Industrial Relations Commission of New South Wales CITATION: A V Jennings Holdings Limited v. Dean, ex parte Pecotic [2008] NSWIRComm 1057 APPLICANT A V Jennings Holdings Limited PARTIES: RESPONDENT Robert Dean FILE NUMBER(S): IRC 3510 of 2004 CORAM: Connor C CATCHWORDS: costs - questions of jurisdiction - unfair dismissal claim rejected - appeal withdrawn - settlement reached - application for costs against agent as confirmed in the terms of settlement LEGISLATION CITED: Industrial Relations Act 1996 Deluux Pty Limited v. Mini-Tankers Pty Limited [2007] NSWIRComm 101 Di Battista v. Motton (1971) VR 565 Lewis v. Kunama Securities Pty Limited - unreported CASES CITED: Ogston v. Laurieton United Servicemen's Club - unreported Pedlow v. Cini (1976) AR 177 R v. Justices of South Brisbane; ex parte Zagami (1901) 11 QLJ 81 Sparks v. Fred Hoskins Pty Limited - unreported Steel v. Miorroe Newspapers Limited (1975) 2 NSWLR 48 HEARING DATES: 09/07/2008 DATE OF JUDGMENT: 9 July 2008 APPLICANT Bryce Cross LEGAL REPRESENTATIVES: RESPONDENT John Thompson (for the initial written submissions) Robert Dean (for written submissions in reply) DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: CONNOR C Wednesday, 9 July, 2008 Matter No IRC 3510 of 2004 A V Jennings Holdings Limited and Robert Dean; ex parte Elma Mary Pecotic Application for costs under S.181 of the Industrial Relations Act, 1996 INTERLOCUTORY DECISION [2008] NSWIRComm 1057 Background 1 These proceedings raise a jurisdictional issue concerning an application for costs that flow from a decision I handed down on Wednesday, 6 June, 2007. Mrs Elma Pecotic had been dismissed from her position as service manager with A V Jennings Holdings Pty Limited on Monday, 31 May, 2004 for alleged misconduct - essentially the circulation of a damaging and distressing rumour that an employee whom she directly supervised had threatened to physically harm another employee under her supervision. She had lodged an application under Part 6, Unfair Dismissals, of Chapter 2, Employment [Ss.83 to 90] of the 1996 Industrial Relations Act. In my decision of Wednesday, 6 June, 2007, I dismissed that application, reserving the position of A V Jennings as to costs. 2 Mrs Pecotic lodged an appeal against my decision of Wednesday, 6 June, 2007 dismissing her Part 6 application but that appeal was subsequently withdrawn by her and the matter was settled by a deed of release which relevantly contains the following provision: "...Upon entering into this agreement, the employer hereby releases and discharges forever the employee from all costs incurred as a result of the application and appeal. For the avoidance of doubt, this agreement does not preclude in any capacity the company or the employee from initiating any proceedings (including but not limited to an application for costs) against Robert Dean (the advocate representing the applicant) ..." 3 On Thursday, 20 December, 2007 solicitors representing A V Jennings in the proceedings filed an application for costs - directed, as the settlement agreement suggested, not against Mrs Pecotic but the agent who had represented her in the hearing (Mr Robert Dean) and limited to certain issues which it was alleged had unnecessarily complicated and delayed the proceedings. As a threshold issue, Mr Dean has challenged my jurisdiction to entertain such a claim for costs against him and I have made directions for the filing of the necessary submissions, with the intention of determining this matter on that written material. Mr Thompson provided written submissions on behalf of Mr Dean. Mr Cross, who had represented A V Jennings in the original proceedings, provided written submissions on behalf of A V Jennings. Mr Dean subsequently provided further submissions in reply to Mr Cross' submissions. The Application for Costs 4 There has never been an inherent power in the Commission to award costs [Pedlow v. Cini (1976) AR 177]. Cost are a creature of statute [R v. Justices of South Brisbane; ex parte Zagami (1901) 11 QLJ 81]. In particular, S.181(1) of the State IR Act provides as follows: "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." 5 And, as far as the current proceedings are concerned, S.181(2) reads as follows: "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 (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 S.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 Ss.357 and 373." 6 As the opening words to S.181(2) direct - "...the Commission...may award costs only in the following cases..." - applications for costs before single members of the Commission are confined to the specified situations described. In my unreported supplementary decision of Tuesday, 13 May, 1997 in Lewis v. Kunama Securities Pty Limited [Matter No.IRC 6035 of 1996] I had commented (at p.3) that: "…it is an established rule of construction for statutes and instruments that any provisions of a general application give way to specific provisions - generalia specialibus non derogant. I read S.181(2)(c) as a separate head and any application for costs in Part 6 proceedings is confined to it alone…" That decision was given prior to the amendment to the State IR Act which produced S.181(2)(c1) and the comments I made must be qualified to that extent. Nevertheless, it now follows that for any Part 6 proceedings, costs are confined to Ss.181(2)(c) and (c1). 7 Rule 209 provides further as follows: "(1) Where costs are incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default, and it appears to the Commission that a barrister, solicitor or agent is responsible, the Commission may, after giving the barrister, solicitor or agent reasonable opportunity to be heard: (a) disallow the costs as between the solicitor or agent and the solicitor's or agent's client; (b) disallow the costs as between the barrister and the barrister's instructing solicitor or as between the barrister and the client; (c) direct the barrister, solicitor or agent to repay to the client costs which the client has been ordered to pay to any other party; (d) direct the barrister, solicitor or agent to indemnify any party other than the client against costs payable by the party indemnified. (2) Without limiting the generality of subrule (1), a barrister, solicitor or agent is responsible for default for the purposes of that subrule where any proceedings cannot conveniently proceed, or fail or are adjourned without useful progress being made, because of the failure of the barrister, solicitor or agent: (a) to attend in person or by a proper representative; (b) to file any document which ought to have been filed; (c) to deliver any document which ought to have been delivered for the use of the Commission; (d) to be prepared with any proper evidence or account; or (e) otherwise to proceed. (3) The Commission may, before making an order under subrule (1), refer the matter to the Registrar for enquiry and report. (4) The Commission may order that notice of any proceedings or order under this Rule must be given to the client in such manner as may be specified in the order under this subrule. (5) The term solicitor in this Rule includes the solicitor's agent." 8 Costs are not customary for Part 6 applications and in his unreported decision of Friday, 5 March, 1999 Sams DP in Sparks v. Fred Hoskins Pty Limited [Matter No.IRC 3939 of 1998] had this to say (at p.9): "...In my view, the intention of Rule 209 is not directed to proceedings instituted under Part 6... As earlier observed, unfair dismissal proceedings are less formal and designed to achieve agreed outcomes based on minimal legal form and technicality..." 9 Moreover, it is not ordinarily the legal representative or agent of a party who incurs costs, notwithstanding that the conduct of that legal representative or agent may have, in fact, either contributed to the unreasonable failure to settle a claim, behaved in a frivolous or vexatious manner or contributed to the delay and unnecessary expense of the litigation [Di Battista v. Motton (1971) VR 565]. In Steel v. Mirror Newspapers Limited (1975) 2 NSWLR 48 Samuels JA of the Court of Appeal of the State Supreme Court commented in that respect (at p.55) that: "…it is important, in my opinion, to stress that it is not right to use an order for costs as a means of punishing counsel's transgressions. It would be quite unfair to do so, because it is the client and not the counsel who must satisfy the penalty. It would, of course, be unrealistic to ignore the effect that stringent use of the power to make such orders may have in deterring counsel from indulging in the kind of reckless extravagance that may abort a trial. But that is not its purpose; it is intended merely to distribute loss…" But clearly S.181(2)(c1) and Rule 209 still does contemplate costs being ordered against the representative of a party in the proceedings and, notwithstanding the comments of Sams DP in Sparks v. Fred Hoskins Pty Limited to which I have just referred, I see no reason to exclude Part 6 proceedings from that legislative regime for costs. The Arguments 10 The gist of the jurisdictional argument advanced by Mr Thompson on behalf of Mr Dean (and later by Mr Dean in his written submissions in reply) is that any application for costs against Mr Dean in these proceedings is confined by S.181(2)(c1) - a specific provision - and Rule 209 - a more general provision and subordinate legislation to S.181(2)(c1) - must be read within the strict context of S.181(2)(c1). Sams DP in Sparks v. Fred Hoskins Pty Limited commented in that respect (at p.9): "...In any event, reliance on a rule which, on its obvious face, in these proceedings, is in conflict with the statute cannot be sustained. A rule of the Commission cannot operate as to subvert or negate the clear intention of the statute..." 11 Mr Thompson also argues that Rule 209 is inconsistent with S.181(2)(c1) and referred in that respect to comments made by Marks J in his unreported decision of Tuesday, 29 May, 2007 in Deluux Pty Limited v. Mini-Tankers Pty Limited [Matter No.4640 of 2005 at p.8], viz: "...It is clear from Rule 209 that there is contemplated the ability of an agent to render costs to a principal... However, it is necessary to qualify the conclusion to which I have come by reference to the provisions of the Rules by observing that the Rules cannot expand upon or be inconsistent with anything which is contained in the Act, they having been created in effect by delegation..." But for the current proceedings, any question of inconsistency does not arise, in my opinion. As S.181(1) makes plain the award of costs is "...subject to the rules of the Commission and other Act or law...". Whilst, as Marks J indicated in Deluux Pty Limited v. Mini-Tankers Pty Limited , Rule 209 cannot stand alone, independent of the State IR Act, I do not think it does as far as the current proceedings are concerned. 12 There are two headings under S.181(2)(c1) under which costs may be awarded against an industrial agent: (i) where the agent fails to file a S.90A certificate that the agent believes there is a reasonable prospect of success of the Part 6 application, and (ii) where such a S.90A certificate was filed but the agent did not really believe, on reasonable grounds and provable facts, that there was a reasonable prospect of success. Mr Dean did file a S.90A certificate. The question is whether he genuinely believed, on provable facts, that there was a reasonable prospect of success of Mrs Pecotic's claim. That remains a matter going to merit and not jurisdiction. But it must be conceded that the onus resting with Mr Cross to establish Mr Dean's beliefs in that respect is a very onerous one and it may prove to be a hurdle which is very difficult for him to overcome. However, as a question of jurisdiction it would appear to me that it would still remain open to him. 13 But, as Mr Cross outlined in his written statement of contention, contrary to what Mr Thompson has suggested, S.181(c1) is not the only grounds on which costs may fall against an agent. Mr Cross sees S.181(c1) as an additional head for costs. So do I. In fact, as I see the position, it is not S.181(2)(c1) on which Mr Cross is actually relying. It is important to note that Rule 209 preceded the insertion of S.181(2)(c1). In my view, it is read in conjunction particularly with Ss.181(1)(a) and (c) which authorises an award for costs and, among other things, directs "...by whom and to what extent costs are to be paid...". Rule 209 facilitates costs to be awarded against a legal representative or agent. Specifically, Rule 209(d) confirms a direction that an agent of a litigant can be required to provide an indemnity to a person other than his client. 14 In that respect, I note comments made in the unreported decision of Cambridge C on Tuesday, 24 April, 2001 in Ogston v. Laurieton United Servicemen's Club [Matter No.IRC 4606 of 1997 at p.12], viz: "...Therefore it seems that the construction of S.181 of the Act may allow the Commission to award costs against a party to unfair dismissal proceedings pursuant to S.181(2)(c) and make a subsequent order by virtue of S.181(1)(c) specifying by whom and to what extent costs are to be paid in accordance with the award. This application of the provisions of S.181 is further supported by examination of the Rules. In particular, consideration of Rule 209 is relevant. The practical application of that Rule, in particular Rule 209(1)(c), when considered in the context of S.181 of the Act, would support the prospect for the Commission awarding costs against a party to unfair dismissal proceedings, and then specifying in a subsequent order that a particular barrister, solicitor or agent be determined as the person or entity who should pay on behalf of the party against whom the award of costs was made..." I share the views expressed by Cambridge C in Ogston v. Laurieton United Servicemen's Club and adopt them in this decision. 15 Mr Thompson argued that, as a result of the deed of release which A V Jennings entered into with Mrs Pecotic during the appeal proceedings originally initiated by her, A V Jennings was estopped from making any claim for costs against her and unless she actually became a party to the costs application, Mr Dean was entitled to rely on the privilege he had as her representative in the Part 6 proceedings. Mr Dean claimed in his written submissions in reply that any argument to the contrary was "facile". 16 Simply stated, the argument advanced on behalf of Mr Dean in these proceedings is that the deed of release between Mrs Pecotic and A V Jennings excludes any costs application against her and that Mrs Pecotic's representative - a third party to the deed of release - may not be bound by that deed of release. Mr Dean commented in his written submissions in reply that: "....the fact that (A V Jennings) chose to settle with Mrs Pecotic and chose not to raise the issue of Mrs Pecotic failing to settle unreasonably in the application speaks volumes. The original silence is deafening, the forlorn and pitiful attempt to now raise a new ground as an issue should be rejected. Effectively, the applicant (A V Jennings) now seeks to approbate and reprobate, a situation it is not entitled to do for it would be a schizophrenic attack upon the deed of release... The applicant...also has substantial problems in that they are estopped by law to join Mr Dean as a party to the proceedings..." 17 However, Mr Cross argued in his written submissions that: "....there is no need to join Mrs Pecotic to the costs application and no 'privilege' exists. The application has nothing to do with Mrs Pecotic (but for the fact that she was the original party to the proceedings) and is between the respondent and Mr Dean..." As Mr Cross put the matter in his written submissions: "...The offers of settlement establish the jurisdictional gateway for a costs order to be made. The Commission may then, pursuant to S.181(1)(c), decide against whom any order should be made...It is the position of the respondent that once S.181(2)(c) is triggered, an order may be made against (an agent)... Such a course is clear from the words of S.181(1)(c) and Rule 209..." 18 The terms of Ss.181(1)(a) and (c) suggest to me, as it did to Cambridge C in Ogston v. Laurieton United Servicemen's Club, that the appropriate course of action would be to make any order for costs nominally against Mrs Pecotic and then extend such an order, by virtue of S.181(1)(c), against Mr Dean. Quite clearly, the provision in the deed of release exempting Mrs Pecotic but authorising an application for costs against Mr Dean is perfectly consistent with S.181(1)(c) and Rule 209. The jurisdiction of the Commission for the award of costs against Mr Dean by A V Jennings in this hearing is not dependent upon the terms of the deed of release Mrs Pecotic signed with A V Jennings but on the legislative provisions themselves. Such arrangements as A V Jennings choses to enter into with Mrs Pecotic does not in anyway undermine any claim for costs against Mr Dean. Conclusion 19 In those circumstances, I am satisfied that the cost application is jurisdictionally competent. I make no comment at this time on the question of delay in A V Jennings pursuing its claim for costs or any question relating to quantum of costs to be ordered. Mr Dean raised those issues in his written submissions in reply but I regard those matters as being relevant for the question of merit rather than jurisdiction. I propose to adjourn these proceedings and reconvene them for a mention on Friday, 8 August, 2008 for further programming of this matter, if necessary. P J CONNOR Commissioner 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.