Bone Densitometry Australia Pty Ltd t/a Perth Bone Densitometry v Lenny [2006] WASCA 91 (29 May 2006) Last Updated: 6 June 2006 JURISDICTION : WESTERN AUSTRALIAN INDUSTRIAL APPEAL COURT CITATION : BONE DENSITOMETRY AUSTRALIA PTY LTD T/AS PERTH BONE DENSITOMETRY -v- LENNY [2006] WASCA 91 CORAM : ROBERTS-SMITH J (ACTING PRESIDING JUDGE) PULLIN J LE MIERE J HEARD : 1 DECEMBER 2005 DELIVERED : 29 MAY 2006 FILE NO/S : IAC 9 of 2005 BETWEEN : BONE DENSITOMETRY AUSTRALIA PTY LTD T/AS PERTH BONE DENSITOMETRY Appellant AND SHARMAINE DEBORAH LENNY Respondent ON APPEAL FROM: Jurisdiction : WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION Coram : SHARKEY P, SCOTT C, MAYMAN C Citation : [2005] WAIRC 2073 Catchwords: Industrial law - Termination of employment contract - Dismissal unfair within meaning of Industrial Relations Act 1979 (WA) - Right to be heard - Capacity of Full Bench to substitute finding of Commission under s 49 of Act - Jurisdiction of Full Bench - Compensation for lost income and injury Legislation: Industrial Relations Act 1979 (WA), s 7 , s 23 , s 23A , s 29 , s 49 Result: Appeal dismissed Category: B Representation: Counsel: Appellant : Mr T H F Caspersz Respondent : Mr C S Fayle (Agent) Solicitors: Appellant : Valerie Hodgins Respondent : C S Fayle (Agent) Case(s) referred to in judgment(s): Nil Case(s) also cited: Advertiser Newspapers Pty Ltd v Industrial Relations Commission of South Australia [1999] SASC 300 Automatic Fire Sprinklers Pty Ltd & Anor v Watson [1946] HCA 25 ; (1946) 72 CLR 435 Branir Pty Ltd & Ors v Owston Nominees (No 2) Pty Ltd & Anor [2001] FCA 1833 ; (2001) 117 FCR 424 Burazin v Blacktown City Guardian Pty Ltd [1996] IRCA 371 ; (1996) 142 ALR 144 Cargill Australia Ltd, Leslie Salt Division v The Federated Clerks Union of Australia, Industrial Union of Workers, WA Branch 72 WAIG 1495 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24 ; (1982) 149 CLR 337 Corporation of the City of Enfield v Development Assessment Commission & Anor [2000] HCA 5 ; (2001) 199 CLR 135 Dellys v Elderslie Finance Corporation [2002] WASCA 161 ; 82 WAIG 1193 Garbett v Midland Brick Company Pty Ltd [2003] WASCA 36 ; 83 WAIG 893 Hospital Employees' Industrial Union of Workers, WA v Applecross Nursing Home Pty Ltd 61 WAIG 120 Lynam v Lataga Pty Ltd [2001] WAIRComm 2420 ; 81 WAIG 986 McDowell v Swan Cottage Homes Inc 70 WAIG 3818 Personnel Contracting Pty Ltd t/as Tricord Personnel v The Construction, Forestry, Mining and Energy Union of Workers [2004] WASCA 212 Rigby v Ferodo Ltd [1988] ICR 29 Stead v State Government Insurance Commission [1986] HCA 54 ; [1986] 161 CLR 141 Steele v Clarke and Nicholls [2003] WAIRComm 10285 ; (2003) 84 WAIG 17 The Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc [1994] HCA 54 ; (1994) 181 CLR 404 Warren v Coombes & Anor [1979] HCA 9 ; (1979) 142 CLR 531 Wood v National Mine Management Pty Ltd 78 WAIG 4853 1 ROBERTS-SMITH J : I agree with the draft judgment prepared by Le Miere J and have nothing to add. 2 PULLIN J : I have read the draft reasons prepared by Le Miere J. I agree with those reasons and have nothing to add. 3 LE MIERE J : The respondent was employed by the appellant as a part-time medical technician pursuant to a written contract of employment dated 22 May 2003 ("the employment contract"). The respondent worked four days a week doing bone scanning work and office work. On 1 July 2004 Ms Bridges, a friend and fellow employee of the respondent, informed the respondent that she had been told by the appellant's practice manager that the respondent's contract was going to be terminated and that the respondent would be offered another contract working for three days each week. On 6 July 2004 the respondent met with Dr Will who described himself as a proprietor of the appellant's business. The respondent and Dr Will gave conflicting evidence as to what was said at that meeting. The respondent's evidence was that Dr Will said: "Your current contract has - - is terminated, but I will be able to offer you another contract with - - for three days but you'd be scanning only." 4 The respondent's evidence is that she said to Dr Will: "Well, when does this all start from?" and he said: "Today". The respondent said: "Well, I'm not going to make a decision until I see this in writing". 5 Dr Will's evidence was that he said to the respondent that: "We weren't really in the position any longer to employ [her] for 1 day a week of doing clerical duties and that ... at that time ..., [the appellant] could offer her 3 full days a week of bone scanning duties, but there was certainly the likelihood that ... the requirement for bone density scanning would fluctuate from month to month." 6 On 8 July the respondent approached Dr Will and said that she had not received anything in writing. Dr Will said that he did not have time to deal with the matter and that the respondent should see the practice manager. In the following days the respondent asked for some kind of written communication. She did not receive any letter but subsequently received a new form of contract which provided for the respondent to be employed for three months working three days per week. 7 On 15 July 2004 the respondent wrote to Dr Will. The respondent said that on 6 July Dr Will had informed her of his decision to terminate her contract and offer her a three-month contract for a weekly total of eight hours less work. The respondent stated that she had decided not to accept the new contract. She said that her contract stated that the appellant would provide her with five weeks' notice if it terminated her contract and said that that should be implemented from 6 July and the termination was therefore to take effect as of 9 August. The respondent ceased working for the appellant on 9 August 2004. 8 The appellant's case was that the appellant did not terminate the respondent's employment but exercised its contractual right to vary the respondent's hours of work. Clause 2.3 of the employment contract provided, in part: "To ensure that the operational needs of the company are met, [the appellant] may vary your hours of work. In such cases, [the appellant] undertakes to provide you with reasonable notice of significant variation to you [ sic ] hours of work and due consideration will be given to the needs on both parties." Respondent claims unfair dismissal 9 The respondent claimed she was harshly, oppressively and unfairly dismissed. 10 Commissioner Smith found that there was only one substantially material factual issue between the parties and that was whether Dr Will informed the respondent on 6 July that he intended to terminate her contract. Smith C preferred the evidence of the respondent to that of Dr Will. Smith C went on to find that notwithstanding that Dr Will used the word "termination" he did not intend that the respondent should cease to work for the appellant. The Commissioner said that the question was whether Dr Will's actions in offering the respondent a new contract for a period of three months which resulted in the resignation of the respondent constituted a constructive dismissal. 11 The Commissioner found that the appellant's decision to reduce the respondent's hours of work by 25 per cent with a review after three months was unfair. The appellant's proposal was so substantively unfair as to constitute a repudiatory breach of the employment contract. Pursuant to cl 2.3 of the employment contract the appellant was required to consider not only its own needs but the needs of the respondent when making a decision to vary her hours of work. The appellant did not consider the cost of retaining the respondent to work four days a week against a 25 per cent reduction of income to the respondent. Smith C concluded that the appellant's decision to reduce the respondent's hours of work without regard to her needs was unfair. 12 Smith C went on to consider what compensation should be awarded to the respondent. The Commissioner found that the respondent had diligently sought employment as a bone densitometry technician and that the appellant had not discharged the onus of establishing that the respondent had failed to mitigate her loss. The Commissioner awarded the respondent 17 weeks pay, being the time elapsed between the date her employment came to an end and the date of the hearing. The Commissioner found that the manner in which the respondent was informed that her contract was to be terminated was callous, oppressive and humiliating. Further, by informing Ms Bridges in the meeting on 6 July that he intended to provide her with work in relation to new projects when he had just informed the respondent that her hours would be reduced and that she was no longer required to carry out office work the conduct of Dr Will was demeaning. The Commissioner accepted that the respondent later sought medical treatment for depression and insomnia. Smith C awarded the respondent $2000 for injury. Appellant appeals to Full Bench 13 The appellant appealed to the Full Bench. Ground 1 of the appeal was that the Commission erred in fact and law and exceeded its jurisdiction by declaring that the respondent was unfairly dismissed when there was no sufficient evidence that the appellant: (a) dismissed the respondent; or (b) repudiated the contract of employment such that the respondent was "constructively" dismissed. 14 Ground 2 of the appeal was an appeal against the award of compensation for an amount equivalent to 17 weeks of salary and an amount of $2000 for injury. 15 The Full Bench dismissed the appeal. The President, with whom Commissioner Mayman agreed, found that on 6 July 2004 the appellant terminated the respondent's contract of employment. There was an actual or express dismissal of the respondent on 6 July 2004. The President accepted that that was not the way in which Smith C had dealt with the matter. The Commissioner had found that the actions of the appellant constituted a constructive dismissal. The President found that the appellant had expressly breached cl 2.3 of the employment contract and that there was a repudiatory breach of the implied duty of considerateness and goodness. Thus, the President found that there was an actual dismissal on 6 July 2004 or alternatively, that the appellant repudiated the contract, the respondent accepted the repudiation and that this constituted a constructive dismissal. The President found that the dismissal was unfair for reasons which he stated. 16 Commissioner Scott found that there was not a constructive dismissal but an actual dismissal. Commissioner Scott agreed that the respondent's dismissal was unfair for the reasons given by the President. 17 The President, with whom Commissioner Mayman agreed, found that Smith C did not err in awarding compensation of 17 weeks' salary. Further, the President found that the respondent suffered shock and humiliation as a result of her unfair dismissal and the surrounding treatment of her by Professor Will. The President found that ground 2 of the appeal was not made out. Commissioner Scott agreed with the President that the loss and injury found by Smith C was supported by the evidence. This appeal 18 The appellant appeals to this Court on four grounds. I will consider each ground of appeal separately. Ground 1 19 Ground 1 is that the appellant was denied the right to be heard when the Full Bench held that: (a) the appellant actually dismissed the respondent on 6 July 2004 contrary to the finding of the Commission that, on 6 July 2004, the appellant had proposed a variation of the respondent's contract of employment; (b) the appellant owed to the respondent an implied contractual duty of "considerateness and goodness", which it had breached in repudiation of the contract of employment; when the appellant had no notice of, or proper opportunity to respond to such matters. 20 In his submissions to the Full Bench the respondent's advocate submitted that the appellant actually dismissed the respondent on 6 July 2004 rather than constructively dismissing the respondent. In his submissions in reply counsel for the appellant responded to that submission at AB 103: "... If I can reply to what really was the first submission or first part of the submissions by my friend and that is this: It is understood that his submission was along these lines. There was a repudiatory breach because what occurred here was not an attempt to exercise a right under clause 2.3. What occurred here, as I understood my friend's submission, was simply a termination of the contract which at that time was an indefinite contract and the offer of a new fixed term contract of 3 months. That was not something you could do under clause 2.3, given the other provisions of the contract which said you could only have a variation in writing and that, therefore, constituted a repudiatory breach. My friend, in particular, went to paragraph 40 of the Commission's reasons for decision in support of his submission and he also referred to appeal book page 120 and a concession by Dr Will about the use of the word 'termination' and in response to his Honour's question relied upon that as being evidence of a direct act of dismissal. I respond to those submissions as follows." 21 Counsel then went on to respond to that submission. Thus, counsel had the opportunity to, and did, respond to the submission that what occurred on 6 July was an express termination or actual dismissal rather than a constructive dismissal. 22 In the course of counsel for the appellant's submissions, the President expressly raised the proposition that a harsh or oppressive or unfair exercise of the appellant's contractual right to vary the respondent's hours might be a breach of the implied duty of trust and confidence between the parties and might be a repudiatory breach. Counsel for the appellant responded to that proposition. The duty of the employer to be "good and considerate" is an aspect of, or alternatively presented as the employer's part of, the duty of "mutual trust and confidence": see Brooks, A "The Good and Considerate Employer: Developments in the Implied Duty of Mutual Trust and Confidence" [2001] UTasLawRw 2 ; (2001) 20(1) UTasLR 29. Thus, counsel had the opportunity to, and did, respond to the finding of the President that the appellant owed to the respondent an implied contractual duty of "considerateness and goodness", which it had breached in repudiation of the contract of employment. 23 For those reasons, ground 1 of the appeal is not made out. Ground 2 24 Ground 2 is that the Full Bench erred in law in its construction or interpretation of s 49(4) of the Industrial Relations Act 1979 ("the Act ") when it substituted the Full Bench's finding for the Commission's finding despite the latter being a finding of fact that was open to the Commission on the evidence. 25 Counsel for the appellant did not press this ground in his oral submissions. In any event, the ground has no merit. 26 Subsection 49(4) of the Act provides relevantly that an appeal shall be heard and determined on the evidence and matters raised in the proceedings before the Commission. The Full Bench accepted the finding of Smith C as to what was said and happened at the meeting between the respondent and Dr Will on 6 July 2004. The Full Bench differed from Smith C in its conclusion as to the legal effect or consequence of what was said and happened. The Full Bench finding was a conclusion reached by applying the law to the facts. The Full Bench was entitled to substitute its finding for the Commission's finding. In any event the Full Bench is entitled to substitute its findings, including findings of fact, for the findings of the Commission at first instance. The appellant has not demonstrated that the Full Bench erred in its construction or interpretation of s 49(4) of the Act . 27 Ground 2 is not made out. Ground 3 28 Ground 3 is that the Full Bench's decision was in excess of jurisdiction in that the matter the subject of the decision was not an industrial matter as there was no evidence of a necessary jurisdictional fact to enliven the Commission's discretion under subpar 29(1)(b)(i) of the Act , namely, a dismissal by the appellant of the respondent. 29 This ground of appeal is expressed in confusing terms. Subparagraph 29(1)(b)(i) does not confer jurisdiction on the Commission, nor the power to make any orders. Subsection 29(1) of the Act provides who may refer an industrial matter to the Commission. Jurisdiction is conferred on the Commission by s 23(1) which provides that the Commission has got cognizance of and authority to enquire into and deal with any industrial matter. The powers of the Commission on claims of unfair dismissal are specified in s 23A. 30 "Industrial matter" is defined in s 7 of the Act to mean: "Any matter affecting or relating or pertaining to the work, privileges, rights, or duties of employers or employees in any industry or of any employer or employee therein and, without limiting the generality of that meaning, includes any matter affecting or relating or pertaining to – ... (c) ... or the dismissal of or refusal to employ any person or class of persons therein." 31 In this case, the Commission had jurisdiction to enquire into and deal with the matter if it found that the appellant dismissed the respondent. That the appellant dismissed the respondent is a jurisdictional fact; that is, whether the appellant dismissed the respondent is a question concerning the existence of a condition precedent to the power of the Commission to deal with the matter. It is the duty of this Court to decide for itself whether or not the appellant dismissed the respondent and hence whether or not the Commission had jurisdiction to deal with the matter. 32 Smith C found that Dr Will said to the respondent that her contract was terminated but that he would offer her another contract for three days a week. The respondent asked Dr Will when did the termination take effect and he replied: "Today". The Full Bench accepted the findings of fact made by Smith C. There is no appeal from those findings of fact. The legal consequences of those facts is a matter of applying the law to the facts. 33 The appellant, through Dr Will, dismissed the respondent. That is none the less so because the appellant did not intend that the respondent should cease working for the appellant. The undisclosed subjective intention of the appellant is not to the point. Objectively viewed, at the meeting on 6 July 2004, Dr Will terminated the respondent's employment. The conclusion that the appellant dismissed the respondent is not affected by the fact that, by mutual agreement between the appellant and the respondent, the respondent worked out the period of notice provided for by her contract of employment. 34 Alternatively, the conduct of the appellant, through Dr Will, on 6 July 2004 was a repudiatory breach of the contract of employment. That repudiation was accepted by the respondent by her letter of 15 July. The respondent's employment was terminated at the initiative of the appellant. That is, the appellant dismissed the respondent, and the appellant's act was nonetheless a dismissal because the respondent, by mutual agreement between the appellant and respondent, worked out the period of notice provided for in her contract of employment. 35 The appellant dismissed the respondent. This ground of appeal fails. Ground 4 36 Ground 4 is that the Full Bench erred in law in its construction or interpretation of s 23A(6) of the Act when it determined that the appellant should pay compensation to the respondent when there was no evidence of: (a) loss to the respondent caused by the dismissal justifying compensation of an amount equivalent to 17 weeks of salary; (b) injury suffered by the respondent caused by the dismissal. 37 This ground of appeal was elaborated upon by counsel for the appellant in his oral submissions. In essence, the appellant's argument was this. If the respondent's employment had not been terminated unfairly, it may have been terminated fairly by giving five weeks' notice and if that had occurred, the respondent would have suffered no greater loss of income than she ultimately did because, notwithstanding the respondent's dismissal, she worked out five weeks' notice and was paid for that period. 38 This ground of appeal has no merit. The Full Bench found that the appellant acted unfairly in deciding to dismiss the respondent. The President, with whom Commissioner Mayman agreed, found that the dismissal was unfair because: (a) The respondent was a long-standing, hard-working and efficient employee. (b) The replacement of her by a junior employee would give only a small saving of $3200 per annum compared to 25 per cent loss of annual income. (c) There was no reason given why she should have been offered a fixed term of three months instead of an indefinite contract. (d) Whether the contract required or not, the decision to terminate her contract somewhat perplexingly, without considering her needs, was for that reason unfair. (e) There was no evidence of any such consideration of her needs including her obvious financial commitments referred to in correspondence and, for that reason, it was unfair and contrary to the implied term requiring the employer to be good and considerate. (f) The failure to consider her needs was evidenced, too, by the manner in which she was peremptorily dismissed without proper warning, without discussion and, as the Commissioner found, without notice, and presented with a new contract as a fait accompli with no suggestion that the new contract could even be negotiated. 39 There is no basis for finding, or assuming, that if the appellant had not dismissed the respondent unfairly, it would have fairly dismissed the respondent and she would have received no longer a period of employment. 40 The respondent was unfairly dismissed. She was unemployed for a period of time. There was evidence that the respondent suffered loss caused by her dismissal. 41 There was also evidence that the respondent suffered injury as a result of her dismissal. Smith C found that the manner in which the respondent was informed that her contract was to be terminated was callous, oppressive and humiliating. The Commissioner accepted the respondent's evidence that from the time she was informed by Ms Bridges that her hours of work were going to be reduced from four to three days a week at the conclusion of her meeting with Dr Will on 6 July, the respondent was shocked and humiliated. Smith C accepted the respondent's evidence that the respondent later sought medical treatment for depression and insomnia. 42 In its written submissions the appellant submits that the Full Bench must be taken to have misconstrued s 23A(6) of the Act by making an order for compensation for loss and injury in the circumstances. There was evidence that the respondent suffered loss and injury caused by her dismissal. It was open to the Full Bench to find that the respondent suffered loss and injury caused by her dismissal. The appellant has not demonstrated that, in the course of making its decision, the Full Bench erred in their construction of interpretation of s 23A(6) of the Act . This ground of appeal is not made out. Conclusion 43 For the reasons stated, the appeal must be dismissed. Respondent claims unfair dismissal Appellant appeals to Full Bench This appeal Ground 1 Ground 2 Ground 3 Ground 4 Conclusion