Fair work general protections and state of mind issues

The general protections of the Fair Work Act provide, amongst other things, that it is unlawful for a person to take adverse action against another person because of a prohibited reason. Most commonly the causes of action which reach the federal courts are claims by an employee that an employer or former employer took adverse action against that person.

Necessarily the way in which the cause of action is constituted by the Act requires the courts to determine whether adverse action was taken, by whom and why. This logically requires the courts to determine the state of mind of the person or persons alleged to have taken the adverse action relied upon by the applicant.

This rather lengthy extract from a recent case in the Federal Court sets out how that issue is and should be approached.

“Consideration

  1. The inquiry into whether Mr Arnott contributed to the decision-making process culminating in the adverse actions to a degree sufficient to warrant interrogation of his state of mind involved an evaluation of the objective facts in light of the principles stated in the authorities.  We do not consider the underlying facts to be the subject of significant controversy.  It is plain that the information Mr Arnott provided to Ms MacLeod was adopted by her for its truth, just as she accepted the truth of what other personnel told her.  It is also plain that Ms MacLeod was motivated to remove Ms Wong from her role because of the breakdown in relations between her and Mr Arnott.  She accepted Mr Arnott’s word that Ms Wong’s behaviour was the cause of the problem.  She could not tolerate a situation in which Mr Arnott and Ms Wong could not work together.
  2. The case was not one in which Ms MacLeod received information from Mr Arnott the reasonableness, truth or accuracy of which she investigated for herself.  Mr Arnott was not a mere informant or witness among many.  Rather, in our view, he was an instigator of the process that led to the adverse actions being taken on the basis of his word, without reference to Ms Wong.  Not only did he provide a large part of the information upon which Ms MacLeod acted, he also personally authored the reasons for the removal decision in dot points that reflected his own experiences with Ms Wong in the workplace.  He accompanied Ms MacLeod in the seeking of advice as to whether the “case management history” (being an historical narrative largely provided by him) would form a sufficient basis to put in train a process for Ms Wong’s dismissal.  He expressed the opinion that Ms Wong’s employment was untenable.  That Ms MacLeod formed the same view is hardly surprising, given her acknowledgement that she accepted everything Mr Arnott said to be truthful (including the assertion that Ms Wong was to blame for his deteriorating emotional state).
  3. On the facts, there could be no doubt that Mr Arnott was in a position of conflict with an employee under his direct managerial supervision.  In that context, and given what is said in the preceding context, we consider the primary judge was in error to conclude that in order for Mr Arnott’s state of mind to be relevant, it was not sufficient that he enjoyed some influence – even a great deal of influence – over Ms MacLeod’s decision.  The error is made manifest in the primary judge concluding in the above passages that Ms Wong’s submissions “confuses a desire that she attributes to Mr Arnott to wield the influence that he had toward a particular end (namely, her dismissal) with his having possessed the means to that end”.  In our review, that reasoning involves a misapplication of the principles stated in the authorities referred to earlier in these reasons.  More than once, the primary judge emphasised that Ms MacLeod was the person having the authority to cause NAB to take the adverse actions.  But, as discussed above, an inquiry into the reasons of a corporate entity may require an examination of the states of mind of human actors other than the single individual having the authority to bind the corporation in the relevant act.  We consider that, whilst the primary judge correctly recognised that he was bound to follow the principle stated by the Full Court in Kodak, the principle in fact applied reflected his Honour’s preferred view of the law.
  4. The correct position may be illustrated by assuming that Mr Arnott formed the view that Ms Wong was one of the most difficult employees he had encountered because of her conduct in making multiple complaints and inquiries concerning her employment, and that he reported that her position was “untenable” because she persisted in her complaints, that he considered her to be “combative” because of the complaints, that his emotional state was deteriorating because of the complaints, and so on.  That was Ms Wong’s case at trial, bearing in mind that NAB bore the onus on the critical topic.  In light of the degree of involvement of Mr Arnott in the process on the particular facts of this case it would not be difficult to conclude on those assumed facts that NAB had failed to discharge its onus.  Given the nature and degree of Mr Arnott’s involvement, NAB could not discharge its onus without calling Mr Arnott in order to positively establish that he was not motivated by the prohibited purpose alleged by Ms Wong.
  5. It would matter not that Ms MacLeod, in adopting Mr Arnott’s asserted facts and opinions, was unaware that the complaints and inquiries had been made.  Nor would it matter that Ms MacLeod also relied on the advice of others.  On the objective facts, the content of the information Mr Arnott provided formed a critical part of Ms MacLeod’s conclusion.  The point is reinforced by NAB’s refusal to accede to Ms Wong’s request for further details to enable her to dispute the facts, other than to restate facts largely based on Mr Arnott’s accounts.  The objective correspondence demonstrates that Ms Wong’s requests for details only served to reinforce the perception in Ms MacLeod’s mind that Ms Wong lacked insight into her behaviour and was unwilling to receive “feedback”.
  6. In accordance with the principles stated in Kodak, it was necessary to inquire into Mr Arnott’s reasons for making the contribution that he did, whether it be described as “significant”, “plainly important”, “major”, “substantial” or “essential”. It is enough to identify that Ms MacLeod proceeded from factual assumptions that were detrimental to Ms Wong and that were principally (although not solely) based on an assumption that Mr Arnott’s assertions were true. Mr Arnott’s motivations were relevant and as such his actions and accompanying state of mind may be attributed to NAB in accordance with s 793of the FW Act.
  7. The arguments underpinning grounds 2 to 4 should be accepted.
  8. However, it does not follow that the appeal should be allowed.
  9. As discussed below, the primary judge proceeded to consider and make findings concerning Mr Arnott’s state of mind on the assumption that his conclusion that Mr Arnott was not “relevantly a decision-maker” was wrong (at [203]).  The greater portion of his Honour’s reasons for judgment are devoted to that topic and are the subject of grounds 5 to 7.  As Counsel for Ms Wong properly acknowledged, the appeal cannot succeed unless those grounds are also made good.

Did the primary judge err by accepting Mr Arnott’s evidence that he was not actuated by THE PROHIBITED REASON (Grounds 5 to 7)?

  1. Ground 5 concerns the primary judge’s conclusion that nothing Mr Arnott (and therefore NAB) did in relation to the removal decision was because of, or for reasons that included, the making of any of the complaints or inquiries upon which Ms Wong relied.  It alleges that the primary judge erred in the following respects:
  2. his Honour erred in concluding that the evidence led to establish the veracity of the opinions about Ms Wong to which Mr Arnott attributed his conduct rose no higher than to establish that those opinions were formed wrongly or unfairly (Decision [206]and [280]). His Honour should have regarded the veracity (or otherwise) of the opinions of Ms Wong to which Mr Arnott attributed his conduct as important to the overall facts and circumstances in assessing whether NAB had discharged its onus pursuant to s.361 of the FW Act;
  3. his Honour failed to give adequate or sufficient weight to evidence and arguments that Mr Arnott’s concerns about Ms Wong’s behaviour were exaggerated and were not an actuating reason for removing Ms Wong from her role as Internet Banking Manager (Decision [242]-[249]);
  4. his Honour failed to give adequate or sufficient weight to the evidence and arguments that the allegations of poor performance levelled against Ms Wong relating to the late notification of the cost increase to the Internet Banking platform on the NPP Project were not part of the real reason for removing Ms Wong from her role as Manager, Internet Banking and were manufactured as an excuse to remove Ms Wong from that role (Decision [251]-[269]);
  5. his Honour failed to have regard to the evidence (or failed to provide adequate reasons for not having regard to the evidence) that established that Mr Arnott did not like the fact that Ms Wong complained;
  6. his Honour erred in concluding that the evidence that Mr Arnott gave about the views that he formed about Ms Wong and their influence on his conduct were not exaggerated or untruthful (Decision [283]). Specifically, his Honour erred:
  7. in concluding that none of the aspects of Mr Arnott’s evidence that were plainly wrong or inconsistent were of essential importance (Decision [274]), in circumstances where they were of central importance; and
  8. in concluding that Mr Arnott did not try to downplay his role in providing the figures and information to Ms MacLeod in relation to the alleged NPP costs blowout, in the face of evidence led by NAB itself of Ms MacLeod that she relied on Mr Arnott for the figures and information about the alleged costs blowout to the NPP (Decision [276]);
  9. his Honour failed to give adequate reasons for his conclusion that the views Mr Arnott formed about Ms Wong and their influence on his conduct were not exaggerated or untruthful (Decision [283]) (the credibility of Mr Arnott and his evidence being a critical issue to be determined in the proceeding); …
  10. Grounds 6 to 7 allege that the same errors affected the primary judge’s conclusion that nothing Mr Arnott did in relation to the “sending” of the 21 March 2017 Announcement or the termination decision was because, or for reasons that included, Ms Wong’s complaints or inquiries.  It is contended that the primary judge should have concluded that Mr Arnott’s contribution to each adverse action was made for reasons that included the fact that Ms Wong had made the complaints or inquiries upon which she relied.
  11. At trial, Mr Arnott gave evidence about the matters that did and did not enter his mind or factor into his thinking when he had the discussions with Ms MacLeod and otherwise contributed to NAB’s decision-making.  A substantial part of the trial was devoted to that topic.
  12. Mr Arnott told the Court that his actions were motivated by his opinions concerning Ms Wong’s behaviour and her responsibility for the poor performance of the internet banking platform.  As the primary judge observed, a good proportion of evidence adduced at the trial went to the question of whether Mr Arnott’s stated opinions were genuinely held.  Unsurprisingly, Ms Wong sought to challenge the correctness of the opinions held by Mr Arnott and the facts alleged by NAB to underpin them.
  13. The issue raised by these grounds of appeal must be approached with s 361of the FW Actat front of mind. It was not for Ms Wong to establish that Mr Arnott’s conduct was actuated by a prohibited reason. The question at trial was whether NAB had established that the adverse actions were not taken for a reason that included the exercise by Ms Wong of the pleaded workplace rights.  To succeed at trial it would have been sufficient for Ms Wong to show that NAB had not proven that aspect of the case to the requisite standard.
  14. At trial, as on this appeal, Ms Wong submitted that the trial judge ought to have found that “the objective evidence” concerning the subject matter of Mr Arnott’s opinions supported a conclusion that he was a discreditable witness and that his asserted opinions could not be accepted as reliable and truthful.  The objective evidence related to the three reasons asserted by NAB to be the reasons for the adverse actions, being those set out in the email addressed to Ms Wong on 21 March 2017 summarised at [46] to [48] above.  As has already been mentioned, the part of that email summarising those reasons was authored by Mr Arnott and it was Mr Arnott who drafted the script that Ms MacLeod employed in her meeting with Ms Wong earlier that day in which the same reasons were verbally conveyed to her.  Mr Arnott’s evidence was to the effect that he genuinely held the opinions he conveyed to Ms MacLeod such that his own reasons for acting were the same as those conveyed to Ms MacLeod.

Reasons of the primary judge

  1. After summarising the principles in Barclay, the primary judge (correctly) described the nature of his task in the following terms:

81          Where, by way of rebuttal of the presumption established by s 361 of the FW Act, a respondent leads evidence as to why it engaged in the conduct that an applicant seeks to impugn, the relevant inquiry starts and ends with whether, in fact, those reasons relevantly actuated that conduct. It is not necessary for a respondent to prove that the reasons that actuated its conduct were procedurally or substantively fair: Khiani v Australian Bureau of Statistics [2011] FCAFC 109, [31] (Gray, Cowdroy and Reeves JJ).

82          Thus where, as here, a respondent employer cites, as its reasons for taking adverse action against an applicant, opinions that it formed about his or her conduct or capacity, the relevant inquiry is not whether those opinions were fairly or properly formed, or vindicated in fact. Rather and more simply, the relevant inquiry is whether the opinions were formed at all and, if they were, whether the respondent was moved to act as it did in consequence of them. A claim under Pt 3-1 of the FW Act ‘… is not a broad inquiry as to whether the applicant has been subjected to a procedurally or substantively unfair outcome’: Ermel v Duluxgroup (Australia) Pty Ltd (No 2) [2015] FCA 17, [48] (Bromberg J).

83          In some circumstances, it might be possible to infer from evidence tending to show that a respondent’s opinions were formed wrongly or unfairly—that is to say, inconsistently with fact or in a way otherwise susceptible to some other legitimate criticism—that those opinions either were not, in fact, formed or did not relevantly actuate the respondent’s conduct (or both). Such circumstances might warrant the rejection of the respondent’s evidence as to why it did what it did and a finding that the respondent failed to rebut the presumption established by s 361 of the FW Act. But, regardless, the inquiry remains: did the respondent form the views that it said that it formed; and, if it did, was it actuated to conduct itself in the way that it did on account of them (and not on account of any proscribed reason)?

  1. Later in his reasons, the primary judge said that it was “not necessary for the court to resolve the significant evidential conflict concerning Ms Wong’s capacity or behaviour” (at [278]).  He continued:

278         …  It is not necessary—much less is it realistic—for the court to determine whether Ms Wong was, as she maintains, a very high-performing employee who was wrongly pegged to take the fall for problems created by others; nor, as Mr Arnott would suggest, whether she was a needlessly and overly confrontational and difficult employee who was unable to accept valid criticism, and whose grasp on the essential components of her role was properly found wanting.  In all respects, the matters in which the evidence on those scores conflict are matters that do not lend themselves to binary analysis.

279         It must be said, then:  Ms Wong might have a point.  It could well be that the opinions that Mr Arnott formed about her were opinions that others might not have formed.  I make no findings on that score—indeed, at the risk of repetition, I cannot sensibly do so given the subjective nature of the issues at hand.

280         What is sufficiently clear is that the opinions that Mr Arnott says that he formed—and that he says animated the discussions that he had with Ms MacLeod (and others) about Ms Wong—were opinions that he genuinely held, rightly, fairly or otherwise.  Even assuming that Ms Wong is right about what she says concerning the objective circumstances in which those opinions were formed, the most that might flow from that is that Mr Arnott’s opinions about her were unwarranted or wrong.  It is simply not possible to advance as far as Ms Wong needs to and conclude that he, in fact, neither formed nor acted upon them; that is, that the evidence that he gave as to why he was minded to do what he did was untruthful.

  1. As to the removal of Ms Wong from her role, the primary judge accepted Mr Arnott’s evidence as to the factors that did and did not factor into his mind.  His Honour said that the evidence led by Ms Wong concerning the veracity of Mr Arnott’s opinions rose “no higher than to establish that the opinions were formed wrongly or unfairly” (at [206]), and that “nothing that Mr Arnott relevantly did was done because, or for reasons that included that, Ms Wong had made any of the complaints or inquiries upon which she relies” (at [284]).
  2. The primary judge concluded that the views Mr Arnott claimed to have formed were not obviously disconnected from the circumstances from which he claimed to have formed them (at [283]).  His Honour said it was not a case in which objective circumstances conspire to render Mr Arnott’s evidence so improbable that the Court should reject it as deliberate falsity (at [283]).  He found that the evidence Mr Arnott gave about the views he formed of Ms Wong and their influence on his conduct were neither untruthful nor exaggerated (at [283]).
  3. The primary judge premised his findings with observations he made of both Mr Arnott and Ms Wong in the course of giving their evidence, describing them both as impressive witnesses.  As to Mr Arnott, the primary judge described him as “a very impressive witness”.  His Honour explained (at [281]):

…  At the time of the trial, he was no longer employed by NAB and resided in Canada.  Nonetheless, he gave his oral evidence voluntarily and in person.  Although it was not squarely put to him that aspects of his evidence were untruthful, he was subjected to nearly a day-and-a-half of very skilful, persistent and, at times, (not inappropriately) aggressive cross-examination, during which the decisions that he had made, the views that he had formed, and the discussions and meetings in which he had participated—in some cases as long as three-and-a-half years earlier—were dissected, challenged and second-guessed in atomic detail.  Throughout his time in the witness box, he remained composed and focused upon what was asked of him.  He did not attempt to evade difficult questions.  He was direct and articulated his positions with uncommon clarity.  He was inclined toward concessions where appropriate.  He accepted, for example, that Ms Wong was a capable employee who had secured significant improvements to the internet banking platform.  He accepted that the NPP had been beset by numerous difficulties not of her making.  But on every occasion on which the opinions that he claimed to have formed about Ms Wong back in 2016 and 2017 were challenged—and on every occasion that it was put to him that circumstances undermined those opinions or warranted alternative views—he explained, rationally and with clear conviction, why he did not agree.  Again, he might not have been right; but he plainly believed that he was.

  1. With one minor exception, there is no challenge to anything said in this passage.
  2. The primary judge considered that Mr Arnott “answered the questions he was asked as clearly and truthful as he could”.  He said that he could not discern and could not accept that his evidence or “his time in the witness box” disclosed any “instinctive hostility” toward Ms Wong (at [276]).
  3. At trial, Ms Wong advanced 13 reasons for concluding that Mr Arnott should not be regarded as a witness of truth.  The primary judge grouped them into five categories:

(1)          there were aspects of Mr Arnott’s evidence that were plainly wrong, or that contained obvious errors that he could not explain;

(2)          there were otherwise some inconsistencies as between the evidence that Mr Arnott gave and matters that were verified by documents;

(3)          the language that Mr Arnott employed was emotive and, on occasions, extreme;

(4)          Mr Arnott had a tendency to hold Ms Wong accountable for matters more properly attributed to others; and

(5)          Mr Arnott tried improperly (or falsely) to downplay the importance of his role in providing the information upon which Ms MacLeod acted.

  1. His Honour said that whilst there were aspects of Mr Arnott’s evidence that were “plainly wrong or inexplicable”, none of those aspects concerned an issue of central importance (at [274]) and there was no reason to treat Mr Arnott’s evidence with any broad scepticism (at [277]). He did not accept Ms Wong’s submissions based on Mr Arnott’s demeanour. Before proceeding further, and in light of the challenge to findings based in substantive part on the impressions Mr Arnott made as a witness, it is necessary to set out some well-established principles concerning the role of this Court on an appeal by way of rehearing such as this.

Appellate review

  1. In Devriesv Australian National Railways Commission (1993) 177 CLR 472 the majority (Brennan, Gaudron and McHugh JJ) said (at 479):

More than once in recent years, this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against – even strongly against – that finding of fact.  If the trial judge’s finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge ‘has failed to use or has palpably misused his advantage’ or has acted on evidence which was ‘inconsistent with facts incontrovertibly established by the evidence’ or which was ‘glaringly improbable’.

(footnotes omitted)

We interpolate that the advantage the trial judge has over an appellate court is that which is derived from seeing and hearing the witnesses give evidence, and reading and hearing all the evidence as the trial unfolds, rather than the selection included in the appeal book.

  1. Their Honours cited Jonesv Hyde (1989) 63 ALJR 349 and Abalos v Australian Postal Commission (1990) 171 CLR 167. DevriesJones and Abalos were later considered by the High Court in Fox v Percy (2003) 214 CLR 118. Gleeson CJ, Gummow and Kirby JJ emphasised that nothing in the trinity of cases should be understood as departing from established doctrine. Rather, they served as “a reminder of the limits under which appellate judges typically operate when compared with trial judges” (at [26]).
  2. Their Honours continued:

27          The continuing application of the corrective expressed in the trilogy of cases was not questioned in this appeal.  The cases mentioned remain the instruction of this Court to appellate decision-making throughout Australia.  However, that instruction did not, and could not, derogate from the obligation of courts of appeal, in accordance with legislation such as the Supreme Court Act applicable in this case, to perform the appellate function as established by Parliament.  Such courts must conduct the appeal by way of rehearing.  If, making proper allowance for the advantages of the trial judge, they conclude that an error has been shown, they are authorised, and obliged, to discharge their appellate duties in accordance with the statute.

28          Over more than a century, this Court, and courts like it, have given instruction on how to resolve the dichotomy between the foregoing appellate obligations and appellate restraint.  From time to time, by reference to considerations particular to each case, different emphasis appears in such reasons.  However, the mere fact that a trial judge necessarily reached a conclusion favouring the witnesses of one party over those of another does not, and cannot, prevent the performance by a court of appeal of the functions imposed on it by statute.  In particular cases incontrovertible facts or uncontested testimony will demonstrate that the trial judge’s conclusions are erroneous, even when they appear to be, or are stated to be, based on credibility findings.

29          That this is so is demonstrated in several recent decisions of this Court.  In some, quite rare, cases, although the facts fall short of being ‘incontrovertible’, an appellate conclusion may be reached that the decision at trial is ‘glaringly improbable’ or ‘contrary to compelling inferences’ in the case.  In such circumstances, the appellate court is not relieved of its statutory functions by the fact that the trial judge has, expressly or implicitly, reached a conclusion influenced by an opinion concerning the credibility of witnesses.  In such a case, making all due allowances for the advantages available to the trial judge, the appellate court must ‘not shrink from giving effect to’ its own conclusion.  Finality in litigation is highly desirable.  Litigation beyond a trial is costly and usually upsetting.  But in every appeal by way of rehearing, a judgment of the appellate court is required both on the facts and the law.  It is not forbidden (nor in the face of the statutory requirement could it be) by ritual incantation about witness credibility, nor by judicial reference to the desirability of finality in litigation or reminders of the general advantages of the trial over the appellate process.

(footnotes omitted)

  1. In a separate judgment, McHugh J said that it would be a serious mistake to think that anything said in Abalos or Devriesnecessarily prevents the reversal of findings based expressly or inferentially on demeanour (at [90]). His Honour said that whilst that may be done:

… there must be something that points decisively and persuasively to error on the part of the trial judge in acting on his or her impressions of the witness or witnesses.  Recently in State Rail Authority (NSW) v Earthline Constructions Pty Ltd (In liq), for example, this Court held that undisputed and documentary evidence was so convincing that no reliance on the demeanour of witnesses could rebut it.

(footnote omitted)

  1. The issue arose again Lee v Lee(2019) 266 CLR 129. In that case, an appellate court was shown to have erred in deferring to the judgment of a trial judge in circumstances where deferral was not warranted and so had failed to conduct the “real review” required on an appeal by way of rehearing. The majority, Bell, Gageler, Nettle and Edelman JJ said (at [55]):

A court of appeal is bound to conduct a ‘real review’ of the evidence given at first instance and of the judge’s reasons for judgment to determine whether the trial judge has erred in fact or law.  Appellate restraint with respect to interference with a trial judge’s findings unless they are ‘glaringly improbable’ or ‘contrary to compelling inferences’ is as to factual findings which are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence.  It includes findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts.  Thereafter, ‘in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge’.  …

(footnotes omitted)

  1. The majority went on to say that the findings challenged on the intermediate appeal were not findings that were likely to have been affected by impressions about the credibility of witnesses formed as a result of the trial judge seeing and hearing the witnesses giving their evidence.  Accordingly, (at [56]):

…  It was an error for the Court of Appeal to dismiss the appeals in this ‘very closely balanced’ case on the footing that the trial judge’s decision was neither glaringly improbable nor contrary to compelling inferences.  It was the duty of the Court of Appeal to decide for itself which of the two hypotheses was the more probable.  It was the duty of the Court of Appeal to persist in its task of ‘weighing [the] conflicting evidence and drawing its own inferences and conclusions’ and, ultimately, to decide for itself which of the two hypotheses was the more probable.  It did not.  The appellant’s second ground is made good.

(original emphasis, footnote omitted)

  1. The principles were reiterated by the Full Court of this Court in Liberty Mutual Insurance Company Australia Branch (t/as Liberty Speciality Markets) v Icon Co (NSW) Pty Ltd [2021] FCAFC 126; 396 ALR 193 (Allsop CJ, Besanko and Middleton JJ), on appeal from a trial concerning the intention to be convincingly proven for the rectification of a deed in equity. The Full Court said:

272         How that convincing proof is reached is a matter of fact finding.  Here, there were competing witnesses who were cross-examined as to their reliability, on their credit in that sense, for a full day each.  The primary judge had the documents and had a period of a week at the hearing and reflection during and after the hearing to consider all the evidence as it fell out in its order and as relevant documents were put to witnesses.  The real review in those circumstances involves the giving of appropriate weight to that advantage of the trial judge: State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) (1999) 160 ALR 588; [1999] HCA 3 at [90] (Earthline); approved in Fox v Percy (2003) 214 CLR 118; 197 ALR 201; 38 MVR 1; [2003] HCA 22 at [23] (Fox v Percy), and more generally Lee v Lee (2019) 266 CLR 129; 372 ALR 383; 89 MVR 388; [2019] HCA 28 at [55] (Lee v Lee).  Not only did the primary judge have the advantage of a trial in which the evidence unfolded before him with the opportunities described in Earthline, but he made factual findings which were plainly ‘affected by their impression about the credibility of witnesses’ (Fox v Percy at [26]) having seen and heard them give the evidence. This is a further important advantage. This advantage includes ‘findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts’: Lee v Lee at [55]. No findings the subject of this advantage should be disturbed unless they are ‘glaringly improbable’ or ‘contrary to compelling inferences’: Fox v Percy at [29] or where the trier of fact ‘palpably misused the advantage…of seeing and hearing the witnesses’ Abalos v Australian Postal Commission (1990) 171 CLR 167 at 179; 96 ALR 354 at 363 and Fox v Percy at [26].

273         The respect for clear findings of fact by the primary judge that are not capable of being described as glaringly improbable, or contrary to compelling inferences or the product of a misuse of the advantage cannot be unpicked by pointing to documents said to be contrary to the findings, being documents that were taken into account, or where like documents were taken into account, by the trial judge, if the conclusions of fact do not suffer the character to which we have referred.  …

  1. There is a particular need for caution here where the finding which is challenged concerns the state of mind of a witness.  That is because it has long been accepted that an appellate court should only interfere with a finding of this nature in “exceptional circumstances”.  See Nocton v Lord Ashburton [1914] AC 932 Viscount Haldane LC (at 957, also 945 and 949); Clark Boyce v Mouat [1994] 1 AC 428 at 436-7(PC); Barclay, Heydon J (at [141]).
  2. Ms Wong’s arguments proceeded on an assumption that Fox v Percyand the preceding cases erected three alternative bases upon which factual findings based on the demeanour of a witness may be set aside.  It was contended that it would be sufficient to show that the primary judge “palpably misused his advantage”, irrespective of whether the impugned findings were glaringly improbable or contrary to compelling inferences.  If it were necessary to resolve that contention we would be minded to reject it for the same reasons expressed by the New South Wales Court of Appeal in Sica v Brophy [2020] NSWCA 181 (at [23] to [25]). In that case, based on the analysis of the authorities by McHugh J in Fox v Percy, McCallum JA, with whom Basten and Payne JJA agreed, explained at [24]:

… the expression ‘palpably misused his or her advantage’ means no more than that the ‘misuse’ of the advantage enjoyed by the trial judge may be demonstrated (is ‘palpable’) by reason of the existence of incontrovertible facts or uncontested testimony demonstrating error in the judge’s conclusion or where the decision was glaringly improbable or contrary to compelling inferences.  …

Ms Wong’s submissions

  1. Ms Wong submitted that the primary judge erred in concluding that Mr Arnott was a witness of truth and so erred in concluding that NAB had discharged its onus, notwithstanding the favourable impressions the trial judge formed of Mr Arnott having seen and heard him give evidence.
  2. Ms Wong submitted that the primary judge palpably misused his advantage by avoiding the task of deciding substantive questions of contested fact.  Whilst the observations of the primary judge concerning his impressions of Mr Arnott as a witness were open to him to make, it was submitted that those impressions could not justify the primary judge avoiding the determination of contested questions of fact, nor could they justify the primary judge ignoring facts that contradicted or could not be reconciled with Mr Arnott’s asserted opinions.  Ms Wong submitted that it was necessary for the primary judge to grapple with the anomalies in NAB’s evidentiary case that she alleged put a lie to Mr Arnott’s claimed opinions, or at least rendered him an unreliable witness irrespective of his outward demeanour.
  3. Ms Wong’s additional submissions concerning discrete aspects of the evidence will be summarised in the pages that follow.

Consideration

Ground 5(a) – The importance of Mr Arnott’s opinions of Ms Wong)

  1. Contrary to the allegation in ground 5(a), the primary judge did not proceed from the basis that the “veracity of Mr Arnott’s opinions rose no higher than to establish that those opinions were formed wrongly or unfairly” and that those opinions were not “important to the overall facts and circumstances in assessing whether NAB had discharged its onus [of proof]”.  Rather, his Honour concluded that in the particular circumstances of the case, proof that Mr Arnott was incorrect or unfair in the opinions he formed about Ms Wong would not demonstrate that the opinions were not genuinely held.  The primary judge explained at some length why that was so (at [278] to [285]).  The passages extracted above make it plain that the primary judge recognised that objective facts may show that an asserted opinion was not in fact held.  His Honour also recognised that a genuinely held opinion may be objectively wrong or unfair.
  2. As explained below, the aspects of the evidence emphasised by Ms Wong on the appeal (whether considered separately or cumulatively) do not warrant interference with the conclusion of the primary judge as to Mr Arnott’s reliability or more broadly as to NAB’s reasons for taking the adverse actions.

The attacks on credit

  1. Many of the 13 factors relied upon in written closing submissions before the primary judge were not the subject of substantive submissions on this appeal.  Rather, the submissions focussed on five factual issues said to be of critical importance to the outcome.  It was submitted that, by failing to make factual findings to resolve the evidentiary conflicts in respect of those issues, the primary judge “palpably misused his advantage”.
  2. The first and second issues concerned Mr Arnott’s opinion that Ms Wong’s behaviour in the workplace did not align with NAB’s values.  It was submitted that the asserted opinion was undermined by virtue of Mr Arnott making no reference in his affidavit to having any discussions with Ms Wong about her behaviour after April 2016 (when Ms Wong was put on notice that her job was on the line if she did not change her behaviour).  In cross-examination Mr Arnott said that he did discuss the issues with her after that time, but could not recollect what those discussions were and when they occurred.
  3. Between April 2016 and November 2016, performance reviews showed that Ms Wong’s behaviour had improved from a “D” rating to a “C” rating.  In his affidavit Mr Arnott gave an explanation for the “C” rating to the effect that if Ms Wong was given a “D” she would not have been eligible for a bonus.  He said that despite a unanimous decision of the leadership team, he and Mr Copeland determined that Ms Wong should receive a bonus because she had made significant achievements on the internet banking platform and it was thought that the positive feedback might help Ms Wong to turn her behaviour around.  He said that he frankly hoped that the bonus would act as a carrot rather than a stick.  He told the Court that the decision to give Ms Wong a “C” rating represented a balance between the views of two leaders in NAB about how to approach the problem of Ms Wong’s behaviour.
  4. Much was also made of Mr Arnott’s failure to discipline Ms Wong after April 2016 until early 2017 or put her on a performance plan despite referring to her in evidence as “the worst behaved employee he had ever come across”.  However, in response to a proposition put to him in cross-examination that he did nothing about her behaviour in that period, Mr Arnott testified that Mr Walker informed him that “they raised a case with workplace relations” and “he was doing everything he could … to play everything through the correct NAB process”.  Mr Arnott flatly refuted the suggestion that he was exaggerating the extent of the problem.
  5. Counsel for Ms Wong submitted that there was an inconsistency in Mr Arnott’s affidavit evidence and his oral testimony on this topic and that the explanations Mr Arnott gave for them were unimpressive.  We do not detect any inconsistency of a kind that would reflect adversely on Mr Arnott’s credit.  As the primary judge observed, Mr Arnott was cross-examined over a long period in respect of this and other topics.  His Honour’s reasons contain a correct summary of the evidence Mr Arnott gave on the topic, including his explanation for the “C” rating.  The written reasons for removing Ms Wong expressly referred to both the “D” and the “C” rating.  The fact of the improvement from a “D” to a “C” is not so compelling as to warrant appellate interference with the conclusion that Mr Arnott genuinely remained of the view that Ms Wong’s behaviour in the workplace was problematic.  The fact that Ms Wong received a “C” rating did not demand the conclusion that there were no behavioural issues at the time it was given (several months prior to the removal decision).
  6. Mr Arnott said that the performance reviews for the period ending November 2016 occurred in September 2016 and concerned behaviours in the months prior to that time.
  7. The reasons of the primary judge correctly set out the evidence relating to this issue in some detail and in terms that are not the subject of challenge.  His Honour noted a concession by Mr Arnott that between April and September 2016 he had observed some improvement in Ms Wong’s behaviour and style and additional evidence to the effect that Mr Arnott considered her behaviour to have been inconsistent and to have again deteriorated after September 2016.  In light of his Honour’s observations of Mr Arnott as a witness more generally, it is plain that the primary judge accepted Mr Arnott’s explanations.  We do not consider his Honour’s approach to that aspect of the evidence to be affected by error, let alone error that warrants appellate intervention in accordance with the principles summarised above.
  8. The third issue also concerned Mr Arnott’s opinion about Ms Wong’s behaviour.  In his affidavit, Mr Arnott deposed that he had had discussions with at least seven employees whom he named, each of whom “provided negative feedback about their interactions with Ms Wong”, the substance of which he went on to describe.  One of the named employees was Johnathan Zhuang.
  9. Mr Zhuang gave affidavit evidence in Ms Wong’s case.  He said that he did not have any interaction with Mr Arnott, that he had not spoken to anyone about Ms Wong’s behaviour and that no-one had asked him about it.  He said that he had daily interactions with each of the other employees Mr Arnott identified and that none of them had said anything (to him) in the nature of a complaint about Ms Wong’s behaviour.  He reported:

4            … Sene-Li was a very open and direct communicator …  She was one of the most effective managers with whom I have worked.  …

  1. I observed Sene-Li in a number of meetings with managers of other business units …  I formed the view that she was a strong and fact-driven negotiator.  I would describe her manner as direct and rational, but not antagonistic.
  2. Mr Zhuang was not cross-examined on that evidence.
  3. In cross-examination Mr Arnott admitted that Mr Zhuang’s name came up in the discussion with Ms Wong in relation to the negative feedback but could not recall if he told her that Mr Zhuang had come to him and made observations about her behaviour.
  4. It was submitted that Mr Zhuang’s evidence put a lie to Mr Arnott’s claim that he had received negative feedback from him concerning Ms Wong and was of such significance that the positive impressions of Mr Arnott as a witness could not stand.  We do not accept that submission.  The primary judge was alert to the issue concerning Mr Zhuang.  Reading the reasons for judgment as a whole, the primary judge’s general observation that some aspects of Mr Arnott’s evidence were inexplicable or plainly wrong must necessarily be taken to include a reference to this aspect of the evidence.  In cross-examination Mr Arnott said he could not actually recall having a conversation with Mr Zhuang specifically about Ms Wong.  He explained that not all the feedback was direct.  As senior counsel for NAB put it in argument, this was hardly a “gotcha” moment.
  5. After correctly summarising the evidence, the primary judge observed that “evidential anomalies like that, though regrettable, are not uncommon”.  The primary judge did not consider the anomaly warranted rejection of Mr Arnott’s evidence more broadly.  It is apparent that the primary judge regarded the anomaly in the evidence to be the product of an honest mistake and not an instance of deliberate falsity.  That assessment is to be understood as based in part on the observations the primary judge made of Mr Arnott in the course of a long period of cross-examination.  In accordance with the principles stated earlier, we do not consider there to be a proper basis to interfere with it.
  6. The primary judge’s assessment of this matter is unremarkable.  His Honour was not bound to find that the statement in Mr Arnott’s affidavit was a lie.  Before coming to such a conclusion he would need to rule out other possible explanations and an honest mistake was an obvious one.  It is a matter of common experience that memory is fallible.  As one former chief justice of New South Wales observed extra-curially, memory is “plastic” and “[w]itnesses can, without any dissimulation or propensity to lie, confidently assert the truth of conversations, observations and events which did not happen (emphasis added)”:  JJ Spigelman AC, “Truth and the law” in N Perram and R Pepper, The Byers Lectures 2000–2012 (The Federation Press, 2012, p 250).  Spigelman CJ proceeded to refer to a number of “distinct problems with memory” identified by Dr Daniel L Schacter, a leading researcher in the field and a professor of psychology at Harvard University, in The Seven Sins of Memory:  How the Mind Forgets and Remembers (Houghton Mifflin, 2001).  One such problem Dr Schacter described (at p 5) is “misattribution, [which] involves assigning memory to a wrong source”, a phenomenon that is “much more common than most people realize”.
  7. Ms Wong submitted that the primary judge erred in concluding that a defect of such a kind did not go to an issue of central importance.  Of course, Mr Arnott’s state of mind was an issue of central importance.  However, the inquiry undertaken by the primary judge involved a multitude of factors, circumstances and events.  The circumstance that Mr Arnott wrongly included Mr Zhuang in a list of seven employees from whom he said he had received negative feedback about Ms Wong’s behaviour did not require the wholesale rejection of his evidence.
  8. That other employees spoke in favourable terms about Ms Wong’s behaviour and performance, another piece of evidence upon which Ms Wong put weight in her submissions, could scarcely undermine the primary judge’s evaluation of Mr Arnott’s credibility concerning the evidence he gave of his own opinions on those subjects.  That is particularly so in the face of an express reference to that evidence in the reasons for judgment (at [246] to [248]) and in the absence of a challenge to the accuracy of his Honour’s observation that Mr Arnott did not deny it or suggest that it was not well-founded.
  9. The fourth issue concerned Mr Arnott’s opinion about the performance of NAB’s internet banking platform and Ms Wong’s inability to understand financial information she presented on 14 September 2016.  It was submitted that the issue assumes some importance because on Ms Wong’s case she “called out” the cost blowout in the internet banking platform in September 2016 and that there was no late call-out as stated in the letter informing her of her removal.  It was also submitted that Mr Arnott’s evidence on the topic could not be reconciled with the results achieved by Ms Wong on her performance review relating to her technical performance.
  10. In his affidavit, Mr Arnott was critical of what he said was an inability on Ms Wong’s part to explain information she presented in September 2016 about estimated figures concerning the performance of the internet banking platform.  He claimed that she did not have a sound understanding or “control and oversight” over one of the projects for which she was responsible and could not adequately explain the detail behind the project.  He said that Ms Wong blamed others, including by claiming that employees within NAB’s technology team were responsible for the estimates.
  11. In cross-examination on that topic, Mr Arnott acknowledged that NAB’s technology team were responsible for preparing the estimates.  However, he said, it was Ms Wong’s responsibility to understand the numbers and to explain them.  He said “I think most sane people would probe pretty deeply and get a real understanding of what’s in those numbers”.  Counsel for Ms Wong pointed to that response as an example of Mr Arnott’s use of emotive language.  The primary judge dismissed Mr Arnott’s occasional use of emotive language as “minor rhetorical flourishes that spilled out during the day-and-a half that Mr Arnott spent in the witness box, during the course of which he was subjected to the usual and prolonged provocations that adroit cross-examination typically entails”.  His Honour added that, although they might have been regrettable, they did not cause him to doubt the veracity of Mr Arnott’s evidence “more broadly”.
  12. It was put to Mr Arnott that the opinions he expressed about the September 2016 presentation could not be reconciled with the very high performance ranking Ms Wong received for her technical competency in November 2016.  His response was that the meetings with respect to the November 2016 performance review occurred in early September 2016 and were already complete before these particular concerns arose.  He said that it was an unfortunate coincidence that some of the things relating to the performance of the internet banking platform occurred after the end of year performance review process.  When pressed on the timing of the validation meeting, Mr Arnott responded in terms that suggested he could not accurately recollect the dates or sequence of events.  It was submitted that his responses to that questioning were unsatisfactory and his explanation ought not to have been accepted.  We do not accept those submissions.  The explanation Mr Arnott gave was to the effect that the information that fed into the performance review validation meeting had been gathered in the period leading up to it.  That explanation is not inherently incredible, unusual or contrary to objective evidence.  The circumstance that Mr Arnott was unclear around the precise timing in the course of a trial occurring more than four years later does not provide a basis for interfering with the findings of the primary judge as to his credit more generally.
  13. In the result, we do not consider the primary judge palpably misused his advantage in seeing and hearing the witnesses giving their evidence in the various ways contended for by Ms Wong.

Reasons not inadequate

  1. Finally, it was submitted that the primary judge erred in failing to make substantial findings based on evidence that demonstrated that Mr Arnott did not like Ms Wong complaining.  Ground 5(d) alleges that the failure to give reasons in relation to that aspect of the evidence constitutes appealable error in and of itself.
  2. In our view, the submissions on this topic misstated the overall effect of the evidence adduced at the trial.  Mr Arnott repeated in his evidence that he did not like the manner in which Ms Wong complained.  He acknowledged that he did not like her conduct in expressing her disagreement with one of Mr Arnott’s recruitment decisions of a more senior manager and noted that the senior manager had queried why the issue had been elevated in that way.  Mr Arnott was frank and consistent in his expressions of disapproval of Ms Wong’s mannerisms.  Equally, he was persistent with his denials that he was motivated by the fact that the complaints and inquiries had been made.
  3. Nor do we consider the primary judge erred in failing to set out the evidence on this topic in his reasons and in failing to make substantive findings in respect of it.  Counsel for NAB pointed out that evidence on the topic received scant attention in Ms Wong’s written closing submissions at trial, occupying one paragraph out of 72 pages and only a few lines of oral transcript in a dense factual landscape.  As Ryan, Mansfield and McKerracher JJ observed in Devers v Kindilan Society[2010] FCAFC 72; 269 ALR 404 at [58], “a judge’s duty to give reasons is not one which requires him or her to examine in detail every issue raised in the proceedings or to record in minute detail the reasons which led to any particular conclusion”. Rather, “[i]t is enough if the judge outlines the facts found and the process of reasoning which led to the ultimate conclusion”. The primary judge discharged his obligation in this regard. His reasons were not inadequate.
  4. The resolution of the issues did not require the primary judge to decide all of the arguments advanced by Ms Wong such as whether she did or did not have behavioural issues sufficient in the view of the primary judge to warrant the adverse actions.  The objective circumstances to which she pointed were not so compelling as to demand the conclusion that the whole of Mr Arnott’s evidence was unreliable, notwithstanding the positive assessment the primary judge made of his demeanour.  The primary judge was correct to so find.
  5. The primary judge had the advantage of seeing and hearing Mr Arnott give evidence in response to questioning on all of the topics sought to be agitated on this appeal.  Whilst some of the issues raised on the appeal illustrate deficiencies in aspects of Mr Arnott’s evidence, they are not such as to preclude the primary judge from acting on the impressions he formed of Mr Arnott in the course of giving evidence, whether considered alone or in any combination.  It was plainly legitimate for the primary judge to have regard to the impressions formed of Mr Arnott as a witness in assessing whether his asserted opinions were genuinely held and (as an essential incident of that task) in assessing whether his explanation for asserted deficiencies in his evidence should be accepted.  Indeed, he was bound to do so.  Whilst the discrepancy concerning Mr Zhuang was notable, it is the only instance in which Mr Arnott’s account could be said to have been indisputably wrong, and it is a defect of which the primary judge was plainly aware.  Although it is notable, it is insufficient to warrant this Court interfering with the primary judge’s assessment of Mr Arnott’s credibility overall having regard to the evidence as a whole.
  6. It follows that the primary judge did not fall into appealable error in concluding that Mr Arnott’s opinions were genuinely held and that (to the extent that his state of mind was relevant) NAB had discharged its onus.
  7. As Ms Wong did not advance any specific argument to the effect that the findings were glaringly improbable or contrary to compelling inferences it is unnecessary to assess the evidence against those thresholds.

Conclusion

  1. In light of our conclusions in respect of grounds 5 to 7, the appeal must be dismissed.
  2. Neither party sought, or foreshadowed an application for, costs. In the circumstances, and having regard to the limitations on the Court’s power to award costs in a case of this kind (see FW Act, s 570), there will be no order as to costs.”

 

Wong v National Australia Bank Limited [2022] FCAFC 155 delivered 8 September 2022 per Katzmann, Charlesworth and O’Sullivan JJ