s.170CE application for relief re termination of employment

Appeal - Workplace Relations Act 1996 - s.170CH - post-termination conduct - whether correct test applied in considering remedy - findings - threats - whether threats idle - leave to appeal - remedy - orders varied.

[1] Tenix Defence Pty Ltd (the appellant) is in the business of ship building and maintenance. For some years the appellant has been engaged and is still engaged in the construction of ANZAC Class guided missile frigates under contract to the Royal Australian Navy and the Royal New Zealand navy. Mr Galea commenced employment with the appellant as an electrician in 1989 at its Williamstown Shipyard in Victoria. In 1994 he was promoted to the position of foreman and in September 2001 he was transferred to a specialist electrical role in an area known as the Module Hall. For some time prior to being moved to the Module Hall, Mr Galea worked directly on the construction of the frigates. On 9 November 2001 his employment was terminated.

[2] Mr Galea's application for relief in relation to the termination of his employment was in due course heard by Senior Deputy President Acton. In a decision of 23 December 2002 she decided that the termination was harsh, unjust and unreasonable.[1] On the same day she made orders pursuant to s.170CH of the Act requiring the appellant to reinstate Mr Galea, to maintain his continuity of employment and to pay an amount in respect of remuneration lost because of the termination.[2] The appellant lodged its appeal against those orders on 9 January 2003. On 16 January 2003 Vice President Lawler made an order staying the operation of the orders pending the determination of the appeal.

[3] In the proceedings before Senior Deputy President Acton the appellant submitted that Mr Galea's employment had been terminated on the basis of his conduct. It relied upon a number of work performance issues and in addition upon conduct engaged in by Mr Galea after the termination of his employment. The Senior Deputy President rejected all of those grounds.

[4] The appellant's amended notice of appeal challenged most aspects of the decision but the appeal, as finally put, was confined in its scope to the question of remedy. No challenge was made to the Senior Deputy President's finding that the termination of Mr Galea's employment was harsh, unjust and unreasonable. It was submitted that the Senior Deputy President erred in ordering the applicant to reinstate Mr Galea.

[5] The appellant's case relied heavily on two incidents which occurred after Mr Galea's employment had been terminated. In short, it was contended that Mr Galea should not have been reinstated because of his post-termination conduct. It was contended that the Senior Deputy President made two errors of substance in relation to that conduct. First, it was submitted, the Senior Deputy President did not approach the question of reinstatement in the proper way. She should have asked whether there had been a breakdown in the trust and confidence between the parties such that a viable and productive employment relationship could not be restored. It was submitted that if that test had been applied reinstatement would not have been ordered.

[6] The second error of substance alleged was that the Senior Deputy President made findings in relation to the post-termination conduct which were not open to her. Those findings were critical in her decision to make a reinstatement order.

[7] There are, it seems to us, two reasons why the first submission should be rejected. The first is that while the Commission might take into account whether there has been a breakdown in trust and confidence in considering whether to order reinstatement, that cannot be the sole criterion or even a necessary one by which to decide whether or not to order reinstatement. Section 170CH of the Workplace Relations Act 1996 requires the Commission to consider a number of specified matters and to take all of the circumstances into account. While the whole of that section is important, the following parts of it are of particular importance in the present case:

(1) Subject to this section, the Commission may, on completion of the arbitration, make an order that provides for a remedy of a kind referred to in subsection (3), (4) or (6) if it has determined that the termination was harsh, unjust or unreasonable.

(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;

(3) If the Commission considers it appropriate, the Commission may make an order requiring the employer to reinstate the employee by:

(a) reappointing the employee to the position in which the employee was employed immediately before the termination.

(b) appointing the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination."

[8] Of course in most if not all cases whether there has been a breakdown in trust and confidence is an important consideration. But it is not one which should be elevated to such importance that it becomes a substitute either for consideration of the matters set out in s170CH(2) or for the requirement in s.170CH(3) that the Commission consider that reinstatement is appropriate. In summary, the test proposed by the appellant pays insufficient regard to the terms of the statute.

[9] The second reason for rejecting the submission is that in this case there is nothing in the Senior Deputy President's approach which is inconsistent with the application of the test for which the appellant contends. The relevant part of the decision is as follows:

"[78] Tenix submitted there had been a fundamental and irrevocable breakdown in trust and confidence between it and Mr Galea which was also a relevant matter in determining whether or not such orders should be made.

[79] I am not satisfied any breakdown in trust and confidence between Tenix and Mr Galea is irrevocable. As I earlier indicated, I believe the two post-termination incidents involving abuse and threats by Mr Galea against those at Tenix actively involved in his termination were well separated, idle and a product of his frustration. I am not persuaded they are indicative of his likely future conduct."

[10] It is clear that the Senior Deputy President accepted that any breakdown of trust and confidence was an important consideration. She found, however, that any such breakdown was not irrevocable. It emerges clearly from her decision that she expected that the relationship could be a productive one if the appellant changed its behaviour towards Mr Galea.[3] The opening sentence of paragraph [79] does not support the submission that the Senior deputy President made an error in assessing whether the relationship of trust and confidence between the parties could be restored, rather it indicates that she had rejected the appellant's submission as recorded in paragraph [78].

[11] In order to deal with the second alleged error it will be necessary to describe the evidence in some detail. There were two relevant incidents which occurred after the termination. The first occurred on 7 December 2001 and the second on 25 May 2002.

[12] As we have already noted Mr Galea's employment was terminated on 9 November 2001. His application for relief in relation to the termination was filed on 23 November 2001. On 7 December Mr Galea approached Mr Rootsey, an employee relations manager of the appellant, at the bar of the Williamstown RSL. Mr Rootsey and Mr Galea gave differing versions of what occurred. For the most part it is sufficient to refer only to Mr Galea's version. Mr Galea initiated the discussion and his opening words were "That's a nice number you did on me." He testified that Mr Rootsey tried to comfort him saying that he had tried to look after him and put his hand on his (Mr Galea's) shoulder. Mr Galea drew back and said "Please don't touch me again." Mr Rootsey responded, "I wasn't trying to hurt you" to which Mr Galea said, "I don't care, I don't trust anybody. I have learned not to trust anybody." Mr Rootsey indicated that under the circumstances the company had no choice (presumably in the matter of the termination of Mr Galea's employment) and that Mr Galea should go back to the other side of the bar. Mr Galea testified that he then said, "Yes, it would be better for your health." On Mr Rootsey's evidence, Mr Galea said, "I came over here to knock your head off your shoulders." When asked in the witness box whether he had used those words Mr Galea said "I don't believe I did, no." The Senior Deputy President did not make any finding in relation to the precise words used. Apart from that conflict the two versions are consistent.

[13] On 6 and 7 May 2002 there were proceedings in the Commission before the Senior Deputy President. Most of the two days was taken up with Mr Galea's evidence in chief and cross-examination and the remainder with other oral evidence. The case was then adjourned until 13 June 2002.

[14] Mr Sullivan, who was to be a witness for the respondent and whose witness statement had been filed some weeks earlier, was approached by Mr Galea on 25 May 2002 in a hotel in Williamstown. The relevant part of Mr Sullivan's evidence should be set out in full:

MR OGILVIE: I will repeat the question Mr Sullivan. Have you had any contact with Mr Galea since the termination of his employment?---Yes. When - when we launched the ship in May. After we complete works it is fairly usual the guys out to the pub after the ship's launch and they did that. When we finished work I went up there to buy them a few beers. And Mr Galea was there. And while I was there he came over to me, I was - I was probably been there about half an hour or so. And he came up to me, stood right in front of me, nose to nose - and he said to me that I had a "good looking set of teeth" and I "ought to look after them or I could lose them". And I took it very threat - as a - very much as a threat. And the next day I went to Williamstown police station and made a complaint. I don't believe that I should have to put up with that kind of thing outside work."

[15] Mr Galea's representative did not cross-examine Mr Sullivan and although Mr Galea was subsequently recalled he did not give any evidence about Mr Sullivan's version of the second incident.

[16] The Senior Deputy President's summary of Mr Sullivan's evidence on this point is as follows:

"On 25 May 2002, Mr Galea approached him at a hotel in Williamstown in Victoria and abused him, then started slamming balls down on a pool table he (Galea) had been playing on, returned to him and told him "they're a nice set of teeth you have, you should look after them because you may lose them". He (Galea) subsequently left the hotel with his (Galea) children. He (Sullivan) felt very threatened by the confrontation."[4]

[17] This account seems to have been taken from a supplementary statement made by Mr Sullivan which was tendered by the respondent's counsel on 14 June 2002. The tender was objected to by Mr Galea's representative. So far as the transcript shows there was no ruling on the tender and the supplementary statement was not marked. For the purposes of the appeal we have relied only on Mr Sullivan's oral evidence since it seems that this was the only evidence properly before Her Honour and therefore the only evidence to which Mr Galea had a relevant opportunity to respond.

[18] The Senior Deputy President referred to the two incidents in her decision on two separate occasions. On the first occasion she was considering whether the termination of Mr Galea's employment was harsh, unjust or unreasonable. The relevant passage reads:

"[37] With respect to the evidence about Mr Galea's inappropriate behaviour towards some Tenix employees after his termination, as such behaviour occurred post his termination, I do not consider it constituted a valid reason for his termination.

[40] Further, the fact that there were only two well separated incidents against those actively involved in his termination and he walked away after giving some abuse and making a threat suggest his abuse was a product of frustration and his threats were idle."

[19] The Senior Deputy President's second reference to the incidents was in the part of her decision in which she considered the remedy to be ordered. In that context the following passage appears:

"[79] I am not satisfied any breakdown in trust and confidence between Tenix and Mr Galea is irrevocable. As I earlier indicated, I believe the two post-termination incidents involving abuse and threats by Mr Galea against those at Tenix actively involved in his termination were well separated, idle and a product of his frustration. I am not persuaded they are indicative of his likely future conduct.

[80] Moreover, while the evidence revealed Mr Galea had a dim view of the manner in which Tenix and its managers treated forepersons and other employees at Tenix, that view was essentially a product of the way he had recently been treated by Tenix and its managers. I consider that at least some of that treatment was unwarranted, having regard to my finding that there was no valid reason for the termination of Mr Galea's employment by Tenix. If Tenix and its managers refrain from treating Mr Galea in an unwarranted manner, Mr Galea's view of Tenix and its managers should improve."

[20] We are not sure what weight should be given to the fact that the incidents were some six months apart. On one view it might indicate that the making of threats was only an occasional occurrence and therefore less serious. For our part, we think that the making of threats of physical violence at any time is unacceptable behaviour. We do not think much turns on the fact that the incidents were separate in time. On the other hand, the conclusion that the fact the threats were well separated and the fact that Mr Galea walked away after making the threats suggest the threats were "idle" is difficult to sustain. The Macquarie Dictionary relevantly defines "idle" as "futile or ineffective: idle threats". In this sense a threat will be "idle" if the person making the threat manifestly lacks the capacity to carry it out or the recipient of the threat could not reasonably have taken the threat as having been intended seriously.

[21] It is only necessary in this connection to refer to the second threat. The context in which the threat was made was that Mr Sullivan was to be a material witness against Mr Galea, Mr Galea had already been cross-examined and Mr Sullivan was due to give evidence at the adjourned hearing. It is apparent that by the proximity of his face to Mr Sullivan's and by the words he used that Mr Galea's demeanour was very threatening indeed. With respect to the Senior Deputy President, we cannot agree that the threat was an idle one in the sense we have indicated. Furthermore the threat in this case was particularly serious. It was a threat to a witness who was to give evidence which would be adverse to the person making the threat.

[22] In addition, the fact that Mr Galea did not contest Mr Sullivan's version of the event or himself give evidence in mitigation is important. We are left with a serious threat, unexplained. It was not open to the Senior Deputy President on the evidence before her to find that the second threat was idle and her Honour's finding to that effect involved a mistake of fact coming within the principles in House v King[5].

[23] The nature of the threat was clearly a matter of real importance in deciding upon the appropriate remedy and the Senior Deputy President's view that the threat was idle was, on any fair reading of her Honour's decision, an important factor in her determination as to the appropriate remedy. For that reason the decision in respect of remedy is attended with serious doubt. We shall grant leave to appeal and we shall reconsider the remedy to be ordered. To do so, it will be necessary to set out some of the findings made by the Senior Deputy President.

[24] As we indicated earlier in this decision the Senior Deputy President found that the appellant's termination of Mr Galea's employment was harsh, unjust and unreasonable. In so finding she rejected a series of allegations relied upon by the appellant. Those allegations raised issues concerning Mr Galea's work performance and other aspects of his conduct. The Senior Deputy President summarised the work performance and other issues relied upon by the appellant as:

· "failure to satisfactorily perform the requirements of his position;

· failure to be in his work area to perform his duties on time;

· poor and hostile attitude to his work and his colleagues;

· failure to address performance issues associated with the excessive consumption of alcohol; and

· failure to suitably explain absences from work, in purported reliance on sick leave entitlements."[6]

[25] The appellant did not take any issue with this summary and we accept it. The Senior Deputy President resoundingly rejected the appellant's case. Her findings should be set out in some detail:

"[26] I am not satisfied there was a valid reason for the termination of Mr Galea's employment by Tenix related to his capacity or conduct or to the operational requirements of Tenix's undertaking, establishment or service.

[27] At no stage did Tenix stop Mr Galea from starting or continuing with his work at Tenix because of his alcohol consumption. Accordingly, I am not satisfied Mr Galea's alcohol consumption, of itself, constituted, either in whole or in part, a valid reason for his termination. I deal below with the effect it may have had on his work performance.

[28] With respect to Tenix's claim that Mr Galea failed to satisfactorily perform the requirements of his position, I am not satisfied he did so fail.

[29] The evidence for Tenix was that Mr Galea's role in the Module Hall was an evolving one and he was told he was to develop his own position description and key performance indicators. The requirements of his position, therefore, were largely left to Mr Galea to determine and he considered he was satisfactorily performing them. Further, he was sometimes told he was doing a good job.

[30] In addition, while there was much generalised evidence for Tenix that Mr Galea's output was poor, much of the evidence about his output was given by witnesses who had no direct knowledge of his work and relied on advice from others about it. Those who were able to have direct knowledge of his output gave evidence to the effect that he should have been doing more but were short on the detail of what extra he should have been doing.

[31] Finally, although Tenix witnesses also indicated Mr Galea sometimes "disappeared" after lunch and spent too long talking to the employees at his former workplace at Tenix, I accept Mr Galea's evidence to the effect that he was engaged in productive work on those occasions. There is no evidence that Tenix tried to contact him on his radio to ascertain his whereabouts and what he was doing or told him to cease talking to the employees at his former workplace.

[32] In the circumstances, I am not satisfied Mr Galea's work performance, either alone or in conjunction with other factors, constituted a valid reason for his termination.

[33] With respect to Mr Galea's refusal to undertake a medical examination by a medical practitioner nominated by Tenix, I am not satisfied it constituted a valid reason for his termination, either alone or in conjunction with other factors, because ultimately Tenix did not insist that he undertake such an examination.

[34] In regard to Mr Galea's attitude to his work and his colleagues and his absences from work in purported reliance on sick leave, as my consideration of his work performance suggests, I do not accept he had a poor and hostile attitude to his work. Moreover, I consider his attitude to his colleagues and his work absences were understandable. He was transferred against his wishes to an area at Tenix commonly known as the "departure lounge". There he was given a new position and told he was to develop it. Notwithstanding this, he was repeatedly told his output was insufficient but given little detail of what it should be. In the circumstances it is little wonder he was hostile to Tenix management and needed to take time off work. Accordingly, I am not satisfied Mr Galea's attitude to his work and his colleagues and his absences from work, either alone or in conjunction with other factors, constituted a valid reason for his termination.

[35] The evidence on Mr Galea's timekeeping was that he often arrived for work at or just before the time he was meant to start work and sometimes took a few minutes longer for lunch or left work a few minutes early. On the other hand, the evidence also revealed that, except when he was absent on leave, he worked in excess of the minimum 40 hours per week he was required to work. In circumstances where he was not supervising other employees when he was employed in the Module Hall and he was meeting his minimum number of working hours per week, except when he was on leave, I am not satisfied his timekeeping deficiencies, either alone or in conjunction with other factors, constituted a valid reason for his termination.

[36] With respect to Tenix's claim that Mr Galea failed to finish his work duties as directed, I accept Mr Galea's evidence to the effect that his work was on-going and therefore the notion that he should remain at work until it was finished was a nonsense.

[41] With respect to the evidence that Mr Galea sought redundancy, I do not consider that constituted a valid reason for his termination. Such requests for redundancy were made at a time when Mr Galea was under pressure in the sense that he was about to be transferred to a position he did not want to go to or his employment was about to be terminated. In the circumstances, I do not believe his redundancy requests were considered requests. Further, Tenix did not view him as being redundant to its needs."[7]

[26] These findings, which were not challenged on appeal, provide the factual basis for our decision on remedy.

[27] On the hearing of the appeal leave was sought to adduce new evidence said not to have been available at the time of the trial of the application. The evidence, contained in an affidavit of Mr F A Rootsey, related to the likely completion date of the appellant's contract for the construction of ANZAC frigates said to be the appellant's only current construction project. The appellant sought to introduce the evidence to support a submission that if he were to be reinstated there would be no work for Mr Galea to do. We do not intend to receive the evidence. Given the nature of the ship building project and the long lead times involved it seems to us highly unlikely that the relevant information was not available in a sufficient form at the time the application was heard between May and September 2002.

[28] We turn first to the matters specified in s.170CH(2) of the Act. We are not persuaded on the evidence before the Senior Deputy President that a reinstatment order would adversely effect the viability of the appellant's undertaking, establishment or service. The length of Mr Galea's service, some 12 years, is a factor favouring a substantial remedy. Mr Galea's salary was around $85,000 per year and the loss of his job was no doubt a very significant blow to his financial affairs. It could not be concluded that it was likely that his employment would be terminated within the next couple of years. The Senior Deputy President made allowance for money earned in mitigation and there is no reason to think that he was delinquent in any way in attempting to find employment.

[29] There is no doubt, on the unchallenged findings of the Senior Deputy President, that Mr Galea has been harshly treated. Not only was his employment terminated on grounds which have been found to be baseless, he was forced to defend himself through lengthy proceedings against allegations of unsatisfactory performance in a number of respects, a poor and hostile attitude to his work and his colleagues and excessive drinking. Not one of those allegations was proven.

[30] We have carefully considered the significance of the threats made in the incidents referred to on 7 December 2001 and 25 May 2002. The threat made on 7 December 2001, fairly soon after the termination of Mr Galea's employment, might be put down to stupidity and Mr Galea's emotional state. The second threat, that of 25 May 2002, was more serious. It was more than six months after the termination of employment, and was made to a person who was to give evidence in the case against Mr Galea. By its nature it must be construed as intimidatory. So far as we are aware no remorse or apology has been expressed in relation to either incident. In our view the threats must be taken into account in the remedy. We feel obliged to indicate that while no doubt the appellant's behaviour was worthy of condemnation, threats of physical violence are not justified at any time. When they are made to a witness in the context of Commission proceedings they are completely unacceptable and would often, if not usually, provide a strong basis for concluding that reinstatement was not appropriate.

[31] However, in the present case there are other relevant findings of the Senior Deputy President that impact upon how we, as an appeal bench, ought exercise the discretion in relation to remedy. We refer in particular to the following passage:

"[80] Moreover, while the evidence revealed Mr Galea had a dim view of the manner in which Tenix and its managers treated forepersons and other employees at Tenix, that view was essentially a product of the way he had recently been treated by Tenix and its managers. I consider that at least some of that treatment was unwarranted, having regard to my finding that there was no valid reason for the termination of Mr Galea's employment by Tenix. If Tenix and its managers refrain from treating Mr Galea in an unwarranted manner, Mr Galea's view of Tenix and its managers should improve."

[32] This paragraph seems to explain her Honour's finding that the two threats were borne of frustration. There is no doubt, and this is not challenged on the appeal, that the Senior Deputy President found that the appellant's treatment of Mr Galea was deserving of strong criticism. It was certainly open to her Honour to regard that treatment as explaining why Mr Galea made the threats and that history might legitimately be taken into account in considering what might be likely to occur in the future.

[33] Thus, the Senior Deputy President was not persuaded that the threats were "indicative of [Mr Galea's] likely future conduct". Notwithstanding our view that it was not open to the Senior Deputy President to find that the second threat was "idle" we do consider that it was open to her Honour to find that the threats were not indicative of Mr Galea's future conduct (predicated, obviously, on the vindication of Mr Galea's position implicit in the unchallenged finding that his dismissal was harsh, unjust and unreasonable). The Senior Deputy President had the benefit of hearing all of the evidence and, in particular, observing Mr Galea's demeanour in the witness box. We do not share that advantage and, accordingly, we think it appropriate to defer to her Honour's assessment in that regard and to the reasoning in the passage we have just set out. On the other hand, threats were made and they do not appear to have been taken sufficiently seriously by Her Honour.

[34] While this is a case in which reinstatement is appropriate, for the reasons we have given something less than the full remedy should be ordered. We therefore propose to make orders reinstating Mr Galea and maintaining the continuity of his service but limiting the order for lost remuneration to a period commencing four weeks after the date of the termination of his employment. Any further occurrence of threatening behaviour on the part of Mr Galea following his return to work would almost certainly justify his dismissal.

[35] Our orders will vary Senior Deputy President Acton's orders of 23 December 2002. We direct the appellant to file draft orders necessary to give effect to this decision within seven days. The orders will be settled by the President.

F.I. O'Brien SC with H. Skene for Tenix Defence Pty Ltd.

3 PR925610, 23 December 2002, see particularly paras [79] and [80].

5 (1935) 56 CLR 499 at 505

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