Re Australian Industrial Relations Commission; Ex parte Smith [2004] FCAFC 271 (11 October 2004)

INDUSTRIAL LAW – termination of employment – retrenchment of employees at mine – order by Australian Industrial Commission that termination of employees in breach of Workplace Relations Act 1996 (Cth) – finding that terminations were "harsh, unjust and unreasonable" – order by Commission that employees be reinstated – appeal to Full Bench –Full Bench affirmed finding regarding terminations but set aside reinstatement order – whether Full Bench erred in law – whether Full Bench exceeded jurisdiction by quashing order without first finding appealable error – whether Full Bench erred by affirming finding regarding terminations – subsequent application by Union for exceptional matters order –whether later Full Bench erred by making order

Workplace Relations Act 1996 (Cth) ss 45, 45(1)(b), 45(6), 45(7), 89A(7), 150, 170CA, 170CE(1), 170 CF(2), 170CG, 170CG(3), 170CG(3)(a), 170CG(3)(e), 170CH, 170CH(1),
170CH(2), 170CH(3), 170CH(4), 170CH(6), 170HI, 170JF(2), 415
High Court Rules O 55 r 30, O 55 r 17

Construction, Forestry, Mining And Energy Union v Australian Industrial Relations Commission [1999] FCA 847; (1999) 93 FCR 317 at 339-347 discussed
Construction, Forestry, Mining And Energy Union v Comalco Aluminium Ltd [1998] FCA 1536; (1998) 90 FCR 81 referred to
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 applied
Sammartino v Foggo [1999] FCA 1231; (1999) 93 IR 52 referred to
Miller v Australian Industrial Relations Commission [2001] FCA 486; (2001) 108 FCR 192 referred to
Minister for Immigration and Multicultural Affairs v Thiyagarajah [2000] HCA 9; (2000) 199 CLR 343 referred to
Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597 at 612-617, 633-634, 643 referred to
Plaintiff S157/2002 v Commonwealth [2003] HCA 2; (2003) 195 ALR 24 referred to
Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (1998) 89 FCR 200 at 226-227, 230 discussed
House v The King [1936] HCA 40; (1936) 55 CLR 499 referred to
Norbis v Norbis (1985-1986) [1986] HCA 17; 161 CLR 513 at 518-519 considered
Edwards v Giudice [1999] FCA 1836; (1999) 94 FCR 561 at 565, 585 referred to
CDJ v VAJ [1998] HCA 76; (1998) 197 CLR 172 at 191, 201-202 referred to
Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17; (2001) 205 CLR 507 referred to
Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 at 179-182 referred to
Cubillo v Commonwealth [2001] FCA 1213; (2001) 112 FCR 455 at 522 referred to
The Queen v Alley; Ex parte NSW Plumbers & Gasfitters Employees’ Union [1981] HCA 61; (1981) 153 CLR 376 at 380 referred to
Hall v New South Wales Trotting Club Ltd [1977] 1 NSWLR 378 referred to
Malone v Marr [1981] 2 NSWLR 894 referred to
Re Heaney; ex parte Tunza Holdings Pty Ltd [1998] WASCA 341 referred to
R v Marshall; ex parte Baranor Nominees Pty Ltd [1984] VR 211 referred to
Bread Manufacturers of New South Wales v Evans [1981] HCA 69; (1981) 180 CLR 404 referred to
Re Media, Entertainment and Arts Alliance; Ex parte Arnel [1994] HCA 1; (1994) 179 CLR 84 discussed
Quality Bakers of Australia Ltd v Goulding (1995) 60 IR 327 at 334 referred to
Minister for Immigration & Ethnic Affairs v Baker (1997) 73 FCR 187 at 194 referred to
Ex parte Hebburn Ltd; re Kearsley Shire Council (1947) 47 SR(NSW) 416 at 420 referred to
Friends of Hinchinbrook Society Inc v Minister for Environment & Ors (No 3) (1997) 77 FCR 153 at 187 et seq referred to

RE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION; EX PARTE SMITH & ORS
N860 OF 2003

LEE, GOLDBERG & WEINBERG JJ
11 OCTOBER 2004
SYDNEY

	IN THE MATTER OF an application for writs of mandamus and certiorari against:
BETWEEN:	THE HONOURABLE SENIOR DEPUTY PRESIDENT I R WATSON, THE HONOURABLE SENIOR DEPUTY PRESIDENT L KAUFMAN AND COMMISSIONER G R SMITH, members of the Australian Industrial Relations Commission FIRST RESPONDENTS
AND:	PACIFIC COAL PTY LTD ACN 010 542 140 SECOND RESPONDENT
	EX PARTE: ROBERT DAVID SMITH & OTHERS APPLICANTS/PROSECUTORS
AND:	IN THE MATTER OF an application for writs of mandamus and certiorari against:
BETWEEN:	THE HONOURABLE SENIOR DEPUTY PRESIDENT I R WATSON, THE HONOURABLE SENIOR DEPUTY PRESIDENT L KAUFMAN AND COMMISSIONER G R SMITH, members of the Australian Industrial Relations Commission FIRST RESPONDENTS
AND:	ROBERT DAVID SMITH & OTHERS SECOND RESPONDENTS
	EX PARTE: HAIL CREEK COAL PTY LTD ACN 080 002 008 AND PACIFIC COAL PTY LTD ACN 010 542 140 APPLICANTS/PROSECUTORS
AND:	IN THE MATTER OF an application for writs of prohibition, mandamus and certiorari against:
BETWEEN:	THE HONOURABLE VICE PRESIDENT I J K ROSS, THE HONOURABLE SENIOR DEPUTY PRESIDENT D K DUNCAN AND COMMISSIONER K J BACON, members of the Australian Industrial Relations Commission FIRST RESPONDENTS
AND:	CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION SECOND RESPONDENT
	EX PARTE: HAIL CREEK COAL PTY LTD ACN 080 002 008 APPLICANT/PROSECUTOR
JUDGES:	LEE, GOLDBERG & WEINBERG JJ
DATE OF ORDER:	11 OCTOBER 2004
WHERE MADE:	SYDNEY

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

	IN THE MATTER OF an application for writs of mandamus and certiorari against:
BETWEEN:	THE HONOURABLE SENIOR DEPUTY PRESIDENT I R WATSON, THE HONOURABLE SENIOR DEPUTY PRESIDENT L KAUFMAN AND COMMISSIONER G R SMITH, members of the Australian Industrial Relations Commission FIRST RESPONDENTS
AND:	PACIFIC COAL PTY LTD ACN 010 542 140 SECOND RESPONDENT
	EX PARTE: ROBERT DAVID SMITH & OTHERS APPLICANTS/PROSECUTORS
AND:	IN THE MATTER OF an application for writs of mandamus and certiorari against:
BETWEEN:	THE HONOURABLE SENIOR DEPUTY PRESIDENT I R WATSON, THE HONOURABLE SENIOR DEPUTY PRESIDENT L KAUFMAN AND COMMISSIONER G R SMITH, members of the Australian Industrial Relations Commission FIRST RESPONDENTS
AND:	ROBERT DAVID SMITH & OTHERS SECOND RESPONDENTS
	EX PARTE: HAIL CREEK COAL PTY LTD ACN 080 002 008 AND PACIFIC COAL PTY LTD ACN 010 542 140 APPLICANTS/PROSECUTORS
AND:	IN THE MATTER OF an application for writs of prohibition, mandamus and certiorari against:
BETWEEN:	THE HONOURABLE VICE PRESIDENT I J K ROSS, THE HONOURABLE SENIOR DEPUTY PRESIDENT D K DUNCAN AND COMMISSIONER K J BACON, members of the Australian Industrial Relations Commission FIRST RESPONDENTS
AND:	CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION SECOND RESPONDENT
	EX PARTE: HAIL CREEK COAL PTY LTD ACN 080 002 008 APPLICANT/PROSECUTOR
JUDGES:	LEE, GOLDBERG & WEINBERG JJ
DATE :	11 OCTOBER 2004
WHERE MADE:	SYDNEY

1 Before the Court are three applications for the issue of constitutional writs against the Australian Industrial Relations Commission ("the Commission") as constituted by the members of the Commission named as first respondents to each application. The applications were commenced in the High Court in three proceedings ("S56/03"; "S508/03"; "S509/03").

2 In "S56/03", the applicants/prosecutors are sixteen former employees ("the retrenched employees") of Pacific Coal Pty Ltd ("Pacific Coal"), the second respondent to the application. The application was filed in the High Court on 12 February 2003 and remitted to this Court for determination on 11 July 2003.

3 In "S509/03", the applicants/prosecutors are Pacific Coal and Hail Creek Coal Pty Ltd ("Hail Creek Coal") and the retrenched employees are the second respondents.

4 In "S508/03", the applicant/prosecutor is Hail Creek Coal and the Construction, Forestry, Mining and Energy Union ("the Union") is the second respondent. Both "S508/03" and "S509/03" were commenced in the High Court on 22 September 2003 and remitted to this Court on 27 October 2003.

7 Until Pacific Coal terminated their services, the retrenched employees worked at the Blair Athol coal mine in Queensland. At the dates of termination of the employment of the retrenched employees their respective periods of service with Pacific Coal ranged from eight to eighteen years. The employment of each retrenched employee was terminated on dates between 17 August 1998 and 9 October 1998. In about July 1998, Pacific Coal gave notice of such termination. In July 1998, the retrenched employees filed applications in the Commission under Div 3 of Part VIA (s 170CA – s 170HI) of the Act in which, pursuant to s 170CE(1) of the Act, the retrenched employees sought "relief in respect of the termination" of their employment "on the ground that the termination was harsh, unjust or unreasonable".

8 In due course, the Commission issued a certificate under s 170CF(2) of the Act stating that "all reasonable attempts to settle the matter by conciliation" had been unsuccessful and, pursuant to s 170CG(1) of the Act, the Commission "proceed[ed] to arbitrate the matter". The word "arbitrate", where used in Div 3 of Part VIA, refers to a quasi-judicial procedure involving the finding of facts and the enforcement of private statutory rights that arise out of the facts found. It is not an arbitration conducted under the industrial arbitral power vested in the Commission by other provisions of the Act, and an order made under s 170CH of the Act is not an "award" within the meaning of that term as used in s 45(7) or s 150. (See: Construction, Forestry, Mining And Energy Union v Australian Industrial Relations Commission & Ors [1999] FCA 847; (1999) 93 FCR 317 per Wilcox and Madgwick JJ at [341]-[342] and [344]-[347]; and Construction, Forestry, Mining And Energy Union v Comalco Aluminium Ltd [1998] FCA 1536; (1998) 90 FCR 81).

9 On 9 April 2001, the Commission, constituted by Commissioner Hodder, completed the arbitration and determined that the termination of employment of each retrenched employee had been "harsh, unjust or unreasonable": [PR902679]. The Commissioner was satisfied, under s 170CH(3) of the Act, that an appropriate remedy was an order for "reinstatement" of the retrenched employees from 9 April 2001 "without loss of continuity of employment" and an order that they be "paid for remuneration lost...since the date of termination up until the date of actual reinstatement of employment or the date upon which lost remuneration payment is made, whichever event first occurs".

10 On 27 September 2001, Commissioner Hodder made more detailed orders giving effect to the foregoing: [PR903256]. In due course, Pacific Coal paid remuneration to the retrenched employees but did not allocate to them any duties nor permit them to return to their place of employment.

11 On 12 October 2001, the Commission, constituted by Vice President McIntyre, ordered that the orders made by Commissioner Hodder, other than the order that the retrenched employees be reinstated, be stayed pending determination of an application for leave to "appeal" from those orders and, if leave were granted, pending the "appeal".

12 On 18 February 2002, pursuant to s 45(1)(b) of the Act, a Full Bench of the Commission constituted by Vice President McIntyre, Senior Deputy President Kaufman and Commissioner Smith, granted leave to Pacific Coal to "appeal" from the orders made by Commissioner Hodder. Those "orders" were identified, in brief, as being the orders as to reinstatement, and the orders as to maintaining continuity of employment and payment of amounts lost in respect of the remuneration lost because of the terminations. Notwithstanding that s 45(1)(a) provides that an appeal lies to a Full Bench, with the leave of the Full Bench, against "a decision of a member of the Commission by way of a finding in relation to an industrial dispute", there was no order, in terms, granting leave to appeal against any "finding" by Commissioner Hodder. This included his finding that the termination of each retrenched employee had been "harsh, unjust or unreasonable". The Full Bench stated that it was satisfied that it was:

13 The Full Bench went on to say that, having granted leave to appeal on this ground, it was unnecessary to consider the other bases put forward by Pacific Coal for the granting of leave to appeal.

14 On 8 March 2002, the same Full Bench clarified its earlier remarks by noting that the words "seriously arguable", in its earlier decision, were intended to apply not merely to the contention that Commissioner Hodder had failed to make sufficient findings of fact, and failed to adequately analyse the evidence, but also to the submission that appealable error had been demonstrated.

15 The "appeal" from the orders of Commissioner Hodder was heard by a Full Bench constituted by Senior Deputy President Watson, Senior Deputy President Kaufman and Commissioner Smith. As previously indicated, both Senior Deputy President Kaufman and Commissioner Smith had been members of the Full Bench which had granted leave to "appeal". Senior Deputy President Watson replaced Vice President McIntyre.

16 In both written and oral submissions to the Full Bench, Pacific Coal mounted a detailed and sustained attack upon Commissioner Hodder’s reinstatement order, and identified numerous errors that were said to vitiate that order. It argued that Commissioner Hodder erred in ordering reinstatement when the evidence clearly showed that the former positions of the employees who had been dismissed no longer existed, and that reinstatement would lead to other employees having to be made redundant. Pacific Coal also sought to place before the Full Bench evidence as to the then current state of vacancies at the mine. The stated purpose of this evidence was to confirm that there were no positions available for the sixteen employees as at the date upon which the appeal was heard.

17 In their submissions to the Full Bench, the sixteen employees contended that none of the findings of fact challenged by Pacific Coal disclosed any appealable error. In particular, they submitted that Commissioner Hodder had correctly found that their terminations had been harsh, unjust or unreasonable, and that reinstatement without loss was the only appropriate remedy. They also submitted that there was no evidence before Commissioner Hodder to support any conclusion that their former positions were vacant, whether viewed individually, or in an overall context. That meant that his order for reinstatement had been entirely correct.

18 On 12 December 2002, by majority (Senior Deputy President Watson and Commissioner Smith, Senior Deputy President Kaufman dissenting), the Full Bench concluded, at [27] that the employees "selected for redundancy were selected for reasons related to the operational requirements of the employer’s business and for reasons of their capacity and conduct". The majority also accepted that there was an operational requirement upon the appellant to reduce the size of its workforce, in giving effect to its reorganisation. Its business case had been made out. A reduction in the number of employees in the order of the reduction effected was required. However, it was necessary to consider whether there existed a valid reason for the termination of the employment of the respondents and their selection for redundancy.

19 The majority concluded that there were significant deficiencies in the selection process. Having identified these as "areas of concern", they stated at [56]:

20 The majority then observed that the actions of the employer had been "harsh, unjust and unreasonable", just as Commissioner Hodder had found. It expressed that finding with the following caveat at [58]:

21 Having arrived at this conclusion, in relation to s 179CG(3), the majority turned to the question of remedy. It is necessary to set out in some detail the reasoning relating to this issue. The majority said at [60]-[70]:

22 The majority then purported to uphold the "appeal", and quash the "order" made by Commissioner Hodder. Presumably that meant the order [PR902679] made on 9 April 2001 and order [PR903256] made on 27 September 2001, those being the orders for reinstatement and the maintenance of continuity of employment. The majority went on to say that although they had found for themselves that the terminations were "harsh, unjust and unreasonable", given the payments that had been received, they would make no further order. They meant by that that they would make no order for reinstatement under s 170CH(3).

23 It is apparent from the reasoning of the majority that, at least on one view, the question of reinstatement was approached on the basis that the issue before the Full Bench involved a consideration at large of whether the circumstances warranted the making of a reinstatement order. In other words, the matter was approached as though the appeal to the Full Bench involved a hearing de novo. Despite the extensive submissions of the parties purporting to identify specific error on the part of Commissioner Hodder in ordering reinstatement, there was almost no discussion of any such error in the majority’s reasoning.

24 It is, of course, possible that the majority did find some error in Commissioner Hodder’s reasoning on the order for reinstatement. That would depend upon whether par [61] of the majority’s reasoning can be so interpreted. Regrettably, the discussion of this issue in that paragraph is so brief and unilluminating that it is difficult to discern with any clarity precisely what the majority had in mind. That is a matter to which we shall return later in these reasons for judgment.

25 The retrenched employees then commenced application "S56/03" in the High Court seeking the issue of constitutional writs against the Commission. They contended that the decision of the Full Bench involved jurisdictional error in that the Full Bench misconceived its function on the hearing of an "appeal" under s 45 of the Act.

26 At about the same time, the Union applied to the Commission for an "exceptional matters order" under s 89A(7) of the Act, in particular, an order that Hail Creek Coal give preference in employment, and be required to employ, the retrenched employees.

27 Pacific Coal and Hail Creek Coal are wholly owned subsidiaries of Rio Tinto Limited. Hail Creek Coal had been engaged by a joint venture consortium to manage, operate and bring into production the Hail Creek coal mine in Queensland. The major participant in the joint venture was another wholly owned subsidiary of Rio Tinto Limited. The joint venturers engaged Pacific Coal to provide management services to Hail Creek Coal. Hail Creek Coal was to employ production and engineering staff at the Hail Creek coal mine but not "senior management". Pacific Coal employed production and engineering staff at the Blair Athol mine. Both mines were "open cut" operations. The Hail Creek coal mine is about 100 km west of Mackay and the Blair Athol mine is 240 km south-west of Mackay.

28 In respect of the application by the Union for an "exceptional matters order" the Commission, constituted by another Full Bench, determined, on 25 July 2003, that the Union on the one part, and Hail Creek Coal and Dendrobium Coal Pty Ltd (operator of a coal mine in New South Wales) on the other, were parties to an "industrial dispute" which extended beyond the limits of any one State. The Commission ordered, inter alia, that Hail Creek Coal give preference in employment to the retrenched employees by employing them in any vacant positions at the Hail Creek Coal mine for which the retrenched employees were reasonably qualified.

29 On 22 September 2003, Hail Creek Coal applied to the High Court, in application "S508/03", for the issue of constitutional writs against the Commission on the ground, inter alia, that the Commission did not have jurisdiction to make the "exceptional matters order". It contended that no "interstate industrial dispute" existed at any time or, alternatively, at the time the Commission made the order.

30 On the same date, Pacific Coal and Hail Creek Coal, in application "S509/03", applied for the issue of constitutional writs against the Commission in respect of the "finding" by the Full Bench that the termination by Pacific Coal of the employment of the retrenched employees was "harsh, unjust and unreasonable". They contended that the Full Bench misunderstood and failed to apply the terms of s 170CG of the Act and, therefore, acted in excess of its jurisdiction in purporting to make such a "finding".

31 The three remitted applications were consolidated as a single proceeding in this Court. In due course, the Court ordered that applications "S56/03", S509/03" be heard separately from application "S508/03". Accordingly, argument on the first matters was heard in December 2003 and argument in application "S508/03" was heard in February 2004. In December 2003, Hail Creek Coal applied to the Court for an order staying the operation of the "exceptional matters order" to which application "S508/03" related. The Court refused the order and reserved the costs of the motion.

32 In these reasons, we deal with the arguments presented in applications "S56/03" and "S509/03".

33 The material put before the Court in those applications, whether as "hard-copy" documents, or documents in an electronically recorded form, was voluminous. The following account set out in the reasons of the majority of the Full Bench describes a proceeding that appeared to have little in common with a process of quick and efficient arbitration that appears to be contemplated in Part VIA of the Act:

34 The Court was told that the foregoing written submissions referred to by the Full Bench consisted of thousands of pages.

35 Before dealing with the arguments in "S56/03" and "S509/03" that the decision of the Full Bench involved jurisdictional error, it is appropriate to set out a summary of the underlying issues as perceived and dealt with by Commissioner Hodder, and by the Full Bench, respectively.

36 Commissioner Hodder accepted that before the services of the retrenched employees were terminated, Pacific Coal had identified that the workforce at the Blair Athol mine exceeded the requirements of the operation. Commissioner Hodder accepted, therefore, that there was a valid reason which related to the operational requirements of the undertaking carried on by Pacific Coal for the termination of the employment of some employees of that undertaking, being a matter to which the Commission must have regard pursuant to s 170CG(3)(a) of the Act. Commissioner Hodder also accepted that fairness in the manner of selection of employees whose services were to be so terminated to eliminate redundancies in the workforce was a relevant consideration under s 170CG(3)(e) of the Act ("any other matters that the Commission considers relevant") to which the Commission must also have regard in determining whether the termination of employment of an employee had been harsh, unjust or unreasonable. In the view of Commissioner Hodder, the statement in s 170CA(2) of the Act that the object of the operation of the arbitration provision in s 170CG of the Act was to ensure that a "fair go all round" be accorded to both the employer and employee concerned, confirmed that approach.

37 Pacific Coal implemented a system of "performance appraisal" and "performance effectiveness review" ("the PER process") to select the employees whose services were to be terminated. Commissioner Hodder was satisfied that the PER process was intended to create a defensible method of selection of the employees to be dismissed and, in particular, to counter the customary principle of "last on/first off" that had been applied in the "black coal industry" to select employees whose services were to be terminated in the event of redundancies. Commissioner Hodder found that, on its face, the PER process was capable of meeting that purpose. However, Commissioner Hodder accepted evidence that a "blacklist" had been prepared by Pacific Coal that identified employees who had been marked "to go". Commissioner Hodder was satisfied by the evidence before him that the supervisors and superintendents of Pacific Coal who conducted the PER process were aware of the "blacklist" and that their views had been affected by that knowledge. Commissioner Hodder was satisfied that, in respect of an employee on the "blacklist", his chance of getting a fair and impartial assessment under the PER process had been undermined. Commissioner Hodder accepted that an inherent bias operated against employees on the "blacklist". All of the retrenched employees were on the "blacklist" at the time of termination of their employment. Commissioner Hodder found that the "blacklist" appeared to consist of employees who were members of the Union or who had declined to enter into "Australian Workplace Agreements" with Pacific Coal.

38 Commissioner Hodder found that by reason of their inclusion on the "blacklist", the retrenched employees had been "targeted and singled out for termination from the very commencement of the process", and that therefore in respect of those employees the PER process had not been duly applied. The "blacklist" which corrupted the application of that process had been designed to select for termination the employees who were on that list.

39 Commissioner Hodder found that in respect of each retrenched employee, the termination of employment did not accord to that employee a "fair go all round" and that each termination had been harsh, unjust or unreasonable. In considering whether there had been a valid reason for the terminations, Commissioner Hodder stated that "termination of employment based upon [Pacific Coal’s] operational requirements claim [did] not stand up to scrutiny". The entirety of the Commissioner’s reasons show that he considered that if there had been a valid reason for the terminations related to the operational requirements of Pacific Coal’s undertaking, that consideration had been outweighed and overtaken by the degree of unfairness found to permeate the process by which the retrenched employees were selected for termination in the implementation of those operational requirements.

40 On the "appeal", the Full Bench received some limited further evidence, pursuant to s 45(6) of the Act. After reviewing the evidence, the majority stated that Pacific Coal perceived it to be an "operational requirement" of its undertaking that it reduce Union influence by decreasing Union membership within the workforce. The majority noted that this goal would have influenced supervisors and superintendents who prepared the "blacklist". The majority accepted that employees recorded on the "blacklist" were placed in work that did not enable them to compete in performance assessments with other employees and put them at a considerable disadvantage by restricting their opportunity to demonstrate their skills and capabilities. The majority also accepted that appraisals of performance under the PER process may have been coloured by awareness of the "blacklist".

42 As noted earlier in par [19] of these reasons for judgment, the majority then proceeded to find:

45 It is to be noted that none of the foregoing findings purported to identify error, whether in terms, or by implication, in the decision made by Commissioner Hodder. Moreover, the majority did not find that the basis upon which leave to appeal had been granted, namely that it was seriously arguable that Commissioner Hodder had erred in failing to make sufficient findings of fact and in failing to adequately analyse the evidence, had been made out. To the contrary, the findings endorsed the conclusion of Commissioner Hodder that the termination of employment of each retrenched employee had been "harsh, unjust and unreasonable".

46 The conclusion of the majority was based on its finding that the PER process used by Pacific Coal for the selection of personnel to be dismissed had not been duly applied to the retrenched employees. The majority found that by reason of discrimination or bias, which affected the application of the PER process, the skills and capacities of the retrenched employees had not been properly evaluated. The further finding that the remaining employees had been duly assessed under the PER process did not assist Pacific Coal. Commissioner Hodder accepted that the PER process, if duly applied, was a process Pacific Coal was entitled to use. Given the finding by Commissioner Hodder, and by the majority, that the corrupting effect of the "blacklist" undermined the application of the PER process to the retrenched employees, any finding that the PER process had been duly applied to other employees only served to highlight the degree of unfairness in the manner in which it had been applied to the retrenched employees.

47 If the retrenched employees were to be accorded a "fair go all round", as required by the Act, when Pacific Coal purported to apply a process based on merit and capability for selection of employees for dismissal for reasons of redundancy, they had to be assessed by a process that was applied fairly, without manipulation, discrimination or bias. In other words, all employees had to be assessed on the same terms and conditions.

48 We turn now to the issue of whether the majority misconceived its function under s 45 of the Act.

49 In respect of an "appeal" under s 45(1)(b) of the Act that is an "appeal" against an order made under Part VIA, s 170JF(2) in Part VIA provides as follows:

50 An order made under subdiv B of Div 3 includes an order made under s 170CH of the Act. Under s 170CH(1), on completion of an arbitration under s 170CG, the Commission is authorised to make an order under s 170CH(3), (4) or (6) if it has determined that a termination of employment was "harsh, unjust or unreasonable". It is a discretionary power that becomes available under s 170CH(2) if the Commission is satisfied, by having regard to all the circumstances of the case including those specified in the subsection, that the remedy ordered is appropriate.

51 We repeat that the majority did not state, in terms, that Commissioner Hodder had erred in deciding to make the orders that he made under s 170CH of the Act. The majority did not find that Commissioner Hodder was not authorised by the Act to make such orders. To the contrary, the majority confirmed that the pre-condition to the making of such orders had been satisfied, namely, a determination made that the terminations of employment of the retrenched employees had been harsh, unjust or unreasonable.

52 The prosecutors submitted that the majority, having failed to identify any error on the part of Commissioner Hodder, whether in respect of his finding that the employer’s actions were "harsh, unjust and unreasonable", or his determination that reinstatement was appropriate, exceeded its jurisdiction by purporting to set aside the remedial orders that he made, and substituting its own remedial orders. They submitted that there was no occasion or warrant for the exercise by the Full Bench of the power to "make an award, order or decision dealing with the subject matter of the decision or act concerned", pursuant to s 45(7)(b). They noted that leave had been sought, but not granted, to appeal directly against the remedial orders made by Commissioner Hodder. They acknowledged, however, that in truth little turned upon that as leave was granted to appeal against the orders made, and they essentially went to reinstatement.

53 Alternatively, the prosecutors submitted that if it had been open to the Full Bench to substitute its own remedial orders for those of Commissioner Hodder, the majority erred in having regard to irrelevant considerations, and failing to have regard to relevant considerations that it was bound to take into account. They described the "irrelevant considerations" in somewhat unorthodox terms. These were whether the selection process, applied consistently and without bias, might have identified some or all of the prosecutors for redundancy, the adoption of an inappropriate standard of proof, and possibly a reversal of the onus of proof as well. The relevant considerations not taken into consideration were said to be the fact that the prosecutors were entitled not to lose their employment save in a manner sanctioned by law, and the requirement, pursuant to s 170CH(2), that the length of the employees’ service with the employer be taken into account. In addition, it was submitted that the "last on/first off" principle, a term of the contract of employment of each prosecutor, had to be taken into account under s 170CH(2)(e) as a matter that the Commission "considers relevant".

54 Finally, the prosecutors submitted that the majority, having determined that the terminations of employment were "harsh, unjust and unreasonable", purported to exercise the power conferred upon the Commission by s 170CH(1). However, before doing so, it was necessary for the Full Bench, by reason of ss 170CH(2) and 170CH(7), to be satisfied of those matters for which those sub-sections provide. These included the matters set out in s 170CH(2)(b) and (e), and also the matters set out in s 170CH(7)(b) and (e), namely "the length of the employee’s service with the employer" and "any other matter that the Commission considers relevant".

55 Pacific Coal submitted that it was manifest that the majority had concluded, if not expressly then at least tacitly, that Commissioner Hodder had fallen into appealable error. In advancing that submission, it acknowledged, as it was bound to, that an appeal under s 45 was by way of rehearing, and not a hearing de novo. Accordingly, the Full Bench could exercise the power to quash or vary a decision of the Commission under s 45(7) only if there was error in the order or decision appealed from.

56 These principles derive from the decision of the High Court in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194. In a joint judgment dealing with the construction of s 45, Gleeson CJ, Gaudron and Hayne JJ observed at 202-204:

57 Pacific Coal invited the Court to consider carefully the events that had led up to the hearing of the appeal by the Full Bench. An earlier Full Bench, which included Senior Deputy President Kaufman and Commissioner Smith, both members of the Full Bench whose decision is presently impugned, had concluded that it was seriously arguable that appealable error had been demonstrated. Moreover, voluminous submissions had been filed by both parties directed to the question whether Commissioner Hodder had fallen into appealable error in making the reinstatement order. It was inconceivable, given those circumstances, and the experience of Senior Deputy President Watson and Commissioner Smith , that they had failed to appreciate the need for such error before exercising the power under s 45(7).

58 Pacific Coal submitted that it was not correct to say, as the prosecutors did, that the reconstituted Full Bench "resolved the major factual issues in essentially the same way" as had Commissioner Hodder. They submitted that the findings of the majority, compared with those of Commissioner Hodder, revealed significant differences. For example, Commissioner Hodder did not accept that the business case of Pacific Coal had been made out. He stated that he did not accept that Pacific Coal had reasonable grounds, at the relevant time, capable of attracting the characterisation of "genuine" operational requirements of its business as a reason for terminating the employment of the former employees. By contrast, the majority found that there was an operational requirement on Pacific Coal to reduce the size of its workforce, and that the business case was made out. However, the majority found that it was incumbent upon them to determine whether there existed a valid reason for the selection of the former employees for redundancy.

59 Pacific Coal further submitted that Commissioner Hodder had been far more critical of the PER system than was the majority. Indeed, he found that there was a conspiracy attached to the use of the blacklist, a conclusion that the majority did not reach. They simply found that there were "areas of concern", but that these did not, of themselves, justify a conclusion that the employer had not provided reasonable responses in the approach taken as a whole. Indeed, the majority concluded:

60 Pacific Coal submitted that once the Full Bench arrived at conclusions upon the statutory criteria which were significantly different from those of Commissioner Hodder, it necessarily followed that error was demonstrated. Merely because the majority did not declare, in terms, that it had "found error" was of no consequence. The Court should infer that the Full Bench had concluded that the Commissioner’s decision was attended by appealable error, and therefore decline the relief sought by the prosecutors.

61 In support of this submission, Pacific Coal drew attention to the decision of the Full Court in Sammartino v Foggo [1999] FCA 1231; (1999) 93 IR 52. There it was said that in an appeal under s 45 of the Act, the Commission:

62 Pacific Coal also referred to Miller v Australian Industrial Relations Commission [2001] FCA 486; (2001) 108 FCR 192 in which a Full Court had observed that there was "substantial force" in an argument that was based, at least in part, upon Sammartino. The Full Court in Miller regarded the "discretion" conferred upon the Commission as, in truth, a narrow one which could be challenged for error upon normal appellate principles. It also held that the Full Bench, in refusing leave to appeal, had erred in applying the test of whether the decision at first instance was reasonably open to the Commission. The correct test was whether it was seriously arguable that the Commission had actually been wrong. Accordingly, writs of certiorari and mandamus issued.

63 Returning to the present case, Pacific Coal submitted that although the majority did not disagree with the determination by Commissioner Hodder that the dismissals had been "harsh, unjust or unreasonable", the findings upon which that determination was based were very different. This both demonstrated error, and called for a review of the remedies originally granted. However, if contrary to that submission, this Court were to hold that the majority had simply substituted its view of the matter for that of Commissioner Hodder, without any finding of error on his part, the respondents submitted that the decision of the Full Bench should be quashed entirely and not simply that part of the reasoning of the majority that went to reinstatement. It would follow that no part of that decision could be sustained. It would be inappropriate, and unjust, to allow that part of the majority’s decision that affirmed Commissioner Hodder’s determination to stand, but not its decision to set aside his order that the employees be reinstated.

64 Pacific Coal did not refer to any authority on this point. The matter is canvassed, in a broad sense, in recent High Court decisions arising under the Migration Act 1956 (Cth). See generally Minister for Immigration and Multicultural Affairs v Thiyagarajah [2000] HCA 9; (2000) 199 CLR 343; Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597 at 612-617 per Gaudron and Gummow JJ, 633-634 per Kirby J and 643 per Hayne J, and Plaintiff S157/2002 v Commonwealth [2003] HCA 2; (2003) 195 ALR 24. However, none of these cases is, in any way, determinative.

65 Pacific Coal submitted that the alternative case advanced by the prosecutors, namely the claim that the majority had taken into account irrelevant considerations, or failed to take into account a relevant consideration, was without substance. They submitted that having found that the dismissals were "harsh, unjust and unreasonable", the Full Bench had a discretion as to whether or not to grant any remedy. The scope of that discretion was to provide such of the remedies, if any, as are set out in s 170CH(3), (4) or (6) as the Full Bench considered appropriate. Section 170CH(2) established a threshold in a case in which the Commission was minded to provide a remedy, but did not provide an exhaustive checklist of factors that the Commission had to take into account before deciding whether or not to grant a remedy.

66 Pacific Coal next submitted that this construction of s 170CH was supported by reference to the text of the Act, and considerations of general principle. They submitted that the majority had been entitled to have regard to the matters set out in [60]-[61] of the reasons for decision, those being the matters identified by the prosecutors as irrelevant considerations. Indeed, it was submitted that it would have been perverse had the Full Bench not taken those matters into account. Given that the business case for a reduction in staffing had been made out, it was submitted that it would be extraordinary to hold that the Commission should not have considered the practical implications of returning the sixteen former employees to jobs that no longer existed.

67 Finally, Pacific Coal submitted that the Full Bench had not failed to take into account any matters that it was obliged to consider. The contention that the prosecutors were contractually entitled to continue their employment because of the "last on/first off" principle was plainly relevant to the question whether they were harshly, unjustly or unreasonably dismissed. That was the proper place to consider that contention, not at the point of determining whether they should be reemployed rather than compensated.

68 As noted, Pacific Coal argued strenuously that it would be wrong to quash the orders made by the Full Bench while, at the same time, leaving the appeal from Commissioner Hodder unresolved. That would mean that the orders having practical effect would be those of Commissioner Hodder, even though the Full Bench had rejected a significant aspect of his reasoning. Such an outcome would be unjust.

69 However, Pacific Coal submitted that if, contrary to its primary submission, this Court were minded to remit the matter on any such limited basis, it should consider, by way of defence, the respondents’ contentions in "S509/03", filed on 25 November 2003, in support of a case that the primary determination of the majority of the Full Bench should also be set aside by reason of jurisdictional error.

70 Whether or not Commissioner Hodder’s discretion miscarried when he ordered reinstatement was, in our view, a live issue before the Full Bench. Of course, the Full Bench was not exercising judicial power: Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (1998) 89 FCR 200 per Spender, Moore and Branson JJ at 226-227. However, it was required by the terms of s 170JF(2) to determine whether the orders made by Commissioner Hodder, including that for reinstatement, involved appealable error, in that the exercise of the discretion to make those orders was affected by error of the type described in House v The King [1936] HCA 40; (1936) 55 CLR 499, further explained by Mason and Deane JJ in Norbis v Norbis (1985-1986) [1986] HCA 17; 161 CLR 513 at 518-519:

72 The terms of s 170JF(2) reinforce the foregoing and, in particular, remove any remaining doubt as to the nature of an "appeal" under s 45 of the Act from an order made under Part VIA of the Act: Edwards v Giudice [1999] FCA 1836; (1999) 94 FCR 561 per Finkelstein J at 582.

73 With respect to the Full Bench, and subject only its findings at [61], the reasons provided by the majority do not seem to identify any appealable error in the exercise of discretionary power carried out by Commissioner Hodder. There is no disclosed reasoning supporting the decision of the Full Bench to uphold the appeal, and set aside the "order" of Commissioner Hodder. The Full Bench appears to have treated the power to make orders under s 170CH as a discretion that became exercisable upon the Full Bench undertaking the hearing of the "appeal" (having granted leave to appeal), without any need to demonstrate error on the part of Commissioner Hodder in making the orders that he did.

74 The fact that one member of the majority, Commissioner Smith, sat on the Full Bench that had previously held that it was seriously arguable that Commissioner Hodder’s decision was affected by appealable error does not, in our view, demonstrate that the majority on the second Full Bench exercised its statutory function under s 45 in accordance with law. Nor can we draw any such conclusion from the fact that both Senior Deputy President Watson and Commissioner Smith are experienced members of the Commission, and certain to be familiar with the provisions of the Act, and much of the case law that has built up around it. It is a fact that neither is legally qualified. It cannot be assumed that, when considering the appeal, they had at the forefront of their minds the strict requirements laid down by the High Court in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission regarding the nature of the statutory power conferred by s 45. That is particularly so given the manner in which their reasons for decision are structured, with no specific reference to any error on the part of Commissioner Hodder, no implicit finding of any such error in relation to his order for reinstatement, and a series of conclusions expressed in language redolent of an appeal conducted as a hearing de novo.

75 In our view, there is at least a distinct possibility that the majority simply overlooked the need to find appealable error before interfering with Commissioner Hodder’s order for reinstatement. Indeed, if one focuses solely upon its expressed reasons for decision, that distinct possibility becomes a likelihood. The Full Bench therefore lacked jurisdiction to make the orders that it purported to make.

76 It is unnecessary, having regard to this conclusion, to deal with the alternative case propounded by the prosecutors. We should say, however, that we consider that alternative case to be tenuous, at best.

77 That raises the question of what relief, if any, should be granted. It is clear that the matter must be remitted to the Full Bench to be heard and determined according to law. The question is whether the jurisdictional error on the part of the majority requires the whole of the matter to be remitted, or whether it is appropriate to remit only that part of the decision that related to the quashing of Commissioner Hodder’s order for reinstatement.

78 The prosecutors submit that the only matter that should be remitted is the remedial order. As previously noted, Pacific Coal argues that this would be grossly unfair. It says that if the decision of the majority is shown to be tainted by jurisdictional error, namely the adoption of an erroneous approach to the appellate function conferred by s 45, that error affects the entirety of its reasoning. That would include its acceptance of Commissioner Hodder’s finding that the dismissals were "harsh, unjust and unreasonable".

79 In our view, the correct analysis is somewhat more complex. Assuming for present purposes that Pacific Coal’s "defensive" challenge to the Full Bench’s primary finding, as mounted in "S509/03" fails, a matter to which we shall turn shortly, there is no reason why that part of the appeal to the Full Bench should be held to have miscarried. There is no suggestion that the majority approached the issue whether the dismissals were "harsh, unjust and unreasonable" in a way that reveals the type of error that is apparent in its treatment of Commissioner Hodder’s remedial order.

80 However, as previously indicated, it is possible that, notwithstanding the failure of the majority to say so, it did find appealable error in Commissioner Hodder’s decision to order reinstatement. Whether or not that is so depends largely upon how one interprets par [61] of the majority’s reasons. It would certainly have been open to the majority to find such error. To that extent, it would be open to the Full Bench to again do so, after reconsideration, provided that it applied the correct approach to its task.

81 The matter is greatly complicated by the fact that the Full Bench seems to have acted, to some degree, on the basis of further evidence received under s 45(6). When an appellate court receives further evidence, it generally does so only where certain pre-conditions are met. The ordinary requirements for the reception of fresh evidence are that the party seeking to adduce the evidence must show that reasonable diligence was exercised to procure the evidence for the trial and that it is reasonably clear that if the evidence had been available, and had been adduced, a different result would have been produced.

82 It is clear that some statutory provisions allowing for the reception of further evidence on appeal are cast in broader terms than the somewhat narrower common law restraints. See for example s 27 of the Federal Court of Australia Act 1976 (Cth), and see generally CDJ v VAJ [1998] HCA 76; (1998) 197 CLR 172 at 199, 201-202 and Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17; (2001) 205 CLR 507. Nonetheless, it is clear that an appeal to the Full Court of the Federal Court is not an appeal stricto sensu, but is an appeal by way of rehearing: Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 at 179-182 and Cubillo v Commonwealth [2001] FCA 1213; (2001) 112 FCR 455 at 522.

83 Under s 110(2)(b), the Commission is not bound by the rules of evidence. Indeed, under s 110(2)(c), it is required to act according to "equity, good conscience and the substantial merits of the case, without regard to technicalities and legal forms". It is entitled, in the exercise of its discretion, to determine its own procedure: The Queen v Alley; Ex parte NSW Plumbers & Gasfitters Employees’ Union [1981] HCA 61; (1981) 153 CLR 376 at 380.

84 In one sense, there are difficulties with the proposition that an appellate tribunal can receive further evidence, arguably almost at will, yet be limited in the exercise of its appellate powers to correcting appealable errors. However, the High Court has held, in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission, that the powers of the Full Bench are so limited. Indeed, it treated the fact that the Full Bench had a power to receive further evidence as a clear indication that an appeal under s 45 was by way of rehearing, and not a hearing de novo. Almost by definition, when evidence is received on appeal that was not led at first instance, and that evidence is of crucial importance, the outcome may be affected without appealable error having been established. In other words, the decision at first instance may have been correct on the evidence as it stood, but no longer be appropriate in the face of the further evidence.

85 Despite the difficulties raised by s 45, and the interpretation accorded to that section by various appellate courts, jurisdictional error having been established, the prosecutors are entitled to the constitutional writs sought: Re AIRC; ex parte CFMEU per Wilcox and Madgwick JJ at [63]-[79]. Those writs are granted because the Full Bench failed to perform its statutory function according to law. That function should now be performed in relation to the remedial orders previously made, but in the light of the requirements laid down by s 45 as interpreted by the High Court.

86 In arriving at this conclusion, we are conscious of the fact that most decisions that are successfully impugned are nullified completely. However, as is noted in Aronson, Dyer and Groves Judicial Review of Administrative Action (3^rd ed, 2004, Law Book Co) at 640-643 in some cases it may be possible to sever those parts of a decision that are not tainted by jurisdictional error. So a breach of natural justice which occurs only in relation to the setting of a penalty need not result in quashing the finding of guilt: Hall v New South Wales Trotting Club Ltd [1977] 1 NSWLR 378 and Malone v Marr [1981] 2 NSWLR 894. In Re Heaney; ex parte Tunza Holdings Pty Ltd [1998] WASCA 341, certiorari quashed a mining warden’s decision, but left him free to make a decision on elements not yet determined without having to go to another hearing. There are many other examples of severability of appellate tribunals’ decisions including R v Marshall; ex parte Baranor Nominees Pty Ltd [1984] VR 211 (invalid backdating of a wage increase) and Bread Manufacturers of New South Wales v Evans [1981] HCA 69; (1981) 180 CLR 404 (a clause in a new price fixing ruling revoking former rulings).

87 It is interesting to note that in Re Media, Entertainment and Arts Alliance; Ex parte Arnel [1994] HCA 1; (1994) 179 CLR 84, the High Court held that a decision by the Commission amounted to a constructive failure to exercise jurisdiction and was reached in breach of the requirements of procedural fairness. The Court ordered that writs of prohibition, certiorari and mandamus issue. The writ of certiorari operated to quash the impugned decision only to the extent that it affected the entitlement of the applicants to put a case for leave to intervene with respect to differential rates for junior employees. In other words, the writ did not quash the decision in its entirety, but only that part that involved jurisdictional error. Severance was at least tacitly recognised as available.

88 In the present case, it is not difficult to distil from the impugned decision of the majority two quite separate and discrete parts. The first involves the analysis of whether the terminations were "harsh, unjust and unreasonable". The second raises the question of remedial orders. The jurisdictional error made by the majority in relation to the second issue does not of itself taint its finding on the first issue. There is no reason, in principle, why the Full Bench should be required to reconsider a part of its decision which has never been shown to be in error, whether it be jurisdictional or otherwise.

89 With regard to application "S509/03", counsel for Pacific Coal and Hail Creek Coal sought extension of the time provided under the Rules of the High Court ("High Court Rules") to apply for constitutional writs. Under O 55 r 30 of the High Court Rules, the time for application for a writ of mandamus is limited to two months, and under O 55 r 17, for a writ of certiorari six months. As noted earlier in these reasons, the applications were not filed in the High Court until nine months after the determination made by the Full Bench on 12 December 2002.

90 It may be inferred that Pacific Coal and Hail Creek Coal did not see any need to seek judicial review of the Full Bench proceeding when the retrenched employees commenced application "S56/03" in February 2003. It was not until the Commission made the "exceptional matters order" in July 2003 that Hail Creek Coal decided that it, and Pacific Coal, should seek to challenge the earlier determination of the Full Bench.

91 The first ground relied upon, if leave were granted, was a contention that the Full Bench "failed to exercise [its] jurisdiction under s 170CG(3)(a)" of the Act. Under that provision, the Commission, in determining whether a termination was harsh, unjust or unreasonable, must have regard to whether there was a valid reason for the termination related to, inter alia, the "operational requirements of the employer’s undertaking, establishment or service". That is one of a number of matters to which the Commission must have regard in making the determination. Section 170CG does not state that a valid reason related to operational requirements, and termination of employment that is harsh, unjust or unreasonable, are mutually exclusive events. The existence of such a valid reason is a matter the Commission must take into account, with other matters, but it does not determine the issue before the Commission. Indeed, in its submissions to the Commission, Pacific Coal accepted that even in cases of "genuine redundancy", the employer remained under an obligation not to terminate the services of an employee in a manner that was "harsh, unjust or unreasonable": Quality Bakers of Australia Ltd v Goulding (1995) 60 IR 327 per Beazley J at 334.

92 Pacific Coal and Hail Creek Coal submitted that the Full Bench erred under s 170CG(3)(a) by determining that it was bound to consider whether there was also a valid reason related to the capacity or conduct of the retrenched employees, in addition to a valid reason related to the operational requirements of the undertaking of Pacific Coal. Put more simply, they submitted that the Commission, having accepted that the operational requirements of Pacific Coal provided a valid reason for the terminations, was in error in also requiring that there be a valid reason for the terminations related to the capacity and conduct of the employees who were let go.

93 On behalf of the prosecutors it was submitted that the approach of the majority of the Full Bench was that even given a valid reason for the number of terminations that occurred, it was also necessary under s 170CG(3)(a) to consider whether the selection of each of the second respondents was based on a valid reason related to his capacity of conduct. It was further submitted that the approach taken by the majority was based on a misreading of the provision. Paragraph (a) of subsection (3) does not attempt to deal comprehensively with every reason for a termination, or every element in a reason. If there is a valid reason related to capacity or conduct, or to operational requirements, the Commission is required to take that circumstance into account. That there were other reasons which could not be described as valid was a matter that the Commission might also take into account under par (e), but provided no justification for the Commission deciding the case on the footing that the consideration referred to in par (a) had not been satisfied.

94 It followed, so it was submitted, that the majority held, in effect, that Pacific Coal had failed the test in s 170CG(3)(a). In the result, Pacific Coal was deprived of the benefit, in the overall judgment required by the section, of what ought to have been a positive factor in its favour, namely, that there was a valid reason for each termination related to operational requirements. This was not a case in which the second respondents were dismissed for unacceptable capacity or conduct. Rather, it was a case in which sixteen employees were to be dismissed for redundancy and the second respondents were selected from a much larger group. In that context, operational requirements had to be the foremost consideration, but the validity of Pacific Coal’s reason in that regard was diminished or ignored, and treated almost as a side issue.

95 On behalf of the second respondents, it was submitted that the findings made by the majority did not differ materially from those made by Commissioner Hodder. In response to a submission by Pacific Coal that a determination of the existence of a valid reason based on operational requirements under s 170CG(3)(a) precluded consideration of whether a valid reason existed for the selection of a particular employee, the Full Bench ruled (at [26]) that:

96 In substance, all that the Full Bench had done was to note that in an appropriate case it was open to have regard to both limbs of s 170CG(3)(a) in the overall construction of the subsection: see Minister for Immigration & Ethnic Affairs v Baker (1997) 73 FCR 187 at 194. The Full Bench did not misconstrue subsection (3), and did not decide the case on the footing that the consideration referred to in par (a) had, in effect, not been satisfied. In circumstances where the methodology by which individuals were selected for redundancy had been attacked as biased and inaccurate, it was appropriate to consider each limb of the subsection. The validity of the operational reason was taken into account by the majority, and had not been treated "as a side issue". Moreover, if the Full Bench erred in the manner submitted, it was an error within jurisdiction: see Ex parte Hebburn Ltd; re Kearsley Shire Council (1947) 47 SR(NSW) 416 at 420.

97 The submission on behalf of Pacific Coal and Hail Creek seems to us to have elided the adumbration provided by the Full Bench of the task it understood it was required to perform on the material before it. The Full Bench, as required by the Act, had regard to whether there was a valid reason for the dismissals. It was satisfied that there was a valid reason related to the operational requirements of the undertaking of Pacific Coal. However, it determined that it had to consider whether the terminations of employment had been harsh, unjust or unreasonable having regard to all relevant considerations, of which the existence of redundancies was part. The material before the Full Bench showed that Pacific Coal instituted a selection process to replace the custom of the industry that those most recently employed be the first dismissed in the event of the occurrence of redundancies. The Full Bench was not satisfied that the selection process held out by Pacific Coal to be the system of selection it had implemented had been duly conducted. In the view of the Full Bench, the selection process, as conducted, did not discharge Pacific Coal’s obligation to treat its employees fairly and without discrimination. In particular, in respect of the retrenched employees, the termination of employment said to be based upon that selection process was found to be harsh, unjust or unreasonable.

98 A fair reading of the reasons of the Full Bench in their entirety shows that it accepted that Pacific Coal had a valid reason relating to the operational requirements of its undertaking to terminate the services of a number of employees. However, given that Pacific Coal regarded the implementation and use of the PER process relating to capacity and conduct of employees as the means of effecting those operational requirements of the undertaking by selecting the employees whose services were to be terminated, the Full Bench had to consider whether the termination of the services of the retrenched employees was harsh, unjust or unreasonable by reason of improper or discriminatory implementation of that system. It was in that context that consideration of the "capacity or conduct" of employees arose.

99 Although the Full Bench stated its findings in terms that there was not a valid reason for the termination of the retrenched employees related to the capacity or conduct of the retrenched employees, the totality of its reasons show that the Full Bench did not misunderstand the relevant considerations to which it had to have regard under s 170CG(3).

100 Accordingly, no error on the part of the Full Bench in its understanding or application of s 170CG(3) having been demonstrated by Pacific Coal and Hail Creek Coal, the ground relied upon by the prosecutors in this proceeding in that regard must fail.

101 The second ground relied upon by Pacific Coal and Hail Creel was that the Full Bench erred in its understanding or application of s 170CG(3) by failing to make findings with respect to the capacity or conduct of each retrenched employee individually before determining that there was no valid reason for termination of each retrenched employee related to capacity or conduct. Put another way, it was submitted that, on the matter of capacity and conduct, the Commission erred in taking "a global approach" to the second respondents, without considering their position as individuals to assess whether their particular terminations were harsh, unjust or unreasonable.

102 In support of this ground, it was submitted that Div 3 of Part VIA is concerned with individual rights and not the resolution of collective disputes or issues: CFMEU v AIRC [1999] FCA 847; (1999) 93 FCR 317 at 341-342. It is "an employee" who may apply for a remedy under s 170CE. Considerations relevant to the individual dominate Div 3. Such considerations include the qualifying period of employment (s 170CE(5A)), the conciliator’s assessment of the prospects of success (s 170CF(2)), the complex series of elections open to the applicant (s 170CFA), the issues to be determined on the arbitration (s 170CFG(3)), and the considerations governing remedies, particularly quantum of compensation (s 170CH(7)).

103 The prosecutors submitted that this was not to deny that two or more applications under s 170CE could be heard together, nor that there might be issues common to a number of applications justifying joint hearings. There might be cases where the facts showed that a single event (such as a closure of a factory), and not any individual factors, led to a number of simultaneous dismissals such that each applicant’s case was in substance the same as that of every other applicant. However, the present was not such a case. They submitted that s 170CG(3) outlines the matters to which the Commission must have regard in making its determination. They are matters which relate to the individual. If the Commission was to find, as it did, that there was no valid reason on the matter of capacity or conduct, it had to do so in relation to the capacity or conduct of each individual.

104 In the proceedings before the Full Bench, Pacific Coal made detailed submissions as to the PER process, selection for redundancy and operational requirements. These submissions included a careful analysis of the evidence relating to the selection of each of the second respondents for redundancy as against the others within that group and as against the other employees. Pacific Coal dealt in detail with each of the factors that contributed to the PER score and associated selection processes.

105 Having accepted that there was a valid reason for the terminations related to operational requirements, the majority on the Full Bench turned to whether there was also a valid reason related to the second respondents’ capacity or conduct. The consideration given to this issue was confined to the shortcomings in the system used to select employees for redundancy. No consideration was given to the question whether, even if the system were to be criticised, there was nonetheless a valid reason for the termination of a particular employee that was related to his capacity or conduct. No consideration was given to whether any one or more of the second respondents might have been selected for redundancy under any system of selection despite lengthy and comprehensive submissions on that point.

106 It was submitted on behalf of the second respondents that no error of any kind had been demonstrated in relation to the approach taken by the Full Bench to this issue. The parties had conducted the case both before the Commissioner and before the Full Bench upon the basis that what was in issue was simply whether the selection process adopted to identify those who should be terminated was fair. The second respondents were all members of a Union having the benefit of a statutory industrial instrument. They submitted that their Union membership was an important factor in the decision to select them for redundancy. A good deal of evidence was devoted to the manner in which the PERs were administered. The finding that the terminations were harsh, unjust and unreasonable was based upon the manner in which performance assessments and reviews had been carried out.

107 Although Pacific Coal claimed that the second respondents were dismissed because they were the lowest performers based on a merit ranking, the process that established that merit ranking was flawed. Accordingly, all those whose employment had been terminated in consequence of that process were entitled to the benefit of the factual findings that followed.

108 We are not persuaded by the prosecutors’ argument in support of this ground. The case relied upon by Pacific Coal before the Full Bench was that the PER process was a fair method of selection of employees for dismissal by reference to criteria relating to capacity or conduct. The case for the retrenched employees was that the implementation of the PER process was corrupted by elements of discrimination and bias that applied against each retrenched employee.

109 The Full Bench accepted the case submitted by the retrenched employees and determined, therefore, that the termination of employment of each retrenched employee had been harsh, unjust or unreasonable. The Full Bench could not, on the material before it, make any finding of fact as to the capacity or conduct of each retrenched employee and it was unnecessary that it do so.

110 The third ground relied upon by Pacific Coal and Hail Creek Coal was that having found that the "PER system itself...should [not] be overturned", the Full Bench erred in applying s 170CG(3) by failing to find that there had been a valid reason for the termination of the retrenched employees related to their capacity or conduct, and that the termination of each employee had not been harsh, unjust or unreasonable.

111 It was submitted that on any view it was so much of Pacific Coal’s reasons for dismissal as related to the capacity and conduct of the second respondents that stood at the core of the majority’s determination. The dismissals, however, were made wholly as a result of a process of selection, governed by the PER assessments. In short, it was essentially because they fared worst under the PER assessments that the second respondents were dismissed.

112 The majority criticised the "context" in which the selections were made. One might therefore have expected a finding that the assessments were vitiated, or the like. However, to the contrary, the majority reached no conclusion "in relation to the PER process per se". Nor did they overturn the PER results. Indeed, they held that, absent the adverse context "the PER process itself would not warrant a conclusion that it was so flawed that it should be overturned".

113 According to the prosecutors, without overturning the PER process it must be taken that whatever the contextual problems, the second respondents were the sixteen worst performers in the employ of Pacific Coal at the Blair Athol mine. A finding that there was a valid reason for the dismissals related to capacity and conduct was, in the circumstances, unavoidable. The majority might well have held that, because of the unfair context, the dismissals were harsh, unjust or unreasonable under the broad ground in s 170CG(3)(e). However, it was not open to them to find against Pacific Coal under par (a) of the subsection.

114 The second respondents submitted that the third ground was largely a replication of the criticisms lying behind the first two grounds. Although the majority did not specifically hold that the PER process was flawed per se, it made numerous findings that in its implementation it operated unfairly against the employees. The majority did not find that the terminations were harsh, unjust and unreasonable under par (a), but rather upon the totality of the matters to which s 170CG(3) directs attention. That was in accordance with the requirements of the section as a whole: see Edwards v Giudice at 565; and Friends of Hinchinbrook Society Inc v Minister for Environment & Ors (No 3) (1997) 77 FCR 153 at 187 et seq.

115 In our view, the third ground was encompassed within the arguments addressed and dealt with in each of the preceding grounds. The majority accepted that, if duly implemented, the PER process was not an inherently unfair process of selection. It was the manner in which the PER process was implemented, namely, affected by bias and by use of discriminatory procedures, that provided "a context adverse to the consideration of the [retrenched employees]" and made their selection for dismissal by purported use of the PER process a harsh, unjust or unreasonable termination of their employment.

117 It follows from the foregoing that an order should be made on the application of the retrenched employees that a writ of certiorari issue to call in and quash the decision of the Full Bench made on 12 December 2002 and that a writ of mandamus issue directing the Full Bench to complete the "appeal" according to law. That is to say, the Full Bench must address the issue whether there was any "appealable error", in the terms discussed above, in the exercise by Commissioner Hodder of the discretionary powers available to him under s 170CH of the Act by which he ordered that the retrenched employees be "reinstated" in their employment by Pacific Coal.

118 In formal terms, certiorari should go to quash "the order" of the Full Bench by which the orders [PR902679] and [PR903256] issued by Commissioner Hodder on 9 April and 27 September 2001 respectively are quashed as having been made without jurisdiction. The Full Bench exceeded its jurisdiction only in purporting to exercise power under s 45(7) to vary the remedy ordered by Commissioner Hodder. Accordingly, it is that aspect of the matter that should be remitted to the Full Bench for determination according to law. No error on the part of Commissioner Hodder, and no error on the part of the majority (apart from its failure to consider whether appealable error was established) having been demonstrated, there is no justification for remitting the balance of the Full Bench’s determination for further consideration.

119 With regard to the application for leave by Pacific Coal and Hail Creek Coal to seek the issue of constitutional writs in respect of the decision of the Full Bench, the formal order of the Court will be that the application for leave is granted but the application for constitutional writs be dismissed.

120 During the course of argument, the Court raised with the parties the question whether, assuming constitutional writs issued in relation to application "S56/03" or application "S509/03", this would have a bearing upon the proceeding in application "S508/03". On one view, the decision by the Full Bench to make an exceptional matters order on 25 July 2003 was based substantially upon the earlier findings of a differently constituted Full Bench whose decision is now to be reconsidered. It may be that in those circumstances there will be no need to resolve the very many and highly complex issues raised by the challenge to the decision of the later Full Bench.

121 In "S508/03", Hail Creek contends that it would be an error to permit the findings of the later Full Bench to adopt or use the findings of Commissioner Hodder, or the majority of the first Full Bench. The Union on the other hand contends that there is nothing impermissible in doing so. There are serious questions regarding the validity of the exceptional matters order made by the second Full Bench, and the Court has heard extensive argument on this issue. On the other hand, it may be that, depending upon the outcome of the remitter to the first Full Bench, it will no longer be necessary for the Court to deal with those matters. The Court proposes to defer the finalisation and publication of its reasons for judgment in "S508/03" until the Full Bench has determined the appeal from Commissioner Hodder according to law.

Counsel for the Applicants in "S56/03":	R J Burbidge QC, B Docking

Solicitor for the Applicants in "S56/03":	Whyburn & Associates

Counsel for the 2^nd Respondents in "S56/03":	Dr C N Jessup QC, F Parry SC

Solicitors for the 2^nd Respondents in "S56/03":	Freehills

Counsel for the Applicants in "S509/03":	Dr C N Jessup QC, F Parry SC

Solicitors for the Applicants in "S509/03":	Freehills

Counsel for the 2^nd Respondents in "S509/03":	R J Burbidge QC, B Docking

Solicitors for the 2^nd Respondents in "S509/03":	Whyburn & Associates

Dates of Hearing:	3, 4, 5, 18 December 2003 and 19, 20 February 2004

Date of Judgment:	11 October 2004

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N860 OF 2003

Federal Court of Australia - Full Court Decisions

Re Australian Industrial Relations Commission; Ex parte Smith [2004] FCAFC 271 (11 October 2004)