IN THE PIPELINE—HIGHLIGHTING CHANGES OF INTEREST TO EMPLOYERS IN AUSTRALIA
Recent amendments to the Fair Work Regulations 2009
(Cth) have passed the Australian Senate after Palmer United Party
Senators joined with Coalition Senators.
The amendments to the regulations will allow the government of
Western Australia and interested third parties to make applications
to the Fair Work Commission to have protected industrial action
terminated pursuant to section 424 of the Fair Work Act
2009 (Cth) (the "Act"). The federal government (and
all other state and territory governments) have been able to make
such applications to the Commission since 2009 when they referred
their industrial relations powers to the Commonwealth.
Extending the jurisdiction of section 424 applications to third
parties is a significant move. It will allow parties who are
affected by industrial action to approach the Fair Work Commission
and request that this action be terminated. This could include, for
example, clients or joint venture partners of employers whose
operations are slowed or suspended because of industrial
action.
HOT OFF THE BENCH—DECISIONS OF INTEREST FROM THE AUSTRALIAN COURTS
Costs Orders in Fair Work Act Proceedings
Section 570 of the Act makes it difficult for parties to claim costs in relation to claims made through the Act. The section states that parties can have costs awarded against them only where they have either:
- Instituted the proceedings vexatiously or without reasonable cause;
- Acted unreasonably and by doing so caused the other party to incur costs; or
- Unreasonably refused to participate in a matter before the Fair Work Commission arising from the same facts as the proceedings before the Court.
In practice, costs orders are very rarely made against parties. In
two recent decisions, the Federal Court and Federal Circuit Court
have illustrated how this section is interpreted and applied in
practice (and in what circumstances the Court will be inclined to
order costs in line with section 570 of the Act).
Shea v Energy Australia
In Shea v Energy Australia Services Pty Ltd (No 7) [2014] FCA 1091, the Federal Court ordered Ms Shea (a former executive of Energy Australia) to pay costs wasted by Energy Australia, on an indemnity basis, in responding to several aspects of her claim which were unreasonably advanced.
Facts
Ms Shea alleged that she had been terminated from her employment
because she complained that her manager has sexually harassed her
(and other female staff members) in breach of section 340 of the
Act (adverse action). Ms Shea made several complaints to Energy
Australia management. These complaints were directed at the conduct
of Energy Australia's Chief Financial Officer, Mr Kevin Holmes
and other senior male employees. Ms Shea alleged that she was
terminated because she made a complaint to Energy Australia
management about an unwelcome sexual advance made by Mr
Holmes.
In the course of the litigation which followed Ms Shea's
dismissal, Energy Australia made a without prejudice settlement
offer of $440,000 to Ms Shea. Ms Shea rejected this offer. Justice
Jessup acknowledged that this was an attractive settlement
offer.
Offers of Compromise and Adverse Action Claims
It is not uncommon for settlement offers made before a hearing
to be expressed as offers of compromise made in accordance with the
Federal Court Rules. Ordinarily (in litigation not subject to
section 570 of the Act), the Federal Court will take the existence
of a reasonable offer of compromise into account when later
determining a costs application. If a party refuses a reasonable
offer of compromise, and then proceeds to be unsuccessful in the
litigation or is successful but fails to achieve an order from the
Court which provides for the payment of more than the
pre-litigation offer, that party can expect to be ordered to pay
the opposing parties costs (usually on an indemnity basis) from the
date the offer of compromise was made. The orders of the Federal
Court in Richardson v Oracle Corporation Australia Pty Limited
(No 2) [2013] FCA 359 are an example of this.
The offer made by Energy Australia was very reasonable. However,
Justice Jessup could not find that Ms Shea was acting unreasonably
in refusing it because she was seeking an additional remedy which
had not been offered: reinstatement.
Basis for Indemnity Costs Order
Justice Jessup ultimately ordered that Ms Shea pay part of Energy Australia's costs (on an indemnity basis). His Honour considered that Ms Shea wasted the Court and the Respondent's time by unreasonably including allegations within her claim which were not supported with evidence and, in any event, were not directly relevant to the issue in dispute. These unreasonable allegations included:
- That another Energy Australia staff member, Mr McIndoe, sexually harassed a female employee at a staff party in 2006;
- That Mr McIndoe attempted to engage in sexual misconduct at a staff Christmas party in 2010; and
- That Mr McIndoe received a telephone call, at work, from the irate husband of a female employee whom he had sexually pursued.
Ms Shea did not witness any of these incidents directly. The basis
of her allegations was the "rumour mill". Such hearsay
evidence was ruled as inadmissible. As Ms Shea had no admissible
evidence to support these allegations, Justice Jessup concluded it
was unreasonable for her to have brought them.
Further, even if these allegations were established, it is
difficult to see how they are relevant or would assist Ms
Shea's claim. They do not establish that Ms Shea complained
about such conduct and was terminated as a result of her
complaint—the issue which was in dispute. Ultimately, the
Court ruled that Ms Shea was terminated by Energy Australia for
poor performance, not because of her complaints.
Justice Jessup ordered that Ms Shea pay the legal costs wasted by
Energy Australia in responding to the allegations which were
unreasonably made.
Miller v Executive Edge
In Miller v Executive Edge Travel & Events Pty Ltd
(No 2) [2014] FCCA 2271, Ms Miller brought an adverse
action claim against her former employer, Executive Edge. This
claim was dismissed. Executive Edge sought costs against Ms Miller
on the basis that she had acted unreasonably in refusing two
settlement offers which were made in the course of the
litigation.
The first settlement offer, made on 8 May 2014 and expressed to be
open until 15 May 2014, was for $5,500. A second settlement offer
was made on the eve of the hearing (by email) for $11,000.
Ms Miller was unrepresented in her claim, and Justice
O'Sullivan considered that given her status as a layperson, she
did not act unreasonably in refusing the offers of settlement. This
was the case particularly because Executive Edge's affidavit
evidence was not available to Ms Miller when the first offer
expired and also because there was no evidence that Ms Miller
received the offer made on the eve of the hearing before it
expired.
If Executive Edge's offers were made after they served their
evidence and within a timeframe which allowed Ms Miller to properly
consider them, they would have been in a much better position to
make an argument for costs on the basis of Ms Miller's refusal
of these offers.
If Ms Miller had been represented, the Court would have been more
inclined to make a costs order against her (as the Court would
infer that Ms Miller's legal representative would have
explained to her the consequences of refusing a reasonable
settlement offer).
ACKNOWLEDGMENTS
Thanks to Michael Whitbread (Associate) for his assistance in the preparation of this Update.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.