FEDERAL COURT OF AUSTRALIA

Shea v EnergyAustralia Services Pty Ltd [2014] FCAFC 167

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    In January 2007, Ms Kate Shea commenced employment with EnergyAustralia Services Pty Ltd (“EnergyAustralia”) as the Director of Corporate and Government Affairs. From September 2011 EnergyAustralia was investigating a better operating model to address ongoing difficulties it was facing with various State regulators. It was restructured in February 2012. On 6 February 2012, Ms Shea was dismissed on the stated ground that her position had become redundant.

2    On the case advanced by Ms Shea, EnergyAustralia had taken “adverse action” against her because she had made a “complaint” alleging that she had been sexually harassed or because she had made subsequent complaints about EnergyAustralia’s response to her initial or subsequent complaints, including against the Managing Director, Mr Richard McIndoe. The initial “complaint” focussed upon an incident which took place following a work function in Hong Kong in February 2010.

3    More than two years after the conduct which was the subject of the first complaint, in April 2012, Ms Shea commenced proceedings under the Fair Work Act 2009 (Cth) (the “Fair Work Act”). She alleged that she had been dismissed for exercising a workplace right in contravention of s 342 of the Fair Work Act.

4    In March 2014, a Judge of this Court dismissed her application: Shea v TRUenergy Services Pty Ltd (No 6) [2014] FCA 271. Her Honour subsequently left the Court. In October 2014, another Judge of the Court ordered that Ms Shea pay the costs of defending certain specific issues pursued by her during the proceeding on an indemnity basis: Shea v Energy Australia Services Pty Ltd (No 7) [2014] FCA 1091. EnergyAustralia was formerly known as TRUenergy Services Pty Ltd.

5    Ms Shea appealed against both her Honour’s substantive decision, which resolved the application of ss 340, 341 and 361 of the Fair Work Act and his Honour’s decision awarding indemnity costs.

6    The appeal should be dismissed.

Sections 340, 341 & 361

7    Three provisions of the Fair Work Act received considerable attention during the hearing of the appeal – ss 340, 341 and 361. Each of those provisions is contained within Part 3-1 of Chapter 3 of that Act. Chapter 3 deals with “Rights and responsibilities of employees, employers, organisations etc”. Part 3-1 deals with “General protections”. These provisions, in relevant part, are as follows:

340    Protection

(1)    A person must not take adverse action against another person:

(a)    because the other person:

(i)    has a workplace right; or

(ii)    has, or has not, exercised a workplace right; or

(iii)    proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or

(b)    to prevent the exercise of a workplace right by the other person.

(2)    A person must not take adverse action against another person (the second person) because a third person has exercised, or proposes or has at any time proposed to exercise, a workplace right for the second person's benefit, or for the benefit of a class of persons to which the second person belongs.

341    Meaning of workplace right

    Meaning of workplace right

(1)    A person has a workplace right if the person:

(a)    is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or

(b)    is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; or

(c)    is able to make a complaint or inquiry:

(i)    to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or

(ii)    if the person is an employee--in relation to his or her employment.

361    Reason for action to be presumed unless proved otherwise

(1)    If:

(a)    in an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or with a particular intent; and

(b)    taking that action for that reason or with that intent would constitute a contravention of this Part;

it is presumed that the action was, or is being, taken for that reason or with that intent, unless the person proves otherwise.

(2)    Subsection (1) does not apply in relation to orders for an interim injunction.

8    Section 361 is a provision which was the subject of analysis by the High Court in Board of Bendigo Regional Institute of Technical and Further Education v Barclay (No 1) [2012] HCA 32, (2012) 248 CLR 500. It has received further attention more recently in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2014] HCA 41, (2014) 88 ALJR 980.

The need for a genuine complaint?

9    Grounds 1, 2 and 3 of the Amended Notice of Appeal focussed on the operation of ss 340 and 341 of the Fair Work Act. Ground 6 challenged the primary Judge’s conclusions as to her Honour’s characterisation of each of the five “complaints” relied upon by Ms Shea. Ms Shea had claimed that EnergyAustralia had taken adverse action against her because she had exercised a workplace right when she made each of those five complaints.

10    Those grounds canvassed questions of statutory construction fundamental to the nature of the “workplace right” as defined by s 341(1). Questions also potentially arose as to when a person is “able to make a complaint” and what constitutes a “complaint”.

11    In particular, a question arose as to whether the learned primary Judge was correct in reaching the following conclusions:

[623]    Accordingly, in my view, the complainant must hold a genuine belief in the truth of the matters communicated as a grievance or accusation. In the absence of such a belief (which may be difficult, albeit not impossible, to establish in the absence of some reasonable basis) the complaint would not be a genuine grievance or finding of fault.

[624]    Further, the grievance or accusation must be communicated for a proper statutory purpose, which would, at least, entail giving the employer notice of the relevant matters or securing information, protection, redress or some other appropriate response.

On appeal, Senior Counsel for EnergyAustralia repeated the submission that the “workplace right” referred to in s 340(1)(a)(i) was not a “right” to make a “vexatious” complaint. He contended that construing ss 340 and 341 in that way would be counter to the objects of the Act (set forth in s 3 of the Fair Work Act) as well as the more specific objects of Part 3-1 of that Act set out in s 336.

12    Considerable care needs to be exercised before implying into s 341 any constraint that would inhibit an employee’s ability to freely exercise the important statutory right to make a “complaint”. To too readily imply into the language of ss 340 and 341 the necessity for a complaint to be a “genuine” complaint, necessarily would be productive of argument about whether a “complaint” is bona fide and may serve to discourage those who may well have mixed motives for making a complaint. The expression or drafting of a “complaint” should not require the sophistication or knowledge of an experienced industrial lawyer or legal advice regarding whether it should in fact be made. Care should also be taken before construing the term “right” in s 341 in a manner which may have more far-reaching implications for the meaning of that term when it is employed elsewhere in the Fair Work Act. When considering the construction of these provisions, there is an obvious need to balance the legitimate interests of both employees and employers in a manner consistent with the objects of the Act as a whole and the objects of Part 3-1.

13    Notwithstanding the fundamental importance of ss 340 and 341 to the scheme of protection established by the Fair Work Act, questions regarding their construction and application do not need to be now resolved. These fundamental questions of statutory construction have, to date, received limited judicial attention: eg. Jones v Queensland Tertiary Admissions Centre Ltd (No 2) [2010] FCA 399, (2010) 186 FCR 22 at [55]–[57], [84] per Collier J. Indeed, it was contended by both parties on appeal that the ambit of the term “complaint” (as employed in the Fair Work Act) had not been previously considered.

14    No matter how such questions were to be resolved, it was common ground that for Ms Shea to succeed in setting aside the decision of the primary Judge on the substantive issues, it was necessary for her to successfully challenge the primary Judge’s conclusions as to whether EnergyAustralia had discharged the “onus” imposed by s 361.

15    For the reasons below, Ms Shea failed to demonstrate that her Honour erred in finding that none of her alleged complaints were a substantial and operative factor in EnergyAustralia’s decision to make her position redundant. Accordingly, it is not necessary to decide whether her Honour was correct to find that a complainant has to hold a genuine belief in the matter of the subject of complaint for the purposes of ss 340 and 341.

Unless the person proves otherwise – s 361

16    The primary Judge’s conclusions as to whether EnergyAustralia had proved that it did not dismiss Ms Shea because she had made complaints were variously expressed throughout her Honour’s reasons for decision. Nothing turns on how her Honour expressed herself in this respect because, in substance, she consistently found that Mr McIndoe’s evidence, as the decision-maker, should be accepted and that he did not make Ms Shea’s position redundant for the reason that she had made any of her five complaints.

17    Relevantly, her Honour concluded in respect to s 361 that:

[798]    … Accusations that a superior is guilty of sexual misconduct and has lied to an investigator to cover it up (whether true or false) could engender hostility and resentment in the accused, motivating him to dismiss the accuser. I have found that the accusations were not advanced as independent complaints and were not complaints that the applicant was able to make; but if they were, I am not satisfied that the making of the accusations was an operative or immediate reason for Mr McIndoe’s decision to make Ms Shea’s position redundant.

Her Honour ultimately concluded:

[820]    In my opinion, assuming that (contrary to my conclusion above) the applicant made any of the alleged complaints that was a complaint that she was able to make in relation to her employment within the meaning of s 341(1)(c)(ii) of the Act, the respondent discharged the burden of proving that none of the alleged complaints (or any variant thereof) was a substantial and operative factor in, or an operative or immediate reason for, the decision to take adverse action against the applicant by making her position redundant.

18    It was ground 7 (and ground 3, to some extent) of the Amended Notice of Appeal which sought to impugn these conclusions.

19    Both of these grounds fail.

20    Ms Shea’s two principal challenges to the factual conclusions were that:

    the primary Judge failed to consider the entirety of the evidence and reasoned that because she had accepted that Mr McIndoe was a credible witness and a witness of truth in respect to his account of the complaints as to sexual harassment, he was necessarily to be accepted as a witness of truth when recounting reasons for the dismissal of Ms Shea; and

    the entire hearing had miscarried by reason of evidence being admitted and findings of fact made in respect to whether there was a “culture” of misconduct prevailing within EnergyAustralia separate from the incident in Hong Kong in February 2010.

The findings in respect to events separate from the reasons for Ms Shea’s dismissal were characterised on behalf of Ms Shea as findings of credit which “polluted” the well of relevant facts from which the question of EnergyAustralia’s reason for dismissal fell to be determined.

21    The forensic objective of Senior Counsel for Ms Shea was, obviously enough, to marginalise or quarantine the adverse findings her Honour made regarding Ms Shea. The objective was to focus attention – not upon her conduct – but upon the conduct of Mr McIndoe. The only relevant evidence as to purpose or motive, on this approach, was evidence going to the reasons for the decision to terminate Ms Shea’s employment. Ms Shea’s motive or purpose in making her complaint and the allegations of sexual misconduct, it was submitted, was of no relevance. She had a “workplace right” to make a complaint and once a “complaint” had been made, she had the benefit of s 361 of the Fair Work Act. The focus of the fact finding should have then shifted to the reasons for her dismissal.

22    This argument, however expressed, is without substance.

23    The argument’s principal focus was on how the primary Judge employed the evidence of the allegations of sexual misconduct and the findings made regarding that evidence.

24    Senior Counsel for Ms Shea placed considerable emphasis upon the proposition that the allegations that there was a prevailing “culture” of sexual misconduct were raised by her simply in answer to EnergyAustralia’s defence that her complaint was not a “genuine” complaint. He contended that the making of those allegations by others, on this account, simply supported her belief that she had a genuine reason to complain. It was submitted that ascertaining whether these further allegations were true was not, on this approach, a relevant exercise for her Honour to undertake.

25    Considerable time was expended throughout the hearing of the appeal to develop this proposition. As such, it was regrettable that it later emerged that the hearing before the primary Judge was in fact conducted quite differently. Counsel for Ms Shea before the primary Judge, contrary to the submissions put on the appeal, opened the case on the basis that these further allegations were in fact true and proceeded to lead evidence to establish their truth. It may be accepted that some submissions made during the course of the hearing at first instance were equivocal when objection was taken to the relevance of this evidence. But it is not appropriate for substantive submissions to be made on appeal about how the hearing at first instance was conducted that are materially contrary to the actual way in which the party making those submissions conducted the case in the Court below. An appellate Court is entitled to rely upon Counsel, especially Senior Counsel, to accurately outline matters relevant to an appeal without the Full Court needing to verify those matters for itself.

26    However, the fact that the primary Judge heard and resolved the evidence adduced before her is of more immediate relevance. She made findings as to credit. Her Honour’s assessment of Ms Shea was not particularly favourable to her case. Her Honour formed the view that Ms Shea “was not … an impressive, persuasive or reliable witness… [S]he was not candid, forthcoming or responsive”: [2014] FCA 271 at [41]. On the other hand, her Honour formed the view that Mr McIndoe “was an impressive, conscientious and credible witness”: [2014] FCA 271 at [45].

27    Having made findings of fact regarding the credibility of the main protagonists, the primary Judge then proceeded to make findings of fact with respect to both the motivation for the complaints of sexual harassment and the reasons for Ms Shea’s dismissal by reference to the evidence before her Honour. There was no reason for her Honour to quarantine her assessment of the credibility of the witnesses on the sexual harassment issues when making findings of fact relevant to the reasons for Ms Shea’s dismissal. The submission that the primary Judge failed to base her conclusions and ultimate findings upon the entirety of the evidence before her is without substance.

28    Insofar as ground 7 specified particular evidence which it is alleged the primary Judge failed to either consider or to draw some required inference from or otherwise mischaracterised the Appellant’s case, those arguments also fail. Her Honour’s careful and detailed reasons demonstrate that the primary Judge dealt with Ms Shea’s case precisely as it was put by her, weighed all of the evidence (including that which the Appellant alleges her Honour overlooked) and, contrary to grounds 7(a) to (i) in the Amended Notice of Appeal, reached conclusions that were reasonably open on, and supported by, the whole of the evidence having regard to her Honour’s assessment of the reliability and credibility of the witnesses.

29    The hearing did not miscarry. Her Honour resolved the relevant conflicts in the evidence adduced and made findings of fact relevant to the issues as identified by the parties. There was no “polluting” of the well of evidence used to ascertain the reasons for Ms Shea’s dismissal. Given these conclusions, there is no need to address the contentions raised in ground 6 of the Amended Notice of Appeal.

The remaining grounds of appeal

30    The remaining grounds of appeal are equally without substance.

31    Ground 4 alleges error on the part of the primary Judge in failing to draw an adverse inference from the fact that particular witnesses were not called by EnergyAustralia. Reliance was placed upon Jones v Dunkel (1959) 101 CLR 298. Kitto J there observed (at 308):

… any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence.

Witness statements had been served by EnergyAustralia in advance of the hearing. But several of its proposed witnesses were not called.

32    Ground 4 is to be rejected for the simple reason that, in the light of the available evidence, there was no basis for an adverse inference. The witness statements of those witnesses who were not called by EnergyAustralia were available to Ms Shea, yet her counsel did not seek to identify to her Honour or the Full Court any aspect of those statements which suggested that evidence the makers could have given about any matter may have been adverse to EnergyAustralia’s case. Nor was any question apparently put during the oral evidence of any witness suggesting that a different account of the facts could have been given by one or more of the persons not called. Senior Counsel for Ms Shea did not identify any adverse inference of any fact that any uncalled maker of a witness statement might have proved. The character of the evidence that could have been given by each of the uncalled makers of witness statements was entirely speculative.

33    At the trial, the actual decision-maker, Mr McIndoe, gave evidence and was extensively cross-examined as to his reasons for deciding to make Ms Shea’s position redundant. Accordingly, this was not a case where EnergyAustralia’s defence depended on inferences, far less one that depended on uncertain inferences or in which there was a question about whether limited material provided an appropriate basis on which her Honour could reach a reasonable decision. Nor did Ms Shea suggest that any evidence of the uncalled makers of witness statements would elucidate a particular matter in the sense discussed by French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ in Australian Securities and Investments Commission v Hellicar [2012] HCA 17 at [169]-[170], (2012) 247 CLR 345 at 413-414. Adopting their Honours’ observation (at [170]), the fact that EnergyAustralia did not call any of those persons who had made witness statements did not affect, in the sense of diminish, the cogency of the proof that EnergyAustralia advanced by the witnesses that it did call and the documentary evidence, such as it was, that was adduced.

34    Accordingly, no error is exposed in the primary Judge’s conclusion that “other potential witnesses were peripheral”: [2014] FCA 271 at [40].

35    Ground 5 alleges the primary Judge erred in refusing to allow Ms Shea access to part of a memorandum from the former lawyers for EnergyAustralia. EnergyAustralia claimed legal professional privilege over part of that memorandum. That claim was upheld in a separate judgment of the primary Judge: Shea v TruEnergy Services Pty Ltd (No 4) [2013] FCA 936.

36    Privilege over the redacted portion was claimed when the document was first discovered and provided to Ms Shea in March 2013. The challenge to the privilege claim arose on the eighth day of the hearing before the primary Judge. Her Honour concluded that “it was inappropriate to entertain the challenge of client legal privilege for the memorandum, given the stage of the trial”: [2013] FCA 936 at [16].

37    Although submissions on the appeal canvassed whether the part of the memorandum withheld from Ms Shea was properly the subject of a claim for legal professional privilege, the decision under appeal was not a determination that the claim had been properly made. Rather the ground of appeal was concerned with whether the primary Judge erred in not “entertain[ing]” the challenge to the claim of privilege in the context of the advanced stage of the hearing in September 2013 and the lack of any earlier challenge following the discovery of the unredacted portion in March 2013.

38    Ordinarily, appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure. Not only must there be an error of principle by the primary judge but the decision appealed from must work substantial injustice to one of the parties as Gibbs CJ, Aickin, Wilson and Brennan JJ said in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177.

39    No error has been exposed in her Honour’s decision on what amounted to a matter of practice and procedure arising during the course of the final hearing. The unredacted memorandum was made available to the Full Court in a sealed envelope in the event that it was considered necessary to examine it and form a view about the propriety of the privilege claim. The Full Court has not examined the unredacted memorandum. There was no reason to question the veracity of the privilege claim and no reason, more importantly, to question the primary Judge’s discretionary decision not to “entertain the challenge” late into the trial.

40    Ground 8 was properly abandoned during the course of the hearing of the appeal.

Costs – s 570(2)(b) of the Fair Work Act

41    The final ground of appeal maintains that the primary Judge who made the order directing the payment of indemnity costs erred.

42    The terms of s 570 of the Fair Work Act are well known. Section 570(1) relevantly provides that a party to a proceeding in relation to a matter arising under the Act may be ordered to pay costs “only in accordance with subsection (2)”. Section 570(2) provides as follows:

The party may be ordered to pay the costs only if:

(a)    the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or

(b)    the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or

(c)    the court is satisfied of both of the following:

(i)    the party unreasonably refused to participate in a matter before the FWC;

(ii)    the matter arose from the same facts as the proceedings.

43    The learned primary Judge who made the order for costs rejected more broad-ranging submissions advanced on behalf of EnergyAustralia that the proceeding had been instituted by Ms Shea vexatiously. His Honour also rejected a submission that the rejection of two settlement offers was sufficient to bring the facts within s 570(2)(b). His Honour, however, took a different view in respect to the third of the matters relied upon by EnergyAustralia, concluding, relevantly:

[32]    The third circumstance upon which the respondent relies under s 570(2)(b) is that the applicant introduced into her case, and prosecuted, serious allegations of impropriety against Mr McIndoe when she lacked, and must have appreciated that she lacked, admissible evidence to support those allegations. If the respondent’s point is justified on the facts, there can be no doubt but that the applicant’s conduct would have been, in relevant respects, unreasonable. On an interlocutory motion before the Chief Justice on 26 April 2013, his Honour expressed the view that the making of such allegations would amount to an abuse of process and, with respect, I agree. It is necessary, therefore, to consider each of the allegations of impropriety with which this aspect of the respondent’s application is concerned.

His Honour then examined each of the allegations raised by Ms Shea and made findings as to whether Ms Shea had acted “reasonably” in making them. In respect to some, but not all, his Honour found Ms Shea to have acted “unreasonably”.

44    The parts of the case in respect of which Ms Shea was found to have acted “unreasonably” attracted the order for costs. A separate question was whether costs should be paid on an indemnity basis. Costs were ordered to be paid on an indemnity basis: [2014] FCA 1091 at [66].

45    Ms Shea has not established that the primary Judge erred when making the orders for costs. Indeed his orders were justified. His Honour distinguished between those allegations of sexual misconduct made by Ms Shea for which she gave direct evidence (which her Honour had not accepted in her principal reasons) and those allegations which were (for example) “unjustifiable” or evidence obtained by “unseemly means”. It was the latter category which attracted the order for costs which were to be paid on an indemnity basis.

46    There was certainly no error of principle in the primary Judge’s exercise of his discretion in making those orders.

47    The final ground of appeal, ground 9, should be rejected.

Conclusions

48    No error has been exposed in either decision under appeal. Each decision displayed detailed and careful attention by the respective primary Judge to the entirety of the evidence.

49    The appeal should be dismissed.

Associate:

Dated:    8 December 2014