Byrne v Australian Airlines Ltd

185 CLR 410
[1995] HCA 24
(1995) 131 ALR 422
(1995) 69 ALJR 797

(Judgment by: Brennan CJ, Dawson J, Toohey J)

Between: George Albert Byrne and George Mortimer Frew
And: Australian Airlines Ltd

High Court of Australia

Brennan CJ

Dawson J

Toohey J
McHugh J
Gummow J

Hearing date: 2 May 1995
Judgment date: 3 May 1995


Judgment by:
Brennan CJ

Dawson J

Toohey J

The appellants were employed by the respondent as baggage handlers at Sydney airport.

On 28 March 1989, they were dismissed from their employment for pilfering. They sought relief in the Federal Court, claiming that their dismissal was harsh, unjust or unreasonable and, for that reason, in breach of cl 11(a) of the Transport Workers (Airlines) Award 1988. That clause provided:

"Termination of employment by an employer shall not be harsh, unjust or unreasonable.

For the purposes of this clause, termination of employment shall include terminations with or without notice."

Each appellant sought an order under s 178 of the Industrial Relations Act 1988 (Cth) ("the Act") for the imposition of a penalty and an order under s 356 for the payment of the penalty to him. The maximum penalty available in each case was $1,000. Invoking the accrued jurisdiction of the Federal Court, the appellants also sought damages for breach of contract and for breach of statutory duty.

2. The trial judge found that the respondent's conduct in terminating the appellants' employment was not harsh, unjust or unreasonable and dismissed the claims. On appeal, the Full Court found to the contrary, but held that the appellants were not entitled to damages for breach of contract or breach of statutory duty. [F1] The matters were remitted to the trial judge to deal with the claims in relation to penalty. The appellants now appeal to this Court against the rejection by the Full Court of their claims for damages.

3. The appellants' right to damages for breach of contract arose because, it was said, cl 11(a) became a term of the contract of employment.

According to the appellants' argument, this occurred, first, because the provision was "imported" into the contract by force of the award, independently of the intention of the parties. Next, the argument ran, such a term was an implied term of the agreement between parties. Then, it was said, cl 11(a) embodied a "crystallised custom" of the industry in which the parties were engaged and for that reason became a term of the contract. The appellants also claimed damages for breach of a statutory duty said to be imposed by cl 11(a). The appellants further argued that even if cl 11(a) did not become a term of the contract, the purported termination of their employment was in breach of that clause and for that reason was illegal and void. The consequence was, it was said, that the contract was left on foot, but repudiated by the respondent so that the appellants were able to accept the repudiation and claim damages for its breach.

"Imported" Term

4. In putting the first argument the appellants relied upon Mallinson v Scottish Australian Investment Co Ltd. [F2] In that case, an employee sought to recover in the New South Wales District Court the difference between the award rate which bound his employer and the lesser amount which he had been paid.

This Court held that the District Court had jurisdiction to entertain the claim, which was by way of action of debt pursuant to an obligation created by statute. The Court said: [F3]

"The new right created in the employee by the (Conciliation and Arbitration Act 1904 (Cth)) operating on the award made under it is to receive from his employer wages at a rate not less than the minimum rate fixed by the award. This is apparent from the terms of sec 40(1)(b) of the Act, which provides that the Court by its award may prescribe a minimum rate of 'wages or remuneration.' It is important to observe that the alteration which the (Conciliation and Arbitration) Court is thus empowered to make in the rights and liabilities of the parties is not an alteration in the character of the payment but in its amount. The amount is still to be paid as 'wages or remuneration,' and this necessarily imports that the employee shall have a right to receive, and if necessary to recover, from the employer payment of the amount calculated according to the rate fixed by the award. The right conferred being a right to receive from a designated person a liquidated sum of money, the question is whether the Act contains provision forbidding the recovery by appropriate legal proceedings of the amount payable."

The Court went on to determine that the provision of a penalty for breach of the award and the power given to the court imposing the penalty to order it to be paid to the employee were not inconsistent with a right of recovery in a civil action.

5. There is, in our view, nothing in Mallinson to suggest that the award's prescription of a minimum rate of pay became a term of the contract of employment. The award effected an alteration in the rights and obligations of the parties to the contract, but it did so by force of the Conciliation and Arbitration Act. The debt which arose as a consequence was a debt which owed its origin to the statute and not to the contract. That is why the Court examined the Conciliation and Arbitration Act in order to determine whether it contained anything inconsistent with recovery by way of civil action. It is also why the Court referred to Groves v Wimborne, [F4] a case which involved a cause of action for damages for breach of statutory duty. A similar examination of the statute was undertaken in that case to ascertain whether the penalty provided was inconsistent with an action for damages for breach of the statutory duty.

6. In Amalgamated Collieries of WA Ltd v True, [F5] the respondent was employed by the appellant as a miner. The contract of employment, though oral, contained an express term that the respondent be paid at tonnage rates, and not at day rates, upon the terms and conditions of an award made under the Industrial Arbitration Act 1912 (WA). The respondent sued for payment at full tonnage rates. In this Court it was held by a majority that his action was barred by s 176 of that Act, which declared that he was entitled to payment of an amount in accordance with the award, but provided that any action to recover such amount must be commenced within twelve months from the time when the cause of action arose. The decision was reversed in the Privy Council [F6] where it was held that the respondent was able to sue upon the contract without resort to s 176 and so was not bound by the limitation which it imposed.

7. The appellants relied upon the observations of Dixon J, who was in the majority in this Court, in the following passage: [F7]

"The right to payment of award wages is really a term imported by statute into the contract of employment, and imported independently of the intention of the parties. ...

The distinction between express promise and obligation imputed by statute relates only to the juristic source of the obligation. It does not touch the character of the sum sued for nor the purpose of the proceeding."

8. However, we do not understand Dixon J to be saying in that passage that "a term imported by statute into the contract of employment" loses its statutory character and becomes incorporated in the contract as one of its terms.

On the contrary, he recognises the distinction between an obligation originating in a statute and an obligation arising from a contract.

In his view, the distinction was not of importance in that case, but it is crucial in the present one. No doubt there are terms which are incorporated by statute in contracts of a particular kind so that the ordinary remedies for breach of contract are available in relation to them. [F8] And apart from statute, a term may be implied by law as an incident of a particular class of contract, [F9] but we do not understand the appellants to be submitting that any such implication arises here. They rely upon the statutory force given to the award and say that, because the relationship between the parties is contractual, the provisions of the award - or at least some of them including cl 11(a) in this case - become terms of the contract enforceable by the use of contractual remedies as well as the remedies provided by statute.

9. A right to the payment of award rates is imported by statute into the employment relationship, which is contractual in origin, and, express promise apart, it is only in that sense that it can be said that award rates are imported into the contract of employment. The award regulates what would otherwise be governed by the contract. But award rates are imported as a statutory right imposing a statutory obligation to pay them. The importation of the statutory right into the employment relationship does not change the character of the right.

As Latham CJ points out in his judgment in Amalgamated Collieries of WA Ltd v True, [F10] the legal relations between the parties are in that situation determined in part by the contract and in part by the award. And as the judgment of the Privy Council in that case suggests, a provision in an award may also be made a term of the contract by agreement between the parties, but that is only to emphasise the distinction between an obligation imported by statute and one arising by agreement.

10. This distinction was not adverted to in a passage in R v Gough; Ex parte Meat and Allied Trades Federation of Australia [F11] where, in speaking of a clause in an award relating to the termination of employment, Windeyer J said:

"the first paragraph of the clause would create new rights as between master and servant superimposed on the common law incidents of their relationship. It seems therefore that an action for wrongful dismissal or for a refusal of employment might be brought at common law by an employee based upon a non-compliance with the clause. Certainly proceedings could be instituted in the Industrial Court, or proceedings for a penalty taken in one of the courts mentioned in s 119 of the Act."

However, that passage is obiter and the view which is expressed is somewhat tentative. Windeyer J does not specify the basis upon which any action at common law might be brought. In particular, he does not appear to have turned his mind to the way, if any, in which a term of the contract of employment corresponding to the clause of the award might arise such that its breach would found an action for damages. The correct view, in our opinion, is that reflected by the remarks of Isaacs J in Josephson v Walker, [F12] a case in which an employee claimed the unpaid balance of wages due under an award.

Isaacs J said: [F13]

"And the unpaid balance is claimed as due by virtue, not of a common law contract, but of the statutory obligation which subsists notwithstanding any agreement to the contrary - no man being capable under the Statute of contracting himself out of his rights or obligations in this respect. The right claimed is a new right. It is a right which was unknown before to the law: a right to receive from an employer more than was bargained for."

11. In a system of industrial regulation where some, but not all, of the incidents of an employment relationship are determined by award, it is plainly unnecessary that the contract of employment should provide for those matters already covered by the award. The contract may provide additional benefits, but cannot derogate from the terms and conditions imposed by the award [F14] and, as we have said, the award operates with statutory force to secure those terms and conditions. Neither from the point of view of the employer nor the employee is there any need to convert those statutory rights and obligations to contractual rights and obligations. There is, therefore, an insuperable obstacle in the way of the appellants' second argument that the terms of an award such as cl 11(a) are implied terms of the contract of employment.

Implied Term

12. The implication which the appellants seek to make is based upon the presumed or imputed intention of the parties. In that context, the remarks of the majority in the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings [F15] are frequently called in aid:

(the implication) must be reasonable and equitable;
it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
it must be so obvious that 'it goes without saying';
it must be capable of clear expression;
it must not contradict any express term of the contract".

In laying down those criteria, it was recognised that there was a degree of overlap. Further, as Deane J has observed, [F16] the cases in which the criteria in BP Refinery (Westernport) Pty Ltd v Shire of Hastings have been applied in this Court are cases in which there was a formal contract, complete on its face. He pointed out that a rigid approach should be avoided in cases, such as the present, where there is no formal contract.

In those cases the actual terms of the contract must first be inferred before any question of implication arises. That is to say, it is necessary to arrive at some conclusion as to the actual intention of the parties before considering any presumed or imputed intention. And the test to be then applied was in a later case formulated by Deane J in these terms: [F17]

"The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties."

13. That is, we think, the appropriate test to apply in this case and the answer must be that it is not necessary to imply a term in the form of cl 11(a) for the reasonable or effective operation of the contract of employment in all the circumstances. In the absence of any provision in the award and of any express provision in the contract of employment the law would regard it as a legal incident of the contract that it should be terminable upon reasonable notice or summarily for serious breach. Clause 11(a) may alter that position, but there is no reason to presume that any alteration was intended by the parties to form a term of their contract, nor any reason to impute such an intention to them. Plainly, the fact that the inclusion of such a term would, if it were breached, support an action for damages by the employee is no ground for saying that the term is necessary for the reasonable or effective operation of the contract. The contract is capable of operating reasonably and effectively in the absence of such a term and in the presence of an award provision offering limited remedies in the event of breach. The argument that cl 11(a) constituted an implied term of the contract of employment should be rejected.

"Crystallised Custom"

14. The term "crystallised custom", upon which the appellants base their third argument, appears to have been coined by Professor Otto Kahn-Freund [F18] to explain how, in the United Kingdom, the terms of collective bargains between employers and unions might become terms of individual contracts of employment between employers and employees. The legal basis of the theory propounded by Kahn-Freund must lie in the recognition by the law of contract of implied terms based upon custom or usage.

It is there that the appellants' argument strikes immediate difficulty. Whatever may, as a matter of implied agreement, flow from collective bargains into individual contracts of employment, a term of an award derives its force, not from agreement between the parties, but from statute. That being so, if a contract of employment is made in reliance upon a provision of an award, it is not a reliance which requires the provision to be made a term of the contract because it already has statutory force. It is not something "so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract". [F19]

The existence of a custom or usage that will justify the implication of a term into a contract is a question of fact and there must be evidence of its acceptance such that it is "reasonable to assume that the parties contracted on the basis of the custom, and that it is therefore reasonable to import such a term into the contract". [F20] Just as there can be no implied or presumed intention of the parties in this case to include a provision of an award as a term of their contracts of employment, there can be no assumption that they contracted upon the basis of the inclusion of an award provision. There would be no need for them to do so because the award operates of its own force. Whatever may be the situation with the terms of collective bargains, which at least involve a measure of agreement albeit not with individual employees, there can in our view be no basis for treating a provision of an award as a "crystallised custom" and implying a term to its effect into a contract of employment.

Breach of Statutory Duty

15. Nor do we think that the appellants succeed in establishing the existence of a cause of action for damages for breach of statutory duty consequent upon a breach of cl 11(a). Clearly Mallinson v Scottish Australian Investment Co Ltd [F21] is no authority for the existence of such a cause of action. In that case the nature of the cause of action which was held to arise was that of debt, the obligation giving rise to the debt being statutorily created. Debt is a form of action for a liquidated sum and not for damages. [F22]

16. A cause of action for damages for breach of statutory duty arises where a statute which imposes an obligation for the protection or benefit of a particular class of persons is, upon its proper construction, intended to provide a ground of civil liability when the breach of the obligation causes injury or damage of a kind against which the statute was designed to afford protection. [F23] The question is one of the construction of the statute, although as Dixon J pointed out in O'Connor v SP Bray Ltd, [F24] an examination of the statute "will rarely yield a necessary implication positively giving a civil remedy". One generalisation that can be made is that where the persons upon whom the statutory obligation is imposed are under an existing common law duty of care towards the persons whom the statute is intended to benefit or protect, the statutory prescription of a higher or more specific standard of care may, in the absence of any indication of a contrary intention, properly be construed as creating a private right. [F25] Thus it is that Factories and Shops Acts and other legislation designed to protect the health and safety of employees in the workplace have been held to impose duties the breach of which gives rise to a right to sue for damages. [F26]

17. The legislation in this case, the Industrial Relations Act 1988 as it stood at the relevant time, is of a very different kind. There have been significant amendments to the Act in the meantime, but it is convenient here to speak of it (as it existed) in the present tense. The principal object of the Act is expressed in s 3 to be the promotion of industrial harmony and co-operation among the parties involved in industrial relations in Australia by the doing of a number of things which include the provision of a framework for the prevention and settlement of industrial disputes by conciliation and arbitration in a manner which minimises the disruptive effects of industrial disputes on the Australian community as a whole. The function of making awards is vested in the Industrial Relations Commission by s 111 and in exercising that function the Commission is required under s 90 to take into account the public interest and, for that purpose, to have regard to the objects of the Act and the likely effects on the economy of any award it is considering or proposing to make, with special reference to the likely effects on the level of employment and on inflation. The Act does not prescribe the content of the awards which the Commission is empowered to make in the settlement of industrial disputes.

18. Having regard to the public aims of the legislation, its scope and purpose is not such as to disclose any intention to benefit or protect employees or any other class of persons by conferring on them a right of action at common law for breach of an award obligation. However, in pursuit of those aims the Act does provide for the enforcement of awards thereby giving them statutory force. The appellants' argument tended to focus upon the award itself rather than the Act. But an award is not a statute [F27] and if a duty imposed by an award is to be regarded as a statutory duty enforceable by way of a civil action for damages, then the necessary intention that it should be so regarded must ultimately be found in the Act and not the award.

The Act discloses no such intention and, indeed, cannot do so in the absence of any specification of the duties which might be imposed by an award. On the other hand, the Act can and does disclose a contrary intention in providing a means for the enforcement of awards which does not contemplate the existence of private rights enforceable by way of an action for damages.

19. Section 178 imposes a penalty for the breach of an award which might be sued for and recovered by, amongst others, a party to the award or a member of an organisation who is affected by the breach. Under s 356 a court that imposes a penalty may order that it be paid to a particular organisation or person. Section 178 also provides that where, in a proceeding against an employer under the section, it appears to the court concerned that an employee of the employer has not been paid an amount to which the employee is entitled under an award, the court may order the employer to pay to the employee the amount of the underpayment. And s 179 provides that an employee entitled to the benefit of an award may sue for wages and other payments due under it.

The maximum penalty which may be imposed for a breach of an award is the relatively modest sum of $1,000 which, when regard is had to the fact that a court may order it to be paid to a member of an organisation affected by the breach, is plainly inconsistent with a right to unlimited compensation by way of damages. So also is the express provision for the recovery of underpayments and of wages under awards inconsistent with a right to sue for damages for breach of an award.

20. Even if it were permissible (and we do not think that it is) to seek the creation of a statutory duty giving rise to private rights in the award itself without regard to the Act, we do not think that as a matter of construction they would emerge. Awards are made in settlement of industrial disputes and represent the degree of compromise necessary to effect such settlements. They are required to be made having regard to the objects of the Act which, as we have observed, extend beyond the interests of the parties to the dispute. The obligations which awards impose are various and are not wholly for the protection or benefit of any one class of persons, be they employers or employees or the organisations which represent them. In those circumstances, as a matter of construction, awards cannot in our view be regarded as conferring private rights enforceable by way of an action for damages. When regard is had to the enforcement mechanism provided by the Act, the situation is even plainer.

Automatic Fire Sprinklers Pty Ltd v Watson [F28]

21. The appellants' final argument was of a different kind. They contended that, even if they had no claim for damages based upon the breach of cl 11(a) as a term of their contracts of employment or as imposing a statutory duty, nevertheless the purported termination of those contracts, being in breach of cl 11(a), was illegal and void. The appellants were entitled in those circumstances, so the argument ran, to treat their dismissal as a repudiation of the contracts, to accept it as putting an end to them and to sue for damages. In support of that argument, the appellants referred to the decision of this Court in Automatic Fire Sprinklers Pty Ltd v Watson.

22. In that case, a war-time regulation [F29] provided that an employer carrying on a protected undertaking should not, without the permission in writing of the Director-General of Man Power or of a person authorised by him, terminate the employment of a person employed in the undertaking. The appellants employed the respondent in such an undertaking and purported to dismiss him without obtaining the permission of the Director-General. Contravention of the regulation was an offence against the National Security Act 1939-1943 (Cth). The Court (Rich, Dixon, McTiernan and Williams JJ; Latham CJ and Starke J dissenting) held that the purported dismissal was ineffectual in law to terminate the respondent's employment.

But the decision of the majority was arrived at by the application of two English decisions [F30] concerning legislation which was thought not to be materially different from the Australian regulation. Dixon J said: [F31]

"I am afraid that, but for the guidance of authority, I should have regarded the Regulations as attempting to prevent the unpermitted discharge of a man from employment only by penalising it and not as making the relationship legally infrangible. But I think that we should apply the two decisions I have mentioned to the Man Power Regulations."

23. In speaking of "the relationship", Dixon J had in mind the relationship of employer and employee as distinct from the contract of employment. It does not appear to have been doubted in this country that a wrongful dismissal terminates the employment relationship notwithstanding that the contract of employment may continue until the employee accepts the repudiation constituted by the wrongful dismissal and puts an end to the contract. That was accepted by both the majority and minority in Automatic Fire Sprinklers Pty Ltd v Watson. [F32] As Latham CJ said: [F33]

"An employer terminates the employment of a servant when he dismisses him, though, as I say hereafter, such a dismissal does not put an end to the contract between the parties. An argument that a dismissal because wrongful was a nullity was raised and rejected in both Williamson's Case [F34] and Lucy's Case." [F35]

And as Dixon J said: [F36]

"there is nothing in the general law preventing the wrongful dismissal of a servant operating to discharge him from service, notwithstanding that he declines to accept the dismissal as absolving him from further performance but keeps the contract open and remains ready and willing to serve".

24. In England, the position was for a time not so clear, although the view taken in Australia appears now to be accepted there. [F37] Of course, even if an employee who is wrongfully dismissed chooses to keep the contract of employment on foot, he or she cannot claim remuneration in respect of any period after the wrongful dismissal because the right to receive remuneration for services is dependent upon the services having been rendered. [F38] The employee is also under a duty to mitigate any damage. [F39] Moreover, a court will not, save in exceptional circumstances, order specific performance of a contract of personal service. The possible continuation of the contract of employment after a wrongful dismissal will, therefore, ordinarily be of no real significance [F40] as it will for all practical purposes be at an end.

25. There is no reason to doubt that in the present case the dismissal of the appellants by the respondent rightly or wrongly put an end to the employment relationship.

In Automatic Fire Sprinklers Pty Ltd v Watson the majority felt constrained by authority to say that the regulation in question prevented that from happening. We are bound to say that we prefer the reasoning of the minority to the contrary on the point. As Latham CJ said: [F41]

"the fact that a statute prohibits the doing of an act under a penalty does not show that the act cannot be done".

Indeed, as Mason J said in Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd: [F42]

"There is much to be said for the view that once a statutory penalty has been provided for an offence the rule (role?) of the common law in determining the legal consequences of commission of the offence is thereby diminished".

Short of a law deeming an employment relationship to exist when it does not, the question whether or not it continues to exist seems to us to be a question of fact.

26. But even if the decision of the majority in Automatic Fire Sprinklers Pty Ltd v Watson be correct, there is sufficient distinction between the regulation in that case and cl 11(a) to reach a different conclusion here.

The regulation directly prohibited the termination of the employment without the required permission. Clause 11(a), on the other hand, merely provides that the termination shall not be harsh, unjust or unreasonable. That does not suggest that failure to observe the requirements of the clause renders a de facto termination a nullity.

Moreover, cl 11(f) makes cl 41 of the award applicable. Clause 41 provides a procedure to be followed for the settlement of disputes or claims arising under cl 11. Again, that does not suggest that termination of employment in breach of cl 11(a) is to be regarded as a nullity. In our view, cl 11(a) cannot be read in the way in which the majority in Automatic Fire Sprinklers Pty Ltd v Watson read the regulation in that case, which was to render the termination of employment in breach of its terms a nullity.

27. Termination of employment in breach of cl 11(a) is, of course, a breach of the award, but since cl 11(a) is not, unless made so, a term of the contract, it is not a breach of contract. It is a different question whether a dismissal, if wrongful, otherwise amounts to a breach of contract sounding in damages. In the absence of anything to the contrary and putting to one side the provision in the award for notice, at common law a contract of employment for no set term is to be regarded as containing an implied term that the employer give reasonable notice of termination except in circumstances justifying summary dismissal. [F43] Clause 11(d) of the award prescribes periods of notice varying according to the length of service and the age of the employee. If that provision were not to preclude the implication of a term that reasonable notice be given, it might provide evidence of what constitutes reasonable notice at common law. Upon the basis of such an implied term, the appellants might possibly have been able to mount a claim for damages for wrongful dismissal because of the failure to give them the appropriate notice. [F44] But it is unnecessary for the purposes of these appeals to determine the point.

28. The claim which the appellants advance is not a claim for wrongful dismissal based upon a failure to give reasonable notice. It is a claim for damages for loss of employment for, it would seem, an indefinite period, based upon the inability of their employer, because of cl 11(a), to terminate the employment relationship. There is, of course, an immediate difficulty because the claim is also based upon the appellants' acceptance of the respondent's repudiation of the contract and that would have brought the contract to an end. However, for the reasons which we have given, cl 11(a) did not preclude the termination of that relationship even if the termination amounted to a breach of the clause, and the claim for damages upon that basis must fail.


29. In the Full Court a majority held that the termination of the appellants' employment was unreasonable because they had been denied procedural fairness.

The majority were of the view that there was undue delay in bringing to the appellants' attention a video said to be evidence of the involvement of the appellants in pilfering. They were also of the view that the nature of the appellants' alleged misconduct was inadequately specified and that another member of the appellants' loading team ought to have been interviewed. In reaching their conclusion, the majority did not consider whether the trial judge was correct or in error in reaching his decision that there was sufficient evidence to establish the appellants' misconduct.

30. The respondent seeks special leave to cross-appeal against the finding in the Full Court that the dismissal of the appellants was unreasonable. The ground advanced by the respondent is that, whilst the adoption of an unfair procedure may render a dismissal harsh, unjust or unreasonable, whether it does so or not must depend upon the whole of the circumstances. The respondent contends that, having failed to consider whether the evidence established that the appellants had been involved in pilfering, the majority in the Full Court were in no position to determine whether the procedure adopted resulted in their dismissal being unreasonable. In our view that contention is plainly correct.

31. Save for the prescription of periods of notice, cl 11 does not require the adoption of any particular procedure for the dismissal of an employee.

However, it is clear that the use of an unfair procedure may result in a dismissal being harsh, unjust or unreasonable. For example, the failure to afford an employee the opportunity to explain apparent misconduct where there is an innocent explanation available would result in the dismissal of the employee being in breach of cl 11(a). [F45] On the other hand, if an employer were to observe the actual misconduct of an employee in circumstances which allowed no innocent explanation, a summary dismissal might not be in breach of cl 11(a). And facts which existed at the time of a dismissal, but which come to light only subsequently, might justify the dismissal when otherwise it would be harsh, unjust or unreasonable. [F46]

32. It was not, therefore, a permissible approach for the Full Court to reach a conclusion adverse to the respondent based upon the procedure employed in dismissing the appellants without considering whether the trial judge was correct in reaching the conclusion that there was sufficient evidence to establish that the appellants were involved in the misconduct alleged against them. Special leave to cross-appeal should be granted and each of the cross-appeals allowed. The matters should be remitted to a Full Court of the Federal Court to be reconsidered in the light of this Court's reasons. The appeals should be dismissed.