FEDERAL COURT OF AUSTRALIA Shanahan v Australian Industrial Relations Commission (No 2) [2006] FCAFC 175 WORKPLACE RELATIONS – employment – claim of harsh, unjust or unreasonable termination of employment – application for prerogative relief in relation to a decision of the Australian Industrial Relations Commission – issue about whether applicant's misconduct occasioned by psychiatric condition – whether there was jurisdictional error in respect of question to be addressed Workplace Relations Act 1996 (Cth) ss 45(1)(c), 45(2), 45(6)(a), 45(7), 170CB(1)(c), 170CE(1)(a) 170CE(5)(a), 170CE(5A), 170CE(5B), 170CE(7), 170CG(1) 170CG(3), 170CH, 170CI, 170 JF(2) and 347(1) Craig v The State of South Australia(1995) 184 CLR 163 Plaintiff S157/2002 v The Commonwealth of Australia (2003) 211 CLR 476 Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission (2000) 203 CLR 194 House v The King (1936) 55 CLR 499 Re Polites; Ex Parte The Hoyts Corporation Pty Limited (1991) 173 CLR 78 Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285 North v Television Corporation Ltd (1976) 11 ALR 599 IAN SHANAHAN v AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION AND UNIVERSITY OF WESTERN SYDNEY NSD 693 OF 2006 MARSHALL, GRAHAM AND JESSUP JJ 13 DECEMBER 2006 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 693 OF 2006 On remittal from the High Court of Australia BETWEEN: IAN SHANAHAN Applicant AND: AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION First Respondent UNIVERSITY OF WESTERN SYDNEY Second Respondent JUDGES: MARSHALL, GRAHAM AND JESSUP JJ DATE OF ORDER: 13 december 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The Application for an Order to Show Cause be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 693 OF 2006 On remittal from the High Court of Australia BETWEEN: IAN SHANAHAN Applicant AND: AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION First Respondent UNIVERSITY OF WESTERN SYDNEY Second Respondent JUDGES: MARSHALL, GRAHAM AND JESSUP JJ DATE: 13 december 2006 PLACE: SYDNEY REASONS FOR JUDGMENT MARSHALL AND GRAHAM JJ 1 Under s 170CE(1)(a) of the Workplace Relations Act 1996 (Cth) ('the Act') as it stood on 24 July 2003 it was open to an employee whose employment had been terminated by his employer to apply to the Australian Industrial Relations Commission ('the Commission') for relief in respect of the termination of his employment on the ground that the termination was 'harsh, unjust or unreasonable'. 2 The limitations upon the making of an application under s 170CE(1)(a) were satisfied in the present case (see s 170CB(1)(c), s 170CE(5)(a), s 170CE(5A), s 170CE(5B) and s 170CE(7)). 3 By virtue of s 170CG(1) of the Act the Commission was empowered to arbitrate matters arising under s 170CE(1)(a) applications. In relation to such arbitrations s 170CG(3) provided: '170CG(3) In determining, for the purposes of the arbitration, whether a termination was harsh, unjust or unreasonable, the Commission must have regard to: (a) whether there was a valid reason for the termination related to the capacity or conduct of the employee or to the operational requirements of the employer's undertaking, establishment or service; and (b) whether the employee was notified of that reason; and (c) whether the employee was given an opportunity to respond to any reason related to the capacity or conduct of the employee; and (d) if the termination related to unsatisfactory performance by the employee – whether the employee had been warned about that unsatisfactory performance before the termination; and (da) the degree to which the size of the employer's undertaking, establishment or service would be likely to impact on the procedures followed in effecting the termination; and (db) the degree to which the absence of dedicated human resource management specialists or expertise in the undertaking, establishment or service would be likely to impact on the procedures followed in effecting the termination; and (e) any other matters that the Commission considers relevant.' 4 Under s 170CH of the Act the Commission is empowered to make certain orders 'if it has determined that the termination was harsh, unjust or unreasonable'. Such orders include orders for reinstatement. 5 Section 170CI of the Act renders orders made on an arbitration binding. It provides: '170CI Subject to any right of appeal to a Full Bench of the Commission, an order made by the Commission under section 170CH is final and binding between the parties.' 6 Section 45(1)(c) of the Act provides for appeals to a Full Bench against a decision of a member of the Commission not to make an order. Section 45(1)(c) provides: '45(1) Subject to this Act, an appeal lies to a Full Bench, with the leave of the Full Bench, against: … (c) a decision of a member of the Commission not to make an … order; …' 7 Under s 45(2) of the Act a Full Bench is required to grant leave to appeal if, in its opinion, the matter is of such importance that, in the public interest, leave should be granted. 8 On the hearing of appeals the Full Bench is empowered to admit further evidence (s 45(6)(a)). 9 The powers of a Full Bench are contained in s 45(7) which provides as follows: '45(7) On the hearing of the appeal, the Full Bench may do one or more of the following: (a) confirm, quash or vary the decision or act concerned; (b) make an … order or decision dealing with the subject-matter of the decision or act concerned; …' 10 By an application filed 13 August 2003 the applicant sought relief in relation to termination of his employment by the second respondent on the basis that the termination was harsh, unjust or unreasonable. 11 The applicant's employment was regulated by an industrial agreement certified under the Act, being the University of Western Sydney Academic Staff Enterprise Agreement 2001-2003 ('the Agreement'). 12 Following a hearing in the Commission on 17 – 20, 24 and 27 May 2004, Senior Deputy President Cartwright handed down his decision on 5 July 2004 ordering that the application under s 170CE(1) of the Act be dismissed. On or about 26 July 2004 the applicant filed a 'Notice Of Appeal Under Section 45' in the Commission. 13 The appeal came before a Full Bench of the Commission comprising Senior Deputy President Drake, Senior Deputy President Hamberger and Commissioner Raffaelli. 14 Leave to appeal was granted. However, by a majority of 2:1 the appeal was dismissed, Senior Deputy President Drake dissenting. 15 The decision of the Full Bench was handed down on 27 May 2005. 16 On 25 November 2005 the applicant filed an Application for an Order to Show Cause in the High Court of Australia in which constitutional writ relief was sought in respect of the decision of the Full Bench. 17 On 1 April 2006 Kirby J in the High Court ordered that the application be remitted to the Federal Court of Australia. 18 The grounds on which the applicant seeks relief are: (1) That the First Defendant [the first respondent] failed to exercise its jurisdiction in failing to consider and determine according to law whether a person suffering from a disease of the kind such as to cause the person to engage in disinhibited conduct is or may be capable of misconduct in engaging in such disinhibited conduct. (2) That the First Defendant [the first respondent] failed to exercise its jurisdiction in failing to consider and determine according to law whether, in circumstances where the Plaintiff's [the applicant's] employment with the Second Defendant [the second respondent] was terminated by the Second Defendant [the second respondent] for reason of misconduct, such termination for misconduct was or could be, in proceedings brought pursuant to the provisions of section 170CE of the Workplace Relations Act 1996, for a valid reason within the meaning of the said Act where the actions said to constitute misconduct occurred by reason of the disease of the mind of the Plaintiff [applicant]. (3) The Full Bench wrongly held that there was misconduct on the part of the plaintiff [applicant] (accepting the view which they appeared to hold about the evidence, although they did not express themselves with complete clarity) [see plaintiff's [applicant's] submissions paragraphs 5.4, 5.5]. [Ground 3 was added by leave granted on 21 November 2006] 19 Paragraphs 5.3, 5.4 and 5.5 of the submissions of counsel for the applicant before this Court were as follows: '5.3 An essential ingredient of misconduct … is that the conduct is wilful …. It would not be misconduct for an employee to strike another by reason of involuntary muscle response and it would not be misconduct if striking occurred by reason of mental illness. 5.4 That being so, the Commission, having accepted that the Plaintiff [applicant] was suffering from a temporary abnormality of mind at the time of the events in question … was obliged to consider whether Mr Shanahan's behaviour constituted misconduct or something of a different order in order to determine whether there was a valid reason for his dismissal. 5.5. It failed to consider this matter and accordingly failed to exercise its jurisdiction. …' 20 If an administrative tribunal identifies a wrong issue, asks itself a wrong question, ignores relevant material, relies on irrelevant material, in some circumstances makes an erroneous finding or reaches a mistaken conclusion and the tribunal's exercise or purported exercise of power is thereby affected it will exceed its authority or power and commit an error of law amounting to jurisdictional error which will invalidate any order or decision of the tribunal which reflects it (per Brennan, Deane, Toohey, Gaudron and McHugh JJ in Craig v The State of South Australia (1995) 184 CLR 163 at 179). 21 An administrative decision which involves jurisdictional error is 'regarded, in law, as no decision at all' (per Gaudron, McHugh, Gummow, Kirby and Hayne JJ in Plaintiff S157/2002 v The Commonwealth of Australia (2003) 211 CLR 476 at 506 [76]). 22 In relation to a decision of the Full Bench of the Commission, Gleeson CJ, Gaudron and Hayne JJ said in Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission ('Coal and Allied') (2000) 203 CLR 194 at [31]: 'There would only have been jurisdictional error on the part of the Full Bench if it had misconceived its role or if, in terms used by Jordan CJ in Ex parte Hebburn Ltd; Re Kearsley Shire Council, it "misunder[stood] the nature of [its] jurisdiction … or 'misconceive[d] its duty' or '[failed] to apply itself to the question which [s 45 of the Act] prescribes' … or '[misunderstood] the nature of the opinion which it [was] to form'". …' (footnotes omitted) 23 An appeal under s 45 of the Act is properly described as an appeal by way of rehearing because a Full Bench of the Commission has power under s 45(6) to receive further evidence on appeal. However, its powers under s 45(7) are exercisable only if there is error on the part of the primary decision-maker (per Gleeson CJ, Gaudron and Hayne JJ in Coal and Allied at [17]). 24 If an appellate tribunal can receive further evidence, as here, and its powers are not restricted to making the decision that should have been made at first instance, the appeal is usually and conveniently described as an appeal by way of rehearing. Although further evidence may be admitted on an appeal of that kind, the appeal is usually conducted by reference to the evidence given at first instance and is to be contrasted with an appeal by way of hearing de novo. In the case of a hearing de novo, the matter is heard afresh and a decision is given on the evidence presented at that hearing (per Gleeson CJ, Gaudron and Hayne JJ in Coal and Allied at [13]). 25 Ordinarily, if there has been no further evidence admitted, as here, and if there has been no relevant change in the law, a court or tribunal entertaining an appeal by way of rehearing can exercise its appellate powers to interfere with the decision at first instance only if satisfied that there was error on the part of the primary decision-maker. That is because statutory provisions conferring appellate powers, even in the case of an appeal by way of rehearing, are construed on the basis that, unless there is something to indicate otherwise, the power is to be exercised for the correction of error (per Gleeson CJ, Gaudron and Hayne JJ in Coal and Allied at [14]). 26 The applicant was notified of the termination of his employment by letter dated 24 July 2003 from the second respondent's Vice-Chancellor. That letter relevantly provided: 'The University Secretary has referred documentation to me relating to allegations articulated in our letter dated 17th February 2003 that may constitute serious misconduct, or in the alternative misconduct by you. … … based on the Committees findings, the University now finds you guilty of serious misconduct in that your behaviour is of a kind, which constitutes a serious impediment to the carrying out of an academic staff member's duties, and that you are in serious dereliction of the duties required of an academic staff member. Your actions have broken the inherent trust relationship within your contract of employment and you have breached your duty of good faith and fidelity to the University of Western Sydney as your employer. Consequently, due to the serious nature of this matter, the University has decided in accordance with subclauses 14.2 and 49.21(c) of the Academic Staff Enterprise Agreement 2001–2003 to terminate your employment effective from Thursday, 24th July 2003. …' 27 Clause 49 of the Agreement relevantly provided: '49. Dealing with Possible Cases of Misconduct or Serious Misconduct 49.1 Other than as provided for under clause 20 Progression Within Salary Levels and clause 13 Probationary Appointments of this Agreement, any disciplinary action for misconduct or serious misconduct by an academic staff member … must be taken in accordance with this clause … 49.2 Disciplinary action should not be used precipitately: supervisors shall make reasonable efforts to resolve incidents of possible misconduct informally, with the expectation that, in many cases, situations will be resolved with appropriate guidance, counselling, conciliation, or other appropriate action that may include staff development. … 49.3 All allegations of serious misconduct and allegations of misconduct, where it is not appropriate to reach resolution under subclause 49.2 above, or where action under subclause 49.2 above has failed to resolve the matter, shall be referred to the DVC (Resources) [the Deputy Vice-Chancellor (Resources)] for consideration. 49.4 The DVC (Resources) may undertake an informal preliminary investigation into the allegations as he/she considers appropriate, for the purpose of determining whether the initial allegations warrant further action under this clause and/or for the purpose of allowing the DVC (Resources) to provide sufficient detail of the allegations to the academic staff member under subclause 49.5(i) below. 49.5 If, following any preliminary investigation, the DVC (Resources) is of the view that such allegations warrant further action the DVC (Resources) shall: (i) notify the academic staff member in writing and in sufficient detail to enable the academic staff member to understand the precise nature of the allegations, and to properly consider and respond to them; and (ii) require the academic staff member to submit a written response within 10 working days. … 49.11 If, in the written response under 49.5(ii) above, the allegations are admitted in full by the academic staff member, or there is no response from the academic staff member and the DVC (Resources) is of the view that the conduct amounts to misconduct or serious misconduct, he/she may take disciplinary action as set out below … … 49.12 If, in the written response under 49.5(ii) above, the allegations are denied in part or in full, the DVC (Resources) shall refer the matter to a Misconduct Investigation Committee unless … … 49.17 The Misconduct Investigation Committee established by the University under subclause 49.12 shall be convened within 15 working days and consist of three members, … … 49.18 The terms of reference of the Misconduct Investigation Committee shall be to report on the facts relating to the alleged misconduct or serious misconduct, including whether any mitigating circumstances are evident. … 49.19 The academic staff member shall be given 5 working days to respond to the Committee ...'s report. 49.20 On receipt of the report of the Committee under subclause 49.18 … and the response of the academic staff member under subclause 49.19, and having considered the findings on the facts related to the alleged misconduct or serious misconduct and any mitigating circumstances, the DVC (Resources) may take action as follows: … (iii) referral of the matter to the Vice Chancellor, providing to the Vice Chancellor all relevant documentation including the original allegations and academic staff member's response, the Committee …'s report and the response by the academic staff member to it. 49.21 Having considered the relevant documentation referred to in subclause 49.20(iii) above, on the facts relating to the alleged misconduct or serious misconduct, the Vice-Chancellor may take the following action: … (iii) where the Vice Chancellor is of the view that there has been misconduct or serious misconduct, he/she may: (a) formally censure and/or counsel the academic staff member; … (b) demote the academic staff member by one or more salary levels or increments; … (c) terminate the employment of the academic staff member, provided that a decision to terminate the employment of the academic staff member can only be made in instances of serious misconduct, as defined in clause 3 Definitions of this Agreement. … 49.25 Nothing in this clause prevents or affects the procedures for the denial of an increment under clause 20 Progression Within Salary Levels or the termination of employment of a probationary academic staff member under clause 13 Probationary Appointments of this Agreement.' 28 The Agreement contained a series of definitions in clause 3 including: '3. Definitions In this Agreement: "Academic staff member" means a person engaged on a continuing, part time or fixed term contract basis to perform academic work. … "Misconduct" means conduct that is not serious misconduct but nonetheless is conduct that is unsatisfactory. … "Serious misconduct" means: (i) serious misbehaviour of a kind which constitutes a serious impediment to the carrying out of an academic staff member's duties …; (ii) serious dereliction of the duties required of the academic staff member's office; or … …' 29 The letter from the Vice-Chancellor to the applicant of 24 July 2003 referred to a letter to the applicant from the second respondent dated 17 February 2003. That letter outlined the allegations against the applicant. It was one of the documents which came before the Misconduct Investigation Committee, which addressed the alleged misconduct or serious misconduct in relation to the applicant and reported on the facts relating to the alleged misconduct or serious misconduct including whether any mitigating circumstances were evident. 30 The report of the Misconduct Investigation Committee comprised some 22 pages. On page 2 the Committee recorded its terms of reference in accordance with clause 49.18 of the Agreement and emphasised that its function was to report on the 'facts' relating to the alleged misconduct or serious misconduct, including whether any mitigating circumstances were evident. On pages 3 – 18 of its report the Committee identified some 11 allegations concerning the applicant as allegations A to K respectively. The report set out particulars of each of the allegations, the applicant's responses to each of them, and the findings of the Committee and its reasons in respect of each of them. 31 After dealing with those matters, the Committee's report included material under the headings '3. MITIGATING CIRCUMSTANCES' and '4. ADDITIONAL OBSERVATIONS'. In the latter section the Committee noted that it had 'confined itself to findings on the specific allegations set out above'. 32 Under the heading '3. MITIGATING CIRCUMSTANCES' the Committee reported 'Mr Shanahan's consistent blanket denials to most of the allegations makes it difficult for him to argue, and the Committee to find, mitigating circumstances'. 33 It is apparent from clause 49.20(iii) and clause 49.21(iii)(c) of the Agreement when taken with the definitions of 'Misconduct' and 'Serious misconduct', that is was open to the Vice-Chancellor on the facts relating to the alleged misconduct or serious misconduct as found by the Misconduct Investigation Committee to terminate the employment of the applicant as she did. 34 In paragraph 4 of their submissions in this Court, counsel for the applicant provided a pithy summary of 'THE BACKGROUND'. In that section of their submissions they stated: '4.2 … the Plaintiff [applicant] had been employed for 7 years in an academic capacity teaching music to students enrolled with the Defendant [presumably intended as a reference to the second respondent]. 4.3 He was dismissed from his employment with the Second Defendant [second respondent] in 2003 following a number of events characterised by the Second Defendant [second respondent] as misconduct. 4.4 The alleged misconduct related to the plaintiff's [applicant's] dealings with students, in particular, instances of physical contact with students. 4.5 In substance, the complaint against the Plaintiff [applicant] was that he had behaved in an "unwelcome" way to students. 4.6 It was clear at all times that the matters complained of had occurred.' 35 The applicant accepts that his employment was terminated. There has been no suggestion that the decision of the Vice-Chancellor was colourable. 36 The reasons for decision of Senior Deputy President Cartwright included the following: '[29] … the Applicant's conduct as a lecturer lifting and tickling female students remains improper conduct in a University teacher/student situation. The other findings of inappropriate conduct as a teacher compound the impropriety. High standards are required of those in positions of trust. Such conduct is, in my view, unacceptable and constitutes serious misconduct within the meaning of the Agreement. It does not become so because the University has published a policy on harassment; in my view self-evident principles which any academic staff member can reasonably be expected to follow dictate that such conduct for a teacher toward students is unacceptable. Even allowing for different value judgements on this question, it cannot be said that a decision to terminate the Applicant's employment for conduct of this type is "capricious, fanciful, spiteful or prejudicial". In my view it is "sound, defensible and well-founded". I find that there was a valid reason for the termination related to the Applicant's conduct.' 37 When the matter came before the Full Bench of the Commission seven grounds of appeal were relied upon by the applicant in his written submissions as demonstrating error on the part of Senior Deputy President Cartwright. Ground 7 was expressed by the Full Bench of the Commission as follows: '7. He failed to give weight to the views of Dr Teoh and gave no reasons for so doing.' 38 The majority in the Full Bench (Senior Deputy President Hamberger and Commissioner Raffaelli) dealt with Ground 7 in their reasons for decision at [196] – [205]. 39 The majority found that Senior Deputy President Cartwright had fallen into error in accordance with the statement of principle set out in House v The King (1936) 55 CLR 499 at 505 per Dixon, Evatt and McTeirnan JJ. The majority found that Senior President Cartwright erred in taking into account some extraneous considerations as grounds for giving relatively little weight to the medical evidence of Dr Teoh, erred in placing less emphasis on the medical evidence because of the way it found itself introduced into the proceedings and erred in failing to give appropriate weight to the medical evidence of Dr Teoh. They also found that a number of the reasons given by Senior Deputy President Cartwright for giving less weight to Dr Teoh's evidence were not reasonable (see [199], [202] and [205] of the reasons for decision of the Full Bench). 40 In the circumstances the Full Bench of the Commission proceeded to determine for itself whether the termination of the applicant's employment was harsh, unjust or unreasonable within the meaning of s 170CG(3) of the Act. 41 The psychiatric report of Dr Teoh, a consultant psychiatrist and physician in addiction medicine, of 14 April 2004 included the following under the heading 'Summary and Opinion': 'Mr Shanahan's psychiatric history is consistent with a diagnosis of a bipolar mood disorder (DSM IV diagnostic criteria). … … he has had mood swings characterized by irritability, rapid speech, disinhibited behaviour and elevation of his mood. These symptoms are consistent with hypomania, which is part of his bipolar mood disorder. … … His behaviour towards the second part of 2002 indicated that his mood was clearly unstable. He had shown disinhibited behaviour and irritability. … … Some of the allegations like lifting up students without their permission, verbal aggression and irritability are consistent with his mood disorder. These symptoms are consistent with the hypomanic phase of the bipolar mood disorder. …' 42 The majority of the Full Bench dealt with Dr Teoh's report in their reasons at [200] as follows: '[200]The medical report of Dr Teoh was unchallenged and there is no reason not to accept its contents. While Dr Teoh did not go so far as to say that Mr Shanahan's inappropriate conduct in the second half of 2002 was a direct result of the hypo manic (sic) phase of his bipolar mood disorder, he did state that "symptoms" such as lifting up students without their permission, verbal aggression and irritability were "consistent" with his hypomania. …' 43 The majority of the Full Bench concluded that the termination of the applicant's employment was not harsh, unjust or unreasonable (see [227] of the decision of the Full Bench). However, before coming to draw its conclusion the majority addressed, seriatim, each of the matters which under s 170CG(3) of the Act the Commission 'must have regard to'. 44 There are two matters which may have some importance. Firstly, unlike Senior Deputy President Cartwright, the majority failed to make a finding, in terms, that there had been 'serious misconduct' within the meaning of the Agreement which provided a 'valid reason for the termination'. 45 Under the heading 'Was there a valid reason for Mr Shanahan's termination?' the majority of the Full Bench recorded its reasons and finding as follows: '[208]Mr. Shanahan's counsel, during his oral submissions, described what he saw as the "principal point" before the appeal bench in this way: "If the University established that Mr. Shanahan was a sexual predator who, motivated sexually, improperly touched female students, then one would, without hesitation, say that such a person should not be employed in a university and his application was bound to fail. On the other hand, if what occurred was no more than boisterous but ill-advised horseplay, then every criterion of fairness would suggest that such conduct ought at least to be the subject of a warning and counselling before termination …" [209] The Senior Deputy President took the view that "whether or not there was a sexual motive, the Applicant's conduct was improper." We agree with the Senior Deputy President. No student should be expected to put up with being lifted and tickled, or swung around a room, by one of their lecturers. We totally reject any characterisation of these incidents as a bit of "tomfoolery". For a number of those on the receiving end it was frightening and degrading. [210] Moreover, there was a clear sexual element to at least some of Mr. Shanahan's misconduct. Little weight should be placed on Mr Shanahan's behaviour towards Ms Spillane – Mr. Shanahan's repeated phone calls to her while undoubtedly unfortunate would only constitute the mildest form of misconduct. However he also made sexual remarks to both Ms. Herbert and Ms Jifkins, the second of whom was subject to one of the "lifting and tickling" episodes. [211] Mr Shanahan's conduct constituted a valid reason for the termination of his employment.' (footnotes omitted) 46 Senior Counsel for the applicant on the present application conceded that 'conduct of the kind in question was inappropriate and conduct of a kind that an academic ought not to engage in'. 47 In the context of the appeal from the decision of Senior Deputy President Cartwright it seems clear that whilst the words 'serious misconduct' were not expressly incorporated in the majority of the Full Bench's reasons, it may be inferred from the findings made at [209] – [211] of their reasons, especially their adoption of Senior Deputy President Cartwright's view, that the majority in fact addressed the correct issue and were entitled to come to the conclusion that the applicant's conduct provided a valid reason for the termination of his employment. Apart from other considerations, none of the grounds of appeal suggest that the majority of the Full Bench failed to address the right question. 48 The second matter is the failure by the majority of the Full Bench to carry forward into its reasoning in paragraphs [209] – [210] an express reference to its findings in respect of Dr Teoh's evidence as set out at [200]. In the context of the majority's overall reasons this is unimportant. The fact is that the conduct in which the applicant engaged and of which complaint was made was not, as the majority found, considered by Dr Teoh as being 'a direct result of the hypo manic (sic) phase' of the applicant's bipolar mood disorder. Rather, his conduct was simply considered to be 'consistent' with the applicant's hypomania. 49 It is clear that the majority of the Full Bench did not find that the actions of the applicant, of which complaint was made, were involuntary and the result of his psychiatric condition. 50 In such circumstances it was unnecessary for the majority to address whether involuntary conduct occasioned by a psychiatric condition could amount to 'serious misconduct' for the purposes of the Agreement. 51 Before deciding whether the termination of the applicant's employment by the second respondent was harsh, unjust or unreasonable, the Full Bench was entitled to have regard under s 170CG(3)(e) to 'any other matters that the Commission considers relevant'. One such matter, to which the majority of the Full Bench had regard, was the applicant's psychiatric condition. At [226] they said: 'It is very likely that Mr. Shanahan's hypomania made at least some contribution to his behaviour in the latter part of 2002. The sheer bizarreness of some [of] his behaviour in lifting and tickling female students in public, as well as his involvement in the Palm Beach fracas, tend to reinforce this conclusion.' 52 Having addressed all relevant issues the majority of the Full Bench proceeded to draw its conclusion at [227] and proffered three reasons in support of that conclusion at [228] – [230]. They said: '[227]However we are still drawn to the conclusion that his termination was not harsh, unjust or unreasonable. [228] First, as we have noted, the conduct itself was totally unacceptable. Any university has a duty of care to protect its students from that sort of behaviour by a member of staff, whatever caused that behaviour. [229] Secondly, it is simply not possible to be confident that if Mr. Shanahan was still employed as a lecturer at the university, he would not commit similar conduct in the future. While his behaviour in the latter part of 2002 was particularly bizarre, he had shown prior to that a continued failure to have regard to the proper boundaries between staff and students. [230] Even more importantly, while Dr. Teoh gave evidence that if Mr. Shanahan adhered to a "closely supervised treatment program" his prognosis was good and his condition could be "stabilised", he also noted that Mr. Shanahan had poor insight into his condition. Mr. Shanahan's intermittent approach to seeking treatment for his condition gives us no confidence that he could be genuinely expected to adhere to close medical supervision. The University should certainly not be put in the position where it would have to monitor closely both Mr. Shanahan's conduct and his psychiatric care. It is simply not reasonable to expect the University to continue to employ him as a lecturer in regular contact with young students under those circumstances.' 53 The findings of the majority of the Full Bench were open to it. The Full Bench did not fail to apply itself to the questions which s 45 of the Act prescribed nor did it misunderstand the nature of the opinion which it was to form. 54 In the circumstances, the Full Bench of the Commission did not commit any reviewable jurisdictional error. 55 We do not consider that the applicant has an arguable case that the first respondent exceeded its jurisdiction. Accordingly, the Application for an Order to Show Cause should be dismissed. 56 The parties did not address us on the question of costs. Perhaps that is because the proceeding in this Court concerned the Full Bench's performance of its duty under the Act to hear and determine an appeal according to law and was thus 'a matter arising under' the Act (see s 347(1) of the Act and Re Polites; Ex Parte The Hoyts Corporation Pty Limited (1991) 173 CLR 78 at 93). That is why it is unnecessary for us to say anything further as to costs. I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Marshall and Graham . Associate: Dated: 13 December 2006 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 693 OF 2006 On remittal from the High Court of Australia BETWEEN: IAN SHANAHAN Applicant AND: AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION First Respondent UNIVERSITY OF WESTERN SYDNEY Second Respondent JUDGES: MARSHALL, GRAHAM AND JESSUP JJ DATE: 13 DECEMBER 2006 PLACE: SYDNEY REASONS FOR JUDGMENT JESSUP J 57 The applicant, Mr Ian Shanahan, was an academic in the tenured employ of the second respondent, the University of Western Sydney. During the period which is presently relevant, his employment was regulated by an industrial agreement certified under the Workplace Relations Act 1996 (Cth) ("the Act"), the University of Western Sydney Academic Staff Enterprise Agreement 2001-2003 ("the certified agreement"). 58 Clause 49 of the certified agreement, which was headed "Dealing with Possible Cases of Misconduct or Serious Misconduct", regulated the procedure by which academic staff might be disciplined for misconduct or serious misconduct, as defined in the agreement. Relevantly to the present case, "serious misconduct" was defined as – serious misbehaviour of a kind which constitutes a serious impediment to the carrying out of an academic staff member's duties or to an academic staff member's colleagues carrying out their duties; [or] serious dereliction of the duties required of the academic staff member's office. "Misconduct" was defined as conduct that was not serious misconduct, but nonetheless was unsatisfactory. The certified agreement provided for a Misconduct Investigation Committee to investigate any matter referred to it, and to report upon the facts relating to the alleged misconduct or serious misconduct, including whether any mitigating circumstances were evident. The committee's report was to be forwarded to the Deputy Vice Chancellor (Resources), and might ultimately be referred to the Vice Chancellor. If the Vice Chancellor were of the view that there had been misconduct or serious misconduct, he or she was empowered under the agreement to take various disciplinary steps including – … terminate the employment of the academic staff member, provided that a decision to terminate the employment of the academic staff member can only be made in instances of serious misconduct .… 59 In 2002, the authorities at the university received a number of complaints from students about the behaviour of the applicant. By letter dated 30 January 2003, the Deputy Vice Chancellor (Resources) informed the applicant that he intended to refer those complaints for investigation pursuant to cl 49 of the certified agreement. The Misconduct Investigation Committee reported on 10 June 2003. The report disclosed that 11 allegations, or groups of allegations, were dealt by the committee. In 6 cases, the committee found that the allegations had been made out. In three cases, the committee found that the allegations had not been made out. In two cases, the committee found that the allegations had been made out in part. In each case, the committee's report provided a short statement of the basis upon which the applicant defended himself against the allegations concerned. In most instances, he denied the allegations. 60 In summarising the applicant's defences, the committee noted that he had conducted his defence essentially by reference to two categories: first, "collusion and coercion", and secondly, "medical issues". As to the former, it was noted that the applicant had claimed that the inconsistencies in the complainants' evidence discredited them, and suggested that there had been collusion and fabrication. He claimed that "rumour and gossip" had contributed to the manifestation of stories about complaints being made against him, and that a staff member whom he named had co-ordinated that collusion, and coerced the complainants, and other witnesses, to be involved in the complaint process. As to the medical issues, the committee noted that the applicant had submitted medical reports relating to a motor vehicle accident in which he was involved, and suggested that injuries which he thereby suffered would have prevented him from doing some of things which had been alleged by the complainants. The committee considered the applicant's contentions under each of these categories of defence, and rejected them. There does not appear to be any occasion upon which the applicant's defence was, in effect, that he was not at the relevant time in control of his own actions. 61 As required by the certified agreement, the committee gave its attention to the question whether there were any mitigating circumstances in the applicant's favour. It noted that his "consistent blanket denials" made it difficult for him to argue, and for the committee to find, that there were mitigating circumstances. However, the committee noted that the applicant had argued that he had not received training in relation to the university's policy on the prevention of harassment, vilification and bullying, on the university's code of conduct, or on the Sex Discrimination Act. He also argued, in mitigation, that he was well-liked by most students, and was considered to be a fair, generous and competent teacher who strove to get the best out of his students. 62 In due course the committee's report found its way to the Vice Chancellor. By letter dated 24 July 2003 addressed to the applicant, the Vice Chancellor terminated the applicant's employment. In that letter, the Vice Chancellor said: It follows that based upon the Committees findings, the University now finds you guilty of serious misconduct in that your behaviour is of a kind, which constitutes a serious impediment to the carrying out of an academic staff member's duties, and that you are in serious dereliction of the duties required of an academic staff member. Your actions have broken the inherent trust relationship within your contract of employment and you have breached your duty of good faith and fidelity to the University of Western Sydney as your employer. In finding as she did, the Vice Chancellor applied the criteria for "serious misconduct" for which provision was made in the definition of that term in the certified agreement, and to which I have referred in par 58 above. 63 On 13 August 2003, the applicant applied to the Australian Industrial Relations Commission ("the Commission") under s 170CE of the Act for relief in respect of the termination of his employment on the ground that that termination was harsh, unjust or unreasonable. In the proceeding which followed, a central question was whether the university had had a "valid reason" for the dismissal of the applicant within the terms of s 170CG(3)(a) of the Act. For this purpose, the university did not simply rely upon the report of the Misconduct Investigation Committee: it called primary evidence of the events to which the original complaints related. For his part, the applicant tendered a report by Dr Ben Teoh, a consultant psychiatrist and physician in addiction medicine. Dr Teoh had seen the applicant in late 2000, in 2001 and in early 2002. The applicant again consulted Dr Teoh in early 2003, and then again on 11 May 2004. Dr Teoh expressed the opinion that the applicant's psychiatric history was consistent with a diagnosis of bipolar mood disorder. He said that, when he first saw the applicant in December 2000, the applicant was experiencing severe depression associated with suicidal ideation. Dr Teoh's report continued: In addition to depression, he has had mood swings characterized by irritability, rapid speech, disinhibited behaviour and elevation of his mood. These symptoms are consistent with hypomania, which is part of his bipolar mood disorder. Dr Teoh said that the applicant's condition improved, and that he stopped seeing Dr Teoh in early 2002. When he saw Dr Teoh again in early 2003, Dr Teoh concluded that his behaviour towards the second part of 2002 indicated that his mood was "clearly unstable" and that he had "shown disinhibited behaviour and irritability". Dr Teoh's report continued: Mr Shanahan stated that he could not recall several of the allegations. It is likely that he would have difficulty recalling specific events during his period of hypomania. Some of the allegations like lifting up students without their permission, verbal aggression and irritability are consistent with his mood disorder. These symptoms are consistent with the hypomanic phase of the bipolar mood disorder. 64 According to the decision at first instance in the Commission, it was argued on behalf of the applicant that his conduct "lacked sexual motivation" and should be seen in the way that, apparently, several of the students themselves regarded it, namely, as "playful or foolish horseplay". It was also submitted that the applicant's behaviour was explained by his medical condition "as being out of character". The way in which the Commission dealt with the medical aspects of the submissions made on behalf of the applicant may be seen in the following passage from its decision: I have considered the evidence of Dr Teoh, Mr Wales arguing that it establishes that the Applicant's conduct in the latter part of 2002 was out of character. Though the Misconduct Investigation Committee was willing to consider medical issues as a mitigating circumstance, the issue was not raised. Nor did the Applicant raise it in his first statement to the Commission. It was not until 7 May 2004, after the Respondent filed statements from the student complainants, that a medical explanation was offered for the Applicant's conduct. A week before the first day of hearing in this matter, on 10 May 2004, the Applicant's solicitor referred him to Dr Teoh for assessment. Dr Teoh saw him on 11 May 2004. The Applicant gave evidence that it was received on the first day of hearing, on 17 May 2004. I agree with Mr Miller that the inference is open that the Applicant saw Dr Teoh to get a report to put into evidence. I am not persuaded that these factors mean that the Applicant should be held any less accountable for his conduct. 65 In its decision published on 5 July 2004, the Commission dismissed the applicant's application under s 170CE of the Act. 66 The applicant appealed to a Full Bench of the Commission. By the terms of s 170JF(2) of the Act, the applicant was confined to grounds "that the Commission was in error in deciding to make the order" by which his application was dismissed. In his case before the Full Bench, the applicant contended that the Commission had been in error in seven respects. As to the first five of these, by a majority the Full Bench found no error in the first instance decision of the Commission. 67 The sixth error claimed by the applicant was that the Commission at first instance had incorrectly rejected the applicant's evidence that he did not recall many of the events alleged against him. The Full Bench made no specific finding on this aspect, apparently because it took the view that the critical issue was whether the relevant events occurred, not whether the applicant could recall them. It noted that there was "no doubt in fact that the events took place". Having said this, the Full Bench surmised that it was odd that the applicant would have categorically denied incidents which took place in the presence of witnesses who were not directly involved unless he genuinely had no recollection thereof. It proceeded to say that it was "quite possible" that the applicant could not recall some incidents that occurred during his period of hypomania, and if it were the case that the applicant could not recall those incidents, that in itself could be evidence that he was indeed suffering from hypomania. In the result, the Full Bench did not make a finding about the applicant's recollection, and did not disturb the finding that had been made in that respect at first instance. 68 The seventh claimed error was that the Commission had "failed to give weight to the views of Dr Teoh and gave no reasons for so doing". The majority referred to two passages from the Commission's decision (including that set out in par 64 above), and held that the chain of reasoning disclosed thereby did reveal an error of an appellable kind. This meant that the majority was obliged to consider for itself whether the applicant's dismissal had been harsh, unjust or unreasonable. It did so within the framework established by s 170CG(3) of the Act. 69 With respect to the question whether the university had a valid reason, the majority referred to the submission made by counsel on behalf of the applicant that the "principal point" before the Full Bench could be described as follows: If the University established that Mr Shanahan was a sexual predator who, motivated sexually, improperly touched female students, then one would, without hesitation, say that such a person should not be employed in a university and his application was bound to fail. On the other hand, if what occurred was no more than boisterous but ill-advised horseplay, then every criterion of fairness would suggest that such conduct ought at least to be the subject of a warning and counselling before termination … The majority referred to the view of the single member of the Commission that, whether or not there was a sexual motive, the applicant's conduct had been improper. It agreed with that view. It continued: We agree with the Senior Deputy President. No student should be expected to put up with being lifted and tickled, or swung around a room, by one of their lecturers. We totally reject any characterisation of these incidents as a bit of "tomfoolery". For a number of those on the receiving end it was frightening and degrading. Moreover, there was a clear sexual element to at least some of Mr Shanahan's misconduct. Little weight should be placed on Mr Shanahan's behaviour towards Ms Spillane – Mr Shanahan's repeated phone calls to her while undoubtedly unfortunate would only constitute the mildest form of misconduct. However he also made sexual remarks to both Ms Herbert and Ms Jifkins, the second of whom was subject to one of the "lifting and tickling" episodes. The majority concluded that the applicant's conduct constituted a valid reason for the termination of his employment. 70 In a decision published on 27 May 2005, the Full Bench, by majority, dismissed the applicant's appeal. 71 On 25 November 2005, the applicant filed an application for orders to show cause in the Sydney Registry of the High Court of Australia, together with a supporting affidavit sworn by his solicitor on that day. The deponent stated that it was the applicant's case at first instance, and before the Full Bench, that "at least much of the alleged misconduct, occurred by reason of psychiatric difficulties" suffered by the applicant. The deponent referred to the way in which the sixth alleged error had been disposed of by the majority in the Full Bench, and said that the majority accepted that the applicant could not remember the events in question (something of an overstatement, in my reading of the majority's reasons), and that this was a fact tending to suggest a mental disorder known as hypomania. The deponent referred to the finding by the majority that the single member of the Commission had erred in not accepting Dr Teoh's report at face value, and to the fact that the majority then considered whether the termination of the employment of the applicant had been harsh, unjust or unreasonable. The affidavit concluded: The majority did not consider whether a person, in particular the Plaintiff, when dismissed from employment for misconduct, must necessarily be properly in control of his or her mind and/or could or did have the necessary mental element to be guilty of misconduct. 72 The application for an order to show cause in the High Court relied upon the following grounds: 1. That the [Full Bench] failed to exercise its jurisdiction in failing to consider and determine according to law whether a person suffering from a disease of the kind such as to cause the person to engage in disinhibited conduct is or may be capable of misconduct in engaging in such disinhibited conduct. 2. That the [Full Bench] failed to exercise its jurisdiction in failing to consider and determine according to law whether, in circumstances where the [applicant]'s employment with the [university] was terminated by the [university] for reason of misconduct, such termination for misconduct was or could be, in proceedings brought pursuant to the provisions of section 170CE of the Workplace Relations Act 1996, for a valid reason within the meaning of the said Act where the actions said to constitute misconduct occurred by reason of a disease of the mind of the [applicant]. On 1 April 2006, by consent, the High Court ordered that the applicant's application for a rule to show cause be remitted to this court. 73 The application is for writs of mandamus and certiorari. The mandamus aspect is, of course, fundamental to the applicant's prospect of success generally. The applicant's case is that the Full Bench constructively failed to exercise its jurisdiction when it disposed of his appeal from the original decision of the Commission dismissing his application under s 170CE of the Act. It is apparent that each of the grounds upon which the applicant relies is based upon the proposition that the applicant's mental condition at the time of the events about which complaint had been made was such as to render it impossible – or at least practically so – for the university to have adjudged him guilty of misconduct. The proposition is, it seems, that wilfulness is an essential element of misconduct in the employment context, and that the applicant was not, at the relevant times, capable of forming an intention, or capable of being sufficiently in control of his actions, to the extent necessary to justify the characterisation of his conduct as wilful. 74 The argument on behalf of the applicant was based upon the jurisprudence established by Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285 that the summary termination of the employment of an employee on the ground of misconduct is justifiable on the basis that the conduct demonstrates a repudiation of the contract of service by the employee. That is to say, the misconduct must have such a quality of wilfulness about it as to connote "a deliberate flouting of the essential contractual conditions": [1959] 2 All ER at 288. Counsel for the applicant relied also upon the judgment of the Full Court in North v Television Corporation Ltd (1976) 11 ALR 599, in which Laws was followed. It was submitted that a finding of wilfulness in the Laws sense was critical to any conclusion that the applicant had misconducted himself such as to provide legal justification for the summary termination of his employment. It was submitted that the majority of the Full Bench made no reference to Laws or to the principle for which it stood, and that, therefore, they constructively failed to exercise their jurisdiction. 75 There is no doubt but that, if wilfulness in the Laws sense was an essential ingredient of the university's "valid reason" for terminating the employment of the applicant, the Full Bench would have constructively failed to exercise jurisdiction if, assuming that the matter had been properly put to it, it omitted to address that question. There is also no doubt but that, on the facts of this case, the majority of the Full Bench made no reference to Laws or to the principle for which it stands. I consider, however, that there is no substance in the submissions made on behalf of the applicant in this regard, for reasons which follow. 76 First, neither the Commission at first instance nor the Full Bench on appeal was concerned with the question whether, as a matter of contract, the university was entitled lawfully to dismiss the applicant summarily. I accept, of course, that an answer to that question would often be (and in the present case might well have been) an ingredient in the series of propositions which together provide an answer to the question with which the Full Bench was concerned, namely, whether the university had a "valid reason" for the termination. But the question whether the applicant's conduct was repudiatory was not, as such, the question which the Full Bench was required to address. It was not an essential statutory or legal ingredient, such that failure to take it into account would constitute a constructive failure to exercise jurisdiction. 77 Secondly, the question before the Full Bench was not whether the applicant had been guilty of misconduct in the general sense. The question was whether the applicant had been guilty of serious misconduct as defined in the certified agreement. That was the definition which guided the decision of the Vice Chancellor and, although not specifically referred to, there is no reason to consider that it was not also the touchstone for the deliberations both of the Commission at first instance and of the Full Bench. The effect of the certified agreement was that the university had the legal authority summarily to terminate the employment of the applicant if he had been guilty of serious misconduct as defined, whether or not his conduct amounted also to misconduct in the Laws sense. 78 Thirdly, we were informed that the particular point upon which the applicant here relies was not advanced before the Full Bench. In those circumstances, at least as a matter of discretion, I would decline to order mandamus. However, the omission may have, and in my opinion does have, a more fundamental dimension. This is not a case in which it is suggested that the Full Bench has acted in excess of jurisdiction. There is no order or similar instrument having ostensible coercive effect but which, as a matter of law, is a nullity. The Full Bench dismissed the applicant's application. Save for that dismissal (which was, in effect a decision that no order would be made) there is no act having statutory effect which hereafter regulates the relations of the parties. Neither is this a case of a statutory body or official being under an obligation, derived from the statute itself, to take a particular step having consequences in law. This is a case where the Commission, a quasi-judicial body, had the statutory duty to deal with an application made before it, and to do so in an inter partes setting. It being accepted that the Full Bench in the present case did have regard to the question whether there was a valid reason for the termination of the applicant's employment as required by s 170CG(3)(a) of the Act, its obligations beyond that (or, perhaps more accurately, within that) to consider detailed elements of the facts and circumstances which bore upon that question depended substantially if not entirely upon the way the parties conducted their respective cases before it. I do not consider that the Full Bench should be taken as having constructively failed to exercise its jurisdiction in these circumstances where the party making such a complaint has conducted its case without reference to the particular legal obligation upon which it now seeks to rely. 79 For the foregoing reasons, I take the view that the applicant is not entitled to mandamus, and it follows that neither is he entitled to certiorari. I consider that the appropriate disposition of the matter would be to order that the application for orders to show cause be treated as an application for orders absolute, and to dismiss that application. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. Associate: Dated: 13 December 2006 Counsel for the Applicant: I M Wales SC and A G Rogers Solicitor for the Applicant: Harrington Maguire & O'Brien The First Respondent filed a submitting appearance. Counsel for the Second Respondent: M P Cleary Solicitor for the Second Respondent: Pryor Tzannes & Wallis Date of Hearing: 21 November 2006 Date of Judgment: 13 December 2006