Daly Smith Corporation v Sean Cain

Coram: Walton J, Acting President Boland, J Macdonald, C

DALY SMITH CORPORATION (MANAGEMENT SERVICES) PTY LIMITED v SEAN CAIN

Application to appeal against a decision of Commissioner Murphy given on 30 September and 4 December 2002 in Matter IRC 2957/2001

1 This matter concerns an application for leave to appeal and, if leave be granted, appeal by Daly Smith Corporation (Management Services) Pty Limited ("the appellant") against decisions and orders of Commissioner J P Murphy made on 30 September and 4 December 2002. In his decision of 30 September 2002 the Commissioner found that the dismissal of Mr Sean Cain ("the respondent") by the appellant was harsh, unreasonable or unjust. In his decision of 4 December 2002, after considering the question of mitigation, the Commissioner made orders against the appellant requiring the appellant to pay compensation to Mr Cain.

2 Mr Cain had been employed as a branch manager at the Surry Hills branch of the appellant's operations. He claimed he had been dismissed from his employment on 2 May 2001 following a visit to the branch office by the appellant's managing director and proprietor, Mr T Smith, and the appellant's general manager, Mr G Teahen.

3 Mr Smith and Mr Teahen disputed this and said they had visited Mr Cain to discuss an application filed by Mr Cain with the Industrial Registry on 30 April 2001 alleging that he had been threatened with dismissal. Mr Smith and Mr Teahen maintained that whilst discussing the matter with Mr Cain he placed his keys and mobile phone on his desk and walked out of the office, not to be seen again. Mr Cain alleged that Mr Smith and Mr Teahen came to the branch office with the express purpose of dismissing him and, in fact, did so.

4 Mr Teahen wrote to the respondent on 9 May 2001 advising that if he did not respond by 15 May, the appellant would assume that he had abandoned his employment. In the proceedings below the appellant contended that Mr Cain had abandoned his employment.

5 In his decision of 30 September 2002, Commissioner Murphy found that the appellant had dismissed Mr Cain on 2 May 2001 and that the dismissal was harsh, unreasonable or unjust. The Commissioner also made significant adverse findings of credit against Mr Smith and Mr Teahen.

6 In these appeal proceedings we adopted the usual course of directing the parties to file and serve their written submissions both on the question of leave and on the merits. However, the parties were also advised that we would hear them first on the question of leave and in doing so we would have regard to the submissions on merit. In proceedings before us on 5 June 2003, after hearing the parties both as to leave and having reviewed the written submissions as to merit, we reserved our decision on the question of leave. On 12 June 2003, the parties were informed that we had decided to grant leave to appeal and that the reasons for so doing would be incorporated into any final judgment in the matter. The parties were also directed to file and serve supplementary submissions going to the merits of the appeal and the matter was set down for further hearing on 31 July 2003. The matter was not concluded on that day and the parties were invited to file and serve written submissions on matters that were outstanding.

7 The reasons put forward by the appellant as to why leave should be granted were as follows (note the reference to the respondent is the respondent at first instance): (a) The Commissioner made adverse findings as to the credit of witnesses for the Respondent in circumstances where such findings were not open to him;

(b) The Commissioner allowed legal objections on behalf of the Respondent which legal objections the Commissioner should (sic) have allowed;

(c) The Commissioner did not identify which evidence was relevant to his determination of the claim by the Applicant of unfair dismissal;

(d) The Commissioner declined (sic) relevance of evidence when repeatedly requested to do so;

(e) Made a decision on the 4th December, 2002 against the evidence and a decision which was not open to him, made a decision on the 30th September, 2002 against the weight of evidence;

(f) The Commissioner made findings and observations which were irrelevant.

8 The respondent opposed leave being granted. It was submitted the appeal did not raise matters of general significance or matters that were "substantial and important"; that there was no denial of procedural fairness to the appellant. Further, it was submitted that on the principles governing appeals under s 188 of the Act there was no basis for the Full Bench to interfere with the Commissioner's decision as there was no error of fact or law, nor was there a failure on the Commissioner's part to properly exercise his discretion. It was submitted that where the Commissioner's findings of fact depended to any substantial degree on the credibility of witnesses, the test for overturning those findings becomes higher. That is, a finding of fact must stand unless it can be shown that the Commissioner failed to use or had palpably misused his advantage or had acted on evidence which was inconsistent with facts incontrovertibly established by the evidence or which was glaringly improbable: Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479; Wilson v Department of Education and Training (2000) 100 IR 1 at 11, 12.

9 The relevant principles governing leave to appeal are to be found in Knowles v Anglican Church Property Trust (No2) (1999) 95 IR 380. Also see King v State Bank of New South Wales [2002] NSWIRComm 353. Leave will not lightly or automatically be granted. However, having heard the submissions on leave a number of public interest considerations emerged that, in our opinion, warrant the granting of leave. These included the conduct of the proceedings by the Commissioner and his handling of the evidence in the face of persistent objections by the appellant; the nature of the Commissioner's findings as to the credit of witnesses in reaching his conclusion that the respondent had been unfairly dismissed; findings that the Commission was misled by the appellant's witnesses; the nature of the Commissioner's disparaging language in relation to the appellant's witnesses; and, the inference in the Commissioner's decision that certain of the appellant's witnesses had perjured themselves. Accordingly, leave was granted. The issue on appeal

10 It became evident in the course of the hearing that the issue on appeal was a relatively narrow one. That is, whether the respondent had been dismissed by the appellant. Mr D Brezniak of counsel for the appellant accepted that this was the central issue and if the Commission on appeal found that the appellant had terminated the respondent, the appellant did not contest the issue of whether the termination was unfair.

11 The central issue, therefore, is whether the Commissioner erred in finding that the respondent had been dismissed on 2 May 2001. In his decision the Commissioner described what had occurred on 2 May 2001 and expressed his view of the events as follows: It was the subsequent visit to Mr Cain's office by both Mr Smith and Mr Teahen on 2nd May (them having received the threatened dismissal application) which was the most controversial area of evidence. The applicant maintained that the unannounced visit involved very little conversation, resulting in his dismissal with words from Mr Smith " well, lets get on with this dismissal" , to which Mr Cain responded by handing over his office mobile phone and keys to the office car and immediately walking out of the office and the building, and then being escorted out of the front door by Mr Teahen who asked if he had an office car in the garage.

The respondent's evidence, through Mr Smith and Mr Teahen, was that they came to the applicant's office for the purpose of ascertaining why he had lodged his application to this Commission, Mr Cain had simply responded to those few words of inquiry from Mr Smith by placing his mobile phone and keys on the table and immediately walking out. Mr Smith gave evidence, supported by Mr Teahen of being completely surprised by the sudden departure of the applicant, and simply asked him "why are you leaving?" which drew no response whatever from the applicant, who simply kept walking. Accordingly, there was therefore no dismissal according to the respondent with the applicant abandoning his employment. Mr Cain's account of the incident on 2nd May, showing that he was dismissed, was supported to some extent at least by the evidence of Ms Heidi Judd, the receptionist on duty close by at the time of the visit of Mr Smith and Mr Teahen. Whilst Mr Brezniak successfully prevented much of her prepared affidavit from being admitted into evidence, her oral evidence of this aspect remained intact and of significance. It was Ms Judd's evidence that she observed much of what occurred, but readily acknowledged that she could not hear crucial parts of the alleged conversations. There were nevertheless some surviving aspects of her evidence which were rightly of interest to the Commission in determining which of the parties were prepared to perjure themselves for the sake of the jurisdictional question of whether there had been a dismissal. Two aspects of Ms Judd's more limited evidence were firstly that she was at a reasonable distance from where the applicant walked from his office door to leave the main entrance for her to be able to have heard Mr Smith say "why are you leaving" to the applicant as he walked out of the main office in view of Ms Judd if he had said it. She was also insistent under cross-examination that she did not hear him say this to Mr Cain. The second aspect, which strictly speaking it might be said, suffers from a hearsay element, was the behaviour of Mr Smith and Mr Teahen approaching Ms Judd immediately after the applicant had left the premises and telling her (inter alia), that Mr Cain had been dismissed by them.

They also told her not to allow him back into the office and this later aspect was conceded by them and explained by Mr Smith on the basis of fearing later stealing of information invoices etc.

While she was unable to precisely attribute word for word what was said by each of the pair, her explanation for not being able to do so was on the basis of the usual difficulty of precise recall of conversation when two people are talking across one another, I was satisfied by this explanation that she had not invented, expanded or embellished the things she claimed was said to her. That conversation recalled by her, at least established that Ms Judd was told that the applicant had been dismissed. That leaves the question as to why they would say that if it was not true, and although still not hard evidence, the common sense approach of the reasonable person would say that it is a strong indication on the balance of probabilities that they were reflecting the true situation.

Her evidence of being told in a boasting style that the applicant had been dismissed, was all the more convincing in that it appeared to be a moderate account of what was said and she appeared to have resisted the opportunity under the pressure of cross-examination to embellish what the two gentlemen said by way of telling her of their actions.

As indicated, strictly speaking, her evidence was limited to satisfying me that Mr Smith and Mr Teahen had told her Mr Cain had been dismissed by them. I am conscious that the Commission is not strictly bound by the rules of evidence Section 163(1)(b), although the Commission must always be on guard to ensure that natural justice prevails in its procedures … To disregard the evidence of Ms Judd as hearsay, without regard to how its weight combined with other factors mentioned here, I believe would represent a classic triumph of form over substance. 12 Mr Brezniak submitted on appeal that the evidence did not support a finding that the respondent had been dismissed. Moreover, he submitted, the Commissioner allowed into evidence irrelevant material that not only made it difficult for the appellant to rebut but it also coloured his view of the credit of the appellant's witnesses. This, it was submitted, led the Commissioner into error in assessing the evidence where there was a conflict - in particular, the conflict in the evidence about what occurred on 2 May 2001.

13 The issue of whether the respondent was dismissed by the appellant is a mixed question of fact and law. The nature of an appeal from a decision in relation to such a question was recently discussed in Humphries v Cootamundra Ex-Services and Citizens Memorial Club Limited [2003] NSWIRComm 211 where it was said commencing at par [82]: [T]he appeal is an appeal in stricto sensu (see King v State Bank at [65]). As cited in King v State Bank at [70], the relevant principles to be applied on appeal are those set out in the joint decision of Hungerford J and Murphy C (with respect to which Peterson J agreed, at 240) in Re Solicitors State Award (1997) 72 IR 225 (citing Haynes v CI&D Manufacturing Pty Limited (1995) 60 IR 149):

It is not, of course, we would interpose, every case which would require an appellate court to substitute its views for those of the primary judge, and in that respect we agree with the comment by Hill J sitting on appeal in this Court in Hussmann Australia Pty Ltd v Walker ((1993) 48 IR 396 at 406) to the effect that there should be no interference with "conclusions on facts unless (the Full Court) is of the opinion that they were not reasonably open on the evidence.

83 The relevant principles to be applied on appeal in such circumstances may conveniently be adopted from the decision of the Full Bench in Burge v NSW BHP Steel (at [7]): The general principle is that an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge; in deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusions of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it: Warren v Coombes (1978) 142 CLR 531 at p 551. And, in addressing error, an appellate court should not interfere with the trial judge's conclusions on facts unless it is of the opinion that they were not reasonably open (or were clearly wrong) on the evidence: Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73 at p 107; Autobake Pty Ltd v Budd [1986] 19 IR 18 at p 25; Abalos v Australian Postal Commission (1990) 171 CLR 167 at pp 178 ff; Haynes v C I & D Manufacturing Pty Ltd (1994) 60 IR 149 at pp 153-155; and Port Macquarie Golf Club v Stead (64 IR at p 59). [Emphasis added].

84 These principles were also articulated in Wilson v Department of Education and Training [2000] NSWIRComm 120 (at [61]-[62]): The appellate court substitutes its own judgments only if the trial judge makes a finding of fact which is wrong or not reasonably available on the evidence: ( Camilleri's Stock Feeds Pty Ltd v Environmental Protection Authority (1993) 32 NSWLR 683 at 688). The appellate court should otherwise not intervene. As Priestley JA recently observed in Martin v Byrnes (unreported, Court of Appeal, Priestley , Stein JJA and Sheppard AJA, 25 May 1999): The cases running through the hundred years from Coghlan v Cumberland [1898] 1 Ch 704 to Earthline Constructions [(1998) 160 ALR 588] all show that courts such as this court are duty bound to reverse conclusions based on trial judges' views of fact when those views of fact are plainly wrong but are equally duty bound not to reverse such decisions of a trial judge merely because the intermediate appellate court itself takes a view different from that of the trial judge of the factual findings that should have been made.

This Commission and its predecessors have adopted the above view: ( Hussmann Australia Pty Ltd v Walker (1993) 48 IR 396 at 406; Haynes v CI&D Manufacturing Pty Limited (1995) 60 IR 149 at 154).

14 We respectfully agree with the approach articulated in Humphries.

15 We have examined closely the evidence relating to what occurred on 2 May 2001 and we have come to the conclusion that the Commissioner's finding that the respondent had been dismissed was, on balance, open to him on the evidence.

16 Mr Brezniak submitted that the evidence of Ms Judd that was relied upon by the Commissioner as corroborative of the respondent's evidence that he was dismissed on 2 May 2001 fell short of being evidence in the respondent's favour. The following exchange took place between the respondent's representative and Ms Judd in cross examination: Q: So did Mr Tom [Smith] and Gerald [Teahen] tell you at that conversation that they terminated Mr Cain's employment? A: Yes.

Q: They told you very clearly? A: Yes, they said, yes, that they …

17 At that stage the commissioner interrupted the respondent's representative, indicating the questions were repetitive (which it does not seem to us they were). Mr Brezniak (who also represented the appellant below) indicated the questions were leading, which was obviously the case and thereby diminished the probative value of Ms Judd's answer. Shortly after this exchange the following exchange occurred: Jayawardene (for the respondent): Q. So when you came back on the following day did you realise what happened to Mr Cain?

A. … not allowed back on, yes, they told me they had gotten rid of him, he was not to be back on the premises.

18 It may be seen that the foregoing evidence could not be said to be unequivocal evidence of Ms Judd that she was told by Mr Smith or Mr Teahen that they had dismissed the respondent.

19 Ms Judd had made out a declaration, which was tendered in the proceedings before the Commissioner, and which recounted what Ms Judd had heard and observed on 2 May 2001. The declaration did not, however, refer to any part of a conversation in which Ms Judd was informed that Mr Smith and/or Mr Teahen had terminated Mr Cain's employment.

20 The Commissioner also relied on the proposition that Ms Judd: [was] at a reasonable distance from where the applicant walked from his office door to leave the main entrance for her to be able to have heard Mr Smith say "why are you leaving" to the applicant as he walked out of the main office in view of Ms Judd if he had said it. She was also insistent under cross-examination that she did not hear him say this to Mr Cain.

21 In other words, the evidence of Ms Judd that she would have heard Mr Smith say "why are you leaving", if he had in fact said those words, was used by the Commissioner as one of the bases upon which he preferred the evidence for the respondent. However, the evidence of Mr Smith was that he said the words "why are you leaving" in Mr Cain's office and not within hearing distance of Ms Judd. The Commissioner appears to have overlooked this evidence.

22 We consider the Commissioner's analysis of the evidence was less than satisfactory and that the corroborative evidence of Ms Judd was not as strong as the Commissioner apparently considered it to be. However, given the whole of the evidence relating to the events of 2 May 2001, including the respondent's evidence of his dismissal, the evidence relating to Mr Cain being escorted from the premises and Ms Judd being advised not to let Mr Cain back on the premises, when weighed against the evidence led for the appellant it could not be said that the Commissioner acted inconsistently with facts incontrovertibly established by the evidence or that his findings were glaringly improbable or contrary to compelling inferences of the case: See Wilson at 11. On balance, the findings of fact made by the Commissioner were open to him and such errors as have been demonstrated, do not warrant a reversal of the decision at first instance on appeal.

23 The evidence as to what occurred on 2 May 2001 was directly contradictory. With the assistance - albeit slight - to be gained from the evidence of Ms Judd and the Commissioner's findings regarding the credibility Mr Smith and Mr Teahen he was able to come to the view that he preferred the respondent's evidence. The appellant submitted that the Commissioner's conclusions were seriously tainted by credit findings he made adverse to the appellant which were based on irrelevant material. In that respect we note, firstly, that the issue of whether the dismissal was unfair was a matter in contest in the proceedings below and that credit was a consideration open to the Commissioner. Secondly, even putting aside the issue of credit, we do not consider the Commissioner erred in arriving at a conclusion that on the balance of probabilities the appellant dismissed Mr Cain on 2 May 2001. In coming to this conclusion, we would wish to emphasise that we consider that there is simply not sufficient basis for appellate intervention, even though some errors were demonstrated in the Commissioner's decision.

24 We are moved to comment, however, that in making adverse findings against the appellant's witnesses it was quite unnecessary of the Commissioner to disparage the witnesses in the manner he did. Given those adverse findings, the reference by the Commissioner in his decision to "determining which of the parties were prepared to perjure themselves" allows the inference to be drawn that the Commissioner considered the witnesses were prepared to perjure themselves. Perjury is a very serious allegation and if it is to be used in relation to a witness he or she is entitled to a rigorous and detailed justification in the reasons citing cogent grounds for that conclusion: Hand v Adelaide Bank 1997 72 IR 289 at 290, citing State Bank of SA v D'Marco (unreported Duggan J S3978). In this case the Commissioner fell well short of such a requirement, and we might add we can see no basis for him making such a finding. 25 We also refer to the observations by Wright J President in Followes v Frank Knight (NSW) Pty Ltd [2003] NSWIRComm 41 at pars [28] to [30]. Whilst his Honour was concerned with judicial observations made in the course of proceedings adverse to an applicant we consider that they are entirely apposite in this case. At par [29] Wright J referred to observations of Cahill V-P in NSW Professional Officers' Association v Forestry Commission (NSW) (1990) 39 IR 46 at 51 as follows: It is pertinent to observe, however, that where criticisms are considered to be justified in the context of a case such as this, care should be taken to ensure that they are couched in terms which are not immoderate or unnecessarily hurtful and that they do not extend beyond bounds which are reasonable and proper in the particular circumstances.

26 We respectfully agree with his Honour's sentiments.

27 We would add that the making of such criticisms does not add to but detracts from findings of credit made in support of findings of fact.

1. Leave to appeal is granted. 2. The appeal is dismissed.

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