The full appeal decision here.
The original decision involved an unfair dismissal application by a Care Coordinator against her employer on the grounds that the applicant alleged that she was forced to resign due to the conduct of the respondent.
In the decision being appealed, Deputy President Beaumont (Her Honour) agreed with the applicant’s ex-employer, that the application should be dismissed as it had no reasonable prospects of success; and most telling, that the it had incurred costs defending the matter. And, as a matter of course, that the applicant and her lawyer should be have an order of costs made against them.
Whilst not deeming it necessary, Her Honour nonetheless, cited the various parts of the Fair Work Act and numerous citations.
“…the award of costs is appropriate in these circumstances. I will exercise my discretion and order that [the applicant] and [the applicant’s lawyer] pay the costs [the respondent] incurred by engaging Ai Group as its legal representative from 17 December 2018 up until the preparation of its costs application, which relevantly includes the conduct of the costs arbitration on 8 April 2019.
“I consider it appropriate to apportion the costs to be paid such that 67% are to be paid by [the applicant’s lawyer and 33% by [the applicant]. This apportionment of costs recognises that both, by their own actions but in different ways, contributed to the costs incurred by the [the respondent]”.
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The full Bench kicking off with clarifying the purpose of the appeal, which was made by the applicant’s lawyer, but was unclear as to the applicant’s order. Whilst it was clear that the applicant’s lawyer was appealing against his own liability per the decision-in-chief, it was not so clear as to his client. The Full Bench determined that application covered both the lawyer and his client.
Contrary to the lawyer’s application in the original matter (Her Honour commented on this), he was very detailed in the grounds set forth in the application for appeal.
The Full Bench finding:
“We are satisfied that the public interest is attracted and that permission to appeal should be granted. The appeal raises important issues of general application in relation to the award of costs against parties and their representatives in unfair dismissal proceedings. To determine the appeal, it is necessary to consider the costs decision in some detail”.
The original findings
The appeal decision treated the (in my own words) the decision as though it were swiss cheese – holes throughout. In the outset, the Full Bench found that that “two essential findings” from the decision-in-chief were worthy of further consideration:
- Firstly, that Her Honour concluded that the material filed by the respondent established a case that was so strong that a reasonable person would have withdrawn the unfair dismissal application.
- Secondly Her Honour concluded that the applicant’s lawyer was instrumental in the decision of the Appellant to continue with her application and had devised a strategy in this regard knowing that it was not reasonable to continue with the application.
Further, the Full Bench observed that:
“After considering case law in relation to s. 400A of the Act the Deputy President determined that the section concerns matters already instituted rather than whether a matter should have been instituted at all. On that basis the Deputy President concluded that the initiation of the application was not an unreasonable act for the purposes of that section. In relation to the failure to discontinue the application after the receipt of [the respondent’s] response, the Deputy President observed that although the response was comprehensive at the date it was received, the Appellant’s pursuit of her application at this stage was not unreasonable because the Appellant “had not been privy to the evidence [the respondent] would adduce and was ‘not yet cognisant of the meticulous submissions it would provide that thwarted the lines of argument she would pursue’”.
- The finding that the Appellant’s failure to discontinue the application after receiving [the respondent’s] outline of submissions and witness statements was an unreasonable act and that legal costs had been incurred, albeit that those costs had not been adequately quantified so that the precise expenditure could be identified.
- the Deputy President’s assessment of the strength of the respondent’s case based on its materials filed on 17 December 2018 was erroneous.
- There is no specific appeal ground dealing with the Deputy President’s finding that the applicant’s lawyer advised his client to maintain silence. In the initial hearing, the applicant stated:
“I was very stressed, really emotional, crying all of the time. The Employment Assistant counsellor even continued ringing me and we had appointments and supporting me. When I went off sick, I couldn’t even get out of bed I was that bad. The doctor tried to put me on antidepressants which I had a bit of a reaction to and they had to take me off, so I was in quite a poor state”.
- The applicant further stating that the removal of the on-call allowance “tipped her over the edge.” Going on to testify that she was “absolutely distraught by then” and was “too ill to have contact initially.” And that she had sought assistance from an external service provided by the respondent to support employees and had been advised by a consultant that she should take personal leave.
- Repudiation of an employment contract by an employer is but one of the bases upon which the Commission may find that employment ended at the initiative of the employer. The same conduct which is said to amount to repudiation of an employment contract may also be part of a course of conduct which results in the employee having no effective choice to remain in employment and being forced to resign.
- The Appellant argued that the removal of the on-call allowance significantly reduced her annual income and was part of a course of conduct to force her resignation. A broader consideration of the respondent’s evidence would have established that the fact that the Appellant did not have a contractual entitlement to the allowance was not determinative of whether the Appellant was entitled to rely on its removal in support of her claim. On any view, $12,000 was a significant sum of money to have been removed from the applicant’s annual income representing an approximate 20% reduction in her earnings.
- This also left open the argument that consultation required by the SCHCDS Award had not been undertaken by the respondent. The respondent’s assertion that there was no requirement to consult the applicant about this change because it was in place in other of its workplaces is not determinative. It is also arguable that even if the removal of the on-call allowance was not a significant change for the purposes of clause 8 of the SCHCDS Award, it was a change in respect of rosters or hours of work requiring consultation pursuant to clause 8A of the SCHCDS Award. Whether consultation was or was not required by the terms of the Award was not the end of the matter. Failure to consult was also capable of being considered as part of a course of conduct alleged by Ms Sharkey to have forced her resignation regardless of whether or not it was required by the SCHCDS Award.
- The respondent merely sent an email sent to the applicant advising of the removal of the on-call allowance.
- Her Honour drew in relation to the fact that the applicant’s lawyer and his client did not give evidence was a factor in her conclusions about the lawyer’s conduct for the purposes of the s. 401(1A). In our view, it was not open to Her Honour, and in doing so was an error of law.
- In the words of the Full Bench:
“In some cases, it will be objectively apparent that at a particular point in time an application or a response is doomed to failure. In terms of applications, such cases include circumstances where on the facts pleaded, the party’s application or response cannot succeed or where the response to an application sets out facts which are undisputed or cannot be disputed, upon which it is apparent that the application being responded to cannot succeed. However, where there are disputed facts which can only be resolved at hearing, which if resolved in favour of a particular party would raise an arguable case – either in support of or opposition to an application – it is unlikely that a party who presses on and seeks that the Commission rule on disputed facts is acting unreasonably”.
- That the applicant had yet to file her material, it cannot be said that the respondent’s case was “presented in a forensic fashion” and “nothing was undisclosed,” as found by the Deputy President in the costs decision.
- The respondent also contended in its 17 December 2018 submissions that “where an individual claim they were forced to resign from their employment, the onus is on the individual to prove that they did not resign voluntarily and that the employer forced them to do it.” The Full Bench:
“Implicit in this submission is the proposition that it was incumbent upon [the applicant] to prove that her resignation was forced…[the applicant] cannot be criticised on the basis that she took steps to do just that and continued with her application”.
The Full Bench went on to summarise that the material that was filed by the respondent that there were disputed issues of fact and law which could only be resolved at hearing.
In summary the Full Bench basically destroyed the decision-in-chief, stating that:
“In our view the approach to considering indemnity costs adopted by the Deputy President discloses no error.
“However, we do accept, on the basis of our conclusions in relation to the Appellant’s case at first instance, that the case was one where indemnity costs should not have been granted and in our view the decision to do so was not open to the Deputy President. The Appellant’s case was not doomed from the outset and there was no basis for finding that the Appellant or her representative made allegations knowing them to be false or that the proceedings were commenced for some ulterior motive. The fact that the Appellant’s case was not strong or that her contentions were not accepted was not a basis for the grant of indemnity costs. The Deputy President erred in awarding indemnity costs…”
The full Bench concluding
- Permission to appeal is granted.
- The Appeal is upheld.
- The Decision in  FWC 2287 is quashed.
- The application by [the respondent] for costs in U2018/11109 is dismissed.
Applications for costs should be used sparingly. Whilst inferred in this decision (I did not dwell on it), the fact that the applicant’s lawyer sought to settle the matter weighed in their favour.
Now, it will be (presumably) up to the applicant – with or without – her lawyer to pursue the “constructive dismissal claim”.