Unfair Dismissal: Kunce v Deliver Australia Pty Ltd

Costs awarded against employer for lacklustre defence - Kunce v Deliver Australia Pty Ltd U2012/6097 (27 July 2012)

This case concerned an application made by the dismissed employee for the costs of his application.  Fair Work Australia had previously decided that the employee had been unfairly dismissed by the respondent employer.  However, after that decision, the Commissioner held the matter over in relation to an application for costs.

Section 611 of the Fair Work Act 2009 provides the general rule that costs are not awarded in unfair dismissal matters (ie, they lie where they fall), but provides two exceptions in relation to this general position:

  • where the application or response was made vexatiously
  • where the application or response was made without reasonable cause OR
  • where it should have been reasonably apparent ... that the application or the response had no reasonable prospects of success

The Applicant, who was legally represented, argued that the self-represented Respondent had conducted its response in such a manner as to fall within each of these headings.  The case is unusual as it is difficult for a Respondent to fall within these categories - usually claims of frivolous and vexatious are made in relation to applicants (and often applicants who engage in serial and scattergun litigation).  As Respondents are brought to the court or tribunal involuntarily by the applicant, it is much rarer (and harder) to apply these labels.

The Commissioner first considered whether or not the response had been conducted without reasonable prospects of success.  The Commissioner noted the fact that the Respondent was not legally represented, but also noted that the Respondent was a company with some 40 employees and an HR Manager.  The Commissioner noted that the conclusion that an application or response is 'without reasonable prospects of success' should only be reached with extreme caution as the general principle involves applications and responses being fully ventilated before courts and tribunals.  However, the Commissioner held that the failure of the Respondent to call any witnesses or to seek to cross-examine the Applicant (thereby effectively admitting the Applicant's evidence uncontested) gave rise to a finding that the Respondent's claim had no reasonable prospects of success at the date of the hearing.  The Respondent's conduct indicated that it was 'reasonably apparent' to the Respondent that its claim had no reasonable prospects of success. The Commissioner noted that the Respondent's claim at the costs hearing of 'inexperience' and 'naivety' should not be accepted as they were never raised in the principal proceedings.

The Commissioner then considered whether or not the Respondent acted vexatiously.  He noted that the Respondent had complied generally with the timetable and procedural requirements of the tribunal up until the hearing and rejected the argument that the Applicant had acted vexatiously.

The Commissioner also considered whether or not the Respondent had acted without 'reasonable cause'.  The Commissioner noted that 'without reasonable cause' and 'without reasonable prospects of success' are very close in meaning - indeed judicial precedents appear to use these interchangeably.  Although the Commissioner did not definitively separate the two concepts, the Commissioner did determine that the Respondent's actions were not taken without reasonable cause.

As the Commissioner had found that the second limb of s. 611(2) was satisfied, the Commissioner went on to consider whether or not he should award costs.  As the Commissioner had found that the lack of reasonable prospects of success had arisen at or shortly before the hearing, this was the point from which costs could be awarded.

It is unclear from the judgment precisely why the Respondent acted in the way it did.  It appears that it effectively withdrew from the proceedings without actually withdrawing - and thereby negating the need for the applicant to put its case on.  Undoubtedly a significant part of the Respondent's problem was its failure to obtain legal advice.  As a consequence it was required to pay for some of the Applicant's.  Although the cost of legal advice can appear significant this case is an example of one consequence of failing to obtain suitable legal advice, even to effectively withdraw or concede a case - not only was the Respondent company liable for compensation for unfair dismissal, but it was also liable for a significant part of the Applicant's legal costs.

* PCC Lawyers are a team of employment practitioners based in Sydney, with many years of combined knowledge and experience in workplace law, industrial relations, workplace investigations and training.  They provide a high standard of excellence and an exceptional level of personal service to a variety of clients in the Sydney metropolitan area, Central Coast, regional NSW and interstate.

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