A Full Bench of the Fair Work Commission (the Commission) has refused permission for an employee’s appeal to overturn a rare costs order.

Background

Ms D’Ortenzio (the employee) was employed for approximately 27 years by Charles Parletta Real Estate (the employer).

The employer terminated the employee in August 2017 for misconduct and a break down in the employment relationship. The employee then brought an unfair dismissal application in the Commission.

Commissioner Platt found that the employee’s dismissal was not harsh, just or unreasonable, as her conduct resulted in breaches of her contract and had damaged her working relationship with the employer. The specific conduct included:

• Instructing the employer’s lawyer (who the employee was in a de facto relationship with and represented her in this unfair dismissal application) to communicate with banks seeking information to assist with taking proceedings against the employer. Commissioner Platt found this conduct to be a breach of the employee’s contract and adversely impacted on the employment relationship.
• Advising a prospective purchaser that the employer had engaged in improper conduct, which Commissioner Platt found was a breach of the employee’s contract and had fatally damaged the working relationship.
• Findings outlined in a report prepared by the employer’s human resources department (HR Report) concluded that the employee had provided herself with salary increases without express permission of the employer, unilaterally reduced the pay of other employees as a punitive measure for a loss of a property management contract, as well as failing to document arrangements of other employees. Commissioner Platt accepted the findings of the HR Report.

Costs application

Subsequently, the employer sought an order for costs against the employee pursuant to s400A and 611(2) of the Fair Work Act 2009 (FW Act) on the basis that:

• the employee’s application was brought vexatiously and without reasonable cause
• it should have been reasonably apparent to the employee that her application had no reasonable prospects of success
• the employee had caused the employer to incur costs because of acts or omissions in connection with the conduct or continuation of her unfair dismissal application.

The employer also sought an order for costs against the employee’s lawyer pursuant to s401 of the FW Act. Commissioner Platt found that, given the relationship between the employee and the lawyer, and that the lawyer’s conduct was at the behest of the employee, he did not consider it appropriate to order costs against the lawyer.

Commissioner Platt also found that the employee’s unfair dismissal application was vexatious and without proper cause and had little prospects of success from the outset. Further, he found that the employee’s motivation was to inflict as much damage as possible on the employer. This was evident when the employee said to the employer ‘You know what I am capable of and you know what a good actress I am’, and said on several occasions ‘I will bring you down’.

Commissioner Platt outlined that at the conclusion of the evidence, the employee should ‘have realised that her case was in tatters … and was doomed to fail’. He also outlined that when the evidence had concluded, he had invited the employee to consider her position in light of the evidence; however, the employee still was determined to proceed with her application, which was the time that Commissioner Platt found the employee’s conduct to be delinquent.

Commissioner Platt granted the employer costs on a party-party basis from 8 August 2017 (the day following the lodgement of the employee’s application) and on an indemnity basis from the conclusion of the evidence on 29 November 2017.

Appeal

The employee then filed an appeal of Commissioner Platt’s decision awarding costs against her, outlining that Commissioner Platt erred in his decision when he ordered costs, since the circumstances contemplated by ss400A and 611(2) of the FW Act were not established by the employer.

The employee further outlined that Commissioner Platt erred in finding her unfair dismissal application was vexatious, without proper cause, and that it was not reasonably apparent to the employee that her application had no reasonable prospects of success. Much of the basis for the appeal turned on the employee’s proposition that she was acting on advice from her lawyer which Commissioner Platt failed to take into account as a relevant consideration when ordering costs against her.

The Full Bench stated that:

The mere assertion that a party has acted on legal advice of itself cannot shield against a costs order when all indications are instructions to lawyers did not fairly represent the facts of the case as found.

…

… the conclusion that the application was vexatious does not rely on conduct on the part of the Employee’s legal advisers as the findings were made based on the Employee’s own conduct.

The Full Bench also found that the other grounds of her appeal did not disclose any arguable case of appealable error and therefore refused permission for the employee to appeal.

This case demonstrates that the Commission is willing to enforce its discretion to order costs against an employee where it is satisfied that the application has been instituted vexatiously or without reasonable cause, and where an employee causes the employer to incur costs because of acts or omissions in connection with the conduct or continuation of an unfair dismissal application.