Industrial Relations Commission New South Wales Medium Neutral Citation: Dul v Health Secretary, in respect of Sydney Local Health District (No. 2) [2021] NSWIRComm 1024 Hearing dates: Matter determined on the papers Date of orders: No orders made Decision date: 25 March 2021 Jurisdiction: Industrial Relations Commission Before: Commissioner Murphy Decision: The Commission declined to award costs to the applicant Catchwords: COSTS – notice of motion – applicant sought an award of costs after a successful unfair dismissal application – did respondent unreasonably fail to agree to a settlement of the claim – exchange of offers of settlement – exercise of discretion to decline to award costs Legislation Cited: Industrial Relations Act 1996 Cases Cited: Bankstown City Council v Paris (1999) 93 IR 209 Four Sons Pty Limited v Sakchai Limsiripothong (No 2) (2000) 100 IR 400 IGA Distribution Pty Ltd v Moses (No 3) (2003) 150 IR 145 Phillips v Industrial Relations Commission (NSW) [2006] NSWCA 183 Texts Cited: Nil Category: Costs Parties: John Dul (Applicant) Health Secretary, in respect of Sydney Local Health District (Respondent) Representation: Counsel: Ms R Kumar (Applicant) Mr A Britt (Respondent) Solicitors: Mr O Khan, Brydens Lawyers (Applicant) File Number(s): 2020/00184348 Publication restriction: Nil DECISION 1. On 22 June 2020, the applicant, Mr John Dul, filed in the Office of the Industrial Registrar an Application for Relief in relation to Unfair Dismissal following the termination of his employment on 28 May 2020 by Dr Teresa Anderson AM, Chief Executive, Sydney Local Health District ("Application"). The respondent to the Application was the Health Secretary, in respect of Sydney Local Health District ("SLHD"). The reason given for the dismissal of the applicant from his positon as a Mechanical Fitter and Control Room Operator at Royal Prince Alfred Hospital was that he had swapped two shifts with another employee without authorisation (see Dul v Health Secretary, in respect of Sydney Local Health District [2020] NSWIRComm 1082). 2. The hearing of the Application occurred on 18 and 21 September and 30 October 2020. Written submissions were received on 6 and 13 November 2020. 3. On 3 December 2020, I made the following orders: (1) The applicant is to be reinstated to the position he held at the Sydney Local Health District immediately before his dismissal on 28 May 2020. (2) Order (1) is to take effect on and from Monday 14 December 2020. (3) The applicant is to be paid by the respondent an amount equivalent to the wages he would have earned but for his dismissal for the period 28 May 2020 until 14 December 2020 less the one week's pay that he was paid in lieu of notice and the amount of any other income he has received during that period for work he has performed or in the nature of unemployment benefits. (4) The parties are to confer in order to reach agreement on the amount of back pay payable to the applicant pursuant to order (3). (5) The matter is stood over generally with liberty to the parties to apply to have it relisted on seven days' notice for the purpose of addressing the Commission on the quantum of back pay to be paid to the applicant pursuant to order (3) if agreement cannot be reached pursuant to order (4), and on the question of costs. If that liberty is not exercised by close of business on 23 December 2020 the file will be closed administratively. 1. On 23 December 2020 the applicant filed a Notice of Motion ("Motion") seeking an order that the respondent pay the applicant's costs of and incidental to the proceedings as agreed or assessed on an ordinary basis, and on an indemnity basis after: 1. 17 July 2020; or 2. 20 July 2020; or 3. 21 July 2020; or 4. 18 September 2020. 1. The applicant also sought an order that the respondent pay the applicant's costs of and incidental to the Motion. 2. The Motion was supported by an affidavit affirmed on 21 December 2020 by the applicant's solicitor, Omar Khan, parts of which I have extracted below. Hall Payne Lawyers were the firm that was initially representing the applicant. 5 On 16 July 2020, Hall Payne offered to settle the matter on the following terms: a. The Respondent will pay the Applicant an amount equivalent to 5 months' salary: and b. The Applicant will lodge a notice of discontinuance, the termination of the Applicant's employment will be treated by the Respondent as a resignation, and the parties will enter a deed of release containing the usual terms including mutual release, mutual confidentiality and mutual non­ disparagement (the Non Monetary Terms). 6 On 17 July 2020 at 1:00 PM, the Respondent offered to settle the matter on the following terms: a. The Respondent will pay the Applicant an amount equivalent to 6 weeks' salary: and b. The Non-Monetary Terms. 7 On 17 July 2020 at 4:08 PM, Hall Payne offered to settle the matter on the following terms: a. The Respondent will pay the Applicant an amount equivalent to 3 months' salary: and b. The Non-Monetary Terms. 8 On 20 July 2020 at 11:23 AM, the Respondent offered (for a second time) to settle the matter on the following terms: a. The Respondent will pay the Applicant an amount equivalent to 6 weeks' salary: and b. The Non-Monetary Terms. 9 On 20 July 2020 at 4:40 PM, Hall Payne offered to settle the matter on the following terms: a. The Respondent will pay the Applicant an amount equivalent to 8 weeks' salary: and b. The Non-Monetary Terms. 10 On 21 July 2020, the Respondent offered (for a third time) to settle the matter on the following terms: a. The Respondent will pay the Applicant an amount equivalent to 6 weeks' salary: and b. The Non-Monetary Terms. Respondent's first offer to settle in September 2020 11 In August and September 2020, the Applicant was put to the cost of: (a) filing and serving his evidence; (b) reviewing the extensive evidence filed by the Respondent; and (c) filing and serving his evidence in reply. 12 On 14 September 2020, after all material in the matter had been filed, the Respondent offered to settle the matter on the following terms: a. The Respondent will pay the Applicant an amount equivalent to 16 weeks' salary: and b. The Non-Monetary Terms. ……………………………….. 14 I rejected the above offer on behalf of the Applicant. Applicant's offer to settle in September 2020 15 On 17 September 2020, the Applicant instructed me to offer to settle the matter on the following terms: a. The Applicant be reinstated to his former position; b. The Applicant will receive back-pay from date of the dismissal; c. No need of release; and d. The Applicant's continuity of service will be recognised. ………………………………… Respondent's second offer to settle in September 2020 17 On or around 4 PM on 18 September 2020, at the end of the first day of the hearing, the Respondent: a. Rejected the Applicant's offer of 17 September 2020; and b. Offered to settle the matter in the same terms as the Respondent's offer of 14 September 2020. 18 On or around 5:00 PM on 18 September 2020, I called Juliette Rex, Employee Relations Manager for the Respondent, and rejected the above offer on behalf of the Applicant. 1. Annexed to Mr Khan's affidavit was the exchange of correspondence, the contents of which were accurately summarised in the affidavit. 2. On 25 January 2021, I held a directions hearing on the Motion. On that occasion I made directions for the filing and serving of evidence and outlines of submissions and raised the issue as to whether the Motion could be determined on the papers. 3. On 8 February 2021, the respondent filed an affidavit affirmed by Juliette Rex, Employee Relations Manager for SLHD, on that day. In her affidavit, Ms Rex confirmed the exchange of settlement offers between the parties in September 2020, as summarised in Mr Khan's affidavit of 21 December 2020. 4. After the parties had filed and served evidence and outlines of submissions in support of their respective positions on the costs issue, the Commission, on 2 March 2021, received advice that both parties consented to me determining the matter on the papers. I have proceeded on this basis. Applicant's submissions 1. On 23 February 2021, the applicant filed an outline of submissions in support of the Motion. Those submissions referred to a number of relevant authorities of this Commission, some of which I refer to later in this decision, and then continued as follows (footnotes omitted): D. AN ORDER FOR COSTS SHOULD BE MADE IN FAVOUR OF MR DUL 24. Mr Dul submits that an order for costs on an indemnity basis pursuant to s.181(1)(a) and (b) should be made against the SLHD, on the basis that s.181(2)(c) is engaged by the SLHD's conduct. 25. First, the SLHD did not discharge its obligation to carefully and responsibly assess the prospects of its defence should the matter proceed to arbitration. The SLHD bore the evidentiary onus of proving that Mr Dul had engaged in the misconduct for which he was dismissed. That misconduct involved swapping 2 shifts with his colleague, Mr Hahu, without obtaining formal or written authorisation. However, it should have been obvious to the SLHD that it would not be able to discharge its onus, and further that its defence was hopeless and doomed to fail, in the following circumstances: a. The evidence before the SLHD's investigators was that written approval was not required prior to about 2012 or 2013. Mr Dul's evidence to the SLHD's investigators was that he had swapped the 2 shifts in 2010 or 2011. There was no evidence before the SLHD's investigators to contradict that claim - indeed, there was no evidence at all that positively identified the date on which the 2 shifts were swapped. b. Mr Dul's evidence to the SLHD's investigators was that he had obtained verbal authorisation from his supervisors, Paul Cujack and Rodney Janetzki, to swap shifts. There was no evidence before the SLHD's investigators to contradict that claim. To the contrary, Ms Lopez's evidence to the SLHD's investigators was that the practice of employees swapping shifts without formal or written authorisation was known and condoned by management of the Engineering Services Department at least until 8 October 2018. c. There was some evidence before the SLHD's investigators that a memorandum requiring employees in the Control Room to seek formal or written authorisation may have been issued in March 2013, but Mr Dul denied ever seeing the document until he was shown by the investigators on 30 July 2019, and there was no evidence before the SLHD's investigators to contradict that statement. d. The above was all material available to the SLHD prior to the hearing - indeed, prior to the dismissal - that would have enabled the SLHD to conclude, had it engaged int eh requirement careful and responsible assessment of its prospects, that its defence was utterly unmeritorious. 26. Secondly, Mr Dul's offer dated 16 July 2020 was a reasonable settlement of the claim which was not agreed to by the SLHD, particularly in light of the above deficiencies in the SLHD's investigation, its decision to dismiss, and the case that it could therefore run on arbitration. The reasonableness of the offer can be ascertained by the fact that Mr Dul was at that time open to settling the matter on terms that did not include reinstatement, where he was ultimately successful in obtaining an order for reinstatement and backpay. 27. Thirdly, in circumstances where the conclusions reached by the Commission in the substantive proceedings were 'plainly obvious' and 'the only conclusions available on the facts' following a proper exercise of discretion (in the sense those phrases were used in Boner v Anderson (No 2) and cited in Bankstown City Council v Paris), it would be unreasonable and unfair that Mr Dul should be out of pocket as a result of the proceedings. E. CONCLUSION 28. For the foregoing reasons, an order for indemnity costs should be made against the SLHD from 17 July 2020, the date on which the SLHD rejected Mr Dul's offer to settle the matter on the payment of 5 months' salary, together with the Non-Monetary Terms. Respondent's submissions 1. On 1 March 2021, the respondent filed an outline of submissions which contained the following (footnotes omitted): Reasonable settlement of the claim that was not agreed by the other party 27. The first basis for a costs order recognised in Paris is that a party failed to accept a reasonable settlement of a claims. 28. lt is conceded that that this is the strongest claim of the Applicant that the jurisdictional gateway has been opened. 29. The reasonableness of a party's response to an offer is to be assessed from the perspective of a reasonable person by the Commission applying its own perception of what was reasonable. A Respondent does not act unreasonably in such circumstances by assessing the appropriate response to an offer on the basis the Commission may accept the evidence they give (or intend to give) on oath: acting reasonably in response to a settlement proposal does not require a Respondent to be clairvoyant or to act as a judge in their own cause. 30. The evidence demonstrates that prior to the closure of evidence the Applicant and Respondent exchanged offers. The Applicant did not respond to the last offer by the Respondent. 31. At no stage prior to the filing of evidence (when the earlier offers were open to acceptance), could the Respondent's contention that the dismissal was not harsh, unjust or unreasonable have reasonably been described as unarguable. Nor were the contentions that reinstatement was impracticable unarguable. 32. Given the evidence at the time July 2020 the conduct of the Respondent could not be said to not be said to have rejected a reasonable offer especially given the Respondent's own offers at the time. The course of conduct of the Respondent over a relevant period could be said to amount to conduct inconsistent with an intention to settle the proceedings on any basis that could be considered reasonable. 33. At the heart of the Applicant's submissions is the contention that the decision by Respondent to defend the proceedings evinces an intention not to settle them on any basis that could be considered reasonable, particularly in light of the adverse findings that were made against the Respondent in the Commissioner's earlier decision. The Applicant suggests that the adverse but erroneous basis on which the Respondent decided to dismiss the Applicant effectively precluded the possibility of the relevant decision-makers ever turning their minds to a settlement on reasonable terms. 34. The "evident purpose'' of s 181(2) is to encourage the settlement of proceedings to which it applies. This in turn involves an obligation on the parties to consider in an objective way the strengths or limits upon the case that they will be propounding should the matter proceed to arbitration: Paris at p 220. In Four Sons Pty Limited v Sakchai Limsiripothong (No 2) [2000] NSWIRComm 131 the Full Bench, relying on Paris, stated at [11] that the obligation imposed on parties is "to undertake a responsible and careful assessment of the prospects of the litigation". 35. The evidence when considered in its entirety shows that the Respondent's conduct was not wholly inconsistent with any intention to settle the proceedings on any basis that could be considered reasonable. 36. The evidence demonstrates that the Respondent made a history of offers significantly increasing its offer after the filing of evidence from 6 weeks to 16 weeks' compensation. This last offer was significantly in excess of the two most recent offers to settle made by the Applicant on 17 July 2020 (3 months' pay) and 20 July 2020 of 8 weeks' salary. 37. It was the position of the Applicant at that time hardened and despite the offer being considerably higher that the two previous offers of the Applicant the offer was rejected. 38. Further, it is evident that the Respondent did evaluate the evidence and in so doing increased its offer between July and September 2020. 39. To the extent that the Applicant made offers of settlement on 17 September 2020 this did not involve any element of compromise of his claim. As such, the offers were little more than an "invitation to [SLHD] to capitulate", as referred to in Carlton and United Beverages Limited & Brunt [2007] NSWIRComm 135 at [36]. 40. The Respondent even on 18 September 2020 sought to settle the proceedings by a monetary order. Such an offer was not unreasonable in light of the following (even if the Commission ultimately does not give weight to such matters); (a) The terms of the unfair dismissal application are inconsistent with the Applicant's evidence concerning shift swaps and the need to obtain approval. (b) On 18 September 2020 the Applicant gave evidence: (i) he was far from clear as to the number of shifts he worked; (ii) he gave contradictory evidence about seeking employment following termination T10.40-T15.37; (iii) his explanation about sign on and payments for Mr Hahu are not believable in that he signed in on own name and Mr Hahu got paid T25.12-45; then completely reverses what happened with sign on T25.48-26.1; (iv) he claimed he completed his time sheets when he worked and did it truthfully T26.6-31l; then admits this was not the case when working Mr Hahu's hours T26.36-28 and admits his answers were wrong T27.1-2; (v) he claimed for first time in his evidence in cross examination he was directed by supervisors to record incorrect hours T27.12-45; then it was a vague recollection of being told T28.19-26 and then no recollection of discussing completion of time sheets on swaps T38.34-39.15; (vi) The alleged common practice of swapping shifts was restricted to 3 persons T35.7-36 and the Applicant clearly exaggerated the common practice; (vii) He admitted to breaching the Code of Conduct by falsifying time sheets by not recording own times T35.42-36.1 and (viii) Most importantly, the Applicant in cross examination made serious allegations against other employees of the Respondent and thus the Respondent. The Applicant claimed documents were fraudulently created for these proceedings by officers of the LHD, engineering department and management staff and specifically mentioned Carole Lopez and John Gaudi T53.20-54.9. This allegation was made with no direct evidence that the Applicant was prepared to submit to testing in these proceedings 54.27-43. Tellingly this allegation was not put to Ms Lopez. The Applicant if he was to return to work would have to work with Ms Lopez. 41. The evidence demonstrates that the Respondent's conduct was not inconsistent with an intention to settle the proceedings on any basis that could be considered reasonable. 42. The Respondent does not meet the description of the Court of Appeal in Phillips of a "pig-headed litigant blinded by self-absorbed stupidity or malice." Response to Applicant Submission 43. In respect to paragraph 25 of the Applicant's submission, there is no evidence that the Respondent did not discharge its obligation to carefully and reasonably assess in an objective way the strengths or limits upon the case that it propounded. The Respondent participated in conciliation made offers to settle the matter and once the evidence had been all filed significantly increased its offer. This demonstrates an objective assessment took place. Acting reasonably in response to a settlement proposal does not require a Respondent to be clairvoyant or to act as a judge in their own cause. 44. In respect to paragraph 26 of the Applicant's submission, the Respondent relies upon the submission above. 45. In respect to paragraph 27 of the Applicant's submission, the conclusion reached by the Commission is not as stated but as set out in the decision at [110]-[117]. 1. The respondent's submissions then dealt with the issue of indemnity costs. I have found it unnecessary to canvass these submissions. Determination 1. Section 181 of the Industrial Relations Act 1996 ("Act") is in the following terms: 181 Costs (1) Subject to the rules of the Commission and any other Act or law— (a) the Commission may award costs, and (b) costs are in the discretion of the Commission, and (c) the Commission may determine by whom and to what extent costs are to be paid, and (d) the Commission may order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis. (2) However, the Commission may award costs only in the following cases— (a) the Commission may award costs against an applicant if it considers that the application to it was frivolous or vexatious, or (b) the Commission may award costs against a party to proceedings who, in the opinion of the Commission, instituted proceedings without reasonable cause, or (c) the Commission may award costs against a party to proceedings under Part 6 of Chapter 2 (Unfair dismissals) who, in the opinion of the Commission, unreasonably failed to agree to a settlement of the claim or whose application was frivolous or vexatious, or (c1) the Commission may award costs against an industrial agent representing an applicant or employer in proceedings under Part 6 of Chapter 2 if— (i) the industrial agent fails to file a certificate as required by section 90A, or (ii) the Commission finds that the industrial agent has filed a certificate under that section certifying that the agent has reasonable grounds for believing, on the basis of provable facts, that the applicant's claim or employer's response to the claim had reasonable prospects of success when the agent did not have reasonable grounds for believing, on the basis of provable facts, that it had reasonable prospects of success, or (d) the Commission may award costs in proceedings for a breach of an industrial instrument or the recovery of money under Chapter 7, as provided by sections 357 and 373. (3) (Repealed) (3A) Despite subsection (1), the Commission may not award costs in proceedings under Part 7 of Chapter 2. Note— This subsection does not prevent the award of costs in appeals relating to questions of law in relation to public sector promotional and disciplinary matters under section 197B. (4) In this section, costs includes— (a) costs of or incidental to proceedings in the Commission, and (b) in the case of an appeal to the Commission, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal. 1. It is clear from the terms of section 181 that the power to award costs is discretionary but it is also clear that there are restrictions on the exercise of that discretion. Costs may only be awarded against the respondent in this matter if I form the opinion that the respondent unreasonably failed to agree to a settlement of the Application (subsection 181(2)(c)). 2. In Bankstown City Council v Paris (1999) 93 IR 209 a Full Bench of the Commission (Wright J, President, Peterson J, Bishop C) stated (at 218-220): Section 181(2)(c) on its face is a provision which is designed to apply only to unfair dismissal proceedings. It is the only provision designed to be applied specifically in that context. Also, when read in terms of the other provisions in the Act as to costs, it is one of only three provisions which may have application to unfair dismissal proceedings. The other provisions are paras (a) and (b) of s 181(2). However, those provisions apply to many other proceedings before the Commission and, unlike the particular limb of s 181(2)(c) relied on in this application, they are designed to operate where the Commission considers either the application itself, or the institution of the proceedings, was affected by considerations which made it manifestly inappropriate for the proceedings to have been commenced. The relevant part of s 181(2)(c), on the other hand, does not require the Commission to focus upon the circumstances of the commencement of the proceedings, or to consider only the situation of the applicant. Instead the Commission is required to consider in a more general way, the conduct of the party in respect of which an application for costs is made; and, in that regard, to consider the conduct of the party in relation to the question of settlement of the claim. An understanding of the meaning and purpose of s 181(2)(c) is assisted by reference to the particular provisions in Pt 6, Unfair Dismissals, of Ch 2 of the Act, which relate to conciliation or settlement of unfair dismissal applications. Section 86 for example, provides: "The Commission must endeavour, by all means it considers properly necessary, to settle the applicant's claim by conciliation." Section 87(1) is also relevant. Its effect is to preclude the Commission from proceeding to determine the claim by arbitration until "all reasonable attempts to settle the applicant's claim by conciliation have been made but have been unsuccessful". Section 87(2) continues the statutory emphasis upon conciliation by specifying that the earlier provisions do not prevent further conciliation from being attempted at any time before the Commission makes an order in the proceeding. Construing the relevant part of s 181(2)(c) in its overall statutory context, we conclude that the evident purpose of the provision is to encourage the settlement of proceedings to which it applies. The criterion set out in the provision is to be applied objectively and requires a consideration of the whole of the conduct of the party against whom the order is sought, or some discrete part of that party's conduct, with a view to ascertaining whether it unreasonably failed to agree to a settlement of the claim. We also consider that on the proper construction of the provision, an affirmative conclusion may be reached on at least two bases. First, where there was a proposal put by a party which could be described as a reasonable settlement of the claim and that was not agreed by the other party. The second situation in which the criterion could be satisfied is where the course of conduct of the party over a relevant period could be said to amount to conduct inconsistent with an intention to settle the proceedings on any basis that could be considered reasonable. We emphasise that, although the legislature has clearly intended that there be strict limits on the power of the Commission to award costs in unfair dismissal proceedings, the legislature has also evinced a clear intention that costs orders be available in circumstances where there has been a failure on the part of a party to properly conciliate proceedings to the extent that they have failed reasonably to facilitate a potential settlement of them. Further, the Commission is obliged to consider all relevant circumstances in deciding whether such failure has occurred. Once the statutory criterion has been met, the Commission's broad powers and discretions under s 181(1) are available for exercise. When the circumstances of this matter are approached accordingly, two particular considerations are crucial to the determination of this issue. The first is that part of the decision on appeal, which is included in the extract set out earlier, where reference is made to the inadequate nature of the appellant's investigation of the matter and that, in the context of that investigation, three employees, including the respondent, were "tarred with the same brush" notwithstanding the different circumstances pertaining to the respondent. The second consideration, which is to be considered in the context of the other matters adverted to, was the failure and thus apparent unwillingness of the appellant, to respond to the various offers of compromise and settlement made on behalf of the respondent. The one exception to the appellant's otherwise consistent course of conduct was the proposal made by it on the second last day of a five day hearing which invited the respondent to capitulate. Only a very short period (in the order of a few hours) was provided for the respondent to consider the offer. Far from indicating any retreat from the inflexible approach adopted by the appellant, its approach in relation to settlement on this occasion, served only to emphasise the consistent position that had been adopted. We emphasise that there will be many circumstances in which parties to litigation, including unfair dismissal proceedings, may appropriately take a firm position generally, including on the question of conciliation or settlement. Nevertheless, such a position runs significant risks in terms of the exercise of the power and discretion under s 181(2)(c). This is particularly so where such a position is assumed without due regard to the policy of the Act which requires parties to take seriously their obligation to attempt to settle the proceedings. That in turn involves an obligation to consider in an objective way the strengths or limits upon the case that they will be propounding should the matter proceed to arbitration. On the material before us, we consider that the appellant failed to give appropriate consideration to such matters before it adopted its inflexible position. We consider that, in the circumstances of this matter, the criterion in the relevant provision has been made out. It has been met as to the proceedings both at first instance and on appeal. 1. In Four Sons Pty Limited v Sakchai Limsiripothong (No 2) (2000) 100 IR 400 a Full Bench of the Commission (Wright J, President, Hungerford J, Cambridge C) stated (at [11]): 11 The obligations imposed on parties to proceedings under s 84 of the Act, as identified in the Full Bench judgment in Bankstown City Council v Paris, require parties to such proceedings to undertake a responsible and careful assessment of the prospects of the litigation, in the absence of which an unsuccessful party may realistically face the prospects of a costs order being made against it. In those circumstances, it may often be appropriate for a party to consider making an offer to settle, even if the offer could be seen, either with the benefit of hindsight or otherwise, to be at a rather low level. However, the making of such an offer on "the low side" does not exhaust the responsibilities of a party to reasonably attempt to settle the claim. It is conceivable that if the respondent had responded to those offers in a more timely way, the proceedings may have settled. We doubt, however, that that is the appropriate finding on the evidence before us. Rather, the evidence as to further negotiations makes plain that the appellant had no realistic intention to make an offer which was likely to settle the proceedings before McKenna C. However, it would be inappropriate not to take into account the lack of a timely response from the respondent to the nominal offers of settlement which were made by the appellant in August and September 1999. 1. In IGA Distribution Pty Ltd v Moses (No 3) (2003) 150 IR 145 a Full Bench of the Commission (Wright J, President, Walton J, Vice-President, Redman C) stated (at [85] and [100]): 85 In submissions in reply, the respondent emphasised that from the commencement of proceedings, he had sought what was identified in Commonwealth Steel v Ward to be the primary remedy under the Act, that is, reinstatement, or failing that, re-employment. This was not a matter which should count against him on the question of costs. …………………………………. 100 The position adopted by the appellant essentially amounted to a demand that the respondent bargain against himself in a way which would require him to step back from his primary remedy under the Act. In the absence of any offer from the appellant, it is in our view, inappropriate to conclude that the respondent's stance was unreasonable. The appellant did not take the necessary steps to deal with its situation in the litigation as discussed in Paris and Four Sons (No 2). Certainly it gave little or no weight to the fact that reinstatement is the primary remedy under the statute: Little v Commissioner of Police (No 2) (2002) 112 IR 212 at 243. 1. The respondent relied upon the following passages from the Court of Appeal in Phillips v Industrial Relations Commission (NSW) [2006] NSWCA 183 (at [19]-[20] per Mason P with whom Spigelman CJ and Beazley JA agreed): 19 When the Full Bench in Paris spoke of applying the statutory criterion "objectively" it was correctly discerning that the standard of unreasonable failure was to be applied by reference to the hypothetical yardstick of the fictional "man on the Clapham omnibus" or his Australian, gender-neutral counterpart. This does not mean that this hypothetical personage is placed anywhere other than in the context of the party in question (here the party against whom costs are sought). Nor does it mean the reasonableness assessment may commit hindsight error. But it does mean that the standards of the actor in question are not determinative. Thus, in the realm of negligence law, a person's conduct may be held unreasonable even though he or she was ignorant of the circumstances calling for a particular response or even if he or she lacked the capacity to discern or provide a correct response in the circumstances. 20 Under s 181(2)(c) costs may be awarded against the employer or the employee, depending on who has failed to agree to a settlement and done so unreasonably. The reference to the opinion of the Commission emphasises, if emphasis were required, that the criterion is to be decided by the Commission applying its own perception of what was unreasonable, as distinct from the perception (if any) of the party. This does not permit the Commission to ignore the standpoint or standards of the party concerned, but the Commission must not be captive to those matters. Were it otherwise, the costs discretion could not be invoked against a pig-headed litigant blinded by self-absorbed stupidity or malice. 1. I will apply the principles that emerge from the above cited authorities in the exercise of my discretion in this case. 2. I reject the submission put at paragraph 25 of the applicant's outline of submissions that "it should have been obvious to the SLHD that it would not be able to discharge its onus, and further that its defence was hopeless and doomed to fail…" (at [11] above). The respondent acted on the basis of findings made by an investigation team and set out in an investigation report. Whilst I came to a different conclusion based on the evidence presented in the substantive proceedings, I am not of the opinion that SLHD should have, before that evidence was presented and tested, concluded that its defence to the Application was doomed to fail and simply capitulated to the applicant's claim for reinstatement with back pay. 3. Further, I am of the opinion that the exchange of settlement offers between the parties that occurred between 16 July and 14 September 2020, none of which involved reinstatement of the applicant, demonstrated a preparedness on the part of the respondent to engage in genuine settlement negotiations which did not involve the applicant returning as an employee of SLHD. Through this process, the respondent increased its offer of monetary compensation to the applicant from an amount equivalent to 6 weeks' salary up to an amount equivalent to 16 weeks' salary. 4. The "offer" made on behalf of the applicant on 17 September 2020, the day before the hearing was scheduled to commence, as set out at paragraph 15 of Mr Khan's affidavit (at [6] above), was, in reality, no offer at all but, rather, an invitation to the respondent to capitulate to the Application. Up until that "offer" was made, the applicant had demonstrated a willingness to settle the Application on a basis that did not involve reinstatement or re-employment. What had divided the parties was the quantum of monetary compensation to be paid, where the applicant's settlement offers had ranged from five months to as low as 8 weeks' salary and the respondent's offers had ranged from 6 up to 16 weeks' salary. 5. The attitude of the parties towards settlement negotiations in this matter, apart from the applicant's "offer" referred to immediately above, can be contrasted to the attitude of parties in cases such as Paris where the Full Bench considered, as one of "two particular considerations" crucial to the determination of the costs issue, the employer's "failure and thus apparent unwillingness" to respond to the various offers of compromise and settlement made on behalf of the dismissed employee until a proposal was made on the second last day of a five day hearing which invited the applicant to capitulate. The approach of the employer in cases such as Paris, Four Sons (No 2) and IGA Distribution (No 3) towards settlement negotiations stands in stark contrast to the approach of the respondent in this matter. 6. To borrow from the Court of Appeal in Phillips, this is not a case where the respondent could be characterised as "a pig-headed litigant blinded by self-absorbed stupidity or malice". 7. I decline to exercise my discretion to award costs to the applicant in this matter on the basis that I am not of the opinion that the respondent unreasonably failed to agree to a settlement of the Application. John Murphy Commissioner ********** Amendments 29 March 2021 - Amendment to cover sheet made DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 March 2021