Barsha v Motor Finance Wizard (Sales) Pty Ltd [2003] QIRC 108 (2003) 173 QGIG 609

20 June, 2003 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 609 ########################################################################################################################### QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 – s. 335 – application for costs Chris Barsha AND Motor Finance Wizard (Sales) Pty Ltd (No. B492 of 2002) COMMISSIONER ASBURY 6 June 2003 Application for costs – Unfair dismissal application – Industrial Relations Act 1999 s. 335(1)(b) – Admissibility of evidence of offers of settlement made at conciliation conference – Case law on offers of settlement and costs application – Presumption that offers of settlement made in conciliation conference are “without prejudice” – Necessary for party seeking to call evidence of offers made at conciliation conference to rebut the presumption of “without prejudice” status of such offers – No evidence that offer made on basis that applicant reserved right to raise it on question of costs – No evidence that offer of settlement was repeated outside conciliation conference or put in writing in a manner which deprived it of “without prejudice” status – Decision that affidavit of applicant purporting to detail offer of settlement made at conciliation conference would not taken be taken into account on costs application – Case law on circumstances in which costs will be awarded by Commission – Commission constrained in argument on costs by relevant findings of fact made in hearing of application itself – Consideration of findings of fact – Consideration of certificate issued by conciliating Commissioner – Certificate indicates that respondent prepared to negotiate but not prepared to meet applicant’s demand in relation to settlement – Absent any admissible evidence of quantum or nature of applicant’s offer of settlement no finding that respondent unreasonably rejected reasonable offer of settlement – Application for costs dismissed. -- 1 of 8 -- 610 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 20 June, 2003 DECISION Background On 4 October 2002, a decision was released awarding the applicant $8,400.00 as compensation for his unfair dismissal. The issue of costs was reserved. On 10 February 2003, solicitors for the applicant corresponded with the Industrial Registrar seeking directions in relation to submissions on the issue of costs. On 24 February 2003, a further directions order was issued setting a time frame for the receipt of written submissions and indicating that the application for costs would be determined on the papers. Final submissions in relation to the application for costs were received by the Commission on 27 March 2003. This decision deals with that application. Submissions for the Applicant on Costs The applicant’s claim for costs is based on his contention that a reasonable offer of settlement was made to the respondent, and was rejected. Had the offer been accepted, all costs of the hearing would have been avoided. Further, the certificate issued by the member of the Commission who conciliated the unfair dismissal application, stated: “The Commission is unable to see any ‘lack of loyalty’, no warnings were given and no procedural fairness.”. It is contended that these two things make the respondent’s conduct unreasonable, because faced with both a reasonable offer of settlement and a Commissioner’s intimation, all future costs were caused by the unreasonable conduct of the respondent. Further, it was argued that at the hearing into the application, the Commission had found that the allegations of disloyalty made by the respondent were “entirely unreasonable” and that there was no evidence of any warnings or allegations being put to the respondent before his dismissal. The Commission had found that the applicant’s claim proved under three heads: it was unfair, unjust and harsh. Material was also filed with the submissions for costs on behalf of the applicant indicating that the respondent had filed an application to appeal and an application seeking leave to appeal against the decision of the Commission on the unfair dismissal application. It was contended that the appeal was unilaterally withdrawn and the applicant was forced to spend money to begin resisting the appeal. The applicant was only partly compensated for the costs thrown away in resisting the appeal. In support of the contention that a reasonable offer was made by the applicant at the conciliation conference, an affidavit sworn by the applicant detailing that offer was appended to the written submissions in relation to the costs application filed on his behalf. That affidavit also deposed to an offer of settlement being made by the respondent at the conciliation conference. In support of the proposition that this material was admissible, it was argued that if the material was not admissible the Queensland Industrial Relations Commission would be the only body in the common law world which could not take into account offers made in negotiations, in assessing which party ought to pay costs. The respondent referred the Commission to an extract from Lexis Nexis, an on-line legal research service provided by Butterworths, wherein the following cases are cited: Rush & Tompkins Ltd v Greater London Council [1989] AC 1280 at 1289 per Lord Griffiths; Cutts v Head [1984] 1 Ch 290; [1984] 2 WLR 349 at 259 per Oliver LJ: Calderbank v Caldberbank [1975] 3 All ER 333 at 342; [1976] Fam LR 93 at 106 per Cairns LJ and Computer Machinery Co Ltd v Drescher [1983] 1 WLR 1379; [1983] 3 All ER 153 per Megarry VC. Reference was also made to the decision of Thomas J in Transit Australia P/L v Crewford Australia [1997] QSC 141 (12 August 1997) which held that it was an error of law for an arbitrator to refuse to consider an oral offer of settlement in an award of costs. It was also contended for the applicant that the statement of Mr Roderick James in the hearing of the substantive application, made a reference to an offer of settlement on behalf of the respondent, and that the applicant had responded to this in his statement. This had constituted a waiver of privilege by the respondent, given that the statement of Mr James had opened up the issue of offers, and it was unjust for the respondent to now claim privilege after the event. The applicant had at all times sought compensation on the basis of remuneration including commissions, but had abandoned the claim for commissions in the offer of settlement he made at conciliation. Regarding the quantum of costs, Rule 66 of the Industrial Relations (Tribunals) Rules 2000, provides that the Commission may have regard to the scale of costs for Magistrates Courts under the Uniform Civil Procedure Rules 1999. It was submitted for the applicant that notwithstanding Rule 66, the applicant should be awarded costs as incurred which are reasonable as assessed by the Industrial Registrar. Submissions for the Respondent on Costs In opposing an award of costs in this case, the respondent submitted that there was a longstanding philosophy of the Commission that in the absence of frivolous or vexatious applications, or other circumstances that are abnormal, costs will not be awarded in traditional kinds of matters within the jurisdiction of the Commission. This philosophy had been expressed by the then President McKenzie J in Goldman v Data General Australia Pty Ltd (1993) 144 QGIG 379, where it was held that cases where a party had acted unfairly, unreasonably or improperly in the course of pursuing or resisting relief to the extent that those actions were so unjustifiable that the proceedings had worked as an act of oppression to the other party, would be rare. In Townsville City Council v Brennan (1998) 157 QGIG 92, Chief Industrial Commissioner Hall as he then was, had considered the nature of the discretion to award costs (provisions for which were in essentially in the same terms as s. 335 of the current Act) and held that the discretion was not unfettered, and arose only where the applicant for costs satisfied the Commission that a case of the type described in the section existed – i.e. an application made frivolously, vexatiously or without reasonable cause or causing costs to be incurred by an unreasonable act or omission. Further, it was held in that case that it was the effect of s. 32 CA of the Acts Interpretation Act 1925, that the provisions of the then Act dealing with costs could not be read as casting an obligation on the Commission to award them where those circumstances existed. It is contended for the respondent that to trigger the discretion to award costs to the applicant, the respondent must have acted unreasonably in the conduct of the application, and that the conduct of the respondent in this matter could not be so described. The applicant was seeking to found an argument of unreasonableness on the part of the respondent, on the basis of: • A privileged offer of settlement at a conciliation conference; and • Disregarding “a very clear intimation by the [conciliating] commissioner that there was no evidence to substantiate the respondent’s claims of disloyalty and that “no warnings were given and no procedural fairness.”. It was submitted that financial offers to settle in conciliation conferences are essential elements to any settlement negotiations, and are always privileged and inadmissible, especially in an argument as to costs: cf. Marcinow v Marketplace Communications Pty Ltd (2000) 166 QGIG 10 where it was held that prior inconsistent statements made at a conciliation conference, not reasonably incidental to settlement negotiations, are admissible. While the failure to respond in a reasonable fashion to a reasonable offer of settlement had attracted an award of costs in other cases before the Commission, the facts in this case could be distinguished. -- 2 of 8 -- 20 June, 2003 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 611 In Byvan Management Queensland v Rhonda Hansen (1999) 160 QGIG 132, an open offer of settlement had been made in which the respondent clearly flagged its intention to seek costs in the event the offer was not accepted. Similarly in Riley v KMKM Aboriginal Corporation (2000) 164 QGIG 45 it was found that the applicant had been put to considerable cost as a result of the unreasonable act or omission of the respondent in not responding to an offer to settle through a draft deed of settlement. In Hoffenback v Gold Coast Equipment Hire Sales and Service (2000) 163 QGIG 359, there was a finding that the respondent had engaged in a series of unreasonable acts including defending a termination totally lacking in merit; producing falsely represented documents and the failing to make a reasonable settlement offer. The question of whether there was evidence to substantiate the respondent’s allegations of disloyalty was a triable issue and for the respondent to have proceeded on that basis was not unreasonable. Further the respondent’s case was arguable on its merits, and involved: • interpretation of the applicant’s contract of employment; • the quantum and method of payment of his remuneration; • facts, matters and circumstances of the termination of his employment; • resignation of the applicant as a working director of the respondent; and • the impact of that resignation on the respondent. It was also submitted that the respondent had sought to have negotiations with the applicant on the morning of the hearing, but that his decision to include in his claim commissions averaged over a three month period, totalling $17,745.30, had prevented those negotiations from taking place. The fact that at trial, the applicant had not succeeded in gaining an award of compensation which included commissions was said to support the respondent’s contention that the defence of the application was reasonable, meritorious and partially successful. Given the provisions of s. 335(1)(b) of the Act, it was irrelevant that a portion of the award for the unfairness of the applicant’s dismissal would be absorbed by the costs of pursuing that application. Costs incurred by the applicant (at first instance) in an appeal/application for leave to appeal, were also irrelevant to a costs application pertaining to the application at first instance. The respondent had voluntarily withdrawn the appeal/application for leave to appeal and had reached an agreement in relation to the costs thrown away by the applicant, occasioned by the appeal. That agreement had been fulfilled and costs paid by the respondent. The issue of those costs could not be again raised in relation to an application for costs of the hearing at first instance. Conclusions Issues for Determination The central issue for determination in this case is whether the applicant should be awarded costs on his unfair dismissal application. A further issue is whether in deciding to award costs, the Commission should give consideration to an affidavit of the applicant in the costs proceedings, deposing to an oral offer of settlement made by him to the respondent, and a counter offer made by the respondent, at a conciliation conference conducted under s. 75 of the Act. There is no evidence in affidavit form or otherwise that the applicant’s offer of settlement was made on an open basis or repeated outside the conference. The final issue for determination is whether the respondent has waived any right to privilege with respect to “without prejudice” offers of settlement made at the conciliation conference by repeating an offer made by it at the conciliation conference outside the conference. For the sake of convenience, I will deal first with the latter issues. Admissibility of Evidence of Matters Raised in Conferences under s. 75 of the Act The issue of what – if any – evidence of matters raised in conciliation conferences should be considered in hearings is a vexed one. To assist parties a Practice Note (No. 1 of 2001) was issued by the Vice President pursuant to rule 80 of the Industrial Relations (Tribunals) Rules 2000, entitled Admissibility of Evidence of Matters Raised in Section 75 Conference (2001 166 QGIG 318. As well as being published in the Queensland Government Industrial Gazette, the Practice Note is displayed on the notice board in the foyer of the Commission. That Practice Note deals with evidence of documents or communications in connection with an attempt to negotiate a settlement of a s. 74 application. Regrettably neither of the submissions in this application referred to the Practice Note. The Practice Note is relevant to, but not determinative of, the issues in this case, and for this reason, I am reluctant to put both parties to the further cost of making additional submissions on the Practice Note. Accordingly, I intend to determine this application for costs without further hearing from the parties on the subject of the Practice Note. For the sake of completeness, I set out below the Practice Note in Full: “QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations (Tribunals) Rules 2000 – r. 80 – issue of practice note ADMISSIBILITY OF EVIDENCE OF MATTERS RAISED IN SECTION 75 CONFERENCE (No. 1 of 2001) PRACTICE NOTE This practice note operates to clarify the position with regard to the admissibility into evidence in s. 76 proceedings of the Industrial Relations Act 1999 (the Act) of communications made and/or documents produced in a conciliation conference required to be held by the Commission under s. 75 of the Act. 1. Evidence is not to be adduced of: (a) a communication that is made between parties in connection with an attempt to negotiate a settlement of a s. 74 application; or (b) a document that has been prepared in connection with an attempt to negotiate a settlement of the s. 74 application. 2. Paragraph 1 hereof does not apply: (a) to communications made during the course of a s. 75 conference or documents produced and/or referred to in that conference which outlines the positions of the parties’ in respect of either the dismissal or the s. 74 application; or -- 3 of 8 -- 612 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 20 June, 2003 (b) if evidence that has been adduced in the s. 76 proceeding, or an inference from evidence that has been adduced, is likely to mislead the court or commission unless evidence of the communication or document is adduced to contradict or qualify that evidence; or (c) if the communication or document is relevant to determining whether a party caused costs to be incurred by the other party because of an unreasonable act or omission connected with the conduct of the s. 74 application; or (d) if the parties to the application consent to the evidence being adduced in the s. 76 proceeding; or (e) if the communication or document included a statement to the effect that it was not to be treated as confidential; or (f) if the evidence tends to contradict or to qualify evidence that has already been admitted; or (g) if the proceeding is a proceeding to enforce an agreement between the parties to settle the application, or the making of such a settlement is in issue. 3. In paragraphs 1 and 2 hereof: (a) a reference to a communication made by a party to the application includes a reference to a communication made by an employee or agent of such party; and (b) a reference to the consent of a party includes a reference to the consent of an employee or agent of such party, being an employee or agent who is authorised so to consent; and (c) a reference to the commission of an act includes a reference to a failure to act. Dated this twelfth day of March, 2001. D. M. LINNANE, Vice President.”. The case of Marcinow v Marketplace Communications (2001) 166 QGIG 10 dealt with the issue of the admissibility of prior inconsistent statements made at a conciliation conference, in a hearing of an unfair dismissal application. In that case evidence of a prior inconsistent statement made at a conference under s. 75 of the Act, by a witness in the hearing of the substantive application, was admitted in that hearing. The evidence was admitted because it was not in connection with an attempt to negotiate a settlement of the application and because it went to the credibility of the witness who had made the statement in the conciliation conference and adduced for the purpose of contradicting his evidence. The circumstances in which a statement made in a conciliation conference will be admissible on the hearing of the substantive application which was the subject of the conference will be extremely limited. Those circumstances will be confined to ensuring that a person who is a witness in a hearing into an unfair dismissal application is not able to depart from a statement about a version of events made at a conciliation conference, and give a different version of events in a hearing into that same application, without having his or her credit challenged on the basis of the prior inconsistent statement. Further, the purpose of the admission of such evidence is to ensure that the Commission is not mislead. The terms of the Practice Note, would not prevent such evidence being admissible in future proceedings in which the same or similar circumstances arose. However, unlike the situation in Marcinow, this application raises the issue of admissibility of evidence about settlement offers made at a conciliation conference. There is a long established practice in this Commission that an application for costs will be heard and determined after the hearing and determination of the substantive application for which costs are sought. It is implicit in the decision of McKenzie J (then President of the Industrial Court) in Goldman v Data General (1993) 144 QGIG 379, that evidence of matters raised at a conciliation conference may be admissible on an application for costs. That decision confirmed the earlier decision of Bougoure C where it had been noted that a party may act unfairly, unreasonably or improperly in pursuing or resisting relief. It was and remains the case that in order to determine whether there has been unreasonableness in pursuing or resisting relief in an unfair dismissal application, reference may be had to what transpired at a conciliation conference in relation to that application. It is explicit in a number of recent decisions of the Commission that the record of a conciliation conference has been opened and considered by the Commission on a costs application: see Paterson v Medical Benefits Fund of Australia Ltd (1999) 160 QGIG 95, where then Chief Commissioner Hall in determining an application for costs said: “… the record of the conciliation conference – which in accordance with the normal procedure, was opened on the question of costs…” and the decision of then Commissioner Swan in Hamco Original Floors v Hutchison (1998) 158 QGIG 74 at 75, where reference was made to a report of conciliation conference proceedings of then Chief Commissioner Hall (who had conducted the conference), to confirm that the applicant had been advised not to proceed with his claim and warned in relation to costs. That matters raised in a conciliation conference might be admitted into evidence in a costs application, is also apparent from the provisions of s. 75 of the Act. That section requires the Commission to hold a conference to attempt to settle an unfair dismissal application before it hears the application. Section 75(3) provides that if the Commission is satisfied that all reasonable attempts to settle a matter by conciliation are or are unlikely to be successful, the Commission must issue a written certificate to that effect. The Commission must also inform the parties to the conciliation of the Commission’s assessment of the merits of the application and the possible consequences of further proceeding, and may recommend that the application be discontinued. It is axiomatic that the evidence of these matters, including the certificate itself, would be admissible on an application for costs. The preamble to the Practice Note makes it clear that it operates to clarify the position with respect to admissibility into evidence in s. 76 proceedings of communications made and/or documents produced in a conciliation conference under s. 75 of the Act. Clearly paragraph 2(c) deals with such evidence being adduced in a costs application. It is highly unlikely that the Practice Note would in any circumstances be construed to enable evidence of a communication or a document in connection with an attempt to negotiate a settlement of an unfair dismissal application to be adduced in the hearing on the merits of that application. There is nothing remarkable about the proposition that evidence of settlement offers may be adduced in proceedings for the determination of an application for costs. The case law cited by solicitors for the applicant in this matter deals with the use of what came to be referred to as “Calderbank” letters in proceedings other than matrimonial cases, where such letters had originated (see Calderbank v Calderbank [1975] 3 All ER 333 at 342; 93 Fam LR 93 at 106 where an offer of settlement in a letter which stated that the offer was “without prejudice” except as to costs, was considered in the determination of costs). This course was subsequently approved in Cutts v Head [1984] 1 Ch 290 at 312 where Oliver LJ held that the “Calderbank formula” was not restricted to matrimonial causes but was available in all matters where what is in issue is more than a simple money claim in respect of which a payment into court would be the appropriate way of proceeding. On that basis an offer to settle an action made “without prejudice” but subject to a clearly expressed reservation of the right to refer to it on the issue of costs, was admissible for that purpose in all cases. The earlier decision in Walker v Wilsher 23 QBD 335 where it had been held that “without prejudice” letters which did not result in agreement would not be referred to on the question of costs, was not followed. -- 4 of 8 -- 20 June, 2003 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 613 In relation to policy considerations Oliver LJ said in Cutts v Head (at [1984] 1 Ch 290 at 306) that it was difficult to see how an inability to refer to correspondence on a question of costs after judgement, would encourage settlement and that a consciousness of a risk of costs if reasonable offers of settlement are refused, can only encourage settlement. At 307 Oliver LJ went on to say: “whatever may have been the position in 1889 [when Walker v Wilsher was decided], it is, I think, clear that there can now no longer be said to be any reason in public policy why, where offers have been made of everything which could be obtained by the proceedings, that fact should not be brought to the Court’s attention in the argument as to costs…is there any logical reason why, in appropriate circumstances, the conventional meaning of the phrase [without prejudice] should not be modified so long as this intended modification is clearly expressed and brought to the attention of the recipient? Is there, to put it another way, any policy of law which prevents a party to litigation putting forward an offer of compromise on the footing that it shall be treated as ‘without prejudice’ on the issue of liability only?”. In Cutts v Head the policy considerations of admissibility of “Calderbank” offers was also considered in the judgement of Fox LJ. In relation to the rule in Walker v Wilsher that such offers were not admissible, the following was stated (at [1984] 1 Ch 315): “The rule is concerned with offers. The use of the formula protects both parties from reference to the offer if it is refused. The reason why the words ‘without prejudice’ had to be given the extended meaning of ‘without prejudice to the position of either party if the offer was refused’ was because the offeror was not entitled to impose one sided terms which might prejudice the offeree if the offer was rejected…the qualification that the offerer is to be quite free to refer to the offer on the question of costs, so far form being without prejudice, however, may be highly prejudicial to the offeree.”. Fox LJ went on to hold that it was necessary to revisit Walker v Wilsher. While the policy considerations in that case were that the compromise of disputes should be facilitated, an offer of settlement in the “Calderbank” form was not so far as the substantive issues are concerned, an inhibition on compromise. This was because up to the point of judgment, the proposal of compromise could not be referred to and arose only upon the question of costs, after the issues between the parties had been decided. Fox LJ said that: “… I am not convinced that the reservation as to costs would inhibit a reasonable compromise. If a party is exposed to risks as to costs if a reasonable offer is refused, he is more rather than less likely to accept the terms and put an end to the litigation. On the other hand, if he can refuse reasonable offers with no additional risk as to costs, it is more rather than less likely to encourage mere stubborn resistance.”. (at [1984] 1 Ch 315): This approach had been followed by Sir Robert Megarry V.-C in Computer Machinery Co Ltd v Drescher [1983] 1 WLR 1379 at 1382–1383, who admitted a “Calderbank” letter and declined to follow referred to what had been seen as settled law in Walker v Wilsher, stating (at 1383): “In my view the principle is one of perfectly general application which is in no way confined to matrimonial cases. Whether an offer is made ‘without prejudice’ or ‘without prejudice save as to costs’ the courts ought to enforce the terms on which the offer is made so as to encourage compromises and shorten litigation. The latter form of offer has the added advantage of preventing the offer from being inadmissible on costs, thereby assisting the court towards justice in making the order as to costs.”. In Johns Perry Industries v International Rigging (Aust) [1988] 2 Qd R 556 Cutts v Head was followed in the Supreme Court of Queensland by Ryan J, who held that the meaning of the “without prejudice” formula did not extend to a case where a reservation was made that a “without prejudice” communication would be taken into account on the question of costs. All of the cases cited above, deal with circumstances where a written offer of settlement was made “without prejudice” but subject to a clearly expressed reservation of the right to refer to it on the issue of costs. None of these cases provides any authority for the proposition that a bare offer of settlement, absent any reservation of the right of the party making the offer to refer to it on the question of costs, is admissible on such an application. It is implicit in the decision in Cutts v Head that the party rejecting the offer of costs must be on notice or at least made aware, that there is a risk that rejection of a settlement offer may result in reference being made to that offer, on an application for costs. It is also made clear in Computer Machinery Co Ltd v Drescher that the formulation of an offer of settlement on the basis that it is “without prejudice save as to costs”, is what makes the offer admissible on an application for costs. The case of Transit Australia P/L v Crewford Australia P/L [1997] QSC 141 (12 August 1997) cited in the submissions for the applicant can in my view be distinguished from the cases cited above. There, Thomas J was considering an oral offer of settlement made by a party to a proceeding which had been arbitrated under the Commercial Arbitration Act 1990. That act contained a specific provision that required the arbitrator to take into account an offer of compromise and its terms, on an application for costs. Thomas J held that the provision in question should be read broadly so that offers which did not comply with the requirements of the rules of court were also required to be taken into consideration. Under this broad approach, oral offers could be taken into account, although reservations were expressed by Thomas J in relation to difficulties in precisely proving such offers. The Industrial Relations Act 1999 does not contain such a provision. It should also be noted that the Uniform Civil Procedure Rules 1999 provide at chapter 9, r. 353(3) that an offer of settlement is to be made in writing. In this case, the offer of settlement which the applicant deposes that he made, was not in writing. The only evidence of it is an affidavit of the applicant which indicates that he made an offer of settlement of a certain amount at a conciliation conference and that the respondent made a counter offer of a lesser amount. There is nothing in the affidavit of the applicant to indicate that the offer of settlement was made on an open basis or repeated outside the conciliation conference. There is also nothing to indicate that the applicant put the respondent on notice, either at the conciliation conference or subsequently, that if the offer of settlement was not accepted, he reserved the right to raise the fact that the offer was made and rejected, on an application for costs. There is a long established practice of this Commission that the positions taken by parties in conciliation conferences are generally “without prejudice” to the positions to be taken in a hearing. While there is no specific provision in the Act prohibiting evidence of anything said or done in a conciliation proceeding from being given in subsequent proceedings, there is a strong presumption that this will not occur other than a narrow range of circumstances (cf. s. 104(5) of the Workplace Relations Act 1996). The Practice Note reflects this narrow range of circumstances. As was pointed out by a Full Bench of the Australian Industrial Relations Commission in McKenzie v Meran Rise Pty Ltd t/as Nu Force Security Services (375/00 M Print S4692) Giudice J; Watson SDP and Whelan C: “An offer of settlement made in conciliation proceedings is by its nature made on a without prejudice basis. It is inappropriate that an offer made in those circumstances should be taken into account in a costs application unless the offer is subsequently repeated on an open basis. It has long been accepted that positions taken in conciliation are without prejudice to the position to be taken in arbitration. The protection afforded to participants by this principle is an essential feature of conciliation proceedings. This is so whether the conciliation takes place in relation to an industrial dispute, an application pursuant to s. 170CE [Application to Commission to deal with termination…] or any other proceeding.”. I respectfully agree with these views. -- 5 of 8 -- 614 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 20 June, 2003 There is a strong presumption that in conciliation proceedings conducted by this Commission, that positions taken by parties, particularly in relation to offers and counter-offers of settlement, are taken on a “without prejudice” basis and will not be raised in any subsequent proceedings. With respect to a matter that is not connected with an offer of settlement, admissibility will be limited to a narrow range of circumstances such as those which arise when a witness in a hearing of an application makes a statement which is inconsistent with a statement made in a conciliation conference, and if evidence of the inconsistency was not lead, the Commission may be mislead. In this regard, the policy considerations of preventing a witness in the hearing of an unfair dismissal application from giving evidence which might mislead the Commission, outweigh those relating to the “without prejudice” nature of matters raised in a conciliation conference. I can see no basis upon which evidence of an offer of settlement would ever be admissible in the hearing of an unfair dismissal application, although such evidence may be admissible on an application to strike out an unfair dismissal application. However, when evidence is sought to be adduced of an offer of settlement made at a conciliation conference on a costs application, it will be necessary for the party seeking to lead that evidence, to rebut the presumption that the offer was made on a “without prejudice” basis at a conciliation conference. The offeror will at very least be required to demonstrate that the offer was clearly made on the basis that the right to refer to it on a costs application was reserved. Given that there is no provision in the Act equivalent to s. 104(5) of the Workplace Relations Act (C’th), there is nothing to prevent an oral offer made at a conciliation conference, in a manner which placed the offeree on notice that the “without prejudice” status had been removed from such an offer, from being admissible on a costs application. However, it would be prudent for such offers to be put in writing, or at very least for the conciliating Commissioner to be requested by the offeror to include a reference on the certificate to the fact that the offer was made on the basis that it was “without prejudice save as to costs”. In this case it is contended for the respondent, that it relied on the presumption that the offers of settlement made at the conciliation conference were made “without prejudice” on the basis that all matters which were discussed at the conference were discussed on that basis. That at least one Director of the respondent is a solicitor, in my view reinforces the reasonableness of the reliance on the part of the respondent on the presumption that offers of settlement made at the conciliation conference “were without prejudice”. There is no evidence from the applicant to rebut that presumption or the respondent’s reliance on it. The applicant does not state in his affidavit that any offer of settlement was made at the conference in a manner or in terms which deprived it of “without prejudice” status. The obvious method of reducing any offer of settlement to writing and indicating that the party making it reserved the right to raise it on an application for costs, was not employed. This is not a case where the applicant and the respondent were both totally unrepresented. In the absence of representation, it might have been argued that no presumption in relation to the offers of settlement being “without prejudice” was raised in the first place because neither party understood this to be the case. In this case, the applicant while unrepresented at the conference, was legally represented in the hearing of his application. At least one of the respondent’s directors is a solicitor, and the respondent was also legally represented at the hearing. Any offer of settlement could reasonably have been made on an open basis or in a manner which deprived it of “without prejudice” status before the application was heard. I am also of the view that in this case, to give consideration to the applicant’s affidavit detailing an offer and counter offer of settlement made at a conciliation conference, without the applicant having reserved the right or otherwise advised the respondent that it would be referred to on an application for costs, would be unfair. Accordingly, I decline to consider the affidavit of the applicant which was appended to the submissions filed on his behalf in relation to the application for costs. Waiver of Privilege with Respect to Settlement Offers The applicant also points in this case to the fact that the respondent has waived any privilege in relation to “without prejudice” offers of settlement made at the conciliation conference, by repeating its offer of settlement in the witness statement of Rodney Wickham James, made on 20 May 2002 and filed prior to the hearing of the substantive application. The witness statement (Exhibit R1) in the hearing of the substantive application, contains the following at point 20: “Barsha was paid weekly under his contract and on finishing up was paid one weeks salary in lieu (less the week already paid) but has rejected this offer.” In the applicant’s witness statement in reply, contains the following at point 17: “With respect to paragraph 20 [of the statement of Mr James) I say that I was offered two weeks salary at the conciliation conference on 4 April 2002. I sought six weeks salary at that conference which was rejected by the respondent.” In McKenzie v Donald Murhome cited above, a similar situation occurred, when the respondent’s representative referred to an offer of settlement in arbitral proceedings. It was held by the Full Bench that the applicant’s failure to object to the disclosure in arbitral proceedings of something said or done in conciliation constituted a waiver by the applicant of the right to object to that disclosure, under s. 104(5) of the Workplace Relations Act 1996. However, the Full Bench went on to hold that reference to the offer in arbitral proceedings, did not change the nature of the offer to one which was made on a without prejudice basis, to one which was appropriate to be taken into account on the question of costs, stating that: “To hold otherwise would not only be contrary to principle, but would also have the potential to do great damage to the conciliation process which is such a central part of the Commission’s work. If the offer had subsequently been repeated in a manner which deprived it of its without prejudice status in relation to costs, the position would have been quite different.”. I am also in agreement with this statement. While it is the case that there is no equivalent provision to s. 104(5) of the Workplace Relations Act 1996 in the Industrial Relations Act 1999¸ for reasons outlined above, there is a strong presumption to the same effect. In my view, the fact that the respondent referred to the offer in his witness statement did not change the nature of that offer from one made on a “without prejudice” basis at a conciliation conference to one which was appropriate to be taken into account on an application for costs. At the point that the witness statements were drafted, both parties were legally represented, and should have been quite capable of stating any “without prejudice” offers in a manner which would have made them admissible on an application for costs. Further, a live issue in the hearing of the substantive application was the quantum of salary and whether it included the significant commission payments earned by the applicant. The references to an offer and counter offer of settlement in the witness statements do not make clear exactly what was being offered, and it would be inappropriate to consider those statements given this ambiguity. Case Law in relation to Costs on Unfair Dismissal Applications Section 335(1) of the Act provides as follows: “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 application.”. -- 6 of 8 -- 20 June, 2003 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 615 In Doyles Construction Lawyers v Serratore (No 2) (2002) 170 QGIG 103 a Full Bench of the Commission said in relation to this section, that the decision of McKenzie P in Goldman v Data General Australia Pty Ltd (1993) 144 QGIG 379 is descriptive of the correct approach to be adopted in assessing whether there have been unreasonable acts or omissions in connection with the conduct of an application, notwithstanding that the decision was based on provisions of the previous Industrial Relations Act 1990. In Goldman McKenzie P said: “These cases illustrate the long standing philosophy of the Industrial Commission that in the absence of a frivolous or vexatious application or other circumstances that are abnormal costs will not be awarded in the traditional kinds of matters within the jurisdiction of the Industrial Commission. However, there is a discretion to be exercised and such discretion cannot be fettered in such a way that, in practical terms, denies its character as a discretion. Where circumstances that can properly be described as abnormal can be identified in a case and it would cause serious injustice if costs were not awarded it would not do violence to these general principles if an award of costs is given. It would however be emphasised that the circumstances must be significantly out of the ordinary before the general rule is departed from. It is really the rationale of the cases where costs have been awarded that such circumstances have been able to be identified. . . . Nonetheless, it does make the point that some reinstatement cases by reason of the procedural steps involved and their nature, length and complexity have rather got away from the ideal of inexpensive dispute resolution. 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. The mere fact that a party fails to succeed would be far removed from this kind of case 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.”. As Blades C noted in Barry v Irish Bar and Restaurant Company Limited (1998) 159 QGIG 210, the decisions in Toowoomba City Council v Schaumberg (1996) 153 QGIG 541 and Lather v Lucas (1997) 155 QGIG 1058 greatly freed up the basis in which costs were awarded in dismissal cases. But the discretion to award costs is still fettered by the provisions of s. 335(1)(b) of the Act in that there must be an unreasonable act or omission. The categories of unreasonable acts or omissions which might attract the exercise of the discretion to award costs (or the refusal of the exercise of that discretion) are relatively well established, although the following list is not exhaustive: • Failure 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. • A demand for excessive compensation: Doyles Construction Lawyers v Serratore (No 2) (2002) 170 QGIG 103 Barry v Irish Bar and Restaurant Company Limited (1998) 159 QGIG 210; Townsville City Council v Brennan (1998) 157 QGIG 92; Wilson v Venron Pty Ltd (1998) 158 QGIG 425. • Proceeding with an application after a certificate or recommendation from a conciliating Commissioner indicating that an application had no prospect of succeeding: Paterson v Medical Benefits Fund of Australia Ltd (1999) 160 QGIG 95. • Untenable position taken by a party: L v Thuringowa City Council (1993) 144 QGIG 224 at 225. • Dishonest argument: Vernon Reddick v Ocean Spirit Cruises (1999) 169 QGIG 163 at 164. • Lies and evasiveness of the applicant unreasonably extending hearing of an application: Balboni v Mijan Pty Ltd (1996) 159 QGIG 168; Trevanion v Tricare Limited (1998) 157 QGIG 97; • Spitefulness and prejudice involved in the dismissal of the applicant: Cater v Electra Cables (1997) 155 QGIG 733. • Facts which reasonable employee would acknowledge as being improper conduct by the employee and justifying action by the employer: Ryan v Washington Motors Pty Ltd (1997) 155 QGIG 431. • Applicant or those advising him or her proceeding with an application knowing that it could not succeed – cf. party representing himself or herself and doing it badly: Townsville City Council v Brennan (1998) 157 QGIG 92 at 93. • Applicant unsuccessful in two previous applications to the Commission involving identical arguments: Barlow v Brisbane Cabs Ltd (1997) 155 QGIG 741. • Deliberate attempt to annoy or embarrass the employer and to use any evidence gained to support claims to prosecute the employer elsewhere: Shop Distributive and Allied Employees Association (Queensland Branch) (1991) 137 QGIG 257. Conclusion In Blagojvech v Australian Industrial Relations Commission [2000] FCA 483 (18 April 2000), it was held by Moore J that both the parties and the Commission are constrained in their arguments about, and conclusions upon, questions of costs, by any relevant findings of fact made by the Commission in determining the application itself. That is, the Commission must determine whether an order for costs should be made by reference to the facts as found in the hearing of the substantive application. In this case, the facts as found can be briefly summarised as follows. The respondent contended that the applicant had resigned his position as a working director bringing his contract of employment to an end, subject to him remaining for a further week in the role of licensed manager, until a replacement working director could be found. Correspondence from the respondent to the applicant and from the respondent to the Office of Fair Trading, was totally at odds with the respondent’s contention in this regard and was found to have indicated that the applicant’s choice to cease acting as working director was accepted by the respondent, and he had reverted to another position, that of licensed manager. The evidence for the respondent that the position of working director was a fundamental term of the applicant’s employment contract was found to be at odds with the written contract. Further, the evidence of the respondent’s witnesses was found to be at odds with the submission that the applicant resigned his employment. It was also found that the dismissal of the applicant was harsh because of its consequences for the applicant who was given only one week’s notice; unjust because he had simply sought to raise a legitimate issue about his legal position and that issue was not dealt with appropriately by the respondent following the grievance procedure in the applicant’s written contract of employment; and unreasonable because it was decided on inferences – that the applicant was disloyal – which could not reasonably have been drawn from the material before the respondent. Significant findings made at the hearing of this application were essentially reflected in the certificate issued by Blades C on 4 April 2002, appended to the written submissions filed on behalf of the applicant, which stated: “The applicant signed a written contract of employment that he would undertake a Working Director position as part of his duties. He later refused to continue in that role. That refusal would constitute a resignation. However, by letter dated 20 February, there was a variation to the written contract whereby the Company reverted applicant’s position to that of ‘Licensed Manager’. That letter will be seen as a variation of the previous written contract. The Company terminated the applicant’s position one week later for ‘lack of loyalty’. The Commission is unable to see any ‘lack of loyalty’, no warnings were given and no procedural fairness. The written contract purporting to provide for one week’s notice is likely to be declared void and varied as an unfair contract in proceedings under that provision of the Act. The applicant sought compensation but the respondent while prepared to negotiate, was not prepared to meet the applicant’s demands.”. -- 7 of 8 -- 616 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 20 June, 2003 It is also of significance in my view that the respondent persisted in running an argument that the applicant had resigned, notwithstanding the clear terms of the certificate issued by Blades C which indicates his view that the respondent terminated the applicant’s employment. On one view, this is a clear case where the respondent pursued an argument at trial which was untenable on the terms of its own written documentation. It is also a case where the conciliating Commissioner formed a view that the respondent’s arguments in relation to resignation and the accusation of disloyalty on the part of the applicant, were not sustainable. Compounding the untenability of the respondent’s argument about the resignation, is that the letters referred to above were written by a director of the respondent who is a solicitor and should well have known that the terms of those letters was at odds with the argument about resignation. On another view, the admissible evidence about settlement offers on the costs application – which for reasons I have outlined above is essentially confined to the certificate issued by Blades C – indicates that the respondent was prepared to negotiate a settlement of the application. On balance, and in the absence of admissible evidence on the nature and quantum of settlement offers and counter offers, I am not satisfied that this is a case where the Commission should exercise the discretion to award costs. I would add that had the certificate issued by the conciliating Commissioner indicated that the respondent had made no offer, or had there been admissible evidence to demonstrate that an offer of settlement had been made by the applicant for an amount less than or in the vicinity of the award of compensation he obtained as a result of the hearing, I would have been disposed to award costs to the applicant for the hearing of the substantive application. However, in doing so, I would have accepted the respondent’s arguments in relation to the costs of the appeal. I would also note for completeness that rule 66(2) enables the Court to order that costs be assessed by the Registrar. The rule makes no reference to the Commission being given discretion to make such an order, and I would have declined to do so. The application for costs in B492 of 2002 is dismissed. I order accordingly. I.C. ASBURY, Commissioner. Hearing Details 2002 31 May Appearances: Ms K. Prior of Prior & Associates, instructed by A.J. Torbey & Associates for the applicant. Mr M.J. Byrne, instructed by Llewellyns Solicitors for the respondent. -- 8 of 8 --