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AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
Workplace Relations Act 1996
s.45 appeal against decision
issued by Senior Deputy President Cartwright on 18 November 2004
s.170CE application for relief in respect of termination of employment
Qantas Flight Catering Pty Ltd
JUSTICE GIUDICE, PRESIDENT
SENIOR DEPUTY PRESIDENT HAMBERGER
MELBOURNE, 4 APRIL 2005
Appeal - termination of employment - whether valid reason for termination based on physical incapacity - whether proscribed reason can be a valid reason - alleged failure to make relevant findings - Workplace Relations Act 1996 ss.45, 170CE, 170CFA, 170CG(3), 170CK and 170JF.
 This is an appeal, for which leave is required, pursuant to s.45(1) and s.170JF of the Workplace Relations Act 1996 (the Act) by Mr Loren Ermilov (the appellant) against a decision given by Senior Deputy President Cartwright in Sydney on 18 November 20041. In that decision the Senior Deputy President dismissed the appellant's application under s.170CE (1) of the Act for a remedy in relation to the termination of his employment by Qantas Flight Catering Pty Ltd (the respondent).
 The appellant sought orders quashing the Senior Deputy President's decision and reinstating the appellant pursuant to s.170CH(3) of the Act. The respondent opposed the grant of leave to appeal but submitted that, in the event we were to grant leave, we should dismiss the appeal.
 The appeal was heard on 25 January 2005 in Sydney. Mr Chin appeared by leave for the appellant. Ms McKenzie appeared by leave for the respondent.
THE FACTUAL BACKGROUND
 The respondent provides flight catering services. The appellant was employed by the respondent from 10 November 1993 until the termination on 6 August 2003. He was substantially employed in the position of Airline Service Operator ("ASO") Level 2, but was employed in different sections throughout his employment including the Wash Up Section, the Equipment Section, the Transport Section and the Food Production Section.
 The appellant sustained a back injury in February 1998. He returned to full pre-injury duties in November 1998. In January 2000 he again injured his back. He resumed his pre-injury duties in the Wash up and Equipment Sections in October 2000. In December 2001 he was awarded compensation and damages in the District Court for a 26 per cent permanent impairment of his back and lower leg. The court found that the second injury was an exacerbation of the first injury.
 In March 2003 the appellant suffered a further back injury. On 3 April 2003 Ms Vicki Stevens, the respondent's Workers Compensation Co-ordinator, notified the appellant that she had made an appointment for him to be examined by Dr Ng on 8 April 2003. Dr Ng is a consultant physician in occupational and musculoskeletal medicine and an approved injury management consultant with WorkCover.
 On 4 April 2003 Dr Kuzmanovski, the appellant's general practitioner and treating doctor, certified that the appellant was unfit to work for the period from 31 March to 11 April 2003.
 The appellant was examined by Dr Ng on 8 April 2003. Dr Ng subsequently produced a detailed report. At the hearing before Senior Deputy President Cartwright, Dr Ng gave evidence that in his opinion if the appellant returned to his pre-injury duties there was a high risk that he would not be able to sustain this role and would further aggravate his chronic lower back condition.
 Dr Kuzmanovski issued three further medical certificates certifying that the appellant was unfit to work from 11 April to 8 May 2003.
 On 1 May 2003 Mr Ermilov's claim for workers compensation was rejected. The insurer denied liability on the ground that the injury suffered in March 2003 was an aggravation of the injury suffered in January 2000. The award of damages in December 2001 was said to compensate for that injury once and for all. On 5 May 2003 Mr Ermilov consulted Dr Loefler, an orthopaedic specialist. After examining him, Dr Loefler concluded that the appellant was fit for modified duties with the appellant.
 On 8 May Dr Kuzmanovski again examined the appellant and issued two medical certificates. The first certificate stated that the appellant was fit for "suitable duties" for 4 hours per day, 5 days a week. The second certificate stated that the appellant was fit for "suitable duties" 8 hours per day, 5 days a week. Both certificates were for the same period - from 9 May to 13 June 2003 - and both indicated that the appellant was not to lift more than 7kg, was not to stand for more than one hour at a time and was to avoid repetitive bending.
 Later that day the appellant met with Ms Stephens and in the course of discussions about his injury he presented the first certificate. When Ms Stephens told him that he would only be paid for the hours actually worked, he presented the second certificate. The next morning there was a telephone conversation between Ms Stephens and the appellant during which she told him that, considering the restrictions that were placed on him, the respondent could not provide him with "suitable duties".
 On 14 May 2003, Ms Stephens and Mr Matthew Sharratt, the respondent's Pre-Production Manager, met with the appellant. They again indicated that there might not be any "suitable duties" available for him. They asked if he wished to provide any further medical reports for their consideration. Following the meeting, Ms Stephens and Mr Sharratt reviewed all of the medical reports in their possession. They had no reports other than the aforementioned certificates.
 On 16 May 2003, the appellant again consulted Dr Loefler who on this occasion issued a certificate indicating that the appellant was fit to return to pre-injury duties, without restriction. Ms Stephens received this certificate on 19 May 2003. Ms Stephens was concerned about the conflicting reports from Dr Kuzmanovski and Dr Loefler and decided to obtain a supplementary report from Dr Ng. On the same day Mr Sharratt wrote to the appellant to advise him that the respondent did not recognise Dr Loefler's certificate because it conflicted with the certificates issued by Dr Kuzmanovski. This letter also stated that the respondent was reviewing the appellant's medical reports, and would meet with him to discuss this information and his employment situation.
 A further meeting took place on 20 May, at which the respondent indicated that it was considering terminating the appellant's employment. He was given a 5 page letter outlining the reasons for his termination and invited to provide a written response to that letter.
 On 11 June 2003, the appellant gave Ms Stephens a further medical certificate from Dr Kuzmanovski. The certificate was dated 10 June 2003 and stated that the appellant was fit to resume his pre-injury duties. In a further meeting, on 16 June, Mr Sharratt discussed the appellant's written response to the respondent's letter of 20 May 2003. Mr Sharrat said that the respondent would like to get WorkFocus Australia involved in the process in an attempt to resolve the conflicting medical advice and certificates.
 From 26 June 2003 Ms Lucinda Martin, an occupational therapist with WorkFocus Australia, conducted an assessment of the appellant and the duties of an ASO Level 2 employee. Ms Martin concluded that his "recommended long term physical work restrictions did not match the physical requirements of his pre-injury duties as a ASO Level 2 in Pre-Production. Further, I regarded that Ermilov would be at risk of further aggravation/injury if he returned to the duties of a Level 2 ASO in the Wash Department."
 On instructions from the respondent Ms Martin considered positions in several other areas and concluded that the appellant "may not be suited to the full range of duties" within any of these. Ms Martin conducted her assessments on the basis of the respondent's requirement that permanent placement in a job requires performance of all of the requirements of that job.
 On 14 July 2003 Ms Stephens sent Dr Ng's and Ms Martin's reports to Dr Kuzmanovski and Dr Loefler and sought their response.
 On 31 July 2003, the appellant wrote to the respondent indicating that he was fit to return to pre-injury duties and sought to return on 4 August 2003. He enclosed a letter addressed to Ms Stephens from Dr Kuzmanovski, dated 29 July 2003, and a letter from Dr Loefler to Dr Kuzmanovski, dated 14 July 2003.
 Mr Sharratt gave evidence that the responses from Dr Kuzmanovski and Dr Loefler did not address the respondent's concerns about whether or not the appellant was fully fit to return to and sustain his pre-injury duties.
 On 6 August 2003, the respondent terminated the appellant's employment by letter, stating as the reason:
"QFCL is of the view based on medical evidence that you are unable to perform your contracted position as an Airline Services Operator (Level 2). An independent assessment has been made to assess any possible alternative roles you could fulfil bearing in mind the medical restrictions you have including a 26% permanent impairment of your lower back function. Unfortunately there are no suitable alternative positions available and QFCL is unable to create a new role for you."
THE DECISION UNDER APPEAL
 Senior Deputy President Cartwright considered the factors under s.170CG(3)(a). He stated that in his view there was a valid reason for the termination related to the appellant's capacity (s.170CG(3)(a)):
" . . . That reason was that the [Appellant] was assessed unable to perform the duties of his contracted position as an ASO Level 2 and the Respondent was not able to create a new role for him.
 . . . [The respondent] applied a policy that ASO Level 2 employees are required to perform all the duties of the role and that the [Appellant] was to be capable to rotate through the various tasks within all sections of the Wash Department. I am satisfied that this was a reasonable policy in deciding how to run its business and no argument has been put that the Respondent was precluded from making such a decision. Rather, the Respondent was faced with an apparent conflict in the medical opinion about whether the [Appellant] could perform the duties of the role.
 . . . In my view, it was reasonable for the Respondent to have concerns about the [Appellant's] capacity to do the full duties of an ASO Level 2 in the Wash Department and to resolve the apparent conflict in medical opinion in the manner it did . . . On the basis of Ms Martin's reports, it determined it had no other role which matched the [Appellant's] capacity. In the circumstances of this case, it cannot be said that the reason for termination of the [Appellant's] employment was capricious, fanciful, spiteful or prejudicial. In my view, it was sound, defensible or well founded [Selvachandran v Peteron Plastics Pty Ltd (1995) IR 371 at 373]. That view is not changed with the benefit of the additional evidence available to the Commission from the medical practitioners called in this case [Australian Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 14]. I find that there was a valid reason for the termination related to the capacity of the [Appellant]."2
 Having considered the other sub-sections of s.170CG(3)(b) the Senior Deputy President found that the termination of the appellant's employment was not harsh, unjust or unreasonable.
 A decision under s170CE is properly characterised as a discretionary one. The correctness of the decision can only be challenged by showing error in the decision-making process. This proposition is affirmed by the terms of s.170JF(2) of the Act which reads:
"For the avoidance of doubt, an appeal to a Full Bench under section 45 in relation to an order made by the Commission under Subdivision B of Division 3 may be made only on the grounds that the Commission was in error in deciding to make the order."
 The manner in which a Full Bench of the Commission should determine an appeal against such a decision is set out in the following passage from House v King:
"The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred."3
 In Rhodes v Violet Town Bush Nursing Centre Incorporated4 a Full Bench commented on the nature of an appeal against a finding under s170CG(3) as follows:
"Section 170CG(3) sets out the matters to which the Commission must have regard in determining whether a termination of employment was harsh, unjust or unreasonable. When the Commission has regard to those matters, provided it does not have regard to matters to which it should not have regard, it will be rare for a Full Bench to find that the Commission at first instance was in error in determining whether the termination of a person's employment was harsh, unjust or unreasonable."
THE GROUNDS OF APPEAL
 The first ground in the notice of appeal is:
"1. The Senior Deputy President was wrong in law, and acted on wrong principles:
(a) failing to address the question whether the Appellant's condition rendered him able to fulfil the inherent requirements of his job;
(b) finding that the Respondent had a valid reason for terminating the employment of the Appellant because it was reasonable for the respondent to have concerns about the Appellants capacity to perform each and all of the duties of the Appellants position."
 This ground is based on the contention that if a termination of employment is unlawful because it is for a reason proscribed by s.170CK of the Act, there cannot be a valid reason for the termination for the purposes of s170CG(3)(a).
 The relevant provisions are as follows:
"170CG(3) In determining, for the purposes of the arbitration, whether a termination was harsh, unjust or unreasonable, the Commission must have regard to:
(a) whether there was a valid reason for the termination related to the capacity or conduct of the employee or to the operational requirements of the employer's undertaking, establishment or service; . . ."
 Section s170CK(2) provides:
"(2) Except as provided by subsection (3) or (4), an employer must not terminate an employee's employment for any one or more of the following reasons, or for reasons including any one or more of the following reasons:
. . .
(f) race, colour, sex, sexual preference, age, physical or mental disability, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction or social origin;
. . .
(3) Subsection (2) does not prevent a matter referred to in paragraph (2)(f) from being a reason for terminating employment if the reason is based on the inherent requirements of the particular position concerned."
 The appellant submitted that the effect of subsections 170CK(2)(f) and (3) is that an employer may not lawfully dismiss an employee by reason of the employee's physical disability unless the reason is based on the inherent requirements of the particular position concerned. Thus a termination of employment by reason of an employee's physical incapacity which does not relate to the inherent requirements of the position concerned would not constitute a valid reason for the termination for the purposes of s170CG(3)(a). The ground alleges that the Senior Deputy President made an error in not addressing the question of whether the appellant was capable of fulfilling the inherent requirements of the job.
 Reliance was placed on the decision of a Full Court of the Federal Court in Cosco Holdings Pty Ltd v Thu Thi Van Do and Others5. In that case it was decided that termination of employment for a reason which was forbidden by the Act could not be for a valid reason.6 The decision was concerned with a similar but different statutory context and is therefore not binding on us. Nevertheless the proposition was referred to with apparent approval by a Full Bench of the Commission in Smith and others v Moore Paragon Australia Ltd7. The Bench expressed the view in that case that a redundancy selection criterion based on a proscribed reason (as set out in s.170CK) could not be a valid reason pursuant to s.170CG(3)(a), even though there was a genuine need to reduce the size of the workforce8.
 We accept that if it were to be established that employment had been terminated unlawfully it is highly likely, bordering on certain, that there could be no valid reason for the termination pursuant to s.170CG(3)(a). In considering this matter, however, it is necessary to bear in mind that the Act provides, relevantly, for two quite different avenues of relief. The first is based on the ground that the termination was harsh, unjust or unreasonable and must be pursued through the Commission9. The second is based on the ground that the termination was unlawful and must be pursued in the Federal Court of Australia10. While applications on both grounds are to be lodged in the Commission, if conciliation is unsuccessful s.170CFA provides that an employee must make an election as to which of the remedies to pursue.
 The appellant could have chosen to challenge the termination on the basis that it was unlawful pursuant to s.170CK(2)(f), being because of physical disability. In that situation, the court would be required to consider, among other things, whether the reason for the termination was based on the inherent requirements of the position. It should be noted that this is not the same question as whether the appellant was capable of carrying out the inherent requirements of the job.
 In this case the appellant elected to seek relief in the Commission on the basis that the termination was harsh, unjust or unreasonable. In this context the decision-maker was required to have regard to whether there was a valid reason for the termination of the employee's employment. A valid reason is one which is "sound, defensible or well founded", but not "capricious, fanciful, spiteful or prejudiced".11 It is clear from the terms of s.170CG (3)(a) that there can be a valid reason which is related to an employee's capacity including, it is to be inferred, physical capacity.
 So far as we can ascertain it was never put to the Senior Deputy President that there was no valid reason for the termination because the termination was in breach of s.170CK(2)(f). The case was conducted before him primarily on the basis that the parties were in dispute about whether the appellant had the capacity to fulfil the requirements of the relevant position. It was submitted on the appellant's behalf that on the medical evidence he was able to perform a variety of functions associated with the position and there was no basis to conclude he was unfit for his pre-injury duties. The respondent disputed this. Senior Deputy President Cartwright found that the respondent terminated the appellant's employment because he was not capable of performing the duties of an ASO level 2 and in so doing squarely dealt with and rejected the case put to him by the appellant. The appellant did not seek to rely on s.170CK(2) at all. If it had, the course of the evidence and submissions would no doubt have been different and relevant questions of law and fact would have been dealt with.
 In the circumstances it would be wrong and unfair to the respondent to permit the decision under appeal to be challenged on this basis. We reject the first ground of appeal.
 Grounds 2 to 6 in the notice of appeal allege that the Senior Deputy President erred in failing to make certain findings of fact.
"2. The Senior Deputy President erred in failing to find, in accordance with the evidence, that the Appellant was fit to perform all tasks associated with his position, or in the alternative, fit to perform the inherent requirements of his position.
3. The Senior Deputy President erred in failing to find that the "apparent conflict" in medical opinion was limited to whether the Appellant was capable of performing repetitive heavy manual handling work.
4. The Senior Deputy President erred in failing to find that repetitive heavy manual handling work was not a part of the Appellant's work duties, at all, or in the alternative, was not an inherent requirement of his position.
5. The Senior Deputy president erred in failing to find that there was no requirement for the Appellant to perform each and all tasks in the Respondent's wash department.
6. The Senior Deputy President erred in failing to find that the Respondent's practice of rotating its employees, including the Appellant, within the different tasks performed in the Respondents wash department established that the Appellant was not required to perform repetitive heavy manual tasks, either at all or on a daily basis."
 In an appeal against the exercise of a discretion the question is whether the decision is materially affected by error. Grounds 2 to 6 each allege that the decision was made in error by reason of the fact that the Commission failed to make a particular finding either about the nature of the appellant's job or about the appellant's ability to perform the job. We find these grounds less than compelling.
 The Senior Deputy President had evidence before him regarding the nature of the duties the appellant was expected to perform as well as his capacity to perform them. The Senior Deputy President heard evidence from a number of doctors, much of it conflicting and some of it inconsistent, consultants and company officers. He decided that there was a valid reason for the termination of the appellant's employment based on his incapacity to do the job required of him. He found that the respondent's policy of rotating all of the employees in the wash department through the various tasks in all of the sections of the department was a reasonable one and that the appellant was not able to do all of those tasks. Notwithstanding the submission on appeal, those findings are adequately supported by the evidence to which we were referred by Ms Mckenzie. Nothing put to us in relation to grounds 2 to 6 raises a sufficiently arguable case of error in the decision.
 Ground 7 in the notice of appeal alleges that the Senior Deputy President erred by taking into account an irrelevant matter:
"7. The Senior Deputy President erred in taking into account the following extraneous or irrelevant matters:
(i) That the Respondent had a policy of rotating its staff including the Appellant through all tasks within the Respondent's wash department."
 The respondent's policy of rotating its employees through the tasks in the wash department could not be irrelevant or extraneous. The policy had a direct effect upon the work of the employees in the department. Furthermore, if that policy had been unreasonable, other questions would have arisen likely to have a direct bearing on the appellant's case. As we have already noted, however, the Senior Deputy President explicitly found the policy was reasonable. This was a finding that was open on the evidence. It cannot be concluded that he made an error in taking the policy into account.
 Ground 8 is a general statement and not a ground of appeal as such. It does not require separate consideration. Ground 9 deals with remedy in the event that a finding is made that the termination was harsh, unjust or unreasonable. Because of our conclusion on the other grounds that issue does not arise.
 Under s.45(1) of the Act an appeal to a Full Bench lies only by leave of a Full Bench. Under s.45(2) a Full Bench must grant leave to appeal if, in its opinion, the matter is of such importance that, in the public interest, leave should be granted. Otherwise, considerations for the grant of leave to appeal will include whether the decision is attended with sufficient doubt to warrant its reconsideration or whether substantial injustice may result if leave is refused. Generally it is not appropriate to grant leave unless an arguable case of appealable error has been demonstrated.
 We did not require the appellant to address the question of leave separately and we heard the submissions of both parties on the question of leave and the appeal itself. We have not been persuaded that any of the grounds of appeal raise matters which, in the public interest or otherwise, warrant the grant of leave to appeal. The application for leave to appeal is dismissed.
BY THE COMMISSION:
D Chin of counsel with C Tanner for L. Ermilov.
H McKenzie, solicitor, for Qantas Flight Catering Limited.
3 (1936) 55 CLR 499, at 504.
4 PR909974, 5 October 2001.
5 (1997) 77 IR 94.
6 ibid., at 120.
7 PR915674, 21 March 2002.
8 ibid., at para .
9 Section 170CE(1)(a).
10 Section 170CE(1)(b).
11 Selvachandran v Peteron Plastics Pty Ltd (1995) IR 371 at 373.
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