Industrial Relations Commission of New South Wales CITATION: Sanders v Beresford Blake Thomas [2006] NSWIRComm 1123 PARTIES: APPLICANT: Mr. Jason Sanders RESPONDENT: Beresford Blake Thomas Ltd FILE NUMBER(S): 6448 of 2005 CORAM: Ritchie C Application for costs by respondent Company in unfair dismissal case. Original Decision jurisdictional argument as to whether applicant under a probationary period.-found applicant was covered by probationary period. Company argued that s181(2)(a) to (c) must be considered. CATCHWORDS: Applicant's representative submitted that only s 181(2) (c) relevant. Commission found only s.181(2) (c) relevant in such a case. Found that the application at first instant was neither frivolous or vexatious nor did the applicant unreasonably fail to agree to a settlement. Disagreement on facts existed. Application for costs dismissed. LEGISLATION CITED: Industrial Relations Act,1996 Legal Professional Act 1987 Orange Community Accommodation Service Incorporated and Carolyn Vivienne Roddenby [2004] NSWIRCComm333. Bankstown City Council v Paris (1999) 93IR 209 CASES CITED: Lewis v Kunama Securities Pty Limited 6035 of 1996. Talbot v Rostcom Pty Ltd 99IR 131. Buston v Shire of Bairnsdale(1908) CLR 76. General Steel Industries v Commissioner of Railways(1964) 112 CLR HEARING DATES: 13/07/06 DATE OF JUDGMENT: 07/31/2006 Mr. R Hassell-Solicitor LEGAL REPRESENTATIVES: Ms. L. Tucker-Solicitor DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: RITCHIE C. 31 July 2006 Matter No IRC 6448 of 2005 Jason Wade Sanders and Beresford Blake Thomas Ltd Application by Jason Wade Sanders re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION [2006] NSWIRComm 1123 Background. 1 On 20 April 2006, the Commission as presently constituted, handed down a Decision in the above matter, determining that the applicant Mr. Jason Sander's appointment for employment with the respondent BBT (Australia) Pty Ltd t/as Beresford Blake Thomas Ltd, was subject to the successful completion of a three month probationary period, that such a requirement was reasonable in the circumstances and that the applicant was terminated within the three month probationary period which was determined in advance. 2 As a consequence of that determination the applicant was therefore an employee exempted from Part 6 of Chapter 2 of the Industrial Relations Act, 1996 (the Act). 3 The application for unfair dismissal was accordingly dismissed. 4 As a consequence of that Decision, the respondent sought the awarding of costs on a party/party basis from the date of the first conciliation to the date of the hearing for costs inclusive. 5 In the costs Hearing the Company was represented by Mr. R. Hassall and the applicant Mr. Sanders by Ms. L Tucker. 6 Both parties filed written submissions and the costs Hearing was held on 13 July 2006. At the end of the brief hearing the Commission reserved its Decision. Company's Submission. 7 It was their submission that the applicant's unfair dismissal claim fell into either : · Sub-section 181(2)(a)—the application was frivolous or vexatious, and/or · Sub-section 181(2)(b)- instituted proceedings without cause and or in the alternative, and/or · Sub-section 181(2)(c) unreasonably failed to agree to a settlement of the claim. 8 It was the Company's submission that this application for unfair dismissal was frivolous because the applicant's employment was governed by an employment contract which the applicant had signed without alteration prior to commencement which clearly expressed a three months probationary period, which the applicant had not completed when he was terminated thereby making him ineligible to apply under the unfair dismissal section of the Act. 9 In the Hearing of the unfair dismissal claim, Ms. Costa gave evidence to state that she had not given any undertaking to the applicant that he would not be caught by the probationary period expressed in his written employment contract. This was contrary to the evidence given by the applicant. 10 Mr. Hassall did not press an argument that the application had been vexatious in the sense that the proceedings were brought to annoy or embarrass, but were vexatious in the sense of the claim being so untenable, given the findings that were made. 11 As a consequence of the employment agreement clearly stating that a probationary period formed part of the offer and the findings of the Commission that the applicant had not raised that issue with Ms. Costa but just signed the employment contract without variation, therefore the applicant commenced proceedings without reasonable cause. 12 Also, the Company had reacted to the unfair dismissal application by writing to the applicant in a letter dated 21 December 2005 requesting that he discontinue the proceedings. Incorporated in the letter were the facts upon which it considered the application was improperly based and that he was excluded from the jurisdiction by way of section 83(2)(b) and Clause 6(1)(c)(1) of the Industrial Relations (General) Regulation 2001(NSW). 13 That correspondence dated 21 December 2005, briefly outlined the facts as seen by the respondent, highlighting the different Company entities that operated in Dubai and Australia and that the applicant was subject to a probationary period. The applicant was then placed on notice that the respondent would be tendering the correspondence in support of a claim for costs. 14 In response to Ms. Tucker's submission that only section 181(2)(c) was applicable for consideration in this matter, it was Mr. Hassall's submission in reply that the Orange Community Case did not take the matter any further because in that case, the costs argument centred on the exchange of correspondence concerning offers and counter offers of settlement between the parties. Applicant's Submission. 15 It was Ms. Tucker's submission that there were no circumstances in this case that would justify the making of an order for costs in favour of BBT (Australia) Pty Ltd, the respondent employer. The usual ruling relating to costs should apply, namely that each party should pay their own costs of the proceedings. 16 In her submission, whilst the Company has submitted that it was seeking costs on the basis of sections 181(2) (a) to (c), it was Ms. Tucker's view that section 181(2)(c) was the only source of power for the Commission, as presently constituted, to make an award for costs under a claim from Part 6 of Chapter 2 of the Act. 17 In her submissions Ms. Tucker took the Commission to a Decision of the Full Bench in Orange Community Accommodation Service Incorporated and Carolyn Vivienne Roddenby[2004]NSWIRComm 333 at [16-17] which stated: 16. It will be readily seen from these decisions that determination of a costs application under Pt6 Ch 2 of the Act requires a two staged process. Firstly, the Commission is required to make a finding under the discrete provisions of s.181(2)(c ) of the Act. Those provisions are relevantly as follows: However, the Commission when it is not in Court Session may award costs only in the following cases: (a) ……………… (b) ………………… (c) the Commission may award costs against a party to proceedings under Part 6 of the 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. 17. Secondly, 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. 18 This two stage process was explained by the Full Bench 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 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 the. 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 18(1) are available for exercise." 19 The unfair dismissal application that was made was neither frivolous or vexatious nor did the applicant unreasonably fail to agree to a settlement. It was Ms. Tucker's submission that the applicant's evidence was that an employee of the respondent Ms. Costa had verbally confirmed to the applicant that he was not obligated to the probationary period that was expressed in his contract of employment that he had received from Australia. Taking into consideration his current employment with BBT in Dubai and his prospective employment with BBT in Australia, there was no obvious change of employer expressed in the contract of employment that was offered and the same paperwork and computer setup in both countries. Plus, as he had already completed a six months probationary period in Dubai then such a comment from Ms. Costa was understandable. 20 Ms. Tucker stated that an offer was made by the applicant at the first conciliation to settle his claim with the payment of twelve weeks wages. The respondent's representative was not authorised to make an offer in reply. A letter dated 23 January 2006 was directed to the respondent from the applicant reiterating the original offer but did not receive a reply. 21 It therefore occurred a contest of fact as to what Ms. Costa did state, an arguable case existed which could only be determined by the cross examination of both the applicant and Ms. Costa. That in accordance with Rule 122 of the Act did take place, which resulted in the Commission preferring the evidence of Ms. Costa. The application could therefore not be considered frivolous. Consideration and Decision. 22 I believe it necessary at first instant to consider the preliminary argument that existed between the parties as to the correct interpretation of section 181(2) of the Act. 23 In this consideration I am assisted by the comments of Connor C. in Lewis v Kunama Securities Pty Limited, matter no.6035 of 1996 who stated: "Nor, in my view are costs under s.181(2)(b)-that the TWU instituted proceedings without reasonable cause-open to the respondent employer in Part 6 proceedings. It is an established rule of construction for statutes and instruments that any provisions of a general application give way to specific provisions- generalia specialibus non derogant. I read S.181(2) (c) as a separate head and any application for costs in Part 6 proceedings is confined to it alone. And in Talbot v Rostcom Pty Ltd 99IR 131, Sams DP stated: "In my view, s181(2)(c) is the only source of power because of discrete reference to Ch 2 Pt 6 proceedings, setting this subsection apart, and independent, from the more general powers to award costs found elsewhere in the statute. Thus in my view, it is not open to ground a costs application on the head of power "without reasonable cause" as it is not a criterion self contained in s 181(2)(c). Consequently I dismiss this aspect of Mr. Heath's submission." 24 I also note the comments made by the Full Bench in Orange Community when it stated on "make a finding under the discrete provisions of s181(2)( c) of the Act"(underlined added). 25 In summary it is my finding that it is only the grounds found in s181(2)(c) of the Act, which I intend to apply to the facts and circumstances of this case. 26 When considering whether an application is frivolous or vexatious, this notion is no better expressed than by what O'Connor J of the High Court said in Burton v Shire of Bairnsdale (1908)7 CLR 76 at 92: "Prima facie, every litigant has a right to have matters of law as well as of fact decided according to the ordinary rules of procedure, which give him full time and opportunity for the presentation of his case to the ordinary tribunals, and the inherent jurisdiction of the Court to protect its process from abuse by depriving a litigant of these rights and summarily deposing of an action as frivolous and vexatious in point of law will never be exercised unless the plaintiff's claim is so obviously untenable that it cannot possible succeed." and in General Steel Industries v Commissioner of Railways(1964) 112 CLR 125 at 126 Barwick CJ stated in what constitutes a substantial test to be proven : "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'; 'be 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 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'…. 27 I find that the applicant did actively participate in the conciliation process by making an offer to settle his claim. No counter offer was made by the respondent other than a prior request for him to withdraw his application. The facts of this case were that the applicant had been working for Beresford Blake Thomas Ltd in Dubai (BBT Dubai) and had sought employment with BBT (Australia) Pty Ltd t/as Beresford Blake Thomas Ltd. Conflicting evidence existed between the parties as to the contents of a phone conversation between the applicant and Ms. Costa as to whether the applicant was bound by the probationary period expressed in the contract of employment. It was arguable on behalf of the applicant, taking into consideration, the emails that went between the applicant and the respondent, the company name expressed in the Employment Agreement and the alleged content of this phone conversation between himself and Ms. Costa, for the applicant to believe it was a transfer in employment. In such circumstances, the applicant's claim for unfair dismissal can hardly be described as "manifestly groundless" or "obviously untenable". 28 In conclusion it is my finding that whilst Mr. Jason Sanders unfair dismissal application was dismissed by the Commission for reasons as previously expressed, the application itself falls short of being classified as frivolous or vexatious, nor did the applicant unreasonable fail to agree to a settlement. 29 I therefore dismiss BBT Australia Pty Limited t/as Beresford Blake Thomas Limited application for costs. 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