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, 15 APRIL 2015
Appeal against decision [2014] FWC 9191 of Commissioner Wilson at Melbourne on
19 December 2014 in matter number U2014/8599 - Appeal upheld [2015] FWCFB 873 -
rehearing - calculation of compensation.
[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). On 19 December 2014 Commissioner Wilson issued a decision1
where he found that Mr McCulloch was unfairly dismissed and ordered the respondent to pay
him the amount of $1281.82, less appropriate tax (the First Instance Decision). Mr McCulloch
appealed the Commissioner’s decision contending that the amount of compensation ordered
was inadequate in the circumstances. There was no challenge to the Commissioner’s finding
that reinstatement was inappropriate.
[2] The Fair Work Commission (FWC), as presently constituted, heard the appeal on
19 February 2015 and in a decision dated 5 March 20152 (the Appeal Decision) we decided
that the Commissioner’s finding (pursuant to s.392(2)(c)) as to the remuneration the appellant
would have been likely to receive but for his dismissal constituted a significant error of fact.
On that basis we granted permission to appeal, upheld the appeal and quashed the
Commissioner’s compensation order. We have decided to rehear the question of
compensation ourselves and that is the matter before us.
[3] On 5 March 2015 the parties were directed to file submissions on the question of
compensation, specifically addressing among other things, s.392(2)(a)-(g) and s.392(3) of the
FW Act. The parties’ submissions were specifically asked to address the length of time the
appellant would have remained in employment with the respondent but for the dismissal. The
parties have consented to the quantum of compensation being determined ‘on the papers’ and
[2015] FWCFB 2267
DECISION
AUSTRALIA FairWork Commission
[2015] FWCFB 2267
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we have given careful consideration to the written submissions filed on behalf of both parties
in arriving at our decision.
[4] It is apparent that Mr McCulloch has suffered financial loss as a result of his unfair
dismissal and it is appropriate in all the circumstances of his case that he be awarded
compensation. We now turn to assess the amount of compensation to be paid.
[5] Section 392 of the FW Act sets out the criteria that the FWC must take into account
when determining the amount of compensation to be awarded, which provides:
“392 Remedy — compensation
Compensation
(1) An order for the payment of compensation to a person must be an order that the person’s
employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), 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 FWC considers relevant.”
Misconduct reduces amount
(3) If FWC is satisfied that misconduct of a person contributed to the employer’s decision to
dismiss the person, FWC must reduce the amount it would otherwise order under subsection
(1) by an appropriate amount on account of the misconduct.
Shock, distress etc. disregarded
(4) The amount ordered by FWC to be paid to a person under subsection (1) must not include
a component by way of compensation for shock, distress or humiliation, or other analogous
hurt, caused to the person by the manner of the person’s dismissal.
Compensation cap
(5) The amount ordered by FWC to be paid to a person under subsection (1) must not exceed
the lesser of:
(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.
(6) The amount is the total of the following amounts:
[2015] FWCFB 2267
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(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26
weeks immediately before the dismissal; and
(b) if the employee was on leave without pay or without full pay while so employed
during any part of that period—the amount of remuneration taken to have been
received by the employee for the period of leave in accordance with the regulations.”
[6] We have adopted the well established methodology for assessing compensation in
unfair dismissal cases which was most recently the subject of consideration in the context of
the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc T/A
Ottrey (‘Bowden’).3 We now turn to the particular matters we are required to take into
account.
s.392(2)(a): effect on the viability of the employer’s enterprise
[7] It is not contended that an order for the payment of compensation would affect the
viability of the respondent’s business and we find that the order we propose to make will not
affect the viability of the respondent’s business.
s.392(2)(b): length of service
[8] Mr McCulloch was employed by Calvary for about 7 ½ years. This is a period which
supports the making of an order for compensation. Certainly no diminution of any amount
that might otherwise be determined is warranted because of this circumstance.
s.392(2)(c): remuneration received but for dismissal
[9] On behalf of Mr McCulloch it is submitted that, but for his dismissal, it is likely that
he would have remained employed by Calvary for ‘a substantial period’, being at least a
further year. It is conceded that because of the appellant’s age (he was 69 years old on
24 March 2015) it cannot reasonably be assumed that his employment would have continued
indefinitely. It is submitted that Mr McCulloch was unlikely to leave his employment readily,
for the following reasons:
(i) The appellant would have found it difficult to find alternative employment due to his
advanced age, limited education (he left school after completing grade 7), and narrow
employment experience;
(ii) There is no evidence that the appellant had any plan to resign his employment or seek
other employment;
(iii) The appellant gave evidence that he continued to work as he enjoyed his job and had
positive relationships with his colleagues; and
(iv) The appellant had worked for the respondent for a significant period, 7 ½ years.
[2015] FWCFB 2267
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[10] The appellant also submits that there is no evidentiary basis to suggest that
Mr McCulloch was likely to engage in further misconduct that might jeopardise his
employment. He had not been subject to any disciplinary action in his 7 ½ years of
employment, other than the conduct which led to his unfair dismissal.
[11] Calvary contends that we should adopt the Commissioner’s finding at first instance,
namely: ‘it is impossible to draw the conclusion that his (Mr McCulloch’s) employment with
(the respondent) would have continued to an unspecified date well into the future’.
[12] We accept that because of the appellant’s age it is not reasonable to conclude he would
have remained employed by Calvary indefinitely, or for a significant number of years. But the
issue is how long would he have been employed by Calvary but for his dismissal? As we have
noted, the appellant says he would have remained in his employment for at least a further
year.
[13] Calvary’s primary submission is that the Commissioner correctly found that the
appellant would have only remained in employment for no more than 8 weeks. At paragraph
16 of its written submission Calvary says:
“The adverse findings made by Commissioner Wilson having seen and heard the Appellant
and the other witnesses included the substantiation of Mr Hart’s version of events,4 the
reaction of those who had witnessed the abuse and the overall attitude of the Appellant such
that it was open to him to conclude that his future employment was limited to “no more than 8
weeks from the date of dismissal.”5
In the Respondent’s submission if the full bench determines that the Appellant’s future
employment was to continue beyond 8 weeks it is submitted that his employment would not
have continued for a period which exceeded 6 months6 for the reasons discussed in this
submission.7”
[14] As we mention in the Appeal Decision, 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;8
(ii) a complaint made to management two weeks prior to dismissal, which related to
the inappropriate disposal of fridges;9 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.10
[15] These matters are referred to at paragraphs [83]-[85] of the First Instance 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.
[2015] FWCFB 2267
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[16] In the context of the compensation rehearing the respondent has not referred to any
other persuasive material to support the proposition that but for his dismissal the appellant
would only have remained in his employment for 8 weeks. As we observed in the Appeal
Decision, at [27],:
“[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.”11
[17] We do not find the respondent’s primary submission persuasive, (ie. that the appellant
would have only continued in his employment for 8 weeks). In the event we rejected the
respondent’s primary submission it advanced an alternate submission, at paragraph 17 of its
written submission,:
“...if the full bench determines that the Appellant’s future employment was to continue beyond
8 weeks it is submitted that his employment would not have continued for a period which
exceeded 6 months for the reasons discussed in this Submission.”
[18] The reasons advanced by the respondent in support of 6 months anticipated
employment are primarily those directed at supporting the Commissioner’s original finding12
- 8 weeks - and the proposition that had he remained in employment ‘it would have likely
caused unacceptable problems or seriously affected the harmony of the workplace’. It seems
to us that the latter proposition conflates the reasons for not ordering reinstatement with how
long Mr McCulloch would have remained in his employment bur for his unfair dismissal.
[19] We find that but for the unfair dismissal Mr McCulloch would have remained in his
employment with Calvary for a period of 12 months. For the reasons advanced by the
appellant (see [9] - [10] above) we think that Mr McCulloch was likely to have remained in
employment for such a period and there is no sufficient evidentiary basis for concluding that
he was likely to engage in further misconduct that might jeopardise his employment. We now
turn to consider whether we should discount this 12 month period, on account of
contingencies.
[20] There has been some variation in cases as to when contingencies should be considered
in determining an amount of compensation. For example in Sprigg v Pauls Licensed Festival
Supermarket (Sprigg)13 and Ellawala v Australian Postal Corporation (Ellawala)14
contingencies were considered after both the remuneration the dismissed person would have
received, or would have been likely to receive, if they had not been dismissed and the monies
earned by them since termination had been considered. However, in Lockwood Security
Products Pty Limited v Sulocki and Others15 a Full Bench of the AIRC, in consideration of
[2015] FWCFB 2267
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the particular facts in the case, applied a contingency discount directly to the amount they
estimated the dismissed person would have earned but for their dismissal, before making any
other deductions.16 Of course, any discount for contingencies depends upon the circumstances
of each particular case.17
[21] It is important to appreciate that a deduction for contingencies is applied to
prospective losses, that is loss occasioned after the date of the hearing. As the Full Bench
observed in Ellawala,:18
“... A discount for contingencies is a means of taking account of the various probabilities that
might otherwise affect earning capacity. At the time of hearing any such impact on an
applicant’s earning capacity between the date of termination and the hearing will be known. It
will not be a matter of assessing prospective probabilities but of making a finding on the basis
of whether the applicant’s earning capacity has in fact been affected during the relevant
period.”
[22] Mr McCulloch was dismissed on 28 July 2014. We have found that but for his
dismissal he would have remained in his employment with Calvary for a further period of 12
months. (ie until 28 July 2015). It follows that any contingency calculation would only have
relevance for the 3 ½ months between the date of our decision and the end of the anticipated
period of employment. A contingency discount necessarily only applies to future
circumstances. In the context of the present matter we are not persuaded to make any discount
for contingencies.
[23] It follows that the remuneration that Mr McCulloch would have received, or would
have been likely to receive, if he had not been dismissed is $20,829.90 - based on a weekly
wage of $367.50 and a 9% superannuation entitlement.
s.392(2)(d): efforts to mitigate loss
The reasonableness of the efforts taken to mitigate loss depends on the circumstances of the
case.19 In this case the appellant applied for six jobs and circulated a flyer advertising lawn
mowing services. Since these unsuccessful attempts the appellant concluded that he was
unlikely to find work and has not sought further employment. The respondent submits that the
paucity of the evidence regarding the efforts of the appellant to mitigate his loss warrant a
10% deduction to the amount of compensation to be awarded. In the First Instance Decision
the Commissioner characterised Mr McCulloch’s efforts to mitigate his loss as ‘modest’ but
did not amend the amount of compensation awarded on account of a failure to mitigate loss.
The Commissioner stated:
“[97] Mr McCulloch submits that between the time of dismissal and the hearing, a period of
just under 3 months, he has applied for 6 jobs and put out a flier for mowing lawns.20 From
these activities he has earned less than $500.
[98] These are relatively modest efforts by Mr McCulloch to mitigate his loss, even after
taking into account his age of 68 and that he was employed on a part-time basis.21
Notwithstanding, there were some efforts by Mr McCulloch to mitigate his loss, and I do not
propose to amend the amount of compensation ordered for reason of a failure to mitigate
loss.”22
[2015] FWCFB 2267
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[24] We agree with the Commissioner’s assessment. While the appellant’s efforts to
mitigate his loss were ‘modest’, they were reasonable having regard to his age, limited
education and narrow employment experience. We are not persuaded that any deduction to
the amount of compensation to be awarded is warranted on account of a failure to mitigate
loss.
s.392(2)(e) amount of remuneration earned since dismissal
[25] Mr McCulloch has earned less than $500 in remuneration from other work following
the dismissal. On behalf of the appellant it was submitted that no deduction should be made
given the negligible amount in question. The appellant remains unemployed.
[26] Calvary submits that given the remuneration earned it is appropriate to apply a
deduction to the amount of compensation payable of up to one weeks pay.
[27] At first instance the Commissioner considered the amount of remuneration earned but
decided to make no deduction from the amount of compensation to be awarded. The
Commissioner deals with this issue at paragraph [100] of the First Instance Decision:
“[100] Mr McCulloch also earned the incidental amount referred to above of an amount less
than $500. Because this is an undetermined and incidental amount, I will make no deduction
for post-dismissal earnings from the amount of compensation I order.”23
[28] The approach taken by the Commissioner was appropriate and we propose to adopt it.
s.392(2)(f): income likely to be earned during the period between the making of the order
and the actual compensation
[29] No submission was advanced by the respondent in relation to this criterion. The
appellant has been unemployed since the dismissal and there is no sound evidentiary basis on
which to conclude that the appellant is likely to earn remuneration from employment or other
work between the making of the order and the payment of compensation.
s.392(2)(g): any other relevant matter
[30] Both parties submit that we should make a deduction of $1,602.32, representing the
four weeks’ wages paid inclusive of superannuation by Calvary to the appellant, in lieu of
notice. This matter was not the subject of any detailed submissions and we propose to give
effect to the consent position of the parties.
[31] Mr McCulloch was in receipt of a part-pension while in employment, and has been in
receipt of the full pension rate of $644 per fortnight following his dismissal. The appellant
submitted that no amount should be deducted for the appellant’s receipt of the Age Pension.
Calvary submitted that there should be a deduction made to the compensation awarded on
account of these pension payments.
[32] The FWC, and its predecessors, have not deducted social security payments in the
manner proposed by the respondent on the basis that such payments do not constitute
‘remuneration earned ... from employment or other work’ for the purposes of s.392(2)(d).
[2015] FWCFB 2267
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This issue was specifically addressed in Kennedy and Cumnock No.1 Colliery Pty Ltd24 where
the Full Bench said:
“We note that allowance is generally not made for social security payments in assessing an
amount to be ordered in lieu of reinstatement pursuant to s.170CH(6): Sprigg v Paul’s
Licensed Festival Supermarket (1998) 88 IR 21; Australian Postal Commission v Ellawalla 17
April 2000, [Print S5109]. The relevant part of the decision in each of these cases was
influenced to some extent by the decision in Shorten v Australian Meat Holdings Pty Ltd
(1996) 70 IR 360.”25
[33] The Full Bench then went on to say at [11]:
“It is not our intention that the remuneration lost should be discounted for social security
payments which the applicant is required to repay. Equally we think it would be inequitable to
permit recovery of lost remuneration from the employer when social security payments
referable to loss of income could be retained.”26
[34] The most recent consideration of this issue appears to have been in Kim Lee Jarvis v
Crystal Pictures Pty Ltd27 in which Cloghan C declined to make any deduction on account of
the receipt of Centrelink payments, for the following reasons:
“[74] I should note for the benefit of both parties that Ms Jarvis advised that during between
her termination of employment and 15 April 2010, she received Centrelink payments.
Ms Jarvis did not disclose the amount received. For my purposes under s.392(e) of the Act, I
do not consider Centrelink payments as “…remuneration earned by [Ms Jarvis] from
employment or work during the period between the dismissal and the making of the order for
compensation”. Further, I do not consider it “relevant” for the purposes of s.392(g) of the Act,
as it would be inappropriate for Australian taxpayers to effectively subsidise compensation
(foregone wages) payable to an employee, where the employer has instantly dismissed that
employee unfairly.
[75] Having said that, if the Centrelink payments received by Ms Jarvis have to be repaid or
there is discretion for repayment, that is a matter between Ms Jarvis and the relevant
Commonwealth officers.”28
[35] Given the limited argument advanced in respect of this issue we do not propose to
depart from previous authority and accordingly we will not make the deduction sought by the
respondent. We have also proceeded on the assumption that the order we propose to make
may mean that a proportion of the pension payments received by Mr McCulloch since his
dismissal will have to be repaid to the Commonwealth.
s.392(3): misconduct
[36] Section 392(3) provides that if the FWC is satisfied that the applicant’s misconduct
contributed to the employer’s decision to dismiss them then,:
“...the FWC must reduce the amount it would otherwise order under subsection (1) by an
appropriate amount on account of the misconduct.”
[2015] FWCFB 2267
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[37] We are satisfied that Mr McCulloch’s misconduct contributed to Calvary’s decision to
dismiss him, it follows that we must reduce the amount of compensation we would otherwise
have ordered, on account of that misconduct. It is apparent from the terms of s.392(3) that any
deduction on account of misconduct is to be applied before the application of the legislative
cap.
[38] In the First Instance Decision the Commissioner reduced the amount of compensation
by 20% on account of Mr McCulloch’s misconduct,:
“[103] Mr McCulloch was dismissed for misconduct, and I am satisfied that his behaviour
amounted to such, albeit at the lower end of what might be regarded as the scale of
misconduct.
[104] Because of this assessment as to the nature of the misconduct and its seriousness, I
consider the amount of compensation should be reduced by an amount of 20% on account of
the fact that Mr McCulloch’s misconduct contributed to the employer’s decision to dismiss
him.”29
[39] The approach taken by the Commissioner was appropriate and we intend to adopt it.
We will reduce the amount of compensation we would have awarded by 20% on account of
Mr McCulloch’s misconduct.
s.392(5): compensation cap
[40] Subsection 392(5) imposes a legislative ‘cap’ on the amount of compensation the
FWC can order. In the context of this case the ‘cap’ is the total amount of remuneration which
Mr McCulloch received for his employment with Calvary during the 26 weeks immediately
before his dismissal (see s.392(6)(a)).
[41] The appellant submits that the legislative cap in this case is $10,414.95. The
respondent submits that the ‘cap’ is in fact $9,133.13, that is $10,414.95 less the sum of
$1,281.52, being the amount which has already been paid to Mr McCulloch. We reject this
submission.
[42] Contrary to the respondent’s submission, the post dismissal sums paid to the appellant
are not relevant to the determination of the ‘cap’. The ‘cap’ is calculated by reference to the
amount of remuneration received by Mr McCulloch for the period of employment with
Calvary during the 26 weeks ‘immediately before the dismissal’. So much is clear from
s.392(6)(a). The payments sought to be deducted by the respondent were made after
dismissal, and in any event the amount of compensation to be awarded has already been
reduced by this amount pursuant to s.392(2)(g).
s.393: instalments
[43] There was no submission that any amount of compensation should be subject to
payment by instalments. We are not satisfied that in this case payment by instalments is
warranted.
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[44] In summary we find as follows:
1. An order for the payment of compensation would not affect the viability of Calvary’s
business (s.392(2)(a)).
2. The length of the appellant’s service favours the making of an order for compensation
and no diminution of any amount that might otherwise be determined is warranted
because of this circumstance (s.392(2)(b)).
3. The remuneration that the applicant would have been likely to receive, but for his
dismissal, is $20,829.90 (s.392(2)(c)).
4. We make no deduction for contingencies
5. We make no deduction on account of a failure to mitigate loss (s.392(2)(d)).
6. We make no deduction for remuneration earned since dismissal (s.392(2)(e)).
7. We make no deduction for income likely to be earned during the period between the
making of the order and the actual compensation (s.392(2)(f)).
8. We deduct the sum of $1,602.32 (representing pay in lieu of notice), having regard to
the fact that this is an agreed deduction. This leaves an indicative amount of
$19,227.58 (being $20,829.90 - $1,602.32).
9. We deduct 20% from the indicative amount in step 8, on account of Mr McCulloch’s
misconduct (s.392(3)), leaving $15,382.10.
10. We apply the ‘cap’, resulting in an amount of $10,414.95.
[45] We have taken into account all of the circumstances of the case and all of the matters
we must take into account pursuant to subsections 392(2), (3) and (5). We are satisfied that it
is appropriate to order that the respondent pay the appellant compensation in the amount of
$10,414.95, less applicable tax. This amount shall be payable within 14 days of the date of
this decision. We will issue a separate order to this effect.
PRESIDENT
Final written submissions:
Appellant’s submissions on compensation - 16 March 2015
Respondent submissions in response on compensation - 26 March 2015
Printed by authority of the Commonwealth Government Printer
[2015] FWCFB 2267
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Price code C, PR562677
1 [2014] FWC 9191
2 [2015] FWCFB 873
3 [2013] FWCFB 431
4 Which meant that Mr Hart was not the aggressor and that the appellant had in fact abused him during the altercation.
5 Mr John McCulloch v Calvary Health Care Adelaide [2014] FWC 9191 at paragraph [96]
6 Including the period of notice required for termination of the appellant’s employment
7 Including for the reason that it would have likely caused unacceptable problems or seriously affected the harmony of the
workplace
8 See transcript evidence at PN102-PN111, PN1480-PN1491, PN1960 and Exhibit R9 at paragraph 4
9 See transcript evidence at PN90-PN98 and PN1873-PN1879
10 See transcript evidence at PN247-PN255 and Exhibit R9 at paragraph 9
11 [2015] FWCFB 873
12 See paragraphs 10-16 of the respondent’s written submission
13 (1988) 88 IR 21
14 Print S5109
15 PR908053
16 Ibid at [56].
17 Enhance Systems Pty Ltd v Cox, PR910779 at [38].
18 Print S5109 at [43]
19 Biviano v Suji Kim Collection, PR915963 at [34]
20 Exhibit A2, paragraphs 40 - 41
21 Ibid at paragraph 2
22 [2014] FWC 9191 at [97] - [98]
23 Ibid at [100]
24 PR908987; Also see Steggles Ltd v West, Print S5876
25 Kennedy and Cumnock No.1 Colliery Pty Ltd, PR908987 at [10]
26 Ibid at [11]
27 [2010] FWA 3674
28 [2010] FWA 3674 at [75] - [75]
29 [2014] FWC 9191 at [103] - [104]
