Industrial Relations Commission of New South Wales CITATION: Papaioannou -V- Tejinder Singh (No.2) [2005] NSWIRComm 1074 APPLICANT Maria Papaioannou PARTIES: RESPONDENT Tejinder Singh FILE NUMBER(S): 2464 of 2004 CORAM: Cambridge C CATCHWORDS: Unfair dismissal - costs - claim that respondent unreasonably failed to agree to a settlement - costs refused. LEGISLATION CITED: Industrial Relations Act 1996 [NSW] Bankstown City Council v Paris (1999) Full Commission of Industrial Relations Commission of NSW [Wright P, Peterson J & Bishop C], 93IR 209. Calderbank v Calderbank, (1975), 3 All ER 333. CASES CITED: Four Sons Pty Limited v Sakchai Limsiripothong (No 2), (2000) Full Commission of Industrial Relations Commission of NSW [Wright P, Hungerford J & Cambridge C] 100IR 400. Orange Community Accommodation Service Incorporated v Carolyn Vivienne Roddenby, (2004), Full Commission of Industrial Relations Commission of NSW, [Walton VP Sams DP Murphy C], [2004] NSWIRComm 333. HEARING DATES: 04/04/2005 DATE OF JUDGMENT: 05/25/2005 APPLICANT Mr C Magee, of Counsel LEGAL REPRESENTATIVES: RESPONDENT Mr Tejinder Singh, in person DECISION: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES COMMISSIONER CAMBRIDGE 25 May 2005 Matter No IRC 2464 of 2004 Maria Papaioannou -V- Tejinder Singh Application by M Papaioannou re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996. DECISION ON COSTS [2005] NSWIRComm 1 This Decision involves an application for costs made by the successful applicant, Maria Papaioannou, (the applicant). The applicant has sought Orders for costs in respect of proceedings arising from her application for Relief from unfair dismissal which was taken pursuant to section 84 of the Industrial Relations Act 1996 [NSW], (the Act). 2 The applicant was successful in obtaining Orders for compensation made pursuant to sections 89(5) and 89(6) of the Act. The Orders for compensation were made against Tejinder Singh, (the employer), and contained in the Decision issued in this matter on 2 November 2004. Following that Decision the applicant's representative formalised a request that the Commission provide an opportunity for the applicant to be heard on the issue of costs. 3 The issue of costs was the subject of Mention proceedings held on 3 December 2004. At these proceedings the Commission was advised that the question of costs was contested and Directions were made for the filing and service of evidence and any other material regarding the issue of costs. Subsequently, a Hearing on the question of costs was conducted on 4 April 2005, at which time the Commission reserved Decision. THE CASE ADVANCED ON BEHALF OF THE APPLICANT SEEKING COSTS 4 At the Hearing on costs the applicant continued to be represented by Mr C Magee, barrister. Mr Magee sought to reply upon the affidavit of the applicant dated 24 January 2005, which was admitted by consent and without the requirement for cross-examination of the deponent. This affidavit of the applicant became Exhibit C1 in proceedings. 5 Mr Magee also filed written submissions on 27 January 2005, which he supplemented with oral submissions during the Hearing. 6 Mr Magee commenced his submissions by outlining the history of negotiations between the Parties which explored the prospects for settlement of the unfair dismissal claim. Mr Magee said that the applicant had been making efforts to settle the claim even prior to the matter formally commencing in the Commission. Mr Magee submitted that the respondent employer did not engage in any attempts to settle the matter prior to the conciliation proceedings in the Commission. 7 Mr Magee then recounted an outline of the conduct of the Parties aimed at conciliated settlement. Mr Magee referred to the transcript of proceeding of 8 June 2004. The conciliation proceedings were unsuccessful. 8 Mr Magee advised that after the conciliation proceedings there had been no further communication between the Parties in respect of the pursuit of settlement and the matter moved forward to Hearing and ultimately Determination. 9 Mr Magee submitted that the employer had not made any real assessment of the strength and weaknesses of its case. Mr Magee said that the employer's refusal to make offers above a two weeks settlement proposition was inconsistent with any proper assessment of the strength and weaknesses of its case. Mr Magee submitted that having regard for the relevant provisions of the Act regarding costs in unfair dismissal cases, the employer's failure to contemplate settlement for any amount above a two weeks offer, represented an unreasonable failure to agree to a settlement of the claim. Therefore according to Mr Magee the applicant was entitled to a costs Order in her favour. 10 Mr Magee referred to the Full Bench Decision in the case of Bankstown City Council -v- Paris (Paris) Bankstown City Council v Paris (1999) Full Commission of Industrial Relations Commission of NSW [Wright P, Peterson J & Bishop C], 93IR 209. and he said that the employer's conduct demonstrated that the applicant's offer to settle for the figure of $12,500.00 was a proposal that could be described as reasonable and was not agreed to. In addition Mr Magee submitted that the conduct of the employer in respect to the pursuit of settlement could be said to amount to conduct that was inconsistent with any intention to settle on any reasonable basis. Therefore according to the submissions of Mr Magee, the employer had failed to act reasonably in respect to any conciliated settlement of the claim. Consequently Mr Magee submitted that the applicant's request for costs Orders should be granted. THE CASE ADVANCED BY THE EMPLOYER AGAINST COSTS 11 Mr Tejinder Singh appeared unrepresented during the Hearing on the question of costs. Mr Singh said that he had received a letter from the applicant which stated that she was happy to take $13,000.00 and that amount was not negotiable. Mr Singh said that after reading that letter, the amount involved was no where near the amount that he would contemplate, being an alternative figure of approximately $5,000.00. Therefore according to Mr Singh, he said that the settlement discussion appeared to be "just a waste of my time and Maria's time." 12 Mr Singh also stated that the applicant's legal representative never approached him saying that there was a further negotiation procedure that could be adopted. Mr Singh said that he was totally unaware of the process that could involve further negotiation for settlement. 13 Mr Singh also filed a statement on 21 February 2005, which outlined certain matters that related to the Hearing on the question of costs. CONSIDERATION 14 There were no significant factual contests that arose in respect to the evidentiary basis upon which to Determine the question of costs. Broadly, the following synopsis of the pursuit of conciliated settlement can be recorded. 15 During the conciliation before the Commission the applicant advanced a proposition to settle her unfair dismissal claim for a figure of $13,000.00 which represented approximately twenty three weeks remuneration. The employer initially made an offer of one week, which was rejected by the applicant, who then reduced her offer to $12,500.00. The employer then doubled its offer to settle to two weeks remuneration being an amount of approximately $1,120.00. The applicant rejected that proposition for settlement and initially refused to consider any lesser amount than $12,500.00. The applicant then proposed $12,400.00 and as a consequence of that very minor movement in respect to a lower offer for settlement, the employer rejected any further contemplation of amounts greater than the earlier offered $1,120.00. At this point the Commission advised the Parties that it could not participate further in any attempts to reach conciliated settlement and that the matter remained unresolved. 16 It was without question that the requirements of section 181(2)(c) of the Act provided the only statutory basis by which a Party to unfair dismissal proceedings could pursue the question of costs. 17 Relatively section 181(2)(c) of the Act states as follows: "(2) However, the Commission when it is not in Court Session may award costs only in the following cases: … (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 …" 18 In this instance the application for costs was pursued under that Part of section 181(2)(c) of the Act which requires the Commission to find that the employer had unreasonably failed to agree to a settlement of the claim. The concept of what constitutes an unreasonable failure to agree to a settlement of an unfair dismissal claim was the subject of detailed consideration by a Full Bench of this Commission in the case of Bankstown City Council v Peter John Paris, (Paris) a case referred to by Mr Magee, for the applicant. 19 There is further important Authority established in the Full Bench Judgement in the case of Four Sons Pty Ltd v Sakchai Limsiripothong (No 2), (Four Sons) Four Sons Pty Limited v Sakchai Limsiripothong (No 2), (2000) Full Commission of Industrial Relations Commission of NSW [Wright P, Hungerford J & Cambridge C] 100IR 400.. The Judgements in Paris and Four Sons make it clear that in any assessment as to whether a Party's conduct could be held to represent an unreasonable failure to agree to a settlement of the claim, it is necessary to analyse whether that Party made a careful and reasonable assessment of the prospects for success or failure of their case. It would seem that if the Commission ultimately found that the Parties significantly misjudged the strengths and weaknesses of their case, whilst in possession of material relevant to such an appropriate determination at the time, such failure would likely provide proper basis for costs Orders to be made against that Party. 20 Further, on balance, it must also be recognised that the construction of the costs provisions in the Act provides for a framework, which, in the main, seeks to avoid costs, but which emphasises a requirement on Parties to conduct themselves in a manner which promotes conciliated settlement of unfair dismissal claims. Further, more recent Authority on the question of costs can be obtained from the Full Bench Decision in the case of Orange Community Accommodation Service Incorporated v Carolyn Vivienne Roddenby (Roddenby) Orange Community Accommodation Service Incorporated v Carolyn Vivienne Roddenby, (2004), Full Commission of Industrial Relations Commission of NSW, [Walton VP Sams DP Murphy C], [2004] NSWIRComm 333.. 21 In this instance the applicant has asserted that the employer failed to make any careful assessment of the strengths and weaknesses of its case. According to the applicant, it therefore followed that the applicant's success, particularly in obtaining Orders for compensation that exceeded the amounts offered at settlement, should provide justifiable basis for the granting of costs Orders in the applicant's favour. It would seem that the Authority established in the Judgement in Four Sons would provide significant support for the applicant's proposition in this respect. 22 However it is necessary to recognise that the applicant engaged legal representation at some point in time following the unsuccessful conciliation and before the matter came on for Directions before the Hearing. The employer was unrepresented throughout the proceedings. Therefore the employer's assessment as to the strengths and weaknesses of its case must be made, having cognisance of the employer being unrepresented, whilst the applicant had engaged Counsel. 23 It is therefore important to note that Mr Singh stressed that he had not been approached by the applicant's Counsel, in respect to the prospects for any further pursuit of settlement. In such circumstances, it is difficult to predict what may have happened, had there been some formal communication, perhaps in the form of a Calderbank style letter made to the employer prior to the Hearing. In this vacuum, the inexperienced and unrepresented employer appeared to assume that no further contemplation of settlement could be undertaken. 24 Therefore in such circumstances it would seem that the applicant's representative had not properly tested the employer's position on the question of settlement. Consequently it would seem that a finding that the employer, in these circumstances, had unreasonably failed to agree to a settlement of the claim could only be fairly made, if the applicant's legal representatives had formally tested the employer's position. 25 Having regard to the absence of any proper testing of the employer's alleged intransigence in respect to settlement of the claim, and combined with a statutory regime that establishes that costs are the exception, rather than the rule, it would seem that before the legally represented Party could properly establish that the other side, unrepresented, had unreasonably failed to agree to a settlement of the claim, that proper formal testing of the pursuit of settlement by way of a Calderbank style letter would be necessary. 26 It should also be noted that no criticism can be made of the employer's conduct in respect to proceedings before the Commission, as distinct from the findings made in respect to the primary determination of this matter. As Mr Singh submitted, at no time did he attempt to delay or otherwise frustrate proceedings. Mr Singh appeared as respectful and courteous at all times and this display of commendable conduct assists his defence against a finding that he acted unreasonably in respect to the pursuit of settlement. I am persuaded to accept that, in the absence of any approach from the applicant's representative, Mr Singh genuinely believed that no further exploration of settlement was available after the Directions proceedings and up to and including the Hearing. CONCLUSIONS 27 The application for costs made by the successful applicant in this unfair dismissal claim has logically involved an examination of the conduct of the Parties in the pursuit of settlement. There were no significant contests about the factual basis for Determination of the question of costs. 28 The applicant has sought that the Commission should find that the employer's conduct in the pursuit of settlement represented an unreasonable failure to agree to a settlement of the claim. 29 Having carefully considered the evidence and assessed the uncontested factual position against the Authorities and relevant Principles that should be applied to a costs application such as this, the Commission must conclude that the applicant's claim for costs should fail. 30 In particular, given the respective position of the Parties, vis-a-vis the applicant being legally represented, whilst the employer was unrepresented, the applicant should have properly tested the alleged intransigence of the employer on the question of settlement. In the absence of something akin to a Calderbank letter, the applicant will not be entitled to a finding that the employer had unreasonably failed to agree to a settlement of the claim. If, following the conciliation before the Commission, the employer had bluntly rejected some formal offer to settle either at the earlier figures circa $12,500.00, or at some other amount, then the Commission may well have been able to establish that any such rejection represented an unreasonable failure to agree to a settlement of the claim. 31 An examination of the respective positions at the Conciliation before the Commission on 8 June 2004 cannot establish, consistent with the Authority provided by the Decision in Roddenby, any conduct on the part of the employer which could constitute an unreasonable failure to agree to a settlement of the claim. Therefore the Commission is unable to find that the employer, either at the Conciliation before the Commission or in respect to any other conduct, did unreasonably fail to agree to a settlement of the claim. 32 Therefore the Legislative pre-requisite to provide for any Order for costs is unavailable. Consequently the applicant's claim for costs is refused and the proceedings are concluded. oooOOOooo 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.