Industrial Relations Commission of New South Wales CITATION: Reid-Frost and Commissioner of Police (No 2) [2009] NSWIRComm 74 APPLICANT PARTIES: Alyson Reid-Frost RESPONDENT Commissioner of Police FILE NUMBER(S): IRC 814 of 2008 CORAM: Marks J CATCHWORDS: s 181E Police Act - application for costs - s 181 IR Act applies to proceedings - entitled to costs order if respondent unreasonably failed to agree to a settlement - necessary for parties to consider in all the circumstances strengths and weaknesses of their case, possible outcomes of proceedings, and necessity to reach sensible resolution without recourse to litigation - applicant made several attempts to resolve the proceedings which were not responded to by the respondent - approach of legislation to conciliation and encouragement to settle - respondent should have been aware that the applicant was considering raising issues beyond the merits argument - no attempt was made by respondent to seek appropriate compromise or engage the applicant in any settlement process - order for costs granted in favour of the applicant LEGISLATION CITED: Industrial Relations Act 1996 s181 Police Act 1990 s181D, s181E, s181G, s181J Bankstown City Council v Paris (1999) 93 IR 209 CASES CITED: Four Sons Pty Limited v Sakchai Limsiripothong (No 2) [2000] NSWIRComm 131 Harrison v Commissioner of Police (No 2) [2007] NSWIRComm 93 HEARING DATES: 8 May 2009 DATE OF JUDGMENT: 25 May 2009 APPLICANT Mr D Nagle of counsel Solicitor: WG McNally Jones Staff Mr N Keats LEGAL REPRESENTATIVES: RESPONDENT Mr A Searle of counsel Solicitor: Bartier Perry Ms G Gowland JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: Marks J Monday 25 May 2009 Matter No IRC 814 of 2008 Alyson Reid-Frost and Commissioner of Police (No 2) Application by Alyson Reid-Frost for costs and variation of orders DECISION [2009] NSWIRComm 74 1 In Reid-Frost and Commissioner of Police [2009] NSWIRComm 43, I granted relief to the applicant, Alyson Reid-Frost, inter alia by ordering her reinstatement to a particular position as a police officer. I granted liberty to apply with respect to the quantum of any amount payable by the respondent, the Commissioner of Police, to the applicant upon her reinstatement in employment and liberty to apply with respect to costs. 2 On 8 May 2009, I dealt with a number of matters, the most significant being an application by the applicant for the costs of the proceedings. Before dealing with this matter, I shall deal with two other matters that do not call for any consideration on my part. 3 The applicant sought that I make an additional order making it clear that the order for reinstatement as at the date of her removal from the police force by the Commissioner did not impact in any way upon her continuity of employment. I would have thought that such a position would necessarily follow from the order as made by me, a position shared by counsel for the Commissioner, who did not, however, oppose the making of the order. Accordingly, applying to the extent necessary the slip rule embodied in the Rules of this Commission, I add the following to Order 1) made by me on 3 April 2009, namely: "The applicant's employment with the New South Wales Police Force shall be taken to be continuous from the date of her removal to the date of reinstatement." 4 The applicant also sought to exercise liberty to apply with respect to the quantum of any back pay to which she may become entitled under s 89(3), calculated in accordance with my decision. The parties have reached sensible agreement about this matter and it is not necessary that I deal with it further. Costs 5 The applicant sought, and the respondent resisted, the making of an order for costs. 6 The power to award costs is contained within s 181 of the Industrial Relations Act 1996, which is in the following terms: 181 Costs (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 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis. (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. (3) The Commission in Court Session may not award costs in proceedings for a contravention of a dispute order or in proceedings under Division 2 of Part 4 of Chapter 5 (Rules of industrial organisations). (4) In this section, costs includes: (a) costs of or incidental to proceedings in the Commission, and (b) in the case of an appeal to the Commission, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal. 7 It was common ground that if s 181 applied, the only relevant provision would be s 181(2)(c). The applicant conceded that she would only be entitled to a costs order if "in the opinion of the Commission, (the respondent) unreasonably failed to agree to a settlement of the claim…" 8 The respondent took a preliminary point that the provisions of s 181 did not apply to these proceedings which were instituted by the applicant under s 181E of the Police Act 1990. Relevantly, I set out the provisions of ss 181E and 181G of that Act. 181E Review generally (1) A police officer who is removed from the NSW Police Force by an order under section 181D may apply to the Industrial Relations Commission (referred to in this Division as the "Commission") for a review of the order on the ground that the removal is harsh, unreasonable or unjust. (2) An application under this section does not operate to stay the operation of the order in respect of which it is made. (3) Except to the extent to which the regulations otherwise provide, it is the duty of the Commissioner to make available to the applicant all of the documents and other material on which the Commissioner has relied in deciding that the Commissioner does not have confidence in the applicant's suitability to continue as a police officer, as referred to in section 181D (1). 181G Application of Industrial Relations Act 1996 to reviews (1) The provisions of the Industrial Relations Act 1996 apply to an application for a review under this Division in the same way as they apply to an application under Part 6 (Unfair dismissals) of Chapter 2 of that Act, subject to this Division and to the following modifications: (a) section 83 (Application of Part) is to be read as if subsection (3) were omitted, (b) section 85 (Time for making applications) is to be read: (i) as if a reference to 21 days in that section were instead a reference to 14 days, starting from the day on which the applicant is given a copy of the order to which the application relates, and (ii) as if subsection (3) were omitted, (c) section 86 (Conciliation of applications) is to be read as if it provided that a judicial member of the Commission who is involved in any endeavour to settle the applicant's claim by conciliation must not subsequently be involved in the conduct of proceedings on the review, (d) section 89 is to be read as if subsection (7) (Threat of dismissal) were omitted, (e) section 162 (Procedure generally) is to be read as if the requirement of subsection (2) (a) of that section that the Commission is to act as quickly as is practicable were instead a requirement for the Commission to commence hearing the application within 4 weeks after the application is made, (f) section 163 (Rules of evidence and legal formality) is to be read as if it provided that new evidence may not be adduced before the Commission unless: (i) notice of intention to do so, and of the substance of the new evidence, has been given in accordance with the regulations under this Act, or (ii) the Commission gives leave. (2) The Commission may grant leave as referred to in subsection (1) (f) (ii) in such circumstances as it thinks fit and having regard to the nature of proceedings under section 181F, and without limiting the generality of the foregoing, the Commission must grant leave in the following circumstances: (a) where the Commission is satisfied that there is a real probability that the applicant may be able to show that the Commissioner has acted upon wrong or mistaken information, (b) where the Commission is satisfied that there is cogent evidence to suggest that the information before the Commissioner was unreliable, having been placed before the Commissioner maliciously, fraudulently or vexatiously, (c) where the Commission is satisfied that the new evidence might materially have affected the Commissioner's decision. 9 It will be noted that s 181G purports to apply certain provisions of the Industrial Relations Act to an application for a review brought under s 181E. It was the respondent's contention that only those provisions of the Industrial Relations Act which are specified within s 181G are to be imported into review proceedings, that s 181 of that Act, which deals with costs, is not mentioned and is therefore excluded. 10 I am unable to construe s 181G in this way, that is, by restricting those provisions of the Industrial Relations Act which are applicable to review proceedings brought under s 181E. In my opinion, the plain English meaning of the opening words of s 181G(1) is that all of the provisions of the Industrial Relations Act 1996 apply to an application for review qualified by reference to those of them that apply to unfair dismissal applications and qualified further by the modifications set out in sub-paragraphs (a) to (f). There is nothing in the language used that, in my opinion, is indicative that a more restricted reading of the words is appropriate given the context in which s 181G occurs, namely to create a framework within which review proceedings are to be conducted by this Commission. 11 It is true, as Mr Searle of counsel appearing for the respondent pointed out, that there are some other provisions of the Police Act which deal in a general way with matters which are otherwise contained within the Industrial Relations Act and which are not specified in s 181G(1). For example, s 181J of the Police Act is in the following terms: 181J Application of Division to both reviews and appeals from review decisions This Division applies not only to proceedings before the Commission on a review under this Division but also to proceedings before the Full Bench of the Commission on an appeal from a decision of the Commission under this Division. 12 However, this section does not provide any clue to the procedures and protocols to be adopted by a Full Bench of the Commission on an appeal other than by necessary referral to the provisions generally of the Industrial Relations Act 1996. 13 In the same way, s 181K of the Police Act confines the conduct of reviews at first instance and on appeal to judicial members of the Commission, albeit those members are not sitting as the Industrial Court of New South Wales. Again, this does not, in my opinion, provide any reason to apply a restrictive construction on the provisions of s 181G(1); to the contrary, they point to the construction for which I contend. 14 This matter was also the subject of consideration by Backman J in Harrison v Commissioner of Police (No 2) [2007] NSWIRComm 93. Her Honour considered relevant authority in coming to the same conclusion as that expressed by me having regard to the ordinary English meaning of the words used in s 181G(1). Her Honour's exhaustive examination of the relevant authorities has saved me undertaking such a task. I gratefully adopt the reasons for decision published by her Honour. 15 Accordingly, the respondent's submission that s 181 of the Industrial Relations Act does not apply to these proceedings is rejected. 16 This now leads me to a consideration of the provisions of s 181(2)(c). These provisions have been the subject of comment at Full Bench level. The commencement point is Bankstown City Council v Paris (1999) 93 IR 209, a Full Bench decision of this Commission. In considering the proper approach to the application of s 181(2)(c), the Full Bench observed that this was the only provision which applied exclusively to unfair dismissal proceedings, although some of the other provisions of s 181(2) could conceivably apply but those other provisions would apply generally to other proceedings, and directed attention to the circumstances in which the proceedings were commenced. The Full Bench said: "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. An understanding of the meaning and purpose of s 181(2)(c) is assisted by reference to the particular provisions in Part 6, Unfair Dismissals, of Chapter 2 of the Act, which relate to conciliation or settlement of unfair dismissal applications. Section 86 for example, provides: The Commission must endeavour, by all means it considers properly necessary, to settle the applicant's claim by conciliation. Section 87(1) is also relevant. Its effect is to preclude the Commission from proceeding to determine the claim by arbitration until "all reasonable attempts to settle the applicant's claim by conciliation have been made but have been unsuccessful". Section 87(2) continues the statutory emphasis upon conciliation by specifying that the earlier provisions do not prevent further conciliation from being attempted at any time before the Commission makes an order in the proceeding. 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 s 181(1) are available for exercise." (At 218 – 219) 17 The Full Bench then went on to consider the circumstances of the proceedings with which it was dealing. They concerned, in part, an investigation process undertaken by the employer and also "…the failure and thus apparent unwillingness of the appellant, to respond to the various offers of compromise and settlement made on behalf of the respondent…"(At 220). The Full Bench noted that the appellant employer had adopted a consistent position that it would not participate in any settlement of the proceedings. 18 The Full Bench said: "We emphasise that there will be many circumstances in which parties to litigation, including unfair dismissal proceedings, may appropriately take a firm position generally, including on the question of conciliation or settlement. Nevertheless, such a position runs significant risks in terms of the exercise of the power and discretion under s 181(2)(c). This is particularly so where such a position is assumed without due regard to the policy of the Act which requires parties to take seriously their obligation to attempt to settle the proceedings. That in turn involves an obligation to consider in an objective way the strengths or limits upon the case that they will be propounding should the matter proceed to arbitration. On the material before us, we consider that the appellant failed to give appropriate consideration to such matters before it adopted its inflexible position. We consider that, in the circumstances of this matter, the criterion in the relevant provision has been made out. It has been met as to the proceedings both at first instance and on appeal." (At 220). 19 Bankstown City Council v Paris was also considered by a Full Bench of this Commission in Four Sons Pty Limited v Sakchai Limsiripothong (No 2) [2000] NSWIRComm 131. At [11], the Full Bench said: "The obligations imposed on parties to proceedings under s 84 of the Act, as identified in the Full Bench judgment in Bankstown City Council v Paris , require parties to such proceedings to undertake a responsible and careful assessment of the prospects of the litigation, in the absence of which an unsuccessful party may realistically face the prospects of a costs order being made against it. In those circumstances, it may often be appropriate for a party to consider making an offer to settle, even if the offer could be seen, either with the benefit of hindsight or otherwise, to be at a rather low level. However, the making of such an offer on 'the low side' does not exhaust the responsibilities of a party to reasonably attempt to settle the claim. It is conceivable that if the respondent had responded to those offers in a more timely way, the proceedings may have settled. We doubt, however, that that is the appropriate finding on the evidence before us. Rather, the evidence as to further negotiations makes plain that the appellant had no realistic intention to make an offer which was likely to settle the proceedings before McKenna C. However, it would be inappropriate not to take into account the lack of a timely response from the respondent to the nominal offers of settlement which were made by the appellant in August and September 1999." 20 Accordingly, in determining whether an order for costs should be made on the basis that a party has unreasonably failed to agree to a settlement of the claim, it is necessary to consider within all of the circumstances pertaining to the proceedings the necessity of parties to carefully consider the strengths and weaknesses of their cases, the possible outcomes of the proceedings on a realistic basis and the necessity to endeavour to reach some appropriate and sensible resolution without recourse to the litigation process. For completeness, I observe that s 86 of the Industrial Relations Act, which mandates an attempt to settle proceedings by conciliation, is specifically applied to review proceedings under the Police Act modified as set out in s 181G(1)(c). The circumstances of the proceedings 21 There were two aspects to the review proceedings which I conducted. The first concerned a number of allegations made by the applicant that the respondent had failed to comply with the statutory regime in that there had been a failure to comply with the provisions of s 181D(3)(a), s 181D(3)(c) and s 181D(4). I accepted these arguments and extended relief to the applicant on this basis. The second part of the proceedings concerned what I shall refer to as the "merits" consideration, namely whether the removal of the applicant from the New South Wales Police Force in regard to her competence, integrity, performance or conduct was harsh, unreasonable or unjust, having regard to her conduct, behaviour and personality. I expressly refrained from making any finding concerning the applicant's suitability to continue as a police officer, having regard to her competence, performance or conduct, although I said that I was not satisfied that the applicant was unsuitable to continue as a police officer having regard to her integrity. ([206]). 22 It will be necessary to refer to these matters further when considering the application for costs. 23 I also need to refer to what passed between the parties, or at least from the applicant to the respondent concerning settlement. 24 The application for review was filed in these proceedings on 29 May 2008. 25 By letter dated 10 July 2008, the applicant's solicitors wrote to the respondent's solicitors offering to resolve the matter on the basis that the applicant would be "reemployed to a local area command", that she would not be entitled to back pay but that she would otherwise be considered as having had continuous service, that she receive a Warning Notice in relation to her "integrity, performance and competence", that she repeat a remedial performance program and that she be demoted by one increment. That offer was said to remain open for 28 days. The respondent did not reply to that offer. 26 On 18 November 2008, before the hearing commenced, the applicant's solicitors made an offer to resolve the proceedings on the basis that she be reemployed as a Detective Senior Constable at her previous increment at a local area command "to be determined", that she be paid the equivalent of two months' back pay, that her employment be considered continuous for all purposes and that she undergo a further remedial performance program. The offer was said to remain open for 7 days. There was no response from the respondent. 27 Finally, on 22 December 2008, after the conclusion of the hearing of evidence in the proceedings, the applicant's solicitors offered to resolve the proceedings on the basis that she be reemployed in general duties as a Senior Constable, that she be afforded continuity of employment, full back pay and payment of her legal costs up to and including 19 December 2008. That offer was said to remain open until 7 January 2009. Again, there was no response from the respondent. 28 The respondent submitted that part of the difficulty that he encountered in considering the offers made by the applicant was that he was unaware that the procedural grounds upon which the applicant ultimately succeeded would be advanced by her in the course of the proceedings. It was contended for the respondent that he was not on notice until the commencement of the substantive proceedings that the applicant intended to advance these grounds and that up to that date the respondent thought that the proceedings would go forward confined to the "merit" matters to which I have earlier referred and with respect to which it was said that the respondent had, in effect, a good arguable case. Certainly, in this regard, I repeat that I refrained from making any findings totally adverse to the respondent's interests. 29 The applicant said that in a response document dated 21 April 2008, she alerted the respondent to the attack that was to be made on the basis of the procedural matters. That document which, excluding attachments, contained 254 paragraphs said in part in [6]: "The notice itself, especially Allegation 1, lacks any particularity or precision with respect to my alleged failings." I do not regard an assertion of this kind made in a response document which was served on the respondent before he determined to remove the applicant from the police force could be said to have alerted the respondent about the procedural arguments that would later be advanced. Indeed, some of those arguments were not at that stage sustainable because the respondent had not at that stage determined to remove the applicant. 30 However, as at November 2008, the applicant had issued a summons for production and a notice to produce directed to the respondent to produce a number of documents which clearly were directed to the processes and procedures adopted by the respondent and persons within his office in considering the applicant's response and in determining to remove her from the police force. This summons for production and notice to produce were the subject of correspondence between the solicitors for the respondent and the applicant. Certainly on 8 and 9 December 2008 there was correspondence between the parties as to the creation of an agreed statement of facts which dealt with the time during which the respondent considered the applicant's response submissions on 1 May 2008. In a letter of 9 December 2008, the applicant's solicitors said, in part, "We say the material caught by the summons and notice to produce and dealt with by the above proposed agreed fact is relevant to the procedure adopted by the Commissioner in reaching his decision that he had lost confidence in the applicant. It also goes to the reasonableness of the decision…" 31 If I accept the submissions made on behalf of the respondent during the course of the costs hearing on 8 May 2009, I would conclude that the respondent did not, as at 9 December 2008, understand that the applicant would be considering, at the least, an attack on the procedures utilised by the respondent in purported compliance with his obligations under s 181D. If this be the case, then I cannot understand how or in what circumstances the respondent or those advising him could have failed to have understood that the enquiries being pursued by the applicant went far beyond a consideration of the "merit" arguments simpliciter. The respondent must be deemed, acting reasonably, to be aware of decisions of this Commission which make amenable for examination the processes adopted by the Commissioner in and about the formulation and making of his decision to remove the applicant. There are a number of well-known Full Bench authorities which deal with this matter, some of which I have referred to in [8] of my principal decision. 32 I conclude that by no later than 9 December 2008, the respondent, if properly advised, should have been aware that the applicant was considering raising issues beyond the consideration of the "merit" arguments. Such an awareness should have led to an examination of the formulation of the Notice given to the applicant, the circumstances of the consideration of that Notice by the respondent personally and the formulation of the reasons and grounds for the decision to remove the applicant from the police force. Such an examination, properly carried out, should, in my opinion, have indicated at the least a degree of vulnerability. These observations are pertinent, in my opinion, to a consideration as to whether the respondent unreasonably failed to agree to a settlement of the applicant's claim within s 181(2)(c) of the Industrial Relations Act having regard to the approach to the application of this sub-section stated by the Full Bench in Bankstown City Council and Four Sons, to which I have earlier referred. 33 I should also refer to the failure of the respondent to respond in any way to the several offers made by the applicant to resolve the proceedings. Even if no counter offer were forthcoming, it would seem to me appropriate that the applicant be so advised and as to why, given the approach of the legislation to conciliation and an encouragement to settle. 34 The respondent complained that the offers made by the applicant were not appropriate and did not involve any real concession on her part. I disagree. Certainly, the letter of 10 July 2008 concerned a concession in terms of demotion. Even though it was somewhat vague as to what was meant by "reemployed" this could have been the subject of further discussion. Furthermore, the offer of 18 November 2008 contained a significant compromise in terms of back pay, albeit that she sought reemployment as a Detective Senior Constable, subject to a further remedial performance program. The offer of 22 December 2008 contained some concession by abandoning a claim for reemployment as a detective, although by then the proceedings had all but concluded and the offer included payment of legal costs and full back pay. 35 I have some sympathy for the respondent's contention that the applicant did not, in her several offers, signify that she was prepared to accept a more significant compromise. Perhaps, there was little room in reality for movement on her part in this regard. However, the fact remains that the respondent did not respond in any way to any of the offers or make any counter offer. There was no attempt in any way to seek any appropriate compromise or to engage the applicant in any settlement process. Certainly, on and after 9 December 2008, when the substantive hearing had barely commenced, the respondent failed to have regard to the submissions to be advanced by the applicant directed to the procedural matters to which I have earlier referred. 36 Having regard to the approach to the application of s 181, referred to in the Full Bench authorities, which I have earlier set out, and having regard to the history of the several offers of settlement and the lack of response thereto, I am persuaded that it is appropriate to grant an order for costs in favour of the applicant under s 181(2)(c). In so concluding, I refer also to the potential vulnerability in the respondent's position of which the respondent should have been aware when put on notice that an attack was to be made as to the procedural matters attending the action that he took under s 181D of the Police Act. 37 On the evidence, the earliest possible time at which the respondent should have been aware that such an attack would be made was receipt of the summons for production and notice to produce issued on 18 November and 24 November 2008 respectively. An appropriate appreciation of the strengths and weaknesses of the respondent's case, having regard to the procedural matters to which I have referred, should have caused the respondent to reply in some way to the offer to settle made by the applicant on 18 November 2008. 38 In all the circumstances, I conclude that it is appropriate to make a costs order effective as and from 25 November 2008, which is a period that should have given the respondent and his advisers an opportunity of considering the matters to which I have referred. 39 I order that the respondent pay the costs of the applicant as and from 25 November 2008, assessed by the Registrar of this Commission in default of agreement. 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.