Industrial Relations Commission of New South Wales CITATION: Butcher v LKM Retail Stores [2007] NSWIRComm 1013 APPLICANT: Ellen Maree Butcher PARTIES: RESPONDENT: LKM Retail Stores P/L t/as Farmer Charlies FILE NUMBER(S): 2523 of 2006 CORAM: Ritchie C Application for unfair dismissal under s 84 of IR Act Offers and counter offers made to settle matter at first conciliation Further offer made by applicant prior to arbitration and counter offer by respondent., not successful. Applicant withdrew application prior to arbitration. CATCHWORDS: Respondent made application for costs claiming unreasonably failed to settle,application vexatious and frivolous. Applicant terminated for theft of monies or knowledge of theft of monies Applicant denied claims Commission rejects claim that applicant failed to unreasonably settle the matter Commission rejects claim that application was vexatious and frivolous Application for costs by respondent rejected. LEGISLATION CITED: Industrial Relations Act 1996 Bankstown City Council v Paris (1999) 93IR 209 Phillips v Industrial Relations Commission of NSW & anor [2006] NSWCA 183 Luke v Handicapped Children's Centre IRC 2586 of 1994 CASES CITED: Copperart Pty Limited (1996) IR58 Orange Community Accommodation Services Incorporated and Carolyn Vivienne Roddenby {2004} NSWIRCOMM 333 Attorney General v Wentworth (1988) 14 NSWLR 481 General Steel Industries Inc v Commissioner for Railways NSW (1964) 112CLR 125@129. HEARING DATES: 01/02/07 DATE OF JUDGMENT: 27 February 2007 APPLICANT: Mr P. Walsh-solicitor Parker &Kissane LEGAL REPRESENTATIVES: RESPONDENT: Mr L Juhasz-solicitor Koops Martin DECISION: -1- INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: RITCHIE C 27 February 2007 Matter No IRC 2523 of 2006 Ellen Maree Butcher and LKM Retail Stores Pty Ltd t/as Farmer Charlies Application by Ellen Maree Butcher re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION [2007] NSWIRComm 1013 Background. 1 On 19 June 2006 Ms Ellen Maree Butcher (the applicant) filed a claim for unfair dismissal under section 84 of the Industrial Relations Act 1996 against LKM Retail Stores Pty Ltd trading as Farmer Charlies (the respondent). In her claim the applicant sought reinstatement and back pay or "if reinstatement does not occur a compensatable(sic) sum allowed under law." 2 The applicant was employed by the predecessor to the present owners when it was purchased in September 2005. She was terminated by Farmer Charlies on 29 May 2006. In her application she stated that the reasons given for termination were duty performance awareness, involvement in misappropriation of funds. 3 A conciliation/direction was held on 11 July 2006 in Coffs Harbour but was unsuccessful in settling the matter. A timetable for the filing and serving of evidentiary material was provided to the parties. This was later varied by Deputy President Harrison. A two day Hearing was listed for 16 and 17 October 2006 in Ballina. 4 A Notice of Discontinuance was raised by the legal representatives of Ms Butcher on 11 October 2006 and filed on 13 October 2006. 5 On the same day the Commission held a Mention via a teleconference as a consequence of the Commission receiving communication from Farmer Charlies' legal representative seeking costs in the matter. A timetable for the filing and serving of evidentiary material for the costs application was provided to the parties and a Hearing was held in Coffs Harbour on 1 February 2007. At the conclusion of submissions the Commission reserved its decision. 6 In the costs hearing Mr L. Juhasz of Koops Martin Lawyers represented Farmer Charlies and Mr P. Walsh of Parker Kissane appeared for Ms Butcher. 7 A document entitled Agreed Facts (Ex 1) was provided to the Commission on the day of the costs hearing. Included in the Agreed Facts document were the following statements: · On 14 May 2006 Ms Butcher had printed a significant number of reports for the period 18 February 2005 to 25 August 2005, which contained sales returns of approximately $22,000 for that period. These reports were forwarded by facsimile on or about 10 August to the previous owner of Farmer Charlies, Mr John Waterhouse. · In early to mid May 2006 Ms Butcher spoke to Mr Shepherd of Farmer Charlies about high dollar value sales returns from the Evans Head store. · On 24 May 2006 Farmer Charlies spoke with Ms Butcher and raised eight (8) specific high dollar value sales returns. These eight refunds were carried out whilst Ms Butcher was in charge of the Evans Head store. · Ms Butcher was terminated by Farmer Charlies on 29 May 2006. · During the first conciliation on 11 July 2006, Farmer Charlies raised the issue of the refunds and offered to settle the matter on the basis that each party pay its own costs to date. · This offer was rejected by Ms Butcher and a counter offer of reinstatement with back pay or a payment of some thirteen (13) weeks was made. This was rejected by Farmer Charlies. · On 11 September 2006 Ms Butcher filed her statement with the Commission. · On 29 September 2006 Farmer Charlies served five witness statements (Waterhouse, Burgess, McPherson, Tickle, Shepherd) to the applicant and on 3 October 2006 served the same statements with annexures to Ms Butcher's legal representatives. · On 9 October 2006 Ms Butcher offered to settle proceedings on the basis that the application be withdrawn and each party pay their own costs. · On 10 October 2006, Farmer Charlies rejected Ms Butcher's settlement offer and made a counter offer that she pay Farmer Charlies $10,000. · On 11 October 2006, Ms Butcher rejected this offer and on the same day Farmer Charlies received the Notice of Discontinuance. Case for Farmer Charlies. 8 In the respondent's written submissions on costs the applicant was terminated for the following reasons: · the misappropriation of funds from the respondent via high dollar value sales returns; · that the applicant was aware of the misappropriation of funds from the respondent; · that the applicant should have been aware of the misappropriation of funds from the respondent ; · that, while the applicant was aware of the misappropriation of funds from the respondent, she failed to advise the respondent of such; · failed to act honestly and diligently in the performance of her duties whilst in the employ of the respondent; · failed to act in a professional and businesslike manner in undertaking her duties while employed by the respondent. 9 On 16 January 2007, Koops Martin Lawyers (Mr Juhasz) wrote/faxed to Parker & Kissane (Mr Walsh) asking whether they could advise them by 19 January 2007, of those persons, if any, who would be required for cross examination, at the costs hearing listed for 1 February 2007. In return correspondence to Koops Martin lawyers dated 29 January 2007, Parker & Kissane stated that they would require Waterhouse, Shepherd and McPherson for cross examination but that they had overlooked advising them. 10 At the hearing Mr Juhasz pressed that all statements be marked as exhibits, notwithstanding that those above named persons were not available for cross examination on the day of the hearing. Mr Juhasz submitted that they had made other arrangements because Mr Walsh had not notified his requirement to have them available for cross examination, until some three days before the hearing. Mr Walsh pressed his request to be able to cross examine the people. I ruled that all the statements would be marked as exhibits. I note that the Amended Directions for Arbitrated unfair dismissal hearing provided by Harrison DP raised on 14 August 2006, for the substantive unfair dismissal case, required each party to advise each other at least seven days prior to Hearing if witnesses were required for cross examination. Mr Walsh had these statements in his possession since 3 October 2006. 11 Mr Tony Tickle's statement (Ex 5) stated that he had worked as the Operations Manager for the previous owner (Mr Waterhouse) of the supermarket store located at Evans Head prior to the new owner buying the business on 29 August 2005. He had worked for Mr Waterhouse for 23 years. He said that on or about 13 June 2006 he spoke with a Ms Cathy Harvey-Williams, the prior store manager of the Evans Head store. He stated that she said that both her and Ms Butcher had been put off as there was money missing. Ms Butcher had locked up one night and the next morning when she came in to do the banking, money was missing. Ms Harvey-Williams was put off because she had not told Farmer Charlies earlier of the missing money. Mr Tickle stated that he could not recall the specific date on which the conversation took place. 12 Mr Jim Shepherd's statements (Ex 2 and 4) advised that he was the General Manager of Farmer Charlies from October 2005 to July 2006. He stated that a stocktake was undertaken of the business because whilst gross profits were down, turnover had doubled in the fruit and vegetable section. The audit revealed that a significantly large number of high value returns were occurring at the Evans Head store. Whilst the average dollar value return at Lismore was $1.70 and at Ballina it was $2.50, at Evans Head it was over $50. He was advised by Mr Graham McPherson, the Financial Controller, that a review of the sales returns at the Evans Head store showed that a significant portion of the high value returns lacked the proper paperwork. Mr Shepherd said that on 15 May 2006, he forwarded to Mr McPherson a copy of the high dollar value returns which he had located. On 16 and 17 May 2006 both Mr Shepherd and Mr McPherson went to the Evans Head store to conduct an audit into who was misappropriating funds by sales returns. It was his view that their presence at the store raised suspicion with the other employees as to why such an audit was being carried out. On 18 May 2006 at approximately 8.00am whilst at the Evans Head store Mr Shepherd was approached by Ms Butcher who said to him that she had concerns about some of the returns that she had come across. She said that she did not know how she had got into that part of the system and that some of them had been done at strange times of the day. Mr McPherson stated that he was aware of some of the returns and that an audit was currently being undertaken. It was Mr McPherson's view that he was only approached by Ms Butcher about her concerns, due to the investigation that was taking place. It was also his view that based on the material available both Ms Harvey-Williams and Ms Butcher were responsible for the misappropriation of funds via the use of sales returns as both women were responsible for the store and did the end of day balances and banking. He finished his first statement by stating that: "although I do not recall the specific dates on which the conversations took place, I do recall my discussions with the persons referred to in this statement." He also stated that at no time did he authorise Ms Butcher to send, by facsimile, to Mr Waterhouse (the previous owner) reports of high dollar value sales returns for the period 18 February 2005 to 25 August 2005. 13 Mr Simon Burgess stated in his statement (Ex 6) stated that he is the Chief Executive Officer for Farmer Charlies. He said that a stock take took place in January 2006 as a consequence of there being an increase in turnover which did not match the level of gross profit. A systematic investigation of the business revealed high level sales returns for the Evans Head store. On 29 May 2006 Mr Burgess together with Mr Shepherd and Ms Margaret Smith met with Ms Butcher and advised her that, based on their investigations in respect of the high level returns, her services were terminated. A letter setting out their reasons and termination pay was provided to Ms Butcher. Mr Burgess stated that he agreed with the contents of the statements of Mr McPherson and Mr Shepherd. 14 Mr John Waterhouse, the previous owner of the Evans Head store, filed a statement (Ex 3). He recounted conversations he had with both Ms Butcher and Ms Harvey-Williams. He confirmed that he received a phone call from Ms Butcher around mid August 2006, post her termination with Farmer Charlies, when she raised the issue of refunds during the period when Mr Waterhouse was the store owner. He stated that she asked him if he would like to see these reports of the refunds and he advised that he would. Mr Waterhouse received the reports from Ms Butcher and analysed them. From his analysis he concluded that large refunds took place when both Ms Butcher and Ms Harvey-Williams were separately working in charge. He formed the belief that both women were jointly responsible for the large sales returns. Attached to Mr Waterhouse's statement were the reports that had been sent by Ms Butcher to him for various days between 18 February 2005 and 25 August 2005 with the name of Ms Williams on each daily report. The Commission was not provided with any analysis or explanation of these documents. 15 Mr Graham McPherson the Financial Controller of Farmer Charlies filed a witness statement (Ex7) and was subject to cross examination. His statement had a large number of annexures. During examination in chief a sample of these annexures was explained as to what he believed did occur and also what he said should have occurred. Mr McPherson explained how on 15 May 2006 he received a facsimile from Mr Shepherd (General Manager) enclosing three high dollar value sales returns in respect to the Evans Head store. From the material provided it appeared that these transactions were not properly supported in the daily paper work received from the store and were thus unable to be verified. On 16 and 17 May 2006 Mr McPherson said he went to the Evans Head store and conducted a preliminary investigation of the sales returns from that store. He had printed off the full transaction journal for 11 May 2006 (register 2), daily taking sheet and related dockets for that day. It was Ms Butcher who was in charge that day as Ms Harvey-Williams was on her day off. He stated that a close investigation of the transactions for that day showed that a sales return in the sum of $200.83 occurred. A return item of ginger of $2.83 was incorrectly returned at $200.83. A sales return occurred at $2.85. He could not find a corresponding sales docket of $200.83 to reverse the earlier incorrect sales return. Based on the documentation the register should have been over $200.83. The register was in fact under by $2.02 that day. Mr McPherson's statement then listed eight (8) separate return transactions during April/May 2006 on days when Ms Butcher was in charge. In each case he stated that he had examined the transaction report for the day but could not find a corresponding sales docket that would reverse the incorrect sales return. He had asked Ms Butcher what the procedure was for a refund and she had described the correct procedure. The register for the day was not over for the corresponding amount. It was his view that on each occasion there was a misappropriation by the applicant or in the alternative, with the knowledge and/or assistance of Ms Butcher. On 24 May 2006, Mr McPherson with Mr Burgess interviewed Ms Butcher at the Evans Head store. At their request Ms Butcher explained how she would carry out the balancing of cash when she was in charge. She also explained how she would fix an incorrect sales return. She explained the process stating she would raise a sales docket for the same value to match the return and attach both dockets. An example of the correct procedure that she had previously carried out was shown to her. Mr McPherson then showed her the eight sales returns and asked her to explain. She responded that she could not explain them and that she trusted her staff. 16 Mr Juhasz filed and then spoke to written submissions on their costs application. He claimed that the applicant (Ms Butcher ) pay the respondents costs of and incidental to these proceedings on a party/party basis as agreed or assessed. He stated that the applicant's unfair dismissal claim was both frivolous and vexatious and that she unreasonably failed to agree to a settlement. Mr Juhasz said that the application was vexatious because the applicant had filed her claim not for the proper purpose of having the Commission determine the matter to which it gives rise but to annoy and disrupt the respondent into paying the applicant some money to end the proceedings. She was well aware at the commencement of proceedings that there was no reasonable cause for instituting the proceedings. The application was frivolous because in the respondent's view it could not have possibly succeeded and was manifestly groundless in light of the significant volume of evidence before the Commission. The applicant had been offered a reasonable settlement and she had then made a counter offer which was rejected by the respondent and no further offers were made in the proceedings. The respondent submitted that because of the evidence it was unreasonable for it to offer any other terms to the applicant. It was also the actions of Ms Butcher who provided confidential information to a third person (Mr Waterhouse) without the authority or consent of the respondent. The discontinuance of the unfair dismissal application by the applicant was due to her real concern in being found guilty of some criminal act for the misappropriation of funds from the respondent. Case for Ms Butcher. 17 Ms Butcher filed an affidavit (Ex A) and was subject to cross examination. Ms Butcher denied that she had been dishonest or negligent in carrying out her duties. She denied being involved in any misappropriation or that she had failed to bring to the notice of the employer misappropriation of funds or that she had acted in an unprofessional or business-like manner. Ms Butcher outlined the procedure for the return of goods both under the old ownership and the new. Post 29 August 2005, Ms Butcher was shown how to do the banking. She only carried out this function on the Manager's day off. In January 2006 she started to work every second weekend and she did the banking for these weekends as well as for Thursday morning. She stated that the tills were allocated cash and where the register tills were over at the end of the day's trading, the excess monies, if it was a large amount, was placed in the change draw. This procedure was explained to her by the store manager Ms Harvey-Williams When she started working weekends the change draw float was $2000. When she worked at weekends the change draw did not always have $2000. That was why she always placed the excess money from the tills in the change drawer to balance the float back again. She brought this variation of the change draw float to the Manager's attention. She said that the Manager stated that if the tills are short she would top them up from the change draw to balance them. Ms Butcher stated that at the end of January 2006 when she worked the weekends she, with another employee, would count the change draw. She found that the change draw would vary in total from around $1600 to $925. She did not report this to her Manager. Ms Butcher stated that on one occasion she reported to Mr G. McPherson that one of the registers was $50 down and that she took money from the change drawer to balance the register. She said that she pointed out to Ms Margaret Smith the variations to the balance of the change draw. In cross examination Ms Butcher stated that with respect to the eight specific transactions as noted in Mr McPherson's statement, she advised that in less than the space of one month she had placed $1200 from the register tills into the cash draw, in accordance with her manager's procedure. Ms Butcher also stated that as she was becoming suspicious of these large excesses, she would write into the store's diary on the day, that she had made a transfer from the register till to the cash draw and notate the amount. This notating in the store diary she kept to herself. She in fact did not tell anyone of this practise until the day of this costs hearing. Ms Butcher said that she told Mr McPherson on one occasion that she had taken $50 out of the cash draw and put it into a register so it would balance. It was also accepted by Ms Butcher that with respect to the transactions that she had been involved in that she had not sighted all the documents at the time the refund was given and/or not asked the check out operator whether such documentation had been raised. Ms Butcher stated that she noticed a number of large returns being done on weekends. She reported this to the Manager. She said that she did not bring to the Manager's attention large refunds that had been carried out on a Wednesday or a Friday as they were usually done around 6.00pm. Ms Butcher also advised that she had printed out a number of days' reports that showed details of refunds that had taken place between February and August 2005. These reports were attached to the statement of Mr Waterhouse. An examination of these reports confirms that they were printed out on 14 May 2006. The reports covered a period of time when Mr Waterhouse owned the business. She retained these reports after she had been terminated but later, on 25 August 2006, she sent them to Mr Waterhouse, to bring to his attention the high degree of refunds that had taken place when he owned the store. She said that she had brought to the attention of Mr Burgess on 11 May 2006 some previous reports she had printed off. Prior to sending the reports to Mr Waterhouse, Ms Butcher had spoken to him and he had replied that he "would love to see the reports." Ms Butcher said that she became aware of the misappropriation of funds but she wanted to have it clear in her mind before she reported these issues to Management. As previously expressed in this decision, Ms Butcher eventually reported her concerns to Mr Jim Shepherd on 11 May 2006 and sent him return reports which she believes he then sent on to Mr McPherson on 18 May 2006. In his statement Mr Shepherd believed it was on 18 May 2006 that she spoke to him. When investigations did commence Ms Butcher was questioned about a return that was carried out on 11 May 2006 whilst she was on shift. The employee involved was rostered to do a noon to 6.00pm shift, yet sales took place allegedly from 8.00am to 12.50pm. Management were unaware that this person had done a shift change and had worked 7.00am to 3.30pm. Ms Butcher said a notation of this shift change had been put in the diary. On 29 May 2006 Ms Butcher said that she went to a meeting where Mr Simon Burgess said to her that she was terminated. She did not have anything to say for herself as she was very upset. She was given an envelope and left the store. Ms Butcher said that she did not take any money. 18 Mr Walsh, on behalf of Ms Butcher, had filed submissions on costs and read to that document. The applicant denied any wrong doing or breach of her contract. She became suspicious and was undertaking investigations and brought her findings to the attention of her managers. She believed she had done no wrong and should not be penalised because she had rejected the respondent's offer and was ready to run her case. When the applicant found out that the respondent had informed the NSW Police of the results of its investigation of its shop records it was recognised by her solicitor that any evidence or revelation of any material before this Commission could in fact assist in, or lead to, the prosecution of the applicant if action was taken by the Police. The applicant had to carefully consider her position that she could be prosecuted for material revealed before this Commission. As there was no immunity from prosecution it would have been foolish for the applicant to proceed. All the evidence before this Commission would be available to the Police to perhaps prosecute the applicant in criminal proceedings if they so chose. The applicant then had to consider her position as to whether in fact she would be inadvertently supplying information by way of evidence that led to her prosecution in another area. In those circumstances the applicant chose not to proceed. Mr Walsh stated that any costs that were "thrown away" in these proceedings were "thrown away" because of the action of the respondent in referring the business records to the NSW Police Service for investigation. Considerations and Decision. 19 Section 181(2) of the Industrial Relations Act 1996 is expressed in the following form: 181(2)[Commission not in Court Session] 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. 20 If a positive finding is made under this section (the jurisdictional "gateway"), the Commission may then move to the general discretionary powers to award costs. I refer, in this respect, to the provisions of s.181(1) which are set out below: (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 Professional Act 1987 or on any other basis. 21 Mr Juhasz submitted that the application of Ms Butcher was both frivolous and vexatious and that she unreasonably failed to agree to a settlement of her claim. Unreasonably failed to agree to a settlement. 22 An analysis of what constituted an unreasonable failure to settle was considered by a Full Bench of this Commission in Bankstown City Council v Paris: "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 powers and discretions under Section 181(1) are available for exercise." and " 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." 23 I note also the comments in Phillips v Industrial Relations Commission of NSW & Anor : "The reference to the opinion of the Commission emphasises, if emphasis were required, that the criterion is to be decided by the Commission applying its own perception of what was unreasonable, as distinct from the perception (if any) of the party. This does not permit the Commission to ignore the standpoint or standards of the party concerned, but the Commission must not be captive to those matters." and the comments of Connor C in Luke v Handicapped Children's Centre : " an order for costs on the grounds of an unreasonable failure to settle the matter should be contemplated only where there is such an obdurate refusal to participate in the discussions that there has been a total frustration of the conciliation process…" and the comments of a Full Bench of this Commission in Copperart v Martin said: 'It is clear that, in a scheme where costs are not the usual regime, the part of the Act contemplates and apprehends two distinct propositions: · that costs are not the automatic outcome of a refusal to settle; · that under certain circumstances costs are appropriate." and the comments of the Full Bench in Orange Community Accommodation Service Incorporated and Carolyn Vivienne Roddenby said: " In our view, the test of whether a party has unreasonably failed to agree to a settlement of a claim should not be made by reference to the extent of costs expended by the other party. If that was so, a party could incur substantial legal expenses, and simply argue that any offer of settlement which failed to go close to meeting expenses, demonstrated an unreasonable failure to agree to a settlement. This is not the appropriate test under s 181(2)(c) of the Act." 24 As per Ex 1 (Agreed Facts) ,it is stated that on the day of the first and only conciliation on 11 July 2006, the respondent made an offer that the applicant discontinue the proceedings and each party pay its own costs. The applicant made a counter offer of reinstatement with back pay of 13 weeks pay which she claimed to be the balance of her employment contract with the respondent. Post the exchange of witness statements the applicant made an offer on 10 October 2006 to settle the proceedings on the basis that the application be withdrawn and each party pay their own costs. This was rejected by the respondent on the following day and a counter offer consenting to the withdrawal of the proceedings on the condition that the applicant pay the respondent the sum of $10,000. The following day the applicant rejected this offer and a Notice of Discontinuance was filed. 25 It is my view that the applicant did participate in the conciliation process be it during the conciliation in July, and in October. I find that the offers made by the applicant were not unreasonable. She did try to settle the matter. She did not seek to frustrate the process. It would seem neither party then moved from their opening offer for some three months as I note that no evidence was brought before the Commission by either party as to whether any other offers were made during the period between July and October. I therefore find that the applicant did not unreasonably fail to agree to a settlement. Was the claim frivolous or vexatious ? 26 A vexatious action is one where the party bringing the claim, is not acting in good faith and merely seeks to annoy or embarrass an opponent or which is not designed to produce any practical result. In order to bring a case within the description of frivolous and vexatious it is not sufficient merely to say that the applicant has no cause of action. It must appear that the cause of action is, on the face of it, clearly one which no reasonable person could properly treat as bona fide and contend that the applicant has a grievance which she was entitled to bring before the court. The tests for what is a frivolous or vexatious application focus upon the motive for the institution of the proceeding or its lack of prospects of success. In Attorney-General v Wentworth, Roden J. of the Supreme Court stated that a proceeding was vexatious if it was instituted with the intention of annoying or embarrassing the respondent, if it was brought for a collateral purpose and not for having the court adjudicate on the issues, or irrespective of motive, if it was so obviously untenable or manifestly groundless as to be utterly hopeless. The Commission's powers to dismiss a matter on the ground that the applicant's cause of action is frivolous or vexatious must be exercised only with caution. In General Steel Industries Inc v Commissioner for Railways, Barwick CJ summarised the position in the following manner: " I have examined the case law on the subject ....There is no need for me to discuss in any detail the various decisions...It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action-if that be the ground on which the court is invited , as is this case, to exercise its power s of summary dismissal-is clearly demonstrated. The test to be applied has been variously expressed; 'so obviously untenable that it can not 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';' to 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'; 'so to speak apparent at a glance..." 27 Mr Juhasz stated that the applicant had filed a claim not for the bona fide purpose of obtaining a judgement. This comment was based on the applicant's action of abandoning her claim to safeguard her position in criminal proceedings that may or may not arise from the same facts. It was his submission that it was filed to obtain some monetary compensation from the respondent through some settlement of the claim. 28 He went on to say that the claim was also frivolous because of the amount of evidence that was before the Commission. 29 He also raised the issue of the applicant knowingly sending confidential information to a third person (Mr Waterhouse) thereby breaching her contract of employment. 30 In response Mr Walsh stated that Mr Waterhouse had been keen to see the reports and in no way sought to discourage the applicant Ms Butcher from sending the reports. There was a concern that the transcript from this matter could be used in the criminal matter to differentiate in answers given to the same question. Also the concern that witnesses in this matter may incriminate themselves. Mr Walsh also stated that just because an applicant does not accept an offer and is subsequently unsuccessful in the substantive proceedings does not of itself give rise to an award of costs pursuant to the Act. Mr Walsh also denied that Ms Butcher's claim had been vexatious or frivolous and that his client had had an arguable case. 31 Firstly I do not believe that the applicant would have been terminated fairly for directing to the former owner Mr Waterhouse, store records of transactions that took place when he was the owner of the business. What was sent to Mr Waterhouse were reports of his own business. The respondent may well have had grounds for termination if the records that had been sent to Mr Waterhouse had been for transactions that had occurred after the business had been sold. 32 The matter before this Commission is not one of determining whether the termination of Ms Butcher was harsh, unreasonable or unjust. It is a claim by the respondent for costs of a matter that did not proceed to arbitration. 33 After hearing all the evidence in this costs application I have not been convinced that Ms Butcher's original unfair dismissal claim was either vexatious or frivolous. If, as Mr Juhasz stated, the application was made on the basis of forcing a monetary settlement, then her tactics were to say the least strange. She made one offer to settle for a thirteen week payment during the first conciliation date, then made no further monetary claim. If the purpose of her application was to reach some financial settlement then one would imagine that a number of diminishing monetary based offers would have been made to the respondent. Taking into consideration the descriptions of applications by Barwick CJ as expressed above, I cannot conclude that Ms Butcher's application could be described as fitting one of those categories. In my view the applicant held a bona fide view that she had been unfairly terminated, that she had not stolen any money nor been a part of stealing any money. She submitted that she had held concerns over high dollar refunds prior to being approached by management. Whilst she did not have answers for all the questions posed to her in cross examination, and some answers as to what she alleges she was told to do by the store manager with respect to excess money, were contrary to my experience, she had at the very least an arguable case. I note that from the evidence of the respondent, that it was on 15 May 2006 that Mr Shepherd notified Mr McPherson by fax, copies of high dollar refunds from the Evans Head store. It was the respondent's submission that Ms Butcher first made contact with Mr Shepherd on 18 May as per her concerns over high dollar refunds, only after she witnessed the physical investigations by Mr McPherson and Mr Shepherd taking place at the Evans Head store on 16 and 17 May 2006. The applicant stated that she had spoken to Mr Shepherd earlier on 11 May with respect to her concerns. What we do know, and it is agreed between the parties, that Ms Butcher down loaded reports on 14 May 2006 (the reports eventually being sent to Mr Waterhouse) showing high value returns, the day before management commenced their investigation and therefore before she would have known about their investigation. 34 In summary it is my finding that Ms Butcher's application was neither vexatious or frivolous nor did she unreasonably fail to agree to a settlement of her claim. 35 The application for costs in this matter made by LKM Retail Stores Pty Limited trading as Farmer Charlies is dismissed. 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