CONTRACTUAL BENEFIT CLAIM

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

CITATION : 2023 WAIRC 00282

DELIVERED : Friday, 19 May 2023

FILE NO. : B 106 OF 2022

Applicant

AND

South West Transit Group Pty Ltd as trustee for the South West Transit Group Unit Trust

Respondent

CatchWords : Industrial law (WA) – Denied contractual benefits claim – Withdrawal or discontinuance of application – Application discontinued before matter was set down for hearing – Commission functus officio – Application for costs – Commission’s powers to award costs – Whether there were “exceptional circumstances” where a costs order would be appropriate – No jurisdiction to award costs – Order for costs not justified – Costs not awarded

Legislation : Industrial Relations Act 1979 s 29(1)(d), s 27(1)(c)

Industrial Relations Commission Regulations 2005 r 16

Result : Application dismissed

Representation:

Applicant : Mr C Fogliani, of counsel

Respondent : Mr P King, of counsel

Case(s) referred to in reasons:

Adrian Manescu v Baker Hughes Australia Pty Limited [2021] WAIRC 00558

Australian Leisure and Hospitality Group Pty Ltd v Director of Liquor Licensing [2012] WASC 463

Denise Brailey v Mendex Pty Ltd t/a Mair and Co Maylands (1992) 73 WAIG 26

Robe River Iron Associates v Amalgamated Metal Workers and Shipwrights Union and Others (1990) 70 WAIG 2083

Transport Workers Union of Australia Industrial Union of Workers, WA Branch v Tip Top Bakeries (1994) 75 WAIG 9

Peter John Morris v Lift Equipment Pty Ltd (ACN 125 331848) [2013] WAIRC 00357

Decision

1         On 19 September 2022, Inger Isaksen (applicant) made an application to the Commission under s 29(1)(d) of the Industrial Relations Act 1979 (IR Act), alleging she was denied a benefit to which she was entitled, under her contract of employment (contractual benefit claim). The application was given the file number B 106 of 2022.

2         On 2 March 2023, before the contractual benefit claim was listed for hearing, the applicant filed a prescribed Form 1A (Notice of Discontinuance). Following this, her employer made an application for costs.

3         For the reasons set out, I have determined there is no basis to make an order for costs.

Discontinuing applications

4         Regulation 16 of the Industrial Relations Commission Regulations 2005 (IR Regulations) relevantly describes how proceedings before the Commission are to be withdrawn or discontinued as follows:

16. Withdrawal of discontinuance of application

(1) Subject to subregulation (4) an applicant may withdraw or wholly discontinue an application against any respondent or withdraw any part of the claim contained in the application at any time before it has been set down for hearing by filing a notice in the approved form in the office of the Registrar or by giving advice in writing to the Commission and to every respondent affected by it.

(2) Subject to subregulation (4), the filing of a notice in accordance with subregulation (1) withdraws or discontinues the application or part of the claim, as the case may be, and the Registrar is to advise the parties accordingly after the notice has been filed.

…

(4) Where a counter-proposal has been filed in response to an application the application may only be withdrawn under subregulation (1) with the consent of the respondent making the counter-proposal in the approved form.

…

Issues to be determined

5         The question that first arises for consideration in this matter is whether it its necessary for the applicant to obtain the respondent’s consent to withdraw her application. If not, the Commission will not be able to make an order for costs because it would be “functus officio”. This means there would be no application before the Commission to enliven its jurisdiction to make an order for costs.

6         If sub-regulation 16(4) requires the respondent’s consent, the question that next arises is whether the respondent should be entitled to an order for its costs.

Background to the costs application

7         When the applicant filed her contractual benefit claim, it was initially issued against the entity she thought was her employer: Australian Transit Group trading as South West Coach Lines Pty Ltd.

8         At the same time the applicant made her application, Peter Watkins (Watkins) in application B 105 of 2022 filed a similar and related claim against the Australian Transit Group trading as BusWest.

9         Both Watkins and the applicant were being assisted in their applications by Glenn Ferguson from Transport Edge Inc. I will collectively refer to these two applications as the claims. It is also helpful to refer collectively to Watkins and the applicant together, as the applicants.

10      In the claims, the applicants both alleged they had been denied benefits to which they are entitled, under terms varied or implied into their contracts of employment.  Their employers are related businesses providing school bus services out of depots in Bunbury and Busselton in Western Australia’s South West (South West). 

11      On 7 October 2022, the Australian Public Transport Industrial Association (APTIA) filed responses to the claims (responses).

12      In the responses, APTIA not only denied the named respondents to the claims (respondents) were the correct employers, but it also denied the material allegations that were being made against them.

13      I convened two conciliation conferences in relation to the claims, the first of which was held on 7 November 2022. With the consent of the parties, I listed the claims together.

14      Mr Ferguson appeared for the applicants in the first conciliation conference.  Mr Ian McDonald from APTIA appeared for the respondents.

15      A second conciliation conference was held on 12 December 2022 and for this conference, the applicants were represented by legal counsel, Cory Fogliani. During the conciliation conference, Mr Fogliani foreshadowed his intention to file amended claims on the applicants’ behalf.

16      Although the claims were not able to be resolved by conciliation, the parties did reach agreement on a set or programming orders that I issued 20 December 2022 (consent orders), as follows:

1. THAT the applicants are to file their amended applications by 9 January 2023.

2. THAT the respondents are to file responses to the amended applications by 16 January 2023.

3. THAT informal discovery is to be provided by 25 January 2023

4. THAT the parties are to confer on and file an agreed statement of facts by 3 February 2023.

5. THAT the matter is to be listed for a programming conference on a date to be fixed not before 3 February 2023

6. THAT there be liberty to apply.

17      On 10 January 2023 the parties agreed to extend the dates by which they were required to complete the various steps under the consent orders. The dates were respectively extended to 13 January 2023, 20 January 2023, 3 February 2023 and 10 February 2023.

18      Pursuant to the consent orders, the applicants filed amended applications on 13 January 2023. The applicant changed the name of the respondent in her amended application to the South West Transit Group Pty Ltd as trustee for the South West Transit Group Unit Trust, trading as South West Coach Lines (SWCL).

19      On 20 January 2023, APTIA filed responses to the amended applications (amended responses). In its amended responses, APTIA asserted the claims were frivolous and vexatious with no chance of success. 

20      APTIA also foreshadowed that it would seek an order for costs against the applicant relying upon the principles in Adrian Manescu v Baker Hughes Australia Pty Limited [2021] WAIRC 00558 (Manescu).

21      On 2 March 2023, after the date on which the parties had agreed to complete informal discovery and file a statement of agreed facts, the applicant filed a Notice of Discontinuance.

22      In her Notice of Discontinuance, the applicant advised she was seeking permission to discontinue her claim as result of new information SWCL had provided by way of informal discovery and received in discussions to finalise a statement of agreed facts.

23      Upon receiving the Notice of Discontinuance and as foreshadowed, APTIA made an application for costs. I then directed the parties to file outlines of submissions on this issue and advised that I would hear the application for costs on the papers.

The applicant’s contractual benefit claim

24      To put this matter in context, it is useful to summarise the allegations raised in the applicant’s claim.

25      The applicant is a bus driver who is employed by SWCL on a casual basis and is based at SWCL’s Busselton depot. She is paid $38.73 per hour under a written contract of employment (employment contract).

26      SWCL is a private bus company that provides school bus services on different routes in the South West, one of which includes the Margaret River Burnside Route (MR Burnside Route). The school bus services are provided under a contract with the Public Transport Authority (PTA).

27      The contract that applies on the MR Burnside Route is covered by what is known as an “Evergreen Contract” (Evergreen contract). The applicant alleged SWCL was a party to the Evergreen contract that applied on the MR Burnside Route.

28      Under the Evergreen contract, the PTA pays the respondent service fees which include a component to ensure bus drivers are paid a specified “grossed up” hourly rate of pay for each hour worked.

29      An information bulletin issued the PTA entitled Evergreen Contract Model Payments Elements, states the “grossed up” hourly rate that should apply to the MR Burnside Route is $43.31 per hour (pass-through rate).

30      As a mechanism to ensure bus drivers receive the higher pass-through rate, the Evergreen contract at Clause 9.12 (Pass-through of wages) contains a prohibition against a contractor receiving a windfall from the additional money the PTA pays in service fees under the Evergreen contract.

31      The applicant drives school buses on the MR Burnside Route. After discovering the difference between the hourly rate of pay under her written employment contract and the pass-through rate, the applicant made the contractual benefit claim.

32      The applicant alleged in her amended claim that although her employment contract contains written terms as to pay rates, the higher rate is, as a matter of law, implied in her employment contract.  The applicant claimed the terms in her employment contract which provided for a lower rate of pay, have as matter of law, either been varied by the parties conduct or in the alternative, are void, by reason of illegality or on public interest grounds.

33      The applicant claimed that as result, the pass through rate applies because her employment contract was varied by the parties conduct or it is an implied term, overriding those terms that are void. The applicant alleged the voided term in her employment contract is her lower hourly rate.

34      The applicant claimed the contractual benefit to which she was entitled and should have been paid, is the higher pass-through rate for each of the hours she worked on the MR Burnside Route.

New information

35      In the documents exchanged between the parties by way of informal discovery and for the purposes of preparing and filing a Statement of Agreed Facts, it emerged the Evergreen contract for the MR Burnside Route is not between the PTA and SWCL, but with a different, albeit related entity, the Australian Transit Group Pty Ltd (ATG).

36      Having learned SWCL is not a party to the Evergreen contract as alleged, and although the applicant believed her employer was covered by an Evergreen contract because she was performing work as a bus driver on the MR Burnside Route, the applicant determined she could no longer proceed with the claim.

The applicant’s submissions

37      The applicant submits she did not need SWCL’s consent to discontinue her contractual benefit claim. She was entitled to do so because the respondent had not, as required by sub-regulation 16(4), filed a counter proposal.

38      The applicant submitted that if she is right on this point, the Commission would not be able to make an order for costs because it is “functus officio”.

39      In the alternative, the applicant submitted that if SWCL’s consent is required, her case was not a matter where the Commission should depart from its usual “no costs” approach.

APTIA’s submissions

40      The submissions APTIA filed did not address the issue of whether the applicant was required to seek the respondent’s consent under sub-regulation 16(4) to discontinue her contractual benefit claim.

41      The APTIA submissions did not directly address the principles from Manescu that the Commission should follow when deciding whether to make an order for costs.

42      Rather APTIA submitted it was entitled to an order for costs by reference to the history of the matter and that it had placed the applicant on notice it would be pursuing an order for costs.

Consideration – is the Commission functus officio?

43      I agree with the applicant’s submissions the Commission became “functus officio” after the Notice of Discontinuance was served on SWCL”. Regulation 16(4) did not come into play because SWCL did not file a “counter proposal”.

44      I am “functus officio” when I have completed all of the judicial functions in the case before me: Brinsden J at (2085) in Robe River Iron Associates v Amalgamated Metal Workers and Shipwrights Union and Others (1990) 70 WAIG 2083. If sub-regulation 16(4) did not come into effect, then all of the judicial functions in the application will be completed upon filing of the notice of discontinuance and the Commission will be “functus officio”.

45      Although the term “counter proposal” is not defined in either the IR Act or IR Regulations, I accept the filing of a counter proposal would involve something additional or more than a mere response to the allegations set out in her denied contractual benefits claim.

46      Unless the contrary intention is indicated, the words used in a statue should be construed in its ordinary and natural sense: SZTAL v Minister for Immigration and Border Protection [2017] HCA 34. As Hall J stated in Australian Leisure and Hospitality Group Pty Ltd v Director of Liquor Licensing [2012] WASC 463 at [22]:

If it is intended that a word in a statute will be used in a specific way that may not accord with ordinary usage such an intention is generally reflected in a definition in the statute. Absent such a definition, the ordinary meaning should prevail unless there is something in context to suggest that another meaning is intended.

47      When this principle of statutory interpretation is applied in the present case (and as the applicant submitted), unless there is something in the context that suggests otherwise, the words counter proposal should be afforded their ordinary meaning.

48      When reviewing the context in which the term counter proposal is used in the IR Regulations the applicant looked at how the term was used in sub-regulation 22(1), regulations 31 and 48. I accept the submission that a counter claim would involve the making of an independent claim that is separate to the applicant’s originating claim against respondent.

49      It makes sense that a counter proposal in the context of a specialist industrial tribunal, with a broad jurisdiction to deal with industrial matters, that has award making powers and dispute resolution functions, including the power to arbitrate in disputes over good faith bargaining and the terms and content of industrial agreements, is something more or different than putting on a response to allegations.

50      A counter proposal could by way example, be the provision an alternative clause or clauses within an award or industrial agreement. It may involve providing an alternative set of demands from an employer, put up in response to a union’s log of claims. When viewed in this context, the intended meaning of the term counter proposal is obvious.

51      I also conclude the respondent’s foreshadowed application for costs, which appears in part 3.1(5) of its Form 3A Amended response is not a counter-claim. It is not separate to or independent of SWCL’s response to the applicant’s contractual benefit claim. It is not a proposal in the form of an alternative industrial condition or arrangement, of the character routinely considered by this Commission.

52      Accordingly, I have concluded the applicant’s contractual benefit claim, which was not listed for a substantive hearing and was withdrawn at a very early stage in the proceedings, was able to be discontinued without the need for applicant to obtain SWCL’s consent.

The Commission’s powers to award costs

53      Even if I was not “functus officio” after the filing of the Notice of Discontinuance, I would have declined to make an order for costs. That is because this is not a matter which falls into the exceptional category of cases in which an order for costs is justified.

54      Section 27(1)(c) of the Industrial Relations Act 1979 (the Act) gives the Commission the power to order any party to a matter to pay to any other party its costs and expenses, including witness expenses, but no costs are allowed for the services of any legal practitioner or agent.

55      The test to be applied in awarding costs under s 27(1)(c) of the Act is set out in Denise Brailey v Mendex Pty Ltd t/a Mair and Co Maylands (1992) 73 WAIG 26 where the Full Bench held that ‘[t]he general policy in industrial jurisdictions is that costs ought not to be awarded, except in extreme cases’ (27). It is trite there is a very high bar that needs to be cleared to meet this test.

56      It is also the case that costs may be awarded against a party where an application has no merit and is ‘manifestly groundless’ or ‘so manifestly faulty that it does not admit of argument’ (see Transport Workers Union of Australia Industrial Union of Workers, WA Branch v Tip Top Bakeries (1994) 75 WAIG 9 at (11) (TWU v Tip Top)).

57      The respondent sought to rely on Manescu.  However, Manescu dealt with the powers of a Full Bench to award costs following an appeal of a decision from an Industrial Magistrate, rather than following the withdrawal of an application prior to hearing before a single Commissioner in a denied contractual benefits claim.

58      Although Manescu is distinguishable to the extent that it dealt with the specific powers of a Full Bench under the IR Act to issue orders for costs, it is relevant authority in as much as it adopted and applied the same policy considerations as those in TWU v Tip Top Bakeries on the awarding of costs under s 27(1)(c).

59      The point Manescu ultimately affirms is that costs, will only be awarded by industrial tribunals, even at the appellate level, in exceptional circumstances.

Costs order is not justified

60      The present case needs to be viewed from the perspective that it was programmed by consent, alongside a similar and related claim that is continuing.

61      There is a connection between the applicants’ employers. SWCL is a closely related entity to ATG. Any mistake the applicant may have made regarding the identity of employer and whether it was covered by an Evergreen contract and the like, is completely understandable.

62      There was also a significant amount of duplication in the responses and the statements of agreed facts the parties filed pursuant to the consent orders. The level of inconvenience experienced by SWCL is somewhat overstated.

63      There is nothing exceptional in the applicant deciding to discontinue her application, at an early stage, after she had the benefit of discovery and the provision of further information from her employer.

64      It is also relevant the applicant discontinued her contractual benefit claim well ahead of the matter being listed for a substantive hearing and before the parties had committed substantial resources, which stands in contrast to cases where such resources are expended and committed in the final hearing of a case (see for example Peter John Morris v Lift Equipment Pty Ltd (ACN 125 331848) [2013] WAIRC 00357 at [5] and [9])

65      In Heidt v Chrysler Australia Ltd (1976) 26 FLR 257, in the context of an Act which stated that "a party shall not be ordered to pay any costs incurred by any other party to that proceeding except where the party against whom the order is made instituted the proceedings vexatiously or without reasonable cause", Northrop J at (274) held that "the test is not subjective to the party instituting the proceedings".

66      Although SWCL and APTIA may have formed a strong view about the merits of applicant’s claim and her conduct in pursuing the proceedings, when considered objectively, her case is not one which falls into the category of a matter that is frivolous, vexatious, or made without reasonable cause.

Conclusion

67      For all the reasons set out in the preceding paragraphs I have concluded my jurisdiction to make an order for costs against the applicant is not enlivened.

68      In addition, even if I had the power to make such an order, I do not consider an order for costs would be justified in the circumstances.

69      To the extent I have the power to do so, orders that this application be dismissed will now issue.