| [2015] FWCFB 873 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
JUSTICE ROSS, PRESIDENT |
MELBOURNE, 5 MARCH 2015 |
Appeal against decision [2014] FWC 9191 of Commissioner Wilson at Melbourne on 19 December 2014 in matter number U2014/8599
[1] Mr John McCulloch (the appellant) was dismissed from his employment with Calvary Health Care Adelaide (Calvary, the respondent) on 28 July 2014, and subsequently lodged an application for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (Cth) (the FW Act).
[2] On 19 December 2014 Commissioner Wilson issued a decision 1 which he found that Mr McCulloch was unfairly dismissed and ordered the respondent to pay him the amount of $1281.82, less appropriate tax (the Decision). Mr McCulloch has appealed the Commissioner’s decision contending that the amount of compensation ordered was inadequate in the circumstances and that is the matter before us.
[3] The decision subject to appeal was made under Part 3-2 – Unfair Dismissal – of the FW Act. Section 400(1) provides that permission to appeal must not be granted from such a decision unless the Commission considers that it is in the public interest to do so. Further, in such matters appeals on a question of fact may only be made on the ground that the decision involved a “significant error of fact” (s.400(2)). In Coal & Allied Mining Services Pty Ltd v Lawler and others, Buchanan J (with whom Marshall and Cowdroy JJ agreed) characterised the test under s.400 as “a stringent one”. 2 The Commission must not grant permission to appeal unless it considers that it is “in the public interest to do so”.
[4] The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment. 3 In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest:
“... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters.” 4
[5] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error. 5 However, the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.6
[6] Mr McCulloch was employed by Calvary as a part-time cleaner. At the time of his dismissal he had worked for Calvary for about 7 ½ years and was 68 years of age. Mr McCulloch was dismissed, with notice, following an altercation with a manager, Mr Hart. In the proceedings at first instance the central issue in dispute concerned the nature of this altercation. A paragraphs [50]-[51] of his decision the Commissioner rejected Calvary’s contention that Mr McCulloch ‘verbally abused, intimidated and threatened catering and housekeeping management and staff’ and found that he had verbally abused Mr Hart:
“[50] The evidence before the Commission supports a finding that Mr McCulloch verbally abused Mr Hart; however, this appears at the lower end of might be regarded as verbal abuse. He undoubtedly was verbally argumentative, questioned what Mr Hart had done to his wife and Ms Nasinski and called him “a gutless wonder.” However, despite his evidence that he felt threatened, there is no evidence the verbal abuse went significantly beyond those illustrations. The evidence does not support that this behaviour rose to intimidation or threatening of Mr Hart. While certainly a relatively heated argument took place, but not one offensively so, it is unlikely that a reasonable observer of the argument would have thought Mr Hart was being threatened with menace or consequences for his actions; or that Mr Hart was being intimidated into a changed path by inducing fear.
[51] This is not to say that Mr McCulloch’s conduct was acceptable because it was not. However, it is to say that an objective analysis of what happened leads to the view that although his conduct was verbal abuse it does not rise so far as it being either conduct designed to intimidate or threaten, or conduct which would be viewed by a reasonable person as being of that nature. Instead, viewed objectively and in the context of Mr McCulloch’s employment, the conduct would likely be seen as an over-reaction by him to something relatively minor. It would also likely be seen as misconduct by someone with a chequered employment history, who would have to be held to account once he had calmed down or taken advice.” 7
[7] The Commissioner went on to find that it had not been established that there was a valid reason for Mr McCulloch’s dismissal, within the meaning of s.387(a) 8 and then considered the other criteria in s.387.9 The Commissioner ultimately found that Mr McCulloch was unfairly dismissed.10
[8] The Commissioner next dealt with the question of remedy and concluded that reinstatement was inappropriate. 11 There is no challenge to this aspect of the Decision and so it is unnecessary to say anything further about it. The Commissioner then turned to the issue of compensation and addressed the criteria in s.392(2), which provides:
“Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.”
[9] The Commissioner made findings in respect of each of the matters set out in s.392(2)(a)-(g) as follows:
[10] After considering the criteria in s.387(2)(a)-(g) the Commissioner set out the approach to be taken to the calculation of the amount of compensation to be ordered, at paragraph [108] of the decision: (footnotes omitted)
“[108] The approach by the Fair Work Commission in these matters, and which I follow here, is to estimate the remuneration the employee would have received if they had not been dismissed (usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment); deduct any remuneration earned by the employee since their dismissal until the end of the anticipated period of employment; deduct an amount for contingencies; consider the impact of taxation and adjust the figure accordingly; and assess the figure against the compensation cap set by s.392(5).”
[11] The methodology set out by the Commissioner is sometimes referred to as the Sprigg formula, a reference to the Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket. 19 The Commissioner also referred to the Full Bench decision in Haigh v Bradken Resources Pty Ltd20 which dealt with, among other things, the approach of deducting an amount on account of employee misconduct.
[12] It is not contended that the Commissioner made any error in his statement of the relevant principles, but rather that he erred it is the application of those principles in the circumstances of this case.
[13] As we have already mentioned the Commissioner ordered Calvary to pay Mr McCulloch the sum of $1281.82, less appropriate tax. At paragraph 111 of the decision the Commissioner sets out how he arrived at this amount:
“Having regard to the considerations established by s.392 of the Act, and the criteria established by the FWC, I find that compensation should comprise a payment by Calvary Health Care Adelaide to Mr McCulloch calculated as follows:
Assessment of remuneration lost: |
8 weeks projected lost income at the rate of $367.50 per week 21 |
$2,940.00 |
Employer superannuation contribution on above |
9% |
+ $264.60 |
LESS: |
Monies earned since dismissal 4 weeks pay at the rate of $367.50 per week, and in addition an amount of 9% for the employer’s superannuation contribution (total $400.58 per week) |
- $1,602.32 |
LESS: |
Contingencies Nil |
- $0.00 |
SUB-TOTAL |
$1,602.28 | |
LESS: |
20% deduction on account of misconduct. 22 |
- $320.46 |
TOTAL |
$1,281.82” |
[14] The appellant contends that the amount of compensation ordered was inadequate in the circumstances. In particular the appellant challenges the central finding which underpinned the amount ordered, namely that had he not been dismissed Mr McCulloch’s employment would have been summarily terminated within eight weeks. The proposition that the Commissioner found that Mr McCulloch would be summarily terminated within eight weeks is inferred from the fact that the Commissioner deducted the payment in lieu of notice previously paid to Mr McCulloch.
[15] The Commissioner deals with Mr McCulloch’s anticipated period of employment at paragraphs [90]-[96] of the decision. The Commissioner rejected (at [92]) the proposition (advanced on behalf of Mr McCulloch) that the appellant’s employment would have ‘continued to an unspecified date well into the future’ observing that (at [92]):
“. . . the impression I have formed is of an employee who, on the one hand, was not entirely controlled in their conduct and who, for their own reasons, from time to time made serious, but less than well-founded, complaints, and, on the other hand, being someone who may well react poorly to circumstances he does not like.”
[16] The Commissioner goes on to make the following findings, at paragraphs [93]-[95]:
“[93] Had Calvary Health Care Adelaide chosen to issue a strongly worded final warning to Mr McCulloch, instead of dismissing him, it seems more likely than not that the final warning would not have corrected his behaviour.
[94] It was reasonable for Ms Tran and Mr Hart to take Mrs McCulloch and Ms Nasinki to task for where they were sitting and to instruct them not to sit or pray there at the statue of Mary again. While in all probability Mr Hart seemed annoyed, or even angry when he spoke with them, the evidence is that he was not unreasonably angry or that he was abusive to them. Mr McCulloch had a right to be privately annoyed that his wife had been upset at work by Mr Hart but it was unreasonable of him to react in the way he did.
[95] A relatively minor cause, such as the above, is more likely than not, to be sufficient to cause a repetition of Mr McCulloch’ misconduct. In his mind, I doubt that a warning would be enough for him to concede his behaviour was wrong in the recent past, notwithstanding the remorse he expressed in his written response to Calvary on 24 July 2014. The aggravation of a final warning, together with a further set of circumstances he did not like would no doubt be sufficient to cause a further argument or set of complaints.” (emphasis added)
[17] The Commissioner appears to have relied on three episodes from the appellant’s employment, in addition to the incident which led to the appellant’s dismissal, to support his finding regarding future employment:
(i) a complaint made in 2011-12 when the appellant experienced a psychotic episode, which was subsequently treated and resolved; 23
(ii) a complaint made to management two weeks prior to dismissal, which related to the inappropriate disposal of fridges; 24 and
(iii) the fact that, at the end of the altercation which led to the appellant’s dismissal, he expressed an intention to make a further complaint to management about a matter unrelated to the altercation. 25
[18] These matters are referred to at paragraphs [83]-[85] of the Decision in the context of a consideration as to whether reinstatement was appropriate. There does not appear to be any other evidence related to the Commissioner’s finding.
[19] Before turning to consider the appellant’s contention that the Commissioner’s finding was erroneous, we propose to canvass the submissions advanced at first instance in relation to the amount of compensation to be ordered. We observe at the outset that the submissions put were brief. On behalf of Mr McCulloch, Mr Grealy submitted as follows:
“Mr Grealy: Not at all, thank you, Commissioner. As we have heard, the applicant served for more than seven years, a substantial period, and I'm raising that in the context of the level of compensation to be awarded and addressing the statutory criteria. There is no evidence that the applicant's employment was otherwise about to cease and it can reasonably be inferred that the applicant would have earned substantial and ongoing remuneration but for the dismissal.
The applicant has advised the commission in his written statement that he has made efforts to mitigate his loss by seeking employment with several businesses but has been unsuccessful to date in finding work. He has also attempted to interest neighbours in his area in his services in mowing lawns but this too has not provided any remuneration of note. I have spoken with my friend regarding this matter and confirmed that Mr McCulloch's remuneration from that work falls below both of the thresholds which were suggested yesterday, Commissioner, which were $500 and $1000, if I recall correctly, and I'm happy to address that in any other way if the commission sees fit.
The Commissioner: No, I will be satisfied with what you have to say.
Mr Grealy: Thank you, Commissioner. Unfortunately at the applicant's age he expects that he will have enormous difficulty in finding any further employment and we submit that unfortunately that conclusion isn't reasonable in the circumstances. In terms of any other matters that the commission may consider relevant with respect to compensation we point to the applicant's limited recent employment experience, his limited education and lack of a high school certificate and, of course, his advanced age in asking that the commission order compensation. The respondent's decision has effectively ended Mr McCulloch's career and we submit he should receive substantial compensation. Unless there are any questions, Commissioner, those are the submissions of the applicant.
The Commissioner: All right. In respect of the consideration which is set out in section 392 subsection (3), misconduct to reduce the amount of compensation, do you have any submissions to make in that particular criteria?
Mr Grealy: Our submission is that the misconduct was not so serious as to warrant a reduction as a result of that behaviour and that the misconduct could have been dealt with through a lesser form of disciplinary action and no further penalty is necessary for Mr McCulloch following the personal and economic cost he has suffered through this period, but I'm mindful that the commission - - -
The Commissioner: The difficulty I have with that submission is this: if you agree that there is misconduct, it's just a question of the degree of the misconduct, then I'm obliged by section 392(3) to reduce the amount of compensation by an appropriate amount on account of the misconduct even if that's only by a dollar.
Mr Grealy: We would submit, Commissioner, that the gravity of the misconduct should be considered in making such an assessment and that the reduction, if there is to be a reduction, should be at the lower end of the spectrum in accordance with the seriousness of the misconduct.
The Commissioner: All right. So you don't demur with the proposition that it's misconduct. It's just purely that it's at the lower end of the scale.
Mr Grealy: Precisely, Commissioner.
The Commissioner: All right. The other thing I did wish to check was in respect of the traditional formula used by the commission in assessing compensation. That which is set out in Sprigg often takes the commission to consider contingencies which should be taken into account which potentially can reduce the amount of compensation. Are there any that you see in that respect?
Mr Grealy: We do not see any contingencies that should lead the commission to reduce the - - -
The Commissioner: All right. I thought I should ask you here and, indeed, if Mr Duggan brings up the issue, then obviously you can reply. I think that has exhausted the questions I had. Yes, it has so that concludes your submissions.
Mr Grealy: Thank you, Commissioner.” 26 (emphasis added)
[20] On behalf of Calvary, Mr Duggan’s submissions are confined to one paragraph of the transcript:
“In respect of compensation as an alternative the respondent submits that this should be minimal, particularly taking into account the principles set out in section 392(3), that is, his conduct should reduce the amount of compensation. Commissioner, in this case there is admitted misconduct and the respondent is seeking to adduce evidence that it is more serious than what is admitted. So there clearly is already admitted conduct before we commenced the arbitration and that is something that can be taken into account by the commission and it's submitted that for those reasons, if compensation be considered, there should only be a minimal award of compensation, noting that the applicant has already been paid four weeks in lieu at the time of termination. Commissioner, those are the submissions of the respondent unless you have got any further questions for me.” 27
[21] Written outlines of submissions were also tendered in the proceedings but they add nothing to the oral submissions made on behalf of each party.
[22] A number of observations may be made about the submissions put in the proceedings at first instance.
[23] First, the proposition put on behalf of the applicant, that ‘[t]here is no evidence that the applicant’s employment was otherwise about to cease and it can reasonably be inferred that the applicant would have earned substantial and ongoing remuneration but for the dismissal’, was unchallenged by the respondent. Indeed the respondent made no submissions at all about how long Mr McCulloch would have remained in his employment had he not been dismissed.
[24] Second, the evidence of the previous psychotic episode (in 2011-12), and the two complaints, which were apparently relied upon by the Commissioner, were not advanced by the respondent to suggest that the appellant’s future employment prospects were limited. Indeed, the respondent introduced evidence of the two complaints for an entirely different reason, namely to suggest that the appellant should have complained to senior management rather than confronting his immediate supervisor. The respondent made no submission to the effect that the earlier psychotic episode or the other complaints were relevant to the issue of compensation, and nor did the Commissioner raise them with the appellant’s counsel. Procedural fairness requires that a party be given the opportunity to meet the case against them, or address a potentially adverse finding. 28 No such opportunity was provided in this case.
[25] In the course of the proceedings at first instance reference was made to the various complaints to which we have referred and to the prospect that in the future Mr McCulloch would engage in conduct similar to that which led to his dismissal. The respondent says that the reference to these matters, albeit not in the context of any consideration of how long Mr McCulloch would have remained in employment with Calvary but for his dismissal, is sufficient to meet the procedural fairness point. It was a matter for the Commissioner to use the evidence as he saw fit.
[26] We accept that a Commission Member may use evidence in proceedings for a purpose other than the purpose for which it was adduced. But the parties must be put on notice as to the prospect of any adverse findings based on that evidence in circumstances where no party seeks to rely on the evidence for such a purpose. As Gleeson CJ and Heydon J observed in Suvaal v Cessnock City Council 29
“A trier of fact, confronted with divergent cases being advanced by the parties, may decline to accept either case and may proceed to make findings not exactly representing what either party said. But that does not justify the creation of an entirely new case with which the losing party had no testimonial or other evidentiary opportunity to deal.” (footnotes omitted) 30
[27] We would also observe that, in our view, the evidence upon which the Commissioner relied was insufficient to sustain the inference that, but for the dismissal, the appellant would only have remained in employment for a further 8 weeks, at which time he would be summarily terminated. Implicit in the Commissioner’s finding is that the conduct which led to his dismissal (and which the Commissioner found did not constitute a valid reason for termination) would not only be repeated within a relatively short period of time but would in fact be repeated in a more serious form such as to constitute serious misconduct. While the task of determining an anticipated period of employment can be difficult, it must be done. In the context of this case it seems to us that the Commission would require cogent evidence to conclude that a person such as the appellant, who was dismissed without a valid reason, would only have worked another 8 weeks at which time he would have been summarily dismissed. The Commissioner’s s.392(2)(c) finding constitutes a significant error of fact, within the meaning of s400(2) of the Act.
[28] Counsel for the respondent sought to minimise these matters by referring to the fact that the Commissioner’s finding in respect of Mr McCulloch’s anticipated period of employment was but one of a number of matters he was required to take into account in the exercise of a broad judgment as to the appropriate amount of compensation. We accept that this is so, but such a submission ignores the centrality of the Commissioner’s finding as to the anticipated period of employment. It is this finding which provides the starting point - and the framework - which ultimately leads to the amount of compensation awarded. So much is clear from the Commissioner’s calculations, set out at paragraph [13] above.
[29] Finally, as observed by a previous Full Bench, if the application of the Sprigg formula ‘yields an amount which appears either clearly excessive or clearly inadequate’ than the Commission should reassess the assumptions made in reaching that amount. 31 The order for the payment of compensation must be appropriate having regard to all the circumstances of the case (see s.390(3)(b) and s.392(2)). The circumstances in this case were that the applicant had been employed by the respondent for 7 ½ years; he had never previously been the subject of any disciplinary process and had not previously engaged in conduct similar to that which led to his dismissal; and, because of his age and limited education, he had little likelihood of obtaining other employment. In such circumstances an award of 8 weeks compensation appears to be clearly inadequate.
[30] For the reasons given (see especially paragraphs [14]-[29] above) we are satisfied that it is in the public interest to grant permission to appeal in respect of the Commissioner’s order as to compensation. We will therefore grant permission to appeal, uphold the appeal and quash the Commissioner’s compensation order. We have decided to rehear the question of compensation ourselves and will issue directions to facilitate that course of action.
PRESIDENT
Appearances:
The Appellant: Mr N. Grealy
The Respondent: Mr B. Duggan
Hearing details:
Sydney
19 February 2015
2 (2011) 192 FCR 78 at [43]
3 O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennon, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others [2011] FCAFC 54 at [44] -[46].
4 (2010) 197 IR 266 at [27]
5 Wan v AIRC [2001] FCA 1803 at [30]
6 GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]-[27]; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28], affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler; [2011] FCAFC 54; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28]
7 [2014] FWC 9191 at paragraphs [50]-[51].
8 See [2014] FWC 9191 at paragraph [65].
9 See [2014] FWC 9191 at paragraphs [66]-[74].
10 See [2014] FWC 9191 at paragraph [75].
11 See [2014] FWC 9191 at paragraphs [77]-[87].
12 See [2014] FWC 9191 at paragraph [88].
13 See [2014] FWC 9191 at paragraph [89].
14 See [2014] FWC 9191 at paragraph [96].
15 See [2014] FWC 9191 at paragraphs [97]-[98].
16 See [2014] FWC 9191 at paragraph [100].
17 See [2014] FWC 9191 at paragraph [99].
18 See [2014] FWC 9191 at paragraphs [102]-[104].
19 (1998) 88 IR 21.
21 Exhibit A2, paragraph 4
22 Haigh v Bradken Resources Pty Ltd [2014] FWCFB 236, at [12]
23 See transcript evidence at PN102-PN111, PN1480-PN1491, PN1960 and Exhibit R9 at paragraph 4
24 See transcript evidence at PN90-PN98 and PN1873-PN1879
25 See transcript evidence at PN247-PN255 and Exhibit R9 at paragraph 9
26 Transcript, 22 October 2014, PN2334-PN2347.
27 Transcript, 22 October 2014, PN2492.
28 See Suuval v Cessnock City Council [2003] HCA 41, [18] and [36]; Re Refugee Tribunal; ex parte AALA [2000] HCA 57, [100]; Goldie v Minister for Immigration and Multicultural Affairs [1999] FCA 1277, [35]-[37], [44].
29 [2003] HCA 41 (6 August 2003) at [36]
30 Also see Parker-Walford v PHT Holdings Pty Ltd T/A Sushi-Pro [2013] FWCFB 2191; Lyndoch Living Inc T/A Lyndoch Warrnambool v S Bolden [2014] FWCFB 5969
31 Smith v Moore Paragon Australia Ltd (2004) 130 IR 446 at [32].
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