Industrial Relations Commission of New South Wales CITATION: Graham v. South Eastern Sydney and Illawarra Area Health Service [2010] NSWIRComm 1048 APPLICANT John Graham PARTIES: RESPONDENT South Eastern Sydney and Illawarra Area Health Service FILE NUMBER(S): IRC 1697 of 2009 CORAM: Connor C CATCHWORDS: termination of employment - hospital - claim of unfair dismissal - employee reinstated in employment - application for costs - application granted LEGISLATION CITED: Industrial Relations Act 1996 Bankstown City Council v. Paris (1999) 93 IR 209 CASES CITED: Calderbank v. Calderbank (1975) 3 All ER 333 Phillips v. Industrial Relations Commission of New South Wales (2006) 154 IR 96 Wehner v. Chakra Holdings Pty Limited - unreported HEARING DATES: 02/09/2010 DATE OF JUDGMENT: 9 September 2010 APPLICANT Bernard O'Donnell K P O'Donnell and Associates LEGAL REPRESENTATIVES: RESPONDENT Mark Sullivan Landers and Rogers DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: CONNOR C Thursday, 9 September, 2010 Matter No IRC 1697 of 2009 John Graham and the South Eastern Sydney and Illawarra Area Health Service Application under S.84 of the Industrial Relations Act, 1996 SUPPLEMENTARY DECISION [2010] NSWIRComm 1048 1 On Friday, 9 July, 2010 I handed down my decision on an application by Mr John Graham made under Part 6, Unfair Dismissals, of Chapter 2, Employment [Ss.83 to 90] of the 1996 Industrial Relations Act. Mr Graham had been employed by the South Eastern Sydney and Illawarra Area Health Service as a health and security assistant at the Coledale Hospital. His services were terminated after 32 years of employment at the hospital effective from Tuesday, 13 October, 2009 following an altercation he had on Friday, 3 July, 2009 with Mr Greg McEwen, a gardener and maintenance officer employed at the hospital. Mr McEwen was not dismissed following the incident involving him with Mr Graham, although Mr McEwen did receive a formal warning. 2 My decision was to order the reinstatement of Mr Graham as a security officer, either at the Coledale Hospital or, alternatively, at some other public hospital in the Illawarra region [S.89(1)]. I commented in that respect in my decision (at p.16): "...I conclude, having particular regard to Mr Graham's lengthy period of otherwise satisfactory employment, that his dismissal was...unfair - "harsh", "unreasonable" or "unjust", to use the language of S.84(1)... I consider Mr Graham's dismissal to be too severe in all the circumstances and, more importantly, inequitable when compared to the position taken by the SESIAHS with respect to Mr McEwen. The word "unjust" in S.84(1) particularly highlights the obligation on employers to treat all employees the same when incidents of this nature arise and to make fish of one and fowl of another would constitute an obvious unfairness to the employee against whom the greater disciplinary action is directed..." I nevertheless rejected any claim by Mr Graham for any retrospectivity on the wages he lost due to the termination of his services [S.89(3)], recognising (at p.35) that he was not entirely blameless over the incident which gave rise to his dismissal. 3 On Friday, 6 August, 2010 Mr O'Donnell, who had represented Mr Graham in the proceedings before me, lodged an application for costs in accordance with the 2004 Legal Profession Act. Mr O'Donnell's application was to operate on and from Friday, 26 February, 2010 when an offer of settlement was made by him on behalf of Mr Graham but which was subsequently rejected by the SESIAHS. At that time Mr Graham's Part 6 application was before Grayson DP for conciliation. He had unsuccessfully attempted conciliation on Friday, 6 November, 2009 and programmed the matter for arbitration. However, on Friday, 19 February, 2010 he attempted further conciliation in the light of the proposal advanced on behalf of Mr Graham at that time, adjourning the proceedings for a further mention on Friday, 26 February, 2010 to give the SESIAHS the opportunity to consider the proposal advanced on behalf of Mr Graham in an attempt to settle the Part 6 application. However, that proposal was rejected by the SESIAHS and the file was then allocated to me for arbitration. 4 I set Mr O'Donnell's application for costs for hearing on Thursday, 2 September, 2010. Mr O'Donnell continued to represent Mr Graham in the proceedings, arguing that there was justification for an order for costs for Mr Graham. Mr Sullivan, who had represented the SESIAHS in the initial hearing, continued his appearance on behalf of the SESIAHS. Mr Sullivan opposed the costs application. 5 The proposal advanced by Mr O'Donnell on behalf of Mr Graham in the conciliation of his Part 6 application was for his re-engagement on a part-time basis, working three days each week with no payment for loss of earnings from the time he was dismissed to the time he was re-engaged by the SESIAHS. Mr O'Donnell put the SESIAHS on notice that he intended to rely in due course on that offer for an application for costs, ie he made the offer of settlement on a Calderbank basis to be available for consideration by the Commission in a subsequent application for costs [Calderbank v. Calderbank (1975) 3 All ER 333]. 6 Costs against a party in Part 6 proceedings fall under S.181(2)(c), viz: "...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..." Costs against an agent in Part 6 may also be available in certain circumstances under S.181(2)(c1) but that is not relevant in these proceedings. In Mr O'Donnell's application he has asserted that the SESIAHS was unreasonable in its failure to settle Mr Graham's claim. 7 All the circumstances surrounding the dismissal, and the conduct of the parties with respect to the subsequent Part 6 application should be taken into account for applications for costs. Costs do not automatically follow the success or failure of a particular Part 6 application. In my unreported decision of Thursday, 25 February, 1999 in Wehner v. Chakra Holdings Pty Limited [Matter No. IRC 1617 of 1998] I indicated (at p.22), that a party: "…was always entitled to press its position in arbitrated proceedings and should not be penalised for doing so…" The test for me to apply is whether or not the refusal to settle a particular Part 6 claim was unreasonable - an objective test. And, as Mr Sullivan indicated in his submissions, it would be inappropriate to approach the determination of that matter with the benefit of hindsight. 8 However, in Bankstown City Council v. Paris (1999) 93 IR 209 the Full Bench of the Commission (Wright J - President, Peterson J and Bishop C) expressed the view (at p.219) that: "....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..." 9 In Phillips v. Industrial Relations Commission of New South Wales (2006) 154 IR 96 the Court of Appeal of the State Supreme Court (Spigelman CJ, Mason P and Beazley JA) also commented (at pp.19 and 20) that: "...when the Full Bench in Paris spoke of applying the statutory criterion 'objectively' it was correctly discerning that the standard of unreasonable failure was to be applied by reference to the hypothetical yardstick of the fictional '...man on the Clapham omnibus...' or his Australian, gender-neutral counterpart. This does not mean that this hypothetical personage is placed anywhere other than in the context of the party in question (here the party against whom costs are sought). Nor does it mean the reasonableness assessment may commit hindsight error. But it does mean that the standards of the actor in question are not determinative. Thus, in the realm of negligence law, a person's conduct may be held unreasonable even though he or she was ignorant of the circumstances calling for a particular response or even if he or she lacked the capacity to discern or provide a correct response in the circumstances. Under S.181(2)(c) costs may be awarded against the employer or the employee, depending on who has failed to agree to a settlement and done so unreasonably. 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. Were it otherwise, the costs discretion could not be invoked against a pig-headed litigant blinded by self-absorbed stupidity or malice..." 10 In those circumstances, and having regard to the guidance provided to me in Bankstown City Council v. Paris and Phillips v. Industrial Relations Commission of New South Wales, I believe that costs are warranted against the SESIAHS in these proceedings on the basis proposed by Mr O'Donnell, ie on and from Friday, 26 February, 2010 when the offer of settlement was made by him. I make the following order: . ORDER 1. The South Eastern Sydney and Illawarra Area Health Service shall pay to Mr John Graham costs as agreed or assessed in accordance with the Legal Profession Act within 21 days. 2. This order shall take effect on and from Thursday, 9 September, 2010. 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.