Cost awards in unfair dismissal cases – part 3

Previous articles by Dundas Lawyers have looked at the difficulties confronted in obtaining a costs order against an unsuccessful party in an unfair dismissal application (Application).  To recap, section 611(1) of the Fair Work Act 2009 (FWA) holds that a party to an Application, be it the complainant employee or the respondent employer, must bear its own costs in relation to a matter before the Fair Work Commission (FWC).  However, there are circumstances when the other side’s costs can be imposed on a party to an Application.  This article outlines these circumstances.

Legislative provisions

Section 611(2) of the FWA provides that costs can be ordered under against a party to an Application if the FWC is satisfied that:

• the applicant or the respondent was acting vexatiously or without reasonable cause; or
• it should have been reasonably apparent to the relevant party that they had no reasonable prospect of success.^[1]

Case law

The recent case, Claudia Montero v Club Holdings Pty Ltd T/A Horizons West Bus & Coach Lines [2021] FWC 733 illustrates when costs will be awarded against a complainant employee because it should have been apparent they had no reasonable prospect of success.

Montero (Employee) lodged an application for an unfair dismissal remedy under section 394 of the FWA.^[2]  Club Holdings (Employer), in its response by Form F3 – Employer’s response to unfair dismissal application, asserted a jurisdictional objection on the basis the Employee had not been terminated, but had in fact resigned.^[3]

The resignation took place within the context of a heated exchange discussing procedures for the reporting of hazard incidents.^[4]  The Employer in its defence asserted that:

• during the discussion, the Employee said she no longer wanted to work for the Employer;
• the Employee was afforded an opportunity to reconsider her resignation;
• the Employee reaffirmed her decision to resign;
• confirmation of the resignation was emailed to the Employee the following day;
• two days later the Employee disputed that she had resigned.^[5]

On 2 September 2020, the FWC issue directions regarding the filing of materials, such as witness statements, to be relied upon by the parties and listed the jurisdictional question for a hearing on 4 November 2020.^[6]  Both parties filed witness statements, submissions and supporting documentation in compliance with the directions.^[7]  The Employee asserted that the resignation was not an act of free will on her part but the Application less than 24 hours before the time for the listed hearing on 4 November 2020.^[8]  The Employer sought its costs thrown away because of the late discontinuance.^[9]

Consideration of costs by the FWC

For the purposes of subsection 611(2)(a) of the FWA, the FWC was of the opinion, after having considered the filed evidence, that the unfair dismissal application had not been made:

• vexatiously, as there was no evidence as to the Employee’s motivations that would support such a conclusion; and
• without reasonable cause.

Turning to subsection 611(2)(b) of the FWA, the FWC was of the opinion that upon having received the evidence of the Employer, objectively it should have been readily apparent to the Employee she had no reasonable prospects of success.^[10]  While the Employee’s position was that she was initially unsure if she had resigned, upon seeing the Employer’s witness evidence it should have been apparent she:

• had resigned from her employment;
• had not been forced to resign by the conduct of the employer; and
• may have argued she resigned in the heat of the moment, it still took her three days to contest the Employer’s acceptance of her resignation.^[11]

Accordingly, the Employee was ordered to pay the Employer’s incurred costs from the date she received the Employer’s evidence.

Takeaways

While perhaps rare, an employee will, in the appropriate circumstances, be ordered to pay the costs of an employer in the event the Application remedy is unsuccessful.

Links and further references

Legislation

Fair Work Act 2009

Cases

Claudia Montero v Club Holdings Pty Ltd T/A Horizons West Bus & Coach Lines [2021] FWC 733

Baker v Salva Resources Pty Ltd [2011] FWAFB 4014

Other resources

Fair Work Commission

Form F3 – Employer’s response to unfair dismissal application

Further information on unfair dismissal application

If you are dealing with an unfair dismissal application or have any questions regarding costs in these matters, contact Dundas Lawyers Gold Coast for a confidential and obligation-free discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1] See also Fair Work Act 2009 s 611(2).

[2] Claudia Montero v Club Holdings Pty Ltd T/A Horizons West Bus & Coach Lines [2021] FWC 733, [5].

[3] Claudia Montero v Club Holdings Pty Ltd T/A Horizons West Bus & Coach Lines [2021] FWC 733, [7].

[4] Claudia Montero v Club Holdings Pty Ltd T/A Horizons West Bus & Coach Lines [2021] FWC 733, [6].

[5] Claudia Montero v Club Holdings Pty Ltd T/A Horizons West Bus & Coach Lines [2021] FWC 733, [8].

[6] Claudia Montero v Club Holdings Pty Ltd T/A Horizons West Bus & Coach Lines [2021] FWC 733, [10].

[7] Claudia Montero v Club Holdings Pty Ltd T/A Horizons West Bus & Coach Lines [2021] FWC 733, [13].

[8] Claudia Montero v Club Holdings Pty Ltd T/A Horizons West Bus & Coach Lines [2021] FWC 733, [3], [6].

[9] Claudia Montero v Club Holdings Pty Ltd T/A Horizons West Bus & Coach Lines [2021] FWC 733, [1], [31].

[10] Claudia Montero v Club Holdings Pty Ltd T/A Horizons West Bus & Coach Lines [2021] FWC 733, [31].

[11] Claudia Montero v Club Holdings Pty Ltd T/A Horizons West Bus & Coach Lines [2021] FWC 733, [31].

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