Appeal - Dismissal for serious and wilful misconduct - Whether a question of fact or law - No question of law - Appeal dismissed - Ss.36(1), 47, 86(1), 100 Workers Rehabilitation and Compensation Act 1986.

Rohrlach v. Christianos (1980) 26 S.A.S.R. 161.

Vickers v. Jarrett Industries (1977) 15 S.A.S.R. 525.

White v. Perovic (1988) 145 L.S.J.S. 293.

Hahnheuser v. Workers Rehabilitation and Compensation Corporation v. Casino (unreported Full Supreme Court, 10 September 1996, Judgment No. S5799).

Ortlepp v. Le Cornu Furniture Centre (unreported Full Supreme Court 12 April 1991).

Fernandez v. The State of South Australia (1994) 177 L.S.J.S. 436.

Collector of Customs v. Agfa-Gevaert Ltd. [1996] HCA 36; (1996) 141 A.L.R. 59.

Adami v. Maison De Luxe Limited [1924] HCA 45; (1924) 35 C.L.R. 143.

Scharmann v. Apia Club Ltd. (1983) 6 I.R. 157.

Ms R. Layton Q.C. with Mr. G. Biddle (of counsel) for the Respondent.

I have read the reasons for decision prepared by Deputy Presidents McCusker and Parsons. I am in general agreement with what they have written and I agree with the conclusion that they have reached.

For my part I would however like to make the following observations.

The criterion for determining whether or not an appeal lies against a decision of a Presidential Member of the Tribunal is stipulated in the Act as being limited to `a question of law'. This is the same criterion as existed when the Act permitted appeal s to the Supreme Court of South Australia, but it is to be contrasted with the criterion that existed under the Workers Compensation Act 1971, that appeals be limited to `a matter of law'. Although it is not necessary for me to decide in determining the o utcome of this case, whether or not there is any difference between these two criteria; I must say that I am inclined to think that because Parliament deliberately changed the wording it must follow that Parliament intended that a different threshold test should apply and it is certainly arguable that Parliament changed the wording with a view to further limiting the circumstances in which an appeal will lie.

As to what constitutes `serious and wilful misconduct', I think that the learned Deputy President correctly identified the relevant principles and it is my view that the applicability of those principles is essentially a factual exercise. I think His Hon our's reference to the passage from Hepple and O'Higgins: `Employment Law' bears repeating: -

`1. The modern test is basically whether the conduct complained of by the employee is a breach of an important term of the contract of employment.

2. It is primarily the conduct of the parties, the words that they have used in the contract (or in the works rules where such are embodied in the contract) which are the best guide to the identification of the important terms which will give rise to a right of summary dismissal if they are broken.

3. Certain terms, particularly certain implied terms, will be regarded by the judges as always prima facie being important, e.g. the obligation not to steal one's employer's property; the obligation not to deal with his property dishonestly, not to dama ge it deliberately; the obligation to obey reasonable and lawful orders, etc.

4. Breach of an important term nowadays will not necessarily give rise to a right of summary dismissal if it occurs in such circumstances that the employee has a reasonable excuse or justification for his conduct.

5. Single acts of misconduct are somewhat less likely to give rise to a right of summary dismissal than is a persistent pattern of misconduct; in the case of a single act of misconduct a record of unsatisfactory behaviour may tip the balance and lead th e judge to the view that there are grounds for summary dismissal.

6. What is to be regarded as an important term will also depend upon the nature of the business or industry and the position of the employee.

7. Misconduct inside the workplace is likelier to give rise to breach of an obligation entitling the employer summarily to dismiss than misconduct outside the workplace or outside working hours; but dependent upon the terms of the contract, and sometime s on the position of the employee, misconduct outside the workplace or working hours may exceptionally give rise to a right of summary dismissal.

8. Decisions of the courts in other cases are of little relevance in deciding in a particular case whether there is a right of summary dismissal; misconduct serious enough to justify summary dismissal needs to be examined in the light of all the surroun ding circumstances.

9. Whether misconduct is sufficient to justify summary dismissal is not dependent upon proof that such misconduct has had in fact serious consequences; the test is the nature of the misconduct itself; and

10. At the end of the day in any particular case it is usually only possible to guess the answer to the question: `Does this misconduct justify in law summary dismissal?' The more serious the misconduct the likelier it is that a court will regard it as justifying summary dismissal; the more trivial the less likely is a court to uphold a right of summary dismissal.'

Finally, I think that the following passage of evidence of Mr Gilbert at page 103 of the transcript:

`... Underdale Metal Processing is a company in the metals industry which is a very tough environment to work and we employ a lot of people, some of whom are illiterate - a lot of people aren't particularly articulate or educated, and I guess, general ab use can be - can come from people time to time. In Mr Smith's case - Mr Smith is quite articulate. I thought that what he said to me, in the few minutes around that threat and including the threat, I thought that what he said had - was quite deliberate an d the tone of his voice was quite deliberate. He was quite - it was almost as if he had thought about what he was going to say and the first opportunity after he came to work he was going to say what he did to me. It was sort of cool and calculating, in a sort of low tone of voice. It wasn't particularly characteristic of him as far as my experience of him the previous days had been, ie that he tends to get very, very tense very, very quickly. So I had no doubt that what he was saying he meant ...'

**clearly demonstrates that the learned Deputy President's finding that the appellant's conduct was serious and wilful, and that it justified summary dismissal, was not only open to him but was one that I would have reached if it were necessary for me to d o so.

**This is the worker's appeal from a Deputy President. It is made pursuant to section 86(1) which reads as follows:-

**`An appeal lies on a question of law against a decision of the Tribunal constituted of a single Presidential Member to a Full Bench of the Tribunal.'

**Ms Layton Q.C. for the respondent contends there is no question of law raised by the appeal and therefore that issue must be determined at the outset. The grounds for appeal are as follows:-

**`1. The Deputy President erred in law in finding that the appellant's conduct was serious and wilful. The findings of fact, and in particular the finding that Michael Gilbert did not take the appellant's alleged threat seriously, do not give rise to a fi nding of serious and wilful misconduct.

**2. The Deputy President erred in law in failing to consider whether the appellant had by his conduct revived mutuality and as such that the finding of serious and wilful misconduct did not permanently deprive the appellant of the benefit of weekly payme nts.

**3. The Deputy President erred in law in failing to consider whether mutuality had been revived on the basis of evidence that the appellant was ready and willing to perform work for which he was fit and which was reasonably available.'

**At the outset of the appeal Mr Durkin of counsel for the appellant was granted leave to insert a further ground. The ground is as follows:-

**`4. The learned Deputy President erred in concluding that the facts as found amounted to lawful justification for the invocation of section 36(1)(e) of the Act.'

**The provisions under examination are contained in section 36(1) and read as follows:-

**`(1) Subject to this Act, weekly payments to a worker who has suffered a compensable disability must not be discontinued unless -

**(a) the worker consents to the discontinuance of weekly payments; or

**(b) the Corporation is satisfied, on the basis of a certificate of a recognised medical expert, that the worker has ceased to be incapacitated for work by the compensable disability; or

**(d) the worker has obtained work as an employee, or as a self-employed contractor, that is providing remuneration equal to or above the worker's notional weekly earnings; or

**(e) the worker is dismissed from employment for serious and wilful misconduct; or

**(f) the worker breaches the obligation of mutuality; or

**(g) the worker is, without the Corporation's consent -

**(ii) absent from the State for more than two months in any continuous period of 12 months; or

**(h) the discontinuance of weekly payments is authorised or required by some other provision of this Act.

**(1a) A worker breaches the obligation of mutuality if -

**(a) the Corporation has, by written notice to the worker, required the worker to submit to an examination by a recognised medical expert nominated by the Corporation and the worker fails to comply with the requirement within the time allowed in t he notice or obstructs the examination; or

**(b) the Corporation has, by written notice to the worker, required the worker to submit to the Corporation a certificate from a recognised medical expert certifying that the compensable disability continues, and the worker fails to comply with th e requirement within the time allowed in the notice; or

**(c) the worker refuses or fails to submit to proper medical treatment for the worker's condition; or

**(d) the worker refuses or fails to participate in a rehabilitation program under this Act or participates in a way that frustrates the objectives of the program; or

**(e) the worker fails to comply with an obligation under a rehabilitation and return to work plan under this Act; or

**(i) to undertake work that the worker has been offered and is capable of performing; or

**(ii) to take reasonable steps to find or obtain suitable employment,

**or having obtained suitable employment, unreasonably discontinues the employment; or

**(g) the worker does anything else that is, apart from this subsection, recognised as a breach of the obligation of mutuality.

**(1b) However, a worker does not breach the obligation of mutuality -

**(a) by reasonably refusing surgery or the administration of a drug; or

**(b) where there is a difference of medical opinion about the appropriate treatment for the worker's condition, or the possibility of choice between a number of reasonable forms of treatment - by choosing one form of treatment in preference to ano ther.'

**In the decision appealed against the learned Deputy President found as a fact that the worker made a menacing remark to his supervisor and that he was dismissed for that conduct. He then proceeded to analyse section 36(1)(e) of the Act and in particular the words `serious and wilful misconduct' and concluded that the words used in that context describe misconduct which justifies summary dismissal from employment. He then considered what kind of conduct would do so and relying on the decision of Laurie v. Mt Gunson Mines Pty. Ltd. (1981) 48 S.A.I.R. 656 at 667, concluded that it is conduct which shows a disregard for an essential condition of the contract of service. He then considered the worker's conduct in the context of certain other conduct wh ich he was found to exhibit over the day preceding the menacing remark and concluded that the remark made by the worker revealed a complete contempt for the supervisor in question and his authority to give reasonable and lawful directions and that as such the conduct struck at the very heart of the contract of employment in that it demonstrated a lack of preparedness to submit to the reasonable and lawful directions of the employer. The dismissal was therefore found to be serious and wilful justifying sum mary dismissal and WorkCover's decision to discontinue the worker's weekly payments was confirmed.

**In Rohrlach v. Christianos (1980) 26 S.A.S.R. 161, the Full Court considered the application of the provisions of section 47 of the Workers Compensation Act 1971 (`the repealed Act') which read:-

**`An appeal shall lie from any order or decision of the Full Industrial Court on a matter of law to the Full Court as defined by section 5 of the Supreme Court Act 1935, as amended.'

**The distinction between the words `a matter of' and `a question of' is somewhat debatable: see Zelling J. in Vickers v. Jarrett Industries (1977) 15 S.A.S.R. 525 at 545. However for the purposes of this case the analysis in Rohrlach's Case is helpful. The issue in that case was whether the deceased worker was employed by the respondent or employed by one of the incorporated companies which the respondent controlled. Concerning the competency of the appeal, King C.J. stated (at. 162) as foll ows:-

**`The distinction between a matter of law and a matter of fact is not always easy to make. "The proper legal effect of a proved fact is essentially a question of law, but the question whether a fact has been proved when evidence for and against has been p roperly admitted is necessarily a pure question of fact.": Wali Mohammed v. Mohammed Bakhsh, (1929) L.R. 57 Ind. App. 86, at p.92, quoted by Rich A.C.J. in Federal Commission of Taxation v. Broken Hill South Ltd. [1941] HCA 33; (1941) 65 C.L.R. 150, at p.154. The question is one of fact, whether it relates to primary facts or to inferences of secondary facts drawn from the primary facts: Vickers v. Jarrett Industries Pty. Ltd., (1977) 15 S.A.S.R. 525 , per Zelling J. at p.546. Some questions are matters of mixed law and fact. Their resolution requires a correct appreciation of the legal concepts involved and a correct understanding of the facts to which those concepts must be applied. It seems to me t hat the question whether the relationship of worker and employer exists at a particular time for the purpose of s. 9(1) of the Workers Compensation Act falls into that category. Its resolution requires a correct appreciation of the legal conce pts of worker and employer as used in the Act, a correct appreciation of the principles of the law of contract relating to the formation, termination and novation of contracts as those principles apply to the relationship of worker and employer, and a cor rect understanding of the facts to which those principles must be applied to resolve the question in the particular case.'

**His Honour went on to conclude that the majority in the lower Appeal Court had posed to themselves the wrong question and therefore had misdirected themselves as to the correct legal approach at the case. That was an error of law. But it must be recognis ed that whether or not a contract is one of employment has been regularly treated by the Courts as a question of law: see Morren v. Swinton and Pendlebury Borough Council (1965) 2 All E.R. p.349 at 352 per Lord Parker C.J.

In White v. Perovic (1988) 145 L.S.J.S. 293 the facts concerned a worker who suffered injury in the course of his employment in a scrap metal yard. He had been cutting a car battery with a bench mounted circular saw when he severed his fingers. Th e employer denied liability contending the injury was consequent upon his `serious and wilful misconduct' within the meaning of section 9(5) of the Act. The Full Supreme Court first examined what was specifically complained of by the appellant as disclose d by the grounds of appeal. Did that complain of a misunderstanding of the law or did it merely complain about the conclusions of fact drawn by the Judge. The Court went on to find the complaint was of matter of fact and not a matter of law. In terms of t he issue before us this decision bears remarkable similarity. (See especially Cox J. at 293, also Hahnheuser v. Workers Rehabilitation and Compensation Corporation and Casino, unreported Full Supreme Court, 10 September 1996, Judgment No. S5799).

****Mr Durkin referred to the provisions of section 100 under the 1986 Act which read as follows:-

****`(1) A party to proceedings before the Tribunal may, by leave of the Supreme Court, appeal against a decision of the Tribunal in those proceedings.

****(2) An appeal under this section shall be heard and determined by the Full Court.

****(3) An appeal under subsection (1) shall be limited to a question of law.

****However, as with the approach under section 47, of the repealed Act the authorities dealing with the right of appeal pursuant to section 100 of the 1986 Act indicate there must appear not merely a question of law raised by the grounds of appeal but also that in truth the issue be one of law and not one of fact. In Ortlepp v. Le Cornu Furniture Centre (unreported Full Supreme Court 12 April 1991) the issue was causation. After setting out the respective arguments, Olsson J. stated (at 4):-

****`As I have earlier indicated, at the end of the day, one is driven to the conclusion that what is essentially in issue in this matter is nothing more than a divergence of opinion as between the Appeal Tribunal and the Review Officer as to what compelling inferences fairly arose on the factual material. There is, in reality, no issue as to what is the appropriate legal test by which the facts, as found, are to be measured, or as to the legal consequences which must flow one way or the other from an applic ation of the proper test to the facts.'

****`The purpose of leave to appeal applications will be thwarted if care is not taken to identify accurately the relevant issues so as to allow for an informed assessment of the merits of the application. In the present case it would appear that the learned judge hearing the application was presented with a summary which bore little resemblance to the matters eventually raised on appeal.'

****In Ettridge v. State Transport Authority and WorkCover (1992) 163 L.S.J.S. 153 the majority (Legoe and Millhouse J.J.) regarded a question of whether certain days worked by the worker constituted overtime within the meaning of section 4 of the Act as a question of law. However Zelling A.J. said that a question of the characterisation of overtime as occasional or spasmodic is one of fact on which minds may legitimately differ. As there was nothing in the Tribunal's reasons to suggest that they misu nderstood or misapprehended the relevant law his Honour decided that there was no question of law. His Honour referred to the judgment of Glass J.A. in Azzopardi v. Tasman UEB Industries Ltd. (1985) 4 N.S.W.L.R. 139 at 156 where he said that `an ul timate finding of fact, even in the absence of a misdirection, may reveal error of law if the primary facts found are necessarily within or outside a statutory description ...'. The decision assailed in Ettridge was said not to be of that ch aracter.

****In Pham v. Workers Rehabilitation and Compensation Corporation (1995) 181 L.S.J.S. 241, Cox and Mullighan J.J. held that there was a question of law as required by section 100 of the 1986 Act in that the Tribunal and the Review Officer had wrongly decided that an inference could not be drawn from proven facts so as to conclude that the causal link between the work injury and the psychiatric condition was established.

****`Whether an inference can be drawn from proven facts is a question of law: Hope v The Council of the City of Bathurst [1980] HCA 16; (1980) 144 CLR 1 at pp7-8 and Australian Broadcasting Tribunal v Bond & O rs [1990] HCA 33; (1990) 170 CLR 321 at p 355.'

****In Fernandez v. The State of South Australia (1994) 177 L.S.J.S. 436, it was agreed the worker's disability was not serious and permanent, that he had been dismissed because of the disclosure to his employer of four convictions of larceny outside work and that his disability, anxiety and depression, was occasioned by the processes of dismissal brought into being by the employer's discovery of his convictions. Debelle J. stated the matter as follows:-

****`It was common ground that the convictions for larceny constituted misconduct and that the misconduct was wilful. The only issue, therefore, was whether the conduct was serious misconduct within the meaning of s.56.'

****In looking at the matter the Court had to determine whether the provision of the legislation was intended to take into account conduct outside employment, (it did), whether `serious' was determined by the consequences flowing or the risk of serious conse quence, (it held the latter being the relevant criterion) and finally, although of lesser focus, matters of causation. These were questions of law. This can be seen because the concern was about matters of generality (i.e. the way in which the legislation would operate whatever the fact situation it was applied to) as distinct from matter of specificity (of no application beyond the particular case).

****In our view those rulings of what is a question of law are sufficient. They are consistent with the approach required of us as indicated by a number of important authorities referred to by counsel: see Hayes v. Federal Commissioner of Taxation (19 56) [1956] HCA 21; 96 C.L.R. 47, Bill Williams Pty. Limited v. Williams [1972] HCA 23; (1972) 126 C.L.R. 146, Vickers v. Jarrett Industries Pty. Ltd. (1977) 15 S.A.S.R. 52 5, Australian Steel and Mining Corporation Pty. Ltd. v. Corben and Others (1974) 2 N.S.W.L.R. 202, Ipec Insurance Ltd. v. Commissioner of Taxation (1975) 12 S.A.S.R. 249, Harris and Others v. McKenzie and Others (1987) 9 N.S.W. L.R. 139 and Collector of Customs v. Agfa-Gevaert Ltd. [1996] HCA 36; (1996) 141 A.L.R. 59.

****In the latter the Court stated their view as follows:-

****`The distinction between questions of fact and questions of law is a vital distinction in many fields of law. Notwithstanding attempts by many distinguished judges and jurists to formulate tests for finding the line between the two questions, no satisfac tory test of universal application has yet been formulated. In Hayes v. FCT, [1956] HCA 21; (1956) 96 C.L.R. 47, Fullagar J. emphasised the distinction between the factum probandum (the ultimate fact in issue) and the facta probantia (the facts adduced to prove or disprove that ultimate fact). His Honour added:

****"Where the factum probandum involves a term used in a statute, the question on whether the accepted facta probantia establish that factum probandum will generally - so far as I can see, always - be a question of law."

****In Collector of Customs v. Pozzolanic Enterprises Ltd., (1993) 43 F.C.R. 280, the Full Federal Court spoke of the distinction between law and fact in a statutory context as resting upon "value judgment[s] about the range of [an] Act" which, the co urt said, necessarily raised questions of law.

****Some recent Federal Court decisions have attempted to distil the numerous authorities on the problem into a number of general propositions. Thus in Pozzolanic, after referring to many cases, the court identified five general propositions:

****1. The question whether a word or phrase in a statute is to be given its ordinary meaning or some technical or other meaning is a question of law.

****2. The ordinary meaning of a word or its non- legal technical meaning is a question of fact.

****3. The meaning of a technical legal term is a question of law.

****4. The effect or construction of a term whose meaning or interpretation is established is a question of law.

****5. The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law.

****In Pozzolanic, the Full Court qualified the fifth proposition. The court said that, when a statute uses words according to their ordinary meaning and it is reasonably open to hold that the facts of the case fall within those words, the question as to whether they do or do not is one of fact.'

****Ms Layton Q.C. emphasised the second of the five propositions, and the qualification of the fifth proposition.

****Drawing upon that summary we are satisfied none of the three original grounds of appeal suggest a question of law. They are complaints as to findings specific to this case and which were open on the evidence. In fact Mr Durkin properly conceded th e appellant could not challenge the findings of the Deputy President: (see Appeal Transcript p.5). The fourth ground he contended was a question of law.

****Mr Durkin conceded the misconduct was serious (appeal transcript p.11). Therefore he confined himself to the second limb of the phrase in respect of which his argument was that in context the conduct could not be said to be wilful. We disagree wit h that contention. The concept of `wilful' is described by Isaacs A.C.J. in Adami v. Maison De Luxe Limited [1924] HCA 45; (1924) 35 C.L.R. 143 at 151, 152:-

****`"Wilfully" does not necessarily connote in that connection anything criminal or immoral, but it does connote some deliberate design or purpose to derogate from duty.'

****This concept, taken up by the legislation from the common law (a premise we understood Mr Durkin agreed with), must be realised in full context. In Scharmann v. Apia Club Ltd. (1983) 6 I.R. 157 Wootten J. at 163 said:-

****`In the law of employment the right of an employer to terminate a contract by reason of breach by the employee is referred to as a right of summary dismissal. There is no fixed rule of law defining the degree of misconduct which will justify dismissal (Clouston & Co. Ltd. v. Corry [1906] A.C. 122 at 129). The right will arise if something is done by the employee which impliedly or expressly is a repudiation of the fundamental terms of the contract (Harman L.J. in Pepper v. Webb [1969] 2 All E.R. 216 at 218). "If an employee by wilful disobedience to a lawful and reasonable order shows a determination to disregard an essential term of his contract, then this may amount to a repudiation of the contract entitling the employer to elect to t reat the contract as at an end ... The type of conduct which can amount to a repudiation must necessarily depend on the circumstances on each individual case. It is a matter of fact and a matter of degree. It must be related to the situation at the time a nd the particular situation of those personalities involved." (Gorse v. Durham County Council [1971] 2 All E.R. 666 at 671).'

****That meaning to the word in section 36(1)(e) is correctly described by the learned Deputy President. He said:-

****`The term "serious and wilful misconduct", is one well known to the industrial law. It describes misconduct which justifies summary dismissal from employment. And, I think that it is that conduct, that Section 36(1)(e) is concerned with.'

****The learned Deputy President then went on to find:-

****`I now turn to consider the conduct of the worker. As I have explained above, I have no doubt that the worker uttered the remarks described by Mr. Gilbert. I am not however, prepared to find, on the evidence as presented to me, that the worker actually i ntended to carry out his threat. Nor, despite contrary evidence from Mr. Gilbert, am I prepared to find, that Mr. Gilbert took the threat seriously. I say that for two reasons. First, because of the measured response by Mr. Gilbert, that is, his request t hat the threat be repeated in front of a third person followed by the calculated entry in his diary. Secondly because of the impression that I formed as a result of hearing and observing Mr. Gilbert give his evidence.

****But these findings do not necessarily lead to a conclusion that the making of a statement did not constitute serious and wilful misconduct. The statement must be looked at by reference to what preceded it. The day before it was made, the worker was admon ished for failing to abide by the hours of employment. He challenged the right of the employer to stipulate those hours and indicated an intention to defy the request by the employer that he remain at work until 4 p.m. It seems to me, that in those circum stances, the statement made by the worker to Mr. Gilbert revealed a complete contempt for Mr. Gilbert and his authority to give reasonable and lawful directions to the worker. As such, that conduct struck at the very heart of the contract of employment, n amely, the preparedness to submit to the reasonable and lawful directions of the employer. It therefore in my view, was misconduct that was serious and wilful and which justified summary dismissal and I find accordingly.'

****That was a finding that was open on the evidence. We have had due regard to the various submissions about the evidence and the reasons made by Mr Durkin in his address: see pp.17-24 appeal transcript. Those matters are factual and not questions of law. But in any event Mr Durkin's contentions as to fact are strenuously contested by Ms Layton, (see pp.30-33).

****We have therefore concluded that there is no question of law in this case and the appeal must be dismissed.

Having decided the matter on this basis it is not necessary for us to deal specifically with Ms Layton's contention that all that WorkCover was supposed to examine pursuant to section 36 was whether the employer asserted the dismissal was for seri ous and wilful misconduct. In other words her contention was that WorkCover is not meant to conduct an independent examination of the dismissal to see whether it was consequent upon misconduct both serious and wilful: (see submissions pp.38-43). We would indicate that we are against that contention. The legislative intent is for the Corporation to satisfy itself that the dismissal is a lawful dismissal; that is that the elements to entitle the employer to accept the repudiation as a matter of fact do exis t. However that matter can be left to another day.