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Snippet: Cost awarded against ex-employee in unfair dismissal case.

In somewhat rare event the FWC has awarded costs against the applicant in an unfair dismissal matter, after the applicant withdrew her application.


The FWC in this matter requested that the parties file their written submissions by a certain date. The company requested and was granted further time to submit its arguments.

The applicant commenced performing work for the company on 18 April 2018 until she was notified on 11 January 2020 that she was not required to perform any further work.

The applicant (ie the ex-employee), presumably deciding that her case was not strong, sought to discontinue the matter.

Upon the applicant ceasing to sue for unfair dismissal, the respondent sought an award from the FWC for the applicant to pay its legal costs resulting from the unfair application. The FWC gave the parties time to make submissions on the subject, however the applicant – despite an extension of time – failed to respond the FWC’s request.

The company allegations included the embezzlement of its funds

The respondent argued that the application for unfair dismissal was made vexatiously and without reasonable cause and had no reasonable prospect of success causing reh company to incur costs as a result the applicant’s unreasonable acts and omission.

The company successfully argued that the applicant:

  • Was an independent contractor not an employee;
  • Was aware that the company employed three people (a small business employer); and
  • Made unauthorised transactions from the company’s bank account and redirected payments to her own account.

The Company sought costs of $14,150.


In finding that the company had incurred significant legal costs, however was not satisfied that the application for unfair dismissal was vexatious or without reasonable cause, finding that the applicant would not have foreseen the number of jurisdictional issues; however found that the applicant had substantially drained funds from respondent’s account and on this basis the application had no reasonable prospect of success.

As a result, the applicant had caused respondent to incur costs because of an unreasonable act in connection with the continuation of the matter beyond the conciliation conference and applicant’s actions which would have significantly impacted on the company.

The FWC ordered the applicant to pay respondent $4,000 in weekly instalments of $100.

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.

Finding that:

“…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 appeal

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.

Appeal allowed

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:

  1. 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.
  2. 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 Appellanthad 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 failings

  • 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”.

In summary

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

  1. Permission to appeal is granted.
  2. The Appeal is upheld.
  3. The Decision in [2019] FWC 2287 is quashed.
  4. 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”.

Full decision at:

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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:

  1. 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?
  2. Was continuation of the application an unreasonable act or omission or should it have been apparent that continuation had no reasonable prospects of success?
  3. 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?

Full decision:

This matter titillated my interest due to the explanatory nature of the decision in relation to costs orders, and the claim (for costs) following on from an unfair dismissal application where an offer was made by the applicant (ie ex-employee) and rejected by his former employer (the respondent). It was the rejection of this offer that led to costs being awarded (amongst other things) against the ex-employer.

And what does a 1975 English Court of Appeal divorce case have to do with this matter in 2019?

[Please note that there was an issue whether the “ex-employee” was or was not a contractor, I used the terminology “ex-employer and “ex-employee” for convenience].

The nuts and bolts of this matter is the submission that the ex-employee incurred costs because the ex-employer did not “settle” the matter before going to arbitration, therefore causing the employee to endure additional costs in fighting (and ultimately) winning a higher sum than the offer an arbitration of the matter. That is, the offer was 16 weeks, the arbitrated outcome was 18.45 weeks’ pay, finding that the employee (was an employee) and was unfairly dismissed.

The Canadian CEO “pointed” response to the offer was:


Andrew O’Farrell was never an employee of [ex-employer].

I find your position parasitic and disgusting.

Should you proceed any further we will contact the Australian revenue authorities since [the ex-employee] has never paid taxes.

As well we will contact the Australian bar association to report your unprofessional representation.

Govern yourself accordingly.



The commissioner ed that the matter be determined “on the papers”:

“That is, he will make a decision on the application based on the written submissions and evidence both parties have already filed, without requiring the parties to attend the Commission”.

The ex-employee claim was:

“The Applicant claims that because the arbitrated outcome is superior to that proposed by the Applicant in the final settlement offer correspondence, in accordance with the obiter in Calderbank v Calderbank [see “Legal bits”], the unreasonable action by the Respondent in not settling the matter for the amount proposed by the Applicant, the Respondent prolonged the settlement of this matter unnecessarily, which caused the Applicant to incur additional costs”.

Also stating that the ex-employer made no attempt to seek or obtain legal advice on Australian law.

In consideration, the Commissioner noted:

  • The Respondent had every right to reject the offer from the Applicant based on their understanding of the contractual relationship with the Applicant. They were of the view, albeit misguided, that the contract that they entered into with the Applicant was binding and enforceable.
  • The Applicant put the Respondent on notice of a further application in relation to costs if they were successful in an arbitrated outcome.
  • The Respondent did not enter into any negotiations with the Applicant.
  • The Respondent did not attend the Hearing.
  • Regarding Australian representation:

“I do not accept the Respondent’s excuse that they could not find representation to prosecute their case. Sydney has a large number of competitively priced advisors, solicitors and barristers who specialise in the field of industrial relations. Any one of a number of these specialists could have provided advice or representation in this matter”.

[Ed: A Google search of “unfair dismissal lawyers Sydney” had 257,000 results!]
  • The Applicant sent the Respondent a letter “putting them on notice” as to costs.

The Commissioner concluded:

  • The Respondent’s involvement in the conduct of the proceedings was relatively unique. The Respondent was difficult to contact and appeared somewhat blasé about the whole process before the FWC. I have sympathy with the Applicant in relation to the frustration that the Applicant experienced in the conduct of the matter.
  • The Applicant’s letter should have at least generated an enquiry to an Australian IR practitioner. This letter clearly put the Respondent on notice in relation to the possibility of a future claim by the Applicant in relation to his legal costs.
  • The Respondent’s attitude and inactivity in the process before the FWC was unreasonable conduct.
  • That this unreasonable conduct resulted in the Applicant being required to incur additional costs.

The Commissioner, in allowing the costs to be awarded, referred the parties to the FW Regulations, and encouraged the parties to agree to a sum of money being the costs incurred by the Ex-employee after 18 October 2018 and until 28 February 2019.

The legal bits

Section 400A of the FWA.

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.”

Section 400A was inserted into the Act in 2012. The Explanatory Memorandum of the Fair Work Amendment Bill 2012 stated:

“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”

“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.

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.

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.

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.” (Commissioner’s emphasis).

In Sidney v Employsure Pty Ltd (Sidney), Commissioner Bissett conveniently summarised a number of relevant authorities on this issue in the following manner:

“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.”

In Matthew Gugiatti v SolarisCare Foundation Ltd, 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.”

The Full Bench in Roy Morgan also stated:

“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.”

Section 400A appears in Part 3-2 Unfair Dismissal of the Act. Relevantly, section 381 of the Act states:

381 Object of this Part

(1) The object of this Part is:

(a) to establish a framework for dealing with unfair dismissal that balances:

(i) the needs of business (including small business); and

(ii) the needs of employees; and

(b) to establish procedures for dealing with unfair dismissal that:

(i) are quick, flexible and informal; and

(ii) address the needs of employers and employees; and

(c) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.

(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a “fair go all round” is accorded to both the employer and employee concerned.

Note: The expression “fair go all round” was used by Sheldon J in in re Loty and Holloway v Australian Workers’ Union [1971] AR (NSW) 95.

In Baxter Healthcare Pty Ltd t/a Baxter Healthcare v Andrew Portelli, a Full Bench of the Commission held:

“We note at the outset that the relevant sections provide that if the requisite jurisdictional facts are established (relevantly, ss. 400A(1) and (2), and s.611(2)) then the Commission may make an order for costs. A costs order does not automatically follow upon a finding of the requisite jurisdictional fact. It is clear from the use of the word ‘may’ that the Commission retains a discretion as to whether or not to make an order for costs. In that regard these provisions may be contrasted with ss. 418(1) and 424(1), which provide that the Commission must make certain orders if certain jurisdictional facts are present.”

Calderbank v Calderbank (Source: Wikipedia)


After a marriage of 17 years, Mr and Mrs Calderbank separated and filed for divorce which was duly granted.

However substantial difficulties arose regarding the division of the matrimonial assets of £78,000, consisting of the £80,000 Mrs Calderbank had previously inherited during the relationship from the estates from the death of both her parents. Complicating matters further, the matrimonial home was registered under only Mr Calderbank’s name (for fiscal reasons), and he continued to live in this property after the divorce.

The matter was referred to the Family Court, and the judge awarded Mr Calderbank the modest amount of £10,000 (out of the total assets of £78,000), as well as court costs.

However, prior to the matter going to trial, Mrs Calderbank had made the following offer via no less than the form of an affidavit, “I am willing, and have always been willing, to make over to the [husband] the house at Alderley Edge”, which Mr Calderbank declined.

While this house was not the matrimonial home (it was rented by Mr Calderbank’s father, and Mr Calderbank’s mother lived there), the trial judge was of the opinion that this house was worth about £12,000, which was £2,000 more than Mr Calderbank later obtained at trial.

Mrs Calderbank, not happy with the outcome, appealed on two grounds, that the courts had no legal jurisdiction to make such a property division and, of most legal significance, that as Mr Calderbank had obviously declined a reasonable pretrial settlement offer, he should not be entitled to legal costs for unnecessarily prolonging the legal proceedings.


The Court decided that if a winning party in litigation refuses an earlier settlement offer made by the losing party, the losing party may produce the settlement offer as evidence towards the appropriate level of costs payable. In practice, if the winning party’s award of damages is less than the earlier settlement offer, the losing party may have to pay less costs to the winning party than normal.

On the facts, the Court upheld the lower court’s quantum of the £10,000. However, the Court reversed the burden of paying legal costs from Mrs Calderbank onto Mr Calderbank. The Court held that the legal proceedings had been unnecessarily prolonged by Mr Calderbank’s earlier refusal to accept Mrs Calderbank’s settlement offer of around £12,000.