DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

Ewan Chapman
v
Ignis Labs Pty Ltd t/a Ignis Labs
(C2020/4353)

Application for costs

Introduction and background

[1] On 22 July 2020, we issued a decision 1 in which we refused to extend time for Mr Ewan Chapman to lodge an appeal against a decision and order made by Deputy President Clancy on 13 June 20192 dismissing Mr Chapman’s application for an unfair dismissal remedy against Ignis Labs Pty Ltd (Ignis). Ignis has now lodged an application for its costs in respect of the appeal proceedings pursuant to ss 400A and 611 of the Fair Work Act 2009 (FW Act). This decision concerns this costs application.

[2] The factual background of the matter is explained in our earlier decision. 3 In short, Mr Chapman filed his unfair dismissal application on 11 February 2019. At a conciliation conference on 12 March 2019, an agreement was reached between Mr Chapman and Ignis to settle the matter. The terms of the settlement were subsequently reduced to writing, but Mr Chapman refused to sign the settlement document. At a mention of the matter on 13 June 2019, the Deputy President dismissed Mr Chapman’s application pursuant to s 587(1)(c) of the FW Act on the basis that, because a settlement agreement had been made on 12 March 2019, the application had no reasonable prospects of success.

[3] Rule 56(2) of the Fair Work Commission Rules 2013 (Rules) requires that an appeal of a decision must be filed within 21 calendar days after the date of the decision appealed against, or such further time as is allowed by the Commission on application. Mr Chapman filed his appeal on 4 June 2020, 335 days outside the prescribed 21-day period. Accordingly, Mr Chapman required an extension of time pursuant to rule 56(2) in order for his appeal to be competent.

[4] In our earlier decision, 4 we refused an extension of time on the basis of the following conclusions:

•  Mr Chapman had not provided a satisfactory or, indeed, any comprehensible explanation for the delay in the lodgement of his appeal;

•  the delay was lengthy and significant;

•  we were not satisfied that Mr Chapman’s grounds of appeal disclosed an arguable case of appealable error in the Deputy President’s decision;

•  there was nothing on the material which satisfied us that it would be in the public interest to grant Mr Chapman permission to appeal; and

•  the grant of an extension of time would cause prejudice to Ignis.

[5] Our overall conclusion was that the interests of justice did not favour the grant of an extension of time.

[6] As earlier stated, Ignis’ costs application is made pursuant to ss 400A and 611 of the FW Act. Section 400A provides:

400A Costs orders against parties

(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.

[7] The “Part” referred to in s 400A(1) is Pt 3-2, Unfair Dismissal. Section 611 provides:

611 Costs

(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).

[8] The costs claimed in Ignis’ application are those said to have been incurred in relation to work undertaken by its employed “Governance Officer/In-house Lawyer”, Ms Joy Yi. Ms Yi is a lawyer admitted to practice in the ACT. The application is made on the basis that Mr Chapman’s appeal application was made without reasonable cause and had no reasonable prospects of success. In support of its application, Ignis submitted that:

•  Mr Chapman’s unfair dismissal application had no merit since he resigned from his employment;

•  his attempt to renege on the settlement agreement reached was unreasonable;

•  he did not genuinely believe that his dismissal was unfair but was rather trying to damage Ignis’ business;

•  despite being advised by the Deputy President to address his complaint about the settlement with his representative at the conciliation who advised him to enter into it, he lodged an appeal;

•  Ignis had proposed that the appeal be determined on the papers, but Mr Chapman insisted on their being a hearing;

•  Mr Chapman sent 33 documents to Ignis in the period between filing his notice of appeal and 3 July 2020, ranging from 1 to 174 pages in length, which were largely irrelevant to the proceedings but nonetheless required Ignis to spend a significant amount of time on them;

•  his appeal never had any prospects of success given that he entered into a binding settlement agreement; and

•  Ignis is a small business that “has done its best to follow the Commission’s procedures and to respond to Mr Chapman’s unreasonableness while struggling to operate during the COVID-19 pandemic”.

[9] In his response to the costs application, Mr Chapman firstly contended that the primary cause of the costs application was that the Commission’s staff members compelled him to start a Full Bench appeal when he applied for the case file in relation to his unfair dismissal application. He contended that he was heavily reliant on the Commission staff member’s legal advice as he did not possess the legal knowledge to decline. The staff member responsible was, he contended, acting beyond jurisdiction and exercising an invalid delegation of power. He submitted therefore that “his action was therefore started by the Fair Work Commission and all costs should be paid for, by the Commission”, “this action was engaged to conceal [the Deputy President’s] premature closure of the matter and subsequent concealment of the Full bench appellate” [sic], and the Commission had, in unreasonably failing to investigate this, “only engaged this action to conceal its administrative malfeasance from federal examination”. He also submitted that using a cost order to silence an applicant or impede federal proceedings is an abuse of s 611 of the FW Act as it evidences the order being used for punitive measures rather than for its primary purpose, and that the Commission’s timing in dealing with the costs application “infers a mens rea of malice”.

[10] Second, Mr Chapman advanced a range of propositions about the merits of his unfair dismissal application. In summary, he contended that his case had merit prior to the conciliation and would have had a reasonable chance of success if it was presented properly or reheard, his case had matters of merit and substance at the time of the conciliation that were not presented, and that “at no time was the claim vexatious or the remit of an ultra vires vendetta but rather [an] inexperienced legal self-representative using legal facilities clumsily”.

[11] Third, Mr Chapman identified the “Remedies for these actions” as being that the Commission should:

“•  Conduct an inquiry (s590(2)(f)) on who the individual was who compelled me to start a full bench appeal despite it being outside my original litigation schedule additionally, out of time resulting in these cost orders

•  Conduct an inquiry (s590(2)(f)) on Vice President Clancy and determine why he concealed the appellate

•  Submit orders to produce (s590(2)(c)) to ensure the record C2020/4535 is accurate

•  Submit orders to hold a hearing regarding this matter (s590(2)(i)) to give all parties an opportunity to have a fair hearing for their aggrievement from this cost order…

•  Submit a report (s590(2)(e)) from the full bench explaining how blindly endorsing and thus enabling Unfair Dismissals Direct is not a breach of public faith as this has contributed to this cost order Additional to this, why no legislative instrument has been amended to rectify this conciliation predation.

•  Pay the cost orders…”.

Consideration

[12] We doubt whether, in an appeal from an unfair dismissal decision, a Full Bench has power to order costs pursuant to s 400A of the FW Act. An appeal is brought pursuant to s 604 of the FW Act and is not itself a matter arising under Pt 3-2, although an alternative view is that such an appeal may be characterised as part of a wide justiciable controversy that arises under Pt 3-2. It is not necessary, however, for us to reach any final conclusion about this because, for the reasons which follow, we consider that Ignis should be awarded its costs under s 611.

[13] In Hansen v Calvary Health Care Adelaide Limited 5 a Full Bench said in relation to s 611 generally:

“[15] It is trite to observe that the statutory and policy imperative underpinning a costs application under the Act, is that a person in a matter before the Commission must bear their own costs. So much is plainly obvious by the precise and unambiguous language of s 611(1).

[16] However, the statutory scheme sets out the relatively circumscribed circumstances in which an order for costs might be found by the Commission to be appropriate in a particular case. It includes the exercise of discretionary power where the Commission is satisfied that one, or more of the circumstances set out in s 611(2), has been established. If such circumstances are established, the Commission, in the broad exercise of its discretion, may make an order that a person/s bear some, or all of the costs of another person, in relation to the application, including on an indemnity basis, or decline to make any order at all.”

[14] The relevant principles concerning the interpretation and application of s 611(2)(a) were comprehensively stated in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing 6 and may be summarised as follows:

•  An application is made vexatiously when the predominant motive or purpose of the applicant is to harass or embarrass the other party or to gain a collateral advantage.

•  An application is not made without reasonable cause simply because the application did not succeed.

•  Whether an application is made without reasonable cause may be tested by asking, on the facts apparent to the applicant at the time the application was made, whether 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 characterise the application as having been made without reasonable cause.

•  In relation to an appeal, the question becomes whether the appeal has no substantial prospect of success. The prospect of success must be evaluated in the light of the facts of the case, the judgment appealed from and the points taken in the notice of appeal. If there is a not insubstantial prospect of the appeal achieving some success, it cannot fairly be described as having been made without reasonable cause.

•  An application will have been made without reasonable cause if it can be characterised as so obviously untenable that it cannot possibly succeed, is manifestly groundless or discloses a case where the tribunal is satisfied it cannot succeed.

[15] In relation to s 611(2)(b), the relevant principles were summarised by the Full Bench in Baker v Salva Resources Pty Ltd 7 as follows (footnotes omitted):

“[10] The concepts within s.611(2)(b) ‘should have been reasonably apparent’ and ‘had no reasonable prospect of success’ have been well traversed:

•  ‘should have been reasonably apparent’ must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis, rather than a subjective test; and

•  A conclusion that an application ‘had no reasonable prospect of success’ should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable.”

[16] We are satisfied, largely for the reasons set out in our earlier decision, that it should have been reasonably apparent to Mr Chapman that his appeal application had no reasonable prospect of success and, accordingly, that the jurisdictional prerequisite for the award of costs in s 611(2)(b) is made out. The following matters may be emphasised in respect of this conclusion:

(1) As we stated in our decision, Mr Chapman never identified a comprehensible reason why his notice of appeal was filed approximately 11 months out of time. In his Form F7 notice of appeal, in response to the direction in the standard form to “Explain the reason for the delay and the grounds on which you say an extension of time should be granted”, he responded: “I believed that all proceedings with the Fair Work Commission had concluded & was building a case for Supreme Court appeal. QED: Vice President Clancy declared the matter closed.” Mr Chapman did not advance any further explanation for the delay in his written and oral appeal submissions beyond stating that: “I would argue that the out of time provision should be set aside as these were created primarily by the [Deputy President’s] statement.” It should reasonably have been apparent to Mr Chapman that none of this constituted any form of explanation for the delay, and that he had no reasonable explanation he was prepared to advance. The assertion now made that some unidentified member of the Commission’s staff compelled him to initiate the appeal is entirely baseless.

(2) Mr Chapman’s notice of appeal and submissions did not advance any reasonably arguable contention of error in respect of the Deputy President’s decision, and indeed were largely not concerned with the decision at all. He accepted at the hearing that he had entered into a settlement agreement with Ignis, but contended that he was not bound by it because he entered into it under duress. This duress was said by him to consist of the advice which he was given by his then representative. 8 Because there was nothing in Mr Chapman’s case which challenged the Deputy President’s conclusion that he had entered into a settlement agreement which extinguished his cause of action, it should reasonably have been apparent to him at all relevant times that there was no reasonable prospect of him demonstrating any appealable error in the Deputy President’s decision.

(3) It is clear from his submissions and the material that he filed in connection with his appeal that Mr Chapman’s main grievance was directed at the representative engaged by him at the time the settlement agreement was entered into. It should reasonably have been apparent to Mr Chapman that an appeal against the Deputy President’s decision was not a proper course by which this grievance could be pursued and that, as a consequence, his appeal had no reasonable prospect of success.

[17] Having found that the s 611(2)(b) prerequisite is satisfied, it is unnecessary for us to consider whether s 611(2)(a) is also satisfied.

[18] We consider that we should exercise our discretion in favour of awarding costs to Ignis. The principal consideration in this respect is the fact that Ignis has incurred costs in responding to an entirely meritless appeal application. Those costs were incurred in respect of the time spent by Ignis’ employed legal practitioner dealing with the appeal. Costs incurred in respect of an employed legal practitioner are recoverable at law in the same way as the costs of an independent legal practitioner. 9 However, caution needs to be exercised in respect of the exercise of the discretion to award costs to a party using a legal practitioner for whom permission for representation was not required by virtue of s 596(4) of the FW Act. As was stated by the Full Bench in Maleknia v University of Sydney:10

“[19] In circumstances like these, we consider there should be considerable caution in the exercise of the discretion under s.611(2) to order costs notwithstanding that any precondition specified in that provision is satisfied. An unsuccessful party should not necessarily have to pay the costs of a successful party where the use of an employed lawyer, and the cost associated with that use, was not required to obtain that success and/or where it gave an unfair advantage to the successful party.”

[19] Ignis’ itemised claim for costs is quantified as follows:

[20] The basis for the claim at a rate of $200 per hour is unclear. It is not asserted that this amount reflects the cost per hour to Ignis of employing Ms Yi, although we accept it would be a reasonable rate for an independent lawyer to charge. We are not satisfied that it was necessary for Ignis to require a lawyer to perform over 10 hours work on the appeal. The matter was listed for hearing only in relation to the issues of the extension of time and permission to appeal, and Ignis was not required to file written submissions in advance of the appeal. The oral submissions made on behalf of Ignis at the hearing were brief (although, we emphasise, not unnecessarily so). Having regard to these matters, we consider it appropriate to award Ignis the amount of $800 for costs.

[21] An order 11 giving effect to this decision will be issued in conjunction with this decision.

VICE PRESIDENT

Determined on the basis of written submissions.

Printed by authority of the Commonwealth Government Printer

<PR727165>

 1   [2020] FWCFB 3849

 2   PR709289

 3   [2020] FWCFB 3849 at [4]-[5]

 4   Ibid at [12]-[36]

 5   [2016] FWCFB 8162 

 6   [2014] FWCFB 810, 240 IR 377 at [23]-[33]

 7    [2011] FWAFB 4014, 211 IR 374

 8   Transcript, 6 July 2020, PNs 28-34

 9   See Commonwealth Bank of Australia v Hattersley [2001] NSWSC 60, 51 NSWLR 333 at [17]-[21]

 10   [2015] FWCFB 4002

 11   PR727207