PR976069 issued by Commissioner Cargill on 13 February 2007

s.170CE - Application for relief re (HUU) termination of employment

Appeal - termination of employment. Leave to appeal - failure to order reinstatement - discretion.

[1] This decision arises from an application by Mr M. Mehdi (the appellant) pursuant to s.120 of the Workplace Relations Act 1996 (the Act) for leave to appeal against the order of Cargill C in respect of the termination of his employment on 16 February 2006 by the Rail Corporation of New South Wales (the respondent). We shall refer to the proceedings before us as "the appeal". In her decision the Commissioner found that the appellant's termination had been harsh, unjust and unreasonable [1]. She found that reinstatement was not an appropriate remedy and awarded compensation equal to ten weeks' pay.

[2] The appeal is against the Commissioner's decision not to make an order of reinstatement pursuant to s.170CH(3) of the Act as it stood prior to 27 March 2006 (the pre-reform Act), not to make an order pursuant to s.170CH(4) of the pre-reform Act and against the quantum of compensation awarded. Although said to be under s.120 of the Act, the appeal is properly characterised as made under s.45 of the pre-reform Act. As the provisions are relevantly identical nothing turns on this.

[3] The appeal was heard on 28 May 2007. Mr M. Ayache, solicitor appeared by leave for the appellant and Ms K. Nomchong, of Counsel appeared by leave for the respondent.

"1. The Commissioner did not give proper weight or consideration to evidence led by the Applicant with regard to all matters relevant under section 170CH(2)(e) of the Act.

2. The Commissioner's decision, and the reasons relied upon in reaching her decision, not to order reinstatement on the ground that it was inappropriate was contrary to section 170CH and against the weight of the evidence.

3. The Commissioner's decision that the Applicant's period of employment (had it not been for the termination) would not have been lengthy, was in error and against the weight of the evidence.

4. The Commissioner's finding on reinstatement was at odds with the findings that preceded it and the Commissioner failed to give sufficient weight to the findings preceding the Commissioner's conclusions."

[5] The appeal arises under Part VI of the pre-reform Act. It is governed by s.170JF which provides:

(1) An appeal to a Full Bench under section 45 may be instituted by any person who is entitled under section 170JD to apply for the variation or revocation of an order under this Part.

(2) For the avoidance of doubt, an appeal to a Full Bench under section 45 in relation to an order made by the Commission under Subdivision B of Division 3 may be made only on the grounds that the Commission was in error in deciding to make the order."

[6] The Commissioner's decision not to reinstate the appellant was discretionary. The well established principles of House v King [2] that apply to discretionary decisions were restated in Coal & Allied v AIRC (Coal & Allied) as follows:

"Because a decision-maker charged with the making of a discretionary decision has some latitude as to the decision to be made, the correctness of the decision can only be challenged by showing error in the decision-making process [See Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 at 518-519 per Mason and Deane JJ]. And unless the relevant statute directs otherwise, it is only if there is error in that process that a discretionary decision can be set aside by an appellate tribunal. The errors that might be made in the decision-making process were identified, in relation to judicial discretions, in House v The King in these terms:

_'If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. [_House [1936] HCA 40; (1936) 55 CLR 499 at 505, per Dixon, Evatt and McTiernan JJ].' " [3]

[7] The grant of leave to appeal is not automatic but requires the appellant to establish appealable error that would convince a Full Bench to interfere with the findings of the Commission at first instance. Because of s.170JF, s.120(2) of the Act which states:

"(2) A Full Bench shall grant leave to appeal under subsection (1) if, in its opinion, the matter is of such importance that, in the public interest, leave should be granted."

is not relevant in termination of employment appeals. It is, accordingly, not necessary to have regard to Mr Ayache's submissions in relation to the grant of leave on public interest grounds.

[8] In Wan v AIRC, a Full Court of the Federal Court stated:

"…It will rarely, if ever, be appropriate to grant leave unless an arguable case of appealable error is demonstrated. This is so simply because an appeal cannot succeed in the absence of appealable error." [4]

[9] The matter before Cargill C spanned several days of evidence and copious pages of transcript. As an appellate bench, we are not obliged to examine every minute detail of the evidence in search of error.

[10] Kirby J stated in Minister for Immigration and Ethnic Affairs v Wu Shan Liang:

"The reasons under challenge must be read as a whole. They must be considered fairly. It is erroneous to adopt a narrow approach, combing through the words of the decision-maker with a fine appellate tooth-comb, against the prospect that a verbal slip will be found warranting the inference of an error of law." [5]

[11] In Coal and Allied, the High Court also stated:

"'Discretion' is a notion that 'signifies a number of different legal concepts'. In general terms, it refers to a decision-making process in which 'no one [consideration] and no combination of [considerations] is necessarily determinative of the result.' Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made. The latitude may be considerable as, for example, where the relevant considerations are confined only by the subject-matter and object of the legislation which confers the discretion. On the other hand, it may be quite narrow where, for example, the decision-maker is required to make a particular decision if he or she forms a particular opinion or value judgment." [6]

[12] The task of this Full Bench in deciding whether to grant leave to appeal is to determine whether it is seriously arguable that Cargill C erred in the exercise of her discretion in finding that reinstatement was inappropriate and that compensation equal to ten weeks' pay was inadequate.

[13] The Commissioner's decision dealt in considerable detail with the evidence before her and the submissions made by the parties. She carefully summarised the appellant's work history as a train driver over the period January 1996 until the termination of his employment. She found that for the first four and a half years the appellant's employment was without incident, but that from October 2000 onwards the appellant was "the subject of counselling, warnings and the laying of internal charges in relation to various matters including absenteeism, failure to provide medical certificates, failure to advise of non-attendance, falsification of timesheets and safety breaches. The details of these disciplinary steps are set out in the evidence of Mr Baias. I do not intend to itemise them in this decision, suffice to note that they are numerous". [7]

[14] Given that there is no cross appeal against the Commissioner's finding that the termination of Mr Mehdi's employment had been harsh, unjust and unreasonable it is not necessary that we canvass the events that led to it other than to the extent they bear upon the remedy awarded by the Commissioner. Suffice to say that, although she found that the appellant had had a far from satisfactory work history, the manner in which the respondent handled the unauthorised taking of leave that led to the termination of Mr Mehdi's employment was found to be so procedurally deficient that the Commissioner found it rendered the termination unfair.

[15] The approach taken to determining remedy under s.170CH was summarised by a Full Bench in Henderson v Department of Defence [8]. The Full Bench stated:

"[16] It appears to us that s.170CH provides for four classes of remedy:

• an order for reinstatement by reappointment to the same position: s.170CH(3)(a);

• an order for reinstatement by reappointment to a position "on terms and conditions no less favourable": s.170CH(3)(b);

• in conjunction with either of these, an order for continuity of employment and an order for an amount in respect of lost remuneration: s.170CH(4); and

• an order for payment in lieu of reinstatement: s.170CH(6).

[17] It is clear from the terms of s.170CH(6) that, in determining the question of remedy, the Commission must first consider reinstatement.

[18] It is equally clear that, in making a decision as to remedy, the Commission is obliged to consider each of the matters listed in s.170CH(2) and to treat them as matters of significance in determining whether any and, if so, what remedy is appropriate. Section 170CH(2) is expressed in mandatory terms. The Commission cannot make an order for a remedy unless it is satisfied that the remedy is appropriate and, in determining whether or not a remedy is appropriate, the Commission is required to have regard to the matters prescribed in paragraphs (a) to (e) of that sub-section. However, as is the case with determining under s.170CG(3) whether or not a termination of employment is "harsh, unjust or unreasonable", the Commission, in determining under s.170CH, whether or not a remedy is appropriate, is only required to have regard to these matters in so far as they are applicable or are relevant to the particular circumstances of the case.

[19] This does not mean that, in every case in which the Commission decides to order an amount in lieu of reinstatement, the matters referred to in s.170CH(2) would require examination at least three times - once in deciding that reinstatement was not appropriate, once in deciding an order in lieu of reinstatement was appropriate and once, because of the repetition of those matters in s.170CH(7), in determining the amount to be ordered. In determining a remedy, reference would only need to be made to those matters once. All that s.170CH(2) requires is that the Commission must not make an order unless it is satisfied that the remedy is appropriate having regard to the matters specified in that sub-section. To adopt the words of Moore J in Edwards v Giudice and Others, each of the matters "must be treated as a matter of significance" in the decision as to which remedy (or combination of remedies) is appropriate. Having regard to those factors, the Commission would determine whether reinstatement was the appropriate remedy and, if not, whether a payment in lieu of reinstatement should be ordered.

[20] It is correct that, if the Commission decides to order an amount in lieu of reinstatement, regard would have to be had to the same matters for the purpose of determining the amount to be ordered. But that involves having regard to these matters for a different purpose. In s.170CH(2) the purpose of the inquiry is to ascertain which remedy or remedies, if any, are appropriate. In s.170CH(7) the purpose of the inquiry is to ascertain the amount to be awarded in lieu of reinstatement. If it were otherwise s.170CH(7) would be redundant." [9]

[16] In addition the pre-reform Act requires that a "fair go all round" under s.170CA(2) be provided in determining the appropriate level of remuneration. This includes the matters listed in s.170CH(7).

[17] Although a good deal of the written submissions filed on behalf of the appellant dealt with cases decided when the Commission was to have regard to the "practicability" of reinstatement rather than to appropriateness, Mr Ayache accepted that he had overlooked the decision of a Full Bench in McLauchlan v Australia Meat Holdings Pty Ltd which found that "inappropriate" is wider than "impractical":

"The appellant contends that the Commissioner fell into error in approaching the question of reinstatement on the basis of fairness not practicability. We do not agree. The appellant's submissions do not have sufficient regard to the change in terminology referred to above. The question of whether the reinstatement of an employee is impracticable is no longer the focal point of the Commission's consideration of the remedy to be granted. In considering whether to order reinstatement the Commission is not confined to an assessment of the practicability of such an order but rather must decide whether such an order is appropriate.

We accept that the question of whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is appropriate. It is one factor to be taken into account, but it is not necessarily conclusive." [10]

"Given the broad nature of the discretion in ss.170CH(3) and (6) we think that the question of whether reinstatement is `appropriate' in a particular case will be a matter for the judgment of the Commission member at first instance based on the evidence and material before the Commission." [11]

[18] Mr Ayache sought to read this down by referring to "fundamental" or "ancillary" concepts in applying the test of appropriateness to the circumstances of a particular case. We reject this submission. The statute speaks for itself.

[19] There is no requirement other than to consider whether reinstatement is appropriate before providing a remedy. Having considered whether or not it was appropriate, the refusal of Cargill C to award reinstatement was a matter of discretion.

[20] We turn to a consideration of whether Cargill C erred in exercising her discretion in refusing reinstatement and awarding compensation in lieu thereof.

[21] The approach taken by Cargill C was to have regard to all of the factors under s.170CH(2) which states:

"(2) The Commission must not make an order under subsection (1) unless the Commission is satisfied, having regard to all the circumstances of the case including:

(a) the effect of the order on the viability of the employer's undertaking, establishment or service; and

(b) the length of the employee's service with the employer; and

(c) the remuneration that the employee would have received, or would have been likely to receive, if the employee's employment had not been terminated; and

(d) the efforts of the employee (if any) to mitigate the loss suffered by the employee as a result of the termination; and

(e) any other matter that the Commission considers relevant;

[22] In [169] of her decision, Cargill C concluded:

"[169] I have had regard to all of the circumstances of the case. I now turn to the circumstances set out in paragraphs (a) to (e) of subsection (2). …" [12]

"[173] Subsections (3) and (4) of section 170CH make it clear that the remedy of reinstatement is to be considered first. The applicant seeks reinstatement and the respondent opposes it. I have carefully considered all of the evidence and submissions and have again had regard to all of the circumstances of the case including my findings as to the matters specified in paragraphs (a) to (e) of section 170CH(2). I have decided, on balance, that is not appropriate to make an order for reinstatement. I have arrived at that conclusion for the following reasons:

• The applicant has, in my view, displayed an extremely cavalier attitude towards his work and attendance at work. This view has been formed after due consideration of the various reasons put forward by the applicant to explain his poor history. In addition to that history I have also considered the fact that the applicant appears to have applied for only two positions during 18 months as an unattached officer;

• If reinstated, the applicant would most likely be facing disciplinary action about the casuals issue. He may also be facing disciplinary action in relation to his unauthorised absence in November/December 2005. In addition, there may be performance management concerning his lack of action in applying for other jobs." [13]

[24] The Commissioner then turned her attention to subsection (6) of s.170CH, which states:

"(6) If the Commission thinks that the reinstatement of the employee is inappropriate, the Commission may, if the Commission considers it appropriate in all the circumstances of the case, make an order requiring the employer to pay the employee an amount ordered by the Commission in lieu of reinstatement."

"(7) Subject to subsection (8), in determining an amount for the purposes of an order under subsection (6), the Commission must have regard to all the circumstances of the case including:" It then replicates paragraphs (a) to (e) of subsection (2).

[26] In her consideration of what amount to award the Commissioner stated:

"[176] I have again considered all of the circumstances of the case and have decided that it is appropriate to make an order requiring the respondent to pay the applicant an amount in lieu of reinstatement. I have had regard to all of the matters referred to in subsections 170CH(2) and (7). Paragraph (c) of both subsections requires further consideration. The principles applicable to determining such an amount were dealt with in Full Bench decisions: Sprigg and Ellawala v Australian Postal Corporation [Print 14

She then made a finding in respect of the first step:

"[177] The first step in the process is to estimate the remuneration lost which is calculated by estimating how long the employee would have remained in the relevant employment but for the termination. It is recognised that there is a speculative element in making such an assessment. In this case I assess this "anticipated period of employment" as ten weeks. In my view this would have been the likely period for which the applicant would have remained in the respondent's employment. I have reached this conclusion after considering the factors set out in paragraph 173 above." [15]

[27] After the Commissioner considered the other relevant considerations she awarded compensation equal to ten weeks' pay [16].

[28] The gravamen of Mr Ayache's submissions as to why the Commissioner had erred was in relation to her findings at [173]. Mr Ayache carefully analyzed the evidence in order to demonstrate that had the Commissioner properly considered the appellant's work history she would not have concluded that he had displayed a cavalier, let alone an extremely cavalier, attitude to his work. He also contended that the Commissioner had placed too much weight on the fact that he had only applied for two positions as an unattached officer because she did not understand the reasons for the paucity of his applications.

[29] The appellant submitted that for the period 2000 - 2003 he had suffered depression due to domestic problems and that the incidents relating to attitude and behaviour to work and absenteeism were a result of this. The respondent failed to grant leave of absence to allow the appellant to address his domestic situation and this created the problems. There could be no probative value in the evidence of his poor record (an exception being an event in July 2004) and therefore the Commissioner gave weight to irrelevant considerations in relying on the appellant's history. In doing so she erred.

[30] The Commissioner analyzed a number of disciplinary matters in her decision [17]. She gave consideration to a number of key incidents which illustrated the appellant's attitude towards his work and absenteeism. In her refusal to order reinstatement she expressly stated that she had given consideration to the various reasons put forward by the appellant to explain his poor history. At [145], the Commissioner stated:

"[145] The second reason for termination relied on by the respondent is the applicant's chronic absenteeism and consistent breaches of the respondent's leave policies. I agree that the evidence demonstrated that the applicant had an extremely poor record in relation to absenteeism and leave. I note that the applicant had in fact received a final warning concerning absenteeism and failure to provide medical certificates in support of such absences. I also note that the final warning indicated that future failures in this regard might lead to further disciplinary action including dismissal. However, this warning was issued in April 2002, almost four years before the termination of the applicant's employment." [18]

[31] There is ample evidence [19] to support the Commissioner's finding that the disciplinary matters were "numerous" and that the appellant had an extremely poor record in relation to absenteeism and leave. These findings are sufficient to ground a finding that the appellant was extremely cavalier in his attitude to work and his attendance at work. Much of the appellant's written submissions merely reagitated what was put below rather than demonstrating error by the Commissioner. We can discern no error in the Commissioner's finding which would allow us to interfere with her discretionary findings.

[32] As to the second dot point in [173] Mr Ayache contended that it amounted to a predetermination by the Commissioner that the appellant's employment would have been terminated within about ten weeks. He submitted that this resulted in the appellant not having an opportunity to answer the matters that would have been the subject of the disciplinary hearings. As the outcome of those hearings could not be known, the Commissioner had erred in taking those matters into account in deciding not to reinstate the appellant.

[33] During the hearing it was suggested to Mr Ayache that the Commissioner's finding in relation to the likely outcome of disciplinary action did not amount to a predetermination, but rather to an informed assessment that there was a likelihood that the disciplinary proceedings could lead to a termination of the appellant's employment and that therefore reinstatement was inappropriate. Whilst Mr Ayache did not concede that the Commissioner had not predetermined the issue that it was likely that his client's employment would again be terminated were he to be reinstated, he did properly concede that there was a fifty-fifty chance of that happening. This concession was appropriate given that the appellant had admitted during the hearing at first instance that he had taken "casual sickies". These were days taken as sick leave when in fact the appellant had not been sick. The respondent had not been aware of this practice until the appellant gave his evidence.

[34] Again, we can discern no error. It was open to the Commissioner to find that the period for which the appellant would have been employed had he been reinstated might have been ten weeks and to formulate her order accordingly. The finding was not a prejudgment; the Commissioner did no more than have regard to material relevant to the exercise of her discretion.

[35] In Sprigg v Paul's Licensed Supermarket a Full Bench stated:

"… we acknowledge that there is a speculative element of involved in all such assessments. We believe it is a necessary step by virtue of the requirement in s.170CH(7)(c). We accept that assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law." [20]

[36] Taken in this context and having regard to the detailed reasons for decision, including the Commissioner's summary of the respondent's view or what would happen upon reinstatement of the appellant [21], and the need for an element of speculation, it was clearly open to Cargill C to find that the anticipated period of employment would have been ten weeks.

[37] We consider there is no substance in the appellant's second contention that the Commissioner's discretionary decision was vitiated by an error of the type referred to in House v King or that the result was so unreasonable and plainly unjust that the Commission should "infer" that the learned Commissioner failed to properly exercise her discretion.

[38] Having regard to our conclusion that it was open to the Commissioner to find that reinstatement was not an appropriate remedy and that compensation equivalent to ten weeks was, it is not necessary to deal with the appellant's argument that the Commissioner's discretion miscarried because she overlooked important facts and/or alluded to erroneous or irrelevant matters.

[39] The appellant submitted in the alternative that if we find there is no appealable error we should nevertheless review the Commissioner's exercise of discretion on the basis that a "substantial wrong has occurred". This submission cannot be accepted. The appellant must demonstrate an arguable case of appealable error before leave to appeal can be granted.

K. Nomchong, of Counsel for Rail Corporation of New South Wales.

[1] PR976068, 13 February 2007, Cargill C at [167].

[2] [1936] HCA 40; (1936) 55 CLR 499 at 504.

[3] [2000] HCA 47; (2000) 203 CLR 194 at 205.

[4] [2001] FCA 1803; (2001) 116 FCR 481 at [30].

[5] [1996] HCA 6; (1996) 185 CLR 259 at 291.

[6] [2000] HCA 47; (2000) 203 CLR 194 at 204.

[8] Print S8591, 28 July 2007, Giudice J, Williams SDP and Huxter C.

[10] Print Q1625, 5 June 1998, Ross VP, Polites SDP and Hoffman C at p.17.

[19] See affidavit of George Baias [AB1273 to 1277] including Annexures GB1 to GB13 [AB1285 to 1332]; affidavit of Ricky Anderson, which set out the reasons for the removal from train driving duties [AB1216 -1217] and Annexure RA1 [AB1219 to 1230]; Exhibit MFI 20 [AB1382 - 1385] for chronology of the history of the appellant's absenteeism. See also Cargill C's identification of matters which may require disciplinary action if he was reinstated.

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