Croft v Chubb Security Australia Pty Ltd [2005] QIRC 37 (2005) 178 QGIG 361

[Extract from Queensland Government Industrial Gazette, dated 15 April, 2005, Vol. 178, No. 16, pages 361-363] QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 – s. 335 – application for costs Peter Anthony Croft AND Chubb Security Australia Pty Ltd (No. B1364 of 2003) DEPUTY PRESIDENT BLOOMFIELD 31 March 2005 Application for costs – Case law – Failure of respondent to attempt to settle – Treatment of applicant oppressive – Costs awarded. DECISION In a decision now published at 177 QGIG 533 I concluded that Mr Peter Anthony Croft’s termination by Chubb Security Australia Pty Ltd (Chubb) on 5 August 2003 was harsh, unjust and unreasonable. I also decided that Mr Croft’s reinstatement to his former employment was impracticable and awarded him the sum of $16,221.58 as compensation. Mr Croft now seeks an order for costs pursuant to s. 335 of the Industrial Relations Act 1999 (the Act). On behalf of Mr Croft it is argued that Chubb caused Mr Croft to incur costs by its unreasonable act or omission connected with the conduct of the application in that Chubb: (i) failed to respond in a reasonable manner to a reasonable offer of settlement: Byvan Management (Qld) Pty Ltd v Hansen (1999) 160 QGIG 132; Riley v KMKM Aboriginal Corporation (2000) 164 QGIG 45; Hoffanbeck v Gold Coast Equipment Hire Sales and Service (2000) 163 QGIG 359; (ii) took an untenable position in that it sought advice without giving full and frank instructions: L v Thuringowa City Council (1993) 144 QGIG 224 at 225; (iii) presented a dishonest argument: Vernon Reddick v Ocean Spirit Cruises (1999) 169 QGIG 163 at 164; (iv) failed to act responsibly, as any reasonable employer would have, by assuming Mr Croft was guilty of the charge against him prior to any hearing into the facts: Ryan v Washington Motors Pty Ltd (1997) 155 QGIG 431; and (v) failed to take heed of the certificate issued after the conciliation conference held pursuant to s. 75 of the Act. Without going through the whole of his argument, Mr Coates, of Counsel, who represented Mr Croft, highlighted that Mr Croft made a very reasonable offer of settlement at the initial conciliation conference, namely two weeks’ pay and the ability to resign his employment. Mr Coates also said the unchallenged evidence of Mr Croft and the solicitor who represented him at the time was that the Commission Member who conciliated the matter informed them that the attitude of Chubb was “we won’t reinstate him and he won’t get a cent from us”. Mr Coates said Chubb’s refusal to make any offers of settlement whatsoever, thus forcing Mr Croft to trial, constituted an unreasonable act or omission thereby causing Mr Croft to incur considerable costs. In this respect, Mr Coates highlighted an extract of the decision of Blades C in O’Reilly v Coco’s Trading Pty Ltd (No. 2) (2003) 173 QGIG 337 in which the Learned Commissioner stated “(t)he Legislation relating to costs was designed to encourage parties to litigation to enter into meaningful negotiations.”. Mr Coates also highlighted the well known statement by McKenzie P in Goldman v Data General Australia Pty Ltd (1993) 144 QGIG 379 at 380 where His Honour stated: “… There may be some cases where at the end of the day it can be seen that a party has acted unfairly, unreasonably or improperly in or in the course of pursuing or resisting such relief and that those actions were so unjustifiable that the proceedings have worked as an act of oppression to the other side. It goes almost without saying that cases where such a finding could properly be made will be rare and would have to fit the description frivolous, vexatious or otherwise abnormal.” and said this case fell within that description. In relation to the second and third grounds (above), Mr Coates said Chubb’s decision to enter into the proceedings without advising its representative that the decision to bring Mr Croft back to Australia before Mr Jackwitz, Chubb’s operations manager, even left Australia was a critical omission. Mr Coates said Mr Turner, Chubb’s general manager, failed to give that critical piece of evidence as part of his evidence-in-chief and it only arose during the course of his cross-examination. Whilst the Commission had not specifically found Mr Turner had been untruthful, it was implied in -- 1 of 4 -- 2 the Commission’s decision that he was because of the Commission’s ultimate findings and conclusions. Had Chubb disclosed that piece of evidence to its representative prior to the hearing there could have been more enquiry into the issue of whether Chubb had provided natural justice to Mr Croft and whether his termination was fair. The application was vigorously opposed by Mr Herbert, of Counsel, who represented Chubb. Mr Herbert said the word “unreasonable” in s. 335(1)(b) of the Act had to take its flavour from the context in which it appeared, but in circumstances where the primary rule was that no costs would be awarded unless a party’s behaviour has been so bizarre, or out of the ordinary, that that behaviour ought to be visited with some form of reprimand or punishment by way of a costs order. Mr Herbert said the authorities made it clear that a party exercising its right to defend a very contentious allegation fell a long way short of the tests required under s. 335 of the Act. In the instant case, Chubb was entitled to defend its decision to terminate Mr Croft because its reputation as a security contractor “in a very sensitive international situation” was at risk. This was because Mr Croft had been arrested by the local police in Nauru in circumstances that placed the entire position of the company, and its reputation, in question. Further, at the time the conference under s. 75 of the Act was conducted, Chubb had in its possession statements from at least 4 witnesses which referred to admissions made by Mr Croft which were consistent with the admissions made by him about the use of drugs to the Nauruan police. Mr Herbert said that armed with that information, and the implications for its international reputation, Chubb was entitled to defend Mr Croft’s application for reinstatement. He also said that “… nobody at that stage, of course, had the 20/20 foresight to know that in the course of the proceedings, in examination and cross-examination and other matters that occurred, that the Commission would be persuaded that (the evidence from each of Chubb’s 4 witnesses) … would not be accepted … and that they would be left without what they believed to be firm ground on a factual basis for genuinely believing that he had in fact committed the employment offence with which they were concerned.”. In support of his contentions that Chubb was entitled to defends its actions, Mr Herbert also referred me to the leading recent authority on the issue of costs, being that of Hall P in Coco’s Trading Pty Ltd v O’Reilly (2003) 174 QGIG 102 as follows: “The critical issue is whether an omission to mediate in a constructive way and in particular an omission to respond in a constructive way to reasonable offers of settlement may be held to be an ‘omission connected with the conduct of the application’ within the meaning of s. 335(1)(b). As a matter of first impression, the proposition is a little startling. If the primary purpose of s. 335 be to protect the right of a party to litigate free of the fear of an adverse costs order, it is more than a little difficult to accept that the power to award costs may be triggered by the exercise of the right to litigate. Additionally, the full reference at s. 335(1)(b) is to ‘an unreasonable act or omission connected with the conduct of the application’. In Knowles v. Logan Beaudesert District Health Service (1999) 161 QGIG 267 and Vibe Allerup v. Heka Pty Ltd trading as Brisbane Dental Group (1999) 161 QGIG 268 Williams P held that for the purposes of s. 219(4) of the Workplace Relations Act 1997 an ‘action in relation to the application [for reinstatement]’ meant a formal step having the effect of moving the application towards the relief sought. An omission to mediate, and in particular an omission to respond constructively to a reasonable offer of settlement, would not ordinarily be considered to be a ‘formal step moving the application towards the relief sought’. However, first impressions may be misleading. The compulsory attempt at conciliation required by s. 75 is both a mediation and a proceeding under the Act. In many cases it will be difficult to separate out informal attempts at resolution and attempts at resolution within the s. 75 proceedings which are a ‘formal step’. Neither is there any utility in doing so. If conduct in relation to mediated resolution, and in particular conduct related to the acceptance or non-acceptance of reasonable offers, falls within the concept of an ‘unreasonable act or omission connected with the conduct of the application’, parties will be adequately protected by the approach developed by Mackenzie P and by the circumstance that, even if a power to award costs arises, it is a power controlled by the exercise of an unfettered discretion.”. Mr Herbert said the approach developed by McKenzie P, in Goldman v Data General Australia Pty Ltd (supra) was as stated above by Mr Coates but, importantly, included the following qualification: “The mere fact that a party fails to suceed would be far removed from (the description frivolous, vexatious or otherwise abnormal) and will be far from sufficient to found an argument for costs. No one with a reasonably arguable case need be deterred from proceeding by fear of the consequences of costs unless some abnormal unfair aspect enters into the conduct of the proceedings.”. Mr Herbert said that was the way Chubb approached Mr Croft’s application. It had a large body of evidence which supported its position. The fact that its argument failed was irrelevant. At the time the hearing commenced Chubb had an arguable case and had not caused costs to be incurred by Mr Croft “because of an unreasonable act or omission connected with the conduct of the application”. -- 2 of 4 -- 3 Before turning to the issues involved and some recent case law on the matter of costs it is worthwhile to record my findings in relation to the reasons for Mr Croft’s original termination, as follows: “After considering all of the evidence, I have concluded that the primary or motivating factor for the termination of the Applicant’s employment was the Respondent’s concern that if it did not take strong and decisive action against the Applicant, and the other 2 employees concerned, prior to their court hearing, then the Respondent’s contract with ESS/IOM may have been at risk. Further, my consideration of the evidence leads me to conclude that the reason relied upon i.e. the Applicant’s alleged use of marijuana, was not the true reason for the termination, but merely the excuse to justify it.”. After considering all of the submissions, and the authorities referred to, I have concluded that the facts in this case trigger the operation of s. 335(1)(b) of the Act and that I should exercise my discretion to grant Mr Croft an award of costs. There are a number of reasons why I have reached this conclusion. Firstly, whilst Chubb now argues it had a reasonably arguable case, the fact remains it made no attempt, whatsoever, to settle the application (see the decision of Blades C in O’Reilly v Coco’s Trading Pty Ltd (No. 2) (supra), which was supported by Hall P on appeal, where the Commissioner stated: “It is my view that honest attempts at settlement are not caught within the meaning of the phrase ‘unreasonable acts or omissions’ but parties who make no attempt whatever to settle or make unreasonable demands for settlement can expect to have costs awarded against them if they are ultimately unsuccessful. Provided that a party has made an honest attempt at settlement and has a reasonably arguable case, a costs order would not be appropriate.”). Chubb simply informed Mr Croft, through the Commission Member who conducted the conciliation conference under s. 75 of the Act, that “we won’t reinstate you and you won’t get a cent from us”. Secondly, whilst it is contended Chubb had a reasonably arguable case that Mr Croft had smoked marijuana that argument needs to be viewed in the context of the Commission’s findings as to the primary or motivating factor for Mr Croft’s termination. As noted above, the true reason for Mr Croft’s termination was not his alleged use of marijuana but merely the excuse to justify it. As such, it is not correct to argue that Chubb came with a reasonably arguable case that Mr Croft’s termination was justified. In any event, there were still very significant procedural flaws associated with the termination which could have led to a decision he was unfairly terminated. Finally, and most importantly, I think that this is one of those cases where the qualification factored into the decision of McKenzie P in Goldman v Data General Australia Pty Ltd (supra) is attracted. In my view, this is a case “where at the end of the day a party has acted so unfairly, unreasonably or improperly in or in the course of pursuing or resisting … relief and that those actions were so unjustified that the proceedings have worked as an act of oppression to the other side”. When compared to the ultimate findings of the Commission – that Mr Croft was unfairly terminated and should be awarded compensation of $16,221.58 – Mr Croft’s offer to settle the application on the basis of two week’s pay and the ability to resign can be regarded as extremely reasonable. The difference between the original offer to settle and the final outcome simply demonstrates the magnitude of the unfairness to Mr Croft which resulted from his termination. This unfairness was exacerbated by Chubb’s refusal to settle, or to even attempt to settle. Chubb gave Mr Croft no other option other than to bring the matter to trial. As a result, Mr Croft incurred considerable costs. It would be oppressive if he was not awarded his costs. Whilst Mr Croft claimed the amount of $14,302 as costs in his application it was acknowledged that that amount might contain a component related to the conduct of the proceedings prior to, and including, the conciliation conference. It also omits costs related to the preparation for, and conduct of, the costs hearing. In the circumstances I propose to direct Mr Croft’s solicitors to prepare a schedule of costs, in accordance with Scale G of the Magistrates Court Scale of Costs, dealing with all costs incurred from the day after the conciliation conference. Such schedule is to be provided to Chubb’s representative within 14 days of date of release of this decision. The parties are then directed to confer within a further period of 14 days with a view to agreeing the amount of costs. If the parties are unable to agree the quantum within that period of time, Mr Croft’s solicitors are to inform the Commission of that fact and are to provide the Commission with details of the agreed and non-agreed elements. After giving Chubb’s representative a chance to comment on the non-agreed items the Commission will then determine the amount of costs to be awarded and issue the appropriate orders. -- 3 of 4 -- 4 The Commission determines and orders accordingly. A.L. BLOOMFIELD, Deputy President. Hearing Details: 2004 3 December 2005 4 February Appearances: Mr S.P. Coates, Counsel instructed by Mr H. Small of Gilshenan & Luton, for the Applicant. Mr A. Herbert, Counsel instructed by Mr G. Muir of Employer Services Pty Ltd, for the Respondent. Released: 31 March 2005 Government Printer, Queensland The State of Queensland 2005. -- 4 of 4 --