By Sooraj Sidhu and Lindsay Carroll, NRA Legal

In an unusual case before the Fair Work Commission, an employee has been ordered to pay indemnity costs after finding that she continued to press an unfair dismissal application that was “doomed to fail”.

Ordinarily, parties to a claim before the Fair Work Commission will bear their own legal and representational costs. However, after the employee’s application was dismissed in February, the employer brought an application seeking an order for costs against the employee and her representative.

Unfair dismissal application

Earlier this year, Commissioner Chris Platt heard evidence from Charles Parletta Real Estate Pty Ltd (LJ Hooker Glynde) that it had dismissed one if its office managers on the basis of misconduct and a breakdown of the professional relationship.

Specifically, the employee was found to have engaged in misconduct by increasing her salary without permission, reducing the pay of another employee without consent and failing to document the arrangements of other employees.

The employee was stood down pending the outcome of the investigation. However, during this time the employee engaged in “treacherous” conduct, which in the eyes of Commissioner Platt “fatally damaged her working relationship”.

For example, the employee instructed her solicitor to write to the Commonwealth Bank and National Australia Bank for assistance in proceedings against her employer. She also instructed the solicitor to communicate her employer’s breach of the Land Agents Act 1994 (SA) to a potential buyer of the business.

On that basis, the Fair Work Commission determined that the employee’s dismissal was neither harsh, unjust nor unreasonable, despite not being granted an opportunity to respond to the breakdown of her working relationship.

Costs application

LJ Hooker Glynde subsequently filed an application for costs against the employee on the following grounds:

  • the application was brought vexatiously and to seek revenge against the employer,
  • the employee knew at the time of making her application that her dismissal was warranted,
  • a reasonable person in the employee’s position would have determined the application had no reasonable prospects of success, and/or
  • the institution and maintenance of the application was an unreasonable act.

LJ Hooker Glynde also sought costs against the employee’s solicitor.

Decision

In determining the costs application by the company, the Commission reiterated that the power to order costs is discretionary.

In this case, there was evidence from the employee which made apparent her motivation to inflict as much damage on the employer as possible. For example, in a number of meetings with the employer, words were said to the effect of “I will bring you down” and “I will get you for everything you have done”.

Additionally, the Commission considered the dismissal letter and held that “it should have been evident to [the employee] that at the time the application was lodged there was no reasonable basis for her to commence the claim.” Commissioner Platt agreed with the employer that this position should have been placed beyond doubt after a review of LJ Hooker Glyne’s evidence filed on 19 October 2017.

In contrast, Commissioner Platt acknowledged that the employee’s solicitor was not an expert in industrial relations and was perhaps only engaged on the basis of their role as a support person and life-partner to the employee.

Whilst it would have been prudent for the solicitor to provide some advice as to the prospects of success, it was clear that the employee was the driver of her application and therefore, the Commission considered it was unreasonable to order costs against her solicitor.

Ultimately, the Fair Work Commission held that the requisite element of delinquency was not evident until after the conclusion of the employee’s evidence, at which point the employee was invited to consider her position by Commissioner Platt. By continuing to proceed with her application, the employee had been delinquent and was ordered to pay costs from that date on an indemnity basis.

What does this mean for employers?

This case sheds light on the circumstances in which an order for costs against the other party is likely to succeed.

Although the Commission will exercise a high level of caution, so as not to discourage applicants with genuine grievances, employers should take comfort in knowing there are avenues to seek redress for the legal expenses incurred as a result of the pursuit of vexatious claims in an unreasonable manner.

To find out more information and speak to one of our workplace advisors, call the NRA today on 1800 RETAIL (738 245).


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