Secretary of the Department of Education v Williams

DECISION

1. On 5 October 2023, the Full Bench handed down its decision in Secretary of the Department of Education v Williams [2023] NSWIRComm 1098 ("Earlier Decision"). In that decision, the Full Bench dismissed an appeal which had been brought by the Secretary of the Department of Education ("Secretary") against the decision of Commissioner Webster in Williams v Secretary of the Department of Education [2023] NSWIRComm 1032.
2. Ms Williams has applied for an order that the Secretary pay her costs "of and incidental to the Appeal Proceedings".
3. We have determined to dismiss Ms Williams' application for costs on the basis that such an order is not permitted by s 181(3A) of the Industrial Relations Act 1996.

Background

1. On 1 September 2020 Ms Williams was dismissed from the Teaching Service (as defined in s 44 of the Teaching Service Act 1980) after having been found to have engaged in misconduct. Her name was placed on the list of persons not to be employed by the Department of Education, maintained by the Secretary pursuant to s 7 of the Teaching Service Act ("NTBE List").
2. Ms Williams brought proceedings in the Commission under Ch 2 Pt 7 of the Industrial Relations Act. In Williams v Secretary of the Department of Education, Commissioner Webster determined that the Secretary had been unable to prove that Ms Williams had engaged in the misconduct alleged against her. The Commissioner made orders to the effect that the decision to dismiss Ms Williams from the Teaching Service be set aside; that Ms Williams' employment in the Teaching Service be deemed not to have been broken by the decision to terminate her employment; and, that the Secretary remove Ms Williams' name from the NTBE List.
3. The Secretary applied for leave to appeal and appealed Commissioner Webster's decision ("Appeal"). The Application for Leave to Appeal and Appeal set out eight grounds of appeal. Ultimately, only five of those were pressed.
4. In our Earlier Decision, we granted the Secretary leave to appeal in respect of one of the grounds on which he relied, but otherwise refused leave. Having considered the arguments advanced by the parties in respect of the ground on which leave to appeal was granted, we dismissed the Appeal.

Overview of the application for costs

1. Ms Williams has applied for an order for the costs in respect of the Appeal, pursuant to s 181(1) of the Industrial Relations Act. Section 181 relevantly provides: 181 Costs (1) Subject to the rules of the Commission and any other Act or law - (a) the Commission may award costs, and (b) costs are in the discretion of the Commission, and … (2) However, the Commission may award costs only in the following cases - (a) the Commission may award costs against an applicant if it considers that the application to it was frivolous or vexatious, or (b) the Commission may award costs against a party to proceedings who, in the opinion of the Commission, instituted proceedings without reasonable cause, or (c) the Commission may award costs against a party to proceedings under Part 6 of Chapter 2 (Unfair dismissals) who, in the opinion of the Commission, unreasonably failed to agree to a settlement of the claim or whose application was frivolous or vexatious… … (3A) Despite subsection (1), the Commission may not award costs in proceedings under Part 7 of Chapter 2. Note - This subsection does not prevent the award of costs in appeals relating to questions of law in relation to public sector promotional and disciplinary matters under section 197B.
2. It is now well-established that the exercise of the Commission's discretion to award costs involves a two stage process. The first stage requires a determination as to whether s 181(2) is enlivened. The second stage requires the Commission to exercise its discretion whether to award costs under s 181(1) of the Act: see Re Operational Ambulance Officers (State) Award (No 2) [2011] NSWIRComm 85 at [28]; Ters v Health Secretary in respect of the South Western Sydney Local Health District (No 2) [2023] NSWIRComm 1023 at [10].
3. Ms Williams contends that the Appeal was vexatious and brought without reasonable cause, enlivening s 181(2)(a) and (b). In her Application for Costs, Ms Williams also relied on the ground that the Appeal was frivolous. She advanced no submissions in support of that ground, and we have proceeded on the basis that it was not pressed.
4. The Secretary submits that the Commission has no power to award costs in the present matter. He argues that the limitation on the Commission's powers to award costs in proceedings under Ch 2 Pt 7 of the Act imposed by s 181(3A) extends to appeals from decisions made in such proceedings.
5. In what must be considered an alternative submission, the Secretary also contends that an appeal is not an "application" for the purposes of s 181(2)(a). In the further alternative, the Secretary submits that the Appeal was neither vexatious nor brought without reasonable cause.

Does s 181(3A) preclude an award of costs in respect of the Appeal?

1. The Secretary advances four arguments as to why he contends that s 181(3A) precludes the Commission making an order for costs on the Appeal.
2. First, the Secretary drew our attention to a number of decisions in which the Full Bench has invoked s 181(2)(c) to award costs in appeals from decisions in unfair dismissal proceedings. The Secretary contended that this could not have been possible unless the Full Bench had been satisfied that appeals were caught by the expression "proceedings under Part 6 of Chapter 2" appearing in s 181(2)(c). By parity of reasoning, it was submitted that the same approach would be taken to the phrase "proceedings under Part 7 of Chapter 2" in s 181(3A).
3. Second, the Secretary submitted that "the expression 'proceedings' has wide and general application and certainly includes an appeal", citing Re Coldham; Ex parte Australian Building Construction Employees' & Builders Labourers' Federation (1985) 13 IR 98 at 101; [1986] HCA 87 ("Coldham"). The Secretary contended that the Appeal is "part of the proceedings under Part 7 of Chapter 2". He further argued that the use of the plural "proceedings" demonstrated an intention to cover more than the original application.
4. Third, the Secretary submitted that it would be "an absurd result" that costs could be awarded in respect of an appeal from a decision in a public sector disciplinary appeal, but not at first instance.
5. Finally, the Secretary drew our attention to the note following s 181(3A). While he acknowledged that the note does not form part of the Industrial Relations Act, by virtue of s 9 of that Act, he observed that the note makes it clear that costs may be awarded in appeals pursuant to s 197B but is silent in respect of appeals under s 187. This was said to be consistent with appeals under s 187 being caught by s 181(3A).
6. In response, Ms Williams submitted that on its terms s 181(3A) did not apply. She argued that the section applies only to proceedings under Ch 2 Pt 7 of the Industrial Relations Act, whereas the Appeal was commenced under Ch 4 Pt 7.
7. Ms Williams further submitted that it would not be inconsistent that costs may be awarded in appeals to the Full Bench of the Commission but not with respect to public sector disciplinary appeals. She observed that either party, and indeed certain third parties, may make an application under s 187(1), but only the affected public sector employee may make an application under Ch 2 Pt 7.
8. Finally, Ms Williams contended that "one of the most important principles in connection with the discretionary power to award costs is to provide an indemnity against the expense of litigation that should not, in justice, have been visited upon that party" and that it "would not in any way be an 'absurd result' to compensate a genuine claimant who rightly commenced public sector disciplinary appeal proceedings and was subsequently, at the conclusion of those proceedings, required to incur unnecessary expenses in defending unreasonably instituted appeal proceedings".
9. We have been unable to locate any decisions of the Commission which deal directly with s 181(3A), much less whether it extends to appeals from decisions made in respect of applications brought under Ch 2 Pt 7. Neither party referred us to any such authority.
10. As stated, the Secretary invited the Full Bench to approach s 181(3A) in a manner analogous to the way in which it has applied s 181(2)(c).
11. We have identified five cases in which the Full Bench has awarded costs on appeal pursuant to s 181(2)(c): Bankstown City Council v Paris (1999) 93 IR 209 at 220-221; Department of Community Services and Bragg (No 2) [2000] NSWIRComm 28 at [10]; Four Sons Pty Limited v Sakchai Limsiripothong (No 2) (2000) 100 IR 400; [2000] NSWIRComm 131 at [17]; IGA Distribution Pty Limited and Moses (No 3) [2003] NSWIRComm 230 at [104]-[106]; and, Margaritte Joanne Colefax v Secretary, Department of Education (No 4) [2019] NSWIRComm 1017 at [60], [63].
12. In Department of Community Services and Bragg (No 2) the Full Bench (Wright J President, Hungerford J, Neal C) observed: "10. We deal finally with the question of costs of these appeals. Counsel for the appellant, appropriately in our view, accepted that, if the commissioner's finding that the relevant criterion under s 181(2)(c) had been satisfied was not overturned on appeal, then this Full Bench thereby had power to award costs in these appeals. …"
13. We have identified a further six cases in which no costs were awarded by the Full Bench, but in which the analysis of the Full Bench was clearly predicated on s 181(2)(c) being available to award costs in appeal proceedings: Pendergast v Tony Blain Pty Ltd [2000] NSWIRComm 107 at [7]-[8]; D & R Commercial Pty Ltd and Flood (No 2) [2003] NSWIRComm 237 at [31]; Youssef and Western Sydney Area Health Service (No 3) [2004] NSWIRComm 124 at [26]; Carlton and United Beverages Limited & Brunt [2007] NSWIRComm 135 at [33], [40]; Director-General of Education and Training and Bond (No 2) [2009] NSWIRComm 59 at [8]-[11]; and, Department of Health v Perihan Kaplan (No 4) [2011] NSWIRComm 63 at [19].
14. In Director-General of Education and Training and Bond (No 2) the Full Bench (Kavanagh and Staff JJ, Bishop C) observed: "8. In respect of the respondent's claim for costs of the appeal proceedings, Mr MD Broun QC contended that the appeal was not an application under Pt 6 Ch 2 of the Act, and accordingly, the discretion to award costs is not limited by s 181(2)(c). It followed, so it was submitted, that the Commission may award costs on the ground set out at s 181(2)(b), being the institution of proceedings without reasonable cause. This is in addition to the Commission awarding costs where it finds the application was frivolous or vexatious (the s 181(2)(c) ground of unreasonably failing to agree upon settlement of a claim not here being relevant). 9. This submission is misconceived. If it be correct, it would follow that any appeal in respect of an application alleging that a dismissal was harsh, unreasonably [sic] or unjust would not arise under Pt 6 Ch 2 of the Act. 10. Clearly, this appeal and any appeal from a decision in respect of an application brought pursuant to s 84 of the Act is an appeal from a decision made under Pt 6 of the Act. 11. The Commission's jurisdiction to order costs against an applicant only arise if the Commission determines that the applicant has unreasonably failed to agree to a settlement of the claim, or where the Commission determines the application was frivolous or vexatious: see s 181(2)(c)."
15. These authorities make it clear that the Full Bench has construed the phrase "proceedings under Part 6 of Chapter 2" in s 181(2)(c) as encompassing appeals to the Full Bench in respect of decisions in unfair dismissal matters. Noting the principle of comity, we are not satisfied that a different approach to construction should be applied to the words "proceedings under Part 7 of Chapter 2" in s 181(3A). As the Secretary submitted, while the Appeal was brought under s 187, it related to proceedings under Ch 2 Pt 7.
16. Such an approach to construction would give effect to the apparent statutory purpose behind s 181(3A). The section was introduced by the Industrial Relations Amendment (Public Sector Appeals) Act 2010, which commenced on 1 July 2010. That Act also introduced Ch 2 Pt 7 into the Industrial Relations Act and repealed, inter alia, the Government and Related Employees Appeal Tribunal Act 1980 ("GREAT Act"). In broad terms, the Commission was conferred with the public sector disciplinary and promotions appeals jurisdiction previously exercised by the Government and Related Employees Appeal Tribunal ("Tribunal").
17. Significantly, nothing in the GREAT Act conferred a power on the Tribunal to award costs in proceedings before it.
18. We agree with the Secretary that it would be illogical for the legislature to protect parties against costs orders at first instance but not on appeal. The fact that appeals may be commenced under s 187 by interests other than the affected employee, as Ms Williams noted, does not provide an adequate explanation as to why costs ought to be available on appeal. On Ms Williams' case, the affected employee might also be exposed to a costs order on appeal. We also note that there are only limited circumstances in which non-parties can invoke s 187.
19. We accept Ms Williams' submissions that the ordinary meaning of the words of s 181(3A) allow for a distinction to be drawn between an appeal pursuant to Ch 4 Pt 7 and "proceedings under Part 7 of Chapter 2". However, such a construction would lead to an unreasonable result.
20. It follows that we can have regard to extrinsic material to ascertain the meaning of s 181(3A): s 34(1)(b)(ii) of the Interpretation Act 1987.
21. In the second reading speech to the Legislative Assembly regarding the Industrial Relations Amendment (Public Sector Appeals) Bill on 10 June 2010, the Honourable Paul Lynch, then the Minister for Industrial Relations said: "To ensure that public sector appeals remain a no-cost jurisdiction, the bill will amend section 181 of the Industrial Relations Act so that it will not be possible for the commission to award costs for proceedings conducted under the new part 7."
22. A statement to similar effect was made by the Honourable Penny Sharpe, then the Parliamentary Secretary, in her second reading speech to the Legislative Council regarding the Bill on 23 June 2010.
23. We have also considered the note appearing beneath s 181(3A), having regard to s 34(2)(a) of the Interpretation Act. The note evinces a parliamentary intention that costs may only be awarded in appeals brought to the Supreme Court pursuant to s 197B. Further, the note suggests that the drafters of the Industrial Relations Act considered that in the absence of the clarification provided by the note, appeals pursuant to s 197B might be regarded as being encompassed by the phrase "proceedings under Part 7 of Chapter 2".
24. For completeness, we are not greatly assisted by the Secretary's submissions drawn from Coldham. The High Court observed (at 100) that the word "proceedings" is of "wide and general application", and that it would encompass an appeal. This does not significantly advance the meaning of the word as it appears in s 181(3A).
25. Similarly, we do not consider that much can be made of the fact that the legislature adopted the plural "proceedings" in s 181(3A). When referring to matters before the Commission (or the Supreme Court), the Industrial Relations Act uses "proceedings" approximately 400 times and "proceeding" ten times. In the context of the Act as a whole, we are not persuaded that the use of the plural in s 181(3A) of itself evinces an intention to "cover more than the original application".
26. Finally, it is necessary to address Ms Williams' submissions reproduced at [19] above. The ground on which we granted the Secretary leave to appeal in our Earlier Decision was in these terms: "1. The Commission erred in ordering the appellant to remove the respondent's name from the appellant's 'Do Not Employ List' where the Commission had no power to make such an order pursuant to s 100C(2) or 100D of the Industrial Relations Act or otherwise."
27. In granting leave to appeal, we observed in our Earlier Decision: "12. Ms Williams submitted on appeal that ground 1 of the appeal was a 'discrete factual issue which does not have widespread practical application'. We do not agree. 13. Ground 1 of the appeal goes to the Commission's powers to make orders in proceedings brought under Pt 7 of the Industrial Relations Act, having regard in particular to the terms of ss 100C(2) and 100D. This is a significant issue that has wider implications for the jurisprudence of the Commission beyond the interests of the immediate parties. For these reasons and having regard to the authorities referred to at [8] above, we have determined that ground 1 of the appeal raises issues of such importance that, in the public interest, leave to appeal should be granted in respect of that ground."
28. Consistent with these observations, the matters raised by ground 1 which required consideration were not inconsequential. They occupied [35]-[67] of our Earlier Decision.
29. It follows that we cannot accept Ms Williams' characterisation of the Appeal as being "unreasonably instituted appeal proceedings". In any event, even were that the case, it would say nothing as to the Commission's statutory power to award costs.

Conclusion

1. We accept the Secretary's submissions that s 181(3A) of the Industrial Relations Act is not confined to first instance proceedings brought pursuant to Ch 2 Pt 7, but extends to appeals to a Full Bench from such decisions. It follows that the Commission has no power to award costs on the Appeal.
2. Having drawn that conclusion, it is not necessary to consider the other arguments advanced by the parties as to why costs ought, or ought not, be awarded to Ms Williams.

Order

1. Ms Williams' application for costs on the appeal is dismissed.

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