Industrial Relations Commission of New South Wales CITATION : Tyndall and Ibnix Limited [2001] NSWIRComm 111 APPLICANT PARTIES : Troy Patrick Tyndall RESPONDENT Ibnix Limited FILE NUMBER: 5243 of 2000 CORAM: Sams DP Costs in unfair dismissal proceedings - s181(2)(c) of the Act - unreasonable refusal to settle claim - conduct of the parties - discretion of Commission. CATCHWORDS : Held, respondent's conduct unreasonable - respondent refused to reasonably settle claim - costs ordered. LEGISLATION CITED : Industrial Relations Act 1996 Legal Profession Act 1987 Bankstown City Council v Paris, 93 IR 209 CASES CITED : Copperart v Martin, 68 IR 58 Blagojevch v Australian Industrial Relations Commission, 98 IR 32 HEARING DATES: 04/05/2001; 04/25/2001; 05/02/2001 DATE OF JUDGMENT: 05/25/2001 APPLICANT Mr E Peterson of Counsel Solicitor LEGAL REPRESENTATIVES: Mr M Corrigan RESPONDENT No appearance JUDGMENT: - 10 - MINDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM : SAMS DP 25 May 2001 Matter IRC00/5243 TROY PATRICK TYNDALL AND IBNIX LIMITED Application by Troy Patrick Tyndall re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION AS TO COSTS 1 In a decision published on 12 March 2001 the Commission, as presently constituted, reinstated the applicant, Mr Troy Tyndall, on certain terms to his former position employed by Ibnix Limited ("the respondent"). Relevantly, the decision ordered that any application for costs be filed within twenty-one days. 2 Subsequently, on 28 March 2001, the applicant filed a notice of motion as to costs in respect to the substantive hearing ($2,700) and costs in respect to the notice of motion. The notice of motion was accompanied by an affidavit of Mr Michael Corrigan, the applicant's solicitor, dated 28 March 2001. 3 The Commission listed the notice of motion for mention on 5 April 2001. There was no appearance for the respondent; a notice of ceasing to act having been filed by Shanahan Tudhope, Solicitors, on 30 March. 4 Mr Peterson of Counsel (for the applicant) relied on the documents filed in support of a costs application pursuant to s181(2)(c) of the Industrial Relations Act 1996 ("the Act"). 5 In view of the absence of the respondent, the Commission determined that a further opportunity be afforded to the employer to respond to the application. The Commission issued directions for the filing and service of affidavit evidence and submissions from both parties and directed the Registrar to advise the respondent of such directions. 6 On 24 April 2001, a document, purporting to be an affidavit in accordance with Form 43, was filed by T R Holland, Managing Director, Ibnix Services. I quote the document in full: Ibnix have made two offers to the Applicant which were refused, copies of which are attached. Ibnix has had to pay extensive cost's(sic) with regard to this dispute copies are attached, we have also been very heavily financially penalised with regard to the settlement. Ibnix is no longer in a financial position to be able to afford legal representation. Ibnix ask's(sic) that the parties pay their own cost's(sic). 7 The document was signed by Mr Holland, but not witnessed. It is clearly irregular as to both form and content and does not comply with Form 43. It is said that the attached two letters are "offers to the applicant which were refused". This is not so. Both letters are from the respondent's then solicitors, Shanahan Tudhope. The first, dated 21 February, is addressed to the respondent, as its client, and details its total costs of $5,462.15. The second is a letter of offer dated 9 February 2001 – five days prior to the hearing – offering four weeks' salary as a settlement of the applicant's claim. 8 The complete history of settlement offers is to be found in the affidavit of Mr Corrigan, solicitor for the applicant. I shall put the history in short form: 10 November 2000 Commission's conciliation proceedings commence - both parties are unrepresented. 4 December 2000 Applicant's solicitor offers to settle for fifteen weeks' pay. Respondent does not reply. 13 December 2000 Applicant extends deadline for reply to 15 December and reserves rights as to costs. 15 December 2000 Deadline passes and respondent does not reply. 19 January 2001 Respondent's solicitor offers four weeks' pay as ETP and reserves rights as to costs. 6 February 2001 Applicant offers to settle for ten weeks' pay. 9 February 2001 Respondent's offer reaffirmed at four weeks' pay. Submissions for the Applicant 9 Mr Corrigan submitted that the Commission's orders of reinstatement and approximately fifteen weeks' lost remuneration demonstrate that the respondent's settlement offer of four weeks' was unreasonable. 10 The applicant had been reasonable in reducing his original claim of fifteen weeks to ten weeks. 11 The respondent's purported affidavit does not contest the applicant's claim for costs; but rather complains about its own costs. He submitted the applicant's costs were reasonable in comparison. 12 Mr Corrigan referred the Commission to the relevant sections of the Act and cited Bankstown City Council v Paris, 93 IR 209, in support of his submissions. CONSIDERATION 13 While not expressly set out in the purported affidavit, the respondent has seemingly put its defence of the costs application on two bases: 1) That its own costs were "extensive". 2) That the Commission had "heavily financially penalised" the respondent and it was not in a financial position to afford legal representation. 14 As to the first basis, the Commission hardly needs to observe that a party's own costs - be they excessive or otherwise - are not a relevant factor to the determination of whether costs should be awarded against it. This defence, indeed both bases, seem to imply a curious plea of "incapacity to pay". 15 Notwithstanding the fact that not a scrap of evidence was put to substantiate its financial status, there is no statutory basis for the Commission to have regard for a losing party's financial position when determining whether costs should be awarded against it. So much is plainly evident from the relevant provisions of the Act: SECTION 181 COSTS 181(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 Division 6 of Part 11 of the Legal Profession Act 1987 or on any other basis. 181(2) However, the Commission, when it is not in Court Session, 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 (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. 16 While cost applications are determined in the exercise of the Commission's discretion, I am unaware of any authority for the respondent's curious line of reasoning, even having regard for the crude and obscure manner in which it was put. 17 In any event, I doubt that, in the exercise of discretion, whether the Commission would be minded to take such a plea into account. That is, of course, distinct from consent arrangements the parties might enter into when negotiating a settlement of a costs application, such as payments by instalment, for example. 18 The approach the Commission is to adopt in Pt 6 ch 2 proceedings in respect to costs, has recently been discussed by a Full Bench of the Commission in Bankstown City Council v Paris: 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 power and discretions under s 181(1) are available for exercise. 19 A number of principles, which are relevant to my findings in this matter, can be gleaned from this passage: 1) There are strict limits to the power of the Commission to award costs in unfair dismissal proceedings. See also Copperart v Martin , 68 IR 58. 2) Costs are available in circumstances where a party has failed to properly conciliate the claim. 3) The general conduct of a party is a relevant consideration. 4) The Commission is obliged to consider all relevant circumstances. 20 There is another aspect of Mr Corrigan's submission which requires the Commission's comment. It was submitted that the offer of settlement was unreasonable, vis a vis the orders made by the Commission on 12 March 2001. On this point, I refer to the comments of the Full Court of the Federal Court in Blagojevch v Australian Industrial Relations Commission, 98 IR 32 at 42-43, where Marshall and Lehane JJ said: Certainly there is no reason to give primacy to the result of a mechanical comparison between an amount offered and the amount of compensation ultimately awarded; although, if an applicant offers to settle for a particular amount and the arbitration results in the award of a substantially lesser amount by way of compensation, it would no doubt be only in unusual circumstances that the respondent would be held to have acted unreasonably in rejecting the offer. CONCLUSIONS 21 The Commission, having considered all the relevant circumstances of the case, and applying the principles discussed in Bankstown City Council v Paris determines that costs should be awarded in the applicant's favour. In so finding, I have had regard to: 1) The conduct of the respondent leading up to, and during, the course of the proceedings, particularly: a) The respondent not replying to the applicant's offer of settlement of 4 December 2000 until 19 January 2001. b) The respondent's failure to reasonably reconsider its offer of settlement. c) The respondent's unreasonable response to settlement, based on it's own knowledge and admissions during the proceedings, particularly that the process of dismissing the applicant, was not perfect (see para 25 of 12 March 2001 decision). d) The respondent's indifference to the costs proceedings by failing to attend, or be represented, at the mention on 5 April 2000, without any excuse or explanation. 2) The willingness of the applicant to conciliate his claim by reducing it from fifteen to ten weeks' pay. 3) At all times, from 13 December 2000, the respondent was aware, should it be unsuccessful in defending the claim, that a costs application was a possibility. 4) The failure of the respondent to make any sensible defence of its position as to costs, including its failure to specifically address the proposition that it had unreasonably failed to settle the claim. 5) The applicant's costs of $2,700 do not appear to be extravagant or excessive. 22 The Commission is satisfied, pursuant to s181(2)(c) the Act, that the respondent unreasonably failed to settle the claim. Accordingly, costs should be awarded in the applicant's favour. 23 Pursuant to the Commission's general powers under s181(1), I determine to exercise my discretion by ordering costs on the following basis: 1) The respondent, Ibnix Limited, shall pay to the applicant, Troy Tyndall, an amount of $2,700, being his costs associated with the proceedings in Matter IRC5243 of 2000. 2) That the respondent, Ibnix Limited, shall pay to the applicant, Troy Tyndall, an amount as agreed or assessed, associated with the proceedings on the notice of motion, filed by the applicant on 28 March, 2001. 3) The costs so ordered are to be paid within twenty-eight (28) days of today. 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.