General protections case principles; state of mind

Most general protections cases which proceed to trial will inevitably  require the court to make decisions about what motivated an employer to make the decision or decisions at the core of the case. Self evidently this is because companies can only act by or through the actions of an individual person or multiple persons and it will be necessary to identify the state of mind of that person or persons.

The following passages from a recent general protections case in the Federal Court casts an interest light on how the courts resolve this issue.. Thus

“Corporate decision-making

Where a decision that visits adverse action is made by (or on behalf of) a body corporate, the court must consider by whose conduct the body corporate should be thought to have acted and in whose mind or minds its reasons for doing so should be thought to reside. Bodies corporate, by their nature, act only via the agency of their human officers. They have no conscience or mind within which a reason or reasons for acting might form. In some cases, corporate conduct is the product of collective decision-making—for example, decisions made at the level of a company’s board of directors or some other committee of management, formal or otherwise. In others, corporate conduct arises from decisions of single officers exercising powers that are theirs alone to exercise. In the former case, the states of mind of the individual decision-makers can accumulate to form the state of mind of the body corporate on behalf of which those individuals act. In order that the court might interrogate the body corporate’s reasons for engaging in particular conduct, attention must focus upon why those who resolved that it should conduct itself in that way were moved so to resolve. In the case of decisions made by lone corporate officers, the state of mind of the body corporate will be the state of mind of its agent. Its reasons for acting will be the reasons of the individual that made the decision on its behalf. As much is made clear enough, in the context of the FW Act, by s 793(2).

Complications can arise in circumstances involving decisions made on behalf of a body corporate by an officer or group of officers with input from others.  There are authorities in this court that hold that a body corporate’s reasons for conducting itself in a given way might reside or partly reside in the mind or minds of individuals other than those who decided to effect that conduct.  In National Tertiary Education Union v Royal Melbourne Institute of Technology (2013) 234 IR 139 (hereafter, “RMIT”; Gray J), for example, the court determined that a university’s reasons for dismissing an academic employee resided not merely in the minds of those who made the decision to dismiss but also in the minds of those who authored a memorandum that recommended that course.  The memorandum was said to be “an essential part of the process” that led to the university’s decision to dismiss; and, thus, the reasons that animated its authors were held also to be the university’s reasons for dismissing the employee.

RMIT was consistent with the earlier reasoning of the full Federal Court in Elliot v Kodak Australasia Pty Ltd (2001) 129 IR 251 (hereafter, “Kodak”; Lee, Madgwick and Gyles JJ). That case also involved the dismissal of an employee, Mr Elliot. The employer had there undertaken an assessment process to determine which of its employees it should dismiss as part of a redundancy program. Those assessments were made by two supervisors and resulted in employees receiving a ranking. Mr Elliot was ranked toward the bottom of his cohort and the employer’s general manager, relying upon the rankings that had been produced, decided that his employment should be terminated. The court determined that the employer’s reasons for dismissing Mr Elliott resided not simply in the mind of its general manager but also in the minds of the two supervisors, who, it was noted (at 172 [37]), had made “an indispensable contribution to the rankings”.

Kodak has been the subject of more recent consideration in this court:  CFMEU v Pilbara Iron Company (Services) Pty Ltd (No 3) [2012] FCA 697 (Katzmann J); CFMEU v Clermont Coal Pty Ltd (2015) 253 IR 166 (hereafter, “Clermont Coal”; Reeves J).  More recently, in Australian Red Cross Society v Queensland Nurses’ Union of Employees (2019) 273 FCR 332 (hereafter, “Australian Red Cross”; Greenwood, Besanko and Rangiah JJ), a full court of this court, after referring to Kodak and Clermont Coal, accepted (at 348 [91]) that:

…a person who is involved in the process leading to the decision may be a decision-maker for the purpose of a prescribed purpose, but we do not need to formulate a precise test for the purpose of this case and consider it prudent to refrain from doing so.

Respectfully, I confess some difficulty reconciling RMIT, Kodak and Australian Red Cross with Barclay and, in particular, the more recent decision of the High Court in CFMEU v BHP Coal Pty Ltd (2014) 253 CLR 243 (hereafter, “BHP Coal”). There, the court considered the dismissal of an employee who had taken part in a union-sponsored protest. In the course of doing so, the employee had displayed a union-supplied sign that vilified as “scabs” other BHP Coal employees who had opted not to participate in the protest (or in related industrial action). His employment was terminated. He alleged (amongst other things) that, by displaying the sign, he was participating in lawful industrial activity and that BHP Coal should be understood to have terminated his employment on account of his having done so, contrary to s 347 of the FW Act.

In BHP Coal, there could be no doubt that the union-backed protest was an essential or indispensable part of the process that led to the employee’s dismissal.  Had there been no protest, there would not have been any sign or any decision to dismiss.  That circumstance bore upon BHP Coal’s decision to dismiss the employee in much the same way as the supervisors’ assessments of Mr Elliot and his co-workers bore upon the decision of the general manager in Kodak.

Indeed, that was the very argument advanced on behalf of the employee by his union.  The High Court rejected it, just as it had rejected Mr Barclay’s equivalent point two years earlier.  It was enough that the employee’s participation in industrial activity at the time that he engaged in the conduct for which he was later dismissed did not factor in the mind of BHP’s decision-maker, notwithstanding the obvious (or essential or indispensable) connection between that activity and that conduct.

True it is that BHP Coal—like Barclay before it—did not concern the anatomy of corporate decision-making.  At issue in BHP Coal was whether it was necessary to wholly dissociate adverse action from a reason or circumstance proscribed under Pt 3‑1 of the FW Act, not whether the influence of others might cross beyond some threshold sufficient to constitute their reasons as the reasons (or some of the reasons) for which a body corporate should be taken to have acted. Nonetheless, BHP Coal and Barclay are instructive:  they illustrate the distinction to be drawn between a person’s reasons for doing something and the contextual influences that might bear in some way upon those reasons.  In a case such as the present, although the latter might inform the court’s assessment of the former, it is the former that remains the central issue to be determined.

Earlier decisions of this court reinforce that reasoning.  In AWU v John Holland (2001) 103 IR 205 (hereafter, “John Holland”; Goldberg J), the court was called upon to consider a builder’s decision to dismiss one of the applicant’s members.  A rival construction union had learned of his employment and, by way of protest against it, had embarked upon a campaign of industrial action against the builder.  It demanded that the builder dismiss the employee.  It was obvious enough that that demand was made because the employee was a member of the applicant union.  The builder yielded to that demand and the employee (via the agency of his union) contended that it had done so because of his union membership.  That contention was rejected:  the court accepted that the builder had done what it had done out of concern to minimise disruption to its business.  The fact that the employee’s membership of the applicant union—although plainly significant in a contextual sense—did not factor in the putative mind of his employer as a reason for his dismissal.  Equivalent reasoning was employed more than two decades earlier in Wood v City of Melbourne Corporation (1979) 26 ALR 430 (hereafter, “City of Melbourne”; Smithers J).

Again, neither of John Holland or City of Melbourne grapples squarely with the boundaries of corporate decision-making.  Both, however, illustrate that the reasons of those who significantly or indispensably influence (or, as Reeves J put it in Clermont Coal, 198 [121]: have “a material effect on”) such decisions ought not to qualify, merely by reason of that influence, as reasons that animate resultant corporate conduct.

That reasoning is consistent with the language employed by s 793(2) of the FW Act. That section serves to deem (in defined circumstances) the existence of a corporate state of mind “in relation to particular conduct”. It does so by paying regard to the state or states of mind of the human agents by whom “the conduct was engaged in”. Insofar as concerns a course or instance of conduct engaged in by or on behalf of a body corporate, the question that arises under s 793(2) is not “Who influenced (or indispensably or significantly influenced), contributed to or had a material effect on the decision to embark upon that conduct?”; it is, rather and more simply, “Who decided that that conduct should be embarked upon?” It is in the mind or minds of the latter that the state of mind of the body corporate on behalf of which they act is to be found.

The question as to which of its human agents’ minds the conscience of a body corporate might reside within in particular circumstances (or in connection with particular corporate conduct) is one of fact.  In some cases, the evidence will disclose a degree of cooperation amongst officers, by reason of which it might be said that the course or courses of corporate action upon which they collaborate or jointly embark should be thought to have been decided upon collectively by them.  In others, individual corporate officers might contribute to or be involved in the making of a decision—even though they do not themselves make it—through the provision of information, assistance, advice or encouragement, or through their inducement of the outcome to which it relates.  For my own part, I am unable to see how an individual officer might qualify as a maker of any given corporate decision unless he or she can be thought to have exercised some authority or executive power to effect it, be that actual or ostensible, formal or otherwise.

That reasoning aligns with the law of attribution more generally:  Meridian Global Funds Management Asia Limited v Securities Commission [1995] 3 All ER 918, 927-928; Gregg v The Queen [2020] NSWCCA 245, [490] (Bathurst CJ, with whom Hoeben CJ at CL and Leeming JA agreed); ACCC v Australian Safeway Stores Pty Ltd (No 3) (2001) 119 FCR 1, 189-190 [811]-[812] (Goldberg J). It is also consistent, at least at a general level, with the modern caution against the notion of aggregated corporate knowledge: as to which, see Commonwealth Bank of Australia v Kojic (2016) 249 FCR 421, 438 [67] (Allsop CJ), 450-451 [118] (Edelman J, with whom Besanko J relevantly agreed).

I am, however, in no position to ignore Kodak and the other cases that have applied equivalent reasoning.  On the contrary, I am bound to apply it.  In Clermont Coal, Reeves J, after referring to Kodak, made the following observations (at 198 [121]):

…where the reasoning process is dispersed through an assessment process involving a number of persons, the task is much more complicated.  In that situation, I consider the judgment in Kodak requires me to examine the reasoning process employed by each person whose involvement had a material effect on the ultimate decision.  This inquiry does not involve a roving search of the minds of the employees of the kind rejected by Heydon J in Barclay (at [146]). Nor does it involve an objective inquiry of the kind rejected in Barclay (at [44] and [126]), nor import some “unconscious” reasoning to the ultimate decision-maker that was also rejected in Barclay (at [124] per Gummow and Hayne JJ, and [146] per Heydon J). Instead, it focuses on the conscious reasoning processes of those who had a material effect on the ultimate outcome to determine whether their reasoning processes were free of the alleged prohibited reason or reasons. If one or more of the reasons employed by one or more of them was a prohibited reason, that will impugn the ultimate decision. This is what I consider the Full Court meant by “inadvertently” adopting an “undisclosed prohibited reason” in Kodak…

Despite the reservations recorded above, I adopt his Honour’s observations.  Fortunately, for reasons that will later become apparent, they do not materially impact upon my determination of the matters presently in issue.”

 

Extract from the judgment in Wong v National Australia Bank Limited [2021] FCA 671 delivered 22 June 2021 per Snaden J