Cosco Holdings Pty Ltd v Thu Thi Van Do
[1997] IRCA 215
•30 Jun 1997
DECISION NO:215/97
INDUSTRIAL RELATIONS COURT OF AUSTRALIA
INDUSTRIAL LAW - REVIEW OF DECISION OF JUDICIAL REGISTRAR - nature of review “on the papers” - meaning of a “hearing de novo” - whether weight to be given to judicial registrar’s findings as to credit where no further evidence is called on review - necessity for consideration “afresh” on review - whether, if party requests, judge should refrain from reading judicial registrar’s reasons
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - VALID REASON - terminations based on the operational requirements of the undertaking - onus of proof - employer must justify the termination of employment of each particular employee
Workplace Relations Act 1995 (Cth), s 170DE, s 170EDA, s 170DF(1)(b)
Abalos v Australian Postal Commission (1990) 171 CLR 167
APESMA v Deniliquin Council (1995) 58 IR 275
Aldridge v Booth (1988) 80 ALR 1
Andrews v Uniting Church in Australia Frontier Services (1995) 60 IR 437
Bechara v Healey (1996) 65 IR 382
Brandy v Human Rights and Equal Opportunities Commission (1995) 183 CLR 245
Cox v South Australian Meat Corporation (1995) 60 IR 293
Gibson v Bosmac Pty Ltd (1995) 60 IR 1
Harris v Caladine (1991) 172 CLR 84
Kenefick v Australian Submarine Corporation Pty Ltd (No 2) (1996) 65 IR 366
Max Foods Centre Pty Ltd v McLeish (1995) 62 IR 381
Nettlefold v Kym Smoker Pty Ltd (1996) 69 IR 370
Kerr v Jaroma Pty Ltd (t/as Treasury Motor Lodge) (Marshall J, IRCA, 7 October 1996)
Simpson v Systems Services Pty Ltd (von Doussa J, IRCA, 13 June 1997)
Victoria v Commonwealth (1996) 138 ALR 129
Warren v Coombes (1979) 142 CLR 1
Westen v Union des Assurances de Paris (Madgwick J, IRCA, 17 December 1996)
Wyndham Lodge v Reader No 2 (1996) 65 IR 253
COSCO HOLDINGS PTY LTD v THU THI VAN DO & ORS
QI95/1330, 1331, 1332, 1333, 1334, 1364
MADGWICK J
BRISBANE
30 JUNE 1997
IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
No. QI 95/1330
QI 95/1331
QI 95/1332
QI 95/1333
QI 95/1334
QI 95/1364
BETWEEN COSCO HOLDINGS PTY LTD
Appellant
AND THU THI VAN DO
LAN NGOC THI QUAN
HAHN HUU NGUYEN
THAO NGOC HOANG
LOAN ANH NGUYEN
THANH DUC HUA
Respondent
MADGWICK J
BRISBANE
30 JUNE 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
No. QI 95/1330
QI 95/1331
QI 95/1332
QI 95/1333
QI 95/1334
QI 95/1364
BETWEEN COSCO HOLDINGS PTY LTD
Applicant
AND THU THI VAN DO
LAN NGOC THI QUAN
HAHN HUU NGUYEN
THAO NGOC HOANG
LOAN ANH NGUYEN
THANH DUC HUA
Respondent
MADGWICK J
BRISBANE
30 JUNE 1997
REASONS FOR JUDGMENT
HIS HONOUR: This is an application for the review of decisions by a judicial registrar in six cases which were, by consent, heard together. Before the judicial registrar, six former employees of the applicant company (“Cosco”) had each claimed that their employment was unlawfully terminated. These claims were upheld by the judicial registrar in each case. The judicial registrar ordered that two of the employees be paid compensation and that the other four be reinstated. Cosco seeks a judicial review of those decisions.
Factual background
The largely uncontested facts, taken for convenience from the reasons for judgment of the judicial registrar, were as follows. Cosco operates a factory in a Brisbane suburb, where it recycles paper. The plant, relevantly, is divided into five sections. The first is the de-inking plant where raw paper is recycled by the removal of ink and is then wound into large rolls. These rolls go to four process lines, in which the large rolls are respectively broken down and converted into toilet tissues, facial tissues, serviettes and hand towels. Prior to 16 September 1995, the conversion to facial tissues operation (“the facial tissues line”) operated 24 hours per day in three eight hour shifts. The workforce was divided into three panels known respectively as the ‘A’, ‘B’ and ‘C’ panels. The employees were rostered on rotating shifts; that is, they would work several day shifts, followed by several afternoon shifts, followed by several evening shifts.
Shortly before 16 September, Mr Coco, Cosco’s managing director, decided to eliminate the nightshift on the facial tissues line. Five of the respondents (“the employees”) worked on that line. Respectively, they were:
Ms Thu Thi Van Do, employed by Cosco from 28 December 1990 to 30 November 1994 and again from 24 January 1995;
Ms Lan Ngoc Thi Quan, employed by Cosco since 21 July 1986;
Mr Hanh Huu Nguyen, a leading hand, employed by Cosco since 12 December 1988;
Mr Thao Ngoc Hoang, employed by Cosco on a full time basis from 21 June 1994 until 21 September 1994 and again from 6 April 1995;
Ms Loan Anh Nguyen, employed by Cosco on a full time basis since December 1993.
The sixth applicant was Mr Thanh Duc Hua. It seems that Mr Hua was employed as a maintenance man/cleaner across various production lines.
All of the applicants, apart from Mr Hua, were informed on 15 September 1995 that their employment would be terminated the following day. It was some little time later, about 6 October, that Mr Hua learned that his employment was to be terminated on one day’s notice.
The case for the employees was that Cosco had no valid reason for each termination of employment within the meaning of s 170DE(1) of the Workplace Relations Act 1995 (Cth) (“the Act”). The controversy, having regard to the way in which Cosco sought to discharge the onus upon it of showing that it had such a valid reason (s 170EDA(1)), boiled down to whether there was such a valid reason.
Cosco’s claim, advanced through Mr Coco, was, as I understood it, that he had determined to eliminate the night shift on the facial tissues conversion line in pursuit of greater efficiency and economies, and that Mr Hua’s position, partly as a consequence of reduced production on the facial tissues line, had also become redundant.
The employees also contended that the applicant had terminated the employment of each of them for a reason proscribed by s 170DF(1)(b), namely, “Union membership or participation in union activities outside working hours”. There was nothing at all, as far as I can see, to enliven a claim that the third limb of paragraph (b), namely “participation in Union activities . . . with the employers consent, during working hours”, may have been contravened.
It appeared, somewhat oddly in respect of a manufacturing establishment with between 130 and 180 employees, that until shortly before the terminations of employment, there had been a degree of urgency of union interest in the workforce which could be called something less than electric. In 1983 an industrial agreement was entered into between Cosco and the then Printing and Kindred Industries Union, but it had never been updated and there was apparently no counterpart State award.
Nature of review proceedings
The first question that arose before me revisited this well-trodden field. The parties agreed that the review should be conducted “on the papers”. There had been a lengthy hearing before the judicial registrar. The case had been meticulously investigated by the legal representatives of the relevant union which provided assistance to the employees, and all parties evidently took the view that their respective interests could adequately be safeguarded without the trouble and expense of recalling witnesses. Some further statements of the employees were admitted by consent to bring their employment status up to date as at the time of the review. This was, if I may say so, a sensible approach and one much to be encouraged by the Court. The consequence was that the hearing was able to be completed in two days instead of the nine originally projected when it was anticipated that the evidence, or at least the cross-examination, would be presented anew.
Two questions soon arose on the review. These were:
(a) What inferences as to credit could be drawn?
(b)Whether, and for what purposes, the Court might have regard to the reasons for decision of the judicial registrar?
It was argued on behalf of Cosco that Wyndham Lodge Nursing Home v Reader (No 2) (1996) 65 IR 253 is authority for the proposition that, in a review, unless the parties have agreed that the review shall be conducted as if it were an appeal by way of re‑hearing, so as to attract the principles of review in cases such as Warren v Coombes (1979) 142 CLR 1 and Abalos v Australian Postal Commission (1990) 171 CLR 167, where a party’s success depends upon the acceptance of a witness’ evidence and the credit of that witness has been attacked, the party who bears the onus of establishing that issue or question must fail. Cosco contended that I should apply that approach even if it were to its detriment. Whether there had been an attack on a witness’ credit capable of being successful could be deduced from the written record. Consequently, and this is the second question raised, there ought to be no reason for me to peruse the reasons of the judicial registrar. To do so, it was argued, might influence me in favour of the judicial registrar’s factual conclusions, and in particular, insofar as he may have expressed views as to demeanour and credibility, might have an ineradicable effect on my mind such that the fresh look at the case by a judge, which the constitutionally-mandated process of review of judicial registrars’ decisions envisages, might be frustrated or impaired.
Although almost all of the jurisdiction of the Industrial Relations Court of Australia has now been transferred to the Federal Court of Australia, this case remains in the Industrial Relations Court, a substantial hearing having been commenced before 23 May (see s 69 in Div 3, Sch 16 Workplace Relations Act 1996 (Cth). I am therefore bound by the decision in Wyndham Lodge.
In my respectful opinion, however, the reasoning of the Court in Wyndham Lodge bears further examination. The Court began by approving the decision of Moore J in APESMA v Deniliquin Council (1995) 58 IR 275, in which his Honour explained why Harris v Caladine (1991) 172 CLR 84 and Brandy v Human Rights and Equal Opportunities Commission (1995) 183 CLR 245 had indicated that it was, in the phrase I used above, “constitutionally mandated” that s 377 (which provides for the review process) be construed as requiring that the review be treated as a hearing de novo. His Honour had continued by indicating that there was no necessity that the review be conducted as if the hearing before the judicial registrar had never occurred, and in particular that the Court should, so far as possible, take steps to see that oral evidence which had been given before the judicial registrar need not be given twice. His Honour concluded: “[T]here will be situations where it will be necessary for some or all of the oral evidence given before the judicial registrar, both in chief and cross-examination, to be given again” (at 263).His Honour relied upon remarks by Spender J in Aldridge v Booth (1988) 80 ALR 1 at 7-8, which had been referred to in Brandy:
“. . . where . . . the dispute requires an assessment of the credibility of the parties and their witnesses, it seems to me impossible to avoid the conclusion that those issues must be determined on the basis of oral evidence”.
The Full Court then adopted the Chief Justice’s agreement, in Gibson v Bosmac Pty Ltd (1995) 60 IR 1, of Moore J’s decision in Deniliquin Council. In Gibson, the Chief Justice pointed out that whereas Moore J was contemplating what is often called a “hearing de novo”, that term, having been relied on in submissions in Gibson, was itself ambiguous and might mean either:
“a hearing conducted as if there never had been a hearing before the judicial registrar, everything concerning that hearing being completely ignored”
or
“a hearing at which the parties are not bound by the course they took before the judicial registrar, where they have the right to adduce such further evidence as they wish, perhaps to adopt positions and put contentions different from those adopted before, and put to the judicial registrar; and, of course, where the judge is not bound by the judicial registrar’s finding of fact” (at 3).
The Chief Justice thought that a review hearing was a “hearing de novo” in that second sense. But, even so, his Honour made it clear that “the judge must decide the relevant facts for himself or herself and not simply adopt the findings of the judicial registrar”.
Next the Court approved von Doussa J’s decision in Cox v South Australian Meat Corporation (1995) 60 IR 293, which was a case where the parties had “consented to the Court treating the review as if it were an appeal by way of rehearing”. However, an appeal by way of re‑hearing is quite different from a hearing de novo, even in the more limited sense which Moore J and the Chief Justice had accepted that s 377 required in the two cases just referred to. That was made clear by Gray J in Andrews v Uniting Church in Australia Frontier Services (1995) 60 IR 437 at 443.
Then, as if Spender J in Max Foods Centre Pty Ltd v McLeish (1995) 62 IR 381 had been dealing with a case in which, as in Cox, there had been an agreement that the review be conducted as if it were an appeal by way of re‑hearing, the Full Court quoted with approval some remarks of Spender J in that case. But McLeish was a case where the parties had, as here, simply chosen to conduct the review on the basis of the evidence that had been before the judicial registrar, notwithstanding serious conflicts in that evidence. In McLeish, Spender J said:
“unless there was no evidence to support a particular finding made by the Judicial Registrar the court on a review under s 377 has to acknowledge the great advantage of the Judicial Registrar who saw the witness give their evidence and saw them cross-examined. As the cases make plain, a review on the papers so to speak, which is what I am being asked to conduct, suffers significantly where there are factual conflicts between the witnesses, as there are here.”
The Full Court continued “this approach is open to a judge if the parties agree that the review is to be conducted as if it were an appeal”. As I have pointed out, there is nothing in the report to suggest that in McLeish the parties had so agreed. The Full Court seemed to feel that there was a unanimity of approach on the part of members of the Court. In my view, that is not the case. It seems to me that in Aldridge, Spender J had espoused the view that one could not make fresh findings as to credit and credibility without seeing and hearing witnesses, and in McLeish he seemed to take the view that, in such a matter, it was necessary that the judge have regard to any such findings made by the judicial registrar. In consequence, the Full Court said (at page 258):
“. . . where there is a dispute as to primary facts, it will usually be impossible for the judge to resolve it ‘on the papers’. Determination of a dispute about primary facts involves choosing between conflicting elements of the evidence. It almost always involves an assessment of the witnesses, not only as to their truthfulness but also as their characters and personalities and the likelihood that they acted in a particular way. Without seeing and hearing the witnesses, a judge has no basis for substituting his or her opinion on such matters for that of the judicial registrar. The judge will be bound to hold that the party who bears the onus of proof on the disputed issue has failed to discharge that onus. It is important that parties understand this in determining how they wish a review to be conducted.”
With respect to all the judges concerned, I must say that I am not persuaded by this. If the parties choose to ask the judge to conduct the review on the papers, knowing that there are serious conflicts apparent in the papers, it seems to me that each party is simply admitting that, insofar as considerations of demeanour of witnesses might possibly bear in their favour on issues of credit‑worthiness (including matters such as illumination of the characters and personalities of the witnesses, and the likelihood that they may have acted in a particular way), the demeanour of the witnesses would in fact not have assisted. Where each party makes the same concession, the result simply is that the judge is asked to deal with the matters upon the assumption that if he or she had heard the matter, he or she would have derived no assistance from the demeanour of the witnesses. The modern tendency is, while not to diminish the possible importance of subtle aspects of the demeanour of witnesses, to guard against any over-reliance upon it which might encourage a relaxation of intellectual rigor. The spectre of the bright and shining, but lying, police officer, for example, has come to haunt us all after the establishment of widespread police corruption in more than one state of the Commonwealth.
In my opinion, a more accurate statement of the position than in Wyndham Lodge is that there will be many cases in which it will be too difficult for a judge to resolve a dispute about primary facts on the papers, and in that case the party bearing the onus will indeed fail; but in other cases, it will be quite possible for the judge satisfactorily to resolve the matter. An examination of what can be deduced from the facts surrounding the vital “primary facts” can very often yield a satisfactory result, even where one can assume that the credit of all the competing witnesses for the parties is tarnished. An example in this court, of no special importance except that it comes readily to my mind as I was the judge who conducted the review, was Bechara v Healey (1996) 65 IR 382 in which I felt able so to proceed, notwithstanding a radical factual conflict between the parties. That approach did not attract any hint of appellate disapproval in an appeal decided after the decision in Wyndham Lodge.
It is virtually a national institution that District and County Courts daily hear “all grounds appeals” from magistrates on hotly disputed factual issues. In a great many cases, for reasons of cost and convenience, the parties invite the Court to determine these matters on the papers. Those courts include on their benches distinguished jurists. They not infrequently have the assistance in such cases of counsel of real ability and experience. As far as I am aware, it has never occurred to any judge to say a priori that, where there is some conflict in the evidence apparent on the papers, he or she must decide the matter upon a simple application of onus theory, as may have been adumbrated in Wyndham Lodge.
Further, if it is inherent in Wyndham Lodge that the Court will necessarily acquaint itself with the findings of a judicial registrar on credit and only depart from them in a review “on the papers” in unusual cases, I think that is an indefensible position. If a party has a right to have a case in the Federal Court heard by a Chapter III judge and the price of the use of quasi‑judicial personnel who are not such judges to hear some of the matters which might otherwise detain a judge is that there must be a review which amounts to a hearing de novo (in Wilcox CJ’s more restricted sense), then I cannot see that, in principle, any finding as to credit by a judicial registrar must or even may be accorded the degree of significance which the Full Court, and it seems to me also with respect Spender J, would accord to it.
The parties may conduct their cases as they see fit. The Court should not, except in cases of necessity, foist upon them procedural requirements which would add to the expense, length and inconvenience of hearings, especially in a review process. As I have indicated, in many cases, there is in my view no such necessity.
To bring this discussion to bear on the present case, I did in fact form a view about the credibility of witnesses, based upon the papers. It is not such an adverse view of credit as the judicial registrar was able to form, with the advantage of seeing and hearing the witnesses. If it mattered, I would certainly acknowledge the judicial registrar’s advantage, but I would not, except if required by the doctrine of precedent to follow Wyndham Lodge, act to the detriment of a party because of such a finding, except with the party’s consent. If I am to review a matter in the constitutional sense, I must acknowledge everyday experience that my impression of demeanour, character and credibility, had I heard the evidence, might be different from that of the judicial registrar. Indeed, I would go further. If it transpired that, upon the papers I came to a different view of credibility and probability as to primary facts than had the judicial registrar, I would give effect to my own views even if so to do would be to act on a means of judging these matters that was necessarily poorer than that available to the judicial registrar. This would not be anomalous, however; it would be the simple result of the way in which the parties had chosen to conduct the review. It might also be, of course, in a particular case, that I could not sort the matter out on the papers and, if that were so, then I would agree with the Full Court in Wyndham Lodge, that the party who bore the onus on an issue must fail.
In this case it does not matter. If I apply the view of the Full Court in Wyndham Lodge, the appellant, as it seems to me, must fail. On the facts and circumstances of this case, if I acted in accordance with the way I would wish to act if I were free of what I would regard as the artificial constraints of Wyndham Lodge (assuming Cosco’s submission as to its binding effect is correct), I would come to the same conclusion. However, I do not regard Wyndham Lodge as having any binding effect in this case. In Wyndham Lodge the Court remarked that “. . . where there is a dispute as to primary facts, it will usually be impossible for the judge to resolve it ‘on the papers’” (emphasis added) and, in such a case, the “judge will be bound to hold that the party who bears the onus of proof on the disputed issue has failed to discharge that onus”. Be it the case that it is usually so impossible, I do not find it so here. I have nevertheless felt it worth stating my views at some length because the nature of a review of a judicial registrar’s decision is a practical point of continuing importance for the Federal Court.
In the course of the case, in deference to the submissions which were put to me by the applicant employer, I was able to and did refrain from looking at the reasons for decision of the judicial registrar until I came to write this judgment when, as an aide-memoire as to various issues, I was much assisted by the concise and I think accurate account of undisputed matters given by the judicial registrar. The principle is not, however, an easy one. The test in all cases, in my view, is the notion put by Gray J in Andrews (at 443):
“The duty of the judge is to ignore the findings and conclusions of the judicial registrar, except insofar as they may be adopted by the parties, and to deal with the matter afresh, even if relying on the evidence which was before the judicial registrar, supplemented as necessary.”
In most cases, I suspect, most judges of the Court would, as a matter of course, read the decision of the judicial registrar as a means of easing themselves into the case - of establishing the universe of discourse, and what in broad terms was the factual background leading to the factual issues. In particular cases, to do so may be to risk an effect being engendered in one’s mind that, in truth, is not thereafter easily removed. In particular cases, it may be that if a party fears such an effect on the judge, then, at an early stage, perhaps at the time of lodging the application for review, the party might request that the judge not read the judicial registrar’s decision. If a request were made to me in that form I would, at least until I had examined the matter in open court, comply with it. In this case, I do not feel that, even if I had read the judicial registrar’s reasons before I came to deal with the matter, I would have received any impression of such a force, subtly engendered or otherwise, as to prejudice me against looking at the matter afresh for myself.
Cosco’s case: redundancy
Cosco’s case relied on the evidence of Mr Coco and Mr Gracie, Cosco’s financial controller.
The case for Cosco was that facial tissue sales had been low; stocks of the tissues were high; production of them had been reduced, especially on the night shift; the night shift was chronically underemployed; the night shift’s underemployment had a tendency to disrupt the good morale of workers employed elsewhere in the factory; the sensible economic thing was to cut out the night shift. As it was the production of facial tissues that was to be so reduced for the indefinite future, Mr Coco had determined that employees from that production line should go. He selected the particular shift, “panel ‘B’”, by lot. He then “reviewed” the people on that shift. He decided that three of them should not go. He could not say why he decided to keep those three on. Instead of those three, he selected:
•Ms Thu Thi Van Do, because she “had come and gone several times of her own accord . . . it would be fairer to dismiss her than one of the permanents”;
•Ms Loan Anh Nguyen, because “she was the last one to arrive” on the facial tissues line and “it would be fair” that she replace one of the others; and
•Mr Thanh Duc Hua, because he was “employed really doing nothing” although he had not been exclusively employed on the facial tissues line.
As to the selection process, Mr Coco had given an account in an affidavit of 20 August 1996 filed in the Court. In the affidavit he said:
“13.I considered how best to select the employees who would be chosen for redundancy. I found this is a very difficult thing to do. As far as I am concerned, all employees are equally entitled to their position. I do not consider I am in any position to make decisions about who “deserves” his or her position the most or the least, unless that decision is made on the basis of the employees’ value to Cosco.
14.Operating the converting lines is an unskilled job. It takes a maximum of one or two hours to learn the entire operation. Apart from this basic familiarisation with the machines, there is no “training” as such. Employees do not significantly improve their performance through experience or length of time on the job. In fact, I have known the opposite effect to occur. It is tedious and repetitive work.
15.I therefore decided that there were no fair or sensible criteria which I could use which were based on the employees’ value to Cosco.
16.Ultimately, I determined that the fairest way to carry out the selection process was randomly.
. . .
19.I do recall, however, that one of the employees on panel ‘B’ was pregnant at the time. I held a belief that there was a legal impediment to my making a pregnant employee redundant. Accordingly, I selected (using another random process) another employee from another panel. I have also been advised that according to Cosco’s time and wages records, one other employee was then working on a different panel. My belief at the time was that all of the employees (apart from the one described above) were from the ‘B’ panel.
20.At no time did I adopt any criteria based on conduct or capacity. I did not believe in the circumstances that it was useful or reasonable to do so. As far as I am concerned, all of the employees were of equal value to Cosco and each of them had an equal right to his or her job.
21.The seventh employee (Thanh Duc Hua) was employed at the time to clean up and do general handyman jobs in support of employees working on production lines. He had been put on at an earlier time when there was enough of this work to justify a full-time position. At about this time it became clear that there was simply no ongoing work for this person. This was partly caused by my decision to reduce production on facial tissues. Accordingly, there being no useful work for him to do, he was made redundant as well. The position has not been replaced.
In the light of this, his evidence in cross-examination at p 318 is instructive:
“MR AMERENA: Because you conducted the review of the persons who were on the B shift, having randomly drawn the B shift out of a hat, it follows necessarily, does it not, that you did not treat all employees as being equally entitled to their position?---It looks that way.
Well, that is true, is not it, on your account of things now?---Well, I - I can’t give you a reason for what I did.
But certainly it would be misrepresenting things if anyone suggested, on your version of things, that you had taken the stance that all employees should be equally entitled to retain their position?---Yes
And the cutbacks you made in - in costs to meet your problem of - the problems of your company at this time, one involved decreasing labour on the facial tissues conversion line, or on review, substituting other persons for more - - - ?---Yes
More deserving people?---Yes”
Ms Do had not “come and gone several times” - she had two periods of employment, from 28 December 1990 to 30 November 1994 and then, after a break of less than 8 weeks, from 24 January 1995. However, it was frequent for employees to come and go (for example, to return temporarily to Vietnam for family reasons). Mr Hua, for example, had three periods of employment, but that was not apparently thought to be a factor relevant to him.
Ms Loan Nguyen had been told that she was only temporarily being transferred to the facial tissues line from the toilet paper line. It emerged that the real reason she was transferred to the facial tissues, as an alternative to termination, was that Mr Coco suspected her of sleeping on night shift on the toilet paper work. Neither Mr Coco nor anyone else had sought, in this regard, to give her (as distinct from her husband) a chance to defend herself, c.f. s 170DC.
Further, he was quite unable to explain why Mr Hua was dismissed at a later time.
As to the non-existent pregnant lady on the B shift, Mr Coco is unlikely to have made a mistake. His evidence was that he was not good on Vietnamese names but, being often on the factory floor, identified the workers by photograph.
An explanation for the differing accounts can hardly be mistake: a union was showing active interest in organising Cosco’s employees in the period immediately before the dismissals, and was making much of its intention to assist the dismissed employees by challenging the terminations of their employment. The prospect of having to defend his actions must have been in Mr Coco’s mind.
Mr Coco presented himself as a caring employer, whose relations with the staff were excellent: after two disastrous fires, in November 1992 and September 1994, employees were kept on though under-employed; from March 1995, Mr Gracie repeatedly indicated that, because the sales of facial tissues were below expectations and the business was overstocked with tissues, there was “meaningless” over-employment on that line, yet Mr Coco resisted retrenchment; he ran the establishment “as a family”; he had many meetings with the factory employees - “I liked to make myself available at all times”. Yet no face-to-face explanation was offered to the terminated employees; nor were they offered references to help them find other employment; nor, it having been asserted by Mr Coco that 30 employees were to be dismissed for economic reasons, did he move at all in any of the reasonable, ameliorative directions contemplated by s 170GA of the Act, even putting aside the question of involving any union. Despite the reference therein to “deep regret”, the letters of termination were chilly and comfortless; uncaring would not be too strong a term. It is worth remembering the work records of the dismissed members of the “family”:
Ms Do - over 4½ years’ service in two periods;
Ms Quan - 9 years’ continuous service;
Mr Hanh Nguyen - leading hand; nearly 7½ years’ continuous service;
Mr Hoang - 9 months’ service in two periods;
Ms Loan Nguyen - 21 months’ continuous service;
Mr Hua - close to 11 years’ service in three periods.
Other circumstances, suggesting reason for disbelieving Mr Coco, were also pointed out by counsel for the employees, Mr Amerena.
I feel quite comfortable in rejecting, on the papers, Mr Coco’s account of the selection process and the various supposed rationales for it.
There is some objective support for the view that the night shift was terminated and, despite the painstaking and often effective challenge on behalf of the employees to the operational requirements case mentioned by Cosco, I think that there was a reasonably felt need to reduce operations on the facial tissues line.
However, the extent and consequence for Cosco’s level of employment of such a reasonably felt need are not clear. Counsel for the employees showed that the effect of the dismissals of facial tissues line employees was to reduce the average staffing level (including casuals) from 18 in the 4 weeks preceding the terminations to 13 for the 9 weeks thereafter, but, by December, that level was back to 14 to 15. Cosco’s total workforce fluctuated between 167 and 174 in the four weeks up to the terminations, between 165 and 175 in the 9 weeks thereafter, and between 170 and 177 in December. Within two weeks of the terminations of the employees (other than Mr Hua), a considerable increase, sustained at least to the end of 1995, occurred in the de-inking plant.
One could hardly regard a net reduction in Cosco’s non‑casual factory floor workforce of more than two or three employees as having been shown to be the consequence of the decision to close the night shift.
The production employees were readily transferable between lines: the work was “unskilled”, it took little training and, on Cosco’s case, it was difficult to choose between employees in terms of their value to the enterprise. Ordinary staff turnover was high. Cosco’s net profit for the financial year in question did not appear strained.
In these circumstances, Cosco’s inability to make any case of significance as to why:
(a)volunteers might not have been called for and/or discussed with the employees;
(b)natural attrition might not have been relied upon;
(c)selection by lot was not made a matter of last resort, and adhered to; and
(d)selection, by lot, or otherwise, was not made across the entire workforce, rather than confined to the hapless production employees concerned with facial tissues,
assumed considerable significance, although such factors might be less important in other circumstances. Such explanations as were advanced were, to say the least, unconvincing.
Thus, Cosco is doomed to failure in these proceedings. It has not been shown that there was any actual “reason . . . based on the . . . operational requirements of the undertaking” for the termination of services of the number of employees who were terminated. Nor has it been shown that there was any such reason for the termination of the services of any of the particular employees terminated. It is unnecessary, in the light of either of those conclusions to go further; but, in my view, however narrowly one may restate the notion of a “valid” reason, it has not been shown that any of these terminations was sufficiently defensible as to be able, in ordinary language, to be termed “valid”.
Cosco’s evident strategy on this review was:
(a)to submit that the reviewing judge could not introduce any credit finding that would impair the view, best supported in the evidence, that Cosco (through Mr Coco) had a reasonably felt belief that a reduction in the number of employees on the facial tissues line, by closing the night shift, was necessary because of disappointing sales and excessive stocks on hand;
(b)to accept the prospect that on other issues, Cosco might fail because Mr Coco’s credit had so evidently been put in issue; and
(c)to submit that a “valid reason” is constituted merely by an actual reason of the kinds mentioned in s 170DE(1), without any necessity for, or ability in, the court to consider the defensibility or justification of terminating an employee’s service, that is, in the usual case, removing his or her means of livelihood. Thus, Cosco wished to submit that cases such as Nettlefold v Kym Smoker Pty Ltd (1996) 69 IR 370 (Lee J), Kerr v Jaroma Pty Ltd (t/as Treasury Motor Lodge) (Marshall J, Industrial Relations Court of Australia, 7 October 1996) and Westen v Union des Assurances de Paris (Madgwick J, Industrial Relations Court of Australia, 17 December 1996) are wrongly decided.
The problems with this approach are the true facts of the matter, as I have explained above, and the decision in Kenefick v Australian Submarine Corporation Pty Ltd (No 2) (1996) 65 IR 366, applied and explained in Westen and Simpson v Systems Services Pty Ltd (von Doussa J, Industrial Relations Court of Australia, 13 June 1997). Kenefick is clear authority that a valid reason to terminate the services of a given number of employees is not necessarily a valid reason to terminate the services of that number of particular employees: as I said in Westen:
“. . . the first task is to focus on the relevant inquiry. This is not whether some change in the functioning of the undertaking, which change accompanies or immediately precedes or follows the employee’s termination, is made for a valid reason based on the operational requirements of the undertaking. The enquiry is whether there is a valid reason for the actual termination in question. This was brought out by the Full Court’s judgment in Kenefick”.
In Kenefick, a case where an existing shipyard workforce could not be maintained in the absence of orders for more vessels and 36 employees were selected for redundancy, the Court said:
“s 170DE(1) is concerned with the termination of the employment of an individual employee . . . The decision to reduce the overall number of welders . . . did not of itself lead to the termination of individual [employees] and the process of selection was only commenced after the decision to reduce overall numbers had been taken. Consequently, the respondent carried the onus of showing that there was a valid reason for the selection of each appellant.
This conclusion is consistent with the scheme of ss 170DE and 170EDA(1) [which] provides for the employer to carry the onus on matters peculiarly within the knowledge of the employer, and for the employee to carry the onus on matters peculiarly within the knowledge of the employee . . .”
It was therefore requisite, in this case, that Cosco should show that the decision to close the night shift on the facial tissues line (and to do away with a maintenance job) furnished the reason why each of the particular employees was selected to go. That link, on any reasonable view of the facts, was simply lacking. The selection of the respondent employees has not been shown to be for a reason based on the operational requirements of the undertaking. It was based on nothing, in the end, other than Mr Coco’s whim.
It follows that each respondent employee was entitled to succeed in the court. Those who desire reinstatement should have it, nothing having been shown to suggest that re-instatement is impracticable or otherwise inappropriate; otherwise, compensation should be paid. The parties anticipated a narrowing of the issues on quantum, and I shall hear them further on that.
This case, therefore, does not really warrant a response to the criticism made of Westen, Nettlefold and Jaroma. However, I would briefly say these things about Westen. First, I am not, of course, concerned to defend it all costs, and have re-considered it in the light of the submissions made.
Secondly, the reasoning in Westen is not, in my view, inconsistent with anything said by the High Court in Victoria v Commonwealth (1996) 138 ALR 129. In particular, when the majority said (at 171):
“The terms ‘harsh, unjust or unreasonable’ [in s 170DE(2)] are not merely a synonym for ‘valid’ . . . or even . . . a subset of grounds that [might be] ‘valid’ . . .”
it seems clear that they had the entire phrase “harsh, unjust or unreasonable” in mind. The judgment refers to “a” synonym. Further, the term “harsh” is, at least in modern times (c.f. O.E.D.), more readily used of the effect of an action on a person rather than of a person’s reason for an action. Hence the judgment is unlikely to have been considering the meaning of the phrase “valid reason” as possibly encompassing the concepts denoted by the individual words “unjust” or “unreasonable”.
Prima facie, it would be odd if an unjust or unreasonable reason for terminating an employee’s means of livelihood could be regarded as a valid reason.
Thirdly, it seems to me that the reference in Westen to “Australian courts [having] a policy choice” in the way the term “valid reason” should be applied was, in the context, obvious enough. However, further elucidation may be useful. I believe I had shown, in Westen, that in Australia, in contrast with some other countries’ implementation of the ILO Termination of Employment Convention 1982, Parliament opted to leave to the Court (or the Commission) the examination of both (a) whether the economic requirements of an undertaking have led to terminations of employment, and (b) whether such requirements are of sufficient weight and importance to justify such terminations. In such a situation, the Court may, looking at the matter for logical possibilities, choose to make its satisfaction as to consideration (b), for example, easy or hard or of varying difficulty in different cases. That is, the Court faces choices of judicial policy. Naturally, I did not mean political policy. I went on to suggest, as something of a partial guard against “length-of-the-Chancellor’s-foot” decisions, the adoption of a “fair go all round” test, which stresses fairness to both parties to the employment contract, and also, to my mind, in the notion of “fairness”, what the man on the Blacktown train or, since I am sitting in Brisbane, the woman on the Mt Gravatt bus, would regard as a justifiable reason. I indicated the necessity to proceed on a case-by-case basis; the difficulty of the Court deciding, where the employer has a genuine, non-capricious economic reason for the termination, whether the termination is nevertheless justified; and the unhelpfulness of any early effort to restate the phrase “valid reason” in any more “concrete” form.
Union membership/activities
Mr Coco denied that the terminations were motivated by any reason which would contravene s 170DF(1)(b), which is in the following terms:
“(b)union membership or participation in union activities outside working hours or, with the employer’s consent, during working hours.”
As indicated above, a union had recently renewed its predecessor’s apparently long-dormant interest in organising Cosco’s production workers. Mr Coco apparently had the view that the union took members’ money for nothing; that membership was not helpful for employer-employee relations and could lead to an attitude unconducive to hard work; and that some of the workers’ money would unjustifiably be diverted to a political party. However, it does not appear that Mr Coco had the means to know precisely which employees were members or were seeking or showing interest in membership of the relevant union. Apparently, the only employee of those terminated who, to Mr Coco’s knowledge, had attended a union recruitment meeting before 16 September 1995 was Mr Hua; his employment lasted longer than that of the other dismissed employees. Mr Coco permitted some union activities on Cosco’s premises and it was not submitted that this was simply under any legal compulsion. In general, while Mr Coco actively pursued his right to stress to his employees his poor opinion of trade unionism, he did not exhibit such a degree of antipathy to unions as would require one to disbelieve his evidence that union considerations were not among his reasons for dismissing the respondents.
Mr Coco addressed a meeting of Cosco’s employees soon after 16 September. He urged them against joining the union. But the evidence does not, in my view, bear the inference that he threatened anyone with dismissal if they did so join. It was argued for the employees that, in a context where Cosco employees were likely to be considering union membership, Mr Coco had dismissed the respondents to demonstrate to his workforce his power and disposition generally and to give point to his observation to the meeting he addressed to the effect that the gate was there those who did not wish to work hard. However, the evidence is equally consistent with a reasonable operational requirement to close the facial tissues nightshift and some idiosyncratic choices as to the number and identities of the employees to go, which choices need not have included any consideration of union membership or activity.
I think that Cosco has discharged its onus on this aspect of the case.
Because of that conclusion, based on an assumption of a wide reach for the shorthand phrases “union membership” and “union activities” in s 170DF(1)(b), I need not consider to finality the precise scope of that paragraph.
Final orders can wait submissions on quantum.
I certify that this and the preceding twenty one (21) pages are a true copy of the Reasons for Judgment of the Honourable Justice Madgwick.
Associate:
Dated: 30 June 1997
Counsel for the Applicant: M Cooke QC
Solicitors for the Applicant: Quinlan, Miller & Treston
Counsel for the Respondent: M Amerena
Solicitors for the Respondent: Minter Ellison
Date of hearing: 24 & 25 June 1997
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