[2015] FWCFB 1956
The attached document replaces the document previously issued with the above code on 24 March 2015.
Amending typographical errors in the references and correcting the date of a previous Full Bench decision in this matter at paragraph [2].
Annastasia Kyriakidis
Associate to Justice Ross, President
Dated 25 March 2015
| [2015] FWCFB 1956 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.365 - Application to deal with contraventions involving dismissal (consent arbitration)
JUSTICE ROSS, PRESIDENT |
MELBOURNE, 24 MARCH 2015 |
Application for costs - ss. 375B and 611 Fair Work Act 2009 (Cth) - meaning of ‘without reasonable cause’ and ‘no reasonable prospect of success’ - application dismissed.
[1] Mr Keep was dismissed from his employment with Performance Automobiles Pty Ltd (Performance Automobiles, the respondent) on 4 April 2014 and subsequently made an application under s.365 of the Fair Work Act 2009 (Cth) (FW Act) alleging that Performance Automobiles had contravened s.340 of the FW Act by taking ‘adverse action’ against him because he exercised a ‘workplace right’ (the Application). A conference did not resolve the dispute and the parties agreed to the Fair Work Commission (FWC) determining the dispute by consent arbitration, pursuant to s.369 of the FW Act.
[2] The FWC, as presently constituted, heard the dispute and in a decision dated 15 December 2014 1 (the Decision) we decided that the respondent had discharged the onus, under s.361(1) of establishing that the reasons for the decisions which constituted the ‘adverse action’ were not for a prohibited reason under the FW Act. On that basis Mr Keep’s application was dismissed.
[3] The respondent now seeks orders pursuant to ss.375B and 611 of the FW Act that the applicant pay the respondent’s costs of and incidental to the consent arbitration proceedings on the basis that the applicant should not have:
(i) commenced the Application based on the unchallenged facts known to the applicant prior to making a claim; or
(ii) continued the Application after receipt of the respondent’s submissions, witness statements and documentary evidence which was unchallenged by the applicant.
[4] In the alternative, the respondent contends that the applicant unreasonably continued the Application, which caused the respondent to incur costs. It is submitted that the applicant should have discontinued the Application as he did not have any basis in fact to dispute or challenge the respondent’s reasons or evidence. In particular, the following stages presented an opportunity for the applicant to re-assess the Application and discontinue:
(i) after the applicant had the benefit of the information in the respondent’s Form F8A Response;
(a) had the benefit of a frank discussion about the Application during the conciliation; and
(b) was subsequently offered an amount of $3,500.00 to settle the Application (i.e. after the conciliation but before the filing of material for the arbitration) which was rejected on 19 June 2014 by the applicant; or alternatively
(ii) after the filing of outline of submissions and witness statements and inspection of the documents produced to FWC at which time the applicant had all the information available and still had no factual basis to challenge the respondent’s evidence.
[5] The parties have consented to the costs application being determined ‘on the papers’ and we have given careful consideration to the written submissions filed on behalf of both parties in arriving at our decision. 2
[6] It is convenient to deal first with the relevant legislative provisions before turning to the merits of the respondent’s costs application.
[7] The FWC has the power, relevantly for present purposes, to make an order for costs pursuant to ss.375B and 611 of the FW Act.
[8] Section 375B is in the following terms:
“375B Costs orders against parties
(1) The FWC may make an order for costs against a party (the first party) to a dispute for costs incurred by the other party to the dispute if:
(a) an application for the FWC to deal with the dispute has been made under section 365; and
(b) 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 dispute.
(2) The FWC may make an order under subsection (1) only if the other party to the dispute has applied for it in accordance with section 377.
(3) This section does not limit the FWC’s power to order costs under section 611.”
[9] Section 377 is also relevant, it provides:
“377 Applications for costs orders
An application for an order for costs in relation to an application under section 365 or 372 must be made within 14 days after the FWC finishes dealing with the dispute.”
[10] In the present matter the FWC finished dealing with the dispute when it published its decision on 15 December 2014. The respondent’s costs application was filed on 24 December 2014 and hence within the time period prescribed in s.377.
[11] Section 375B was inserted into the FW Act by the Fair Work Amendment Act 2013 (Cth). The new provision came into effect on 1 January 2014 and applies to dismissals which took effect from that date.
[12] The Supplementary Explanatory Memorandum to the Fair Work Amendment Bill 2013 (Cth) states as follows:
“New section 375B allows the FWC to order costs against a party to a general protections dismissal dispute (the first party) if it is satisfied that the first party caused the other party to the dispute to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the dispute. New section 375B is similar to the costs orders that are available against parties in relation to unfair dismissal matters (see section 400A).
57. This power to award costs is in relation to the dispute before the FWC and does not include costs associated with a general protections court application.
58. The power to award costs under new section 375B is not intended to prevent a party from robustly pursuing or defending a general protections dispute before the FWC. Rather, the power is intended to address the small proportion of litigants who pursue or defend disputes in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.
59. The FWC’s power to award costs under subsection 375B(1) 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.
60. 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.
61. New subsection 375B(2) provides that the power to award costs against one party in these circumstances is only exercisable if the other party to the dispute makes an application in accordance with section 377. New subsection 375B(3) makes it clear that the new power to award costs under subsection 375B(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.”
[13] It is apparent from the Supplementary Explanatory Memorandum that the legislature intended that the power to order costs provided by s.375B only be exercised where there is clear evidence of unreasonable conduct. Such an approach is entirely consistent with the jurisprudence relating to the other costs provisions in the FW Act (such as s.611).
[14] As stated in s.375B(3), the power to make an order for costs pursuant to s.375B(1) does not limit the FWC’s power to order costs pursuant to s.611. Section 611 has general application in relation to matters before the FWC and provides as follows:
(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.”
[15] It may be observed at the outset that there are some similarities between s.611 and s.570 of the FW Act, in particular the common use of the expression ‘vexatiously or without reasonable cause’. On that basis judgments which have construed s.570, and its legislative antecedents, have been regarded as relevant to the consideration of s.611. 3 Of course s.570 deals with the ordering of costs in court proceedings in relation to matters arising under the FW Act. In court proceedings the usual practice is that an order for costs follows the outcome of the substantive proceedings. The Commission context is quite different. There is no general practice that costs follow the event and the FWC’s power to order costs only arises in the circumstances specified in ss.376, 400A, 401, 611 and 780 of the FW Act. Section 611(1) sets out a general rule - that a person must bear their own costs in relation to a matter before the FWC, and then provides exceptions to that general rule in the limited circumstances referred to in s.611(2).
[16] The FWC’s power to order that a person bear some or all of the costs of another person in relation to an application is only enlivened if the FWC is satisfied as to the matters set out in either s.611(2)(a) or s.611(2)(b).
[17] The proper construction of s.611(2)(a) was recently considered by a Full Bench in Church v Eastern Health t/as Easter Health Great Health and Wellbeing (Church). 4 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. 5
(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. 6
(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. 7
(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’. 8
[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. 9
[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’. 10 In Deane v Paper Australia Pty Ltd11 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”. 12
[20] The respondent contends that the applicant made the Application ‘without reasonable cause’, within the meaning of s.611(2)(a) and, further, that it should have been reasonably apparent to the applicant that the Application had ‘no reasonable prospect of success’, within the meaning of s.611(2)(b).
[21] The respondent submits that the Application had no reasonable prospect of success and that on any view of the evidence could never have succeeded because:
(i) none of the reasons advanced by the respondent for terminating the applicant’s employment due to redundancy were challenged by the applicant; and
(ii) the applicant did not advance any factual basis on which the FWC could accept that the applicant’s workers’ compensation claim was a factor in the respondent’s decision to make the applicant’s position redundant as claimed by the applicant.
[22] The respondent also submits that the Application was brought ‘without reasonable cause’ because it should have been apparent to the applicant at the time he lodged the Application that his employment was terminated because his position was redundant. This submission is put on the basis that the applicant knew (and did not challenge) the following facts:
(i) circumstances leading to the operational changes in the respondent’s business (i.e. closure of Cambridge site and change to the composition of the applicant’s administrative and ‘on the tools’ duties);
(ii) Pre-Delivery Department of the respondent’s business was not performing to the expected standard;13 and
(iii) the respondent:
(B) having a representative attend medical appointments with the applicant;16 and
(c) assisted the applicant to be rehabilitated back into the workplace by adopting necessary changes to his position to assist the applicant to remain in the workplace.17
[23] It may be observed at the outset that the task of the FWC in a consent arbitration pursuant to s.369 is to determine three factual questions:
(i) Was the employee exercising a workplace right, within the meaning of s.341?
(ii) Did the employer take ‘adverse action’ against the employee, within the meaning of s.342?
(iii) Did the employer take the adverse action against the employee because of a prohibited reason, or reasons which included that reason?
[24] In the context of this particular matter the applicant bore the onus of establishing that he had exercised a workplace right at the relevant time and that adverse action was taken against him. Once those matters were established, the respondent then bore the onus of establishing that the adverse action was not taken because Mr Keep had exercised a workplace right. It was common ground that the applicant had exercised a workplace right and that the respondent had taken adverse action against the applicant. The sole substantive issue in dispute in the proceedings was whether the respondent took adverse action against the applicant because he exercised a workplace right.
[25] The FWC’s task in the substantive proceedings was to determine, on the balance of probabilities, ‘why the employer took adverse action against the employee, and to ask whether it was for a prohibited reason.’ 18 Subsection 361(1) casts an onus of proof on an employer to show that it did not take action for a prohibited reason.
[26] The practical effect of s.361 is that in most cases an explanation of the real reason for the adverse action, consistent with the absence of a prohibited reason, is also necessary to rebut the presumption.19 In assessing the evidence led to discharge the onus upon the employer under s.361(1), the reliability and weight of such evidence is to be balanced against evidence adduced by the employee and the overall facts and circumstances of each case; but it is the reasons of the decision-maker at the time the adverse action is taken which is the focus of the inquiry.20
[27] As we stated in the Decision dealing with the Application, evidence from the decision maker which is accepted as reliable is capable of discharging the burden of proof cast on the employer but such evidence will not necessarily always discharge the statutory onus. It is open to the FWC to accept as honest and credible a decision maker’s explanation of the decision constituting the adverse action, then to weigh all of the evidence and the overall facts and circumstances of the case and not be satisfied that the employer has discharged the statutory onus.
[28] In this particular matter there was a dispute about who made the decisions which constituted the adverse action. The respondent contended that the sole decision maker was Mr Brown, whereas the applicant submitted that the relevant decisions were made, jointly, by Messrs Brown and Eve. The resolution of this disputed matter was important because Mr Eve had engaged in conduct which lent some support to the applicant’s submission that Mr Eve was ‘fed up’ of dealing with the Applicant’s workers compensation claim. If Mr Eve had been a joint decision maker then it was at least arguable that a substantial and operative factor in the decisions which constituted the adverse action was the fact that the Applicant had made and maintained a workers compensation claim.
[29] The applicant’s contention that Mr Eve was a joint decision maker was not manifestly untenable or groundless. Evidence was adduced which showed that Mr Eve played a role in the relevant decisions, but an assessment of all the evidence led us to conclude that he was not a joint decision maker for the purpose of the relevant inquiry.
[30] Having regard to all of these considerations we are not persuaded that the Application was made without reasonable cause. Nor are we persuaded that the Application had no reasonable prospect of success. As to the respondent’s alternative submission - that the applicant acted unreasonably in failing to discontinue the Application - we are not persuaded that the applicant’s continuation of the dispute was unreasonable.
[31] As the respondent has not satisfied us as to the matters in s.611(2)(a) or (b), or s.375B(1)(b) the discretion to make an order for costs is not enlivened and the costs application must be dismissed.
PRESIDENT
2 The respondent’s outline of submissions and response to the applicant’s submissions; and the applicant’s response and 2nd response to the respondent’s submissions.
3 see Church v Eastern Health t/as Eastern Health Great Health and Wellbeing [2014] FWCFB 810 at [22]-[23]
5 Ibid at [27]
6 Ibid at [30]
7 see Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257, cited with approval in Church at [30]
8 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]
9 see Wodonga Rural City Council v Lewis (2005) 142 IR 188 at [6], and Baker v Salva Resources Pty Ltd [2011] FWAFB 4014
10 Wright v Australian Customs Service, PR926115, 23 December 2002
12 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]
13 See Annexure 5 to the Statement of Evidence of Adrian Brown dated 6 August 2014
14 See PN764, PN1077 and PN1211 of the Transcript
15 See PN1522 of the Transcript
16 See PN1523 of the Transcript
17 See PN753, PN967, PN 1054 of the Transcript
18 Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 220 IR 445 (Barclay) at [5] per French CJ and Crennon J
19 Seymour v Saint-Gobain Abrasives Pty Ltd (2006) 161 IR 9 at [29] per Buchanan J; Rojas v Esselte Australia Pty Ltd (No 2) (2008) 177 IR 306 at [48] per Moore J.
20 Barclay at [127] per Gummow and Hayne JJ
Printed by authority of the Commonwealth Government Printer
<Price code C, PR562273>