FEDERAL COURT OF AUSTRALIA

Wang v MTC Australia Ltd [2018] FCA 1037

ORDERS

THE COURT ORDERS THAT:

1.    The appeal is dismissed.

2.    The cross-appeal is dismissed.

3.    The Appellant is to pay the Respondent’s costs of the appeal, other than costs incurred in respect to the cross-appeal.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The Appellant in the present proceeding, Ms Annie (Ran) Wang, was employed by the Respondent, MTC Australia Ltd (“MTC Australia”).

2    Ms Wang commenced employment with MTC Australia in September 2014. Her remuneration package was reviewed in August 2015. On 16 June 2016, she made a complaint about bullying and harassment. Her contract was renewed on 20 June 2016. Ms Wang’s complaint was thereafter investigated. In the course of carrying out the investigation of the complaints made by Ms Wang, matters of concern emerged regarding Ms Wang’s own work performance. In July 2016, she was given a letter calling upon her to show cause why her employment should not be terminated. A response to that invitation was provided. Her employment was thereafter terminated.

3    In October 2016, Ms Wang then commenced a proceeding in the Federal Circuit Court of Australia under the Fair Work Act 2009 (Cth). She maintained that she had been unlawfully dismissed and that the reason for her dismissal was the exercise of a workplace right, namely the right to make a complaint about bullying and harassment. She sought orders for both the payment of compensation and for the imposition of a pecuniary penalty. The form of Application filed with the Federal Circuit Court did not itself quantify the amount of compensation sought but an attached document indicated that she was seeking “$40,000 for loss of income about six months and loss of mental health”. The quantum of the penalties sought was identified in the Application as “$54,000 + $10,800 + 10,800”.

4    In October 2017, a Judge of the Federal Circuit Court dismissed the proceeding: Wang v MTC Australia Ltd [2017] FCCA 2840. It was concluded that although MTC Australia had taken adverse action against Ms Wang, her dismissal was not occasioned by the exercise of any workplace right but as a result of the investigation into her conduct and the outcome of that investigation. The primary Judge made an order that there be no order as to costs.

5    Ms Wang now appeals to this Court. She maintains (in summary form) that the primary Judge:

    erred in concluding that she was dismissed because of her performance and not because she made a complaint; and

    exhibited bias against her during the course of the hearing.

MTC Australia has filed a Notice of Cross-Appeal against the order of the primary Judge that there be no order as to costs.

6    Ms Wang appeared before this Court unrepresented. MTC Australia appeared by Counsel.

7    It is concluded that both the Notice of Appeal and the Notice of Cross-Appeal should be dismissed. It is also concluded that an order should be made in favour of MTC Australia for the costs it has incurred in this Court on appeal.

The taking of adverse action & the reverse onus of proof

8    MTC Australia admitted before the primary Judge that it took “adverse action” against Ms Wang when it terminated her employment: [2017] FCCA 2840 at [11].

9    The primary Judge accepted that the complaint about bullying and harassment constituted the exercise of a workplace right and that the onus thereafter shifted to MTC Australia to prove that Ms Wang was not dismissed because she had exercised that workplace right, in accordance with s 361 of the Fair Work Act: [2017] FCCA 2840 at [19] to [20]. The primary Judge concluded that MTC Australia had discharged that onus as follows:

[23]    … It is abundantly clear from the available material that MTC has discharged its onus to establish that the adverse action was not undertaken for a prohibited reason. There is no doubt in my mind that the reason for Ms Wang’s dismissal was the outcome of the investigation of her, based upon complaints about her and other concerns which were numerous, manifest and from a number of people, not simply those against whom Ms Wang had concerns.

The “available material” included the “matters uncovered during the course of the investigation”. The primary Judge summarised this material as follows:

[13]    The matters uncovered during the course of the investigation included:

a)    during the period of March – June 2016, MTC had received seven complaints from students and a colleague of Ms Wang’s relating to her behaviour and approach towards students;

b)    various students had requested to be transferred out of Ms Wang’s class;

c)    Ms Wang had shown poor judgement when, on or about 18 May 2016, she provided sexual health education material in the form of a worksheet to students from diverse religious and cultural backgrounds; and

d)    Ms Wang had failed or had refused to accept MTC’s directions given during performance management sessions on 10 March 2016 and 31 March 2016.

10    No appellable error is exposed in reaching the factual conclusion that MTC Australia had discharged the onus and there is no appellable error exposed in the manner in which the reverse onus was applied to the facts.

11    Although Ms Wang maintained that she had an overwhelming case proving that no issue arose as to her work performance, the primary Judge disagreed. He preferred the evidence that had been adduced on behalf of MTC Australia, including an affidavit of Mr Radwan Kassir.

A reasonable apprehension of bias?

12    The submission made by Ms Wang that the primary Judge had exhibited a reasonable apprehension of bias against her was expressed in a number of ways. She variously described that the primary Judge “change[d] his attitude” or had a “change of heart” once he became aware of her contract being renewed after she had made the complaint.

13    Ms Wang relied upon exchanges she had with the primary Judge. During the course of her submissions to this Court, Ms Wang referred to many exchanges. It is sufficient, however, for present purposes to refer to the following.

14    The connection made by the primary Judge between the dates upon which Ms Wang’s contract of employment was renewed and the date on which she made her complaint is evident from the following exchange:

HIS HONOUR:    I think, Ms Wang, if the contract had not been renewed four days after you made your complaint …

MS WANG:    Yes.

HIS HONOUR:    … you might have a stronger case.

MS WANG:    Four days after I …

HIS HONOUR:    If the contract had not been renewed, I think you would have been able to complain that your complaint was a factor.

15    Reliance was also placed upon the following exchange when the primary Judge invited submissions from Ms Wang as follows:

HIS HONOUR:    Reflect on this: what the case is about is your allegation that you were dismissed for a prohibited reason, and the prohibited reason you offer is that you had exercised your workplace right to make a complaint. So, what you need to do is to draw a link between your complaint and your dismissal. Once you draw that link, then the onus shifts onto the employer to satisfy the court that your complaint was not the real reason for dismissal. There was another reason. So, I want your submissions to focus on what was the real reason for your dismissal. Okay?

MS WANG:    Yes. Thank you.

A short adjournment was then granted by the primary Judge to allow Ms Wang to consider her response.

16    Another exchange followed a submission being made by Ms Wang that she had a “real eyewitness” (Ms Rebecca Austin) who had given evidence and Ms Wang having a “medical certificate” and suffering from “stress” and “big headaches”. The exchange continued as follows:

HIS HONOUR:    You had some issues. And I think you were not so disabled that you could not deal with the case. I think you were capable of dealing with the case. And, at times, you did quite well in cross-examination. There were times where I think you overreacted and became loud and a bit aggressive.

17    A further exchange followed a submission being made by Ms Wang regarding the evidence of Mr Kassir. That exchange was as follows:

HIS HONOUR:    I have to say, Ms Wang, it seems to me that the reason for your dismissal was the adverse outcome of the investigation of your performance and behaviour. It seems to me that was genuinely the reason for your dismissal.

MS WANG:    It’s not genuine. I have an eyewitness today here. Is like I – I performed – they even gave me a pay rise. If I just do have this, why didn’t I receive any warning? …

…

HIS HONOUR:    Another way of looking at this is that you lodged your complaint because you knew that you were experiencing difficulties in your job.

MS WANG:    No, I didn’t. I did have trouble through problems with this other teacher, with Radwan. But I didn’t experience ... to lose my job. I didn’t know that.

HIS HONOUR:    No. I accept that.

MS WANG:    But what’s your question, your Honour?

HIS HONOUR:    Well, my proposition is that you made a complaint as a defence because you knew that there were issues.

18    Although it may be accepted that different trial Judges may have expressed the same concerns in different terms to those employed by the primary Judge in this case, it is not considered that these exchanges (or a more general reading of the transcript as a whole) expose anything other than a trial judge:

    expressing concerns or reservations as to the case being advanced and inviting submissions to address those concerns; and

    attempting to assist an unrepresented party to “focus” on issues of relevance.

None of the exchanges, with respect, evidence the primary Judge approaching the resolution of the factual and legal issues other than with a mind open to persuasion.

19    The supposed “change [of] attitude” of the primary Judge relied upon by Ms Wang was, with respect, nothing more than the primary Judge exposing for the consideration of Ms Wang a question as to why an inference was not available that the making of a complaint played no part in the decision-making processes of MTC Australia where it had in fact renewed her contract after the making of the complaint.

20    The contention that the decision of the primary Judge should be set aside by reason of a reasonable apprehension of bias is thus rejected.

The cross-appeal as to costs

21    The primary Judge ordered that there should be no order as to costs: [2017] FCCA 2840 at [26] to [27].

22    The Notice of Cross-Appeal filed by MTC Australia contends (inter alia) that the primary Judge erred in not ordering Ms Wang to pay its costs either on a party/party basis or on an indemnity basis.

23    The cross-appeal is to be dismissed.

24    The proceeding before the primary Judge arose under the Fair Work Act. In proceedings arising under the Far Work Act, s 570 of the Act displaces the normal discretion of the Court when resolving claims in other jurisdictions to order costs and the general rule that costs should follow the event. That section provides as follows:

Costs only if proceedings instituted vexatiously etc.

(1)    A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.

(2)    The party may be ordered to pay the costs only if:

(a)    the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or

(b)    the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or

(c)    the court is satisfied of both of the following:

(i)    the party unreasonably refused to participate in a matter before the FWC;

(ii)    the matter arose from the same facts as the proceedings.

25    The policy behind s 570 and the principles to be applied in the exercise of the discretion conferred by s 570(2) have been summarised by Dowsett, McKerracher and Katzmann JJ in Australian Workers’ Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23, (2013) 232 FCR 428 at 430 to 431 as follows:

[7]    … In our view the authorities establish the following principles:

(1)    The purpose or policy of the section is to free parties from the risk of having to pay their opponents’ costs in matters arising under the Act, while at the same time protecting those parties who are forced to defend proceedings that have been instituted vexatiously or without reasonable cause.

(2)    It follows from the protection offered by s 570(2) that a person will rarely be ordered to pay the costs of a proceeding. But it is not necessary to prove that there are exceptional circumstances warranting the making of an order: Spotless Services Australia Ltd v Senior Deputy President Marsh [2004] FCAFC 155 (Spotless) at [12]-[13] (to the extent that the Full Court in Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275 (Kangan) held otherwise, we would respectfully disagree).

(3)    The relevant question is whether the proceeding had reasonable prospects of success at the time it was instituted, not whether it ultimately failed: R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia (1978) 140 CLR 470 at 473 per Gibbs J; Kangan at [60]. In Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264-265 (approved in Kangan) Wilcox J said:

If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being “without reasonable cause”. But where, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.

[8]    We would emphasise, however, that these principles relate to the question of whether the jurisdiction to award costs is enlivened. Even if the Court has jurisdiction to make a costs order, it retains the discretion to refrain from exercising it in an appropriate case.

See also: Shamir v Commonwealth [2015] FCA 1463 at [2] per Pagone J.

26    In seeking an order that Ms Wang pay its costs below, MTC Australia submitted before the primary Judge (and maintained before this Court) that the discretion to award costs pursuant to s 570 was enlivened because (inter alia):

    Ms Wang’s failure to accept offers of compromise was an “unreasonable act or omission” within the meaning of and for the purposes of s 570(2)(b) of the Fair Work Act;

and that the discretion should be exercised in its favour because:

    the offers of compromise were in excess of any likely result that she may otherwise achieve.

The proceeding before the Federal Circuit Court was commenced by the filing of an Application on 26 October 2016. There was thereafter a mediation by a Registrar on 28 April 2017. The hearing before the Federal Circuit Court was held over two days on 26 and 27 October 2017. The offers of compromise were all made before the hearing commenced and were as follows:

27    With reference to s 570(2)(b), Counsel for MTC Australia relied upon the following observations of Katzmann J in Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 3) [2017] FCA 810:

The Court’s powers

[25]    The Court’s powers to award costs in an application of this kind are constrained by the terms of s 570 of the FW Act. That section relevantly provides that a party to proceedings relating to a matter arising under the Act may only be ordered to pay the costs incurred by another party if the court is satisfied that the first mentioned party’s “unreasonable act or omission” caused the other party to incur the costs: s 570(2)(b). In the present case that means that the Court only has the power to make the orders the Ombudsman seeks if two conditions are established. First, the Court must be satisfied that GPS, by its action(s) or omission(s), behaved unreasonably. That question is to be determined objectively: Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392 at [32]. Secondly, the Court must be satisfied that GPS’s unreasonable act(s) or omission(s) caused the Ombudsman to incur costs. If those two conditions are established, the Court has a discretion to make a costs order against GPS and in the Ombudsman’s favour: Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574 at [28].

[26]    Importantly, the touchstone for the exercise of the power is unreasonableness, not negligence or inefficiency. That said, once the power is enlivened and the Court is considering whether or not to exercise its discretion to make an order, the Court is bound to exercise that discretion in the way that best promotes the overarching purpose of any statutory provision on a matter of practice and procedure referred to in s 37M of the [Federal Court of Australia Act 1976 (Cth)]: s 37M(3). At this point questions of inefficiency are very relevant, for the overarching purpose of the civil practice and procedure provisions includes the efficient resolution of disputes.

28    In resolving MTC Australia’s submissions in respect to the cross-appeal, it is to be constantly borne in mind that this Court is exercising an appellate function. The task of the Court presently being undertaken is not to itself exercise the discretion afresh and to make such orders as to costs that it considers would have been appropriate, but the more limited task of reviewing the exercise of discretion by the primary Judge.

29    It is further to be borne in mind that the order that there be no order as to costs made by the primary Judge was an exercise of a discretionary power. An appeal from an order as to costs constrained by s 570, just as much as an appeal from an order as to costs pursuant to s 43 of the Federal Court of Australia Act 1976 (Cth) (cf. Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1987) 17 FCR 211 at 222 per Bowen CJ, Morling and Gummow JJ), needs to demonstrate an error of the kind identified in House v The King (1936) 55 CLR 499 at 504 to 505 per Dixon, Evatt and McTiernan JJ.

30    In exercising the discretion and in making the order that there be no order as to costs, the primary Judge considered three factors, namely:

    what he perceived to be “a general doubt about the capacity of the Court to award costs in Fair Work proceedings” but that that doubt “should not prevent the Court from making a costs order, but should cause the Court to be cautious in departing from the general principle set out in s.570” ([2017] FCCA 2840 at [26]);

    his assessment that the “proceedings were properly brought” ([2017] FCCA 2840 at [26]); and

    an assessment that “the claim for costs was based substantially on settlement offers properly made by MTC” and an assessment that there was “real doubt” as to whether Ms Wang “was able to focus objectively on the offers that were put to her” ([2017] FCCA 2840 at [27]).

31    The error of the kind identified in House v The King was said on behalf of MTC Australia to lie in the reasoning of the primary Judge that:

    there was “a general doubt about the capacity of the Court to award costs in Fair Work proceedings”; and

    there was “real doubt” as to the ability of Ms Wang “to focus objectively on the offers that were put to her”.

The error was said to be exposed because of both the absence of any doubt as to the “capacity” of the Court to award costs and the reliance placed upon an assessment of the subjective ability of Ms Wang to consider offers of settlement as opposed to whether those offers viewed objectively were fair and reasonable.

32    Given the offers that had been made prior to the commencement of the hearing in the Federal Circuit Court, there is no difficulty in concluding that the pursuit by Ms Wang of those proceeding caused MTC Australia to incur costs and that such costs were incurred as a result of Ms Wang’s “unreasonable act or omission”. The “unreasonable act or omission” was the failure to accept one or other of the offers of compromise or, at the very least, the offer last made on 29 September 2017 of $45,000.

33    Although the reasoning of the Federal Circuit Court Judge is far from clear, it would appear as though that Judge correctly understood that the question to be resolved was not whether the occasion arose for the exercise of the discretion but rather a question as to the manner in which that discretion was to be exercised.

34    The question thereafter arises as to whether the manner in which that discretion was exercised exposes error.

35    Neither of the two asserted errors relied upon by MTC Australia should prevail.

36    As to the former error relied upon, although reservation may be expressed as to whether the primary Judge was correct in observing that there was “a general doubt about the capacity of the Court to award costs”, that observation did not affect the conclusion reached that the Court should be “cautious in departing from the general principle set out in s.570”.

37    As to the latter error relied upon, the reasons of the primary Judge as fully expressed were as follows:

[27]    Thirdly, the claim for costs was based substantially on settlement offers properly made by MTC. While it was unwise, probably exceptionally unwise, of Ms Wang to refuse the offers made to her, particularly the final offer made by letter on 29 September 2017, I take into account her medical condition, as established by a medical certificate she provided, and my own observation of her as a person who has a fixation about the strength of her grievances and the rightness of them. While Ms Wang had the capacity to conduct the proceedings, I have real doubt that she was able to focus objectively on the offers that were put to her.

Properly construed, those reasons evidence nothing other than the primary Judge giving consideration to both:

    the relevance of the offers of compromise that had been made and the observation that Ms Wang had been “exceptionally unwise” in not accepting the offers; and

    the extent to which Ms Wang had the capacity to understand the offers being made.

So construed, the reasons of the primary Judge do not expose any error of the kind identified in House v The King. The rejection of an offer greater than the amount of the compensation claimed, it may be noted, would at least invite question as to why an order for costs should not be made against the party rejecting the offer. But the resolution of such questions was a matter for the primary Judge. Different judges could well have reached a different conclusion. The primary Judge did in fact make an objective assessment of the prudence of rejecting the offers made and concluded that it may have been “exceptionally unwise” for Ms Wang not to have accepted the offers made. And it was not irrelevant to the exercise of the discretion, having made that objective assessment, to then consider the ability of Ms Wang to properly consider the offers made. No error of the House v The King kind is thereby exposed.

38    The cross-appeal is thus to be dismissed.

CONCLUSIONS

39    The appeal should be dismissed.

40    The cross-appeal should be dismissed.

41    The appeal, it is respectfully considered, had no reasonable prospects of success. Accordingly, it can be said that the Appellant “instituted the proceedings … without reasonable cause” within the meaning of s 570(2)(a) of the Fair Work Act. The discretion to award costs in the appeal is therefore enlivened. In the circumstances of the case, it is considered that the discretion should be exercised adversely to the Appellant. The appeal was without merit and was, with respect, “doomed to failure”: cf. Sankararamalingam v InfoTech Professionals Pty Ltd [2017] FCA 917 at 49 to 50. MTC Australia, accordingly, should have its costs of the appeal. That order should not include the costs incurred by MTC Australia in respect to its Notice of Cross-Appeal.

THE ORDERS OF THE COURT ARE:

1.    The appeal is dismissed.

2.    The cross-appeal is dismissed.

3.    The Appellant is to pay the Respondent’s costs of the appeal, other than costs incurred in respect to the cross-appeal.

Associate:    

Dated:    12 July 2018