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[2017] FWCFB 4801
General information, not legal advice.
Fair Work Commission (Full Bench)
2017-09-14
Original judgment source is linked above.
Decision on costs - s.400A and s.611 of the Fair Work Act 2009 (Cth).
[1] On 8 March 2017, Senior Deputy President Hamberger ("Hamberger SDP") handed down a decision[1] dismissing an application by Mr Mohammed Ayub for an unfair dismissal remedy.
[2] On 24 March 2017, Mr Ayub filed an appeal against this decision. We heard the matter on 3 May 2017. On 21 April 2017, we issued a decision refusing permission to appeal on the grounds that Mr Ayub failed to show that it would be in the public interest to grant permission to appeal, as required by s.400(1) of the Fair Work Act 2009 (Cth) ("the Act").[2]
[3] On 18 May 2017, NSW Trains lodged an application for costs and attached submissions in support of their application, and served it on Mr Ayub. Having received NSW Trains' application for costs and accompanying submissions, we sent correspondence to Mr Ayub on 25 May 2017 seeking submissions in response by 8 June 2017. Mr Ayub provided his response submissions on 8 June 2017. We summarise the application and submissions before us as follows.
[4] NSW Trains made the following submissions pursuant to s.611 and s.400A of the Act:
(a) Mr Ayub's appeal application was made vexatiously;[3]
(b) Mr Ayub's appeal application was made without reasonable cause or without reasonable prospects of success;[4] and
(c) Mr Ayub unreasonably continued the matter.[5]
[5] NSW Trains highlighted the decision at first instance where Hamberger SDP found that there was a valid reason for termination of employment. NSW Trains argued that Mr Ayub has shown a tendency to pursue vexatious claims in the past and that Mr Ayub's application to appeal the decision of Hamberger SDP continued to press allegations and claims against NSW Trains which were previously identified as vexatious and unsubstantiated. In these circumstances, NSW Trains submitted that Mr Ayub's appeal application was made vexatiously.
[6] NSW Trains submitted that Mr Ayub's application did not disclose any appealable error, nor did the submissions identify any error of law or any issue of public importance as required by s.400 of the Act. From these findings, NSW Trains argued that Mr Ayub's application to appeal was without reasonable cause or reasonable prospects of success, and that a reasonable person in this circumstance would have come to the conclusion that there were no reasonable prospects of success.
[7] NSW Trains argued that Mr Ayub's conduct fulfils the criteria in s.400A of the Act, and that by unreasonably continuing the matter, Mr Ayub caused NSW Trains to incur significant costs in defending the application.
[8] NSW Trains have sought an order that Mr Ayub pay its professional costs for the period from 24 March 2017 to 3 May 2017, being the period from which NSW Trains received the appeal application notification, to the conclusion of the appeal hearing.
[9] NSW Trains attached a detailed itemised schedule of costs to the costs application, which shows that the total costs and disbursements claimed by NSW Trains is $3,384.00.
[10] Mr Ayub sent two emails making up his submissions in response to the costs application and submissions of NSW Trains. Other than claiming that the appeal application and previous allegations made against NSW Trains and their employees were not vexatious, Mr Ayub's submissions do not address the criteria of s.611 and s.400A, nor do they address the grounds put forward in NSW Trains' costs application. The submissions largely address the merits of the matter. We briefly summarise the submissions of Mr Ayub as follows:
Claims made against Mr Ayub were unsubstantiated, and NSW Trains never undertook a proper investigation of the allegations;
The Commission previously found that the allegations against Mr Ayub, from Mr Austin and Mr Singh were unsubstantiated;
NSW Trains did not follow a due process before dismissing Mr Ayub;
Mr Ayub did nothing wrong; and
Due to lack of work and the difficulty in finding work at his age, Mr Ayub submitted that he does not have the ability to pay any costs.
[11] Section 400A appears in Part 3-2 Unfair Dismissal. The object of the Part is set out in s.381:
(1) The object of this Part is:
(a) to establish a framework for dealing with unfair dismissal that balances:
(i) the needs of business (including small business); and
(ii) the needs of employees; and
(b) to establish procedures for dealing with unfair dismissal that:
(i) are quick, flexible and informal; and
(ii) address the needs of employers and employees; and
(c) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.
(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a "fair go all round" is accorded to both the employer and employee concerned.
Note: The expression "fair go all round" was used by Sheldon J in In re Loty and Holloway v Australian Workers' Union [1971] AR (NSW) 95."
[12] Section 400A of the FW Act provides as follows:
(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."
[13] Item 4 of the Fair Work Amendment Bill 2012 inserted a new section 400A into the Act to enable the Fair Work Commission to order costs against a party to an unfair dismissal matter (the first party) if it is satisfied that the first party caused the other party to the matter to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the matter.[6] The explanatory memorandum provides as follows:
"169. As with the new power to dismiss applications under section 399A, the power to award costs under section 400A is not intended to prevent a party from robustly pursuing or defending an unfair dismissal claim. Rather, the power is intended to address the small proportion of litigants who pursue or defend unfair dismissal claims in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.
170. The FWC's power to award costs under this provision is discretionary and is only exercisable where the first party (whether the applicant or respondent) causes the other party to incur costs because of an unreasonable act or omission. This is intended to capture a broad range of conduct, including a failure to discontinue an unfair dismissal application made under section 394 and a failure to agree to terms of settlement that could have led to the application being discontinued.
171. However, the power to award costs is only available if the FWC is satisfied that the act or omission by the first party was unreasonable. What is an unreasonable act or omission will depend on the particular circumstances but it is intended that the power only be exercised where there is clear evidence of unreasonable conduct by the first party."
[14] Section 611 of the FW Act provides as follows:
(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)"
[15] The explanatory memorandum provides as follows:
[16] NSW Trains also applies under s.611, and application of this provision is guided by the object of this Act (s.3).
[17] In Nilsen v Loyal Orange Trust,[7] North J said in relation to earlier provisions which enabled costs to be order if an application was 'vexatious', the term used in s.611(2)(a):
"The next question is whether the proceeding was instituted vexatiously. This looks to the motive of the applicant in instituting the proceeding. It is an alternative ground to the ground based on a lack of reasonable cause. It therefore may apply where there is a reasonable basis for instituting the proceeding. This context requires the concept to be narrowly construed. A proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party, or to gain a collateral advantage: see Attorney General v Wentworth (1988) 14 NSWLR 481 at 491."
[18] It is not enough to satisfy the requirement in s.611(2)(b) that an application be made without reasonable cause or without reasonable prospects for success that allows Mr Ayub's case to be rejected: General Steel Industries Inc v Commissioner for Railways.[8] As a Full Bench of the Commission said in A Baker v Salva Resources Pty Ltd:[9]
"[10] The concepts within s.611(2)(b) 'should have been reasonably apparent' and 'had no reasonable prospect of success' have been well traversed:
[19] We note at the outset that the relevant sections provide that if the requisite jurisdictional facts are established (relevantly, ss. 400A(1) and (2), and s.611(2)), then the Commission may make an order for costs. A costs order does not automatically follow upon a finding of the requisite jurisdictional fact. It is clear from the use of the word 'may' that the Commission retains discretion as to whether or not to make an order for costs. In that regard these provisions may be contrasted with ss. 418(1) and 424(1), which provide that the Commission must make certain orders if certain jurisdictional facts are present.
[20] Having regard to Baxter Healthcare Pty Ltd T/A Baxter Healthcare v Andrew Portelli,[10] the following general observations may be made about the discretion to order costs in ss. 400A and 611:
The discretion is expressed in general, unqualified, terms confined only by the subject matter, legislative context and purpose;
The terms of ss. 400A and 611 operate to limit the scope of any order which may be made;
The discretion must be exercised judicially, that is to say not arbitrarily, capriciously or so as to frustrate the legislative intent; and
The discretion must be exercised in a manner which is 'fair and just', and takes into account 'equity, good conscience and the merits of the matter'.
[21] In relation to the claim that the application had no reasonable prospects of success within s.611(2)(b), it is a matter of record that in refusing permission to appeal we did not uphold or find merit in any of the grounds of Mr Ayub's appeal. We did not identify any error of law, any error of fact or any other issue of public interest.
[22] We stated there was 'nothing in these submissions which raise issues of importance and general application' and made similar observations about other possible public interest arguments. We stated that the appeal was in the nature of an attempt to run a case at first instance on appeal. There were no public interest grounds advanced by the Mr Ayub which had any success. Therefore, we refused permission to appeal.
[23] Turning to deal with Mr Ayub's appeal grounds and submissions on appeal, the grounds of appeal are very general in nature. Mr Ayub alleged that there were errors in the Commission finding that there was a valid reason, and that the process was procedurally fair, and makes other similar general allegations. It is true that the hearing before us was confined to the issue of permission to appeal. However, if Mr Ayub wished to obtain such permission to appeal, he needed to demonstrate some public interest such that permission to appeal should be granted which related to or arose out of his appeal grounds. The appeal grounds and his submissions claimed error in the evidentiary findings without providing any demonstration of error, let alone error which raised issues of public interest.
[24] After the hearing on 3 May 2017, Mr Ayub sent correspondence to the Commission dated same, in which he stated that the "only people who are in breach of conduct are the officials who backed each other in the cover up". Mr Ayub sent further correspondence on 4 May 2017, whereby he alleged that it was an "underworld figure" that "plotted" his dismissal.
[25] On 9 May 2017, we issued our decision refusing permission to appeal. Subsequently, Mr Ayub was invited to respond to the written application for costs made by NSW Trains. In doing so, he repeatedly alleged misconduct by the same people. In his email of 8 June 2017, Mr Ayub alleges that the Commission should be "going after the perpetrators". In a further email of 8 June 2017, Mr Ayub states that "the only people who are guilty of vexatious attack (sic) are Mr Austin, Mr Singh and all railways officials involved in this unsubstantiated and made up case against me."
[26] Mr Ayub filed an appeal primarily based on overturning evidentiary findings without any real attempt to do so. It was a vexatious appeal without any prospects of success. We are also satisfied that it was unreasonable for Mr Ayub to continue the appeal. Thus, the grounds for awarding costs set out in ss.611 and 400A are satisfied.
[27] On 5 April 2017, directions were issued to the parties in relation to the hearing for permission to appeal only and, therefore, only Mr Ayub was required to file submissions. In this regard, the Commission does not, as a matter of course, require a respondent to file submissions in relation to a matter listed for permission to appeal only. It is only once permission to appeal is granted and the merits of the appeal are listed for hearing that a respondent will be required to file submissions. Nevertheless, NSW Trains, as the respondent in the appeal matter, elected to file detailed submissions and was legally represented by Counsel, despite the matter being listed for permission to appeal only (permission was granted for both parties to be legally represented at the hearing). Thus, NSW Trains took the unnecessary step of filing submissions and incurred legal costs that were not necessary.
[28] It might be said that this was in the nature of due diligence, and that it would not have adequately protected its position if it had not appeared. However, it must also have been aware that even if permission to appeal had been granted on the basis that there was a public interest, there would have been further hearings to address the issue of whether the appeal should be granted. It should also have been aware that the prospects of permission to appeal being granted were not strong, given the submissions filed by Mr Ayub.
[29] Further, we note that s.577 states:
FWC must perform its functions and exercise its powers in a manner that:
(a) is fair and just; and
(b) is quick, informal and avoids unnecessary technicalities; and
(c) is open and transparent; and
(d) promotes harmonious and cooperative workplace relations.
Note: The President also is responsible for ensuring that FWC performs its functions and exercises its powers efficiently etc. (see section 581)."
"Matters the FWC must take into account in performing functions etc.
In performing functions or exercising powers, in relation to a matter, under a part of this Act (including this Part), FWC must take into account:
(a) the objects of this Act, and any objects of the part of this Act; and
(b) equity, good conscience and the merits of the matter; and
(c) the need to respect and value the diversity of the work force by helping to prevent and eliminate discrimination on the basis of race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer's responsibilities, pregnancy, religion, political opinion, national extraction or social origin.'
[31] It follows from ss. 577 and 578 that in exercising the discretion to order costs, the Commission must exercise its powers in a manner which is 'fair and just' and takes into account 'equity, good conscience and the merits of the matter.'
[32] Noting the above, we have decided not to award full costs, given the deliberate choice of NSW Trains to incur costs when it was aware that it was not necessary to put submissions, nor to appear. We also consider that it would be inappropriate to order no costs at all. We have decided to award 15% of the costs incurred by NSW Trains.
[33] Given the difficult financial position that Mr Ayub claims to be in, we are prepared to provide for these costs to be payable in instalments, if this would be of assistance to Mr Ayub.[11] If he wishes to provide for instalments, he should confirm in writing that this arrangement would be acceptable to him within 7 days of this decision. NSW Trains may object within the same period if it wishes to do so, setting out the grounds. We will then determine the issue on the papers unless a hearing is requested. We will provide for payment in instalments of 3 equal monthly payments if Mr Ayub requests this and NSW Trains does not object.
[4] Ibid s 611(2)(b).
[6] Fair Work Amendment Bill 2012 Explanatory Memorandum, [168].
[7] (1997) 76 IR 180 at 181.
[8] [1964] HCA 69; (1964) 112 CLR 125 at 129.
[11] Minhaj Mansoor v Coles Supermarkets T/A Coles Northland [2012] FWAFB 8081; Minhaj Mansoor v Coles Supermarkets T/A Coles Northland [2012] FWAFB 9415.
Printed by authority of the Commonwealth Government Printer
NSW Trains
Mohammed Ayub [2017] FWCFB 4801
(1988) 14 NSWLR 481
(1997) 76 IR 180
(1964) 112 CLR 125