FEDERAL COURT OF AUSTRALIA

Coal & Allied Mining Services Pty Ltd v Lawler [2011] FCAFC 54

THE COURT ORDERS THAT:

1.    The application be dismissed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

marshall j

1    I have had the opportunity to read, in draft form, the reasons for judgment of Buchanan J. I agree with those reasons. I have also had the benefit of reading the additional observations of Cowdroy J. I also agree with those additional observations. The application should be dismissed.

Associate:

Dated:    19 April 2011

REASONS FOR JUDGMENT

Cowdroy J

2    I have read the reasons of Buchanan J. I agree with them and wish to add the following.

The decision of Commissioner MacDonald

3    I have identified two errors in the approach taken by Commissioner MacDonald (‘the Commissioner’) in his decision delivered on 30 September 2010: Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWA 6750.

4    Firstly, under s 387 of the Fair Work Act 2009 (Cth) (‘the FW Act’), the Commissioner was required to determine whether the dismissal of Mr Lawrence was ‘harsh, unjust or unreasonable’. Pursuant to s 387 of the FW Act it was mandatory for the Commissioner to take into account the matters prescribed in sub-paragraphs (a) to (h) to discharge his statutory obligation.

5    The Commissioner’s decision strongly suggests that paramountcy was given to s 387(a) of the FW Act which states:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees) …

6    The Commissioner at [81] demonstrated that he gave overriding effect to sub-paragraph (a) over the remainder of the considerations referred to in sub-paragraphs (b) to (h) by framing his conclusion in the following manner:

[81] Having considered all of those matters, I am still of the view that the respondent had a valid reason for terminating the services of the applicant.

7    The key phrase in the above passage ‘I am still of the view’ suggests that the Commissioner misapplied s 387 of the FW Act, by first determining whether there was a ‘valid reason’ for the dismissal and thereafter, having answered such question in the affirmative, only then considering whether the remainder of the matters prescribed by s 387(b)-(h) of the FW Act were sufficient to displace his initial finding. Such approach demonstrates an erroneous application of s 387 of the FW Act by the Commissioner.

8    Secondly, in his reasoning, the Commissioner confined the result of the application before him to two possible outcomes as stated in his decision as follows:

[82] In this case, I have considered two possible outcomes:

(a) the dismissal was unfair because of the remoteness of injury to any worker(s) owing to the applicants conduct in removing the contractors’ locks and

(b) the dismissal was not unfair because the applicant consciously breached a safety procedure in a working environment wherein assumptions about risk likelihood to another worker(s) is not acceptable.

Having considered all of the evidence, I have concluded that the dismissal was not unfair: that is, was not harsh, unjust or unreasonable.

9    The Commissioner was correct to identify the only two possible outcomes to the application, namely that the dismissal was either unfair or not unfair. However, the Commissioner’s process of reasoning shows that in both outcomes (a) and (b) he closed his mind to other possible supporting arguments for each outcome. This again demonstrates an erroneous application of s 387 of the FW Act.

10    By framing the outcomes as the Commissioner did at [82] it is apparent that he concentrated solely upon issues relating to whether there was a ‘valid reason’ for the dismissal under s 387(a) of the FW Act. Both the remoteness of injury argument (considered by the Commissioner at [64] of his decision) and the argument that Mr Lawrence deliberately breached a safety procedure (see [66] of the Commissioner’s decision) were factors that the Commissioner took into account in consideration of s 387(a) of the FW Act.

The decision of the Full Bench

11    The majority of the Full Bench of Fair Work Australia (the ‘Full Bench’) granted permission to appeal from the decision of Commissioner MacDonald pursuant to s 604(2) and s 400(1) of the FW Act: see Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089. These subsections of the FW Act are set out at [33] and [35] of Buchanan J’s decision.

12    In my opinion, the significant factor which gave rise to the Full Bench granting permission to appeal is evident from its findings at [28] of its decision, which provides:

[28] This is not to say that there will be a public interest in granting permission to appeal in any case to which s.400 applies where error is identified. To adopt that approach would effectively set the limitation in s.400 at nought and would frustrate the obvious intent of the legislature to limit appeals from unfair dismissal decisions. Moreover, it is not to say that there will be a public interest in granting permission to appeal merely because the appeal bench would have reached a different conclusion from the member at first instance. Again, such an approach would be at odds with the principles in House v R. Rather, we have in mind a case where the outcome is so at odds with what the Full Bench considers a proper outcome that the epithet “manifest injustice” can properly applied. Such a conclusion will only be reached in rare cases. [Emphasis added]

13    The applicant submits that there was no error in the decision of the Commissioner which possessed the requisite marked impact upon the public to warrant review. Such submission clearly overlooks the finding of the Full Bench which is emphasised in bold above, namely that ‘manifest injustice’ resulted from the Commissioner’s decision.

14    The Full Bench found at [29]:

[29] In our view, this is such a case. For reasons which will become evident, we consider that the proper exercise of discretion at first instance in this case was, on the evidence before the Commissioner, so clearly in favour of a finding that the dismissal was harsh that the decision to dismiss Mr Lawrence’s application for an unfair dismissal remedy constitutes a manifest injustice that engages the public interest. We are satisfied that there is a public interest in grant of permission to appeal and grant that permission. The appeal then proceeds as a re-hearing.

15    The Full Bench then provided its reasons before concluding that the dismissal of Mr Lawrence was ‘manifestly harsh’.

16    In making its finding, the Full Bench did not merely consider that ‘if they had been in the position of the primary judge, they would have taken a different course’ (House v The King (1936) 55 CLR 499 at 505). Rather the Full Bench characterised the Commissioner’s decision as one which falls within the second limb of the principle in House v The King at 505, namely that the decision was ‘plainly unjust’.

17    As has been pointed out by Buchanan J at [51] no question of an abuse of power arises in accordance with the principle in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 233 as claimed by the applicant.

18    I agree with the order proposed by Buchanan J.

Associate:

Dated:    19 April 2011

REASONS FOR JUDGMENT

BUCHANAN J

19    These proceedings, which were commenced in the original jurisdiction of the Court under s 39B of the Judiciary Act 1903 (Cth), seek constitutional writs directed to members of a Full Bench of Fair Work Australia: arising from a decision of the Full Bench of 24 December 2010 (which reinstated the second respondent in his former employment); quashing a decision and orders of the Full Bench made on 24 December 2010; and requiring Fair Work Australia either to dismiss an appeal to it (with which the Full Bench dealt) or to deal with the appeal again “according to law”. The Chief Justice directed that the application be heard by a Full Court of this Court.

20    The essential premise upon which the application depends, if it is to succeed, is that the Full Bench committed jurisdictional error because either it misunderstood the nature of the jurisdiction granted to it, or it failed to exercise its jurisdiction as required by law. In my view, this contention should not be accepted and the application should be dismissed.

21    Fair Work Australia (“FWA”) is established under the Fair Work Act 2009 (Cth) (“the Act”) (s 575(1)). FWA consists of a President, an unspecified number of Deputy Presidents, an unspecified number of Commissioners and between three and six Minimum Wage Panel Members (s 575(2)). FWA is given statutory functions by the Act in relation to subject matters set out in s 576. One of those subject matters is “unfair dismissal”, which is dealt with in Part 3–2 of the Act. The proceedings before FWA, with which the present application is concerned, related to that subject matter.

22    Section 577 of the Act directs:

577    FWA must perform its functions and exercise its powers in a manner that:

(a)    is fair and just; and

(b)    is quick, informal and avoids unnecessary technicalities; and

(c)    is open and transparent; and

(d)    promotes harmonious and cooperative workplace relations.

23    Section 590(1) of the Act provides:

590(1)    FWA may, except as provided by this Act, inform itself in relation to any matter before it in such manner as it considers appropriate.

24    Section 591 of the Act provides:

591    FWA is not bound by the rules of evidence and procedure in relation to a matter before it (whether or not FWA holds a hearing in relation to the matter).

25    There is no doubt that members of FWA are (as were members of its statutory predecessors, the Commonwealth Conciliation and Arbitration Commission and the Australian Industrial Relations Commission (“the AIRC”)) bound to act “judicially” in the sense that they are obliged to respect and apply traditional notions of procedural fairness and impartiality. (See Re Australian Bank Employees Union; Ex parte Citicorp Australia Ltd (1989) 167 CLR 513 at 519, citing R v Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group (1969) 122 CLR 546 at 552; R v Moore; Ex parte Victoria (1977) 140 CLR 92 at 101–2. See also Re Polites; Ex parte Hoyts Corporation Pty Limited (1991) 173 CLR 78; Re Finance Sector Union of Australia; Ex parte Illaton Pty Ltd (1992) 66 ALJR 583). However, it is an important aspect of the work of FWA, at all levels including on appeal (as it was of its statutory predecessors), that it is to proceed without unnecessary technicality and as informally as the circumstances of the case permit. FWA is not a court and its members are not judicial officers as such (although the President has the same status as a judge of this Court and some senior members of FWA retain an equivalent status from earlier statutory arrangements). It is not inappropriate to say that the members of FWA have a statutory mandate to get to the heart of matters as directly and effectively as possible.

26    Part 3–2 of the Act provides “protection from unfair dismissal”. Section 385 of the Act states:

385    A person has been unfairly dismissed if FWA is satisfied that:

(a)    the person has been dismissed; and

(b)    the dismissal was harsh, unjust or unreasonable; and

(c)    the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d)    the dismissal was not a case of genuine redundancy.

27    The proceedings before FWA, with which the present application is concerned, involved the question of whether the dismissal of the second respondent from his employment with the applicant was “harsh, unjust or unreasonable”. Section 387 of the Act gives the following direction to FWA about that issue:

387    In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA must take into account:

(a)    whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b)    whether the person was notified of that reason; and

(c)    whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d)    any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e)    if the dismissal related to unsatisfactory performance by the person – whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f)    the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g)    the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h)    any other matters that FWA considers relevant.

28    Section 394(1) of the Act provides:

394(1)    A person who has been dismissed may apply to FWA for an order under Division 4 granting a remedy.

29    On 23 February 2010 the second respondent applied to FWA for such a remedy. The application to FWA contained the following statement:

The termination of employment was unfair as:-

a)    The Applicant was a long term employee of the Company have worked for the Company as a full time employee for approximately 28 years.

b)    During the Applicant’s employment he has never had to have been previously warned or formally counselled about any aspect of his employment.

c)    The Applicant, throughout his 28 years of employment, had proved himself to be a long term and trusted employee of the Company that had helped the Company in any way he could.

d)    The incident that resulted in the termination of the Applicant’s employment occurred on 8 February 2010 and because of the circumstances that occurred on the day in question the Applicant, in an attempt to help out some contract employees, failed to follow the correct isolation procedure.

e)    When the circumstances of the incident when compared to the Applicants lengthy service without blemish should not have resulted in his termination of employment.

30    On 19 March 2010 the employer (the present applicant) responded. The response included the following statements:

2.    What were the reasons for dismissal?

1.    The Applicant was involved in an incident at the Mount Thorley/Warkworth Mine (the Mine) on 8 February 2010. The Applicant deliberately and without authorisation removed two personal ‘isolation locks’, belonging to other persons, from a piece of plant on which he was working. The Applicant admitted that he removed the locks, that this was a breach of the Mine’s Isolation Procedure, and that he had not reported the incident because he did not want to get in trouble.

2.    The Respondent has statutory obligations to ensure the health and safety of all persons working at the Mine. The Isolation Procedure is a fundamental part of the procedures it has put in place to ensure such persons are not injured and that it complies with its statutory and other obligations.

3.    The Isolation Procedure in particular is put in place to minimise risks to health and safety from any potential accidental or unexpected start-up of machinery or plant, movement of materials during servicing or any other interaction or contact with or exposure to other risks of personal injury. As a result, the Procedure is a ‘Golden Rule’ at the Mine, and is critical to ensuring the safety of all people working on the site.

4.    The Applicant’s deliberate and conscious breach of the Isolation Procedure demonstrated that he was not prepared to follow critical safety procedures, and displayed the Applicant’s preparedness to engage in serious risk taking behaviour. The Applicant’s conduct (in removing the locks) put the safety and health of other workers on the site at significant risk, where the potential outcome of an incident was the death or serious injury of another worker.

5.    The Applicant’s failure to report the breach of the Isolation Procedure also demonstrated that he is not prepared to comply with safety requirements and processes at the Mine.

3.    What is your response to the Applicant’s contentions?

1.    The termination of the Applicant’s employment was not unfair.

2.    The Respondent had a valid reason for terminating the Applicant’s employment, as described above.

3.    The termination of the Applicant’s employment was undertaken in a procedurally fair manner, including conducting an investigation into the conduct, notifying the Applicant of the intended termination of his employment, and offering him an opportunity to respond. The Respondent took time to consider the Applicant’s response.

4.    When considering the nature of the Applicant’s conduct leading to his dismissal and the Respondent’s legitimate concerns about that conduct in light of the potential consequences of the breaches of procedure, the length of the Applicant’s service and his lack of prior warnings do not render the termination of his employment unfair.

31    The proceedings were assigned to Commissioner MacDonald who, on 30 September 2010 ([2010] FWA 6750), concluded that the dismissal of the second respondent was not harsh, unjust or unreasonable and declined to make any order in his favour. Commissioner MacDonald made the following findings, which have not subsequently been challenged:

[10]    The applicant had 28 years service at the time of the incident that led to his dismissal.

[11]    The incident took place on Monday, 8 February 2010.

[12]    The respondent is engaged in mining operations outside of Newcastle. The applicant was employed as a production employee and his duties mainly involved that of a shot firer – the firing of the shot to remove material in order to gain access to a coal seam.

[13]    At the time of his termination, he had been working with water pumps. The mine is vast and required de-watering where rain gathers in pools. The mine has about 20 pumps and a network of pipes which are used in the de-watering process.

[14]    On 8 February 2010, the applicant commenced his shift at 7.00am. His role that day was to de-water the West Pit area. There was already a pump located within that body of water for the de-watering process. Repair work was required to be carried out on a pipe (poly pipe) connected to the pump. For the purpose of repair, two outside contractors were engaged.

[15]    In order to carry out the pipe repair, a certain safety procedure is required by the contractors – water pump isolation by use of isolation locks.

[16]    The water pump in question is about the size of a shipping container … and was partly submerged in the water to be pumped out via the poly-piping connected to the water pump. The pump is diesel powered and the diesel engine is started by use of a battery. An isolator switch separates the battery from the rest of the pump. In order to carry out repair work, and for safety reasons, the isolator switch is switched from the “ON” position to “OFF”. The contractors then affix their own personal safety lock to a scissor clip which is affixed to the isolator in order to isolate the battery from the diesel engine. These safety locks prevent the pump from being switched on whilst any workers are carrying out work.

[17]    Mr Jared Everett, supervisor of the blast and pump crews, deposed as to the relevant safety issue, that the pumps are capable of pumping water to a pressure of 750kPa being more than 100 pounds per square inch, and results in the pumping of about 180 litres per second. These pumps could potentially cause serious injuries or fatalities if the proper observance of safety procedures are not followed. The applicant disputed the foregoing pumping capacity and said the rate for the pump in question was 50 litres a second.

[18]    After the safety locks (two) had been affixed by the two contractors, they began their repair work (welding) on the poly pipe. At the conclusion of that task, they left to attend another job (for about 10 minutes) within the coal mine area. The applicant was present throughout this time. After the contractors left the area (but without removing their locks), the applicant carried out work involving piping work and moving the pump further into the pooled water.

[19]    The applicant left the scene and returned later, about one to two hours later. He relocated the water pump further again into the pooled water. (For present purposes, this water pump is designated as water pump number one.)

[20]    The applicant drove from pump number one to the next pump (the inline pump) and turned it on. This inline pump is located on a higher level of ground to pump number one and it assists in powering the water along the pipeline (which is some 5 kms long) to the water outlet.

[21]    The applicant drove back to pump number one via the length of the piping between the inline pump and pump number one. This distance travelled along the winding pipeline is about 500 metres, due to the contour of the ground. The actual distance, point to point, between the two water pumps is about 200 metres.

[22]    The applicant, in driving along the length of the pipeline, was able to discern that no person was working on this length of pipeline. The evidence showed agreement that an observer, standing at either pump, could not see the entire length of this pipeline.

[23]    The applicant arrived at water pump number one. He noted that the contractors had not returned but he knew that their job had been completed. He sought to turn on the pump but it did not start. He observed that the reason for the non-start was that the contractors’ safety isolation locks were still in place. The applicant removed those locks by prying open the scissor clips and turned on the pump. He assessed, he said, the situation and said there was no danger to any workers in removing the locks. The applicant left that area of work to look for, he said, the contractors.

[24]    The contractors returned to the work area and saw that their personal safety locks had been removed and the pump turned on. They telephoned a Mr Barry Trudgett, job co-ordinator, who advised them to speak to the applicant (who had informed Mr Trudgett of the safety lock removals). They retrieved their locks from the applicant.

[25]    Five days later, on Friday 12 February, Mr Trudgett received an email from Mines Assist, being the company that let out the contractors to the respondent. The email raised the isolation breach (removal of the personal safety locks) of 8 February.

[26]    Mr Trudgett telephone Mr Jared Everett about the email and thus began the respondent’s investigation into the applicant’s removal of the two safety locks.

[27]    The applicant was stood down with pay on Friday 12 February.

[28]    Arising out of the investigation, the applicant was dismissed on 22 February. The termination letter stated that the applicant’s conduct in removing the contractors’ safety locks was a serious and clear breach of the isolation procedure which is one of the Golden Rules and which is critical to ensuring the safety of all people working at Mount Thorley.

(Footnotes omitted)

32    Commissioner MacDonald concluded that there was a valid reason for the termination of the second respondent ([73] and [81]). He then said (at [82]):

[82]    In this case, I have considered two possible outcomes:

(a) the dismissal was unfair because of the remoteness of injury to any worker(s) owing to the applicants conduct in removing the contractors’ locks and

(b) the dismissal was not unfair because the applicant consciously breached a safety procedure in a working environment wherein assumptions about risk likelihood to another worker(s) is not acceptable.

Having considered all of the evidence, I have concluded that the dismissal was not unfair: that is, was not harsh, unjust or unreasonable.

33    Section 604(1) of the Act provides a general right of appeal from members of FWA (other than a decision of a Full Bench or the Minimum Wage Panel) “with the permission” of FWA. This is a way of requiring that leave to appeal be granted. Section 604(2) of the Act then provides:

604(2)    Without limiting when FWA may grant permission, FWA must grant permission if FWA is satisfied that it is in the public interest to do so.

34    However, different, more stringent, requirements are prescribed by s 400 of the Act in relation to appeals concerning applications alleging unfair dismissal.

35    Section 400 provides:

400(1)    Despite subsection 604(2), FWA must not grant permission to appeal from a decision made by FWA under this Part unless FWA considers that it is in the public interest to do so.

400(2)    Despite subsection 604(1), an appeal from a decision made by FWA in relation to a matter arising under this Part can only, to the extent that it is an appeal on a question of fact, be made on the ground that the decision involved a significant error of fact.

(In the proceedings with which the present application is concerned no issue arose under s 400(2).)

36    On 19 October 2010 the second respondent filed an appeal against the decision of Commissioner MacDonald. The Full Bench of FWA that heard the appeal was constituted by the members of FWA identified as the first respondent to the proceedings in this Court. The Full Bench gave its decision on 24 December 2010 ([2010] FWAFB 10089). The Full Bench was not unanimous. The majority view was that permission to appeal should be given under s 400 of the Act, that the appeal should be upheld and that the second respondent should be reinstated to his previous employment with continuity of employment (and salary) from the date of his employment, subject to a deduction of about three months’ salary “to reflect a material sanction for Mr Lawrence’s misconduct”. The minority view was that permission to appeal should not be given and the appeal should not be upheld. From this point, only the majority view need be considered. I will refer to it as the view of the Full Bench.

37    The Full Bench recorded that no challenge was made to the findings of fact made by Commissioner MacDonald and it recited paragraphs [12] to [24] from the slightly longer extract which I set out earlier from Commissioner MacDonald’s decision. It also set out the concluding paragraphs of Commissioner MacDonald’s decision. The Full Bench noted that the appeal before it was “an appeal against a discretionary decision”. It took the view that the principles stated by the High Court in House v The King (1936) 55 CLR 499 applied to the disposition of the appeal. It referred, in particular, to the passage at 504–5 of that judgment, giving particular emphasis to the following:

It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.

38    The Full Bench also drew attention to the following statement from the joint judgment of McHugh and Gummow JJ in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 (“Byrne”) at 465:

It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.

39    Then the Full Bench set out the provisions of s 387 of the Act which I set out earlier. It explained that it had formed a doubt about whether the statements made by Commissioner MacDonald at [82] of his decision (earlier set out), which followed immediately after his conclusion that there had been a valid reason for the termination of the second respondent’s employment, sufficiently addressed the requirements of s 387 of the Act. The Full Bench’s doubt was apparently generated in part because the statements in [82] were the only further amplification of Commissioner MacDonald’s reasoning. The Full Bench said (at [14]-[15]):

[14]    The terms of paragraph [81] of the Commissioner’s decision indicate that he regarded the matters listed in paragraph [80], being the matters he considered pursuant to s.387(h), as relevant to whether or not there was a valid reason for the dismissal. It is not at all clear that the Commissioner in fact considered whether the matters specified in s.387(b) to (g) together with other relevant matters considered pursuant to s.387(h), rendered the termination harsh, unjust or unreasonable notwithstanding the existence of a valid reason. On one view, the last sentence of paragraph [82] may be seen as encompassing such a consideration. However, even giving the reasons a beneficial reading, the Commissioner erred in limiting his consideration to the two alternatives specified in (a) and (b) of paragraph [82]. Those were not the only two alternatives and, indeed, to the extent that the alternative in (a) represents an alternative favourable to Mr Lawrence it does not properly reflect the way in which Mr Lawrence’s case was put or the strengths of that case. In particular, the low risk presented by the breach of procedure was only one of a number of factors that were relevant to whether the termination was harsh.

[15]    Moreover, the fact that the specification of those two outcomes was followed immediately by the last sentence of paragraph [82], strongly suggests that the ultimate determination of whether the termination was harsh, unjust or unreasonable was determined by the Commissioner confining himself to a choice between those two outcomes rather than by a consideration of whether the matters in s.387(b) to (g) together with other relevant matters considered pursuant to s.387(h), rendered the termination harsh, unjust or unreasonable notwithstanding the existence of a valid reason.

40    The Full Bench noted that the applicant’s own policies did not appear to dictate dismissal for conduct of the kind attributed to the second respondent and said, of that issue (at [21]):

[21]    Objectively determined, this was a relevant consideration that should have been taken into account by the Commissioner pursuant to s.387(h). The Commissioner’s failure to do so involved error.

41    Then the Full Bench turned its attention to a different aspect. It said (at [22]):

[22]    Even if we are wrong in the identification of error we have just made, for reasons that will become apparent, we would regard the present appeal as one of those rare cases that fall within what we have called the second limb in House v R.

42    This was a reference to the passage from House v The King which I extracted earlier. Before dealing with that issue, and explaining its further conclusions, the Full Bench dealt explicitly with the requirement that it grant permission to appeal. It dealt with the differences between ss 604 and 400 of the Act. It discussed some earlier observations about when it would be, in accordance with s 400 of the Act, in the public interest to grant permission to appeal, including “where the decision at first instance manifests an injustice, or the result is counter intuitive” (GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [27]). The Full Bench then said (at [28]–[29]):

[28]    This is not to say that there will be a public interest in granting permission to appeal in any case to which s.400 applies where error is identified. To adopt that approach would effectively set the limitation in s.400 at nought and would frustrate the obvious intent of the legislature to limit appeals from unfair dismissal decisions. Moreover, it is not to say that there will be a public interest in granting permission to appeal merely because the appeal bench would have reached a different conclusion from the member at first instance. Again, such an approach would be at odds with the principles in House v R. Rather, we have in mind a case where the outcome is so at odds with what the Full Bench considers a proper outcome that the epithet “manifest injustice” can properly applied [sic]. Such a conclusion will only be reached in rare cases.

[29]    In our view, this is such a case. For reasons which will become evident, we consider that the proper exercise of discretion at first instance in this case was, on the evidence before the Commissioner, so clearly in favour of a finding that the dismissal was harsh that the decision to dismiss Mr Lawrence’s application for an unfair dismissal remedy constitutes a manifest injustice that engages the public interest. We are satisfied that there is a public interest in grant of permission to appeal and grant that permission. The appeal then proceeds as a re-hearing.

43    It is clear from these passages that the Full Bench regarded the test imposed by s 400 of the Act to be a substantial one and not a test satisfied simply by the identification of error or a preference for a different result. It described the case before it as falling into a class of “rare” cases where the test was satisfied. It is not necessary in the present case to consider whether Parliament had in mind that permission to appeal under s 400 would be given only rarely or that a sufficient public interest to give permission to appeal would arise only in a rare case. It is enough to note that criticism is not available to suggest that the Full Bench failed to appreciate that the test under s 400 was a stringent one. Provided the Full Bench did not misunderstand its powers and functions in some respect relevant to the present matter, the evaluation of the matters relevant to whether permission to appeal should be given was an issue committed to the Full Bench by the Act. It is not a matter for this Court, whose role in a case such as the present is limited to examining whether jurisdictional error was committed.

44    The nature of the task committed to the Full Bench at this stage of the appeal process (i.e. assessing whether a “public interest” test was met) was a discretionary one involving a broad value judgment, as has recently again been emphasised. In Hogan v Hinch (2011) 85 ALJR 398, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ said (at [69]):

The expression “that it is in the public interest” imports a judgment to be made by reference to the subject, scope and purpose of the Act.

45    Their Honours referred to O’Sullivan v Farrer (1989) 168 CLR 210 where (at 216) Mason CJ, Brennan, Dawson and Gaudron JJ said:

… the expression “in the public interest”, when used in a statute, classically imports a discretionary value judgment to be made by reference to undefined factual matters, confined only “in so far as the subject matter and the scope and purpose of the statutory enactments may enable … given reasons to be [pronounced] definitely extraneous to any objects the legislature could have had in view” …

46    The grant of permission to appeal depended, as the passages I have set out show, on a prior conclusion that the dismissal of the second respondent was manifestly unjust. Subject to that conclusion being available, can it be said in the present case that the considerations referred to by the Full Bench could be pronounced to be “definitely extraneous to any objects the legislature could have had in view” in passing the Act, or that part of the Act dealing with unfair dismissal? I think not.

47    After stating that it would grant permission to appeal, the Full Bench proceeded to state its own view about the circumstances of the dismissal of the second respondent, and whether a case had been made out for a remedy. It is clear from its earlier remarks at [22] and [29] that it intended what it said about those matters to explain also why the case was one of manifest injustice in the result. The Full Bench said (at [30]–[38]):

[30]    Historically, equipment unexpectedly starting while it is being worked upon has been prominent cause of serious industrial injury or death. One of the key ways in which that risk is addressed is by the employer insisting that no work occur on any item of equipment or plant unless it has been isolated from its power source etc. That was the purpose of Golden Rule 1 and the associated Isolation Procedure.

[31]    The breach of policy here, while certainly not trivial, was far from being at the most serious end of the scale. Mr Lawrence knew that the contractors had finished their repair and that, consequently, there was no reason why the locks should not be removed (albeit that this should have been done by the contractors in accordance with the isolation policy). If the contractors had returned in the time frame they indicated there was no question that after the line had been reconnected to the pump (a task that did not require the specialist expertise of the contractors) they would have removed the locks and Mr Lawrence would have been free to start the pump.

[32]    The relevant risk in this case was a risk that a person working on the pump line would be injured by an unexpected flow of water under high pressure from an opening at which the person was working. Hypothetically, the actions of Mr Lawrence in removing the contractors’ locks in breach of the Isolation Procedures gave risk to such a risk. However, in the particular circumstances of this case, the safety risk posed by the actions of Mr Lawrence in removing the contractors’ locks in breach of the Isolation Procedure was, for all practical purposes, non-existent. Mr Lawrence had driven the relevant pump line only minutes before and there was no person in the vicinity of the line. Even if other work had been occurring on the relevant line (and it was not) then, in the ordinary course, Mr Lawrence would likely have been aware of it and, more importantly, there was an independent obligation on the person doing such work to again ensure that the pump was isolated with their own safety lock. Mr Lawrence knew that no other locks had been applied.

[33]    Mr Lawrence did not accrue any advantage whatsoever to himself by removing the locks. His only motivation was to get the dewatering that the respondent needed to have occur underway as soon as possible.

[34]    Mr Lawrence had been employed for 28 years. This is a very long period of service. He has devoted the vast majority of his working life to the respondent. He cannot start a new career.

[35]    This very long period of service also needs to be considered in the context that, on the evidence before the Commissioner:

•    Mr Lawrence was not just a good employee, he was an exemplary employee with an exceptional work ethic.

•    In 28 years of service Mr Lawrence had not been subject to any disciplinary allegation or action.

•    In 28 years of service Mr Lawrence had never been guilty of any safety breach (and this in circumstances where he had worked for the majority of the time in a safety critical role).

•    The conduct that led to his dismissal was, as the Commissioner found, was [sic] entirely out of character.

•    Mr Lawrence admitted the breach as soon as he became aware that the matter was being investigated. As noted by the Commissioner, he was remorseful. In all the circumstances, the prospect of Mr Lawrence reoffending must be regarded as so vanishingly small as to be non-existent for practical purposes.

[36]    Mr Lawrence had not found alternative employment at the time of the hearing before the Commissioner notwithstanding reasonable efforts to do so. At 55 years of the [sic] age, Mr Lawrence will almost inevitably find it difficult to secure alternative employment, let alone employment at the level of remuneration he was earning in his employment with the respondent. That difficulty is not only a function of his age. It is likely that any employer in the coal industry would be concerned to know why he has left his previous job and would likely be wary of engaging a person dismissed for a safety breach.

[37]    Mr Lawrence was the primary breadwinner for his family. Given Mr Lawrence’s age and circumstances, the dismissal is likely to cause Mr Lawrence and his family serious hardship. In the longer term, his superannuation is likely to be adversely affected to a very substantial degree. It is no exaggeration to say that the dismissal of someone in Mr Lawrence’s circumstances has the potential to effectively ruin his life.

[38]    We regard the unqualified dismissal of an exemplary employee with 28 years of service, an impeccable disciplinary record and an otherwise impeccable safety record for a policy breach the sort that occurred in this case – particularly when the policy itself contemplates that breaches will not necessarily lead to disciplinary action let alone dismissal and having regard to the personal consequences for the employee and his family – as manifestly harsh. We accept that the misconduct reasonably called for a disciplinary sanction and that a period – even an extended period – of suspension without pay may still have been within the acceptable range. But in all the circumstances, unqualified dismissal was, in our view, manifestly harsh. On the rehearing we find that Mr Lawrence was unfairly dismissed within the meaning of s.385.

48    In its submissions before this Court, the applicant argued that the aspect of the tests from House v The King which was employed by the Full Bench was indistinguishable from “Wednesbury unreasonableness” (see Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1 KB 223 (“Wednesbury Corporation”)) and cited Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 (“Peko-Wallsend”) per Mason J at 41. However, in Peko-Wallsend and in Wednesbury Corporation what was discussed were the circumstances in which a court might act to set aside the decision of an administrative decision-maker. Those cases did not call for an examination of the grounds upon which a discretion, reposed in a tribunal required to exercise it “judicially”, might be set aside in a statutory appeal which unmistakeably permitted consideration of the manner of exercise of the discretion.

49    In Wednesbury Corporation Lord Greene MR said at [233]:

In the result, this appeal must be dismissed. I do not wish to repeat myself but I will summarize once again the principle applicable. The court is entitled to investigate the action of the local authority with a view to seeing whether they have taken into account matters which they ought not to take into account, or, conversely, have refused to take into account or neglected to take into account matters which they ought to take into account. Once that question is answered in favour of the local authority, it may still be possible to say that, although the local authority have kept within the four corners of the matters which they ought to consider, they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it. In such a case, again, I think the Court can interfere. The power of the court to interfere in each case is not as an appellate authority to override a decision of the local authority, but as a judicial authority which is concerned, and concerned only, to see whether the local authority have contravened the law by acting in excess of the powers which Parliament has confided in them. The appeal must be dismissed with costs.

(Emphasis added)

50    In Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 Gummow J said of Wednesbury Corporation at [123]–[124]:

The case concerned the exercise of the power of an authority to impose conditions, not, for example, any anterior question as to the jurisdictional fact that the authority have [sic] power in the area to grant licences under the 1909 statute. In Attorney-General (NSW) v Quin [(1990) 170 CLR 1 at 36-37], Brennan J identified the duty and jurisdiction of the court to review administrative action by reference to the declaration and enforcement of the law which (i) determines the limits of the power in question and (ii) governs its exercise. Wednesbury is concerned with the second, namely with abuse of power.

(Emphasis added)

51    The present case is not one where the Full Bench was concerned with any suggestion of an “abuse” of power by Commissioner MacDonald. The Full Bench was sitting to hear a statutory appeal conditioned upon “permission” to appeal in the public interest. There are good reasons not to complicate (or confuse) matters by attempting to introduce notions of Wednesbury unreasonableness into the present matter. The issue for examination in the present case is whether the Full Bench understood the jurisdiction it was to exercise on the appeal and acted within any limits on that jurisdiction. The surest judicial guide as to the nature of the jurisdiction committed to FWA when it deals with an appeal is to be found in the judgment of the High Court in Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission (2000) 203 CLR 194 (“Coal and Allied”) when it dealt with a similar function given to the statutory predecessor to FWA, the AIRC. In Coal and Allied the High Court emphasised (at [21]) that in the case of appeals against a discretionary decision (such as Commissioner MacDonald’s in the present case) the question to be addressed was whether there had been “error in the decision-making process” (my emphasis). The tests for determining error in the decision-making process were identified by reference to House v The King. There was no error or lack of understanding of its functions when the Full Bench applied the tests in House v The King to its consideration of Commissioner MacDonald’s decision. Had it not done so, there might be room for criticism of its approach, but that is not what happened.

52    The character of the test from House v The King which was employed by the Full Bench in the present case was explained (in a different context, but by reference to precisely the same passage in House v The King) in Dinsdale v R (2000) 202 CLR 321 (“Dinsdale”) in the joint judgment of Gleeson CJ and Hayne J (at [6]) as follows:

Manifest inadequacy of sentence, like manifest excess, is a conclusion. A sentence is, or is not, unreasonable or plainly unjust; inadequacy or excess is, or is not, plainly apparent. It is a conclusion which does not depend upon attribution of identified specific error in the reasoning of the sentencing judge and which frequently does not admit of amplification except by stating the respect in which the sentence is inadequate or excessive. It may be inadequate or excessive because the wrong type of sentence has been imposed (for example, custodial rather than non-custodial) or because the sentence imposed is manifestly too long or too short. But to identify the type of error amounts to no more than a statement of the conclusion that has been reached. It is not a statement of reasons for arriving at the conclusion. A Court of Criminal Appeal is not obliged to employ any particular verbal formula so long as the substance of its conclusions and its reasons is made plain. The degree of elaboration that is appropriate or possible will vary from case to case.

53    In the present case the Full Bench explained the reasons why it viewed the dismissal of the second respondent as manifestly unjust. In the words of Gleeson CJ and Hayne J in Dinsdale, “the substance of its conclusions and its reasons [was] made plain”. There is therefore no occasion for criticism on that account. What is significant on the present application is that the conclusion engaged the tests in House v The King, which caused the Full Bench to give permission to appeal and which justified its reconsideration of the outcome. That is enough to demonstrate that the charge against the Full Bench of jurisdictional error cannot be sustained in relation either to its grant of permission to appeal or in its conclusion that some remedy should have been afforded to the second respondent.

54    A further point may, nevertheless, be made about this issue. Had any error been made by the Full Bench in its evaluation of those questions, it would not have been a jurisdictional error, but an error within jurisdiction.

55    A distinction between jurisdictional and non-jurisdictional error remains an important one in Australia where the courts have not followed the approach taken in England in Anisminic Limited v Foreign Compensation Commission [1969] 2 AC 147 at 171 (see for example Re Heerey; Ex parte Heinrich (2001) 185 ALR 106 at [19]–[20]; Re Minister for Immigration and Multicultural Affairs; Ex parte Holland (2001) 185 ALR 504 at [22]). The distinction was emphasised in Coal and Allied at [32]. It is a distinction that has a long history of application to the work of federal industrial authorities. In R v Gray; Ex parte Marsh (1985) 157 CLR 351 Gibbs CJ said (at 371) that “[t]here is a well recognized distinction between an error made by a tribunal in the course of deciding a matter, on the one hand, and an absence or excess of jurisdiction on the other”.

56    The principle also provides examples of applications for prerogative relief being refused at the order nisi stage. In Re Operative Plasterers Workers Federation of Australia; Ex parte Brown (1992) 67 ALJR 179 Gaudron J said, in relation to one such challenge against the AIRC (at 180):

It is not every error that will ground prerogative relief. So far as mandamus, which is sought in this case, is concerned, there must be an error amounting to a refusal to exercise jurisdiction. Such an error, it is well established, may be constituted by what is said to be a constructive failure to exercise jurisdiction, that is, a mistake of some kind, the effect of which is that the Commission has failed to do that which it is obliged to do, whether pursuant to constitutional requirement or pursuant to statute.

There is, of course, a clear distinction between an error of that kind and an error within jurisdiction where the tribunal concerned simply fails to apply some principle or to discharge some legal obligation which does not, however, affect jurisdiction as such. An example of an error of the latter kind would be one in which the tribunal failed to have regard to matters which should be taken into account in the exercise of a discretion.

57    Similarly, in Re Commonwealth of Australia; Ex parte Marks (2000) 75 ALJR 470 McHugh J dismissed an application for an extension of time in which to apply for an order nisi directed to the AIRC. His Honour observed (at [18]) that the High Court “should not burden the Federal Court [on remitter] with cases when, as a result of a recent decision of this Court, it is clear that they do not enjoy any prospects of success”. His Honour was referring to the decision in Coal and Allied. His Honour said (at [23]–[24]):

The Full Bench understood its role on appeal

[23]    The Full Bench’s role in the applicant’s s 45 appeal was to ascertain whether or not Jones C had made an error in dismissing the applicant’s application under s 170CE. As Gleeson CJ, Gaudron and Hayne JJ noted in Coal and Allied, an appeal under s 45 “is properly described as an appeal by way of rehearing”, and the powers under s 45(7) “are exercisable only if there is error on the part of the primary decision-maker”. This is so “regardless of the different decisions that may be the subject of an appeal under s 45”.

[24]    In my view, there can be no doubt that the Full Bench understood that its function was to ascertain whether or not Jones C had made a relevant error. The Full Bench considered the applicant’s grounds of appeal, and concluded that, in respect of each of them, Jones C did not relevantly err. If the Full Bench was wrong to reach this conclusion, then that was an error within jurisdiction.

(Footnotes omitted)

58    It follows, in my view, from the well established distinction between jurisdictional and non-jurisdictional error as it applies to the work of a statutory body such as FWA, that if the Full Bench was wrong in either of its conclusions, that would represent error within its jurisdiction.

59    There is one further issue which merits some discussion. In its decision, the Full Bench decided to reinstate the second respondent and preserve the continuity of his employment. However, it decided also that it would withhold three months’ salary (approximately $30,000) from the amount it would order that the second respondent be paid to recognise his entitlement to salary from the time of his dismissal. It did so to acknowledge the potentially serious consequences of the second respondent’s conduct. At [38] of its decision (set out earlier) the Full Bench stated its conclusion that the “unqualified dismissal” of the second respondent was manifestly harsh but accepted that the second respondent’s conduct “reasonably called for a disciplinary sanction”. In a footnote, it referred to the following:

We recognise that some employers may operate under statutory agreements that may not provide for suspension as a disciplinary option. An employer is not “obliged” to dismiss an employee without prospect of reemployment when the other available disciplinary options are thought to be inadequate. An outcome equivalent to suspension without pay can usually be achieved in a practical sense by dismissing an employee but agreeing with the employee at the time of the dismissal to reengage the employee at the end of the period of “suspension” with continuity of employment, also perhaps on condition that the employee agrees not to receive a payout of their entitlements.

60    It was common ground that the applicant had no statutory or common law right to suspend or stand down the second respondent as a disciplinary measure in the present case. At least it could not do so unilaterally. The applicant submitted that, as the measure employed by the Full Bench was not one within the applicant’s own discretion, it was an error of jurisdiction for the Full Bench to have concluded that “unqualified” dismissal was, in all the circumstances, manifestly harsh.

61    I understand the concern which might be generated by the observations made by the Full Bench in its footnote. They relate to matters which may not be available to an employer as a response to serious conduct without some form of negotiation. They might be seen therefore, at a practical level, to lack utility as an effective disciplinary measure. However, that circumstance does not raise any jurisdictional question for consideration in the present case.

62    The critical conclusion of the Full Bench was that “in all the circumstances, unqualified dismissal was … manifestly harsh”. Those circumstances included the matters referred to in paragraphs [34]–[37] of its decision (earlier set out). The Full Bench was entitled to take those circumstances into account in making a judgment whether unqualified dismissal was manifestly harsh. Having reached that critical conclusion the Full Bench was entitled to grant a remedy including, at its discretion, reinstatement (s 391 of the Act). At the same time, it was entitled to fashion a remedy in a way that recognised the seriousness of the second respondent’s conduct (s 392(3) of the Act). No suggestion was made to the contrary.

63    The observations of the Full Bench about the steps which might be open to an employer who had no common law or statutory right of suspension or stand-down were correctly described by counsel for the second respondent as obiter dicta. They were not essential for the conclusion that the second respondent’s unqualified dismissal was manifestly harsh. The remedy fashioned by the Full Bench did not depend on those observations either. No criticism (at least at a jurisdictional level) is available with respect to those observations which were, no doubt, intended to be constructive. The practical utility of the approach suggested (or the lack of it) is not a matter for this Court.

64    A final matter may be dealt with more briefly. The applicant submitted that, by taking into account the second respondent’s age and personal circumstances in its own assessment of the justice of his dismissal, the Full Bench infringed some prohibition arising from the Act against “discrimination”. Matters of that kind may be directly relevant to an assessment of whether a dismissal is harsh (see the earlier extract from Byrne). There was certainly no discriminatory consequence for the second respondent. The way in which it was alleged that any other form of discrimination might be disclosed remained, to my mind, unclear. In my view the contention had no substance.

65    Demonstration of jurisdictional error in the present case would require it to be established that the Full Bench did not understand the nature of its jurisdiction (it clearly did), did not have regard to the statutory limitations on its jurisdiction (it clearly did) or failed to exercise the jurisdiction committed to it (it clearly did not). In my view, all the complaints made about the decision of the Full Bench in the present case are complaints about the way in which it exercised its discretion. Even if the Full Bench made some error in the exercise of its discretion to grant permission to appeal, or in its analysis of the circumstances surrounding the dismissal of the second respondent, any such error (if it was made) was not a jurisdictional error, but rather an error made within the exercise of the jurisdiction committed to the Full Bench by the Act.

66    In my view, the present application should be dismissed.

Associate:

Dated:    19 April 2011