never submitted the application to fair work I had to borrow the money to do it. I wouldn't of taken on a big company with unlimited resources like Stamford if I had done the wrong thing. This wasn't done out of spite or anger only out of the fact I felt and truly believed I had done nothing wrong! As I said in my initial application right at the start all I wanted was my name cleared and my entitlement. That's all I wanted and we tried to negotiate at every mediation call right up until the trial. I never got paid my entitlements I was owed by Stamford until October even though they should of paid within a few days of being terminated even if there was a termination due to misconduct entitlement still have to be paid. This is on the fair work website yet I had to wait from June till October to receive mine. I never wanted any of this! This has been the most stressful experience of my life! I enjoyed my job and I felt I was good at it and always and only ever did what was in the best interests of the hotel."
[47] Unfair Dismissals Australia oppose the costs order sought against it on the ground that it did not, when viewed in context, engage in unreasonable acts or omissions. Unfair Dismissals Australia says as follows:[22]
"Though UDA concedes to some errors having been made in the filing of documents, this did not unduly prejudice the Applicant's case, and were caused by technological and communication issues within UDA. UDA wishes to point out that similar technological errors were also made by the Respondent, such as sending documents to incorrect email addresses or sending incomplete documents.
Any delays due to witness unavailability was due predominantly to the Respondent threatening legal action against Mr Nicholls. UDA wishes to additionally point out that the Respondent similarly had not prepared any of its witnesses for appearance to give evidence on 28 October."
[48] More specifically, Unfair Dismissals Australia submits:
The Commission granted representation rights on the ground of efficiency, and concluded that representation achieved that objective;
A majority of the delays were created by Stamford's conduct;
Stamford sent its letter of offer of 10 October 2019 to an incorrect email address and not the email address which it had advised;
The witness statements emailed by Stamford on 8 October 2019 (Mr Knight and Mr Diaz de Rivera) were flagged by Unfair Dismissals Australia's anti-virus software as malware due to the link by which they were sent;
Ms Both was unaware of the non provision of the supplementary statements of Mr Lewis during his evidence in chief and cross examination on 28 October 2019. This lack of awareness was the product of an earlier and unidentified miscommunication within Unfair Dismissals Australia whereby those statements which had been prepared and sent by Mr Lewis to Unfair Dismissals Australia were inadvertently not passed on to the Commission or served on Stamford until the luncheon adjournment on 28 October 2019;
• The offer of settlement made by Unfair Dismissals Australia at conciliation (12 weeks compensation (negotiable), discontinuance of all proceedings (including the civil claim) and a bar on any future proceedings) was reasonable;[23] in contrast to an unreasonable offer by Stamford dated 10 October 2019 (discontinuance of the Commission proceedings with payment to Stamford of $10,000 as contribution to its costs, with civil proceedings by Stamford to continue);
• Stamford unnecessarily called Mr Baggaley and Ms Binnie as the allegations made by Mr Nicholls in his statement "were not material to the matter at hand"[24]. Unfair Dismissals Australia says that it had no control over the contents of Mr Nicholls's statement. It says that it was Stamford unnecessarily calling Mr Baggaley and Ms Binnie to respond to irrelevant evidence that caused the hearing to carry over into an unscheduled fourth day;
[49] As noted, the facts set out above (including in the summary of submissions of Stamford, Mr Lewis and Unfair Dismissals Australia) are (with two exceptions) largely not in dispute. I adopt those facts as relevant to this decision.[25] As to the disputed matters I conclude as follows.
[50] Firstly, the letters of demand and civil proceedings. Stamford submit that factual assertions in paragraphs 3 and 10 of the submission on costs by Mr Lewis and Unfair Dismissals Australia should not be relied upon. It claims that assertions concerning letters of demand served on Mr Lewis and Mr Nicholls (including civil proceedings against Mr Lewis) are not properly before me and, in any event, are irrelevant.
[51] I do not accept the proposition that such matters, if in evidence before me, would be irrelevant. They are relevant to Mr Lewis's conduct pre-hearing, and relevant to the conduct of Unfair Dismissals Australia insofar as it related to the calling of Mr Nicholls. Those issues relate to the grounds on which Stamford's costs application is advanced.
[52] However, neither Mr Lewis nor Unfair Dismissals Australia called evidence in relation to the costs application despite my directions providing an opportunity to do so.[26] Assertions of fact concerning letters of demand are contained in its submissions. Those assertions were neither admitted into evidence nor cross examined on. Whilst the Commission can inform itself as it sees fit[27] it would generally be unsafe to rely on asserted but not proven or admitted facts. I do not have regard to them other than to the extent to which those matters were the subject of sworn evidence at the merits hearing and canvased in the Decision.
[53] Secondly, the settlement offers. The context in which settlement offers are made in unfair dismissal cases and the terms of such offers are of potential relevance to a costs application, as they concern the conduct of parties in connection with the matter. The settlement offer made by Stamford by letter dated 10 October 2019 is before me in evidence.[28] At the costs hearing, Stamford's representative conceded that its letter was, due to an administrative error on its representative's part, not correctly sent to Unfair Dismissals Australia on 10 October 2019, but only sent and received at 2.08pm on 24 October 2019 when a correct email address was used.
[54] I now turn to the alleged settlement offer by Mr Lewis. The Decision notes that conciliation before a Commission-appointed conciliator occurred on 29 July 2019.[29] This fact is apparent on the Commission record. However, for good reason, the content of positions put by parties and in particular offers made at these conciliation conferences is not on the Commission record. Details of settlement offers or counter offers advanced during conciliation or in open correspondence are (unless admitted by consent) facts that need to be proven before the Commission as evidence if they are to be relied on in a costs proceeding. The content of Mr Lewis's settlement offer of 29 July 2019 referred to in paragraph B(ii) of his submission on costs is an assertion made by way of submission and not the subject of evidence. Without that assertion having been tested, it is unsafe to rely on it. I am unable to do so.
[55] It is however on the Commission record, and able to be relied on, that Stamford declined further Member Assisted Conciliation when I called the matter on for directions on 8 August 2019.
[56] A decision to order costs is governed by sections 400A, 401and 611 of the FW Act. Section 400A, which is specific to Part 3-2 'Unfair Dismissal', provides:
(1) The FWC may make an order for costs against a party to a matter arising under this Part (the first party) for costs incurred by the other party to the matter if the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter.
(2) The FWC may make an order under subsection (1) only if the other party to the matter has applied for it in accordance with section 402.
(3) This section does not limit the FWC's power to order costs under section 611."
[57] Section 611, which sits amongst general provisions in Part 5-1 'The Fair Work Commission', provides:
(1) A person must bear the person's own costs in relation to a matter before the FWC.
(2) However, the FWC may order a person (the first person) to bear some or all of the costs of another person in relation to an application to the FWC if:
(a) the FWC is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or
(b) the FWC is satisfied that it should have been reasonably apparent to the first person that the first person's application, or the first person's response to the application, had no reasonable prospect of success.
Note: The FWC can also order costs under sections 376, 400A, 401 and 780.
(3) A person to whom an order for costs applies must not contravene a term of the order.
Note: This subsection is a civil remedy provision (see Part 4-1)."
[58] Section 401(1A), concerning costs orders against representatives in unfair dismissal matters, provides:
"401 Costs orders against lawyers and paid agents
(a) an application for an unfair dismissal remedy has been made under section 394; and
(b) a person who is a party to the matter has engaged a lawyer or paid agent (the representative) to represent the person in the matter; and
(c) under section 596, the person is required to seek the FWC's permission to be represented by the representative.
(1A) The FWC may make an order for costs against the representative for costs incurred by the other party to the matter if the FWC is satisfied that the representative caused those costs to be incurred because:
(a) the representative encouraged the person to start, continue or respond to the matter and it should have been reasonably apparent that the person had no reasonable prospect of success in the matter; or
(b) of an unreasonable act or omission of the representative in connection with the conduct or continuation of the matter.
(2) The FWC may make an order under this section only if the other party to the matter has applied for it in accordance with section 402.
(3) This section does not limit the FWC's power to order costs under section 611."
[59] An issue of clarification arose concerning the basis on which the application for costs is pursued against Mr Lewis. Although Stamford's application as filed ticks a box indicating that it advances its claim by reference to section 400A of the FW Act[30], the body of the application refers only to section 611(2) of the FW Act[31]. At the costs hearing's outset (and consistent with its written submissions[32]) Stamford advised that it was pursuing orders against Mr Lewis under section 611(2) only. Hence, I proceed on that basis.
[60] The application for costs against Unfair Dismissals Australia has, at all times, been pursued under section 401 of the FW Act.
[61] Section 611(2) of the FW Act deals with circumstances where there has been what might broadly be termed 'an abuse of process' by a party.[33] However, the discretion embodied in this sub-section sits within a statutory framework where the primary position is that each party bears their own costs in proceedings before the Commission (section 611(1)).
[62] Importantly, the concept of an application having been brought "without reasonable cause" or that it should have been reasonably apparent to an applicant that their claim had "no reasonable prospect of success" are to be determined objectively, applying a reasonable person test. A subjective belief of reasonableness, even where genuinely held, is neither sufficient nor determinative[34].
[63] Principles governing the application of section 611(2) of the FW Act have recently been summarised by a full bench of the Commission as follows:[35]
"[9] There is overlap between the two jurisdictional bases for awarding costs under s 611(2). An application brought "without reasonable cause" could often also be described as one which, objectively considered, had "no reasonable prospect of success". Nevertheless each basis is to be considered separately.
[10] Authority in relation to the first jurisdictional basis indicates that an application could be regarded as brought "without reasonable cause" if the claim was misconceived. On the other hand it could not be so described simply because a person's arguments had been rejected. In Kanan v Australian Postal & Telecommunications the Federal Court observed that one way of ascertaining whether a proceeding had been brought "without reasonable cause" was to ask whether, on the applicant's own version of the facts, it was clear that the proceeding must fail. If so, it could properly be said that the proceeding had no reasonable cause. But if the success of the claim depended upon the resolution in the applicant's favour of arguable points of law, it would be "inappropriate to stigmatise the proceeding as being 'without reasonable cause'".
[11] As to the second jurisdictional basis for awarding costs under s 611(2), a Full Bench of the Commission in Baker v Salva Resources Pty Ltd concluded that the words "should have been reasonably apparent" are directed to a belief formed on an objective basis, not a subjective one, and that a conclusion that an application had no reasonable prospect of success should only be reached with great caution, in circumstances where the application is "manifestly untenable or groundless or so lacking in merit or substance to be not reasonably arguable."" (citations omitted)
[64] Although at the time of dismissal and at the time of making his application an investigation by forensic accountants into Mr Lewis's conduct was continuing, six of the nine allegations advanced by Stamford at the hearing of the matter were known to him,[36] either via the show cause letter of 3 June 2019 or the dismissal letter of 14 June 2019. Allegations 3 (re theft of copper piping), 5 (re disclosure of competitor quotes to preferred suppliers) and 7 (re novation to preferred suppliers) became known at least upon the filing of Stamford's materials on 4 and 8 October 2019.
[65] Mr Lewis's claim was within the Commission's jurisdiction. As a dismissed employee he was entitled to exercise litigation rights under Part 3-2 of the FW Act even where this would require the employer to be put to proof. The remedy sought by Mr Lewis, as stated in his application was expressed as follows:[37]
[66] His desire to "clear all allegations" was unremarkable. A successful application by a dismissed employee may go some way to keep their reputation and future employability intact, in the same way that an unsuccessful application may be damaging in either or both respects. Notwithstanding that reputational damage cannot be compensated for,[38] there are a category of applications under Part 3-2 which are properly pursued even if the primary objective is the protection of one's reputation rather than re-employment or compensation.[39] Mr Lewis's desire to "receive fair entitlements" is capable of being interpreted as a desire for a compensation order under section 392 of the FW Act (which is what he ultimately pursued) and not simply a request for monies he believed owed[40] (which would not have been within jurisdiction).
[67] That Mr Lewis sought by way of remedy, amongst other outcomes, all "legal action" to be cleared muddies the waters somewhat. It is not clear whether he was referring to the possibility of threatened or future civil action by Stamford or even possibly future prosecution. On the material before me, at the time of filing there was a continuing investigation by the forensic accountants but other proceedings had not been commenced. It would be unsafe for me to speculate as to what Mr Lewis meant, and I decline to do so.[41] In any event, the question must be assessed objectively, and not based on his subjective intent. The mere fact that dual proceedings are or may operate in parallel is not, of itself evidence of an abuse of process.[42]
[68] Nor would it have been reasonable for Mr Lewis to have waited until the full scope of misconduct alleged against him was uncovered and the investigation by the forensic accountants completed. That investigation continued beyond the 21-day post dismissal period during which Mr Lewis was statutorily obliged to file a claim, if he was to make one.
[69] For these reasons I do not consider Mr Lewis made his application for a collateral purpose. Bearing in mind the strictures of the legal test[43], his application was not, when viewed objectively, made "without reasonable cause" within the meaning of section 611(2)(a) of the FW Act.
Application having no reasonable prospect of success
[70] I now turn to section 611(2)(b) and whether it should have been "reasonably apparent" to Mr Lewis that his application had "no reasonable prospect of success".
[71] As noted, six of the nine allegations known at the time of filing included two of the three allegations (bribes, kick-backs and secret commissions; and falsification of a quote) which Stamford asserted[44] constituted not just serious misconduct as an employee but also criminal conduct (the third being the theft allegation). It is plainly obvious that the allegations made against Mr Lewis and known to him at the time of making his application were of a serious character such that some individually and others collectively would be likely to constitute a valid reason for dismissal in their own right, if proven.
[72] In making and pursuing his application Mr Lewis rolled the dice. As was apparent from his evidence and submissions (both at the merit hearing and on the costs application) he was primarily (but not exclusively) concerned with attempting to rebut the allegation concerning bribes, kick-backs and secret commissions, which he considered the most damaging against him. He chose a forum (the Commission) in which he could put Stamford to proof on its allegations in the hope that sufficient evidence would not be able to be mustered against him. Even though self-represented at the time of filing, Mr Lewis knew or ought to have known that the most serious allegations against him would involve issues of credit, direct evidence and circumstantial evidence. To a certain degree, Mr Lewis's application focused primarily on the allegations he considered the most serious. He gave inadequate consideration to other serious matters of an industrial character (such as alleged conflicts of interest and breach of policy).
[73] At the time of filing, during the merits hearing and even in submissions to me on costs after my findings and decision, Mr Lewis continued to assert that he did no wrong:[45]
"I didn't do any of the things I was terminated for and if I had ever been told it was against Stamford's policy's and it was something I could be terminated for I also would not of shown contractors quotes to other contractors. I felt I was doing the right things and getting the best price and quality job for my employer...I wouldn't of taken on a big company with unlimited resources like Stamford if I had done the wrong thing. This wasn't done out of spite or anger only out of the fact I felt and truly believed I had done nothing wrong!"
[74] In advancing and maintaining this position Mr Lewis displays profound naivety. I made findings of fact and Mr Lewis did not appeal the Decision in which those findings were made. My findings were that Mr Lewis did in fact:
falsify a quote submitted by a contractor and failed to exercise care and diligence in decisions concerning that quote (allegation 2);
failed to disclose personal dealings with suppliers and failed to disclose conflicts and potential conflicts of interest (allegation 4);
compromised the integrity of Stamford's tendering processes by providing competitor quotes to his preferred suppliers (allegation 5); and
failed to conduct due diligence on preferred or recommended suppliers (allegation 6).
[75] I concluded that the conduct comprising allegations, 2, 4 and 5 were serious breaches of duty and that each individually a valid reason for dismissal.
[76] I also concluded that the conduct comprising allegation 6 was a less serious performance failure but, in conjunction with other matters, capable of forming part of a valid reason for dismissal.
[77] The conclusions I drew with respect to allegations 4, 5 and 6 were discretionary assessments involving matters of degree based on the difference between personal and professional duties, the interpretation and application of company policy concerning procurement, and due diligence obligations owed by Mr Lewis. The conclusions involved mixed issues of fact and arbitral discretion. They were conclusions of the type commonly found in contested unfair dismissal proceedings. Although my conclusions were unambiguous on allegations 4 and 5 in particular, it cannot objectively be said that it ought to have been reasonably apparent to Mr Lewis that his contentions against allegations 4, 5 and 6 were without reasonable cause in the sense of being manifestly untenable.
[78] However, allegation 2, is in a different category. It concerned a heavily disputed fact, whether Mr Lewis falsified the Johnson Controls quote. I found that he had done so. Relevantly, my finding was based on circumstantial evidence and the absence of a plausible explanation for the changed quote.
[79] It is true that issues of credit arose in the merit proceedings. I have regard to the fact that a dismissed employee cannot, at the time of filing proceedings, know which witnesses may be called by their former employer much less the precise role which creditworthiness may have on matters in issue. Where critical findings in complex fact-rich proceedings involve creditworthiness, and where an applicant gives evidence on oath (as Mr Lewis did), thus putting their creditworthiness on the line, this weighs against a conclusion that it ought to have been reasonably apparent that the employee's unfair dismissal application was made without reasonable cause. Nor could Mr Lewis have known in advance the manner in which the Commission concluded that circumstantial evidence established conduct comprising allegation 2 to the required standard of proof.
[80] Mr Lewis denied, on oath, the alleged conduct. I said in the Decision:
"[160] The circumstantial evidence against Mr Lewis points strongly towards an inference that he altered the quote and did so for no proper reason. Although his claim of making an innocent mistake has some superficial attraction, on examination it is a weak denial. He and he alone received the original at his business email address, he and he alone attached the altered quote to the CER and VQS, the altered quote remained at all times under his control and altering the quote made it more likely that his recommended tenderer would be selected over Johnson Controls and denied a line of sight over a cheaper quote for a different product.
[161] The circumstantial evidence relating to the falsification allegation is necessarily different circumstantial evidence to the kickback allegation. The evidence about falsification does not require the same degree of weight to be attached to the evidence of Mr Weeks. The alteration to the quote was conduct of a single individual whereas the kickback allegation involved a payer and payee. Unlike the kickback allegation where Mr Lewis provided a plausible explanation (the personal loan) for at least two payments, there was no plausible explanation provided for the falsification allegation."
[81] In concluding that Mr Lewis falsified the quote, I necessarily rejected his evidence on that matter. His denial was not creditworthy. Relevantly, my finding was not reliant on the adverse findings on credit I made against Mr Weeks. I found that the attempt by Mr Lewis "to implicate Mr Weeks or other unknown or un-named persons is speculative and implausible. I do not accept it."[46]
[82] It follows that despite his sworn evidence, Mr Lewis knew at the time of filing that he had falsified the Johnson Controls quote. He also knew that this allegation formed part of the employer's decision to dismiss. It had been referred to by Stamford in both the show cause letter and the dismissal letter.
[83] It ought to have been readily apparent to a person in Mr Lewis's position that having falsified a quote, such conduct would in its own right have constituted a valid reason for dismissal.
[84] Were this the sole basis on which Mr Lewis advanced his application I would conclude that it ought to have been reasonably apparent to Mr Lewis that his unfair dismissal application was made without reasonable cause.
[85] However, Mr Lewis also prosecuted his claim, in part, on the basis that he had been denied procedural fairness[47].
[86] I found that some, but not all of the procedural failings contended, were sustained. I reached the following conclusion:
"[311] Mr Lewis was denied, in part, procedural fairness. Reasonable criticism can be made of Stamford that the misconduct which triggered its decision to dismiss was not put to Mr Lewis for response. In this sense the dismissal was pre-meditated as the decision had been made on 13 June 2019 and the meeting of 14 June 2019 was somewhat of a formality. Reasonable criticism can also be levelled at the employer for not having agreed to delay the earlier 4 June 2019 allegations meeting by one hour to allow a support person to be present.
[312] However, these omissions, whilst material, did not constitute an overall denial of procedural fairness. Mr Lewis had earlier allegations put to him (including the falsification allegation which I have found sustained) and was placed under suspension. He reluctantly agreed to proceed without his support person and was on notice that the investigations into his conduct were ongoing.
[313] I weigh these procedural failures against the other factors I take into account, including the multiple and serious failures of duty by Mr Lewis...
[315] In all the circumstances, I do not conclude that the procedural failings by Stamford were of such a fundamental nature so as to render the dismissal harsh, unjust or unreasonable having regard to the serious misconduct and performance failures."
[87] It is apparent from the conclusion reached in [312] of the Decision that the procedural failings I found did not involve a failure to provide Mr Lewis a right to respond to the falsification allegation. Whilst this minimises the basis on which Mr Lewis's claim had a reasonable prospect of success on procedural fairness grounds, section 611(2)(b) requires the application as a whole to be considered. Whilst it was unlikely having regard to the facts as found and established authority[48] that he would succeed, it remained possible that procedural failures found could have tipped the balance of the case in Mr Lewis's favour. Ultimately the discretionary assessment made was that they did not. That conclusion was based on a weighing process. Unfair dismissal cases are multifactorial.[49] They are capable of being reasonably litigated over procedural fairness issues. Those are matters specifically required to be considered under section 387 of the FW Act. The application was not manifestly untenable or groundless.
[88] Having found material but not determinative procedural fairness deficiencies, and noting the caution required before making a positive finding under section 611(2)(b), I do not conclude that it ought to have been reasonably apparent to Mr Lewis that his unfair dismissal application had no reasonable prospect of success.
[89] I do not accept Stamford's contention that Mr Lewis acted unreasonably in not accepting its settlement proposal of 10 October 2019. Leaving aside that a communication error on Stamford's part meant that Mr Lewis did not receive the proposal until the date on which it had to be responded to (24 October), the proposal was a dressed-up version of a costs application. It proposed that Mr Lewis discontinue his unfair dismissal proceedings, pay Stamford $10,000 as contribution to its costs, but not require Stamford to discontinue civil proceedings it had commenced against Mr Lewis in the District Court.
[90] The proposal was made once Stamford had filed its witness statements and written submissions. In this sense, Mr Lewis had a line of sight of the strength of the case against him. The proposal was reflective of the dim view Stamford took to what it considered serious breaches of trust by Mr Lewis. In this sense the offer was not, in a litigation context, unreasonable. It was however one-sided. In the context of Mr Lewis having already exercised his rights to invoke a remedial cause of action in the form of an unfair dismissal claim, it was not unreasonable for him to reject the offer.
[91] Section 401 of the FW Act deals with the circumstances in which costs orders may be made against lawyers and paid agents for unreasonable conduct in connection with a matter.
[92] Whilst the section does not displace the general statutory proposition that each party bear their own costs in proceedings before the Commission, it sits exclusively within the unfair dismissal provisions of the FW Act. That it was inserted by the legislature by amendment in 2012 after the FW Act (including Part 3-2 and section 611(1) had commenced) it represents a clear indication of legislative purpose that representatives be held accountable for unreasonable conduct in pursuit of unfair dismissal matters.[50] The legislature referred to its 2012 amendments as being a "stronger deterrent".[51]
[93] In different but analogous circumstances, it has been said by the Federal Court that the power to make such an order must be exercised with care and discretion and only in clear cases.[52]
[94] Stamford advance its application against Unfair Dismissals Australia for costs incurred after a particular date with respect to its conduct of the matter (section 401(1A)(b)). The Commission's task is to be approached having regard to the purpose and terms of that sub-section:[53]
"After all, the manifest purpose of the provision is to act as a disincentive to lawyers or paid agents granted permission to appear from causing costs to be incurred by other parties through unreasonable acts or omissions. However, such a finding does not inevitably result in the discretion being exercised against the lawyer or paid agent. There may be circumstances in a particular case that would render it unjust to make any award of costs notwithstanding such a finding. The issue is really one of adequacy of reasons."
[95] Whether a representative has engaged in "an unreasonable act or omission" will depend on the particular circumstances of each case.[54]
[96] That lawyers or paid agents are only able to represent their clients before the Commission with permission (section 596 of the FW Act) is also a relevant contextual consideration. It has been observed by a full bench of the Commission:[55]
"..because the section applies to the actions taken or not taken by a legal representative of a party it seems to us to follow that these actions or omissions by legally qualified and trained people should be measured against a higher standard than that which would apply to an unrepresented party, by virtue of the representative's training and expertise."
[97] I now apply these principles to the specific acts or omissions relied upon by Stamford.
[98] Stamford claims that the witness statement of Mr Nicholls filed by Unfair Dismissals Australia contained irrelevant hearsay and disparaging allegations against certain Stamford employees, requiring it to file response statements (of Mr Baggaley and Ms Binnie) and then seek an order requiring Mr Baggaley to attend (as he was no longer employed by Stamford at the hearing date), only to find that at the hearing Unfair Dismissals Australia conducted little or no cross examination of those persons.
[99] Mr Nicholls was a former Acting General Manager of the Hotel. In the Decision, I observed that Mr Nicholls was a reliable witness but that his evidence was of limited relevance.[56] Although no longer with the Hotel at the time of Mr Lewis's dismissal, certain historical matters relating to his dealings with Mr Lewis were relevant to my findings. However, his witness statement, as filed, also contained serious allegations against a Human Resources Officer Ms Binnie and a Manager Mr Baggaley. Mr Nicholls claimed they had engaged in fraudulent and dishonest conduct including instructing others to forge documents.[57]
[100] Stamford correctly point to the fact that this evidence was not pressed when Mr Nicholls gave evidence in chief and, more particularly, that neither Mr Baggaley nor Ms Binnie were specifically cross examined on the allegations (Mr Baggaley was briefly otherwise cross examined).
[101] Whether either Mr Baggaley or Ms Binnie would have otherwise been required to give evidence in this matter is speculative. There is no evidence that either would have been required to do so; Stamford says that it would not have called them. Considered objectively, other than on these rebuttal points, their evidence was not central to Stamford's case.
[102] Unfair Dismissals Australia respond by saying that Stamford unnecessarily called Mr Baggaley and Ms Binnie as the allegations made by Mr Nicholls in his statement "were not material to the matter at hand".[58] Unfair Dismissals Australia claims that it had no control over the contents of Mr Nicholls's statement.
[103] Unfair Dismissals Australia's response is not convincing. If those aspects of the evidence of Mr Nicholls were not material to the matter at hand, why then was that material brought before the Commission by Mr Lewis's representative? Whilst a representative has no specific control over the evidence of a witness it calls, it has a responsibility to not have that witness advance a narrative on irrelevant matters. It ultimately has control over whether to file a statement of a particular person or not. It is also reasonable that a representative inform the Commission and the other side at an early opportunity if certain matters its client or its witnesses had initially pressed are not to be pursued, even if they had some ostensible relevance. To do otherwise creates inefficiency in proceedings and potentially puts the other side to cost and expense in rebuttal.
[104] This is what happened in this instance. The allegations against Ms Binnie and Mr Baggaley had tangential relevance as they potentially bore on the issue of the culture and practices of Stamford managers and officers of which Mr Lewis was one. It was reasonable for Stamford to secure evidence in rebuttal from Mr Baggaley and Ms Binnie and (in the circumstances) seek an order that Mr Baggaley be required to give evidence. This put Stamford to cost and expense.
[105] For Unfair Dismissals Australia to now say that, in calling Mr Baggaley and Ms Binnie, Stamford was expending costs on irrelevant evidence is perplexing to say the least. At no stage prior to expending these costs did Unfair Dismissals Australia put Stamford on notice that those allegations in Mr Nicholls statement were to be excised and not relied on.
[106] I conclude that costs associated with the preparation of the statement of Mr Baggaley and Ms Binnie and the costs of securing an order for Mr Baggaley's appearance were costs incurred on account of unreasonable conduct by Unfair Dismissals Australia.
[107] Unfair Dismissals Australia filed a statement of a contractor, Mr Demetriou late, in contravention of directions and without prior permission to file a late statement. That statement was ultimately accepted into evidence, and Mr Demetriou gave evidence and was cross examined on it. I found his evidence relevant but limited.[59]
[108] Whilst it is discourteous to the Commission and potentially prejudicial to the other side for a party's representative (in this instance Unfair Dismissals Australia) to file a statement late and without seeking leave, the conduct did not prejudice Stamford in a significant way. Stamford had almost a week before hearing to consider the statement and prepare its cross examination and rebuttal evidence. It cross examined Mr Demetriou without constraint. The statement was relevant and filed (albeit five days late) in reply.
[109] In these circumstances, whilst the lateness of the statement filed was discourteous, the conduct was not of a sufficient nature to reach the threshold of unreasonableness within the meaning of section 401(1A)(b) of the FW Act. I do not conclude that expenses incurred by Stamford in responding to the late statement of Mr Demetriou should be included in a costs order.
[110] In the Decision I observed as follows:
"[12] The proceedings were lengthy and, in their initial stages, not efficiently conducted due to:
[13] These apparent instances of representative error on the part of Unfair Dismissals Australia had the potential to prejudice Mr Lewis's case. Given the latitude I provided to ensure Mr Lewis's case was ultimately fully put, it has not done so. I note that I granted permission for the parties to be represented on the basis that in a complex matter such as this, the taking of evidence would likely be more efficiently conducted via representatives. This was the case; but only once the aforesaid relevant materials (including documents prepared but not provided pre-hearing) were before those witnesses and parties."
[111] The two supplementary witness statements of Mr Lewis were prepared by him in reply and intended by Mr Lewis to be filed by Unfair Dismissals Australia in accordance with my directions. They were significant documents directly relevant to matters in issue. Unfair Dismissals Australia's failure to produce either supplementary statement to the Commission or Stamford at any time prior to Mr Lewis's cross examination on the first day of hearing (let alone within the time required by my directions) was a serious failure on its part.
[112] The failure was not caused by Mr Lewis. He believed his supplementary statements were before the Commission and Stamford when, from the witness box, he referred to them in response to a question in cross examination.[60] Unfair Dismissals Australia's explanation for the failure was said to be a communication error on its part; it was said that the supplementary statements sent to it by Mr Lewis required Ms Both's supervisor to review the statements and on-forward them to the Commission and to Stamford. It was said that this was requested by Ms Both but did not occur in this instance. No explanation was given as to why it did not occur. The following exchange occurred during the hearing:[61]
MS BOTH: That is Mr Lewis' response to the statements given - the statements of evidence, the witness statement given by the respondent. It's the response to Trieneke Collins' statement, Luke Harrington's statement, David Donald's statement, and Lochlan Weeks' statement.
DEPUTY PRESIDENT: What is the explanation for this document being produced at this point in time while Mr Lewis is in the midst of his cross examination and has given his evidence in chief?
MS BOTH: I had believed that this had been sent through on Friday with the other documents that were supposed to have been sent through. I did instruct my supervisor to send that through, that was apparently not done."
"MS BOTH: ...I forwarded it on to my supervisor, asking him to relay this to the Commission and to the respondent regarding this matter, and he stated that he would do so, and I assumed that he had.
DEPUTY PRESIDENT: Is it your organisation's practice that you, as representative of Mr Lewis, do not have authority to communicate with the representatives of the other side or the Commission?
MS BOTH: I do have authority, but generally my supervisor prefers that correspondence go through him so that he's copied in on it. He runs the company, essentially, and I just work for him.
DEPUTY PRESIDENT: Why did you choose to send this statement to him and not just copy it to him but tender it to the Commission?
MS BOTH: Because he had asked everything to be run by him first in this case."
[114] I am satisfied that the error was not deliberate though it appears from the record that Ms Both allowed cross examination to commence knowing that certain (unspecified) statements had not been sent through.[63] In any event, failure by the paid agent to have produced these supplementary statements was entirely of its own making, was serious and caused prejudice. That prejudice was both to the efficiency of proceedings and to the flow of Stamford's cross examination of Mr Lewis. In the interests of fairness, the applicant's cross examination had to be adjourned immediately after lunch on the first day. It did not resume until the next day. In a matter such as this, where serious and complex conduct issues and the applicant's credit were in issue, interrupting the flow of cross examination allowed Mr Lewis extra time to think about his evidence and the questions that were being put to him.
[115] The failure also led directly to half a day of hearings being lost. Whilst it would not have been ideal for other applicant witnesses to be interposed, even this was not possible as others to be called were not present. Advance notice had not been given of their unavailability. As it turned out, this loss of half a day meant that the hearing did not conclude in the three allocated days. It was adjourned for three weeks and an extra half day was required to complete evidence and take oral submissions.
[116] I do not accept the submission of Unfair Dismissals Australia that the failure to complete the hearing in the allocated three days was due to delays or unnecessary evidence on the part of Stamford. There is nothing before me that suggests that Stamford conducted its litigation other than in an orthodox manner. Its counsel was as patient as could reasonably be with the inefficiency of Mr Lewis's case, the inexperience of his advocate and the guidance and rulings I made on procedure and evidence to help overcome some of these inefficiencies.
[117] I also reject the submission of Unfair Dismissals Australia that Stamford was culpable because it did not have its witnesses available to be interposed on the afternoon of the first day of hearing. This submission lacks an appreciation of arbitral litigation even given the Commission's less formal processes than courts. This was not a determinative conference. In a strongly contested hearing involving complex facts such as this, where the applicant had (by then) foreshadowed four persons giving evidence on his case, it would have been unreasonable for a responding employer to be required to commence their case before the applicant himself had been fully cross examined.
[118] Whilst Ms Both apologised for her firm's failure to produce, pre-hearing, the supplementary witness statements of their client, the apology does not transform what I objectively asses to have been an unreasonable omission of a serous kind on the part of Unfair Dismissals Australia. It led to a delay in proceedings, and caused an extra half day of hearings to be scheduled. It is well established by Commission authority that a failure to advise the other party of the first party's intentions, if deliberate or reckless, would be unreasonable.[64] Although not deliberate, the conduct by Unfair Dismissals Australia was reckless.
[119] I conclude that costs associated with the additional half day of hearing on 19 November 2019 were costs incurred on account of this unreasonable conduct.
[120] The first dot point in paragraph [12] of the Decision is a reference to the failure by Unfair Dismissals Australia to have provided Mr Lewis, prior to the hearing, with a copy of the witness statement of Mr Diaz de Rivera which had been filed by Stamford on 8 October 2019. This failure became apparent when Mr Lewis was being cross examined on the first day of hearing.[65]
[121] The statement of Mr Diaz de Rivera was relevant and lengthy. In the interests of fairness Stamford's cross examination could not continue until Mr Lewis had read and absorbed its detail. This resulted in proceedings being adjourned for a considerable period on the first morning of the hearing.
[122] The statement had been sent by Stamford to Unfair Dismissals Australia (as well as the Commission) in the ordinary manner well prior to the hearing. Again, due to a further communication failure on the part of Unfair Dismissals Australia, the statement appears to have not been provided to its client. Ms Both told the hearing:[66]
"I just want to clarify that I don't dispute that that likely was the case. My supervisor had access to that email inbox and he's supposed to forward relevant documents to me for any cases that I'm working on and it was not forwarded to me, so I believe that's been an error on our part."
[123] Ms Both apologised for this failure. The explanation that Unfair Dismissals Australia's anti-virus software identified Stamford's transmitting email as malware is not convincing. The evidence of Mr Payard[67] is that the software used to transmit Mr Diaz de Rivera's statement (Mimecast) was the same as used for earlier statements that had been sent and received by Unfair Dismissals Australia.
[124] I also reject Unfair Dismissals Australia's submission that this failure is mitigated by the fact that Stamford's letter of demand dated 10 October 2019 was sent to an incorrect email address. All this establishes is that administrative errors are capable of being made by any organisation. Whether a particular error has the quality of unreasonableness is a separate question. Stamford's email of 10 October 2019 was entirely unrelated to the issue of Mr Lewis not having been provided with the statement of Mr Diaz de Rivera.
[125] The failure to provide Mr Lewis the statement of Mr Diaz de Rivera in advance of the hearing was unreasonable conduct on the part of Unfair Dismissals Australia. It, not Stamford, had control of its internal software settings, it had an obligation to search its email inboxes and, as a participant in litigation, it was responsible to ensure those settings were fit for purpose including receiving large litigation files. Its failure caused delay, although not as significant as the delay caused by the non-provision of Mr Lewis's supplementary statements. Had Mr Diaz de Rivera's statement been provided to Mr Lewis, the non-provision of the supplementary statements would have still emerged that day and proceedings would still have been adjourned. In other words, the delay created inefficiency, but that inefficiency came to be overtaken by a greater inefficiency - the later abandonment of the first day of hearing.
[126] As I have not found section 611(2)(a) or (b) to be made out, the jurisdictional facts enlivening the discretion to make an order against Mr Lewis do not exist. The application for a costs order against Mr Lewis is dismissed.
[127] Jurisdictional facts exist which enliven the discretion to make an order for costs against Unfair Dismissals Australia. Is it appropriate to do so?
[128] I take into account that orders against representatives should be made only where there is a clear case, and that the discretion should be exercised with care. Whilst there is a clear statutory intent to hold representatives accountable, the default position is that each party bear their own costs. I also take into account that the Commission is not a court of law, that unfair dismissal matters are to be dealt with in a quick, flexible and informal manner[68] and that this is a jurisdiction where self-represented parties and lay advocates regularly appear; indeed the default statutory position is that they appear given that external professional representation (other than via associations) requires permission. In the interests of fairness, a degree of latitude should also be given not just to the self-represented or lay advocate but also to the inexperienced professional advocate engaged by a paid agent or law firm. Ms Both was an inexperienced advocate professionally engaged by the paid agent who appeared alongside experienced counsel and instructing solicitors acting for Stamford.
[129] Those considerations however only go so far. They do not displace the statutory intent that representatives be accountable. They do not excuse unreasonableness, objectively assessed. It is that unreasonableness that enlivens the discretion to order costs. Section 401(1A) is not reserved exclusively for the unreasonable acts of experienced lawyers. Ms Both apologised during the merits hearing for aspects of her inexperience and her firm's errors. The submissions of Unfair Dismissals Australia on costs conceded that "some errors having been made in the filing of documents...caused by technological and communication issues within UDA."[69]
[130] I have rejected the submission that these failures did not cause prejudice to Stamford. In varying degrees, they did.
[131] Concerning potential pre-hearing settlement, for reasons aforementioned, I do not have reliable evidence before me of offers by Mr Lewis and conduct related thereto. I do not take those matters into account. Nor is Stamford's unwillingness to submit to a Member Assisted Conciliation once the application was referred to me a matter that weighs against a costs order. Stamford participated in conciliation on 29 July 2019; any further conciliation was not directed and not listed. Nor have I found Mr Lewis's rejection of Stamford's settlement offer as unreasonable.
[132] My objective findings of unreasonableness by Unfair Dismissals Australia collectively warrant the making of a costs order but, in the exercise of discretion and taking the totality of relevant considerations into account, I will make two exclusions. I will not order costs in the terms sought by Stamford but will make an order in more limited terms.
[133] I will not order costs arising from Stamford calling Mr Baggaley and Ms Binnie for the following reasons:
Although unreasonable, the failure to alert Stamford (and the Commission) in a timely way to those aspects of the statement of Mr Nicholls not being pressed appears to have largely been a failure borne of an advocate's inexperience and unfamiliarity with the norms of arbitral litigation;
Mr Nicholls statement was not wholly irrelevant and even those aspects not pressed had some ostensible relevance to Mr Lewis's case as filed; and
Mr Baggaley was cross examined, albeit in a limited way.
[134] Nor will I order costs arising from the non-provision of the statement of Mr Diaz de Rivera. Whilst Unfair Dismissals Australia's conduct was unreasonable, its inclusion in a costs order would constitute double counting given that this failure came to be overtaken by a greater inefficiency - the later abandonment of the first day of hearing.
[135] I will order that Unfair Dismissals Australia pay Stamford's costs with respect to attendance at the additional half day of hearing on 19 November 2019 on account of its failure to produce to Stamford the supplementary statements of its client prior to Mr Lewis's cross examination and the consequential abandonment of the afternoon of the first day of hearing.
[136] Noting that indemnity costs orders are rare, the circumstances in this matter warrant an order on that basis. Although the unreasonable conduct was not a product of bad faith, it was reckless. It arose from an organisational failure, not just an advocate's inexperience or misjudgement. It was highly prejudicial to the efficiency of proceedings and Stamford's right to procedural fairness. Curing those impacts led to delay which directly and materially contributed to an extra half day of hearing. It was, within the meaning of the authorities, a "relevant delinquency".[70] The costs ordered will be assessed on an indemnity (solicitor and client) basis. Ultimately the quantum ordered will be based on what is reasonable, within these parameters.
[137] I will direct that Stamford and Unfair Dismissals Australia confer on the quantum of costs reasonably payable under the terms of the foreshadowed order. I direct this occur within fourteen days of this decision. To avoid further unnecessary costs, I will not order that costs be assessed by a costs assessor. If the quantum is not resolved privately between Stamford and Unfair Dismissals Australia I direct that within twenty-one days Stamford file in the Commission and serve on Unfair Dismissals Australia an itemised schedule of costs consistent with this decision. Within seven days of receipt of Stamford's itemised schedule Unfair Dismissals Australia is to file a response in the Commission and serve its response on Stamford. If the matter is unresolved and if I receive such a schedule I will re-list these proceedings to settle the issue of quantum.
[138] An order and directions[71] giving effect to this decision is issued in conjunction with its publication.
[139] I will not require Mr Lewis to be further involved in these proceedings but he may, if he so wishes, appear should further proceedings arise. He will continue to be notified of proceedings as finalising quantum remains a sub-set of his primary application.
N. Healy of Counsel and D. Payard, with permission, for the Costs Applicant (Stamford)
A. Both, with permission, for S. Lewis, the First Costs Respondent and for Unfair Dismissals Australia, the Second Costs Respondent
[1] Decision [2019] FWC 8552; Order PR715397
[2] F2 application dated 18 June 2019 page 22 of 23
[3] F53 17 July 2019; Email admin@unfairdismissalsaus.com.au to UDT 17 July 2019 9.55am
[4] Email Chambers to parties 25 September 2019 10.13am
[6] Later in this decision I consider the circumstances whereby, during the merits hearing, the two supplementary statements of Mr Lewis were produced
[8] On 11 November 2019, for which leave was granted at the hearing on 19 November 2019
[9] F51 application 17 October 2019; Orders 23 October 2019
[11] Written submissions were received from Mr Lewis (3 December 2019) and Stamford (8 December 2019)
[16] Submissions on application for costs against the Applicant; Submissions on application for costs against the Applicant's Representative; Statement of Damien Andrew Payard (undated) with attachments DAP 1 to DAP 5 (Exhibit A1) and Further Statement of Damien Andrew Payard (undated) with attachment DAP 6 (Exhibit A2)
[17] Submissions in response to application for costs against the Applicant and Applicant's Representative (undated)
[18] Email Simon Lewis to Chambers 6 March 2020 9.35pm
[19] Email Chambers to parties 18 March 2020 1.51pm
[22] Submissions in response to application for costs against the Applicant and Applicant's Representative (undated) page 7 of 7
[23] Stamford contest admission of these alleged facts and their relevance to the costs application. I deal with this matter later in this decision
[24] Submissions in response to application for costs against the Applicant and Applicant's Representative (undated) Item D(ii) page 5 of 7
[25] Though I note that the Commission was advised by Ms Both on the afternoon of 28 October 2019 (PN 596) that Mr Nicholls was not available that day due to work commitments. It was not until the morning of 29 October 2019 that the Commission was advised by Ms Both that Mr Nicholls declined to voluntarily attend (PN 688)
[26] Directions 29 January 2020 at [3]
[31] F6 section 2.2 paragraph 5 and paragraphs 6 to 16
[32] Submissions on application for costs against the Applicant paragraphs 2 and 13
[33] Dean Weikl v Western Australian Turf Club T/A Perth Racing [2019] FWCFB 5362 at [18]
[34] Baker v Salva Resources Pty Ltd [2011] FWAFB 4014 at [10]
[35] Linfox Australia Pty Ltd v Australian Federated Union of Locomotive Employees; Australian Rail, Tram and Bus Industry Union [2019] FWCFB 7020 at [9] to [11]
[36] Show cause letter: allegations 2 re falsification of quote and 8 re failure to conduct due diligence on scope of works; Dismissal letter: allegations 1 re bribes, kick-backs and secret commissions, 4 re conflicts of interest, 6 re failure to conduct due diligence on preferred suppliers and 9 re inflated progress payment to Mr Weeks
[38] Guorgi v Transdev Queensland Pty Ltd [2019] FWCFB 898 at [46]
[39] Brazillian Butterfly Pty Ltd v Charalambous PR 968915 (25 August 2006); Kanga Batman TAFE v Hunt PR 958003 (13 May 2005)
[40] Mr Lewis did contend at the hearing that upon dismissal he believed he had not been paid his final two weeks of salary
[41] It is noted that in Stamford's reply (F3 1 July 2019 at paragraph 3.1) the employer asserted: "His misdemeanours amount to not only civil but also criminal wrongs. The Hotel is in the process of receiving legal advice in its case against the Applicant and will be proceeding on all fronts in due course."
[42] McCloskey v Norgrove Training Pty Ltd [2019] FWC 732 at [83]
[43] "A party cannot be said to have made an application 'without reasonable cause', within the meaning of s 611(2)(a), simply because his or her argument proves unsuccessful. The test is not whether the application might have been successful, but whether the application should not have been made.": Church v Eastern Health [2014] FWCFB 810 at [30]
[44] F3 1 July 2019 at paragraph 3.1: "His misdemeanours amount to not only civil but also criminal wrongs."
[45] Final written submission on costs by email Simon Lewis to Chambers 6 March 2020 9.35pm
[48] Parmalat Food Products Pty Ltd v Wililo [2011] FWAFB 7498 at 20: "Having found a valid reason...it would only be if significant mitigating factors are present that a conclusion of harshness is open"
[49] "The consideration of whether a dismissal is harsh, unjust or unreasonable is multifactorial.": Jones v Brite Services [2013] FWC 4280 at [24]
[50] Livingstones Australia v ICF (Australia) Pty Ltd [2014] FWCFB 1276 at [80]
[51] Explanatory Memorandum to the Fair Work Amendment Act 2012 at paragraph 180
[52] Barkhazen v Conair Australia Pty Ltd (No 2) [2018] FCA 992; see also Keep v Performance Automobiles Pty Ltd [2015] FWCFB 1956 at [18] to [19]
[53] Livingstones Australia v ICF (Australia) Pty Ltd [2014] FWCFB 1276 at [94]
[54] Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143 at 28
[55] Rohan Veal v Sundance Marine Pty Ltd [2013] FWCFB 8960 at [15]
[57] Merits hearing Exhibit A23 paragraph 8
[58] Submissions in response to application for costs against the Applicant and Applicant's Representative (undated) Item D(ii) page 5 of 7
[60] Mr Lewis PN 191 (28 October 2019): "I believe it was part of the documents that I sent you prior to our final submissions."
[63] At PN 201 (28 October 2019), prior to cross examination commencing, Ms Both refers to text messages that Mr Lewis sought to tender and said "They were to be sent up on the Friday with the statement that was not sent up by my supervisor."
[64] Roy Morgan Research Limited v Baker [2014] FWCFB 1175 at [11] citing Goffet v Recruitment National Pty Ltd [2009] AIRCFB 626 at [47]
[65] PN 453 (28 October 2019): "Mr Healy: It wasn't received? Sorry, just so I'm clear, are you saying that you did not see Paul Diaz's statement? Mr Lewis: No, I have not seen it, no. I'm looking at it right now and I haven't had a chance to read it."
[67] A1 paragraphs 4, 5 and 8 DAP-1 and DAP-4
[69] Submissions in response to application for costs against the Applicant and Applicant's Representative (undated) page 7 of 7
[70] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 per Gaudron & Gummow JJ at [44]
Printed by authority of the Commonwealth Government Printer
Mr Simon Lewis
SGA
(1998) 193 CLR 72