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Seeking a costs order in the IRC? Perhaps don’t bother

May 9, 2019

Two recent matters heard by the NSW Industrial Relations Commission highlight the need for great care in seeking cost orders. Both cases involved employers who had successfully defended unfair dismissal applications but then had their applications for costs dismissed, confirming the approach of the Commission in rarely exercising its discretion to award costs. The lead matter concerned North Sydney Council following the alleged constructive dismissal of an employee wanting more time to work in secondary employment as a pole dancer and fitness instructor.

 

 

Background

The applicant, Ms Isobel Moore, claimed she had been unfairly dismissed after her employer, North Sydney Council, declined her request to decrease working hours so she could work more hours of secondary employment, which included as an instructor at pole dancing and aerial fitness studios. While Ms Moore claimed she was ‘constructively dismissed’ because she had no choice but to resign, the Commission at first instance found that she had freely resigned without undue pressure. It is noted that during cross examination, it was disclosed that the amount of outside work performed by Ms Moore had not only exceeded what had been declared in her secondary employment form, but that she had also performed work for another pole fitness business as well as another business operated by herself.

 

The Commission’s decision re costs

Following North Sydney Council’s successful outcome at the unfair dismissal hearing, the Council sought costs from its former employee on the basis that her conduct in instituting a frivolous or vexatious application without reasonable cause and unreasonably failing to agree to settlement of a costs claim led to the respondent incurring further unnecessary and wasted costs.

 

However, Commissioner Constant was not persuaded that the Application was “so obviously untenable or manifestly groundless as to be utterly hopeless such as to have been commenced without reasonable cause” nor that the applicant “unreasonably failed to agree to settlement of the Application or that the Application was frivolous or vexatious”. Accordingly, costs were not awarded.

 

Comments on this matter

The approach of the Industrial Relations Commission in the above matter of costs closely reflects another Commission decision concerning an employee of the NSW Department of Industry where after successfully defending its decision to terminate an employee for sending ‘inappropriate or offensive communications that might denigrate, disparage or otherwise offend’.

 

However, when the Department sought cost orders relying on the Applicant’s unreasonable rejection of a settlement offer of 6 months pay (the maximum available to him for unfair dismissal) and seeking the respondent’s costs in defending the proceedings (totalling $248,394.90 plus $59,671.34 for disbursements).

 

Again, the Commission (Murphy C) decisively ruled against the cost application, dismissing submissions the personal circumstances of the applicant should not be taken into account in opening the jurisdictional gateway to the exercise of the discretion for him to award costs (Smith v Secretary, Department of Industry (No.2) [2019] NSWIRComm 1019 - you can read our article on this case here).

 

Moore v North Sydney Council [2019] NSWIRComm 1021

Read the full case here

 

 

Aimee Saaib is the Practice Manager of O'Connell Workplace Relations and has considerable experience in conducting impartial, third-party investigations with clients in the public sector, local government and private sector. She holds a Bachelor of Laws and a Graduate Diploma in Legal practice.

 

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