Express law No. 19

18 March 2005

Obtaining security for costs in unfair dismissal proceedings

The
AIRC recently dismissed unfair dismissal proceedings brought
under section 170CE of the Workplace Relations
Act 1996 (WR Act) after a self-represented applicant
failed to provide security for costs.

Dominika Lis and
Suncorp-Metway Staff Pty Ltd

Australian Industrial Relations
Commission, 4 March 2005, Richards C, PR955459

On 7 January
2005 the respondent made application for an order that
Ms Lis provide security for costs. On 3 February
2005 Richards C ordered Ms Lis to pay $7,350 as security
for costs within 28 days.

On 4 March 2005 Richards C dismissed
Ms Lis's unfair
dismissal proceedings in accordance with a general discretion
under rule 47 of the Australian Industrial Commission Rules
1998. Rule 47A applies to applications or proceedings brought
under section 170CE of the WR Act, lodged on or after 1
March 2003. It provides the AIRC with discretion to stay
or dismiss an application where a party is in breach of
a security for costs order.

Background

The respondent terminated Ms Lis's employment
because she stored and/or distributed emails that included
images
of the genitalia of naked men and women. Ms Lis admitted
to storing and/or distributing the images but considered
the images were 'unique' or 'weird'.
She did not admit the images were pornographic or in breach
of the respondent's computer use policy.

Ms Lis applied
for relief under 170CE of the WR Act because she claimed
that:

  • she was prevented from attending
    a company social function in circumstances where other
    employees whose employment
    was also terminated for breaches of the computer policy
    had been allowed to attend; and
  • the
    respondent had made the decision to terminate her
    employment before allowing her time to respond to the
    allegations
    put to her.

Findings

Rule 47A provides the AIRC with a discretion to
order security for costs, subject to provisos. In this
case, the provisos
were met. In view of all of the circumstances, Richards
C concluded that there was nothing which dissuaded him
from exercising his discretion and making an order for
security for costs. In reaching this decision, Richards
C's salient considerations were:

  • Ms Lis had not demonstrated that she had the resources
    or assets to meet any future costs order. Richards
    C did not consider her financial situation arose solely
    from
    the respondent's actions.
  • The
    AIRC had conducted three directions conferences aimed
    at obtaining particulars from Ms Lis so that the respondent
    could reply.
  • Richards C did not consider
    the respondent made the application with the purpose
    of delaying the matter.
  • Richards C considered
    there was no developed or comprehensive submissions
    or available evidence which suggested that
    Ms Lis had a sustainable case. He also doubted whether
    her application could result in an outcome providing
    any appreciable relief. In this regard, Richards C noted
    Kirby
    J's comments, in Merribee Pastoral Industries,
    that lack of apparent merit might be a reason for ordering
    security
    for costs.
  • As Ms Lis was not legally
    represented, a costs order would not affect her ability
    to proceed with the application.

Implications

This is a rare exercise of this discretion.
The decision follows from the recent decision of Whelan
C in Polaris
Sales Australia and Pettigrew PR946259. Both decisions
demonstrate that particular factors must be present in
order for the AIRC to make an order for security for costs.
When determining whether a respondent is likely to be successful
in an application for security for costs, the respondent
needs to consider the following factors:

  • The applicant's financial situation should not
    be an automatic bar to making the order; nor should
    it automatically
    mean that an order should be made.
  • Has the applicant's financial situation been
    caused by their employment being terminated?
  • Will the order frustrate the applicant's right to
    litigate their claim?
  • Is the application without
    merit, without reasonable prospect of success or vexatious?
  • If the application is brought at a later stage of
    the proceedings, has the applicant acted unreasonably?
  • Are there any public interest considerations which
    should be taken into account and are there any unusual
    aspects
    to the case?

Text of the decision is available at:
http://www.airc.gov.au/decisionssigned/html/PR955459.htm

This
is to be read in conjunction with the orders of Richards
C of 4 March 2005 dismissing the application which is available
at:
http://www.airc.gov.au/decisionssigned/html/PR956250.htm

For
further information please contact:

Damien O'Donovan

Senior Executive Lawyer

T 02 6253 7424 F 02 6253 7384

damien.o'donovan@ags.gov.au

Briony Eales

Lawyer

T 02 6253 7032 F 02 6253 7381

briony.eales@ags.gov.au

Important: The material in Express law is
provided as an early, interim view for general information
only and further analysis on the matter may be prepared
by AGS. The material should not be relied upon for
the purpose of a particular matter. Please contact
AGS before any action or decision is taken on the basis
of any of the material in this message.