FWAFB 8753
FAIR WORK AUSTRALIA
Fair Work Act 2009
s.604—Appeal of decisions
JUSTICE GIUDICE, PRESIDENT
 This is an appeal, for which permission is required, by Regional Express Holdings Limited trading as REX Airlines (Rex) under s.604(1) of the Fair Work Act 2009 (the Fair Work Act). The appeal is against a decision made by Commissioner Bissett on 3 September 2010 reinstating Mr Richards (the respondent) in his employment as a flight captain with Rex. 1
Statutory basis for appeal
 Section 604(2) of the Fair Work Act provides that Fair Work Australia must grant permission to appeal if it is satisfied that it is in the public interest to do so. Section 400(1) of the Fair Work Act provides that despite s.604(2) the tribunal must not grant permission to appeal from a decision under Part 3-2 of the Fair Work Act unless it considers that it is in the public interest to do so. Part 3-2 of the Fair Work Act deals with protection from unfair dismissal and, among other things, empowers Fair Work Australia to order a remedy to an employee who has been unfairly dismissed. Commissioner Bissett’s decision is a decision under Part 3-2. It follows from s.400(1) that we must not grant permission to appeal unless we consider that it is in the public interest to do so.
 Section 400(2) provides that an appeal from a decision under Part 3-2 of the Fair Work Act can only, to the extent that it is an appeal on a question of fact, be made on the ground that the decision involved a significant error of fact. It follows from s.400(2) that to the extent that this appeal is on a question of fact, unless there is a significant error of fact no appeal lies.
 For reasons which we give in the course of our decision we consider that it is in the public interest to grant permission to appeal. We are also satisfied that the decision involves a significant error of fact. We grant permission to appeal.
The Commissioner’s decision and the grounds of appeal
 Rex terminated the respondent’s employment without notice on 24 February 2010. The misconduct concerned the use of cars supplied by Rex for the use of flight and cabin crew required to stay overnight away from their home port. In the appeal Rex relied on a number of allegations of misconduct. It is convenient to reproduce the summary of the relevant allegations as they appear in Commissioner Bissett’s decision:
“(i) That the Applicant, on the evening 21 January, deliberately drove a crew car in low gear at speeds of 40 or 50 kilometres an hour from the Burnie Airport to the accommodation, causing the engine to rev excessively.
(ii) That the Applicant [on the evening of 21 January] deliberately drove a crew car with the handbrake on from the Burnie airport to the milk bar on the corner of Saunders and Goldie Sts.
(iii) That, on 21 January, the Applicant deliberately and maliciously scratched the back of the car with a key.
(iv) That, on at least one other occasion before 21 January 2010 the Applicant deliberately misused the crew car by driving it in either or both of low gear and with the handbrake on which caused the engine to overheat to the point that you could smell it.
(v) That, on 7 February 2010, the Applicant deliberately misused the Burnie crew car by putting the gear stick out of drive and into low gear while he was a front seat passenger and while First Officer Jordan Moras was driving the car at speeds approaching 50 kilometres per hour.
(vii) That, on 17 and 18 February the Applicant provided dishonest responses [in his interviews with Mr Hine].” 2
 The final ground refers to an internal inquiry conducted by Rex’s chief pilot, Mr Hine, prior to the termination of the respondent’s employment. The Commissioner found only two of the allegations, those in paragraphs (i) and (ii), proven. She found there was a valid reason for the termination of the respondent’s employment but that the termination was nevertheless harsh because, in the circumstances, the penalty was disproportionate to the misconduct. The circumstances included the impact of the respondent’s dismissal upon him financially and emotionally and the lack of employment prospects. The Commissioner decided that he should be reinstated in his employment and that he should be paid his base salary and superannuation for the period between termination and reinstatement. She determined, however, that the respondent should not be entitled to travel allowance, leave loading or long service or other accumulation for that period. She suggested that he should be subject to disciplinary action and that an official warning in relation to his conduct and attitude with respect to the use of crew cars would be appropriate.
 The first ground of appeal is that on the facts as found by the Commissioner she ought to have concluded that the misconduct was so serious as to outweigh any and all other considerations in the respondent’s favour and to have dismissed the respondent’s application. It is unnecessary to consider this ground because, as we indicate below, we have concluded that the Commissioner did make an erroneous finding.
 The remaining grounds of appeal are directed at the Commissioner’s failure to find the remaining allegations of misconduct proven and at the question of remedy.
 We deal now with the allegations of misconduct. Rex submitted that the Commissioner was in error in finding that four of the allegations of misconduct were not proven. The relevant allegations are designated (iii), (iv), (v) and (vii) in paragraph  above. We make some comment in relation to each of them.
 Allegation (iii) is that on 21 January 2010 the respondent deliberately scratched the back of the crew car with a key. This is alleged to have occurred on the same night, 21 January, that the respondent drove the crew car in low gear and with the handbrake engaged on the way from Burnie airport to the crew accommodation. The allegation was based on evidence given by a Ms Anderl. Her evidence was that she saw the respondent move his arm near the car. She gave no evidence of hearing a scratching noise or seeing a scratch. She was apparently not in view of the back of the vehicle when the alleged conduct occurred. Photographic evidence produced by Rex in relation to damage to crew cars generally included a photograph of the back of the Burnie crew car. It was common ground that there was no scratch mark evident. The respondent denied having scratched the back of the vehicle. On this evidence we have no doubt that the Commissioner’s finding was open to her.
 Allegation (iv) is that on at least one previous occasion the respondent had driven a crew car either in low gear or with the handbrake on or both causing the engine to heat to the point that one could smell it. This allegation is based on the witness statement made by Ms Anderl for the purpose of the proceedings before the Commissioner. The statement alleged that the respondent, while in the crew car on the evening of 21 January 2010, said words to the effect: “You should have seen the last car I drove we had it so hot by the time we pulled up you could smell the engine.” This allegation had not previously been made by Ms Anderl and was not relied upon by Rex at the time of the termination of the respondent’s employment nor in Rex’s outline of submissions filed in the proceedings. While the respondent did not deal with the allegation in his witness statement in reply he indicated in his oral evidence that he doubted he had made any such statement. The other Rex employee in the car at the time, Mr Morrison, gave no evidence of having heard such a comment. It is telling that the respondent had only driven the crew car in Burnie once before 21 January 2010. In the course of the internal inquiry Rex had interviewed crew who flew to Burnie with the respondent and asked them about any misuse of vehicles. It is to be presumed from the lack of evidence on the point that none reported actual misuse of the crew car on that earlier occasion. In the circumstances the Commissioner was entitled to reject this allegation as well.
 Allegation (iv) is that on 7 February 2010 the respondent deliberately misused the crew car by pulling the gear stick out of drive and into low gear while someone else was driving the car at speeds of up to 50 kilometres per hour. This allegation arose from a statement given to Rex by a Ms Turner during the internal investigation. The contents of the statement were the basis of evidence given by Ms Turner. In substance the evidence was that Ms Turner was in a crew car on 7 January 2010 with a first officer, Mr Moras, and the respondent. Mr Moras was the driver. As they left the Burnie airport the respondent grabbed the gear lever and put it into low gear while the car was travelling at 50 kilometres per hour. She said that when she protested one of the men put the lever back into drive about 500-600 metres into the trip. The respondent denied the allegation. Mr Moras was not called to give evidence although he had been interviewed by Rex during the investigation. The notes of the interview do not indicate that Mr Moras witnessed any particular conduct but he did say that misuse of crew cars had occurred. The Commissioner found that Rex could have called Mr Moras and its failure to do so led to an inference that his evidence would not have assisted Rex’s case. She found in addition that the drawing of an inference was not negated by the respondent’s failure to call Mr Moras. She found that it was not reasonably open to the respondent to call Mr Moras because it was unaware of the evidence to be given by Ms Turner until her statement was filed eight days before the hearing. The Commissioner stated her conclusion in the following passage:
“ On the balance of probabilities however I cannot find that the conduct occurred. The evidence of the two witnesses called on the matter is contradictory. The third person who may have shed some light on events was not called. I have inferred that his evidence would not have assisted the Respondent in this instance.
 There is an obligation on the employer to prove that the conduct occurred. They have failed to do so.” 3
 In our view the Commissioner’s analysis of the position is unsatisfactory. There seems to be an unspoken assumption in the Commissioner’s reasoning that Mr Moras was more apt to be called by Rex than the respondent. There is no basis for that approach. In our view it was open to either party to call Mr Moras. Indeed, the respondent’s counsel called another witness of first officer rank to give evidence on the respondent’s behalf. The fact that the respondent may have been unaware of Ms Turner’s evidence until her statement was filed is not an adequate excuse for not calling Mr Moras. The Commissioner should have resolved the issue without resort to an inference of the kind referred to in Jones v Dunkel. 4 We dismiss any suggestion that Ms Turner’s evidence should be rejected based on a Jones v Dunkel inference; in the circumstances no inference should be drawn.
 Although the respondent denied the allegation both in his statement in reply and in oral evidence his earlier statements to Rex were not as categoric. It is appropriate to set them out as they appear in evidence:
“I honestly don’t recall and honestly doubt that to be the case” 5
“My response was no recall of ever taking such action and highly improbable” 6
“The allegation I believe to be false” 7
 It is implicit in these statements that the respondent might have done what was alleged. It is no answer to say that the statements were made in response to an allegation which was not specific as to date and time. The allegation was capable of a direct denial. There was no denial until the respondent’s statement in reply. It is also significant that the Commissioner had already rejected parts of the respondent’s evidence concerning allegations relating to similar conduct on 21 January 2010. The respondent’s credit was tarnished by those findings. There is no suggestion that Ms Turner’s credit was in issue.
 For these reasons we have decided that it is more likely than not that the respondent did move the gear lever from drive to low while Mr Moras was driving the crew car from Burnie airport on 7 February, 2010. We find that he did so.
 We deal now with allegation (vii), that the respondent gave dishonest responses to Mr Hine during the internal inquiry. The following paragraphs illustrate the Commissioner’s decision on that matter:
“ A proper investigation into incidents of misconduct should allow the interviewee a reasonable opportunity to respond to the allegations. There is no doubt that Mr Richards was under pressure at this time. He had been stood down; his job was in jeopardy; and his private life was far from settled. He was, in my view, entitled to have allegations put to him with a level of specificity that would enable him to answer those questions. Basic principles of natural justice require this. This did not, in my opinion, occur. This does not, however, excuse his conduct.
 When asked in the interviews of 17 and 18 February Mr Richards’ responses to the allegations, as recorded in the notes of the meeting, were:
 On the basis of this record of the meeting I cannot conclude that Mr Richards provided dishonest answers. His answers were not a direct ‘yes’ or ‘no’ but they reflect the way in which the questions were put to him. Mr Richards had the right to couch his answers at the time of these interviews in the way that he did.”
 The Commissioner found that the respondent’s answers were “not direct”, but declined to make the finding Rex sought, that the respondent deliberately gave false answers. We do not take quite the same view. The way in which the respondent answered these questions was, to say the least, less than frank. In our view that should be taken into account in considering whether the termination was harsh and on the question of penalty. If he had driven the crew car with the handbrake on, as the Commissioner found, he should have remembered it. If he had moved the gear lever to lower gear while someone else was driving the crew car, as we have found, he should have remembered that as well.
 In the circumstances, while we consider that the Commissioner made errors, the errors are not so significant as to lead us to disturb the finding that the termination was harsh. We agree generally with the considerations the Commissioner referred to. We also attach significance to the absence of any evidence that the crew car was in any way damaged as a result of the conduct the respondent has been found to have carried out.
 We turn to the question of remedy. We have found that the respondent’s misconduct was more extensive than the Commissioner found. We consider that we should review the Commissioner’s decision in relation to remedy on the basis of the material and submissions before us.
 Rex’s first submission in relation to remedy is that the Commissioner made an error of law in that she proceeded on the basis that reinstatement is the presumptive remedy. This is a question of the proper construction of the relevant statutory provision. It also submitted that in deciding to reinstate the respondent the Commissioner took into account irrelevant considerations and failed to take relevant considerations into account. On the latter point, Rex submitted that the Commissioner erred in not taking proper account of the chief pilot’s loss of trust in the professionalism and integrity of the respondent. We deal with the question of statutory construction first.
 Section 390 of the Fair Work Act is the main provision dealing with remedy. It reads:
“390 When FWA may order remedy for unfair dismissal
(1) Subject to subsection (3), FWA may order a person’s reinstatement, or the payment of compensation to a person, if:
(a) FWA is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).
(2) FWA may make the order only if the person has made an application under section 394.
(3) FWA must not order the payment of compensation to the person unless:
(a) FWA is satisfied that reinstatement of the person is inappropriate; and
(b) FWA considers an order for payment of compensation is appropriate in all the circumstances of the case.
Note: Division 5 deals with procedural matters such as applications for remedies.”
 It is clear from the terms of s.390(3)(a) that, in circumstances where a remedy is appropriate, compensation must not be ordered unless the tribunal is satisfied that reinstatement is inappropriate. Seen in the proper context the Commissioner’s statement that reinstatement is the presumptive remedy is not indicative of any error in the decision. The section provides that compensation must not be ordered unless reinstatement has been found to be inappropriate. There is no basis for concluding that the Commissioner interpreted the section differently. Rex’s first submission on remedy must fail.
 In relation to remedy, therefore, the first question is whether reinstatement is appropriate. In considering that question the issue which looms large in Rex’s submissions is that reinstatement is inappropriate because the chief pilot has lost trust in the professionalism and integrity of the respondent. The Commissioner found that the trust and confidence necessary for an ongoing employment relationship had not been irrevocably destroyed. We have reached the same conclusion.
 Rex relied on the evidence of the chief pilot, Mr Hine. When it was put to Mr Hine that if the tribunal were to find that the respondent had not been guilty of misconduct he would not have any difficulty rehabilitating a relationship with the respondent, he answered:
“No, sir, I would ... ... if it was to be found that there was indeed no deliberate act or wilful misconduct, I have to answer the question that I would have difficulty going forward. I would have difficulty in overcoming the loss of trust and the loss of integrity irrespective of what was found.” 8
 Whenever an employer dismisses an employee for misconduct, assuming the employer is acting honestly, there is an implied loss of trust and confidence in the employee. If it is subsequently found that the termination was harsh, unjust or unreasonable it is appropriate to consider whether the relationship can be restored if the employee is reinstated. That question cannot be answered solely by reference to the views of management witnesses. All of the circumstances should be taken into account. In this case there is a number of relevant matters. They include the fact that not all of the conduct alleged against the respondent has been proven, the respondent’s apparently unblemished record in the performance of his flying duties over a period of 14 years, the fact that the misconduct is not directly related to the performance of the respondent’s professional duties as a first officer and Rex’s failure to pursue any substantial disciplinary action against another pilot who, it is alleged, has been guilty of misconduct at least as serious as that of which the respondent was accused. The significance of the last consideration is that the pilot in question is still carrying out the full range of his duties, despite allegations of conduct of a kind which, in the respondent’s case, is said to have led to an irrevocable loss of trust and confidence. Assuming a positive approach on both sides we find there is a reasonable chance that the employment relationship can be restored with the necessary level of mutual trust.
 Turning to the other matter bearing on the appropriateness of reinstatement we consider that the consequence of the loss of his employment on the respondent would be very significant, primarily because of the difficulty in obtaining other employment. The evidence suggests he would be unemployed for a long time and might incur very heavy retraining costs.
 We have concluded that reinstatement is appropriate. Reinstatement should operate from the date ordered by the Commissioner.
 The final question for decision is whether any other orders should be made in relation to the period between the termination of the respondent’s employment and the date of reinstatement. We consider that the respondent’s conduct, although in the circumstances not warranting termination of employment, was inappropriate for any employee let alone a senior pilot. While we would maintain the continuity of the respondent’s employment and continuous service pursuant to ss.391(2)(a) and (b), we do not intend to make any order pursuant to s.391(3) for payment of remuneration lost between the date of termination and reinstatement. As we understand from the evidence the respondent’s salary was in the region of $110,000 per year.
 We direct the respondent to file a draft order to give effect to our decision within seven days.
N Green QC with R Dalton of counsel for Regional Express Holdings Limited.
M Irving of counsel for R Richards.
October, 21 and 22.
1  FWA 4230.
2 Ibid. at para 25.
4 (1959) 101 CLR 298.
5 Appeal Book at p. 457.
6 Appeal Book at p. 321.
7 Appeal book at p.322.
8 Transcript in U2010/299, 23 July 2010 at PN2308.
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