Director General, New South Wales Department of Health v Industrial... [2010] NSWCA 47 | Case summary

22 March 2010 Director General, New South Wales Department of Health v Industrial Relations Commission of New South Wales Judgment 1 SPIGELMAN CJ: The applicant (to which I will refer as the "Department of Health") invokes the supervisory jurisdiction of the Court to overturn the orders of the Full Bench of the Industrial Relations Commission of New South Wales in an appeal brought by the second respondent ("Mr Casari"). (See Casari v Sydney South West Area Health Service [2009] NSWIRComm 103.) 2 The background facts can be briefly stated. Mr Casari was employed as a ward orderly in a public hospital. He took a photograph of a naked two year old patient. He was summarily dismissed for misconduct. 3 Mr Casari invoked the unfair dismissals jurisdiction of the Industrial Relations Commission of NSW. 4 Chapter 2 Pt 6 of the Industrial Relations Act 1996 ("the Act") makes provision for applications to the Commission with respect to unfair dismissals. The present case turns on s 89 which is found in that Part. It provides: "89 Orders for reinstatement, re-employment, remuneration, compensation (1) Reinstatement The Commission may order the employer to reinstate the applicant in his or her former position on terms not less favourable to the applicant than those that would have been applicable if the applicant had not been dismissed. (2) Re-employment If the Commission considers that it would be impracticable to reinstate the applicant, the Commission may order the employer to re-employ the applicant in another position that the employer has available and that, in the Commission's opinion, is suitable. (3) Remuneration If the Commission orders reinstatement or re-employment, it may order the employer to pay to the applicant an amount stated in the order that does not exceed the remuneration the applicant would, but for being dismissed, have received before being reinstated or re-employed in accordance with the order. (4) Continuity If the Commission orders reinstatement or re-employment, it may order that the period of employment of the applicant with the employer is taken not to have been broken by the dismissal. (5) Compensation If the Commission considers that it would be impracticable to make an order for reinstatement or re-employment, the Commission may order the employer to pay to the applicant an amount of compensation not exceeding the amount of remuneration of the applicant during the period of 6 months immediately before being dismissed. If the applicant was on leave without full pay during any part of that period, the maximum amount of compensation is to be determined as if the applicant had received full pay while on leave. (6) When assessing any compensation payable, the Commission is to take into account whether the applicant made a reasonable attempt to find alternative employment and the remuneration received in alternative employment, or that would have been payable if the applicant had succeeded in obtaining alternative employment. (7) Threat of dismissal In determining a claim relating to a threat of dismissal, the Commission may order the employer not to dismiss the employee in accordance with that threat. (8) An order under this section may be made on such terms and conditions as the Commission determines." 5 Justice Schmidt dismissed his application on the basis that Mr Casari had not demonstrated that the decision to dismiss him by the Department of Health was harsh, unreasonable or unjust within the meaning of s 84(1) of the Act. (Casari v Sydney South West Area Health Service (No 2) [2008] NSWIRComm 240.) 6 Schmidt J found that the conduct was such as to warrant summary dismissal. Her Honour also commented on a submission as to whether or not an order for reinstatement or re-employment could have been made if she had come to a different conclusion. She said: "[141] … I am satisfied that in the circumstances, there could be no basis upon which it could be concluded that the respondent's necessary confidence in Mr Casari's judgment, could be restored. Given his duties with sick patients, who depend on his judgment for their welfare while admitted to the respondent's hospital, no conclusion other than that an order of either reinstatement or re-employment would not be practicable, is open." 7 The Full Bench of the Industrial Relations Commission allowed the appeal and made the orders which are the focus of the application before this Court and to which I will refer further below. 8 The Full Bench made a finding that the dismissal was harsh, unjust and unreasonable, within the meaning of the Act, in large measure on the basis that, in the absence of any "improper motive" on the part of Mr Casari, it was not appropriate to conclude that summary dismissal was warranted. The appropriateness of this finding is not raised in this Court. 9 The applicant's case in this Court turns on the Full Bench's findings with respect to remedy. The Full Bench outlined at [72] and [73] of its judgment, a number of propositions with reference to prior case law in the Commission, as follows: "Reinstatement is the primary remedy". "It is only where it is impracticable to reinstate an applicant that the other remedies available under s 89 of the Act may be applied". "We have given earnest consideration to whether reinstatement is impractical …". 10 The Full Bench went on to conclude: "[74] Whilst we have determined that the appellant's misconduct was not such as to strike at the heart of the employment contract it was, nevertheless, serious. There has been a loss of trust and confidence in the appellant by his employer. By taking the extreme step of summary dismissal the respondent has declared it has no confidence in the appellant's ability to maintain a proper standard of conduct in an environment where the employer has a duty to ensure that hospital staff, including wardorderlies, act with sensitivity and with the utmost respect for the privacy of the sick. Wardorderlies come into daily contact with citizens in a vulnerable state due to their illness or injury. The taking of photographs of such persons without permission, especially sick children, and regardless of motive, is unacceptable conduct and the employer is plainly of the view that it does not have the necessary confidence in the appellant that there will not be a recurrence of the misconduct. We consider that reinstatement for the purpose of future employment with the employer is impracticable. [75] Nevertheless, the appellant has suffered significant humiliation and distress caused by the summary dismissal which, in the circumstances, was not justified. We have decided that the appellant shall be re-employed from the date of this decision in his former position with back payment to the date of his dismissal, but only for the purposes of the appellant affecting a resignation from employment. Thus, the re-employment shall be subject to the appellant resigning from his employment effective from the day immediately following the date of this decision. For the period from 30 July 2007 to the day immediately following the date of this decision, the appellant shall receive wages and other relevant benefits that would have accrued and which he would have received had he not been summarily dismissed on 30 July 2007. We note that Mr Casari has not worked since he was dismissed." 11 The order of the Full Bench which is challenged in this Court was: "(4) The appellant is re-employed in his former position effective from the date of this decision on the following terms and conditions: (i) the appellant will not return to work and he shall resign in writing effective from the day immediately following the date of this decision; (ii) for the period from 30 July 2007 to the day immediately following the date of this decision the respondent shall pay to the appellant within 14 days the wages he would have received if he had not been summarily dismissed, together with any benefits, such as annual leave, long service leave and superannuation, that would have accrued to the appellant from 30 July 2007 if he had not been summarily dismissed." 12 Mr Casari chose not to participate in the proceedings in this Court. He submitted to the jurisdiction save as to costs. However, counsel who had represented him in the Commission came to Court with a watching brief. In order to ensure that there was a proper contradictor on a matter of significance with respect to the jurisdiction of the Industrial Relations Commission, the Attorney General of New South Wales intervened and made submissions in reply to those of the applicant. I wish to express the gratitude of this Court that the Attorney did intervene, so that the legal issues were properly argued. 13 By force of the application of the privative provision in s 179 of the Act, as understood at the time of the oral hearing in this Court, the submissions focused on the applicability of the principle identified in R v Hickman; Ex parte Fox (1945) 70 CLR 598 esp at 614-619. The issues raised were whether or not the orders made by the Full Bench constituted a bona fide attempt to exercise the statutory power or, alternatively, were reasonably capable of reference to that power. 14 After the Court reserved its judgment in this matter, the High Court handed down its decision in Kirk v Industrial Relations Commission (NSW) [2010] HCA 1; (2010) 84 ALJR 154. The High Court determined that, on its proper construction, s 179 did not apply to jurisdictional error. This Court sought further submissions. 15 The parties accept that in the light of the High Court judgment in Kirk, it is no longer necessary for the applicant to bring itself within the Hickman principle. The issue for determination is whether or not the decision, specifically Order 4 made by the Full Bench, manifests a jurisdictional error or an error of law on the face of the record. The submissions originally advanced with respect to contravention of the Hickman principle were readily adapted to meet the lower level test which must now be applied. 16 The focus of the submissions is upon the order made by the Full Bench that Mr Casari is re-employed in his former position on the condition that he would not return to work, but resign immediately. The practical effect of this order was that Mr Casari would receive his full pay for the period from 30 July 2007 to 3 July 2009 being the day after the decision of the Full Bench. As a matter of substance this gave him compensation for a period of just under two years which, notably, is substantially more than an order for compensation that could have been made under s 89(5) of the Act. 17 The focus of the submissions on the part of the applicant in this Court is on the fundamental inconsistency between the power which the Full Bench purported to exercise and the condition which it imposed requiring immediate resignation by Mr Casari. This is a manifestation of the express finding of fact in [74] of the Full Bench judgment set out at [10] above, which, to repeat, was: "We consider that reinstatement for the purpose of future employment with the employer is impracticable." 18 This finding reflects the introductory words of s 89(2), to repeat: "If the Commission considers that it would be impracticable to reinstate the applicant …" 19 Section 89(2) authorises the Commission to make an order for re-employment. This is what the order set out at [11] above purports to do. However, s 89(2), to repeat, authorises the Commission to make an order of re-employment "in another position that the employer has available". The actual order made by the Commission was that "the appellant is re-employed in his former position …". Section 89(2) provides no statutory basis for an order of this character. This is an order of 'reinstatement' which requires the exercise of the power in s 89(1), a power which the Commission expressly abjured. 20 Furthermore, the Full Bench made no findings of the character required by s 89(2). It did not identify "another position" which the employer had "available" and about which the Commission had formed the opinion that it was "suitable". Indeed, the finding that Mr Casari could not be reinstated "for the purpose of future employment" is, in substance, a finding that no other "position" would be "suitable". The power to order re-employment cannot be exercised unless such findings are made. 21 Finally, the condition imposed by the Full Bench's order to the effect that "the appellant will not return to work and he shall resign" is also on its face inconsistent with the concept of an order to "re-employ the applicant" within the meaning of s 89(2). The idea of 're-employment' necessarily requires a return to work. There is no power to order 're-employment' which involves no return to work at all. (Cf Blackadder v Ramsey Butchering Services Pty Ltd [2005] HCA 22; (2005) 221 CLR 539 esp at [13]-[15], [33]-[34], [43]-[44], [65], [69].) 22 This is, in my opinion, both jurisdictional error and error of law on the face of the record (even if confined to the order itself) for each of three alternative reasons. First, the power which the Commission purported to exercise did not authorise an order that Mr Casari be re-employed "in his former position". Secondly, the Full Bench failed to make findings which were an essential precondition to the exercise of the statutory power. Thirdly, a condition requiring a person to resign and not return to work is outside the permissible sphere of any order capable of answering the description of an order "to re-employ". 23 Pursuant to s 89(8) of the Act, the Commission can impose "terms and conditions" on "an order under this section". The conditions able to be imposed pursuant to this power must be attached to something capable of constituting an "order" within s 89(1)-(5). There was no such order. Section 89(8) is not a power enabling the Commission to do whatever it thinks is fair and/or reasonable. The "conditions" identified as 4(i) and (ii) are not conditions within s 89(8). 24 In my opinion, in each of these three respects to which I have referred, the Commission has misconstrued the statute and therefore disregarded both 'the nature and limits of its functions and powers' and made 'an order of a kind which lies outside the theoretical limits of its powers'. (See Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163 at 177; Kirk supra at [72].) In this respect, I apply the test for exercising a supervisory jurisdiction over an inferior court. It appears to me that when sitting as the Commission, rather than as the Industrial Court, the broader basis of intervention with respect to a tribunal is applicable. However, this need not be decided. In the present case it is sufficient to state that the Commission had no power to make Order 4. (Cf Kirk supra at [74]-[76].) 25 I propose the following orders:

Director General, New South Wales Department of Health v Industrial Relations Commission of New South Wales

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