Trustees of the Roman Catholic Church for the Diocese of Wagga Wagga v Lorraine Roche
[2019] FWCFB 4684
•24 JULY 2019
| [2019] FWCFB 4684 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decision
Trustees of the Roman Catholic Church for the Diocese of Wagga Wagga
v
Lorraine Roche
(C2019/3079)
DEPUTY PRESIDENT GOSTENCNIK | MELBOURNE, 24 JULY 2019 |
Appeal against decision [2019] FWC 2768 of Deputy President Dean at Sydney on 24 April 2019 in matter number U2017/13136 – costs – appealable error identified – public interest enlivened – appeal upheld – decision to order costs quashed – part of s.400A(1) application dismissed – remainder of costs application remitted for rehearing.
Introduction
[1] Ms Lorraine Roche (Respondent) commenced employment with the Catholic Schools Office Wagga Wagga (CSO) on or about 23 April 2012. The Respondent had held the position of School Support Officer at St Patrick’s Primary School in Griffith, New South Wales, from May 2013 until her dismissal on 22 November 2017. Her employer was the Trustees of the Roman Catholic Church for the Diocese of Wagga Wagga (Appellant).Her dismissal followed an investigation into an incident that occurred on 17 August 2017 involving the Respondent and another staff member of the School. The Respondent applied for an unfair dismissal remedy by application to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Act). The application was lodged on 11 December 2017.
[2] The Respondent succeeded in her application, with Deputy President Dean determining on 14 August 2018 that the Respondent’s dismissal was unfair and ordering the Respondent’s reinstatement, continuity of employment, and payment of wages between the date of dismissal and the reinstatement. 1
[3] The Respondent applied for an order for costs on 28 August 2018 under both ss.400A(1) and 611(2)(b) of the Act. Section 400A(1) allows the Commission to order costs against a party to a matter relating to an unfair dismissal remedy application if it is satisfied that because of an unreasonable act or omission by the party in connection with the conduct or continuation of the matter, that party caused costs to be incurred by the other party. Section 611(2)(b) allows the Commission to order a party to bear some or all of the costs of another party in relation to an application before the Commission if it is satisfied that it should have been reasonably apparent to the first mentioned party that its application, or its response to the application, had no reasonable prospects of success.
[4] The Deputy President determined the Respondent’s costs application in her favour pursuant to s.400A(1), by a decision published on 24 April 2019 2 (Decision). The quantum of the costs order is yet to be determined. The Deputy President did not deal with the application under s.611(2)(b) given her decision under s.400A(1). It is from that decision that the Appellant seeks permission to appeal and appeals.
The Decision
[5] After setting out some detail as to the nature of the application for costs, some relevant background matters and summary of relevant evidence and submissions made by the parties in relation to the application for costs, the Deputy President begins her consideration of the s.400A(1) aspect of the application with a recitation of some relevant principles. Thereafter, the Deputy President’s reasoning underpinning her conclusion is set out in the following paragraphs of the Decision:
“[35] Having considered the evidence and submissions of the parties, I am satisfied that the CSO’s failure to agree to terms of settlement in the form of the Second Offer was unreasonable.
[36] While there were some matters which may have supported a view by the CSO that dismissal was appropriate at the time Ms Roche was dismissed, such as the report of the workplace investigator (the Tawfiq Report) and the report of the NSW Police, the CSO could not reasonably have continued to hold the view that Ms Roche’s dismissal was justified, or that it could defend an order for reinstatement, after the first two days of hearing. In particular, at the time of the expiration of the Second Offer, it ought to have been clear to the CSO that there were significant risks in continuing to defend the application. In this regard, I accept the submissions made on behalf of Ms Roche.
[37] I do not accept the CSO’s argument that it would have placed itself in breach of its duty under the WHS Act if it were to reinstate Ms Roche because it alleged Ms Roche was the cause, or part of the cause, of Ms Culla’s psychological injury. First, Ms Culla had resigned prior to Ms Roche’s dismissal. Second, the evidence given prior to the expiration of the Second Offer made it clear that Ms Culla was the principal cause of the difficulties experienced within the office, and that she was emotionally volatile and unpredictable.
[38] The CSO did not call Ms Campbell, a key witness, to give evidence. She gave evidence in response to an order to attend and give evidence which was sought by Ms Roche. Both Ms Campbell and Mr Morrell had given evidence that was favourable to Ms Roche, including that Ms Campbell considered Ms Roche to be an “amazing front of house person”.
[39] The primary remedy in relation to unfair dismissal is reinstatement. Clearly, Ms Roche placed great value on her role with the CSO and at no point did she resile from her stated desire to return to her position. Her willingness to spend a significant amount of money (more than one year of her annual salary) on legal fees towards obtaining reinstatement, and her willingness to forgo backpay in both of her offers to settle, also made it evident that Ms Roche was completely focussed on reinstatement.
[40] The offers put to Ms Roche by the CSO on 21 February and 24 April were both principally of a financial nature. In light of Ms Roche’s very clear desire to be reinstated, I do not consider these offers reasonable in the circumstances. At the time the second financial offer was made by the CSO, their prospects of success were obviously and significantly diminished. The significantly increased monetary sum the CSO offered at this time supports a view that the CSO recognised their diminished prospects of success in defending the application.
[41] In addition, the CSO was represented by experienced Counsel throughout the proceedings, and was put on notice that Ms Roche would seek costs upon the CSO failing to obtain a more favourable result than the Second Offer.
[42] I am not satisfied that the CSO’s conduct prior to the expiration of the First Offer was unreasonable. At the time of the expiration of the First Offer, the hearing had not commenced and the evidence referred to above had not been given. There is no basis for me to conclude that its conduct prior to the expiration of the First Offer was unreasonable in the manner required by s 400A.
[43] I am satisfied that the actions by the CSO in continuing to defend the application and refusing to accept the Second Offer, were unreasonable from the time of, and subsequent to, the Second Offer expiring, and that Ms Roche incurred costs as a result of those actions.
[44] Taking into account the principles guided by the authorities cited, and having considered the facts and circumstances of the present matter, I am persuaded that, when viewed objectively, it is appropriate to exercise my discretion and award Ms Roche her costs on a party/party basis from 4pm on 20 April 2018, being the expiration of the Second Offer.” 3 [Endnote omitted]
[6] As is evident from the extracted paragraphs, the Deputy President reasoned that the relevant act or omission in which the Appellant engaged, and which caused the Respondent to incur costs, was the Appellant’s “failure to agree to the terms of settlement in the form of the Second Offer.” 4 The Deputy President also concluded that continuing to defend the application after rejecting the Second Offer was an unreasonable act.5 The “Second Offer” was made on 3 April 2018 and lapsed at 4:00pm on 20 April 2018. That offer was to settle the application on the basis, inter-alia, that the Respondent be reinstated in the role of Assistant to the Principal or School Support Officer at one of three identified schools operated by the Appellant but without payment for wages between the date of dismissal and the reinstatement.
[7] At [36] of the Decision, the Deputy President explains why in her view the failure by the Appellant to accept the Second Offer was unreasonable. In so doing the Deputy President accepts the submissions made on behalf of the Respondent. Although it is not entirely clear which submissions were being accepted, the Respondent made a number of submissions related to the “Second Offer” and the failure to accept as an unreasonable act or omission causing her to incur costs. These submissions were summarised by the Deputy President at [16] of the Decision as follows:
“[16] It was submitted in the alternative that Ms Roche should be awarded costs from the time the Second Offer lapsed. In that regard, Ms Roche relied on the following matters:
• Prior to the Second Offer lapsing, the parties had attended two days of hearing in Wagga Wagga. After hearing the opening submissions of Ms Roche’s case, the CSO should have known about the legal risks that it would face if the matter went on to be determined;
• Evidence had been given that Ms Culla was the principal cause for the breakdown of working relationships within the front office of St Patrick’s Primary School (including between Ms Campbell and Ms Culla) and that Ms Culla was emotionally volatile and unpredictable;
• Evidence had been given by Ms Campbell and Mr Morrell which was favourable to reinstatement of Ms Roche into her former position;
• Evidence given by Mr Bowyer in cross examination revealed that his reasons for decision were not quite as set out in the letter to Ms Roche, and to the extent that he relied on Mr Tawfiq’s investigation report, the report was affected by serious flaws and was unreliable;
• Evidence yet to be given by the remaining witnesses (Mr Bowyer, Ms Delaney, Ms Price and Mr Tawfiq) was unlikely to assist the CSO and to the contrary, its case would be further weakened by the cross-examination of its remaining witnesses;
• Ms Roche made a genuine and significant compromise in the Second Offer in offering to release the CSO from a potential claim for a five month period of lost wages and a potential claim for legal costs;
• The CSO was placed on notice that the Second Offer was made in the form of a Calderbank offer and that Ms Roche would seek costs upon the CSO failing to obtain a more favourable result than the Second Offer;
• The CSO was given a reasonable period of time to consider the Second Offer;
• The CSO had the benefit of advice from experienced Counsel on its legal risks and the inference must be drawn that the CSO had made a conscious decision to reject the Second Offer and take on the risk of a reinstatement order;
• It should have been apparent to the CSO by this time that Ms Roche would be reinstated;
• “A deliberate decision to refuse a reasonable offer of settlement is a factor which would normally weigh more heavily in favour of a finding of unreasonable action than would a mere failure to respond by an unrepresented litigant.” (Cugura v Frankston City Council [2012] FCA 1299 at [31]); and
• The CSO’s “rejection of, or failure to accept the Second Offer and/or failure to participate in genuine or reasonable settlement negotiations prior to the expiry of the Second Offer was an unreasonable act or omission within the meaning of s.400A(1) of the Act, and justifies an order for costs at least from the date on which the Second Offer lapsed.” 6
[8] Relevant also is the Respondent’s submissions which are summarised at [30] of the Decision:
“[30] Submissions in reply made on behalf of Ms Roche, in summary, stated:
• The CSO’s submissions demonstrate that since at least 24 April 2018, it was aware of the weakness of its position. The fact that the CSO made an offer on 24 April which was significantly exceeded the maximum compensation award available, justifies an inference that the CSO was aware that it did not have reasonable prospects in resisting Ms Roche’s unfair dismissal claim. This fortifies the submission that it was unreasonable conduct by the CSO not to accept the Second Offer which lapsed two days prior to its offer on 24 April.
• Alternatively, the offer of 24 April 2018 indicates that the CSO was aware at the least that it did not have reasonable prospects of success in these proceedings. The CSO should have conceded that the dismissal was unfair and such concession would have made it possible for the parties to reduce the scope of the proceedings to the question of remedy only, which would have saved considerable time and expense.
• Further, had the CSO confronted the weakness of its position, the proceedings in the period between 21 and 23 May 2018 would have been reduced to one hearing day, given much of the cross examination of the CSO’s witnesses would become unnecessary and closing submissions can be made orally within the same hearing day.
• For these reasons, Ms Roche should be entitled to her costs of two hearing days and her written closing submissions.” 7
[9] As is clear from the summary immediately above, the Respondent contended for two alternative unreasonable acts or omissions of the Appellant which she said caused her to incur costs. The first was the failure to accept the Second Offer. The second was its failure to concede that the Respondent’s dismissal was unfair, which concession would have resulted in the scope of proceedings being narrowed to remedy only. Consequently, the failure to make the concession caused the Respondent to incur costs in unnecessary hearing time, cross examination and submissions on the question of whether the dismissal was unfair.
[10] As we have already noted, the Deputy President accepted that the unreasonable act or omission was the failure to accept the Second Offer and continuing to defend the application thereafter. The Deputy President therefore did not consider the alternative basis upon which this part of the application was put.
Grounds of appeal
[11] The Appellant’s notice of appeal contains six appeal grounds.
[12] Ground 1 contends that the Deputy President erred in taking into account an irrelevant consideration that the Appellant ought to have been aware that there were significant risks in continuing to defend the application in determining that the rejection of Ms Roche's Second Offer was unreasonable.
[13] Ground 2 contends the Deputy President erred in finding that after the first two days of hearing and on or before 20 April 2018, the Appellant could not have reasonably held the view it could defend the application. This is because the Deputy President is said to have failed to pay regard to the Appellant's submissions and the evidence of Mr MacLean; relied upon a factually incorrect submission of Ms Roche that Mr Bowyer had conceded on or before 20 April 2018 that there were serious flaws with respect to the investigation report of Mr Tawfiq; and failed to have regard to the evidence of Ms Campbell concerning impracticability of reinstatement.
[14] Ground 3 contends the Appellant was denied procedural fairness in relation to the findings that the Appellant should have known that monetary offers without reinstatement would not be accepted by Ms Roche and that it held certain knowledge about the prospects of successfully defending the application based on the quantum of its 24 April 2018 settlement offer.
[15] Ground 4 contends the Deputy President erred in finding that the Appellant recognised that it had diminished prospects for defending the application given the quantum of its 24 April 2018 settlement offer.
[16] Ground 5 contends the Deputy President erred in finding that the Appellant's offers of 21 February 2018 and 24 April 2018 were not reasonable.
[17] Ground 6 contends the Deputy President erred in incorrectly applying the Appellant’s duties under the common law and the Work, Health and Safety Act 2011 (NSW) (NSW WHS Act).
[18] We deal with the appeal grounds below.
Ground 1
[19] The Appellant contends that central to the Deputy President's decision to order costs, was her finding that at the time of the expiration of the Second Offer (20 April 2018), it ought to have been clear to the Appellant that there were significant risks in continuing to defend the application. 8 It says this was an irrelevant consideration.
[20] The Appellant contends that the commencement and the defence of an unfair dismissal remedy application carries significant risks and it says that what is required to enliven the discretion to award costs under s.400A(1) of the Act, is something more than the identification that there were significant, and in this matter, unidentified risks.
[21] The finding made by the Deputy President is informed by her conclusion earlier at [36], that after the first two days of hearing the Appellant could not reasonably have continued to hold the view that Ms Roche’s dismissal was justified, or that it could defend an order for reinstatement.
[22] These conclusions are said by the Respondent to have been open to the Deputy President and were correct. If that is so, this ground of appeal must fail. Whether the act or omission of not accepting the Second Offer was unreasonable is to be objectively ascertained. The Deputy President’s conclusions based on her assessment of the evidence as at the end of day two of the hearing is plainly relevant to assessing objectively whether the identified act or omission was unreasonable.
[23] However, we think the conclusion was neither open, nor correct. The Deputy President’s conclusion is to be assessed by reference to the known state of affairs in the case as at the end of the second day of a five day hearing. By the end of the second day of hearing, the Respondent’s evidentiary case had concluded but the Appellant was only part way through its evidence. The Deputy President observed that “Ms Campbell and Mr Morrell had given evidence that was favourable to Ms Roche, including that Ms Campbell considered Ms Roche to be an “amazing front of house person”.” 9 But that was not the only evidence given by Ms Campbell.
[24] Ms Campbell is the Principal of the school at which the Respondent had worked. She gave evidence that:
• the Respondent “struggles with her interpersonal relationships which to me is just as important to creating good workplaces as technical proficiency”; 10
• she had no confidence that the Respondent “would get along with a new supervisor” and considered “it highly likely” that the Respondent would “struggle to take direction from anyone given her behaviour”; 11
• the Respondent’s behaviour “was exhausting for me in my leadership role at the School and extremely stressful . . .” and that it was clear from the Respondent’s statement “that she will never accept that she needs to significantly change in order to work at the School”; 12 and
• for the first time since “I became Principal I feel the front office is running smoothly.” 13
[25] Ms Campbell also gave evidence that:
• there were relationship problems involving the Respondent; 14
• the Respondent had been passively aggressive at times; 15
• she would facilitate reinstatement of the Respondent if ordered to do so and would endeavour to manage the situation but that she “had quite a few of [her] staff members come to [her] concerned because they have been rebuked by Lorraine publicly and ignored. That to me is a concern.”; 16
• reinstatement will not result in the house coming down and the school would get by, but she will still have to do a lot of work with her staff; 17
• she was concerned about the relationships between the Respondent and other staff including teachers and how the relationships would be re-established with those staff as the front office role is such a vital role; 18 and
• there would “have to be quite a bit of work done around re-establishing those relationships” and that would distract “those teachers from the performance of their duties.” 19
[26] All of this evidence is relevant to the question of reinstatement. It is doubtless the case that by the end of day two of the hearing the Appellant’s prospect of successfully defending against a finding that the Respondent’s dismissal was unfair had been damaged. But it had not put on its full case. In any event, the relevant act or omission that the Deputy President found to be unreasonable was the failure by the Appellant to accept the Second Offer. That offer, like the first offer, was for reinstatement. The Appellant was resisting reinstatement.
[27] Given the evidence noted above and given that the Appellant had not completed its evidentiary case, it was simply not open for the Deputy President to conclude that the Appellant “could not reasonably have continued to hold the view that . . . it could defend an order for reinstatement.” It is this conclusion that founds that which follows namely, the Deputy President’s conclusion that it ought to have been clear to the Respondent that there were significant risks in continuing to defend the application. That conclusion was erroneous because the underpinning conclusion was not open on the evidence after the second day of a five day hearing. It follows that by taking that matter into account the Deputy President fell into error.
[28] Ground 1 of the notice of appeal therefore succeeds.
Ground 2
[29] The Appellant contends that the Deputy President erred in finding that after the first two days of hearing and on or before 20 April 2018, the Appellant could not have reasonably held the view it could defend the application. The Respondent contends that whether or not the Appellant believed it had reasonable grounds for continuing to defend the case is not the statutory criterion – it is whether there was an unreasonable act, judged objectively. This is correct, however, it is clear that the Deputy President assessed the unreasonable act of failing to accept the Second Offer by reference to her conclusion that the Appellant “could not reasonably have continued to hold the view that Ms Roche’s dismissal was justified, or that it could defend an order for reinstatement, after the first two days of hearing.” 20 The evidentiary matters which the Appellant says the Deputy President did not take into account, concerned not just the subjective belief of the Appellant, or its various officers, but concerned objective factual matters upon which that belief was formed. Some of those matters are relevant in the assessment of whether the failure to accept the Second Offer and to continue to defend the prospect of reinstatement were objectively, unreasonable acts.
[30] The Respondent also contends that the Deputy President judged that there was an unreasonable act, having regard to the findings that were made in the substantive decision and that this obliterates the allegation of error. This submission cannot be accepted. The effect of this submission is that if the Deputy President was wrong in her conclusion that the Appellant could not reasonably have continued to hold the view that it could defend an order for reinstatement after the second day of hearing, the act of failing to accept the Second Offer was nonetheless unreasonable by reference to the final outcome.
[31] In any event, this is not what the Deputy President found. As is evident from the Deputy President’s analysis at [35]–[43] of the Decision, the Deputy President assessed whether the failure to agree to the terms of settlement in the form of the Second Offer was unreasonable by reference to the state of affairs as were known at that time. The further conclusion that continuing to defend the application after refusing to accept the Second Offer was an unreasonable act was also assessed by reference to the state of affairs known to the Appellant at the time of the Second Offer expiring.
[32] To make good this appeal ground, the Appellant makes three points. First, it says the Deputy President failed to pay regard to the Appellant's submissions and the evidence of Mr MacLean. Secondly, it says the Deputy President relied upon a factually incorrect submission of Ms Roche that Mr Bowyer had conceded on or before 20 April 2018 that there were serious flaws with respect to the investigation report of Mr Tawfiq. Thirdly, it contends that the Deputy President failed to have regard to the evidence of Ms Campbell concerning the impracticability of reinstatement.
[33] Dealing with the third contention first, we cannot discern any analysis of the evidence given by Ms Campbell save for the reference at [38] of the Decision that “Ms Campbell...had given evidence that was favourable to Ms Roche including that Ms Campbell considered Ms Roche to be an “amazing front of house person”. As our consideration of appeal ground 1 shows, Ms Campbell’s evidence was far more extensive, particularly so far as the question of the practicality of reinstatement is concerned. It is to be remembered that the Second Offer was one for reinstatement. It was that offer that was not accepted and the decision not to accept the offer that is said to be unreasonable, as well as continuing to defend against an order for reinstatement by reference to the state of the evidence after the second day of hearing.
[34] Ms Campbell gave evidence favourable to the Respondent on that question, but she also gave unfavourable evidence. On its face, the Decision discloses that the Deputy President only took account of the evidence that was favourable. The Decision does not disclose that she took into account the evidence we have earlier recounted and that was not favourable to the Respondent. We therefore consider the Appellant has made out the third contention.
[35] Returning then to the first contention, Mr MacLean’s evidence explaining his reasoning for rejecting the second offer was as follows:
“28. On 3 April 2018, I received a copy of Ms Roche's Second Offer (see Annexure "MML-3").
29. I considered Ms Roche's Second Offer. I was quite surprised to read within this letter that Ms Campbell was said to have given evidence at the hearing that Ms Roche was an ""amazing" front of house person" and that "she has reasonable expectations that Ms Roche will be able to successfully rebuild her relationship with teachers" as this was inconsistent with what she told me during our conversation outlined above in paragraph 24. However, I am aware that the transcript from the cross examination of Ms Campbell revealed that she held concerns about the impact of a reinstatement order on other staff members of the school, due to comments made to her by staff concerning Ms Roche's behaviour following the termination of her employment.
30. Notwithstanding the abovementioned comments regarding Ms Campbell, there was nothing within this letter that changed any of the concerns I previously held with respect to the proposed reinstatement of Ms Roche (as outlined above in paragraphs 25-27). In terms of the threat that our case was "doomed to fail", I thought this view was premature given the CSO was permitted to prepare and file further written evidence, and that the most senior and specialised witnesses for the CSO had still not had the opportunity to give evidence at the hearing, namely Mr Tawfiq, Ms Price, Mr Bowyer and Ms Delaney. For the above reasons I decided not to accept Ms Roche's Second Offer, and instructed CCER accordingly.” 21
[36] Mr MacLean also gave evidence that he understood from his conversation with Ms Campbell that she held significant concerns about the possibility of the Respondent’s reinstatement, and that in the Respondent’s absence the interpersonal conflict and tension had ceased and the front office staff were happy and working cooperatively with each other. 22 Mr MacLean’s evidence about his conversation with Ms Campbell which had occurred on or around March or April 201823 is consistent with the evidence given by Ms Campbell to which we have earlier referred.
[37] The Respondent contends that the Deputy President considered Mr MacLean’s statement, and the opinions expressed therein. The Respondent points to the Deputy President’s summary of Mr MacLean’s evidence set out at [20] – [26] of the Decision. The Respondent contends that it cannot be said that the Deputy President somehow overlooked this material or otherwise did not have a proper basis for the findings that she made. The Respondent says that the Appellant’s allegation is a mere expression of disagreement with Deputy President’s conclusions.
[38] This submission must be rejected. Although reasons for a decision need to be read fairly and as a whole, it is not sufficient to merely set out a summary of evidence that is material to a question that is to be decided without disclosing whether that evidence was accepted or rejected or how it was weighed in the balance in reaching the ultimate conclusion. Mr MacLean’s evidence dealt squarely with the factual basis upon which he decided to reject the Second Offer. The Deputy President concluded that the failure to accept the Second Offer was an unreasonable act which caused the Respondent to incur costs. Mr MacLean’s evidence was not contested. Mr MacLean’s summary of the concerns that Ms Campbell had expressed to him about reinstatement before she had given evidence, was consistent with the evidence that she ultimately gave. Although it may be inferred from the Deputy President’s ultimate conclusion that she did not accept Mr MacLean’s evidence or gave it little or no weight, the reason why that might be so is not explained. The Deputy President does not engage with Mr MacLean’s evidence at all. We consider that the Appellant’s first contention is also made out.
[39] As to the second contention in support of this ground of appeal, a review of the transcript reveals that Mr Bowyer had not concluded his evidence on or before 20 April 2018. By the end of the second day of hearing, he had given evidence about a 2015 investigation report prepared by Mr Tawfiq and a related warning to the Respondent about that time. 24 He had not yet traversed findings of misconduct made against the Respondent in a subsequent investigation report by Mr Tawfiq in 2018, which were relied upon to justify her dismissal. We would also observe that to the extent that concessions had been made by Mr Bowyer by the second day of hearing, they were in response to hypothetical scenarios put by the Respondent. Those scenarios had not yet been established. In our view, Mr Bowyer’s evidence in this regard cannot fairly be seen as having so comprehensively undermined the Appellant’s case that it could not hope to establish a valid reason for dismissal.
[40] It follows that the second appeal ground succeeds.
[41] It is convenient that we deal next with ground 4 before returning to ground 3.
Ground 4
[42] By this appeal ground, the Appellant contends the Deputy President committed an error of fact in drawing an inference that the Appellant recognised the weakness of its case after the 2 days of hearing given the size of the settlement offer made after the Second Offer had lapsed.
[43] The Respondent says that there is a fundamental problem with this appeal ground. The Respondent correctly points out that whether the Appellant believed that it had reasonable prospects of success in defending the case is not relevant to whether an inference is available from the size of the financial offer actually made to the Appellant, bearing in mind that the statutory criterion is whether there was an unreasonable act, judged objectively. The Respondent contends the inference was correctly drawn as the Appellant would not have made such a large offer unless it actually knew that its case was not reasonably defensible. This contention must be rejected.
[44] The basis upon which an inference of the kind drawn by the Deputy President may be drawn in civil proceedings was discussed in Transport Industries Insurance Co Ltd v Longmuir 25 as follows:
“In a civil case like this, where there is no direct evidence of a fact that a party bearing the onus of proof seeks to prove, ‘it is not possible to attain entire satisfaction as to the true state of affairs’: Girlock (Sales) Pty. Ltd. v Hurrell. In such a case, however, the law does not require proof to the ‘entire satisfaction’ of the tribunal of fact. A definition of the sufficiency of circumstantial evidence in a civil case to support proof by inference from the directly proved facts was given by the High Court in the unreported case of Bradshaw v McEwans Pty. Ltd. (27 April 1951) in a passage since repeatedly adopted: e.g. Luxton v Vines; Holloway v McFeeters; Jones v Dunkel; Girlock's case. The relevant passage in Bradshaw's case is this:
‘Of course as far as logical consistency goes many hypotheses may be put which the evidence does not exclude positively. But this is a civil and not a criminal case. We are concerned with probabilities, not with possibilities. The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence, while in the latter you need only circumstances raising a more probable inference in favour of what is alleged. In questions of this sort, where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture: see per Lord Robson, Richard Evans & Co. Ltd. v Astley. But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then, though the conclusion may fall short of certainty, it is not to be regarded as a mere conjecture or surmise ...’” 26
[45] The imputed motivation for the size of the Appellant’s settlement offer, was in the circumstances a matter of conjecture rather than one where the circumstances appearing in the evidence gave rise to a reasonable and definite inference. It was plainly the case that the Appellant was resisting reinstatement. Ms Campbell had given evidence about the practicality of reinstatement. The Respondent had made two offers of settlement each involving reinstatement consistent with her desire to be reinstated. At the conclusion of the second day of hearing there had been some evidence which had been favourable to the Respondent and which had assisted in her merits case. The case had not concluded but there was evidence as we discussed earlier which was not favourable to the Respondent’s case for reinstatement and which was favourable to the Appellant’s case against reinstatement. In this context, we consider there are at least two conflicting inferences available which have essentially equal degrees of probability. The first is the inference drawn by the Deputy President. The second is that the Appellant wanted to ensure an outcome that did not involve reinstatement and structured its financial offer in such a way that might make a financial outcome acceptable to the Respondent in lieu of reinstatement. That is, the Appellant was motivated to ensure that it obtained the outcome it was seeking. In the circumstances of the state of the evidence at the conclusion of day two, deciding which of the two motivated the Appellant is mere conjecture and is not appropriately the subject of an inference, one way or the other. The Deputy President erred in so doing.
[46] It follows that this ground of appeal succeeds.
[47] The Respondent also submitted that the fact that the Deputy President had not examined the evidence of Mr MacLean in greater detail on this point was really a matter of politeness. She contended that the Deputy President would otherwise have to express impolite observations about his (in)capacity to correctly judge the merits of the case. This submission is not helpful and merely speculates about that which the Deputy President might otherwise have said. We have earlier set out relevant passages of Mr MacLean’s evidence. We consider that Mr Maclean’s assessment as to the Appellant’s capacity to continue to resist reinstatement and his reasons for rejecting reinstatement, having regard to the evidence available to him at the time, was understandable.
Ground 3
[48] By this ground of appeal the Appellant contends that it was deprived of an opportunity to present a case in relation to the inferences to be drawn from the quantum of its settlement offer. This is a procedural fairness point. As the Appellant has had a full opportunity during the appeal to ventilate the issue of the inference drawn by the Deputy President and given our conclusion on ground 4, we need not deal with this ground.
Ground 5
[49] Appeal ground 5 is concerned with the Deputy President’s finding at [40] of the Decision that the financial offers of settlement made by the Appellant were not reasonable. That finding is based on that which is described by the Deputy President as the Respondent’s “very clear desire to be reinstated.” It seems to us also that a further reason for that conclusion was her finding that at the time the second financial settlement offer was made by the Appellant, its “prospects of success were obviously and significantly diminished.” 27 As we have earlier pointed out, the evidence given by Ms Campbell as to the difficulties associated with reinstatement, which were known to the Appellant at the time it made its second offer of a financial settlement, were relevant to the question whether reinstatement could be resisted. On the basis of the evidence on that question as at the conclusion of the second day of hearing, it could not in our view be said that the Appellant’s prospects of successfully resisting an order for reinstatement “were obviously and significantly diminished” or that reinstatement was the only likely outcome of the case.
[50] Moreover, it is difficult to understand the Deputy President’s finding that the Appellant’s financial offers were not reasonable in light of the Respondent’s “very clear desire to be reinstated”. The fact that one party holds a strongly held desire for a particular remedy does not render settlement offers of a different kind inherently unreasonable. In this case, the Appellant had offered financial compensation far in excess of the statutory maximum available to the Respondent if reinstatement was found to be inappropriate. There was evidence to support findings both in favour of and against reinstatement, and each was open to the Deputy President. While reinstatement was clearly the Respondent’s preference, she had also sought compensation in answer to the question in her initiating application “[W]hat outcome are you seeking by lodging this application?”
[51] It follows that we do not agree with the Deputy President’s findings in relation to whether the Appellant’s offers of settlement were reasonable. However, we are not persuaded the findings had any relevant bearing on her assessment that the Appellant’s rejection of the Second Offer and its continuing defence of the application were unreasonable acts, warranting an order for costs. In these circumstances ground 5 has no bearing on the appeal.
Ground 6
[52] Under this ground of appeal, the Appellant contends the Deputy President erred in incorrectly applying the Appellant’s duties under the common law and the NSW WHS Act. The Appellant points to Mr MacLean’s evidence that he had a concern about reinstating the Respondent as it would pose an acceptable risk to all employees. 28 It contends that the Deputy President determined that there was no such risk, firstly for the reason that Ms Culla had resigned and therefore there was no risk and that this approach ignored the full extent of the duty and was an error of law.
[53] This submission is rejected. The Deputy President did not find that there was no risk. Rather, she rejected the Appellant’s contention that reinstatement of the Respondent would have placed it in breach of its obligations under the NSW WHS Act. To the extent that reinstatement of the Respondent might have given rise to a risk to the health and safety of others, it is self-evidently the case that the primary obligation under work, health and safety law is to provide and maintain so far as is practicable a workplace that is safe and without risk to health and safety. The elimination or diminution of health and safety risks can be achieved through a number of means. If reinstatement posed a risk to health and safety, it does not follow that the Respondent would be in breach of its duty by acting in that way. Rather, it would then have an obligation to eliminate or diminish the risk by implementing appropriate controls. Resisting the Respondent’s return to the workplace was one example of such a control, but it was not the only one.
[54] No appealable error is disclosed by this ground of appeal and it fails.
Permission to appeal
[55] As will be apparent from our discussion above, we have identified appealable error based on a number of the grounds advanced in the notice of appeal. We consider that it is in the public interest that permission to appeal be granted because the Decision manifests an injustice by reason of the matters that we have identified.
Conclusion
[56] For the reasons stated, we grant permission to appeal and uphold the appeal on grounds 1, 2 and 4. As a consequence, the Decision should be quashed. For the reasons stated, we are not persuaded that the failure by the Appellant to accept the Second Offer or its decision to continue to defend against an order for reinstatement was an unreasonable act. So much of the application for costs under s.400A(1) as relies on those two acts must fail.
[57] The Respondent’s application for costs will be remitted to another member for rehearing for two reasons. Firstly, the Deputy President did not deal with the Respondent’s alternative argument that the failure to concede that the Respondent’s dismissal was unfair was an unreasonable act or omission which could have confined the remainder of the proceedings to dealing only with remedy. Secondly, the Deputy President did not deal with the application under s.611(2)(b) of the Act. These are matters that are appropriately dealt with by a single Member at first instance.
Orders
[58] We order as follows:
1. Permission to appeal is granted;
2. The appeal is upheld on grounds 1, 2 and 4 in the notice of appeal;
3. The Decision in [2019] FWC 2768 is quashed;
4. So much of the Respondent’s application for costs under s.400A(1) which relies on the Appellant’s failure to accept offers of reinstatement or on its continued defence against an order for reinstatement is dismissed; and
5. The remainder of the Respondent’s application for costs is remitted to the Region 1 Regional Coordinator for allocation.
DEPUTY PRESIDENT
Appearances:
D O’Sullivan of Counsel for the Appellant.
A Aleksov of Counsel for the Respondent.
Hearing details:
2019.
Melbourne and Sydney (by video):
June 14.
<PR710043>
1 Lorraine Roche v Trustees of the Roman Catholic Church for the Diocese of Wagga Wagga [2018] FWC 3933 at [172], [178]-[179]
2 [2019] FWC 2768
3 Ibid at [35]-[44]
4 Ibid at [35], [43]
5 Ibid at [43]
6 Ibid at [16]
7 Ibid at [30]
8 Ibid at [36]
9 Ibid at [38]
10 Appeal book at p.768
11 Ibid
12 Ibid
13 Ibid
14 Ibid at p.415, PN1997
15 Ibid at pp.429 – 430, PN2164 – PN2167
16 Ibid at p.457, PN2469 – PN2472; see also Appeal book at p.474, PN2665
17 Ibid at p.458, PN2481
18 Ibid at p.475, PN2669 – PN2675
19 Ibid at p.475, PN2673 – PN2675
20 [2019] FWC 2768 at [36]
21 Appeal book at p.129, [28] – [30]
22 Ibid at p.128, [26(f)]
23 Ibid at p.127, [24]
24 Appeal Book at p.1531
25 [1997] 1 VR 125
26 Ibid at 141
27 [2019] FWC 2768 at [40]
28 Appeal book at p.124, [12]
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