C2001/6062, Transcript of Proceedings [2002] AIRCTrans 305 (5 February 2002)

AUSCRIPT PTY LTD
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TRANSCRIPT OF PROCEEDINGS

O/N VT02106
AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

VICE PRESIDENT ROSS
SENIOR DEPUTY PRESIDENT LACY
COMMISSIONER SIMMONDS

C2001/6062

APPEAL UNDER SECTION 45 OF THE ACT
BY SMITH, ARTHUR AND OTHERS CONCERNING
THE DECISION OF COMMISSIONER HINGLEY ON
WEDNESDAY, 7 NOVEMBER 2001 IN U NUMBER
1310 OF 2001 RE TERMINATION OF EMPLOYMENT

MELBOURNE

10.38 AM, MONDAY, 21 JANUARY 2002

PN1

MR L. ARMSTRONG: I seek leave to appear on behalf of the appellants.

PN2

MR G. McKEOWN: I seek leave to appear on behalf of the respondent.

PN3

VICE PRESIDENT ROSS: Leave is granted in both cases. Just before you begin, Mr Armstrong, I should indicate that we have had the opportunity to read all of the written submissions and the material in the appeal books, including the Commission's decision below.

PN4

MR ARMSTRONG: I am sorry, your Honour. The wind is noticeable. Could I ask you to - I am having trouble hearing.

PN5

VICE PRESIDENT ROSS: Certainly. We have had the opportunity to read the written submissions that have been filed and the material in the appeal books. That being the case, what we want to avoid is each of you reading that material to us. I have also taken the opportunity to draft a document which would seem to be the uncontested facts but I want to test that with each of you. That is being typed at the moment. When that comes to hand I will provide a copy to each of you and an adjournment to consider it and test its accuracy. What I was proposing to do is to go through your written submission, Mr Armstrong, to test our understanding of it and give you an opportunity to clarify and expand on a number of points and then you can supplement that with any short oral submission you wish to put and I would do the same for Mr McKeown.

PN6

MR ARMSTRONG: Thank your Honour.

PN7

VICE PRESIDENT ROSS: Is that process agreeable to each of you?

PN8

MR ARMSTRONG: Certainly to me, your Honour. Perhaps if before my friend rises could I just raise one issue. The appellants' submissions in reply were filed with the Commission at about 3 o'clock on Friday afternoon by e-mail and then I think at about 3.30 by fax and at the same time as both the e-mail and the fax were sent, similar e-mails and faxes were sent to the Australian Industry Group on behalf of the respondent. I have been informed by my friend's instructor this morning that they only received those submissions in reply this morning, even though they had been faxed and e-mailed on Friday afternoon.

PN9

My friend has indicated that he would like an opportunity to read through the submissions in reply perhaps a little bit more closely than he has had the opportunity to do so far and to that end he would, as I understand it, need a brief adjournment. For my own part, if it suits the Commission, perhaps either the Commission could adjourn now and give my friend the opportunity or I could make my submissions and answer the Bench's questions and then have an adjournment at that stage.

PN10

VICE PRESIDENT ROSS: The first might be more desirable - - -

PN11

MR McKEOWN: Your Honour, all I was going to suggest is this, that I would be quite happy in terms of what you have already outlined that if I just have additional when we have that adjournment when the document comes forth in terms of what has been put as facts and, hopefully, we will reach agreement on them. So I am happy to adopt that process if it assists the Commission.

PN12

VICE PRESIDENT ROSS: Well, we will proceed on that basis.

PN13

MR McKEOWN: Thank your Honour.

PN14

MR ARMSTRONG: If your Honour pleases.

PN15

VICE PRESIDENT ROSS: Mr Armstrong, if I can just go through your written submission, in relation to leave to appeal, you say leave should be granted on two bases. The first is that the case advanced shows that the decision below - that it was seriously arguable that there was an error in the House v King sense and the second basis is that in the public interest leave should be granted because you say that the effect of the decision below is to greatly weaken the standards of fairness and openness required of an employer in terminating employees where there is an operational need for redundancy.

PN16

Then the submission goes through the specifics in relation to some of the individual applicants and the process and chronology of the events that took place that led to their termination. Then you turn to, at the beginning of paragraph 57 - I won't go through that material because some of it, indeed some of the respondent's material also is sought to be encompassed within the draft document that is being typed. Appeal points 1 and 2 relate to the certified agreement and it is put that the employer's selection process was in breach of its obligations under clause 33.6 and you say that 33.6 brings with it two obligations: that the skills criteria brings with it two obligations, that the skills criteria either be the exclusive or at least paramount consideration.

PN17

There I take it you say there is a breach of that because the evidence of the various respondent witnesses when you put to them in the proceedings below that whether the skills audit was the main or substantial motivating reason they invariably gave evidence to the effect that, well, it was part of the consideration. You then say the second implicit obligation in 33.6 is that the skills criteria will be assessed in a reasonable manner and you say that wasn't done here and, further, in relation to the first point, that the company relied on non-skills criteria also.

PN18

MR ARMSTRONG: Your Honour, could I just respond in relation to the first of the two implicit obligations which I have referred to there. Certainly, the evidence from the manager witnesses was that the skills audits were only part of the criteria. At least another part of the criteria were the interviews and part of our submissions in relation to skills being only part of the criteria arises from the fact that during the interviews questions were asked such as how do you like to be managed, what sort of community activities are you involved in? My friend in his submissions says, well, a skills criteria is multi-dimensional and it can relate to things more than simply the bare technical competencies of operating, for instance, one of the Marcandi machines.

PN19

VICE PRESIDENT ROSS: I think the respondent draws the distinction between the skills of the employees and the skill needs of the enterprise and they say, as I understand it, that it is the skill needs of the enterprise, which is the expression used in the certified agreement and that embraces, I think it is the four criteria that were eventually applied. I understand what you say about - and indeed the evidence of the respondent's witnesses below seemed to accept that the interviews were not limited to an assessment of technical skills and adopted different criteria to those adopted in the skills audits.

PN20

So, whilst I think the evidence supports your submission to the extent that it would suggest that the company relied on non-skills criteria, that is, criteria not specific to the technical skills of the individuals, but the broader point is was it required to limit itself to the technical skills of the individual employees in the way you suggest.

PN21

MR ARMSTRONG: Your Honour, even accepting that the company's skill needs may embrace something that is not completely coterminous with the employees' own skills, our submission is that the criteria to which these employees were subjected was not on any view reasonably related to the company's own skill needs. The company, in terms of technical competencies, required these employees or employees having the same skills as these employees in order to operate the various machines. The evidence was that these employees were better skilled at operating those machines.

PN22

For the company to have said that it is basing its criteria on skills needs but then not choosing the employees whom the evidence indicates were best skilled with those skills, it follows that the company has applied something beyond a bare skills needs criteria and a big part of the problem with the process that was applied in this case was that the interviews or the audits for starters, we have little information about how they were conducted. For the three employees where we can identify the process that was gone through, which was Mr Smith, Mr Rapsey and Mr Perrett, there are, on the evidence, very serious questions about the way the audits were prepared, which I have dealt with at some length in the submissions.

PN23

In relation to the interviews for the five of the seven employees who were interviewed, the evidence again shows that the interviewing managers had limited familiarity with the employees that they were being required to interview. The employees themselves were ignorant as to why they were there and therefore their opportunity to participate meaningfully in the interview process was severely circumscribed.

PN24

The interviewing managers made no inquiries outside the interviews and in the course of the interviews they asked a range of questions, some of which could conceivably be related to the company's own perceptions of what its skills needs were but they also asked these other questions about how do you like to be managed and, in my submission, that goes well beyond what the company's reasonable perception of its skills needs might have been. There was no evidence to suggest that these employees had been disloyal or were troublemakers, had bad attitudes, any of the sort of distinguishing factors that might perhaps conceivably be regarded as a legitimate grounds for distinguishing between employees.

PN25

VICE PRESIDENT ROSS: Just a moment, Mr Armstrong. We might adjourn briefly to get the air conditioning attended to. It is becoming a bit difficult to hear you. So we will adjourn for 10 minutes.

SHORT ADJOURNMENT [10.50am]

RESUMED [12.13pm]

PN26

VICE PRESIDENT ROSS: Mr Armstrong, we may as well continue going through your written submissions.

PN27

MR ARMSTRONG: Perhaps I will just finish off with the last matter that we were dealing with, your Honour, in relation to the skills needs question of the company. The appellants' submission in relation to just this first part of the two obligations that we contest for in relation to clause 33.6 of the certified agreement, on any view of it, in order for skills needs to have any significant meaning it must bear some reasonable relation to what the possible skills requirements of the company are and, in turn, in giving definition to skill it must mean something like the employees' technical competencies and, at its broadest, the employees' suitability in terms of manageability and the way they fit into the workplace. Now, there was no evidence that the employees - - -

PN28

VICE PRESIDENT ROSS: I am sorry, would that embrace capacity to work in a team environment, that sort of thing?

PN29

MR ARMSTRONG: Teamwork is not something that we would strongly object to in relation to the questioning. What we have serious concerns about is the company's questions about how do you like to be managed, what did you think of Mr McGilly's speech last week? That is not, on any view of it, something to do with skills. That is more along the lines of the thought police.

PN30

VICE PRESIDENT ROSS: The second issue was only asked in relation to one of the employees, wasn't it?

PN31

MR ARMSTRONG: No, your Honour. In relation to the structured interviews, just as an example, could I ask the Bench to turn to page 233 of the second volume of the appeal book. Now, these are a convenient little example of the structured interview forms. The particular ones here relate to Mr Hodge. Now, taking page 233, your Honour, in the second box on the left-hand side, the third and fourth dot points:

PN32

How do you feel about the new direction the company is taking? How do you see yourself fitting into the new direction the company is taking?

PN33

And the second last box on the left-hand side:

PN34

How do you like to be managed?

PN35

VICE PRESIDENT ROSS: No, my question was your comment about Mr McGilly's speech and their reaction to it. That question, my recollection was, was only put specifically to one individual - that was the state of the evidence - and the respondent's witness, who was asked about that question - I understand what you say about his response - was essentially that yes, we asked the question but we didn't take it into account in the scoring.

PN36

MR ARMSTRONG: Yes, your Honour. Certainly there was only one witness who recalled being asked that question and I can't cavil with that.

PN37

VICE PRESIDENT ROSS: In terms of how do you like to be managed, you say that is not something that could be embraced within the skill needs of the company but the question may go to whether - and some of the responses suggest that they prefer - this is leaving aside whether they are marked for information or exhibits; I am really raising it as an observation rather than a matter on which we would make a factual finding - that they preferred to work with direction; others might prefer to work as semi-autonomous work units or without close supervision. Aren't those matters that might be regarded as how the company may want to operate in the future?

PN38

MR ARMSTRONG: If they were put with that sort of explanation and the employees knew why they were being asked and had an opportunity to give a considered response, then that may well be a reasonable approach for the company to have taken but the evidence is that they were asked how do you like to be managed and the evidence, just from Mr Hodge on page 233, the only recorded answer is fair give and take. Now, in my submission, an employee called in to a meeting and asked a motherhood-type question like that is at a real loss in terms of giving any sort of answer that the company might reasonable form an opinion on.

PN39

Do you like working here? An employee is presumably going to say yes. Why do you like it? Well, they make great coffee. It is very difficult for the employees to have understood what the direction of this question was and there is no evidence that there was any sort of further explanation given to them as to what the company was talking about. For instance, I think it was Mr Hodge's evidence, was that he was asked what do you think of Mr McGilly's speech, which is an impossible question. What do you think of what the boss had to say last week? There is only one answer that any employee with any prescience would give, which is something - - -

PN40

VICE PRESIDENT ROSS: Any survival instinct, you mean?

PN41

MR ARMSTRONG: Yes, your Honour. Of course they are going to say, well, I thought it was good. What do you think of the company's new direction? Well, what does that mean? These are not questions that admit of meaningful answers and just touching on an aspect of it that your Honour raised in your question a few moments ago, they were asked a wide range of questions, it appears, and they were not scored on all of them. The interviewers told them to speak freely, asked them a variety of questions without scoring them against the particular criteria at the time, formed an overall impression, asked the employees to leave the room and then went back and made up the answers as they went along.

PN42

Now, how could the interviewers have differentiated in their gut feeling, which was, look - the evidence was the gut feeling and the matters of impression that the interviewers had formed. They were the result of the answers to all of the questions that had been asked and yet in the interview form it is limited to these particular criteria. But, having asked the employees this full range of questions, the interviewers' responses and ultimately the scores that they are going to give are going to be affected by the totality of the exchange and it would have been impossible for the interviewer to go back and say, well, the answer to this question - having also asked them what do you think of Mr McGilly's speech - were going to give him, in Mr Hodge's case, 3, which is in the lower or average range there. It is not a fair process that was undertaken for these employees.

PN43

SENIOR DEPUTY PRESIDENT LACY: I was just going to ask, in terms of the skills audit, that had a question about flexibility and reaction to change and acceptance of authority and I was just wondering whether the question "how do you like to be managed" seems to me to have some logical relationship with those issues in the skills audit and if the idea was to get some sort of objective, unbiased assessment to compare it with the outcomes in those two aspects of the skills audit, that might have been a reasonable sort of question to ask in that context.

PN44

MR ARMSTRONG: If it was done differently, perhaps, your Honour, yes.

PN45

SENIOR DEPUTY PRESIDENT LACY: Yes. It depends, I suppose, on the level of understanding in the people that were conducting these interviews and the level of specification that was given in relation to the skills audit itself.

PN46

MR ARMSTRONG: Exactly, your Honour. If they had explained to the employees why they were asking and what it was directed to and the employees knew the purpose, and part of that reasonably ought to have been that the employees be told, well, Joe Bloggs has done your skills audit for you and he doesn't think that you have got good acceptance of authority, or somebody - they wouldn't even have to name names: They company has assessed your acceptance of authority as being not so good. Can you respond to that.

PN47

Now, Mr Hodge, for instance, was the senior or one of the most long serving employees in the finishing section and he was the employee that was used to fix whatever problems came up because he was the one that had all of the skills to fix machines when they broke down or identify production problems or what have you. There is no evidence that he did not display an appropriate acceptance of authority. There was only one occasion when he had any problem that he recalled, which was a minor thing about having been late to work one day, as I recall. There were other employees that he refers to in his statements who had worse disciplinary records. Now, in that context it is not clear what has been taken into account by the company in acceptance of authority and the employees have not had an informed opportunity to make a response to it.

PN48

VICE PRESIDENT ROSS: You concluded paragraph 65 with the submission that the company breached the certified agreement by failing to base its selection on any defensible assessment of the employees or their skill levels. That leads into the proposition that it was a substantial breach and on that basis the termination was necessarily harsh, unjust or unreasonable, and you cite the dried fruits case in support of that. You say in the analysis at paragraph 66 that proposition must be correct: employees terminated in circumstances that might not otherwise seem harsh but involve a breach of a certified agreement would have no remedy under the Act. Wouldn't they have a remedy for a breach of the certified agreement?

PN49

MR ARMSTRONG: That is a too general proposition on my part, your Honour. I would be referring to a remedy under division 3 of part VIA.

PN50

VICE PRESIDENT ROSS: I see, right.

PN51

MR ARMSTRONG: Putting to one side entirely the question of section 178 proceedings.

PN52

VICE PRESIDENT ROSS: Yes. Appeal points 3 to 4 on the skills of the appellants - and there is an obvious issue not just about these appeal points but a number of them between the parties. As I understand it, the essence of your proposition is that each of the appellants gave evidence about their skills and relative skill levels compared to other employees in their work area. That wasn't challenged in cross-examination. That is one element of the proposition. The second is that only, I think, in respect of three of the applicants in the proceedings below was the provenance of their skills audits, or interviews, for that matter, established through the evidence of the respondent's witnesses and here is where you bring in the marked for information versus marked as an exhibit proposition.

PN53

Those elements of your argument then lead you to say that in those circumstances the Commissioner ought to have accepted the unchallenged evidence of the applicants and, on that basis, the preponderance of the evidence, you say, does not support any conclusion other than that each of them was at least in the middle ranking of their peer groups in terms of skill levels. Now, in reply, and I will come to that at the appropriate time, it is said against you that, well, Mr McGilly was asked the question about the middle ranking and he said no, in essence.

PN54

You say, well, he wasn't involved in any of them, so he wouldn't know and it essentially comes down to the respondent - I will ask them in due course whether they accept that Mr McGilly had no direct knowledge. He certainly didn't accept the proposition but whether he had any direct knowledge of the skills of these applicants seems, to me at least, to be an open question. But the respondent relies on the skill audits and the relative ranking under them and you say in relation to that, well, flawed process, flawed result, therefore you can't rely on it. Is that the nub of what lies between you?

PN55

Also there is the debate about the marked for information, the section 110 point, etcetera, but that seems to be the essence of it: you on the one hand relying on your submissions about how the employer got to the score on the skills audit and also on the uncontested evidence of the applicants, at least by cross-examination, and the employer, the respondent on the appeal, relies on the skills audit outcome and what Mr McGilly says. Is that the - - -

[12.28pm]

PN56

MR ARMSTRONG: I think that is, with respect, the nub of the proposition, your Honour. Obviously there are aspects to it, but - - -

PN57

VICE PRESIDENT ROSS: Yes. No, I understand there are some detailed points that both of you take in relation to it. It also leads into appeal points 5 and 6 and here is where you develop the argument that the audits don't provide any justification because you say they were reached as a result of a flawed process and hence don't provide a sound, rational or well-founded reason for the selections made.

PN58

That raises another issue. There seem to be two approaches open on the authorities or at least there are authorities in support of two approaches, whether they are both open or not I suppose we may have to decide, but it goes to this notion of valid reason and whether it is sufficient to establish a valid reason in circumstances where the terminations are due to redundancy if the employer had an operational requirement to reduce the number of employees. That is one view. And if the employer did have a sound, defensible reason for reducing the overall numbers, then there was a valid reason for the terminations.

PN59

In relation to the process by which the employer arrived at the selection of individuals, that might be a matter that could be looked at under 170CG(3)(c) or (e) for that matter; that is one approach. The other is to look at the notion of valid reason perhaps more broadly such that there has to be a defensible reason relating to operational requirements to reduce the numbers and secondly, the selection of these individuals has to be sound and defensible. It may be that whichever those two constructions one adopts, you look at both issues anyway. One, whether there is a sound basis for the reduction relating to operational requirements for the reduction in overall numbers, and secondly, whether the process adopted or the selection method or whatever was sound. Which do you say?

PN60

MR ARMSTRONG: My submission, your Honour, would be that the second of the approaches which you have just outlined would be the appropriate one. Certainly under both approaches the Commission is properly entitled and it is obviously relevant to look at whether there was a valid reason for the overall reduction in the first place. In my submission, the second question, whether there was a valid reason for the termination of the employment of these particular employees, is properly part of section 170C(3)(a) rather than just coming up in the question of 170CG - sorry, you get mental blanks now and then.

PN61

VICE PRESIDENT ROSS: (c).

PN62

MR ARMSTRONG: I am sorry, CG(3)(c). Now, the reason that I say that, your Honour, is that the focus under division 3 of Part VIA of the Act is the termination of the employment of the applicant or applicants as the case may be. In that context, 170CG(3)(a), in requiring the Commission to determine whether there was a valid reason, would naturally direct itself to the existence of a valid reason for the termination of the employment of the particular applicant.

PN63

VICE PRESIDENT ROSS: Appeal point 7 goes to the interviews which were described by the respondent, I think, as self-assessment interviews and there is an issue taken by the Commissioner in relation to that, but we don't need to dwell on it.

PN64

MR ARMSTRONG: I should say perhaps, your Honour, if I could interrupt - - -

PN65

VICE PRESIDENT ROSS: Yes.

PN66

MR ARMSTRONG: - - - certainly the learned Commissioner below concluded that it was not proper to call them self-assessment interviews. I have tried to very carefully only call them interviews here really for my own purposes. To call one thing a self-assessment audit or a skills assessment and then something else is an assessment interviews, there are too many references to assessments and it just gets confusing, so I have referred to them audits and interviews.

PN67

SENIOR DEPUTY PRESIDENT LACY: You may have covered this in your answer to his Honour's question before, but I was distracted doing something else, do you say there is likely to be any substantive difference in the outcome of the matter whether you apply the first approach or the second approach to the application of the section 170CG(3)?

PN68

MR ARMSTRONG: I think perhaps, Senior Deputy President, it would be a question of weight or degree more than anything. Given the effect of Windsor Smith v Liu that the existence of a valid reason is only - it is not determinative anyway, it is a factor to be considered, then necessarily whether you would deal with the question of valid reason for these particular terminations under 170CG(3)(a) or CG(3)(c), either way it is going to come up, but in my submission if the question is only referred as under 170CG(3)(c), then effectively an applicant is slightly on the back foot in that the employer then will have established the existence of a valid reason. The existence of a valid reason which therefore stands as valid unless and until it has been challenged to some degree shifts the - doesn't shift the burden, but it changes the weight a little, and if it was then being considered under 170CG(3) it would be not necessarily a lesser consideration, but as I say, the employee would be on the back foot given that the employer would be treated as having established a valid reason.

PN69

In my submission, the question of valid reason overall and valid reason for selecting these employees all goes to the existence of a valid reason for these terminations and it is these terminations which are the focus of the division generally, but 170CG(3) in particular.

PN70

SENIOR DEPUTY PRESIDENT LACY: Yes, thank you.

PN71

VICE PRESIDENT ROSS: Appeal point 7 deals with the interviews and you say that the evidence was contrary to the Commissioner's conclusion that the selection criteria were objectively applied. You make the point that you have raised already in the answers to some questions that are put that the process was flawed, that you say it prevented a proper consideration of all relevant matters and prevented the employees from participating in an informed or meaningful way and ultimately required the exercise of wholly subjective judgments based on the broadest and most normative criteria, and the Commission should have found that the interview process was as unsatisfactory and unreliable as the audit process.

PN72

Appeal points 8 and 9 deal with the WorkCover considerations. The essence of this is that the submission that the selection process was infected by an improper consideration, namely whether the employees had an injury status being either a WorkCover claim made or foreshadowed or any injury which restricted their duties. You say that despite the denial by the management witnesses when the question was put to them, was this a matter that was taken into account, you say that the Commissioner should have drawn the inference that it was a matter that was taken into account and there are a number of reasons why you say the inference should have been drawn.

PN73

What you say is a record of inappropriate conduct towards injured workers, the fact that Mr McGilly referred to WorkCover issues at the general meeting of employees on 2 February and he did so in front of all of the managers who later implemented the selection process. You say also the appellants' selection for redundancy sits uncomfortably with the evidence that they were relatively highly skilled employees.

PN74

You deal with Briginshaw and also the test going to the drawing of an inference of the type you have suggested. At paragraph 101 you set out the evidence which you say the Commissioner should have had regard to, and you conclude that the preponderance of that evidence favoured the inference and that the bare denial should have been rejected, and had the Commissioner drawn the inference and concluded that injury status had an influence on selection, it would have followed that the terminations were harsh, unjust or unreasonable.

PN75

Appeal points 10 and 11, the no valid reason, I think we have canvassed with you.

PN76

MR ARMSTRONG: Your Honour, I am sorry, could I just go back to that WorkCover considerations issue. I would just like to emphasise, because it can otherwise get lost a bit given that it is a complicated question and I have had to go into the authorities in some detail, but the WorkCover allegation comes up, as it were, as an alternative proposition which I make clear in paragraph 85.

PN77

VICE PRESIDENT ROSS: Yes.

PN78

MR ARMSTRONG: If it was concluded that despite all of the flaws in the process that the company nevertheless was justified in forming the view that it had a valid reason for the termination of these employees, nonetheless we say that the inference should have been drawn that another factor taken into consideration was WorkCover and it infects the whole result.

PN79

VICE PRESIDENT ROSS: So if you reject the proposition that the process generally was flawed, then its application to these individuals was flawed because regard was had to an improper consideration.

PN80

MR ARMSTRONG: Yes, your Honour.

PN81

SENIOR DEPUTY PRESIDENT LACY: Could I just clarify, Mr Armstrong, are all of the factors set out in paragraph (a) to (h) of paragraph 101 all the primary facts that you rely on from which the inference should be drawn? Do they constitute all of the primary facts?

PN82

MR ARMSTRONG: Excuse me a moment, sir.

PN83

VICE PRESIDENT ROSS: It may be that you would add those you refer to in paragraph 88. There is a bit of overlap.

PN84

MR ARMSTRONG: Yes, thank you, your Honour. I think that paragraph 101 picks up everything that we would rely on. It does so necessarily in very general terms. The only thing that is perhaps not embraced - the only thing in paragraph 88 which perhaps is not specifically referred to or picked up by paragraph 101 is the fact that Mr McGilly had referred to WorkCover at the meetings with the employees in the canteen on 2 February.

PN85

SENIOR DEPUTY PRESIDENT LACY: Yes. It was a matter discussed at the management meetings determining who would be selected for retrenchment, wasn't it, as well?

PN86

MR ARMSTRONG: Yes, yes, that is subparagraph (g), Senior Deputy President.

PN87

SENIOR DEPUTY PRESIDENT LACY: Yes.

PN88

MR ARMSTRONG: The submission is that given all of this evidence and the fact that the allegation had been squarely raised in the applicant's outline which was part of the first exchange of papers in the case, the applicants had established grounds for drawing the necessary conclusion, and given the respondent was on notice, its failure to have attempted to explain any of this and do nothing beyond offering a bare denial, is something which the learned Commissioner ought to have relied on to conclude that the respondent could not have advanced any exculpatory explanation, and he therefore ought to have been sufficiently satisfied on the state of the evidence to draw the inference.

PN89

VICE PRESIDENT ROSS: As I say, in relation to appeal points 10 and 11 I think we have covered the valid reason proposition. Appeal points 12 and 13 go to the Commissioner's finding that the selection of each applicant was objective and fair, a finding which you say is contrary to the evidence. You say that the skills audits were manifestly not objective; rather, they were the reflection of the relevant author's opinions, and that the interviews and the scores given were matters of impression and gut feeling.

PN90

You also say that the process wasn't fair. You advance that submission on the basis that the employees were not told they were being audited, nor were they given an opportunity to respond to the outcome in relation to the scores. You then, as it were, test the process which took place against the criteria set down in Peck and your submission seeks to show that the process adopted here was deficient relative to the process or the criterion referred to in Peck.

PN91

MR ARMSTRONG: We wouldn't put Peck any higher as a useful set of guidelines, your Honour - - -

PN92

VICE PRESIDENT ROSS: Yes.

PN93

MR ARMSTRONG: - - - but given the respondent had referred to it - well, I think it was perhaps the learned Commissioner who referred to it in the decision, even assessed against those guidelines, this case is notable for its departures.

PN94

VICE PRESIDENT ROSS: In relation to appeal points 14 to 16, the essence of the - well, the submission goes to the Commissioner's conclusion that 170CG(3)(c) did not apply because the terminations weren't related to the employees' capacity or conduct. The essence of your submission is that, well, the employees were selected from a wider group of redundancy candidates and were selected, at least in part, by reference to an assessment of what you say is a flawed assessment, but their skills performance and capacity to fit the company's view of what its workforce should be and in those circumstances they should have been given an opportunity to respond to the basis of their selection.

PN95

Appeal point 17 goes to whether the outcome would have differed, and this goes to the fact that Messrs Murphy and Smith were not interviewed because they were absent at the relevant time, and they also go to the Commissioner's conclusion that, well, the outcome wouldn't have been different in any event, and you rely on the evidence as to the relevant skill of the two employees.

PN96

Appeal point 18 goes to the Commissioner's reliance on the instructions given to managers as being relevant to the appropriateness or fairness, as it were, of the selection process. You say the instructions weren't relevant. The evidence was that they weren't followed. In relation to that, is that the - I think Mr McGilly's evidence was that the interview process - during that process, the interviewers were to bring the skills audit results to the attention of the employee and that doesn't seem to have occurred, at least where it is gone to in the evidence.

PN97

MR ARMSTRONG: Yes. Yes, your Honour, I think the - - -

PN98

VICE PRESIDENT ROSS: Is that what you are referring to there?

PN99

MR ARMSTRONG: Yes, your Honour. It was Mr McGilly's evidence - I am just looking for the transcript reference - that it was his intention that the audits were to be discussed in the interviews, but the universal evidence was that it didn't happen.

PN100

VICE PRESIDENT ROSS: 2.19, this is a submission put in the alternative that even if there was a valid reason for the selection of each of the employees, the process followed independently made the terminations harsh, unjust or unreasonable.

PN101

Appeal points 20 and 21, this is the implied term, mutual trust and confidence point, and there is a degree of overlap between this point and one of the earlier propositions as to the improper consideration point.

PN102

Appeal point 22, this goes to the Commissioner's finding that the company had breached its obligations to be a good and considerate employer to Mr Smith and your submission is the same in conclusion from the Commissioner's reasoning would seem to apply to Mr Murphy, and the Commissioner was in error, in your submission, in failing to conclude that that breach rendered their terminations harsh.

PN103

MR ARMSTRONG: Yes, your Honour, perhaps just to amplify that. Given the learned Commissioner's finding that the company had failed to be a good and considerate employer, in our submission, almost by definition, that is a substantial breach. If it wasn't substantial misconduct by the employer, it wouldn't amount to a breach of the implied term. If it amounted to a breach, then applying the reasoning, in my submission, on a Commissioner Simmonds decision in Australian Dried Fruit Sales, the Commissioner ought to have gone on to conclude that therefore the company had terminated the employment in circumstances which was harsh, unjust or unreasonable.

PN104

Despite having made the first finding, he didn't draw the necessary conclusion. If there was an intervening step of logic, which we submit there couldn't be, but in any event the learned Commissioner did not make it clear.

PN105

VICE PRESIDENT ROSS: But is it every breach of - if you take the Malik implied term, is it every breach of the implied term that would lead you to conclude that the termination was harsh, unjust or unreasonable?

PN106

MR ARMSTRONG: In my submission, your Honour, there would never be conduct which amounted to a breach of the implied term which would not then cause the termination to be harsh, unjust or unreasonable. It is a problem that the Full Court of the Industrial Relations Court in Burazin adverted to in a way that in order for conduct to amount to a breach of the implied term, it has to be pretty serious. If it is just a minor thing, then it wouldn't undermine trust and confidence, it would just be one of the vagaries of employment life. But if it has been serious enough in the context of a dismissal to amount to a breach of the implied term, then by definition it has undermined the fundamental expectation in the employment relationship and it would make the termination harsh, unjust or unreasonable.

PN107

If it is not serious enough to be a breach of the implied term, then it is not a breach of the implied term and the question doesn't arise. If it is that serious, then it is by definition harsh, unjust or unreasonable.

[12.50pm]

PN108

VICE PRESIDENT ROSS: Appeal point 23 goes to what is said to be the inadequacy of the redundancy payments in relation to five of the appellants. That is, the five that would have been entitled to WorkCover weekly payments following their terminations. And this goes to the effect of section 96 of the Accident Compensation Act 1985. And the proposition of the effect of that section is that those five appellants were denied the benefit of the redundancy payments, which was the very purpose of those payments. They were denied all or most compensatory benefit of the payment, and that rendered the payments inadequate. And the inadequacy of redundancy payments is a relevant consideration in determining whether terminations are harsh, and you cite authority for that proposition. Is that the line of reasoning?

PN109

MR ARMSTRONG: Yes, sir.

PN110

VICE PRESIDENT ROSS: Right. And the balance of your submission deals with remedy, which - I don't think either of you dispute the - at least in relation to the compensation, the relevant principles. The issue of reinstatement is obviously contested between you. But I didn't have any questions for you in relation to the remedy point.

PN111

MR ARMSTRONG: I should perhaps just note, in fairness to my learned friend, your Honour, that I apprehend from the respondent's submissions that there may be an issue as to how the redundancy payments are taken into account, if at all, in the context of assessing compensation.

PN112

VICE PRESIDENT ROSS: Yes.

PN113

MR ARMSTRONG: I have made submissions about that. My friend has too, as I understand it.

PN114

VICE PRESIDENT ROSS: Yes.

PN115

MR ARMSTRONG: And perhaps over the luncheon adjournment, your Honour - my recollection is that there may be a question about the work - the weekly payments issue in relation to Mr Perrett. I am not - just off the top of my head, as I stand here, I can't recall whether he was entitled to weekly payments after the termination, so perhaps I will check that over luncheon.

PN116

VICE PRESIDENT ROSS: It may be that if we get to - if you succeed on your appeal, we get to the point of remedy, that it might require further submissions or analysis in any event. So it may not be an issue that, at this point at least, either party need to trouble themselves with in going into great detail.

PN117

MR ARMSTRONG: Yes, your Honour.

PN118

SENIOR DEPUTY PRESIDENT LACY: Just in relation to the WorkCover issue and the inferences to be drawn from the primary facts that have been established, am I right in my reading of the material that only Mr Murphy raised the issue of WorkCover as discussed by Mr McGilly at the meeting on 2 February? He was the only one who raised that in his witness statement?

PN119

MR ARMSTRONG: In his witness statement?

PN120

SENIOR DEPUTY PRESIDENT LACY: Yes. Perhaps it is something you could look at over the luncheon adjournment. But - - -

PN121

MR ARMSTRONG: Yes, your Honour. My recollection is that at least a couple of the other witnesses did give specific evidence that they thought that they had been dismissed because of WorkCover. For what it is worth, I must say, Senior Deputy President, it is - it would, at most, be an expression of the witness' view.

PN122

SENIOR DEPUTY PRESIDENT LACY: Yes, sorry. But each of them, in their witness statement, raised the speech by Mr McGilly at the meeting on 2 February - meetings on 2 February. But only Mr Murphy referred to the statement - - -

PN123

MR ARMSTRONG: About WorkCover.

PN124

SENIOR DEPUTY PRESIDENT LACY: Yes. About WorkCover.

PN125

MR ARMSTRONG: Yes. I think that may well be right, Senior Deputy President. But the employees' recollections of the meeting on 2 February were generally not fantastic. They recalled reference to the voluntary redundancy process, and a couple of them got the numbers right in terms of the initial request being for 36 voluntary redundancies. But most of the evidence in relation to what was discussed at that meeting came from the respondent's witnesses, and Mr McGilly in particular.

PN126

SENIOR DEPUTY PRESIDENT LACY: Well - and, am I right also in my understanding of the documents, that there is no evidence about the actual number of employees who are currently on WorkCover who are being retained in the establishment?

PN127

MR ARMSTRONG: That is correct, Senior Deputy President.

PN128

SENIOR DEPUTY PRESIDENT LACY: Yes.

PN129

MR ARMSTRONG: The question was asked of Mr McGilly, in the context of putting to him that it was disproportionate that 70 per cent, at least of the persons terminated were on WorkCover. That that was an over-representation of WorkCover employees when assessed against the make-up of the workforce generally. He couldn't answer it.

PN130

VICE PRESIDENT ROSS: I thought there was an objection taken to the question, and - - -

PN131

MR ARMSTRONG: Yes. I think - - -

PN132

VICE PRESIDENT ROSS: - - - it ultimately wasn't dealt with.

PN133

MR ARMSTRONG: I think his answer, as I recall, was that he didn't know. And I then asked him, well, would it be in the order of 70 per cent, and that - - -

PN134

VICE PRESIDENT ROSS: Yes, I see. That was the point at which the objection was taken.

PN135

MR ARMSTRONG: Yes.

PN136

VICE PRESIDENT ROSS: He has already answered the question in the answer.

PN137

MR ARMSTRONG: Yes. So the applicants are not in a position to go beyond that. We simply don't know the make-up of the workforce. It was put to the respondent. Mr McGilly didn't know. Again, no other evidence was led in that regard, and it is not something we could lead evidence about. It was something that the respondent ought to have explained.

PN138

SENIOR DEPUTY PRESIDENT LACY: Yes.

PN139

MR ARMSTRONG: And have the opportunity to explain.

PN140

SENIOR DEPUTY PRESIDENT LACY: Yes, thank you.

PN141

VICE PRESIDENT ROSS: Is there anything else you wish to add, Mr Armstrong?

PN142

MR ARMSTRONG: Only a couple of very brief matters, your Honour. First of all, in the course of just re-reading through some of the authorities yesterday, I have referred in the written submissions to the Full - the fairly recent Full Bench decision in Sulocki v Lockwood Security Products. In - I won't take the Bench to it this afternoon, because it is fairly well know. In my submission, Sulocki if very, very close of the facts to the present case, it appears. And the trial Commissioner in Sulocki made many of the findings, which in our submission, the Commissioner in this proceeding ought to have made at first instance, and applied tests in terms of what degree of information should be provided to employees in order to allow them to participate meaningfully in the process; the way it needs to be assessed by the company; and the manner in which any decisions need to be implemented, which, in my respectful submission, does set highly apposite guidelines to this proceeding.

PN143

Sulocki is a Full Bench decision which, in my submission, is very strongly in favour of the various tests for which the appellants in this proceeding contend. And I haven't referred to it in a great deal of detail in my submissions, but I did want to draw the Bench's attention to the decision as one on which we rely very strongly in this appeal.

PN144

SENIOR DEPUTY PRESIDENT LACY: Was Commissioner Hingley's attention drawn to that decision?

PN145

MR ARMSTRONG: Yes, your Honour. Yes. It was discussed in some detail in closing submissions in Albury. Both in the context of the Windsor Smith type test be applied for the selection. There has to be a reasonable selection process, as well as an overall valid reason for the termination, if not for the downsizing of the workforce. And it was also referred to in the context of the Sprigg type test for the assessment of remedy. The closing submissions are reproduced in the transcript, which is part of the Appeal Books.

PN146

VICE PRESIDENT ROSS: Do you have copies of the decisions that you are referring to in the written submissions?

PN147

MR ARMSTRONG: Yes, your Honour. That is the next thing I was going to do. I apologise for the bulk of them, sir, but they are, at least, all reproduced.

PN148

VICE PRESIDENT ROSS: Thank you.

PN149

MR ARMSTRONG: There is one decision, a further decision, which is not reproduced in the bundle of material which I have handed up to the Bench. That is the decision of Commission Whelan in Smith and Another v Capral Aluminium. I hand up some copies for the Bench. I rely on that decision, your Honours, again as an example of the kind of considerations which arise where the Commission is confronted with the selection of some employees for redundancy. And, in particular, I rely on paragraphs 48 and 49 of Commissioner Whelan's decision as being relevant to a number of aspects of the present case, both in terms of valid reason, overall harshness, unjustness and unreasonableness, and as to appropriate remedy.

PN150

48 and 49 are curious, in that the applicant there even had the same surname as one of the applicant's here. Although given it was Smith, perhaps that is not such an amazing thing. But I will just take a moment, if it pleases, to read 48 and 49. In this case there was no consultation with Mr Smith.

PN151

VICE PRESIDENT ROSS: That is all right, Mr Armstrong. We have noted them. We will read them.

PN152

MR ARMSTRONG: Thank you, your Honour. The last matter which I wish to at least just raise for the Bench is the question about the income earned by the employees since their termination. I am cognisant of the comments that you have made and the guidance that you have given. In those circumstances, perhaps just to explain to the Bench, at the hearing we had led evidence in the appellants' witness statements as to the success or lack thereof that they had had in finding other employment, and gaining other income since their termination. There was an agreement between the parties' representatives that, in order to assist the Commissioner, we would obtain and provide some more up-to-date details, because the situation of a couple of the applicant's had changed slightly.

PN153

We wrote to the representatives for the employer a couple of weeks after the hearing, and forwarded details of the up-to-date income situation of each of the employees, just topping up the evidence that had been given in their own witness statements. I haven't - that letter did not - we received a response to it earlier this month which, I think, without being unfair to my friends, doesn't take matters anywhere. I can hand up to the Bench a copy of the letter that we had sent to the employer, if that was of assistance. However, if the Commission was not minded to deal at all with the question of remedy in the present context, then I wouldn't belabour you with it.

PN154

VICE PRESIDENT ROSS: Well, ultimately, if we upheld the appeal, how would we deal with the question of remedy on - simply on the material before us.

PN155

MR ARMSTRONG: In my - - -

PN156

VICE PRESIDENT ROSS: Of necessity, we would need some additional material, you would think.

PN157

MR ARMSTRONG: Further information. Your Honour, there was, in evidence given to the learned Commissioner below, the hearing and the judgment at the trial level took place more than six months after the terminations had taken effect. And any further information that has occurred since then - - -

PN158

VICE PRESIDENT ROSS: Yes. I see.

PN159

MR ARMSTRONG: So, in my submission, the Commission could deal with the matter on the material as it presently exists. But in order to ensure that the Commission is properly apprised of all this information, and given that the respondent may well wish to make submissions about how various matters are to be taken into account, in particular, the fact that Mr Rapsey operates a private family farm, which generates some income, but it is not really possible to identify what that income is. It is a farm. We don't know what the expenses are, how the balance sheet is going to be made up, or what his net income is going to be at the end of any given financial year. There are a couple of imponderables in there.

PN160

VICE PRESIDENT ROSS: Yes.

PN161

MR ARMSTRONG: This material seeks to bring this as up-to-date as possible, identifies some issues in relation to Mr Rapsey in particular.

PN162

VICE PRESIDENT ROSS: Right. But do I take it that the respondents are contesting what is in your correspondence?

PN163

MR MCKEOWN: Your Honour, what will be submitted is that the evidence is at an unsatisfactory state.

PN164

VICE PRESIDENT ROSS: Yes.

PN165

MR MCKEOWN: That there was an agreement of some sort, that is discussed at transcript, and I don't disagree with what my learned friend said about that. But my examination of the material would clearly indicate that there is a need for additional evidence. I wouldn't be - well, I would be submitting that the documentation - some of the documentation, I don't say all. But, for example, there is a handwritten examination of income and expenses for lawn mowing activities, etcetera.

PN166

And clearly, that is not sufficient, from the respondent's aspect. And that is why objection is taken in that area. Obviously I do adopt an approach as pragmatic as possible. For example, if there is documentation in terms of group certificates and wages, obviously they can be looked at and accepted. But there are other issues in that letter that I would be taking the Commission to.

PN167

VICE PRESIDENT ROSS: Mr Armstrong, if we get to the point of remedy, this isn't designed to depress you. I am not making any judgment about how the matter has gone. But it seems to us that, given the number of applicants and that some of the issues are contested, etcetera, that is something we would issue directions about, how we would propose to deal with that matter.

PN168

MR ARMSTRONG: If it pleases.

PN169

VICE PRESIDENT ROSS: Is there anything else you wish to add to it?

PN170

MR ARMSTRONG: I am grateful to my instructor, your Honour. I am not sure if the Commission would have terribly legible copies of our submissions in reply. They were e-mailed as well as faxed, but if the Commission only has faxed copies, perhaps it might be helpful to hand up.

PN171

VICE PRESIDENT ROSS: No. No, they are fine.

PN172

MR ARMSTRONG: They are okay? In that case, I won't kill any more trees than I have to.

PN173

VICE PRESIDENT ROSS: Can I indicate that - I know this might create some inconvenience in that we will all have to move, but we don't seem to have solved the air conditioning problem, and I understand that Court room 1 on level 39 is available. We might move to there on re-convening. And then would hear from you, Mr McKeown.

PN174

MR ARMSTRONG: So, it was 39, 1, your Honour.

PN175

VICE PRESIDENT ROSS: Yes. Hearing room 1 on level 39.

PN176

MR ARMSTRONG: Those are the submissions in chief for the appellants.

PN177

VICE PRESIDENT ROSS: Thank you. Yes, Mr McKeown.

PN178

MR MCKEOWN: Your Honour, just very briefly, because I just want to consider this matter over the luncheon adjournment. Your Honour indicated the two approaches, and I just want to be sure that I am on the same wave-length and in the fashion as to these two approaches. The first approach being that one looks at the notion of a valid reason, whether that has been established on - for operational reasons. But then, under this, what I will call the first approach, it can still be - if one looks at the process under 170CG(3)(c) and (e), that then can become a termination which is harsh, unjust and unreasonable. That is how I understand the first approach.

PN179

VICE PRESIDENT ROSS: Yes, because you would simply - you wouldn't look so much at the selection criteria at all under (a). You would simply look at was there a sound, defensible reason, based on operation requirements for reducing the size of the workforce. Or, there may be - and this is covered by, I think, the appellant in the written submissions, that Windsor Smith alludes to the fact that there may be cases where there are operational requirements for the termination of individuals. For example, an entire factory may shut down. In those circumstances, selection is not really an issue. So if that approach was adopted, and valid reason is simply based on a sound reason on the basis of operational requirements, if that was the approach adopted then I think, on what the appellants' submission says, they would accept there was a valid reason. If that was the construction.

PN180

MR MCKEOWN: Yes.

PN181

VICE PRESIDENT ROSS: Because they are not contesting. Indeed, they accept that there was an operational requirement for redundancies. The contest is really in relation to the selection process of these individuals - that led to the termination of these individuals. The second approach - sorry. On the first approach the selection of individuals, such as, if we take this case, then if that approach was adopted then it would lead, presumably, to a finding that there was a valid reason. The issues about the fairness or otherwise of the selection criteria may then become an issue under (e) - - -

PN182

MR MCKEOWN: Yes.

PN183

VICE PRESIDENT ROSS: - - - being another relevant consideration. Or (c). And I understand - - -

PN184

SENIOR DEPUTY PRESIDENT LACY: Or (d).

PN185

VICE PRESIDENT ROSS: - - - the competing submissions on that. Or (d). Yes. The other approach is to, if you like, conflate the considerations so that under (a), whether there is a valid reason, this is the notion that looks at a termination due to redundancy as a two step process. The first being, there is an operational need to reduce the size of the workforce.

PN186

MR MCKEOWN: Yes.

PN187

VICE PRESIDENT ROSS: And the second being the selection of these individuals.

PN188

MR MCKEOWN: And so, the second approach, your Honour, is really - it is, if you like, expanding the valid reason, so to speak. You fall under valid reason.

PN189

VICE PRESIDENT ROSS: That is right. Yes.

PN190

MR MCKEOWN: Thank you, your Honour. I just want to be sure.

PN191

VICE PRESIDENT ROSS: It may be that - well, you heard his Honour's question to Mr Armstrong about, well, does it make any difference in essence.

PN192

MR MCKEOWN: Yes.

PN193

VICE PRESIDENT ROSS: And the proposition back was, well, it may make a tactical difference if you like. It is - given that it - whilst it wouldn't shift the onus or the burden, nevertheless there would be a finding of valid reason that you would have to balance the other considerations against. But in terms of actually looking at all of the considerations, in that sense it doesn't make any difference, because one has a look at, is there a sound reason for the reduction in the workforce, based on operational requirements. And secondly, one would look at the fairness or otherwise of the selection process.

PN194

MR MCKEOWN: Thank you, your Honour.

PN195

VICE PRESIDENT ROSS: We will adjourn until 2.15 in Court room 1.

LUNCHEON ADJOURNMENT [1.13pm]

RESUMED [2.22pm]

PN196

MR ARMSTRONG: If it pleases there are a couple of matters which have occurred to me over lunch time which I would like to just supplement before Mr McKeown makes his submissions, with the leave of the Commission. Firstly, your Honour, Vice President Ross, questioned me in some detail about the test for valid reason and how Windsor Smith type considerations operate and in particular whether the opportunity - the justification for the termination of the particular employees is part of valid reason or comes up under genuine opportunity to respond.

PN197

It occurred to me over lunch time this is actually the subject of decision of a Full Bench of the Commission and I refer in that regard to the Sulocki decision which I referred to before lunch at paragraph 19. In my respectful submission that is two the effect that the sort of question that we are here discussing is part of valid reason, not one of the other considerations under 170CG(3).

PN198

VICE PRESIDENT ROSS: What number is that in the - I am sorry, 42.

PN199

MR ARMSTRONG: I apologise to the Bench, there are not tabs between the various decisions but they are stapled as it were and it is paragraph 129, Vice President.

PN200

VICE PRESIDENT ROSS: Yes. Thank you.

PN201

MR ARMSTRONG: Vice President Ross, you also raised with me the question - I raised the issue about Mr Perrett and whether he was in receipt of weekly payments. I have checked that over lunch time. It is our understanding that Mr Perrett was not in receipt of weekly payments following his termination. Whatever other WorkCover entitlements might have existed, or may still exist, they are not weekly payments. I am instructed that he was not eligible for weekly payments.

PN202

Vice President Ross, you raised with me at one point a question about the MFI status of some of the skills audits and it was our recollection over lunch that you had reserved something about that question and I am just wondering whether there was some residual issue which you wanted to raise with me about it.

PN203

VICE PRESIDENT ROSS: No.

PN204

MR ARMSTRONG: No.

PN205

VICE PRESIDENT ROSS: Not that I can recall anyway.

PN206

MR ARMSTRONG: In any event the submission that we make in relation to those skills audits is that it is not simply a question of them being admitted but their evidentiary value being subject to some perhaps discounting on the basis of weight. In light of the fact that none of the applicants were actually cross-examined or challenged about their evidence that they had relatively superior skills, even if these MFI skill audits are admitted and had regard to, it is important to identify what purpose or what issue it is that they go to.

PN207

Given that the employees were not cross-examined about their own skills levels these audits cannot be evidence relating to their actual skills. Even if they are admitted the most they can relate to is - the most they can stand as is evidence of some unknown author's opinion of those skills. So it is opinion rather than the employees' actual skills. And then we get into the question of whether the opinion was reasonable. The last two issues - in relation to the question of remedy the Bench has indicated that is unlikely to be dealt with in the context of the current appeal and I understand would likely be remitted to a single Commissioner for determination.

PN208

In my submission accepting what the Bench has said, that would perhaps be necessary in relation to any compensation that needs to be awarded, but in my submission there is sufficient material before the Commission now that the Commission as currently constituted could make orders for reinstatement. Now, in relation to Mr Hodge and Mr Bakic the only claim is for compensation and so they have to be remitted. In relation to the other employees there is a question of whether there is compensation as well as reinstatement, but in my submission only the compensation aspect of it would need to be remitted, and this Bench if it was so minded has sufficient material before it to make orders about reinstatement.

PN209

SENIOR DEPUTY PRESIDENT LACY: Is that appropriate though, given the time that has elapsed since the termination of employment?

PN210

MR ARMSTRONG: In my submission, your Honour, yes, it would be, that although these terminations happened more than 11 months ago the company continues to operate the - continues to require these employees' functions to be performed at the workplace - well, that is the last evidence.

PN211

SENIOR DEPUTY PRESIDENT LACY: How do we know that though?

PN212

MR ARMSTRONG: Well, that was the evidence at the hearing, Senior Deputy President.

PN213

SENIOR DEPUTY PRESIDENT LACY: Yes.

PN214

MR ARMSTRONG: Beyond there we can't take it any further than that.

PN215

SENIOR DEPUTY PRESIDENT LACY: But in those circumstances wouldn't it be more appropriate to convene a further hearing to determine that issue?

PN216

MR ARMSTRONG: In my respectful submission reinstatement attracts different sets of considerations to say compensation. At the close of the hearing before Commissioner Hingley the company had had its opportunity, as had the applicants, to make submissions about the appropriate remedy. If, instead of giving a decision which is then subject to appeal, Commissioner Hingley had reserved his decision for three or four months, then even then the question of reinstatement could be decided on the basis of the evidence as it stood at the hearing. In my submission the present situation is little different to that.

PN217

Secondly, and a sub set of that first set of considerations is that the simple passage of time in my submission should not be a reason for not awarding - or not ordering reinstatement. The employees have acted with all expedition and the fact that time has elapsed ought not to dissuade the Commission from ordering reinstatement if it was otherwise appropriate. The last matter which I just wanted to refer to is in relation to the agreed statement of facts which the Bench has asked the parties to comment on, I didn't address that at all in my submissions at the moment and having discussed it with my friend we thought perhaps we might deal with that at the end of all submissions.

PN218

VICE PRESIDENT ROSS: That was our thought as well.]

PN219

MR ARMSTRONG: Yes. If it pleases.

EXHIBIT #A1 APPELLANTS' SUBMISSIONS

EXHIBIT #A2 SUBMISSIONS IN REPLY

EXHIBIT #R1 RESPONDENT'S SUBMISSIONS

PN220

VICE PRESIDENT ROSS: Mr McKeown, I will adopt the same approach to yourself. In relation to the approach on appeal you refer at page 3 to the decision of the Full Federal Court in CFMEU v Giudice. Isn't that the matter that was subsequently overturned by the High Court?

PN221

MR McKEOWN: Your Honour, I think it could be the case there. I am not - - -

PN222

VICE PRESIDENT ROSS: In any event I take it if that is the case it is the High Court judgment we would be adopting.

PN223

MR McKEOWN: Yes, your Honour.

PN224

VICE PRESIDENT ROSS: You say in relation to leave to appeal that there is no special importance or public interest in the matter, so no issue of principle arises warranting the grant of leave.

PN225

MR McKEOWN: Yes, your Honour.

PN226

VICE PRESIDENT ROSS: And you also submit that there is no arguable case that the Commissioner materially erred in the sense set out in House v King.

PN227

MR McKEOWN: Yes, your Honour.

PN228

VICE PRESIDENT ROSS: And for that matter leave should be refused. You then address each of the grounds of appeal. In relation to ground 1, as I indicated in the questioning of Mr Armstrong earlier, you say that clause 33.6 of the EBA does not impose the two obligations described in paragraph 59 of the appellants' written submissions and it is the skill needs of the company that is the paramount consideration, not the skills of each employee.

PN229

MR McKEOWN: Yes.

PN230

VICE PRESIDENT ROSS: And I think you go on to say that that notion isn't as restrictive as the appellant would contend and indeed that the notion of the skill needs of the company embrace the process that was adopted for the criteria in the interview and the skills audit.

PN231

MR McKEOWN: Yes, very much so, your Honour. It is submitted - and that is why in my submission one can get too tied into this concept of the skills of the employees. That is not what this certified agreement is about and as your Honour would well know and all members of the Commission, certified agreements come out because of agreements reached between the parties as to how they are going to process certain, in this case, redundancy. And in my submission it is quite clear when one looks at the clause that it is the skill needs of the company and that is why it is only one component, the aspect of the skills of the employee.

PN232

It does go to those very issues of how an employee might, if you like, interact with other managers and things of those issues. They are all part of that - under that broad - I submit is a very broad criteria, the skills needs of the company. And as was pointed out, and I think it was picked up by your Honour, that in terms of the situation there was only evidence of one applicant who raised a question about the speech. I don't think - in my submission that is not relevant at all.

PN233

What is more relevant is that they had a standard set of questions and your Honours were taken to in terms of - and that is in the appeal book just for convenience sake, the last page I think of the appeal book of those particular fixed headings: communication, teamwork, technical skills, initiative. And that is all consistent in my submission, your Honour, with the company trying to ascertain company skills. And also whilst I am just on that, which is at page 492 of the appeal book, because it does come up as an issue in this case because it is said that somehow these appellants - and I think for ease of reference and subject to your Honour's direction I think I will just refer to - would your Honour prefer I refer to them as applicants or appellants so I try and keep it consistent.

PN234

VICE PRESIDENT ROSS: Appellants is fine.

PN235

MR McKEOWN: All right. The appellants - it is put some emphasis in terms of somehow this is - they are taken by surprise, they are not given an opportunity and things of that nature. When you look at the standard headings there and the questions - and there is no dispute from my reading of the transcript that these standard questions were followed by the interviewers. There were instructions given and there didn't seem to be a dispute that it was a proforma sort of type interview arrangement.

PN236

At the very end of that they were each asked, "Have you reconsidered your voluntary redundancy application?" In my submission, your Honour, it was quite apparent from the nature of the interview. We have evidence from Mr McGilly that on 31 January there was this meeting called. We have the evidence that all except for one appellant were present. We have evidence that there were overheads presented, that there is evidence of the company following the certified agreement.

PN237

And even more telling in all of these processes we have the evidence that - and Commissioner Hingley drew attention to this, that the union were involved, there were discussions with the union and there were consultations. I didn't want to digress too much, your Honour.

PN238

VICE PRESIDENT ROSS: And you then move on to say at paragraph 14 that there is no evidence to support the conclusion asserted by the appellant that the appellants' skills are superior in relevant respects - or in relevant aspects to other employees. This is the, if you like, contest I was referring to earlier where you rely on the skills audits to support that conclusion, or the outcome of them, whereas the appellants rely on the evidence of each of the applicants in the proceedings below. What do you say about that evidence?

PN239

MR McKEOWN: Well, your Honour, what I would say is that it falls back on how this matter is to be judged full stop in terms of the House v King principles and that is whether or not Commissioner Hingley has erred in his discretion so to speak. And in my submission I raise those documentary evidence because that was before Commissioner Hingley. Now, it is said against us that somehow because there was no marking, or documents presented to be marked as an exhibit, nothing further goes on that, that it is only marked for an exhibit, it can't be relied upon.

PN240

In my submission clearly it can because some of the confusion that was caused was caused, with respect to my learned friend, because there is a mention about marking for documentation but in general the process was each document is handed up, it is marked as an exhibit. I say in the alternative that even if there was some point raised about that the Commissioner was still entitled to look at the documentary evidence before him and that wasn't an issue taken.

PN241

It would be a different matter, your Honour, if it was the case at the end of the day that my learned friend has lengthy submissions on why and nominates the documents that were marked, but as you can see from my written submissions there is something like six or seven documents that were all just handed up marked as exhibits. And in my submission there can be no reliance upon this distinction being made. And one gets back to the point in terms of the Commission is entitled to take into regard all, if you like, both oral and documentary evidence and when one looks at this material it is clear that despite all the assertions made there is no - there can be no proper conclusion drawn that these were in a middle ranking of the skills levels of these employees.

PN242

It also goes back to common sense that - and the Commissioner is of considerable experience, Commissioner Hingley - that, of course, you are going to get all the appellants saying that they are highly skilled because they don't want to lose - they want their jobs back; that is natural. But that has got to be a consideration taken into effect that it is not unusual that all the appellants have indicated yes, it is put against us in terms of a challenge over that, but what I submit, your Honour, is clearly it can't be accepted that because a matter is unchallenged you then have a single tunnel vision approach and ignore documents that have been tendered in the Commission.

PN243

And as my written submissions clearly indicate you have individuals here who are ranked - for example, in the Labels Department out of 23 employees they are ranked last and third last. You have the evidence of the audit skills in terms of the criteria used and I can take - that is at paragraph 26 of my written submissions and also at paragraph 14, Your Honour. What is submitted there is that clearly Commissioner Hingley was entitled to take into account that documentary evidence which goes against and it even, your Honour - the fact that the appellants have given evidence that they perceive themself to be highly skilled, etcetera, as Commissioner Hingley noted in his decision, that doesn't necessarily bear out in terms of the audit skills.

PN244

SENIOR DEPUTY PRESIDENT LACY: But there was no real challenge to that, was there, in cross-examination?

PN245

MR McKEOWN: No, your Honour.

PN246

SENIOR DEPUTY PRESIDENT LACY: I mean the Commission must determine the matter on the basis of the evidence before it, whether or not the termination of employment was harsh, unjust or unreasonable.

PN247

MR McKEOWN: Yes, your Honour.

PN248

SENIOR DEPUTY PRESIDENT LACY: And there doesn't appear to have been any endeavour on the part of the company to demonstrate that the assessment of the skills was a validly achieved result, or to even put to the employees that their own assessment of their skills was inaccurate or unfounded.

PN249

MR McKEOWN: Yes, your Honour, I don't think I can move from that position in the sense that I have challenged, but what I do say is that this is looked at from the decision of the Commissioner based on all the material before him and in my submission it is within the scope of his discretion to take into consideration his experience in terms of redundancies matters of that nature, and that what we have here is that simply because a point is not challenged does not mean that the arbitrator has to accept that.

PN250

The arbitrator has his wealth of experience, or her wealth of experience, knowledge of the Act and their different experiences in different industries and in my submission that has to come into play. But simply - because it would be like the example of simply because someone hasn't challenged something that is put that it is then set in concrete, that it has to be. It is a bit like saying, well, it wasn't challenged that the rectangle was a triangle; therefore, we have to accept that it is a rectangle and that doesn't have to be the case. In my submission it is still within the Commissioner's scope to take on board what has been given in evidence, to take on board that it wasn't necessarily challenged.

PN251

But taking into account all those considerations he still found - and I will come to this depending on the approach of the Full Bench - but what is very important in this case in my submission is Commissioner Hingley I submit deliberately refers to the test of Hoffman C in Peck's case which was subsequently followed by Commissioner Simmonds in the Australian Dried Fruits case, but the test in that particular case is how it is evolved, if you like, is that it is set in the background of a fair go all round, that you simply don't isolate it, you take into account other extraneous factors and in my submission there are extraneous factors in this matter which, yes, it can be said that there is not a challenge, but that doesn't necessarily follow then because there is no challenge that the Commissioner has to accept that.

PN252

The Commissioner has got other considerations, not only the documentary evidence but also in terms of how the evidence was presented, his own examination of the witnesses himself, as the Full Bench will not. And it might be of assistance if I hand up - I have got a case folder of the respondent's cases. It doesn't purport to be, your Honours and Commissioner, to be all of the cases referred to in respondent, so I state that now. I have only put in there the cases in which we, if you like, rely in the main in terms of this particular appeal.

[2.45pm]

PN253

There is an index at the front, your Honours and Commissioner, indicating that the cases are there. The case I was referring to in terms of the assessment, if you like, of witnesses, is the case of Abdel-Karim

PN254

Osman v Toyota Motor Corporation, in particular at paragraphs 55-57. The Full Bench, which was constituted by - well, with the exception - as constituted currently, with the exception of Commissioner Simmonds. In that particular Full Bench - well, it is noted there, of the caution which must be exercised, in terms of disturbing findings at first instance. And that is at - which it is stated at 55:

PN255

On appeal, the Commission should give way to the obvious advantage enjoyed by the member at first instance in assessing the evidence given at the initial hearing.

PN256

And also in this particular case, your Honours and Commissioner, we had the unusual situation in which the witnesses were present throughout the hearing. So in my submission, Commissioner Hingley not only had the benefit of seeing the witnesses give their evidence from the witness box itself, as with - he also had the benefit of observing witnesses in the court generally. And what is stated in that particular decision, I am not sure if it is - - -

PN257

MR ARMSTRONG: I am sorry to interrupt my friend, but my friend may be making that submission ignorant of the layout of the courtroom at Albury. There is a barrier, which I presume was at some point a prisoner box, which forms a very major impediment to the vision by the Bench of the back of the courtroom.

PN258

SENIOR DEPUTY PRESIDENT LACY: In any event, is the observation of people in the courtroom relevant?

PN259

MR ARMSTRONG: That was a matter for reply, Senior Deputy President.

PN260

MR McKEOWN: Well, I think it can be of relevance at times, your Honour, with respect, because there might be things that affect the weight to be given to evidence. But I won't take that any further. I am indebted to my friend. My knowledge of this matter is from reading the transcript, and the exhibits. Just going back to the decision involving Toyota Motor Corporation, at 57 of that particular decision, the Commission noted as follows:

PN261

In our view, if a finding made by a member at first instance depends to any substantial degree on the credibility of a witness, that finding must ...(reads)... the advantage the member at first instance enjoyed in hearing the witnesses give evidence.

PN262

And it is quite important in a matter of this nature where there are a considerable amount - or there can be, in terms of - in assessing who is to be believed. There is considerable advantage in terms of the decision maker having the observations, making note of - not only verbal, but non-verbal. Non-verbal can be just as important in terms of making assessments as to who is the Commission to believe. And there is very much a case of credibility in terms of this matter, because what is said that - and it was put in a considerably different number of ways by my learned friend, with ultimately the same response, but in regard to the issue of WorkCover status, the interviewers didn't take that into account. And that is noted by Commissioner Hingley in his decision which he puts in brackets, and the interviewers.

PN263

VICE PRESIDENT ROSS: You then move on to deal with the relevance of the on-going discussions between the Union and the Company. This is at paragraph 19. And you say that the Commission has suggested it might leave open an inference to be drawn that the Union was satisfied with the selection process. You say that - you submit that it is open for such an inference to be drawn, and that it is significant that the Union did not represent or seek leave to represent the appellants in their applications against the respondents. There are two issues that go from that. Was the Commissioner asked to draw the inference in the proceedings below, do you recall?

PN264

MR McKEOWN: Not - I will just check with my instructor, your Honour, but from my reading of the transcript I don't think - no, your Honour, I understand, and that confirms my reading of the transcript. I think that was an issue raised by Commissioner Hingley in his decision.

PN265

VICE PRESIDENT ROSS: I am not sure on what basis it is put that we should draw an inference from the fact that the Union didn't represent the appellants. There may be more than one reason for that, not that the least of which we don't know - yes, I am not - I can't recall whether there is any evidence about the membership status of the appellants.

PN266

MR McKEOWN: Of my reading of the transcript, I don't think that was put. However, if one looks at the payslips - they were provided in terms of - I've looked at those payslips and they indicate union deductions. That is more where that - - -

PN267

VICE PRESIDENT ROSS: For each of the appellants?

PN268

MR McKEOWN: I am not sure if I've checked each one individually, your Honour. I went through a process, because I examined that point that your Honour makes that I don't think it was specifically put. And it wasn't put in the evidence in terms of a closed shop situation. But I took it from - - -

PN269

VICE PRESIDENT ROSS: I would be careful about using that expression in the current legislative framework, Mr McKeown.

PN270

MR McKEOWN: Yes, I withdraw that. I had gone through the witness statements, for example, where they had provided gross earnings, and just looked at a deduction for union. For example, at page 206 involving Mr - looks like Mr Smith's pay roll details, there is a deduction there for union, and I think that similarly occurs. But, your Honour, in respect of the point you raise, and also at page 228 of the appeal book, there is the exhibit of Mr Hodge. Again, there appears to be a deduction for union there. So that is where that - but, your Honour, in terms of the point that you make, I would agree in terms of that, probably it is walking a thin line, in terms of the inference.

PN271

VICE PRESIDENT ROSS: If I can take you to paragraph 20, you say there that - well, the Commission has identified the self-assessment procedure as being, it was a broad assessment of skills. You then say, it was based on responsibility and conduct, as well as skills. So as I understand the proposition, the skills audit and the interview involved a broad assessment of skill. It was based on responsibility and conduct as well as skills. Technical skills, I suppose, in that context. And that that was within the contemplation of the expression, skill needs of the Company, within clause 33.6 of the agreement.

PN272

MR McKEOWN: Yes, your Honour.

PN273

VICE PRESIDENT ROSS: Can I just work through the propositions. So in this instance in paragraph 20, the interview process involved a broad assessment of skills based on responsibility and conduct of the interviewee as well as their technical skills. That interview score then formed part of the combined points score which was then - led into the management group meeting and the consideration of which employees would be made redundant.

PN274

MR McKEOWN: Yes, your Honour.

PN275

VICE PRESIDENT ROSS: In those circumstances, isn't employee conduct then one of the matters that led to the selection of the appellants in this case for redundancy?

PN276

MR McKEOWN: No, your Honour. It is submitted that - and it probably comes back to those two approaches that were discussed previously, that clearly we have one element that there is a valid reason based on the operational. It is not challenged by my learned friend that - and indeed it is said in the paragraphs which have been provided in terms of the hopefully agreed facts document that we have a production downturn, we have a reduction in numbers, and the issue of - and that is one separate issue in my submission.

PN277

The issue of the - so therefore the valid reason is nothing to do with capacity. The area of capacity comes up under still looking at whether or not the termination was harsh, unjust or unreasonable.

PN278

VICE PRESIDENT ROSS: So under what paragraph would it arise?

PN279

MR McKEOWN: Capacity?

PN280

VICE PRESIDENT ROSS: Yes. If capacity was an element of the selection process, which seems to be accepted.

PN281

MR McKEOWN: If I can put it - because it was not, as my learned friend suggested, was determined in Sulocki's case. What, in fact, happened - or what I submitted in Sulocki's case was that when one looks at section 170CG(3), your Honour, we have quite specific in subparagraph (a):

PN282

In determining for the purposes of the arbitration whether a termination was harsh, unjust or unreasonable ...(reads)... whether there was a termination related to the capacity or conduct or -

PN283

separately -

PN284

or the operational requirements of the employer's undertaking.

PN285

The reason for termination was the operational; that is the reason for termination, not capacity/conduct. There seems to be - and in Sulocki's case, with respect to the - and I had better check to make it is not a similarly constituted Commissioner, but with respect to - - -

PN286

VICE PRESIDENT ROSS: You might have problems with one; an overlap of one.

PN287

MR McKEOWN: Well, yes.

PN288

SENIOR DEPUTY PRESIDENT LACY: In Sulocki's case the Full Bench ultimately decided that the reason for termination involved some collateral purpose, namely the view of the employer that the individuals were troublemakers, and that was basically what the Commissioner had found, that the skills audit was not the basis of the selection for termination of employment, but rather the fact that these employees had a bit of history in terms of causing problems in the workplace.

PN289

MR McKEOWN: Yes, your Honour, but the paragraph I wanted to take the Full Bench to was paragraph 18 of Sulocki decision where the Full Bench observed as follows in the latter part of this paragraph, and that is the final tab on the case book that has been handed up to your Honours and Commissioner. It is said there at paragraph 18 in the middle part:

PN290

The argument seems to proceed on the premise that because of the size of the appellant's workforce ...(reads)... or attributes because the management knows what is best for business.

PN291

And then the Full Bench continues:

PN292

If our characterisation of the argument is correct, we are satisfied that no error has been shown in that regard.

PN293

What I obviously didn't succeed in my submissions in that particular appeal was that the argument is very much this, that when you read the actual section 170CG(3)(a), it is compartmentalised. We have the first part which is related to capacity and conduct, we have the second part which is separate, because of the very wording "or to the operationals". What seems to have developed through the cases appears to be overlap notion that because the selection process involves capacity/conduct, therefore you don't - and if that is flawed, then you don't have a valid reason.

PN294

In my submission, that misses the point. The point is the valid reason is operational. That is the reason that they have been terminated, not because of their capacity/conduct, it is a separate issue that in the selection process, yes, it does come into it and that is where it can fall foul of the section 170CG(3), and that is consistent with the first approach as opposed to the second approach. The second approach adopts the position, well, you look at valid reason, and when you look at valid reason you not only look at the fact of operation, you look at the selection process.

PN295

And if you go back to Selvachandran's case itself, Selvachandran didn't involve redundancy. Selvachandran, which is so often recited - I have recited it myself so many times - in term of a valid reason, but that particular decision involved a chap who refused to undertake multiskilling. It wasn't a redundancy situation at all. It was squarely put on capacity/conduct. It was his conduct in refusing to undertake multiskilling.

PN296

In my submission reliance on Selvachandran not only is it on different sections of the former Act, but what seems to have developed is that, well - and I agree it makes sense that you can't have a situation where an employer can simply put up operational, that is it, and there are no further restrictions on them as to they select, how they select. That obviously can still fall foul, but it falls foul because of the approaches - or the subsequent - under subparagraphs (b) to (e), and in particular (e) of 1270CG(3). In my submission that is the correct approach, but you don't fall back and simply say that because conduct is used in terms of the selection that it is not a valid reason, that is not the issue.

PN297

There is a valid reason, it is made out here, it is not in dispute. The area where Commissioner Hingley did examine it is in the area of the process, procedural fairness.

PN298

SENIOR DEPUTY PRESIDENT LACY: Well, things like quality of work, for example, that would be to do with the performance of work, wouldn't it?

PN299

MR McKEOWN: Sorry, your Honour?

PN300

SENIOR DEPUTY PRESIDENT LACY: Quality of work. That was one of the aspects that was assessed in the skills audit.

PN301

MR McKEOWN: Yes.

PN302

SENIOR DEPUTY PRESIDENT LACY: That would fall within the broad description of performance of work, wouldn't it?

PN303

MR McKEOWN: Yes, I don't dispute that, your Honour.

PN304

VICE PRESIDENT ROSS: Speed of work; that would fall within the description, performance of work?

PN305

MR McKEOWN: Yes, it could.

PN306

VICE PRESIDENT ROSS: Knowledge of products and materials; that would fall within capacity?

PN307

MR McKEOWN: Yes.

PN308

VICE PRESIDENT ROSS: Ability to teach others; that would fall within capacity?

PN309

MR McKEOWN: Yes, your Honour.

PN310

VICE PRESIDENT ROSS: Relationship building with others would fall within conduct or capacity?

PN311

MR McKEOWN: I am not sure about that, your Honour, it depends. It is a multi-layered sort of question because it depends on how deeply one goes into the relations and whether that is conduct or is it the personality, capacity.

PN312

VICE PRESIDENT ROSS: But how do you measure it then - or how would you measure it?

PN313

MR McKEOWN: Well, there is going to be a subjective element. I mean, it is put in the submissions by the appellant that we have to have this objective standard, but it goes back to my point about the very reason why Commissioner Hingley refers to Commissioner Hoffman's decision in Peck's case is the fact that you have got to approach these matters with a view that it is a fair go all round, that you have a practical application, so to speak, but there is going to be a subjective element in any process that is adopted by the very fact that, well, in your audit skills it is said that is conducted by the supervisors who actually supervise these people and they had these set criteria that they were to judge them on. They had the scale 1 to 6. In terms of the interview, that was conducted by non-supervising, if I can put it that way, managers. All of that has an element of subjectivity to it.

PN314

But in my submission it doesn't flow from all of that, as is borne out by the decisions in Crozier, and decisions in Dahlstrom. But it doesn't flow, because you don't have a perfect system, a perfect system of assessment. That somehow that turns around what, essentially, was a decision that was made because of operational requirements.

[3.05pm]

PN315

VICE PRESIDENT ROSS: Do I take it that, from what you have said, that you accept that the criteria that the interviewers were required to have regard to, it could be categorised - or for many of the criterion, could be categorised as conduct or performance issues. But you say they don't - that didn't require the Commissioner to give - to have regard to 170CG(3)(b) and (c), because those conduct or performance issues weren't the reason for the termination of the appellants. The reason for the appellants' termination was the operational requirements.

PN316

MR MCKEOWN: Yes.

PN317

VICE PRESIDENT ROSS: Is that the short point?

PN318

MR MCKEOWN: Yes, your Honour.

PN319

VICE PRESIDENT ROSS: How does that fit with the paragraph 19 of Sulocki that you took us to, where - about halfway, or the beginning - the end of the fourth line:

PN320

However, the Commissioner, consistent with principle, and correctly in our view, held that while operational requirements may provide a valid reason for staff reductions, they do not necessarily provide a valid reason for the retrenchment of particular employees. The Commission must be satisfied on the fact as they appear before it that there is a valid reason for the termination of the employment of the particular employees who are selected for redundancy or for retrenchment.

PN321

That seems to bring within it the notion of two reasons, as it were. There is the operational requirements, which is the reduction in the number of employees. There may be a valid reason for that, and indeed, in this case, that isn't contested. But the decision seems to be saying that there also has to be a valid reason associated with the selection of particular employees for retrenchment. Am I wrong about that?

PN322

MR MCKEOWN: No, I agree with how you have viewed that, your Honour. But what I say then is that when you actually look at the legislation, it says:

PN323

... whether there is a valid reason for the termination, related to the capacity or conduct ...

PN324

Well, the valid reason did not relate to the capacity or conduct. The valid reason - because it is quite distinct. Or to the operationals. Once you have the operational, in my submission, that is where it ends on that point. It doesn't end, the examination of the processes that are called into place. What - - -

PN325

VICE PRESIDENT ROSS: Does that mean - I am sorry, Mr McKeown. Does that mean that Sulocki is wrong? I am just trying to understand whether - - -

PN326

MR MCKEOWN: Yes.

PN327

VICE PRESIDENT ROSS: Yes. Okay.

PN328

MR MCKEOWN: On that point.

PN329

VICE PRESIDENT ROSS: Okay.

PN330

MR MCKEOWN: Because if it was - because what it is really introducing is a two stage valid for reason test.

PN331

VICE PRESIDENT ROSS: Yes.

PN332

MR MCKEOWN: And if it was a two stage test, it wouldn't be in the legislation "or". You wouldn't have "or" there.

PN333

COMMISSIONER SIMMONDS: What would you have?

PN334

MR MCKEOWN: Well, you would have "and". Because you only have "or" because you are distinguishing between one set from the other. You have "capacity or conduct". Or you would have "and/or".

PN335

VICE PRESIDENT ROSS: You could have someone terminated for both capacity and conduct reasons, couldn't you?

PN336

MR MCKEOWN: You could, your Honour.

PN337

VICE PRESIDENT ROSS: They can't do their job and they belt the foreman, type of problem.

PN338

MR MCKEOWN: Yes, your Honour. But the thing - - -

PN339

COMMISSIONER SIMMONDS: But you have got "capacity or conduct or operational requirements".

PN340

MR MCKEOWN: Sorry, Commissioner. I didn't - - -

PN341

COMMISSIONER SIMMONDS: You have got "capacity - - - "

PN342

MR MCKEOWN: Yes.

PN343

THE COMMISSIONER: - - - "or conduct or operational requirements".

PN344

MR MCKEOWN: Yes. And in my submission - - -

PN345

COMMISSIONER SIMMONDS: And they are all separate.

PN346

MR MCKEOWN: And in my submission they are three distinct - - -

PN347

COMMISSIONER SIMMONDS: They are all - the three are separate?

PN348

MR MCKEOWN: Yes. Because what you have got - I am not sure about the service one, Commissioner.

PN349

VICE PRESIDENT ROSS: I think we can take it that is - well, whether you can take anything for granted. But that seems to be dealing with the class undertaking establishment or service. I don't think there would a valid reason for the termination related to the service of the employee.

PN350

MR MCKEOWN: Yes.

PN351

VICE PRESIDENT ROSS: I think you can - - -

PN352

COMMISSIONER SIMMONDS: No, no. I wasn't - I think that is right.

PN353

MR MCKEOWN: But - - -

PN354

VICE PRESIDENT ROSS: All right. Thanks for that, Mr McKeown. That is another - - -

PN355

MR MCKEOWN: Yes.

PN356

VICE PRESIDENT ROSS: Something else to think about.

PN357

MR MCKEOWN: It was unintentional, your Honour.

PN358

VICE PRESIDENT ROSS: In an area that was otherwise relatively straightforward.

PN359

MR MCKEOWN: Well, I - your Honour, I didn't think it was straightforward when I was - made the submissions in Sulocki. But as I have said, I was ruled against on those submissions. And I don't raise them in any way of disrespect to what has gone on before, in terms of the principles that are - Sulocki's decision. But I do raise this. What seems - and he goes back to Selvachandran's decision. That decision was describing a valid reason in a very confined, if you like, section of the Act. It didn't have the subsections that we have existing now. And I can be corrected on this. But it didn't have subsections (a) to (e) set out like that.

PN360

VICE PRESIDENT ROSS: No. That is right.

PN361

MR MCKEOWN: It only had - and in my submission, what seems to be happening is that valid reason is being developed into something bigger than what it was. That we have specific legislation now which deals with - if you had a valid reason that is based on operational, that is the end of the issue there, as regard to the reason for the termination. And in my submission, when you look at it, it says where there is a valid reason for the termination. So the reason for the termination here is clearly operational. That is the reason for termination. No other reason. The fact that capacity is used in the selection process still is covered by the legislation in terms of - in terms of (e).

PN362

But they are not being selected because, as in Selvachandran's case, he refused to - that was conduct. It was pure and simple. And that, in my submission, is where the, if you like, and your Honour reverted to this, that these two approaches, from the authorities.

PN363

VICE PRESIDENT ROSS: You deal with ground 3, beginning in paragraph 21. And this is the issue that we referred to earlier, the implicit rejection by the Commissioner of the appellants' evidence as to their skill levels.

PN364

MR MCKEOWN: Yes.

PN365

VICE PRESIDENT ROSS: And reliance on the skills assessment orders.

PN366

MR MCKEOWN: Yes.

PN367

VICE PRESIDENT ROSS: You deal also with, as you already have, with the marked for information issue. In paragraph 25 dealing with ground 4, you say in the last sentence there:

PN368

By undertaking a skills audit, the respondent was complying with the requirements of subclause 33.6 of the agreement.

PN369

MR MCKEOWN: Yes, your Honour.

PN370

VICE PRESIDENT ROSS: Can you just expand on that point?

PN371

MR MCKEOWN: Well, I will just go back to the certified agreement.

PN372

VICE PRESIDENT ROSS: And you make the same point in paragraph 27 as well.

PN373

MR MCKEOWN: Yes. What is submitted there, your Honour, is that they did comply with it, because they are looking at the skill needs of the company. And it is submitted that - well, it was two pronged attack. You have the skills audit, and they are all done in close proximity. There wasn't a huge time frame between the skills audit. And again, it goes back to my submission earlier that, even though it is said upon the appellants' part that they are all taken by surprise and things of that nature, there was a process in place. That was an announcement, then there is a skills audit, then there is the interview.

PN374

But what is clear on the evidence is they didn't, and it was not challenged, to my reading of the transcript, is that it was that two pronged approach, the assessment made. And that all fell within that general heading of the skills, the company skills, as required by section 30 - by subclause 33.6. That is how it is submitted there, your Honour.

PN375

VICE PRESIDENT ROSS: Right. I see. You then deal with ground 5. Again, see, the point is raised that - the submission is made, rather, that it was open to the Commission to have regard to the skills assessments arising from the respondent's skills audit.

PN376

MR MCKEOWN: Yes.

PN377

VICE PRESIDENT ROSS: Similar points are made in relation to ground 6. And it is submitted that it was open to the Commission to make a finding that the selection process was fair. And had been objectively applied from a practical, common sense approach.

PN378

MR MCKEOWN: Yes.

PN379

VICE PRESIDENT ROSS: There is the rejection of the submissions made by the appellants that the skills assessment audits, and indeed, the selection process, was serious flawed. And similar points are made in relation to ground 7 regarding the interviews. And it is submitted that the appellants' proposition that the evidence was contrary to the Commissioner's conclusion that the selection criteria were objectively applied - well, that submission, it said - or such a conclusion, it said, can't properly be drawn. And that it is inappropriate to apply the technical definition of objective in the context of the application of a practical, common sense approach.

PN380

MR MCKEOWN: Yes, your Honour.

PN381

VICE PRESIDENT ROSS: Clause 33 is that issue we have discussed already. The evidence of the appellants before the Commissioner versus the results of the skills audit. Ground 8 deals with the WorkCover issue. And it is said that it was open for the Commissioner to reject the inference that the applicants in the proceedings below sought to draw from the material.

PN382

MR MCKEOWN: Your Honour, just on that, too, what is in my submission very important in this particular case is, this is not an appeal from a decision given ex tempore. This is a matter that was - ran for two days. I think it was 18 and 19 September. You had the unusual situation, in the sense that the appellants' counsel was in a position to present detailed closing submissions. In addition to his oral submissions he presented something in the order of 20 typed pages, and there - they commence at page 383 of the Appeal Book, and they - so we have a Commissioner who, firstly, had an opportunity to - because the decision subject of appeal was handed down 7 November.

PN383

He has had the opportunity to not only go through the detailed written submissions that were filed by the appellants' counsel, but also his oral closing submissions as transcribed. Clearly setting out in great detail what their case is, and why the inference should be drawn. All of that material was before Commissioner Hingley. And he comes to his decision, based on having all that material. And in my submission, he has carefully worded his decision to take into account - like, Commissioner Hingley points out the errors in terms of process. I note I am criticised in the reply submissions for using the self-assessment title.

PN384

But I was only doing that for consistency with the evidence that went before. Clearly, Commissioner Hingley found it wasn't a safe assessment. It was a flawed process. But, more importantly, Commissioner Hingley cites the flaws, and says, but look, overall he was satisfied that it was objective and reasonable. And in my submission it was clearly open to him to come to that finding, on the material that he had before him. And that is why I submit that he does refer to the decision in Peck, and also followed by Commissioner Simmonds' decision in Brooks' case, in terms of - and again, that is consistent with the fact that you can have the situation - well, Crozier's decision is a clear example where, not only did - the employer was found not to have the valid reason, but also the Full Bench came to a decision on the material before it there is a - - -

PN385

VICE PRESIDENT ROSS: I think we found that the employer did have a valid reason.

PN386

MR MCKEOWN: I am sorry, your Honour.

PN387

VICE PRESIDENT ROSS: In Crozier.

PN388

MR MCKEOWN: I mean to - meant to say - - -

PN389

VICE PRESIDENT ROSS: I know what you mean. The procedural fairness aspects.

PN390

MR MCKEOWN: Yes. But more importantly, I think, and you would correctly me easily, your Honour, but I think the employer based it on retrenchment, that they found it was capacity, in terms of he wasn't able to perform his sales function and do it. But the end result being it all came down to the fact that everything could and did fall under (e), if you like, other factors. The Commission took into account that he had to be aware. And in my submission also it can be said in this particular instance that they had to be aware something was afoot for a start.

PN391

Not only in terms of the mass meeting, which all but one of them attend. Also in the very fact of the standard questions put to them in the self-assessment interview, is "have you reconsidered?" Now, you are not being asked to reconsider a voluntary retrenchment, and you don't think that there is something in the wind, so to speak.

PN392

VICE PRESIDENT ROSS: I suppose the difficulty is that that wasn't actually put to them, was it? To the appellants, when they gave evidence.

PN393

MR MCKEOWN: Not that I am aware of, your Honour. I think that - but again, I would submit, your Honour, it comes back to that question, and that is why the House v The King principles are so important in this particular case. And I know, with the Full Bench of this considerable experience, I won't recite the House v The King, but it goes without saying, the issue is not whether you might come to a different view. The issue is whether or not it was reasonably open to Commissioner Hingley. And in my submission he, at first instance, had the benefit of hearing the oral evidence, had the benefit of documentary evidence.

PN394

And it was reasonably open for him to find - he recognises the flaws this respondent had in its process. He didn't - he is not blindsided by any of that. And said, you know, he says "Look, this is not self-assessment." I take all that. But he specifically refers to Peck's case. And Peck's case, in my submission, clearly indicates - is that, he can't necessarily adopt a strictly objective standard. That you have to look within a view of the common sense, practical and fair go all around. And in terms of those details written submissions that my learned friend submitted to Commissioner Hingley, it is not a case of the Commissioner not being aware of what the inference that they are trying to have drawn.

PN395

But what is important about this case is there is no documentary evidence to support such an inference. The best they could hope for was a passing comment that it might have been discussed at the meeting. For example, there was no documents that I am aware of that was discovered under summons. I understand there was a summons issued in relation - I will just check that, your Honour.

PN396

VICE PRESIDENT ROSS: I think the - there were no minutes kept of the management meeting.

PN397

MR MCKEOWN: Your Honour, there was nothing in terms of it. And I note in the reply submissions by my learned friend, refers to a - let me just find it. He refers to - yes. Paragraph 17 of his reply submission refers to a decision in White Industries v Flower and Hart. In that particular case it was said:

PN398

The applicants were only able to show that a meeting between Queen's Counsel and the defendant's solicitor had occurred, and had resulted in a letter settled by Queen's Counsel and turned - and in turn led to institutional proceedings alleging fraud. The Court rejected the explanation, declined to infer the representatives had considered the question.

PN399

But in relation to this particular matter, we don't have any documentary evidence. We only have this general assertion that the Commissioner indicated in his decision, where he refers to a nagging doubt, that that is all it was. And there was no basis, no proper basis on which the Commissioner could make the inference that was being sought. Which he clearly understood, it was clearly articulated by my learned friend, in terms of his written submissions and oral submissions.

PN400

[3.25pm]

PN401

VICE PRESIDENT ROSS: Do you say in considering whether an inference should be drawn the Briginshaw principle should apply?

PN402

MR McKEOWN: Yes, your Honour. Clearly this is a very serious matter that is being alleged against this company. It is saying that this company has acted in a discriminatory manner. It exposes the company to serious breaches of this Act. So it is quite a serious matter, it is not a trivial matter at all and, therefore, the Briginshaw principle does apply. That is all I can say on that.

PN403

SENIOR DEPUTY PRESIDENT LACY: Is it your submission that it was reasonably open to the Commissioner not to draw the inference that the WorkCover issue played a part or was taken into account for determining who should be made redundant?

PN404

MR McKEOWN: Yes, your Honour. And in particular it is - I think, and I could be - stand corrected on this, there was a reference earlier to Mr Murphy in terms of I thought it was said that Mr Murphy raised the issue of WorkCover, but in fact on my reading of the statement he didn't raise that WorkCover per se as - or use that terminology.

PN405

SENIOR DEPUTY PRESIDENT LACY: No, I might not have expressed myself clearly. Mr Murphy was the only one of the appellants who raised in his witness statement the fact that Mr McGilly had mentioned WorkCover at the meetings on 2 February.

PN406

MR McKEOWN: Yes, your Honour. I understood in terms of his statement he didn't actually refer to WorkCover, he refers to injuries, but I could be corrected on that.

PN407

VICE PRESIDENT ROSS: Ground 9 deals similarly with the WorkCover issue where you set out the evidence that would go against the drawing of any inference, essentially that Mr McGilly was not aware of which employees have had or currently have a WorkCover claim at the time of the retrenchments, that he said that the respondent still has employees who have had such claims. And there is the specific evidence of the managers involved in the selection process to the effect that they did not take into consideration WorkCover or injury status at the time of assessing the employees that they assessed.

PN408

The valid reason I think we have dealt with which is ground 10. Ground 11 refers to - as there is a degree of overlap in the grounds - to the earlier submissions made in paragraphs 43 to 45. Ground 10 goes to the Commissioner's finding that the selection criteria adopted were objectively applied and again the point is made that the test of objectivity must be viewed from a practical common sense approach and also from a fair go all round perspective.

PN409

It is suggested that it would have been open for the Commissioner to infer that had there been any serious cause for concern about the skills audit, or self-assessment interview process, then the union would have on behalf of its members raised objections.

PN410

MR McKEOWN: I should say on that point, your Honour, that it goes to in effect what could be a consideration that the Commissioner took into account under subparagraph (e) in forming his overall view.

PN411

VICE PRESIDENT ROSS: Is there any evidence that the union was aware that selection for redundancy would be on the basis of the skills audit and self-assessment interviews? I can certainly recall generalised evidence that the union was told of the increase in the number, for example, from 36 to 42. There was the earlier meeting. There was the correspondence to Mr Matson I think.

PN412

MR McKEOWN: Yes.

PN413

VICE PRESIDENT ROSS: But is there any evidence that they were told that the selection would be on the basis of the skills audit and the interview?

PN414

MR McKEOWN: Your Honour, I think the closest thing would probably be of Mr McGilly's evidence of ongoing consultations, that I can't say from my reading of the transcript - excuse me, your Honour. I think there is a reference from the transcript in my appeal submissions to his ongoing consultations with the union,. but nothing specific is what your Honour has raised.

PN415

VICE PRESIDENT ROSS: Ground 13 covers material previously put. Ground 14 deals with the 170CG(3)(c) point which we have already canvassed with you in questions.

PN416

MR McKEOWN: Yes, your Honour.

PN417

VICE PRESIDENT ROSS: I don't have any questions arising from 15 or 16. In relation to 17, paragraph 55, the second sentence there where you say:

PN418

This assertion is not supported by any evidence placed before the Commission.

PN419

I take it in that context you are discounting Mr Murphy's evidence? You say there is no - other than the evidence of Mr Murphy which for reasons you have already covered ought not be accepted.

PN420

MR McKEOWN: Yes.

PN421

VICE PRESIDENT ROSS: In relation to ground 18 you say:

PN422

That the Commissioner correctly took into account the respondent's efforts to instruct its department managers and supervisors to conduct the self-assessment interview in a structured format with set criteria and that it was open to the Commissioner to find that those interviews were conducted in an objective and fair manner.

PN423

MR McKEOWN: And on that point, your Honour, that is noted by Commissioner Hingley in terms where he refers to Peck's decision and refers to some of the criteria used there. And he has used - at paragraph 33 of his decision, appeal book, page 10 he refers to Hoffman C.

PN424

In the above matter found that the selection criteria were objective and reasonable.

PN425

And then refers to by way of dot points:

PN426

The selection criteria is based upon skill responsibility and conduct.

PN427

Which we say applies here. But the skills audit, combined with the interview, covers those aspects. Then refers to the supervisors were given a presentation, including instructions and procedures by the management as to how to carry out the assessments. Again, we have in the matter before you evidence in terms of directions given as to how the interviews were to be conducted and who was to conduct the interview. And then again the next dot point referring to without bias. Well, that has been covered in the evidence in terms of - before Commissioner Hingley in terms of not using direct supervising managers.

PN428

And then it refers to:

PN429

The selection process was not rushed and was carried out consistently and in the absence of bias.

PN430

Well, both the skills audit and the self-assessment interview were on set criteria and on assessments to be made and that was, in my submission, indeed an attempt by the company to be objective and use - it would be a different issue if, for example, the self-assessment was just comments made by a supervisor without any structured questions. That then in my view would be more of a case to say, well, this is just people selecting people because they didn't like them, or for whatever reason.

PN431

At least there is tangible evidence before the Commissioner that attempts were made by this company to have a process, follow the process and then make an assessment.

PN432

VICE PRESIDENT ROSS: And the same issues arise in relation to ground 19. In relation to ground 20 at paragraph 59 you say:

PN433

That the Commissioner was not required to make any findings on whether there was a breach of the employment contract.

PN434

MR McKEOWN: Yes.

PN435

VICE PRESIDENT ROSS: If the employer had breached the certified agreement in relation to the selection process would that have been a matter that was relevant under 170CG(3)(e)?

PN436

MR McKEOWN: Yes.

PN437

VICE PRESIDENT ROSS: Why doesn't the same consideration apply if the employer in the selection process breached the contract of employment? Why is the contract of employment in a different position?

PN438

MR McKEOWN: I was looking at this again last night, your Honour, in terms of - and I could recognise an argument developed on that point. There was a decision - I think it was in Chubb Security - where the Court examined the aspect. The danger with it is this, your Honour, that I see with - when you start incorporating common law and contractual conditions, when we are looking at a decision made under a statutory Act. We are not looking at the contract - I agree that it can be considered upon subparagraph (e) but the decision for Commissioner Hingley was based within the statutory framework of 170CG(3).

PN439

And I think my learned friend submitted that once you have a breach of implied term that is it, it is an unfair dismissal. Well, clearly I would submit that that is not the case. You can have - in this case the Commissioner recognised himself that taking an overall look at it it wasn't that major in the overall scheme of things, that, yes, he was treated shabbily and it could have been done better, but that didn't detract from the fact that overall it was not harsh, unjust or unreasonable. And that is consistent with the fact that you can have a breach of implied term; it doesn't necessarily follow.

PN440

It is a bit like the argument or distinction between a contract of employment that can be terminated lawfully by notice. That doesn't mean it is not harsh, unjust or unreasonable. There are quite distinct categories and there is a real danger when one attempts to blend the two together. I don't disagree with the fact, your Honour, that it can be an aspect taken into account. Commissioner Hingley took it into account and he recognised it and he dealt with it. He said that overall it wouldn't have changed in terms of the decision made. I will just find that. Sorry, your Honour, I might be able to come back to that point.

PN441

VICE PRESIDENT ROSS: Appeal ground 23, this relates to the effect of section 96 of the Accident Compensation Act. At paragraph 62 the first sentence is that:

PN442

It is a proposition that the Commissioner did not make any finding as to the effect of section 96 due to his finding that the applicants' termination were not in breach of the Act.

PN443

As I understand the argument that is put by the appellants, it is that the operation of section 96 goes to whether or not the terminations were harsh, at least in relation to the four or five, I have forgotten exactly, employees who would have been entitled to ongoing weekly payments, because it was harsh because it went to the inadequacy of the redundancy pay. That is as I understand the proposition. So I am not sure I understand what submission you are making in that first sentence.

PN444

MR McKEOWN: In the third sentence.

PN445

VICE PRESIDENT ROSS: No, the first one, I am sorry.

PN446

MR McKEOWN: Sorry. Well, essentially I am saying, your Honour, that he didn't even - he didn't have to go and look at the effect of section 96. He might have had to have a look at it if he found that the terminations were harsh, unjust.

PN447

VICE PRESIDENT ROSS: Yes, but what I am putting to you is that as I understand the appellants' argument the 96 point doesn't go to remedy under 170CH. The 96 point goes to the CG(3) finding, whether the terminations were harsh, unjust or unreasonable and it is put that - and correct me if I have misconstrued your argument, Mr Armstrong, but it is put that at least in relation to I think five of the appellants, the Commissioner should have found that the terminations were harsh or unjust or unreasonable because the operation of section 96 meant that the redundancy pay was manifestly inadequate.

PN448

And the argument goes that inadequate redundancy pay can ground a finding and there is authority for that proposition inside it, that the termination was harsh. That is as I understand the argument. So it is the first part of the process, CG(3), not so much the remedy.

PN449

MR McKEOWN: Well, I must admit I did misunderstand that argument. In terms of how that argument is - I would submit, your Honour, how can it be taken that redundancy payments made in accordance with the certified agreement which far exceed the TCR standard could be considered in any way inadequate? What is really happening is because of the operation of an independent Act which has got nothing to do with the redundancy payments - yes, it has an effect but the company has complied with - it has done everything it could to comply with the certified agreement.

PN450

It has paid large - or in the case of the appellants who had lengthy service, three weeks for each year of service plus a notice period well in excess of the TCR standard. So how can it be then reversed as an argument saying that because of the operation of an independent Act that suspends their payments, that is harsh - in my submission that argument has got no substance to it because the company has paid out the redundancy. The fact that there is another operation of another Act doesn't make it harsh, unjust.

PN451

SENIOR DEPUTY PRESIDENT LACY: Are you saying section 96 existed at the time the agreement was made; therefore, the redundancy payments ought to have had in contemplation the likely consequence of those amounts on the operation of the Act?

PN452

MR McKEOWN: Yes, your Honour. The Act in question is the Accident Compensation Act 1985.

PN453

SENIOR DEPUTY PRESIDENT LACY: Yes.

PN454

MR McKEOWN: I have only extracted this morning a copy of that particular section. The extract doesn't provide me as to the insertion date but in my submission it is very strange to be arguing that somehow because of the operation of an independent Act outside the contract of employment, that turns payments made by the company comply with their certified agreement to be harsh, unjust or unreasonable. To me there is no substance in that argument.

PN455

VICE PRESIDENT ROSS: Those were the only matters we wished to raise with you, Mr McKeown. Is there anything you wish to add?

PN456

MR McKEOWN: Only extremely briefly, your Honour. Essentially from the respondent's submissions the matter you have before you I would again just emphasise the fact that Commissioner Hingley hasn't endorsed fully the actions of the company. His decision reflects where he recognises that there were faults in the system, but more importantly - and we don't have the situation of an ex tempore decision; this is a considered decision. It goes for 92 paragraphs. The Commissioner deals specifically with the issues he has to deal with in terms of the legislation under 170CG(3), that he had the benefit of detailed submissions from the appellants' counsel.

PN457

He had the benefit of the transcript and the exhibits and that in terms of the House v King principles he has not erred in the exercise of his discretion. He recognises that, if you like, in total - on the total factual matters before him that the terminations were not harsh, unjust or unreasonable and that is consistent with the decisions in Crozier and Dahlstrom that there can be problems in terms of the process, but overall he finds there is a valid reason based on the operational requirements. He finds that, yes, he recognises - he refers to as a nagging doubt but he addresses that.

PN458

He addresses it and he finds that there could be no inference drawn on the evidence that is before him and it is the respondent's submission, your Honour, that when one takes into account the benefit Commissioner Hingley had - but in terms of as per the written submissions, your Honours and Commissioner, the matters were open for Commission Hingley to find, which he did find, that the inference couldn't be drawn that there was a valid reason for termination. Yes, there were problems in terms of the process but overall looking at what Dahlstrom refers to as the totality of the factual circumstances, he found that the terminations were not harsh, unjust or unreasonable.

PN459

Your Honours and Commissioner, it is submitted as per my written submissions that if you were to find against - if you were to grant leave - briefly in terms of the granting of leave it is argued - it is submitted that there were no seriously arguable errors in terms of House v King. In terms of the second point about public interest, it is submitted that the effect of this decision would not greatly weaken at all the standards that are in place in terms of the statutory protections under the Act. These decisions are very much decided on their own factual basis. It is submitted by my learned friend that Sulocki's case is very close on all fours with this; clearly it is not.

PN460

There are a large range of factual differences between this matter and Sulocki's case. Sulocki's case, as his Honour correctly identified earlier, was really involved in an aspect of an extraneous factor coming into. There was an asbestos issue involved in that matter which was drawn out in the particular running of the case and it is clearly, as with a large number of these cases, they are confined to a large extent to their factual basis. Unless there are any further questions they are the submissions on behalf of the respondent.

PN461

VICE PRESIDENT ROSS: Thank you, Mr McKeown. Mr Armstrong, we have had the opportunity to read your submission in reply and there is nothing we want to raise with you in relation to that. Is there anything in brief you wish to say in response to the oral submissions made by Mr McKeown?

[3.49pm]

PN462

MR ARMSTRONG: Yes, your Honour, and there is a number of matters I would just like to deal with very quickly. Taking the very last point first, the appellants do not contend that any error in a redundancy selection process, no matter how slight, is going to affect and invalidate the whole process. That has never been our contention. Our contention is that the process undertaken in this case complied with, in substance, virtually none of the guidelines established by decisions of this Commission and its defects were so substantial and extensive that this process was too flawed to stand.

PN463

Now, dealing firstly with the operation of House v King, your Honour, Vice President Ross raised with my friend on two occasions the fact that the employees had not been challenged in cross-examination as to their own evidence regarding their skills and in answer on both occasions my friend said, well, that is true but House v King deferred to the trial judge's advantages. That is not the effect of House v King. To adopt such an approach would be an abdication of the whole appellate jurisdiction which the Commission as currently constituted enjoys. If it is apparent to - - -

PN464

VICE PRESIDENT ROSS: Well, enjoys might not be the right word.

PN465

MR ARMSTRONG: Is burdened with, perhaps.

PN466

VICE PRESIDENT ROSS: Exercises.

PN467

MR ARMSTRONG: Exercises. If it is apparent, as in my submission it is, that the trial Commissioner was presented with evidence on the one hand from the appellants and nothing reliable on the other hand from the respondent, which in my submission is the case, then the Commissioner ought to have held in favour of the appellants and concluded that their skills were as the appellants have submitted. In our submission it was an error of principle for the learned Commissioner not to have done so and that is exactly the sort of error which House v King is concerned to allow to be reviewed.

PN468

In relation to the advantages, so called, enjoyed by the Commissioner at first instance in this proceeding, in my respectful submission, they are not so weighty in any respect that this Full Bench would or should be concerned by the sorts of restraining considerations which House v King refers to. The Commissioner did not make findings of credibility, in my submission. There is the question about the way that WorkCover considerations were taken into account at the management group meeting. There was evidence that it was discussed. That called for an explanation and no explanation was forthcoming. That doesn't require the Full Bench to make a finding as to credibility.

PN469

As I have outlined in the submissions in reply, all that requires the Full Bench to decide is that the burden had passed to the respondent to provide an explanation. It hadn't provided an explanation and therefore it had simply failed to establish on an evidentiary basis the defence that it needed to establish. That is not a finding of credibility, as his Honour, Finkelstein J makes clear in the CPSU v Telstra decision, which I have cited and quoted in the submissions in reply. It is simply a finding that the company did not discharge its burden of proof.

PN470

In relation to the question of whether the interviews were limited to skills, I have referred in paragraph 38 of the written submissions in-chief to the fact that the interviewers themselves gave evidence that they did not regard their questions as being limited to skills or to skills criteria. I have provided transcript references in paragraph 38 of my submissions in-chief.

PN471

SENIOR DEPUTY PRESIDENT LACY: But no attempt was made to define what skills were, was there, in cross-examining the witnesses? In other words, when they were asked if the questions were related only to skills, it is reasonable to infer in the context that they were referring simply to technical skills.

PN472

MR ARMSTRONG: There was cross-examination of at least one witness and the name presently escapes me and possibly another directed at the questions about how do you like to be managed and what do you think of Mr McGilly's speech. For the most part I accept the point that you make, Senior Deputy President, that the nature of what a skills test is was not gone into when the managers were cross-examined. There is likewise no evidence that it was gone into when the managers were conducting the interviews. It was as broad in that sense as well. The question of union membership I do not have instructions about. It was not an issue before the Commissioner and it is, in my submission, a non-issue now.

PN473

The union's views, favourable or otherwise, about this selection process: there was some discussion with Mr McGilly at transcript paragraph numbers 1032 and 1263 about his correspondence with the union but he does not detail exactly what the content of those discussions were and we can't take that matter any higher and, in any event, we submit that the appropriateness of the process that was undertaken is entirely a matter for the Commission to determine on its own views on the basis of the evidence led at the hearing and whatever views the union might have had ultimately, of course, give way to the Commission's assessment of the process according the guidelines established by previous decisions.

PN474

Lastly in relation to this question about the proper construction of 170CG(3)(a), in my submission, the proper approach to it is that it may well be the case that there is an operational reason for redundancies but, as I submitted in my submissions in-chief, the focus of the division is the termination of this particular employment and "valid reason" and "the termination" in the context of 170CG(3)(a) mean valid reason for this termination. The fact that there was an overriding valid reason for redundancies generally does not explain the selection of the particular employee and it is that selection which is required to be explained.

PN475

The valid reason is the reason or the grounds on which this employee was differentiated from other employees in the potential group of candidates for redundancy. It occurred to me, and I only make this submission by way of example, but if the interpretation for which my friend contends is correct, then if, for instance, the reason for termination was, to take an example, that the employees to be made redundant were all women, then the fact that there was an overriding need for redundancies would produce the result that the Commission would be forced to conclude that, although the company had engaged in a very deliberate process of discriminating against women, nonetheless, there was a valid reason for their termination.

PN476

The only context in an application under section 170CE, the only context in which that sort of discrimination would then come into play is as part of subparagraph (e), any other relevant matter. Now, Selvachandran is and has always been applied as requiring that a reason which is discriminatory or prejudiced or biased or spiteful is not valid and there is no reason to limit Selvachandran by reason of the fact that it wasn't particularly dealing with a redundancy case.

PN477

SENIOR DEPUTY PRESIDENT LACY: What would you say if in this situation the individual employees were informed about the skills audit and given the results of the skills audit and given an opportunity to comment on those matters prior to the selection for retrenchment?

PN478

MR ARMSTRONG: Can I answer that question in two stages. Firstly, if there was other evidence that, despite that, WorkCover considerations had been taken into account, then in my submission the whole process is infected and bad.

PN479

SENIOR DEPUTY PRESIDENT LACY: Yes. Leave aside the WorkCover.

PN480

MR ARMSTRONG: Putting that to one side, if these employees had been given an opportunity to respond to the skills audits and it was a genuine opportunity in the sense using Mastrioanni that they had a chance, a reasonable chance of causing the audit score to be changed for instance Mr Smith saying hang on a second, Trevor, Mr Wellasden, how can you say that I have got poor skills when I have been acting as the supervisor in Wodonga 2 for the last four months? I can't remember how long it was but he had been acting as supervisor.

PN481

If Mr Wellasden as a result had said I didn't know that and said okay, we will give you high skills score because we accept it is not company policy to appoint poorly skilled employees to supervisor positions, then that part of the process would be difficult to complain about. The employees had had a reasonable opportunity to respond to the skills audits and influence the company's assessment of their skills.

PN482

SENIOR DEPUTY PRESIDENT LACY: You would say in those circumstances that there was a valid reason, leaving aside any other collateral considerations?

PN483

MR ARMSTRONG: Assuming that a similarly open and reasonable process was conducted for the interviews and, as a result of a fair skills assessment and fair interviews, the company had reached a supportable view that these employees in fact had qualities or characteristics or lacked them that justified their selection, well, that is a fair selection process and it would be difficult to challenge that sort of thing. But that is exactly what didn't happen here and that is what we complain about. The employees were kept in the dark until the day when they were told you have been made redundant.

PN484

They never had an opportunity to influence the skills audits. They didn't know what the interviews were for. They had been told that the company would be seeking voluntary redundancies and they were not told when the company made the decision to move to involuntary redundancies. They were not given an opportunity to prepare for the interviews and they were not told what scores they had got from either the audits or the interviews. It was a completely covert and I emphasise unreasonably and unnecessarily covert process that this company followed.

PN485

There was no reason for not showing the employees the audits or giving them some sort of reasonable informed opportunity to have a genuine input into the scores that the company came up with to be ranked in the final selection process. There is no justification for any of the little hidden stuff that went on here. In fact, in the draft uncontested facts document the Commission has reproduced the original memo to the managers, which emphasises this stuff has to be kept confidential, four exclamation marks, and it was.

PN486

The employees never had an opportunity to - they were completely disenfranchised in this process. I think that is an appropriate word and it suits the situation. They were just locked out of it in any reasonable sense and all of a sudden at the end they get told they have been made redundant, if that. Mr Smith and Mr Murphy just find out they have been paid some money and then get a letter in the post.

PN487

My friend complains about - or drew the Commission's attention to the fact that the appellants were unable to produce documentary evidence confirming that WorkCover had been a consideration. It would have been absolutely wonderful if we could have produced some sort of minutes, which apparently don't exist, of the management group meetings, saying these are the 13 or the nine or whatever number on WorkCover and we will get them but, fairly unsurprisingly, it seems that no such document exists.

PN488

The whole point about the principles for the drawing of inferences is to fill an evidentiary gap and to fill it recognising the fact that the party who needs to prove that point might not be in a position to adduce all of the evidence to actually identify the smoking gun, as it were. That is why we have the rules about inferences and as part of that the principle in Jones v Dunkel that if an explanation ought to have been given or ought reasonably to have been expected and it wasn't forthcoming, then the tribunal is entitled to draw the conclusion that the explanation would not have been of assistance to the party responding to the point. As I emphasise, we didn't have documentary evidence but we had the other circumstantial evidence which the Bench has questioned me about in my earlier submissions. Those are my submissions in reply, which I think leads us to the uncontested - - -

PN489

VICE PRESIDENT ROSS: It does. Are there any amendments or changes you wish to make to it?

PN490

MR ARMSTRONG: A couple of really minor matters for starters - - -

PN491

VICE PRESIDENT ROSS: You don't need to pick up typographical errors. I can make that easier for you.

PN492

MR ARMSTRONG: And names was the other thing. Some of the names are spelt wrongly.

PN493

VICE PRESIDENT ROSS: No, that is fine. If you would be good enough to provide those to my associate when we adjourn.

PN494

MR ARMSTRONG: Yes, your Honour. In relation to paragraph 8, point 1, the skills audits, it was not contested that there was the direction given to keep them confidential with the four exclamation marks. That is made clear in the document which is the first annexure, as it were, which the Commission has attached to their statements. So we would seek to have that reference put in. Also, it was not - - -

PN495

MR McKEOWN: Sorry, I didn't quite follow what has been - - -

PN496

MR ARMSTRONG: It is also not - well, it was not disputed in the evidence that Mr McGilly made no effort to remove the potential for bias in the preparation of the skills audits.

PN497

VICE PRESIDENT ROSS: I don't really want this exercise to become an all-embracing statement of every fact or issue that was not contested. If you could confine yourself to is there anything in here that you say is incorrect. I readily appreciate that there is a range of other issues that might be regarded as uncontested or which either of you would wish to include but I want to keep it within some sort of reasonable bounds.

PN498

MR ARMSTRONG: On that basis, your Honour, the only thing that I wasn't able to confirm over the luncheon adjournment was paragraph 5, the last arrow. I know that Mr McGilly referred to the enterprise agreement in the correspondence with the union which was reproduced as an exhibit to his witness statement. I haven't been able to find evidence that he had referred to the enterprise agreement during that canteen meeting. My friend might be able to correct me on that but in terms of errors, there are no others.

PN499

VICE PRESIDENT ROSS: Yes, Mr McKeown.

PN500

MR McKEOWN: Your Honour, in light of what you have indicated before - - -

PN501

VICE PRESIDENT ROSS: Unless the two of you can agree on some other uncontested facts, that might be the easiest way of - what I wanted to avoid is - - -

PN502

MR McKEOWN: I think it is worth noting this and I will let my learned friend if he wants to - in terms of page 3 of the document, before paragraph 6: "Describe work-related injuries - major concern at Wodonga complex", there is a further qualification to the answer and that is at paragraph number 1079 and paragraph number 1080. There is a qualification to that point. In terms of page 7 of the document, where it is referred to, your Honour, the last sentence prior to "Mr Darrell John Murphy", it refers to "Mr Perrett's skills was carried out by Mr Gasperov." Again, your Honour, that is qualified by "It was done in conjunction with two supervisors", and reference to that is at paragraph number 1811, 1812 and 1937 and 1939. Otherwise, your Honour, in light of what you have indicated, we don't take issue.

PN503

VICE PRESIDENT ROSS: Are there any other matters that each of you can agree are uncontested?

PN504

MR McKEOWN: Well, uncontested; I think the document is very comprehensive, actually, on those issues, your Honour. I would say, and it is in our written submissions and again I would put forward that if the Full Bench is of a view to grant leave, that the issue of remedy should be subject to referral back. Thank you, your Honour.

PN505

VICE PRESIDENT ROSS: Thank you, Mr McKeown.

PN506

MR ARMSTRONG: Your Honour, in terms of uncontested material, I am not sure that we would be able to reach agreement in the course of this afternoon.

PN507

VICE PRESIDENT ROSS: Would it assist if - rather than doing it on the run, if there are other matters, other factual issues which are not contested, you can discuss that amongst yourselves. If you come up with any, if you forward it to my associate by the end of the week, that might be the easiest way. If you don't, then I am not inviting you to forward contested facts because we have spent the day hearing about those but if something else occurs to you that you may be able to agree on, then feel free to take advantage of that opportunity.

PN508

MR McKEOWN: I understood this document was going to be, really, agreed. That is how I understood it.

PN509

VICE PRESIDENT ROSS: That is right. That was - - -

PN510

MR McKEOWN: I am happy with that position.

PN511

VICE PRESIDENT ROSS: - - - the intention, that with the amended references that you have provided to put whatever statement appears in the document in a broader context. Then I have taken it that the document is agreed as setting out the uncontested facts. That doesn't suggest that there are other facts which might be uncontested or, indeed, that there are other facts but this is as far as we have been able to take it.

PN512

MR McKEOWN: Just so I am clear on that, that is why I was - maybe I have misunderstood what my learned friend was on about. I took it that we had agreed these are the agreed facts and if there is any supplementary ones that might be agreed, then we notify you within a week.

PN513

VICE PRESIDENT ROSS: That is right.

PN514

MR McKEOWN: Thank your Honour.

PN515

MR ARMSTRONG: And the second point I was going to make, Vice President, was - - -

PN516

VICE PRESIDENT ROSS: I am sorry. You can do that by e-mail after - only one of you do it but - - -

PN517

MR McKEOWN: Yes. I won't be here, I think, your Honour.

PN518

MR ARMSTRONG: I, unfortunately, will be, Vice President. In relation to the two corrective points that my learned friend just made, I am not in a position to accept them this afternoon and so I would ask that they not be treated as corrections to this statement of agreed facts at this stage.

PN519

MR McKEOWN: Well, if it makes it easier, your Honour, I am happy if it is noted my comments about those and I will leave it in the Commission's hand in terms of that.

PN520

VICE PRESIDENT ROSS: Yes.

PN521

MR ARMSTRONG: Also, just a very minor point for the Bench's assistance, I noticed in checking some transcript before that there is a page out of place in the course of the transcript which doesn't readily identify itself, which was page 138 of the transcript volume, which is volume 1 of the appeal book. Actually, it is reproduced for some curious reason after page 171. It is part of the further cross-examination of Mr McGilly and for some reason the photocopier has just jumped. At least in my copy it has.

PN522

VICE PRESIDENT ROSS: I think it might only be in your copy.

PN523

MR ARMSTRONG: In that case I don't need to deal with that. Unless there are any other matters arising.

PN524

VICE PRESIDENT ROSS: Nothing further?

PN525

SENIOR DEPUTY PRESIDENT LACY: Could I just thank counsel for their comprehensive and helpful written submissions and oral submissions.

PN526

VICE PRESIDENT ROSS: I add my thanks to that also.

PN527

MR McKEOWN: Thank your Honours.

PN528

MR ARMSTRONG: Thank you.

PN529

VICE PRESIDENT ROSS: We will adjourn and reserve our decision. Thank you.

ADJOURNED INDEFINITELY [4.15pm]

INDEX

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #A1 APPELLANTS' SUBMISSIONS PN220
EXHIBIT #A2 SUBMISSIONS IN REPLY PN220
EXHIBIT #R1 RESPONDENT'S SUBMISSIONS PN220