Most Read Contributor in Australia, September 2016
Adverse action claims have become increasingly popular for
reasons including their purported "no cost" jurisdiction
status, which means that an employee can pursue a claim without
risk of paying their employer's costs if unsuccessful. There
are however exceptions if the claim was initiated vexatiously or
the person engaged in unreasonable acts. In a welcome decision for
employers, the Federal Magistrate's Court recently awarded
costs to an employer.
Mr Cugura was employed by Frankston City Council as a Senior
Community Safety Officer and was required to drive a car as part of
his duties. He made a number of complaints regarding his ability to
drive which he attributed to a medical condition. Mr Cugura
subsequently contacted Victorian Police complaining of the
Council's treatment of him and raising other allegations
outside the scope of his role.
Following an investigation, his employment was terminated due to
serious misconduct. Mr Cugura's initiated adverse action
proceedings alleging that his employment was terminated because of
his disability. The Council was successful in discharging the
reverse onus of proof and it was held that Mr Cugura's
dismissal related to his misconduct and not his disability.
Following the dismissal of the initial proceedings, the Council
applied for a costs order against Mr Cugura on the basis that:
Mr Cugura instituted the initial proceedings vexatiously or
without reasonable cause; and/or
he engaged in unreasonable acts or omissions that caused the
Council to incur costs,
which entitled the Council to costs pursuant to section
570(2)(a) and (b) of the Fair Work Act 2009 (Cth)
The Council submitted that it should have been apparent to Mr
Cugura that the element of his claim relating to family
responsibilities, which was raised later in the proceedings,
"could not possibly succeed" or was
"manifestly groundless" and should have been
In relation to the second ground, the Council submitted that
during the course of the proceedings, Mr Cugura engaged in a number
of acts and omissions which caused the Council to incur costs,
failing to accept or respond to an open-ended offer from the
Council to forgo making a costs application if he withdrew from the
abandoning a number of issues he initially raised but still
requiring the Council's witnesses for cross-examination of
these issues which were unrelated to the proceeding; and
failing to challenge crucial evidence about why his employment
Reasons for the decision
The Court confirmed that costs can only be awarded in adverse
action claims where a number of specific circumstances are
satisfied, including those claimed by the Council.
In determining whether Mr Cugura had pursued his adverse action
case vexatiously or without reasonable clause, the Court held that
it is necessary to consider whether or not on the applicant's
own material a proper basis for the proceeding can be made out. If
not, that was a circumstance where the proceedings could be found
to have been initiated without reasonable cause. However, the Court
held that in all of the circumstances there was an issue regarding
whether the dismissal related to a proscribed reason and the
proceedings as a whole were not instituted without reasonable
In determining the second ground, the Court granted costs on the
basis that Mr Cugura had rejected a settlement offer made several
months prior to the trial causing the Council to incur legal
expenses. The Court accepted the Council's argument that Mr
Cugura did not accept a settlement offer despite knowing it had a
significant volume of evidence on which to argue its case. Further,
Mr Cugura's conduct in requiring witnesses for
cross-examination for abandoned claims was held to be
Implications for employers
The potential impact of this decision is that it may deter
employees (and other claimants) in bringing adverse action claims
or make them think twice about the consequences of making such
claims. It will also assist employers to obtain costs in the event
an applicant's conduct during the course of the proceedings
causes them to incur unnecessary legal costs. Conversely, employers
should also now expect similar tactics to be adopted by applicants
to recover costs and they will need to ensure they act reasonably
in order to avoid a potential costs order.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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