Fair Work Act 2009

s.394 - Unfair dismissal

[1] Mrs Kylie Smith (the Applicant) applies under s.394 of the Fair Work Act 2009 (the Act) for an unfair dismissal remedy in respect of her dismissal by Bank of Queensland Ltd (the Respondent/BOQ). The Applicant was employed by the Respondent for a total of some 11.5 years in two periods from November 2005 to January 2009 and February 2012 to May 2020. The Applicant was dismissed on 8 May 2020. At the time of her dismissal, the Applicant held the position of Branch Manager, Nambour. The dismissal was as a result of the Applicant mistakenly transferring an amount of $37,500.00 being the final draw down from an owner/builder construction loan account held by a BOQ customer, to an account with the Commonwealth Bank of Australia (CBA) operated by a person who had fraudulently intercepted the emails of the BOQ customer.

[2] It is not in dispute that the Applicant authorised the transfer in error as a result of the conduct of a fraudster and that the Applicant did not behave in a manner that was dishonest and nor did she benefit in any way from the erroneous transaction. It is also not in dispute that only $7,500 of the amount was recovered by the Respondent.

[3] The Respondent dismissed the Applicant following an investigation which concluded that the Applicant had: breached significant bank policies; failed to identify a risk to the customer and to follow steps to protect the Bank from risk which resulted in a loss of some $30,000.00. It was also determined that the Applicant had demonstrated a pattern of behaviour and conduct that did not align to the inherent requirements of the Applicant's role and that the Bank had lost trust and confidence in the Applicant.

[4] The Applicant contends the dismissal was unfair given she was not trained in a lending capacity, the transaction was an innocent mistake, and the circumstances did not warrant a loss in trust and confidence to satisfy a valid reason for dismissal by the Respondent. The Applicant also contends that a number of mitigating factors were not taken into account in the decision to dismiss her, including: the increase in foot traffic into the Nambour Branch as a result of the COVID-19 Pandemic; the fact that she was due to go on leave and was under pressure to finalist the loan; and her 8 years of unblemished service at the time of her dismissal, including a positive performance review shortly before her dismissal.

[5] Section 396 of the Act requires that four specified matters must be decided before the merits of the application may be considered. There was no contest between the parties regarding these matters, and I find that:

(a) the application was made within the period required by s.394(2);

(b) the Applicant was a person protected from unfair dismissal;

(c) the Respondent was not a "small business employer" as defined in s.23 of the FW Act; and

(d) the dismissal was not a case of genuine redundancy.

[6] As provided in s.397 of the Act, I decided to conduct a hearing on the basis that there were disputed issues of fact and I considered this to be the most appropriate means to resolve them. The hearing was held in Brisbane on 29 September 2020. At the hearing, the Applicant was represented by Mr M White of Counsel who was instructed by Ms Bell of Butler McDermott Lawyers, and the Respondent was represented by Mr J Wells of King & Wood Mallesons. Permission was granted pursuant to s. 596 of the Act for both parties to be represented on the basis that the matter involve some complexity and I was satisfied that it would be more efficiently dealt with if the parties were represented and no issues of fairness arose.

[7] The Applicant gave evidence on her own behalf at the hearing. Evidence for the Respondent was given by:

• Ms Amy Sun, Senior Financial Claims Officer, Financial Crimes Operations; and

• Mr Brett Holland, Area Manager.

[8] The Applicant was employed by the Respondent as Branch Manager at its Nambour Branch. As previously noted, the Applicant had two periods of employment with the Respondent with her most recent period commencing on 14 February 2012, on a full-time basis. At the time of dismissal, the Applicant's annual income was $84,246.58 exclusive of superannuation and performance bonuses.

[9] The evidence in relation to the fraudulent transaction can be summarised as follows. In 2018, a builder (the customer) took out a construction loan with the Respondent, which involved the customer drawing down periodic sums to pay for the work as it progressed. At the time of the fraudulent transaction, there was a single drawdown remaining in the loan, to the sum of $37,500. The Applicant stated that on 30 January 2020, Ms Karen Hartley, Lending Performance Manager for the Respondent, instructed the Applicant to finalise a "final progress payment" for the customer's home loan file. The home loan file was written by Ms Sonia Shead.

[10] The Applicant had not previously worked with an owner builder construction loan and stated that she informed Ms Hartley of this and sought her assistance as she did not know how to finalise the progress payment as required. Ms Hartley attended the Nambour Branch in March 2020, to assist the Applicant with the transaction. Ms Hartley explained that the Applicant was required to obtain approval from the Respondent's Retail Credit department. Ms Hartley drafted an email on the Applicant's computer, addressed to Retail Credit and seeking approval for a final progress draw of $37,500.00 to be released. This email was sent under the Applicant's electronic signature.

[11] On 4 March 2020, Mr Robert Pozzebon, Retail Credit Officer, responded to the Applicant's correspondence, seeking further information and a property valuation. The Applicant said this correspondence confused her and she felt the transaction was outside her capabilities and the tasks she had been trained to perform. On 6 March 2020, the Applicant sent reply correspondence to Mr Pozzebon, seeking clarification of what was required of her.

[12] On 20 March, the Applicant asked Mr Matt Needham, Lending Manager for the Respondent, to order a construction stage valuation as she did not know how to undertake this task. Mr Needham ordered the valuation as requested which was received and the valuer telephoned the Applicant to discuss the valuation and noted the costs to complete the outstanding works would be $37,500.00.

[13] On 23 March, the Applicant emailed the valuation to Mr Pozzebon for approval, and Mr Pozzebon replied that day, approving the release of the final progress payment in the sum of $37,500.00 to the customer. On 24 March, the Applicant forwarded Mr Pozzebon's email of 23 March to Ms Hartley. Between 25 and 27 March, Ms Hartley attended the Nambour Branch during which time the Applicant asked her whether she should now move on to the funding stage. Ms Hartley directed that she should.

[14] The Applicant telephoned the customer to advise that the final progress payment had been approved and asking him to send through an email with a tax invoice for payment. She did not receive an email from the customer and followed up with an email again requesting the tax invoice. The customer replied by email on 1 April 2020, at 6.35 am stating: "Hi Susie, I thought I sent it to Alex last week. Not sure where it went". The following appears at the foot of the email: "Sent from Mail for Windows 10." The attached invoice sets out details of a Bank of Queensland Account. The Applicant emailed the customer at 9.14 am on 1 April 2020, confirming receipt of the invoice and advising that the team member he had originally sent it to was on annual leave.

[15] On receipt of the tax invoice, the Applicant located the progress payment request form from the customer's lending file. The Applicant stated that she checked the signature on the Bank's "Records Manager" program which determined that it was a match and proceeded with completion of the form. The Applicant stated that she received another email a few minutes later, advising of a change of bank account. That email was sent at 11.05 am and was in the following terms:

Please i need you to hold on with payment for tax invoice if not yet made as i have just checked with account and have just been advised that we are missing on some payments and we are trying to trace. So we are moving all pending invoice payments to our business savings account until situation is resolved.

[16] The email did not contain a reference to it being sent from Mail for Windows 10. It is common ground that this email was the first fraudulent email received by the Applicant. The Applicant responded to the first fraudulent email at 12.18 pm on 1 April stating that she had completed the paperwork but had not lodged it and seeking confirmation as to whether the customer wanted her to fund the final payment to a different account or "not at all at this stage." At 4.11 pm the Applicant received a further email - the second fraudulent email - stating: "Hi Susie, Kindly proceed with payment to my business savings account" and setting out details of a CBA account said to be in the customer's name. The email concluded with: "Please forward payment remittance as soon as payment is processed so i can look out for it." The second fraudulent email also did not include a footer stating that it had been sent from Mail for Windows 10.

[17] The Applicant responded to the second fraudulent email at 9.10 am on 2 April 2020 stating that the tax invoice would need to be amended to reflect the change to the account and requesting that it be amended and emailed to her. At 9.23 am the Applicant received a third fraudulent email stating that a copy of the tax invoice was attached and concluding: "kindly let me know when payment has been processed." Again, this email did not include a footer stating that it had been sent from Mail for Windows 10. The email also attached a fraudulent tax invoice which was in identical terms to the original and authentic invoice sent on 1 April 2020, except that the reference to the BOQ account had been removed and replaced with a reference to a CBA account. The name of the CBA was incorrectly spelled on the invoice as "CommonWealth".

[18] The Applicant amended the "progress payment request form" in accordance with what she thought were the customer's instructions. The Applicant stated that on 1 April 2020, she logged into the Respondent's "Support Point" site and read through the procedure for progress payment authority. The procedure stated that the progress payment authority form needs to be signed by an "Authoriser" who holds a Delegated Approval Authority (DAA) and must have a different person as "Preparer" of the form. As the only employee at the Nambour Branch holding a DAA, the Applicant proceeded to sign the form as Authoriser and asked her colleague, Ms Leanne Condren, Customer Relationship Specialist, to sign the form as Preparer.

[19] Under cross-examination at the hearing, the Applicant maintained that as the only DAA holder, she had no option but to sign the progress payment authority form in that capacity, and that she had "talked Leanne [Condren] through the form and asked her to sign it". In response to a question as to why the same person could not be preparer and authoriser, the Applicant stated that "in hindsight, you're checking your own work". The Applicant also had the following exchange with Mr Wells for the Respondent:

"So, if Leanne had no role on the transaction and wasn't really a preparer, she was sort of a stunt preparer, doesn't that deprive the process of the two pairs of eyes that it's meant to have?---We talked through it, but, yes, I mean in normal circumstances, the lender would complete that form. I didn't have that luxury. I would always sign as the authoriser, but I didn't have a lender.

You could have signed a preparer and had someone else authorise it, it didn't have to be a branch-based authorisation, did it?---It's not something I'd ever done before and, again, I've learned that after the fact that we can send those forms to other branches.

But, clearly, the solution wasn't to have a preparer that knew nothing about it, was it?---Done it before.

To replicate an error isn't to make it right, is it?---I didn't know it was wrong.

Does it not feel counterintuitive that someone who knows nothing about it is one of the two pairs of eyes?---Well, we worked closely together for six years, but, yes, I see what you're saying, I definitely should have not asked her to sign the form."[1]

[20] While conceding that Ms Condren did not prepare the form the Applicant maintained that Ms Condren signed it as preparer. The Applicant said that the first time she sent the form she forgot to ask Ms Condren to sign it and it was sent back to the Applicant to get it signed. Ms Condren signed the form and the Applicant resubmitted it.

[21] Further, the Applicant's evidence was that there was no requirement, pursuant to the Respondent's procedure for progress payment authority located on "Support Point", to telephone the client. At the hearing, the Applicant said that while she was aware of the requirement that "if receiving request via letter, email or fax then...positively identify a customer over the phone", when she performed a Support Point search on that day, it returned a different result that did not require a call to be made. She said that "If Support Point said to call him [the customer], I would have called him".[2] In this regard, the Applicant said that she searched for and read the procedure for progress payment authorities and did not read other general procedures.

[22] While accepting that the specific procedure for progress payment authorities did not exclude other procedures relating to positively identifying the customer, the Applicant maintained that she did not do this because the specific procedure did not require that she do so. In response to the proposition that what she needed assistance with was the identification of the customer, the Applicant said that she had no idea that she was not talking to the customer and she needed help to complete the progress payment form. In response to the proposition that she was in a hurry because she was going on leave, the Applicant said she was surrounded by "crazy circumstances" and did the best she could.

[23] In response to the proposition that she would be required to verify a customer's identity if the customer had cash on deposit and sent an email asking for it to be transferred to another bank, the Applicant said that emails are not accepted for that kind of transaction. The Applicant also said that some lending transactions are different because the customer has already been identified and that progress payments are the only type of transactions the bank does via email with a tax invoice.[3] The Applicant agreed that she did not positively identify the customer by telephone on this occasion but had previously contacted the relevant customer by telephone many times. The Applicant maintained however, that she had never done that for a progress draw in the past, and had done three transactions of this kind previously where she had received a tax invoice from the builder and emailed the customer to seek approval to move forward with the payment and then completed the form and sent it off.[4] In response to the proposition that this was not Bank policy, the Applicant said that this is what she had been shown.[5] The Applicant conceded that there are many ways she could receive an email that was not from a genuine customer but said that it had never happened before in her fourteen years with the Bank.[6]

[24] The Applicant was also cross-examined regarding the statement in the first fraudulent email that the customer was "missing on some payments" and had the following exchange with Mr Wells for the Respondent:

"Didn't that send some alarm bells that if he's saying, 'I don't want money into that account now, I want it to go to a foreign, competitor bank account because we're missing on some payments', isn't that a bit of a red flag?---Nil. Nothing at the time.

But reading it now, the customer says they're missing some payments from their account or to their account?---There is some background to that, but I'm not sure if you want to hear that or not.

I'm just wondering if you had received an email saying, 'I'm missing some money from my BOQ account, can you please deposit this drawdown to another account'?---Well, I've actually read that as in people he's done work for have not paid him, not that money has gone missing from his BOQ account. When I've read that, I've read, 'We're missing on some payments and we are trying to trace', so they haven't actually hit the BOQ account. I can't do anything to help him run his business."[7]

[25] On 2 April 2020 the Applicant sent an email to the customer thanking him for his response and booked in a time to "touch base" on her return from annual leave on 22 April 2020. Also on 2 April, the Applicant sent the signed progress payment request pages to the Bank's Drawdowns team. The Applicant commenced annual leave on Monday 6 April 2020 but said that her last day at work was Friday 3 April 2020. The Applicant continued to check work emails on her mobile phone while on leave. During this time, she received a number of emails from the customer's account, but sent by the fraudster, querying why the payment had not appeared in the CBA account. The first email was received on 3 April at 5.30 am and asked: "if the payment have gone through". The next email was received on 6 April at 7.01 am and queried how long it would take for payment to reach the CBA account. The Applicant contacted the Drawdowns team by email who confirmed the payment was made and attached confirmation of the payment details and this was confirmed this by email on that date.

[26] On 8 April 2020 at 7.08 am, the Applicant received a further email from the customer's account but sent by the fraudster, advising that the funds had not been received and requesting payment confirmation so that a complaint could be made by the CBA. The Applicant responded requesting that the customer check the invoice to ensure details were correct. The fraudster responded again from the customer's email account, at 8.52 am, stating that a cross-check had been undertaken and the details were correct, and requesting the transaction details to enable the payment to be traced. The Applicant sent a further email requesting that the customer ask the CBA what it needed to conduct the trace and the fraudster again responded from the customer's email account requesting a payment or transaction receipt of transfer containing transaction details, date of transfer and other information.

[27] The Applicant also sent an email to the Drawdowns team, which responded confirming that details of the account to which the money was paid matched the invoice provided and that payment had gone through and had not been rejected. The Applicant said that on 8 April 2020 she also telephoned Ms Asha Howlett-Arnold, Customer Relationship Specialist at the Nambour Branch, requesting that she telephone the customer and provide him with the confirmation details and the details for customer service. The Applicant forwarded the emails from the Drawdowns team to Ms Howlett-Arnold. The Applicant said that she did this because she was on annual leave and did not have the client's contact details. Under cross-examination it was put to the Applicant that she had received a series of "frenetic" emails from the fraudster about not getting the money and that the Applicant had responded to those emails while on annual leave. In response to a question about why she had not telephoned the customer at that time, the Applicant said that she was on annual leave and should not have been working but had been checking her emails to assist her team. The Applicant also said that she asked Ms Howlett-Arnold to contact the customer.

[28] On 8 April 2020 at 3.51 pm, the BOQ Financial Crimes Operations team received an email from the CBA advising that the BOQ had deposited funds into a CBA account that was suspected of being involved in fraudulent activity. This correspondence was brought to Ms Sun's attention that same day. A member of Ms Sun's team contacted CBA that afternoon to conduct a name check, and the CBA responded indicating that the name on the CBA account was not a match to the Respondent customer's name. Ms Sun's team confirmed by email to CBA early that evening that they were investigating the progress payment, and that it was suspected there had been fraudulent activity. On 9 April 2020, Ms Sun's team telephoned CBA to make an official fraud report. That afternoon, Ms Sun's team sent CBA an indemnity covering their risk when recovering the funds for the BOQ.

[29] On 15 April 2020, Ms Sun attempted to contact the Applicant and left a voice message requesting the Applicant to call her back urgently. The Applicant returned the call and was advised there was an investigation underway regarding the progress payment for the client and asking that the Applicant access her emails to assist with the investigation.

[30] The Applicant stated she contacted her Area Manager, Mr Holland, to advise him of the call from Ms Sun. Mr Holland asked that the Applicant forward him the email from Ms Sun but the Applicant stated that she could not locate the email. Mr Holland's evidence was that he first became aware of the transaction when Ms Sun contacted him to advise there had been an incident and that an investigation was ongoing. Mr Holland stated he was not advised the transaction involved fraud, as the Respondent's policy is that investigations are conducted without branch staff and Area Managers necessarily knowing the details.

[31] On 17 April 2020, the Applicant was sent a calendar invite to attend a teleconference on 20 April 2020. Mr Russell Cornish, Manager Investigations - Fraud Investigations, was the host and Ms Sun was also scheduled to be on the call. The meeting was titled "Fact Finding". The Applicant contacted Mr Holland by telephone on 17 April 2020, and according to Mr Holland's evidence, she sounded agitated, causing him to form a view that the Applicant was worried about the meeting.

[32] The Applicant stated that during the telephone call with Mr Holland, he advised that the customer's email had been intercepted by fraud, and the progress payment had been made to the incorrect account meaning the customer had not received the funds. The Applicant said that Mr Holland assured her she had nothing to worry about and that the meeting was simply to help with tracing the money.

[33] Mr Holland agreed in his evidence that he tried to put the Applicant at ease by telling the Applicant she should not worry about the meeting and should instead focus on explaining what she knew about the transaction. He denies stating the transaction involved fraud as he states he was unaware of this at the time and knew very little about what was involved in the investigation process or fact-finding meeting.

[34] The Applicant stated that while she did not request this, Ms Hartley was appointed as her support person for the meeting of 20 April. Ms Hartley attended at the Branch with the Applicant for the telephone conference meeting, and they did not discuss the matter prior to the meeting. Mr Cornish led the teleconference and asked the Applicant questions regarding the events leading up to the funds being transferred. Mr Cornish also asked the Applicant to provide all emails between herself and the customer, and to provide a statement of events. The Applicant stated that she was advised the call was recorded.

[35] Following the meeting, the Applicant provided an account in writing of what had occurred, in her own words. That account is generally consistent with her evidence to the Commission in these proceedings and includes that:

• Generally the task of completing the loan would have been undertaken by the Branch Lending Specialist but there had not been a person in this role since the resignation of the lender from the Nambour Branch in October 2019;

• Another employee (Ms Goldspink) initially had discussions with the customer about the final progress payment and reported to the Applicant that he was angry at the suggestion that the funds may be released in instalments;

• The Applicant reached out to the newly appointed part-time lender for the Branch and asked him to order a valuation for the property as required by the Retail Credit department;

• The Applicant had telephone discussions with the customer between 16 and 20 March in which he expressed dissatisfaction at issues he had with having funds released from the loan and why he was required to obtain a valuation for the final payment which he saw as a "hassle" and stated that he had spent the other drawdowns on landscaping and retaining walls which he thought would increase the value of the house and enable him to obtain the final payment "with no questions asked" as he had been informed by the previous lender; and

• On 24 March the Applicant was informed that the Retail Credit department approved the final payment being released and contacted the customer to inform him of this and requested that he provide a tax invoice for that amount.

[36] The Applicant then outlined the email exchange with the genuine customer on 30 March 2020 in which she requested a copy of the invoice. In relation to preparation of the progress draw request, the Applicant said in her written account:

"Within the lending file were completed progress payments which I removed, checked the signature and proceeded to complete the progress draw request. Support Point makes note that this form needs to be authorised by a DAA holder which is me so I asked Leanne to sign as preparer so I could sign as authoriser."

[37] In relation to the first fraudulent email, the Applicant said in her written account:

"I received a 3rd email from [customer] at 11.06 am instructing me to alter the account details for payment as their BOQ account has payments missing, they are trying to trace them so don't want any more funds hitting that account until traces were resolved. This did not appear out of character in comparing to our previous conversations/correspondence when he expressed his dissatisfaction with BOQ with how we have conducted this construction loan and withheld the last payment for almost 2 years. I did however respond to [customer's] email to confirm the new account or no payment at all to which he responded 'yes please to my Business Account'. With his written instructions I explained the tax invoice needs to reflect the change also."

[38] In conclusion, the Applicant stated in her written account:

"Please note that the weeks between 23/03/20 - 03/04/20 we were experiencing the peak impact of Covid-19. During this time at Nambour Branch our customers/transactions spiked to an average of 157 per day with the phones ringing off the hook on top. We were also lacking in staff with 2 team members not present in branch.

The expectation from my Leader was to contact every home loan customer that settled in the last 2 years with urgency to check in with them and ask if they needed assistance through Covid-19. There were many tears and fears and every customer I spoke with did actually need assistance with deferring their mortgage payments which needs to be requested via IT assist plus input to CEP.

It was never my intention to do anything but assist [customer] with his final progress draw. Even though I am inexperienced in this area of final progress draws I took on the task with the sole purpose to provide a good outcome for the customer and the Bank. To this day I am stunned that I have been tangled up in a scam and I would like to profusely apologise for my mistake. Never in my 15 years of employment have I acted without integrity or made a mistake that resulted in a financial loss to the Bank."

[39] In relation to the effect of the COVID-19 pandemic, the Applicant said in her evidence that the Nambour Branch of the Bank has an older customer base which does not like to do on-line banking. The Branch had higher than usual foot traffic as customers came in and a further issue was that they were seeking to withdraw large amounts of cash ranging from $10,000 to $50,000 because they were panicking. The Applicant also said that the presence of a QML facility next to the Nambour Branch resulted in people lining up outside the Branch to be tested for COVID-19 and this placed additional stress on staff members. The Applicant said that these matters were in her view, unique to the Nambour Branch.

[40] Ms Sun's evidence was that she was appointed lead investigator to investigate the progress payment, and that her role was to investigate how and why the funds from the progress payment, intended for the Respondent's customer, were transferred to a fraudulent CBA account, and to determine if the fraud was contributed to by the actions of the Respondent's customer, and if not, whether the Applicant contributed to the fraud or loss. She stated she was not involved in any HR review or disciplinary action.

[41] Ms Sun stated that as part of the investigation, the Respondent's staff provided her with emails between the Applicant and the customer in relation to the progress payment. She annexed these emails (the contents of which are described above) to her witness statement filed in these proceedings. Ms Sun identified that emails apparently sent by the customer to the Applicant between 1 April 2020 and 8 April 2020 were all sent by a fraudster presenting as the Respondent's customer. In relation to the fraudulent emails, Ms Sun's report identifies the matters including:

• Characteristics (Grammar, format, layout and wording) are not in line with previous emails sent by the genuine customer;

• The genuine emails from the customer have "Sent from Mail for Windows 10" in the body of the email while none of the fraudulent emails include this;

• Both genuine emails had headers with an X-Authentication which the fraudulent emails did not have; and

• Both genuine emails had a Domain, ISP Mobile Carrier showing Telstra whereas the two fraudulent emails used other domains.

[42] Ms Sun's report also identified that despite the email of 1 April claiming account issues and funds going missing there were no signs in internal reporting systems that such issues had been reported to BOQ and "Smith with her 15 or so years with BOQ and being Manger of a branch made no attempts and failed to call [customer] to assist with rectifying the situation of the 'missing funds'". Ms Sun's report states that had a call been made or an attempt to assist the customer with the "missing payment" it would have been established that there were no missing payments and that the email had been sent by a fraudster. Ms Sun also made findings that:

• The Applicant's claim that she had not spoken to the customer since 3 April was not credible and that all correspondence had been via email since 1 April 2020 with no calls being made by the Applicant to the customer between 1 and 3 April;

• The Applicant had failed to complete a new Progress Payment Authority form when the tax invoice was received from the customer and used a pre-signed form from the file which indicated that the forms had been signed in advance when the lending file was established rather than in stages;

• The Applicant had failed to obtain a signature or initials from the customer when amendments were made to the date and payment details of the pre-signed Progress Payment Authority form and made no attempts to telephone the customer to confirm the account number, despite his phone number being recorded on the form; and

• The Applicant failed to raise questions or telephone the customer regarding the change in bank details even though all previous progress payments had gone into a BOQ account.

[43] Ms Sun's report also stated:

"The 'Progress Payment Authority - Branch Processing Checklist' form is meant to be prepared by a 'Preparer' and then given along with all relevant documentation to an "Authoriser'. In this case CONDREN is listed as the 'Preparer' and SMITH is the 'Authoriser', however it is evident that CONDREN had no involvement in preparing this form and SMITH had solely prepared the form and associated paperwork and also neglected to obtain CONDREN's signature".

[44] Ms Sun's recommendations were as follows:

• [Customer] is to be reimbursed for the full amount of the Final progress payment of $37,500 from FCO Cost Centre, Non-Lending loss account initially.

• Any recovery of funds from CBA to be credited back to FCO Cost Centre Non- Lending loss account;

• Any difference in the loss of funds incurred by FCO's Cost Centre as a result of this case is to be reimbursed by a Cost Centre linked to the Nambour Branch as it was identified that the Nambour Branch staff had failed to follow procedure which resulted in the loss.

• Area Manager Brett Holland to liaise with People and Culture regarding the appropriate action to be taken against SMITH for her failure to follow correct policy and procedure.

• An Operational Risk Incident is raised so that the Operational Risk Team can conduct further review on the actions and/or lack of actions taken by Nambour Branch.

• BOQ staff to be better educated on scam awareness and fraud activity.

[45] Ms Sun conceded under cross-examination that her conclusion that the Applicant had falsely stated that she had not spoken to the customer since 3 April was based on a misunderstanding about what the Applicant said.[8] Ms Sun also conceded that not all the matters identified in her formal Report would have been apparent to a receiver of the fraudulent emails, such as "authentication data" sitting behind the face of the email and said that this was included in the report as evidence important to the final conclusion that the emails came from a source different to the customer's normal email account and therefore was consistent with fraud. Ms Sun said that some matters such as the language and punctuation in the emails, and the absence of the signoff "Sent from Mail for Windows 10" were apparent on the face of the emails.

[46] Under cross-examination, Ms Sun agreed that the first fraudulent email was actually sent from the customer's email address, and that there was nothing on the face of the first fraudulent email to indicate that it was being sent from an address other than the email address of the customer. In relation to how the fraud works, Ms Sun said:

"So when the email - so the email did actually come from [customer's] email address, but because it was intercepted, when it was intercepted, it would have been then, I guess, forwarded to another email account where the fraudster would have been able to manipulate the email and then, once they're done with it, they will then, I guess, move it back and then have it sent from the actual, I guess, original email account. So, essentially, the email did still come from [customer's] email account."[9]

[47] Ms Sun also had the following exchange with Counsel for the Applicant:

"For the recipient of that email, there's nothing to indicate it wasn't sent from his email account?---Aside from the way it was structured, the actual email, and the lacking of the 'Sent from mail for Windows 10' and also just the layout because normally with [customer's] emails, they're very short and blunt whereas this one's very, I guess, well set out and quite polite as well, which was not how [customer] would normally conduct himself.

It's also sent within an existing email chain; is that correct?---Yes.

So that below email there, 'Hi Suzie, I thought I sent it to Alex last week', that's a legitimate email from [customer], isn't it?---Yes."[10]

[48] Ms Sun also made concessions under cross-examination that the genuine invoice and the fraudulent invoice were virtually identical other than the inclusion of the CBA account number on the fraudulent invoice. Ms Sun agreed that there was nothing on the face of the second fraudulent invoice alone that would indicate anything out of the ordinary when compared to the documents the customer had submitted previously aside from the inclusion of CBA details_._[11] Further, Ms Sun conceded that a person may send an email from their email account, but using a different app or device which would change the notation at the bottom, for example so that it would not state that it was "Sent from Mail for Windows 10".[12]

[49] Ms Sun also gave evidence that:

• The matters she identified as "going on behind the scenes" of the fraudulent email would not have been apparent to the Applicant as the recipient;

• The Applicant was unknowingly corresponding with a fraudster; and

• There was no suggestion that this was anything other than a mistake on the Applicant's part_._[13]

[50] Ms Sun conceded with respect to matters identified in her report as indicative of fraud such as language, punctuation and sign off, that the Applicant may not have had sufficient source material to enable a comparison on which to base that conclusion.[14] In relation to her recommendation that more training be provided to staff, Ms Sun said that the more staff know about "this sort of thing" the less fraud can occur. Ms Sun also agreed that the lack of education of branch staff gave rise to the issue "from a scam perspective".[15] In response to the proposition that if better education had been provided by BOQ the situation leading to the Applicant's dismissal would have been avoided, Ms Sun said that BOQ has invested "quite a bit" in educating, especially branches, given the increase in scams seen over the past year or so. Ms Sun was not aware of training that had been conducted with respect to staff at the Bank's Nambour Branch. Ms Sun had the following exchange with Counsel for the Applicant in cross-examination in relation to her recommendation about further training being provided:

"Why did you recommend that further training? In terms of training with regards to spreading the awareness. So, the more I guess staff know about this sort of thing, the less fraud can occur to customers.

Did you identify that this was an issue of education that gave rise to the issue, a lack of education of branch staff? From a scam perspective, yes.

So if there was better education provided by BOQ, this could have been avoided; is that what you're saying? BOQ have invested quite a bit in educating staff, especially branches as well, given, I guess, the increase in scams that we have seen over the course of the last year or so.

Can you comment personally on the training that's provided to the staff at the Nambour branch? I couldn't comment personally, no, sorry.

What other measures does BOQ have in place to recognise fraudulent emails of this type? I don't think we have - I don't think there's really any way of being able to monitor this sort of activity, yes.

You say this can only be identified in hindsight? Yes. Oh - yes, yes". [16]

[51] Ms Sun also agreed that to a recipient of the fraudulent email of 1 April 2020 it would not on its face look like it was sent by anyone other than the customer. Further, Ms Sun agreed that in relation to her conclusions about the language and punctuation of the fraudulent email, there was not enough source material for the Applicant to have made a comparison and reached this conclusion. Ms Sun confirmed that on 23 April 2020, CBA credited the Respondent's account for the recovered amount of $7,000, with the other $30,500 having already been disbursed. She stated that CBA did not provide any information as to how those lost funds were disbursed.

[52] At the conclusion of the investigation, Mr Holland was provided with a copy of Ms Sun's report dated 28 April 2020. The report stated that the transaction had involved fraud and on the basis of matters raised therein, Mr Holland was concerned regarding the way the fraud occurred. Mr Holland stated the report was not an investigation into the Applicant, rather it was for the fraud team to identify whether there had been fraud on the customer's account and if established, how the fraud had occurred. In Mr Holland's view, there were a number of "red flags" which should have alerted the Applicant to the fraud before the progress payment was made.

[53] Mr Holland's evidence was that the first point of suspicion related to the fraudster's email of 1 April 2020, which was written in an odd, "challenged language", and in a style that did not match the other emails sent by the Respondent's builder customer. The email asked for payment to a different account referred to as a "business savings account" as "we are missing on some payments". Under cross-examination Mr Holland conceded the format and style alone might not attract suspicion, but stated that in the banking industry, there is an increased sense of risk and staff are trained accordingly to watch out for fraud. Mr Holland also agreed that it could be the case that when the Applicant received the fraudulent email, she did not have much of the customer's writing style to compare it to.[17] Mr Holland was also shown a quote provided to the Bank by the real customer where in the word "Quote" was incorrectly spelled as "Qoute" and agreed that it could be a typo or indicate that the real customer had issues with spelling. In relation to the email from the customer stating money was "going missing", Mr Holland maintained that given that the customer was stating this in relation to a BOQ account, the Applicant should have contacted the customer to find out what was going on, and the Applicant did not do so.

[54] In relation to the correspondence from the fraudster, responding to the Applicant's request for an amended tax invoice with the changed bank details, Mr Holland noted that the second (and fraudulent invoice) referred to the Commonwealth Bank as "CommonWealth Bank", which he said is suspicious.

[55] Mr Holland also conceded that the fraudster's tax invoice appeared virtually identical on its face - save for the bank details - to earlier invoices provided by the true customer.[18] However he maintained that when the change of bank details was requested, further action on the part of the Applicant was required and that he would have seen this as a red flag prompting him to take a further step.[19]

[56] In this regard, Mr Holland's evidence was that the Applicant authorising a change in bank details without verifying the customer's identify was inconsistent with the Respondent's protocol dealing with email requests, as set out in two procedures: "Action a Customer Request not made in person" and "Positively Identify a customer over the phone", which are available to staff via "Support Point" an internal computer database which the Applicant had consulted before finalising the transfer.

[57] Mr Holland stated that a transaction of $37,500 was a large value transaction, and in accordance with the procedures, a value transaction is not permitted via email, and the Applicant should have positively identified the customer over the telephone. His evidence was that no customer requests received by email should be actioned in the way this transaction was actioned by the Applicant. Without contacting the customer to verify identity, the Applicant changed the customer's details on a "pre-signed" Progress Payment Authority form from 2018, where the only authority to change the account details was an unverified email. Mr Holland stated that to change the form signed by the customer had the effect of certifying that the customer had signed the form with that detail included, when this was not the case. Further, in doing so, the Applicant breached the Respondent's "Action a Progressive Drawdown request" procedure, which was also available via the Bank's Support Point site.

[58] Mr Holland stated that under the "Action a Progressive Drawdown request" procedure, the Applicant should have requested the customer come into the branch and complete a fresh form in relation to the change of account and that authorisation should not have been taken either by email or by phone. In this regard, Mr Holland said that any time a customer requests a change to their bank account details, it is BOQ's policy that the customer come into a branch to prove their identity and authorise the change. According to Mr Holland, a customer's account details should never be changed if authorisation is only provided by email or telephone. Further, Mr Holland stated that the same form was authorised by the Applicant in a way that was not intended, on the face of the form. First, it is a form signed by the customer approving the contents. Second, the Applicant was the "Preparer" of the form and had changed the payment details herself. The Applicant also signed the form as "Authoriser" and named someone else, unconnected with the form, as "Preparer" and the "Preparer" named on the form did not sign the form. The effect of this was that the Applicant was telling BOQ that she was authorising what had been put in front of her by the preparer and verified it as being ok, when in fact, the Applicant was verifying her own work.

[59] The form also purported that the Authoriser certified "Customer signatures on Progress Payment verified". Mr Holland stated this was not the case as the customer had provided no signature to authorise the direction in relation to the progress payment being transferred to a CBA account. As to the Applicant's evidence that she was the only person at the branch able to act as Authoriser, Mr Holland conceded this is technically correct, but stated that the Applicant could have asked another branch manager or himself to authorise the form. Mr Holland confirmed at the hearing that this means the Applicant should have gone "outside the branch" to get another Branch Manager or himself as Area Manager to authorise the form.[20] Mr Holland conceded that this step did not appear anywhere in the policy, however he confirmed his evidence that regardless, the preparer and authoriser of a form should never be the same person.[21]

[60] In response to a question from me, Mr Holland agreed that there were two issues with the Progress Payment Authority Form. Firstly, when the Form was originally signed by the customer, it contained no details of any account (BOQ or other financial institution) into which the payments were to be made. The Applicant inserted into the pre-signed form the details of the customer's BOQ account in her own handwriting and also changed the date on the form from 26 June 2018 to 1 April 2020. After receiving the fraudulent email on 1 April 2020 the Applicant then inserted the details of the CBA account into the pre-signed form.

[61] Further as to the process followed by the Applicant and her reference to policies on Support Point, Mr Holland gave the following evidence under cross-examination:

"If I understand correctly, you type into Support Point what you're looking for and then a relevant policy should pop up?---Correct.

But it's only going to pop up by reference to what you are searching for, isn't it?---That's correct.

There's no big stack of policies that sits on a desk. Is there a system where branch managers are trained by reference to each of the policies?---Only when you actually conduct your initial modules. So, as a CSO, you'd actually be taught on the module, on the policies at the time, et cetera, and, as you've already stated, Suzie didn't do the lending policies.

So she wouldn't have gone through that process then?---Not the lending policy, no.

As we said before, the policies are found by inputting your specific search terms into Support Point, so is it fair to say that unless you know there's a particular policy on a matter, you may not know to search for it; is that fair?---I think it's fair to say that if you're unsure of anything, then you should be searching, and if you can't get the search - if you can't find the response needed, then you go to someone else, your immediate manager."[22]

[62] Mr Holland also gave evidence that the loan file had been "red flagged" internally because it had not been fully drawn down within 18 months of construction commencing.[23] In relation to the process of putting allegations to the Applicant, on 5 May 2020 Mr Holland arrived at the Nambour Branch around 3:30pm, unannounced. The Applicant said that Mr Holland asked her to come and speak with him, and that he handed her a notice to attend a formal meeting on 6 May 2020. The Applicant was advised she could bring a support person, however she declined. Mr Holland then advised the Applicant that Ms Hartley would be appointed as a support person for the meeting; and the Applicant requested that Ms Hartley not come, given her lack of support on the last occasion. Mr Holland tendered a document headed "Notice of Formal Meeting" which was handed to the Applicant on 5 May 2020. That Notice sets out the allegations in detail and informed the Applicant that the matters are considered serious and that if substantiated, may result in disciplinary action up to and including termination of the Applicant's employment.

[63] The allegations set out in the notice included that the Applicant changed the details on the Progress Payment Authority form in cursive writing and provided instructions to the Drawdowns team to release the funds. The allegations also included that the Applicant corresponded with and accepted instructions from a fraudster who claimed that he wanted payments redirected to a CBA account as he had "account issues involving funds going missing" despite there being:

• No signs of engagement notes in the My Client database suggesting the customer had submitted a trace for the missing funds;

• No signs that indicated issues with the Customer's bank account; and

• Characteristic (grammar, format, font, layout, structure and wording of the email) identified in emails sent by the fraudster are all out of character and not in line with emails sent by the customer previously.

[64] The allegations also included that when the Applicant received the email from the fraudster on 1 April regarding account issues involving funds going missing, she failed to check this or to contact the customer, despite having "15 or so years of experience with BOQ and being Manager of a Branch" in circumstances where if such a call had been made, it would have come to light that the email was sent by a fraudster. Other allegations were:

• The Applicant's failure to complete a new "Progress Payment Authority" form when the tax invoice was received from the customer;
• The Applicant's use of a pre-signed request form dated 25 June 2018 which suggested that the lender who established the loan had the customer pre-sign the forms instead of signing them in stages;
• Failure to obtain signature or initials from the customer when changes were made to the date and payment details pre-signed forms or to attempt to contact the customer by telephone to confirm the account number despite his contact phone number being recorded on the form; and

• Failure to follow the correct procedure on the "Progress Payment Authority - Branch Processing Checklist" form which is meant to be prepared by a "Preparer" and then given with relevant documentation to an "Authoriser" in circumstances where the Preparer of the form had no involvement and the Applicant failed to obtain her signature in any event. [24]

[65] On 6 May 2020, the Applicant and Mr Holland met at the Business Centre at Maroochydore. Mr Holland advised the Applicant of the allegations against her and took written notes of her responses. Mr Holland said that he read the Applicant's responses back to her at the end of the meeting, and the Applicant agreed with the accuracy of his record. Mr Holland advised the Applicant that her responses would be compiled into a report and submitted to "a board" or "a committee", which on his evidence meant that they would be considered by "a group of people". The Applicant stated that she was not asked to and did not sign Mr Holland's notes, but confirmed in her evidence that she answered all questions honestly and to the best of her ability.

[66] Mr Holland also had an "off the record" conversation with the Applicant at the conclusion of the meeting. Mr Holland stated that he advised the Applicant she should consider resigning from her employment as his concern was that if she were terminated and the reasons were disclosed, it would have repercussions from an industry reputational perspective. His evidence was that he did not pressure her to resign; it was a matter for her. The Applicant's evidence was that she chose not to resign. The Applicant was stood down on full pay following this meeting, in accordance with standard procedure.

[67] In his evidence, Mr Holland referred to the Applicant raising concerns during this meeting regarding the COVID - 19 outbreak and increased pressure that she was dealing with at the time of the fraudulent event. However, Mr Holland's evidence is that the Nambour Branch was under no more pressure than any other of the Respondent's branches, and the COVID - 19 Pandemic did not explain or excuse the Applicant not following the bank's procedures.

[68] Mr Holland 's evidence was that following the meeting of 6 May, he was concerned about the Applicant's attitude regarding the fraudulent event, as while she did not dispute what had happened and was cooperative in the investigation, the Applicant demonstrated little insight as to what she should have done differently. Mr Holland said that the Applicant did not take accountability or responsibility for the steps as should have been taken. Mr Holland also said that it appeared the Applicant thought the fraudulent event was unavoidable in the circumstances. Mr Holland stated the Applicant did not act with the level of care and rigour required, and in her role as Branch Manager, he needed to be able to trust how the branch was being run and he no longer had confidence in her after this process.

[69] In his evidence in chief and under cross-examination, Mr Holland accepted that he was aware the Applicant was not trained as a lender, and the type of transaction in the current case was one that would usually be undertaken by a lender. Mr Holland agreed that the Applicant was performing this role as there was not a lender in the Nambour Branch and that the full-time lender had left the branch in October 2019.[25] Mr Holland also conceded also that most of the bank's branches have a full-time lender[26] and that the Applicant had raised with him on many occasions the need for a full-time lender at the Nambour branch.[27] The Applicant had been provided with a part-time lender in January 2020, who split time between the Nambour and Caloundra branches with the majority of time spent in Caloundra. Further, Mr Holland agreed that a staff member who was training to be a lender was also absent on annual leave at the time of the incident and could have undertaken the transaction "with some support" had she been present at work. However, Mr Holland also said that the issue that resulted in the Applicant's dismissal, related to customer verification before authorisation of a significant payment of money, and this issue could also arise if a customer was directing the bank to transfer money held on deposit and not just in relation to lending.

[70] Mr Holland said that he was not aware of the training the Applicant had received on commencement with the Bank, as she was already working as a Branch Manager when he took on his Area Manager role. In response to the proposition that it was a management role involving sales leadership, coaching and developing staff, customer service and compliance, Mr Holland maintained that the Applicant' duties also included risk management.[28] Mr Holland agreed that there is no requirement for a Branch Manager to conduct lending activities.

[71] Mr Holland was also cross-examined about training in relation to fraud as follows:

"In your statement, you talk about training your staff to look out for fraud?---Yes.

What training is that specifically?---We have certain online modules, you know, bedded into multiple different modules, there is awareness of fraud, you know, awareness of the processes to follow, what policies and procedures to follow if you're unsure, et cetera.

There is training in respect of money laundering and counterterrorism. Is that the training you are talking about?---Yes.

Any other fraud specific training?---I can't categorically say what they are exactly, no.

I would suggest to you that there's no training of the like that would give rise to this email indicating to Ms Smith that it was sent by anyone other than [customer], it was sent by fraud?---In the context of reading an email, yes, I agree.

When you put to Ms Smith that there was training provided by BOQ in respect of fraud, she said that she'd undertaken it but it was difficult to correlate that with the real world actions of the fraudster. That's a fair statement, isn't it?---Not for someone - I don't believe it's a fair statement for someone who's been in banking for a period of time. I would suggest someone who's in a probationary period, less than six months, I could understand that.

Is it fair to say then you see it more as an experience issue rather than a training issue?---Correct, combine the two together, yes.[29]

[72] Mr Holland said in his evidence that he discussed his decision to terminate the Applicant's employment with Mr Peter Atkins, Head of Network, and Ms Judith Himstedt, Employee Relations Manager, both of whom supported the decision on the reasons before them.

[73] Prior to those discussions, Mr Holland forwarded an email to the Bank's HR Department in which he recorded the Applicant's responses to allegations given at the meeting on 6 May 2020. The Applicant did not take issue with the contents of the email or the accuracy of the notes of her responses set out in it. The responses from the Applicant as set out in that email indicate that the Applicant agreed that her negligence resulted in the BOQ making a $37,500.00 payment to a CBA account confirmed to be involved in fraudulent activity but that the Applicant stated that in her normal process of work she would not have thought that a customer's email could be hacked and that she had not previously caused a loss to the Bank. In relation to allegations that she changed the details on progress authority form and instructed the Drawdowns team to release the payment, the Applicant is recorded as stating that she believed that she was acting on written instructions of the customer and in his best interests.

[74] In response to the allegation that she used a pre-signed progress payment form the Applicant is recorded as having stated that she had never been a lender and was promoted to Branch Manager from the position of Customer Service Officer. The Applicant is also recorded as having stated that she has seen previous lenders in her Branch compile pre-signed progress draw claims and thought this was acceptable. Further the Applicant is recorded as stating that she has never previously been exposed to fraudulent activity and was "naïve" to the fact that this kind of activity existed. Mr Holland notes that he asked the Applicant whether she acknowledged that the Bank provided training in regards to identifying and preventing fraudulent activity and she agreed that this was provided but "was unable to correlate that training to the real world actions of a 'fraudster'"

[75] In relation to the allegation that she had corresponded with and accepted instructions via email from a fraudster and the characteristics of the emails (grammar, format, font, layout, structure and wording) were out of line with previous emails from the customer, the Applicant is recorded as stating that:

• The allegation about changes in font is not reasonable as font can change based on the device being used;

• All previous conversations with the customer indicated he was concerned with the gradual release of funds under the Bank's control and the instructions of the fraudster made sense to the Applicant as by having funds deposited to the CBA the fraudster would self-administer them; and

• The Applicant did email the customer in relation to the missing funds offering to conduct a trace.

[76] In response to the allegation that she made no attempts to check with the customer in relation to his alleged "account issues involving funds going missing" and there was no indication in the Bank's records that the customer had previously raised the issue of missing funds or issues with his account, the Applicant is recorded as stating that she looked in support point and there was no reference to calling the customer and she believed his preferred communication method was via email. The Applicant is also recorded as stating that the position description for a branch manager does not state that she is required to conduct lending activities.

[77] The Applicant is also recorded as stating that she provides more discretionary effort than many other Branch Managers and the process is not acknowledging that fact. Further, the Applicant is recorded as stating that the Bank has not been supportive and as raising that the process of finalising the loan with the customer was driven by Mr Holland and Ms Hartley and she was being pushed to complete the loan before going on annual leave. Mr Holland acknowledged in the email that this was correct noting that construction of the property had been going on for two years. In conclusion, Mr Holland's email states:

"Based on Susie's responses in the formal meeting I believe that the trust of employer and employee is now diminished to a point that I do not believe that ongoing employment is appropriate. If there was a decision for Susie to retain her role, this would need to have quite strict restrictions including removing her Branch Manager delegation removing her as an authoriser and limiting her ability to act on requests from customers via non face to face methods. All of which would be very difficult to manage and would impact the confidence of her staff in her as manager. The decision is further made on the basis that Susie at no time could identify the lack of additional steps that should have been taken based on her significant experience and in particular her role as a Branch manager. This issue is not a lending issue, rather an issue of identifying risk and putting steps in place to protect the bank."

[78] Mr Holland decided to dismiss the Applicant. On 8 May 2020, Mr Holland telephoned the Applicant and read her termination letter to her. The Applicant was dismissed with effect on the same day. The termination letter which was emailed to the Applicant stated:

This letter is to advise you of the outcome of the Notice of Formal Meeting (NOFM) dated 5 May 2020. In the NOFM, you were advised that BOQ had reason to believe that following your recent actions and behaviour, you may be in breach of BOQ Policy and procedure.

You were required to attend a Formal Meeting (meeting) to discuss and respond to these issues and that meeting took place on Wednesday 6 May 2020 at the Sunshine Coast Business Centre Maroochydore at 3pm.

You chose to attend the meeting without a support person.

It was alleged in the NOFM that your negligence resulted in BOQ making a $37,500 payment to a Commonwealth Bank (CBA) account confirmed to be involved in fraudulent activity.

On 8 April 2020, a situation was brought to the attention of BOQ's Financial Crimes Office (FCO) when FCO received an email from CBA DF requesting validation for a payment of $37,500 they received from BOQ on 3 April 2020. It was identified that the funds received by CBA were in relation to a "Final Stage" progress payment for a Constructions/Builder's loan, and the intended recipient of the funds was [customer], a BOQ customer.

A Senior Financial Crimes Officer from FCO investigated this matter and determined that the main contributing factor that lead to the funds successfully leaving BOQ and going into a fraudulent BOQ bank account was due to you failing to follow correct procedures.

You stated in the meeting that you agreed with the allegation. However you claimed that you would not have thought in the normal process of your work that a customer's email had been hacked.

You stated that after receiving the invoice containing CBA bank details, you changed the details on the Progress Payment Authority form which lead to the payment being made to the CBA account. You changed the details on the Progress Payment Authority form in cursive writing. You admitted to investigators from the FCA that you had:

Changed the date and payment details on the Progress Payment Authority form; and

Provided instructions to the Drawdowns team to release the payment of the Final Progress Payment.

You claim that you did this on the basis that you believed you were acting on written instructions from the customer and that by altering the Progress Payment Authority, you were acting in the best interest of the customer.

You claimed that you have never been a lender and were promoted form Customer Service Officer to Branch Manager. You have seen previous lenders at your branch compile pre-signed progress draw claims and as such thought this process was acceptable. You did say you had printed out the 'fraudulent' invoice and compared it to the invoices held on file and believe they were identical and therefore not suspicious.

You claimed that you have never been exposed to fraudulent activity previously and you said you were 'naïve' to the fact that this type of activity even existed. In response to a query from me as to whether you acknowledged that BOQ did provide training in regards to identifying and preventing fraudulent activity, you agreed however you were unable to correlate the training to the real world actions of the 'fraudster'.

You did not accept that your failure to notice changes in font was a reasonable allegation noting that font can change based on the device being used.

You also stated that all your previous conversations with the customer indicated that he was concerned with the gradual release of funds under the banks control based on receipt of invoice for works completed. You stated that therefore the instructions provided by the 'fraudster' made sense to you by having funds deposited into the CBA account for his self-administration. You claimed you did email the customer back in regards to his advice that funds were missing and you offered to complete a trace or assist further but he advised that he would worry about it later. It was pointed out to you that at this stage you were conversing with the 'fraudster' and not the customer and therefore this step was superfluous.

You stated you did look in Support Point and there was no reference to call the customer in this instance and as you had solely been dealing with the customer via email, you believe this was his preferred method of communication.

In response to a question from me about you not taking the extra step of contacting the customer via an alternative method of communication, noting the change in account details to be paid, you again advised that you believed the customer wanted to circumvent our process of controlling the funds. However, when Ms Karen Hartley, Deputy Area Manager Queensland, had a conversation with the customer after the issue was identified, she advised the customer that we would need to control funding on receipt of invoices for work completed and the customer agreed.

You agreed you failed to obtain a signature or initials from [customer], our customer, when the amendments were made to 'Date' and 'Payment Details' on the pre-filled Progress Authority form and made no attempt to call the customer or confirm the account number, despite his phone number being recorded on the form.

In relation to the claim that you did not follow correct procedure on the Progress Payment Authority - Branch Processing Checklist form, you said you reviewed Support Point which advised that the Authoriser must be a DA holder. As you are the DA holder for Nambour Branch, you did not believe you needed to get this checked by anyone else.

You also stated that nowhere in the position description (PD) of Branch Manager does it state that you have to conduct lending activities. Whilst the PD does not specify that the Branch Manager has to conduct lending activities, it does clearly state 'Manage risk within the branch and protect the bank, colleagues and customers from loss & risk'.

In relation to the above allegation, after consideration of your explanations provided during the formal meeting, BOQ does not consider that your response adequately explains or excuses your behaviour for the following reasons:

You therefore failed to follow steps to protect the bank from the risk; and

As a result of your failure, the bank has lost $37,500.

As a result of the above findings, BOQ does not accept that your responses throughout the process sufficiently justify or mitigate the allegations presented to you.

After careful consideration of all options relating to your ongoing employment, BOQ has determined that you have demonstrated a pattern of behaviour and conduct that does not align to the inherent requirements of your role.

Further, BOQ finds that the trust the Bank is entitled to have in a Branch Manager to manage risk is lost. This has subsequently led to a loss in the trust and confidence in you to effectively perform as a Branch Manager in the Nambour Branch.

Therefore, BOQ has made the decision to terminate your employment effective immediately. Your last day of employment is today, Friday 8 May 2020.

Your remuneration up to and including your last day of employment;

Any accrued but untaken annual leave and long service leave.

There is a summary of other matters about which you should be aware (and may be obliged to comply), following termination of your employment, enclosed with this letter.

I appreciate that this decision may be disappointing and I remind you of your ability to access BOQ's confidential Employee Assistance Program (EAP). This is a confidential service provided by Benestar who can be contacted on [redacted]."

[79] Mr Holland was cross-examined at the hearing regarding whether he took into consideration the Applicant's performance history before making the decision to terminate her employment and conceded that the Applicant had received positive performance reviews. He confirmed that immediately before the relevant issue arising, he was very satisfied with the Applicant's performance as a Branch Manager.[30]

[80] In his witness statement, Mr Holland raised other issues with the Applicant's work performance discovered after her dismissal including not following procedure when opening accounts, accessing the account details of a family member - the Applicant's son - and not completing workplace health and safety tasks in the Bank's Smart System. Mr Holland agreed that these issues were not significant enough to have resulted in the Applicant's dismissal without warning.[31] Mr Holland accepted the following matters put to him in cross-examination:

• 1 April was when the incident occurred which coincided with the height of the COVID-19 Pandemic;

• The Bank's hotline had been inundated with queries and customers had been directed instead to go to their local branches;

• There were four staff present on that day and prior to October last year there had been six staff working at the Branch;

• There is a QLM Pathology testing centre located next door to the branch which had people lined up for testing;

• It was a stressful time in all of the Bank's locations;

• Ms Goldspink who was assisting with the finalisation of the customer's loan was on leave at the time and it fell to the Applicant to deal with the final progress payment;

• It was a high priority loan for the bank having been on the books for 18 months;

• The Applicant was due to go on two weeks' leave the next day;

• While arrangements had been made for the Manager of Coolum to be available to handle any staff queries in the Applicant's absence, she had not been informed of this and no handover was conducted; and

• The Applicant would not have known that there was anyone to hand the file over to when she went on leave.[32]

[81] Mr Holland also said that he did not know whether Nambour Branch was experiencing unprecedented foot traffic at that time but accepted that all branches were under pressure and he did not know whether this was a particular issue for the Nambour Branch. Mr Holland accepted that it appeared that the incident which led to the Applicant's dismissal was an isolated one but in response to the proposition that given the surrounding circumstances, he could have been offered a level of assurance that it would not happen again, said: "Not necessarily".[33] Mr Holland did not accept that the Respondent contributed to the incident including by failing to provide the Applicant with sufficient resources at the Nambour Branch.

[82] Mr Holland said that he had considered the alternatives to termination of the Applicant's employment, including removing her delegation, changing or relocating her to another branch to work under another branch manager, increased monitoring and supervision, and further training. Mr Holland did not deem these alternative options appropriate in the circumstances.[34] In relation to his consideration of alternatives, Mr Holland made the following comment in his email report of the meeting with the Applicant dated 7 May 2020 and sent to the Respondent's Human Resource Management staff:

"Based on Susie's responses in the formal meeting I believe that the trust of employer and employee is now diminished to a point that I do not believe that ongoing employment is appropriate. If there was a decision for Susie to retain her role this would need to have quite strict restrictions including removing her Branch manager delegation, removing her as an authoriser and limiting her ability to act on requests from customers via non face to face methods. All of which would be very difficult to manage and would also impact on the confidence of her staff in her as a manager. This decision is further made on the basis that Susie could at no time identify the lack of additional steps that she should have taken based on her significant experience and in particular her role as Branch manager. This issue is not a lending issue, rather an issue of identifying risk and putting steps in place to protect the bank."[35]

[83] Mr Holland denied that the Applicant's dismissal had been related to reducing staff numbers and overheads across the board but agreed that the Nambour Branch now has a part-time Branch Manager who splits his time between Nambour and Coolum and a part-time lender who splits his time between Nambour and Caloundra. Mr Holland also rejected the proposition that the Respondent contributed in any way to the actions of the Applicant which resulted in her dismissal.

[84] In response to questions from me, Mr Holland accepted that at his meeting with the Applicant prior to making the decision to terminate her employment, she was apologetic about what had occurred. He said however his concern was that the Applicant was still saying: "I don't believe I did anything wrong here, I was acting in the customer's best interests," as opposed to identifying that she had not followed the required steps.[36] Mr Holland stated that at the meeting of 6 May 2020, he had required that the Applicant indicate she understood the process she should have taken and she had not done this. Mr Holland also said that if the Applicant had indicated understanding of what she had done wrong, he may have considered an alternative to dismissal.[37]

[85] Mr Holland was shown the Applicant's performance review for the half yearly financial year in 2020 and agreed that she had been rated as having "Superior" work performance and had either met or exceeded targets. In response to the proposition that the Applicant's performance was "superior" in the six months prior to her dismissal, Mr Holland said that this would require an overall rating of 4 out of a possible 5 and that the Applicant's rating was 3.8. Mr Holland agreed that at the time the performance rating was undertaken, he was very satisfied with the Applicant's performance as a Branch Manager and that he had informed her that the passion she brought to her role does not go unnoticed and that he appreciated her.[38] Further, Mr Holland agreed that a full audit of the Nambour Branch was conducted in November 2018, which looked into all compliance issues and "went through the Branch with a bit of a fine tooth comb". Mr Holland also agreed that the Branch received the highest possible rating for that audit.[39]

[86] At the hearing the Applicant conceded that there was nothing preventing her from calling the customer and said that she wished that she had done this and thereby prevented a loss to the Bank.[40] In response to the proposition under cross-examination that she was essentially saying that no-one was to blame and that being defrauded is just a cost to the bank of doing business, the Applicant said:

"No, I feel terrible that it cost the business money. I've lost my job over it. It's terrible circumstances and all I can say is that I've done three of these types of transactions and each time I've conversed with the customer via email to confirm the instructions to move forward and, in the Support Point policy that I was looking at the time on how to complete my form, it didn't say to ring the customer.[41]

[87] The Applicant also said that she wished she had never changed the details on the progress payment form and that she accepted that there is a risk if she changes details on the form without getting the customer to sign it.[42] As to use of the "pre-signed" Progress Payment Authority, the Applicant said that she now knows that the form can only be completed at the time that the customer is signing it, and had the following exchange with Mr Wells for the Respondent:

"Isn't that just logical, though, that if the customer is signing the form, they are verifying what's above?---Well, he did give me the instructions to complete the rest of the form as well. He sent me the tax invoice to complete this transaction.

But isn't that where you have a problem because even if you are prepared to say that you can fill all these things out in advance and then put in the numbers later, if the customer never signs that form or countersigns the amendments, you've amended it again with further changes with the fraudster's bank details?---I have.

Isn't that what doesn't get picked up if the customer doesn't sign the form to verify the contents?---Yes.

In paragraph 21 of your statement, which is at page 44, there's a reference to another email that the customer sent you advising of the change of the bank account details and enclosing an amended tax invoice?---Mm-hm.

Do you accept that although your statement says [customer name], it's actually the fraudster, not the customer, that has sent that to you?---Yes, I do accept that now, yes, yes."[43]

[88] The Applicant' case centred on the assertion that the transaction was an honest and innocent mistake and that her conduct did not justify dismissal. The Applicant submitted that all of the circumstances must be taken into account, including the following mitigating factors:[44]

• That the applicant was dealing with the COVID-19 outbreak and was working in very difficult circumstances whereby many customers were very distressed about their financial situation;

• That the branch was facilitating unprecedented foot traffic due to COVID-19 and the panic that this caused in the BOQ's customers;

• That the BOQ established a COVID-19 hotline but within three (3) days of its establishment, it was realized that the hotline could not cope with the very high levels of inquiry and so customers were directed to their respective branches;

• That the applicant has worked for the respondent for 8 years;

• That there had only been one previous been issue raised with the applicant's performance;

• That the applicant was not trained in a lending capacity.

[89] The Applicant submitted that loss of trust and confidence in her ability to perform her role, as stated by the Respondent, is not sufficient for finding there was a valid reason for the dismissal. She submitted that there needs to be sufficient evidence and reasoning to support this loss of trust and confidence,[45] and stated the Respondent has not provided sufficient evidence to support the asserted loss of trust and confidence. The Applicant submitted there had only previously been one issue raised regarding her performance and that her most recent performance review had established that she was performing well in her role.

[90] The Applicant sought reinstatement pursuant to s.391 of the Act, or in the alternative, the maximum compensation at 26 weeks' pay pursuant to s.392(6)(a) of the Act. The Applicant also said that she had applied for some 22 positions since her dismissal including business manager positions at a number of schools, customer service officer positions, administration positions, food service assistant at a hospital and room and housekeeping positions in hospitality and at a hospital. The Applicant has not been invited to attend an interview for any position she has applied for and has not obtained alternative employment. In oral submissions Mr White for the Applicant emphasised that the dismissal was harsh and that it was an "over-response" to the gravity of the issue. It was submitted that the Applicant's actions were an honest mistake, borne out of the intentional fraudulent act of a third party, directed at the bank and which the Applicant "fell for".

[91] It was the Applicant's submission that while her actions did result in a financial loss to the bank, she was not complicit in that loss and her conduct was not an intentional act to cause loss to the bank. It was submitted that any reasonable person would, in light of all the facts and the Applicant's eight years of otherwise excellent employment history, forgive her this error and accept her ability to continue to perform the role with integrity, honesty and professionalism. It was submitted that the Applicant's conduct would not preclude her from continuing to perform the duties in her position and on this basis reinstatement was sought.

[92] Mr White pointed to the Applicant's evidence that she regretted that she did not telephone the customer to verify that he wanted the funds transferred to the CBA account and that the Applicant stated that she would make the telephone call in the same circumstances in the future. Reference was also made to the Applicant's evidence of failure on the part of the Respondent to support her in her role during the COVID-19 Pandemic and to the fact that there was no dedicated lender employed at the Nambour Branch at the relevant time.

[93] Mr White submitted that the primary issue is in respect of a failure to comply with the Respondent's policies and procedures. While it was conceded by the Applicant that all relevant policies and procedures sit within the "Support Point" facility, the Applicant's evidence is that she did conduct a search in respect of the transaction she was undertaking, and the policies to which she was taken at the hearing were not the policies she uncovered in her search. The Applicant conceded that having regard to the confirming a customer's identify policy and surrounding policies, those did exist.

[94] It was submitted that regarding the policy around progressive drawdown requests, Mr Holland has conceded it is directed at retail branch lenders and provides for provision of the documentation to an authoriser for consideration of the process. It was also submitted that the Applicant's actions were taken in an extraordinary circumstance not contemplated by the policy, in that in the absence of a lender, she both prepared the document and had to authorise it. While Mr Holland's evidence was that she should have looked outside of the branch to assist with this process, this was not set out in the policy.

[95] As to Ms Sun's finding of negligence in her report, it was submitted that this was not made out and it is not within the scope of what that investigation report was intended to investigate. Rather this was a matter for Mr Holland. Further, it was submitted that when the relevant actions were taken, the Applicant was about to go on leave, and did not realise there was going to be someone filling or assuming her role during that leave. There was no handover in respect of the Applicant's work and she had no option but for the relevant matter to be raised on her return from leave.

[96] It was submitted that while the correspondence from the fraudster may have seemed ambiguous, the Applicant gave evidence that she had previously spoken with the customer about the Bank's control over money and his ability to access the final progress payment and that his request was consistent with earlier concerns he had expressed about control of funds. Regarding the progress payment authority forms being held on file, it was submitted that if this was not an adopted practice, this was at least the only practice the Applicant was familiar with. Further, the audit in November 2018, which post-dated the preparation of the relevant forms should have identified, at very least, that the forms were blank in respect of the particulars that would be filled in, when the progress payments were called upon.

[97] In respect of the questions raised around training, it was submitted on behalf of the Applicant that this is a lender issue, as the relevant policy referred to indicates the actioning of a progressive drawdown is to be done by a lender. It was also submitted that in circumstances where it is a process ordinarily followed by a lender, and not a person in the position of the Applicant, it was a lack of a dedicated lender to undertake this role that meant the Applicant was required to perform it in the first place, absent the lending training.

[98] As to the options available to the Respondent, other than dismissal, it was submitted that the Commission should look beyond any assertion of a loss of trust and confidence, and determine whether or not a reasonable position was adopted in the first place. It was the Applicant's submission that regard should have been had to the nature of the incident when compared to the Applicant's previous work history with the Respondent.

[99] It was submitted also that the Commission should also have regard to the implications of the COVID-19 Pandemic and that its effect on the Respondent's business had been downplayed. In particular, the Applicant's evidence that the Pandemic had particular implications for the Nambour Branch should be noted and this should be a consideration that should be taken into account, beyond the issues associated with the Applicant's otherwise excellent work history and the circumstances surrounding the fact that she was fulfilling the role of a lender as well as that of manager.

[100] The Respondent submitted that the Applicant had the necessary resources available to her to complete the transaction appropriately and apart from directing the funds to the fraudster and not the customer, the Applicant did complete the process. The Respondent submitted that the Applicant's error was a combination of the Applicant not verifying the customer's identity when acting on the direction of the fraudster (and in this regard the type of transaction was immaterial) and not completing forms in accordance with Bank procedures and the provisions of the forms.

[101] As a result of the investigation and further enquiries, the Respondent considered the Applicant had missed a number of opportunities, and if handled differently and in accordance with bank procedure, the fraud would have been uncovered before the funds were transferred. It submitted the relevant matters were:

(i) The Applicant had been told (in an email from the fraudster) that the account details were being changed because "we are missing on some payments and we are trying to trace" and made no further enquiries of the customer, either:

(A) to verify the identity of the person sending the mail in accordance with bank procedure; or

(B) to determine what had occurred with the "missing payments" from a BOQ account;

(ii) The Applicant changed the bank details on a previous Progress Payment Authority (relating to an earlier drawdown), rather than have the customer sign a new Progress Payment Authority in accordance with bank procedure;

(iii) The Applicant signed the Progress Payment Authority as Authoriser, despite being the Preparer of the document.

[102] The Respondent submitted the emails from the fraudster were suspicious in language, punctuation and format. The Respondent also submitted that in deciding to terminate the Applicant's employment, it took into account a range of matters including that the Applicant had not acted in accordance with procedure, the cost to the Respondent was significant, the Applicant was an experienced employee in the banking industry and should have acted differently, and the Applicant demonstrated limited cognition that there were steps she could have taken to avoid the outcome that eventuated. The dismissal was not summary dismissal, and the Applicant received pay in lieu of notice.

[103] Further to these submissions, the Respondent addressed the matters under s.387 of the Act in summary as follows:

(a) The Respondent had a valid reason relating to the Applicant's capacity or conduct (paragraph (a));

(b) The Applicant was notified of the reason in the letters of 5 and 8 May 2020 (paragraph (b));

(c) The Applicant was given an opportunity to respond, having been given the letter of 5 May 2020 and an opportunity to address its contents during the meeting on 6 May 2020 (paragraph (c));

(d) The Applicant was not denied the opportunity to have a support person, as indicated in the Applicant's Outline of Argument (paragraph (d));

(e) The Applicant had been warned about compliance with procedure on an earlier occasion; but the Respondent submits the consequences, and ongoing risk to the Respondent, would not require prior warnings in the sense used in paragraph (e);

(f) Paragraphs (f) and (g) do not arise, as factors which otherwise might mitigate against a default in procedure.

[104] The Respondent also submitted that while the Applicant had an acceptable record prior to the fraudulent event, she did not have an unblemished record and had received a formal written warning in September 2017 for waiving a $440 equipment finance establishment fee, outside of her delegated authority.[46] Following the Applicant's dismissal the Respondent also reviewed the practices at the Nambour Branch and other irregularities in relation to policy and procedure.

[105] Mr Wells submitted on behalf of the Respondent that this case is about two separate processes. The first being the fraud investigation, which was designed to establish where the bank's money had gone and why, and to help demonstrate that the customer and the Applicant were not involved in the fraud. It was submitted that this process was designed to verify that a fraudster had in fact seized control of the customer's email account and had "purloined" that money. The second process is the Applicant's disciplinary proceeding.

[106] The Respondent submitted that the two processes are not irrelevant to one another, and much of the evidence in this matter has related to matters such as font style, language and other matters which is not pressed by the Respondent as matters that were considered in taking action in relation to the Applicant. The Respondent submitted that its employees are not required to perform any detective functions regarding receipt of emails which may be from a fraudster.

[107] The Respondent noted that the fraudulent email correspondence referred to some "missing payments" and submitted that while there was no clear consensus between the witnesses as to what the fraudster was suggesting in this correspondence, this heightened its importance. As Mr Holland pointed out in his evidence, where a customer states that money is missing from an account, the first reaction should be to contact the customer and find out what is going on. While this is not a procedural or a protocol related issue, it is a judgment that would be expected to have been applied by the Applicant in the circumstances. It is telling that the Applicant accepted that she did not take any steps to react to that email, other than enquiring whether the fraudster wanted to proceed via the other account. The Respondent submitted that Applicant took no steps to ascertain what was at the heart of the missing funds and did not propose to do so until she had returned from leave in three weeks' time. If the Applicant had contacted the genuine customer at that time, the fraud would have been averted. In failing to make this telephone call, the Applicant's actions snowballed into the specific direction from the fraudster to send funds to a Commonwealth Bank account.

[108] The Respondent noted Mr Holland's evidence that the typographical error on the fraudulent tax invoice seeking that money be sent to the "CommonWealth" Bank would not, considered alone, have aroused interest. However, in the context of the account details being changed, he would have expected that enquiries would be made. The Respondent submitted that its protocols deal with this very issue, and further, the Applicant has accepted that in an analogous scenario of a person having cash on deposit and asking for it to be transferred to another account, she would need to verify the identity of that person by telephone. The Respondent submitted that the Applicant recognised that verification of identity must be done by phone in some instances, but sought to carve out lending transactions as some sort of special species, when the policy did not provide for this carve out.

[109] The Respondent noted that the Applicant accepted a verification telephone call would have taken no more than one minute and that the telephone numbers are on its system. Notwithstanding the effect of the COVID-19 Pandemic, a one minute telephone call in circumstances indistinguishable from a cash transfer, is a very small inconvenience and a strong verification tool, which would have led to a different outcome. Notwithstanding the Applicant's suggestion that there was a practice of pre-populating forms, and that this is fair and reasonable, it is the first problem. The second problem is the fact that the Applicant changed the bank details on the form. The Respondent contended that regardless of any training issues, anyone experienced in banking practices would consider a pre-signed blank form to be a "red flag" issue.

[110] Further, the Respondent contended that on any sensible view, the pre-signing of forms is an improper practice, as the purpose of such a practice can only be to falsely declare to the people who process the form that the customer has confirmed the details set out in the form. The Respondent submitted this should not be accepted as being a widespread practice, as on the Applicant's evidence she had done this three times and someone told her to do it. As to the Applicant acting as both preparer and authoriser of the payment form, the Respondent submitted that the form misrepresents that Ms Condren (who was nominated as the Preparer) played any role in the transaction and the Applicant's evidence demonstrated that she knew that the same person could not complete the form in both capacities. As a result, there was a misrepresentation to the recipient of those documents - the Bank's head office - that the customer had in fact approved the changes.

[111] In summary the Applicant's mistakes in this matter, were first, that there was no enquiry in relation to the original email which was the first chance for the Applicant to pick up the issue of potential fraud. The change in bank details was the second chance to pick up the issue. The third chance was the non-completion of the form before the customer signed it. The fourth chance was the merger of the preparer and authoriser of the form. Mr Holland's evidence in this regard is that if he had been asked to authorise the form he would have picked up the irregularities of the changes to the bank details. The Respondent noted this as another key opportunity for the bank to have detected the fraud and noted also that the Bank's Support Point site contains the procedure regarding change to bank details, and the relevant procedure was not followed.

[112] As to any training, the Respondent noted some evidence had been given about training in relation to lending but maintained that the incident was not a lending issue but one of verification of a customer's identity. The Respondent also submitted that the Commission should not interpret evidence as to the potential for more training or education, as evidence of a lack of training. Amendment of forms after they are signed is something that should not be done and this was not a training issue.

[113] The Respondent maintained that there was a valid reason for the Applicant's dismissal. The bank has procedures regarding verification of a customer's identity, and in this matter the relevant procedures were not followed. It submitted that common sense required that a call be made to the customer, particularly given the Applicant's knowledge that in that analogous transaction she would not have proceeded without verifying the customer by phone. There was no denial of a support person at any stage of the process.

[114] There was an extensive opportunity to respond to the allegations, as set out in the material before the Commission. The Applicant was not terminated summarily, so the only issue of consideration here is whether there was a valid reason for the dismissal. As to Mr Holland putting to the Applicant at the time that she could consider resigning, the Respondent submitted that this was not an attempt to force a resignation. In this regard, Mr Holland's evidence should be accepted to the effect that he tried to give the Applicant that option, and it was not intended as a means to deny her the opportunity to have the employer consider its position and make a decision and stand by it.

[115] The Respondent reiterated that the Applicant was a good worker, however there has been a clear erosion of Mr Holland's capacity to trust that the Applicant would make the right calls in her work, based on the matters raised in these proceedings. Mr Holland's evidence is that he took the Applicant's employment record and history into account but decided that her inability to accept there was another way of correctly performing her duties outweighed her work history.

[116] As to any evidence regarding the Applicant's insight into her mistakes, the Respondent submitted that the Commission should find it difficult to recognise there was any insight on the part of the Applicant about what went wrong in this transaction, given there were at least four if not five triggers, each of which should have resulted in a one minute phone call that would have avoided the fraud. The Respondent submitted that the Applicant saying she wished she had made the telephone call and confirmed the customer's identity, was not sufficient to demonstrate the relevant level of recognition and accountability.

LEGISLATIVE PROVISIONS CONCERNING UNFAIR DISMISSAL

[117] In deciding whether a dismissal was unfair on the grounds that it was harsh, unjust or unreasonable, the Commission is required to consider the criteria in s.387 of the Act, as follows:

• (a) whether there was a valid reason for the dismissal related to the person's capacity or conduct (including its effect on the safety and welfare of other employees); and

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

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

• (d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

• (e) if the dismissal related to unsatisfactory performance by the person - whether the person had been warned about that unsatisfactory performance before the dismissal; and

• (f) the degree to which the size of the employer's enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

• (g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

• (h) any other matters that the FW Commission considers relevant.

[118] The employer bears the onus of establishing that there was a valid reason for a dismissal.[47] A valid reason for dismissal is one that is "sound, defensible or well founded" and not "capricious, fanciful, spiteful or prejudiced."[48] The reason for dismissal must also be defensible or justifiable on an objective analysis of the relevant facts,[49] and validity is judged by reference to the Tribunal's assessment of the factual circumstances as to what the employee is capable of doing or has done.[50]

[119] To determine whether there was a valid reason for a dismissal relating to conduct, the Commission must determine whether, on the balance of probabilities, the conduct allegedly engaged in by the employee actually occurred, on the basis of the evidence before the Commission. The test is not whether the employer believed on reasonable grounds, after sufficient inquiry, that the employee was guilty of the conduct. Further, to constitute a valid reason for dismissal, the Commission must assess whether the conduct was of sufficient gravity or seriousness to justify dismissal as a sound, defensible or well-founded response.[51] In finding that there was a valid reason for dismissal, the Commission is not limited to the reason relied on by the employer.[52]

[120] The matters in s.387 go to both substantive and procedural fairness and it is necessary to weigh each of those matters in any given case, and decide whether on balance, a dismissal is harsh, unjust or unreasonable. A dismissal may be:

Harsh - because of its consequences for the personal and economic situation of the employee, or because it is disproportionate to the gravity of the misconduct;

Unjust - because the employee was not guilty of the misconduct on which the employer acted; and/or

Unreasonable - because it was decided on inferences that could not reasonably have been drawn from the material before the employer.[53]

Was there a valid reason for dismissal of the Applicant?

[121] The Applicant does not dispute that she transferred an amount of $37,500 into the bank account of a fraudster and that as a result, the Respondent lost an amount of some $30,000. The gravamen of the Applicant's case is that her dismissal was not for a valid reason because it was disproportionate to the gravity of her misconduct and that mitigating factors were not taken into account or given appropriate weight in the decision taken by Mr Holland on behalf of the Respondent, to dismiss her.

[122] As Vice President Hatcher observed in Raj Bista v Group Pty Ltd t/a Glad Commercial Cleaning[54] (Bista), merely establishing the factual basis for the reason for dismissal does not by itself demonstrate that it was a valid reason. It must, as s.387(a) makes clear, be a valid reason for dismissal - that is, dismissal must be a justifiable response to the relevant conduct or issue of capacity. Factually-established conduct which might, for example, justify the issue of a reprimand or a warning may not necessarily justify dismissal.

[123] In Bista, Vice President Hatcher considered cases concerning the question of whether there was a valid reason for dismissal and distilled a number of principles. In relation to the the decision in Selverchandran v Peteron Plastics Pty Ltd[55], often referred to as authority for the proposition that a valid reason for dismissal is a reason that is sound, defensible and well-founded, his Honour observed that:

"There is nothing in the reasoning in Selvachandran to suggest that some minor failing or trivial misdemeanour on the part of the employee could constitute a valid reason for dismissal simply because it was proven to have occurred. Dismissal on such a basis could not be said to be sound, defensible or well founded, and to approach the concept of a "valid reason for dismissal" otherwise would not constitute a practical and commonsense way to ensure that employers and employees are treated fairly."[56]

[124] His Honour cited the decision of the Federal Court Full Court in Edwards v Giudice,[57] and stated that the case is clear authority for the proposition that the consideration of whether there is a valid reason for dismissal requires, where the relevant conduct upon which the dismissal proceeded is found to have occurred, an assessment of whether the conduct was of sufficient gravity or seriousness such as to justify dismissal as a sound, defensible or well- founded response to the conduct.[58]

[125] Vice President Hatcher went on to observe that it is well established that a dismissal for misconduct may be found to be harsh on the basis that the sanction of dismissal is a disproportionate penalty to the gravity of the misconduct,[59] and that the issue of proportionality is usually considered having regard to all relevant circumstances of the dismissed employee and his or her conduct. His Honour also noted that there is divergence in the authorities in relation to whether the gravity of the misconduct is considered separately from the factors subjective to the particular employee with the former consideration arising under s. 387(a) and the latter under s. 387(h). His Honour observed that proportionality of dismissal as discussed by Moore J in Edwards v Giudice[60], was not concerned with proportionality of dismissal in the sense where the gravity of the misconduct is weighed against a range of other potentially mitigating factors. Rather it was concerned with whether the conduct in question, considered in isolation, was intrinsically capable of constituting a valid reason for dismissal if it only involved a minor misdemeanour.

[126] I do not understand that there is a rule that the gravity of the misconduct must be considered under s. 387(a) devoid of any mitigating factors a dismissed employee may raise. While the gravity of the conduct must be considered and assessed, in my view, there are some mitigating factors which may also go directly to the validity of a reason for dismissal by mitigating the seriousness of the conduct for which a person was dismissed. Examples of some of these factors may be lack of training or the dismissed employee being placed under undue pressure by some failure on the part of the employer, which contributed to the conduct for which the employee was dismissed. Those matters may go to the reasonableness of the dismissal on the basis that they mitigate the gravity of the employee's conduct. There are other mitigating factors which relate to personal circumstances of the dismissed employee and which may render the dismissal harsh, notwithstanding that the gravity of the employee's conduct justifies dismissal. The first category of mitigating factors falls for consideration under s. 387(a) of the Act and the second category under s. 387(h).

[127] In the present case, there is no doubt that the Applicant engaged in the conduct alleged. The issue for determination is whether the conduct was of sufficient gravity such as to justify dismissal. I am also of the view that some of the mitigating factors raised by the Applicant in the present case, go to the validity of the reason for her dismissal and whether her conduct is mitigated so that dismissal was not a sound, defensible and well-founded response. Accordingly, I have considered them in relation to whether there was a valid reason for the Applicant's dismissal

[128] The reason for the Applicant's dismissal given by Mr Holland was a pattern of behaviour and conduct that did not align to the inherent requirement of the Applicant's role and that her failings were so significant that he lost trust and confidence in her ability to perform her role.

[129] I am satisfied that the Applicant did engage in a pattern of behaviour and conduct that came close to crossing the line between carelessness and negligence. However, I am also of the view that the Applicant did not cross this line and that her failure to follow procedure was not wilful. My conclusions in relation to the conduct of the Applicant are as follows. The Applicant was a Branch Manager and had a lengthy career in which she had been promoted to that position from the position of Customer Service Officer. The conduct of the Applicant in relation to the fraudulent transaction was a simple failure to give sufficient attention to avoiding error and a failure at a number of points to appreciate that there were red flags which should reasonably have caused the Applicant to stop and check what was occurring before taking various steps that led to the fraud. The Applicant's conduct was also a failure to take proper care in the performance of her duties.

[130] The first fraudulent email, sent at 11.05 am on 1 April 2020, contained several pieces of information on its face, that should have alerted the Applicant to the need to contact the customer. First, the email referred to a BOQ account that was "missing on some payments" and that the customer was trying to trace those payments. As the Manager of the Branch at which the customer banked, the Applicant should have been put on notice that she needed to contact the customer to ascertain what the issue with the missing payments involved. I do not accept that the Applicant's view that the missing payments related to the customer's clients not paying him, was a reasonable view for her to have taken. At best, this was one possible view and the alternative view that the money was missing from a BOQ account should have been considered by the Applicant, particularly when the customer mentioned tracing amounts, which would normally be done by the Bank. This was the first red flag.

[131] The second red flag which should have caused the Applicant to stop and check before making the transfer, was the Progress Payment Request form itself. The actions the Applicant took to change the details of the account into which the drawdown funds were to be transferred, were not authorised by the form. By altering a pre-signed form, it should have been apparent to the Applicant that the effect of her alterations to the form indicated that the bank account details she was inserting were set out in the form when the customer signed it, when this was not the case. The fact that there was a practice of having customers pre-sign Progress Payment Request forms was not to the point. If the Applicant had simply transferred funds into the account nominated in the pre-signed form, it would not have been such a significant matter, notwithstanding that technically the use of pre-signed forms was not a practice approved by the Bank.

[132] The third red flag should have been the fact that the Applicant had to manipulate the signing of the Progress Payment Request form by having a colleague who was not the Preparer of the form sign it in that capacity. The Applicant did this because she knew that the Authoriser and the Preparer of the form could not be the same person. The Applicant also knew, or should have known, that by taking these steps she was authorising her own work, in circumstances where the process she was circumventing was designed to prevent that from happening. Further, the Applicant was authorising her own work when she had altered a pre-signed form by changing the account into which funds were directed.

[133] I do not accept that the Applicant could not have picked up a telephone and contacted a more senior colleague to get advice about how she could have complied with the requirements for preparing and authorising the form, in circumstances where she was the only person at the Branch who could act as Authoriser. The Applicant had previously contacted Ms Hartley to seek advice and there is no reason she could not have done so again or contacted Mr Holland or some other more senior person. The fourth red flag for the Applicant should have been the series of four emails from the fraudster complaining that the funds had not reached his CBA account. The Applicant should have contacted the customer at that point. I do not accept that the fact that Applicant was on leave, was a reasonable basis for her failure to take this step. Quite simply, if the Applicant could respond to four emails sent by the fraudster while she was on leave, she could have telephoned the real customer.

[134] The Applicant believed that she was dealing with the real customer and that he was telling her that the funds had not reached his account. On her own evidence, the Applicant had told the customer that the funds should be in his account within 48 hours (albeit on working days) and by 8 April 2020, that period had well and truly expired. The fact that the Applicant did not have a contact number for the customer could easily have been addressed by emailing someone at the Bank and asking for the customer's telephone number or emailing the customer asking the customer to provide his mobile phone number as she did not have access to it at that time. Given that the customer is a builder and doubtless advertises his services on the internet, the Applicant could also simply have conducted a search to obtain a telephone number on which to contact him.

[135] Notwithstanding these matters, I am also of the view that there were factors which mitigate the gravity of the Applicant's conduct so that dismissal was not a sound, defensible and well-founded response to that conduct. The first of these factors is the lack of training provided to the Applicant in relation to fraud. Mr Holland's evidence was that he viewed the Applicant's errors as an issue of experience and a failure to correlate training she had been given to the real-life activities of the fraudster. The Applicant's uncontested evidence was that she was not provided with training in relation to fraud of the kind that she encountered on 1 April 2020. The Applicant also said - and I accept her evidence in this regard - that she had not encountered fraud in all her years of employment at the Bank. Quite simply, the Applicant had no basis to suspect fraud and no real life experience to apply to the situation she was faced with. Even if the Applicant was given some training at the time she was promoted to Branch Manager, that promotion occurred in 2014. As Ms Sun pointed out in her evidence, email scams of the kind perpetrated on the Applicant have been more prevalent in recent times.

[136] Second, the matters referred to by the Respondent as the "characteristics" of the fraudulent emails are not matters that are so obvious that the Applicant should reasonably have noted them. The difference in the grammar, format, layout and wording of the fraudulent emails, compared to genuine emails from the actual customer is not so striking as to raise a reasonable suspicion. In this regard, I note that the real customer's command of spelling and grammar was not of a high standard including that one document he sent to the Bank misspelled the word "QUOTE" as "QOUTE".

[137] It is also the case that the fraudulent emails were inserted into a chain which included a genuine email from the actual customer. Further, font and formatting can change depending on the device on which an email is generated and this can also result in the removal of references to the email being sent by a particular program or app such as Mail for Windows 10. The genuine quote and the fraudulent quote were also not distinguishable and the fact that the fraudulent quote contained a typographical error in that "Commonwealth" was spelled as "CommonWealth" was not a significant departure from the customer's previous documents. Finally, the authentication data behind the fraudulent emails identified in Ms Sun's report such as headers and domains, is not visible on the face of the email and there is nothing in this regard that should reasonably have raised the Applicant's suspicion. As Ms Sun conceded, they were only apparent in hindsight.

[138] These matters were put to the Applicant in the allegations letter and were not addressed in the letter advising of the outcome of the investigation. In short, no outcome was recorded to indicate that this matter was not taken into account in the decision to dismiss the Applicant. While Mr Holland's evidence was that he did not rely on these matters in deciding to dismiss the Applicant, he included them in his notes of the meeting with the Applicant and responses from the Applicant which he sent to the Respondent's Human Resources staff. In my view it is more probable than not that these matters were taken into account in circumstances where no adverse finding could properly have been made against the Applicant in relation to them.

[139] Third, the content of the first fraudulent email and the request to transfer the funds to a CBA account, was consistent with the views of the customer. The evidence established that the customer had issues with the BOQ loan funds and his access to them. The Applicant's evidence was that the funds had not been fully drawn down for an extended period and the Respondent had issues with the loan because the customer had previously used some of the funds on items such as landscaping rather than completing the house. The Applicant said that the customer's desire to use an account at another bank was consistent with his desire not to be restricted on the way in which he spent the loan funds.

[140] Fourth, the Applicant was not a trained lender and as such, was not equipped to have undertaken the transfer. The Sharepoint procedure "Action a Progressive Drawdown Request" referred to by Mr Holland and appended to his witness statement, is directed to Retail Branch Lenders and BOQ Business. The Applicant was not employed in either of these roles. In relation to whether the procedure provides for telephone identification, it is notable that while the procedure provides for a verbal check with the customer where the account details for the progress payment have changed, this relates to a change to the account details of the builder rather than those of the customer. The circumstances the Applicant was dealing with involved a customer who was an owner builder, and whom the Applicant genuinely believed had changed his own bank account details by email and had verified this with an invoice. Further, the Applicant was conducting the transaction by email in the same way she had conducted other transactions - albeit a limited number of such transactions.

[141] Fifth, the staff levels at the Nambour Branch were lower than usual when the Applicant made the transfer, and I accept her evidence that this placed her under pressure. Not only did the Applicant not have a lender in the Branch on the day in question, another staff member training to be a lender was also absent. Further, the Applicant's uncontested evidence was that the Branch was unusually busy as a result of the demographic of its customers and the effect of the COVID-19 Pandemic. It was also the case that the Applicant was under some pressure due to the fact that she was going on leave. Mr Holland did not place any weight on these matters and effectively disregarded them.

[142] Sixth, Mr Holland did not accept that the Respondent contributed to the circumstances in which the Applicant found herself on 1 April 2020. In my view, Mr Holland's refusal to make any concessions in relation to this was unreasonable and it is clear from the evidence that there were contributing factors brought about by the Respondent, to which Mr Holland did not have regard. The pre-signed Progress Payment Authority form was not identified in an audit of the Branch conducted in November 2018. That form was prepared by a previous lender in circumstances where it should not have been, and its existence contributed to the errors the Applicant made. The Applicant's colleague Ms Condren also signed a form as Preparer when she must have known that she did not prepare the form.

[143] It is also the case that while the emails querying the fact that the funds had not arrived in the CBA account were sent by a fraudster, there is no evidence that the content of those emails was incorrect. The CBA did not identify the transfer as fraudulent until 8 April. In that time, four emails had been sent by the fraudster querying the fact that the funds had not arrived, and the Applicant had forwarded those emails to other colleagues in the Nambour Branch because she was on leave at the time. None of those colleagues took any steps to contact the customer in circumstances where if they had done so, the fraud could still have potentially been averted. This includes Ms Howlett-Arnold whom the Applicant telephoned and specifically requested to contact the customer.

[144] Seventh, the Applicant was remorseful and expressed regret for the loss suffered by the Bank and stated that she wished she had telephoned the customer. The Applicant's evidence of remorse was genuine and was not challenged at the hearing. I also note that the Applicant expressed her remorse in the written response she gave to the allegations. Further, the Applicant was able to explain the Respondent's policies and accepted that she had not complied with those policies. Having been the victim of email fraud for the first time in her career and with the consequences of that fraud being so significant, there is no reason to believe that the Applicant would repeat her conduct or that she would not take more care in future.

[145] Eighth, Ms Sun's report contained some factual errors. As Ms Sun conceded, her conclusion that the Applicant's claim that she had not spoken to the customer since 3 April 2020 was not credible, was wrong and the Applicant made no such claim. Further, Ms Sun's conclusion that the Applicant failed to obtain Ms Condren's signature as preparer of the form was incorrect and the Applicant did obtain the signature after the form was returned to her by the Drawdowns team because the signature was missing.

[146] When all of these matters are considered, I do not accept that Mr Holland had a reasonable basis to conclude that he could not trust the Applicant to properly carry out her role as Branch Manager. I am also of the view that these matters mitigate the gravity of the Applicant's conduct to the extent that dismissal was not a valid, sound and defensible response to the conduct. The Applicant deserved to be strongly censured for her conduct and to have been subjected to some or all of the alternative measures to dismissal that Mr Holland considered. However, although the balance is fine, in all of the circumstances I do not accept that there was a valid reason for the Applicant's dismissal.

Was the Applicant notified of the reason for her dismissal?

[147] As a Full Bench of the Commission observed in Crozier v Palazzo Corporation Pty Ltd[61] procedural fairness requires that an employee be notified of a valid reason for dismissal before any decision to dismiss is taken, in order to provide an opportunity to respond to the reason identified. The real reason for the Applicant's dismissal was Mr Holland's loss of confidence in her ability to undertake her role as a result of her conduct. While the Applicant was notified in detail about the allegations in relation to her conduct, she was not notified that Mr Holland had lost confidence in her ability to undertake her role as a result of that conduct. Accordingly, the Applicant was not notified of the reason for her dismissal in a manner that enabled her to fully respond.

Was the Applicant given an opportunity to respond to the reason for her dismissal?

[148] While the Applicant was given an opportunity to respond to the allegations about her conduct, the failure to advise the Applicant that there was a loss of trust and confidence in her to carry out her role as a result of that conduct, meant that she did not have an opportunity to respond to the reason for her dismissal.

[149] Mr Holland decided that the Applicant had not indicated that she understood what she could have done to avert the fraud in circumstances where, on his own version of the discussion, he did not ask the Applicant to answer this question. Further, Mr Holland did not put the proposition of his lack of trust in the Applicant's ongoing ability to manage the Nambour Branch, so that she had an opportunity to respond.

Was there an unreasonable refusal by the Respondent to allow the Applicant to have a support person

[150] The Applicant did not request a support person and states that she chose to attend the meeting of 6 May 2020 without a support person. Accordingly, there was no refusal to provide the Applicant with a support person.

Did the size of the employer's enterprise impact on the procedures followed in effecting the dismissal of the Applicant?

[151] The employer is a large business and this is a neutral consideration in the present case.

Did the absence of dedicated human resource management specialists or expertise in the enterprise impact on the procedures followed in effecting the Applicant's dismissal?

[152] The employer has dedicated human resource management specialists who were involved in the decision to dismiss the Applicant and this is also a neutral consideration.

[153] The Applicant raised a number of matters which she submits mitigate the conduct she engaged in. I have considered some of these matters as part of considering whether there was a valid reason for the Applicant's dismissal. A further matter which is of significance is the Applicant's length of service and her excellent work record. The Applicant's performance review immediately prior to her dismissal was overwhelmingly positive. Mr Holland seems to have had little regard for this in his decision to dismiss the Applicant and to have reached a conclusion that he had lost trust and confidence in her without considering her employment record. Mr Holland's evidence that he had regard to the matter of the Applicant's employment record is at odds with the contemporaneous email he sent to HR on 7 May 2020, which makes no reference to this matter.

[154] I also note that Mr Holland's evidence about why he rejected alternatives to dismissal is somewhat at odds with the operational changes that have been implemented in the Nambour Branch since the Applicant's dismissal, including that the Manager of another Branch splits time between Nambour and Coolum and there is also a part-time lender allocated to the Nambour Branch. In those circumstances, Mr Holland could have increased monitoring and supervision of the Applicant by virtue of the Coolum Manager undertaking this task.

[155] In normal circumstances the reasons for the Applicant's dismissal would have made it difficult for her to obtain alternative employment. Further the Applicant has lost credits for accrued entitlements. The adverse impact of dismissal for the Applicant is heightened by the difficult economic conditions caused by the COVID-19 Pandemic which has further affected the Applicant's ability to obtain alternative employment.

[156] For these reasons I find that the Applicant's dismissal was unfair. Having considered the matters in s. 387, I am satisfied that on balance, the dismissal was harsh, because of its effect on the Applicant in the context of her good employment record and the length of her service. While the Applicant did engage in misconduct which was careless, her dismissal was also unreasonable because Mr Holland's conclusion that the Applicant could not be trusted to carry out her role in future, was not soundly based. The parties sought that I first determine whether the dismissal was unfair and then determine remedy after further submissions. Accordingly, the matter will be listed for Mention to program proceedings in relation to remedy.

Mr M White of Counsel instructed by Ms Bell of Butler Mc Dermott Lawyers for the Applicant.

Mr J Wells of King & Wood Mallesons for the Respondent.

[44] B, C and D v Australian Postal Corporation T/A Australia Post [2013] FWCFB 6191; (2013) 238 IR 1.

[45] Mammarella v Department of Parliamentary Services [2019] FWC 6340.

[46] Witness Statement of Mr Brett Holland dated 25 August 2020 - annexure BH-7.

[47] Allied Express Transport Pty Ltd v Anderson (1998) 81 IR 410 at 5; Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201 at 204.

[48] Selverchandron v Peteron Plastics Pty Ltd [1995] IRCA 333; (1995) 62 IR 371 at 373.

[49] Rode v Burwood Mitsubishi Print R4471 at [90] per Ross VP, Polites SDP, Foggo C.

[50] Miller v University of NSW [2003] FCAFC 180 at pn 13, 14 August 2003, per Gray J.

[51] Bista v Glad Group Pty Ltd [2016] FWC 3009.

[52] Heran Building Group Pty Ltd v Anneveldt [2013] FWCFB 4744 at [15] per Acton, SDP, Sams DP and Hampton C citing MM Cables (a Division of Metal Manufacturers Ltd v Zammit AIRC (FB) S8106 17 July 2000.

[53] Stewart v University of Melbourne (U No 30073 of 1999 Print S2535) Per Ross VP citing Byrne v Australian Airlines (1995) 185 CLR 410 at 465-8 per McHugh and Gummow JJ.

[54] [2016] FWC 3009

[55] [1995] IRCA 333; (1995) 62 IR 371 at 373.

[57] [1999] FCA 1836; (1999) 94 FCR 561

[59] See Byrne v Australian Airlines Ltd [1995] HCA 24, (1995) 185 CLR 410 at 465 per McHugh and Gummow JJ

[60] [1999] FCA 1836; (1999) 94 FCR 561

[61] (2000) 98 IR 137.

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