Coco’s Trading Pty Ltd v O’Reilly [2003] ICQ 38 (2003) 174 QGIG 102

102 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 12 September, 2003 ########################################################################################################################## INDUSTRIAL COURT OF QUEENSLAND Industrial Relations Act 1999 – s. 341(1) – appeal against decision of industrial commission Coco’s Trading Pty Ltd AND Barbara Gay O’Reilly (No. C48 of 2003) PRESIDENT HALL 3 September 2003 DECISION By a decision of 16 April 2003 the Queensland Industrial Relations Commission found that the applicant had been dismissed from her employment with Coco’s Trading Pty Ltd and that the dismissal was harsh, unjust or unreasonable. She was awarded $7,000 by way of compensation. Subsequently, the applicant, who by her pleadings had always maintained a claim for costs, requested that the matter of costs go to a hearing. The request was granted and by a decision of 12 June 2003 (now reported at (2003) 173 QGIG 669) the respondent was awarded $5,197 by way of costs. This is an appeal from that decision. Some criticism has been of the Commission’s omission to reserve the matter of costs. I agree that it would have been better if the Commission had reserved the question of costs but am not persuaded that the omission to do so should be treated as a decision not to grant the application for costs, compare Ray and Sue Boundy Pty Ltd v. Gwydir (1999) 162 QGIG 191 at 191. By s. 329(e) of the Industrial Relations Act 1999 the Commission has full power to make corrections intended to express an intention which the Commission would certainly have had if it had adverted to the matter, compare Ray and Sue Boundy Pty Ltd v. Gwydir, ibid. On an appeal one starts with the presumption that the tribunal at first instance was correct. Rather than proceed on the (extraordinary) assumption that the Commission changed its mind without informing the parties, it seems to me that I should proceed on the assumption that the Commission had not by its decision of 16 April 2003 intended to reject the application for costs and, in the absence of any submissions to the contrary by the parties, simply went about the matter of dealing with costs after that issue had been listed, without expressly correcting the earlier omission. It is common ground that the Commission’s only power to award costs is that vested by s. 335 and that the only provision of s. 335 which is relevant is subsection (1)(b). It is also common ground that the correct approach to be adopted in determining whether costs have been incurred “because of an unreasonable act or omission connected with the conduct of the application” is that developed by Mackenzie P in Goldman v. Data General Australia Pty Ltd (1993) 144 QGIG 379 at 380: “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.”. In fact, the Commission did adopt that approach, as I think it was required to do by the decision in Doyles Construction Lawyers v. Serratore (No. 2) (2002) 170 QGIG 103. In my view the decision of Mackenzie P does represent the correct approach, though I take the liberty of adding that the source of the power is to be found in s. 335(1)(b) and that grammatical analysis of Mackenzie P’s observations should not be permitted to supplant the terms of the statute. 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. Additionally, s. 335(1)(b) is really a reproduction of s. 225(1)(b) of the Workplace Relations Act 1999. The explanatory note to the Workplace Relations Act 1997 relevantly recounts: -- 1 of 3 -- 12 September, 2003 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 103 “Subclause 225(1)(b) provides for an order for costs to be made against an employer or an employee if the Commission is satisfied that an unreasonable act or omission by the party caused costs to be incurred, in connection with the proceedings, by the other party. For example, where a party acted unreasonably in the conciliation conference or on arbitration, by failing to discontinue a matter or failing to agree to terms of settlement then the Commission may make an order for costs against the party.”. By s. 14B of the Acts Interpretation Act 1954 the Court is entitled to go to the explanatory note to confirm an interpretation. In my view, the exercise of the power at s. 335(1)(b) may be triggered by conduct in relation to mediation, and in particular be triggered by the way in which reasonable offers of settlement are dealt with. It is then contended that, having identified a failure to respond reasonably to a reasonable offer of settlement as an “omission” which might found an exercise of the power to award costs, the Commission either mis-applied the test or went one step further and equated “a failure to respond reasonably to a reasonable offer of settlement” with a failure to make “an honest attempt at settlement”. The first limb of the attack upon the Commission’s decision involves the application of forensic forceps to the Commission’s language. It may be conceded that the Commission did refer to “an honest attempt at settlement” and to the absence of an “attempt to enter into honest negotiations to settle this matter”. However, in both cases the full passage has to be read. The first passage (at 670) is: “It is my view that honest attempts at settlements 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.”. The second passage (at 670) is: “Clearly the respondent had an arguable case and there was no inference or finding that the respondent’s witnesses lied merely because their evidence was not accepted on the balance of probabilities. But the significant fact is that there was no attempt to enter into honest negotiations to settle this matter. There is a clear inference that the respondent was determined to force the applicant to litigation. There have been many cases in the Commission where the failure to respond in a reasonable fashion to a reasonable offer of settlement has attracted an award of costs . . .”. In my view the reference to an “honest attempt” at settlement arose out of the circumstance that the appellant had met one reasonable offer of settlement with a flat rejection and had not responded to other reasonable offers at all. Given the Commission’s careful analysis of the decision of Mackenzie P in Goldman v. Data General Australia Pty Ltd (1993) 144 QGIG 379, the reference to the explanatory note to s. 225 of the Workplace Relations Act 1997 and the reference to other cases in which the Commission had treated a failure to respond in a reasonable way to a reasonable offer of settlement as founding an exercise of the power to award costs, I am not persuaded that I should proceed on the assumption that the Commission had either forgotten or misunderstood the appropriate test. The second prong of the attack on the Commission’s decision is that one may find that the Commission applied the wrong test because a finding that the appellant had “failed to respond reasonably to a reasonable offer of settlement” was not open on the evidence. Notwithstanding the diligence with which Mr Dahl has argued the case for the appellant, I am unable to accept that submission. It is true that the Commission referred to an alleged offer, the making of which was disputed. But the Commission also referred to the circumstance that the making of the offer was disputed without resolving the disputation. In my view, it would be wrong to proceed on the assumption that the Commission assumed the offer to have been made. The remainder of Mr Dahl’s attack upon the Commission’s findings really requires an assessment of the reasonableness of the various offers in light of the then state of the pleadings and other issues between the parties. I can understand that other people might have taken a different view to the view taken by the Commission. But it is commonly the case that honest and reasonable men may differ about the conclusion to be drawn from agreed facts. It cannot be said that the Commission’s conclusions were not open to it. The next round of appeal is about the finding that the appellant did not make a reasonable response to reasonable offers of settlement. For reasons given above, I am of the view that the Commission’s finding was open to it. In any event, the appellant is required to demonstrate an error of law. On the most generous view, to distil an error of law out of a finding of fact, the appellant would need to show that the finding of fact was perverse. A finding of fact which is reasonably open cannot properly be characterised as perverse. Both before the Commission and on the appeal it was contended that the respondent gave up her right to claim costs when she accepted $7,000 in “full and final settlement” of the application. I quite accept Mr Dahl’s proposition that the circumstances that the sum of $7,000 was paid whilst an order of the Commission requiring the appellant to pay $7,000 to the respondent was in force, is not in itself justification for concluding that the sum was paid in discharge of the liability imposed by the Commission order. Everything depends upon what was said, both orally and in writing. Given that the appellant (and for that matter the respondent) had a right to appeal (even if, on one view, dependent upon the grant of an extension of time), a payment of $7,000 in discharge of all claims against the appellant arising out of the respondent’s application would have been sufficiently supported by consideration, notwithstanding the obligations arising under the Commission’s order, compare Wigan v. Edwards (1973) 47 ALJR 586 at 595 per Mason J. And it must be squarely borne in mind that where intervention of the Commission, e.g. to make a consent order, is not required to give effect to a compromise, the compromise is construed as a contract and given effect as a contract. If on its proper construction the compromise did go to the claim for costs as well as the sum due under the Commission order, it would be idle for the respondent to assert that she had made a mistake. Unilateral mistake is nothing. True it is that equity may intervene to permit the rescission where the making of the mistake is facilitated by unconscionable behaviour, e.g., where the mistake is induced or arises out of the cloaking of facts, compare Easyfind (NSW) Pty Ltd v. Paterson (1987) 11 NSWLR 98 at 107 to 109 per Young J and Buseska v. Sergio (1990) 102 FLR 157 at 163 to 164 per Higgins J. But nothing of that kind is alleged here and there may be a real issue about whether the Queensland Industrial Relations Commission has the jurisdiction of a court of equity. In any event, as noted above, the appellant did not lead evidence. The appellant contented itself with an entirely ambiguous assertion at paragraph 6 of its written submission on costs that: “An additional fact not mentioned by the applicant is that it accepted the respondent’s cheque for $7,000 (being the compensation awarded herein), tendered prior to the application for costs being made, and tendered on the basis that it was in ‘full and final’ settlement of the application.”. In those circumstances, it seems to me that the Commission was quite right to construe the submission against its maker and proceed on the view that the $7,000 had been paid in discharge of the Commission order only. (On the appeal, Mr Dahl for the appellant sought to introduce fresh evidence about the compromise. I rejected the application on the basis that the evidence sought to be adduced was available to the appellant at the time of the hearing in the Queensland Industrial Relations Commission). In the alternative, the appellant submits that if the power to award costs under s. 335(1)(b) had arisen, it was erroneously exercised. -- 2 of 3 -- 104 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 12 September, 2003 The quantification of costs is a quintessential exercise of discretion. This Court should interfere only where the case may be brought within the principle of House v. The King (1936) 55 CLR 499 at 504 to 505 per Dixon, Evatt, McTiernan JJ. Save as to one matter, the appellant has quite failed to make out such a case. The award of costs was based on the scale appropriate to the award of $7,000 in proceedings in the Magistrates Court. Such an outcome is expressly contemplated by the Industrial Relations (Tribunals) Rules 2000, r. 66 and is (in truth) more vulnerable to attack as too low rather than too high. The one matter upon which it seems to me the appellant must succeed is a decision of the Commission to allow $563 for instructions to sue and settling and filing the application. That s. 335(1)(b) may support an award of costs both where costs were incurred by the innocent party after the unreasonable act or omission complained of, and where costs were incurred by the innocent party before the act or omission complained of, I quite accept. However, I am unable to accept that an unreasonable act or omission connected with the conduct of the application may properly be said to be a cause of the costs incurred in initiating the application. To the extent of that item, I consider that the appeal should succeed. The respondent seeks the costs of the appeal to this Court. I accept that the unreasonable prosecution of an appeal may be an “unreasonable act … connected with the conduct of the [reinstatement] application” for the purposes of s. 335(1)(b), compare Julia Ross Personnel v. Rebecca Wain (2001) 166 QGIG 350 at 351. I also accept that the institution of an appeal may be characterised as “unreasonable” notwithstanding that on a minor matter the appeal is successful. This appeal, however, raised issues which had not previously been litigated in the Court. The decision in Barsha v. Motor Finance Wizard (Sales) Pty Ltd (No. C46 of 2003) did not deal with the question whether conduct in relation to settlement might found a finding that the power at s. 335(1)(b) was triggered. It dealt with the issue whether, the power at s. 335(1)(b) being triggered by the prosecution of an untenable case, constructive negotiation towards a settlement might justify a refusal to exercise the discretion against the party mounting the untenable case. In any event, that decision was released four working days before this appeal was heard. Further, not only were the issues novel (in this Court), as noted above as a matter of first impression s. 335(1)(b) was not available in a case such as this. I do not consider the institution of the appeal to have been unreasonable within the meaning of s. 335(1)(b) nor, if it be necessary to say so, made vexatiously or without reasonable cause within the meaning of s. 335(1)(a). I dismiss the respondent’s application for costs of the appeal. The respondent seeks the costs thrown away when the hearing of the appeal which was scheduled for Friday 22 August was adjourned until Thursday 28 August. It is entirely regrettable that costs were thrown away. The difficulty confronting the appellant is that the unfortunate saga commenced when the appellant failed to provide its outline of submissions in accordance with the timetable set by the directions order. Doubtless, if the solicitors for the parties had been prepared promptly and enthusiastically to put their shoulders to the wheel, the appeal might still have been brought on for hearing on 22 August. That did not happen. By the time steps were taken a change in the family circumstances of counsel for the respondent made a hearing on 22 August an impossibility. I am not satisfied that there has been an “unreasonable act or omission” by the respondent within the meaning of s. 335(1)(b). In any event, if I had power to award costs, I should not have done so. All that occurred was a series of unfortunate incidents that sometimes occur in the course of litigation. I set aside the decision of the Queensland Industrial Relations Commission on the matter of costs in No. B671 of 2002. In lieu thereof I order the appellant (forthwith) to pay to the respondent the sum of $4,634 by way of costs. Dated 3 September 2003. D.R. HALL, President. Appearances: Mr A. Dahl, Solicitor of Colwell Wright, for the appellant. Mr L. Smith, instructed by Ace Solicitors, for the respondent. -- 3 of 3 --