C2001/6228, Transcript of Proceedings [2002] AIRCTrans 1121 (5 April 2002)

AUSCRIPT PTY LTD
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TRANSCRIPT OF PROCEEDINGS


O/N VT03100
AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

VICE PRESIDENT McINTYRE
SENIOR DEPUTY PRESIDENT LACY
COMMISSIONER HOLMES

C No 6228 of 2001
C No 6229 of 2001

APPEAL UNDER SECTION 45 OF THE ACT
BY SOUTHCORP WINES PTY LIMITED AGAINST
THE DECISION GIVEN BY COMMISSIONER
TOLLEY AT MELBOURNE ON 29 NOVEMBER 2001
IN U2001/3000 RE SEYMOUR AND SOUTHCORP
WINES PTY LIMITED RE TERMINATION OF
EMPLOYMENT

MELBOURNE

9.00 AM, WEDNESDAY, 20 MARCH 2002

PN1

VICE PRESIDENT McINTYRE: Could I have the appearances please.

PN2

MR R. MANUEL: I appear for Southcorp Wines and with me is MS MORTON.

PN3

VICE PRESIDENT McINTYRE: Thanks Mr Manuel.

PN4

MR B. SHAW: I appear for the respondents in the appeal.

PN5

VICE PRESIDENT McINTYRE: Thanks Mr Shaw. Mr Manuel.

PN6

MR MANUEL: Thank you, your Honour. Perhaps if I could first make an embarrassing admission. I was reading the transcript - that is not the admission, and I managed to find that I think we have left out two of the witness statements that were put before Commissioner Tolley at first instance in respect of the matter involving Mr McDonald. I have shown them to my learned friend. I have three copies and perhaps if I could, with apologies, ask you to supplement the appeal books.

PN7

Your Honour, you will note that this is a reasonably discrete appeal in the sense that it is focussed on the issue of whether Commissioner Tolley was correct in the awarding of the amount of compensation that he did to the two applicants. Now the three fundamental points that we seek to make are firstly that Commissioner Tolley didn't meet his obligation to provide appropriate reasons for his decision.

PN8

The second is that he failed to follow or at least failed to demonstrate that he had followed the tests in the legislation under section 170CH(7) and we say as an aside that both of those are fundamental errors of law which require intervention by the Full Commission and also, perhaps on a lesser level, is that he made findings that were not open to him on the evidence that was before him.

PN9

If I could, with the permission of the Commission, deal with this in one block rather than go specifically to leave to appeal. I am happy to do that but it seems to me that I would need to address you on the merits of the appeal in any event to justify our position on leave to appeal. I don't propose - always subject to being wrong, I don't propose to be making submissions for anything more than 45 minutes or so, in any event.

PN10

VICE PRESIDENT McINTYRE: All right. Well you proceed as you wish then, Mr Manuel.

PN11

MR MANUEL: Thank you, your Honour. I don't propose to take you to the outline with respect to the principles on appeal. I think it is clear from my learned friend's outline that in broad terms they were accepted. It is really the application of them to the particular matter that may be an issue. I would like - because I think this is the overarching issue, to take you to the issue of failure to provide adequate reasons.

PN12

There is no doubt that the Commission is obliged to comply with the rules of natural justice. It is a quasi-judicial tribunal. However it also, we say, is clearly obliged to provide adequate reasons. Now we have cited the case of the Full Federal Court in Edwards v Giudice. I should note I have referred to Moore and Marshall JJ. The reason for that, of course, is that Finkelstein J was a dissenting judgment and in fact my recollection of Finkelstein J's judgment was that he didn't think, for other reasons, the matter needed to be dealt with in that particular case but I would, if I may, take you briefly to the decision of Edwards v Giudice, which is in the case book at point 6 or tab 6.

PN13

Now I should say, in case any conspiracy theory arises, I didn't pick this because it involved Commissioner Tolley. That was just a matter of pure coincidence but if I could take you to the decision of Moore J, which is the first decision in the book or in the decision. At point 10, and then thereon, at point 10 his Honour said:

PN14

While the Full Bench did not say so expressly, it appears to have proceeded on the basis that Commissioner Tolley had a duty to give reasons which addressed material issues of fact and law. It was correct in taking this approach.

PN15

And what we would say there is that what has happened in this matter is that the reasons of Commissioner Tolley in respect of the compensation issue have not, in fact, dealt with the material issues of fact and law and if I can take you over the page, at point 11 or paragraph 11, his Honour quotes from a decision of a Court of Appeal ..... v Civil Services Board but then over the page he says:

PN16

In my opinion, the subject matter of the power to arbitrate under 170CG, when taken together with conditional right of appeal conferred by section 45 and the grounds ...(reads)... the matters the Commission must consider because of section 170CG(3) and the relevant provisions of section 170CH.

PN17

What we would say about that is it makes it clear that it is not enough to make a generic statement. I have considered all of the relevant matters that have been put before me and I have considered the relevant law. There must be some cogent attempt to actually deal with the facts and then deal with them insofar as they relate to the specific provisions in 170CG. I note in my learned friend's outline that there is the suggestion that because the awarding of compensation is discretionary, therefore there is no obligation to provide reasons.

PN18

With respect, that distinction is not made in any of the authorities and in fact, this particular case is actually dealing with the reasons for decision in respect of compensation. Now it may be in another jurisdiction where there is a general power to award compensation that that might be a valid point; we wouldn't agree, but it might be. But in this case, you have 170CH(7) which specifically sets out a range of considerations that must be considered by the Commission and in those circumstances the Commission must, we say, consider those matters and set out the basis for its findings and if it fails to do so, then it fails to meet its obligation to provide adequate reasons. That is a fundamental error of law and you would be entitled, and we would ask you to, uphold the appeal solely on that basis. I would, if I - - -

PN19

VICE PRESIDENT McINTYRE: Correct me if I am wrong, Mr Manuel, but you did not put to Commissioner Tolley that submission, as I - - -

PN20

MR MANUEL: That is correct.

PN21

VICE PRESIDENT McINTYRE: In fact I can't see any reference to 170CH(7),in the transcript of the submissions anyhow, at all, by either side.

PN22

MR MANUEL: Yes, I think - well there are two issues I am making about that. Firstly, I think in the outline, the initial outline, the criteria were clearly put before Commissioner Tolley as to what - - -

PN23

VICE PRESIDENT McINTYRE: They were just stated, yes.

PN24

MR MANUEL: And then there was - well, there were conclusions that we said should be drawn, not of course that the Commission had to draw, so the matter was fairly before his Honour. In any event, where you have an obligation under statute, it can't be given away, as it were, by the parties. In this case, it is reasonable for counsel to assume that the Commission will apply the law. It is not necessary to take his Honour through and say you have an obligation under 170CH(7), you now need to go through these steps. Those are the steps that are set out for the Commission in legislation.

PN25

VICE PRESIDENT McINTYRE: At each of those steps deals with a matter, one might have thought that counsel, in first instance, would have gone through those matters one by one and made a submission about it.

PN26

MR MANUEL: The basis of the submissions was that they were supplements to the outline and so the matters that were dealt with in the outline were, in fact, put before Commissioner Tolley as part of our case and so the closing submissions were, as my recollection, by way of a supplement to - I am just - sorry, your Honour, I am just trying to - - -

PN27

VICE PRESIDENT McINTYRE: Is this the outline at tab 4 of the appeal book?

PN28

MR MANUEL: That is it, yes, and you will - - -

PN29

VICE PRESIDENT McINTYRE: Well when one turns to remedy, on page six, paragraph 34 sets out, in effect, 170CH(7) or possibly CH(2), which are very similar.

PN30

MR MANUEL: Yes, but in the sense that it is a replication on the basis of whether it is reinstatement or it is compensation. Those are the factors which would need to be considered.

PN31

VICE PRESIDENT McINTYRE: As I understand the conclusion there, you were submitting before Commissioner Tolley that in the circumstances where reinstatement was not being sought, that no remedy at all was appropriate.

PN32

MR MANUEL: That was our submission at the time. Obviously, having regard to the passing of events and the findings of Commissioner Tolley, which we have not challenged, that is no longer an option which is effectively available to us but at the time - and the point we made was one, that he hadn't suffered any loss and we expanded on that based on his generous severance payment that he received, coupled with the fact that he had obtained alternative employment.

PN33

VICE PRESIDENT McINTYRE: When you say he, you mean both applicants?

PN34

MR MANUEL: Both of them, sorry, both applicants. Yes, it is one of those unusual cases where both applicants, in reasonably close proximity to each other, obtained alternative employment, albeit of a different nature. But if I can try your patience by perhaps just looking for the transcript. If I can take you to paragraph 693 - - -

PN35

VICE PRESIDENT McINTYRE: Yes.

PN36

MR MANUEL: Again, although it is not set out seriatim as it is in the outline, there is nevertheless the reference to the generous payment upon termination, the fact that Mr Seymour, in particular, received long service leave without actually strictly qualifying for it, then you will see over at 694 that the two outlines have been put in basically as the closing submissions as well, or adopted as the closing submissions and then at 696, although again not specific, it talks about it. In any event, what we say is the Act makes it clear that this is a balancing act; that it is a matter of looking at all the matters on balance.

PN37

There is some reference to the issues of onus and proof and the like. Sorry, your Honour, I am just attempting to find this as we go. The issue of the contractual entitlement claim, in other words, we had a contractual entitlement to be paid severance payment, is one that is dealt with in evidence of course, but also it is specifically dealt with at 714 and 715.

PN38

The provision of out placement is dealt with immediately thereafter and there is a submission put to Commissioner Tolley at 722 relating to what compensation, if any, should be paid to someone on the basis of a failure to consult and that is the length of the submission - the breadth of the submissions. What we would say though is the matters were raised clearly in evidence before Commissioner Tolley. There is a raft of evidence on all of these topics.

PN39

Secondly, the Commission has to comply with the legislation, regardless of how submissions are put. For instance, it would not be possible, strictly, for the respondent to say we concede there should be a payment of $25,000 compensation. It would still be a matter for the Commission to have to satisfy himself that there was a basis for that because he is exercising a statutory duty. It is not a private arbitration or something along those lines.

PN40

VICE PRESIDENT McINTYRE: But it is so often the case, in my experience, that appellants come along and put submissions as to how the Commissioner erred when really putting a much more detailed case than was ever put at first instance. Things at first instance seem to be done a little sketchily sometimes and try to be made up on appeal.

PN41

MR MANUEL: Your Honour, certainly. I have taken issue myself on appeal with those very points but all I can say is this was a matter that was squarely before the Commission. It wasn't a matter that was in any way conceded or consented to, even if was capable of being so. The issues that pertained to those factors were covered in cross examination by both parties, therefore it was reasonable to expect that Commissioner Tolley would deal with them in accordance with the legislation and the cited authority.

PN42

You might also recall that one of the submissions that was specifically put by the applicants was reliance upon the decision in Spriggs. Now that is specifically in transcript. Now Spriggs - and Commissioner Tolley says I adopt Spriggs and what we say is he said he adopted Spriggs but he didn't, actually, but nevertheless, Spriggs fairly sets out all of the points that are relevant and so we say it is difficult to say that he didn't have before him those issues.

PN43

In addition, just as one final point on that topic, a failure to provide adequate reasons is a denial of natural justice. That is a matter of jurisdiction, not just a matter of discretion and so we would say that if the Commission believed or considered that Commissioner Tolley had failed to give adequate reasons, then what it would be faced with is a breach of jurisdiction or a lack of jurisdiction and that that is not a matter that can be given away by consent.

PN44

I think we were talking about - or I was about to talk about Ellawala v Australian Postal Commission. If I could briefly take you to that, it is only a single paragraph. It is at tab 5 of the case book that we have provided and at paragraph 59 of that case book. This is a decision of Vice President Ross, Senior Deputy President Williams and Commissioner Gay in April 2000 on an unfair dismissal matter.

PN45

VICE PRESIDENT McINTYRE: Yes, I think you can assume that we are familiar with cases that are in your book, including Sprigg and Ellawala.

PN46

MR MANUEL: Thank you, your Honour. Just the final sentence of that paragraph at 59, I think is instructive and it says:

PN47

A consequence of this construction of section 170CH(7) is that the Commission is obliged to make a finding in respect of each of the circumstances specified in paragraphs 170CH(7)(a) to (d), insofar as each of these paragraphs is relevant to the factual circumstances of a particular matter.

PN48

Now with one exception, we say the Commission hasn't done that. The exception is that - - -

PN49

VICE PRESIDENT McINTYRE: Has he referred to Ellawala, Commissioner Tolley?

PN50

MR MANUEL: I am not comfortable to say that he wasn't or that he was. I suspect the answer is that he was not. Spriggs was really the case which was used at the central point of what the criteria were for dealing with compensation. Of course from the respondent's point of view at that time was that there was no compensation so you didn't actually get to Spriggs but nevertheless, it was fairly put by the applicants on the basis of Spriggs.

PN51

VICE PRESIDENT McINTYRE: Sprigg, not Spriggs.

PN52

MR MANUEL: Sprigg, my apologies. Too much football entertainment, I am afraid. The point we would make is there may be situations where you don't need to make a statement. For instance, in this case we would suggest that it wasn't necessary for Commissioner Tolley to say I am satisfied that the order will not affect the viability of Southcorp's operations. There are certain things which I think are reasonably self evident and wouldn't require that sort of traversing but on the other issues he was required to do that and he didn't and if I can take you to the appeal book to his decision. You will see it is reasonably short but that is not necessarily a criticism within itself.

PN53

At paragraph 22 is the introduction, where Commissioner Tolley turns to the issue of remedy and he just notes Mr Shaw's comment at paragraph 23 that they are seeking compensation at this time and then at 24, he basically sets out - or 24 and 25 he basically sets out what Mr Shaw submitted. At 26 he sets out one issue that we submitted in respect of long service leave. At 27 he concludes that reinstatement is not practicable, although I might add although there is no reasons for that, that was a common point between the parties, so I think it might be a little harsh to take too much issue with that, and agreed with the submissions of Mr Shaw as regards Sprigg. He then looked at - at 28, he said:

PN54

I have also paid attention to the submissions about Mr Seymour being in receipt of long service leave ...(reads)... would have been legally entitled to pro rata for at least 10 years service.

PN55

And then 29 and 30 are just the formal statements about the amounts of compensation to be awarded. There is nothing, with respect, within that part of the judgment that complies with the legislation. It is not enough on the authorities to say I have had regard to Sprigg and I apply it. There is no actual reference to section 170CH(7) or any of the individual criteria.

PN56

There is no conclusions upon or findings upon which the conclusions are based so there is nothing to say - really, in effect it says I agree with Mr Shaw as regards Sprigg - in other words I should apply the law which is the Full Commission decision of Sprigg but no explanation as to why he does that or how he does that and what we say is that that is fundamentally flawed as a decision of the Commission.

PN57

Now our position is very clearly that that means, with respect, that the Full Commission is in a position to find on that basis alone that the appeal should be upheld. The question then arises - well, there are a couple of issues. If we are right on that, then the question then arises well what should the Full Commission do with the matter and if we are not right on that, then there are other issues which arise along the way, which are related but have some differences and so I would seek to briefly deal with those.

PN58

VICE PRESIDENT McINTYRE: Including leave to appeal?

PN59

MR MANUEL: Yes, tie it in. Well perhaps if I could just make a comment on leave to appeal at this point in time. Where there is an exercise of power outside of jurisdiction, that is a very strong basis for leave to appeal. There is a public policy interest in not allowing the Commission to step outside the boundaries of its powers and so it is not just a matter of error of law, which the other matters are; it is in fact a fundamental error of jurisdiction and that on its own is a ground for leave to appeal.

PN60

The other issues we say are important because what we say is they further demonstrate a failure to apply the authority of the Full Commission in terms of Sprigg and cases which are following in a similar line and it is again in the public interest to ensure certainty and consistency in decision making and that those decisions are followed. Now that is not a submission in case it be mistaken that you can somehow step into the discretionary area of a Commissioner and we are not asking you to do that.

PN61

What we are saying is the Commission had to make its decision in accordance with law and therefore, if it didn't make its decision in accordance with law, that should not be allowed to stand and that that is a matter of public interest and should generate leave to appeal on top of the natural justice issue. Now I may - I am sure you will be happy about this.

PN62

I won't read you out my outline obviously, because I think a number of the matters that we have discussed, your Honour, and debated, have been covered already in the argument about adequate reasons in terms of Sprigg but I will take you to some points if I may. There is a - sorry, under the heading Error in Calculating Compensation, the fundamental point we make is that the Commission did not refer - despite mentioning Sprigg, did not refer to 170CH(7) and clearly did not enunciate any of the matters within there.

PN63

Referring back to Ellawala, that is a fundamental flaw within itself and we say rightly so. Parties have an entitlement to know why an order or a judgment has been made against them or, for that matter, why an order or a judgment is being made for them. In terms of the failure to follow Sprigg, I don't propose to set that out. I suspect that every member of the bench has heard Sprigg read to them on more than one occasion.

PN64

SENIOR DEPUTY PRESIDENT LACY: Tell me, Mr Manuel, if Sprigg was applied in this case, do you have any idea of what the final outcome should be?

PN65

MR MANUEL: I am not sure - I am happy to answer your Honour's question. I don't propose to try and put a dollar figure on it. I think that might be a little presumptuous on my part and might be overstepping my role.

PN66

VICE PRESIDENT McINTYRE: I wouldn't regard it as such, speaking for myself.

PN67

COMMISSIONER HOLMES: No, neither would I.

PN68

VICE PRESIDENT McINTYRE: Because if we were minded to grant leave to appeal, don't we then have to decide the matter ourselves?

PN69

MR MANUEL: Or refer it back.

PN70

VICE PRESIDENT McINTYRE: Yes, or refer it back or to another member of the Commission but the result will be somewhere between the low amount and the amounts that were determined by Commissioner Tolley, not excluding both ends of it so what - we would like to hear, I think, what submission you make as to the quantum.

PN71

MR MANUEL: Our submission is this, and this is what we say was another flaw in the way Commissioner Tolley followed the matter, but what he should have looked at was how long were these people likely to be employed if they returned to Southcorp. The evidence as we see it is, although there were sound and cogent criticisms of the consultation process, there was no effective attack on their selection to be redundant and there was no finding by Commissioner Tolley that that selection was inappropriate and so what we say would have happened is they would have gone back to Southcorp, Southcorp would then have been obliged to put in place an appropriate consultation process over an appropriate period and then the decision would have been made again and the decision would have been the same. They would have been made redundant. And so we say - - -

PN72

VICE PRESIDENT McINTYRE: It might not have been the same.

PN73

MR MANUEL: But there is no attack in the evidence to indicate that it wouldn't have been. The evidence from the respondent's witnesses - or the appellant's witnesses is very much we selected them on these criteria for the needs of the business into the future. We weren't saying they were bad employees or they had done anything wrong; we were just saying there were better people to meet our needs for the future. That was not effectively attacked in the applicant's evidence because what they came along and said, quite understandably, was we were good employees. I don't disagree with that but the exercise is one for Southcorp as to the comparison as to who stays and who goes and so - - -

PN74

SENIOR DEPUTY PRESIDENT LACY: Sorry, but is that approach consistent with Sprigg?

PN75

MR MANUEL: We say it is. It is not spelled out in that manner but in terms of determining how long they would have likely been employed, how long would their employment have gone into the future - - -

PN76

SENIOR DEPUTY PRESIDENT LACY: But for the termination.

PN77

MR MANUEL: But for the termination.

PN78

SENIOR DEPUTY PRESIDENT LACY: But you are going another step and you are saying you must consider them going back into their position as a result of the proceedings in the Commission and then assess how much longer they would have been kept on in those circumstances.

PN79

MR MANUEL: Yes, I may have been inaccurate in the way I put that and I apologise for that. What we are saying is, work on the basis that termination had not occurred and on the date of the decision of the termination you had a clean slate, no termination, Southcorp then carried out its task properly, as opposed to - and I don't wish to overly criticise my client but there is no doubt there is a flaw in the way it carried out its procedure.

PN80

It then carries out its procedure; that might have taken on estimate from two to four weeks. At the end of that, and I say maximum four week period, they would have been redundant, they would have received their severance payment and their notice payment, Mr Seymour would have still received his, what effectively is an ex gratia long service leave payment, and so what we say is that although there would be an entitlement to compensation, it would be a comparatively small period for the reasons that I have stated, your Honour.

PN81

SENIOR DEPUTY PRESIDENT LACY: But how are we - what evidence do we form an opinion about how much longer they would have stayed?

PN82

MR MANUEL: It is clear that it is an estimate. I am not going to say guess because it needs to be an estimate in the sense there has to be some cogent evidence around it. Now what we say is there was no cogent evidence to support a finding of three years. In fact, the finding of three years - and I make no criticism of Mr Shaw on this basis, seems to be based on his submission rather than on any evidence. Mr Shaw makes a submission in closing that they would have been employed between three and five years and - - -

PN83

VICE PRESIDENT McINTYRE: You didn't respond to that in your reply, as I recollect.

PN84

MR MANUEL: Well the issue had already been taken. You don't need to take reissue with everything that is already - - -

PN85

VICE PRESIDENT McINTYRE: No, but Mr Shaw, at para 758, raised the three to five years and said let us take three years and then calculated the figures which I assume are correct. Then, in the event it all came out so that the maximum under the Act is payable, but - - -

[9.34am]

PN86

MR MANUEL: Yes. Yes, I accept that there are - it is always possible to get into an exercise of futility, whether it is a year or five years doesn't make a huge amount of difference. But our submissions were - look, they were - it was only a matter of consultation. And we then in fact refereed Commissioner Tolley to a decision of the Commission in respect of calculating compensation in a similar matter, which was a decision of Senior Deputy President Watson - I think it is Nunes v Castricum Brothers, at Print S1935 - sorry, paragraph 720 of the transcript.

PN87

VICE PRESIDENT McINTYRE: Yes.

PN88

MR MANUEL: And we are saying is that that was our position as to if there was to be compensation - because our position was this: if there was to be compensation it would be a small period because it was a consultation issue not a fundamental issue, as it were. These people had been paid a very significant sum by way of severance - severance and wages, and Mr Seymour had received, in addition, an ex gratia lump sum payment to which he was not entitled. And so our position was that that meant the answer should still be no compensation. Because they had - because in fact the provision is not a penalty provision, it is to compensate them for their loss. And as a result they had already been adequately compensated.

PN89

VICE PRESIDENT McINTYRE: Are the actual dollar amounts paid to the applications set out in the appeal books - - -

PN90

MR MANUEL: Yes.

PN91

VICE PRESIDENT McINTYRE: Yes. I notice - I know the basis of the redundancy pay calculation was something plus three weeks per year of service.

PN92

MR MANUEL: Yes, no, there is actually like a - - -

PN93

VICE PRESIDENT McINTYRE: Yes, yes.

PN94

MR MANUEL: - - - it is not quite a pay slip but it is something similar.

PN95

VICE PRESIDENT McINTYRE: Yes. Which tab is the number.

PN96

MR MANUEL: At tab four, in respect to Mr Seymour in the event, at tab four there is a statement of Mr Falkinberg which appears immediately after our outline.

PN97

VICE PRESIDENT McINTYRE: Yes.

PN98

MR MANUEL: Then the first - no, the two documents in from that, or three documents in, it is headed "Estimated Redundancy Calculation, Malcolm John Seymour".

PN99

VICE PRESIDENT McINTYRE: Yes.

PN100

MR MANUEL: And as I understand it, the severance payment is the - on the next page, up the top, which is $23,372. He has also, just a bit further down from that, got payment in lieu of notice, $4464.72. And there should also be a reference to long service leave here somewhere - yes, down at - on the page previous, my apologies, at the very bottom, long service leave is the last box which is $4,736.12.

PN101

VICE PRESIDENT McINTYRE: Yes, I see.

PN102

MR MANUEL: Now, in terms of Mr MacDonald, the same document is contained in the documents I handed up this morning.

PN103

VICE PRESIDENT McINTYRE: Right.

PN104

MR MANUEL: And in fact, it is the last document of that bundle. We obviously don't claim the long service leave because Mr MacDonald had in fact qualified for long service leave under the statute.

PN105

VICE PRESIDENT McINTYRE: Yes.

PN106

MR MANUEL: On the following page there is the severance - - -

PN107

VICE PRESIDENT McINTYRE: Yes.

PN108

MR MANUEL: - - - you will see is $59,081.54. And the payment in lieu of notice, I think it is $4,608.36.

PN109

VICE PRESIDENT McINTYRE: Yes. All right. Now - thank you.

PN110

MR MANUEL: Senior Deputy President Lacy, I am not sure whether I have answered your query completely, or not?

PN111

SENIOR DEPUTY PRESIDENT LACY: Well, I just wondered if you could point to any particular evidence that you rely on suggesting that the period of time that was estimated was wrong?

PN112

MR MANUEL: Sorry, the period of three to five years?

PN113

SENIOR DEPUTY PRESIDENT LACY: Yes.

PN114

MR MANUEL: No, what I have to - well, indirectly, I point to the findings of the Commission in respect of the lack of consultation as opposed to any other fundamental findings. The evidence of the appellant that there were not - on the basis of selection and the lack of, if you like, successful attack of that - in other words, that the error would appear on the evidence to be only procedural and it appears to have been accepted by the Commission.

PN115

In terms of any evidence as to the three to five years, what we would say is: no, there is no evidence to show that that is wrong but, more to the point, there is no evidence to show that that has any basis. There needs to be some - it is an estimate, I accept it is an estimate - but there needs to be some cogent basis to underpin that estimate. And, really, the only reference that we can see in the documentation is the submission of my learned friend which of course is not evidence and is an estimate in itself by Mr Shaw between three and five years.

PN116

That is then just taken almost in total by the Commission as being his finding but there is nothing to support that. And the other fundamental point, your Honour, is that there is no reasoning by the Commission as to how he gets the three to five years. I mean, if he had said, "I have heard what Mr Shaw says, I have looked at the evidence. This evidence indicates this, this indicates that. I think the estimate is a reasonable one," then that may be sufficient. But all that we have is just an assumption that this is the appropriate figure.

PN117

VICE PRESIDENT McINTYRE: Well, he had the evidence that they had been both been employed for - one for a very long time and one for a reasonably long time.

PN118

MR MANUEL: Reasonable, yes.

PN119

VICE PRESIDENT McINTYRE: And that they were satisfactory employees.

PN120

MR MANUEL: Yes.

PN121

VICE PRESIDENT McINTYRE: On those bases, one might think they would have continued for quite a long time to come.

PN122

MR MANUEL: Well, yes, but he also had the evidence of the Southcorp restructure, as a result of the Rosemount takeover.

PN123

VICE PRESIDENT McINTYRE: Was this - - -

PN124

SENIOR DEPUTY PRESIDENT LACY: Was that - - -

PN125

VICE PRESIDENT McINTYRE: Was that, yes - - -

PN126

SENIOR DEPUTY PRESIDENT LACY: I say no more.

PN127

VICE PRESIDENT McINTYRE: Go ahead.

PN128

SENIOR DEPUTY PRESIDENT LACY: Thank you. Was that as a result of the Rosemount takeover, was it, the restructure that resulted in these people being made redundant.

PN129

MR MANUEL: Yes, that is correct, your Honour. Yes.

PN130

SENIOR DEPUTY PRESIDENT LACY: All right.

PN131

MR MANUEL: And I think the evidence is, and I am sorry I can't just take you directly to it, but there is some 150 people made redundant at this time as a result of that takeover and merger, or merger is perhaps a better word than takeover. So it is - you have the evidence of a company making major change. You have the evidence, also, from the appellant's witnesses that they had too many cellar coordinators and that is why they reduced them. It wasn't to replace them with someone else. They were reducing the numbers.

PN132

And so it would be logical - we would say the inference to be drawn from that is that there had to be a reduction. These people had been selected before on grounds which had not been effectively challenged in the hearing, what possible reason would there be to find that there would be any other selection would occur. And what we say is there is not. Southcorp most properly, not as a penalty but as a recognition that they should have consulted, would then be subject to some two to four weeks or something similar by way of compensation to recompense these people for not having been properly consulted. And the effects of that lack of that consultation.

PN133

But after that, we say that they were effectively recompensed by the very large severance pays, the significant severance pays, and the ex gratia payments that were made. I might also add there were outsourcing provided. There was certainly some disagreement, I think, at the conference - sorry, at the trial, as to whether that made any practice difference or not. And we don't make - we don't seek to make an argument that it had or hadn't, rather that it was a facility provided by the employer to assist the employees and is of some benefit.

PN134

VICE PRESIDENT McINTYRE: Well, just for argument's sake, assuming instead of three to five years the correct period was one month - - -

PN135

MR MANUEL: Yes.

PN136

VICE PRESIDENT McINTYRE: - - - what result does Sprigg produce then?

PN137

MR MANUEL: Well, we would say, at best it produces a month. The reason I say "at best" is you have also got to look at - withdraw that. There are a number of factors that cut off, if you like, the compensation in this matter. One is the fact that both of these persons obtained employment within approximately three months. I am sorry, one of them wasn't employed, he was engaged - or took up work as a contractor with the postal service.

PN138

So he was engaged as a contractor but nevertheless working - I think he was over 30 hours a week. The other, Mr MacDonald, I think was employed. Now it is certainly true that they were employed at rates of pay significantly less than the rate of pay they were in receipt of at Southcorp.

PN139

VICE PRESIDENT McINTYRE: Do you say the amount of redundancy pay should be deducted?

PN140

MR MANUEL: Yes, we do.

PN141

VICE PRESIDENT McINTYRE: Isn't that going to produce virtually nought, or - - -

PN142

MR MANUEL: It may well.

PN143

VICE PRESIDENT McINTYRE: - - - in one case nought and in one case maybe just a shade off it - - -

PN144

MR MANUEL: Yes, the - - -

PN145

VICE PRESIDENT McINTYRE: - - - on the figures you just took us to.

PN146

MR MANUEL: Yes. No, that would be right.

PN147

VICE PRESIDENT McINTYRE: Maybe there is a couple of thousand for Mr Seymour.

PN148

MR MANUEL: Yes, certainly, the reason why we - and this was debated in some length at trial. There was a claim, as you will see in the appellant's or the applicant's outline, that they had a contractual entitlement to the severance pay and that therefore it should not - a bit like long service leave. If you have got a entitlement it shouldn't be removed.

PN149

VICE PRESIDENT McINTYRE: Yes. But it is your - I am not suggesting Mr Shaw agrees with it, but it is your submission that the severance pay, and I take it the pay in lieu of notice, should have been deducted?

PN150

MR SHAW: Perhaps less though the pay in lieu of notice because if they had been - let us say there had been that four week consultation period, or two week consultation or whatever, a consultation period and the decision had been made to terminate them at the end of that, when that decision was made they still would have been entitled to a notice period flowing on from that. So, no, I ama not sure that we could maintain that claim.

PN151

SENIOR DEPUTY PRESIDENT LACY: But if you concluded that he likely continuation of employment was three years, if you deduct then the severance pay and deduct the amount of earnings to date, you would still end up with an amount in excess of the amount that was actually awarded.

PN152

MR MANUEL: Yes, I think that is right.

PN153

SENIOR DEPUTY PRESIDENT LACY: Yes.

PN154

MR MANUEL: Where we would take issue with that approach is in respect of the earnings. What we say is that you have to look at mitigation under the legislation. That both applicants, to their credit, did mitigate their losses and obtain work at about three months but at that point of time they no longer sought to mitigate - understandably, we are not criticising them for that, it is just an observation. That at that point of time they had accepted a job and then weren't looking for another job, or further income, to further mitigate their loss.

PN155

And what we are saying is that there should be a cut off point at the point of the employment being obtained, where their loss has ceased because of their own choices. And so putting that to one side, Senior Deputy President, yes, we would agree with what you have put in respect of the - I think that is what I was trying to say to Vice President McIntyre, was that you can get into arguments about futility at some point of time if you are always going to get to six months. But of course that is not our position.

PN156

VICE PRESIDENT McINTYRE: If you looked at the steps in Sprigg, which I think are set out on page 29 of the decision under tab 4 - - -

PN157

MR MANUEL: Yes, your Honour.

PN158

VICE PRESIDENT McINTYRE: - - - that sets out the approach adopted by the Court, the step - one, two, three, four, five steps - one to five on page 29 of the decision.

PN159

MR MANUEL: Yes.

PN160

VICE PRESIDENT McINTYRE: Are they the steps you say Commissioner Tolley should have followed?

PN161

MR MANUEL: Yes, certainly he should have followed those, yes. I think - well, perhaps I should say I think he was obliged to follow them. I think they were binding upon him.

PN162

VICE PRESIDENT McINTYRE: Yes. Well, step one is similar to CH(7)(c) - - -

PN163

MR MANUEL: Yes.

PN164

VICE PRESIDENT McINTYRE: - - - remuneration the employee would have received or been likely to have received if employment not terminated.

PN165

MR MANUEL: Yes.

PN166

VICE PRESIDENT McINTYRE: Step 2 doesn't, I think, have any direct parallel in CH(7).

PN167

MR MANUEL: Yes, the only - because of the second sentence one wonders whether that is something to do with the consideration of the mitigation of loss issue.

PN168

VICE PRESIDENT McINTYRE: Yes, it may be related to that. But then - but it refers to:

PN169

...money earned since termination.

PN170

MR MANUEL: Yes.

PN171

VICE PRESIDENT McINTYRE: That - what the two applicants earned was what they got in the jobs that they got after six months.

PN172

MR MANUEL: Yes, I must admit, I think there is a problem with that in one respect. That if you look at a three year period, for instance, that is not - the amount they earned will only be up to, let us say, the first nine months of that three year period. It would seem that it would at least be necessary to project out for the whole of the three years as to what they were likely to earn.

PN173

SENIOR DEPUTY PRESIDENT LACY: But the figure that Mr Shaw put forward in fact posited that notion, in any event, as I understood it.

PN174

MR MANUEL: Yes, I don't recall. I have no data, your Honour.

PN175

SENIOR DEPUTY PRESIDENT LACY: Yes, well, I think the three year figure for Mr MacDonald, for example, would be $150-odd thousand he would have earned.

PN176

MR MANUEL: Yes.

PN177

SENIOR DEPUTY PRESIDENT LACY: Mr Shaw put that as 90,000, which is 150,000 less three years of earnings, or two years and 9 months of earnings on 20-odd thousand that he was on in the new role.

PN178

MR MANUEL: Yes. I think, subject again to our point about mitigation - what we say about mitigation, I think that that is a reasonable approach to take but, of course, our point is that three years is not the right period. And it is probably - it is probable that - from our perspective it is probably there is sufficient evidence to support our contention in respect of the consultation period, but there is no evidence to support any finding by the Full Commission of likely ongoing employment. I might just refer to step 3 while we are with that decision, your Honour.

PN179

VICE PRESIDENT McINTYRE: Yes, please do.

PN180

MR MANUEL: It says the remaining amount of compensation is:

PN181

...discounted for contingencies.

PN182

Now that clearly hasn't been done. And the discount could be quite significant. The discount can be - I thin in Ellawala it was 15 percent. I think in Sprigg it was 25 percent. I may have noted that in the - - -

PN183

VICE PRESIDENT McINTYRE: I think it might have been, yes.

PN184

MR MANUEL: Now, again, I am mindful of what Senior Deputy President Lacy has said, that even if you discounted it by 25 percent if you took a three year period you are still going to come up, I think, with six months - at least with six months. But of course what we are saying is that there is no basis for that and so the failure to have regard to any contingency is nevertheless a fundamental failure on the part of the Commissioner and his decision.

PN185

Step four is the taxation issue. That is pretty important in this matter because, of course, being redundant they received beneficial taxation rates. It seem fairly difficult to maintain on the one hand, "We have been unfairly dismissed and we weren't redundant. We were unfairly dismissed and we should be compensated," because that should attract a rate of some 31.5 percent; and on the other hand say, "Well, we will keep the benefit of the beneficial taxation paying our severance pay."

PN186

And what we are saying is that there is a logical inconsistency in that argument. And therefore there should have been some bringing to account, by the Commissioner, of the difference in the tax rates between about 31.5 percent which is the normal triple termination payment rate, and the whatever was actually taxed on redundancy. It used to be 5 percent but I aware now that it keeps - for every year of service you get an extra two and a half thousand dollars free, as it were.

PN187

VICE PRESIDENT McINTYRE: Was anything put before the Commissioner that would have enabled him to do the arithmetic?

PN188

MR SHAW: I honestly can't say, Vice President. I can check - - -

PN189

VICE PRESIDENT McINTYRE: No, well, I mean, hear you saying it you should have been done and it wasn't - - -

PN190

MR MANUEL: Yes.

PN191

VICE PRESIDENT McINTYRE: - - - but how was it to be done? You have just put something to us, but - - -

PN192

MR MANUEL: Yes. I am not quite sure I understand - understand the point.

PN193

VICE PRESIDENT McINTYRE: Well, I don't - well, how do you work out the impact of taxation so that the employee - I am looking at step 4 - receives the actual amount he or she would have received if they had continued in their employment? How do you do it?

PN194

MR MANUEL: I think you probably need some specialist evidence.

PN195

VICE PRESIDENT McINTYRE: Well, there was nothing.

PN196

MR MANUEL: No, there certainly wasn't any specialist evidence. There was certainly evidence before the Commissioner as to the taxation imposed on the ordinary tax - on the ordinary pay of the employee. That was certainly before him. But, what we are saying is again it was a matter that under Sprigg had to be considered. The Commissioner said, "That is what I am going to do." But then there is no evidence, or no indication from his decision, that that is what he has done.

PN197

So again, I guess, we are coming back to that fundamental point and reasons - the adequacy of the reasons for the decision in the first instance. Also there are issues of onus of proof, here. It is not necessarily for the respondent or the appellant in this matter to prove all points that perhaps the applicant should bear responsibility for. And so what we will be saying is it is not - it shouldn't just be on the basis - well, if you didn't put the evidence forward, then a Commissioner doesn't have to have regard to it.

PN198

There are issues of onus of proof in respect of what the applicant was obliged to do - applicants were obliged to do. But also there is the statutory duty issue as well. I have already addressed you, briefly, on the mitigation. I don't propose to take you any further using the outline. I think I have made the points of contingencies. And, yes, sorry - in Sprigg it was 25 percent.

PN199

What we would say, and perhaps this is a useful summary from the question that you asked, Vice President, as to what we would say the compensation should have been, it seems to use that the Commission should have had regard to the following issues that were before him: he significant amount paid to the respondents upon termination of employment and, in particular, the payment to Mr Seymour of the long service leave to which he was not strictly entitled; the provision about placement services by the appellant, although again they are of - although unimportant they are not, within the scheme of things, a major consideration; the taxation benefits obtained by the respondents as a consequence of being taxed as a bona fide redundancy; the likelihood the respondents would have been made redundant any way; the successful mitigation by the respondents of their loss.

PN200

And combined with that, the respondents then ceasing to looking meaningfully for any alterative work to, if you like, improve their position; and the allowance for contingencies would have to be considered as well, the vicissitudes of life have to come into play at some in time, and the lack of any evidence of ongoing loss of any description. And so what we say, if you take all of those matters into account, the highest amount that would be paid would be a short period to enable - to recognise what should have been done by way of consultation it is difficult to say, with any precision, what that period of time should be.

PN201

But on the evidence with the restructure and the like, we would say between two and four weeks would have been appropriate and that there is absolutely no basis for saying three years or, for that matter, for saying 12 months. Although if you say 12 months, at least then - with all the calculations and the like - you still come well under the six month amount that was ordered. So our fundamental position is this, if the Full Commission pleases, there was a breach of jurisdiction in terms of not providing adequate reasons for decision.

PN202

There was - despite the statement that Sprigg was being followed, it clearly was not followed and there is no indication within the decision that it was followed in any sense. And nor is there any indication of any attempt to follow 170CH(7). And so what we say is there is a fundamental error. We would say that the Commission should uphold the appeal and impose its own decision, but alternatively that the matter should be referred to another member of the Commission for rehearing, just on the issue of compensation. May it please the Commission.

PN203

VICE PRESIDENT McINTYRE: Thanks, Mr Manuel. Mr Shaw, we might just have a short break, if you wouldn't mind, before we hear your submission.

PN204

MR SHAW: Thank you.

SHORT ADJOURNMENT [9.57am]

RESUMED [10.5am]

PN205

VICE PRESIDENT McINTRYE: Mr Shaw.

PN206

MR SHAW: Your Honours and Commissioner, the respondent in the appeal's position is as set out in the outline of submissions. Whilst they are headed an outline, they effectively are the submissions, the submission really is simply that it was, indeed, open on the material before Commissioner Tolley for him to make the findings that he did. He, in my submission, there is ample indication in the decision of Commissioner Tolley that he did apply the Sprigg principles.

PN207

Now, my learned friend has, in answer to some of your questions, has resorted to pointing out that things that might not have been in the submissions or might be in appeal documents were originally in the transcript of the proceedings. And it is fairly clear that the question of Sprigg was dealt with in my submissions and, indeed, the only step which was not taken into account was the taxation issue.

PN208

In the paragraph number 758 and 759 the calculation is made and it is made on - and a contingency, indeed, of 25 per cent is applied and the figure still comes out well in excess of the legislative ceiling. And indeed, it would be - it was our submission then that there was no need to go any further as it was so in excess that if one were to apply the principles based on an acceptable of the possibility of being employed for a further three years, that the amount, the maximum amount that could be allowed would be the appropriate amount to be awarded.

PN209

As regards the issue of the acceptance by the Commissioner of my suggestion in those submissions that the two employees would continue to be employed for a period of three to five years and then a concession that three was the appropriate figure to apply, it is clear from the material that was before the Commissioner in evidence that the - two things.

PN210

The restructure in Mildura was entirely within the old Southcorp group. It was not something that had anything with the Rosemount merger and it was done very, very quickly. And indeed, I have quoted Mr Falkinberg's evidence in the outline of submissions on the appeal, but if one is to read the paragraph, surrounding paragraph 509 of the transcript in Mr Falkinberg's submissions, it is quite clear that no real serious process was gone into either to do a proper analysis as to what restructure was to take place, or indeed why these particular people were chosen.

PN211

And there is no evidence to suggest, as my learned friend suggests now, that even if there had been a proper process that the result would have been the same. It may well have not been the same. If one of the key players admits that there was no time for a proper analysis, then perhaps on a proper analysis it may well be that they would not have been made redundant, either the positions or the people concerned.

PN212

SENIOR DEPUTY PRESIDENT LACY: But sorry, Mr Shaw, there was in evidence the redundancy program including the competency table and the respective competencies for Mr MacDonald, Mr Seymour, Mr Keevel and Mr Gavin MacDonald, were they challenged at all?

PN213

MR SHAW: They were not challenged, simply because it was not until we got to Mildura that it was the first time when this material was tabled that the two applicants had seen any justification for their selection. Now, it in my submission then and my submission now, it is not up to the applicants to point out that they are necessarily better than somebody else. It is up to the employer to justify their selection based on some proper analysis and some proper process.

PN214

And clearly regardless of the documentation, which was subsequently produced and never discussed with them prior to their termination, and that is clearly in evidence, too. It is clear from the evidence of Mr Falkinberg that the whole thing was, indeed, a rushed process without a time for proper analysis. So in my submission, it is clearly open on the material before him for the Commissioner to find that they may well have continued in employment for a further three years.

PN215

VICE PRESIDENT McINTRYE: And possibly someone else retrenched instead.

PN216

MR SHAW: Yes. Yes.

PN217

VICE PRESIDENT McINTRYE: You were seeking reinstatement initially, as I understand it, and tell me if I am wrong, Mr Shaw.

PN218

MR SHAW: I think, yes, when they initially filled in their applications they were seeking reinstatement.

PN219

VICE PRESIDENT McINTRYE: Yes. Yes.

PN220

MR SHAW: Subsequently, they in the light of things that were subsequently said about them, they changed their minds, but that indeed was correct, they were seeking reinstatement.

PN221

VICE PRESIDENT McINTRYE: Yes.

PN222

MR SHAW: As regards the other points that Mr Manual has made this morning and makes in the outline of submissions, the issue of the amount paid by way of redundancy was dealt with in my submissions at first instance from about paragraph 740 onwards and it is submitted still that clearly a redundancy payment relates to an entitlement or an accrual over a period of time. Whereas the legislative protections under section 170 of the Act deal with compensation for the termination. In this case, termination which was found to be - and is not challenged by the appellant - to be harsh, unjust and unreasonable.

PN223

SENIOR DEPUTY PRESIDENT LACY: The Full Bench in Sulocki which is print PR908053 said that it was appropriate to deduct the redundancy payment from any amount that might be awarded by way of anticipated loss remuneration.

PN224

MR SHAW: Well, yes, your Honour, but even if that were done, provided it were done before the legislative cap was applied, the result would still be same.

PN225

SENIOR DEPUTY PRESIDENT LACY: Yes, on the basis of the three-year estimate.

PN226

MR SHAW: If the three years, yes. - - -

PN227

VICE PRESIDENT McINTRYE: Yes.

PN228

MR SHAW: If the three years is found to be appropriate or open to the Commissioner to find, then indeed, it would make little difference. The other issues raised by my learned friend, in my submission, are dealt with in the outline of submissions. They are brief but the essential outline is that - or the essential fundamental point of our case is that it was open to the Commissioner to make the findings that he made based on the material that was put before him.

PN229

And that his decision in the termination, certainly in setting the quantum applies the Sprigg principles which clearly covers the issues raised by section 170CH(7), the issues raised in Sprigg which came, I think, from essentially from Slifka v Sanders, from a decision of North J did take into account those particular issues, as indeed his Honour in that instance applied or developed the principles from the requirements of the Act as it then was written. I have nothing to add unless the members of the Bench have questions.

PN230

VICE PRESIDENT McINTRYE: Mr Shaw, just in paragraph 8 of your submission, just the first line, you refer to CH(2) there, but I note (2) and (7) are virtually the same.

PN231

MR SHAW: Yes, it should be said - - -

PN232

VICE PRESIDENT McINTRYE: It is (7) you are talking about, isn't it.

PN233

MR SHAW: It is (7), I apologise for that.

PN234

VICE PRESIDENT McINTRYE: Yes.

PN235

MR SHAW: It is a typographical error.

PN236

VICE PRESIDENT McINTRYE: All right. Thanks, Mr Shaw. Mr Manual.

PN237

MR MANUAL: I have two very brief matters in reply, your Honour. Just as a matter of clarification, I think my learned friend said that the assessments that Senior Deputy President Lacy was referring to were not seen until the morning of the hearing in Mildura. I should note that my recollection is they were provided well before that, but it was a matter of my learned friend's difficulties in contacting his clients at the time.

PN238

So it is not a matter that it was a matter of trial by ambush on those documents, and in any event there could have been an application for adjournment, whether for a short time or whatever was needed to deal with those documents as they were needed. My learned friend also made the assertion that it was up to the employer to justify the selection. With respect, we would say that is a reversal of the onus of proof insofar as onus of proof is relevant in arbitral proceedings.

PN239

What we would say, though, that in any event there was no finding by the Commission the selection was wrong. It was only purely harsh, unjust, unreasonable on the basis of the lack of consultation. May it please the Commission, those are our submissions.

PN240

MR SHAW: This is not a reply to the reply. I concede that the vote material was, indeed, in the written materials and I thought I said that on transcript, but - and Mr Manual has, in fact, gone further than I went and explained the difficulty I had in getting instructions.

PN241

VICE PRESIDENT McINTRYE: All right. All right. Well, thank you both for your submissions. We will reserve our decision.

ADJOURNED INDEFINITELY [10.17am]