A recent decision by the Federal Magistrates Court of Australia may deter some employees who vexatiously bring general protection claims against employers, because it highlights the risk of adverse cost orders being imposed against them.
The Applicant was employed as a Safety Officer by a local Council, a role which required him to drive a car to perform his duties. The Applicant made a number of complaints to the Council about the discomfort he experienced while driving, which he attributed to a medical condition. The Applicant also sent an inflammatory email to police officers bemoaning the Council's treatment of him and identifying a member of the public as a 'graffitist'. The Council subsequently terminated his employment for gross misconduct.
The Applicant commenced legal proceedings against the Council, alleging it had taken adverse action against him because of his disability.
Several months prior to the hearing the Council wrote to the Applicant, who was at the time unrepresented, and invited him to withdraw from the proceedings on the basis that it would forgo making an application for costs against him. The Applicant did not respond.
During the hearing the Applicant:
- abandoned a number of issues he initially raised in his submissions;
- insisted upon a laborious cross examination of witnesses in relation to matters outside his amended pleadings; and
- did not challenge crucial evidence about why his employment was terminated.
The Court ultimately dismissed the claim and the Council applied for a costs order against its former employee.
The Court confirmed that in relation to proceedings brought under the Fair Work Act 2009 (Cth) (FW Act), costs can only be awarded against a party where the Court is satisfied that:
- the party instituted the proceedings vexatiously or without reasonable cause;
- the party's unreasonable act or omission caused the other party to incur costs; or
- the party unreasonably refused to participate in the matter before Fair Work Australia.
The Council submitted that costs should be awarded against its former employee because he rejected the 'walk away' settlement offer and had caused the Council to incur significant legal expense by insisting upon examining witnesses unrelated to his cause of action.
In considering whether the Applicant had acted unreasonably the Court noted the discretion to award costs is not necessarily enlivened merely because a party does not conduct litigation efficiently, a concession is made late, a party could have acted in a different or timelier fashion, or a party adopted a genuine but misguided approach.
However the Court concluded that the way the Applicant had conducted the trial and his failure to accept the settlement offer warranted the imposition of a costs order against him in an unspecified amount.
Implications for employers
This decision highlights that, as a matter of strategy, an early offer of settlement can be an extremely useful tool in limiting financial exposure to court costs, even where, as in this case, the offer does not include provision for any payment of compensation. The case may also serve as a deterrent to potential litigants, particularly those acting as individuals, who must now weigh up the very real risk that costs may be awarded against them should they vexatiously pursue their claims.