Potter v Industrial Relations Secretary in respect of the Department of Regional New South Wales

Application for leave to appeal and appeal

1. The Application for Leave to Appeal and Appeal set out five grounds of appeal, being: "1. The Commission erred at law in finding at [143] that the Commission's discretion under s 243 of the WC Act permitted it to consider matters unrelated to the appellant's capacity for employment and the statutory purpose underpinning Part 8 of the WC Act. 2. The Commission erred at law in finding at [142] 'that the appellant will make unsubstantiated bullying and harassment type claims in the future', in circumstances where the Commission was estopped from reaching this conclusion by the determination of the Workers Compensation Commission, which had determined the question whether her injury was caused by 'reasonable management action'. 3. The Commission's decision not to reinstate the appellant under Part 8 of the WC Act was unreasonable and plainly unjust as it was conditioned on a conclusion at [105]-[109] and [139]-[142], that the appellant would make unsubstantiated bullying and harassment claims in the future, a conclusion which was not available on the evidence, and was unreasonable and unjust. 4. The Commission erred by failing to determine whether the appellant's dismissal was unjust by failing to determine whether the respondent acted consistently with its obligations under WIMWC Act, thereby constructively failing to exercise jurisdiction. 5. The Commission erred by failing to conclude that the appellant's dismissal was unjust in circumstances where the respondent dismissed the appellant because of her unfitness for work as a consequence of suffering a workplace injury, when it had failed to comply with obligations under the WIMWC Act, which was unreasonable and unjust." [Emphasis in original]

Leave to appeal - legal principles

1. Pursuant to s 188(1) of the IR Act, an appeal to a Full Bench of the Commission requires leave of the Full Bench. Pursuant to s188(2) of the IR Act, the Full Bench "is to grant leave to appeal, if in [the Full Bench's] opinion, the matter is of such importance that, in the public interest, leave should be granted".
2. The appellant submitted that "[w]here the appeal raises substantial issues of principle or law, or has wider implications for the Commission's jurisprudence", leave should be granted.
3. Citing Public Service Association and Professional Officers Association Amalgamated Union of New South Wales v Roads and Maritime Services (2015) 250 IR 412; [2015] NSWIRComm 16 ("PSA v RMS"), at [10]-[11], the respondent submitted that, subject to the requirements of s 188(2), unless the appellant demonstrates that the appeal "raises substantial issues of principle or law or has wider implications for the jurisprudence of this Commission, including whether the decision has widespread practical application …" leave would not be granted.
4. In this matter, it is not necessary that any distinction between the two formulations be addressed as the submissions on leave did not press any alternative basis than that the appeal raised "substantial issues of principle or law, or has wider implications for the Commission's jurisprudence".
5. The respondent also correctly submitted that other principles to be taken from PSA v RMS included that: 1. an appeal under the IR Act is an appeal in the strict sense, and the Full Bench will only intervene to correct error; 2. in the case of a discretionary decisions, it is not enough that the Full Bench would have come to a different decision, it must be shown that the Commissioner at first instance failed to properly exercise the discretion committed to her; and 3. leave will not be lightly granted.
6. The Full Bench resolved to hear from the parties on leave and as to the substantive appeal together.

Leave to appeal - submissions of the parties

1. Strictly as to leave, the appellant submitted that the grounds advanced in the appeal raise substantial issues of principle and law, being the "proper approach to the exercise of the Commission's power under Pt 8 of the WC Act".
2. The appellant submitted that, while in Leticia Casino v South Western Sydney Area Health Service (1999) 130 IR 1; [1999] NSWIRComm 355, the Commission held that the discretion must be exercised in a "proper manner", it did not directly consider the breadth of matters which could properly be considered in the exercise of the discretion. This was the direct substance of this appeal here, at least as to ground 1.
3. The substance of the appellant's appeal on ground 1 was that only considerations related to the capacity of the appellant for employment may be considered by the Commission in exercising its discretion as to whether to make orders pursuant to s 243 of the WC Act.
4. Second, the appellant submitted that the Commission at first instance had failed to determine whether the respondent had acted consistently with its obligations pursuant to the Workplace Injury Management and Workers Compensations Act 1998 ("WIMWC Act"). This purported failure amounted to a failure to exercise jurisdiction, and was therefore a serious question of law. It was, accordingly, of such importance that it was in the public interest for leave to be granted.
5. Finally, the appellant submitted that adverse findings made against the appellant by the Commission at first instance were so unfairly destructive of the appellant's credit and reputation that it was in the public interest for them to be corrected by the Full Bench.
6. For completeness, we record that the appellant did not in terms address leave to appeal against each specific ground of appeal.
7. The respondent accepted that the scope of discretionary considerations relevant to the exercise of power under s 243 of the WC Act raised matters of principle that have wider implications for the jurisprudence of the Commission. He submitted, however, that the narrow scope argued for by the appellant was so lacking in merit that ground 1 should not be the subject of leave.
8. The respondent similarly asserted that ground 2 of the appeal was so lacking in merit that leave in reliance on ground 2 should be refused. He did not concede that this ground raised matters of principle that have wider implications for the jurisprudence of the Commission.
9. The respondent submitted that ground 3 raised no issue of principle.
10. Grounds 4 and 5, it was submitted had both, no significance beyond the instant proceedings, and were so lacking in merit as to not warrant leave to appeal.

Leave to appeal - consideration

1. In support of his submission on ground 1, the respondent also took the Full Bench to Cansino, submitting in his Outline of Submissions: "13. In Leticia Cansino v. South West Sydney Area Health Service (1999) 130 IR 1, in dealing with provisions of Pt 7 of Ch 2 of the Industrial Relations Act (the statutory precursor to the provisions in issue) a Full Bench of the Industrial Relations Commission of New South Wales stated: '(12) Whether and to what extent any such order is made under s94 is discretionary and the section should not be construed as imposing a mandatory requirement upon the Commission to make such an order, subject, of course, to the discretion being exercised in a proper manner. So much is clear from the repeated use in the section of the word 'may'. (13) If the Commission is satisfied it is appropriate to make an order under s94(2), the discretion reposes in the Commission as to which of the alternative courses it should adopt. In exercising discretion it would be necessary to do so on the evidence put before the Commission by the parties.' 14. The question as to what limitations exist on the discretion is not answered by pointing to the beneficial nature of the legislation. As the Full Bench in Leticia Cansino observed, the Commission would need to reach a state of satisfaction that it is appropriate to make an order of reinstatement. The Full Bench further stated that: 'In determining whether or not to make an order under s94(2), his Honour was, in our opinion, entitled to take into account the history of attempts at rehabilitation undertaken by the Respondent for the Appellant including the rehabilitation regime itself, the manner in which the Respondent conducted its operations and deployed its staff generally, the manner in which the Respondent deployed its staff in the particular areas the subject of the Appellant's application for reinstatement and such impact that any order made would have on the Respondent either in the short term or the long term.' 15. The Full Bench in Leticia Cansino clearly accepted that the interests of the employer, including the potential impact on the employer of an order for reinstatement, were material considerations in the exercise of discretion. The manner in which the Respondent deployed its staff in the area in which the Appellant might potentially be reinstated if her application was upheld, is relevant, and includes the managerial, supervisory and organisational structure. …" [Emphasis in original; footnotes omitted]
2. The Full Bench in Cansino, under a heading "The Statutory Provisions in Operation", beginning at page 11 of the authorised report, comprehensively set out the way in which it considered the predecessor to Pt 8 of the WC Act operated. In our view, the logic set out by the Full Bench is applicable to the current s 243, as the wording considered by the Full Bench is relevantly identical.
3. This would be an end to the question of leave on ground 1, save for the fact that the issue now before this Full Bench was not the subject of the appeal in Cansino.
4. At page 6, in Cansino, the Full Bench set out that: "In considering the provisions of Pt 7 of Ch 2, his Honour considered an argument which had been advanced on behalf of the appellant that once the conditions referred to in s 94(2) were fulfilled it was mandatory to make an order under s 94(3). That argument was rejected by his Honour and there is no appeal from it."
5. The argument to which the Full Bench referred, but which it was not required to consider, is precisely the gravamen of appeal ground 1. That argument has not been the subject of determination by a Full Bench.
6. Leave is therefore granted in respect of ground 1 of the appeal.
7. Ground 2 does not raise issues which have wider implications for the jurisprudence of the Commission. The legal principles to be applied were not contested between the parties. It was agreed that an issue estoppel may arise from orders of the Workers Compensation Commission, including where they are made by consent.
8. Ground 2 can therefore only warrant the granting of leave to correct error in the application of those principles.
9. The Commissioner at first instance found that the issues advanced by the respondent, as to why the appellant should not be reinstated, were different from those determined by the Workers Compensation Commission. The appeal challenges that determination.
10. It is necessary for the appellant to demonstrate that there was an identity of issue between the determination of the Workers Compensation Commission and the basis put by the respondent at first instance as to why the Commission should not exercise discretion to reinstate the appellant.
11. In his written Outline of Submissions, which he referenced specifically as to leave on ground 2, the respondent submitted that: "32. The Commissioner dealt with the Appellant's estoppel contention in respect of the matter identified in paragraph 29(c) above, at paragraphs [97] to [109] of the Decision. At paragraph [107], the Commissioner correctly observed that, 'the respondent does not seek a finding that the applicant's psychological injury was wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer, demotion....or dismissal of workers or provision of employment benefits to workers.' That correct conclusion was enough to dispose of the estoppel point. 33. The Commissioner properly understood an important distinction, namely that in the proceedings below, the Respondent was not seeking to positively prove that the cause of the Appellant's injury was 'reasonable management action', by way of a quasi s11A WC Act defence. Rather, it was seeking to persuade the Commission that the allegations made by the Appellant about the bullying and other inappropriate conduct of her managers were unfounded, and had serious adverse consequence for the merit and efficacy of an order for reinstatement. Thus, there was no identity of issue which could engage the issue estoppel contended for by the Appellant. As the Commissioner succinctly framed it 'they are different determinations'." [Emphasis in original; footnotes omitted]
12. We respectfully agree with these submissions, and the logic inherent in them. It is neither obvious nor compelling that there is an identity of issues between the appellant being likely to make unsubstantiated allegations of bullying and harassment, and whether or not any injury was caused by reasonable management action.
13. Logically, there may be overlap. However, the Commissioner had the benefit of observing the appellant under cross-examination. She was entitled to draw conclusions as to how the appellant was likely to conduct herself in the future. This is particularly so, when, as was apparent from the Commissioner's decision, the appellant's own evidence continually raised allegations against her colleagues, and outside the context of her workers' compensation claim.
14. We refuse leave to appeal in respect of ground 2.
15. Ground 3 of the appeal, like ground 2, does not in our view raise any issues which have wider implications for the jurisprudence of the Commission. It could only warrant the granting of leave if it were necessary to correct the error asserted.
16. We agree with the submissions of the respondent that ground 3 is only a basis on which error could be properly found if ground 2 of the appeal was upheld. This circumstance aside, we have not been persuaded that the findings of the Commissioner at first instance were not open to her on the evidence.
17. As we have refused leave as to ground 2, we refuse leave to appeal in respect of ground 3.
18. Ground 4 and 5 of the appeal combine in a two-step process which asserts that the Commissioner at first instance: 1. first, failed to exercise her jurisdiction by failing to determine a matter before her; and 2. second, had she exercised that jurisdiction she ought to have reached a different conclusion as to whether the appellant's dismissal was unjust.
19. A recent Full Bench decision in Davidson v Commissioner of Police (No 3) [2022] NSWIRComm 1102 addressed and determined the questions of law raised by ground 4.
20. In the respondent's Outline of Submissions, he submitted that: "57. It is true that the Commissioner did not, in terms, make a finding in respect of the Appellant's allegation that s.46 of the WIM Act had not been complied with. However, it is abundantly clear that the Commissioner did in fact address the central or critical elements of the Appellant's substantive allegations about the Respondent's obligations under the WIM Act. This appears from paragraphs [165] - [177) of the Decision. … 60. [These] findings and reasoning demonstrate clearly that the Commissioner understood, considered and rejected the Appellant's allegations that her dismissal was unjust or unreasonable because the Respondent did not meet its obligations to participate in an injury management plan under the WIM Act. … 63. It can be seen that the Commissioner did not misapprehend the nature of her jurisdiction or overlook the Appellant's central contentions about the Respondent's obligations under the WIM Act, specifically what was contended to be the obligations to participate in the establishment of an injury management plan. …"
21. We respectfully agree with these submissions. In our view, on a proper reading of the Commissioner's reasons in full it is clear that the Commissioner at first instance did consider and determine the matters raised by ground 4. She did so in the context of whether the dismissal of the appellant was harsh, unreasonable or unjust, which is the context in which she was required to consider it.
22. Accordingly, there was no failure to exercise jurisdiction, and given Davidson, no issue having have wider implications for the jurisprudence of the Commission.
23. Ground 5 consequently falls away.
24. We refuse leave to appeal in respect of grounds 4 and 5.

Consideration of ground 1 of the appeal

1. In her Outline of Submissions, filed on 31 January 2023, the appellant submitted, in support of ground 1 of the appeal, that: "27. Whilst the Commission has a discretion in the orders it may make pursuant to Part 8, that discretion is not, properly understood, unfettered. The absence of an enumeration in the statute of the matters that are relevant to the exercise of the discretion does not mean that the discretion is unlimited. The matters relevant to the exercise of a discretion may be implicitly confined by the subject matter, purpose and scope of the statutory scheme in which it is located. The discretion must be exercised for the purposes for which the power was conferred. 28. On a proper analysis of Part 8 of the WC Act, there is a limitation on the matters that may be considered on the exercise of the Commission's discretion to be found in the statute. … 30. First, the Part appears in the Workers Compensation Act, 'an Act to provide for the compensation and rehabilitation of workers in respect of work related injuries; to repeal the Workers' Compensation Act 1926 and certain other Acts; and for other purposes.' The WC Act plays no role in regulating recruitment or the management of disciplinary matters. … 37. This purpose of the Part was discussed by the Court of Appeal in Bindaree Beef Pty Ltd v Riley [2013] NSWCA 305 at [47]: In the present case the purpose of the provisions of Pt 8 of the Act is relatively clear. It is to provide a mechanism to assist an injured worker to return to work either in his or her previous position or such other position for which he or she is fit. 38. The beneficial and protective nature of Pt 8 (and its previous statutory iteration) has been observed by numerous members of the Commission, including: a. Harrison DP in Banning v Great Lakes Council [2002] NSWIRComm 47 at [72]: [72] The clear and unambiguous objective of this part of the legislation is to provide a security of employment to persons who have suffered a work related injury and to continue injured workers in employment so far as practicable. It is beneficial legislation and is to be approached on that basis. b. Sloan C in Tawfils v Woollahra Municipal Council [2020] NSWIRComm 1007 at [34]: [34] The statutory purpose of Pt 8 is not to provide redress for the manner or fairness of a person's dismissal. Rather, as stated, it is to enhance rehabilitation prospects for injured employees who recover fitness such as to be able to resume their former employment. … 42. The question whether an employer has concerns that an employee may in future be a cause of inconvenience to an employer is no concern of Part 8. Nothing in the statutory scheme supports the conclusion that the jurisdiction permits employers to contest applications for relief on the basis of the desirability of employees who otherwise meet the statutory criteria, and there is an absence of decisions which positively support that view or exercise the discretion in that manner. … 43. By engaging with the respondent's argument about the appellant's alleged tendencies the Commission had regard to an irrelevant consideration, and her discretion miscarried." [Emphasis in original; footnotes omitted]
2. In oral submissions, the appellant also took the Full Bench to passages from Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at [40], to the same effect as set in par 27 of the Appellant's Outline.
3. From his Outline for Submissions, as to ground 1 of the appeal, the respondent submitted that: "5. … The power conferred upon the Commission pursuant to s.243 of the WC Act to order reinstatement is plainly discretionary. 6. The Appellant's articulation of her contention … is misconceived if it is suggested that discretionary considerations are confined to the Appellant's capacity for employment. The statutory discretion is not enlivened unless an applicant has demonstrated fitness for employment in the position to which reinstatement is sought. That is to say, the Commission must be satisfied that the injured worker is fit for (i.e. has 'capacity' to perform) work of the kind for which reinstatement is sought, before the discretion is enlivened as to whether to make an order reinstating the injured worker into that position. 7. Section 243 of the WC Act does not contain any express limitation on the considerations that the Commission may take into account in deciding whether or not to exercise the discretion to make a reinstatement order. … 9. The Respondent accepts that the discretion must still be guided by principle in a manner that is 'legal and regular, not arbitrary, vague and fanciful' and 'according to the rule of reason and justice'. … 11. It is not in dispute that the purpose of Part 8 of the WC Act is to provide a mechanism to assist an injured worker to return to work either in her previous position or such other position for which she is fit. But the legislature has chosen to confer a discretionary power, and not a mandatory power, to order reinstatement in section 243 of the WC Act. Thus, Part 8 of the WC Act does not confer any right to a reinstatement order notwithstanding the dismissed injured worker has become fit to perform work. … 13. In Leticia Cansino v. South West Sydney Area Health Service [1999] NSWIRComm 355, in dealing with provisions of Pt 7 of Ch 2 of the Industrial Relations Act (the statutory precursor to the provisions in issue) a Full Bench of the Industrial Relations Commission of New South Wales stated: '(12) Whether and to what extent any such order is made under s94 is discretionary and the section should not be construed as imposing a mandatory requirement upon the Commission to make such an order, subject, of course, to the discretion being exercised in a proper manner. So much is clear from the repeated use in the section of the word 'may'. (13) If the Commission is satisfied it is appropriate to make an order under s94(2), the discretion reposes in the Commission as to which of the alternative courses it should adopt. In exercising discretion it would be necessary to do so on the evidence put before the Commission by the parties.' 14. The question as to what limitations exist on the discretion is not answered by pointing to the beneficial nature of the legislation. As the Full Bench in Leticia Cansino observed, the Commission would need to reach a state of satisfaction that it is appropriate to make an order of reinstatement. The Full Bench further stated that: 'In determining whether or not to make an order under s94(2), his Honour was, in our opinion, entitled to take into account the history of attempts at rehabilitation undertaken by the Respondent for the Appellant including the rehabilitation regime itself, the manner in which the Respondent conducted its operations and deployed its staff generally, the manner in which the Respondent deployed its staff in the particular areas the subject of the Appellant's application for reinstatement and such impact that any order made would have on the Respondent either in the short term or the long term.' 15. The Full Bench in Leticia Cansino clearly accepted that the interests of the employer, including the potential impact on the employer of an order for reinstatement, were material considerations in the exercise of discretion. The manner in which the Respondent deployed its staff in the area in which the Appellant might potentially be reinstated if her application was upheld, is relevant, and includes the managerial, supervisory and organisational structure. …" [Emphasis in original; footnotes omitted]
4. In the words of the respondent, s 243 of the WC Act confers a discretion on the Commission. The question is the breadth of that discretion.
5. As the respondent submitted, and as the Full Bench in Cansino set out, the capacity of an employee for employment is the gateway to the Commission exercising the discretion set out in s 243 of the WC Act. It therefore makes little logical sense that a discretion could be confined to reconsidering a pre-condition to the exercise of that discretion.
6. In terms, ground 1 of the appeal was limited to the basis that the discretion was confined to matters relating to an employee's capacity for employment. To this extent, the appeal would be dismissed.
7. We consider that the submissions of the appellant, in the alternative, sought to constrain the scope of the discretion so that how an employee will or may conduct themselves in the workplace could not properly be within that discretion.
8. Nothing in the purpose of Pt 8 of the WC Act, nor in the decisions of the Commission or the courts or other tribunals cited by the appellant, persuades the Full Bench that the discretion to be exercised by the Commission pursuant to s 243 of the WC Act should be constrained such that the Commissioner at first instance considered impermissible matters. That Pt 8 of the WC Act is beneficial and protective, does not preclude, in appropriate cases, consideration of the possible, probable or likely conduct of an employee if reinstated. That the purpose of Pt 8 is not to provide redress for the earlier dismissal, is again no answer to the broad discretion given to the Commission.
9. Clearly, there must be boundaries to the factors considered by the Commission. However, the matters taken into account by the Commissioner at first instance do not trespass outside employment matters, and the relationship of employers and employees. Such issues are the subject of the majority of matters before the Commission.
10. We consider the analysis of the Full Bench in Cansino comes to the same conclusion and we agree with its summation as to the breath of discretion: "(12) Whether and to what extent any such order is made under s 94 is discretionary and the section should not be construed as imposing a mandatory requirement upon the Commission to make such an order, subject, of course, to the discretion being exercised in a proper manner. So much is clear from the repeated use in the section of the word 'may'. (13) If the Commission is satisfied it is appropriate to make an order under s 94(2), the discretion reposes in the Commission as to which of the alternative courses it should adopt. In exercising discretion it would be necessary to do so on the evidence put before the Commission by the parties." (at p 13) And further: "In determining whether or not to make an order under s 94(2), his Honour was, in our opinion, entitled to take into account the history of attempts at rehabilitation undertaken by the Respondent for the Appellant including the rehabilitation regime itself, the manner in which the Respondent conducted its operations and deployed its staff generally, the manner in which the Respondent deployed its staff in the particular areas the subject of the Appellant's application for reinstatement and such impact that any order made would have on the Respondent either in the short term or the long term. …" (at p 19)
11. We dismiss the appeal in respect of ground 1.

Order

1. Leave to appeal is granted in respect of ground 1 of the appeal and is otherwise refused.
2. The appeal is dismissed.

Amendments 06 October 2023 - Amended punctuation at [21] and [55]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 October 2023