Industrial Relations Commission New South Wales Medium Neutral Citation: Dr A v Health District (No 3) [2014] NSWIRComm 55 Hearing dates: 26 September 2014; 30 October 2014 (on the papers) Decision date: 21 November 2014 Before: Boland AJ Decision: The applicant's application for costs is dismissed. Catchwords: UNFAIR DISMISSAL - Threat to dismiss - Order made that employer not proceed to dismiss in accordance with threat - COSTS - Application by applicant for costs - Whether respondent unreasonably failed to agree to a settlement of the claim that an order be made under s 89(7) of the Industrial Relations Act 1996 - Consideration of the strength of respondent's position - Application for costs dismissed Legislation Cited: Industrial Relations Act 1996 Cases Cited: Bankstown City Council v Paris [1999] NSWIRComm 585; (1999) 93 IR 209 Dr A v Health District (No 2) [2014] NSWIRComm 50 Four Sons Pty Ltd v Sakchai Limsiripothong (No 2) [2000] NSWIRComm 131; (2000) 100 IR 400 Phillips v Industrial Relations Commission of NSW [2006] NSWCA 183 Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales (on behalf of Rosanna Ganino) v Roads and Maritime Services (No 9) [2014] NSWIRComm 31 Category: Costs Parties: Dr A (Applicant) Health District (Respondent) Representation: A Moses SC with Y Shariff of counsel (Applicant) K Nomchong SC with A Britt of counsel (Respondent) TressCox Lawyers (Applicant) Bartier Perry Solicitors (Respondent) File Number(s): IRC 715 of 2013 Decision 1In Dr A v Health District (No 2) [2014] NSWIRComm 50, the Commission ordered that the respondent, the Health District, not dismiss the applicant, Dr A, in accordance with its present threat to do so. The order was made pursuant to s 89(7) of the Industrial Relations Act 1996 (IR Act). The Commission further ordered: Within 14 days of the date of this decision the applicant shall file and serve written submissions on costs. The respondent has a further 14 days in which to reply. Unless a party seeks to be heard orally, the question of costs will be determined on the papers. 2Written submissions were received from the parties. Neither party sought to be heard further on the question of costs. This decision deals with costs. 3The basis upon which the applicant sought costs was s 181(2)(b) and (c) of the IR Act. Section 181(1) is also relevant. Those provisions are 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: ... (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 ... Consideration 4Section 181(2)(b) is inapplicable because the respondent did not institute any relevant proceedings. The principles governing the operation of s 181(2)(c) were considered by the Full Bench in Bankstown City Council v Paris [1999] NSWIRComm 585; (1999) 93 IR 209 at 219: 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. 5As the respondent advised, the principles in Paris were considered and approved by the Court of Appeal in Phillips v Industrial Relations Commission of NSW [2006] NSWCA 183. At [19]-[20] Mason P (with whom Spigelman CJ and Beazley JA agreed) said: [19] 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. [20] 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. 6After referring to Paris, in Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales (on behalf of Rosanna Ganino) v Roads and Maritime Services (No 9) [2014] NSWIRComm 31 Boland AJ stated at [85]-[86]: [85] Thus, the criterion in s 181(2(c) 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. Further, a conclusion that a party unreasonably failed to agree to a settlement of the claim may be reached on at least two bases: (i) 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; and (ii) 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. [86] In exercising its power under s 181(2)(c) the Commission "is obliged to consider all relevant circumstances in deciding whether such failure has occurred" and that "[o]nce the statutory criterion has been met, the Commission's broad powers and discretions under s 181(1) are available for exercise." See also Four Sons Pty Ltd v Sakchai Limsiripothong (No 2) [2000] NSWIRComm 131; (2000) 100 IR 400. 7Determining whether a party acted unreasonably in failing to agree to a reasonable settlement offer, or whether a party's conduct was inconsistent with an intention to settle the proceedings on any basis that could be considered reasonable, requires an examination and consideration of the various exchanges of settlement between the parties and the conduct of the parties. 8What was referred to as a "counter offer" was contained in a letter from the applicant's solicitors to the respondent's solicitors dated 2 October 2013. The counter offer was in the following terms: Dr [A] will resign from [the Hospital] with effect from 4 October 2013; [The Health District] will record a finding in relation to Allegation One in the terms recommended by Justice Haylen, namely: As a result of conciliation in the Industrial Relations Commission the [Health District] withdraws a final determination that Dr [A] forcibly applied a pillow to the patient. Dr [A's] conduct in relation to this incident is to be determined by the Medical Council of New South Wales. The Service Check Register will be updated to reflect the above finding in relation to Allegation One and Dr [A's] name is to be removed from the Register with respect to this matter; [The Health District] will notify the Health Care Complaints Commission and the Medical Council of NSW of the finding in relation to Allegation One; [The Health District] will pay Dr [A] the difference between his base wage and the wage he would have been paid had he worked his rostered shifts for the total period during which he was suspended (including shift penalties and loadings); The proceedings be dismissed with no order as to costs. 9The foregoing offer remained open for acceptance until 5.00 pm on Friday 4 October 2013. "Allegation One" was an allegation of misconduct made against the applicant and was in the following terms: Allegation One: That on 26 May 2013 in the [Hospital] Emergency Department, Dr [A] forcefully applied a pillow to the face of a patient in response to the patient spitting at Dr [A]. 10The respondent responded to the counter offer on 4 October 2013 with an offer of its own. The offer included an offer that Dr A resign with effect from 9 October 2013, but critically it was proposed that the respondent would record the following finding in relation to Allegation One: As a result of conciliation in the Industrial Relations Commission the [Health District] finds that Dr [A] held a pillow on the face of the patient. 11The remaining elements of the respondent's offer were premised on the finding it proposed to record. The offer remained open for acceptance until 2.00 pm 9 October 2013. The offer was rejected by the applicant on 8 October 2013. It is apparent from the respondent's rejection of the applicant's offer and its own counter offer that it had a firm view that the applicant was guilty of misconduct. 12Apparently, the respondent and the applicant participated in conciliation on 9 October 2013, where both parties made a number of offers and counter-offers, but no agreement was reached. The matter proceeded to arbitration where the respondent strenuously resisted the applicant's claim that an order should be made under s 89(7) of the IR Act. 13It has been recognised that a party to unfair dismissal proceedings "may appropriately take a firm position generally, including on the question of conciliation or settlement": Paris at 220. However, as the Full Bench observed in Paris: [S]uch 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 also 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. 14In my opinion, whilst the respondent ultimately did not succeed in resisting an order under s 89(7) of the IR Act, it could not be said it unreasonably failed to settle the proceedings. Aspects of the Commission's reasons in Dr A (No 2) clearly support that conclusion. These aspects were identified by the respondent and they include the following: (1)Dr [A] was not a completely credible and reliable witness: at [326]. (2)Dr [A] used the pillow twice despite his denials of having done so: at [331]. (3)The Commission found it difficult to determine whether Dr [A] forcefully applied the pillow to the Patient's face: at [336]. (4)Despite being very troubled by aspects of Dr [A's] evidence, and with a high degree of scepticism about Dr [A's] version regarding the use of the pillow, the Commission was ultimately unable to find that Dr A forcefully applied the pillow to the Patient's face: at [340]. (5)Dr [C] (for the respondent) presented herself as an honest witness who gave evidence to the best of her recollection nor was she untruthful or exaggerated her evidence: at [350]. 15At [390], the Commission stated that the matter was not easy to determine and that: The respondent's case was not one without any foundation and the applicant's evidence in a number of respects was unreliable and/or outweighed by the respondent's evidence. But in order to accept the respondent's case it is necessary that I "feel an actual persuasion" or a state of "comfortable satisfaction" that the respondent is correct. I do not consider either of those tests has been met. 16The "actual persuasion" the Commission was required to feel was that Dr A forcefully applied the pillow to the Patient's face. The Commission found that a difficult issue to determine, but ultimately was unable to make that finding: at [340]. 17I agree with the respondent that this was not a case where there were weak prospects of the respondent being successful in having its decision to dismiss Dr A undisturbed, nor was it a case that lacked evidentiary support. Objectively, the respondent was not being unreasonable in maintaining a firm view about the strength of its position. 18The jurisdictional gateway to a costs order, namely, that the party against whom a costs order is sought "unreasonably failed to agree to a settlement of the claim", has not been opened in this case. Accordingly the applicant's application for costs is dismissed. I so order. ********** 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. Decision last updated: 21 November 2014