Lech Keller v QBE Group (Investments) Ltd [1994] IRCA 176

CATCHWORDS INDUSTRIAL LAW - Termination of employment - Complaint of unlawful termination - Application in respect of a termination occurring on 4 July 1991 - Application dismissed - Application for costs. Industrial Relations Act 1988, S.347 Kanan -v- Australian Postal Telecommunications Union (1992) 43 IR 257 at 264 Saddington -v- Oliver Anors (1993) 49 IR 412 at 414 RV Moore: ex parte Federated Miscellaneous Workers Union of Australia (1978) 140 CLR 470 at 473 Standish -v- University of Tasmania (1989) 28 IR 129 at 139 Thompson -v- Hodder (1989) 29 IR 339 at 341 Heidt -v- Chrysler Australia Limited (1975) 26 FLR 257 at 274 LECH KELLER - V - QBE GROUP (INVESTMENTS) LTD No. VI-925/94 Before:Ryan JR Place: Melbourne Date 30/01/95

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY Matter No VI-925/94 B E T W E E N: LECHKELLER Applicant AND: QBE GROUP (INVESTMENTS) LTD Respondent RYAN JR MINUTES OF ORDER

30 January 1995 THE COURT ORDERS THAT:

The Applicant pay the costs of the Respondent as specified pursuant to Order 62 Rule 1(b). NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY Matter No VI 925/94 B E T W E E N: LECHKELLER Applicant AND: QBE GROUP (INVESTMENTS) LTD Respondent COURT: RYAN JR PLACE:MELBOURNE DATE: 30/01/95 APPLICATION FOR COSTS Lech Keller was employed by QBE Investments Ltd. His employment was terminated on 4 July 1991 although Mr Keller does not necessarily accept that this was the effective date of termination. On 5 July 1994 he filed an Application for Remedy on the grounds that the 1991 termination was unlawful. On 6 September 1994 the employer filed a Notice of Motion seeking dismissal of the Application and Costs. The applicant was unrepresented and personally appeared on 3 October 1994 to oppose the Motion. Mr Mark Rinaldi of Freehills appeared for the employer. Once the Court found that the employer terminated the employment before 30 March 1994, indeed on 4 July 1991, the original Application was doomed and the Motion was successful in the sense that the Application was dismissed. Mr Rinaldi then submitted that the Application was, if not vexatious, at least without reasonable cause and that pursuant to Section 347 of the Industrial Relations Act 1988 costs should be awarded to the employer. Mr Keller made a brief submission in reply. He argued that he did not institute the proceedings vexatiously. I doubt that he understood what at law constituted or might constitute the institution of proceedings without reasonable cause. In effect he submitted that if he had instituted the proceedings without reasonable cause the Court should, as a matter of discretion, decline to order costs against him. Mr Keller did not express his arguments in these terms but that was the thrust of it. He made reference to proceedings in forma pauperis and he was really saying he had no means and that blood could not be extracted from stone. The Application for costs was reserved and both parties were advised in writing on 19 January 1995 that the costs application would be determined on 30 January 1995. A recent leading authority on costs in just this situation under Section 347 is Kanan -v- Australian Postal Telecommunications Union (1992) 43 IR 257 at 264 where Wilcox J said "Mr Rothman submits, that if the proceeding is dismissed, the Court ought to take the extraordinary course of ordering that Mr Kanan pay the costs incurred by his client. Section 347 of the Industrial Relations Act sets out the general rule that a party to a proceeding in a matter arising under the Act "shall not be ordered to pay costs incurred by any other party to the proceeding". But this rule is subject to a qualification: "unless the first mentioned party instituted the proceeding vexatiously or without reasonable cause". Mr Rothman argues that the qualification applies to the present case because the proceeding was instituted without reasonable cause. Mr Van Aalst does not dispute that proposition, if his reliance on Section 52 and Section 258 should prove ill-founded. But he says that, as a matter of discretion, the Court ought not to order costs if it considers the proceedings not vexatious. I do not doubt that, in instituting this proceeding, Mr Kanan was motivated to obtain relief to which he considered himself entitled. There is no reason to believe that he was actuated by a desire to harass the respondent. To the extent that the word "vexatious" imports considerations additional to the question whether there was a reasonable cause for the proceeding, I make no finding adverse to Mr Kanan. But, for the qualification of Section 347 to operate, it is sufficient that the proceeding be instituted "without reasonable cause". A proceeding is not to be classed as being launched "without reasonable cause" simply because it fails. As Gibbs J said in RV Moore: ex parte Federated Miscellaneous Workers Union of Australia (1978) 140 CLR 470 at 473, speaking of the Conciliation and Arbitration Act equivalent of Section 357 (Section 197A): ".......a party cannot be said to have commenced a proceeding without reasonable cause, within the meaning of that section, simply because his argument proves unsuccessful. In the present case the argument presented on behalf of the prosecutor was not unworthy of consideration and it found some support in the two decisions of this Court to which I have referred. The fact that those decisions have been distinguished, and that the argument has failed, is no justification for ordering costs in the face of the prohibition contained in Section 197A". In Standish -v- University of Tasmania (1989) 28 IR 129 at 139 Lockhart J applied the qualification in ordering costs against an applicant whose case he thought "misconceived" rather than simply unsuccessful. But, as the Full Court pointed out in Thompson -v- Hodder (1989) 29 IR 339 at 342, "there may be cases which could not be described properly as misconceived but which would nevertheless be held to have been instituted without reasonable cause". It seems to me that one way of testing whether a proceeding is instituted "without reasonable cause" is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being "without reasonable cause". But where, on the applicant's own version of the facts, it is clear that the proceeding must fail, it may be properly said that the proceeding lacks a reasonable cause. That is the situation in the present case. The qualification of Section 347 applies. The Court has power to order costs against the applicant. I see no discretionary reason to withhold such an order. It is not a matter of the applicant's motives, but, rather, that he has put the respondent to the expense of resisting a claim which was always doomed to failure. There is no question of punishing the applicant for his unreasonable course of action. The rationale for making a costs order is that a measure of indemnity should be conferred upon the respondent for the costs it has been obliged to incur in responding to the unreasonably instituted proceeding. I propose to order that the principal proceeding be dismissed with costs. The costs of the motion will be costs in the principal proceeding and so covered by that order". At the conclusion of the Notice of Motion and before reserving on costs I indicated that I did not accept that Mr Keller had instituted the proceedings vexatiously and that, at that stage, I was not satisfied that the proceeding had been instituted without reasonable cause although It might be argued that, after quite a specific written notice and warning from the respondent employer's solicitors, the proceedings were continued without reasonable cause. Mr. Rinaldi submitted that if I maintained that view then I should hold that the institution of proceedings without reasonable cause included the continuation of proceedings without reasonable cause. While it is not necessary now for me to make a finding on that submission I am by no means convinced that it is correct. I note that in Saddington -v- Oliver Anors (1993) 49 IR 412 at 414 Gray J applied Kanan and held that it was not possible to split the proceedings for the purpose of Section 347. Although he was dealing with two causes of action raised in a rule to show cause and he was not dealing with a differentiation between instituting an action and continuing an action. In Thompson -v- Hodder (1989) 29 IR 339 at 341 the Industrial Division of the Federal Court stated, after an analysis of the authorities "an applicant who has the protection of Section 347 will only rarely be ordered to pay costs of a proceeding in exceptional circumstances" and although Wilcox J did award costs in Kanan he described such an order as "extraordinary". In an earlier leading case Heidt v Chrysler Ltd (1975) 26 FLR 257 at 274 Northrop J set out the principles which had been applied in abuse of process cases in courts. After referring at 274 to various expressions he said "Great care must be exercised to ensure that in finding that a party has instituted proceedings vexatiously or without reasonable cause, that party is not improperly deprived of his freedom from liability to pay costs to an opposing party. The test is a substantial one". I accept the test is indeed substantial but in this case, in terms of proceedings instituted without reasonable cause, I conclude that it has been met. Nevertheless, I have considered exercising the discretion not to order costs but I am met with the concluding comments of Wilcox J as quoted above. I can discern no real distinction or significant difference in this case and Kanan and I can find no discretionary reason to withhold the order for costs. As in Kanan Mr Keller has put the respondent to the expense of resisting a claim which was always doomed to failure. As in Kanan there is no question of punishing the applicant for his unreasonable course of action. The rationale for making a cost order is that a measure of indemnity should be conferred on the respondent for the cost it has been obliged to incur in responding to the unreasonably instituted proceeding.