1
Fair Work Act 2009
s.394—Unfair dismissal
Jason Deeney;
Richard Park;
Christopher Hughes;
Denis Seiffert; and
Christopher Strauss
v
Patrick Projects Pty Ltd
(U2014/982) (U2014/983) (U2014/1008) (U2014/1059) (U2014/5970)
COMMISSIONER WILLIAMS PERTH, 30 SEPTEMBER 2014
Termination of employment - Security for Payment of Costs.
Introduction
[1] This decision deals with five applications for the security for payment of costs filed by
Patricks Projects Pty Ltd (Patricks or the Respondent).
[2] Mr Jason Deeney (Mr Deeney), Mr Richard Park (Mr Park), Mr Christopher Hughes
(Mr Hughes), Mr Denis Seiffert (Mr Seiffert) and Mr Christopher Strauss (Mr Stauss)
(collectively, the Applicants) have each filed applications with the Fair Work Commission
(the Commission) seeking remedies for alleged unfair dismissals.
[3] The Respondent lodged form F5s Applications for Security for Payments of Costs
seeking an order from the Commission that each of the Applicants furnish moneys to provide
security for the payment of costs which the Respondent intends to seek at the conclusion of
the proceedings. The lodgement of the form F5s for each of the Applicants occurred on the
following dates.
(a) 22 May 2014 (Mr Deeney).
(b) 22 May 2014 (Mr Park).
(c) 22 May 2014 (Mr Hughes).
(d) 22 May 2014 (Mr Seiffert).
(e) 22 May 2014 (Mr Strauss).
[4] The Respondent seeks orders that each of the Applicants and their representative, Mr
Patrick Mullally (Mr Mullally), provide security for the payment of costs as follows.
(a) Mr Deeney - $25,000.
[2014] FWC 6700
DECISION
E AUSTRALIA FairWork Commission
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(b) Mr Park - $25,000.
(c) Mr Hughes - $25,000.
(d) Mr Seiffert - $25,000.
(e) Mr Strauss - $25,000.
(f) Mr Mullally - $25,000.
Factual Background
[5] Patricks provides stevedoring services to Agility Projects Logistics at the marine
loading facility located at the Australian Maritime Complex, Henderson, WA (AMC) the
ultimate beneficiary of such work being Chevron for its Gorgon Project.
[6] The Applicants were full time employees of Patricks.
[7] The employment of the Applicants was governed by the Patrick Projects Pty Ltd AMC
Cargo Handling Agreement 2012-2015 (the AMC Agreement), registered under the Fair
Work Act 2009 (the Act), a Memorandum of Understanding Deed between the Respondent
and the Maritime Union of Australia (the Deed) and terms and conditions of employment
provided to each of the Applicants by the Respondent in their letter of appointment at the
commencement of employment, the Stevedoring Industry Award 2010 [MA000053] and the
Asciano 2012 Patricks Employee Handbook.
[8] In July 2013 the Maritime Union of Australia (the MUA) made an application to the
Commission to deal with a dispute in accordance with the dispute settling procedure in the
AMC Agreement. The respondent was Patricks.
[9] That dispute concerned the proposed involuntary redundancy of 62 permanent
employees at the AMC and the consequences for approximately 85 other casual employees
who were employed on the Gorgon Project.
[10] On 22 July 2013, following three conciliation conferences, Commissioner Cloghan
issued an Order by consent of the parties in resolution of the dispute [PR539220] (the Consent
Order).
[11] Relevantly the Consent Order includes the following provisions,
“[7] Following conciliation, and with the consent of the MUA and the Employer,
the Commission makes the following orders in resolution of the dispute:
1. The redundancy of the Redundant Employees, and any future
redundancies which are effected consistent with the terms of this order,
are genuine redundancies and do not give rise to a basis for any claims
arising from employees' length of service or the termination of their
employment (Redundancy Claims). MUA members will not make any
Redundancy Claims. The MUA will not make any Redundancy Claims
and will not directly or indirectly, financially or otherwise, support or
represent any member of the Patrick Workforce in relation to any
Redundancy Claims.
...
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8. The parties agree, and the Commission orders, that the A
Supplementary and B Supplementary are engaged under this order as
genuine casual employees for all purposes under the FW Act, and this
order does not result in them being engaged on a regular and
systematic basis or create a reasonable expectation of continuing
employment on a regular and systematic basis. Where the process in
this order is followed, casual employees are not permitted to make any
claims including unfair dismissal claims in relation to the termination
of their employment in reliance on not being a casual employee
(Casual Claims). MUA members will not make any Casual Claims. The
MUA will not directly or indirectly, financially or otherwise, support or
represent any employee in relation to any Casual Claims.”
[12] Each of the Applicants was a member of the MUA at the time the Consent Order was
issued and at the time of their respective dismissals.
[13] The Consent Order was not subject to appeal nor has it otherwise been impugned in
any other court.
[14] On 19 February 2014 the Respondent wrote to 43 employees including each of the
Applicants notifying them of their redundancy advising that their employment would come to
an end on 20 March 2014 and offering them employment as casuals.
[15] The Respondent sent to the Applicants a list of available positions at Asciano, a
related company of the Respondent.
[16] None of the Applicants applied for any of these positions nor otherwise expressed any
interest in any of the positions.
[17] The Respondent offered to the Applicants casual employment. In the letter of offer the
Respondent included a document titled Deed Poll. The Deed Poll document had to be signed
by the Applicants if they wanted to take up casual employment.
[18] The Deed Poll referred to the Consent Order and included statements in the terms of
the Consent Order that were an acknowledgement that their redundancy from their full time
position was genuine and as provided for in the Consent Order the employee would not make
any “Redundancy Claim” nor a “Casual Claim”.
[19] The Applicants did not sign the Deed Poll and were not employed as casuals.
[20] The termination of the Applicants with the exception of Mr Strauss took effect on 20
March 2014.
[21] On 14 March 2014 Patricks wrote to Mr Strauss requiring him to show cause why he
should not be dismissed because of alleged serious misconduct. Mr Strauss was required to
attend the show cause meeting on 18 March 2014 and provide a response in writing by 17
March 2014.
[22] Mr Strauss advised the Respondent that given the timeframes he could not provide a
written response to the show cause letter and he declined to attend the show cause meeting.
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[23] The Respondent dismissed Mr Strauss for serious misconduct on 18 March 2014.
[24] In April 2014 the Respondent in reply to each of the applications of Mr Deeney, Mr
Park, Mr Hughes and Mr Seiffert (the Redundant Applicants) filed a form F4−Objection to
Application for Unfair Dismissal Remedy and therein provided a detailed explanation of the
circumstances leading up to the dismissals and why the Redundant Applicants’ termination
was a case of genuine redundancy and so could not be unfair. The objection also stated
Patricks reserved its rights to seeks costs.
[25] In April 2014 a form F3−Employer Response to Unfair Dismissal was filed in reply to
the application of Mr Strauss which provided a detailed explanation as to why the dismissal
was not unfair and that Patricks reserved its rights to seeks costs.
[26] In addition the Applicants and their representative, Mr Mullally, were put on notice by
way of letters provided by the Respondent’s representatives, K&L Gates, on 14 and 16 April
2014 that each of the Redundant Applicants’ applications had no reasonable prospects of
success for the reasons contained in the objections filed by the Respondent. Similar
correspondence was sent to Mr Mullally regarding Mr Strauss’s application on 16 April 2014.
Those letters expressly raised the prospect of costs being sought against the Applicants and
their representatives should the application continue1.
Contentions of the Applicants in the substantive applications
[27] For the Redundant Applicants it is contended that:
As a matter of law the Redundant Applicants are not bound by the Consent Order as
it could not be applied to future events.
As a matter of law the Consent Order cannot override the provisions of the Act.
The Redundant Applicants assert that the Respondent failed to discharge its duty
under section 389(2) of the Act in two ways. Firstly by not redeploying the
Redundant Applicants with Asciano as an associated entity and secondly by placing
a condition on the Redundant Applicants in the Deed Poll if they were to be
redeployed as casuals. The Redundant Applicants were not prepared to discharge all
of their rights as provided for in the Deed Poll and any person who accepted the
offer of employment without signing the Deed Poll was rejected.
[28] For Mr Strauss it is contended that that:
There was no valid reason for his dismissal.
A proper investigation with proper time frames of the alleged serious misconduct
would have exonerated Mr Strauss.
Further Mr Strauss was not afforded procedural fairness in that the Respondent
waited until 14 March 2014 to inform Mr Strauss of its allegations and provided him
with an inordinately short time in which to respond and obviously wanted to move
[2014] FWC 6700
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against Mr Strauss before his employment ended and he was paid his redundancy
entitlements on 20 March 2014.
The Respondent purposely restricted Mr Strauss from seeking legal advice as he had
done previously in the show cause situation after his assault and bullying. This
behaviour is in itself bullying.
All of this was explained to the Respondent in writing while Mr Strauss was still
employed and before he was terminated but the Respondent terminated Mr Strauss in
any case without notice.
Scott Orpin from Patricks already knew about the previous complaints, issues,
concerns and disputes of Mr Strauss as he himself was in charge of a dispute referred
to him but which he had not acted upon throughout and since the previous year 2013.
The Respondent through senior management Scott Orpin set the timeframe knowing
firstly there were unresolved disputes with Mr Strauss and secondly, knowing he had
been investigating Mr Strauss and knowing there was not enough time for Mr
Strauss to provide a response.
Mr Strauss was in any case already on notice of being terminated by way of
redundancy to take effect on 20 March 2014.
Legislation
[29] The provision of the Act dealing with security for payment of costs is set out below.
“404 Security for costs
The procedural rules may provide for the furnishing of security for the payment of
costs in relation to matters arising under this Part.”
[30] The relevant provision of the Fair Work Commissions Rules 2013 is set out below.
“55 Order for security for payment of unfair dismissal matter costs
(1) A respondent or applicant in a matter before the Commission arising under
Part 3-2 of the Act (unfair dismissal) may apply to the Commission for an
order that a person provide security for the payment of costs in respect of the
matter or part of the matter.
Note 1: The application must be in the approved form—see subrule 8(2).
Note 2: The Commission will not ordinarily make such an order before the
conclusion of conciliation.
(2) The person to whom an order made under subrule (1) applies must pay the
amount of security at the time, and in the manner and form, required by the
order.
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(3) If the Commission orders that security for the payment of costs be given in
respect of a matter or part of a matter arising under Part 3-2 of the Act, a
respondent or applicant in the matter may apply to the Commission to:
(a) reduce or increase the amount of security to be provided; or
(b) vary the time at which, or manner or form in which, the security is to be
provided.
(4) Without limiting any other power which the Commission may exercise, if the
Commission directs a person to provide security for costs in relation to a
matter or part of a matter arising under Part 3-2 of the Act, the Commission
may order that the matter be:
(a) adjourned until security is provided; or
(b) adjourned indefinitely.”
[31] The relevant provisions in the Act under which costs may be sought by one party
against another or their representative are set out below.
“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.”
“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:
[2014] FWC 6700
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(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.”
“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).”
Principles
[32] A Full Bench of the Commission has considered the principles that apply to security
for the payment of cost applications in the matter of Mr Riccardo Zornada v St John
Ambulance Australia (Western Australia) Inc. (the Zornada case) in a decision issued in
October 2013 [[2013] FWCFB 8255] as follows,
“Security for costs
[34] Commissioner Asbury, as she then was, outlined the principles to be considered
in assessing whether to grant an order for security for costs in Harris v Home Theatre
Group t/as Home Theatre Group:
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“[7] Principles relevant to the making of orders for security of costs can be
summarised as follows. There is no absolute rule to control the exercise of the
discretion to order security for costs, and what should be done in each case
depends on the circumstances of the case with the governing consideration
being what is required by the justice of the matter. The making of an order for
security for costs should not be oppressive in that it would stifle a reasonably
arguable claim.
[8] The financial position of the party against whom the order is sought, will
be relevant in a number of circumstances. There is no absolute rule that
impecuniosity of a party will entitle its opponent to an order for security for
costs. There is also a general rule that poverty should not be a bar to a person
prosecuting a claim at first instance. On appeal, the question of security is to
be determined differently on the basis that the appellant has had his or her day
in court, and should not be given a “free hit”, particularly in circumstances
where the costs of a proceeding below had not been paid by the appellant.
[9] In cases where the impecuniosity of the party against whom the order for
security for costs is sought, it is relevant that the impecuniosity is itself a
matter which the litigation may help to cure or arises from the conduct the
party is complaining of. In such circumstances the party against whom the
order is sought should not be shut out of litigation.
[10] The prospects of success and the strength of the case of the party resisting
the order is relevant. In Merribee (Supra) Kirby J said (citations omitted):
“Another consideration that has sometimes been judged to be relevant is
the strength of the case of the party resisting an order that it provide
security for costs and evaluation (necessarily tentative) of its prospects
of success. Thus, the fact that a party has secured special leave to argue
its case on appeal has been thought a relevant consideration in some
circumstances. Similarly, if a proceeding appeared hopeless and such
as was bound to fail, the lack of apparent merit in a party’s case might
be a reason for ordering it to provide security for the costs to which, it
appears, it is needlessly putting its opponent. Such a consideration
would need to be exercised with care, given that the real merits of a
case might not emerge until the final hearing or might not sufficiently
emerge in the necessarily brief proceedings typically involved in an
application for security of costs. Furthermore, if a party asserts that its
opponent’s proceedings are manifestly lacking in legal merit, other
remedies are available to it to protect it from needless vexation.”
[11] In relation to costs, it is relevant that the nature of a proceeding is such
that, even if successful, an order for costs might not be made or might be
limited. The inability of a party to meet the costs of an unsuccessful
proceeding, or the risk that a cost order will not be satisfied is also relevant to
the exercise of the discretion.
...
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[35] We agree with the summary provided by her Honour. We further note that costs
orders in this jurisdiction are extraordinary, and security for costs orders even more
so. This is because the Act reflects the longstanding principle that costs will not be
awarded against parties in industrial proceedings, other than in exceptional
circumstances. Costs are limited to circumstances where the proceedings have been
commenced vexatiously, without reasonable cause, or in circumstances where it
should have been reasonably apparent that the application had no reasonable
prospect of success. It should be noted that a proceeding is not to be classed as being
instituted without reasonable cause simply because it fails, but rather in circumstances
where the applicant’s own version of the facts, it is clear that the proceeding must fail.
[36] Accordingly, the Commission should award security for costs only in the rarest of
circumstances, once the Commission has balanced the merits of the application, the
financial position of the parties, and what is just in the circumstances.” (References
omitted)
[33] I note that this decision of the Full Bench issued in October 2013 endorses the
principles for security of costs orders as summarised in Harris v Home Theatre Group Pty Ltd
t/as Home Theatre Group [[2011] FWA 2910] (the Harris decision), a decision that was made
2011.
[34] Significantly since 2011 the Act has been amended by the insertion of section 400A
and by amendments to section 401 all of which commenced operation on 1 January 2013.
These new provisions did not apply to dismissals that took effect before this date.
[35] The Explanatory Memorandum for the Fair Work Amendment Bill 2012 provides a
full explanation for the insertion of these new provisions.
“Part 3 – Costs orders against parties
Fair Work Act 2009
168. Item 4 inserts a new section 400A to enable the FWC 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.
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
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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.
172. This amendment responds to Panel recommendation 45.
173. Subsection 400A(2) provides that the power to award costs against one party
in these circumstances is only exercisable if the other party to the matter
makes an application in accordance with section 402. Subsection 400A(3)
makes clear that the new power to award costs under subsection 400A(1)
operates in addition to subsection 611(2), which enables the FWC to make
costs orders against a person in certain circumstances, such as where an
application is made vexatiously or without reasonable cause.
174. Section 402 provides that an application for costs must be made within 14 days
after a matter is determined by the FWC or discontinued.
175. Item 5 amends section 402 consequential on the insertion of new section 400A
in item 4. Item 6 amends paragraph 403(1)(b) to insert a reference to section
400A so that a schedule of costs can be prescribed for the purposes of a costs
order made under that section.
176. Item 7 amends subsection 403(2), which sets out how the FWC can award
costs if a schedule of costs is prescribed, to insert a reference to section 400A.
177. Item 8 amends the note to subsection 611(2) to highlight the FWC’s ability to
make an order for costs under new section 400A.
178. Item 1 of Schedule 11 inserts a new Schedule 3 into the FW Act. Item 12 of
Schedule 3 provides for these amendments to apply in relation to dismissals
that take effect after the commencement of this Part.
Part 4 – Costs orders against lawyers and paid agents
Fair Work Act 2009
179. Section 401 currently enables FWA to award costs against a lawyer or paid
agent in certain circumstances, but only where FWA has granted permission
under section 596 for them to represent a party in unfair dismissal
proceedings. Item 9 replaces subsection 401(1) with new subsections 401(1)
and 401(1A), under which this power will no longer depend on the FWC
having granted permission under section 596.
180. New subsections 401(1) and 401(1A) will provide a stronger deterrent for
lawyers and paid agents from encouraging parties to bring or continue
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speculative unfair dismissal claims, particularly claims they know have no
reasonable prospect of success. The provision will also deter lawyers or paid
agents from unreasonably encouraging a party to defend a claim or make a
jurisdictional argument where there is no prospect of the argument
succeeding. It will act as a stronger deterrent than the current provision as it
will make lawyers and paid agents subject to the possibility of adverse costs
orders even if they are not granted, or do not seek, permission to represent the
party in the matter before the FWC.
181. Item 9 repeals subsection 401(1) and replaces it with new subsections 401(1)
and (1A). New subsection 401(1) provides that the section applies if:
an application for an unfair dismissal remedy has been made under section 394
a lawyer or paid agent (the representative) has been engaged by a party to represent
them in the matter, and
the party is required to seek the FWC’s permission under section 596 to be
represented by the representative.
182. New subsection 401(1A) sets out the grounds on which an order for costs is
available against a representative. Costs are available where the FWC is
satisfied that the representative caused costs to be incurred because:
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 (subsection 401(1A)(a)), or
of an unreasonable act or omission of the representative in connection with the
conduct or continuation of the matter (subsection 401(1A)(b)).
183. The addition of the words “or respond to” in new subsection 401(1A)(a))
makes clear that costs are also available against employer representatives who
encourage an employer to defend a claim where there is no reasonable
prospect of the defence succeeding.
184. An example of where the FWC may award costs against a representative under
new item 401(1A) is where the representative knows that his or her client’s
unfair dismissal claim is dishonest or without foundation but still actively
encourages them to proceed with the claim to try and extract a remedy such as
a financial settlement from the employer.”
[36] The intent of this new section 400A of the Act as explained above is to provide a
response to litigants who pursue or defend unfair dismissal remedy claims in an unreasonable
manner. The intention is to cover a broad range of unreasonable conduct by act or omission
which causes the other party to incur costs. This is clearly an expansion of the circumstances
in which costs may be ordered beyond those to which section 611 of the Act would apply.
[37] The related amendments to section 401 of the Act similarly expand the circumstances
in which costs may be ordered against representatives.
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[38] In the Harris decision Commissioner Asbury, as she was then, placed some emphasis
on the fact that even if the Home Theatre Group, the party seeking the security for payment of
costs order, did successfully defend the substantive unfair dismissal application being pursued
by Ms Harris it was not automatic that an order for costs would be made2. The Commissioner
in this decision quite properly referred to the power to award costs as it was then provided for
in section 611 of the Act. Obviously since that time with the insertion of section 400A there is
an expanded range of circumstances in which the Act now envisages cost orders may be made
and the Harris decision needs to be considered in this context.
[39] Similarly the Full Bench’s statement above that, “Costs are limited to circumstances
where the proceedings have been commenced vexatiously, without reasonable cause, or in
circumstances where it should have been reasonably apparent that the application had no
reasonable prospect of success.” was made in the context of considering a security for
payment of costs order which had been made concerning a dismissal which had taken effect
before 1 January 2013. The Full Bench’s statement and its observations that costs orders in
this jurisdiction are extraordinary and are not make other that in exception circumstances
needs to be understood as a reference to section 611 of the Act only.
[40] As such the Full Bench’s observations in paragraphs [35] and [36] in the Zornada case
did not have regard for section 400A of the Act which allows costs orders to be made against
a party to an unfair dismissal remedy application because of an unreasonable act or omission
in connection with the conduct or continuation of a matter. This is a broader range of conduct
and behaviour than the Full Bench was referring to and will include many situations that
would not come within section 611 of the Act.
[41] The insertion of section 400A of the Act and the amendments to section 401 has
deliberately “lowered the bar” for the ordering of costs in unfair dismissal remedy
applications and the Full Bench’s approach in the Zornado case is not binding for matters
concerning dismissals that occurred since 1 January 2013. I do accept however that otherwise
the principles identified in the Harris case and endorsed in the Zornado case are applicable to
this matter.
[42] The case law within the Commission dealing with costs order applications against a
party’s representative is very limited. In Mr Narong Khammaneechan v Nanakhon Pty Ltd
ATF Nanakhon Trading Trust T/A Banana Tree Cafe [[2011] FWA 651] Deputy President
Bartel considered the application of section 401 of the Act as it was prior to the amendments
in January 2013 and approached the matter follows,
“[20] Section 401(1)(a) of the Act requires that the Tribunal must be satisfied of three
circumstances: firstly, that the lawyer or paid agent encouraged the person to start or
continue the matter; secondly that as a result of that encouragement the other party
incurred costs; and thirdly, that it should have been reasonably apparent that the
person had no reasonable prospect of success. It is not in dispute that the applicant
commenced proceedings prior to engaging SECLS to represent him, so the first issue is
whether SECLS “encouraged” him to continue with the proceedings. There is no
evidence before the Tribunal on this point - only the submissions of Ms Harvey, as
summarised in paragraph [16] above, relate.
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[21] Section 401(1)(a)(i) of the Act has not been the subject of detailed consideration
by FWA, nor does it have an equivalent provision in the WRA. The Explanatory
Memorandum to the Fair Work Bill 2008 states, in relation to s.401 of the Act, that:
“1610. Subclause 401(1) allows FWA to make costs orders against lawyers
and paid agents in two sets of circumstances. The first is where they have
caused costs to be incurred by the other party to the matter because they
encouraged a person to commence or continue a matter when it should have
been reasonably apparent there were no reasonable prospects of success. The
second circumstance is where they have caused costs to be incurred by the
other party because of an unreasonable act or omission in conducting or
continuing the matter.
1611. These provisions are designed to deter lawyers and paid agents from
encouraging others to bring speculative unfair dismissal claims, particularly
claims they know have no reasonable prospects of success, or to unreasonably
encourage a party to defend a claim or make a jurisdictional argument where
there is no prospect of the argument succeeding.”
[22] I consider that in order for a lawyer or paid agent to “encourage a person” to
continue with an application, there must be a positive act, not merely an absence of
discouragement in order for the statutory requirement to be satisfied.
[23] Contrary to the implied submission of the respondent, the fact that an applicant
continues with proceedings which may have no reasonable prospect of success does
not, in itself, lead to the conclusion that his or her lawyer or paid agent encouraged
the applicant to do so. The respondent has put forward no evidence in support of the
proposition that it was SECLS encouragement that led the applicant to continue with
his application. While it is reasonable to assume that the view formed by Ms Harvey
as to the prospect of success of the application was conveyed to the applicant and this
would have no doubt given him some comfort, in my view this is not sufficient to
satisfy the requirement that SECLS encouraged the applicant to continue with the
application. Moreover, even if I am incorrect in this conclusion, there is no evidence
that the view conveyed by SECLS to the applicant “... caused costs to be incurred by
the other party ....” as required by s.401(1)(a)(i) of the Act. That is, the respondent has
not established that absent any advice from SECLS as to the prospect of success, the
applicant would have discontinued his application.”
[43] Whilst the current section 401 of the Act is now somewhat different I agree with the
approach of Deputy President Bartel on the central point which remains applicable under the
current section that in order for a lawyer or paid agent to be found to have caused costs to be
incurred because they “encouraged” a party to start or continue or respond to a matter there
must have been a positive act by that lawyer or paid agent, not merely an absence of
discouragement in order for this requirement to be satisfied.
[44] However section 401(1A)(b) of the Act which was added in January 2013 concerns
unreasonable acts or omissions of the representative in connection with the conduct or
continuation of a case. This new provision could arguably apply in circumstances where there
is evidence that a representative has failed to discourage a party continuing with a claim in for
example a situation where there is information that demonstrates the case cannot succeed.
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Consideration
The Redundant Applicants
[45] There is no evidence before the Commission as to the financial position of the
Redundant Applicants or Mr Mullally. There is no suggestion that the Redundant Applicants
or Mr Mullally are impecunious.
[46] It has not been argued that if these applications proceed to hearing and are
unsuccessful and costs are awarded against the Redundant Applicants and/or Mr Mullally that
they will each not be able to satisfy the orders for costs made against them.
[47] The same absence of evidence as to the financial position of the Redundant Applicants
and Mr Mullally does not allow the Commission to form a view as to whether or not a
security for costs order would stifle the Redundant Applicants claims if their claims are
reasonably arguable.
[48] I now turn to consider the strength of the Redundant Applicants’ cases and their
prospects of success.
[49] The case to be made for each of the Redundant Applicants is the same. It is argued that
they are not barred from proceeding with their applications by the Consent Order because it
cannot be applied to future events and the Consent Order cannot override the provisions of the
Act.
[50] It is also argued that Patricks should have redeployed the Redundant Applicants with
Asciano as an associated entity.
[51] It is also said that Patricks should not have placed a condition on the Redundant
Applicants to discharge all their rights in the Deed Poll if they were to be redeployed as
casuals and this condition wrongly prevented them being redeployed as casuals.
[52] So it is argued that the dismissals of the Redundant Applicants were not a case of
genuine redundancy as defined in the Act and that the dismissals were unfair.
[53] The Respondent’s position is that the dismissals of the Redundant Applicants were
each a case of genuine redundancy and so cannot be unfair dismissals by virtue of section 385
of the Act.
[54] The meaning of a genuine redundancy as defined in section 389 of the Act is set out
below.
“389 Meaning of genuine redundancy
(1) A person’s dismissal was a case of genuine redundancy if:
(a) the person’s employer no longer required the person’s job to be
performed by anyone because of changes in the operational requirements of
the employer’s enterprise; and
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(b) the employer has complied with any obligation in a modern award or
enterprise agreement that applied to the employment to consult about the
redundancy.
(2) A person’s dismissal was not a case of genuine redundancy if it would have
been reasonable in all the circumstances for the person to be redeployed within:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.”
[55] The Redundant Applicants do not challenge that Patricks no longer required their jobs
to be performed by anyone because of changes in the operational requirements of the
enterprise.
[56] The Redundant Applicants do not challenge that Patricks complied with its obligations
under the relevant enterprise agreement that applied to the Redundant Applicants’
employment to consult about the redundancy.
[57] The challenge the Redundant Applicants make is that it would have been reasonable in
the circumstances for the Redundant Applicants to be redeployed either as casual employees
within Patricks’ enterprise or in the enterprise of Asciano which the Respondent concede was
an associated entity of Patricks.
[58] Considering then the question of the strength of the Redundant Applicants’ case in
response to Patricks’ jurisdictional argument that the dismissals of the Redundant Applicants
were genuine redundancies it is arguable that the Consent Order cannot be an absolute bar to
the Redundant Applicants making these applications. In fact the Respondent did not argue
that it was.
[59] I note the Redundant Applicants do not argue that the redundancies were not effected
consistent with the terms of the Consent Order.
[60] There is a sound argument that the existence of the Consent Order of itself does not
predetermine the outcome of these applications. It is likely the Commission would hold that
the Consent Orders existence does not but itself require the Commission to find that the
dismissal of the Redundant Applicants was a genuine redundancy within the meaning of the
Act.
[61] Turning to consider the issue of redeployment, as is normal in a security for payments
of costs application the full evidence regarding relevant matters that would be determined in
the substantive hearing of this matter is not before the Commission. On the information
available at this stage it is not suggested that Patricks itself had any vacancies to which the
Redundant Applicants could be redeployed.
[62] It is not disputed that Patricks provided the Redundant Applicants with a list of jobs
that were available in Asciano which was a related entity to Patricks. On the face of this list
very few of these positions were likely to have been suitable for the Redundant Applicants. In
any event it seems the Redundant Applicants took no steps with regard to any of those
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positions to which they could have been redeployed and had not even expressed their interest
in any of the positions.
[63] For the Redundant Applicants it is submitted that the obligation was on Patricks to
consider positively redeploying each of the Redundant Applicants to one of these vacancies.
This approach however ignores the fact that there were 40 employees who had already taken
voluntary redundancy and a further 43 employees, including the Redundant Applicants, who
were now being made redundant by Patricks. These employees generally it would seem had
similar skills and work experience. Patricks had taken the positive step of advising all of them
of what positions were vacant in Asciano. Patricks’ advice to them was the first step in
providing redeployment for any employee who was interested in and had the skills and
qualifications to fill one of these vacancies. In circumstances where the Redundant Applicants
and their colleagues were represented by the MUA throughout this process it was not
unreasonable for Patricks to believe any employee who was interested in one of these
positions would say so and from there redeployment could be discussed further.
[64] Even if redeployment had been dealt with as the Redundant Applicants submitted it
should have been there will obviously be doubt as to whether the outcome would have been
any different for them. If each of the Redundant Applicants can identify one or more of those
vacancies they could have notionally been redeployed to, given the large number of
employees who were made redundant at the same time with similar skills and experience
there can be no certainty that it would indeed have been a particular Applicant rather than one
of the other Applicants or one of their other colleagues, who was successful in being
redeployed to that position. The Commission may well conclude that it would have been
reasonable for Patricks to redeploy somebody to one of these vacancies but there is no
certainty a particular Applicant would actually have been that person redeployed. This will
work against the Commission finding that the dismissal was not a case of genuine
redundancy.
[65] With respect to the offer of casual employment the Respondent argues that this was
offered as new employment after the dismissals and was not potential redeployment at all.
The offer was to go into a casual pool and did not involve any guarantee of future work and
expressly involved the establishment of a new contract of employment.
[66] The Redundant Applicants’ argument that Patricks improperly prevented them
accepting casual employment as redeployment by requiring them to sign the Deed Poll does
not overcome the Respondent’s view that the casual employment was not redeployment at all.
It defies industrial reality to believe that in other circumstances the Redundant Applicants
would have accepted that they could be redeployed by the Respondent from their ongoing
fulltime jobs into the casual pool where they would have no guarantee of work.
[67] In any event it will often be the case that an offer of redeployment will be subject to
conditions. The conditions in the Deed Poll given that they largely reflected the terms of the
Consent Order, which was negotiated by the MUA of which the Redundant Applicants were
members, cannot be said to be oppressive or unreasonable in the particular circumstances of
this matter. The Commission is unlikely to accept that Patricks placing the condition as they
did of signing the Deed Poll on taking up the offer of casual employment had acted in any
way improperly. For the Redundant Applicants to not take up the casual employment, if
indeed it was redeployment, was their choice and amounts to them rejecting offered
redeployment.
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[68] Considering the above it is most likely that Patricks will be successful in arguing their
jurisdictional objection that the Redundant Applicants’ dismissals were cases of genuine
redundancy.
[69] Of course even if I am wrong in that and the Redundant Applicants’ dismissal is found
not to be a genuine redundancy the Commission then moves to the second stage to consider
whether the dismissal was harsh, unjust or unreasonable and so was an unfair dismissal.
[70] Whilst it may be the case that the Consent Order cannot bar these Redundant
Applicants making the section 394 applications they have I have no doubt that the existence
of the Consent Order and its terms are relevant matters which section 387(h) of the Act
requires the Commission to take into account when considering whether these dismissals were
harsh, unjust or unreasonable.
[71] The terms of the Consent Order include that redundancies effected consistent with the
terms of the Consent Order are genuine redundancies and do not give rise to a basis for any
claims arising from termination of employment and that MUA members will not make any
such claims.
[72] Obviously there is an argument that the Redundant Applicants have acted contrary to
the terms of the Commission’s Consent Order by making their unfair dismissal remedy
claims.
[73] Further the Commission would no doubt have regard for the fact that this statement
that MUA members will not make claims arising from their termination was agreed to in the
settlement of a dispute by the two parties one being Patricks and the other the MUA acting on
behalf of its members.
[74] The Commission would be likely to conclude that it would not be a “fair go all round”
for the Commission to ignore the commitments made on behalf of MUA members to not do
the very thing these Redundant Applicants have done, to pursue unfair dismissal remedy
claims against Patricks.
[75] It is obviously of great importance that in dispute resolution before the Commission
parties to a dispute are be able to enter into settlements confident in the knowledge that the
agreed terms are binding and will be honoured.
[76] Considering this unusual background I think it is highly likely this would lead to the
Commission finding that each dismissal was not harsh, unjust or unreasonable and so the
unfair dismissal claims would most likely fail.
[77] In summary my conclusion is that the Respondent is likely to succeed with their
jurisdictional objection and the cases will fail at this first stage but even if the Redundant
Applicants succeed at this stage and the Commission continues on to consider the merit of the
dismissals the Redundant Applicants do not have a strong case at all and their prospect of
succuss are low.
[78] I note that even if the Commission did conclude the dismissals were not genuine
redundancies because the Respondent should not have required them to sign the Deed Poll
[2014] FWC 6700
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and that if Patricks had not required this the Redundant Applicants would have taken up the
offer of employment as a casual employee then there is real doubts as to what loss if any the
Redundant Applicants have suffered. At best the employees would have gone into the casual
pool. There was no guarantee of work in this situation. It is possible whatever financial loss
has been suffered from not going into the casual pool would have been less than the
redundancy payments the Redundant Applicants have received (which of course in this
situation they were not entitled to receive). In these circumstances there is not likely to be any
compensation ordered payable to the applicants even if they won their cases.
[79] Next it is relevant to consider whether if the Redundant Applicants’ cases are
dismissed an order for costs would be made or might be limited.
[80] In terms of costs being ordered under section 611 of the Act, without there being some
positive evidence brought before the Commission, based on the information available at this
point there is no basis to believe that the Commission would conclude that the Redundant
Applicants had made their applications vexatiously or without reasonable cause.
[81] Further given the stringent tests involved in determining that an application had no
reasonable prospect of success I do not think it is likely that costs would be ordered on this
basis either.
[82] With respect to costs orders that might be made under section 400A of the Act in
circumstances where the Redundant Applicants’ cases are dismissed I think there is a strong
basis on which it could be argued that the Redundant Applicants have caused costs to be
incurred by Patricks because of their unreasonable act or omission in continuing with their
applications having been put on notice by Patricks as to their basis of objection and
opposition to the applications. It is very likely that cost orders would be made by the
Commission on this basis in the circumstances of these applications.
[83] With respect to costs orders against Mr Mullally under section 401 of the Act without
there being some positive information brought before the Commission, based on the
information available at this point there would be no basis to find that Mr Mullally had
positively encouraged the Redundant Applicants to start or continue their applications which
is one of the requirements that would need to be proven. Similarly without there being some
further positive information on the basis of what is known at this stage there would be no
basis to find that Mr Mullally by an unreasonable act or omission in connection with the
conduct or continuation of the matter had caused Patricks to incur costs. Even if the other
elements of section 401 of the Act could be demonstrated for these reasons cost orders being
made against Mr Mullally are unlikely.
Mr Strauss
[84] There is no evidence with respect to Mr Strauss as to his financial position.
Consequently the Commission is not able to determine whether his financial position would
mean he is unlikely to be able to meet any order of costs that would be made against him in
the future. The Commission is also unable to conclude whether a security for payment of
costs order made at this stage would stifle him in pursuing his claim.
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[85] In terms of the prospects of success, Mr Strauss in his application challenges whether
there was a valid reason for his dismissal and separately whether the process adopted by
Patricks leading up to his dismissal amounted to a fair go all round.
[86] This is a case where without the benefit of all of the witness evidence and argument
the Commission is not able to form a view with any certainty as to the strength of Mr
Strauss’s case and so his prospects of success are unclear.
[87] Having said that however I accept there is an arguable case because of the background
facts of the matter.
[88] If Mr Strauss proceeds with his case but he is unsuccessful on the limited information
available to the Commission at this stage there is no currently apparent basis on which it
would be found that he had made the application vexatiously or without reasonable cause.
Further there is no basis on the current information before the Commission to believe that
Patricks would be able to demonstrate that Mr Strauss’s application has no prospects of
success. Consequently costs are not likely to be ordered under section 611 of the Act unless
the outcome of the case fully vindicates Patricks’ decision to dismiss Mr Strauss and the
evidence demonstrates Mr Strauss knew of his misconduct.
[89] In terms of section 400A of the Act there is nothing before the Commission at this
stage that supports the conclusion that whatever cost Patricks may in future incur will be
because of an unreasonable act or omission of Mr Strauss. Costs under this section are
unlikely to be ordered by the Commission unless the outcome of the case shows Mr Strauss
knew of his misconduct and so acted unreasonably in continuing his application.
[90] In terms of section 401 of the Act similarly there is no evidence at this stage that Mr
Mullally has positively encouraged Mr Strauss to start or continue this application or that
Patricks would incur costs because of Mr Mullally’s unreasonable acts or omissions and
accordingly costs under section 401of the Act are unlikely to be ordered by the Commission.
Conclusion
[91] In terms of the Redundant Applicants’ applications as I have indicated the prospects of
them succeeding in their substantive applications are very poor. In all likelihood their
applications will be dismissed. Patricks will inevitably incur further costs to defend these
applications and if indeed these applications are dismissed there are sound arguments for the
Commission to order the Redundant Applicants pay costs to Patricks.
[92] There is no evidence however that the Redundant Applicants will not be able to pay
Patricks whatever amount of costs the Commission might order.
[93] Whilst this matter is finely balanced and given the historical background to the
redundancies and in particular the existence of the Consent Order Patricks are understandably
aggrieved to have to be defending these applications I am not satisfied that this is a case in
which the Commission should order the Redundant Applicants pay a security for the payment
of costs. Patricks’ applications for security for the payment of costs against the Redundant
Applicants will be dismissed.
[2014] FWC 6700
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[94] In terms of Mr Strauss’s application I am not satisfied there is any basis on which the
Commission should order security for payment of costs against this Applicant and Patricks’
application for such security for the payment of costs will be dismissed.
[95] In terms of Mr Mullally I am not satisfied there is any basis on which the Commission
should order security for payment of costs against the Applicants’ representative and Patricks’
application for such security for the payment of costs will be dismissed.
[96] Orders with respect to each application consistent with this decision will now be
issued.
[97] The parties will be notified of hearing dates for these applications in due course.
COMMISSIONER
Appearances:
P Mullally representative for the Applicants
D Fletcher solicitor for the Respondent
Hearing details:
2014.
Perth:
September 5.
Printed by authority of the Commonwealth Government Printer
Price code C, PR555831
1 Exhibit PP3
2 [2011] FWA 2910 at paragraph [32]
