Appeal grounds one to three
81 In the appellants' written submissions, grounds one to three of the appeal are described, collectively, as the "natural justice error". As already outlined, the gravamen of the appellants' complaint expressed in grounds one and two of the appeal is that certain findings were made that should not have been made because, first, the rule in Brown v Dunne was not followed; and, secondly, the judicial obligation to put was not followed (to the extent that it applied). A distinct but related complaint, which finds voice in ground three, is that because the proceeding below involved allegations that, if substantiated, would expose the appellants to penalty, s 140 of the Evidence Act required a quality to the evidence led in proof of those allegations that was ultimately unmet. The appellants' complaint on this score is that the primary judge failed to consider the quality of the evidence to the standard required by that section and, thereby, erred.
82 In reaching her conclusions, the learned primary judge analysed the budgetary reasons by which Mr Heeney said that his decision to make Ms Shum's position redundant was animated. Her Honour rejected those reasons, largely by reference to the financial information contained in exhibit 11 (being the note addressed to Mr Heeney about the financial consequences of the proposed restructure and other budgetary documents), which sowed doubt in her Honour's mind over both the necessity to achieve the anticipated costs savings and whether the proposed restructure would, in fact, bring about that objective. As will shortly be explored, the rejection of that evidence by the primary judge - and, perhaps more importantly, the finding of the existence of an alternative narrative - was ultimately fatal to the appellants' defence.
83 The appellants assert that it was impermissible for the learned primary judge to reason from a conclusion that Ms Shum's dismissal was not made for budgetary reasons that it was, instead, made for a reason or reasons proscribed by s 340(1) of the FW Act. There is, of course, no statutory presumption that either Mr Heeney or Mr Oates - whose liability, if there was any, arose under s 550 of the Act - acted for a prohibited reason: Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2017] FCAFC 50 [59] (Greenwood, Flick and Rangiah JJ); Australian Red Cross Society & Queensland Nurses' Union of Employees (2018) 273 FCR 332, 348-349 [97] (Greenwood, Besanko and Rangiah JJ); Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Visy Packaging Pty Ltd (No 3) (2013) 216 FCR 70, 117 [241] (Murphy J); Australian Building and Construction Commissioner v Hall (2017) 269 IR 28, 39 [26] (Flick J). That is a matter that must be positively established by evidence, which, the appellants say, did not occur.
84 The key passage of the learned primary judge's reasoning that the appellants seek to impugn is extracted at [45] above. It includes a series of adverse inferences drawn against each of Mr Heeney and Mr Oates, and culminates in the finding that Mr Heeney and Mr Oates conspired to dismiss Ms Shum from her employment. That conclusion necessarily involves findings that Mr Heeney and Mr Oates were not truthful in their evidence as to the reason or reasons for which Ms Shum was dismissed; indeed, there and at other parts of the Primary Judgment, her Honour makes adverse credit findings against each of them. The appellants complain that the existence of a conspiracy as between Mr Heeney and Mr Oates was never part of Ms Shum's case, nor was it ever put to Mr Oates or Mr Heeney, either by Ms Shum in cross-examination or by the primary judge. They assert that there was no evidence supporting the primary judge's findings of a conspiracy and, relatedly, that neither Mr Heeney nor Mr Oates was given the opportunity to deal with the criticism that was ultimately made of them. That reality, they say, bespeaks a denial of natural justice and a failure to accord procedural fairness.
85 The appellants rely on the principle articulated by the High Court in Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 ("Kuhl"), 386 [67] (Heydon, Crennan and Bell JJ):
It is not sound judicial technique to criticise a party-witness for deliberately withholding the truth in a fashion crucial to a dismissal of that party's claim unless two conditions are satisfied. First, reasons must be given for concluding that the truth has been deliberately withheld. Secondly, the party-witness must have been given an opportunity to deal with the criticism.
86 The appellants fix upon the second limb of that principle, which was said to be an emanation of the principle in Brown v Dunn (1893) 6 R 67. As to that limb, their Honours in Kuhl expanded (at 387-389 [69]-[74]):
…The second condition is more controversial. Judges are not entitled to inform themselves before taking judicial notice without giving the parties an opportunity to comment on the material referred to. Judges are not entitled to criticise expert witnesses by reference to expert material not in evidence without those witnesses having an opportunity to respond. Judges are entitled to take into account the demeanour of party-witnesses, not only in the witness box, but while they enter and leave it, and also while they are sitting in court before and after giving evidence; but observations by the judge of conduct outside the witness box which the representatives of the parties may not have observed, should, if they are influential in the result, be drawn to the attention of the parties so that they may have an opportunity of dealing with the problem. There is thus no general duty on a judge to advise the representatives of the parties of what they can see for themselves, namely the demeanour of the party-witness in the witness box. Nor, a fortiori, is there a duty on a judge to advise the parties that the party-witness's evidence is not adequate to make out the case of that party-witness. But there was held to be a breach of the duty of procedural fairness where a party claiming compensation for injury was held to have feigned or exaggerated her symptoms although this had not been suggested in cross-examination and the respondent disavowed that possibility.
If, in the present case, the first respondent had submitted in final address that the plaintiff had answered his own counsel's questions in chief about how his arm had been drawn into the vacuum hose by deliberately concealing material adverse to his case and favourable to the first respondent's - an allegation not of inadequacy in evidence but of suppression of evidence supporting an inference that the plaintiff knew his case was bad - a breach of the rule in Browne v Dunn would have taken place.
In Browne v Dunn Lord Herschell LC said:
"[I]t seems to me to be absolutely essential to the proper conduct of a cause, where it is intended to suggest that a witness is not speaking the truth on a particular point, to direct his attention to the fact by some questions put in cross-examination showing that that imputation is intended to be made, and not to take his evidence and pass it by as a matter altogether unchallenged, and then, when it is impossible for him to explain, as perhaps he might have been able to do if such questions had been put to him, the circumstances which it is suggested indicate that the story he tells ought not to be believed, to argue that he is a witness unworthy of credit. My Lords, I have always understood that if you intend to impeach a witness you are bound, whilst he is in the box, to give him an opportunity of making any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practice in the conduct of a case, but is essential to fair play and fair dealing with witnesses."
…
Now if it was not open to counsel for the first respondent to make the postulated allegation, how can it have been open to the trial judge, without warning, to incorporate into his reasons for judgment a finding to the same effect as the allegation?
For those reasons the second condition referred to ought to have been satisfied before the trial judge made the criticism he did.
The second condition was not satisfied. The plaintiff had no opportunity to deal with the criticism…
87 The decision of the New South Wales Court of Appeal in Bale v Mills (2011) 81 NSWLR 498 ("Bale v Mills") concerns the application of the principles in Kuhl and Brown v Dunne to circumstances similar to those that arise on the present appeal. There, a former client of a firm of solicitors instituted proceedings against that firm for negligence, breach of contract, and misleading or deceptive conduct. The trial judge entered judgment in favour of the former client. A critical issue in the proceeding was whether a solicitor in the employ of the firm had made certain false representations to the former client during the course of settlement negotiations. The trial judge accepted the former client's evidence on that issue, and rejected the solicitor's evidence as unreliable, making adverse credibility findings against the solicitor in circumstances where allegations of dishonesty had not been put to him in cross-examination. Relevantly, the Court of Appeal (Allsop P, Giles JA and Tobias AJA) said (at 515-516 [64]-[67]):
It was contended by the appellants on the authority of Kuhl that the rule in Browne v Dunn, being one of fairness, applied equally (and presumably, independently) to a trial judge as to counsel. This is no doubt so, but the issue in the present case is how does it apply to a trial judge where counsel raises the allegation in breach of the rule but no objection is taken to its making by opposing counsel; a fortiori where the latter responds by submitting only that the allegation is not made out to the necessary standard of proof.
In the foregoing context, it was accepted by the appellants that being a rule of practice, objection to senior counsel for the respondent's written submissions in breach of the rule should have been taken at trial: Gordon Martin Pty Ltd v State Rail Authority of New South Wales [2009] NSWCA 287; (2009) 53 MVR 474 at [69] per Beazley JA, with whom Giles and Ipp JJA agreed. It was thus conceded that that failure to object meant that the primary judge was entitled to consider those submissions, although that did not end the question of the approach his Honour should have taken in any such consideration to the fact that the rule in Browne v Dunn had been breached.
Fairness in the administration of justice extends not only to ensuring a fair trial for the actual parties but also to ensuring that a witness who is not a party is treated fairly. It is especially important in circumstances such as the present, where a witness such as Mr Schipp had himself no right to object to his credit being impugned with respect to the Centrelink representation and where he was not given the opportunity to respond to what was clearly an extremely serious allegation not only going to his credit as a witness but also, as the primary judge was at pains to emphasise, to his honesty as a person and to his probity as a solicitor and an officer of the court. Further, the unfairness consequential upon the breach struck directly at the entitlement of the appellants to a fair hearing and procedural fairness in the making of findings by the District Court.
Here, fairness dictated that, in the absence of any cross-examination on the subject of the Centrelink correspondence, the primary judge refrain from making findings about dishonesty arising from that correspondence.
88 The Court of Appeal there concluded (at [106]) that "[a]ny witness about or against whom the grave submissions or findings of dishonesty are to be made should be confronted with and thus afforded an opportunity to explain the dishonesty of which he or she is to be accused…" (Allsop P, Giles JA and Tobias AJA).
89 Another decision of the New South Wales Court of Appeal, New South Wales v Hunt (2014) 86 NSWLR 226 ("New South Wales v Hunt"), is apposite. There, a person entered the private property of an off-duty police officer and, thereafter, became involved in a physical altercation. The person was arrested and subsequently tried and acquitted of a variety of criminal offences arising out of the incident. He then sued the State of New South Wales for malicious arrest, assault and battery, and misfeasance in public office (on the part of the off-duty police officer). Both he and the police officer prepared written statements and were cross-examined at the trial of that suit. Their evidence conflicted in key respects. The primary judge found that the off-duty police officer had fabricated key aspects of his evidence, which led her Honour to find that each of the alleged torts was made out. Critically, it was not put to the off-duty police officer in cross-examination or to the primary judge in submissions that his evidence was fabricated, and neither party was given an opportunity to deal with that finding. The state appealed. Applying Kuhl and Bale v Mills, the New South Wales Court of Appeal (Barrett and Leeming JJA, and Tobias AJA) allowed the appeal and remitted the matter for retrial. Leeming JA, in whose judgment Barrett JA and Tobias AJA concurred, observed (at 235 [44]-[45]):
…It was unfair to Senior Constable Ochs, to be found to have fabricated evidence without that allegation having been squarely put to him. It was unfair to the State to lose on a basis which was not advanced in evidence or in submissions. And ultimately, it was unfair to Mr Hunt, as the disposition of this appeal indicates, for him to be denied the chance to submit to the primary judge that he should win on a basis that did not involve a finding of fabricating the initial conversation and threat, or that, if the judge had formed the preliminary view that there was fabrication, that the witness should be recalled so that he could be confronted with it.
There has been appellable error giving rise to a substantial wrong or miscarriage so as to warrant a retrial…
90 In Port Kembla Coal Terminal Ltd & Anor v Construction Forestry, Mining and Energy Union & Ors (2016) 248 FCR 18 ("Port Kembla"), a full court of this court (Jessup, Rangiah and White JJ) applied the above principles to a proceeding that involved alleged contraventions of ss 340 and 346 of the FW Act. Before the primary judge, it was contended that the first appellant company took adverse action against the second respondent in contravention of s 340 of the FW Act by dismissing him from his employment because he had exercised, or proposed to exercise, a workplace right. It was alleged that adverse action was taken against the second respondent in contravention of s 346 of the FW Act because he was an officer of an industrial association, or because he engaged in industrial activity. Critically, the primary judge found that, as some witnesses called by the appellants (including the second appellant himself) had deliberately failed to include relevant documents in their affidavit evidence, their evidence was unreliable. Having so found, his Honour disregarded all of the evidence given by those witnesses insofar as it related to the reason for the second respondent's dismissal, which led him to find that there was no evidence that supported the company's contention that it had not taken adverse action against the second respondent for a proscribed reason. The primary judge therefore concluded that the company failed to discharge the statutory presumption to which s 361 to the FW Act gives voice.
91 Applying Kuhl, each member of the full court held separately that, where a party is criticised for deliberately withholding the truth in circumstances crucial to a dismissal of his or her claim, the party-witness must be given an opportunity to deal with that criticism: Port Kembla, 77-78 [211] (Jessup J); 121 [411] (Rangiah J); 157 [566] (White J). Justice Jessup further commented (at 94 [263]) that the primary judge's credibility findings in relation to those witnesses "cannot stand alongside the joint judgment in Kuhl" and that "to have made those findings amounted, in the circumstances, to a miscarriage of justice".
92 As has already been recorded, the learned primary judge in the present matter made findings that Mr Heeney and Mr Oates knew each other prior to Mr Heeney's recruitment, that Mr Oates alone recruited Mr Heeney, that he did so partly for the purpose of having Ms Shum's employment terminated, that Mr Oates required Mr Heeney to dismiss Ms Shum, and that Mr Oates and Mr Heeney conspired to that end. Although Ms Shum asked Mr Heeney in cross-examination whether he knew Mr Oates prior to his employment by SMRC (which he denied), none of the remaining suggestions was put to either Mr Oates or Mr Heeney.
93 Her Honour also made adverse credit findings about each of Mr Heeney and Mr Oates. Neither Mr Heeney nor Mr Oates was given the opportunity to respond to the criticisms that were made.
94 In light of the principles established in Kuhl and its application in the cases recited above, the finding of a conspiracy between Mr Heeney and Mr Oates, and several of the facts supporting that finding, were not in this matter open to be made. It was not open to the FCCA to conclude, as it did, that Mr Heeney and Mr Oates were "involved in" any contravention of s 340(1) of the FW Act by reason of any such conspiracy. The relief that the FCCA granted in respect of that finding cannot stand.
95 The appeal, however, goes further: SMRC contends that if the findings against Mr Heeney and Mr Oates cannot stand, it follows that any finding of contravening conduct on the part of SMRC that arises out of, or that is inextricably linked with, the actions of Mr Heeney or Mr Oates cannot stand either. As has already been explained, while any involvement on the part of Mr Heeney and Mr Oates in a contravention by SMRC of s 340 of the FW Act must be positively established by evidence, SMRC is presumed to have contravened that section by dint of the statutory mechanism contained in s 361 of the FW Act. In other words, SMRC has a higher hurdle to clear.
96 The question that arises for consideration is whether the primary judge's adverse credibility findings against Mr Heeney and Mr Oates so contaminated her Honour's reasoning process as to unfairly and improperly foreclose upon SMRC's ability to defend the claims made against it. I consider that they did. Those findings were inherently fatal to any chance that SMRC had of rebutting the statutory presumption created by s 361 of the FW Act.
97 It is worth setting out the learned primary judge's conclusion as to SMRC's liability under s 341 of the FW Act (Primary Judgment, [229]):
It was for SMRC to satisfy the court that it did not dismiss Ms Shum for a prohibited reason. My concerns outlined above about the credibility of Mr Heeney's evidence, in the context of all of the evidence in the case, lead me to conclude that SMRC has not rebutted the statutory presumption that SMRC dismissed Ms Shum for one or more of the prohibited reasons mentioned above. There will be a declaration accordingly.
98 That conclusion is framed in terms that demonstrate an understanding of the statutory task for which s 361 of the FW Act provides. The learned primary judge considered, in some detail, the positive reasons for Ms Shum's dismissal, advanced by SMRC through the evidence of Mr Heeney, and rejected them. However, her Honour's reasons reveal that the rejection of those positive reasons was inextricably and impermissibly linked to several adverse findings against Mr Heeney and Mr Oates, including as to their credibility, about matters that were not put to them as required by the principles just explained. That includes the findings extracted at [40] to [43] above, which formed part of her Honour's consideration of Ms Shum's claim against SMRC under s 340 of the FW Act.
99 A similar question arose before the full court in Port Kembla. There, Jessup J said (at 94 [265]) that the primary judge's rejection of the appellants' evidence "left the appellants without a leg to stand on in their project of discharging the legal onus for which s 361 provides". His Honour continued (at 95 [267]-[269]):
By the terms in which the primary judge dealt with Mr Green's credibility in the proceeding under appeal, his Honour effectively sterilised the evidence of the decision-maker whose reasons were the subject of the central allegation made against the Company. Almost as night follows day, his Honour's emphatic and comprehensive rejection of Mr Green's credibility was fatal to the Company's defence to the respondents' case.
The only rider which might be attached to that conclusion is that the primary judge's positive inferential findings as to Mr Green's reasons, made for the purposes of s 550 of the FW Act, should not be overlooked. Having considered this aspect of the matter, however, I would not regard those findings as sufficient to overcome what I consider to be a miscarriage of justice in relation to Mr Green's own evidence. Necessarily, that evidence lay at the centre of the Company's defence under ss 340 and 346, and to attempt to decide the case without reference to it would inevitably deny the Company a fair and just consideration of that defence. With respect to s 550 itself, of course, absent a successful outcome for the respondents under s 340 or s 346, there would be nothing to which to attach the accessorial liability of Mr Green.
In the circumstances, I take the view that the primary judge's determination in favour of the respondents under ss 340 and 346 of the FW Act cannot stand. It does not follow, of course, that the respondents' application in this department of the case must now be dismissed. They still have a case of adverse action which requires an answer from the Company. Despite its obvious inconvenience, the only course available to the court is to set aside that determination and to refer the case for rehearing. Because of the tenor of the findings made by the primary judge, it would, in my view, be appropriate that such a rehearing proceed before another judge.
100 Justice White agreed with the orders proposed by Jessup J setting aside the disposition of the claims made under ss 340 and 346 of the FW Act and granting a new trial of those claims. Relevantly, his Honour said (at 158 [568]-[570]):
It is apparent that the judge was critical of Mr Green's evidence in a number of other respects. The judge said variously that he found aspects of Mr Green's evidence to be "implausible", "utterly implausible", "improbable", and "inherently unlikely". In these circumstances, I have considered whether it may be said that the judge's findings that Mr Green had sought deliberately to conceal documents were not essential to his assessment of the reliability of Mr Green's evidence relied upon by PKCT to discharge the s 361 onus. However, I do not consider such an analysis to be open. The judge's conclusion about Mr Green's omission to disclose documents and other information appears to have been an integral part of his overall assessment of the reliability of Mr Green's evidence. So much is evident from [16], [143]-[144], and [194]. I note also that the judge relied upon his earlier findings concerning the unreliability of Mr Green's evidence (which included his findings on the topic of concealment) when considering whether PKCT had discharged the s 361 onus, at [444]-[445].
Finally, when considering the claim that Mr Green was liable as an accessory, the judge made a number of findings (which it is not necessary to recount presently) which were strongly critical of Mr Green's evidence. It is evident that those findings too were influenced by the judge's view that Mr Green had set out to conceal documents from the Court. In my respectful opinion, it would not be realistic to conclude that the judge's assessment of these aspects of Mr Green's evidence did not also influence his consideration of whether PKCT had discharged the s 361 onus.
For these reasons, I consider that this part of the proposed appeal should succeed, and the findings that PKCT contravened ss 340(1) and 346 of the FW Act set aside. The finding of accessorial liability against Mr Green should be set aside for the same reasons. There should be a retrial of these aspects of the applicants' claims, if they are to be pursued.
101 Not unlike the appellant company in Port Kembla, the primary judge's adverse findings in respect of Mr Heeney and Mr Oates about matters that were not put to them, including as to their credibility, left SMRC "without a leg to stand on". The rejection of their evidence - and, more accurately, the unfair or improper acceptance of the alternative "conspiracy" narrative - was a product of error, and was fatal to any prospect that SMRC had of defending Ms Shum's claims under s 340 of the FW Act.
102 That being so, grounds one and two of the appeal must be allowed in their entirety (that is, to the benefit of all three appellants). For reasons upon which I shall later elaborate, the matter must be remitted to the FCCA (now the Federal Circuit and Family Court of Australia (Div 2)), so that Ms Shum's claims under s 340 of the FW Act - that is to say, her primary claim against SMRC and her accessorial claims against Mr Heeney and Mr Oates - can be properly determined.
103 Having so concluded, it is not strictly necessary to address ground three of the appeal. It was largely addressed - both in the appellants' written submissions and orally at the hearing of the appeal - in a rolled up manner together with grounds one and two. As it has transpired, the adverse findings that were made below against Mr Heeney and Mr Oates amounted to a miscarriage of justice quite apart from whether the evidence relied upon in reaching them was as cogent as s 140 of the Evidence Act might have required.
104 Nonetheless, I should briefly address the contentions that were put. Section 140 of the Evidence Act requires that the court take account of certain matters in deciding whether it is satisfied that a party has proved its case on the balance of probabilities. Those matters include the nature of the cause of action or defence, the nature of the subject matter of the proceeding, and the gravity of the matters alleged.
105 It is axiomatic that the "strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove": Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170, 171 (Mason CJ, Brennan, Deane and Gaudron JJ; "Neat Holdings"); see also Briginshaw v Briginshaw (1938) 60 CLR 336, 362 (Dixon J). There are numerous authoritative statements to the effect that strict proof is required in cases where a serious matter, such as fraud, is to be found (see, eg, Neat Holdings, 171 (Mason CJ, Brennan, Deane and Gaudron JJ, applied in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466, 481-482 [36]-[37] (Weinberg, Bennett and Rares JJ) and Ashby v Slipper (2014) 219 FCR 322, 344-345 [65] (Mansfield and Gilmour JJ)).
106 A finding that two individuals conspired to engage in conduct in contravention of s 340 of the FW Act is a serious one. It serves to establish the existence of conduct engaged in in contravention of a civil remedy provision under the FW Act (and, thereby, to expose the contraveners to the possible imposition of a civil penalty). Such a finding would ordinarily require convincing proof. Although there may be occasions on which it might be found by process of inference, it ought not to be made on the basis of supposition or surmise.
107 The rejection of Mr Heeney's evidence as to the reasons for Ms Shum's dismissal was not a sufficient evidential foundation upon which to conclude that he effected that dismissal for a prohibited reason. The latter cannot be inferred from the former (at least not merely from the former). Likewise, a "suspicion" that Mr Oates was involved in Ms Shum's dismissal (about which more is said below) fell well short of sufficing to ground her Honour's conclusion that the two men conspired in the manner that was found.
108 Those circumstances acknowledged, I would uphold ground 3 of the appeal. The conspiracy finding was the product of error, which it is proper for this court to correct on appeal.