Industrial Relations Commission of New South Wales CITATION : HAZEL LANG AND REID AND VASELY Application by Hazel Lang re unfair dismissal pursuant to s84 of the Industrial Relations Act 1996 - Application by Reid and Vasely for an order as to costs [2000] NSWIRComm 23 PARTIES : Hazel Lang Reid and Vasely FILE NUMBER: 1400 of 1999 CORAM: Sams DP Notice of motion as to costs - whether original application frivolous or vexatious - whether application instituted without reasonable cause - costs sought on an indemnity basis - s181(2)(c) of the Act - application dealt with ex parte - conduct of proceedings - general principles. CATCHWORDS : Held, applicant's behaviour "curious" - failure to comply with directions - original application frivolous and vexatious - costs not appropriate in conciliation proceedings - indemnity costs rejected - costs ordered. LEGISLATION CITED : Industrial Relations Act 1996 Heidt v Chrysler Australia (1976) 26 FLR 257 at 274 General Steel Inc v Commisioner for Railways (NSW) and Others (1964) 112 CLR 125 at 129 CASES CITED : Spanish Club v Australian Liquor, Hospitality & Miscellaneous Workers Union, New South Wales Branch (1999) 87 IR 294 Burton v Shire of Bairnsdale (1909) 7 CLR 76 at 92 Bankstown City Council v Paris (unreported Wright P, Peterson J, Bishop C, Decision as to Costs in Matter IRC262 of 1999, 17 December 1999) HEARING DATES: 11/08/1999; 11/30/1999; 02/29/2000 DATE OF JUDGMENT: 03/16/2000 APPLICANT Ex Parte RESPONDENT LEGAL REPRESENTATIVES: Mr N McNulty Solicitor Tress Cocks & Maddox JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS, DP 16 March 2000 Matter No IRC99/1400 HAZEL LANG AND REID AND VASELY Application by Hazel Lang re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 Application by Reid and Vasely for an order as to costs DECISION ON COSTS 1 On 11 October 1999 the Commission published a decision in this matter which dismissed Ms Hazel Lang's application for relief pursuant to s84 of the Industrial Relations Act 1996 in respect to her termination of employment by Reid and Vasely (Solicitors) on 19 March 1999. 2 My findings in the matter were as follows: 1. The applicant's evidence lacks credibility and is rejected. 2. The evidence of the respondent's witnesses is preferred. 3. The applicant was told in advance that she was on a three month probationary period. 4. The applicant refused to accept or acknowledge the probationary period. 5. The probationary period was reasonable. 6. The applicant was dismissed during the probationary period. 7. The Commission lacks jurisdiction to entertain the claim for relief under s85 of the Act, by virtue of Reg.5B(1)(c). 8. The application, de juris , must be dismissed. 9. Proceedings in matter IRC 1400/99 are formally terminated. 3 Following the announcement of my decision, Mr McNulty (Solicitor) for the respondent, made an immediate application for costs. However, the applicant had not appeared and was not represented. In these circumstances, the Commission was not prepared to consider the costs application at the time. I directed the respondent to file a relevant notice of motion on costs, following which I would list the application for mention. 4 The notice of motion was duly filed on 18 October 1999 and listed for mention on 8 November 1999. Conduct of Proceedings 5 At the mention of the costs application on 8 November 1999, Ms Lang represented herself and Ms Cheever (Solicitor) represented the respondent. The Commission posed a number of options as to the procedure to be adopted in dealing with the costs application. The parties agreed that the most convenient course would be for both parties to file written submissions, according to an agreed timetable, following which the Commission would consider the submissions and make a determination accordingly. 6 Following an off record discussion of a timetable, the following exchange is recorded at p5 of transcript: HIS HONOUR: In this matter the Commission issues the following directions: 1. That the respondent as the applicant in these costs proceedings is to file and serve its submissions by 4pm on 29 November. 2. That the applicant as the respondent in these proceedings is to file and serve any submission in reply by 4pm on 3 January 2000. 3. The respondent as the applicant in these proceedings is to file and serve any submission in reply by 4pm on 3 January 2000. Ms Lang, so there is no problem with you receiving the submissions from the other side do I have your address correct, Post Office Box 806 Bondi Junction: LANG: That is correct. 7 The respondent's submissions were filed on 30 November and an attempt at service on the applicant was made personally at unit 2/1 Bulga Road, Dover Heights at 4.00pm and 9.00pm the same day. These attempts are recorded in an affidavit of attempted service filed by Craig Malone and marked as Ex'2' in the proceedings of 29 February 2000. 8 On the second occasion that day, Mr Malone spoke to a resident of Unit 3, who confirmed Ms Lang as the resident of Unit 2. Between 1 December and 12 December 1999 Mr Malone attempted on eight occasions to serve the submission on the applicant. On each occasion there was no response. 9 On 16 December, the respondent's solicitor again served the submissions by post and indicated the respondent would settle the claim for costs for the amount of $5,529.71. 10 On 24 January 2000 the respondent's solicitor, Mr McNulty, advised the Commission of it's efforts at serving the submission, and the failure of the applicant to file her submissions in reply. 11 Mr McNulty also advised that when he contacted Ms Lang by mobile phone and identified himself, the person who answered said it was a wrong number and hung up. He called back on the same number and the voice mail message identified the number as that of Ms Lang. 12 This curious behaviour is consistent with two phone calls made by my Associate, on 10 February 2000, to the mobile number earlier provided by the applicant. My Associate had spoken to the applicant on many occasions by phoning this number. However, when calling this number on 10 February, the phone was answered by a woman who denied she was Ms Lang and said it was a wrong number. My Associate subsequently left a message on the applicant's home telephone answering machine. 13 The Registry, on the same day advised the applicant in writing, transmitted both by facsimile and post, of the date for mention of the matter on 29 February, 2000. 14 On this day, Mr McNulty appeared for the respondent - Ms Lang did not appear. 15 Mr McNulty tendered the respondent's submissions, Ex'1' and the affidavit of attempted service (Ex'2'), earlier referred to. He pressed his application for costs in the absence of the applicant. I decided, having regard for the efforts made to contact the applicant by, both the respondent, and the Commission, and her failure to comply with directions, to consider the material filed and issue a decision in due course. Respondent's Submissions 16 The respondent sought costs on an indemnity basis pursuant to s181(2)(c) of the Act. In support, it submitted, that: A) The applicant's claim of unfair dismissal was vexatious or the proceedings were instituted without reasonable cause. It relied on Heidt v Chrysler Australia ( Northrop J, 26 FLR 257 at 274) and General Steel Inc v Commissioner for Railways (NSW) and Others ( Barwick CJ, 112 CLR 125 at 129). B) The applicant's original case was founded on a lie. The Commission had made clear findings contrary to the applicant's assertions. C) The applicant knew she was on probation, but refused to acknowledge it. D) Costs on an indemnity basis were sought because of the special or unusual features of the proceedings and/or the unmeritorious conduct of the applicant. E) This conduct was identified as: i) The Commission found that she was a witness of no credit; ii) The Commission found that despite her assertions to the contrary, she was informed of the probation period. Accordingly, if that had been acknowledged by her, these proceedings should never have been brought as she clearly did not have standing; and iii) Despite being cautioned on numerous occasions by the Commission, much of Ms Lang's evidence and her cross-examination of the Respondent's witnesses had little relevance to the issue to be determined by the Commission. F) The applicant knew her case had no chance of success and that it was commenced, and continued, because of a wilful disregard for known facts and established law. CONSIDERATION 17 The Commission is perfectly satisfied that Ms Lang has engaged in a deliberate 'cat and mouse' game to avoid being contacted by the respondent - or this Commission. It would be comical, if it wasn't for the serious ramifications it has for her, both personally and financially. 18 Despite her churlish and childish attempts to avoid being served with the respondent's submissions or being contacted by the Commission, it is not lost on me that she actually attended the mention of the costs application on 8 November 1999 and was fully cognisant of the directions issued that day. She made no complaint as to the directions issued, or subsequently indicate any difficulty in being able to comply with them. The Commission even checked her forwarding address on the record, as disclosed on p5 of transcript. 19 In these circumstances, her refusal to do so, is both foolish and incomprehensible. I refer to Spanish Club v Australian Liquor, Hospitality & Miscellaneous Workers Union, New South Wales Branch (1999) (Wright P, Marks J, Bishop C, 87 IR 294), where a Full Bench of the Commission said at p294: It is imperative that parties to proceedings before this Commission comply with directions designed to facilitate the efficient and effective determination of matters before the Commission. Absent any proper explanation, any party in default of the direction will run the risk of a sanction imposed by the presiding member of the Commission. .... We have departed from the usual practice of the Commission not to provide reasons for declining to grant leave to emphasise the importance of the directions of the Commission being complied with unless there be good reason shown on the basis of material in proper form placed before the Commission to justify non-compliance. 20 Not only was there no proper explanation, there was no explanation at all. 21 Ms Lang has compounded her difficulties by exposing herself to the costs application being dealt with ex parte, and in the absence of any defence she might have advanced by way of submissions in support of her position. 22 The Commission is left with no alternative but to consider the submissions of the respondent and accept the applicant neither wishes to, nor has any answer, to the submissions contended for by the respondent. 23 Nevertheless, despite these far from satisfactory circumstances, I propose to adopt the general principles which the Commission applies in applications for costs in unfair dismissal cases. 24 A convenient starting point is the relevant provision of the statute at s181(2)(c): 181(2) (c) The Commission may award costs against a party to proceedings under Pt 6 ch 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. 25 It is plain, therefore, for a costs application to succeed under s181(2)(c) that one, or more of three tests, needs to be satisfied, ie: a) was the application frivolous? b) was the application vexatious? c) did a party unreasonably fail to agree to a settlement? 26 A seminal authority for what constitutes frivolous or vexatious is to be found in General Steel Inc v Commissioner for Railways (NSW) and Others, where the High Court said at p129: The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense'. At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or 'so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument'. 27 This line of authority might be traced to a case in 1908 where O'Connor J of the High Court, in Burton v Shire of Bairnsdale (Barton, O'Connor, Isaacs and Higgins JJ, 8 September 1908, 7 CLR 76 at 92) neatly expressed the general principle of the right of every litigant to have his/her case heard and determined, unless such a claim is so obviously untenable that it cannot possibly succeed: Prima facie, every litigant has a right to have matters of law as well as of fact decided according to the ordinary rules of procedure, which give him full time and opportunity for the presentation of his case to the ordinary tribunals, and the inherent jurisdiction of the Court to protect its process from abuse by depriving a litigant of these rights and summarily disposing of an action as frivolous and vexatious in point of law will never be exercised unless the plaintiff's claim is so obviously untenable that it cannot possibly succeed. 28 The Commission is also assisted by the ordinary and common meaning of the expressions as found in the Macquarie Dictionary: Frivolous: 1 of little or no weight, worth or importance, not worthy of serious notice. Vexatious: 2 (of legal actions) instituted without sufficient grounds, and serving only to cause annoyance 29 Having regard for the authorities cited and the ordinary meaning of the terms, I am satisfied that the applicant's claim was frivolous and vexatious. I am led to this conclusion by the following: A) Two Commission members conducted conciliation conferences, myself on 2 June and Redmond C on 27 April, 1999. It was apparent, from the outset, in both conferences that the respondent intended to raise a jurisdictional hurdle to the application proceeding. The applicant ignored this difficulty and persistently continued to protest the unfairness of her dismissal. B) The applicant's conduct during the course of the conciliation and the hearing was clearly designed to cause the respondent as much discomfort, annoyance and expense as possible. It was bordering on an exercise of revenge. C) The applicant should have focused on the correct issue. She did not do so. She claimed to be well qualified and an experienced legal secretary. If this was so, her failure to recognise and confront the jurisdictional issue, is either naive or reveals some other ulterior motive. My earlier findings were that the applicant knew she was on probation and had concocted a letter, post facto , to support her denials. It was created for the express purpose of the earlier proceedings. D) In view of her knowledge of the probationary period and its effect, it was unreasonable for her to persist with prosecuting a claim knowing it was futile to do so. 30 In view of this finding, it is unnecessary for me to consider whether the applicant unreasonably failed to agree to a settlement of the claim. Although I note that the only practical and sensible option, after the conciliation conferences was for the applicant to withdraw her application, with costs to be met by both parties. 31 Because of the express intention of the legislature to encourage conciliation of unfair dismissal claims, and the restrictions placed on costs applications by virtue of s181(2)(c), I am of the view, as expressed in Wahba and Miles Fresh Fruit Market t/as Brighton Fruit Barn Pty Ltd (Sams DP, Decision on Costs in Matter IRC4413 of 1998, 29 July 1999), that only in exceptional circumstances should costs associated with conciliation proceedings be taken into account. 32 This principle is particularly relevant where the applicant is unrepresented, and may not be fully aware of the consequences of proceeding to arbitration, where difficult and complex legal questions, might arise. 33 However, with full knowledge of the ramifications of continuing with a vengeful and unreasonable case, an applicant places him or herself at considerable risk of costs orders being made, for subsequent arbitration proceedings. I am satisfied the applicant falls within this category. 34 I turn now to consider whether costs should be awarded on an indemnity basis. 35 The principles to be applied in matters involving the order of indemnity costs in unfair dismissal cases, has been helpfully and recently considered in a decision of a Full Bench of the Commission in Bankstown City Council v Paris (Decision as to Costs Wright P, Peterson J, Bishop C, Matter IRC262 of 1999, 17 December 1999). 36 At p30 of the unreported decision the Full Bench said: We consider that the following principles should be applied in relation to the application for indemnity costs made in circumstances where the Commission has held that the first criterion in s181(2)(c) has been held to be satisfied, and an application for costs is made. The Commission can properly, in the appropriate exercise of its discretion, make an order for indemnity costs. The power to make a costs order of that kind is clearly available because of the terms of s181(1)(b). It must, however, be recognised that the exercise of discretion is being called for in the context of circumstances which are out of the usual. That is, the discretion is only available in non-Court Session matters where one or more of specified criteria are met. Secondly, although the finding that a relevant criterion has been met may, in some circumstances, be satisfaction of circumstances which might lead to the award of indemnity costs, and although the existence of such circumstances is relevant to the grant of costs on that basis, the Commission should exercise the discretion in full recognition of the caution that should be exercised before making a costs order on a basis other than that costs should simply follow the event, since that is the way in which a discretion to order costs would be exercised 'regularly and judicially': see, for example, Moama Bowling Club Limited v Armstrong (No 2) 64 IR 264 at 267 per Cahill Deputy CJ and Peterson J). Nevertheless, and thirdly, provided such caution is exercised, where the circumstances clearly fall within those where the courts have recognised and indemnity costs should, or may, be granted, then the Commission should consider, in the exercise of its discretion, whether costs should be awarded on that basis. Nevertheless, even at that stage of the exercise of the discretion, the Commission is to recognise that, as the authorities in relation to indemnity costs make clear, the categories in which the discretion may be exercised are not closed and the exercise of the power in relation to indemnity costs remains throughout discretionary. The discretion must be exercised judicially. We have paid regard to the detailed discussion of principles set out in the judgment of Shepherd J in Colgate-Palmolive Company v Cussons Pty Limited , particularly to the distillation of authority set out therein at 232-234. On a consideration of those authorities it is clear that, for example, a court (or this Commission) ought not usually make a payment of costs on a basis other than the party and party basis; and there must be circumstances which would warrant a court (or this Commission) departing from the usual course. 37 I do not consider that this case meets the criterion which the Full Bench identifies as being "out of the usual". Therefore, I am not satisfied that this is an appropriate case for costs to be awarded on an indemnity basis. 38 Accordingly, the respondent's notice of motion is granted to the extent of my conclusions earlier referred to. I so order. ORDER 39 Pursuant to s181(2)(c) of the Industrial Relations Act 1996, the Commission orders that: 1) The applicant, Ms Hazel Lang, shall pay the costs of the respondent in a sum as agreed, or assessed in respect to (a) the proceedings as they relate to the substantive hearing on 3 September 1999; and (b) insofar as they relate to the proceedings relevant to the application for costs; 2) This order shall take effect on and from 16 March 2000 and shall be paid as agreed or assessed within twenty-eight (28) days. Peter Sams Deputy President 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.