Rare win for employer in indemnity costs case

20 August 2018 Topics: Workplace relations and safety

In a rare win for employers, the Fair Work Commission has recently taken the unusual step of ordering indemnity costs against a manager accused of HR breaches, finding she kept pressing a ‘doomed to fail’ unfair dismissal application in a bid to inflict maximum harm.

We discuss the case of Charles Parletta Real Estate Pty Ltd v Ms Maria D’Ortenzio and Mr Nicola Minicozzi [2018] FWC 3286 below.

Facts

In the original unfair dismissal proceedings between the parties , the Commission had determined that Charles Parletta Real Estate Pty Ltd (CPRE) had a valid reason for dismissing the office manager, finding her conduct, after being suspended over HR-related allegations, was treacherous, breached her contract and fatally damaged her working relationship with CPRE.

The office manager had:

  • increased her salary without her employer’s permission
  • unilaterally reduced the pay of another employee as punishment
  • following her suspension for the investigation into her conduct, instructed her solicitor to write to the Commonwealth Bank and the National Australia Bank seeking information to assist her case against CPRE and instructing him to contact a potential purchaser of the business to relay her allegations that her employer had breached South Australia’s Land Agents Act.

The employment relationship started to sour after the office manager began a relationship with CPRE’s solicitor – her representative in the dismissal proceedings. The Commissioner found that by the time CPRE dismissed the office manager, their relationship was ‘poisoned to the point of being totally dysfunctional’.

CPRE applied for costs against the office manager under section 611 of the Fair Work Act 2009 (Cth), on the basis that she had brought her unfair dismissal application:

  • vexatiously
  • without reasonable cause
  • without prospects of success.

CPRE also alleged that the office manager had engaged in unreasonable acts or omissions in connection with the conduct and continuation of her matter. CPRE sought indemnity costs. An application for costs was also brought against the office manager’s legal representative.

Decision

Commissioner Platt made an order for costs against the office manager, finding that her unfair dismissal claim was vexatious and motivated by a desire to ‘inflict as much damage on [her employer] as possible’. The Commissioner was of the view that dismissal letter clearly outlined the grounds relied on for the dismissal of the office manager and because of this ‘viewed objectively it should have been evident to [her] that at the time the application was lodged there was no reasonable basis for her to commence the claim’.

However, the Commissioner was reluctant to award indemnity costs as it was ‘extremely rare for the Commission to order indemnity costs and therefore a high level of caution must be exercised’. The Commissioner confirmed the view that the matter would need to involve ‘some relevant delinquency on the part of the unsuccessful party’ before indemnity costs were awarded.

The Commissioner determined that the relevant level of delinquency was:

  • not present when the office manager commenced her claim
  • arguably present once the office manager had received and reviewed CPRE’s materials
  • certainly present at the conclusion of the office manager’s evidence as the Commissioner had at that time ‘invited [the manager] to consider her position in light of the evidence’, but she still decided to move forward.

Ultimately, the Commissioner ordered costs against the office manager, finding her conduct ‘in continuing the application after that point was delinquent’. Commissioner Platt ordered costs on a party-party basis from the day after the office manager lodged her unfair dismissal application and on an indemnity basis from the conclusion of her evidence on November 29 last year.

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