FEDERAL COURT OF AUSTRALIA

BP Refinery (Kwinana) Pty Ltd v Tracey [2020] FCAFC 89

ORDERS

THE COURT ORDERS THAT:

1.    The originating application for judicial review be dismissed.

2.    Any party wishing to seek costs is to notify the Court and the other party of the order it seeks within seven days.

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

REASONS FOR JUDGMENT

THE COURT:

1    By its originating application the applicant (BP) sought an order that a writ of certiorari be issued, the effect of which would be to quash the decision of the Full Bench of the Fair Work Commission (the Full Bench) in Scott Tracey v BP Refinery (Kwinana) Pty Ltd [2020] FWCFB 820. The Full Bench allowed an appeal against a Deputy President of the Fair Work Commission in Scott Tracey v BP Refinery (Kwinana) Pty Ltd [2019] FWC 4113.

2    The Deputy President had been satisfied that BP’s dismissal of Mr Tracey was not harsh, unjust or unreasonable and thus was not unfair within the meaning of s 385 of the Fair Work Act 2009 (Cth) (the FW Act). The Deputy President was satisfied that there were valid reasons for the dismissal of Mr Tracey arising from his involvement in the making and distribution of a video which, it was alleged, depicted BP representatives involved in negotiations of a new enterprise agreement with BP employees as Nazis. The video depicts extracts from the film Downfall in which Hitler acts in a highly agitated and aggressive manner when informed by his Generals that his regime has lost the Second World War. Mr Tracey was involved in adding captions to the extract which used dialogue from the negotiations between BP and its employees. The Deputy President concluded that a reasonable person would consider the video inappropriate and offensive with the consequence Mr Tracey’s involvement in the making and distribution of the video contravened various BP policies. These contraventions, the Deputy President found, constituted valid reasons for the dismissal of Mr Tracey and underpinned the conclusion that his dismissal was not harsh, unjust or unreasonable and, accordingly, was not unfair within the meaning of s 385 of the FW Act.

3    The Full Bench reached a contrary view. The Full Bench recognised that the Deputy President was making an evaluative judgment about the character of the content of the video: [23]. At [25] the Full Bench said it did not accept that it was reasonably open for the video to be characterised in the way it was by the Deputy President. According to the Full Bench, leaving aside the cultural context set by the fact that the scene from Downfall had gained status as a meme, the video did not compare BP representatives to Hitler or to Nazis in the sense of suggesting their conduct was comparable in inhumanity or criminality. Rather, the video, for satirical purposes, compared the position BP had reached in the enterprise bargaining process to the situation confronting Hitler and the Nazi regime in April 1945.

4    At [26] the Full Bench said this conclusion was reinforced once consideration was given to the development of the use of this clip from Downfall as a meme. The Full Bench explained that the clip had been used thousands of times for over a decade for creating satirical depictions of contemporary situations, the result of which was to culturally disassociate the clip from the historical events portrayed in the film. The Full Bench said that anyone with knowledge of the meme could not seriously consider that the use of the clip was to make some point involving Hitler or Nazis.

5    At [27] the Full Bench accepted that there was no doubt that the clip would be understood by the viewer as satirising BP’s conduct during the enterprise agreement bargaining process but said this, by itself, did not make the video offensive or inappropriate. The bargaining process had been heated and protracted and, according to the Full Bench, was approaching its nadir, so that it was understandable that persons in the opposing camps might between themselves be critical of the other party’s position and conduct. As such, the Full Bench considered that members of BP’s negotiating team could not genuinely have been surprised that employees would be strongly critical of BP’s conduct during the course of the bargaining.

6    At [28] the Full Bench stressed that it was important to distinguish between criticism of the other party’s position and conduct during an industrial dispute and targeted disparagement of an individual in the other camp. According to the Full Bench the video engaged in the former activity through the use of satire, but not the latter. The fact that the video satirised the way in which BP had conducted itself through the agency of one of its employees, Mr Swayn, did not mean that the video was personally denigrative of him. The Full Bench noted that Mr Swayn had not given evidence so there was no proper basis for concluding that he considered the video targeted him or even that he was personally offended by it. Further, the Full Bench said that the evidence did not support the proposition that any other character in the video could be identified with any particular person in BP’s bargaining or management team.

7    The Full Bench then said this:

[29]    For these reasons, we consider that it was not reasonably open to the Deputy President to find that Allegation 1 in the dismissal letter constituted a valid reason for dismissal. The allegation was premised on the proposition that the video was offensive and inappropriate because it compared BP’s negotiating team to Hitler and Nazis - a proposition which we consider to be unsustainable. The Deputy President’s consideration of whether Allegation 2 also constituted a valid reason for dismissal was infected by her conclusion that the video was offensive and inappropriate on the same basis, and for that reason was also attended by appealable error.

[30]    The Deputy President’s erroneous determination that there was a valid reason for Mr Tracey’s dismissal was fundamental to her decision that his dismissal was not unfair and that his unfair dismissal remedy application should be dismissed. Because the decision was affected by error in this way and manifests an injustice to Mr Tracey, and because the appeal raises issues of general application concerning the capacity of employees to engage in legitimate criticism of management in the conduct of an industrial dispute, we consider that the grant of permission to appeal would be in the public interest. Accordingly, permission to appeal is granted as required by s 604(2) of the FW Act. The appeal is upheld on the basis of grounds 1-5, and the decision is quashed. It is unnecessary in those circumstances to consider any of the other grounds of appeal.

8    The Full Bench then proceeded to determine for itself whether BP’s dismissal of Mr Tracey was unfair. It did so by reference to the requirements of ss 396 (about which there was no issue) and 387 (whether the dismissal was harsh, unjust or unreasonable) of the FW Act and, in particular, whether there was a valid reason for Mr Tracey’s dismissal related to his character or conduct. The Full Bench did not consider that the allegations against Mr Tracey had been made out because, as it had concluded, it did not characterise the video as offensive or inappropriate in the circumstances: [34]. Having regard to all of the factors in s 387 of the FW Act the Full Bench found that Mr Tracey’s dismissal was unjust and unreasonable because there was no valid reason for his dismissal and was harsh because of the mitigating factors which it had identified (his unblemished employment record, the context of a tense and embittered industrial environment, his expression of contrition and action in taking the video down as soon as he became aware it had come to BP’s attention, and financial hardship and personal distress caused by the dismissal). Accordingly, the Full Bench found Mr Tracey’s dismissal unfair: [35].

9    BP’s originating application, as pressed during the hearing, alleges two errors by the Full Bench. First, it is said that the Full Bench misconceived its appellate function as the Deputy President’s decision was discretionary, with the consequence that the Full Bench could set aside the Deputy President’s decision only if satisfied that the Deputy President had made an error of the kind identified in House v The King (1936) 55 CLR 499 at 505 (House v The King) as follows:

It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court can exercise its own discretion in substitution of his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonably 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.

10    According to BP, the Full Bench did not find an error of the requisite kind in its review of the decision of the Deputy President. Rather, the Full Bench merely substituted its own evaluation of Mr Tracey’s conduct for that of the Deputy President and treated that as sufficient jurisdictional authority for the orders it made quashing the decision of the Deputy President and ordering Mr Tracey’s reinstatement.

11    Second, BP contended that on the basis that the question whether Mr Tracey’s conduct was offensive or inappropriate within the meaning of BP’s Code of Conduct involves a question of fact (which, we note, was common ground in the appeal) the Full Bench was required to but did not consider s 400(2) of the FW Act. Section 400(2) provides that:

Despite subsection 604(1), an appeal from a decision made by the FWC 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.

Ground 1

12    According to BP, when the Full Bench’s reasons at [24] to [29] are considered it is apparent that the Full Bench was not using the expression “reasonably open” at [29] in any sense that might engage the principles in House v The King. Rather, the Full Bench meant only that it had evaluated the content of the video in a different way from the Deputy President. The Full Bench had concluded the video was merely satirical so that anyone with knowledge of the meme could not have considered that the video was making a point about Hitler or the Nazis. According to BP that circumstance and that circumstance alone was the justification for the Full Bench reversing the Deputy President’s decision. This, said BP, involved a misconception by the Full Bench of its role on appeal which is jurisdictional error engaging this Court’s jurisdiction to correct error.

13    BP’s argument involved the following steps:

(1)    A person will be unfairly dismissed if the Fair Work Commission is satisfied as to the existence of a state of affairs described in s 385 of the FW Act including, relevantly, that the dismissal was harsh, unjust or unreasonable: s 385(b).

(2)    In an appeal to the Full Bench under s 604 of the FWC Act against a decision as to a state of satisfaction under s 385(b) the question is not whether the decision was correct but whether it was reasonably open in the sense described in House v The King. That is, the decision-maker has misdirected itself in law, or has taken irrelevant matters into account or has reached a decision so unreasonable that no reasonable authority could have arrived at it: Buck v Bavone (1976) 135 CLR 110 at 118-119 (Buck v Bavone) and Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1997) 197 CLR 611 at [136]-[137] (Eshetu). In this regard the test of legal unreasonableness is stringent. The decision-maker is allowed considerable latitude, the relevant considerations being confined only by the subject matter and the object of the legislation allowing for the formation of an opinion or subjective satisfaction.

(3)    The questions before the Fair Work Commission in the present case, whether Mr Tracey’s conduct in respect of the video contravened BP’s Code of Conduct and applicable policies by being offensive and inappropriate and whether there was thereby a valid reason for his dismissal, required an evaluative judgment as to criteria which did not demand a unique outcome but rather tolerated a range of outcomes, with the result that there was room for differences of opinion with no particular opinion being uniquely right: Minister for Immigration and Border Protection v SZVFW [2018] HCA 30; (2018) 264 CLR 541 at [49] (SZVFW); Norbis v Norbis (1986) 161 CLR 513 at 517-518 (Norbis). The principles in House v The King that govern an appeal against a discretionary judgment also apply to an appeal against a broad evaluative judgment: Singer v Berghouse (1994) 181 CLR 201 at 212 (Singer v Berghouse); SZVFW at [49]; Norbis at 517-518. A challenge to findings of a broad evaluative nature involves the same “high hurdles” that must be overcome in challenges to discretionary decisions and particular restraint is required: Anton v Bokan (No 2) [2019] NSWCA 250 at [47]; Singer v Berghouse at 211-212; SZVFW at [45], Craig-Bridges v NSW Trustee and Guardian [2017] NSWCA 197 at [118].

(4)    The decision of the Full Bench depends on nothing more than having come to a different view from the Deputy President about whether Mr Tracey’s conduct in relation to the video was offensive or inappropriate within the meaning of BP’s Code of Conduct. That different view does not constitute or demonstrate appellable error on the part of the Deputy President. The Full Bench did not turn its mind to the requisite tests for appellable error in any meaningful way. Accordingly, the Full Bench was not authorised to substitute its evaluation for that of the Deputy President and its powers under s 607(3) of the FW Act (the power of the Full Bench to confirm, quash or vary any decision on appeal and to make a further decision in relation to the matter that is the subject of the appeal) were not lawfully engaged.

14    BP expressly disavowed any argument that the Full Bench’s conclusion, that the Deputy President’s conclusion about the video being offensive and inappropriate within the meaning of BP’s Code of Conduct was not reasonably open, was itself not reasonably open and thereby involved jurisdictional error. BP said that any such contention would be inconsistent with the argument it propounded which was that the question whether the video was offensive and inappropriate and, thereby, contravened BP’s Code of Conduct tolerated a range of outcomes with the consequence that the Full Bench could not merely substitute its own opinion for that of the Deputy President but had to find error in the sense identified in House v The King. The perceived inconsistency, it will be apparent, depends on BP’s proposition that whatever it was saying at [29] of its reasons the Full Bench was not saying that the Deputy President had committed an error of the kind required by House v The King. If it were otherwise and [29] of the Full Bench’s reasons were taken to mean what they say, that the Full Bench concluded that the Deputy President had reached a conclusion that was not reasonably open in all of the circumstances, there would be no inconsistency in BP propounding both that the conclusion about the video being offensive and inappropriate is one that tolerates a range of outcomes and that the Full Bench’s conclusion that the Deputy President’s conclusion was not reasonably open was itself not reasonably open and thereby involved jurisdictional error on the part of the Full Bench. As we have said, however, this argument was expressly disavowed by BP and for that reason should be considered no further.

15    In the circumstances of the present case it is unnecessary to decide whether the criteria for appellate intervention by the Full Bench was the finding of an error within the meaning of the principles established in House v The King, which ordinarily applies to the exercise of a judicial discretion, or of the principles established in cases such as Buck v Bavone and Eshetu, which apply to the exercise of a statutory power conditional on a certain state of satisfaction, or even the application of the standard of correctness (which was the respondent’s alternative argument in support of the Full Bench’s decision) as explained in SZVFW at [35]-[50]. This is because BP’s argument may be accepted at all stages bar the last. That is, it may be accepted that minds might reasonably differ about the question whether the video was offensive and inappropriate and, thereby, whether it breached BP’s Code of Conduct. It thus may be accepted that the standard for appellate review involves the application of the principles in House v The King or Buck v Bavone and Eshetu. The question that remains, what the Full Bench did, must be answered.

16    The first problem for BP is that its argument involves accepting the proposition that the Full Bench did not mean what it said at [29] that it was not “reasonably open” to the Deputy President to find that the first allegation, breach of amongst other things BP’s Code of Conduct by the video being offensive and inappropriate, constituted a valid reason for dismissal of Mr Tracey. This is the language of appellable error within the scope of the principles in House v The King and Buck v Bavone and Eshetu. It cannot be treated as a mere slip of the tongue given that the same language, of the characterisation of the video by the Deputy President not being reasonably open, is also used at [25] of the Full Bench’s reasons. In terms, the Full Bench was not expressing a mere difference of opinion with the Deputy President. It was expressing a legal conclusion that the Deputy President’s conclusion was outside the boundaries of legal reasonableness. Contrary to the assumption implicit in BP’s arguments a decision may be one that permits a range of conclusions but, on the facts, there may still be a decision that is outside that permissible range; a decision that is not reasonably open and, accordingly, is unlawful. So, BP’s argument depends on concluding that the Full Bench expressed itself in the conventional language of legal error in the making of a discretionary or evaluative decision, but did not mean what it said.

17    The second problem for BP is that its argument that the Full Bench did not mean what it said depends on an analysis of the Full Bench’s reasons in support at [24]-[28]. It is not immediately apparent why the Full Bench’s analysis is incapable of founding the conclusion that the Deputy President’s characterisation of the video was not reasonably open. In particular, the Full Bench expressly said at [25] that it was not reasonably open to the Deputy President to characterise the video as offensive and inappropriate because, even divorced from the memetic status of the clip from the film Downfall which was used in the video, the video did not liken BP representatives as Nazis but satirically compared the situation the enterprise bargaining process had reached to the situation that Hitler and the Nazis had reached by April 1945: [25]. The Full Bench also said that once the memetic status of the clip from the film Downfall which was used in the video was taken into account, it could not be seriously said by anyone with knowledge of the meme that the use of the clip was to make some point involving Hitler or the Nazis: [26]. Further, the Full Bench said that given the heated and protracted bargaining dispute and the significant economic interests at stake, members of BP’s negotiating team could not have been surprised that employees would be strongly critical of BP’s conduct during the bargaining: [27]. Finally, the Full Bench did not consider that the video targeted any BP employee as opposed to criticised BP’s position in the bargaining dispute. These are matters that are at least arguably capable of founding a conclusion that the Deputy President’s characterisation was not reasonably open. The first involves a conclusion of error by mischaracterisation of the video content. The second involves a conclusion of error by failure to consider the status of the clip from the film Downfall as a meme. The third involves a conclusion of error by failure to consider the particular context of the bargaining dispute. The fourth involves a conclusion of error by incorrect factual findings. Given that it is at least arguable that these findings are capable of supporting the conclusion that the Deputy President’s conclusion about the video was not reasonably open, it should be inferred that the Full Bench meant what it said at [25] and [29]; that is, that the Full Bench was saying that the Deputy President’s conclusion about the video was not reasonably open in the sense that, in the circumstances, it was a conclusion outside the legally permissible range of conclusions about the video.

18    The submissions for Mr Tracey identified other factors which support the inference that the Full Bench meant what it said in [25] and [29] of its reasons. As the submissions said, it is relevant that the notice of appeal by Mr Tracey was expressed in terms of errors of principle within the meaning of House v The King and Mr Tracey’s written and oral submissions to the Full Bench drew attention to House v The King. In this context, the proposition that the Full Bench was not applying the principles in House v The King when deciding that the Deputy President had erred is difficult to accept. Nor may it be inferred that the Full Bench was unaware of the stringent standard involved in a finding of legal unreasonableness.

19    These considerations effectively put paid to BP’s contention that the Full Bench misunderstood its appellate jurisdiction and upheld the appeal merely because it believed it could substitute its own evaluation of the video for that of the Deputy President. To the contrary, the Full Bench must be inferred to have applied the requisite principles for appellate review of a decision based on an evaluative judgment (whether that be expressed in terms of House v The King or Buck v Bavone and Eshetu) and to have concluded that the Deputy President’s findings about the video being offensive and inappropriate were not reasonably open in the sense of being legally unreasonable. As noted, BP eschewed any suggestion that the Full Bench’s decision was itself legally unreasonable so we are not seized of the question whether the Full Bench’s conclusion was itself not reasonably open in the circumstances.

20    On this basis, ground one of the application must be rejected. On this basis it is also unnecessary to consider the alternative argument for Mr Tracey that the Full Bench had jurisdiction on the appeal to correct error on the basis of mere disagreement with the Deputy President’s conclusion about the video. It is similarly unnecessary to address the arguments put for Mr Tracey about alleged inconsistency between the decisions in Miller v Australian Industrial Relations Court [2001] FCA 486; (2001) 108 FCR 192 at [46]-[49] and Toms v Harbour City Ferries [2015] FCAFC 35; (2015) 229 FCR 537 at [86]-[88], as well as the correctness of those decisions and Coal and Allied Mining Services Pty Ltd v Lawler [2011] FCAFC 54; (2011) 192 FCR 78 to the extent that they applied the principles in House v The King by reference to the considerations permitted to be taken into account in making the disputed decision rather than by reference to the question whether or not the statutory criterion permitted one correct answer only or a range of answers.

Ground 2

21    BP’s argument is that in deciding whether there was a valid reason for Mr Tracey’s dismissal the Full Bench ignored s 400(2) of the FW Act. As noted, it was common ground that the question whether the video involved contravention of BP’s Code of Conduct and other policies such as to justify Mr Tracey’s dismissal involved issues of fact. Accordingly, s 400(2) was engaged. According to BP the Full Bench simply ignored s 400(2) as it did not mention the provision in its reasons and did not make any finding to the effect that the Deputy President’s decision involved a significant error of fact, as required by s 400(2).

22    The Full Bench’s reasons at [30] are set out above. As the submissions for Mr Tracey put it, the finding in [30] that the “Deputy President’s erroneous determination that there was a valid reason for Mr Tracey’s dismissal was fundamental to her decision that his dismissal was not unfair” is, in substance, a finding of a significant error of fact. To this may be added the fact that s 400(2) is a basal pre-condition to an exercise of power by the Full Bench to correct an error of fact. It would not lightly be inferred that the Full Bench had simply overlooked this basal pre-condition to the exercise of its power. When this context is recognised it is readily apparent that the Full Bench was expressing its satisfaction in [30] of its reasons that the Deputy President’s factual error was significant to the decision she made.

23    For these reasons ground two of the application must also be rejected.

Ground 3

24    Ground 3 does not arise as it assumes (contrary to the common position of the parties) that the question whether the video was offensive and inappropriate involves a question of law rather than a question of fact.

Conclusion

25    Neither of the two grounds pressed in the originating application for judicial review can be sustained, with the consequence that the application must be dismissed. Nothing in the circumstances suggests to us that s 570(2) of the FW Act may be engaged in relation to costs but the parties may have seven days in which to notify the Court of any application for costs they wish to make.

Associate:

Dated:    22 May 2020