Cost orders can be made against unreasonable employees even when they are self-represented

The Case

F v GHS Regional Pty Ltd (2016)

Mr F was an employee at GHS Regional Pty Ltd (GHS). Mr F’s employment was terminated for failing to follow a directive not to enter the premises after hours and not to remove GHS property without permission. Mr F commenced unfair dismissal proceedings against GHS.

The Fair Work Commission (FWC) found in an earlier decision that the dismissal was not unfair as Mr F acknowledged he was aware of GHS’s directives, but breached them anyway.

During the conciliation phase, GHS had made an offer to pay Mr F $3,000 to settle his unfair dismissal claim. GHS set out the offer in a letter, making it clear that if Mr F refused the offer and he was unsuccessful in his unfair dismissal claim, GHS would seek a costs order against him. Mr F refused the offer.

GHS then applied to the FWC for an order that Mr F pay the legal costs it had incurred due to Mr F not accepting the offer and pursuing the matter to a hearing, which he subsequently lost. This meant that GHS was given an expense it could have avoided, had Mr F accepted its offer.

The Verdict

It is rare for costs to be ordered in unfair dismissal matters. Normally both sides pay their own legal costs.

However, the FWC found that, pursuant to section 400A of the Fair Work Act 2009 (Cth), Mr F caused GHS to incur costs because of his unreasonable refusal to accept the settlement offer. This refusal went beyond the concept of “hard bargaining”. The FWC found that, despite the fact Mr F was self-represented, he was aware that his case was unlikely to be successful given the facts of the case and material set out in witness statements.

The FWC made an indemnity costs order against Mr F in the sum of $13,875.50.

The Lesson

It is important when defending unfair dismissal claims not to overlook the advantages of making reasonable settlement offers. If the matter does settle, this saves time and money. If it does not settle, you may have an opportunity to make a costs application if you win.

To maximise the chances of a costs order being made, it is important to ensure the offer is:

set out in writing;
marked “without prejudice save as to costs”; and
properly worded.

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.