PR973504 PR973504 Download Word Document AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION Workplace Relations Act 1996 s.658 - Application for payment of costs Aqua Assets Pty Ltd and P. Bottlik (U2006/4193) COMMISSIONER LARKIN SYDNEY, 4 AUGUST 2006 Termination of employment - application for Order for costs re U2005/5246. DECISION [1] On 23 May 2006 Aqua Assets Pty Ltd applied to the Commission for an order for costs. The application stated that the order was sought under s.170CJ (1), (2), (3), (4), (5A) and (6). Aqua Assets seek an order for costs in respect to proceedings arising from an application under s.170CE lodged by Mr. Bottlik for a remedy in respect to the termination of his employment on 15 August 2005. The application for costs was determined on the written material filed on behalf of Aqua Assets and Mr. Bottlik. BACKGROUND [2] The background to this matter can be briefly summarised as follows: [3] On 26 August 2005 Mr. Bottlik lodged an application under s.170CE seeking an amount in relation to the remuneration lost, or likely to have been lost because of his termination of employment. Conciliation proceedings were held on 9 November 2005 before Deputy Industrial Registrar Ellis. After the proceedings before DIR Ellis, the parties exchanged offers to settle the matter, on a without prejudice basis, save as to costs. Mr. Bottlik sought payment of an amount equal to eight weeks ordinary pay. Aqua Assets offered to settle the matter on 11 November 2005 for an amount equal to four weeks with a subsequent offer of five weeks on 7 March 2006. The matter did not settle. [4] A Certificate under s.170CF was issued on 7 December 2005. The Certificate stated: “It is not possible to make an assessment due to a conflict in the factual position and the necessity to hear evidence.” [5] Mr. Bottlik elected to proceed to arbitration. That election, it would appear, was filed two days outside of the prescribed time limit of seven days to file. On 3 March 2006 Senior Deputy President Hamberger, by order, extended the time to lodge the election to proceed to arbitration. [6] On 10 May 2006 I determined Mr. Bottlik’s application under s.170CE and dismissed the application. In conclusion I determined: “Earlier in this decision I found that there was a valid reason for the termination of the employment of Mr. Bottlik on the basis of his refusal to follow a lawful and reasonable direction from his employer. I was not persuaded by Mr. Bottlik’s evidence on the reason for that refusal. I had regard to paragraphs (b) and (c) of s.170CG(3), and found that Mr. Bottlik was notified of the reason for his termination of employment and was given an opportunity to respond to that reason. I have also considered that the size of the employer’s operations and the absence of expert human resource management skills impacted upon the procedures followed in this case. These issues are relevant factors. Having had regard to the matters specified in s.170CG(3) and having noted s.170CA(2) (“fair go all round”) I am of the view that the termination of the employment of Mr. Bottlik was not harsh, unjust or unreasonable in the circumstances. The application is dismissed.” 1 THE LEGISLATION [7] I will briefly outline the changes to the legislation in relation to the Commission’s costs jurisdiction as there appeared to be some confusion on this point in the stated grounds in support of the application and the written submissions filed. [8] On 30 August 2001 the Workplace Relations Amendment (Termination of Employment) Act 2001 (the 2001 Act) was enacted. The 2001 Act brought about substantial changes to s.170CJ 2 . [9] In Bernard Bryant and Defence Housing Authority the Full Bench stated: “The DHA’s application for an order for costs was filed on 2 November 2001. The application says that the order is sought under s.170CJ(3) of the Act. (Section 170CJ was recently amended by the Workplace Relations Amendment (Termination of Employment) Act 2001 (the 2001 Act). Item 31 of the 2001 Act, repealed ss.170CJ(1), (2), (3), (4) and (5) and substituted new ss.170CJ(1), (2), (3), (4), (5) and (5A). By item 48, these amendments to s.170CJ apply only in relation to a proceeding relating to an application under s.170CE made on or after the date on which item 31` commences. Item 31 commenced on 30 August 2001 – see s.2 of the 2001 Act and the Proclamation in the Commonwealth of Australia Gazette No. S357 of 29 August 2001. Accordingly, because Mr Bryant’s application under s.170CE was made before 30 August 2001, the DHA’s application for costs fell to be determined under s.170CJ prior to its amendment by the 2001 Act.)” 3 [10] Mr. Bottlik’s s.170CE application was made after 30 August 2001. His application was made on 26 August 2005. [11] His Honour Vice President Lawler summarised the changes to s.170CJ(1) in Mihajlovski v IR Cootes Pty Ltd 4 as follows: “Section 170CJ was amended substantially by Act No 100 of 2000 which commenced on 30 August 2001. Sub-section 170CJ(1) in its previous form authorised the making of an order for costs if an application under s.170CE was made ‘ vexatiously or without reasonable cause ’. The authorities dealing with s.170CJ(1) in its previous form remain relevant because the test for determining whether a proceeding was instituted ‘ without reasonable cause’ was whether ‘ upon the facts apparent to the applicant at the time of instituting the proceeding there was no reasonable prospect of success ’. In particular, the following propositions laid down by the Full Bench in Henderson v Mainpoint Enterprises (Aust) Pty Ltd remain applicable: ‘2. If the success of the application depends on the resolution in the applicant’s favour of one or more arguable points of law it is inappropriate to conclude that the proceedings were instituted ‘without reasonable cause’. An applicant is not liable to pay costs pursuant to s.170CJ(1) simply because an arguable point proves unsuccessful. 3. Where on the applicant’s own version of the facts it is clear that the proceeding must fail it can properly be said that the proceeding was instituted ‘without reasonable cause’.” [12] I will not elaborate upon all the changes brought about by the amendments to s.170CJ by the 2001 Act ; I simply refer parties to that Act and the Explanatory Memorandum. I note, however, that the change to s.170CJ(3) by the 2001 Act was significant in that prior to that Act the provision provided for a costs order on the basis that a person or organisation discontinued an application made under s.170CE after electing to proceed to arbitration. After the enactment of the 2001 Act, s.170CJ(3) provided that if the Commission was satisfied that a party caused costs to be incurred by the other party through an unreasonable act or omission in connection with the conduct of the proceedings then an order for costs may be made. [13] On 27 March 2006 the Workplace Relations Act 1996 (the pre-reform Act) was amended by the Workplace Relations Amendment (Work Choices) Act 2005 (the Work Choices Act) . Schedule 1 of the Work Choices Act lists the main amendments to the pre-reform Act . [14] Item 131 of Schedule 1 inserts a new subsection (3A) to s.170CJ (with renumbering this subsection is now s.658(3)), which provides that the Commission may order costs against a person (the representative) representing a party to a proceeding relating to a s.170CE application. The Explanatory Memorandum to the Workplace Relations Amendment (Work Choices) Bill 2005 , in relation to item 131, states: “Proposed subsection 170CJ(3A) would extend the 170CJ(3) costs provision, so that costs may be ordered not only against a party to a proceeding, but also directly against a representative of a party to the proceedings. The same test would apply to representatives as for costs orders against a party generally.” [15] 7(1) and 7(2) of Division 3 of Part 2 of Schedule 4, Transitional and other provisions, of the Work Choices Act provide that certain items of Schedule 1, the main amendments, apply in relation to terminations of employment that occur after reform commencement. Item 131 does not appear in the listed items at 7(2), therefore, it would appear that new subsection 170CJ(3A) (now 658(3)) applies to terminations of employment which occurred prior to the reform commencement. [16] Aqua Assets did not rely upon the new provision. However, it is my view that it is appropriate to outline some of the changes brought about by the Work Choices Act. [17] I note, for the benefit of the representatives that there does exist a Schedule of Costs found at Chapter 2, Part 12, Division 4, regulation 12.7 and Schedule 7 of the Workplace Relations Regulations 2006. CONSIDERATIONS [18] Section 170CJ states: (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. (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. (3A) If the Commission is satisfied: (a) that a person (the representative ) representing a party to a proceeding relating to an application made under section�643 caused costs to be incurred by the other party to the proceeding; and (b) that the representative caused the costs to be incurred because of the representative’s unreasonable act or omission in connection with the conduct of the proceeding; the Commission may, on an application by the other party, make an order for costs against the representative. (4) In making a decision under this section, the Commission may have regard to any certificate issued or advice given under section 170CF and whether a party pursued a course of action contrary to any such certificate or advice. (5) An application for an order for costs under this section must be made within 14 days after the determination, discontinuance, settlement or dismissal of the application under section 170CE or proceeding relating to an application under section 170CE (as the case may be). (5A) A schedule of costs may be prescribed in relation to items of expenditure likely to be incurred in respect of: (a) an application to the Commission under section 170CE; and (b) a proceeding in respect of an application under section 170CE. (6) Without limiting, by implication, the generality of the items of expenditure for which the schedule may provide, those items may include: (a) legal and professional costs and disbursements; and (b) expenses arising from the representation of a party by a person or organisation other than on a legal professional basis; and (c) expenses of witnesses. (7) If a schedule of costs is prescribed for the purposes of subsection (5A), then, in awarding costs under this section, the Commission: (a) is not limited to the items of expenditure appearing in the schedule; but (b) if an item does appear in the schedule—must not award costs in respect of that item at a rate or of an amount in excess of the rate or amount appearing in the schedule. (8) For the purposes of this section, the following proceedings are examples of proceedings relating to an application under section 170CE in respect of which the Commission may make an order for costs: (b) a proceeding for dismissal of an application under section�170CE on the ground that the application is outside jurisdiction; (c) conciliation proceedings under section�170CF; (d) arbitration proceedings under section�170CG; (e) an appeal to the Full Bench from an order of the Commission under section�170CH or a costs order under section�170CJ; (f) a proceeding concerning an application for costs by one party in respect of another party’s application for costs.” [19] It is not clear to me under which Act the Aqua Assets costs application has been made. The grounds on which the application was brought, inter alia, state: “The purpose of section 170CJ is to discourage ‘the improper use of Commission proceedings in relation to termination of employment’: para 7.56 of the Explanatory Memorandum accompanying the Workplace Relations Bill. It achieves this purpose by allowing the Commission to award costs in three broad categories of cases:- Where the applicant commences proceedings vexatiously or unreasonably: s 170CJ(1); Where a party has acted unreasonably in failing to discontinue, or failing to settle, a case: s 170CJ(2); Where the applicant has acted unreasonably in failing to discontinue a case earlier: 170CJ(3).” [20] The above reference to paragraph 7.56 of the Explanatory Memorandum, appears to be a reference to the Explanatory Memorandum to the Workplace Relations Act 1996 , prior to the amendments of the 2001 Act , albeit the criteria of unreasonably remains relevant. [21] The written submissions filed on behalf of Mr. Bottlik took issue with point 3 above in that “point 3 is not relevant to these proceedings, as the proceedings were not discontinued”. This submission is correct. Furthermore, it would appear that the costs application, as it applies to s.170CJ(3), is brought under the Act as it existed prior to the 2001 amendments. [22] Having regard to the terms of the costs application, I will determine the costs matter on the following basis. I must be satisfied that Mr. Bottlik made his application under s.170CE in circumstances where it should have been reasonably apparent to him that he had no reasonable prospect of success in relation to the application. Under s.170CJ(2) I must be satisfied that Mr. Bottlik acted unreasonably in failing to agree to terms of settlement that could have lead to the discontinuance of his application under s.170CE. If I am so satisfied under (1) and/or (2) I will determine whether or not I should, as a matter of discretion, make an order for costs against Mr. Bottlik. [23] I will firstly consider whether Mr. Bottlik made application under s.170CE in circumstances where it should have been reasonably apparent to him that he had no reasonable prospect of success. [24] The approach to be taken by the Commission, when considering the expression “no reasonable prospect of success”, has been determined by the Full Bench in G.H. Deane v Paper Australia Pty Ltd : “[U]nless, upon the facts apparent to the applicant at the time of instituting the appeal, 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.” 5 [25] The Full Bench in Kangan Batman TAFE adopted the test applied in G.H. Deane v Paper Australia Pty Ltd and added: “To this we would only add that s.170CJ(1)(b) refers to ‘ circumstances where it should have been reasonably apparent to the first party ’. The word ‘ should ’ in this context clearly connotes an objective test. Hence an applicant is not able to simply ignore what the facts were at the relevant time. However, it is clear that one cannot impute knowledge of certain facts to a party simply based on findings ultimately made by the Commission in the matter. The assessment of whether the relevant s.170CE application had ‘ no reasonable prospect of success ’ is to be made at the time the application for relief is instituted.” 6 [26] I am not persuaded that Mr. Bottlik should have known that his case was not a strong one. On my understanding, material in support of the allegations had not been exchanged. Mr. Bottlik’s version of the events leading up to his termination was the events as he saw them. Presumably Aqua Assets disagreed with his version. The parties, on my understanding of the case, had a difference of opinion of what was said in particular conversations and the intent of those conversations. [27] I am not satisfied that on the facts apparent to Mr. Bottlik, as he saw those facts, he should have known that his case was manifestly untenable or groundless at the time he lodged his s.170CE application. I am not persuaded that it should have been reasonably apparent to him that he had no reasonable prospect of success in relation to his application. I am not persuaded, as a matter of discretion, that an order under s.170CJ(1) should be made. [28] I will now turn to consider the requirements of s.170CJ(2) and whether Mr. Bottlik acted unreasonably in failing to agree to terms of settlement that could have lead to the discontinuance of his s.170CE application. [29] Aqua Assets argued that Mr. Bottlik acted unreasonably in failing to agree to terms of settlement offered to him. [30] In Blagojevch Moore J stated: “It is inconceivable, in my opinion, that consistent with those objectives a refusal to settle could be characterised as not unreasonable because, inter alia, a party adopted a position that it might succeed in an arbitration because it intended to rely upon what might have been contrived evidence or at least evidence of dubious quality for reasons already discussed. That a party might succeed in an arbitration on that basis could not, in my opinion, lead to, or lend support to, a conclusion that the rejection of the offer was not unreasonable…That is not to say that in the usual case reasonableness cannot be assessed by the Commission in a comparatively summary way when considering the position a party was in when an offer of settlement was made and, in that context, asking what would have been known to the party at that time about the prospects of their case succeeding or not in the arbitration.” 7 [31] I am not persuaded that in the substantive matter before me Mr. Bottlik sought to succeed in his application by contrived evidence or the leading of evidence of dubious quality. In my view, Mr. Bottlik was of the opinion that his termination was harsh, unjust and unreasonable given the circumstances of his case. This matter is distinguishable from the facts in Blagojevch. [32] The parties were in disagreement as to the amount of settlement. Mr. Bottlik sought eight weeks pay and Aqua Assets offered to settle the matter on the basis of five weeks pay. When considering a monetary settlement of a matter what is reasonable “will depend upon the actual and perceived strengths and weaknesses of the cases of the parties” 8 . [33] Under s.170CJ(4), the Commission may have regard to a Certificate issued under s.170CF. The terms of the Certificate issued in this case, in my view, are neutral. The certificate, as outlined above, states that there is a conflict in the factual position and “the necessity to hear evidence” . [34] I am not satisfied, given the circumstances of this matter that Mr. Bottlik acted unreasonably in failing to agree to the terms of settlement offered. Mr. Bottlik held his own view of the history of events associated with his employment. That view differed to that of the witnesses called on behalf of Aqua Assets. That evidence, on my understanding, was not available to Mr. Bottlik until the day of hearing of his substantive application. [35] In the substantive matter I made no findings of credit. Having considered the evidence and upon my observation of the witnesses in giving their evidence I preferred the evidence lead on behalf of Aqua Assets. In regard to the evidence given by Mrs. Bottlik, which I accepted as differing from that of her husband, I commented upon her nervousness and the fact that she was at times unsure. While I did determine that the conduct as alleged did occur and, what that conduct involved, that determination was based on my view of the evidence and the alleged conduct. Mr. Bottlik obviously held a different view. [36] In Stagno v. Frews Wholesale Meats the Full Bench, after a consideration of Henderson v Mainpoint Enterprises (Aust) Pty Ltd 9 said: “This is drawn from Mainpoint . The second proposition from Mainpoint , that there is a question of law in dispute, is not directly relevant in the present case. Here a determination of fact was required as a preliminary to any conclusion at law, i.e. what is the legal effect of the facts determined. As for the third proposition in Mainpoint , an examination of the proceedings on the merits established that, on Mr Stagno’s version of the facts, he had been dismissed. We adopt, with respect, the observation of Polites SDP in Coltex (which has already been referred to): “In the final analysis it is hard to disagree with the argument by Mr Perica in this case that to award costs on the basis of preferring one version of the evidence against another would be tantamount to awarding costs in the cause.’ This is not to be taken as differing from either proposition 1. or 3. in Mainpoint . In each of those cases the test relies on the facts apparent to the party affected at the relevant time. In Mainpoint the relevant time was at the institution of proceedings. In the present case the relevant time is at a later stage of proceedings. What we apprehend to be the basis of the comment of Polites SDP is that just because one version of the facts is preferred costs do not follow that preference. There needs to be something more before a failure to discontinue is unreasonable. 10 [37] In the circumstances, I am not satisfied that Mr. Bottlik acted unreasonably in failing to agree to terms of settlement. I am not persuaded that Mr. Bottlik considered his version of the facts to be such that his s.170CE application had no prospect of success in achieving the relief he sought. [38] I am not satisfied that the requirements s.170CJ(1) or (2) have been established and therefore I decline to make an order for costs against Mr. Bottlik in relation to his s.170CE application. [39] The costs application is dismissed. BY THE COMMISSION: COMMISSIONER Printed by authority of the Commonwealth Government Printer <Price code C> 1 PR972213 @ [60] to [63] (Larkin C, 10 May 2006) 2 Act No. 100 of 2001; See Explanatory Memorandum for more detail 3 PR916766 @ [3] (McIntyre VP, O’Callaghan SDP and Redmond C, 19 April 2002) 4 PR943954 @ [28] (Lawler VP, 24 February 2004) 5 PR932454 @ [8] (Giudice P, Williams SDP and Simmonds C, 6 June 2003) 6 PR958003 @ [22] – [23] (Ross VP, Kaufman SDP and Foggo C, 13 May 2005) 7 (2000) 98 IR 32 @ p.37 per Moore J 8 Ibid @ 22 9 Print Q3750 (Ross VP, Watson SDP and Whelan C, 17 July 1998) 10 Print Q8637 (Munro J, Duncan DP and Jones C, 12 November 1998)