s.45 appeal

Appeal by Chubb Security Australia Pty Ltd against decision

Deputy President Duncan on 31 August 1999 in U No. 20066 of 1999

Appeal against decision and order - termination of employment - finding that termination disproportionate to offence - conclusion that termination harsh, unjust and unreasonable - sense in which order made was discretionary - principles applicable to appeal from discretionary order - nature of error within s.170JF(2) - alleged failure to make finding under s.170CG(3)(a) - whether extraneous or irrelevant matters considered - manner in which appeal should be disposed of under s.45(7) - ss.45, 170CA(2), 170CG(3) and 170JF(2)

INTRODUCTION AND DUNCAN DP's DECISION AND ORDER

[1] This is an appeal by Chubb Security Australia Pty Ltd (Chubb) expressed to be "against decision and order by Deputy President Duncan at Sydney on 31 August 1999" in matter U No. 20066 of 1999. In this decision (Print R8455), Duncan DP found that Chubb's dismissal of John Thomas, an applicant for relief under s.170CE of the Workplace Relations Act 1996, was "on balance, harsh, unjust and unreasonable". His Honour, noting that Mr Thomas did not seek reinstatement and that Chubb resisted it, said that he did not consider it appropriate to award reinstatement and concluded that he was "satisfied that payment of sixteen weeks pay subject to tax by way of compensation results in a fair go all round, the object of Division 3 of Part VIA of the Act referred to in s.170CA(2)". His Honour issued the following Finding and Order (Print R8668):

1. That the dismissal of the applicant in the circumstances of this case was harsh, unjust and unreasonable.

2. That the reinstatement of the applicant is not appropriate.

1. That Chubb Security Australia Pty Limited pay John Thomas a sum equivalent to sixteen (16) weeks pay at the date of termination less appropriate tax by way of compensation.

2. That the payment ordered herein be effected within 21 days of this date."

[2] In his decision, Duncan DP under the heading "Findings" said (paragraph [23]):

"The following findings are made on an assessment of the evidence. Where choices have to be made between the evidence of Mr and Mrs Thomas and Mr Alcock I prefer the Thomas' evidence.

1. Mr Thomas was employed as a security guard by Chubb or its predecessors from 4 December 1995 until his employment was terminated for misconduct on 4 December 1998 with effect from 9 December 1998.

2. In June 1998 he successfully completed a Workplace Assessor and RPL Advisor course conducted by Chubb.

3. This course qualified Mr Thomas to carry out competency based assessments of staff but he was never authorised or asked to do so.

4. Mr Thomas was highly motivated to use his assessment skills and, at a discussion level, engaged in the field but there was only one other exercise which could stand alongside the incident which led to the termination of his employment.

6. On 4 December 1998 Mr Thomas requested his wife to contact Chubb at a time when he knew Mr Alcock would be on duty. The phone call advised Mr Alcock that there were alarms on level 3 of the relevant site. Level 3 was known to Mr Thomas to be a part of the site which was more highly security sensitive than other parts being occupied by the police internal investigation unit.

7. Mr Alcock terminated the phone call before finding out who was the caller. (In his first report he says so himself and this is in keeping with Mrs Thomas' evidence). He despatched a colleague to check externally and, there being nothing noticeable, he contacted the second choice out of hours contact for the police.

8. The contact, Commander Brammer, attended the scene.

9. Prior to that Mrs Thomas rang back, without identifying herself she was nevertheless called by a person at her work place which prompted Mr Alcock to question her and establish her identity.

10. The incident caused severe embarrassment to Chubb with both its client, the building management and the police.

11. It is not possible to determine with precision what, if any, part the incident contributed to Chubb's loss of the tender for security services at the site, the most that can be said is that it would not have helped.

12. The assessment was unauthorised and was not conducted in the manner an authorised assessment would have been.

13. Mr Grecian was aware that these informal "assessments" were being conducted - he was approached by one intending assessor - but did not advise against it generally or prohibit it by instruction to the officers at the site.

14. The assessment was the result of Mr Thomas' overconfident views of his capacity and his belief, demonstrated before me in the overall giving of his evidence, that he knew best.

15. The incident was not a prank - it was the result of finding 14.

16. There was no malice towards Chubb in the incident and there was no intent to harm their reputation.

18. He was not precisely aware of the consequences of the incident at the time he commissioned it.

19. What Mr Alcock did as a result of the phone call was, apart from the failure to identify the caller, in keeping with normal procedures.

20. Mr Grecian had two meetings with Mr Thomas. At the first he discussed the matter and, while recognising that intention was good said the execution was terrible. He advised that investigations would continue and that Mr Thomas remained stood down with pay. The second meeting proceeded on somewhat similar lines although devoted in part to putting propositions to Mr Thomas which, if he agreed with them, which he did, laid the basis for termination.

21. Mr Thomas was not told he might have a representative with him but neither did he ask for it."

[3] Except as to point 13 (to which we further refer in our paragraphs [20] and [22]), we are, with respect, of the view that these findings are justified on the evidence before his Honour. To complete the picture we, however, add the following - none of which is in dispute:

* "The relevant site" referred to in point 6 is a building in Sydney. Chubb provided security services to this building pursuant to a contract with the building's property manager, Morgan Grenfell. Level 3 of this building was occupied by what appears to be called the police internal investigation unit or the police internal affairs command. Mr Thomas agreed in his evidence before Duncan DP (transcript p.34) that it was "a pretty high profile site".

* Mrs Thomas in fact made the telephone call which she was requested by Mr Thomas to make. The call was made at about 9.30 pm on Friday 4 December 1998. At this time Mr Thomas was at home. Mrs Thomas made the call from her workplace which was at the premises of a security company unrelated to Chubb. The call was made to Mr Stephen Alcock, an employee of Chubb, who was on duty at the building which housed the police internal investigation unit. According to her statement (exhibit T.2), Mrs Thomas said "I have alarms coming from level 3 the police area. Check them and get back to me". This call was a hoax and was, on Mr Thomas's instructions to his wife, designed to sound as real as possible.

* The reason why Mr Thomas asked his wife to make the call was that Mr Thomas was concerned that Mr Alcock was not following proper procedures and Mr Thomas wanted, for his own personal knowledge, to make an "assessment" of Mr Alcock. (As noted in Duncan DP's findings, the "assessment" was unauthorised.)

* Mr Grecian is the manager of Chubb who was responsible for Mr Thomas.

[4] We also add that, before Duncan DP, Mr Grecian's evidence included that:

* Morgan Grenfell, the building managers, were very angry and annoyed that Chubb had placed them in a compromising position;

* Commander Brammer was annoyed, not only at being called out, but also because a hoax call had initiated such a series of events;

* Chubb had written to Morgan Grenfell apologising for what had occurred;

* in March 1999 Chubb lost the contract for the site;

* Morgan Grenfell did not tell him whether the incident that led to Mr Thomas's termination played any part in Chubb losing the contract; and

* losing the contract required Chubb to relocate approximately 30 permanent guards to other sites.

[5] In his decision, Duncan DP, after setting out the findings we have quoted, turned to s.170CG(3) which states:

"In determining, for the purposes of the arbitration, whether a termination was harsh, unjust or unreasonable, the Commission must have regard to:

(a) whether there was a valid reason for the termination related to the capacity or conduct of the employee or to the operational requirements of the employer's undertaking, establishment or service; and

(b) whether the employee was notified of that reason; and

(c) whether the employee was given an opportunity to respond to any reason related to the capacity or conduct of the employee; and

(d) if the termination related to unsatisfactory performance by the employee - whether the employee had been warned about that unsatisfactory performance before the termination; and

(e) any other matters that the Commission considers relevant."

"whether there was a valid reason for the termination related to the capacity or conduct of the employee or to the operational requirements of the employer's undertaking, establishment or service"

"Mr Thomas was dismissed for misconduct. That was constituted by conducting an unauthorised assessment of a fellow employee. The unauthorised assessment had embarrassing results for Chubb -- with both the police and building management. The dismissal occurred prior to the loss of the contract to supply security services on site so that loss played no part in the decision. I take into account that the assessment was unauthorised and that it had embarrassing consequences and conclude that it warranted action. Whether that conclusion supports a finding that termination of Mr Thomas employment was appropriate depends on the further considerations."

" whether the employee was notified of that reason"

"Mr Thomas was notified of the reason at the latest at the first meeting on 7 December 1998. It was made clear what was being investigated. The position was made even clearer at the meeting of 9 December."

"whether the employee was given an opportunity to respond to any reason related to the capacity or conduct of the employee"

"The applicant was given ample opportunity to respond to the reason which was related to his conduct. The incident was simple and although the time allocated - just over two days - was short I find nothing wrong with the way in which the investigation and interviews were conducted."

" if the termination related to unsatisfactory performance by the employee--whether the employee had been warned about that unsatisfactory performance before the termination"

"Mr Thomas employment was not terminated for any reason associated with unsatisfactory performance. This is not to say that a warning may not have been an appropriate response but the issue does not arise for consideration under this head."

"any other matters that the Commission considers relevant"

his Honour said (paragraphs [29], [30] and [31]):

"[29] In Byrne v. Australian Airlines [(1995) 185 CLR 410 at 465], McHugh and Gummow JJ said:

`It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.' [emphasis supplied]

That is seen as introducing a factor which I consider here. The factor is whether or not termination was disproportionate to the offence.

[30] I find that termination of employment in this case was disproportionate to the offence. This conclusion is reached after considering:

* there was no malice in Mr Thomas' experiment nor any suggestion of industrial sabotage;

* there is no evidence from which I can draw an inference that Mr Thomas was acting in a fashion inimical with his duties as a security officer;

* that in the meetings Mr Grecian twice said words to the effect that he understood what was being attempted but disapproved the execution;

* that Mr Grecian appears to have taken no steps to prevent the practice generally although he was aware of an attempt at a similar incident;

* that Mr Thomas had a generally good record notwithstanding Mr Grecian's criticism of certain aspects of Mr Thomas' approach to work routines;

* that I do not hold Mr Thomas directly responsible for loss of the tender.

* that the action leading to the termination was unauthorised;

* that it was not in any event carried out in accordance with procedures;

* that Mr Thomas was aware Mr Alcock might not identify the caller and that further action might be taken;

* the acute embarrassment for management with the police and building management occasioned on the night of the incident.

[31] In these circumstances I find that Chubb's dismissal of Mr Thomas was, on balance, harsh, unjust and unreasonable. This conclusion is reached after acknowledging that Chubb had ground for some action and Mr Thomas was given the reason for his termination and an opportunity to respond to that reason."

[11] His Honour then considered the matter of remedy and, as we have earlier noted, ordered that Chubb pay Mr Thomas 16 weeks pay less tax.

[12] Chubb's appeal was filed on 21 September 1999. The notice of appeal included an application for an order staying the operation of the decision and order under appeal. This application was heard by McIntyre VP on 12 October 1999. Pursuant to a decision given that day, McIntyre VP on 13 October 1999 made the following order (Print S0104):

"Pursuant to my decision in transcript yesterday I ORDER that the operation of the order made on 31 August 1999 (Print R8668) by Deputy President Duncan be partially stayed save as to the amount of $2,000 which Chubb Security Australia Pty Limited is to pay John Thomas by 15 October 1999.

Chubb Security Australia Pty Limited is to place the balance of the amount awarded by Deputy President Duncan into an interest bearing account pending the determination of the appeal or until further order of the Commission."

[13] The appeal was heard by us on 8 December 1999. Mr S Benson of counsel appeared, by leave, for Chubb and Mr Thomas appeared in person.

[14] The main contentions in Chubb's appeal were that his Honour erred:

* in not making a finding with respect to the matter specified in s.170CG(3)(a); that is, so far as is relevant, whether there was a valid reason for Mr Thomas's termination related to his conduct;

* in not giving sufficient weight to Mr Thomas's actions, the way in which they were conducted and their ramifications; and

* in determining that on balance the findings in paragraph [30] of his decision supported the decision that the termination was harsh, unjust and unreasonable.

[15] As appears from paragraphs [30] and (31] of Duncan DP's decision (included in paragraph [10] of our decision), his Honour concluded that Mr Thomas's termination was "on balance, harsh, unjust and unreasonable" because of his Honour's earlier conclusion that the termination was "disproportionate to the offence". It is, we think, apparent from these words that his Honour viewed what Mr Thomas did as an "offence" but not one serious enough to warrant termination. His Honour's conclusion that the termination was disproportionate to the offence was reached after he considered the matters which are listed in his paragraph [30]. There are ten matters listed. The first six favour Mr Thomas and the remaining four do not.

[16] We turn to the six considerations listed by Duncan DP which are in Mr Thomas's favour and which led his Honour to the conclusion that termination was disproportionate to the offence_._

[17] First consideration: "there was no malice in Mr Thomas' experiment nor any suggestion of industrial sabotage". We accept that this was so. But is this an indication that the termination was disproportionate to the offence? "Malice" means evil intent or a desire to inflict injury. "Industrial sabotage" means malicious injury to work or to an industrial undertaking. An "offence" involving malice or industrial sabotage is obviously one of the gravest nature. Accordingly, in our opinion, the absence of malice or any suggestion of industrial sabotage does not lend support to the view that the termination was disproportionate to the offence.

[18] Second consideration: "there is no evidence from which I can draw an inference that Mr Thomas was acting in a fashion inimical with his duties as a security officer". In our view, Mr Thomas acted in a fashion which was directly inimical to his duties as a security officer. His duties were to carry out his work in accordance with his instructions and not to conduct an unauthorised "experiment" (the word used by his Honour in his first consideration) which had the potential to harm Chubb. (We deal with this aspect further in our paragraph [49].) We are, with respect, of the opinion that there was no basis for this second consideration.

[19] Third consideration: "that in the meetings Mr Grecian twice said words to the effect that he understood what was being attempted but disapproved the execution." As appears from the evidence, Mr Grecian did twice say words to this effect. While Mr Grecian's comments may indicate some support for Mr Thomas's idea of making an "assessment", they specifically disapprove the way in which Mr Thomas did it. And it was the way in which Mr Thomas did it that was the essence of his "offence". Accordingly, we do not think that the third consideration supports the view that termination was disproportionate to the offence.

[20] Fourth consideration: "that Mr Grecian appears to have taken no steps to prevent the practice generally although he was aware of an attempt at a similar incident". In dealing with this fourth consideration, we also refer to his Honour's similar comment in point 13 of his paragraph [23] (which is set out in our paragraph [2]) that "Mr Grecian was aware that these informal `assessments' were being conducted - he was approached by one intending assessor - but did not advise against it generally or prohibit it by instruction to the officers at the site". The evidence contains references to the following incidents:

(1) The Wollongong incident. Mr Grecian said: "There was one incident when I did receive a phone call from a guard in Wollongong who had completed the course and wished to carry out site assessments but I informed that guard that he had no authorisation to do so because the program of placing work place assessors in the company was as a fall-back measure in case there was insufficient time to accredit all the guards through the normal RPL training method and that any activity on this needed to be co-ordinated through the training organisation and they were not doing that" (transcript p.63).

(2) The first Alcock incident. Mr Thomas gave evidence that another guard, Mr Luke Simon, had got his (Mr Simon's) wife to ring Mr Alcock and tell him that "she was from one of our buildings we patrol and that there was a naked man walking around" (exhibit T.1). When Mr Alcock told Mr Simon's wife that he was going to terminate the call and call the police, Mrs Simon identified herself. (This call to Mr Alcock was a hoax.)

(3) The balaclava incident. Mr Thomas, in his evidence referred to an incident where a Mr John Edwards, the person in charge of training at Chubb, walked through Chubb's car park wearing a balaclava to check reactions. Mr Thomas said he "was led to believe that Mr Edwards would advise some office people of which particular time he was going to do it" (transcript p.39). The incident, Mr Thomas said, was stopped when Mr Edwards "was confronted by a patrol officer and his drawn weapon" (exhibit T.1).

(4) The Zanbaka incident. At the 7 December 1998 interview, Mr Grecian asked Mr Thomas if he had "done this before?". Mr Thomas said "Yes. To Fred Zanbaka. I can't understand why he carried out the procedure" (exhibit C.1, attachment A). At the 9 December 1998 interview, Mr Grecian asked Mr Thomas what happened with respect to Mr Zanbaka. Mr Thomas said "It was the same but [Zanbaka] followed the call and found out that it was Maria [Mr Thomas's wife] and continued on to make the call a social one" (exhibit C.1, attachment B). In cross-examination, Mrs Thomas was asked whether there had been a similar incident to the one on 4 December 1998. She said there was one relating to "Fred. I can't pronounce his surname. I believe it starts with Z" (transcript p.52). There is also a brief reference to this incident in Mrs Thomas's re-examination (transcript p.59). This is, presumably, the incident to which Mr Thomas was referring in the interviews with Mr Grecian.

[21] In the context of the fourth consideration and point 13 of Duncan DP's paragraph [23], we refer to the following evidence of Mr Grecian:

"Are you aware of these informal assessments being carried on by other guards of yours?"

"I don't believe there has been any informal assessment being carried on". (transcript p.63)

"I ask you how could you be aware if any other assessors have been doing informal assessments of the site?

"Unless it got back to me through situations, I would not be aware of any informal assessment that was taking place. (transcript p.69)

"So at this stage you are saying you do not know how many informal assessments have been carried out?"

Under the guise of being qualified work place assessors, no, I am not." (transcript p.69)

"... if you were to find out that there were informal assessments being carried out by these 29-odd assessors in a manner that has occurred in this particular case, what would your reaction to that be?"

"My reaction would be to cease these types of informal assessments immediately as it goes against the principles of the work place assessment. (transcript p.72)

"And an informal assessment, you described in that way where a guard has his wife ring in to set up a false situation, what would your reaction be to that if you heard other assessors were doing that?"

"Well, if I heard other assessors doing that I would adopt the same approach that I did in this time because it is compromising the security of the company's operation. I don't have a problem with informal assessment providing the person doing the assessment is in control and follows the procedures and policies laid down." (transcript p.72)

[22] In the light of the evidence to which we have referred in the previous two paragraphs, we express the following views with respect to the fourth consideration (set out in our paragraph [20]) and to point 13 in his Honour's paragraph [23] (also set out in our paragraph [20]):

* there is nothing in the evidence to suggest that Mr Grecian was aware of any "practice";

* the statements that Mr Grecian "was aware of an attempt at a similar incident" and "was aware that these informal `assessments' were being conducted - he was approached by one intending assessor" appear to relate to the Wollongong incident. That incident, however, was no more than a request by a guard to carry out an assessment, to which request Mr Grecian responded by telling the guard that he was not authorised to carry it out. There is no evidence to suggest that the guard did, or attempted to, carry out an assessment;

* if his Honour were referring to any of the other three incidents, there is no evidence that Mr Grecian was aware of the first Alcock incident, there is no evidence that he was aware of the Zanbaka incident before Mr Thomas told him of it at the 7 December 1998 interview and the balaclava incident was not "a similar incident" and, in any event, was carried out by the person in charge of Chubb's training;

* in the circumstances mentioned under the preceding three dot points, neither Mr Grecian nor Chubb could reasonably be expected to "prevent", "advise against" or "prohibit" unauthorised assessments;

* there is no apparent reason not to accept Mr Grecian's evidence set out in our paragraph [21]; in particular, that "I don't believe there has been any informal assessment being carried on" (transcript p.63);

* accordingly, we do not think that there is any evidentiary basis for the fourth consideration.

[23] Fifth consideration: "that Mr Thomas had a generally good record notwithstanding Mr Grecian's criticism of certain aspects of Mr Thomas' approach to work routines." We accept that Mr Thomas had a generally good record and that this was a factor that supported his Honour's view that Mr Thomas's termination was disproportionate to the offence.

[24] Sixth consideration: "that I do not hold Mr Thomas directly responsible for the loss of the tender." We make the following comments in relation to this consideration:

* the loss of the contract played no part in the termination of Mr Thomas's employment. Mr Thomas's employment was terminated on 9 December 1998; the contract was lost in March 1999;

* in any event, and with respect to his Honour, we do not see what basis there can be for him saying that he does not hold Mr Thomas directly responsible for the loss of the contract. There was no evidence before his Honour as to why the contract was lost. As noted in our paragraph [4], Mr Grecian gave evidence that Morgan Grenfell did not tell him whether Mr Thomas's actions played any part in Chubb losing the contract. In point 11 of his Honour's paragraph [23] (set out in our paragraph [2]), his Honour said "It is not possible to determine with precision what, if any, part the incident contributed to Chubb's loss of the tender for security services at the site, the most that can be said is that it would not have helped";

* accordingly, we are of the opinion that there is no basis for the sixth consideration and, if there were, because the termination occurred before the contract was lost, it has no bearing on whether the termination was disproportionate to the offence.

[25] We next turn to the four considerations in paragraph [30] of Duncan DP's decision which were not in Mr Thomas's favour:

"* that the action leading to the termination was unauthorised;

* that it was not in any event carried out in accordance with procedures;

* that Mr Thomas was aware Mr Alcock might not identify the caller and that further action might be taken;

* the acute embarrassment for management with the police and building management occasioned on the night of the incident."

It is sufficient to say that, in our respectful view, each of these considerations is substantiated by the evidence.

[26] Section 170JF(2) is applicable to this appeal. It states:

"For the avoidance of doubt, an appeal to a Full Bench under section 45 in relation to an order made by the Commission under Subdivision B of Division 3 may be made only on the grounds that the Commission was in error in deciding to make the order."

Therefore, the issue before us is whether his Honour "was in error in deciding to make the order".

[27] Section 45(1) makes provision for an appeal to a Full Bench with the leave of the Full Bench, against, among other things, "an ... order made by a member of the Commission ..." (s.45(1)(b)). Section 45(2) states:

"A Full Bench shall grant leave to appeal under subsection (1) if, in its opinion, the matter is of such importance that, in the public interest, leave should be granted."

[28] The order the subject of Chubb's appeal was made pursuant to Duncan DP's finding that Mr Thomas's dismissal was "harsh, unjust and unreasonable". The order is, accordingly, a discretionary one because it depends on the application of a very general standard - that is "harsh, unjust or unreasonable" (s.170CE(1)(a)) - which calls for an overall assessment having regard to the factors mentioned in s.170CG(3), each of which in turn calls for an assessment of circumstances. (The last sentence is an adaptation of a passage in the joint judgment of Mason and Deane JJ in Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 at 518 which was quoted in Construction, Forestry, Mining and Energy Union v Giudice (1998) 159 ALR 1 at pp.28-9.)

[29] Because the order of Duncan DP is a discretionary one, the appeal is to be determined in accordance with the principles applicable to appeals from such an order; that is, the principles stated in House v The King [1936] HCA 40; (1936) 55 CLR 499 at 504-5 (see Construction, Forestry, Mining and Energy Union v Giudice at pp.28-9).

[30] In House v The King, Dixon, Evatt and McTiernan JJ stated these principles as follows (pp.504-5):

"The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. 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 materials 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."

[31] In Norbis v Norbis, Mason and Deane JJ, having categorised the order in that case as discretionary because it depended on the application of a very general standard, said (pp.518-9):

"The principles enunciated in House v The King were fashioned with a close eye on the characteristics of a discretionary order in the sense which we have outlined. If the questions involved lend themselves to differences of opinion which, within a given range, are legitimate and reasonable answers to the questions, it would be wrong to allow a court of appeal to set aside a judgment at first instance merely because there exists just such a difference of opinion between the judges on appeal and the judge at first instance. In conformity with the dictates of principled decision-making, it would be wrong to determine the parties' rights by reference to a mere preference for a different result over that favoured by the judge at first instance, in the absence of error on his part. According to our conception of the appellate process, the existence of an error, whether of law or fact, on the part of the court at first instance is an indispensable condition of a successful appeal."

[32] In Construction, Forestry, Mining and Energy Union v Giudice, the Full Court of the Federal Court said (p.20):

"It can be seen from s.45(1) that an appeal lies to a Full Bench only with the leave of the Full Bench. Section 45(1) confers a power on the Full Bench to grant leave and s.45(2) requires a Full Bench to grant leave if it forms the opinion that the matter is of such importance that in the public interest leave should be granted. The formation of that opinion dictates that leave be granted. Section 45(2) does not prescribe the test for the grant of leave. It requires the Full Bench to grant leave, if the Full Bench forms the requisite opinion. The conventional considerations for the granting of leave, including whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Bench, or whether substantial injustice would result if leave were refused, supposing the decision to be wrong, are not replaced by a different test: rather, s.45(2) provides a further, and obligatory, basis for the grant of leave."

[33] In the recent case of Edwards v Giudice (23 December 1999) FCA 1836 (decided after we reserved our decision) Moore J said (para.3):

"The appellate jurisdiction conferred on the Full Bench by s.45, in relation to an appeal concerning an order arising from arbitration of an application under s.170CE, is conditioned by s.170JF(1) [s.170JF(2)?] which limits the grounds of an appeal. The only ground is that the member of the Commission who conducted the arbitration was in error in deciding to make an order. That can be an error of fact or an error of law. ... However the present case is one where the deficiencies in the Commissioner's reasons identified by the Full Bench manifest a failure to comply with s.170CG(3)(a)."

[34] In the light of the principles applicable to an appeal from a discretionary order, we consider whether an error within these principles was made by Duncan DP in exercising the discretion.

[35] The first matter we consider is Chubb's contention that his Honour erred in not making a finding with respect to the relevant matter specified in s.170CG(3)(a); that is, whether there was a valid reason for Mr Thomas's termination related to his conduct. Section 170CG(3) required his Honour to have regard to the matters set out in paragraphs (a) to (e) of it. We have set out in our paragraphs [6] to [10] what his Honour said with respect to each of these matters. As appears from this, his Honour did not make a finding as to whether there was a valid reason for Mr Thomas's termination related to his conduct.

[36] Section 170CG(3) says that, in determining whether a termination was harsh, unjust or unreasonable, "the Commission must have regard to" the matters specified in paragraphs (a) to (e).

[37] The words "have regard to" were considered by the High Court in Re Hunt; Ex parte Sean Investments Pty Ltd [1979] HCA 32; (1979) 53 ALJR 552. Mason J, with whom Gibbs J agreed, said (of a section of an Act which said that the Permanent Head shall have regard to certain costs) that when the section "directs the Permanent Head to 'have regard to' the costs, it directs him to take those costs into account and to give weight to them as a fundamental element in making his determination" (p.554). Murphy J said that the section "tends in itself to show that his [the Permanent Head's] duty in respect of those costs is limited to having regard to them. He must take them into account and consider them and give due weight to them, but he has an ultimate discretion" (p.556).

[38] Each of paragraphs (a) to (d) of s.170CG(3) requires the Commission to have regard to "whether" a circumstance existed. Whether it existed must then (Re Hunt; Ex parte Sean Investments Pty Ltd) be taken into account, considered and given due weight as a fundamental element in determining whether the termination is harsh, unjust or unreasonable.

[39] In this situation, and subject to the qualifications we express in the next paragraph, the Commission, in our view, is not able to have regard to the circumstances specified in ss.170CG(3)(a) to (d) without making a finding with respect to each of them.

[40] We qualify what we have said in the previous paragraph in two respects:

(1) The circumstance in s.170CG(3)(a) contains three considerations:

* the operational requirements of the employer's undertaking, establishment or service.

The need to make a finding under s.170CG(3)(a) will only be in respect of such of these three considerations as is relevant. (In the present case, for instance, the relevant consideration is whether there was a valid reason for the termination of Mr Thomas related to his conduct.)

(2) The circumstance in s.170CG(3)(d) is only relevant "if the termination related to unsatisfactory performance of the employee" (opening words of s.170CG(3)(d)).

[41] Further, it is not, we think, possible to have regard to s.170CG(3)(b) until a finding has been made with regard to s.170CG(3)(a). Section 170CG(3)(b) refers to "that reason"; that is "a valid reason", being the term used in s.170CG(3)(a). If there is no valid reason, s.170CG(3)(b) has no application. Neither, we think, has s.170CG(3)(c).

[42] We are therefore of the opinion that his Honour's failure to make a finding with respect to the relevant matter specified in s.170CG(3)(a) amounted to a failure, contrary to s.170CG(3), to take that matter into account and, accordingly, an error of the type referred to in s.170JF(2). This view is, we think, supported by Moore J's remarks, quoted in our paragraph [33], in Edwards v Giudice that a failure to comply with s.170CG(3)(a) amounts to an error of this type.

[43] We next consider whether his Honour erred in allowing extraneous or irrelevant matters to guide or affect him; see House v The King at p.505. Earlier in this decision (our paragraphs [17] to [24]), we dealt with each of the six considerations in Mr Thomas's favour which led Duncan DP to conclude that Mr Thomas's termination was disproportionate to the offence. We concluded that, for various reasons, five of these six considerations did not support this conclusion. We are therefore, with respect, of the view that his Honour erred in allowing these five considerations to guide or affect him and that this is also an error of the type referred to in s.170JF(2).

[44] We add, having regard to the words used in the passage quoted in our paragraph [32] from Construction, Forestry, Mining and Energy Union v Giudice, that in our opinion the decision under appeal is attended with sufficient doubt as to warrant it being reconsidered by us and that substantial injustice would result if leave to appeal were refused.

[45] In the light of the views expressed in the preceding three paragraphs, we are of the opinion that the matter is of such importance that, in the public interest, leave to appeal should be granted (s.45(2)).

[46] How then should we dispose of the appeal? Section 45(7), so far as is relevant, provides:

"On the hearing of the appeal, the Full Bench may do one or more of the following:

(a) confirm, quash or vary the decision or act concerned;

(b) make an award, order or decision dealing with the subject-matter of the decision or act concerned;

(c) direct the member of the Commission whose decision or act is under appeal, or another member of the Commission, to take further action to deal with the subject-matter of the decision or act in accordance with the directions of the Full Bench;"

[47] We have concluded (see our paragraphs [42 and [43]) that Duncan DP was in error in deciding to make the order he made (s.170JF(2)). Therefore, pursuant to s.45(7)(a), we will quash the order.

[48] Next, we have decided that we should, pursuant to s.45(7)(b), make an order dealing with the subject matter of the decision or act of Duncan DP. We record that we have considered whether we should act under s.45(7)(c). We have, however, come to the view that this is an appeal which is more appropriately dealt with under s.45(7)(b) than under s.45(7)(c). We have, in the course of deciding this appeal, considered all the evidence before Duncan DP. There is no dispute that Mr Thomas asked his wife to make the call to Mr Alcock and that she did so. There is no dispute that Mr Thomas had no authority to do what he did. (We add that we have noted Duncan DP's comment in his paragraph [23] included in our paragraph [2]) that "Where choices have to be made between the evidence of Mr and Mrs Thomas and Mr Alcock I prefer the Thomas' evidence". The main conflict between Mrs Thomas's evidence and Mr Alcock's evidence related to the manner in which Mrs Thomas's telephone call to Mr Alcock was terminated. We regard this as immaterial. In any event, we do not need to go further than to rely on the evidence of Mr and Mrs Thomas that Mr Thomas asked Mrs Thomas to make the call and that Mrs Thomas did so.)

[49] We then turn to s.170CG(3). As to s.170CG(3)(a), there was, in our view, a valid reason for Mr Thomas's termination related to his conduct. It must, or should, as a matter of common sense, have been obvious to Mr Thomas that his actions could harm Chubb in various ways, including that:

* the police might have a serious and legitimate cause for complaint against Chubb;

* Chubb's client (Morgan Grenfell) might have a serious and legitimate cause for complaint against Chubb; and

* Chubb's reputation might suffer and its ability to retain existing, and obtain new, contracts might be affected.

In cross-examination, Mr Thomas disagreed with the proposition that his actions may have placed Chubb's name in disrepute and caused Chubb to lose credibility with Morgan Grenfell. Mr Thomas, however, said that his view that these consequences would not have occurred was based on the assumption that Mr Alcock would react to the telephone call in the manner Mr Thomas regarded as correct (transcript p.46). Mr Thomas, however, arranged for the call to be made to Mr Alcock because he (Mr Thomas) was concerned that Mr Alcock was not following what Mr Thomas regarded as correct procedures. In cross-examination, Mr Thomas said (transcript p.33):

MR COOK: "And if he did do the wrong thing by not identifying the caller, then there was going to be some pretty serious consequences that flowed from that, was there not? --- Well, I'm not sure. It would have been depending on the meeting on Monday, which I would have discussed it with Michael Harrington, site supervisor.

You might have misunderstood me. Serious consequences insofar as what would happen at that site of a guard acting on a call being made? --- I say again, I don't know what Mr Alcock's actions would have arisen from that phone call.

So, Mr Thomas, when you asked your wife to ring through to Mr Alcock, knowing that there was a good chance that he would not follow the procedure, are you saying you do not know what would happen? --- I wasn't sure what he would do.

So he could have done anything? --- Yes. He could have done the right thing, followed procedures. He may not have. I would not have known.

And if he did not follow procedures, which there was a good chance he was not going to do, based on your evidence, then possibly what would have happened is that he would then follow through on those multiple alarms as if they were real. That would be right, would it not? --- Again, I'm not sure what he would have done.

What would you expect, Mr Thomas? You must have had some idea what was going to happen? --- Well, considering the fact that we'd been through site talks on numerous occasions, that something would have sunk in and he would have followed procedures."

This evidence, in our view, shows that Mr Thomas knew that there was, at least, a possibility that Mr Alcock might not respond to the phone call in the manner which Mr Thomas regarded as correct. In these circumstances, we are of the view that Mr Thomas's actions were irresponsible and reckless and amounted to serious misconduct.

[50] We have earlier (see, for instance, our paragraph [43]) expressed views that amount to a rejection of five of the six considerations in Mr Thomas's favour that led his Honour to conclude that the termination of Mr Thomas was disproportionate to the offence. The remaining consideration was Mr Thomas's "generally good record". Whilst we have found that this consideration supported his Honour's view that Mr Thomas's termination was disproportionate to the offence, it is not, we think, of itself of such weight as would support the view that termination was disproportionate to the offence.

[51] We are accordingly of the opinion that there was a valid reason for Mr Thomas's termination related to his conduct (s170CG(3)(a)).

[52] As to ss.170CG(3)(b) and (c), in our view Duncan DP's findings (which are set out in our paragraphs [7] and [8] and which favour Chubb) were justified on the evidence. We, with respect, adopt them. Section 170CG(3)(d) is inapplicable. As to s.170CG(3)(e), there are no other matters we consider relevant.

[53] Finally, we bear in mind that s.170CA(2) says that:

"The procedures and remedies referred to in paragraphs (1)(a) and (b), and the manner of deciding on and working out such remedies, are intended to ensure that, in the consideration of an application in respect of a termination of employment, a `fair go all round' is accorded to both the employer and employee concerned."

[54] Having had regard, to the extent relevant or applicable, to the matters specified in s.170CG(3), and bearing in mind the intention expressed in s.170CA(2), we have concluded that Mr Thomas's termination was not harsh, unjust or unreasonable. Accordingly, the order we make pursuant to s.45(7)(b) dealing with the subject matter of the decision or act of Duncan DP is that Mr Thomas's application for relief under s.170CE be dismissed.

[55] Our order, which also sets aside the stay order, is published with this decision (Print S2680).

S Benson of counsel (by leave) for Chubb Security Australia Pty Ltd

Termination of employment - unfair dismissal - appeal - full bench - Commission found employee's dismissal on balance was harsh, unjust and unreasonable - termination disproportionate to offence - respondent contended Commission erred in not making a finding as to whether a valid reason for employee's termination related to his conduct - did not give sufficient weight to employee's actions and their ramifications - discretionary order - because Commission's order was discretionary, appeal determined pursuant to established principles as stated in House v The King - Norbis v Norbis, CFMEU v Giudice and Edwards v Giudice also cited - full bench considered whether Commission erred within applicable principles in exercising the discretion - concluded no finding made as to whether there was a valid reason for termination related to employee's conduct - held Commission not able to have regard to circumstances specified in ss170CG(3)(a) to (d) without making a finding with respect to each of them - failure to take matter specified in s170CG(3)(a) into account amounted to error in making order - Commission also erred in considering extraneous or irrelevant matters - leave to appeal granted - disposal of appeal - appeal quashed - order by full bench dealt with subject matter of Commission's decision - found was valid reason for employee's termination related to his conduct - actions amounted to serious misconduct - termination not harsh, unjust or unreasonable - application under 170CE dismissed.

Appeal by Chubb Security Australia P/L against a decision of Duncan DP of 31 August 1999 in Print R8455

Printed by authority of the Commonwealth Government Printer