Fair Work Act 2009

s.394 - Unfair Dismissal

The Good Guys Discount Warehouse (Australia) Pty Ltd T/A Good Guys O'Connor

Application under s.589 for an order to stay hearing in part and determination of specified matters in unfair dismissal proceedings; civil penalty privilege and stay principles considered.

[1] Mr Peter French (the applicant) has applied for a remedy under the Unfair Dismissal provisions of the Fair Work Act 2009 (the FW Act) following his dismissal by The Good Guys Discount Warehouse (Australia) Pty Ltd[1] (the respondent/the Good Guys). Mr French was employed as a full time sales person and seeks reinstatement and compensation.

[2] Mr French's Termination of Employment letter was signed by Ms Lynette Borovica - People & Culture Manager on the letter head of the Good Guys, with reference to the Muir Electrical Company Pty Ltd (Muir Electrical) on the bottom of the correspondence. It is understood Ms Borovica is an employee of Muir Electrical.

[3] Mr French is represented in his application by the Shop Distributive and Allied Employees' Association (SDA).

[4] The employer's response filed with the Fair Work Commission (the Commission) was completed by the Good Guys' legal representative Clayton Utz and refers to a claim filed in the Federal Court (WAD118/17) by the SDA against the Good Guys and Ms Borovica on 24 February 2017.[2] In summary, the claim WAD118 alleges a breach of the General Protections provisions of the FW Act, seeking the payment of pecuniary penalties by the Good Guys and Ms Borovica. The statement of claim asserts that the Good Guys and Ms Borovica prevented Mr French from being represented by employees of the SDA and thus denied him a workplace right.[3]

[5] The employer's initial response to Mr French's unfair dismissal application stated that it was contemplating taking action which included:

• Seeking an order from the Commission staying the unfair dismissal application until the Federal Court matter was finalised;

• seeking an order from the Federal Court restraining the present application from continuing as an abuse of process;

• making an application to the Supreme Court of Western Australia under the Jurisdiction of Courts (Cross - Vesting) Act 1987 (WA) for the transfer of the unfair dismissal application to the Federal Court for hearing at the same time as the Federal Court claim.

[6] The respondent now, by way of an application to the Commission dated 31 May 2107[4], seeks to have the unfair dismissal claim stayed in part, pending the hearing and determination of WAD118.

[7] The respondent contends that the unfair dismissal application can continue, provided that the relevant part that is common to WAD118 (as discussed below) is 'hived off', to be dealt with by the Commission at the conclusion of WAD118 if still required to be dealt with. Presumably an interim decision would issue in the first instance.

[8] The SDA oppose the application. At the hearing the Good Guys were represented by Mr Ritter SC, and Mr French was represented by Mr Rafferty of the SDA. Leave was granted to the respondent to be represented by legal counsel as per s.596(2)(a) of the FW Act.

[9] In summary, Mr French's application alleges that his dismissal was harsh, unjust and unreasonable on 5 grounds:

• There was no valid reason for the dismissal;

• the termination was grossly disproportionate in the circumstances;

• there was a failure to provide a meaningful opportunity to respond to or influence the respondent's decision to dismiss him;

• failure to provide a fair process given the size of the employer and its dedicated Human Resources Manager; and

• failure to take into account the applicant's length of service and impact the dismissal would have on the applicant.[5]

[10] The stay application filed in the Commission attached an affidavit sworn by Mr Vince Annetta, a solicitor and partner of Clayton Utz. In summary, the affidavit makes the points:

• Of the applicant's grounds alleging unfairness, the alleged denial of the right to be represented by the SDA at the termination meeting held on 31 January 2017, at which Ms Borovica was in attendance, involves the same facts and circumstances as contained in matter WAD118;

• there is a risk of inconsistent findings of fact and law in respect of the same issues if the matters are heard and determined separately;

• there is the potential for significant prejudice for both the Good Guys and Ms Borovica in the Federal Court proceedings, and in particular Ms Borovica, who is likely to be required to give evidence in the unfair dismissal claim;

• the SDA (as the applicant's representative) in the unfair dismissal claim will be able to cross examine a respondent to a civil penalty proceeding that the SDA itself has brought, a process that would not ordinarily be available or permissible;

• the SDA would gain an unfair forensic advantage and the Good Guys and Ms Borovica a corresponding forensic disadvantage;

• Ms Borovica is able to lawfully refuse to give evidence about the SDA representation issue concerning the 31 January 2017 meeting on the basis of civil penalty privilege[6]; and

• in lawfully being able to refuse to give evidence about the union representation issue on the basis of privilege, it would materially disadvantage the Good Guys in defending the unfair dismissal claim who would be without the evidence of a key witness on a matter of substance to the unfair dismissal application.

In opposing the application the SDA, in summary, state:

• Mr French will be prejudiced if his application is further delayed;

• there is no risk of inconsistent findings law as the Federal Court proceedings relate to pre-existing legal obligations and the unfair dismissal to whether rights and obligations should be created namely reinstatement and/or compensation;

• a decision of the Fair Work Commission is not binding on the Federal Court;

• in any event the risk of separate findings is entirely speculative;

• the potential reliance on penalty privilege should be subjected to close scrutiny in circumstances where a reverse onus of proof has application;

• the High Court has expressed doubt as to whether the privilege against exposure to a penalty applies outside judicial proceedings; and

• the burden of any prejudice caused by Ms Borovica declining to give certain evidence should be carried by the Good Guys not Mr French.

[11] The SDA's Federal Court proceedings against Ms Borovica seek pecuniary penalties pursuant to s.546(1) of the FW Act. It is contended by the respondent that Ms Borovica has the right to claim privilege against possible self-exposure to a civil penalty. On this basis, should Ms Borovica exercise her right to privilege and decline to answer questions regarding the meeting of 31 January 2017, the Good Guys will not have the evidence of a key witness in defending the unfair dismissal application.

[12] The privilege against self-incrimination is a privilege available to natural persons, including witnesses to proceedings, but it is not available to corporations.[7] The privilege against self-incrimination has been characterised as a common law right, not just a rule of evidence.[8] The rule is stated in Cross on Evidence[9] as follows:

"No one is bound to answer any question or produce any document if the answer or the document would have a tendency to expose that person to ... conviction for a crime"

[13] As stated by Murphy J in Police Service Board v Morris[10] :

"For centuries the privilege against self-incrimination has been recognized in English and Australian jurisprudence as an important safeguard of the freedom and dignity of the individual. It is included in the International Bill of Human Rights (see The International Covenant on Civil and Political Rights, Part III, Article 14(3)(g)) and is constitutionally entrenched in some countries (for example see U.S. Constitution, Fifth Amendment)".

[14] Although matter WA118 is a judicial proceeding, it is a civil proceeding, not a criminal proceeding. In respect to a privilege against exposure to a civil penalty, the High Court has held that the privilege is not a substantive rule of common law applicable to non-judicial proceedings. In Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission[11] (Daniels) Gleeson CJ, Gaudron, Gummow and Hayne JJ stated at [31]:

"... Today the privilege against exposure to penalties serves the purpose of ensuring that those who allege criminality or other illegal conduct should prove it. However, there seems little, if any, reason why that privilege should be recognised outside judicial proceedings. Certainly, no decision of this Court says it should be so recognised; much less that it is a substantive rule of law."

[15] In Valantine v Technical and Further Education Commission & Anor[12] the NSW Court of Appeal (per Gzell J, Beazley and Tobias JJA agreeing) held the privilege applied to proceedings in the Government and Related Employees Tribunal on the basis that there was no binding High Court authority either way, and that the Tribunal was quasi-judicial in nature as distinct from being a purely administrative body. The High Court observations in Daniels were held to be obiter and accordingly there is no binding High Court decision that privilege should be recognised outside judicial proceedings and is a substantive rule of law:

"[67] There is a difference of judicial opinion at the highest level in Australia, then, as to whether the privilege against exposure to penalties applies to a quasi-judicial body such as the Government and Related Employees Appeal Tribunal...

[69] Accordingly, just as there is no binding decision of the High Court that the privilege should be recognised outside judicial proceedings and is a substantive rule of law, there is no binding decision of that Court to the contrary.

[72] In my opinion, and whatever may be the position with respect to purely non-judicial or purely administrative proceedings, the better view is that the privilege is capable of application to quasi-judicial proceedings such as those in the present case. I am not constrained by precedent to find to the contrary.

[75] In my view, privilege against exposure to penalties should apply to the formal sittings of the Tribunal. For the reasons discussed with respect to privilege against self-incrimination, I am of the view that the privilege has not been excluded either expressly or by necessary implication."

[16] The High Court in Police Service Board v Morris[13] was required to determine whether the rule of the common law that a person is not bound to answer any question which might tend to expose themselves to the risk of a criminal conviction or the imposition of a penalty is capable of application to a police officer questioned over a disciplinary matter and if so whether it has been excluded by the Police Regulation Act 1958 Act (Vic) or the Police Regulations 1957 (Vic). Gibbs CJ held that the character and object of the regulations provide a sufficient indication that it was not intended that an officer to whom such an order was given could object to obey it on the ground that his answer might expose him to penalties for breach of his duty.

[17] The position of the privilege applicability to Commission proceedings in relation to civil penalty provisions remains unclear without any binding authority. While the Commission is a non-judicial body_[14]_ the FW Act does not expressly or impliedly exclude privilege against self-incrimination in relation to civil penalties. However as held by the NSW Court of Appeal in Valantine I am inclined to the position that the better view is that the privilege is capable of application to quasi-judicial proceedings in respect of civil penalty proceedings_._ As such I am prepared to adopt the position that privilege against exposure to civil penalties should apply to the formal proceedings of this Commission.

Power of Commission to stay (in part) an unfair dismissal

[18] The stay application is made under s.589 of the FW Act which provides that the Commission may make decisions as to how, when and where a matter is to be dealt with.

[19] Section 381 of the FW Act sets out the objects of the Act's unfair dismissal provisions which include at s.381(1)(b)(i) to establish procedures that are 'quick, flexible and informal'. Section 578 provides that in performing functions or exercising power in relation to a matter the Commission must take into account the objects of the Act.

[20] At s.577(b) the Commission is required to perform its functions in a manner that is 'quick, informal and avoids unnecessary technicalities'.

[21] The SDA did not submit that the Commission could not lawfully entertain the respondent's application.

[22] I am satisfied that s.589 - Procedural and Interim Decisions provides a member with the ability to stay any part of a matter. There is an abundance of authority where the Commission has accepted it has the discretionary power pursuant to s.589 to stay an application before it.[15]

[23] The respondent also relied on s.399(2) in submitting that the Commission has the power to stay part of an unfair dismissal.[16] Having regard for the totality of s.399 and the Fair Work Bill Explanatory Memorandum[17] I do not consider s.399(2) is a source of power to facilitate the respondent's application. The subsection is concerned with whether an unfair dismissal is dealt with in part as a hearing and in part as a conference in private.

[24] The principles to be applied to applications to adjourn civil proceedings pending the determination of other civil proceedings, involving pecuniary penalties, are not readily available. In cases where the Commission has been asked to stay its own matters pending the outcome of criminal proceedings (which WA118 is not) the Commission has frequently relied upon the decision in McMahon v Gould[18] in applying the principles set out by Wootten J[19]:

(a) prima facie a plaintiff is entitled to have his action tried in the ordinary course of the procedure and business of the court;

(b) it is a grave matter to interfere with this entitlement by a stay of proceedings, which requires justification on proper grounds;

(c) the burden is on the defendant in a civil action to show that it is just and convenient that the plaintiff's ordinary rights should be interfered with;

(d) neither an accused or the Crown are entitled as of right to have a civil proceeding stayed because of a pending or possible criminal proceeding;

(e) this court's task is one of the `balancing of justice between the parties', taking account of all relevant factors;

(f) each case must be judged on its own merits, and it would be wrong and undesirable to attempt to define in the abstract what are the relevant factors;

(g) one factor to take into account where there are pending or possible criminal proceedings is what is sometimes referred to as the accused's 'right of silence', and the reasons why that right, under the law as it stands, is a right of a defendant in a criminal proceeding;

(h) however, the so-called 'right of silence' does not extend to give such a defendant as a matter of right the same protection in contemporaneous civil proceedings. The plaintiff in a civil action is not debarred from pursuing action in accordance with the normal rules merely because to do so would, or might, result in the defendant, if he wished to defend the action, having to disclose, in resisting an application for summary judgment, in the pleading of his defence, or by way of discovery or otherwise, what his defence is likely to be in the criminal proceeding;

(i) the court should consider whether there is a real and not merely notional danger of injustice in the criminal proceedings;

(j) in this regard factors which may be relevant include:

(i) the possibility of publicity that might reach and influence jurors in the civil proceedings;

(ii) the proximity of the criminal hearing;

(iii) the possibility of miscarriage of justice e.g. by disclosure of a defence enabling the fabrication of evidence by prosecution witnesses, or interference with defence witnesses;

(iv) the burden on the defendant of preparing for both sets of proceedings concurrently;

(v) whether the defendant has already disclosed his defence to the allegations.

(k) the effect on the plaintiff must also be considered and weighed against the effect on the defendant; and

(l) in an appropriate case the proceedings may be allowed to proceed to a certain stage, e.g. setting down for trial, and then stayed."

[25] Subsequently these principles have been adopted by other judicial bodies and tribunals.[20] In this case the application of the principles in McMahon needs to accommodate the absence of pending criminal proceedings, as the pending proceedings in this matter relate to a civil penalty prosecution. Where relevant to this matter, I will be guided by these principles.

[26] The stay of proceedings (in part) is sought essentially on the grounds of the potential prejudice to the Good Guys and Ms Borovica due to the overlap between claims made by the SDA on behalf of the applicant in the Federal Court and this application. Ms Borovica is said to be 'a likely key witness'[21] in this matter and is a respondent in the Federal Court proceedings. In claiming privilege against possible self-exposure to the civil penalty proceedings, should she choose to do so, it is argued by the respondent that Ms Borovica deprives the Good Guys of a defence witness of substance to the allegation of unfair dismissal.

[27] To alleviate the SDA's concern of having the matter being stayed in its entirety until matter WA118 is finally determined, the respondent submits that 'a common sense solution' is that the application proceed but with the issue relating to union representation at the 31 January meeting, being the 'workplace right' sought to be exercised, to be heard at a later date if required.

[28] The practicality of this course of action is put by the respondent on the basis that the respondent submits that Commission can still hear and determine the question of whether there was a valid reason for the dismissal (s.387(a)) relating to the applicant's capacity or conduct and address all other matters under s.387(b)-(h), other than the claim that Mr French was denied representation by the SDA at the 31 January meeting, contributing to the unfairness of the dismissal.

[29] It is not submitted by the applicant that he was at any relevant time denied the right to have a support person present to assist at any discussions relating to his dismissal (s.387(d)). The union representation issue is said by the SDA to fall under s.387(h) "any other matter the FWC considers relevant".

[30] The respondent contends that a possible outcome of a stay in part being granted is that the Commission may find that the dismissal is unfair without the need to hear evidence relating the union representation issue on 31 January 2017. It submits that it is only where on the evidence relating to all other matters, should the Commission find the dismissal not unfair, that the applicant would then require the issue of union representation to be dealt with to further agitate its claim of unfairness.

[31] The Commission is required to take into account and give due weight to each matter listed in s.387 and make a finding in so far as they are relevant in considering whether a dismissal was harsh, unjust or unreasonable_[22]_ with no one matter being elevated in importance over another. Suffice to say if there is a finding of no valid reason, ss.387(b) and (c) have no application.[23]

[32] A dismissal may be "harsh, unjust or unreasonable" notwithstanding the existence of a "valid reason" for the dismissal.[24]

[33] I do not find the proposition of 'hiving off' evidence of the 31 January 2017 meeting for the issue, if necessary, to be considered at an unknown later date, to be a convenient, satisfactory or practical way of dealing with the respondent's concerns. The matter should either be dealt with or stayed in its entirety.

[34] I accept that to hear the unfair dismissal application raises the possibility that the running of the defence of the Good Guys may be affected should Ms Borovica seek to exercise a right not to answer questions regarding the 31 January meeting, relying on civil penalty privilege.

[35] In Commissioner of the Australian Federal Police v Zhao and Another[25] the High Court stated the prospect that a civil proceeding may prejudice a criminal trial and that such prejudice may require a stay of the civil proceedings is hardly novel. As stated previously in this matter, we are not dealing with a criminal proceeding, but rather two civil proceedings albeit one which involves a civil penalty prosecution.

[36] Justice Wilcox in Cameron's Unit Services Pty Ltd v Kevin R Whelpton Associates (Australia) Pty Ltd[26] (Cameron's Unit Services) made the following observation in refusing an application for a stay of a civil proceeding.

"It is said on behalf of the respondents that, confronted with a choice between defending this application on the merits or maintaining his right of silence, Mr Whelpton is likely to choose the latter course. The result, it is said, is that justice will not be done in the civil action. This may be so, but the failure of the respondents to advance the case necessary for the Court to determine the matter on its merits will be the result of a conscious choice by them to prefer a higher interest. It is not unusual for people to choose not to bring, not to maintain, or not to defend, civil proceedings or not to adduce particular evidence because to do so may conflict with some higher interest. And, in this case, any notion of postponing the civil trial so as to increase the possibility of achieving perfect justice in the evidentiary sense runs into the difficulty that to do so necessarily involves the visitation upon the applicants of the very considerable prejudice of delay."

[37] The respondent contends that the applicant would not suffer any great prejudice other than delay should its application for a stay be granted, whereas the applicant submits that there is a very real prospect that should the Commission await the civil penalty proceeding outcome this will not be known until 2018.

[38] In Sanford v Austin Clothing Company Pty Ltd trading as Gaz Man,[27] SDP Watson stated:

"[31] ... The respondent is prima facie entitled to have the matter determined as quickly as practicable. An adjournment should not be lightly entertained. The onus to make good the adjournment application lies with the applicant for the adjournment. The applicant is not entitled, of right, to an adjournment in light of the criminal proceedings. Each application for adjournment must be made on its own merits and balance the interests of the parties.

[32] Where there are pending criminal proceedings the accused's "right of silence" is a relevant consideration, however the so-called "right of silence" does not extend to give such a defendant as a matter of right the same protection in contemporaneous civil proceedings. In the case of Philippine Airlines v Goldair, Young CJ concluded at page 386 that:

"The right of silence is a right which relates to criminal proceedings and it would need a very strong case before the Court should intervene solely on that ground to stay civil proceedings pending the determination of criminal proceedings."

[33] Injustice to a defendant in the criminal proceedings is a relevant consideration in considering competing interests of the parties, but it must be a real and not merely notional danger."

[39] The application for a stay or adjournment was rejected for the following reasons:

"[35] I am not satisfied that a very strong case has been established for these proceedings to be adjourned or stayed until the determination of the criminal proceedings, or for revoking the directions issued on 28 May 2000... To paraphrase the conclusions of Young CJ in Philippine Airlines, if the allegations of conduct substantiating a valid reason for termination are groundless, no injustice would accrue to the applicant in respect of the criminal proceedings if he were to say so now. The Commission, in determining whether the termination was harsh, unjust or unreasonable, will be required to make findings, on the balance of probabilities, as to whether or not conduct occurred which constituted a valid reason for termination. I have not been satisfied as to how such a finding, or the giving of evidence in relation to it, would create an injustice for the applicant in defending criminal charges to be determined beyond reasonable doubt."

[40] The applicant points out that at the 31 January meeting there were two other representatives of the respondent present in addition to Ms Borovica, both of whom are not subject to civil penalty proceedings who could testify as to what occurred.

[41] In opposing the stay application the applicant urges the Commission to adopt what is said to be the approach taken by Mansfield J in The Director of the Fair Work Building Industry Inspectorate v Construction Forestry, Mining and Energy Union. [28] In that case the CFMEU had framed their pleadings on the basis that the two individual respondents had claimed privilege against exposure to pecuniary penalties which meant they could not plead their case in full. Mansfield J held that the CFMEU itself were not entitled to rely on the privilege of the individually named respondents.

[42] It was noted that there were alleged to be other persons present at the time the asserted conduct was engaged in (as in this case). This circumstance weighs against granting the stay application as sought, but proceeding to hear the application in full.

[43] The decision in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd[29] was referred to by both parties where Asbury DP stayed a Commission proceeding where there were potential criminal proceedings based on the right of privilege against self-incrimination. The matter did not involve an unfair dismissal claim but a dispute under an agreement dispute settlement procedure. The Deputy Present was satisfied that the facts upon which the industrial dispute and the potential criminal proceedings were based were substantially the same, stating that the matters are 'virtually identical'.[30]

[44] In this matter the overlap between the unfair dismissal application and the civil penalty proceedings relates to a discrete and narrow aspect of the applicant's claim to be considered as put by the SDA, under s.387(h) of the FW Act 'any other matters the Commission considers relevant'. Should Ms Borovica decide to exercise her civil privilege right, the respondent conceded there are witnesses other than Ms Borovica who were present at the 31 January meeting to state what occurred at the meeting.

[45] The objects of Part 3-2 - Unfair Dismissal of the FW Act provide in part for the establishment of procedures that are "quick, flexible and informal." The effect of a stay in the manner sought against the applicant must be must be considered and weighed against the effect on the respondent.

[46] There is no right for a stay in part or in whole of the unfair dismissal proceedings as sought by the Good Guys. Mr French's right to a prompt hearing of his claim should not lightly be interfered with; he is entitled to have his application heard and determined as soon as practicable. Staying in part Mr French's application may increase the possibility of achieving perfect justice in the evidentiary sense (as stated by Wilcox J in Cameron's Unit Services) for the respondent in matter WAD118, but that involves the potential of further delay for Mr French in the final disposition of his application before this Commission.

[47] Having regard to the circumstances of this matter I am not satisfied that the potential for prejudice to be suffered by the respondent in the civil penalty proceedings WAD118 is a sufficient reason for the application not to proceed. The Good Guys have not demonstrated such a real risk of injustice sufficient to deny Mr French his right to a hearing in the ordinary course.

[48] The matter will be listed for directions and hearing in the normal course.

M Ritter SC and Ms X Teo solicitor Clayton Utz for the Respondent.

[3] Affidavit of Vince Annetta, Annexure VA-1, WAD118 of 2017

[6] Civil penalty privilege cannot be claimed by the Good Guys being a corporation

[7] Environment Protection Authority v Caltex Refining Co Pty Ltd [1993] HCA 74; (1993) 178 CLR 477; Evidence Act s.187

[8] Sorby v The Commonwealth [1983] HCA 10; (1983) 152 CLR 281 at 309 per Mason, Wilson and Dawson JJ

[10] [1985] HCA 9; (1985) 156 CLR 397

[11] [2002] HCA 49; (2002) 213 CLR 543 at [31]; see also Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129 at [24]

[12] [2007] NSWCA 208

[13] [1985] HCA 9; (1985) 156 CLR 397

[14] Cetin v Ripon Pty Ltd (T/as Parkview Hotel (2003) 127 IR 205 at [48]

[15] See for example Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2014] FWC 7282 at [42]

[16] Respondent's Outline of Submissions at [11]

[18] (1982) 7 ACLR 202 at 206-207

[19] See also summary of principles by Jones C in Stanley v QBE Management Services Pty Ltd [2012] FWA 8397

[20] Philippine Airlines v Goldair (Aust) Pty Ltd (Philippine Airlines) [1990] VicRp 33; (1990) VR 355 at 390; Howarth v Mornington Peninsula Shire Council Print S0138; Sanford v Austin Clothing Company Pty Ltd trading as Gaz Man, Print S8287; Kvackajv Monash University [2005] AIRC 492 Re Sogo Duty Free Pty Ltd and Commissioner of Taxation and Ors [2005] AATA 1298

[21] Respondent's Outline of Submissions at [15]

[22] ALH Group Pty Ltd trading as the Royal Exchange Hotel v Mulhall [2002] AIRC 329

[23] Chubb Security Australia Pty Ltd v Thomas [2000] AIRC 822 Print S2679 at [41]

[24] B, C and D v Australian Postal Corporation T/A Australia Post [2013] FWCFB 6191

[25] (2015) 255 CLR 46

[26] [1984] FCA 406; 4 FCR 428 at 435

[28] [2014] FCA 652

[29] [2014] FWC 9205

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