Peden v Lake Macquarie Refrigeration Pty Ltd

JUDGMENT: - 7 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: HARRISON DP Monday, 19 May 2003 Matter No IRC 1653 of 2000

ANDREW PEDEN AND LAKE MACQUARIE REFRIGERATION PTY LIMITED Application re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION [2003] NSWIRComm 155 1 A decision was issued in the substantive proceedings of this matter on 6 March 2003 in favour of the respondent employer Lake Macquarie Refrigeration Pty Ltd ('the Company') [2003] NSWIRComm 50. The Company now makes application for costs by Notice of Motion pursuant to s181(2)(c) of the Industrial Relations Act 1996 ("the Act") in the amount of $7,643.76. 2 The Notice of Motion was subject to Hearing on 14 May 2003. Ms A Engel, solicitor of Braye Cragg Solicitors, appeared on behalf of the Company. Mr S Coleman of Counsel, instructed by Mr G Kerr, Solicitor of Turnbull Hill, appeared on behalf of Mr Peden. 3 The Notice of Motion seeks an order pursuant to s181(2)(c) of the Act on the grounds that Mr Peden instituted proceedings that were both frivolous and vexatious. S181(2)(c) states: (c) the Commission may award costs against a party to proceedings under Part 6 of Chapter 2 (Unfair dismissals) who, in the opinion of the Commission, unreasonably failed to agree to a settlement of the claim or whose application was frivolous or vexatious, or 4 Ms Engel referred me to Heidt v Chrysler Australia (1976) 26 FLR 257 in support of her submission that the application was frivolous. In support of her contention that the proceedings were vexatious, Ms Engel relied upon Neilson v Loyal Orange Trust (1997) 76 IR 180 wherein his Honour North J said at p181: "A proceeding will be instituted vexatiously where the dominant purpose in instituting the proceeding is to harass or embarrass the other party, or to gain a collateral advantage". 5 Ms Engel submitted that Mr Peden had an ulterior motive not related to a genuine desire for investigation of the unfairness of his dismissal, which she put was for some other collateral advantage, described by Ms Engel as a choice by Mr Peden to "be a thorn in the respondent's side", and to "antagonise the respondent regardless of the fact that the proceedings were unmeritorious. Ms Engel put that this is supported by the absolute failure of the applicant to contemplate reasonable resolution of the claim prior to arbitration. Ms Engel submitted that the attitude of the applicant there demonstrated revealed a determination to put the respondent to the greatest possible degree of distraction, inconvenience and expense. 6 Ms Engel referred to the decision of the Full Bench in Bankstown City Council and Paris [1999] NSWIRComm 585 wherein the obligation of parties to conciliation is described. 7 In opposing the application for costs Mr Coleman submitted that the applicant was a person permitted to file an application as he was an employee dismissed from employment, and that he had done so within the statutory time limit.

8 Mr Coleman submitted that the substantive matter was determined on the evidence without positive finding as to credit against the applicant; nor were assertions of ulterior motive put to the applicant in the course of the substantive proceedings. 9 Mr Coleman relied upon Chaffers v Goldsmid [1894] 1 QB 186 and Dawkins v Prince Edward of Saxe Weimar (1876) 1 QBD 499 to support his submission that to be frivolous an application must be trifling and a waste of the Commission's time. 10 Mr Coleman submitted that the instant case contained issues of contest that required Judicial determination. Mr Coleman submitted that there was further evidence in respect to the employment relationship not set out in the Decision in the substantive matter going to an arrangement between Mr Peden and the employer to book overtime as a credit against purchases of work tools and materials for "private work" on the company accounts, which he put was relevant to a consideration of the reasonableness of the claim. 11 Mr Coleman submitted that in all the circumstances it was reasonable of the applicant to hold the view that the relevant work was within the family and friends policy. 12 Mr Coleman submitted there is a substantial onus required to demonstrate that proceedings were brought on a particular ground, referring me to the Judgment of Wright P in Weisser v Spur Group Pty Limited [2003] NSWIRComm 79. 13 In further addressing the issue of vexatiousness, Mr Coleman referred me to Attorney General v Wentworth (1988) 14 NSWLR 481 which provides a definition of "vexatious" generally regarded as useful, in the following terms: "It seems then that litigation may properly be regarded as vexatious for present purposes on either objective or subjective grounds. I believe that the test may be expressed in the following terms:

1. Proceedings are vexatious if they are instituted with the intention of annoying or embarrassing the person against whom they are brought.

2. They are vexatious if they are brought for collateral purposes, and not for the purpose of having the court adjudicate on the issues for which they give rise.

3. They are also properly to be regarded as vexatious if, irrespective of a motive of a litigant they are so obviously untenable or manifestly groundless as to be utterly hopeless. 14 Mr Coleman submitted that the circumstances of the instant matter cannot meet a lower test of brought without reasonable cause, the principles relevant found in Imogen Pty Limited v Sangwin (1996) 70 IR 254; and Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 wherein his Honour Wilcox CJ said: "It seems to me that one way of testing whether a proceeding is instituted 'without reasonable cause' is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceedings, there was no substantial prospect of success. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being "without reasonable cause". But where on the applicants own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceedings lacks a reasonable cause". 15 Mr Coleman also referred to Fairweather v Ladehai Pty Ltd T/as North Star Holiday Resort [2002] NSWIRComm 367 and Ogston v Laurieton United Servicemens Club [2001] NSWIRComm 1018. 16 Mr Coleman put that the onus of proof lies upon the party seeking an order of costs and that in this matter the required standard to establish the grounds of frivolity and vexatiousness had not been met. Mr Coleman submitted that the fact that an applicant was unsuccessful does not render a claim frivolous and/or vexatious, putting that no such finding was made in the substantive proceedings. CONSIDERATION 17 The substantive proceedings were decided against Mr Peden on the basis that he was unable to substantiate in any way that the relevant job was carried out within the employer's "family and friends" policy. The contention that the job had been arranged through Mr Peden's father as work for his father's "mate", Mr Chapman, was proven on the evidence of Mr Chapman to be a convenient fabrication by Mr Peden. Mr Chapman denied any such arrangement. 18 Mr Chapman's evidence is that on arrival at his residence following a telephone call to the employer's business, it was Mr Peden who brought to Mr Chapman's attention that they had previously met in the company of Mr Peden's father at the local bowling club. 19 Mr Peden's father, said to be the moving agent in the "family and friends" arrangement, was not called to give evidence, nor any explanation offered as to why he was not called; giving rise to the prospect that his evidence would not be helpful. 20 The fact of an overtime booking arrangement, itself of questionable validity, is not relevant to the issues brought in the substantive proceedings and consequently not canvassed in that decision. Any such arrangement was no more than a mechanism to facilitate the "family and friends" policy, not a licence to appropriate work from the employer or excuse to deny the truth. 21 I respectfully follow the determination his Honour Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) and Others 112 CLR 125 at 129 and 130: "The test to be applied has been variously expressed: "so obviously untenable that it cannot possibly proceed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; be manifest that to allow them" (the pleadings) "to stand would involve useless expense".

At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or "so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument"; so to speak apparent at a glance".

"On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed." 22 This is such a case in which the frivolity of the application is known only to the applicant and not revealed to the Commission until the evidence is heard. 23 Had the absolute denial of any "family/friend" arrangement by Mr Chapman been known at the outset, the earlier observation of his Honour Barwick CJ as to the obviously untenable applies. I find the application to be frivolous. Vexation 24 The test to be met in s181(2)(c) of the Act is frivolous or vexatious. Having found the application to be frivolous, it is not necessary to find it vexatious in order to award costs. 25 There is, however, in my view, substance in the argument by Ms Engel that the application had an element of vexation. This is supported by the evidence of Mr Burgess, the principle of the Company, and that of Mr Peden. At point 31 of his affidavit of evidence (Ex 4) Mr Burgess puts: "since Mr Peden started working for himself, he has approached approximately 75% of my customers soliciting for their business". 26 Mr Peden is taken to this at p29 of transcript whereat he concedes contacting clients of his former employer but is unsure as to that percentage of customers he has approached. 27 Having regard to the required tests I would find the application to be also vexatious. 28 The circumstances of this case give rise to a consideration as to whether an order for recovery of costs alone is adequate, and whether, where proceedings are brought for a collateral or vexatious purpose, an award of damages as a penalty should be imposed. This is a matter to which the legislature has yet to turn its mind and, until that occurs, is obviously beyond contemplation. 29 The order of costs as sought is made against the applicant in favour of the respondent to the amount of $7,643.76. 30 Ms Engel also sought costs in the instant proceedings. This was not directly addressed by Mr Coleman. These costs arise from the application brought frivolously and vexatiously and accordingly I make separate order for costs in respect to the proceedings of 14 May 2003 as agreed or as taxed by the Registrar.

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: HARRISON DP Monday, 19 May 2003 Matter No IRC 1653 of 2000

ANDREW PEDEN AND LAKE MACQUARIE REFRIGERATION PTY LIMITED Application re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 ORDERS 1. Pursuant to s181(2)(c) of the Industrial Relations Act 1996 Mr Andrew Hugh Peden is ordered to pay Lake Macquarie Refrigeration Pty Limited the amount of $7,643.76 (seven thousand six hundred and forty three dollars and seventy six cents) within 21 days of the date of this decision.

2. Pursuant to s181(2) of the Industrial Relations Act 1996 Mr Andrew Hugh Peden is ordered to pay Lake Macquarie Refrigeration Pty Limited costs associated with the proceedings of 14 May 2003 as agreed or as taxed by the Registrar. I so order. The Hon. R W Harrison Deputy President

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