WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

PARTIES MICHAEL TKACZ

CLAIMANT

-v-

Watson HJ & Associates

RESPONDENT

CORAM INDUSTRIAL MAGISTRATE G.N. CALDER

HEARD Wednesday, 14 May 2008

DELIVERED Wednesday, 14 May 2008

FILE NO. M 87 OF 2005

CITATION NO. 2008 WAIRC 00351

CatchWords Application for costs, frivolous or vexatious, whole of proceedings.

Result Application for costs dismissed.

Representation 

Applicant Mr DJ Garnsworthy appeared on behalf of the Claimant (the Respondent in the application).

Respondent KJ Trainer appeared on behalf of the Respondent (the applicant in the application).

REASONS FOR DECISION

(Given extemporaneously at the conclusion of the hearing, extracted from the transcript of proceedings and edited by His Honour)

1                      I am going to give an extempore decision and that is not a reflection upon the quality or quantity of the submissions that were made to me.  They were extremely full, however, the view that I have come to is that the threshold has not been achieved; that is, I am not satisfied that the institution of the proceedings was either frivolous or vexatious.

2                      My reasons are these.  The exercise of the determination of the issue of costs in a case such as this is one where it could not be said on the initiating papers that were filed that the claim was self-evidently frivolous or vexatious and where the outcome of the claim depended upon my assessment of the witnesses, my conclusions of fact, my findings as to credibility and my findings, in particular, as to the circumstances of the relationship between the Claimant and the Respondent.

3                      I do not agree with the submission that in order for a finding to be made that proceedings are frivolous or vexatious the case must be an extreme one.  It seems to me that the case is either one that was instituted frivolously or vexatiously or it was not and I do not see that it adds anything to the description of those criteria.  In practice, the awarding of costs is rare but that is not as a consequence, in my view, of anything more than a proper application of the meaning of the words “frivolous” and “vexatious” as used in section 83C of the Industrial Relations Act 1979 (the Act).  I do not think it is necessary to give any particular consideration as to why the legislation has such a provision in section 83C.  That is, the provision that says that there are to be no costs unless it is established that the institution of the proceedings or the defence of them was frivolous or vexatious.  Looking at those things may perhaps give some guidance and there is some comment on it by Le Miere J in the decision of the Industrial Appeal Court in Fisk v Kenji Auto Parts Ltd T/As SSS Auto Parts (WA) 87 WAIG 2443.  It may give some guidance as to what the Court may perhaps look for but I do not think it is of any great assistance to consider why there is a prohibition on costs other than in those particular circumstances where some additional assistance is required.

4                      It can be, in my view, productive of error to put too much focus upon the outcome of the proceedings, upon discrete findings of fact, upon conclusions as to credibility and also to focus too much upon the issues that were in fact joined by the parties in the course of the hearing.  Hearings are often dynamic in the sense that the focus can change, the relative importance of various aspects of the evidence can change, and the nature of the submissions that emerge can change.  That frequently happens in adversarial proceedings and particularly in adversarial proceedings where there are not full pleadings.

5                      What the Court must look at, in my opinion, is the circumstances that pre-existed the commencement of the claim; that is, immediately preceding the initial filing and lodgement of the proceedings.  Those facts, in a case such as this are, generally, not going to fully emerge until all of the evidence has been heard and tested and the matter determined by the Court.  That is when the sum of the facts emerges and it is the sum of those pre-existing facts that must be taken into account in deciding the issue of whether the institution of the action was frivolous or vexatious.  That determination of those pre-existing facts, which of course include the knowledge of the Claimant, in my view, require an assessment of what the Claimant knew or ought to have known by the time of commencement of the proceedings.  I use the words “ought to have known” intentionally, because I think there is an obligation on any person who initiates proceedings to take reasonable steps to ascertain whether the proposed factual basis of the claim and the proposed legal basis of the claim, in particular, the proposed factual basis of the claim, is actually one which justifies taking the step of initiating proceedings.

6                      I did make adverse findings as to the credibility of Mr Tkacz.  There were also parts of the evidence of Ms Watson that I had reservations about or that I did not accept.  Of course, I did not canvass in my findings all of the evidentiary material that was put before me but, nevertheless, I was aware of all of the evidence that had been put before me.  The case was one where it could not be said that it was never open to the Court to make findings of fact or law which would result in a favourable outcome to Mr Tkacz; that is, in his being successful.  Where the onus of proof lay is something that must be borne in mind.  A failure to succeed is, in effect, a failure to discharge the onus of proof.  It does not necessarily follow that because a party fails to discharge the onus of proof that it never had a case and that it was unreasonable or “frivolous or vexatious” to commence proceedings.

7                      In this particular case there were findings of primary fact that I needed to make concerning the relationship of the parties to one another.  There were findings of primary fact that I had to make in relation to matters that did not directly concern the relationship between the parties and those facts included the receipt of Centrelink benefits by Mr Tkacz and also included correspondence and the contents of correspondence in various communications between Mr Tkacz and the New South Wales College of Law.  I was required to draw inferences from those findings of primary fact.

8                      In my opinion, it could not be said that the outcome of my assessment of the evidence, my findings as to primary facts and the inferences that I drew from those primary facts were so self-evident that at the commencement of the proceedings that it could be said that Mr Tkacz had a case in respect of which, objectively, it could be said he had absolutely no hope of success.  It could not be said that, adopting the words used by Mr Garnsworthy for convenience of expression, the Claimant’s case “was manifestly groundless or doomed to failure”.

9                      Almost self-evidently there was the potential for adverse findings of fact and credibility to be made arising out of the documentary material that was produced in the course of the trial relating to Centrelink benefits in particular and the inconsistencies between the claim of Mr Tkacz before me that he was employed and the contents of those documents which indicated that he was not employed and was willing to seek and obtain work.  To a certain extent, my findings in relation to that are collateral to the question of whether or not he was in fact employed by the Respondent.  By that I mean my findings related essentially to credibility.  Arguably, it was not the case that, even if he was claiming and receiving social security benefits (whether he was entitled to them or not), that such a finding was necessarily determinative of whether or not he was an employee of Ms Watson or H.J. Watson and Associates.  As it transpired it was a significant factor in my conclusion as to his credibility.  Those sorts of things, however, were collateral, in a sense, to the central issue.  The central issue before me was whether or not the circumstances of the relationship between the Claimant and the Respondent were such that, either on the basis of direct evidence or on the basis of inference, it was open to the Court to conclude that there was a relevant employer-employee relationship.

10                   There was an unusual aspect about the facts that existed at the time when the proceedings commenced.  That was that there was such a long period of time during which, as I found, there existed a relationship similar to that of employer-employee in the sense that Mr Tkacz worked for the Respondent, but the difference being, as I found it, there was no contract of employment.  There was no obligation to employ but the very fact that he worked for such a long time without pay was something which was unusual and in my view it could not be said that that circumstance, even taking into consideration the other evidence that emerged, was not one from which an inference could never have been drawn favourable to Mr Tkacz.

11                   I also had to take into account, in determining whether or not the proceedings were vexatious, whether they were brought for any collateral purpose or purposes “and not for the purpose of having the Court adjudicate on the issues to which they give rise”.  I take those words directly from the summary provided to me, again by Mr Garnsworthy, from Attorney General v Wentworth (1988) 14 NSWLR 481 at 491.  In my view, as I mentioned earlier in discussion with Mr Trainer during his oral submissions, there is an element of subjectivity which I think necessarily comes into a consideration of whether proceedings are vexatious, adopting that description of the meaning of vexatious that I have just mentioned.  To that extent it was necessary for me to take into account whether or not inferences may not have been properly drawn by Mr Tkacz as to the nature of the relationship between himself and Ms Watson arising from her conduct, his conduct and their mutual conduct, that may not have created an estoppel where, regardless of whether or not there was (and there was not) a written agreement, she may well have been estopped, on the basis of conduct reasonably entitling him to draw inferences as to the nature of the relationship, from denying the existence of a relevant employer-employee relationship.  That is an example, I think, of the sort of thing that in this case, even in the circumstances that existed at the time when it was commenced, the Court was almost necessarily required to give consideration to, and the outcome of such consideration is not something which could be said to be so self-evidently one which would be a failure on the part of the Claimant, that it could be said either that the proceedings were frivolous or that they were vexatious.  That is a factor that mitigates against a conclusion of frivolous or vexatious commencement.

12                   I have mentioned Fisk (supra) and my understanding is that one of the primary aspects of the decision of Le Miere J is that the “whole of the proceedings” need to have been frivolous or vexatious.  I have also taken into account, and with respect, agree with some of the matters mentioned by His Honour Magistrate Cicchini in the case of The Community and Public Sector Union v Vice Chancellor, Murdoch University 85WAIG 1998 where His Honour was required to consider issues similar to those that are now before me.  Reference has been made to certain parts of His Honour’s judgment in Mr Trainer’s submissions.  His Honour said (para 36) in the context of proceedings being frivolous or vexatious:

The meaning of “without reasonable cause” has been the subject of judicial consideration.

13                   His Honour referred to the decision of Marshall J in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Nestle Australia Ltd [2005] 146 IR 379.  In the course of a quote from the decision of Marshall J appears a quote from a decision of a Full Court in Spotless Services Australia Ltd v Marsh [2004] FCAFC 155 , namely:

Whether a proceeding has been commenced without reasonable cause is relevantly established is a matter of objective fact.

14                   That criterion of objective assessment is to be applied to section 83C of the Act.  Reading on, Marshall J said:

In Spotless, the Full Court considered that the application for prerogative relief was bound to fail.  It ordered costs against the unsuccessful applicant.  The expression “bound to fail” is similar to expressions such as “so obviously untenable that it cannot possibly succeed”, “manifestly groundless” and “bad beyond argument” . . .

15                   In my view, none of those criteria can be properly applied to the institution of the proceedings by Mr Tkacz.  There is a vast difference between a weak case or an unsuccessful one and a case which can be described in those terms, and that difference is not manifest in the present case.  Further, Marshall J quotes von Doussa J in Hatchett v Bowater Tutt Industries Pty Ltd (1991) 28 FCR 324 at 327, namely:

The test imposed by the expression “vexatiously or without reasonable cause” is similar to the one applied by a court on an application for the exercise of summary power to stay or strike-out proceedings: see Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 at 272 to 273 . . .

16                   Heidt (supra) is another case that I have been referred to.  Marshall J, in paragraph 6, has then referred to what Gibbs J said in R v Moore; Ex parte Federated Miscellaneous Workers Union of Australia (1978) 140 CLR 470 at 473, namely:

In my opinion a party cannot be said to have commenced a proceeding “without reasonable cause”, within the meaning of that section, simply because his argument proves unsuccessful.

17                   I appreciate that the terminology there used is different to that in section 83C of the Act.  The sense that is conveyed by the term “without reasonable cause” and “frivolous or vexatious” is not the same but has similar characteristics and I think that the message that emerges from Heidt (supra), namely, simply because an argument proves unsuccessful does not mean that proceedings have been commenced frivolously or vexatiously applies to section 83C.  In fact, I think that frivolously and vexatiously is arguably another step beyond commencing a proceeding without reasonable cause; not much of a step but I think it is arguable that there is a difference.

18                   Suffice to say, without reading any more from the decision of His Honour Magistrate Cicchini, I agree, with respect, with the appropriateness of the matters that he has quoted therein and with his reasoning.

19                   There is a difference between frivolous and vexatious.  “Vexatious”, I accept, can properly be described, as I have mentioned, as in Attorney General v Wentworth (supra) and as cited by Mr Garnsworthy in his written submissions.  As to “frivolous”, I refer to the decision of the Full Court of Western Australia in the matter of Coolgardie Gold v Copperfield Gold (1995) Library No 950263.  That matter involved a consideration of the term “frivolous and vexatious” in the context of the Mining Act.  His Honour Steytler J there quoted from the decision of the court in Norman v Mathews (1916) 85 LJKB 857 at 859 per Lush J, namely, that for a case to be brought within the description of being a frivolous action, it must appear that the cause of action is one which, on the face of it, is clearly one which no reasonable person could properly treat as bona fide and contend that he had a grievance which entitled him to bring the matter before the Court.  I do not think that Mr Tkacz’s case could be said to fall within such a description.

20                   I agree with Mr Garnsworthy that it must be clear-cut.  It must be very clear before a Court can properly make a finding that proceedings are frivolously or vexatiously instituted.  I have already indicated that the fact that there were negotiations is of no consequence in this case in connection with the determination of whether or not the proceedings were commenced frivolously or vexatiously.  There is another aspect, I think, that needs to be addressed in respect of that.  My understanding is that the negotiations that are referred to were negotiations which may have occurred after the proceedings had commenced.  In the itemised bill of costs, item 9, there is a reference to “Offer of settlement including the drafting of the terms and all negotiations”.  That is consistent with negotiations having taken place during the trial.

21                   I have taken into account, in reaching my views, the submissions that Mr Trainer has made in relation to inconsistencies between the facts as they existed, namely, working for the Respondent, and the statements of Mr Tkacz as set out in some of the documents that were tendered in evidence in relation to his admission as a solicitor and in relation to Centrelink benefits.  In my view it could not be said that there was necessarily a critical inconsistency.  There was a necessary inconsistency between saying in those documents that he was not working or that he was on work experience and saying in evidence that he was working as an employee of the Respondent.  There was not necessarily an inconsistency between the nature of the proceedings and those documents.  I say that because where he mentioned, for example, work experience and where he said that he was looking for work and not engaged in work, they are matters which might be untrue but do not necessarily affect the legal nature of the relationship between himself and the Respondent.  He was not getting paid for his work.  The person for whom he was working, namely Ms Watson, had not unequivocally said he was going to be paid.  They were my findings of fact and I will say no more about that, other than to say that I have taken those things into account and they are certainly not determinative of the issue.

22                   For those reasons it is not necessary for me to give consideration to some of the other potentially difficult matters that have been raised.  They are my findings.

23                   The application for costs will be dismissed.

GN Calder

Industrial Magistrate