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[2009] AIRCFB 769
Australian Industrial Relations Commission (Full Bench)
2009-08-28
Original judgment source is linked above.
s.120 - Appeal to Full Bench
Appeal - Commissioner's certificate that application has no reasonable prospects of success - test applied in determining to issue certificate - whether wrong test - whether conclusion that application has no reasonable prospects of success unreasonable or unjust.
[1] The applicant seeks leave to appeal from Commissioner Cribb's decision to issue a certificate under s.650 certifying that his application under s.643(1)(a) has no reasonable prospect of success. The application is made under paragraphs (a) and (f) of subs.120(1). In the notice of appeal the applicant contends that his application could not reasonably be held to have no reasonable prospects of success. In the course of argument the applicant sought leave to amend the grounds of appeal to include a ground that the Commissioner applied the wrong test in determining whether the application has any reasonable prospects of success.
[2] The respondent opposes a grant of leave to appeal and supports the correctness of the decision. It did not oppose the application for leave to amend.
[3] We note that the Fair Work Act 2009 commenced on 1 July 2009. It is clear from a composite reading of Items 11 and 12 of Schedule 2 to the Fair Work (Transitional and Consequential Amendments) Act 2009, the Workplace Relations Act 1996 (WR Act) continues to operate in respect of an application for a remedy for a termination of employment that occurred before 1 July 2009. Such matters are to be continued by the Australian Industrial Relations Commission applying the relevant provisions of the WR Act. The WR Act continues to operate in the same way in respect of an unfair dismissal appeal lodged before 1 July 2009. Support for these conclusions can be found in the Explanatory Memorandum to the Fair Work (Transitional and Consequential Amendments) Bill 2009.
[4] The respondent terminated the applicant's employment on 28 November 2008. The applicant applied to the Commission for a remedy in respect of the termination of his employment on 17 December 2008. On 12 February 2009 the matter came before Commissioner Cribb for conciliation. The Commissioner subsequently wrote to the applicant indicating a preliminary view that it would appear unlikely that the applicant would be successful in the event the matter went to arbitration. The applicant was invited to provide further information in relation to his claim and he did so.
[5] After considering the applicant's further information the Commissioner issued a certificate pursuant to s.650(2) certifying that the applicant's application has no reasonable prospects of success. The Commissioner notified the applicant that the effect of the certificate was to dismiss his application insofar as it relied on s.643(1)(a) and, as that was the only ground of the application, it was dismissed in its entirety.
[6] The applicant contends that the Commissioner, in seeking further information from the applicant in her letter of 26 February 2009, asked herself the wrong question and applied the wrong test. The applicant submitted that by indicating that "it would appear unlikely that the applicant will be successful in the event this matter goes to arbitration", the Commissioner held the view that the applicant was in fact unlikely to be successful in the substantive application. This approach, it is submitted, is contrary to the Full Bench decision in Wright v Australian Customs Service [1] wherein it was stated:
"…that the issue before the Commission in such circumstances is not whether the applicant would probably succeed in the substantive application". [23]
[7] The applicant submitted that the correct inquiry is "whether the application is manifestly untenable or groundless". The Commissioner, it was contended, failed to comply with the statutory mandated protocol.
[8] In the alternative it was submitted that the result embodied in the certificate is unreasonable or plainly unjust. The Commissioner must be taken to have failed to properly exercise the discretion that was reposed in her by the statute. This formulation of what is commonly referred to as the Wednesbury [2] principle of unreasonableness seems to suggest that the material facts before the Commissioner were of such probative force that no reasonably minded person could conceivably come to the conclusion to which the Commissioner arrived.
[9] The respondent in its submissions challenged the competency of an appeal based on the applicant's first contention that the Commissioner failed to comply with a statutory mandated protocol. The issue is not disclosed as a ground of appeal in the Notice of Appeal. It was first raised as an issue in the applicant's argument. The respondent submitted that it was in any event a point without substance. Upon the unopposed application of the applicant we have decided to allow the applicant leave to amend his grounds of appeal. It is not apparent that the respondent is prejudiced by doing so.
[10] The respondent submitted that the letter of 26 February 2009 made reference to s.650(3) of the Act which expressly records the applicable test, namely that the applicant's claim "has no reasonable prospect of success." The test of "no reasonable prospect of success" cannot be supplanted, the respondent submitted, with the common law notion of "manifestly untenable or groundless". The Commissioner's letter of 26 February 2009 pre-dated the certificate by three and a half months. The certificate and the letter accompanying it apply the correct statutory test. Accordingly it is not to be readily assumed that the Commissioner applied the wrong test. Furthermore the Commissioner was a member of the Full Bench in the Dauer [3] and O'Meara[4] cases, each of which reflected on the test to be applied in a case such as this.
[11] Turning to the issue of an unreasonable or unjust result the respondent contended that on the available material and the applicant's own version of the facts it was open to the Commissioner to proceed on the basis that the respondent had acted reasonably in addressing issues that had been raised by the applicant in the workplace, including his concerns as to his health and wellbeing. The applicant on the other hand, so the submission goes, was completely unreasonable in refusing to follow the respondent's lawful directions. It was therefore open to the Commissioner to conclude that there was a clear failure of the applicant to comply with lawful and reasonable directions and that he had no prospect of persuading the Commission that the termination of his employment was harsh or that the respondent did not have a valid reason for terminating the his employment. Leave to appeal, it was submitted, should be refused and the application dismissed.
[12] The certificate the subject of this appeal was said to be issued under s.650(2) of the Act. The provision must be read in the context of the section and in the context of the legislation as a whole. Section 650 reads as follows:
(1) When an application is lodged with the Commission, the Commission must attempt to settle the matter to which the application relates by conciliation.
(2) If the Commission is satisfied that all reasonable attempts to settle the matter by conciliation are, or are likely to be, unsuccessful so far as concerns at least one ground of the application, the Commission:
(a) must issue a certificate in writing stating that it is so satisfied in respect of that ground or each such ground; and
(b) must indicate to the parties the Commission's assessment of the merits of the application in so far as it relates to that ground or to each such ground; and
(c) if the Commission thinks fit, may recommend that the applicant elect not to pursue a ground or grounds of the application (whether or not also recommending other means of resolving the matter); and
(d) if the Commission considers, having regard to all the materials before the Commission, that the application has no reasonable prospect of success, it must advise the parties accordingly.
(a) the ground or one of the grounds of the application is the ground referred to in paragraph 643(1)(a); and
(b) the Commission has indicated that the applicant's claim in respect of the ground so referred has no reasonable prospect of success;
the Commission must invite the applicant to provide further information in support of that ground within a period specified by the Commission.
(4) If, in relation to an application to which subsection (3) applies:
(a) the applicant does not provide further information regarding the applicant's claim in respect of the ground referred to in paragraph 643(1)(a); or
(b) after consideration of the original application and the further material provided by the applicant in support of that ground;
the Commission concludes that the application has no reasonable prospect of success at arbitration, it must issue a certificate to that effect.
(5) If the Commission issues a certificate under subsection (4) in respect of an applicant's claim in respect of the ground referred to in paragraph 643(1)(a), the application is dismissed, insofar as it relates to that ground, with effect from the date of issue of the certificate."
[13] Subsection (1) dictates that all applications must undergo the process of conciliation.
[14] Subsection (2) dictates the course that the Commission must follow if it is satisfied that all reasonable attempts to settle the matter by conciliation are, or are likely to be, unsuccessful so far as concerns at least one ground of the application. Importantly it must indicate to the parties its assessment of the merits of the application in relation to the ground that it considers is likely to be unsuccessful. It may as a matter of discretion recommend that the applicant not pursue a particular ground. The Commission however must advise the parties if it, having regard to all the materials before it, considers that the application has no reasonable prospect of success.
[15] If the Commission has indicated a ground of the application has no reasonable prospect of success, it is required by subsection (3) to invite the applicant to provide further information in support of that ground.
[16] Subsection (4) requires that when the Commission invites the applicant to provide further information in respect of a ground that it has indicated has no reasonable prospect of success it must, in the absence of a response or, after consideration of the original application and any additional material, issue a certificate to the effect that the application has no reasonable prospect of success if it has so concluded.
[17] An application that the Commission has certified has no prospect of success is deemed by subsection (5) to be dismissed.
[18] The applicant submitted that s.650 of the Act is a mandatory schema. The respondent did not demur to that proposition. In our view it is a mandatory process to be followed in the event that the Commission is satisfied that all reasonable attempts to settle the matter by conciliation are, or are likely to be, unsuccessful. Subsection (2) imposes a primary duty on the Commission to undertake two actions. First it must issue a certificate. Secondly it must indicate to the parties the Commission's assessment of the merits of the application. A secondary or contingent duty arises in the event that the Commission, having regard to all the materials before the Commission, considers the application has no reasonable prospect of success. That duty requires the Commission to advise the parties accordingly.
[19] The Full Bench of the Commission in O'Meara v Stanley Works Pty Ltd, [5] dealing with a former iteration of s.654 of the WR Act, observed that these provisions leave a great deal to the judgment of the member of the Commission to whom the matter allocated for conciliation. It concluded as follows:
"Unless there is some patent failure on the part of the member to exercise the discretion appropriately, an appeal bench would be reluctant to disturb a conclusion that conciliation or further conciliation would be unlikely to resolve the matter. It would clearly be contrary to the public interest and potentially wasteful of resources if conclusions of this kind were liable to be set aside on appeal without good ground for doing so. Members of the Commission should not be discouraged from exercising their judgment in an efficient and timely manner by an apprehension of close scrutiny at the appellate level." [6]
[20] It is common ground that the decision the subject of the appeal is a discretionary decision. The respondent refers to the decision of the Full Bench in Brazilian Butterfly Pty Ltd v Charalambous [7] referring as it does to the High Court's observation in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission,[8] on the process of an exercise of discretion in the following terms:
" "Discretion" is a notion that 'signifies a number of different legal concepts'. In general terms, it refers to a decision-making process in which 'no one [consideration] and no combination of [consideration] is necessarily determinative of the result.' Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made. The latitude may be considerable as, for example, where the relevant considerations are confined only by the subject-matter and object of the legislation which confers the discretion. On the other hand, it may be quite narrow where, for example the decision-maker is required to make a particular decision if he or she forms a particular opinion or value judgment." [9]
[21] Where the subject of an appeal involves the exercise of discretion leave to appeal will be granted only if the applicant demonstrates an error of the kind identified in House v The King. [10] The oft quoted passage from that decision is in the following terms:
"It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the material for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred." [11]
[22] Here it is said that the Commissioner asked herself the wrong question when considering whether to issue the certificate in which the Commissioner ultimately recorded that the application has no reasonable prospect of success. We think there is some force in the applicant's argument. It is clear from the her letter of 26 February 2009 the Commissioner had "indicated" to the applicant in the conciliation conference on 12 February 2009 that she intended issuing a certificate indicating that "it would appear unlikely that the applicant will be successful" in the event that the matter goes to arbitration. The letter confirms that same indication and asks the applicant if there is any further information he wishes to provide in support of the application. It is at least arguable that the Commissioner applied the wrong test.
[23] It seems the phrase "reasonable prospects of success" conveys something less than likelihood of success. Sheppard J in Ahern v Deputy Commissioner of Taxation [12], in the observation "... will be likely to succeed or at least have reasonable prospects of success" indicates a less stringent test for determining whether a matter has prospects of success. This formulation would suggest there is a question of probability on the one hand and possibility on the other.
[24] In Westend Pallets Pty Ltd v Lally [13] a Full Bench of the Commission equated "reasonable prospects of success" with "arguable case" observing that:
"The requirement for an arguable case of either legal error or that the discretion has been miscarried will mean that applicants must demonstrate that their case has a reasonable prospect of success." [14]
[25] In indicating to the applicant that it would appear unlikely that the applicant will be successful the Commissioner has adopted a more stringent test than is required by the legislation. On one view it might be argued that the higher test indicated by the Commissioner ought to have been sufficient to have put the applicant on notice that the certificate would be to the effect contemplated by s.650(3). We would not be persuaded by that argument. In view of the very serious consequence of certifying that an application has no reasonable prospect of success it is important that an applicant is informed of the intended contents of the certificate in clear and unambiguous terms. An applicant who is not so informed is entitled to presume that the certificate is not going to have the effect of dismissing her or his application. If that be a correct analysis of the requirements of the legislation it matters little whether the Commissioner did or did not apply the correct test. We turn now to that issue.
[26] The applicant urges us to infer that the Commissioner applied the wrong test. The respondent contends that such an inference is not open. It submitted that having regard to the primary facts it would be mere speculation or conjecture to say that the wrong test was applied at the time the certificate was issued.
[27] The relevant primary facts are that on 17 December 2008 the applicant applied for relief in respect of the termination of his employment. The Commissioner convened a conciliation conference in respect of the application on 12 February 2009. On 26 February 2009 the Commissioner wrote to the applicant confirming the indication that had been given to the applicant in conciliation. The letter informed the applicant that the Commissioner intended issuing a certificate in the following terms:
"On the basis of the discussions held during the conference, it would appear unlikely that the applicant will be successful in the event this matter goes to arbitration."
The Commissioner then referred to s.650(3) of the Act and invited the applicant to provide any further information he wished to provide in support of the application by 6 March 2009.
[28] By letter dated 10 March 2009 solicitors for the applicant rehearsed several factual matters and contended that "it is not clear that Mr Smith is unlikely to be successful if the matter goes to arbitration." The letter concluded with a request that a certificate not be issued in the terms indicated in the Commissioner's letter of 26 February 2009. It appears that nothing further happened in the matter until the Commissioner issued a certificate under cover of a letter dated 9 June 2009. In her letter the Commissioner wrote:
"Thank you for the additional material you have forwarded, pursuant to s 650(3) of the Workplace Relations Act 1996 (the Act).
I have considered your original application and also the further material you have provided. On the basis of all of the material, I conclude that your application has no reasonable prospects of success at arbitration.
Accordingly, the Commission is required to issue a certificate to that effect (s650(4)).
Further, if the Commission issues such a certificate, the application is dismissed, insofar as it relates to the ground referred to in s 643(1)(a) of the Act. As your application is only on the ground contained in s 643(1)(a), the Commission is required, pursuant to s 650(5), to dismiss your application in its entirety."
[29] The letter attached a copy of the terms of s.650(4) and a certificate under s.650. The certificate is in two parts. The Commissioner's assessment of the merits is included in the second part. Omitting formal parts the certificate reads as follows:
Pursuant to s.650(2)(b), the Commission indicates to the parties its assessment of the merits of the application insofar as it relates to each ground indicated in the certificate issued under s.650:
On the basis of the conciliation conference, it would appear that the application has no reasonable prospect of success at arbitration."
[30] We do not have the benefit of any reasons for the conclusion reached by the Commissioner. In this regard we note the observations of the Full Bench in Wright v Australian Customs Service: [15]
"We can foresee a potential difficulty arising for a Full Bench in an appeal against the issue of a certificate where there is no record of the proceedings in conference and no reasons are given for the decision to issue the certificate. It would be a matter for any Full Bench which is faced with such a quandary."
[31] On the basis of the primary facts it is evident that the Commissioner conveyed to the applicant the wrong test when inviting him to provide further information. Moreover, the Commissioner then based her view solely on the conciliation conference rather than all the materials before the Commission. The inference is not open however, that the Commissioner applied the wrong test in issuing the certificate. If the Commissioner is to be taken as accurately expressing the factors that influenced her decision on 26 February 2009 to invite the applicant to provide her with further information, why should any view contrary to that expressed in her certificate be inferred. We do not accept that it can be so inferred and it would be mere speculation to say otherwise. That however is not the end of the matter.
[32] If the Commissioner had issued a certificate in the terms foreshadowed in the conciliation conference on 12 February and in her letter of 26 February 2009 the applicant's application would not have stood dismissed by the statute. That is so for two reasons. First, the view that had been formed by the Commissioner on 26 February 2009 was based solely on the conciliation conference rather than all the materials before the Commission as is required by s.650(2)(d). Secondly, an application stands dismissed under s.650(5) only if the Commission certifies that the application has no reasonable prospects of success. A certificate that records that it would appear unlikely that the applicant will be successful in the event the matter goes to arbitration, as the Commissioner indicated it would record, does not attract the operation of s.650(5) in spite of it being a more stringent test. It is evident from the penultimate paragraph of the solicitor's letter dated 10 March 2009 that he was under the impression that the certificate would record that he was unlikely to be successful in the event of arbitration. Arguably the applicant has been denied natural justice in the process. In our view the Commissioner's decision is attended with sufficient doubt to warrant its being reconsidered.
[33] The relevant material is to be found in the following documentation:
[34] The relevant facts as they appear from the documentation are that the applicant is a man of 45 years. He commenced work with the respondent as an apprentice in fitting and turning on 1 February 1984. Upon completion of his apprenticeship the respondent engaged him as a Tradesman-Fitter/Boilermaker in the Systems Maintenance Branch, Customer Services Department where he remained until he was suspended from duty on full pay on 26 November 2008. The respondent terminated his employment on and from 28 November 2008. The ostensible reason for the termination of his employment was his refusal to obey a lawful instruction for redeployment.
[35] Up to the time of his suspension from duty the applicant's role was to fix pumps in the workshop, to do other fitting and turning work as required and to attend pump stations. According to the applicant's application, he began raising issues with management around 2005 about the lack of amenities and "uncleanliness" of the pump sites. He contended that he was exposed to raw sewage and that there was a serious health and safety issue. He also claimed to have been in ongoing conflict with his immediate supervisor, who was acting in a threatening and intimidating manner towards him.
[36] In July 2008 the applicant wrote to the respondent's management requesting the resolution of health and safety issues. In response some three months later management told him he was to be redeployed to a position checking fire hydrants and valve locations. The applicant contended in his application that the position was a basic labouring position that did not require a trade qualification. He asserted that the redeployment was unreasonable, in breach of the award, and only occurred because he had raised valid health and safety concerns with management.
[37] In its Notice of Appearance the respondent denied that the applicant's immediate supervisor acted in a threatening and intimidating manner towards the applicant. It also denied that the position to which the applicant was to be redeployed was a basic labouring job, contending that it required technical skills and the acquisition of new skills. It did not deny the applicant's claims about health and safety issues. The respondent contends that it decided to redeploy the applicant in the interests of his own concerns for his health and in the interests of other employees who had been required to work with him. The redeployment was not, it contended, unreasonable.
[38] The applicant's letter of 28 July 2008 complains about:
The letter concludes with a request that the issues be rectified as he was finding it extremely stressful and difficult to perform his duties.
[39] Some three months later the respondent replied to the applicant's letter of 28 July 2008. It noted the substance of the applicant's letter and of a letter sent to the applicant at some unspecified time about his breach of the Code of Conduct. The letter then proceeds to inform the applicant that the respondent had decided that the most suitable course of action to deal with his complaints was to redeploy him into other duties. The letter tells the applicant that he has been redeployed.
[40] The applicant wrote on 6 November 2008 referring to the respondent's notice of redeployment and discussions with its author and noting his disbelief that he was not involved in any of the process for redeploying him to a position that he had to accept. He records that the outcome is unacceptable to him and advises that he declines the position offered. After noting an increase in his stress levels the applicant suggests that the solution is "quite simple". He records that he expects to perform the majority of his work as a Fitter and Turner as per his trade qualifications and employment. This is followed by a repeat of his concerns about maintenance of facilities and issues of cleanliness and health. Expressing concerns about his job security he states that he had made an appointment to see his local State Member of Parliament and concludes by saying he would appreciate it if no changes are made to his employment situation pending the outcome of his appointment with his local member.
[41] In its reply of 18 November 2008 the respondent admonished the applicant for taking the matter to his local member of Parliament, informing him that it was a workplace matter and that the redeployment was not an offer but rather a lawful instruction to redeploy.
[42] The applicant, in a letter to the Managing Director of the respondent on 26 November 2008, complained that by its actions in redeploying him the respondent was bullying, intimidating and discriminating against him as an act of retribution for raising serious issues and because of his involvement in court proceedings regarding an injury sustained while at work. The applicant that stated he wished to make a formal complaint about the way he had been treated and informed the respondent that he had scheduled a meeting with the Work Safe Field Officers for Friday, 28 November 2008.
[43] The respondent wrote to the applicant on 26 November 2008 noting that the contents of his letter of that same date would be considered and a response provided in due course. The letter notes that the decision to redeploy the applicant was as previously notified and that the respondent was open to discussion in relation to the duties of the new role. The letter goes on to say that if the applicant wished to avoid the potential consequences he was required to accept the redeployment. Later the same day the respondent wrote to the applicant stating that in light of the indications of his refusal by action to carry out a lawful redeployment instruction he was to leave the premises while his memo of 26 November was under consideration.
[44] In the letter dated 27 November 2008 from the Acting Managing Director of the respondent the applicant was informed that his allegations about bullying, intimidating and discriminatory behaviour and retribution were incorrect. It confirmed that redeployment was for the reasons outlined in the letter of 3 November 2008. The letter disputed the applicant's claims about the position to which he was redeployed and confirmed that he had been invited to enter into discussions regarding the duties associated with the new position but had chosen not to do so. It stated however, that the respondent was not prepared to accept his refusal to follow the lawful direction to be redeployed. The letter goes on to deal with other complaints raised by the applicant.
[45] The respondent's letter of 28 November 2008 confirmed oral notification given to him the day before that his employment was terminated with effect 28 November 2008.
[46] The applicant contends that having regard to the foregoing matters the Commissioner could not be satisfied that the application had no reasonable prospect of success. The result, it is submitted, is unreasonable and unjust.
[47] We discuss in paragraph [17] what the expression "reasonable prospects of success" conveys. The applicant's position is that in order to find that there is no reasonable prospect of success we must be satisfied the application is manifestly untenable or groundless. He relies on the decision of the Full Bench in Wright v Australian Customs Service. [16] The respondent contends that the test to be applied is one that requires a real, fair or sensible prospect of success as opposed to one that is fanciful or remote. It submitted that only reasonable, not plausible inferences in favour of the applicant should be drawn in determining the issue. It called in aid of that proposition the decision of the Federal Court in Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited.[17]
[48] Having regard to the authorities cited in argument, and in particular, those to which we specifically refer, it seems to us that an application will have no reasonable prospects of success if it is so lacking in merit or substance as to be not reasonably arguable. Having regard to all the available material, including the submissions in the appeal, there is a serious issue about whether the direction for redeployment was reasonable and lawful. The respondent contends that it was always prepared to discuss the issue with the applicant. The fact is that any such discussion was to be confined to the duties of the redeployed position and was conditional on the applicant moving into the position.
[49] In our view, the applicant's complaint about retribution is reasonably arguable also. There is nothing in the materials to suggest that the respondent seriously considered the applicant's complaints about health and safety. Furthermore, it is a curious coincidence that the respondent, having been informed by the applicant on 27 November 2008 that a meeting with the Work Safe Field Officers was scheduled for the following day, moved to dismiss the applicant on the very same day as the scheduled meeting.
[50] We are not satisfied that one could reasonably come to the view that the applicant's application has no reasonable prospect of success. We allow the appeal and quash the certificate issued under s.650(2) of the WR Act. We will direct that Commissioner Smith deal with the application pursuant to s.650 of the Act. An order to that effect will issue separately.
C O'Grady of Counsel for Barwon Region Water Corporation
[2] Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223.
[12] [1983] FCA 279; (1983) 78 FLR 202 at 213.
[17] [2008] FCAFC 60; [2008] 167 FCR 372, at [132].
Printed by authority of the Commonwealth Government Printer
Ashley Smith
Barwon Region Water Authority - Full Bench [2009] AIRCFB 769
(2000) 203 CLR 194
(1936) 55 CLR 499
(1983) 78 FLR 202
(1996) 69 IR 1
(2002) 120 IR 346