1
Fair Work Act 2009
s.604 - Appeal of decisions
David Armstrong
v
Taxation Management Services Pty Ltd ATF TMS
(C2015/5234)
VICE PRESIDENT WATSON
DEPUTY PRESIDENT GOSTENCNIK
COMMISSIONER ROE MELBOURNE, 16 MARCH 2016
Application for costs – Whether unreasonable act or omission – Whether application made
vexatiously or without reasonable cause –– Fair Work Act 2009 – ss.400A and 611.
Introduction
[1] This decision concerns an application for costs made by Taxation Management
Services Pty Ltd ATF TMS (TMS) against David Armstrong arising from an application for
permission to appeal and an appeal that was listed for hearing before this Full Bench on 30
September and 19 November 2015. Mr Armstrong sought to appeal a decision of
Commissioner Riordan handed down on 6 August 2015.
[2] The application for permission to appeal was granted by the Full Bench in a decision
issued 6 October 20151 and directions were subsequently issued for the filing of additional
witness statements and other evidence in advance of the hearing of the substantive appeal.
The appeal was dismissed by the Full Bench in a decision handed down on 2 December
2015.2
[3] On 16 December 2015, TMS filed an application for costs pursuant to ss. 400A and
611 of the Fair Work Act 2009 (the Act). As the parties agreed that the costs application can
be dealt with on the papers, directions were issued for the filing of written submissions by
both parties.
Background
[4] On 2 May 2014, Mr Armstrong made an application under s.394 of the Act for an
unfair dismissal remedy. On 6 August 2015, Commissioner Riordan dismissed Mr
Armstrong’s application and found that the summary dismissal of Mr Armstrong was
consistent with the Small Business Fair Dismissal Code.
[5] On 27 August 2015, Mr Armstrong lodged a Notice of Appeal in which he made an
application for permission to appeal and an appeal against the decision of the Commissioner.
[2016] FWCFB 1179
DECISION
E AUSTRALIA FairWork Commission
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In the Notice of Appeal, Mr Armstrong submitted that the owner and principal of TMS, John
Hoff, had deliberately fabricated evidence in order to establish the grounds by which to
summarily dismiss him from his employment with TMS and also that he had new evidence
which could prove that no break-in occurred at the company’s office. Permission to appeal
was granted by the Full Bench for the reason that such evidence, which would have been
highly relevant to findings of fact necessary to determine the unfair dismissal matter, was not
put to the Commissioner because it was not then known or available.
[6] At the hearing of the substantive appeal, Mr Armstrong gave evidence which he
submitted proved that the theft of a TMS timesheet did not occur and that the office break-in
was a fabrication by Mr Hoff to create a reason for summary dismissal. Evidence was also
given in relation to these issues by Mr Hoff and Guy Bridge, an IT expert. The Full Bench
made the following findings in relation to the evidence of the parties:
“[18] We have assessed the evidence of Mr Armstrong and Mr Hoff. We have also
observed them giving evidence and being cross-examined in the matter before us. In
relation to the new evidence of an email communication between Aegis Accounting
and TMS, the evidence is directly contradictory. Mr Armstrong says that he caused the
email to be sent to Mr Hoff from Aegis Accounting (under the name of a person not
involved in the business) and received the response from Mr Hoff of TMS. Mr Hoff
states that he did not receive an email from Aegis Accounting and did not send a reply.
This evidence cannot be reconciled. Either Mr Armstrong gave false evidence about
sending and receiving information from TMS or Mr Hoff gave false evidence about
receiving the email and forwarding the information.
[19] We found Mr Armstrong initially self-assured but inconsistent in his evidence.
As his evidence developed he remained forthright but showed signs of evasiveness,
nervousness and irritation at the questions asked of him and testing of his evidence.
We did not find Mr Armstrong to be a reliable witness. Mr Hoff’s evidence was clear
and consistent. We considered him to be reliable and consistent in his evidence. His
evidence was reasoned and plausible.
[20] We accept the evidence of Mr Hoff and Mr Bridge that no email was sent from
the TMS server to Aegis Accounting on 12 August 2015. That raises the question of
the origin of the email. There are a number of possible explanations. It may be that
email records have been altered to remove all records of its existence, the email was
sought to be disguised by Mr Hoff to allow him to later deny its existence, or it had
been fabricated by someone other than Mr Hoff in an effort to apportion responsibility
on Mr Hoff. Our efforts on the day of the hearing to obtain further information on this
question through the evidence of Mr Bridge were thwarted by Mr Armstrong’s lack of
cooperation. We found Mr Armstrong to be evasive and lacking in credibility in
relation to these enquiries.
[21] We accept the evidence of Mr Bridge that any alteration in the log would show
up in the data he considered. We consider it highly unlikely that the log was changed.
In our view, the email was either disguised or fabricated.
[22] It is conceivable that someone may wish to deny possession of a document that
they had previously alleged had been stolen and no longer in their possession.
However it is inherently unlikely that a person would forward the document
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unnecessarily to a third party, and highly unlikely that they would disguise the sending
of an email of an apparently routine nature by sending a phony email from a different
IP address on the same day as receiving the request for client information. There is no
basis for accepting the possibility that Mr Hoff disguised the email himself by sending
it from another email account.
[23] In all of the circumstances we are drawn to the conclusion that the 12 August
2015 email allegedly from Mr Hoff to Aegis Accounting was fabricated by or on
behalf of Mr Armstrong in order to create a foundation for an allegation that Mr Hoff
had lied to the Commission about the break-in and the stolen information. We
conclude that Mr Armstrong also gave false evidence about this matter. It should be
observed that it is a serious offence to fabricate evidence and it is also a serious
offence to give false or misleading evidence.
Conclusions
[24] For the purposes of the matter before us it is not necessary that we consider the
other evidence adduced by the parties. We find that the additional evidence on email
communications and other matters adduced in the appeal proceedings does not alter
the validity of Commissioner Riordan’s finding that Mr Hoff believed on reasonable
grounds that Mr Armstrong’s conduct was sufficiently serious to justify immediate
dismissal. The dismissal was therefore consistent with the Small Business Fair
Dismissal Code. Accordingly we dismiss the appeal against the Commissioner’s
decision. In the light of the serious matters we have encountered in this matter we
propose to forward a copy of this file to the Director of Public Prosecutions.”
Legislation
[7] The power to make an order for costs is dealt with in s.611 of the Act which 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.
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Note: This subsection is a civil remedy provision (see Part 4-1).”
[8] It is well established that an order for costs is a discretionary matter when the basis for
making a costs order is established. Section 611 contains a number of separate bases for
granting an order for costs. An application has been held to be made without reasonable cause
if it is so untenable that it cannot possibly succeed.3
[9] Section 400A of the Act 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.”
Should an order for costs be made?
[10] TMS submits that the Commission ought exercise its discretion and order that Mr
Armstrong pay all of the company’s costs of the appeal for the following reasons:
That Mr Armstrong’s actions in the fabrication of evidence and giving false evidence
to the Commission constituted an unreasonable act or omission;
That Mr Armstrong’s commencement of an appeal on the basis of fabricated
supporting evidence concerning TMS and Mr Hoff meant that the appeal was
vexatious and commenced without reasonable cause; and/or
That it should have been apparent to Mr Armstrong that once the truth became
known in relation to the fabrication of evidence, the appeal had no reasonable
prospects of success and was bound to fail.
[11] TMS submits that the conduct of Mr Armstrong is particularly serious. This is because
Mr Armstrong fabricated evidence and lied to the Commission in an attempt to deceive the
Commission into finding that Mr Hoff had lied. It submits that if Mr Armstrong had been
successful in deceiving the Commission as to the circumstances around the termination of his
employment, then other serious personal and professional consequences may have arisen for
Mr Hoff.
[12] Mr Armstrong submits that the grounds of appeal raised in his matter were reasonable,
in particular given that the Full Bench granted him permission to appeal the decision of
Commissioner Riordan. He states that this refutes any allegations that the application was
groundless. He further submits that while the Full Bench came to a different conclusion about
the origins of the timesheet, it cannot be considered fraudulent as it is a representation of the
truth. Mr Armstrong also contends that he was not put on notice that an application for costs
would be made, that the costs quoted are inflated and unreasonable, and that a reasonable
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settlement has been offered to TMS in this regard. Mr Armstrong also notes that he is in
severe financial hardship and could not raise any significant funds in the event that an order
for costs was made.
[13] TMS notes that the submissions of Mr Armstrong were not focused on reasons as to
why costs should or should not be ordered, and that the submission instead addresses and
challenges the findings of the Full Bench. TMS further contends that it is not appropriate for
the Commission to determine facts or evidence that was or ought to have been before the Full
Bench during the appeal, as it considers that all of this evidence provided by Mr Armstrong
relates to the substantive dispute
Conclusion
[14] The application for an order for the payment of TMS’s costs falls for determination in
the context of the findings we have made in relation to Mr Armstrong’s appeal, which are set
out above. We are satisfied that Mr Armstrong’s appeal was, to a large extent, based on the
fabricated documentary evidence and the dishonest oral evidence he subsequently gave in
relation to that documentation. That evidence sought to challenge the key findings of the
Commissioner in the decision under appeal. Permission to appeal was granted on the basis of
the potential of that evidence to put into question the factual findings made by the
Commissioner. These matters constituted the thrust and import of the appeal. Given the
impact of the allegations on Mr Hoff’s professional standing and future it was necessary for
TMS to vigorously defend the appeal and incur the resulting costs. The costs of the appeal
were clearly incurred because of Mr Armstrong’s unreasonable act – to use the qualifying
words of s.400A. Indeed a more accurate description would not be in such mild terms. In
these circumstances, it is not necessary to determine whether or not costs should be paid
pursuant to s.611.
[15] In our view, the basis of a costs order has been established and in our view such an
order should be made. We accept the submissions of TMS as to the quantification of a costs
order and make an order in conjunction with the issuing of this decision for payment of the
amounts concerned.
VICE PRESIDENT
THE OF THE FAIR WORK C. SEN THE NOISS
[2016] FWCFB 1179
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Final written submissions:
TMS on 22 January 2016.
David Armstrong on 29 January 2016.
TMS in reply on 5 February 2016.
Printed by authority of the Commonwealth Government Printer
Price code C, PR577325
1 [2015] FWCFB 6789.
2 [2015] FWCFB 8094.
3 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125.
