| [2019] FWCFB 3867 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decision
Beijing Capital Airlines Co Limited T/A Beijing Capital Airlines
v
Xueyang Shan
(C2019/2133)
VICE PRESIDENT CATANZARITI |
SYDNEY, 7 JUNE 2019 |
Appeal against decision [2019] FWC 1602 of Commissioner Johns at Sydney on 12 March 2019 in matter number U2019/570 – permission to appeal granted – appeal upheld.
[1] Beijing Capital Airlines Co Limited T/A Beijing Capital Airlines (the Appellant) has sought to appeal, for which permission is required, a decision by Commissioner Johns made on 12 March 2019 (the Decision) in which the Commissioner found that the dismissal by the Appellant of Xueyang Shan (the Respondent) on 4 January 2019 was harsh, unjust and unreasonable and hence unfair.
[2] The Respondent was employed by the Appellant as a sales manager in the Appellant’s Sydney office. On 9 April 2018, the Respondent entered a customs controlled area without authorisation to collect his luggage. This incident was reported to and investigated by the Australian Border Force (ABF) and, on 1 September 2018, the Respondent was issued with a fine of $420 for breaching s.234A(1) of the Customs Act 1901 (Customs Act).
[3] On 23 November 2018, the Appellant directed the Respondent to return to its headquarters in Beijing. The Respondent refused to do so and his employment was terminated by the Appellant on 4 January 2019.
[4] The Commissioner’s Decision was made under Part 3-2 - Unfair Dismissal of the Fair Work Act 2009 (Cth) (the Act). Section 400(1) provides that permission to appeal must not be granted from such a decision unless the Fair Work Commission (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 involves 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’.1 The Commission must not grant permission to appeal unless it considers that it is ‘in the public interest to do so.’
[5] The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgement,2 to be made by reference to the subject, scope and purpose of the Act.3
[6] In GlaxoSmithKline Australia Pty Ltd v Makin, a Full Bench of the Commission identified some of the considerations that may attract the public interest:
‘…the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters…’.4
[7] It will rarely, if ever, 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
[8] The Appellant’s application was heard in Sydney on 14 May 2019. The Appellant was represented by D Mahendra, counsel, and the Respondent by G Fredericks, counsel.
[9] The Appellant’s application to appeal is on seven grounds:
1) The Commissioner erred and/or misapplied legal principle by finding that the Respondent’s contravention of s.234A (1) of the Customs Act did not constitute a valid reason for dismissal.
2) The Commissioner erred and or/ misapplied legal principle when it found that evidence of damage to the reputation was required in order for conduct described in appeal ground 1 constituted a valid reason for dismissal.
3) The Commissioner erred and/or allowed an irrelevant or extraneous matter to guide it when it found that the Appellant’s direction to the Respondent to return to Beijing had a ‘more sinister reason’ behind it, in circumstances where there was no proper evidentiary basis for such a finding.
4) The Commissioner compounded the error in appeal ground 3 by subsequently finding that the Respondent’s refusal to comply with the Appellant’s direction that he relocate to Beijing did not constitute a valid reason for dismissal.
5) The Commissioner erred by failing to consider and/or take into account a relevant consideration (on the question of harshness), namely the Respondent’s failure during the investigation process to accept the seriousness of his misconduct in respect of his unauthorised entry into a Customs Restricted Area at Sydney Airport on 9 April 2018.
6) The Commissioner denied procedural fairness to the Appellant and/or failed to take into account a relevant factor when he refused to allow the Appellant’s representative to cross-examine the Respondent about whether the Respondent knowingly engaged in misconduct when he entered into the Customs Restricted Area on 9 April 2018.
7) The Commissioner denied procedural fairness to the Appellant when he refused to allow the Appellant’s representative to cross-examine the Respondent about whether the Respondent had been dishonest with his employer.
[10] The Commissioner in his Decision (which he gave on transcript) considered whether the Respondent’s breach of the security area at Sydney Airport (whether separately or in combination with the Respondent’s refusal to return to Beijing) constituted a valid reason for dismissal:
‘It is readily conceded that the applicant breached the security area. That matter was investigated by Australian Border Force, the government department responsible for securing our borders. That department decided, having looked at all the circumstances in relation to the matter, that the applicant should not be prosecuted. It decided, rather, that the applicant should be issued with a fine of some $420, which the applicant paid. That ended the matter in the eyes of the Australian Border Force.
I note that the applicant had an obligation to comply with laws of a country. To the extent that [he] breached that obligation, that did not necessarily lead to a valid reason for termination. In the current matter, having regard to the circumstances and the decision made by Australian Border Force, I am not satisfied that the breach of the security area was a valid reason for termination.
One basis … advanced by the Respondent to suggest that it may have been a valid reason for termination was that it somehow damaged the reputation of the Respondent. There is simply no evidence before me that the actions of the applicant in any way damaged the reputation of the Respondent or put in jeopardy its ability or capacity to operate here in Australia. Australian Border Force investigated the matter, concluded the matter, and, if you like, moved on; so, too, should have the Respondent.’ 6
[11] The Appellant submitted that the Commissioner should have adopted the approach set out in B, C and D v Australian Postal Corporation T/A Australia Post 7 (B, C and D) in determining whether the Appellant had a valid reason for dismissal. In that decision the majority said:
‘In considering whether there was a valid reason for a dismissal under s.387(a), the reason(s) being considered are the employer’s reason(s). In a misconduct case, the Commission is concerned with whether the misconduct in fact occurred, not with whether the employer has reasonable grounds to believe that it occurred (eg. Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201, Sherman v Peabody Coal Ltd (1998) 88 IR 408; Australian Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1).
Subject to that, as indicated by Northrop J in Selvachandran, “valid reason” is assessed from the perspective of the employer and by reference to the acts or omissions that constitute the alleged misconduct on which the employer relied, considered in isolation from the broader context in which they occurred. It is the reason of the employer, assessed from the perspective of the employer, that must be a “valid reason” where “valid” has its ordinary meaning of “sound, defensible or well founded”. As Northrop J noted, the requirement for a valid reason “should not impose a severe barrier to the right of an employer to dismiss an employee”.
A failure to comply with a lawful and reasonable policy is a breach of the fundamental term of the contract of employment that obliges employees to comply with the lawful and reasonable directions of the employer. In this way, a substantial and wilful breach of a policy will often, if not usually, constitute a “valid reason” for dismissal.’ 8
[12] The Appellant submitted that on any proper application of the legal principles set out in B, C and D the Commissioner ought to have found that the Respondent’s contravention of the Customs Act gave rise to a valid reason for dismissal having regard to:
• The Appellant being a new competitor in the direct flight market between Sydney and mainland China and, as such, it was very concerned about maintaining its reputation insofar as its business operations were concerned;
• The Respondent’s seniority in the Appellant’s Sydney operation and the impact his conduct was likely to have on the Appellant’s reputation;
• The Respondent had been trained and was aware of the rules at Sydney Airport including the fact that he was not authorised to enter the Customs Restricted Area;
• The Respondent had an express contractual obligation to comply with the laws of the country that he was employed in; and
• Despite his training and awareness of the rules at Sydney Airport, the Respondent deliberately entered the Customs Restricted Area.
[13] B, C and D should not be read as establishing the proposition that all proven cases of misconduct, including breaches of an employer’s policy, necessarily constitute a valid reason for dismissal. As the Full Bench in Gelagotis and Hatwell said:
‘There would be a valid reason for termination if the conduct occurred and it justified termination. There would not be a valid reason if the conduct did not occur or it did occur but did not justify termination. For example, an employee may concede that the conduct took place but contend that it involved a trivial misdemeanour [Edwards v Giudice (1999) 94 FCR 561 at [7] per Moore J].’ 9
[14] The Commissioner took the view, particularly in the light of the ABF’s decision not to prosecute, that the Respondent’s misconduct in entering the secure area did not constitute a valid reason for dismissal. While we do not necessarily share the Commissioner’s assessment, we consider it was one open to him and did not constitute an appealable error.
[15] In his Decision the Commissioner said:
‘The second reason put forward was the refusal to return to Beijing. The obligation or the right retained by the Respondent to relocate employees is to be found in the contract of employment. I have already observed that the relevant provision in Appendix A provided that:
‘The company may from time to time, either on a temporary or permanent basis, require you to occupy another position and/or relocate to another location in accordance with the Company’s operational needs.’
In order to rely upon that clause, it was incumbent upon the Respondent to indicate to the applicant what position it was relocating him or reappointing him to. Alternatively, it was incumbent upon the company to explain the operational needs that it was relying on. In this matter the Respondent did neither.
The evidence of the direction to relocate is in exhibit 16, which I have already read into transcript. The alleged operational reason is to avoid further risks to company operations. I have already observed that there is no evidence that the security breach of the applicant caused any risk to the company’s operations. The fact that the company stated it in this email does not make it true.
It then indicated that he was going to go back to headquarters in Beijing. The memo does not indicate a position to which he is being relocated. It does not indicate a valid operational need for that to occur. It is simply not a valid exercise of the power reposed in the Respondent in item 1, “Position and location of schedule A” in the Australian employment context.
I accept the evidence of the applicant that the basis for him not complying was that it had not been indicated to him what position he was being relocated to and, further, it had not been indicated to him the basis upon the travel arrangements that were being put in place. In the absence of the Respondent doing those things, it was not a lawful or reasonable direction that is contained in the memo of 23 November 2018.
The submission put on behalf of the applicant by Mr Neo was that the real purpose behind the memo was to have the applicant return to Beijing where he would lose the protections of Australian law in relation to unfair dismissal. It seems to me in circumstances where the reason advanced in the memo of 23 November 2018 is completely without any foundation or any merit, it must be that a more sinister reason [lay] behind the direction to return to China.
The direction to return to China in circumstances where it would have caused the applicant to lose his rights to unfair dismissal in this country was not reasonable. In those circumstances, the applicant’s refusal to comply with that direction was not a refusal to comply with a lawful and reasonable direction. He was, in my view, entitled to reject it.’ 10
[16] We consider that this reasoning of the Commissioner was mistaken. In particular, he misconstrued the nature of the discretion available to the Appellant contained in the Respondent’s employment contract. That discretion was very wide. It provided, inter alia, that the Appellant could relocate the Respondent to any other location ‘in accordance with the Company’s operational needs.’ It is clear from the evidence that the Appellant had lost confidence in the ability of the Respondent to represent it in Sydney. In particular it was concerned that he had engaged in conduct that it considered constituted a risk to its reputation and its operations. Ordering him to return to headquarters in Beijing was, from the employer’s perspective, consistent with its ‘operational needs’. The contract did not require the Appellant to identify another position to which he was to be redeployed or to provide any further rationale for its decision to relocate him. There is no basis for the Commissioner to substitute his own assessment of the Appellant’s operational needs for that of the Appellant itself. The Commissioner was wrong to ascribe any ‘sinister’ motive behind the Appellant’s direction to the Respondent. There is simply no evidentiary basis for any such finding, nor was this proposition ever put to any of the Appellant’s witnesses.
[17] We are satisfied that the Respondent’s refusal to comply with the relocation direction was a wilful refusal to comply with a lawful and reasonable direction of his employer and in the circumstances constituted a valid reason for his dismissal. The Commissioner’s failure to make such a finding constituted an appealable error. This error fundamentally undermines the Commissioner’s conclusion as to the unfairness of the Respondent’s dismissal.
[18] In the circumstances, we do not need to consider the Appellant’s remaining grounds of appeal.
[19] We order as follows:
• Permission to appeal is granted;
• the appeal is upheld;
• the Commissioner’s Decision quashed; and
• Mr Shan’s application (U2019/570) is remitted to Commissioner Cambridge for rehearing.
VICE PRESIDENT
Appearances:
D Mahendra, counsel, with C Lang, solicitor, for Beijing Capital Airlines Co Limited T/A Beijing Capital Airlines.
G Fredericks, counsel, with A Cao, solicitor, for Xueyang Shan.
Hearing details:
Sydney with video link to Melbourne.
2019.
May 14.
Printed by authority of the Commonwealth Government Printer
<PR709006>
1 (2011) FCR 78 [43].
2 Coal & Allied Services Pty Ltd v Lawler and others [2011] FCAFC 54 [44].
3 Hogan v Hinch (2011) 85 ALJR 398 at [69] per Mason CJ, Brennan, Dawson and Gaudron JJ.
4 (2010) 197 IR 266.
5 Wan v AIRC [2001] FCA 1803 [30].
6 Transcript of the proceedings on 14 May 2019 PN511-513.
8 At [34] – [36].
9 Gelagotis and Hatwell v Esso Australia Pty Ltd [2018] FWCFB 6092.
10 Transcript of the proceedings on 14 May 2019 PN514-521.