1
Fair Work Act 2009
s.604 - Appeal of decisions
Mr John McCulloch
v
Calvary Health Care Adelaide
(C2015/1131)
JUSTICE ROSS, PRESIDENT
VICE PRESIDENT HATCHER
DEPUTY PRESIDENT GOSTENCNIK
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 decision1 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:
[2015] FWCFB 873
DECISION
AUSTRALIA FairWork Commission
[2015] FWCFB 873
2
“... 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:
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“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:
s.392(2)(a): an order for compensation would not negatively affect the viability of
Calvary.12
s.392(2)(b): Mr McCulloch was employed by Calvary for about 7 ½ years which was
‘a significant period’ but did not require an adjustment to be made to the order the
Commissioner proposed to make.13
s.392(2)(c): Mr McCulloch’s anticipated period of employment with Calvary (but for
the dismissal) was assessed as being ‘a period of no more than 8 weeks from his date
of dismissal’.14
s.392(2)(d): Mr McCulloch’s efforts to mitigate his loss were described as ‘relatively
modest’, but did not warrant an amendment to the amount of compensation ordered
‘for reason of a failure to mitigate loss’.15
s.392(2)(e): the Commissioner made no deductions for post-dismissal earnings,16 but
stated that in determining the amount of compensation he intended to take into account
the 4 weeks pay in lieu of notice paid to Mr McCulloch at the time of his dismissal.17
s.392(2)(f): this matter was not relevant in the circumstances of this case.
s.392(2)(g): the Commissioner decided to reduce the amount of compensation to be
ordered, pursuant to s.392(3), by 20% on account of the fact that Mr McCulloch’s
misconduct contributed to the decision to dismiss him.18
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[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 week21
$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
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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
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(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 - - -
[2015] FWCFB 873
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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
[2015] FWCFB 873
8
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 Council29
“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.
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[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
Printed by authority of the Commonwealth Government Printer
Price code C, PR560765
1 [2014] FWC 9191
2 (2011) 192 FCR 78 at [43]
[2015] FWCFB 873
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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.
20 [2014] FWCFB 236
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].
