1
Fair Work Act 2009
s.394—Unfair dismissal
Shaun Welsh
v
Just Fine Food T/A Vanilla Slice Pty
(U2018/5053)
DEPUTY PRESIDENT CLANCY MELBOURNE, 27 SEPTEMBER 2018
Application for costs – costs awarded pursuant to s.400A.
[1] On 16 May 2018, Mr Shaun Welsh made an application to the Fair Work Commission
(the Commission) for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009
(the Act) in relation to the termination of his employment by Just Fine Food T/A Vanilla Slice
Pty (JFF).
[2] On 26 July 2018, Mr Welsh advised the Commission via telephone that he wished to
discontinue his application. This was accepted as a discontinuance pursuant to Rule 10 of the
Fair Work Commission Rules 2013.
[3] JFF now seeks an order for costs against Mr Welsh. Its costs application is validly
made, having been filed on 5 August 2018 and so is within 14 days after Mr Welsh
discontinued his application.
[4] The general position in relation to unfair dismissal applications is that each party bears
its own costs in proceedings before the Commission.1 The Act provides for exceptions to the
general rule, in certain circumstances, which are discussed below.
Background to the costs application
[5] In his Form F2 – Unfair Dismissal Application (Form F2), Mr Welsh alleged he was
notified of his dismissal on 4 May 2018 and that it took effect the same day. The Form F2
further stated that Mr Welsh had given notice on 22 April 2018, with a view to finishing on
29 April 2018. It further states that Mr Welsh subsequently agreed with the girlfriend of JFF’s
owner to continue working, until he was advised on 3 May 2018 that his resignation had been
accepted and he was “done”.
[6] On 21 May 2018, JFF filed its Form F3 – Employer Response to Unfair Dismissal
Application (Form F3). In its Form F3, JFF raised jurisdictional objections to Mr Welsh’s
application that:
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there was no dismissal because Mr Welsh had voluntarily resigned from his
employment; and alternatively
JFF was a small business and Mr Welsh did not meet the minimum employment
period because he had been employed for less than one year.
[7] At a conciliation conference on 14 June 2018, the parties appeared to settle the matter,
subject to a three day cooling off period. However, on 15 June 2018, Mr Welsh sent an email
to the Commission and requested the matter instead proceed to a hearing.
[8] On 27 June 2018, a Notice of Listing was sent to the parties outlining that:
JFF was to file and serve its Outline of Argument in relation to its jurisdictional
objections, any Statements of Evidence and its Document List by no later than noon
on 9 July 2018;
Mr Welsh was to file and serve his material responding by no later than noon on 19
July 2018; and
The matter was listed for a Jurisdiction Conference/Hearing, by telephone, on 10
August 2018.
[9] On 8 July 2018, JFF filed and served its material.
[10] A Commission staff member sent email correspondence to Mr Welsh on 19 July 2018,
reminding him that his submissions were due. A follow-up email was sent to Mr Welsh on 23
July 2018, advising that in the absence of his submissions or an extension request being
received by 3.00pm on 25 July 2018, his matter would be listed for a non-compliance hearing
on 27 July 2018.
[11] Later on 23 July 2018, Mr Welsh emailed the Commission advising “…I’m done with
this & that man I don’t care anymore ill pay off the court fees or whatever on a payment plan
n say goodbye to him” [sic]. The Commission attempted to telephone Mr Welsh on 24 July
2018 to clarify his intentions. This was unsuccessful and a voicemail was left requesting a
return call. An email was then sent to Mr Welsh requesting that he file a Form F50 – Notice
of Discontinuance if he wished to withdraw his application.
[12] On 26 July 2018, the Commission telephoned Mr Welsh and in this conversation, he
confirmed that he wished to discontinue his application. As outlined above, this was accepted
as a discontinuance pursuant to Rule 10 of the Fair Work Commission Rules 2013. The
discontinuance was confirmed with the parties later that day via a Notice of Listing cancelling
the Jurisdiction Conference/Hearing.
[13] On 5 August 2018, JFF filed its Form F6 – Application for Costs (Form F6).
[14] On 14 August 2018, Commissioner Wilson issued Directions requiring JFF to file its
material in support of its costs application by 5.00pm on 21 August 2018, Mr Welsh to file his
material in response by 5.00pm on 28 August 2018 and JFF to file any reply material by
5.00pm on 4 September 2018.
[15] JFF filed its material on 21 August 2018.
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[16] Mr Welsh has filed no material in response to the costs application. In various
exchanges, he has made it abundantly clear he has no interest in participating in the process
that will determine the costs application and his last contact with the Commission included
the comment, “I’m not dealing with this do as you like.” [sic]
Basis for JFF’s costs application
[17] At Section 2.1 of its Form F6, JFF has indicated it makes its costs application under
s.400A of the Act.
[18] 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.”
[19] In setting out the grounds on which costs are sought in the Form F6, it appears JFF
also makes application under 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.”
[20] I have formed this view having had regard to JFF’s submissions at Section 2.2 of its
Form F6:
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“1. Mr Welsh resigned from his position at Just Fine Food because, in his own written
words, he didn’t “like the direction [the manager] is taking the business”. It was
common cause that he resigned voluntarily and without any pressure whatsoever.
Nevertheless, he soon changed his mind at which point he became bitterly resentful
when his employer held him to his resignation letter. This entailed that even in the
unlikely event that the FWC had jurisdiction over this matter, his case was extremely
weak. Accordingly, it is obvious that his application had no realistic prospects of
success. (my underlining)
2. Mr Welsh then proceeded to initiate no fewer than four blatantly vexatious
complaints with 1. the food safety inspector at the local council, 2. the building/fire
safety inspector at the local council, 3. WorkSafe Victoria and obviously 4. The Fair
Work Commission. In all instances, taxpayer funds and the funds of our business were
wasted on investigation of bogus complaints that were all soon debunked. In the first
three instances, there is no mechanism outside of VCAT for us to claim the costs
associated with a vexatious complaint. Accordingly, this application is the only
process by which we have any chance of partial redress for Mr Welsh’s vexatious
actions. (my underlining)
3. Mr Welsh was made well aware by both myself and the facilitator in our FWC
teleconference that due to the facts that he had worked for us for less than one year
and that we employed fewer than fifteen staff on a systematic basis at the time of his
alleged dismissal, that the FWC did not even have jurisdiction over his claim, yet he
nevertheless persisted with his claim in order to cause me the inconvenience of
preparing our submissions whereupon he withdrew his claim rather than spend time on
the lodgement of his own documents. Accordingly, not only did his application
manifestly have no chance of success at the FWC, he was well aware of this fact, and
proceeded anyway. (my underlining)
4. On 23 July, Mr Welsh sent an email to FWC stating : “I’m done with this and…I
don’t care anymore ill pay off the court fees or whatever on a payment plan…”
Indicating that he was aware of and willing to incur costs associated with dragging
Just Fine Food partway through a legal process that he had no prospect of winning and
every intention of abandoning.
5. A costs order against Mr Welsh should also have a corrective element, in that it
would make it less likely that he would wilfully engage in similar behaviour in the
future, if was better aware that part of the overall cost of doing so (and not just some
token administrative fees) would be shifted back onto him.
6. There were several layers of independently strong defences available against Mr
Welsh’s application.
7. The costs being claimed are modest and are by no means comprehensive. The
hourly rate that is set is merely the wage that Just Fine Food must pay Messrs
Ghumman and Musgrove for their time multiplied by 1.095 to reflect the cost of
compulsory superannuation, there is no additional allowance for other on-costs that
were certainly incurred by Just Fine Food, but have nevertheless been absorbed in
order to keep things simple and to keep the cost estimate as modest and affordable for
Mr Welsh as possible.”
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[21] Noting that JFF is not represented by a lawyer or paid agent and having regard to the
substance of its submissions in the Form F6, I am prepared to consider the costs application
on the basis that it is made under both s.400A and s.611 of the Act.
Nature of the Costs Claimed
[22] In itemising its claim for costs in its Form F6, JFF is not claiming representation costs
incurred for engaging a lawyer and nor does it appear to be claiming the costs of a paid agent
but rather, the wage costs of personnel who undertook the work involved in:
responding to the Form F2;
preparing the Form F3;
participating in the conciliation conference;
preparing JFF’s material in compliance with the Commission’s directions made on
27 June 2018; and
preparing its costs application.
[23] It was declared by Mr Shumsheer Ghumman, JFF’s Café Manager, that the costs
claimed were the “actual costs incurred by the business because both myself and Ron
Musgrove who spent time on this matter were paid for that time by Just Fine Food”.2
Items of expenditure that can be covered by an Order for Costs
[24] In Stanley v QBE Management Services Pty Limited T/A QBE,3 the then
Commissioner Jones discussed the Commission’s power to award indemnity costs as follows:
“Power to Award Indemnity Costs
[15] Indemnity costs were awarded by a Full Bench in Goffett v Recruitment National
Pty Ltd (Goffett) under the Workplace Relations Act 1996 (the WR Act). S.658(3) of
the WR Act provided that costs are to be awarded where the Commission was satisfied
a party had caused costs to be incurred because of the first party’s unreasonable act or
omission in connection with the conduct of the proceeding.
[16] The Full Bench found that the Respondent’s conduct amounted to an
unreasonable act or omission and that satisfaction as to this ground for the award of
costs, by definition, involved “some relevant delinquency”. Consequently the test
having regard to the relevant authorities for the award of costs on an indemnity basis
was satisfied.
[17] Under the Act, the award of costs on the ground of unreasonable act or omission
is specified under s.401 dealing with costs orders against lawyers and paid agents.
S.401 is to be found in Part 3-2 - Unfair Dismissal. S.611 of the Act, the general
provision dealing with costs which provides for costs against a party, does not specify
unreasonable act or omission as a ground. By contrast the general provision dealing
with costs under the WR Act, s.824 included this ground.
[18] The question arises whether FWA has the power to award indemnity costs under
s.611 of the Act.
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[19] By its express terms, FWA’s power to award costs is not limited to ‘items of
expenditure’ contained in the schedule.
[20] Schedule 3.1 of the Regulations sets out the Schedule of Costs. The Schedule of
Costs sets out in tabular form various items, being matters for which charge may be
made and the ‘charge’. The ‘charge’ for each item is expressed in different forms. In
some cases a particular dollar amounted is specified. In some cases the charge refers to
a specific dollar amount or an amount ‘at the discretion of FWA’. In other cases, the
charge is specified as ‘an amount FWA considers reasonable in the circumstances’.
[21] S.403 of the Act expressly provides that FWA is not limited to the items of
expenditure in any schedule. Moreover, Schedule 3.1 to Regulation 3.08 of the
Regulations contemplates, in relation to a number of items specified, the exercise of a
discretion by FWA as to amounts to be awarded.
[22] It is relevant to note that in Goffett, the Full Bench said:
"Query whether the Commission has power to award costs on an indemnity
basis. Its power to award costs under s.658(3) is discretionary. The discretion
is limited to some extent by s.658(9). Section 658(7) makes provision for a
schedule of costs to be prescribed. Schedule 7 to the WR Act is just such a
schedule. Section 658(9) provides that if a schedule of costs is prescribed the
Commission must not award costs in respect of an item appearing in the
schedule at a rate or an amount in excess of that item. The amount that may be
allowed for counsel is entirely a matter of discretion under the schedule. It
would seem therefore that the Commission has discretion to award indemnity
costs, sometimes expressed as solicitor and client costs."
[23] I am satisfied that s.611 of the Act is a broad discretion given to FWA to award
costs, provided it is satisfied as to certain circumstances. Taking into account the
operation and effect of s.403 of the Act, Schedule 3.1 and Regulation 3.08, I am
satisfied that this broad discretion includes the discretion to award costs on a party-
party or indemnity basis. Of course, the exercise of discretion and the basis on which
costs should be awarded will be conditioned by the approach taken by relevant
authorities.” (my underlining, references omitted)
[25] Of particular relevance to this matter are the observations of the then Commissioner
that s.403 of the Act expressly provides that the Commission is not limited to the items of
expenditure in Schedule 3.1 when awarding costs and there is the discretion to award costs on
either a party-party or indemnity basis.
[26] As such, I am satisfied that if I exercise my discretion to award costs under either
s.400A or s.611, my discretion includes the discretion to award the wage costs of the
personnel who undertook the work involved on an indemnity basis.
Consideration – s.400A
[27] Section 400A was inserted into the Act by virtue of the Fair Work Amendment Act
2012. The Explanatory Memorandum to the Fair Work Amendment Bill 2012 stated:
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“Parts 3 and 4 of Schedule 6 to the Bill enhance the FWC’s ability to order costs against
a party and/or their representative in unfair dismissal matters. The new ‘party costs’
provision applies where a party to an unfair dismissal matter (either an employee or
employer) has caused the other party to incur costs by an unreasonable act or omission.
Under section 401 of the FW Act, lawyers and paid agents may currently be exposed
to costs orders if FWA has granted permission for a person to be represented in an
unfair dismissal matter. The Bill will provide for the FWC to order costs against a
lawyer or paid agent whether or not the FWC has given permission for a person to be
represented.
The amendments strike a balance between the need to protect workers from unfair
dismissal, and to provide a deterrent against unreasonable conduct during proceedings.
The amendments will enable costs orders to be more easily made in the case of
unreasonable conduct but will not prevent genuine claims from being pursued. They
will discourage frivolous and speculative claims and assist in the efficient resolution of
claims by encouraging all parties to approach proceedings in a reasonable manner.
These measures are reasonable and proportionate to address the time and expense that
an unreasonable conduct by a participant and/or their representative may cause another
party to incur”4 (my underlining).
and
“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 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.”5
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[28] Section 400A was considered by Commissioner Bissett in Sidney v Employsure Pty
Ltd (Sidney).6 The Commissioner extrapolated the following from various authorities
considered in Roy Morgan Research Ltd v Baker (Roy Morgan)7 in the following manner:
“[28] The authorities relevant to a consideration of the phrase ‘unreasonable act or
omission’ were considered in the decision of the Full Bench in Roy Morgan Research
v Baker. I do not repeat those provisions here but note the following can be taken from
those authorities:
A failure to inform another party of an inability to attend proceedings would be, if
intentional, unreasonable and if accidental, an unreasonable omission;
a failure to advise the other party of the first party’s intentions, if deliberate or
reckless, would be unreasonable and if an omission could be equally unreasonable;
very strong prospects of success will not always justify a failure to participate in
settlement negotiations;
a reasonable person will determine if and how to respond to an offer of settlement
after considering all of the circumstances of the case including the terms of
settlement in relation to the relief sought; the relative strength of the parties cases;
the likely length and cost of proceeding to hearing if the matter does not settle; and
adverse consequences of acceptance of a settlement rather than prosecuting or
defending the primary application.”
[29] In Gugiatti v SolarisCare Foundation Ltd (Gugiatti),8 a Full Bench of the Commission
had considered the legislative history behind s.400A. In this regard, it was prepared to infer
“…that the legislative intention in the enactment of s.400A of the FW Act was to re-introduce
the costs provision in s.170CJ(3) of the WR Act as it was after the Workplace Relations
Amendment (Termination of Employment) Act 2001…”9
[30] The phrase “unreasonable act or omission” was used in s.170CJ(3) of the Workplace
Relations Act 1996 (the WR Act). Sections 170CJ(1), (2) and (3) of the WR Act provided:
“170CJ Commission may order payment of costs
(1) If the Commission is satisfied:
(a) that a person (first party):
(i) made an application under section 170CE; or
(ii) began proceedings relating to an application; and
(b) the first party did so in circumstances where it should have been reasonably
apparent to the first party that he or she had no reasonable prospect of success
in relation to the application or proceeding;
the Commission may, on application under this section by the other party to the
application or proceeding, make an order for costs against the first party.
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(2) If the Commission is satisfied that a party (first party) to a proceeding relating to
an application under section 170CE has acted unreasonably in failing:
(a) to discontinue the proceeding; or
(b) to agree to terms of settlement that could lead to the discontinuance of the
application;
the Commission may, on an application under this section by the other party to the
proceeding, make an order for costs against the first party.
(3) If the Commission is satisfied:
(a) that a party (first party) to a proceeding relating to an application made
under section 170CE caused costs to be incurred by the other party to the
proceeding; and
(b) that the first party caused the costs to be incurred because of the first
party’s unreasonable act or omission in connection with the conduct of the
proceeding;
the Commission may, on an application by the other party under this section, make an
order for costs against the first party.” (my underlining)
[31] As was noted by the Full Bench in Roy Morgan, the unreasonable act or omission
phrase in s.170CJ(3) of the WR Act was considered in Goffett v Recruitment National Pty Ltd
(Goffett),10 which concerned a failure by a party to attend conciliation proceedings, followed
by a further failure to take steps to inform the other party of its intentions immediately after
the issuing of the Notice of Listing. In respect of that further failure, the Full Bench of the
Australian Industrial Relations Commission in Goffett stated:
“[47] The Respondent’s failure to take steps to inform the Appellant of its intentions
immediately after the issue of the notice of listing was either a deliberate or reckless
act that could not be regarded as anything other than unreasonable. Alternatively, to
the extent that the failure might be regarded as an omission, it was equally
unreasonable. That those unreasonable acts or omissions caused the Appellant to incur
the costs in connection with the conduct of the proceeding is unquestionable. We are
satisfied that the Respondent must be ordered to pay the Appellant’s costs of and
incidental to the submissions and preparation for arbitration. We allow also the costs
on an indemnity basis in respect of the costs application.”
[32] In Gugiatti, the Full Bench of the Commission held that s.400A “is concerned with
unreasonable acts or omissions in connection with the “conduct or continuation” of a matter
already instituted, not with whether it was reasonable to have instituted a matter in the first
place.”11
[33] The Full Bench also stated:
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“Section 400A(1) establishes two pre-conditions for the making of an order for costs
under the subsection (in addition to the requirement in s.400A(2)). The first is that the
Commission must be satisfied that a party engaged in an unreasonable act or omission
in relation to the conduct or continuation of a matter. The second is that such act or
omission caused the other party to the matter to incur costs. Once these preconditions
are satisfied, a discretionary power to order the payment of such costs is enlivened.”12
[34] As such, s.400A of the Act provides that costs may be awarded to JFF if I am satisfied
that the costs it claims were incurred as a result of an unreasonable act or omission of Mr
Welsh in connection with the conduct or continuation of the unfair dismissal application.
Even if I am satisfied that the relevant circumstances exist, I am not obliged to order costs. It
is a discretionary decision. The legislative intent behind s.400A was that the power to award
costs is to be exercised only in clear cases of unreasonable conduct.
Item [1]
[35] Having regard to the wording of s.400A, the references to it in the Explanatory
Memorandum to the Fair Work Amendment Bill 2012 and consistent with Gugiatti, I do not
consider the costs in item [1] in the Itemised Schedule of Costs in Section 4 of the Form F6 to
fall within the scope of s.400A. I note this item appears to relate to costs incurred up to and
including the filing and service of the Form F3. While I note Rule 19 of the Fair Work
Commission Rules 2013 requires a respondent to an unfair dismissal application to lodge its
response within 7 calendar days after it is served with an application, it seems to me that
s.400A was intended to cover costs incurred that are caused by the other party to a matter
once it is further progressed, that is, beyond the initial requirement to file a Form F3—
Employer Response to Unfair Dismissal Application in direct response to a Form F2 – Unfair
Dismissal Application.
[36] In particular, I have had regard to the statement in the Explanatory Memorandum,
“[t]he amendments strike a balance between the need to protect workers from unfair
dismissal, and to provide a deterrent against unreasonable conduct during proceedings.”13 It
seems to me that the costs incurred in the preparation and lodgment of the Form F3, if
claimed against Mr Welsh, are more appropriately sought through an application made
pursuant to s.611 of the Act.
Item [2]
[37] I am also not satisfied the costs in item [2] in the Itemised Schedule of Costs in
Section 4 of the Form F6 fall within the scope of s.400A such that Mr Welsh should be
ordered to pay them.
[38] This item concerns costs associated with the conciliation conference that took place on
14 June 2018. On 21 May 2018, there was a discussion between a member of the
Commission’s staff and a representative of JFF and the outcome of this was that JFF elected
to participate in the conciliation. It could have chosen not to. In these circumstances, I am not
persuaded that JFF incurred costs because of an unreasonable act or omission of Mr Welsh.
Items [3]-[5]and [7]
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[39] The question for me to determine in relation to the costs in items [3]–[5] in the
Itemised Schedule of Costs in Section 4 of the Form F6, to the extent they are claimed
pursuant to s.400A, is whether Mr Welsh’s failure to communicate his intention to
discontinue his unfair dismissal application before JFF had prepared, filed and served its
material in response to the Commission’s directions issued on 27 June 2018, was either a
reckless act that was unreasonable or an unreasonable omission in relation to the conduct or
continuation of his unfair dismissal application.
[40] On one view, it might be said that Mr Welsh should have communicated his intention
to discontinue at some stage from after the conciliation on 14 June 2018 and up to and
including the time the Commission’s directions were issued on 27 June 2018.
[41] During this time, Mr Welsh had the ongoing opportunity to assess his position in light
of the conciliation conference and the Form F3 that had been filed by JFF. The Form F3 had
both outlined the basis of each jurisdictional objection JFF intended to make and responded to
allegations made by Mr Welsh in his Form F2.
[42] On another view, it might be said that it was not unreasonable for Mr Welsh to have
waited until he had the opportunity to consider his position in light of the submissions,
witness statements and documents filed by JFF on 8 July 2018.
[43] From email correspondence with the Commission almost immediately following and
on the day after the conciliation, it seems Mr Welsh:
accepted the assertion that he had been employed less than 12 months but
nonetheless disputed JFF’s claim that it was a small business employer, thereby
challenging JFF’s jurisdictional objection asserting he had not completed the
minimum employment period; and
challenged the jurisdictional objection asserting he had not been dismissed.
[44] However, Mr Welsh’s resolve to challenge the jurisdictional objections to his unfair
dismissal then waned. He did not comply with the Commission’s directions issued on 27 June
2018 and the Commission was required to follow up twice before Mr Welsh responded with
the advice that he intended to discontinue his application.
[45] At no stage throughout the proceeding does it appear that Mr Welsh sought
reinstatement. Further, on 26 July 2018 he advised a member of the Commission’s staff that
he had commenced a new job and notwithstanding that it was he who had elected to file the
unfair dismissal application, he appeared to bemoan the fact that the conduct of it was “taking
up his time.” Mr Welsh also alleged he was being harassed by JFF at his new job and
indicated the possibility of having to pay costs if the matter proceeded to hearing, which he
said had been raised at the conciliation, was a consideration for him.
[46] The indifference of Mr Welsh to the procedural requirements of this matter has been
continuous and, at times, hostile. It was only in response to the Commission’s follow-up that
Mr Welsh revealed his intentions. In the circumstances of this case, I am satisfied that the
failure of Mr Welsh to inform either JFF or the Commission of his intentions, until prompted
by the Commission, was either a reckless act that was unreasonable or an unreasonable
omission that resulted in JFF having to incur the costs detailed in items [3] – [5] in the
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Itemised Schedule of Costs in Section 4 of the Form F6. I consider the quantum claimed for
each item is reasonable and appropriate and am therefore satisfied that Mr Welsh should pay
the $767.14 costs claimed.
[47] For the same reason, I am also satisfied Mr Welsh should pay the $15.00 amount
claimed in item [7] in the Itemised Schedule of Costs in Section 4 of the Form F6 for printing.
This item is a reasonable claim and does not offend s.403(2)(b) of the Act.
Item [6]
[48] As to item [6] in the Itemised Schedule of Costs in Section 4 of the Form F6,
representing the costs of preparing the costs application, I decline to exercise my discretion to
award costs for the amount claimed. I adopt the reasoning of Senior Deputy President
Richards in Dean v Sybecca Pty Ltd T/A Sleepy Lagoon Hotel14 in concluding that s.400A of
the Act does not afford a party the opportunity to engage in a circular process of making a
cost application against a cost application.
Consideration – s.611
[49] The determination of the Costs Application made pursuant to s.611(2) of the Act
requires me to consider the following questions:
1) Did Mr Welsh make his unfair dismissal application vexatiously or without
reasonable cause (s.611(2)(a))?
2) Should it have been reasonably apparent to Mr Welsh that his unfair dismissal
application had no reasonable prospects of success (s.611(2)(b))?
Was Mr Welsh’s unfair dismissal application made vexatiously or without reasonable
cause (s.611(2)(a))?
[50] In Church v Eastern Health t/as Eastern Health Great Health and Wellbeing
(Church),15 the Full Bench considered the approach to be taken in determining whether
proceedings have been instituted vexatiously or without reasonable cause and stated:
“[28] We now turn to the exceptions to the general rule expressed in s.611(1) and the
meaning of the expression ‘vexatiously or without reasonable cause’.
[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
[2018] FWC 6077
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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’.”
[30] We now turn to the expression ‘without reasonable cause’. A party cannot be said
to have made an application ‘without reasonable cause’, within the meaning of
s.611(2)(a), simply because his or her argument proves unsuccessful. The test is not
whether the application might have been successful, but whether the application
should not have been made. In Kanan v Australian Postal and Telecommunications
Union Wilcox J put it this way:
“It seems to me that one way of testing whether a proceeding is instituted
‘without reasonable cause’ is to ask whether, upon the facts apparent to the
applicant at the time of instituting the proceeding, there was no substantial
prospect of success. If success depends upon the resolution in the applicant’s
favour of one or more arguable points of law, it is inappropriate to stigmatise
the proceeding as being ‘without reasonable cause’. But where, on the
applicant’s own version of the facts, it is clear that the proceeding must fail, it
may properly be said that the proceeding lacks a reasonable cause.” ”
(references omitted)
[51] In Keep v Performance Automobiles Pty Ltd (Keep),16 the Full Bench summarised the
principles relevant to when an application is made without reasonable cause as follows:
“[17] The proper construction of s.611(2)(a) was recently considered by a Full Bench in
Church v Eastern Health t/as Easter [sic] Health Great Health and Wellbeing
(Church).17 Church is authority for the following propositions:
(i) The power to order costs pursuant to s.611(2) should be exercised with
caution and only in a clear case.18
(ii) A party cannot be said to have made an application ‘without reasonable
cause’ within the meaning of s.611(2)(a), simply because his or her argument
proves unsuccessful.19
(iii) One way of testing whether a proceeding is instituted ‘without reasonable
cause’ is to ask whether upon the facts known to the applicant at the time of
instituting the proceeding, there was no substantial prospect of success.20
(iv) The test imposed by the expression ‘without reasonable cause’ is similar to
that adopted for summary judgment, that is, ‘so obviously untenable that it
cannot possibly succeed’, ‘manifestly groundless’ or ‘discloses a case which
the Court is satisfied cannot succeed.’21 (references from Church included)
[52] As to whether Mr Welsh made his unfair dismissal application vexatiously, I have
considered the submissions and statutory declarations filed on behalf of JFF but they have not
persuaded me he did so. The facts of this case are not such that I am satisfied the
“predominant purpose” of Mr Welsh was to harass or embarrass JFF, or to gain a collateral
[2018] FWC 6077
14
advantage and nor am I satisfied in all the circumstances that the unfair dismissal application
was “seriously or unfairly burdensome, prejudicial or damaging”.
[53] As to whether Mr Welsh made his unfair dismissal application “without reasonable
cause”, I have considered whether upon the facts known to Mr Welsh at the time of instituting
the unfair dismissal application, there was no substantial prospect of success.
[54] At the time he made his application, Mr Welsh relied on his assertion that the
retraction of his resignation was accepted by JFF but he was then terminated shortly after. I
am not persuaded on Mr Welsh’s own version of the facts, that it was clear to him at that
point in time that the proceeding would fail and nor am I persuaded that it was at that stage
apparent that his case was so obviously untenable that it could not possibly succeed.
Should it have been reasonably apparent to Mr Welsh that his unfair dismissal
application had no reasonable prospects of success (s.611(2)(b))?
[55] As to s.611(2)(b), the issue I have to determine is whether I am satisfied that in all the
circumstances it should have been reasonably apparent to Mr Welsh that his claim he had
been unfairly dismissed had no reasonable prospects of success.
[56] In Keep, 22 the Full Bench also summarised the principles relevant to s.611(2)(b) of the
Act:
“[18] As to s.611(2)(b), the FWC may make a costs order against a person if satisfied
that ‘it should have been reasonably apparent’ to that person that their application had
‘no reasonable prospect of success’. The expression ‘should have been reasonably
apparent’ in s.611(2)(b) imports an objective test, directed to a belief formed on an
objective basis as opposed to the applicant’s subjective belief.”
[19] There is Full Bench authority for the proposition that the Commission should
exercise caution before arriving at the conclusion that an application had ‘no
reasonable prospects of success’. In Deane v Paper Australia Pty Ltd23 a Full Bench
made the following observation about this expression in the context of enlivening a
power to award costs under s.170CJ(1) of the Workplace Relations Act 1996;
“unless upon the facts apparent to the applicant at the time of instituting the
[application], the proceeding in question was manifestly untenable or
groundless, the relevant requirement in s.170CJ(1) is not fulfilled and the
discretion to make an order for costs is not available”.24 (references from
Deane v Paper Australia Pty Ltd included)
[57] More recently, when considering the meaning of s.611(2)(b), despite referencing it as
s.611(1)(b), the Full Bench in Health Services Union – Victoria No.1 Branch v Sanli25 stated:
“[113] The observations of the High Court in Spencer v The Commonwealth26 as to the
meaning of the expression ‘no reasonable prospect’ in s.31A of the Federal Court of
Australia Act 1976 (Cth) (the Federal Court Act), are apposite to the matter before us:
‘In many cases where a plaintiff has no reasonable prospect of prosecuting a
proceeding, the proceeding could be described (with or without the addition of
[2018] FWC 6077
15
intensifying epithets like “clearly”, “manifestly” or “obviously”) as
“frivolous”, “untenable”, “groundless” or “faulty”. But none of those
expressions (alone or in combination) should be understood as providing a
sufficient chart of the metes and bounds of the power given by s 31A. Nor can
the content of the word “reasonable”, in the phrase “no reasonable prospect”,
be sufficiently, let alone completely, illuminated by drawing some contrast
with what would be a “frivolous”, “untenable”, “groundless” or “faulty” claim.
Rather, full weight must be given to the expression as a whole. The Federal
Court may exercise power under s 31A if, and only if, satisfied that there is “no
reasonable prospect” of success. Of course, it may readily be accepted that the
power to dismiss an action summarily is not to be exercised lightly. But the
elucidation of what amounts to “no reasonable prospect” can best proceed in
the same way as content has been given, through a succession of decided cases,
to other generally expressed statutory phrases, such as the phrase “just and
equitable” when it is used to identify a ground for winding up a company. At
this point in the development of the understanding of the expression and its
application, it is sufficient, but important, to emphasise that the evident
legislative purpose revealed by the text of the provision will be defeated if its
application is read as confined to cases of a kind which fell within earlier,
different, procedural regimes.’27
[114] Section 31A of the Federal Court Act is a power to enter summary judgment and
accordingly is not directly relevant to the matter before us. However, the High Court’s
observation (in Spencer) that full weight must be given to the expression as a whole
and that descriptors such as ‘frivolous’, ‘untenable’, ‘groundless’ or ‘faulty’ do not
provide a sufficient chart of the metes and bounds of the power, are also applicable to
s.611(1)(b).” (references from Spencer v The Commonwealth included)
[58] Having regard to these authorities, I am required to exercise caution in determining
whether to exercise the power to order costs pursuant to s.611(2)(b) and consider whether it
would have been apparent to a reasonable person that Mr Welsh’s application “had no
reasonable prospect of success”, giving full weight to this expression as a whole.
[59] I am not persuaded that it should have been reasonably apparent to Mr Welsh at the
time he made his application for unfair dismissal remedy that his application had no
reasonable prospects of success. As outlined in paragraph [54] above, at the time he made his
application, Mr Welsh relied on his assertion that the retraction of his resignation was
accepted by JFF, his belief that there was ongoing work and there had been no prior indication
that his employment was at risk.
[60] However, this does not necessarily end the consideration under s.611(2)(b). I agree
with the views of Deputy President Gostencnik in Galea v Billabong Custom Caravans Pty
Ltd T/A Billabong Custom Caravans,28 that an assessment of whether the circumstance
described in s.611(2)(b) existed is not limited to the time at which a person makes an
application and “[k]nowledge gained by a person during the course of a proceeding and after
making an application or response might lead to a conclusion that it should have been
reasonably apparent to a person that the person’s application or response had no reasonable
prospect of success.”29
[2018] FWC 6077
16
[61] Having regard to the circumstances of this case, I decline to order that Mr Welsh
should bear some or all of the costs incurred by JFF in the preparation and lodgement of its
Form F3 or in relation to the conciliation conference on 14 June 2018 pursuant to either
s.611(2)(a) or s.611(2)(b) of the Act.
[62] Once JFF filed its Form F3, its intention to assert that Mr Welsh voluntarily resigned
and that he had not served the minimum employment period would have become apparent to
Mr Welsh. As I have already dealt with the costs claimed by JFF after this time, having regard
to s.400A of the Act, it is unnecessary for me to deal with them having regard to s.611 of the
Act.
Conclusion
[63] For the reasons outlined above, I will exercise my discretion and order that Mr Welsh
pay JFF for the costs incurred set out in Items [3]-[5](inclusive) and [7] in the Itemised
Schedule of Costs in Section 4 of the Form F6, which I have allowed at $782.14. An order to
this effect will be issued separately.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
PR700915
1 Section 611(1) of the Fair Work Act 2009.
2 Statutory Declaration of Shumsheer Singh Ghumman declared on 20 August 2018.
3 [2012] FWA 10164.
4 Explanatory Memorandum to the Fair Work Amendment Bill 2012, page 7.
5 Ibid at page 37.
6 [2016] FWC 2659.
7 [2014] FWCFB 1175 at [10]-[14].
8 [2016] FWCFB 2478.
9 Ibid at [39].
10 [2009] AIRCFB 626.
11 Gugiatti v SolarisCare Foundation Ltd [2016] FWCFB 2478 at [61].
12 Ibid at [43].
13 Explanatory Memorandum to the Fair Work Amendment Bill 2012, page 7.
14 [2011] FWA 1010 at [20].
15 [2014] FWCFB 810.
16 [2015] FWCFB 1956.
17 [2014] FWCFB 810.
18 Ibid at [27].
THE FAIR WOR COMMISSION THE SEAL
[2018] FWC 6077
17
19 Ibid at [30].
20 See Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257, cited with approval in Church at [30].
21 Heidt v Chrysler Australia Limited (1976) 26 FLR 257 at [272 - 273]; Geneff v Peterson (1986) 19 IR 40 at [87-88];
Hatchett v Bowater Tutt Industries Pty Ltd (1991) 28 FCR 324 at 327; Re Ross and others, Ex Parte Crozier (2001) 111
IR 282 at [12]; Re Australian Education Union (NT Branch) (No.2) [2011] FCA 728 at [30]. Also see Wright v
Australian Customs Service, PR926115, 23 December 2002 per Giudice J, Williams SDP and Foggo C and Church at
[33].
22 [2015] FWCFB 1956.
23 PR932454, 6 June 2003.
24 Ibid at [8], also see Baker v Salva Resources Pty Ltd [2011] FWAFB 4014 at [10]; and Metecno Pty Ltd T/A Bondor v
Cameron [2014] FWCFB 2128 at [16].
25 [2018] FWCFB 745.
26 (2010) 241 CLR 118.
27 Ibid at [59]-[60] per Hayne, Crennan, Kiefel and Bell JJ.
28 [2017] FWC 2943.
29 Ibid at [25].
