Construction, Forestry, Mining and Energy Union v Endeavour Coal Pty Ltd [2015] HCATrans 331 (11 December 2015)

Last Updated: 16 December 2015

[2015] HCATrans 331

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S129 of 2015

B e t w e e n -

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

Applicant

and

ENDEAVOUR COAL PTY LTD (ABN 380 99 830 476)

Respondent

Application for special leave to appeal

BELL J
GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 11 DECEMBER 2015, AT 11.47 AM

Copyright in the High Court of Australia

MR H. BORENSTEIN, QC: If the Court pleases, I appear with MR C.W. DOWLING for the applicant. (instructed by Slater & Gordon Lawyers)

MR J.N. WEST, QC: May it please the Court, I appear with my learned friend, MR S.E.J. PRINCE, for the respondent. (instructed by Ashurst Australia)

BELL J: Yes, Mr Borenstein.

MR BORENSTEIN: Thank you, your Honour. Your Honour, this case, as your Honours will have seen from the documents, concerns a complaint about a decision of the Full Court of the Federal Court dealing with an allegation that the employer had engaged in what is described in the Fair Work Act as “adverse action” against Mr McDermott because he had availed himself of an entitlement to take sick leave and carer’s leave which arose under a statutory industrial instrument under the federal legislation.

The nub of the finding against the present applicant was that the decision-maker who imposed the adverse action gave evidence, which was accepted, that he had imposed the detriment on Mr McDermott because the taking of the leave created uncertainty about his attendances at work, and it was the uncertain attendances at work that led him to make the decision he said.

GAGELER J: Well, there was a bit more to it than that, was there not? The uncertainty of the attendance at work had consequences.

MR BORENSTEIN: Yes, indeed, indeed. I was not intending to shy away from that, but the thrust - - -

BELL J: The circumstance that it was those consequences that was operating on the mind of the decision-maker was illustrated by the circumstance that there was not the same concern when the applicant was performing the weekday shift.

MR BORENSTEIN: Certainly. The important thing that we wish to stress about this is that the legislation – this part of the legislation has as its object the protection of what I described as workplace rights. The workplace rights include entitlements under industrial instruments. The question which we say arises, and your Honours will have seen from the papers, is whether it is permissible for an employer who is party to an instrument of this kind, generally by agreement, where there is a commitment to allow an employee to take leave without condition – there is no condition saying you can only take leave if it does not upset the operations, or you can only take leave if you are working during the week instead of on the weekends and so on; there is no such condition. It is an absolute right under the instrument to take a certain amount of leave.

Now, in circumstances where that is the entitlement that arises, and the Act commits itself to protect the exercise of those entitlements, the unique question which this case throws up, distinctly from the Barclay decision and the BHP Coal decision, is whether an employer can say, “Well, I don’t care why you are taking the leave. It may be protected, it may not be protected. All I am interested in is the effect of the leave”. We say that that is an untenable distinction to draw because it is of the essence of taking leave that you will be absent.

GAGELER J: How is it different from the two cases you have already referred to?

MR BORENSTEIN: Your Honour, the two cases we referred to were cases which might be described as cases about characterisation of conduct. So, in Barclay, Mr Barclay was a union representative who had disseminated an email complaining or perhaps alleging that there were corrupt practices within the institution where he worked and the decision-maker took action against him as a disciplinary measure on the basis that it was improper for him to have failed to raise any concerns that he was aware of about corrupt practices with the institution instead of disseminating this material far and wide. So the characterisation was that his conduct was misconduct in that sense.

In the BHP Coal Case, as your Honour will recall, that was a case where one of the employees was participating in a union protest. In the course of participating in the protest he waved a sign which read “Scab” and some other words I cannot remember at the moment, and the decision-maker in that case who sacked him said that he was not concerned about the industrial protest. What he was concerned about was that the conduct which this man engaged in was offensive and was inconsistent with the company policy about conduct and relations between employees, and so it was characterised as that sort of a situation.

It was possible to characterise that. It was possible in both of those cases for the two persons involved to carry on with protected activity if they did them without giving offence or without breaching the codes of conduct and so on. The question we ask rhetorically here is how is it possible for Mr McDermott to take his sick leave and his carer’s leave without being absent? That is the difference. Here what the employer is focusing on is an intrinsic or an inherent aspect of the workplace right itself. The meaning of “leave” means to be absent.

GAGELER J: I think I am understanding that.

MR BORENSTEIN: It is a difference between being able to characterise the conduct in a way that distinguishes it from the protected activity and going to the conduct and not seeking to re-characterise the conduct but to say the effect of that conduct is detrimental to me and for that reason I am going to do whatever I am going to do to you. Now, in a sense, you could transpose it into an example of someone who says to a female applicant for employment “I am not going to employ you on weekends because you may get pregnant and if you get pregnant and you are absent that is going to cause us problems with our roster”.

The answer for an employer that has committed at the outset to allow such leave without imposing conditions is to organise its operation in a way where these things can be covered in the same way, presumably, as they can be covered during the week, but that is the distinction between Barclay and BHP Coal and the circumstances in the present case. If an employer can come along and say, “I am not really interested in the fact that this is protected. I am only interested in what it does to me”, then where do you stop?

All the workplace rights – there is a workplace right to participate in proceedings in the Commission. An employer may say, well, you are not here and I am going to visit a detriment on you because you are not here and the employee says, “But I am in the Commission” and the employer says, “I don’t care about that”. Now, that cannot be right. If you allow that sort of circumstance, then there is really nothing left.

But the point we wish to raise here is that because of the discussion in Barclay and because of the discussion in BHP Coal where there was this debate about the characterisation of conduct and the extent to which an employer can deal with conduct, which might at one level be seen to be part of protected activity in a different way, means that it is necessary for the Court to take on this situation and clarify the position and perhaps clarify where the line is drawn because your Honours will see from the Full Court’s judgment that two of their Honours felt compelled by the decisions in Barclay and in BHP Coal to say, well, we go no further than what the decision-maker said.

GAGELER J: Well, from a finding about what the decision-maker acted upon.

MR BORENSTEIN: That is right.

GAGELER J: What motivated the decision-maker.

MR BORENSTEIN: That is right, and your Honour will recall that in Barclay, particularly Justices Gummow and Hayne, made a big point about the fact that one should not get bogged down in talking about the subjective reason or the objective reasons but one looks at why the action was taken by the decision-maker. That involves, and they said this in Barclay, that involves a consideration of all the facts, all the evidence before the court, and one of the vices which appears to be evolving, and one can see an example of it in the Full Court here, is that where attention is drawn to the fact that the asserted reason of the decision-maker is in fact part and parcel of the activity and cannot be characterised out of it – not in any logical way – that irrespective of that, as long as subjectively the decision-maker believes it, that is enough. We say that as a matter of principle that is really not what Barclay stood for and not really what Barclay decided.

So there are two aspects where this case is to be distinguished from Barclay and BHP Coal. The first is the one I mentioned about characterisation and the second is the way in which the Court should approach evidence of a decision-maker and whether in truth what Barclay intended was that the surrounding circumstances were not to be taken into account in determining why the action was taken by the decision-maker but simply to be taken into account to test the veracity of the evidence that the decision-maker gives in the trial.

Now, our submission would be that that is not something that would have trouble the High Court to write judgments about because it is common sense and every trial judge knows you look at all the circumstances when you are determining the veracity of what somebody is saying.

BELL J: I am sorry, I am just having difficulty understanding this aspect of your argument. What are you saying is the error in the approach taken by the Full Court to the evidence of what it was that the decision-maker took into account?

MR BORENSTEIN: In a nutshell, it is that they focused entirely on the subjective evidence of the decision-maker without taking into account the other circumstances.

BELL J: What other circumstances do you point to?

MR BORENSTEIN: Well, the fact that the absences were the product – the necessary consequence of the exercise of the workplace right and to determine the question of why the adverse action was taken by the decision-maker they needed to factor that into the decision-making process of the court.

GAGELER J: In what way, so if you just mix it around a bit, or how do you factor it in?

MR BORENSTEIN: Well, you factor it in by having regard to what the decision-maker said, assessing whether it makes sense in the world in which the decision was made.

GAGELER J: And you say it did not make sense here?

MR BORENSTEIN: It does not as a matter of logic make sense to say, “I am imposing a detriment on you because of the effects of your leave taking but I am not doing it because you took leave”.

GAGELER J: Yes. Of course, it was not put in those terms. You characterise what occurred as a detriment, and it was in the terms of the Act, but it was not any part of the decision-making process on the findings that have been made to make this employee worse off as a result of the employee taking leave. It was that if the employee was to take that leave, or have a practice of taking that leave, then it would have consequences for the business that were to be addressed in a particular way, a way which I understand was open to the employer under the terms of this workplace agreement.

MR BORENSTEIN: Well, there are two things there, your Honour, if I might. The first point that you put to me, your Honour, is really a point that needs to be answered by giving consideration to whether in any sort of realistic way one can separate the inherent aspect of the workplace right from the label. You cannot take leave without being absent. So that is the first thing. So when the employer says, “I am doing something because you have been absent”, for the court to say, “Well, that means that he did not do it because of a workplace right”, does not make sense and should not follow.

Now, the second thing your Honour put to me was, well, the decision-maker here said, “I am doing it because your absences are causing difficulties in my operation” and I have submitted already that the reason why - for the employer to identify the consequences of the exercise of the workplace right for the employer does not change the fact that the employer is doing it because there has been an exercise of the workplace right.

Every workplace right will have a consequence for an employer. There is a workplace right to have a wage increase under an enterprise agreement every 12 months, let us say. That is going to have a consequence for an employer. Every workplace right has a consequence because that is the nature of it.

Now, for an employer to hide behind that is, we say, impermissible. You have to go back to the central question and say, “What is it that has motivated the employer to do this” and the motivating factor here, or certainly one of the motivating factors here was the taking of the leave, probably the central one. It is a substantial and operative reason for it. Without the taking of the leave, nothing would have happened. So you then come back to that analysis which we have discussed and I will not take up time about it.

The final thing that your Honour raised with me was that there was an entitlement under this industrial instrument to move people on rosters. That may be so. That is a discretionary thing. It is unrestricted, as your Honour says, in the instrument. When a party to an instrument has an unrestricted discretion, if I can describe it in that way, they cannot exercise that discretion unlawfully in breach of a statute.

So, for example, if the employer said, “We are going to move all of our Asian employees onto less remunerative work rosters than others”, the employer could not hide from a claim by saying, “But I have a right”. Now, in the High Court case of Patricks v MUA, there was an argument about this sort of an issue where the Court was confronted with a claim that the administrators of the labour supply companies that had been set up in the Patrick group, they had been divested of all their assets and they were simply employers and there was a strategy about them losing their contract so the employees would be dismissed.

There was an injunction issued to prevent them from doing that and, in effect, to require them to continue operations, and in the High Court it was argued against the injunction that it was a wrongful imposition on the administrators in the exercise of their discretions as administrators to require them to do this. The High Court answered that where there is a discretion, where there are powers under another statute, they must be exercised lawfully and in that case - - -

GAGELER J: I think you are probably reading too much into my comment. I was simply responding to your use of the label of “detriment”; that is all.

MR BORENSTEIN: I see, I see.

BELL J: You take issue with, if one looks to the reasoning of the majority, Justice Perram at application book 125, paragraph 77, looking at CFMEU v BHP said in that case you see an “employee was sacked for offensive behaviour”, the behaviour constituted industrial action.

MR BORENSTEIN: “Also constituted”, yes.

BELL J: Now, his Honour thought it was rather hard in light of the analysis in that case to say this is not an issue of characterisation of the same kind, and the distinction that you draw is that the necessary effect of exercising the workplace right to carer’s leave is that you are absent, so to take into account absence is necessarily to breach the provision.

MR BORENSTEIN: In a nutshell, your Honour, that is our objection to the finding.

GAGELER J: The other cases are to be distinguished on the basis that the rights and issues could have been exercised in a different way. Is that right? A different sign could have been held up, or a different email sent.

MR BORENSTEIN: Yes, that is exactly so, and we say that is a significant point because it highlights the capacity – it highlights the fact that you are not intruding into the ability to take the protected action in those cases and you are accommodating the concerns of the employer, so you achieve that balance that was spoken about in Barclay. But here there is no balance and that is really the point we seek to make. So unless there is anything else I can assist your Honours with.

BELL J: Thank you. Mr West.

MR WEST: Your Honours, there is no point of legal principle in this case at all. It is, in effect, no different from what appeared in BHP and in Barclay. In this case, there were two incidents of adverse action. The first was in September of 2010 and the shift change was brought about because they found that this gentleman was absenting himself, not on leave, but absenting himself from work when he should have been at work coming back from mines rescue training.

True it was that he had a number of days of carer’s leave and sick leave prior to that over a period of some two years, a substantial amount of it, but they had a look at this fellow’s attendance record and he was the only tradesman on the weekend afternoon shift, without him the shift could not operate. They got him in and said, “This isn’t good enough. We are concerned because of your position and with the economic effectiveness of this shift perhaps it would be better if you are going to take leave for whatever reason, it may be some chronic reason, were on a different shift”. That was the first occasion. They moved him, as the trial judge found, because of the economic impact of what was happening here.

BELL J: Just before you move to the second incident, there may be some issue about the factual basis in relation to the first incident. I understood that the Full Court accepted that bar, I think, one occasion, the matter that was of significance to the decision-maker was a record of not being present on occasions when what was being exercised was the workplace right to carer’s leave.

MR WEST: That is right. That is certainly true. That is certainly true, but what triggered it – what triggered the interest in his behaviour was the fact that he was found to be absent from work. So that, yes, the majority of the absences forming a string were the exercise of a workplace right – at least one was not – but that was not the reason why, the mere fact of absence was not the reason for acting. This is where our learned friend’s case very carefully weaves a path here. It is a manner in which the workplace right is exercised that is important. That was the very issue that arose in Barclay. It was the manner of its exercise, that is, improper behaviour in the course of industrial action.

BELL J: What was the manner of the exercise of taking the carer’s leave here?

MR WEST: The cumulative effect of it being taken visited upon the employer economic problems. That was the issue. There was no reason why the employer who had under the terms of the industrial instrument the power to manage the manning of the shifts when faced with a problem like this could not perfectly legally, as the trial judge found, move the man from the weekend afternoon shift back to day shift.

It is not as though when we have people exercising workplace rights visiting untoward economic conditions on a company that they are stuck with it that may have to shut the shift down, or they may have to put more people on the shift than the shift will bear, in which case it amounts to the same thing. They had a management tool in the instrument, as the trial judge found, and there was no criticism of this at all.

So that the move of the gentleman from weekend afternoon shift to day shift because of the economic impact that it was having when the decision-maker said, and the evidence was accepted, that there was not in his mind at the time any awareness that what he was doing was in some way moving a man because he had exercised a workplace right. He was only concerned with the economic impact in his bailiwick.

GAGELER J: What was it that made the movement from one shift to the other meet the definition of “adverse impact”?

MR WEST: The loss of shift loadings.

GAGELER J: I see.

MR WEST: On the second occasion there was one. There was a loss of shift loading. I think on the first occasion – well, I would be going outside the scope of the evidence here, your Honour, but it was accepted that it was adverse action to move him in that way and that was that. But adverse it may be, but it was permitted by the terms of the industrial instrument and the employer availed itself of that, it not being in the decision-maker’s mind that he was acting because the man had exercised a workplace right.

These provisions are part of a suite of provisions in the Act which are concerned with the motivation for action. They are anti-discrimination provisions. They are to stop people being victimised because they have the temerity to exercise a right which the law gave them and if you acted against him to get him because he was a unionist or to get him back because he was away exercising a workplace right, then that is bad. You cannot do that.

Each case will be different. There may be just one incident where someone has been absent exercising a workplace right and adverse action is taken. That is quite a different case to this one, but that is a matter for the trier of fact. The trier of fact here was presented with days of cross-examination of each of the two decision-makers. Everything that could have been said in the employee’s favour was said. The judge said, “Well, it could be one, it could be the other. That is how it is put to me and I have to make that decision”. Fox v Percy, he was acting as a trial judge.

GAGELER J: But what do you say about the dissenting judgment in the Full Court?

MR WEST: Your Honour, in our respectful submission, the important thing about the dissenting judgment is that there is no disagreement between Justice Bromberg and the majority as to what was the proper question to be asked. The difference is how one goes about finding the facts to answer the question was there a breach of the law.

Your Honour, as to the second adverse action, it is common ground – it is not challenged here – that the actual absence which led to that action was not the exercise of a workplace right. What is put against the company was that when the decision was taken to move the gentleman for a second time, he having asked for annual leave and it being denied him and he took the time off anyway, that it was in the mind of the decision-maker as an active and immediate reason that the reason why he was being moved was because of his earlier absences and the trial judge found that was not so.

BELL J: And it was the failure to comply with the absentee management scheme.

MR WEST: Yes.

BELL J: Now, that absentee management scheme - that was not challenged in any way.

MR WEST: No, no, and so, your Honour, they were two unobjectionable incidents of management.

BELL J: The absentee management scheme was one used as a management tool including to counsel employees in relation to their taking of lawful entitlements.

MR WEST: That is what its whole purpose was, your Honour. That scheme and the power in the company – the reserve of the power to the company as the ultimate decider as to how it would man shifts and how it would use its employees were all part of the suite of rights and obligations which came under the industrial instrument and it was for the company to manage that. The trial judge looked at all of that and within the context of that evidence made his decision – Fox v Percy – and we say there is no error and there was no error in the Full Court either. That is our case.

BELL J: Thank you, Mr West. Mr Borenstein.

MR BORENSTEIN: If I might just briefly reply. In relation to the question of absences that our friend raised and how many there were and so on, could I just give the Court a reference to where they appear in the judgment in the Full Court?

BELL J: Yes.

MR BORENSTEIN: Justice Jessup at paragraph 4 on page 103 of the application book. He notes that, halfway through the paragraph:

Between 21 December 2007 and 5 September 2010, he was absent from work on 15 occasions, covering a total of 29½ days, by way of sick leave, carer’s leave, or parental leave, which may be referred to compendiously as “personal leave”. In all but one instance (13 June 2010), this leave was within Mr McDermott’s entitlement under - - -

BELL J: I think Mr West accepted that in the course of his submissions.

MR BORENSTEIN: Good. Now, Mr West was asked by the Court when he complained about the manner of the exercise of the leave taking what he meant by that and he indicated what he meant was the cumulative effect of it. Now, we say that is not exculpatory at all, so long as the employee is

confining himself or herself to the limits which are set for the exercise of the entitlement. So if there is an entitlement to take five days’ leave a year, and the leave that is taken is within those five days, it is not a ground for criticism or the visiting of detrimental effects on the employee because he took it, otherwise our argument stands.

The only other matter that I wanted to address was in relation to the second episode of adverse action which was in April of 2011. I think it is Justice Bromberg who notes that there was no – I am sorry, I will start again. The test is to identify whether the reasons of the decision-maker include a substantial or operative reason that is prohibited by the legislation. It does not have to be the only one. Section 360 says just one of them.

The case that was put in relation to the second cause of action was that because the past history of absenteeism was a reference to the taking of these leaves that we are complaining about and they are protected, in the sense that we speak of, to take them into account in deciding, together with other matters in deciding what is to be done, is potentially itself a contravention of the legislation.

The evidence which is recounted in the judgments is to the effect that Mr Peace, who was the second decision-maker, accepted that he took those matters into account. Now, there was no finding from the trial judge to the effect that the taking into account of those matters was not a substantial or operative factor in the decision-making and because it is linked back to the taking of leave in the first ground, we say that the two combine. Now, if your Honours are unpersuaded about the second, then we would ask your Honours to at least grant us leave in relation to the first episode.

BELL J: Thank you, Mr Borenstein.

Having regard to the decisions of this Court in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd and Board of Bendigo Regional Institute of Technical and Further Education v Barclay & Anor, we are not persuaded that the majority of the Full Court erred in their application of principle. For that reason special leave is refused with costs.

AT 12.22 PM THE MATTER WAS CONCLUDED