BEAVER v RAC INSURANCE PTY LTD [1997] IRCA 142

DECISION NO:142/97 CATCHWORDS INDUSTRIAL LAW - COSTS Workplace Relations Act 1996 (C'th) (formerly Industrial Relations Act 1988 (C'th)) Ss 170EHA and 347 Fenech v Perfect Health Medical Centres Pty Ltd, unreported, IRCA 199/96, Marshall J, 2 May 1996 Kanan v Australian Postal Telecommunications Union (1992) 43 IR 257 Wannberg v Alloa Holdings Pty Ltd t/a Energy Publications, unreported, IRCA 592/96, Ritter JR, 6 December 1996 MARGARET WINIFRED BEAVER v RAC INSURANCE PTY LTD WI 1472 of 1996 Before: BOON JR Place: PERTH Date: 21 APRIL 1997

IN THE INDUSTRIAL RELATIONS COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA DISTRICT REGISTRY ) wi 1472 of 1996 B E T W E E N: MARGARET WINIFRED BEAVER Applicant A N D:

RAC INSURANCE PTY LTD

Respondent MINUTE OF ORDERS 21 APRIL 1997 PERTH BOON JR

THE COURT ORDERS THAT :

1. Ms Beaver pay to RAC Insurance Pty Ltd costs fixed in the sum of $2,500 within 42 days of the date of this order. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules

IN THE INDUSTRIAL RELATIONS COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA DISTRICT REGISTRY ) WI 1472 of 1996 B E T W E E N: MARGARET WINIFRED BEAVER Applicant A N D: RAC INSURANCE PTY LTD Respondent REASONS FOR DECISION 21 APRIL 1997 BOON JR INTRODUCTION This is an application by the respondent, RAC Insurance Pty Ltd, for payment of costs by the applicant, Ms Margaret Beaver. On 25 February 1997, I handed down a decision in relation to an application by Ms Beaver in this Court seeking payment of compensation arising out of the alleged unlawful termination of her employment by RAC Insurance Pty Ltd. On that date I made the following orders: "1. The respondent pay to the applicant an amount equal to two weeks' pay in lieu of notice pursuant to the provisions of section 170DB. 2. The application is otherwise dismissed. 3. The question of costs is reserved. 4. The matter will be set down for hearing at 10 a.m. on Monday 5 March 1997 for submissions in relation to costs." The history of this matter is that Ms Beaver's employment was terminated by RAC Insurance Pty Ltd on 3 October 1996. On 15 October 1996 she filed an application in the Australian Industrial Relations Commission. On 29 November 1996 Commissioner Dight provided a certificate in accordance with subsection 170ED(1) of the Industrial Relations Act 1988, that the Commission had been unable to settle this matter by conciliation within a reasonable period and that the parties had not elected to have the matter dealt with by consent arbitration. Accordingly, the matter was referred to this Court and it proceeded to a hearing on 11 and 12 February 1997. At the hearing RAC Insurance Pty Ltd admitted that originally on terminating Ms Beaver's employment it paid her only two weeks' wages in lieu of notice. As Ms Beaver was over 45 years of age and because she was employed for a period of over five years, she was in fact entitled to a total of five weeks' notice under the provisions of section 170DB of the Workplace Relations Act 1996 (formerly Industrial Relations Act 1988) (the Act). On 6 December 1996 RAC Insurance forwarded to Ms Beaver a cheque representing a further one week's pay. That amount was calculated on the basis that Ms Beaver had already received two weeks' pay in lieu of notice; she had been paid for a week of unauthorised leave and at that time RAC Insurance was unaware that Ms Beaver was over 45 years of age because she had written the incorrect year of birth on her original employment application. Once it was discovered that Ms Beaver was in fact over 45, RAC Insurance sent her a further cheque for one week's pay. Both of those cheques were returned by Ms Beaver because she had received legal advice from Legal Aid to the effect that she should return them. In those circumstances I was satisfied that it was appropriate to make an order that the respondent pay to Ms Beaver an amount equivalent to two weeks' pay in lieu of notice. In relation to the balance of Ms Beaver's claim, I accepted the evidence of the respondent's witnesses over that of Ms Beaver. I stated at page 12 of my Reasons for Judgment: "It is my view, however, that even if all of Ms Beaver's evidence was accepted, the outcome of this case would have been the same. She admitted that she booked a seven-week holiday and that in the end she decided to take the risk and go to Ireland despite the fact that she knew she had only been granted six weeks' leave. She also admits that each of the allegations were put to her in the interviews on 1 and 3 October 1996." In an affidavit sworn by Keith Paul Chilvers, the Group Human Resources Manager of the respondent, in support of the respondent's application for costs, it was stated that Ms Beaver was put on notice on 19 December 1996, 23 January 1997 and 6 February 1997 that the RAC may seek to recover its legal costs and disbursements from Ms Beaver. The respondent filed written submissions in support of its application for costs. Those written submissions referred to section 170EHA(1) and section 347 of the Act. Section 170EHA states as follows: "SECTION 170EHA COSTS 170EHA(1) [Ordered to pay costs] If, in relation to a matter referred to the Court under section 170ED, the Court is satisfied that a party to the proceeding has caused any other party to the proceeding to incur costs because of an unreasonable act or omission of the first-mentioned party in connection with the conduct of the proceeding following the referral, the Court may order the first-mentioned party to pay all or part of the costs incurred by that other party. 170EHA(2) [Power to award costs] This power is in addition to, and not in derogation from, any other power of the Court to award costs. 170EHA(3) ["costs"] In this section: "costs" includes all legal and professional costs and disbursements and expenses of witnesses." In relation to section 170EHA(1) of the Act, the respondent states that the applicant's action in progressing this matter, given the circumstances of the termination of her employment (even on her version of the facts), was an unreasonable act, which as a result caused the RAC to incur unnecessary costs. Reference was made to the applicant's Summary of Facts in which Ms Beaver claimed a total loss of $125,782 representing payment in lieu of notice, long-service leave opportunity lost, plus loss of income between the date of termination and the date on which Ms Beaver will turn 65 years of age. Further, the respondent stated that Ms Beaver's refusal to accept monies tendered to her by the respondent under cover of its letters dated 6 December 1996 and 20 January 1997, by way of additional monies for notice, was unreasonable. It was argued that the sum representing the monies owed by the respondent to Ms Beaver by way of pay in lieu of notice represented just over one percent of her total monetary claim. It was stated that but for Ms Beaver's unreasonable action in refusing to accept the monies tendered, the respondent would not have been put to proof, nor would Mr Chilvers have given evidence in relation to the claim, nor would the Court have had to turn its mind to it and nor would the respondent have had to bear the cost of proving that its actions were reasonable in respect of the notice period. In relation to section 347 of the Act, it was submitted that the power to award costs under that provisions is discretionary. Section 347 states as follows: "SECTION 347 COSTS ONLY WHERE PROCEEDING INSTITUTED VEXATIOUSLY ETC. 347(1) [Payment of costs] A party to a proceeding (including an appeal) in a matter arising under this Act shall not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause. 347(2) ["Costs"] In subsection (1): "costs" includes all legal and professional costs and disbursements and expenses of witnesses." It was submitted by the respondent that to be brought "without reasonable cause" means, amongst other things, where on the applicant's own version of the facts it is clear that the proceeding must fail; see Kanan v Australian Postal Telecommunications Union (1992) 43 IR 257. It was said that Ms Beaver's unlawful termination application was brought without reasonable cause because on her own version of the facts, her claim of breach of sections 170DC and 170DE(1) must have been doomed to failure. The difficulty I see with the respondent's argument in relation to section 347 is that at the time Ms Beaver instituted the proceeding she was clearly owed two weeks' wages by way of payment in lieu of notice. The respondent admitted this and subsequently sought to pay this amount to Ms Beaver. In these circumstances, I do not consider that the proceedings were "instituted" vexatiously or without reasonable cause, notwithstanding the fact that the payment in lieu of notice represented only a small portion of Ms Beaver's claim against the RAC. In my view, therefore, section 170EHA(1) is the only provision relating to costs in the Act which may apply to the present case. The question is whether Ms Beaver's action in refusing the respondent's cheques by way of payment in lieu of notice and proceeding to a hearing in this matter constituted an "unreasonable act or omission" on her part. In relation to this Ms Beaver stated that she proceeded with the action as she thought she had a good reason to proceed. She says she refused the offer of settlement on the basis of legal advice obtained from Legal Aid. Ms Beaver referred to the case of Wannberg v Alloa Holdings Pty Ltd t/a Energy Publications, unreported, IRCA 592/96, Ritter JR, 6 December 1996, in which Ritter JR awarded costs against the respondent under the provisions of section 170EHA(1). In that case, however, the respondent did not concede that there had been a contravention of section 170DB of the Act until the closing submissions. In this case, the respondent conceded its breach of section 170DB several weeks before the hearing. It is clear that this Court's power to award costs under section 170EHA is discretionary because of the use of the word "may" in that section. Further, the Court has the power to order payment of all or part of the costs incurred by a party. In my view, Ms Beaver has caused RAC Insurance Pty Ltd to incur costs because of her unreasonable act in proceeding to a hearing of this matter after the respondent acknowledged its full obligation to her under the provisions of section 170DB. The relevant period is from 23 January 1997 to the hearing on 11 and 12 February 1997. I have arrived at this view because, as I said in my Reasons for Judgment on 25 February 1997, my decision in relation to the alleged breaches of sections 170DC and 170DE(1) would have been the same even if I had accepted all of Ms Beaver's evidence in relation to those provisions. Ms Beaver acknowledged in her evidence before this Court that she had decided to take an extra week of unauthorised leave against her employer's instructions and that all of the allegations against her conduct had been put to her by her employer prior to the termination of her employment. In these circumstances, it is my view that her claim in relation to those two provisions was doomed to failure. In the case of Fenech v Perfect Health Medical Centres Pty Ltd, unreported, IRCA 199/96, Marshall J, 2 May 1996, His Honour stated at page 5: "The prospects of success of the application for interlocutory relief were virtually nil and on that basis it cannot be said that this was a matter where a claim which had some merit was simply found unmeritorious on the better view of the matter. Therefore, in my view, it is appropriate to order costs pursuant to section 170EHA of the Act in favour of the applicant." The conditions giving rise to a power under section 170EHA to award costs have been met. It remains for this Court to decide whether, in all of the circumstances of this case, it should exercise its discretion to award costs. Ms Beaver refers to the fact that she thought she had a good claim, that she was given legal advice not to accept the cheques, and that she was unrepresented. The respondent refers to the fact that Ms Beaver was an office steward with the Finance Sector Union and should have had some understanding of the unlawful termination laws and how they operated, that on several occasions the respondent put Ms Beaver on notice that it intended to seek costs at the end of the day and that Ms Beaver acted in a manner devoid of any common sense or practicality and ought to have known from the outset that her unlawful termination claim was doomed to failure. Further, the respondent submitted that the Federal Court scale of costs would be the most appropriate scale to use. In this case, because Ms Beaver's claim was doomed to failure, I consider it appropriate to make an order that she make a contribution towards the respondent's costs in this matter. However, because Ms Beaver was unrepresented and because she was given legal advice that she should return the respondent's cheque offered by way of settlement, I consider it appropriate to make an order that she pay only part of the respondent's costs, such part to be fixed in the amount of $2,500. THE COURT ORDERS THAT Ms Beaver pay to RAC Insurance Pty Ltd costs fixed in the sum of $2,500 within 42 days of the date of this order.