Industrial Relations Commission New South Wales Medium Neutral Citation: New South Wales Teachers Federation (on behalf of Pamela Hall) and Managing Director TAFE NSW as Division Head, TAFE Commission Division of Government Service [2011] NSWIRComm 86 Hearing dates: 17 May 2011 Decision date: 28 June 2011 Jurisdiction: Industrial Relations Commission Before: Walton J, Vice-President; Kavanagh J; Ritchie C Decision: 1. Leave to appeal is granted. 2. The appeal is upheld. 3. The decision and orders of Commissioner Connor in Matter No IRC1703 of 2009 are set aside. 4. The appellant is re-instated in her former position effective from the date of this decision with continuity of service (save as to the accrual of annual leave and long service leave), upon the condition that the appellant shall receive a formal reprimand as to the finding of a conflict of interest in the procedures she followed in 2002 and 2005 related to the assessment of her sister's qualifications. Catchwords: APPEAL - pursuant to s 187 from decision of Commissioner - application for re-instatement of head teacher dismissed for misconduct in breach of employer's conflict of interest policy - error of law by Commissioner in finding corrupt motivation - error in basing opinion on a case not prosecuted by respondent - not a ground relied upon for dismissal - appeal upheld and leave to appeal granted - facts reviewed on appeal reveal conflict in breach of policy in processes put in place by head teacher in considering academic credits sought by sister - findings of conflict in acts of head teacher confirmed - Full Bench determines application - severity of penalty considered - termination harsh - order for re-instatement from date of judgment with reprimand - leave to appeal allowed Legislation Cited: Industrial Relations Act 1996 (NSW) s 89, s 188 Technical and Further Education Commission Act 1990 (NSW) s 22D(1), s 22E Cases Cited: Blyth Chemicals Limited v Bushnell (1933) 49 CLR 66 Briginshaw v Briginshaw (1938) 60 CLR 336 Hall v Department of Technical and Further Education [2010] NSWIRComm 1049 Burge v NSW BHP Steel Pty Ltd [2001] NSWIRComm 117; (2001) 105 IR 325 Chamberlain v The Queen (No. 2) (1984) 153 CLR 521 Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 Suvaal v Cessnock City Council [2003] HCA 41; (2003) 200 ALR 1; (2003) 77 ALJR 1449 Sydney Ferries Corporation v The Seamen's Union of Australia [2009] NSWIRComm 126; (2009) 186 IR 99 Category: Principal judgment Parties: New South Wales Teachers Federation (on behalf of Pamela Hall) (Appellant) Managing Director TAFE NSW as Division Head, TAFE Commission Division of Government Service (Respondent) Representation: C M Howell of counsel (Appellant) P Ginters of counsel (Respondent) Federation Law (Appellant) TAFE NSW (Respondent) File Number(s): IRC 1335 of 2010 Decision under appeal Citation: Hall v Department of Technical and Further Education [2010] NSWIRComm 1049 Date of Decision: 2010-10-28 00:00:00 Before: Connor C File Number(s): IRC 1703 of 2009 DECISION 1This is an application by the New South Wales Teachers Federation ("the Federation") on behalf of its member, Pamela Hall, for leave to appeal and, if granted, appeal against a decision of Connor C in Hall v Department of Technical and Further Education [2010] NSWIRComm 1049 in which the Commissioner declined to grant the application for reinstatement filed by the Federation pursuant to Pt 6 Ch 2 of the Industrial Relations Act 1996 ("the IR Act"). Background 2Ms Hall had been teaching for 25 years both in part-time employment (from 1982 to 1986) and later in full-time employment (from 1986 to the time of her dismissal). She had been a Head Teacher, Band Two, at the West Wollongong Technical College of the Department of Technical and Further Education (the Illawarra Institute of the TAFE) ("the TAFE") for ten years from 1999 to the time of her dismissal in December 2009. Ms Hall's sister, Susan Hardy, was also employed at the TAFE on a part-time basis. 3On 7 December 2009, Ms Hall was dismissed for misconduct by the Department of Technical and Further Education ("the Department") acting pursuant to the provisions of s 22D(1) of the Technical and Further Education Commission Act 1990 ("the TAFEC Act"). Section 22D(1) states: 22D Definitions (1) In this Part: "disciplinary action", in relation to a member of staff, means any one or more of the following: (a) dismissal from the Government Service, (b) directing the member of staff to resign, or to be allowed to resign, from the Government Service within a specified time, (c) . . . (d) the imposition of a fine, (e) a caution or reprimand. "misconduct" -see section 22E. . . . 4Relevantly, s 22E(1) of the TAFEC Act defines "misconduct" as follows: 22E Meaning of "misconduct" (1) For the purposes of this Part, "misconduct" includes, but is not limited to, any of the following: (a) a contravention of any provision of this Act or the regulations, (b) engaging in, or having engaged in, any conduct that justifies the taking of disciplinary action, (c) taking any detrimental action (within the meaning of the Public Interest Disclosures Act 1994) against a person that is substantially in reprisal for the person making a protected disclosure within the meaning of that Act, (d) taking any action against a person that is substantially in reprisal for an internal disclosure made by that person. 5The four allegations which were relied upon as the basis for dismissal were: 1. In 2002 you placed the name of Susan Hardy on roll books and mark sheets for the Workplace Training and Assessment which Ms Hardy did not undertake after the books and sheets had been signed off by the teacher responsible for those classes. 2. By placing Susan Hardy's name on roll books and mark sheets for classes she did not attend in 2002 you arranged for Ms Hardy to gain a qualification for which she was not eligible being a Certificate in Workplace Training and Assessment. 3. ... 4. ... 5. In 2005 you placed the name of Susan Hardy on roll books, mark sheets for the following classes Ms Hardy did not undertake: (19 'classes' were then listed) 6. In 2005 you undertook assessments for Susan Hardy for the modules listed at Allegation 5 to enable her to gain qualifications. As you are related to Ms Hardy your assessment of Ms Hardy is in breach of TAFE NSW Assessment policy. Two other grounds (3 and 4), although originally notified as grounds supporting a possible termination, were not pursued by the Department. After inquiry, Ms Hall was found guilty of misconduct and her employment was terminated. 6The 2002 allegation involved an upgrade for a Certificate IV in Workplace Training and Assessment (course 8388). Ms Hardy already had a qualification known as VITAL (Vocational Education and Training Initial Teaching and Learning). The issue was whether seven VITAL modules could be recognised for the Certificate IV, leaving one more module to be completed by Ms Hardy. 7The 2005 allegation involved gaining a Certificate IV in Business Studies (course 9766), for which Ms Hardy claimed credit for a number of TAFE courses she had previously undertaken. This prior learning, if credited, would mean that Ms Hardy had only a further six modules to complete for the Certificate IV. The Commissioner's Decision 8The learned Commissioner, having heard detailed evidence on the asserted acts relied upon by the Department as establishing the misconduct which led to the termination of Ms Hall, identified the essential question before him in the following terms at [28]: The issues before me turn essentially on whether or not Ms Hall acted in good faith in providing Ms Hardy with the qualifications she sought or whether her conduct constituted such a serious breach of trust for TAFE as to warrant her dismissal. The Commissioner made the following findings in relation to the Department's "Ethical Practice and Conflict of Interest" Policy at [34]: That appears to me to be no more than a commonsense approach. I regard compliance with the code of conduct as fundamental to Ms Hall's employment. and at [38]: Why did Ms Hall not act at arms length with Ms Hardy's assessments in both 2002 and 2005? She should have done so, in my opinion. 9The Commissioner then concluded as to the acts of Ms Hall at [35]: To my mind there were sufficient irregularities in the processes Ms Hall put in place in both 2002 and 2005 with respect to the assessment of Ms Hardy for the two courses in question to raise serious concerns as a perceived conflict of interests on Ms Hall's part. It would appear to me that from the outset the processes were inappropriately casual and I would have expected that a considerably more formal approach would have been adopted in the assessments made of Ms Hardy's prior qualifications to match them with current courses. 10The Commissioner then held at [40] to [43]: [40] I am therefore satisfied that any reasonable observer would conclude that there was a perceived conflict of interests in both 2002 and 2005 when Ms Hall placed Ms Hardy's name on the roll and mark sheets and, consequently, a breach of the established code for the TAFE. No matter how honest Ms Hall and Ms Hardy were acting, their conduct was highly suspicious, in my opinion. Ms Hall's conduct clearly gives rise to a perception of a conflict of interests on her part. [41] That having been said, is a simple perception of a conflict of interest grounds for dismissal of the offending employee? I do not think so. It is certainly justification for some disciplinary action and counselling but, in my opinion, it would not necessarily be sufficient to form the proper basis of a dismissal of an employee with an otherwise satisfactory employment record. And it follows from the reasoning of Dixon and McTiernan JJ in Blyth Chemicals Limited v. Bushnell that I should not too ready imply improper motives against Ms Hall and Ms Hardy unless the evidence clearly leads me in that direction. Mere suspicion of the improper motives of Ms Hall is insufficient. There must be something more than that. [42] But in my opinion there is. For instance, in 2005 why did Ms Hall arrange for "blind assessments" for some modules [9765L, 9766C, 9765M and 9766D] and not with respect to other modules [9775A and 9775B]? Not only was there a perceived conflict of interests on Ms Hall's part but, in my opinion, on the balance of probabilities according to the standard set in Briginshaw v. Briginshaw , a real conflict of interests - a clear breach of the code of conduct under which Ms Hall was obliged to operate in her activities as head principal. The inescapable conclusion I draw is that Ms Hall took over the assessment of Ms Hardy's qualifications so that she could give her qualifications that she may not necessarily have otherwise received or at least to avoid the risk that Ms Hardy may be assessed as not having completed the necessary qualifications for the new courses. [43] For those reasons I see no grounds to intervene in support of Ms Hall in these proceeding and I decline to do so. 11In effect the Commissioner found that the appellant placed herself in a situation of "a perceived conflict of interests in both 2002 and 2005 when Ms Hall placed Ms Hardy's name on the roll and mark sheets" which, consequently, resulted in "a breach of the established code for the TAFE" and, further, that the appellant placed herself in a position of "real" conflict of interest, which was "a clear breach of the code of conduct under which Ms Hall was obliged to operate in her activities as head principal" when she took over the assessment of her sister's qualifications to give her qualifications "she may not necessarily otherwise have received". 12The learned Commissioner, therefore, reached two separate but not disparate conclusions. Firstly, he was satisfied there was conduct in both 2002 and 2005 that was in breach of the policy, which clearly could give rise to a perceived conflict of interest, but that conduct was not ground for dismissal given Ms Hall's satisfactory employment record. Secondly, he found, by inference, there was a real conflict of interest because Ms Hall's motivation was to assist her sister to achieve qualifications she might otherwise not necessarily have received. On that ground the Commissioner upheld (in effect) the decision of the Department to terminate Ms Hall's employment. The Appeal 13In seeking leave to appeal, Ms Hall pleaded the following grounds of appeal in an amended application: H. Grounds of appeal are that the Commissioner erred in: 1. Making the following finding of fact which was not open on the evidence or was contrary to the weight of the evidence: That Ms Hall took over the assessment of Ms Hardy's qualifications so that she could give her qualifications that she may not necessarily have otherwise received or at least to avoid the risk that Ms Hardy may be assessed as not having completed the necessary qualifications for the new courses. 1B. The Commissioner erred in law in that he denied Ms Hall natural justice by making adverse findings as to her motive, purpose or intent which had not been put to Ms Hall in cross examination and which were not advanced as part of the respondent's case. 2. Failing to make necessary findings of fact in respect of the following matters: i. whether the appellant had approached Mr McDonald or Ms McLeod in 2002 for assistance and/or advice in the assessment of Ms Hall's eligibility for a Certificate IV in Workplace Training and Assessment; ii. the extent to which Ms Hardy's prior qualifications entitled her to advanced standing in respect of the Certificate IV in Workplace Training and Assessment; iii. whether Mr McDonald undertook a 'module mapping' exercise in respect of Ms Hardy for course 8388 in 2002; iv. whether Mr McDonald in 2002 knew that Ms Hardy was a student in course 8388; v. whether Ms McLeod undertook an assessment of Ms Hardy in 2002 for module 8389A; vi. the extent to which prior qualifications gave Ms Hardy advances standing in respect of the Certificate VI in Business Studies in 2005; and vii. whether or not Ms Tasevski, Ms McLeod were approached by the applicant in 2005 to conduct a 'blind assessment' of Ms Hardy's work for certain modules of the Certificate IV in Business Studies. 3. Failing to take into account relevant evidence, being: i. Mr McDonald's acceptance that Ms Hardy's prior qualifications would give her advanced standing for seven modules of the Certificate VI in Workplace Training and Assessment; ii. the appellant's discussions in 2002 with Mr McDonald about the assessment of Ms Hardy's qualifications; iii. the assessment by Ms McLeod in 2002 of Ms Hardy's work for module 8389A; iv. the fact that the module mapping conducted by the appellant in respect of Ms Hardy's prior qualifications for the Certificate VI in Business Studies was (with the exception of minor clerical errors) accurate; and vii. the fact that it was not uncommon for other teachers to enter student results for students who were relatives on rolls and ADP sheets. 4. Failing to give reasons or adequate reasons for his decision and findings. I. Relief Claimed: And the application claims orders that she be reinstated to her former employment with ancillary orders for back pay and continuity of service pursuant to s89 of the Act. 14The grounds of the appeal, therefore, attack all aspects of the Commissioner's decision including the determination that Ms Hall's motive, purpose or intent was to provide her sister with assistance; the failure to make findings of fact related to Ms Hall's acts; the failure to take into account relevant evidence as to the allegations; and the failure to give reasons or adequate reasons for his decision. Submissions Grounds 1 and 1B: Findings as to Motivation 15The appellant contended - as the respondent had neither put the proposition of improper motive to Ms Hall nor relied upon it in the hearing at first instance, nor had it been a ground relied upon by the Department for dismissal - the Commissioner erred in law in reaching his "inescapable conclusion" (by inference) that Ms Hall was motivated improperly to assist her sister. The appellant further submitted the finding of the Commissioner that Ms Hall had an improper motive had to be based on his assessment of the credit of witnesses and the learned Commissioner failed to make any assessments as to the credit of any witness. 16The appellant placed emphasis on a reading of the learned Commissioner's reasoning at [41] where the Commissioner stated he would not have upheld the dismissal of Ms Hall (read: would not have found it to be harsh, unreasonable or unjust pursuant to s 84 of the IR Act) had he only had to consider evidence which, he was satisfied, established Ms Hall had "carelessly" placed herself in a position of "conflict of interest". 17However, as the Commissioner at [42] went on to form the "inescapable conclusion" that Ms Hall "took over" the assessment of her sister's qualifications "so that she could give her qualifications she may not necessarily have otherwise received", the learned Commissioner fell into error. Here, the appellant contended, he found there was a "corrupt purpose" for Ms Hall's actions. Such a finding was an error of law as the respondent had never advanced a case that Ms Hall had either a corrupt motive or an improper purpose and the Department had not relied upon corrupt motivation or improper purpose to terminate her employment. 18It was further submitted by the appellant that no factual findings were made by the Commissioner which could establish a proper basis for the Commissioner's conclusion as to improper motive. Such a finding was, therefore, not available on the evidence. 19The respondent, as to the first ground of appeal related to motivation, conceded, on appeal, that Ms Hall's motivation was not a ground relied upon at first instance or by the Department in its decision to terminate. However, the respondent contended the Commissioner made no error. The respondent pressed the Full Bench to consider the weight of the evidence, which evidence gave substance to the Commissioner's "rational inference" as to Ms Hall's motivation, sufficient to establish the Commissioner's finding of a conflict of interest. Grounds 2 and 3: Factual Findings in Error/Failure to make Findings 20The appellant contended it was necessary for the Commissioner to make findings of fact as to all the acts relied upon by the respondent to establish the asserted conflict and contended the Commissioner was in error in failing to so do. 21As to the 2002 allegation, the appellant submitted, there was a necessity for the Commissioner to make findings of fact before his determination as to conduct, which he failed to do: For example: Mr McDonald's evidence (head teacher at the Shellharbour campus of the Illawarra Institute and the teacher for the workplace training and assessment) was that he could not recall whether he conducted the module mapping exercise for Ms Hardy (ground 2(iii) of the appeal). This evidence, especially in the circumstance where Mr McDonald had signed off the marking record (which indicated Ms Hardy had enrolled in the course (ground 2(iv) of the appeal)) should have led to a finding the process followed was a proper one. Another example relied upon by the appellant was: the weight of the evidence established that the mapping exercise was conducted in a manner that was a reflection of the widespread practice of other teachers within the work environment so a finding of corrupt conduct was not open. 22As to the 2005 allegation, the appellant contended, on appeal: The allegation of the respondent that the modules had been improperly assessed was answered by evidence they were properly assessed through the "blind marking" procedure set up by Ms Hall to avoid perceptions of conflict. The Commissioner did not make a finding on this issue but should have made such a finding. The appellant generally submitted the evidence established there was no gain for Ms Hardy and there was no evidence Ms Hardy sought to gain from Ms Hall any advantage. 23Such findings, it was submitted, were relevant matters necessary to be considered before the Commissioner could reach a proper decision. The appellant further contended findings of fact (not made) would all have been found in Ms Hall's favour and would have had a significant impact in mitigation against the ultimate erroneous finding of the Commissioner that her conduct was corrupt. 24Generally, the appellant contended, in the context of Ms Hall's 25 years of unblemished service, the circumstances, revealed at first instance and on appeal, did not warrant dismissal as the Commissioner himself acknowledged at [41]. 25As to the attack made by the appellant of the failure of the Commissioner to make findings of fact, the respondent submitted the evidence supporting the 2002 allegations disclosed the appellant placed entries on the mark sheets after they had been ruled off by Mr McDonald. Further, the module mapping exercise undertaken by Ms Hall was not, as she sought to contend, merely an administrative step. The learned Commissioner specifically rejected that proposition. 26The respondent submitted it was, therefore, not necessary for the Commissioner to make express findings in relation to appeal grounds (2)(i)-(ii), (iv)-(v) or refer expressly in his reasons for decision to those matters relied upon in appeal grounds 3(i)-(iii). Further, the respondent submitted, the Commissioner did make findings in relation to appeal ground 2(iii), namely, Mr McDonald's involvement in the mapping exercise. 27As to these grounds of appeal, the respondent generally contended, the ultimate finding of the Commissioner was based on the fact that the appellant had, insofar as she was inextricably involved in the assessment processes for Ms Hardy in 2002 and 2005, placed herself in a position of real conflict of interest and that, in doing so, she had conducted herself in a manner that was in breach of a "fundamental" tenet of her employment - compliance with the policy. In these circumstances, it was not necessary for the Commissioner to make express findings in relation to appeal grounds (2)(vi) and (vii) and 3(iv)-(vii). Ground 4: Failure to Give Reasons 28This ground was relied upon by the appellant who contended the Commissioner, generally, erred in failing to give reasons or adequate reasons for both his findings of fact and the decision. The respondent contended the Commissioner's reasons, generally, were "adequate". The respondent contended the learned Commissioner was required to make an "evaluative" judgment and the findings he did make allowed the Commissioner to properly infer as to motivation. Conclusion 29The primary issue raised at first instance and on appeal was whether Ms Hall had breached her obligations under the Conflict of Interest Policy of the Department in her dealings with her sister's qualifications and, if so, whether such breaches established a misconduct sufficient to terminate a long term, senior employee. We, therefore, accept the Commissioner's finding that adherence to the tenets of the Department's policy on conflict of interest was "fundamental" to the appellant's employment. 30Some matters need to be addressed by the Full Bench before it considers the grounds of appeal. Firstly, the Commissioner's reasons for decision do not reveal an express finding as to whether the appellant was harshly, unreasonably or unjustly dismissed. Rather, the Commissioner determined he found "no grounds to intervene in support of Ms Hall" and declined to do so. 31We accept, implicit in the reasons for decision, the Commissioner formed the view, having regard to the appellant's conduct, that her acts were in "clear breach" of the fundamental tenets of her employment. Therefore, he concluded, the decision to dismiss (after the appellant had been provided with an opportunity to resign, which the appellant did not avail herself of) was neither harsh, unreasonable nor unjust. 32The Full Bench of the Commission is "comfortably satisfied", on balance, that it is implicit in a reading of the decision at [41] to [43] that the Commissioner made a determination that the appellant's dismissal was neither harsh, unreasonable nor unjust. Nonetheless, we consider the Commissioner was satisfied, in reaching his conclusion, there was a "real" conflict of interest such that there was misconduct sufficient to support termination of Ms Hall's employment. 33Secondly, we accept, as was agreed between the parties at first instance and on appeal, the onus of proving the appellant's misconduct fell upon the respondent and the standard of "persuasion" is that as held in Briginshaw v Briginshaw (1938) 60 CLR 336. Grounds 1 and 1B: Findings as to Motivation 34These grounds of appeal challenge the Commissioner's determination at [43] to not "intervene" because of his assessment as to Ms Hall's motivation. The appellant contended, in reaching this conclusion, there was an error of law. 35The respondent advanced a case before the Commissioner based on the effect of the circumstantial evidence placed before him and the inferences to be drawn from that evidence. However, the respondent also contended, the facts, which were subsidiary or connected to the conclusion that the appellant engaged in misconduct, were established by the Commissioner sufficient to enable him to reach the proper conclusion there was a real conflict of interest because of Ms Hall's motivation to help her sister which grounded the finding of misconduct justifying dismissal. The respondent submitted this "rational inference" as to Ms Hall's motivation was available to the Commissioner and the finding by him at [42] was properly expressed in the application of the Briginshaw test: ... on the balance of probabilities according to the standard set in Briginshaw v. Briginshaw , a real conflict of interests - a clear breach of the code of conduct under which Ms Hall was obliged to operate in her activities as head principal. 36Reliance was placed by the respondent, in support of the Commissioner's "rational inference" finding as to motivation, on the reasoning in Chamberlain v The Queen (No. 2) (1984) 153 CLR 521 where the High Court held (at 535 to 536): ... in a case depending on circumstantial evidence, the jury should not reject one circumstance because, considered alone, no inference of guilt can be drawn from it. It is well established that the jury must consider "the weight which is to be given to the united force of all the circumstances put together": per Lord Cairns, in Belhaven and Stenton Peerage , cited in Reg. v. Van Beelen ; and see Thomas v. The Queen and cases there cited. ... The Court rejected this argument. Dixon C.J. said: All the circumstances of the case must be weighed in judging whether there is evidence upon which a jury may reasonably be satisfied beyond reasonable doubt of the commission of the crime charged. There may be many cases where it is extremely dangerous to rely heavily on the existence of a motive, where an unexplained death or disappearance of a person is not otherwise proved to be attributable to the accused; but all such considerations must be dealt with on the facts of the particular case. I cannot think, however, that in a case where the prosecution is based on circumstantial evidence any part of the circumstances can be put on one side as relating to motive only and therefore not to be weighed as part of the proofs of what was done. It was the submission of the respondent that, given the principles recited in Chamberlain , all the circumstantial evidence placed before the Commission could be considered by the Commissioner in reaching his conclusion on motivation. 37We reject the submission that circumstantial evidence could be used for the Commissioner's conclusion as to motivation. The inference cast by the Commissioner that Ms Hall had a corrupt motive in assisting her sister was a proposition that was never put to Ms Hall at first instance and was not a ground relied upon by the respondent to terminate Ms Hall. The respondent's case was not that Ms Hall was motivated to assist her sister to give her "qualifications she may not necessarily have otherwise received". Rather, as Mr Ginters, of counsel for the respondent, conceded on appeal, the case conducted by the respondent at first instance was: the appellant had engaged in an impermissible conflict of interest but ... it was not directly put to Ms Hall in cross examination that her motives were dishonest in that regard. 38The Commissioner, in his reasoning, took guidance, in concluding as to Ms Hall's "corrupt" motivation (or, as the respondent has termed it, 'dishonest motivation'), from the reasoning of Dixon and McTiernan JJ in Blyth Chemicals Limited v Bushnell (1933) 49 CLR 66 (at 81 to 83): ...Conduct which in respect of important matters is incompatible with the fulfilment of an employee's duty, or involves an opposition, or conflict between his interest and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee, is a ground for dismissal [ Boston Deep Sea Fishing and Ice Company v. Ansell (1888) 39 Ch D 339 at pp.357-8 and 362-4; English and Australian Copper Company v. Johnson (1911) 13 CLR 490; Shepherd v. Felt and Textiles of Australia Limited (1931) 45 CLR 359]. But the conduct of the employee must itself involve the incompatibility, conflict, or impediment, or be destructive of confidence. An actual repugnance between his acts and his relationship must be found. ... In the present case, many circumstances were given in evidence from which it might be inferred that in all that he did the respondent was actuated by one design, namely, to prepare a position to which he could retreat with a considerable part of his employer's business if it should become necessary or desirable to vacate the management of (a prospective rival). If any such finding had been made, the learned judge would clearly have been entitled, if not bound, to hold that the respondent had been guilty of misconduct. But, although there was evidence from which such an inference might have been drawn, the respondent's conduct was capable of an innocent construction ... In the view we take of the circumstances of the case, the motives and intentions of the respondent become all-important; for the significance and sufficiency as a justification of the other items of misconduct relied upon appear to us to depend upon the truth of his explanation or the bona fides of his acts. Further, the effect to be given to all the acts combined, which have been established against the respondent, must in the end be governed by an estimate of his honesty and motives. The chief embarrassment we have felt in the decision of the appeal arises from the lack of any explicit finding by the learned judge upon the subject ... 39It was here the Commissioner fell into error and where the raison d'etre of the reasoning in Blyth was incorrectly applied. In Blyth, it was held inferences could be cast dependent upon "the truth of his explanation or the bona fides of his acts". However, Ms Hall was never given an opportunity to address the proposition she had an improper motive for her acts so there was no evidence on which the Commissioner could properly assess the truth of any explanation or the bona fides of Ms Hall's acts, let alone properly conclude that the motivation, in fact, existed at the relevant time. 40In Suvaal v Cessnock City Council [2003] HCA 41; (2003) 200 ALR 1; (2003) 77 ALJR 1449, the High Court considered an appeal where a judgment was entered on grounds not argued nor pleaded. The Court held at [36] and [37]: [36] A trier of fact, confronted with divergent cases being advanced by the parties, may decline to accept either case and may proceed to make findings not exactly representing what either party said ( Williams v Smith (1960) 103 CLR 539 at 545). But that does not justify the creation of an entirely new case with which the losing party had no testimonial or other evidentiary opportunity to deal. [37] In Anchor Products Ltd v Hedges (1966) 115 CLR 493 at 499. Windeyer J said: "[I]f a plaintiff builds his case entirely upon allegations in the pleadings of particular acts or omissions on the part of the defendant, he may be confined to the issue he has thus chosen, unless at the trial he be allowed to amend". ... 41In this matter, the respondent did not plead nor advance a case against Ms Hall based upon a corrupt or dishonest motivation. Nor was there any evidence led by the respondent which could have resulted in a proper conclusion as to Ms Hall's motivation. The respondent built its case entirely on the proposition that the procedures Ms Hall set up were in breach of the policy and revealed a conflict which constituted misconduct. The decision of the Commissioner should have been confined to that issue. It was not open to determine the matter based upon issues not advanced before him, namely, Ms Hall's motivation. Thus, in giving his opinion as to motivation, the Commissioner determined the fate of Ms Hall on a ground not advanced before him. The creation of a new case, based on inferences cast from circumstantial evidence, could not be used to form the Commissioner's opinion. That he did so was a denial of procedural fairness. 42The respondent further contended, given the findings of the Commissioner on his assessment of the credibility of witnesses, it was open to the Commissioner to find an improper motivation. However, in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118, the majority (Gleeson CJ, Gummow and Kirby JJ) dealt with an appellate Court's jurisdiction where inferences cast were not available and said at [28] and [29]: [28] ... the mere fact that a trial judge necessarily reached a conclusion favouring the witnesses of one party over those of another does not, and cannot, prevent the performance by a court of appeal of the functions imposed on it by statute. In particular cases incontrovertible facts or uncontested testimony will demonstrate that the trial judge's conclusions are erroneous, even when they appear to be, or are stated to be, based on credibility findings (eg Voulis v Kozary (1975) 180 CLR 177; SRA (1999) 73 ALJR 306; 160 ALR 588 ; cf Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 N SWLR 326 at 349-351. [29] That this is so is demonstrated in several recent decisions of this Court (eg Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd ; (1999) 161 ALR 599 at 603. See also SRA (1999) 73 ALJR 306; 160 ALR 588). In some, quite rare, cases, although the facts fall short of being "incontrovertible", an appellate conclusion may be reached that the decision at trial is "glaringly improbable" ( Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842 at 844; 62 ALR 53 at 57) "contrary to compelling inferences" in the case ( Chambers v Jobling (1986) 7 NSWLR 1 at 10). In such circumstances, the appellate court is not relieved of its statutory functions by the fact that the trial judge has, expressly or implicitly, reached a conclusion influenced by an opinion concerning the credibility of witnesses. In such a case, making all due allowances for the advantages available to the trial judge, the appellate court must "not shrink from giving effect to" its own conclusion. Finality in litigation is highly desirable. Litigation beyond a trial is costly and usually upsetting. But in every appeal by way of rehearing, a judgment of the appellate court is required both on the facts and the law. It is not forbidden (nor in the face of the statutory requirement could it be) by ritual incantation about witness credibility, nor by judicial reference to the desirability of finality in litigation or reminders of the general advantages of the trial over the appellate process. 43In this matter, the Commissioner failed to make any assessment as to the credit of witnesses. What he did was rationalise the circumstances placed before him so as to generate a possible explanation for Ms Hall's acts, which explanation was not directly supported by any evidence that emerged in the course of the hearing. He reached his conclusion based on his opinion of the motivation of Ms Hall in a circumstance in which Ms Hall had no opportunity to deal with a proposition that her motive was corrupt, while either giving evidence in the witness box or at any time before the evidence closed. There was no proper opportunity, therefore, for the Commissioner to assess the truth of any explanation offered by Ms Hall. Further, the Commissioner relied upon only motivation, and no other act, to determine there was a "real" conflict of interest. The Commissioner, therefore, was in error in reaching a conclusion that there was a "real" conflict of interest on the case before him. As we have noted, the proceedings lacked procedural fairness in this respect. 44We uphold grounds 1 and 1B of the appeal. Grounds 2 and 3: Factual Findings in Error/Failure to make Findings 45In approaching these grounds, we have approached the issues raised in the light of the Full Bench decision in Burge v NSW BHP Steel Pty Ltd [2001] NSWIRComm 117; (2001) 105 IR 325 where the Full Bench said at [7]: ... And, in addressing error, an appellate court should not interfere with the trial judge's conclusions on facts unless it is of the opinion that they were not reasonably open (or were clearly wrong) on the evidence: Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73 at p 107; Autobake Pty Ltd v Budd [1986] 19 IR 18 at p 25; Abalos v Australian Postal Commission (1990) 171 CLR 167 at pp 178 ff; Haynes v C I & D Manufacturing Pty Ltd (1994) 60 IR 149 at pp 153-155; and Port Macquarie Golf Club v Stead (64 IR at p 59). Importantly in this latter respect, we have in mind the observations by the High Court in London Bank of Australia Ltd v Kendall (1920) 28 CLR 401 at p 407 as to the duty of an appellate tribunal, as follows: But where the law says that the Court, and not a jury, is to determine the facts, and also says that an appellate Court can be asked to reconsider them, and therefore should reconsider them, it is the duty of the appellate tribunal (and it is the statutory right of the litigant who invokes it to require of it the performance of that duty) to determine for itself the true effect of the evidence so far as the circumstances enable it to deal with the evidence as it appeared in the Court of first instance. 46In this matter, notwithstanding the error made related to the finding as to Ms Hall's motivation, the Commissioner made another finding at [41], namely, on the evidence, he was satisfied there was a "perceived" conflict of interest. The appellant conceded, on appeal, on the basis of the Department's policy and the weight of the evidence when read in the context of the Department's policy, that it was open to the Commissioner to find Ms Hall had been "careless" in the process or procedures she put in place to assess Ms Hardy's qualifications. However, through grounds 2 and 3 of the appeal, the appellant effectively pressed the proposition that, while conceding Ms Hall's "carelessness", the Commissioner failed to make the findings necessary to support his conclusion as to the existence of a "perceived" conflict of interest. 47The Commissioner, in making his finding of a perceived conflict, clearly took guidance from the Department's Ethical Practice and Conflict of Interest Policy. The Commissioner, in his reasoning, adopted a provision in the policy as an appropriate foundation for his determinations: 8. Action Requires where there is potential for Conflict of Interest 8.1 Action needs to be taken to ensure there is no real or perceived conflict of interest in assessment processes. Situations where specific action may need to be taken include (emphasis added): 8.1.1 Assessing a family member of relative of a close friend. 48It is, therefore, necessary on appeal to determine if the finding of a perceived conflict of interest can stand. On balance, we are of the view, it was open for the Commissioner to reach such a conclusion. As to the allegations of misconduct in 2002, the evidence, we accept, established Ms Hall, sometimes but not always, personally recorded qualifications and assessments of work previously done on various documents related to Ms Hardy (be it on rolls or mark sheets). While this was a practice of other teachers, it was open to the Commissioner to find this was an "irregular" practice. The weight of the evidence suggested some but not all of the assessment of Ms Hardy's qualifications in 2005 were done by a process of "blind assessment" by other teachers. The learned Commissioner found, in all these processes, there were "sufficient irregularities" adopted by Ms Hall in 2002 and 2005 to give foundation for his finding of conflict. He referred to her conduct as "inappropriately casual" and that what was required was a more "formal approach". 49We accept the evidence established that the procedures put in place by Ms Hall in processing Ms Hardy's assessments in 2002 and 2005, as the Commissioner found, and as the policy required, did not put Ms Hall at "arms length" from a circumstance where a relative was seeking qualification. The procedures Ms Hall put in place in setting up the process for deciding credits for work done were in breach of the Conflict of Interest Policy. We note, however, the Commissioner also found this occurred in a context where the procedures applied at the West Wollongong TAFE in respect of marking and assessments were generally lax. 50In so far as grounds 2 and 3 of the appeal challenge findings of the Commissioner to the effect Ms Hall's acts constituted a conflict of interest, we reject them. Ground 4: Failure to Give Reasons 51As to ground 4 of the appeal, we are satisfied there were sufficient reasons given by the Commissioner for the finding there was a conflict of interest in the processes adopted by Ms Hall in dealing with the credits claimed for work done by her sister to obtain a qualification. 52The focus for a proper determination of the issue before the Commissioner had to be not whether, as the appellant contended at first instance and on appeal, the correct credits were obtained. The focus had to be on the "processes" which were adopted. The appellant conceded they indicated "carelessness". We consider that submission substantially understated what was, in reality, a clear breach of the Department's policy as to conflict of interest. 53We are, therefore, of the view the evidence established Ms Hall's processes were clearly in breach of the Department's policy and resulted in a conflict of interest which was misconduct in accordance with the definition given in s 22E(1) of the TAFEC Act. Therefore, we uphold the Commissioner's finding as [41], so far as it was consistent with such a finding. Conclusion on Leave to Appeal and Appeal 54The Commissioner was in error in finding that Ms Hall engaged in dishonest or corrupt conduct which was designed to provide her sister with qualifications to which she was not entitled. The proceedings, in this respect, were also procedurally unfair. That conclusion must result in the appeal being upheld and leave to appeal being granted. Disposal of Appeal 55We consider that this is an appropriate case for the Full Bench to determine the matter for itself rather than remit. 56The appellant sought a finding the termination was harsh, unreasonable or unjust and an order for re-instatement. This submission must be judged in the context where the Full Bench of the Commission has found error, but has also found the decision of the Commissioner as to conflict of interest was available. 57The respondent contended that, even if the Commissioner's finding as to a "real" conflict of interest was in error, the Commission should nonetheless have concluded that the dismissal of Ms Hall was not harsh, unreasonable or unjust because the nature of her conduct was such as to constitute a serious misconduct manifested by her conflict of interest in dealing with her sister's qualification. There is much force in this submission. 58The conduct brought under scrutiny was not a single event but showed a pattern of periodic breaches of the Department's policy twice in the space of eight years (albeit in Ms Hall's 25 years of service) before it was challenged. We have accepted the facts reveal the relationship of trust and confidence between Ms Hall and the Department has been undermined, to some degree, by Ms Hall's conduct. It is clearly open to the Department to find there was a breach of the Ethical Practice and Conflict of Interest Policy which constituted misconduct. Nonetheless, in the circumstances, we do consider there is a proper basis for making a finding that the termination of Ms Hall was harsh. 59The Commissioner was clearly of the view that, in the absence of a finding as to, in essence, corrupt conduct, the penalty of dismissal, having regard to Ms Hall's length and quality of service and the gravity of the misconduct, would be harsh. We share that view. In coming to this conclusion, we are also mindful that, whilst there was a clear breach of the Department's policy, it was not one accompanied by aggravating conduct illustrative of a dishonest or corrupt intent or, for that matter, one engaged in alone by Ms Hall. The conduct plainly required sanction but, on a relatively fine balance, it was not one, when weighed against the seriousness of the misconduct and mitigating factors, which should have resulted in dismissal. 60The termination of Ms Hall was, we find, harsh. The conduct, when properly understood, should have been dealt with by counselling and reprimand (or perhaps some other punitive step, less than dismissal, which is not presently relevant). 61It has long been held that re-instatement is the primary remedy where a dismissal is found to be harsh, unreasonable or unjust ( Sydney Ferries Corporation v The Seamen's Union of Australia [2009] NSWIRComm 126; (2009) 186 IR 99). The appellant submitted re-instatement would be "practicable", even in the circumstance of a finding there was a conflict of interest in Ms Hall's acts. 62We do not consider that it is impracticable to re-instate Ms Hall to her former position. Whilst, as we have noted, some issues of trust or confidence arise as a result of Ms Hall's conduct, we do not consider that they are irreparable, particularly having in mind our finding as to the gravity of the misconduct involved. When regard is had to the overall service record of Ms Hall, and remedial processes available within a very substantive Department, we do not consider it is impracticable to re-instate Ms Hall. We re-instate Ms Hall from the date of this decision with limited continuity of service. We consider Ms Hall's conduct disqualifies her from any order for back pay and there should be no accrual of annual or long service leave during the period between her dismissal and re-instatement. We also consider that a condition of Ms Hall's re-instatement is that she receive a formal reprimand. ORDERS 63The Full Bench makes the following orders: 1. Leave to appeal is granted. 2. The appeal is upheld. 3. The decision and orders of Commissioner Connor in Matter No IRC1703 of 2009 are set aside. 4. The appellant is re-instated in her former position effective from the date of this decision with continuity of service (save as to the accrual of annual leave and long service leave), upon the condition that the appellant shall receive a formal reprimand as to the finding of a conflict of interest in the procedures she followed in 2002 and 2005 related to the assessment of her sister's qualifications. ***** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 June 2011