Costs against representatives

See Fair Work Act 2009 s.401

The Fair Work Commission may make an order for costs against a representative for costs incurred by the other party to the matter if satisfied that the representative caused those costs to be incurred because:

• the representative encouraged the person to start, continue or respond to the matter and it should have been reasonably apparent that the person had no reasonable prospect of success in the matter, or
• of an unreasonable act or omission of the representative in connection with the conduct or continuation of the matter.

Representatives are not required to be granted permission to appear before the Commission can make an order for costs.[1]

The Commission cannot make an order under s.401 for costs incurred in an appeal of an unfair dismissal decision.[2]

Encouraging the person to start, continue or respond to the matter etc.

This requires a positive act on the part of the lawyer or paid agent, not merely an absence of discouragement.[3]

Costs against representatives ordered

No reasonable prospects of success

Rainshield Roofing Pty Ltd T/A Rainshield Roofing and Anor v Paerau [2014] FWC 3777 (Wilson C, 6 June 2014).

An application for costs was sought against an employee and his paid agent. The Commission found that the employee was aware that the contended reason for his dismissal was misconduct and of the full weight of the case against him and acted vexatiously or without reasonable cause in commencing and continuing the unfair dismissal application.

The Commission further held that a reasonable representative would have formed the view that the case had no reasonable prospects of success. It was found that the representative caused costs to be incurred by the employee by: encouraging him to continue his application; to fail to settle the matter on the terms offered by the employer; or to advise the employee his application did not have a reasonable prospect of success. Costs orders were issued, 67% to be paid by the employee and 33% by the paid agent.

Unfair dismissal pursued where no termination of employment

Lock v Aged Care & Housing Group Inc T/A ACH Group [2013] FWC 4717 (O'Callaghan SDP, 16 July 2013).

The applicant argued that the respondent encouraged her client to start and continue his unfair dismissal application when it should have been reasonably apparent that there was no reasonable prospect of establishing he had been dismissed. The Commission was satisfied that costs should be awarded against her.

Conduct of negotiations

Alexander M Pty Ltd v Lloyd; McDonald Murholme Solicitors [2013] FWC 8795 (Hamilton DP, 19 December 2013).

An application for costs was sought against an employee and his legal representative. The Commission held that the conduct of negotiations by the employee's legal representative made a settlement beneficial to both sides extremely difficult, led to costs being incurred which could have been avoided, and led to possibly unnecessary proceedings.

The Commission was satisfied that the conduct of the employee's legal representative went beyond 'hard bargaining' and into the realm of disadvantaging both employer and employee when it should have been reasonably apparent that settlement on the terms offered would have been beneficial. An order for costs was made against the employee's legal representative.

Costs against representatives NOT ordered

Application after alleged forced resignation not unreasonable

Sun Health Foods Pty Ltd v Just Relations - Consultants [2014] FWC 2280 (Wilson C, 7 April 2014).

An employee was held not to have been unfairly dismissed because she had resigned. The employer made an application for costs against the employee and her representative. The employer argued it should have been reasonably apparent to the employee and her representative that the application for unfair dismissal, alleging a forced resignation, had no reasonable prospects of success.

The Commission did not find that the application, at the time it was made, had no reasonable prospects of success because it was manifestly groundless or that it could not possibly succeed. The application for costs was dismissed.

Employer claimed that the employee's representative failed to analyse the jurisdictional basis of employee's claim

Andrews v Cooperative Research Centre for Advanced Composite Structures Ltd T/A Advanced Composite Structures – Australia [2011] FWA 2575 (Blair C, 3 May 2011).

The employer sought indemnity costs from the employee, and also from the employee's representative on the basis that he had failed to analyse the jurisdictional basis for the claim. In relation to the representative, it was found that the application was lodged before the representative was engaged, and that the representative did nothing more than represent the interests of his client in a professional manner and in reliance on material provided by the applicant. Costs were refused.

Discontinuance after assessing evidence not unreasonable

Department of Education and Early Childhood Development v A Whole New Approach Pty Ltd [2011] FWA 8040 (Gooley C, 29 November 2011).

An application for costs was made against an employee's paid agent. A conciliation conference was unsuccessful, and a notice of discontinuance was filed by the paid agent on the day the parties were required to file materials in relation to the determination of jurisdictional objections. The employer argued that it should have been reasonable apparent to the paid agent that the claim had no reasonable prospects of success and the agent had caused costs to be incurred by filing the notice of discontinuance on the day that the parties were due to file their material.

The Commission found that it would not have been reasonably apparent there was no reasonable prospect of success until after the paid agent had made a detailed analysis of evidence, which was not undertaken until after the conciliation conference. The Commission held that it was not an unreasonable act or omission to wait until after the conciliation conference to undertake this detailed forensic examination of the evidence and reach the conclusion that the claim should be dismissed. The Commission found that, if the paid agent had permission to appear, it would not have ordered the paid agent to pay the employer's costs.