Full decision at: https://www.fwc.gov.au/documents/decisionssigned/html/2019fwc7248.htm
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The applicant lost his unfair dismissal application against his former employer. The former employer then decided to institute proceeding against its former employer in the Fair Work Commission. Whilst his former employer was ultimately unsuccessful, the reasoning by the Commissioner in this matter is somewhat intriguing.
The former employee in this matter, was a cabin services attendant, and was dismissed for stealing a piece of cake and packet of chips. After he was dismissed and acted against his former employer in the Fair Work Commission, he also threatened his former employer with bad publicity by talking to the television program, A Current Affair.[No doubt arguing that in earlier times he would have been transported to the colonies].
Seeking of costs against a former employee
The former employer was seeking its legal cost which amounted to $30,852.37, including GST.
In a strange twist, the Commissioner who threw out the unfair dismissal, said that the former employee had an arguable case, and that under normal circumstances, the dismissal would have been found to be valid but ultimately unfair. It was the differing explanations and contacting the television program that was the tipping point. The Commissioner commenting:
“A person who accepted what they had done at an early stage may well have an ultimate finding from the Commission that dismissal was a disproportionate penalty”.
The Commissioner, later adding even if the former employer was found to have unfairly dismissed the former employee: “…such compensation as may be ordered would be somewhat low after the anticipated period of employment was calculated and relevant deductions made”.
Offer of “settlement” rejected
The former employer relied upon the former employee’s failure to accept a written offer of three week’s pay ($3,000) to “settle” the matter. The former employee failed to respond to such offer or in any way try to negotiate a higher amount.
The written of was headed “Without Prejudice Save as to costs”; and what could be a timely warning for employer advocates, when dealing with unrepresented applicant, it might be wise to heed the Commissioner’s comments:
“Respectfully, this jargon is not quite the same as bluntly saying to an unrepresented applicant with no legal or industrial relations background and plainly with English language difficulties that ‘we think your case is hopeless and if you fail after an arbitration we will seek to recover from you our legal costs which we expect to be in excess of $30,000 and we think we have a good chance of obtaining them’”.
“It is a regular and somewhat frustrating experience for every Member of the Commission that they have to explain to unfair dismissal applicants that maximum compensation is rarely given and is usually significantly less. Even sophisticated parties with well-trained legal representatives misunderstand this basic fact of the unfair dismissal system, so what hope is there for a person who plainly does not have English as their first language and is not represented to understand the jargon ‘Without Prejudice Save as to costs’?”
Doctrine of awarding costs
As a general rule, and reinforced by the Commissioner, is that each party must bear their own costs in proceedings before the Commission.
In determining the costs matter, the Commissioner stated that:
“The Full Bench has indicated that 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’. An application will have been made vexatiously ‘where the predominant purpose … is to harass or embarrass the other party, or to gain a collateral advantage’
“…In cases where the statutory criteria may be enlivened, the Commission’s power to award costs … is discretionary. The exercise of discretion must be in a manner which is ‘fair and just’ and takes into account ‘equity, good conscience and the merits of the matter’ and there is a broad nature to the factors which may be relevant to the exercise of the discretion. There is also a requisite causal link between the act or omission and the costs incurred”.
Specifically noting that “A party cannot be said to have made an application ‘without reasonable cause’…simply because his or her argument proves unsuccessful”.
The three questions
The Commissioner said that he was required to answer three questions to decide the matter:
- Was the commencement of the application an unreasonable act or omission or made without reasonable prospects of success? Was the application made vexatiously or without reasonable cause?
- Was continuation of the application an unreasonable act or omission or should it have been apparent that continuation had no reasonable prospects of success?
- If the basis for a costs application is established, consideration needs to then be given to whether the discretion to award costs should be exercised.
The Commissioner was far from supportive of the former employee’s case, stating:
“All in all, [the former employee’s] case had moved by the time he had filed his material in the Commission from at least arguable to problematic, if not worse. It was an unreasonable act on his part not to have engaged with the settlement proposal put to him by [his former employer]. Further, by that time, his threats to engage “A Current Affair” against the company were plainly vexatious, in the sense that ‘the predominant purpose … is to harass or embarrass the other party, or to gain a collateral advantage’. [The former employee] had actually engaged with the program and had moved beyond a mere threat”.
Message: do not steal
The Commissioner deciding:
- The former employee was obviously aggrieved. He saw an injustice having been committed against him. Having been accused of stealing a small piece of cake and a bag of chips, he was assured not to worry by one of the company’s managers, “but not the right one it seems”.
- An order for costs against the former employee would reinforce that unmeritorious applications are not to be pursued and that vexatious claims may have dire consequences.
- An order for costs could potentially assist in workplace relations messaging – “do not steal at work; do not lie to us if we enquire about such matters and expect to be dismissed if you do”. However, that messaging is reasonably already available simply because the former employee was dismissed and is able to use his example in its efforts to establish a compliant workplace.
But it ultimately got down to the Commissioner conserving the impact a costs order would have on the former employee, stating:
“On balance, I decline to exercise my discretion to order costs against [the former employee], notwithstanding that the basis for doing so is there. While an order in favour of [the former employer] would compensate [the former employer] monetarily, its effect on [the former employee] may well be severe. Irrespective of whether an order is made, [the former employee], will likely feel the effects of his dismissal from [the former employer] …for some time to come. If he remains unemployed, he will suffer further financial and social hardship. When he seeks future employment, he will have the potential of further difficulties if employers learn of how he left [the former employee]; being called an inventive liar is hardly the quality of a good reference. When he obtains further employment, his positioning in the labour market is such that the new employment is unlikely to make up the loss he has incurred since being dismissed.
It is apparent in this case that the former employer was very fortunate that it had not found wanting in the unfair dismissal case proper. Further, it would appear (at least in this Commissioner’s vocabulary) that the words “discretionary” and “soft” mean the same thing?