JH Briefs

How challenging is seeking legal costs in the unfair dismissal jurisdiction?

A recent case has illustrated how difficult (and often impractical) it is for either party to seek legal costs following a successful outcome in the unfair dismissal jurisdiction.

The thresholds under sections 611 and 400A of the Fair Work Act 2009 (Cth) are very high, meaning costs will only be awarded in the rarest of circumstances, as discussed by Deputy President Gostencnik in Applied Medical Australia Pty Ltd v Gerard Monaghan [2022] FWC 3263.

Despite incurring high costs defending the unfair dismissal claim, the Deputy President only awarded Applied Medical Australia Pty Ltd a small portion following the Applicant’s unreasonable behaviour. Including consistently breaching directions made by the commission that resulted in, among other things, the hearing having to be adjourned halfway through day one. The Applicant subsequently did not attend the adjourned hearing at all.

Difficulties in seeking legal costs are exacerbated by the fact that a party is restricted to claiming costs pursuant to a schedule of costs provided by the Fair Work Regulations. These prescribed costs are very modest and not designed to cover all, or even most, of what a party will often spend in an unfair dismissal matter. For example, in this decision, the company incurred $111,425.10 in legal costs defending the unfair dismissal proceeding, was claiming only $39,500 in the costs application under the prescribed schedule of costs, and was awarded only $8,850.

In this case, it is unlikely that the legal costs incurred making the application, drafting the written material and briefing counsel to appear at the costs hearing were less than the amount ultimately awarded.