DECISION NO:156/97 CATCHWORDS INDUSTRIAL LAW - COSTS - vexatious or without reasonable cause Workplace Relations Act 1996 (C'th) (formerly Industrial Relations Act 1988 (C'th)) Ss 170EHA and 347 Andrews v Uniting Church in Australia (1995) 60 IR 437 Attorney General v Wentworth (1988) 14 NSWLR 481 Canceri v Taylor (1994) 1 IRCR 120 Day v Victorian Railways Commissioners (1949) 78 CLR 62 Fitzroy Motors Pty Ltd v Hyundai Automotive Distributors Australia Pty Ltd (1995) 68 IR 120 Foxcroft v The Ink Group Pty Ltd (1994) 1 IRCR 215 Gazzo v Foldaway Industries Pty Ltd, unreported, IRCA 119/96, Parkinson JR, 29 March 1996 Geneff v Peterson (1996) 19 IR 40 General Steel Industries v Commissioner of Railways (NSW) (1964) 112 CLR 125 Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 Imogen Pty Ltd v Sangwin, unreported, IRCA 640/96, Full Court, 20 December 1996 Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 National Union of Workers v Downtown Duty Free, unreported, IRCA 356/95, Moore J, 8 August 1995 Saddington v Oliver and others (1993) 49 IR 412 Scott v Access Industries for the Disabled Ltd (1994) 58 IR 172 State of Victoria v Commonwealth (1996) 138 ALR 129 Wilkinson and Wilkinson v Cleo's Unitisation, unreported, IRCA 82/97, Moore J, 27 February 1997 Macquarie Concise Dictionary, 2nd Edition Oxford English Dictionary ANTONIO D'ANTUONO -v- MINISTER FOR HEALTH WI95/2574 Before : RITTER JR Place : PERTH Date of Judgment : 12 MAY 1997 IN THE INDUSTRIAL RELATIONS COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA DISTRICT REGISTRY ) WI 2574 of 1995 B E T W E E N: ANTONio D'ANTUONO Applicant A N D: MINISTER FOR HEALTH Respondent MINUTE OF ORDERS 12 MAY 1997 PERTH RITTER JR THE COURT ORDERS THAT: 1. The respondent's application for costs be dismissed. 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 ) No. WI 2574 of 1995 B E T W E E N: ANTONIO D'ANTUONO Applicant A N D: MINISTER FOR HEALTH Respondent REASONS FOR DECISION 12 MAY 1997 RITTER JR On 17 September 1996 the applicant's claim for a remedy in relation to the termination of his employment by the respondent was dismissed. On the same date, counsel for the respondent made an application that the applicant pay the respondent's costs of the proceeding. Programming orders were then made for the filing of written submissions in relation to the costs application and for the filing of affidavits. On 10 October 1996, the respondent filed written submissions in support of the application for costs. An affidavit of Mr Lundberg, the solicitor who had represented the respondent, was also filed on the same date. A bill of costs in support of the respondent's application was filed on 24 October 1996. The applicant filed submissions against the application for costs on 24 October 1996. An affidavit sworn by Mr D'Antuono in opposition to the costs application was also filed on 24 October 1996. The respondent's application relied on two alternative bases for seeking a costs order. The first was the general power of the Court to order costs in the circumstances where section 347 of the Workplace Relations Act (the "Act") does not prohibit an award of costs; the second was in reliance upon the Court's power under section 170EHA(1) of the Act to award costs. I deal first with the second suggested basis. Section 170EHA(1) was inserted by Act No. 168 of 1995 and commenced on 15 January 1996. Section 170EHA(2) provides that the power to award costs in section 170EHA(1) is in addition to the other powers of the Court to award costs. Section 170EHA(1) provides that 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. The reference to a referral to the Court under section 170ED is a reference to the referral of an application to the Court from the Australian Industrial Relations Commission (the "AIRC"). An applicant may lodge with the AIRC an application for relief in respect of the termination of their employment under section 170EA(1) of the Act. Pursuant to section 170EA(4), an application so lodged is treated by the AIRC as an attempt to settle the matter by conciliation. Section 170EB of the Act sets out the role of the AIRC in the conciliation process. Pursuant to section 170EB(2), if the AIRC decides that the matter cannot be settled by conciliation, or further conciliation within a reasonable period, the AIRC must inform the parties to the conciliation that it has made this decision and invite the parties to elect, by notice in writing given to the AIRC, either at once or within a period specified by the AIRC, to have the matter dealt with by consent arbitration. Section 170ED(1) states that if any party to the conciliation does not elect to have the matter to which the conciliation relates dealt with by consent arbitration, the AIRC must refer the application relating to the matter to the Court. Section 170ED(2) provides that when the AIRC refers the application to the Court, the application is taken to have been duly lodged at the Court as an application for a remedy in respect of the termination of the employment of the applicant. By its reference to section 170ED, therefore, section 170EHA relates to an application referred to the Court after one or both of the parties to an unsuccessful conciliation attempt have elected not to have the matter dealt with by consent arbitration. As stated, section 170EHA commenced on 15 January 1996. In practical terms, it can only apply to an application initially made to the AIRC via section 170EA of the Act. The reason for this is because the first part of section 170EHA(1) specifically refers to a matter referred to the Court under section 170ED. Therefore, section 170EHA will not apply to an application made directly and initially to the Court, which was the procedure which applied prior to 15 January 1996. In this instance, Mr D'Antuono's initial application was made to the Court and filed on 19 December 1995. Accordingly, section 170EHA is not applicable to the application of Mr D'Antuono and provides no basis upon which a costs order can be made. As set out earlier, the alternative basis for the application was that the limitation on the general power of the Court to award costs contained in section 347 of the Act, did not in this case apply. Section 347 of the Act provides 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." The section is cast in the form of a prohibition. A party to a proceeding is not to be ordered to pay costs incurred by the other party unless the party who instituted the proceeding did so vexatiously or without reasonable cause. In this instance the proceeding was the application for a remedy in relation to the termination of employment of Mr D'Antuono. It is that proceeding which must be characterised as being vexatious or without reasonable cause for the prohibition contained in section 347 not to apply. The respondent submitted that the application of Mr D'Antuono was both vexatious and/or without reasonable cause. The decisions of the Court, insofar as I have been able to research, do not contain any clear delineation of the distinction in meaning between proceedings which are instituted vexatiously and those without reasonable cause. Wilcox CJ in Imogen Pty Ltd v Sangwin, unreported, IRCA 640/96, Full Court, 20 December 1996 at page 8 said:- "The respondent submits there is no substantial difference in meaning between 'vexatious' and 'without reasonable cause' as those terms are used in section 347 of the Act. I doubt that this is correct; if the two expressions were intended to mean the same thing, there would have been no need for Parliament to use both of them. If there is a difference in meaning, 'without reasonable cause' is the lower standard." Neither Ryan J nor Madgwick J, the other members of the Full Court, expressed any divergence of view. The Chief Justice did not however elaborate on the meaning of "vexatious". A dictionary meaning of "vexatious" includes legal actions instituted without sufficient grounds, and serving only to cause annoyance; see The Macquarie Concise Dictionary, 2nd Edition. Roden J referred to an almost identical definition in the Oxford English Dictionary in Attorney General v Wentworth (1988) 14 NSWLR 481 at page 487. In that case, His Honour had to consider the meaning of the expression "vexatious legal proceedings", in the context of an application by the Attorney General under section 84(1) of the Supreme Court Act (NSW) 1970, for an order that a vexatious litigant do not, without leave of the Court, institute or continue legal proceedings. At page 491, His Honour concluded that:- "1. Proceedings are vexatious if they are instituted with the intention of annoying or embarrassing the person against whom they are brought. 2. They are vexatious if they are brought for collateral purposes, and not for the purpose of having the Court adjudicate on the issues to which they give rise. 3. They are also properly to be regarded as vexatious if, irrespective of the motive of the litigant, they are so obviously untenable or manifestly groundless as to be utterly hopeless." It can be seen that category 3 will overlap with proceedings that are instituted "without reasonable cause". In my opinion, categories 1 and 2 provide an understanding of what are vexatious proceedings for the purposes of section 347 of the Act. The respondent in their written submissions referred to the authorities of General Steel Industries v Commissioner of Railways (NSW) (1964) 112 CLR 125 per Barwick CJ at page 129 and Heidt v Chrysler Australia Limited (1976) 26 FLR 257 per Northrop J at page 275. Both of these cases considered the meaning and application of the compendious expression "vexatiously or without reasonable cause". In looking at the decisions, however it seems to me that the observations there made were more appropriate to an understanding of the expression "without reasonable cause" than the word "vexatiously". The respondent submitted that the applicant's motive and/or state of mind at the time of originating the proceeding was capable of being determined by inference from the manner in which Mr D'Antuono had elaborated and developed his allegations. Specifically, the respondent relied on the following to support the proposition that Mr D'Antuono's claim was instituted vexatiously:- 1. The applicant's claim that eleven persons employed at the Armadale Kelmscott Health Service and in the wider health community were involved in a conspiracy against him which led to the termination of his employment. 2. The fact that on 22 or 23 April 1996 the applicant filed an amended summary of facts which raised new allegations including bias on the part of the person who made the decision to terminate Mr D'Antuono's employment; the termination of the applicant's employment was related to his capacity as a representative of employees; the termination of the applicant's employment was related to the filing of a complaint by the applicant against the respondent; an allegation that the respondent had contravened section 334(1)(j) of the Act; and allegations that certain employees of the respondent displayed hostility and animosity towards the applicant in his capacity as a union job representative. 3. The zealousness with which allegations of conspiracy and bad faith were maintained, including allegations that some of the respondent's witnesses had given false evidence under oath. 4. Allegations "without any proper foundation" that certain other witnesses of the respondent were unreliable, evasive and uncertain. This also included an allegation of attempting to interfere with a witness in the proceedings. The respondent's submission concluded that "the applicant's case carried with it all the hallmarks of a vexatious claim, grounded as it was in unsupported and malleable allegations of fraud and conspiracy. . . . That the claim was manifestly groundless became more apparent as the hearing proceeded, yet the applicant maintained each of his allegations until the conclusion of the evidence and reiterated them in his written closing submissions. In light of the foregoing, this Court may infer that the applicant was, in instituting these proceedings, motivated by spite, bad faith or malice." I have carefully considered these submissions. It is certainly correct that I rejected the allegation that there was any conspiracy to remove the applicant from his employment. I also rejected the individual criticisms levelled against particular witnesses of the respondent. I also agree that the making of claims in a proceeding, such as those particularised by the respondent, when they are found to be without foundation, can be used to infer that the proceeding is instituted vexatiously. However, having carefully considered the matter, I am not satisfied that the institution of the proceedings by Mr D'Antuono was vexatious in either the first or second sense set out by Roden J. Both of these types of vexatious proceedings involve proceedings being instituted for an intention collateral to the proper purposes of litigation. I am not satisfied that this was Mr D'Antuono's intention. Whilst certain of the propositions put by Mr D'Antuono at trial were clearly without foundation, I am not satisfied that the proceedings were instituted for other than a genuine attempt to obtain the reinstatement of his employment. The respondent submitted in the alternative that the proceeding was instituted without reasonable cause. It is important to note again that the section focuses on the institution of the proceeding. Here the proceeding was an application for a remedy in respect of the termination of employment of Mr D'Antuono. The word "proceeding" in section 347 of the Act does not separate any of the submissions, arguments or evidence put forward in support of an application. Wilcox J (as the Chief Justice then was) in Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264, said: "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 properly be said that the proceeding lacks reasonable cause." This statement of the law has been adopted by other Justices of the Court; see, for example, Canceri v Taylor (1994) 1 IRCR 120, a decision of Moore J; Andrews v Uniting Church in Australia (1995) 60 IR 437 at page 445 per Gray J; Saddington v Oliver and others (1993) 49 IR 412 per Gray J; Scott v Access Industries for the Disabled Ltd (1994) 58 IR 172, per Beazley J. In Imogen, cited above, neither Ryan J nor Madgwick J differed from the Chief Justice's quotation and application of the Kanan test. In Foxcroft v The Ink Group Pty Ltd (1994) 1 IRCR 215 at page 219 the Chief Justice cited the Kanan test and said that having looked at the matter again, "I adhere to this statement". The Chief Justice said it was consistent with statements in other cases which were then listed. See also Fitzroy Motors Pty Ltd v Hyundai Automotive Distributors Australia Pty Ltd (1995) 68 IR 120, page 122 per Wilcox CJ. In the judgment of Barwick CJ in the General Steel Industries case, cited above, the Chief Justice used a number of expressions which are probably synonymous to "without reasonable cause". These included "manifestly groundless" and "so obviously untenable that it cannot possibly succeed". In Foxcroft, Wilcox CJ concluded that the application before him was "hopeless" and "misconceived" and was therefore instituted without reasonable cause. This application under section 170EA involved a number of different issues to be determined by the Court. It is only if each of these issues were to be found to be without reasonable cause that the proceeding as a whole could be so characterised; see the analogous position discussed in Foxcroft at page 219. In this case, the dismissal of the application involved the following:- 1. A finding that the Ken Griffin incident occurred largely as given in evidence by Mr Griffin; 2. A rejection of the conspiracy allegation; 3. A finding that the termination of employment was not for a reason including the applicant's status as a union job representative; 4. A finding that section 170DC of the Act had not been contravened; 5. A finding that there was a valid reason for termination of employment pursuant to section 170DE(1) of the Act; and 6. A finding that there had not been a contravention of section 170DB of the Act. Each of these issues involved the determination of questions of fact, and some involved questions of both law and fact. According to the Kanan test, it would be only when, on the facts apparent to Mr D'Antuono on each of these issues at the time of instituting the proceeding, there was no substantial prospect of success, that an application could be characterised as being without reasonable cause. And, if Mr D'Antuono relied on an arguable point of law, it would be inappropriate to stigmatise the proceeding as being without reasonable cause. Further, as Gray J said of section 197A, the predecessor to section 347 of the Act, it "is based on the clear policy that a party is not to be required to pay costs in a proceeding instituted under the Act, simply because his or her version of the facts has not been accepted"; Geneff v Peterson (1996) 19 IR 40 at page 90. There is a suggestion in some of the cases that where an applicant's case is based on fabricated or implausible evidence, the proceeding can be characterised as being without reasonable cause. For example, in National Union of Workers v Downtown Duty Free, unreported, IRCA 356/95, Moore J, 8 August 1995, His Honour at page 5, in rejecting a contention that an application was without reasonable cause, said that the evidence of the applicant was not inherently implausible. In Wilkinson and Wilkinson v Cleo's Unitisation, unreported, IRCA 82/97, Moore J, 27 February 1997, at page 3, His Honour said:- "However the proper approach, in my opinion, in dealing with the issue raised by s 347, namely whether proceedings were instituted without reasonable cause, is to review the evidence of the applicants on the basis that it would be accepted at a final hearing unless the evidence is demonstrably false or, as I described it in National Union of Workers v Downtown Duty Free Stores . . . inherently implausible." His Honour then stated that this accorded with the approach of Wilcox J in Kanan. In Gazzo v Foldaway Industries Pty Ltd, unreported, IRCA 119/96, Parkinson JR, 29 March 1996, the Judicial Registrar quoted the test from the judgment of Wilcox J in Kanan that I have set out above and then said that:- "This approach may extend to include cases where a finding is made as to the veracity of the evidence of the applicant, such as in this case where, on the version of the facts of the respondent, the applicant had no substantial prospect. However, in this matter, it is sufficient to rely upon the fact that in these proceedings, the applicant's own version of events, even if it had been accepted by me, established that there was no substantial prospect of success in this matter. I am further satisfied that, in view of the applicant's conduct, this fact ought to have been known to him. I am of the view that the applicant's evidence in these proceedings is to be characterised as untruthful. I am satisfied that he engaged in a deliberate attempt to reconstruct the events which were relied upon by the respondent to terminate the employment." This paragraph suggests that where an applicant files an application knowing that on the true state of facts there is no substantial prospect of the application being successful, costs may be awarded under section 347. As my judgment in dismissing the application records, on a number of key issues I did not accept the evidence of Mr D'Antuono. I also did not accept a number of the key submissions made on his behalf. However, despite this, I am of the view that this is not an application that can be characterised as being without reasonable cause. In particular, I think it is difficult to so characterise an action where its resolution is dependant upon disputed facts and legal issues. Even if one were to take the view that Mr D'Antuono gave knowingly false evidence on, for example, the Ken Griffin incident and therefore knew the true state of the facts at the time the application was filed was as I have found them, I still do not think the application can be characterised as being without reasonable cause. This is in part because the determination of the application involved the value judgments inherent in a determination being made that the termination of employment was for valid reason and did not involve a contravention of section 170DB of the Act. On these issues, I do not think Mr D'Antuono's case was hopeless, even on the facts as I have found them. For this reason, at least, the application cannot be characterised as being without reasonable cause. In this regard, I refer to the adoption by Northrop J in Heidt v Chrysler Australia Ltd at page 274 of part of the judgment of Dixon J in Day v Victorian Railways Commissioners (1949) 78 CLR 62 at page 91 where, although in a different context, His Honour said "but once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the Court to dismiss the action as frivolous and vexatious and an abuse of process". Northrop J said of section 197A at the same page that:- "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. In considering this matter the Court must have regard to all the material properly before it. The test is not subjective to the party instituting the proceedings as at the time of the institution of the proceedings. The conduct of the opposing party prior to the institution of the proceedings may be relevant in deciding whether the proceedings were instituted vexatiously or without reasonable cause. The conduct of the opposing party both prior and subsequent to the institution of proceedings may be relevant to the discretion remaining in the Court. It may be difficult to satisfy the test where disputed questions of fact arise and the proceedings eventually are dismissed because the Court finds facts adverse to the party instituting the proceeding." Having regard to each of these considerations, as well as the others expressed earlier, in my opinion the respondent's application for costs should be dismissed. I also note that when the application was instituted, the Act contained section 170DE(2) and the application was in part reliant on that subsection. The subsection was declared invalid by the High Court while my decision was reserved; see pages 5 and 6 of my judgment and State of Victoria v Commonwealth (1996) 138 ALR 129. There has therefore been no determination of the issue of whether the termination of employment was harsh, unjust or unreasonable, as would have been required if the legislation was the same at the time of the decision as it was when the application was instituted. In these circumstances, it is also difficult to characterise the application as being instituted without reasonable cause. I certify that this and the preceding fifteen (15) pages are a true copy of the reasons for decision of Judicial Registrar Ritter. Associate: Date: 12 May 1997 APPEARANCES Counsel for the Applicant : Mr I Carija Solicitors for the Applicant: Ivan Carija Counsel for the Respondent: Mr R Hooker / Mr M Lundberg Solicitors for the Respondent Crown Solicitors Office (Western Australia) Date of judgment: 12 May 1997