A Full Bench of the Fair Work Commission (“FWC”) recently handed down a decision that will no doubt cause debate amongst employer and employee groups. The case raises the bar somewhat on the question of whether costs are available to parties in matters arising under the Fair Work Act (“FW Act”).
The so called “general rule” regarding cases brought under the FW Act and or in the FWC is that (generally) parties must bear their own costs. (see for example; sections 570 and 611(1) of the FW Act). However, in certain limited circumstances, the FWC or Courts may depart from the “general rule” and order costs against a party if that party has, (for example), commenced an application that had no reasonable prospects of success. (see s611(2)).
In the case of Hanson v Calvary Care Adelaide, a Full Bench of the FWC ordered that the Appellant (Ms Hansen), pay the Respondent’s (Calvary) costs of $5,000 in relation to Ms Hanson’s appeal from her unsuccessful unfair dismissal application. Ms Hansen, was an unrepresented litigant in the appeal. She was represented by a lawyer in the unfair dismissal matter however she elected to bring an appeal on her own. As matters, transpired, the decision to appeal had severe ramifications.
The Full Bench refused Ms Hansen permission to appeal on the basis that none of the grounds that she identified in her appeal demonstrated any appealable error by the FWC in the unfair dismissal matter. In denying permission to appeal the Full Bench noted; “the appellant essentially sought to rerun the case she had advance before the commission, which in any event, was occasioned largely unrelated to this section 399 application, in the hope of achieving a different result”.
Having successfully disposed of the appeal, Calvary made an application under sections 400A, and 611(2) of the FW Act for their costs of the appeal of to be paid by Ms Hansen. In a resounding decision, the Full Bench agreed with Calvary.
The Full Bench made two pertinent observations;
[15] It is trite to observe that the statutory and policy imperative underpinning a costs application under the Act, is that a person in a matter before the Commission must bear their own costs. So much is plainly obvious by the precise and unambiguous language of s 611(1).
[16] However, the statutory scheme sets out the relatively circumscribed circumstances in which an order for costs might be found by the Commission to be appropriate in a particular case. It includes the exercise of discretionary power where the Commission is satisfied that one, or more of the circumstances set out in s 611(2), has been established. If such circumstances are established, the Commission, in the broad exercise of its discretion, may make an order that a person/s bear some, or all of the costs of another person, in relation to the application, including on an indemnity basis, or decline to make any order at all. We note that Calvary does not seek its costs in relation to the appeal on an indemnity basis.
The above passages reinforces the proposition that there is no hard and fast rule in respect of whether a party may be ordered to pay the other party’s costs. Ultimately it is a matter for the discretion of the FWC or Court. This was particularly relevant in Ms Hansen’s circumstances.
The Full Bench accepted that Ms Hanson’s behavior and conduct was entirely motivated by her aim of proving her innocence and having her “day in court”. They did not consider that Ms Hanson, in her own mind, believed that an appeal against the decision was without merit. They acknowledged that Ms Hansen submitted that the she was told that a successful party in an unfair dismissal case would not be able to pursue their legal costs from the other party and that she could not afford to pay legal costs, and would be faced with either being declared bankrupt or into her life if costs were awarded against her.
Weighing up all these facts, the Full Bench nevertheless concluded that it should have been reasonably apparent to Ms Hansen that her appeal had no reasonable prospects of success therefore, it was open to the Full Bench under s.611(2) of the FW Act to order that Ms Hansen pay Calvary’s costs.
Importantly, the Full Bench considered Ms Hansen’s personal circumstances and emotional state in weighing up whether there was any utility in awarding costs against her. Ultimately they decided that to award costs to Calvary as not to do so would resulted in an unjust outcome in respect to the time, cost and resources which Calvary had expended in defending an appeal that “objectively had no real prospects of success”.
As such the Full Bench was satisfied that it ought to use his discretion and ordered that Ms Hansen pay the sum of $5,000 to Calvary.
Lessons from the case;
The case should serve as a warning to all that the so-called “general rule” that a person must bear their own costs in relation to a matter before the FWC or brought under the FW Act should be treated with caution.
As such, before an aggrieved person considers bringing a case in the FWC or under the FW Act, they should seek advice on whether they have reasonable prospects of success. If the answer is no; irrespective of how unjust it may seem they should not commence the litigation.
Equally, employers who are confronted with a seemingly hopeless case do not necessarily have to put their hands in their pockets to resolve the matter on a commercial basis for fear of spending vast sums on unrecoverable legal fees. As Calvary demonstrated, tenacity in defending a matter may result in a judgement in their favor and some of the costs they have incurred being defrayed, thereby sending a warning to other potential litigants.
A link to the case is below;
https://www.fwc.gov.au/documents/decisionssigned/html/2016fwcfb8162.htm
Should you require advice on any matters involving the Fair Work Act feel free to give Michael a call on 02 8667 3094 or michael@michaeldohertylegal.com.au
