Industrial Relations Commission of New South Wales CITATION: Bradley Robert Miller v NSW Attorney General's Department (No. 2) [2006] NSWIRComm 362 PARTIES: Bradley Robert Miller NSW Attorney General's Department FILE NUMBER(S): 85 of 2006 CORAM: Grayson DP Unfair dismissal - Applicant reinstated - Application for costs - Principles guiding exercise of discretion - Whether respondent unreasonably failed to agree to settlement - Offer by applicant to settle on basis of re-employment and lower grade rejected CATCHWORDS: Held, no unreasonable failure to settle - Application for costs refused LEGISLATION CITED: Anti Discrimination Act 1977 Industrial Relations Act 1996 Copperart Pty Ltd v Martin (1996) 68 IR 58 CASES CITED: Bankstown City Council v Paris (1999) 93 IR 209; Four Sons Pty Limited v Sakchai Limsiripothong (No. 2) (2000) 100IR 400 Nursing Homes and Nurses (State) Award (2001) HEARING DATES: 25/10/06, 13/11/06 DATE OF JUDGMENT: 11/14/2006 Mr S Coleman of counsel instructed by Mr L Adamson Luke Adamson and Co Solicitors LEGAL REPRESENTATIVES: Mr S Benson of counsel instructed by Mr G de Courcey Crown Solicitor's Office JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: Grayson, DP 14 November 2006 Matter No IRC 85 of 2006 Bradley Robert Miller and NSW Attorney General's Department Application by Bradley Robert Miller re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION re COSTS [2006] NSWIRComm 362 1 The applicant obtained a decision in his favour on 13 October 2006, and now seeks an order for costs against the respondent. Although the respondent initially agreed that the Commission was functus officio in relation to costs, it now (properly) accepts that there is jurisdiction to hear and determine the question and I proceed to do so accordingly. 2 The applicant seeks costs of and incidental to the proceedings on an indemnity basis or in the alternative, on a party and party basis as may be agreed or assessed. 3 The Commission has a discretion to award costs in unfair dismissal proceedings in the limited circumstances prescribed by s 181 of the Industrial Relations Act 1996 (the Act) as follows: 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 (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. 4 The principles guiding to the exercise of discretion in the matters of costs are well settled (see for example Bankstown City Council v Paris (1999) 93 IR 209; Four Sons Pty Limited v Sakchai Limsiripothong (No. 2) (2000) 100IR 400; Copperart Pty Ltd v Martin (1996) 68 IR 58 and need not be recited here. I bear the principles in mind, however, in deliberating upon the present application. 5 The applicant argues that the respondent unreasonably failed to agree to a settlement of the claim. That failure manifests itself in the respondent's rejection of the applicant's offer of settlement which was put in the course of attempted conciliation on 3 February 2006. The applicant then offered to accept re employment in a lower graded position within the department and not to seek payment from the date of termination or suspension to the date of conciliation. No counter offer was made and the matter thereafter proceeded to hearing and determination. The applicant further argues that the respondent: · did not make a proper identification of the strengths and weaknesses of its case, including that the matter might ultimately turn on the characterisation of the complaints (which was the case from the earliest time) · did not call alleged witnesses in relation to the allegations of misconduct made against him · did not make a responsible, careful, objective and realistic assessment of the prospects of the litigation including the prospects of a costs order being made against it · at conciliation (or any other time) made no offer or attempt to settle and conducted itself in a manner inconsistent with any intention on its part to settle the matter on a reasonable basis · made allegations which were unmeritorious and which have resulted in significant expense to the applicant who ought not be required to pay for the successful reinstatement application 6 For its part, the respondent relies on s 169(1) of the Act which requires the Commission to take into account the principles contained in the Anti Discrimination Act 1977 (The AD Act). In Nursing Homes and Nurses (State) Award (2001) 110 IR 433 at 438-9 those principles were described as the underlying mutual obligations and responsibilities which the AD Act places on the parties including but not limited to the express terms of the AD Act. It is relevant that Part 2A of the AD Act renders unlawful sexual harassment in the workplace whilst s 53 of the AD Act renders the employer vicariously liable for the conduct of its employees who, in certain circumstances sexually harass other employees. I note with respect, that s 53 creates such a vicarious liability in the employer where the wrongful act of the employee is authorised. This cannot apply here where the respondent has gone to impressive and substantial lengths to proscribe such conduct. At all events, it follows, as the respondent's argument goes, that Parliament has established a statutory scheme whereby employers are expected to be vigilant in ensuring sexual harassment is not tolerated in the workplace. 7 The Commission is asked, in a context where the respondent has in place a Code of Conduct and Ethics as well as a Harassment Prevention policy designed to ensure compliance with the AD Act, to consider the following chronology of events in determining the costs application: 4 September 2000 The respondent issued the applicant with written warning that should the applicant breach the respondent's Code of Conduct and Ethics or fail to scrupulously observe other policies that covered behaviour of its officers, further disciplinary action would be taken that might result in the termination of the applicant's employment. 10 January 2006 The application for relief in relation to alleged unfair dismissal was filed. 19 January 2006 The respondent terminated the employment of the applicant on the basis of the findings of an internal inquiry of misconduct in breach of the respondent's Code of Conduct and Ethics and Harassment Prevention Policy. The findings of misconduct related to the applicant's alleged harassment or sexual harassment of three female subordinates between May 2004 and June 2005. 3 February 2006 At a compulsory conciliation conference the applicant made an offer to the respondent an integral term of which was the re-employment of the applicant. The respondent rejected that offer as it regarded the findings of an internal report inquiry of sexual harassment by the applicant as unacceptable conduct. 13 October 2006 The Commission made orders including the reinstatement of the applicant but in the reasons for decision at [60] the conduct of the applicant was firmly condemned. 8 In my opinion, and in having regard in the circumstances to the case propounded by the respondent, it would be wrong to conclude that its rejection of the applicant's offer constituted an unreasonable failure to agree to a settlement of the claim. The test is not whether the respondent's case was ultimately unsuccessful as the applicant impliedly suggests and it is certainly not the case that the allegations against the applicant lacked substance when objectively assessed at the pre-trial stage. Indeed and as reasons for decision in the substantive proceedings reveal, the determination as to whether the applicant misconducted himself in the manner alleged, rested on a fine balance. 9 I consider the respondent had an arguable case based on the sworn evidence of the complainants and compelled as it was to use its best endeavours to prevent and deal appropriately with harassment by employees, it can hardly be said that rejection of an offer to re-employ that applicant constituted an unreasonable failure to agree to a settlement of the applicant's claim. 10 There is no basis for awarding costs in this matter and the application is accordingly refused. 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