Vexatious employee claims: Who pays costs?

by HCA13 Jul 2016
Employers have been urged to seek costs in unfair dismissal cases where they believe the action is founded on a lie.

The Fair Work Commission has held that unsuccessful parties in unfair dismissal claims can be ordered to pay the successful party's costs where the claim has been vexatious.

The ruling was made in a case in which a truck driver was dismissed after failing a routine drugs test. The driver then claimed that immediately after testing positive for amphetamine and methamphetamine at work, he took a supplementary urine test with his own doctor, proving he did not have those drugs in his system.

He was dismissed and commenced an unfair dismissal claim. Throughout the proceeding, under cross-examination and in his witness statement, the driver claimed he’d taken a supplementary urine test that cleared him.

The employer called the driver's doctor to give evidence. The doctor's evidence established that the driver had not passed the supplementary test. The doctor produced documents that showed the test results attached to the driver's witness statement had been fabricated.

After these revelations, the driver immediately instructed his representative to discontinue his claim.
The employer sought an order for indemnity costs and the Commissioner found the driver's claim was premised on a deliberate lie, and so was unreasonable and vexatious.

As a result, the driver was ordered to pay his former employer more than $18,000 on an indemnity basis.

Allens’ Senior Associate Sikeli Ratu says, “employers should consider making an application for costs if the applicant has made false assertions in witness statements, or other documents, in an unfair dismissal proceeding. If an employer suspects that an applicant's claim is premised on a lie, they should also consider referring to the possibility of costs orders during pre-trial settlement negotiations. This may help achieve a more reasonable settlement, by highlighting to the applicant the potentially expensive costs risks of proceeding to trial.”


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