The corporate mind
18 As French CJ and Crennan J said in Board of Bendigo Regional Institute of Technical and Further Education v Barclay [No 1] (2012) 248 CLR 500, the question of whether adverse action was taken for a prohibited reason is one of fact to be answered in light of all of the facts and circumstances established in the proceeding (at [45]). The effect of s 360 of the FW Act is that an employer contravenes s 340 if the prohibited reason is a "substantial and operative" reason for the employer's adverse action: Barclay at [104] (Gummow and Hayne JJ there citing Mason J in General Motors-Holden's Pty Ltd v Bowling (1976) 51 ALJR 235).
19 In Barclay, an employee exercised a workplace right by virtue of his being an officer of an industrial association and by reason of his engagement in industrial activity. The employee alleged that his employment was terminated because of his exercise of those rights. The trial judge accepted the direct testimony of a single decision-maker who had acted on behalf of the corporate employer and, on the basis of that evidence, concluded that the employer had not contravened s 346 of the FW Act (then in equivalent terms to s 340). The Full Court allowed the employee's appeal. The employer appealed to the High Court.
20 French CJ and Crennan J observed:
44 There is no warrant to be derived from the text of the relevant provisions of the Fair Work Act for treating the statutory expression 'because' in s 346, or the statutory presumption in s 361, as requiring only an objective inquiry into a defendant employer's reason, including any unconscious reason, for taking adverse action. The imposition of the statutory presumption in s 361, and the correlative onus on employers, naturally and ordinarily mean that direct evidence of a decision-maker as to state of mind, intent or purpose will bear upon the question of why adverse action was taken, although the central question remains 'why was the adverse action taken'?
45 … Generally, it will be extremely difficult to displace the statutory presumption in s 361 if no direct testimony is given by the decision-maker acting on behalf of the employer. Direct evidence of the reason why a decision-maker took adverse action, which may include positive evidence that the action was not taken for a prohibited reason, may be unreliable because of other contradictory evidence given by the decision-maker or because other objective facts are proven which contradict the decision-maker's evidence. However, direct testimony from the decision-maker which is accepted as reliable is capable of discharging the burden upon an employer even though an employee may be an officer or member of an industrial association and engage in industrial activity.
(footnotes omitted)
21 To similar effect, Gummow and Hayne JJ said (at [127]):
In determining an application under s 346 the Federal Court was to assess whether the engagement of an employee in an industrial activity was a 'substantial and operative factor' as to constitute a 'reason', potentially amongst many reasons, for adverse action to be taken against that employee. In assessing the evidence led to discharge the onus upon the employer under s 361(1), the reliability and weight of such evidence was to be balanced against evidence adduced by the employee and the overall facts and circumstances of each case; but it was the reasons of the decision-maker at the time the adverse action was taken which was the focus of the inquiry.
22 In Wood v City of Melbourne Corporation [1979] FCA 42; 26 ALR 430 an employee was stood down by a municipal council in circumstances alleged to amount to a contravention of a general protection provision similar to s 340 of the FW Act. In identifying the relevant human actors, Smithers J considered the state of mind of the town clerk (Mr Rogan) who gave directions to the acting town clerk (Mr Reilly) after an exchange of information between them. His Honour observed that whilst "technically" it was Mr Reilly who took the adverse action on the corporation's behalf (as he was authorised to do), he had done so on the advice of Mr Rogan. Accordingly, his Honour said (at 446 - 447):
… in this case, I think the better view is that it was Rogan's mind which was the mind of the defendant. Possibly the mind of the corporation has to be inferred from Rogan and Reilly's joint mind. What is in issue is a decision of the corporation. A decision is defined in the Shorter Oxford English Dictionary as including 'the action of deciding' and, notwithstanding that Rogan characterized his part in the affair as giving advice, the corporation is entitled to have the total transaction looked at objectively by the court. It is the duty of the court to draw such inferences as are proper on the evidence as to who it was that played the decision-making part in the joint administrative activities culminating in Reilly performing the actual act of standing down. So doing I would attribute the decisive factor in the matter to have been Rogan's so-called advice. A relevant statement of principle in this connection is to be found in the judgment of Bray CJ in Brambles Holdings Ltd v Carey (1976) 12 SASR 270 at 275-6: 'Of course, if mental states like knowledge or belief are to be attributed to a notional and metaphysical entity like a corporation, this can only be done by attributing to it the knowledge or belief actually possessed by some one or more of its officers. … Very difficult questions can arise in this connection. … It is enough to say that, in my view it is a fallacy to say that any state of mind to be attributed to a corporation must always be a state of mind of one particular officer alone and that the corporation can never know or believe more than that one man knows or believes. …'
23 In Voigtsberger v Pine Rivers Shire Council (1981) 1 IR 198, Evatt J concluded that in examining the reasons of a decision of a municipal council to dismiss an employee it was relevant to consider the reasons of a finance committee that had recommended that course. The decision of the finance committee was the "essential and material decision to be considered" (at 205). In circumstances where two members of that committee were also members of the Council, his Honour was not satisfied on the balance of probabilities that their minds were not actuated by the prohibited reason alleged by the employee.
24 In Roberts v General Motors-Holden's Employees' Canteen Society Inc (1975) 172 CAR 1073 the Full Court of the Australian Industrial Court (Smithers, Woodward and Evatt JJ) said this of decisions made by a committee managing the affairs of a corporate body (at 1079):
… considerations may have operated on the minds of the various members of the committee, and not all the considerations operating on the mind of every member would necessarily be known to the others. In addition it could well be that, in the decision-making process, the influence of one or more members may, for various reasons, have been greater than that of others. The effective decision may even have been made by a person who was not a member of the committee. In any particular case, a recommendation of one man may have been rubber-stamped by others without their giving the matter independent consideration. In another case a person actuated by improper motives may have overborne the minds of others who were not so motivated. Or a person improperly motivated may have presented a dishonest case to others.
Of course there may be cases in which it would not be proper to go behind the proceedings of a formal meeting of a particular body. But in the circumstances of this case it is our view that the problem should be approached through an analysis of the motives and parts played by the individual actors.
25 As the decisions in Wood, Voigtsberger and Roberts demonstrate, the word "because" as it appears in s 340 of the FW Act directs attention to the reason for an action, which is to be found in the state of mind of the person alleged to have taken the adverse action. Where (as here) that person is a corporate entity, it will in all cases be necessary to examine the state of mind of the human actor or actors who (alone or together) caused the corporation to take the action that it did or, to adopt a phrase from Wood, who "played the decision-making part in the joint administrative activities" culminating in the actual act that constitutes the adverse action. It may be convenient to refer to the person whose conduct directly visited the adverse action on the employee as the "decision-maker" but his or her decision-making process may incorporate the state of mind of other people, including by adopting facts or opinions asserted by them.
26 The authorities show that in asking whether an adverse action was taken by a corporate entity, the Court should remain alert to the possibility that the answer may reside in the mind of more than one natural person. The state of mind of the human actor who said or did the thing that bound the corporation to the action will of course be important, and in many cases determinative. However, the cases illustrate that a person who does the act or thing constituting the adverse action may act on information or advice the provision or content of which is actuated by a prohibited reason. The adoption of such information or advice may necessitate the conclusion that the corporation's reasons for the adverse action include that prohibited reason. In such cases, it matters not that the person providing the information and advice does not formally possess the authority or power to effect the decision based on the information and advice. Whether the person performing the act constituting the adverse action is aware that he or she is acting on information or advice given for a prohibited reason may not be relevant in cases of that kind.
27 The primary judge expressed the view that the principles stated in the authorities were incorrect. His Honour made that clear in the following (at [95]):
… For my own part, I am unable to see how an individual officer might qualify as a maker of any given corporate decision unless he or she can be thought to have exercised some authority or executive power to effect it, be that actual or ostensible, formal or otherwise.
28 His Honour referred to additional decisions of this Court, namely:
(1) Elliot v Kodak Australasia Pty Ltd (2001) 129 IR 251 in which the Full Court (Lee, Madgwick and Gyles JJ) held that a corporate employer's reasons for dismissing an employee resided not only in the mind of the general manager who made the decision but in the mind of a supervisor who had made an "indispensable contribution" to rankings upon which the manager relied. The reasons of the supervisor, the Full Court held, had been "inadvertently adopted" by the manager without independent thought or analysis (at [37]). To found a contravention, it was not necessary for the decision-maker to have had conscious awareness that the supervisor's assessment was affected, motivated or explained by a reason prohibited by the FW Act;
(2) National Tertiary Education Union v Royal Melbourne Institute of Technology (2013) 234 IR 139, in which Gray J held that a university's decision to dismiss an academic employee resided not only in the minds of those who made the decision but in the mind of the author a memorandum recommending that course;
(3) Australian Red Cross Society v Queensland Nurses' Union of Employees (2019) 273 FCR 332 in which the Full Court (Greenwood, Besanko and Rangiah JJ) said (at [91]) that "a person who is involved in the process leading to the decision may be a decision-maker for the purpose of a proscribed purpose" but refrained from formulating a precise test; and
(4) Construction, Forestry, Mining and Energy Union v Claremont Coal Pty Ltd (2015) 253 IR 166 in which the decision-maker acknowledged that he "could not have made his ultimate decision" without referring to a ranking spreadsheet prepared by another employee, Reeves J there observing (at [121]), after referring to Kodak:
… where the reasoning process is dispersed through an assessment process involving a number of persons, the task is much more complicated. In that situation, I consider the judgment in Kodak requires me to examine the reasoning process employed by each person whose involvement had a material effect on the ultimate decision. This inquiry does not involve a roving search of the minds of the employees of the kind rejected by Heydon J in Barclay (at [146]). Nor does it involve an objective inquiry of the kind rejected in Barclay (at [44] and [126]), nor import some 'unconscious' reasoning to the ultimate decision-maker that was also rejected in Barclay (at [124] per Gummow and Hayne JJ, and [146] per Heydon J). Instead, it focuses on the conscious reasoning processes of those who had a material effect on the ultimate outcome to determine whether their reasoning processes were free of the alleged prohibited reason or reasons. If one or more of the reasons employed by one or more of them was a prohibited reason, that will impugn the ultimate decision. This is what I consider the Full Court meant by 'inadvertently' adopting an 'undisclosed prohibited reason' in Kodak …
29 The primary judge doubted that Royal Melbourne, Kodak and Australian Red Cross could be reconciled with the High Court authority in Barclay and Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2014) 253 CLR 243 or with the terms of s 793 of the FW Act.
30 We consider the doubt expressed by the primary judge to have been unwarranted. In light of the nature of the error alleged in the present grounds of appeal it is appropriate to explain why that is so.
31 As the primary judge correctly acknowledged, neither Barclay nor BHP Coal concerned the anatomy of corporate decision-making. In BHP Coal, evidence of the reasons for the dismissal of a mining employee was given by the general manager of the mine and accepted by the trial judge. No issue arose as to whether any other person materially contributed to the decision. The same can be said of Barclay.
32 The primary judge was also correct to observe that both BHP Coal and Barclay illustrate the distinction between a person's reasons for doing something and the contextual influences that might bear in some way on those reasons (at [91]). However, whilst the distinction is relevant to issues of the kind that arise on grounds 5 to 7 on this appeal, it is not relevant to the antecedent question as to whether Mr Arnott's subjective motivations were relevant at all in determining NAB's reasons for taking the adverse actions that it took. It was necessary to consider whether Mr Arnott's role in the decision-making process amounted to more than a mere contextual influence. The circumstance that Mr Arnott did not have authority to remove Ms Wong from her position might be relevant to that inquiry but it is not conclusive.
33 The primary judge went on to say that the reasons of those who significantly or indispensably influence, or have a material effect on, contravening decisions ought not to qualify, merely by reason of that influence, as reasons that animate resultant corporate conduct (at [93]). The primary judge pointed to two further decisions which he said illustrated the point.
34 The first was Wood. However, as discussed above, the Court in that case examined the state of mind of Mr Rogan, notwithstanding that it was Mr Reilly who made the decision constituting the adverse action. It was critical to examine Mr Rogan's state of mind precisely because, on the facts, he had materially influenced Mr Reilly's decision. Whether Mr Rogan was motivated by a prohibited reason was plainly relevant.
35 The second case was Australian Workers' Union v John Holland Pty Ltd (2001) 103 IR 205, correctly summarised by the primary judge as follows (at [92]):
Earlier decisions of this court reinforce that reasoning. In AWU v John Holland (2001) 103 IR 205 (hereafter, 'John Holland'; Goldberg J), the court was called upon to consider a builder's decision to dismiss one of the applicant's members. A rival construction union had learned of his employment and, by way of protest against it, had embarked upon a campaign of industrial action against the builder. It demanded that the builder dismiss the employee. It was obvious enough that that demand was made because the employee was a member of the applicant union. The builder yielded to that demand and the employee (via the agency of his union) contended that it had done so because of his union membership. That contention was rejected: the court accepted that the builder had done what it had done out of concern to minimise disruption to its business. The fact that the employee's membership of the applicant union - although plainly significant in a contextual sense - did not factor in the putative mind of his employer as a reason for his dismissal. Equivalent reasoning was employed more than two decades earlier in Wood v City of Melbourne Corporation (1979) 26 ALR 430 (hereafter, 'City of Melbourne'; Smithers J).
36 In John Holland, the reasons of the employer in dismissing the employee did not equate to the motivations of the rival union demanding the dismissal. Goldberg J held that the rival union did not significantly or indispensably influence the employee's decision at all. The case does not provide any basis for the doubts expressed by the primary judge.
37 On this appeal, as at trial, neither party sought to argue that Kodak was incorrectly decided. In accordance with well-established principle, this Court should follow the reasoning in Kodak and the consistent but brief statement of the Full Court in Australian Red Cross. We do not consider there to be any tension between those authorities and s 793 of the FW Act.
38 Like the Full Court in Australian Red Cross, we consider it unnecessary to summarise the authorities in a single verbal formula or test. The High Court has frequently cautioned against elevating the particular words of a judgment to the status of a statute. As Gummow J observed in Brennan v Comcare (1994) 50 FCR 555 (at 572):
The concern is not with the ascertainment of the meaning and the application of particular words used by previous judges, so much as with gaining an understanding of the concepts to which expression was sought to be given.
39 See also Comcare v PVYW (2013) 250 CLR 246, French CJ, Hayne, Crennan and Kiefel JJ (at [16]).
40 Notwithstanding his doubts, the primary judge stated that he was bound to follow the judgment of the Full Court in Kodak. The effect of Ms Wong's submissions on the present grounds of appeal is that his Honour did not in fact apply those principles but instead applied a test more aligned to his views as to what the law should be.
41 For the reasons that follow we consider there to be merit in that submission.