1
Fair Work Act 2009
s.402 - Application for costs orders against lawyers and paid agents under s.401
Rainshield Roofing Pty Ltd T/A Rainshield Roofing
v
Peter Paerau
and
Garry Dircks T/A Just Relations - Consultants
(U2014/5903)
COMMISSIONER WILSON MELBOURNE, 6 JUNE 2014
Application for costs orders against Applicant and Paid Agent.
INTRODUCTION
[1] A decision dismissing Peter Paerau’s application for an unfair dismissal remedy was
published on 11 March 2014.1 Subsequent to the decision, the respondent in that matter,
Rainshield Roofing Pty Ltd (Rainshield Roofing) made application to the Fair Work
Commission for an order for costs pursuant to the Fair Work Act 2009 (the Act) against both
Mr Paerau and his paid agent, Mr Gary Dirks of Just Relations - Consultants (Just Relations).
[2] The application for costs (referred to as the Costs Application) refers specifically to
ss.400A and 401, which provide that in certain circumstances, costs may be awarded against a
party to an unfair dismissal matter or their representatives. Later submissions made by
Rainshield Roofing in support of the Costs Application also refer to s.611 which provides the
Fair Work Commission with a general power of costs.
[3] Peter Paerau was dismissed from employment by Rainshield Roofing Pty Ltd on 11
September 2013 and commenced his application for an unfair dismissal remedy pursuant to
s.394 on 17 September 2013. His application was heard by me on 7 February 2014, with the
decision in that matter published on 11 March 2014.
[4] For the reasons set out below, I have decided that a costs order is appropriate to be
made against both Mr Paerau and Just Relations.
BACKGROUND TO THE COSTS APPLICATION
1 [2014] FWC 1524
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DECISION
E AUSTRALIA FairWork Commission
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[5] Rainshield Roofing made application for costs specifically under s.400A and 401 of
the Act and made such application in the proper form on 25 March 2014.
[6] It is noted that while the application is made under ss.400A and 401 of the Act, the
Act also provides for costs to be awarded in certain matters pursuant to s.611. While the
application form itself does not refer to it being an application pursuant to s.611, the
Rainshield Roofing submissions make apparent that the company relies upon that section as
well. The company submits that the application was made vexatiously or without reasonable
cause and that it had no reasonable prospect of success, which are the relevant considerations
within s.611(2)(a) and (b). Accordingly I treat this application as one made pursuant to each
of ss.400A, 401 and 611 of the Act.
[7] The application made by Rainshield Roofing puts forward that at the time of the
commencement of Mr Paerau’s application for unfair dismissal remedy, his application had
no reasonable prospects of success and, by way of alternative argument, it should have
become reasonably apparent to the applicant that his application had no reasonable prospect
of success once Rainshield Roofing had filed its submissions and witness statements in
relation to the merits hearing. Rainshield Roofing also set forth as a ground in its Costs
Application that a number of open offers were put to Mr Paerau which, if he had accepted,
would have reduced Rainshield Roofing’s costs.
[8] Rainshield Roofing seeks orders for costs both against the applicant in the original
matter, Mr Paerau and his paid agent, Mr Gary Dircks of Just Relations. Mr Dircks’
submissions include that he personally trades as Just Relations.
[9] Having received the Costs Application, the Commission issued Directions to the
parties for the provision of various materials and advice as to whether any party sought a
hearing. The Directions were issued by the Commission on 31 March 2014 to each of the
representatives on the file. Mr Dircks’ initial response to the Directions indicated he had no
current instructions from Mr Paerau and suggested that the Commission provide the directions
to Mr Paerau directly, which was subsequently done. A copy of the Directions was provided
by the Commission to Mr Paerau by mail on 2 April 2014.
[10] Rainshield Roofing and Just Relations responded to the Directions, however there has
not been a response received from Mr Paerau or anyone acting on his behalf, although it
should be noted there have been several telephone and email exchanges about the need to
respond, both with Mr Paerau as well as a person the Commission understands to be Mr
Paerau’s partner and to the email address the Commission understands Mr Paerau to use. On
29 April 2014, Mr Dircks advised to the Commission that he was not instructed to represent
Mr Paerau’s interests in these proceedings. Accordingly I proceed to consider Just Relations’
submissions and other material as being in relation to Mr Dircks’ personal interests only and
not to those of Mr Paerau.
THE MERITS DECISION
[11] The reasons for Mr Paerau’s termination by Rainshield Roofing are fully set out in the
Commission’s earlier decision. In that decision I found that Mr Paerau’s dismissal by
Rainshield Roofing was consistent with the Small Business Fair Dismissal Code (the Code)
and that Rainshield Roofing was entitled to believe on reasonable grounds that Mr Paerau’s
conduct was sufficiently serious to justify immediate dismissal. The findings I made in that
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regard were that there were two independent circumstances either of which amounted to
conduct sufficiently serious to justify immediate dismissal (being the test set out within the
Code).
[12] For the purposes of context, Mr Paerau was summarily dismissed on 11 September
2013, after having been involved in an incident earlier on that day as he was driving a four-
wheel-drive and trailer owned by Rainshield Roofing. The trailer had four wheels and in the
course of driving the vehicle, another driver pointed out to Mr Paerau that one of the wheels
had come off the trailer. While there may well have been a legitimate safety complaint to be
made to Rainshield Roofing about the trailer as a result, there was no evidence that Mr Paerau
was injured, or at risk of immediate injury. Mr Paerau was understandably shocked and
distressed and he rang the company about the matter and shortly after returned to Rainshield
Roofing’s premises.
[13] The first set of circumstances which justified immediate dismissal involved three
factors;
having returned to Rainshield Roofing’s premises Mr Paerau insisted on
immediately seeing Mr Darren Salan, one of the company’s directors, who was busy
in another meeting, however he refused to wait for Mr Salan to become free;
Mr Paerau then had a heated argument with Mr Salan in which Mr Paerau was the
provocateur and in which Mr Salan and another witness, Mr Nathan Butler, feared
for their safety as a result Mr Paerau’s demeanour; and
thirdly that Mr Paerau was asked to calm down by Mr Salan and to leave the office
on more than one occasion, which he refused to do until he heard Mr Salan instruct
Mr Butler to call the police.
[14] The second set of circumstances which justified immediate dismissal is that having left
the premises, Mr Paerau went to the carpark and ignored a direction from Mr Salan not to
leave in a company vehicle; he then left in the company’s vehicle, knowing it was not his
property. He subsequently refused to return the vehicle, saying that he would only do so once
Mr Salan had agreed to provide an employment separation certificate and payslip.
Notwithstanding this initial refusal to return the vehicle, he subsequently returned it later on
the same day as he was dismissed.
LEGISLATION
[15] The Act provides in s.400A that costs may be awarded against a party to an
application for unfair dismissal remedy, and s.401 provides for costs to be awarded against a
lawyer or paid agent. The respective provisions are as follows;
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.
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(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.
401 Costs orders against lawyers and paid agents
(1) This section applies if:
(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.
[16] In addition to ss.400A and 401, s.611 provides a cost remedy (which is preserved for
applications such as this through ss.400A(3) and 401(3)). The section provides the following;
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
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(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).
[17] The language and tests of s.611 are different to the provisions of ss.400A and 401, and
especially so in relation to the consideration that an action may have been taken “vexatiously
or without reasonable cause”.
[18] Application of these provisions requires a consideration of the circumstances by which
the application proceeded to a merits hearing on 7 February 2014.
CONSIDERATION
[19] Rainshield Roofing contend that in all the circumstances it was not reasonable for Mr
Paerau to commence his application for an unfair dismissal remedy and that the substantive
application was made vexatiously or without reasonable cause. It also contends that it was
unreasonable for Mr Paerau to continue his application in the face both of the case made
against him by Rainshield Roofing and the offers of settlement put forward by the company at
various times before the merits hearing.
[20] The material before the Commission indicates that Mr Paerau sought advice about the
circumstances immediately upon termination by Rainshield Roofing and that he retained Just
Relations soon thereafter. Mr Paerau’s own evidence is that he spoke with Mr Dircks near to
the time he told Mr Salan he would not return Rainshield Roofing’s vehicle without receiving
an employment separation certificate and payslip.2 Having been dismissed on 11 September
2013, Mr Paerau saw Mr Dircks on 17 September 2013 and issued instructions to him to
commence an application for unfair dismissal remedy, which was filed in the Fair Work
Commission later on the same day.
[21] The matter was listed for a telephone conciliation conference on 7 November 2013
and after the conference failed to settle the matter, the hearing of the merits was scheduled for
7 February 2014. In accordance with usual practice, Directions were given to all parties for
the filing of submissions and witness statements, which were complied with.
[22] Mr Paerau’s material was filed by Just Relations on 9 December 2013 and included an
outline of submissions and the witness statement of Mr Paerau.
[23] Rainshield Roofing’s material was filed on 24 January 2014 by Goodman Group
Lawyers. The materials included submissions, together with three witness statements
including that of Mr Salan, Mr Butler and a further director, Mr Steven Bastalich.
2 Transcript, PN 295 - 296
[2014] FWC 3777
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[24] Mr Paerau filed supplementary submissions and a supplementary witness statement on
6 February 2014.
[25] In his original submissions, Mr Paerau stated that he did not seek reinstatement and
instead sought compensation in the order of $26,923. At the time of termination, Mr Paerau’s
submissions indicated that his weekly remuneration including superannuation was $1035.50
per week.
[26] Mr Paerau’s application was made and proceeded on the basis that there was no
misconduct on his part and that he raised legitimate safety concerns before being dismissed.3
His written submissions identified that the dismissal was over a heated argument in which Mr
Paerau vented his anger and frustration but which involved no violence or threatening
behaviour and no intimidation.4 His final written submissions acknowledge the Small
Business Fair Dismissal Code may apply, but contests whether it applies. Mr Paerau’s witness
statement recorded, in verbatim form, an obviously strongly worded argument with Mr Salan
on the day of dismissal, which culminates by recording that Mr Salan instructing Mr Butler to
“call the cops”. The witness statement also records that after the argument, Mr Paerau
“hopped in the truck and drove home”; that he sought advice, rang the company and “asked
for the employment separation certificate and payslips” and that he “drove the truck back
within an hour of dismissal”.
[27] Mr Paerau’s supplementary submissions commence with the opening “[t]he
respondent argues now that the dismissal was for alleged misconduct”. (emphasis added)
Such contention stands in stark contrast with Rainshield Roofing’s “Employer Response”
which was filed on 5 November 2013 and records that Mr Paerau was dismissed for “[v]iolent
and threatening behaviour” and “[i]ntimidation towards other team members”.
[28] The Rainshield Roofing written submissions and witness statements filed on 24
January 2014 reinforce the company’s argument of misconduct. The contents of each witness
statement filed record aspects of behaviour that, if true and correct, could allow an employer
to believe on reasonable grounds that Mr Paerau’s conduct was sufficiently serious to justify
immediate dismissal.
[29] A fair reading of the file is that, at all times from 5 November 2013, Mr Paerau was on
notice that his former employer would contend he was dismissed for reasons of misconduct.
Further, I am satisfied that by at least 24 January 2014, Mr Paerau and Just Relations were
aware of the full weight of the case against him.
[30] I am also satisfied that a reasonable reading of the case at that date would have shown
that, for Mr Paerau’s case to succeed, he would have to show that both Mr Salan and Mr
Butler were not credible witnesses on the key aspects of what occurred in Rainshield
Roofing’s premises when Mr Paerau returned after the incident with the trailer. In this regard,
Mr Paerau would need to show the incidents upon return to the premises were not hostile and
argumentative and provoked by him. Since Rainshield Roofing raised an alternative defence
to the action, relating to his overall capacity and conduct during employment, he would also
have had to show that not only were there insufficiently serious grounds to allow Rainshield
Roofing to hold a reasonable belief that his conduct justified immediate dismissal, but that his
3 Application for Unfair Dismissal Remedy, item 2 and 3
4 Applicant’s Outline of Submissions, 9 December 2013, para 6 - 9
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prior conduct and the company’s responses over several months did not amount to an
otherwise valid reason for dismissal based on his conduct or capacity to do the job.
[31] The Rainshield Roofing’s submissions are that it made open offers to Mr Paerau for
the settlement of his application on several occasions between 11 December 2013 and 24
January 2014. Rainshield Roofing’s submissions summarise these offers as follows5;
“The Applicant put the following open offers to the First Respondent via the Second
Respondent, including placing both of them on notice of a costs application
(throughout the proceeding):
Date: Offer:
ON OR ABOUT 11
DECEMBER 2013
Verbal offer (refer to telephone conversation
between Mr Bastalich and the Second Respondent):
reinstatement
24 December 2013 Written offer (refer to email dated 24 December
2013): two weeks pay
7 January 2014 Verbal offer (refer to the writer’s file note): one
month’s pay
14 January 2014 Written offer (refer to email dated 14 January
2014): one month’s pay
24 January 2014 Written offer (refer to email 24 January 2014): First
Respondent to withdraw application and Applicant
will not pursue him for costs”
[32] Resolution of Rainshield Roofing’s Costs Application requires an examination of the
conduct of Mr Paerau and Just Relations against three separate criteria;
whether there was an unreasonable act or omission on the part of Mr Paerau (relating
to the provisions of s.400A) or Just Relations (relating to the provisions of s.401);
whether it should have been reasonably apparent the matter had no reasonable
prospect of success (relating to the provisions of s.611 in the case of Mr Paerau; or
s.401, in the case of Just Relations); or
whether any action was taken by Mr Paerau vexatiously or without reasonable cause
(relating to the provisions of s.611);
[33] The question of whether something is an unreasonable act or omission, or whether it
had a reasonable prospect of success, requires application of an objective test.
[34] Intentional actions by a party may be unreasonable acts, and unintentional actions may
be unreasonable omissions. 6 For example, the Full Bench has found that institution and
maintenance of an appeal in the face of poor prospects of success was an unreasonable act on
the part of an appellant.7 A matter is not without reasonable cause simply because it fails8; and
5 Rainshield Roofing Outline of Submissions for Costs Application, 29 April 2014, para 22
6 Goffett v Recruitment National Pty Ltd [2009] AIRCFB 626, at [35] and [47]
7 Roy Morgan Research Ltd v Baker [2014] FWCFB 1175, see [25] - [28]
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the test is not whether the application might have been successful, but whether the application
should not have been made.9
[35] Assessment of whether it should have been reasonably apparent the matter had no
reasonable prospect of success requires an objective consideration as well;
“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.”10
[36] The Full Bench has observed that the context of the expression “vexatiously or
without reasonable cause” requires consideration11;
[29] The question of whether an application was made ‘vexatiously’ looks to the
motive of the applicant in making the application. It is an alternative ground to the
ground that the application was made ‘without reasonable cause’ and may apply where
there is a reasonable basis for making the application. In nilsen v Loyal Orange Trust
(Nilsen) North J observed that this context requires the concept of vexatiousness to be
narrowly construed. His Honour went on to state that an application will be made
vexatiously ‘where the predominant purpose ....is to harass or embarrass the other
party, or to gain a collateral advantage’. Deane and Gaudron JJ made a similar
observation in Hamilton v Oades in which they said:
“The terms ‘oppressive’ and ‘vexatious’ are often used to signify those
considerations which justify the exercise of the power to control proceedings to
prevent injustice, those terms respectively conveying, in appropriate context,
the meaning that the proceedings are ‘seriously or unfairly burdensome,
prejudicial or damaging’ and ‘productive of serious and unjustified trouble and
harassment’.” (references omitted)
[37] Having considered all the circumstances of the matter I find it was an unreasonable act
on the part of Mr Paerau to commence his application.
[38] Despite this, I do not find that that it should have been reasonably apparent to Mr
Paerau that his application had no reasonable prospect of success at the time it was made, or
8 Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257; p 264
9 Ibid, p 263
10 Baker v Salva Resources Pty Ltd [2011] FWAFB 4014, with reference to Wodonga Rural City Council v Lewis (2005) 142
IR 188 at [6]; Deane v Paper Australia Pty Ltd (unreported, AIRCFB, PR932454, 6 June 2003) at [7] and Smith v
Barwon Region Water Authority (2009) 187 IR 276 at [48].
11 Church v Eastern Health t/as Eastern Health Great Health and Wellbeing [2014] FWCFB 810
[2014] FWC 3777
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after. The Full Bench in Deane v Paper Australia12 followed the earlier reasoning of Wright v
Australian Customs Service13 in holding that such a finding is to be made only with extreme
caution with a finding that an action is manifestly untenable or groundless to be assessed
through examination of the facts apparent to the applicant.14 In Wright, the Full Bench held
about this examination that;
“We reiterate that, in our view, in considering whether the requisite conclusion should
be drawn, the Commission should proceed with exceptional caution and only draw that
conclusion where, on all the materials before the member, the substantive application
is manifestly untenable or groundless. Where, on those materials, there is a real issue
of fact to be determined and that issue is relevant to the resolution of the substantive
application, it would be unlikely that a conclusion could be formed that the application
has ‘‘no reasonable prospect of success at arbitration’’.”15
[39] In this matter, as laid out in the various submissions and witness statements, there
were real issues of fact to be determined and those issues were relevant to the resolution of the
substantive application.
[40] I find also that the continuation of Mr Paerau’s application in the face of several offers
for settlement and the filing of the employer’s materials was unreasonable and without
reasonable cause.
[41] The circumstances I take into account in relation to my finding regarding the
commencement of Mr Paerau’s application are not only the interaction between he, Mr Salan
and Mr Butler on 11 September 2013, all of which circumstances were personally and
intimately known to Mr Paerau, but also that Mr Paerau consulted with Mr Dircks in between
being requested to return a company vehicle and refusing to do so, and actually returning it.
That is, Mr Paerau had the benefit of advice at an early stage, and before he commenced the
action.
[42] I also take into account that Mr Paerau had the benefit of receiving advice from Mr
Dircks at least by 17 September 2013, which was in the form of a personal consultation. Mr
Dircks has not provided details of advice provided by him to Mr Paerau, if any, beyond his
notes of the initial consultation meeting and subsequent meetings and exchanges, which
appear to be brief and procedural rather than of an advisory nature.
[43] I consider that it would have been reasonably apparent that an application for an unfair
dismissal remedy was a questionable proposition for a person dismissed in the circumstances
of Mr Paerau and with his poor history of employment with Rainshield Roofing, and such
prospects as it had relied upon adverse findings of credibility being made about the witnesses
Salan and Butler. Although these issues were weighed against Mr Paerau’s case from the
start, they were arguable and so I do not find that it should have been reasonably apparent to
him from the beginning that the matter had no reasonable prospect of success.
12 (2003) 121 IR 362
13 (2002) 120 IR 346
14 (2003) 121 IR 362, at [7] - [8]
15 (2002) 120 IR 346, at [32]
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[44] The circumstances I take into account in relation to my finding regarding the
continuation of Mr Paerau’s application include the form and content of the settlement offers
together with the case made against him in the employer’s written submission and witness
statements.
[45] By the time of the hearing, he had received the offers referred to above and had chosen
not to accept them, which was an unreasonable act or omission in respect of the merits of
consideration of the offers themselves as well as how they might be taken into account in
relation to the range of possible compensation in the event the Commission found in Mr
Paerau’s favour.
[46] In forming this view, I take into account that the offers were initially for reinstatement,
which was offered in December 2013 and within two months of the date of termination, and
in late December 2013 and January 2014, prior to the filing of the Rainshield Roofing
response material, for compensation. The amounts of compensation were initially for two
weeks’ pay followed by a later offer of one month’s pay.
[47] I take into account that, within the context of Mr Paerau’s period of employment
within Rainshield Roofing, together with the circumstances of his dismissal, these were
generous offers. A person acting reasonably would have viewed these offers as proper and
generous endeavours on the part of a respondent to avoid the need of a potentially costly,
time-consuming or embarrassing hearing.
[48] I take into account as a demonstration of Mr Paerau acting vexatiously what he said to
Mr Bastalich about his motives for continuing the matter, which are reported in Mr
Bastalich’s witness statement.16 Those statements refer to a desire, in late 2013, on the part of
Mr Paerau to continue the action in order to cause Rainshield Roofing to incur legal fees. I
take this into account as evidence of Mr Paerau’s motivation to commence or continue his
action for a collateral advantage. The failure to settle the matter at an early opportunity or to
take account of the range of possible compensation orders from the Commission reinforces
this view.
[49] I also take into account that between the time of his dismissal on 11 September 2013
and the hearing on 7 February 2014, Mr Paerau earned $10,149.75 from another employer.17
The documents filed on his behalf indicate that he did not seek reinstatement, which means
compensation was the only remedy he sought in the event the Commission found in his
favour. As such, the factors in s.392(2), (5) and (6) may have application. Those subsections
require post-termination earnings to be taken into account in assessing compensation for an
unfair dismissal, as well as capping compensation in some circumstances.
[50] Mr Paerau claimed as compensation $26,923, which was calculated by Mr Dircks as a
payment of 26 weeks’ remuneration calculated on the basis of Mr Paerau’s weekly
remuneration, including superannuation, of $1035.50 per week.
[51] An order for compensation would be calculated taking into account the criteria within
s.392, which is usually applied by having regard to the factors and methodology laid out in
16 Exhibit R4, para D.11 (k) - (s)
17 Exhibit A2, para 3
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Sprigg v Paul’s Licensed Festival Supermarket18, and Ellawala v Australian Postal
Corporation19. In assessing compensation s.392(2) requires the Commission to take account
of the remuneration the applicant received between dismissal and the date of the order; and
s.392(3) requires the Commission to reduce the amount of compensation if satisfied that an
applicant’s misconduct contributed to the employer’s decision to dismiss them.
[52] I consider that a reasonable applicant or representative would have formed the view by
at least the date of the hearing that, in all the circumstances of this matter as set out in the pre-
hearing materials as well as the information known to them privately, the Commission would
have been unlikely to order compensation above the amount earned by Mr Paerau after the
date of his dismissal and would likely have deducted from any order for compensation the
amounts Mr Paerau had earned since dismissal. This possibility was put to Mr Dircks at the
start of the hearing.20
[53] I take into account that the submissions made by Rainshield Roofing and filed in the
Commission on 24 January 2014 in response to the Commission’s directions were clear and
cogent and that the case Mr Paerau faced against him was fully articulated by those
documents, save for two issues on which Rainshield Roofing attempted to adduce evidence in
the hearing and which I ruled should not be admitted as evidence. The outline of submissions
and witness statements indicated that Mr Salan would testify that Mr Paerau was
argumentative; threatening and aggressive. Mr Salan would give evidence that he feared for
his safety and that Mr Paerau’s period of employment with the company been subject to
warnings about abuse of workers and suppliers and the misuse of property. Mr Butler’s
evidence would show that Mr Paerau had been screaming and that it looked like he was going
to assault Mr Salan, which caused Mr Butler to fear for his own safety and that of Mr Salan.
[54] Determination of the application in respect of Just Relations requires the Commission
to be satisfied either that it encouraged Mr Paerau to start or continue his application when it
“should have been reasonably apparent that the person had no reasonable prospect of success”
or that it made an unreasonable act or omission “in connection with the conduct or
continuation of the matter”.
[55] The nature of this matter is not dissimilar to many unfair dismissal applications in
which the applicant is represented, in that it was commenced quickly on relatively basic
information, was the subject of quick and firm denials in the form of the employer’s written
response, and passed through a telephone conciliation conference at which not much more
information appears to have been provided against the applicant. What occurred next is also
not out of the ordinary, with the parties being directed to provide written materials in
preparation for an arbitration and the parties privately exchanging offers for settlement.
[56] By the time the employer’s response was filed on 5 November 2013 and, at latest by
the time the offers commenced being exchanged and Just Relations commenced detailed work
on preparation of Mr Paerau’s case for arbitration, I consider a reasonable representative
would have formed the view that his case did not have strong prospects of success. By the
time the Rainshield Roofing submission and witness statements were filed, a reasonable
representative would have formed the view that its continuation was unreasonable.
18 (1998) 88 IR 21
19 (2000) AIRCFB Print S5109
20 Transcript, PN 41
[2014] FWC 3777
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[57] For the above reasons I am satisfied that the threshold requirements of ss.400A and
401 have been met. In particular, I am satisfied;
Mr Paerau caused costs to be incurred by Rainshield Roofing because of his
unreasonable acts or omissions in connection with the conduct or continuation of his
application for an unfair dismissal remedy;
that the unreasonable acts on Mr Paerau’s part were making the application in the
first place and instructing its continuation to hearing and determination;
that the unreasonable omission on Mr Paerau’s part was not accepting the offers for
settlement put to him by Rainshield Roofing;
that Mr Paerau acted vexatiously or without reasonable cause in commencing and
continuing his application;
Just Relations caused costs to be incurred by Rainshield Roofing because it
encouraged Mr Paerau to continue his application after the time it had to file
submissions and statements on Mr Paerau’s behalf, or after the time on which the
Respondent’s materials were due, when it should have been apparent his application
had no reasonable prospect of success;
Just Relations caused costs to be incurred by Rainshield Roofing because of an
unreasonable act or omission in connection with the conduct or continuation of the
matter, being its failure to either settle the matter on the terms offered by Rainshield
Roofing or to advise Mr Paerau his application did not have a reasonable prospect of
success.
[58] I am also satisfied that it is appropriate to exercise my discretion to make an order for
costs pursuant to ss.400A and 401 against both Mr Paerau and Just Relations. Although I am
persuaded the application was commenced and continued vexatiously or without reasonable
cause, I do not consider it necessary to exercise my discretion and make a separate order
pertaining to s.611, for the reason that I am making orders pursuant to ss.400A and 401.
[59] I consider it appropriate to apportion the costs to be paid on the basis of 67% to be
paid by Mr Paerau and 33% by Just Relations. Mr Paerau’s own conduct resulted in his
dismissal and he had greater insight into the case against him than his representative.
[60] I consider the date from which Mr Paerau and Just Relations should bear liability for
costs is 19 November 2013, being two weeks after the filing of the employer response form
on 5 November. Within two weeks of that filing, the applicant would reasonably have been
fully aware of the case against him and his representative would reasonably have been able to
both seek instructions and provide advice about the disposition of the matter.
[61] The costs order will apply to all party-party costs incurred by Rainshield Roofing from
19 November 2013, and will include the costs associated with its Costs Application, as had
this matter settled prior to or during the hearing, these latter costs would have been avoided.
[2014] FWC 3777
13
[62] I direct the parties to confer and endeavour to agree on the quantum of such costs.
Rainshield Roofing is to file and serve an itemised schedule of costs reflecting this decision
and the apportionment of costs between Mr Paerau and Just Relations within 14 days of this
decision. In the event that there is no agreement about these matters, liberty is given to
Rainshield Roofing to apply within 14 days of the date of this decision for a determination by
me of the quantum of costs to be ordered and their apportionment.
COMMISSIONER
Final written submissions:
Applicant - 29 April 2014
Respondent - 29 April 2014
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