1
Fair Work Act 2009
s.604 - Appeal of decisions
Balaclava Pastoral Co Pty Ltd t/a Australian Hotel Cowra
v
Darren Nurcombe
(C2016/6673)
VICE PRESIDENT HATCHER
DEPUTY PRESIDENT GOSTENCNIK
COMMISSIONER CRIBB MELBOURNE, 20 JANUARY 2017
Appeal against decision [2016] FWC 7454 and order PR586503 of Commissioner Cambridge
at Sydney on 20 October 2016 in matter number U2016/938.
Introduction and background
[1] Balaclava Pastoral Co Pty Ltd, which trades as the Australian Hotel Cowra
(Balaclava), has lodged an appeal, for which permission to appeal is required, against a
decision of Commissioner Cambridge issued on 20 October 20161 (Decision) and an order
issued on the same date2 (Order). The Decision concerned an unfair dismissal remedy
application lodged by Mr Darren Nurcombe in respect of the alleged termination of his
employment as a part-time barman with Balaclava on 21 February 2016. In the Decision the
Commissioner found that Mr Nurcombe had been unfairly dismissed, and ordered that
Balaclava pay him compensation in the amount of $18.552.00.
[2] The factual background may shortly be described. Mr Nurcombe commenced working
in the Australian Hotel in the NSW country town of Cowra in March 2010. In October 2012
the owners of the Hotel, who had been operating to that point, leased the premises and the
operation of license to Balaclava. Balaclava was the business vehicle for Mr Bradley
O’Connor and Ms Anita Fifoot, who at that time were in a de-facto relationship. Both were
directors of Balaclava and operated the Hotel as joint managers, with Mr O’Connor being the
named licensee.
[3] The relationship, both personal and professional, between Mr O’Connor and Ms Fifoot
broke down over the period from 2013 to 2015. Mr O’Connor ceased to be a director of
Balaclava in 2013. The personal relationship ended in 2014 or 2015. Mr O’Connor ceased to
be involved in the day-to-day running of the Hotel in about January 2015. Ms Fifoot became
the named licensee in September 2015.
1 [2016] FWC 7454
2 PR586503
[2017] FWCFB 429
DECISION
E AUSTRALIA FairWork Commission
[2017] FWCFB 429
2
[4] The breakdown in the relationship between Mr O’Connor and Ms Fifoot was the
subject of some bitterness. It appears that this flowed into the working relationship between
Ms Fifoot and Mr Nurcombe, who we infer was, or was at least perceived to be, in Mr
O’Connor’s “camp”.
[5] Ms Fifoot raised some performance issues with Mr Nurcombe in the latter half of
2015. However matters took a more serious turn as a result of an incident which occurred on
30 January 2016. On that day Mr O’Connor attended the Hotel whilst Mr Nurcombe was
working, and told him he was taking some beer dispensing equipment including a “miracle
box” for use at a party. A miracle box is a device which instantly chills beer flowing through
the line from a room-temperature keg to a tap for pouring. It is the antipodean equivalent of
turning water into wine.
[6] Ms Fifoot shortly afterwards became aware that Mr O’Connor had been seen leaving
the premises with the miracle box and other fittings. She confronted Mr Nurcombe about this,
and rebuked him for not reporting the matter to her. She next rang the police to report that the
miracle box had been stolen, and then decided to suspend Mr Nurcombe. Mr Nurcombe and
Ms Fifoot fell into an argument, with Mr Nurcombe protesting that he had no knowledge of
Mr O’Connor’s level of authority in the business. The police then arrived, escorted Mr
Nurcombe out of the Hotel, and questioned him about the matter. They were satisfied with his
explanation about the matter, and then departed.
[7] Ms Fifoot confirmed Mr Nurcombe’s stand-down the following day in writing, and he
was required to attend a formal counselling meeting on 3 February 2016. Mr Nurcombe’s
solicitors responded on his behalf, and this led to an exchange of correspondence. In one letter
Ms Fifoot made new allegations of conduct/performance issues on Mr Nurcombe’s part,
including his refusal to move kegs in the cool room. Mr Nurcombe had long refused to move
the kegs because of a medical issue, and it appears that he had much earlier informed Mr
O’Connor of this.
[8] Ultimately the formal counselling meeting took place on 9 February 2016. Mr
Nurcombe was accompanied by his solicitor, and flatly denied each allegation put to him. He
was then allowed to return to work the following day. On his return to work on 10 February
2016 he was issued with a final warning letter for unacceptable conduct and performance.
[9] On 19 February 2016 the Hotel received a delivery of kegs which had to be moved
into the cool room. Mr Nurcombe refused to undertake this task on the grounds of physical
incapacity. The following day Ms Fifoot, having decided to stand down Mr Nurcombe again,
called him into a meeting where she had arranged the presence of a witness. Shortly after the
meeting commenced, Mr Nurcombe said that the meeting was a “setup”, left and returned to
his duties at the bar. Ms Fifoot’s evidence, which was the subject of dispute, was that later in
the day she told Mr Nurcombe that he was stood down again and was not terminated.
[10] Mr Nurcombe nonetheless attended for work the following day, 21 February 2016, at
his rostered starting time. Ms Fifoot, seeing him at work, approached him and a discussion
ensued. Mr Nurcombe’s evidence was that she told him he was terminated. Ms Fifoot’s
evidence was that she told him that he was stood down, and refuted his suggestion that he had
been dismissed. Ms Fifoot requested that he return his keys to the hotel, which were necessary
for him to perform his duties. He later had them returned.
[2017] FWCFB 429
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[11] On 22 February 2016 Ms Fifoot sent a letter to Mr Nurcombe which, among other
things:
stated her belief that “you have engaged in serious misconduct which justifies
summary dismissal”;
particularised the misconduct as including his refusal to move the kegs and his
attendance at work on 21 February 2016 despite being stood down;
stated that “Based on my concerns I am proposing to terminate your employment
summarily”, but that Mr Nurcombe would be given “an opportunity to respond to the
allegations about your conduct and the proposed dismissal”;
required Mr Nurcombe to attend a meeting at the Hotel on 24 February 2016 to
discuss these matter; and
advised him that “if you choose not [to] attend this meeting without providing a
reasonable excuse, I may move to terminate your employment without further notice to
you”.
[12] There followed another exchange between Mr Nurcombe’s solicitors and Ms Fifoot. In
a letter dated 24 February 2016, Mr Nurcombe’s solicitors contended that Mr Nurcombe had
been dismissed by Ms Fifoot on 21 February 2016, that he would not attend the meeting, and
that he intended to make an unfair dismissal remedy application. Ms Fifoot replied the same
day, stating that Mr Nurcombe had not been dismissed on 21 February 2016 and rescheduling
the meeting for 25 February 2016. Mr Nurcombe’s solicitors replied by re-affirming that Mr
Nurcombe had been dismissed and that he would not attended the rescheduled meeting.
[13] There was no dispute that Mr Nurcombe was not rostered for work, or paid, at any
time after 21 February 2016. He filed his unfair dismissal remedy application on 3 March
2016.
[14] At the time of the hearing before the Commissioner, Mr Nurcombe had not succeeded
in obtaining any alternative employment.
The Decision
[15] The first contested issue dealt with in the Decision was the question of whether Mr
Nurcombe had been dismissed. The Commissioner began his consideration of this issue by
finding that Mr Nurcombe did not resign, nor did he contend at the hearing that that he was
subject to a course of conduct that was intended or likely to lead to the termination of
employment.3 In relation to the disputed issue as to whether Ms Fifoot had told Mr Nurcombe
in their exchange on 21 February 2016 that he was terminated, the Commissioner did not
make a finding about this but concluded that even if Ms Fifoot had done this, Mr Nurcombe
was not entitled “in the absence of broader, contextual considerations” to rely upon words
said in the heat of the moment and quickly retracted to demonstrate the termination of his
employment.4
3 Decision at [54]
4 Decision at [55]
[2017] FWCFB 429
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[16] The Commissioner then made the following findings of fact relevant to this issue of
how the employment came to an end:
Ms Fifoot had told Mr Nurcombe that he was stood down, not dismissed, on 21
February 2016, and required him to surrender the keys to the Hotel premises.5
Mr Nurcombe understood the difference between being stood down and dismissed.6
The requirement for the return of the keys reflected an underlying intention on the part
of Balaclava to bring the employment to an end. This intention was also reflected in
Balaclava’s conduct in relation to the miracle box incident - in particular, the reporting
of the matter to the police.7
Ms Fifoot was motivated in large part by bitterness and malice arising from the actions
of her former partner, Mr O’Connor, and this caused her to implement
disproportionate disciplinary and other retaliatory action against Mr Nurcombe in
relation to the miracle box incident.8
Although Ms Fifoot was aware that it was common practice for Mr Nurcombe not to
move the kegs in the cool room, on 19 February 2016 she used this as a basis to
suspend Mr Nurcombe for the second time.9
[17] The Commissioner then concluded:
“[62] … In reality, the employment relationship could not endure a second,
unwarranted, stand down, particularly so soon after the embarrassing and humiliating
consequences of the miracle box theft incident.
[63] Consequently, despite whatever words may have been said by Ms Fifoot on 21
February, the second, unwarranted and unreasonable stand down of the applicant when
properly construed in the context of the circumstances leading up to that event,
represented the employer’s repudiation of the fundamental elements of trust and
confidence that are necessary for the maintenance of the contract of employment. The
applicant was entitled to treat the (second) stand down as conduct of the employer
which repudiated any continuation of the employment relationship. These
circumstances are akin to what is often described as constructive dismissal, although
there is no formalised resignation provided by the employee.
[64] The position that the applicant found himself in on 21 February could be
described as a constructive dismissal, where the stated position of the employer
disingenuously attempted to continue the employment despite its actions to the
contrary. In a practical sense, the applicant could have verbalised his position as one
5 Decision at [56]
6 Decision at [56]
7 Decision at [57]
8 Decision at [60]
9 Decision at [61]
[2017] FWCFB 429
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whereby he was entitled to reject the second unwarranted stand down, and treat the
actions of the employer as dismissal, notwithstanding any confirmed, spoken
suggestion to the contrary. These were circumstances whereby the dismissal was
constructed by the actions of the employer, although there may have been no words
which conveyed dismissal to the employee, and instead communication was made
which was contrary to the intentions of the action taken.
...
[68] In the present case, a careful analysis of the circumstances has established that it
was the actions of the employer which operated to bring the employment to an end.
Consequently, the applicant was dismissed in satisfaction of the terms of subsection
386 (1) (a) of the Act. That is, the termination of the applicant’s employment occurred
on the employer’s initiative.”
[18] The Commissioner referred to Macken’s Law of Employment10 and the decisions in
Mohazab v Dick Smith Electronics (No 2)11 and Allison v Bega Valley Council12 to support his
conclusion that there had been a termination of employment in the nature of a constructive
dismissal effected by Balaclava.
[19] The Commissioner then dealt with whether the dismissal was unfair. He dealt with all
the matters he was required to take into account under s.387. In respect of s.387(a), the
Commissioner found that there was no valid reason for the dismissal.13 His reason for this
finding were:
“[79] Following a careful and balanced consideration of the totality of the evidence that
was presented in connection with the performance and conduct issues that may have
represented basis for the dismissal of the applicant, those issues, could not, either
singularly or in combination, provide valid reason for the dismissal of the applicant.
Matters such as the applicant’s refusal to move kegs into the cool room, and his other
identified performance inadequacies, should have been carefully and properly
addressed as part of some measured and documented conduct and performance review.
Only in the event that, following such review, the applicant was unable to rectify the
reasonable requirements clearly established by the employer, could these issues
represent valid reason for dismissal.”
[20] In relation to s.387(h), the Commissioner stated that Mr Nurcombe’s work
performance “was clearly not faultless”, but his “performance and conduct inadequacies”
were not properly managed through a formal process because of “the employer’s emotive,
unwarranted and unreasonable overreaction in circumstances whereby the applicant’s
employment was drawn into the broader conflict between Ms Fifoot and Mr O’Connor”.14
The Commissioner’s ultimate conclusion was that the dismissal was harsh, unjust and
unreasonable.15
10 Macken’s Law of Employment, Sappideen et al, 2011, seventh edition at [9.20]
11 (1995) 262 IR 200
12 [1995] NSWIRComm 175; 63 IR 68
13 Decision at [80]
14 Decision at [87]
15 Decision at [92]
[2017] FWCFB 429
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[21] In respect of the remedy to be awarded to Mr Nurcombe for his unfair dismissal, the
Commissioner noted that he did not seek reinstatement, and found that compensation would
be an appropriate remedy.16 The Commissioner then indicated that he approached the question
of compensation having regard to the Full Bench decisions in Sprigg v Paul’s Licensed
Festival Supermarket17 and as commented upon in the subsequent Full Bench Decision
in Smith and Ors v Moore Paragon Australia Ltd.18 The Commissioner’s reasoning for his
conclusion that the appropriate amount of compensation was $18.552.00 was, in full, as
follows:
“[96] Firstly, I confirm that an Order for payment of compensation to the applicant will
be made against the employer in lieu of reinstatement of the applicant.
[97] Secondly, in determining the amount of compensation that I Order, I have taken
into account all of the circumstances of the matter, including the factors set out in
paragraphs (a) to (g) of subsection 392 (2) of the Act.
[98] There was no evidence, as opposed to submissions, that an Order of
compensation would impact on the viability of the employer’s enterprise.
[99] The applicant had approximately three years and five months service with the
employer. The applicant would have been likely to have received remuneration of
approximately $773.00 per week if he had not been dismissed. There was some
prospect that the employment of the applicant may not have endured for a
considerable period. In particular, I have noted that conduct and performance issues
including the applicant’s apparent inability to perform the particular task of moving
the kegs into the cool room, may have ultimately led to his dismissal.
[100] Following the dismissal, the applicant made efforts to mitigate the loss suffered
because of the dismissal. I have noted the submissions of the employer regarding the
alleged inadequacy of the applicant’s attempts to find alternative employment and
mitigate his loss. However, on balance, particularly given the circumstances which
involve a local country community, I have not been persuaded to significantly reduce
the quantum of any compensation because of any established failure of the applicant to
take reasonable steps to find alternative employment.
[101] Thirdly, in this instance there was no established misconduct of the applicant
which contributed to the employer's decision to dismiss.
[102] Fourthly, I confirm that any amount Ordered does not include a component by
way of compensation for shock, distress or humiliation, or other analogous hurt caused
to the applicant by the manner of the dismissal.
[103] In respect to the determination of the quantum of compensation to be provided
to the applicant, I have had regard for the loss of non-transferable employment credits
associated with employment that was approaching, in total, six years’ duration.
16 Decision at [93]-[94]
17 Print R0235, (1998) 88 IR 21
18 PR942856, (2004) 130 IR 446
[2017] FWCFB 429
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[104] Consequently, for the reasons outlined above, I have decided that an amount
approximating with 24 weeks remuneration should be Ordered as compensation to the
applicant. That amount is $18,552.00. Accordingly, separate Orders [PR586503]
providing for remedy in these terms will be issued.”
Appeal grounds and submissions
[22] Balaclava’s notice of appeal contained seven grounds of appeal, and additionally
identified three alleged significant errors of fact. Grounds 1-4 challenged the conclusion that
Mr Nurcombe had been terminated at the initiative of Balaclava, ground 5 challenged the
findings made by the Commissioner in relation to the factors required to taken into account
under s.387, and ground 6 concerned the calculation of compensation under s.392. Ground 7
contended that the Commissioner erred by not resolving the disputed issue of whether Ms
Fifoot told Mr Nurcombe that he was terminated on 21 February 2016 on the basis of a credit
finding adverse to Mr Nurcombe. The three alleged significant errors of fact concerned
findings that Mr Nurcombe had not been the subject of a performance management process19,
that he did not have the opportunity to respond to complaints about his conduct and
performance20, and that the dismissal was directly connected with the miracle box incident.21
These alleged errors all related to the Commissioner’s consideration of whether the dismissal
was unfair and were raised in support of appeal ground 5.
[23] In relation to the question of whether there was a dismissal, Balaclava submitted that:
the Commissioner erred in finding that Mr Nurcombe was terminated at Balaclava’s
initiative, having found that Mr Nurcombe did not resign and did not articulate a case
that conduct on the part of Balaclava was intended or likely to lead to the termination
of the employment;
there was no evidence or even identification by Mr Nurcombe in his case of any
repudiatory conduct or action to accept the repudiation;
there was no action by Balaclava that was intended to bring the employment to an end
or had the probable result of bringing the employment to an end;
Balaclava had done no more than raised performance deficiencies;
the Commissioner erred by failing to resolve the issue of what was said by Ms Fifoot
to Mr Nurcombe on 21 February 2016, a matter which went to Mr Nurcombe’s credit;
insofar as paragraph [60] of the Decision contained a credit finding adverse to Ms
Fifoot, it was erroneous; and
Balaclava was denied procedural fairness in that the basis upon which the
Commissioner found that there had been a dismissal was not raised in Mr Nurcombe’s
19 Decision at [79]
20 Decision at [82]
21 Decision at [70]
[2017] FWCFB 429
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case, nor did the Commissioner raise it in the course of argument and give Balaclava
an opportunity to respond to it.
[24] In relation to the Commissioner’s findings pursuant to s.387, Balaclava submitted that
he had made the significant errors of fact pleaded in the notice of appeal, in that:
he had in fact been subjected to a documented performance counselling process, with
meetings to discuss performance issues on 13 August 2016 and 4 September 2016, the
stand-down and disciplinary meeting of 30 January/9 February 2016, and the intention
to deal with Mr Nurcombe’s repeated failures to perform his duties on 20 February
2016;
the process described afforded Mr Nurcombe numerous opportunities to respond to
the complaints about his performance, which he failed to avail himself of; and
there was no evidence that the miracle box incident had anything to do with the
alleged dismissal.
[25] As to the calculation of compensation, Balaclava submitted that:
the Commissioner did not assess compensation in accordance with the well-
established “Sprigg formula” derived from Sprigg v Paul’s Licensed Festival
Supermarket22;
the Commissioner erred by not correctly resolving the question of Mr Nurcombe’s
estimated period of future employment, which is the necessary first step in the
calculation of compensation;
there was further error in the failure to make a deduction for contingencies, which was
necessary having regard to the facts that Mr Nurcombe was on a first and final
warning letter and had been the subject of ongoing counselling;
the Commissioner also erred by not further reducing compensation on account of Mr
Nurcombe’s failure to mitigate his loss, in that he had made no formal job applications
but merely handed out his business card; and
the Commissioner failed to provide reasons for his conclusion that 24 weeks’
compensation should be paid, and the amount awarded was inexplicable in light of the
earlier matters submitted by Balaclava.
[26] Mr Nurcombe submitted that permission to appeal should be refused on the basis that
the appeal raised no issues of general application, was confined to its particular factual
circumstances, was not counter-intuitive and did not raise any arguable case of appealable
error. In relation to the question of whether there was a termination of employment at the
initiative of the employer, he submitted that:
22 Print R0235, (1998) 88 IR 21
[2017] FWCFB 429
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there was no challenge to the Commissioner’s conclusion that the employment came
to an end on 21 February 2016;
the question which the Commissioner had to determine was therefore who caused the
employment to end;
there was no suggestion on the part of Balaclava in the appeal that the employment
came to an end because of any action independent of the parties, and Balaclava
accepted in the appeal that the Commissioner’s conclusion that there was no
resignation was correct;
Balaclava otherwise advanced no explanation as to how the employment came to an
end;
the second stand-down (found by the Commissioner to be unjustified), the removal of
the keys and Balaclava’s position at the time that the stand-down was justified by
serious misconduct on the part of Mr Nurcombe which justified summary dismissal,
compelled the conclusion that it was Balaclava which had brought the employment to
an end; and
there was no denial of procedural fairness, and the Commissioner’s reference to
repudiation was a shorthand description of his task of examining all the circumstances
in order to identify on whose initiative the employment came to an end.
[27] In relation to the alleged errors of fact, Mr Nurcombe submitted that Balaclava had not
demonstrated that any such errors had the necessary level of significance required by s.400(2).
He further submitted that the Commissioner’s detailed reasoning concerning the inadequacies
in Balaclava’s performance management process, and his findings that the performance issues
raised concerning the miracle box incident and the refusal to move kegs were not justifiable,
were not properly challenged in the appeal, and wholly supported the Commissioner’s
conclusions concerning performance management. In relation to the finding under s.387(c)
that Mr Nurcombe was not given a proper opportunity to respond to any legitimate complaints
about aspects of his performance or conduct, it was submitted that Balaclava’s submission
that this finding was incorrect was unsustainable. This was because the conduct said by
Balaclava to constitute a valid reason for dismissal occurred on 19 February 2016, but the
alleged opportunity to respond was said to have occurred before this date. In relation to the
miracle box incident, it was submitted that it was again unsustainable for Balaclava to submit
that the first and final warning letter issued as a result of the miracle box incident was
appropriate, but then also to submit that the incident had nothing to do with the alleged
dismissal.
[28] In relation to compensation, Mr Nurcombe submitted that:
the Sprigg formula should not be elevated above the statutory criteria in s.392(2);
the Commissioner took into account the possibility that Mr Nurcombe’s employment
may not have lasted for a considerable period, but there was no evidence to suggest
that he would likely to have been fairly dismissed;
[2017] FWCFB 429
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if Balaclava had followed a fair and reasonable performance management process,
there was no reason to think he would not have met reasonable standards;
there was no evidence that Mr Nurcombe would have been likely to find alternative
employment in a country town; and
there was no basis for any deduction for contingencies, since that is a consideration
that is only relevant to future economic loss, and in this case the Commissioner
determined compensation more than six months after the dismissal.
[29] Both parties agreed that in the event we granted permission to appeal and upheld the
appeal in respect of any of Balaclava’s grounds of appeal, we should re-determine the matter
ourselves on the evidence adduced to date, and not remit the matter to a single member of the
Commission for further hearing.
Consideration
[30] An appeal under s.604 of the FW Act is an appeal by way of rehearing and the
Commission’s powers on appeal are only exercisable if there is error on the part of the
primary decision maker.23 There is no right to appeal and an appeal may only be made with
the permission of the Commission.
[31] This appeal is one to which s.400 of the FW Act applies. Section 400 provides:
(1) Despite subsection 604(2), the FWC must not grant permission to appeal from a
decision made by the FWC under this Part unless the FWC considers that it is in the
public interest to do so.
(2) 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.
[32] In the Federal Court Full Court decision 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”.24 The task of assessing whether the public interest
test is met is a discretionary one involving a broad value judgment25. 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
23 This is so because on appeal the Commission has power to receive further evidence, pursuant to s.607(2); see Coal and
Allied v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ
24 (2011) 192 FCR 78 at [43]
25 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, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty
Ltd v Lawler and others (2011) 192 FCR 78 at [44] -[46]
[2017] FWCFB 429
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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.”26
[33] 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.27 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.28
[34] An application for permission to appeal is not a de facto or preliminary hearing of the
appeal. In determining whether permission to appeal should be granted, it is unnecessary and
inappropriate for the Full Bench to conduct a detailed examination of the grounds of appeal.29
[35] Balaclava’s appeal essentially raises three issues: first, was Mr Nurcombe’s
employment terminated at the initiative of Balaclava (appeal grounds 1-4 and 7); second, did
the Commissioner make significant errors of fact which vitiated his conclusion that Mr
Nurcombe’s dismissal was unfair (appeal ground 5); and third, did the Commissioner err in
his quantification of the compensation to be paid to Mr Nurcombe (appeal ground 6). We will
deal with each of these issues in turn.
Whether Mr Nurcombe was dismissed by Balaclava
[36] We do not consider that it is in the public interest to grant permission to appeal in
relation to this issue. There was no dispute that, by the time Mr Nurcombe lodged his unfair
dismissal remedy application on 3 March 2016, his employment relationship with Balaclava
had terminated. The difficulty with Balaclava’s case in the appeal is that it was unable to
identify any plausible alternative to the conclusion that the employment relationship had
terminated at Balaclava’s initiative. It accepted for the purpose of the appeal that Mr
Nurcombe had not resigned. There was no suggestion that the employment had terminated
because of any factor beyond the control of the parties. While Balaclava criticised, in some
respects legitimately, the process by which the Commissioner concluded that the employment
was terminated by it on 21 February 2016, it was unable to mount an arguable case that Mr
Nurcombe’s employment had not been terminated on its initiative on or around that date.
[37] It is clear that Mr Nurcombe remained ready, willing and able to work, as shown by
his attendance at work on 21 February 2016. Notwithstanding this, the employment ended,
and the following facts, which were not in dispute, compel the inference that the employment
ended on Balaclava’s initiative:
Mr Nurcombe was stood down because of his incapacity to move kegs, even though
this incapacity had manifested itself over a long period beforehand;
26 [2010] FWAFB 5343, 197 IR 266 at [27]
27 Wan v AIRC (2001) 116 FCR 481 at [30]
28 GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]-[27], 197 IR 266; Lawrence v Coal & Allied
Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28], 202 IR 388, affirmed on
judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; NSW Bar Association v Brett
McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28]
29 Trustee for The MTGI Trust v Johnston [2016] FCAFC 140 at [82]
[2017] FWCFB 429
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for the first time, Mr Nurcombe had his keys which allowed him to access the work
premises removed from him;
By 22 February 2016 at the latest (as evidenced by Mr Fifoot’s letter of that date),
Balaclava had taken the position that Mr Nurcombe had engaged in serious
misconduct justifying summary dismissal, and it proposed to terminate his
employment summarily, subject to him being given an opportunity to respond at a
meeting which he was required to attend;
Mr Nurcombe was informed that if he did not attend the meeting without reasonable
excuse, he might be dismissed without any further notice being provided to him;
Mr Nurcombe ultimately did not attend any such meeting; and
Mr Nurcombe was never again rostered for work or paid by Balaclava at any time
after 21 February 2016.
[38] The necessary jurisdictional precondition for the Commissioner to determine Mr
Nurcombe’s unfair dismissal remedy application was that there had been a dismissal of Mr
Nurcombe by Balaclava within the meaning of s.386. It is clear to us that such a dismissal had
taken place. It therefore does not matter in jurisdictional terms whether the dismissal actually
occurred on 21 February 2016 or shortly afterwards, or whether Ms Fifoot told Mr Nurcombe
on 21 February 2016 that he was terminated, or whether the precise mode of analysis by
which the Commissioner concluded that there was a dismissal was correct. Nor, if there was
any denial of procedural fairness on this issue, does that justify the grant of permission to
appeal. Balaclava has now had the opportunity to fully advance all its arguments in relation to
the dismissal question, including its arguments in relation to the Commissioner’s analysis, at
the appeal hearing, and we are satisfied that the Commissioner was correct in determining that
Mr Nurcombe had been dismissed by Balaclava.
[39] Permission to appeal is therefore refused in relation to appeal grounds 1-4 and 7.
Whether Mr Nurcombe’s dismissal was unfair
[40] We likewise consider that it would not be in the public interest to grant permission to
appeal in respect of Balaclava’s challenge to the conclusion that the dismissal was unfair
based on the alleged significant errors of fact. As earlier set out, the Commissioner found
under s.387(a) that there was no valid reason for the dismissal based on Mr Nurcombe’s
conduct or capacity, and under s.387(b) that Mr Nurcombe had been denied procedural
fairness. The dismissal arose directly from the stand-down effected on 20 February 2016
because of Mr Nurcombe’s longstanding refusal to move beer kegs based on a medical
condition. Balaclava’s appeal grounds did not involve any substantive challenge to the
Commissioner’s conclusion under s.387(a) that this issue “should have been carefully and
properly addressed as part of some measured and documented conduct and performance
review”. Whatever may be said about the steps Balaclava had earlier taken to address various
issues it had with Mr Nurcombe’s work performance, it is clear that it had not discussed this
issue with Mr Nurcombe or investigated any claim of medical incapacity before it sent its
letter to him on 22 February 2016 stating that it believed he had engaged in serious
misconduct justifying summary dismissal. In those circumstances it seems to us that a finding
that the dismissal was unfair on both substantive and procedural grounds was wholly justified.
[2017] FWCFB 429
13
The alleged factual errors raised by Balaclava are incapable of affecting these conclusions,
and therefore do not have the requisite level of significance required by s.400(2).
[41] Permission to appeal is therefore refused in relation to appeal ground 5.
Quantification of compensation
[42] The correct approach to the assessment of compensation was summarised by the Full
Bench in the recent decision in Double N Equipment Hire Pty Ltd t/a A1 Distributions v Alan
Humphries30 as follows (footnotes omitted):
“[16] The well-established approach to the assessment of compensation under s.392 of
the FW Act, taking into account the matters specified in s.392(2), is to apply the
“Sprigg formula” derived from the Australian Industrial Relations Commission Full
Bench decision in Sprigg v Paul Licensed Festival Supermarket.31 This approach was
articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and
District Retirement Villages32. Under that approach, the first step to be taken in
assessing compensation is to consider s.392(2)(c) - that is, to determine what the
applicant would have received, or would have been likely to receive, if the person had
not been dismissed. In Bowden this was described in the following way:
‘[33] The first step in this process - the assessment of remuneration lost - is a
necessary element in determining an amount to be ordered in lieu of
reinstatement. Such an assessment is often difficult, but it must be done. As
the Full Bench observed in Sprigg:
‘... we acknowledge that there is a speculative element involved in all
such assessments. We believe it is a necessary step by virtue of the
requirement of s.170CH(7)(c). We accept that assessment of relative
likelihoods is integral to most assessments of compensation or damages
in courts of law.’
[34] Lost remuneration is usually calculated by estimating how long the
employee would have remained in the relevant employment but for the
termination of their employment. We refer to this period as the ‘anticipated
period of employment’...’
[17] The identification of this starting point amount “necessarily involves assessments
as to future events that will often be problematic”33. Once this first step has been
undertaken, various adjustments are made in accordance with s.392 and the formula
for matters including monies earned since dismissal, contingencies, any reduction on
account of the employee’s misconduct and the application of the cap of six months’
pay. This approach is however subject to the overarching requirement to ensure that
30 [2016] FWCFB 7206
31 Print R0235, (1998) 88 IR 21
32 [2013] FWCFB 431; 229 IR 6
33 Smith v Moore Paragon Australia Ltd PR942856, [2004] AIRC 57; (2004) 130 IR 446 at [32]
[2017] FWCFB 429
14
the level of compensation is in an amount that is considered appropriate having regard
to all the circumstances of the case.34”
[43] We would add to this that in quantifying compensation, it is necessary to set out with
some precision the way in which the various matters required to be taken into account under
s.392(2) (and s.392(3) if relevant), and the steps in the Sprigg formula, have been assessed
and quantified. That is to say, the way in which a final compensation amount has been arrived
at should be readily apparent and explicable from the reasons of the decision-maker.
[44] We consider (consistent with two arguments advanced by Balaclava in support of
appeal ground 6) that the Commissioner’s quantification of compensation did not conform to
these principles and manifested appealable error in two respects. First, there was no proper
engagement with the critical first step in the Sprigg formula to assess the anticipated period of
employment. Engagement with this step is necessary in order to make the finding required by
s.392(2)(c) concerning “the remuneration that the person would have received, or would have
been likely to receive, if the person had not been dismissed”. The Commissioner observed that
there was some prospect that the employment may not have endured for a considerable
period, and that the conduct and performance issues may ultimately have led to Mr
Nurcombe’s dismissal.35 However no anticipated period of employment was identified for the
purpose of the first step in the Sprigg formula, and no amount of remuneration lost because of
the dismissal was quantified for the purpose of s.392(2)(c).
[45] Second, the Commissioner concluded that 24 weeks’ pay, amounting to $18,552.00,
should be awarded as compensation without adequately identifying the basis upon which this
amount was calculated. It is clear that the Commissioner took into account at least the
anticipated period of employment, Mr Nurcombe’s period of service, and the loss of non-
transferable employment credits in assessing compensation. However the monetary value
assigned to these components was not identified, making it impossible to determine whether
the compensation amount was properly calculated pursuant to s.392 in accordance with
established principle.
[46] The proper quantification of compensation in unfair dismissal cases is an issue of
broad application and general importance. We therefore consider that it would be in the public
interest for permission to appeal to be granted in relation to appeal ground 6. Permission to
appeal must therefore be granted in this respect in accordance with s.604(2). Appeal ground 6
is upheld, and the determination of compensation in the Decision and the Order are quashed.
Re-determination of compensation
[47] It remains necessary to re-determine the amount of compensation to be awarded to Mr
Nurcombe for his unfair dismissal. As proposed by the parties, we will undertake that task
ourselves rather than remitting the matter to a single member of the Commission. We note
that Balaclava did not submit that it was not appropriate for any order for compensation to be
made, and we find that the making of a compensation order is appropriate on the basis of the
Commissioner’s finding of unfairness.
Remuneration that would have been received if the dismissal had not occurred (s.392(2)(c))
34 Ibid
35 Decision at [99]
[2017] FWCFB 429
15
[48] It is clear on the basis of the Commissioner’s findings that Mr Nurcombe’s
employment was in considerable difficulty immediately prior to his dismissal. The
relationship between himself and Ms Fifoot had clearly broken down to a substantial degree.
As the Commissioner found, Ms Fifoot’s “bitterness and malice” arising from the actions of
Mr O’Connor36 had been transferred to Mr Nurcombe. Mr Nurcombe himself was
“embarrassed and humiliated” when he was escorted from the bar by police as a result of the
miracle box incident, and his attitude towards Ms Fifoot was antagonised to the point where
he was reluctant to accept direct instruction from her. This occurred in the context of
employment in a country hotel, which was a small and personalised workplace. Additionally,
we note the Commissioner’s finding that Mr Nurcombe was not a perfect or even good
employee, and that there were legitimate criticisms to be made of his work performance,
albeit not to a degree justifying dismissal absent a proper performance management process.
[49] In those circumstances, we consider that if Mr Nurcombe had not been dismissed, the
employment would not have lasted for very long before either Mr Nurcombe was dismissed
on a proper basis or he left of his own volition. We consider that the anticipated period of
employment would have been no longer than 12 weeks. The Commissioner’s finding that Mr
Nurcombe would have received approximately $773.00 per week had he not been dismissed
was not challenged in the appeal. Therefore we find that, had he not been dismissed, Mr
Nurcombe would have earned $9,276.00 (12 x $773.00).
Remuneration earned (s.392(2)(e)) and income reasonably likely to be earned (s.392(2)(f)
and (g))
[50] There was no evidence that in the 12 weeks after his dismissal Mr Nurcombe was able
to earn any other remuneration. Therefore there will be no deduction on this score.
Length of service (s.392(2)(b))
[51] We do not consider that Mr Nurcombe’s length of service calls for any upward or
downward adjustment to the compensation amount that should otherwise be ordered.
Other matters (s.392(2)(g))
[52] Because we are not dealing with any element of future economic loss, there is no basis
for any deduction for contingencies. In relation to taxation, compensation will be determined
as a gross amount and it will be left to Balaclava to deduct any amount of taxation required by
law.
Viability (s.392(2)(a))
[53] The Commissioner found that there was no evidence that an order of compensation
would have any effect on Balaclava’s viability. There was no challenge to this finding in the
appeal, and we accept it. There will be no deduction form the compensation amount on this
score.
Mitigation efforts (s.392(2)(d))
36 Decision at [60]
[2017] FWCFB 429
16
[54] We are satisfied that Mr Nurcombe made adequate attempts to mitigate his loss during
the 12 week period. There was certainly no basis to conclude that greater efforts on his part
would have led to alternative employment given his residence in a country town. There will
therefore be no deduction from the compensation amount on account of any failure to mitigate
loss.
Misconduct (s.392(3))
[55] Based on the findings of the Commissioner, with which we agree, Mr Nurcombe did
not commit any misconduct contributing to his dismissal that requires a deduction under
s.393(3).
Compensation cap (s.392(5))
[56] The amount of compensation proposed is below the compensation cap.
Installments (s.393)
[57] We do not consider that there is any reason for compensation to be made by way of
instalments.
Conclusion
[58] The amount of compensation which is derived from the above considerations is
$9,276.00, less deduction of any tax as required by law. We consider that is an appropriate
amount of compensation in all the circumstances.
Orders
[59] We order as follows:
(1) Permission to appeal is granted in relation to appeal ground 6 of the notice of
appeal filed on 10 November 2016.
(2) Permission to appeal is otherwise refused.
(3) The Commissioner’s determination of compensation in the Decision ([2016]
FWC 7454) and the Order [PR586503] are quashed.
[60] A separate order (PR589281) will be issued to give effect to re-determination of the
compensation amount.
OF THE FAIR WORK MISSION THE
[2017] FWCFB 429
17
VICE PRESIDENT
Appearances:
B. Cross of counsel and P. Ryan solicitor for Balaclava Pastoral Co Pty Ltd t/a Australian
Hotel Cowra.
B. Miles of counsel for D. Nurcombe.
Hearing details:
2016.
Melbourne:
14 December.
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