INDUSTRIAL RELATIONS COURT OF AUSTRALIA INDUSTRIAL LAW - termination of employment - APPLICATION FOR COSTS ON GROUNDS OF UNREASONABLE ACTS OR OMISSIONS IN CONNECTION WITH THE CONDUCT OF THE PROCEEDING Workplace Relations Act 1996 (Cth) s 170EHA FENECH v PERFECT HEALTH MEDICAL CENTRES PTY LTD VI 1491 of 1996 Judicial Registrar Ryan Melbourne 12 June 1998 IN THE industrial relations COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1491 of 1996 BETWEEN: roslyn FENECH Applicant AND: PERFECT HEALTH MEDICAL CENTRES PTY LTD Respondent BEFORE: RYAN JR DATE OF ORDER: 12 JUNE 1998 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The application for costs be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE industrial relations COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1491 of 1996 BETWEEN: roslyn FENECH Applicant AND: PERFECT HEALTH MEDICAL CENTRES PTY LTD Respondent before: RYAN JR DATE: 12 JUNE 1998 PLACE: MELBOURNE APPLICATION FOR COSTS SECTION 170EHA WORKPLACE RELATIONS ACT 1996 This is an application for costs under s 170EHA (the second costs application). 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 power to award costs under s 170EHA(1) is in addition to, and not in derogation from, any other power of the Court to award costs. Section 170EHA(1) has in effect been replaced by s 170CS(1)(b) but it is s 170EHA which applies in a case such as this where the substantive decision was given prior to 23 May 1997 (the transfer date). At the time when the second costs application was made the applicant had already obtained an Order from Marshall J for costs to be paid by the respondent pursuant to s 170EHA as a result of the dismissal of an application for an interlocutory injunction sought by the respondent. The respondent had likewise obtained an order of 17 June 1996 from Gray J which gave a limited right of appeal as to: "(a) whether the material before Justice Marshall on 2 May 1996 raised allegations by the Respondent of claims which fell within the jurisdiction of the Court; (b) whether in light of the answer to (a) it was open to Justice Marshall to exercise the power to award costs found in Section 170EHA of the Industrial Relations Act 1988." The second costs application was heard on 4 October 1996 and determination adjourned as I intended to await the outcome of the foreshadowed appeal to the Full Court against the order in the first costs application before making a determination on the second application for costs. I am now aware that no appeal was ever filed or served and the second costs application has never been determined. In this matter (the second costs application) counsel for the applicant submitted first that "the respondent at no material time since the referral to the Court had any basis, in law or in fact, for denying the applicant relief". Given that the applicant had sought reimbursement and/or compensation in a claim of unlawful termination of employment, this must be a submission that the respondent had no basis for denying either form of relief. Such a submission, if sustained, would constitute grounds for a claim for costs under s 347 on the basis of a proceeding instituted vexatiously or without reasonable cause. In this case no claim for costs under s 347 was made. In terms of this claim for costs under s 170EHA the respondent was entitled to take the position that the onus was on the applicant to establish a termination of employment which might lead, and in this case did lead, to an order for compensation to the applicant. However, the respondent's primary submission at trial amounted to a concession of termination but alleged termination for valid reason, namely misconduct. When giving Judgment for the applicant (unreported 13 September 1996) I said: "...the Respondent seems caught between a rock and a hard place, asserting that the termination was for valid reason but, if the Court does not accept that, then as an alternative, there was no termination but an agreement by the Applicant and the Respondent not to continue the employment. Such submission arose late in the hearing and is not adequately outlined in the Respondent's contentions of fact and law." While that approach amounted to a respondent "having a bit each way" I do not accept that such conflicting alternative defences amounted to an unreasonable act or omission in the conduct of the proceeding as would warrant a discretionary order requiring the respondent to pay the applicant's costs. In pursuing an application that costs were warranted because of an unreasonable act by the respondent, counsel for the applicant seemed to rely, at least in part, on the concession by the respondent that the applicant at one stage was paid a salary of $50,000 p.a. The fact that the respondent conceded before and at trial that there was an agreement to pay the applicant a salary of $50,000 p.a. may perhaps be relevant background to a claim for costs under s 347 that a party instituted a proceeding vexatiously or without reasonable cause. However, as already observed, no claim was made for costs under s 347. Even if such a claim had been made, a concession of payment of salary, could be no more than potential relevant background for such an application for costs. I cannot envisage circumstances in which such a concession could constitute an unreasonable act in connection with the conduct of these proceedings or even relevant background to such an act. There is more substance in the submission that the pursuit of a cross claim by the respondent in the associated jurisdiction of the Court was misconceived. In refusing the respondent's application for an interlocutory injunction on 2 May 1996 Marshall J found that that application was misconceived and without merit and his finding was followed by the successful first costs application. However, there is a difference between an attempt to obtain an interlocutory injunction through the use of the associated jurisdiction of the Court and a renewed application to pursue a cross claim in the associated jurisdiction of the Court. I am not prepared to categorise such an attempt to mount the cross claim before me as an unreasonable act in connection with the conduct of the proceeding. If I were to be proved wrong in relation to that position, I would merely observe that the unsuccessful application to pursue the cross claim took up only a small amount of time in the hearing before me and I would not be prepared to exercise the discretion in favour of the applicant to order all or part of her costs be paid by the respondent because of that act in the conduct of the proceeding. Counsel for the applicant then turned to the respondent's primary submission at trial, the allegation that the employment had been validly terminated because of the misconduct of the applicant. Counsel submitted (paragraph 5 of his written submission) that: "Notwithstanding the respondent's contentions, no evidence of any description was led to assert - let alone substantiate - the allegation of misconduct levelled against the applicant." In giving an ex tempore judgment in favour of the applicant I stated (at the top of page 4 of the written reasons for judgment) "There is no real evidence, and certainly no acceptable evidence, that the applicant was terminated for the misconduct alleged in the respondent's contentions of fact and law and again in submissions today". However, while no acceptable evidence was led of termination purportedly for misconduct, the respondent certainly asserted that the applicant was guilty of serious misconduct allegedly arising from unlawful detention of property and unauthorised absences from work. I do not accept that the respondent's failure to establish misconduct, or the respondent's failure to call evidence designed to establish misconduct, amounted to unreasonable acts or omissions in the conduct of the proceeding such as would warrant a discretionary order for the respondent to pay part or all of the applicant's costs. I can envisage many circumstances in which a respondent's failure to call evidence of alleged misconduct would amount to an unreasonable omission. All I can say is that in the unusual circumstances of this case I am not prepared to categorise the omission as unreasonable Finally, counsel for the applicant seemed to place some reliance on the respondent's concession that the applicant was entitled to superannuation. However, the concession of a superannuation liability, and the failure to pay that liability, and the admission by Dr Edelsten in cross-examination that the respondent had determined to make no payment of any kind to the applicant, (until the resolution of the claim of unlawful termination of employment), cannot be categorised as unreasonable acts in connection with the proceedings which caused the applicant to incur costs. The refusal to make a timely payment of a superannuation liability may have caused the applicant to incur costs. No doubt such an act of omission was unreasonable but it was not an omission in the proceeding before me and, if the applicant incurred costs because of the omission, those costs were not incurred or caused by an omission connected with the conduct of the proceedings. I found that: · the respondent paid the applicant nothing on termination; · the applicant may well have valid additional claims in respect of payments borne by her on behalf of the respondent and Dr Edelsten; · the applicant was entitled for breach of s 170DE(1) to the maximum compensation open under s 170EE(2) and (3); · the applicant was entitled to salary in lieu of notice. The findings reflected unreasonable acts and omissions by Dr Edelsten on behalf of the respondent prior to the commencement of the proceeding but I am not satisfied that any of those acts or omissions caused the applicant to incur costs in the sense of unreasonable acts or omissions in connection with the conduct of the proceeding. Having found no costs incurred by the applicant because of an unreasonable act or omission of the respondent in connection with the conduct of the proceeding, I am unable to award costs under s 170EHA and the application for costs is dismissed. I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of Judicial Registrar Ryan Associate: Dated: 12 June 1998 Counsel for the Applicant: Mr J D Loewenstein Solicitor for the Applicant: Rigby Cooke Counsel for the Respondent: Mr I Upjohn Solicitor for the Respondent: Webb Korfiatis and Hassett Date of Hearing: 4 October 1996 Date of Judgment: 12 June 1998