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- State of Queensland (South West Hospital and Health Service) v Crews-Bradley[2016] QIRC 93
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State of Queensland (South West Hospital and Health Service) v Crews-Bradley[2016] QIRC 93
State of Queensland (South West Hospital and Health Service) v Crews-Bradley[2016] QIRC 93
QUEENSLAND INDUSTRIAL RELATIONS COMMISSION
CITATION: | State of Queensland (South West Hospital and Health Service) v Crews-Bradley [2016] QIRC 093 |
PARTIES: | State of Queensland (South West Hospital and Health Service) (Applicant) v Tania Crews-Bradley (Respondent) |
CASE NO: | TD/2015/108 B/2015/48 |
PROCEEDING: | Application for Costs |
DELIVERED ON: | 31 August 2016 |
HEARING DATES: | On the papers |
MEMBER: | Deputy President O'Connor |
ORDERS: |
ii. Application to dismiss proceeding (B/2015/48); on the Magistrates Court scale;
|
CATCHWORDS: | INDUSTRIAL LAW – DECISIONS GENERALLY – APPLICATION FOR COSTS – Where the respondent refused an offer of settlement – Where the applicant notified the respondent that refusal would result in a strike-out application in the substantive matter and reliance on the refusal if costs sought – Whether the Commission should exercise the discretion to award costs – Whether the refusal of the settlement offer was vexatious or without reasonable cause. |
CASES: | Industrial Relations Act 1999, ss 74, 335. Workplace Relations Act 1996 s 170CJ Industrial Relations (Tribunal) Rules 2011 r 70 (2)(a) MIM Holdings Ltd v AMWU (2000) 164 QGIG 370. Gersten v Cape York Land Council Aboriginal Corp (No2) 176 QGIG 153 Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 |
APPEARANCES: | Dominic Burke v Simon Blackwood (Workers’ Compensation Regulator) (C/2013/38) Decision - http://www.qirc.qld.gov.au Imogen Pty Ltd v Sangwin (1996) 70 IR 254 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Theseus Exploration NL v Foyster (1972) 126 CLR 507 Webster v Lampard (1993) 177 CLR 598 Cosmos E-C Commerce Pty Ltd v Sue Bidwell & Associates Pty Ltd [2005] NSWCA 81 Appeal by Brazilian Butterfly Pty Ltd against decision [PR961139] and order [PR961184] of Simmonds C of 8 August 2006 - Re Charalambous 155 IR 36 Colin Ferry v GHS Regional WA Pty Ltd [2016] FWC 3120 Nil |
Decision
- [1]The State of Queensland (South West Hospital and Health Service) ("the applicant") applies for an order against the respondent for costs pursuant to s 335(1) of the Industrial Relations Act 1999 ("the IR Act").
- [2]The applicant seeks the following orders:
- (a)That the respondent pay the applicant's standard costs of and incidental to the:
i. Application for reinstatement (TD/2015/108);
ii. Application to dismiss proceeding (B/2015/48);
on the Supreme Court scale or an alternative scale the Commission considers appropriate;
- (b)The costs be in an amount agreed, or failing agreement within 14 days of the decision on costs, as assessed;
- (c)The respondent pay the applicant's cost of any assessment;
- (d)The costs are payable within 14 days of agreement or receipt of the assessment; and
- (e)Any other orders the Commission considers relevant in the circumstances.
Background
- [3]Ms Crews-Bradley was employed as a registered nurse (NG5) at the Cunnamulla Hospital, South West Hospital and Health Service.
- [4]Ms Crews-Bradley filed an application for reinstatement pursuant to s 74 of the IR Act on 14 September 2015.
- [5]On 24 March 2016, the Commission issued a decision dismissing the application for reinstatement and ordered that the parties be heard in relation to costs in both the Application for Dismissal and the substantive proceedings.
Reasons for Decision
- [6]It is convenient to extract some aspects of the Commission's decision of 24 March 2016, to give some contextual background to this application for costs.
"[14] There is no evidence before the Commission to support a conclusion that the employer has evinced an intention to no longer be bound by the contract of employment, and there is no evidence of conduct on the part of the employer that might be considered to have prompted the resignation.
….
[21] The reason the respondent sought reinstatement is evidenced in the affidavit of Ms Katie Castles, the Manager for the Human Resource Service at the SWHHS by telephone on 23 July 2015. In her affidavit she deposes:
"I recall that during my telephone discussion with Ms Crew-Bradly [sic] on 23 July 2015, she informed me that she had learned since her resignation that she had been unable to claim QSuper because payments to QSuper had stopped since her resignation. Ms Crew-Bradley asked me if she could be reinstated from the date of her resignation so that she could access her QSuper income protection benefit."
[22] I accept that the purpose for which the respondent sought reinstatement was to access her QSuper income protection benefit. An order for reinstatement made by the Commission is designed to restore the employment relationship after a finding that an employee has been unfairly dismissed. It is not designed to allow an applicant to gain reinstatement in order to obtain a benefit that they have lost as a consequence of resignation.
[23] No evidence has been submitted to the Commission to support a conclusion that she was dismissed."
- [7]During the application to strike out, heard in the Commission on 7 December 2015, the respondent submitted:
"Hindsight would have been invaluable to both parties. Had the respondent known she was suffering from leukaemia, rather than just being stressed and fatigued, then she would never have resigned. Likewise, had the employer known she was suffering from leukaemia, it's possible they may have offered her extended unpaid leave. The fact that the employer now knows of the medical circumstances and refused to reinstate the respondent, even though there'd be no prejudice to the employer, shows that the applicant desired for the respondent's resignation and a desire for the resignation amounts to a dismissal that's harsh, unjust and unfair."[1]
- [8]In regard to the above submission, the Commission concluded:
"[28] The above submission, is in my view, misconceived and fatal to the respondent's ability to resist the application. It acknowledges that the respondent resigned because she was stressed and fatigued. It recognises that had the respondent been aware of the fact that she was suffering from leukaemia then she would not have resigned. Further, it acknowledges that the applicant was not, at the time of the resignation, aware of the respondent's "medical circumstances". More troubling, the respondent submits that the applicant was under some obligation to reinstate the respondent even though the respondent had, it would seem, freely resigned. Notwithstanding all of the above, and in the absence of evidence to support the contention, the respondent submits that the applicant desired for the respondent's resignation and as such, constituted a dismissal that was harsh, unjust and unfair.
[29] There is no evidence to support the submission the respondent "… presented to her employer in a vulnerable state." No evidence was submitted to the Commission to suggest that at the time of her resignation, the respondent's mental capacity was impaired and the applicant was aware of that fact."
Power to award costs
- [9]The Commission's ability to award costs is contained in s 335(1) of the IR Act. Section 335 of the Act provides:
"335 General power to award costs
- (1)The court or commission may order a party to an application to pay costs, including witness expenses and other expenses, incurred by another party only if satisfied -
- (a)the party made the application vexatiously or without reasonable cause; or
- (b)for an application for reinstatement - the party caused costs, including witness expenses and other expenses, to be incurred by the other party because of an unreasonable act or omission connected with the conduct of the proceedings.
- (2)In making an order, the court or commission may order a party to pay another party an amount reasonably payable to a person, who is not a lawyer, for representing the other party."
- [10]
"As a matter of first impression, the purpose of s 335 seems to be to spare parties the rule of having to pay the costs of an opposing party whilst providing a measure of protection to parties defending proceedings which have been instituted vexatiously or without cause…I am reluctant to construe the provisions in such a way that a successful appellant (respondent) would always, subject to the (proper) exercise of discretion, recover costs of the appeal and the application whilst a successful appellant (applicant) would never do so. It seems to me to be more likely that s 335 (1) (a) is aimed at the case which was objectively recognisable as one which could not succeed at the time when the application was made."
The applicant's case
- [11]In short, the applicant contends that:
- (a)The respondent caused costs to be incurred by the applicant, because the respondent applied for and pursued an application for reinstatement when it had no prospects of success and in circumstances where the application was made for a collateral purposes; and/or
- (b)the respondent caused costs to be incurred by the applicant, because the respondent unreasonably refused an offer by the applicant to resolve the proceedings.
Was the application made vexatiously or without reasonable cause?
- [12]The phrase "vexatiously or without reasonable cause" is to be read disjunctively and not in a composite way.[3]
- [13]It is not my understanding of the submissions of the applicant that they contend the respondent, in bringing the application, has acted "vexatiously"; that is, with the intention of annoying or embarrassing the applicant.[4]
- [14]In determining the expression "without reasonable cause" in s 335(1) of the IR Act, it cannot be said that a party has made an application ‘without reasonable cause’, within the meaning of s 335(1) of the IR Act simply because the applicant's argument proves unsuccessful.
- [15]In considering the phrase "without reasonable cause" Wilcox J in Kanan v Australian Postal and Telecommunications Union,[5] wrote:
"It seems to me that one way of testing whether a proceeding is instituted “without reasonable cause” is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being “without reasonable cause”. But where, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause."[6]
- [16]In practice, the test used to determine "without reasonable cause" is not, in many ways, dissimilar to that applied in determining a summary judgment application. That test has been variously expressed, including that a case is "manifestly groundless” or is "so obviously untenable that it cannot possibly succeed".[7]
- [17]Martin J in Dominic Burke v Simon Blackwood (Workers’ Compensation Regulator)[8] in dealing with "without reasonable cause" expressed the view that where an appeal is brought to the Commission on a footing which is misconceived and doomed to fail, costs should follow the event.
- [18]The respondent submits the application had reasonable prospects of success and it was not apparent until the matter was heard by the Commission that it was found the evidence did not support a conclusion the respondent had been dismissed.
- [19]It is extraordinary the solicitors for the respondent submit that it was only at the hearing they found the evidence did not support the application.
- [20]The respondent submits that the application for reinstatement was based upon a reasonable belief that she was constructively dismissed and that the dismissal was harsh unjust and unreasonable within the meaning of section 73 of the IR Act.
- [21]In the alternative, it was submitted by the respondent at the commencement of her application for reinstatement that if she was found to have resigned then her resignation was not given freely or her resignation was not an effective notice of resignation.
- [22]I do not accept those submissions. As the reasons for decision clearly indicate, there was no evidence to support a conclusion that the respondent was dismissed either constructively or otherwise.
- [23]The submission by the respondent that "Had the respondent known she was suffering from leukaemia, rather than just being stressed and fatigued, then she would never have resigned" appears premised upon the assumption that the respondent was not dismissed but rather resigned. It is, in my view, a clear indication that the respondent's application was brought "on a footing which is misconceived and doomed to fail".
- [24]In regard to accessing QSuper benefits, it was submitted that during the proceedings, it was uncontested by the applicant that the respondent had sought reinstatement to access her QSuper income protection benefits. The submission continues:
"The Respondent was upfront with the applicant and the Commission regarding the intention to seek income protection benefits which demonstrates her actions were bone fide. The respondent commenced these proceedings in good faith, and continued to do so during the conduct of the matter."
- [25]It may well be asked why the applicant would seek to contest the fact that the respondent had sought reinstatement to access her QSuper income protection benefits. It was, after all, the applicant's contention that she sought reinstatement only after becoming aware that she was suffering from leukaemia and wish to be reinstated so that she could access the QSuper benefits.
- [26]I am of the view that the application was one which was brought without reasonable cause.
Did the respondent unreasonably refuse an offer by the applicant to resolve the proceedings?
- [27]A conciliation conference convened on 24 September before Swan DP. Following that conference, the applicant, taking into consideration the respondent's medical condition, offered the respondent an alternate role.
- [28]The offer was set out in a letter to the respondent dated 6 October 2015. Relevantly, it provided:
"Taking into consideration your client's extenuating circumstances, I am instructed that, on this occasion, the Service is willing to agree to reinstate your client on the basis that:
- Your client is reinstated to an alternative nursing role within the Service, namely Registered Nurse - Nursing Relief (permanent), within SWHHS (given your client is certified as medically unfit to return to her substantive role for the foreseeable future) from 22 June 2015;
2 Your client be placed on unpaid sick leave from 22 June 2015 until she is certified fit to return to work by a medical practitioner."[9]
- [29]The offer was rejected by the respondent by letter dated 7 September 2015 [sic]. In that letter, the respondent wrote:[10]
"Our client was employed as a Registered Nurse - Rural and Remote on a permanent basis at Cunnamulla Hospital.
Our client's application is for reinstatement, not to be appointed to a different position.
Your client's offer is to appoint our client to a less favourable position and is therefore rejected."
- [30]The material before the Commission suggests that the respondent was not employed as a Registered Nurse - Rural and Remote but rather as a Registered Nurse - Cunnamulla.
- [31]Further, the respondent sought in her application reinstatement to "… her former position (or as nearly as is possible)…" (emphasis added) and that she be permitted to immediately take unpaid leave due to her illness.
- [32]The respondent was advised by letter dated 16 October 2015[11] that the alternate position offered to the respondent was a permanent full-time substantive registered nurse position within the SWHHS, was at the Award conditions as her previous permanent role with the service, and offered her continuity of employment. There is no evidence before the Commission to suggest that the respondent would suffer any prejudice had she have accepted the alternate full-time position.
- [33]By letter dated 26 October 2015 the respondent advised that she would "conditionally accept" the position of Registered Nurse - Nursing Relief if the applicant could guarantee the position was permanent and full time and that all endeavours would be made to place her in the Cunnamulla Hospital, or as near as possible to the Cunnamulla Hospital.
- [34]The respondent sought the following terms of settlement:
"1. The letter of resignation dated 9 June 2015 be retracted;
- Our client be reinstated to alternative nursing role within the service, namely Registered Nurse – Nursing Relief (permanent), within the SWHHS with agreement that there be continuation of service from her position of a Registered Nurse – Cunnamulla Hospital from 9 June 2015;
- Our client be placed on unpaid sick leave from 9 June 2015 until she is certified fit to return to work by a medical practitioner;
- The parties sign a Deed of Settlement to be prepared by Crown Law reflecting these terms and includes all the usual clauses including bar to further proceedings, release, discharge and indemnity in relation to any further claims arising out of the subject matter of the application, no admission as to liability, confidentiality and that parties bear their own costs;
- That there be agreement that the Deed of Settlement can be produced to our client's income protection insurance (QSuper) if required to prove continuity of employment."[12]
- [35]The applicant responded by letter dated 4 November 2015. In short, the applicant again restated its well-rehearsed position and went on to state:
"The Service has attempted to resolve your client's Application for Reinstatement in good faith, including agreeing to reopen its previous offer at your client's request. Your client has instead imposed unreasonable demands on the Service and rejected the Service's offer for the second time. The Service's offer was just and reasonable and your client's responses demonstrate she is unwilling to resolve her Application for Reinstatement on terms that are fair to both parties. In the circumstances, the Service considers that any further attempts to negotiate would be futile."[13]
- [36]The approach taken by the SWHHS would allow it to find a replacement during the respondent's period of extended unpaid sick leave.
- [37]A Full Bench of the Australian Industrial Relations Commission considered the former ss 170CJ(2) and (3) of the Workplace Relations Act 1996 in Appeal by Brazilian Butterfly Pty Ltd against decision [PR961139] and order [PR961184] of Simmonds C of 8 August 2006 - Re Charalambous ("Brazilian Butterfly").[14] Section 170CJ(2)(b) of the Workplace Relations Act 1996 conferred a power on the Commission to award costs against a party on the basis of an assessment of the reasonableness of the actions of that party in attempting to negotiate a settlement of a matter.
- [38]In Brazilian Butterfly, the Full Bench wrote:
"[39] Very strong prospects of success will not always justify a failure to participate in settlement negotiations initiated by a serious settlement offer from the other party. For example, where reinstatement is not sought and the amount offered by a respondent is equivalent to the statutory cap on compensation that can be ordered pursuant to s. 170CH, it will likely be unreasonable for an applicant to fail to agree to a settlement on those terms, irrespective of how strong the applicant’s case is. Of course, even then, it is possible to conceive of circumstances where a failure to agree terms of settlement on the basis of such an offer would not be unreasonable. For example, depending upon the circumstances, it may be entirely reasonable for an applicant to insist upon a withdrawal of the dismissal and acceptance of a resignation in its stead if this were necessary to repair substantial damage done to an applicant’s professional reputation and future professional job prospects as a result of the dismissal.
[40] On the other hand, modest or even poor prospects of success on liability or remedy will not necessarily always make it unreasonable for a party to fail to agree terms of settlement that may lead to the discontinuance of the application. For example, an applicant who was a long term employee close to retirement may have very substantial contingent superannuation entitlements that will be lost unless he or she obtains reinstatement. The difference between the value of those contingent entitlements and the amount offered by the respondent as a monetary settlement may be so great as to make it reasonable for the applicant to refuse the respondent’s offer, notwithstanding that the applicants’ prospects of success are only modest or even poor. Again, each case will turn on its own facts." [references omitted]
- [39]The Full Bench continued:
"[43] A reasonable person, who is a party to proceedings pursuant to s. 170CE, when confronted with an offer of settlement from the other party, will determine whether, and if so, how to respond to such an offer after considering all the circumstances of the case, including:
- the terms of the settlement offered in relation to the relief sought;
- the relative strengths of the parties’ cases (and thus their relative prospects of success) in relation to both ‘liability’ and the relief sought;
- any assessment of the merits in the certificate issued by the Commission pursuant to s.170CF(2);
- the likely length and cost of proceeding to a hearing if the matter does not settle; and
- any adverse consequences that will accrue to a party if they accept a settlement on particular terms rather than successfully prosecute or defend the primary application, as the case may be.
[44] This list is not intended to be exhaustive. All of the circumstances are relevant and, as is made clear in the joint judgment in Blagojevch, there is no basis in the Act for giving primacy to any particular factor in every case."
- [40]More recently, in Colin Ferry v GHS Regional WA Pty Ltd,[15] the employee was summarily dismissed for entering the employer's premises on an unauthorised basis after hours and removing items of scrap property. The employer successfully defended an unfair dismissal claim and made a separate application for payment of its legal costs on an indemnity basis.
- [41]Prior to the hearing of the unfair dismissal application, the parties had participated in three separate telephone conciliations before the Fair Work Commission. Following the third telephone conciliation the employer made a written offer of settlement which was communicated to the Fair Work Commission. The employer relied on the offer of settlement in its costs application. Relevantly, the offer put the employee on notice that if rejected and the employer incurred further legal costs, the employer would rely on the letter as part of its costs application. The employee rejected the offer of settlement and lost the unfair dismissal claim.
- [42]The basis of the costs application was that the employee had engaged in an unreasonable act or omission in connection with the conduct or continuation of the matter when the applicant refused to accept the settlement offer prior to the hearing.[16]
- [43]Commissioner Williams held that the "… failure to accept the offer of settlement involved the continuation of proceedings in wilful disregard of known facts and also was an imprudent refusal of an offer to compromise and this delinquent conduct warrants the Commission exercising its discretion to award indemnity costs …"
- [44]The applicant contends that costs were incurred because of an unreasonable act or omission connected with the conduct of the proceedings, namely, the refusal to accept the offer.
- [45]In my view, the rejection of the offer of settlement was unreasonable. The offer was made by the applicant notwithstanding that it had a strong case, it provided the respondent with a position which would provide continuity of service, was permanent and with no demonstrated prejudice to her. Importantly, the applicant agreed that the respondent would be placed on unpaid sick leave from 22 June 2015 until she was certified fit to return to work by a medical practitioner.
- [46]The applicant put the respondent on notice that a failure to accept the offer would result in the applicant seeking to strike-out the application for reinstatement and the refusal of the offer would be relied upon if costs were sought.
- [47]Notwithstanding that an offer to reinstate the Respondent had been made, the following submission was made at the hearing of the strike-out application:
"The fact that the employer now knows of the medical circumstances and refused to reinstate the respondent, even though there'd be no prejudice to the employer, shows that the applicant desired for the respondent's resignation and a desire for the resignation amounts to an -dismissal that's harsh, unjust and unfair." [sic]
- [48]No evidence was adduced by the respondent to the support the submission.
- [49]I have come to the conclusion that the respondent has caused costs to be incurred by the applicant because of an unreasonable act, namely, the refusal to accept the settlement offer prior to the hearing, taking into account the circumstances of the matter and the terms of the settlement.
Quantum of costs
- [50]The applicant seeks its costs of the proceedings in on the Supreme Court scale. The basis of the submission is that the respondent had sought orders against the applicant for the amount of the loss of the respondent's income protection benefit in the sum of $115,853.40.[17]
- [51]I do not accept the submission. Putting to one side the question of whether it is a remedy which would or could be granted by the Commission, the claim was contained in correspondence of the respondent's solicitors but never formally pursued. It was certainly not part of the application for reinstatement before the Commission.
- [52]It was the submission of the respondent that each party should bear its own costs.
- [53]In the alternative, the respondent submits that should the Commission find that the responded acted vexatiously, or unreasonably refused to accept an offer of settlement then the respondent submits its costs should be assessed on the relevant Magistrates Court scale.
- [54]Accepting the correctness of the respondent's calculations, the claim, if successful, would have been no more than some $42,093.40. It would therefore be appropriate, in my view, for the Commission to award costs against the respondent in respect of TD/2015/108 and B/2015/48 on the relevant Magistrates Court scale for claims under $50,000 in accordance with rule 70 (2)(a) of the Industrial Relations (Tribunal) Rules 2011.
Orders
- [55]For the reasons expressed above, I make the following orders:
- That the Respondent pay the Applicant's costs of and incidental to the:
i. Application for reinstatement (TD/2015/108);
ii. Application to dismiss proceeding (B/2015/48);
on the Magistrates Court scale;
- The costs be agreed, or failing agreement be assessed within 14 days of this decision; and
- The costs are payable within 14 days of agreement or receipt of the costs assessment.
Footnotes
[1] T1-10 Ll.14-22.
[2] (2000) 164 QGIG 370.
[3] MIM Holdings Ltd v AMWU (2000) 164 QGIG 370, 371.
[4] Gersten v Cape York Land Council Aboriginal Corp (No2) 176 QGIG 153.
[5] (1992) 43 IR 257.
[6] See also: Imogen Pty Ltd v Sangwin (1996) 70 IR 254 per Wilcox CJ (with whom Madgwick J agreed).
[7] See: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 128-129 per Barwick CJ. See also Dey v Victorian Railways Commissioners (1949) 78 CLR 62, 91 per Dixon J; Theseus Exploration NL v Foyster (1972) 126 CLR 507, 514; Webster v Lampard (1993) 177 CLR 598, 602-603; Cosmos E-C Commerce Pty Ltd v Sue Bidwell & Associates Pty Ltd [2005] NSWCA 81, [37]-[38].
[8] (C/2013/38) - Decision - http://www.qirc.qld.gov.au.
[9] Exhibit KP-2 to the Affidavit of Kate Pike.
[10] Exhibit KP-3 to the Affidavit of Kate Pike.
[11] Exhibit KP-6 to the Affidavit of Kate Pike.
[12] Exhibit KP-11 to the Affidavit of Kate Pike.
[13] Exhibit KP-12 to the Affidavit of Kate Pike.
[14] Appeal by Brazilian Butterfly Pty Ltd against decision [PR961139] and order [PR961184] of Simmonds C of 8 August 2006 - Re Charalambous 155 IR 36.
[15] [2016] FWC 3120.
[16] Fair Work Act 2009 (Cth) s 400A.
[17] Exhibit KP-11 of the Affidavit of Kate Pike.