APPEAL AGAINST THE DECISION TO TERMINATE THE EMPLOYMENT ON 9 JUNE 2011

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

CITATION : 2013 WAIRC 00924

DELIVERED : TUESDAY, 29 October 2013

FILE NO. : PSAB 7 OF 2011

Appellant

AND

Mr R Waldock, Director General, Department of Transport

Respondent

Catchwords : Industrial law (WA) – Termination of employment of a public servant – Appellant convicted of offences including stealing as a servant and fraud – Appellant provided with an opportunity to respond – Appeal against the appellant’s conviction dismissed – Application under s 27(1)(a) of the Industrial Relations Act 1979 (WA) that the Appeal Board should dismiss or refrain from hearing the matter – Conduct involved a high degree of dishonesty – Servant of the Crown – Obligation of fidelity and good faith – Further proceedings are not necessary or desirable in the public interest – Appeal dismissed

Legislation : Criminal Code (WA) ss 378(6), 409(1)(c); Industrial Relations Act 1979 (WA) ss 27(1)(a), 80E(1); Public Sector Management Act 1994 (WA) ss 35, 53, 64, 92(1)

Result : Appeal dismissed

Representation:

Appellant : In person

Respondent : Mr R Andretich of counsel

Case(s) referred to in reasons:

Director-General of Education v Suttling (1987) 162 CLR 427

Holly v Director of Public Works (1988) 14 NSWLR 140

Jarratt v Commissioner of Police for New South Wales (2005) 224 CLR 44

Johnston v The State of Western Australia [2012] WASCA 148

Lucy v The Commonwealth (1923) 33 CLR 229

Mounsey v Findlay (1993) 32 NSWLR 1

The Australian Rail, Tram and Bus Industry Union of Employees, West Australian Branch v Public Transport Authority of Western Australia (2013) 93 WAIG 1431

Reasons for Decision

1         This is the unanimous decision of the Appeal Board.

2         The appellant was a senior public servant employed by the Department of Transport in a level 8 position of Executive Director Sustainable and Active Transport Unit. By letter of 30 May 2011, the Department dismissed Ms Johnston from her employment effective 9 June 2011. The reason for Ms Johnston’s dismissal was that she had been convicted on 12 May 2011, by trial on indictment in the District Court, of four counts of stealing in circumstances of aggravation, contrary to s 378(6) of the Criminal Code; a Commonwealth charge of obtaining property by deception; and six counts of obtaining a benefit by fraud, contrary to s 409(1)(c) of the Criminal Code. Her husband, Mr Chapman, was also convicted of largely the same and some other offences. The sum of money involved in the criminal offending engaged in by Ms Johnston and her husband was large, totalling some $1,705,328.40. These monies were stolen from the State of Western Australia over a course of some eight years.

3         On 24 June 2011, Wisbey DCJ in the District Court sentenced Ms Johnston and her husband. Ms Johnston was sentenced to a cumulative five year term of imprisonment, with a non-parole period of 32 months. Wisbey DCJ, in his sentencing remarks, concluded that although Ms Johnston’s husband was the “mastermind” of the criminal conduct, Ms Johnston participated in the joint criminal enterprise by making her private companies available to effectively “launder” the money stolen from the State. Wisbey DCJ said that Ms Johnston was a willing participant and was a beneficiary of their joint criminal conduct. The overall criminality of Ms Johnston and her husband was described in Wisbey DCJ’s sentencing remarks in the following terms:

There can be no doubt that this criminality is of such seriousness and the necessity for general deterrence so important that imprisonment to be immediately served is the only appropriate disposition.  The community would not only expect it but would demand it.

This was carefully planned, implemented and sustained dishonesty of a high level over an extended period of time in respect of which there has been no demonstration of remorse.

4         The initial disciplinary proceedings leading to Ms Johnston’s dismissal, were commenced in January 2009, following the laying the criminal charges against Ms Johnston coming to the attention of the Department. Ms Johnston was requested to respond to the alleged breach of discipline by 23 January 2009.  Ms Johnston was placed on paid leave at this time. An investigator was appointed by the Department to investigate the allegations however the investigation was suspended because of the criminal proceedings.

5         The day following Ms Johnston’s conviction, on 13 May 2011, the Department wrote to Ms Johnston indicating that it proposed to take action under s 92(1) of the Public Sector Management Act 1994, to dismiss her from her employment.  Ms Johnston’s response to this course of conduct was sought by 23 May 2011.  Ms Johnston’s then solicitors duly responded by letter dated 23 May 2011, and informed the Department that the proposed dismissal of Ms Johnston was premature, as she may successfully appeal against her conviction. Despite this, the Department proceeded to dismiss Ms Johnston by letter of 30 May 2011. On 17 June 2011, Ms Johnston’s solicitors filed the present appeal to the Appeal Board under s 80E(1) of the Act. The sole ground of appeal as originally filed was:

The Department of Transport terminated Ms Johnston's employment on 30 May 2011 effective 9 June 2011 as a result of a guilty verdict on all counts in District Court Proceedings 991 of 2010.  Prior to that date, Ms Johnston was working from home for the Department of Transport.  Although Ms Johnston has been found guilty of the crimes the subject of these proceedings, it is not yet known whether she will appeal against the verdict.  The appeal period (which runs for 21 days) does not commence until after Ms Johnston’s sentencing hearing which has been set down for 22 June 2011.  A successful appeal may result in Ms Johnston's conviction being completely set aside, a finding which Ms Johnston has maintained throughout would be the appropriate finding.  For these reasons, the Department of Transport's decision is at least premature and is representative of a denial of natural justice.

6         As a consequence of the matter being listed for mention before the Appeal Board on 27 June 2013, Ms Johnston was given leave to file any proposed amended grounds of appeal. Also, the Department foreshadowed an application under s 27(1)(a) of the Act, that the Appeal Board dismiss or refrain from further hearing the appeal. On 19 September 2013 the Appeal Board heard the Department’s s 27(1)(a) application.

Contentions of the parties

7         For the Department, counsel contended that in summary, the offences committed by Ms Johnston had a direct relationship to her employment, by the State of Western Australia. This is by reason of her being convicted for stealing and obtaining benefits from the State by deception. Furthermore, the Department referred to the magnitude of the criminal conduct, involving the theft of monies from the State in the amount to which we have already referred above. It was submitted that the offending was a result of a planned and sustained course of conduct, involving a high level of dishonesty, over a very considerable period of time. Such a magnitude of offending, according to the Department’s submissions, led to a complete loss of trust and confidence of the Department, on behalf of the State, such that Ms Johnston’s ongoing employment was untenable.  In any event, the fact of Ms Johnston being sentenced to imprisonment for a minimum of 32 months, made any consideration of ongoing employment impractical.

8         Ms Johnston submitted on the other hand, that she had been employed as a public servant since 1984, and had an unblemished record over that time.  Her dismissal was harsh, oppressive and unfair, because the investigation process undertaken by the Department was flawed and was not completed.  Furthermore, the fact of the criminal offending being accepted, it did not directly relate to the performance of her duties as a senior public servant and the fact of the conviction alone, is insufficient to warrant the decision by the Department to terminate her employment.  Ms Johnston also submitted that her dismissal was pre-emptive and she had not been afforded due process, and had not acted contrary to her obligation of trust and confidence to her employer.

Consideration

9         Whilst, as the Department correctly observed, the reference to unfair dismissal in the amended grounds of appeal is new, to the extent that it is necessary, for the purposes of dealing with the s 27(1)(a) application, we will grant leave to amend the grounds of appeal and consider the Department’s application in light of the grounds of appeal now before the Appeal Board.

10      The power of the Commission, and the Appeal Board, to dismiss or refrain from hearing a matter under s 27(1)(a) of the Act, involves the exercise of a discretion.  In relation to this issue, in The Australian Rail, Tram and Bus Industry Union of Employees, West Australian Branch v Public Transport Authority of Western Australia (2013) 93 WAIG 1431 Kenner C said at pars 21-23 as follows:

21 Section 27(1)(a) of the Act provides as follows:

27. Powers of Commission

 (1) Except as otherwise provided in this Act, the Commission may, in relation to any matter before it —

  (a) at any stage of the proceedings dismiss the matter or any part thereof or refrain from further hearing or determining the matter or part if it is satisfied —

  (i) that the matter or part thereof is trivial; or

  (ii) that further proceedings are not necessary or desirable in the public interest; or

  (iii) that the person who referred the matter to the Commission does not have a sufficient interest in the matter; or

  (iv) that for any other reason the matter or part should be dismissed or the hearing thereof discontinued, as the case may be;

22 In another context, in The Construction, Forestry, Mining and Energy Union of Workers v Skilled Rail Services Pty Ltd (2006) 86 WAIG 1268, I considered the meaning of the “public interest” for the purposes of s 36A(1) of the Act.  In referring to s 27(1)(a)(ii) of the Act, empowering the Commission to dismiss or refrain from further hearing a matter, I referred to QEC and at par 35 I observed as follows:

35 Given the construction I have placed on s 36A(1) of the Act, it is for the respondent to demonstrate that it would not be in the public interest for the Proposed Award to the made.  The notion of the “public interest” is somewhat amorphous.  Consideration of this issue is similar to the terms of s 27(1)(a)(ii) of the Act empowering the Commission to dismiss or refrain from further hearing a matter on the basis that further proceedings are not necessary or desirable in the public interest.  Similar provisions exist in other industrial jurisdictions.  In Re Queensland Electricity Commission and Ors; Ex-parte Electrical Trade's Union of Australia (1987) 21 IR 151 the High Court in proceedings for prerogative writs against a Full Bench of the then Australian Conciliation and Arbitration Commission, held that for the purposes of the then s 41(1)(d)(iii) of the Conciliation and Arbitration Act 1904 (Cth) that “Ascertainment in any particular case of where the public interest lies will often depend on a balancing of interests, including competing public interests, and be very much a question of fact and degree” (per Mason CJ and Wilson and Dawson JJ).  In the same case, Deane J in dealing with the refrain from hearing power in the public interest observed at 162:

“The right to invoke the jurisdiction of the courts and other public tribunals of the land carries with it a prima facie right to insist upon the exercise of the jurisdiction invoked.  That prima facie right to insist upon the exercise or jurisdiction is a concomitant of a basic element of the rule of law, namely, that every person and organisation, regardless of rank, condition or official standing, is “amenable to the jurisdiction” of the courts and other public tribunals (cf Dicey, An Introduction to the Study of the Law of the Constitution, 10th ed (1959), p 193).  In the rare instances where a particular court of tribunal is given a broad discretionary power to refuse to exercise its jurisdiction on public interest grounds, the necessary starting point of a consideration whether such a refusal would be warranted in the circumstances of a particular case in which its jurisdiction has been duly invoked by a party must ordinarily be the prima facie right of the party who has invoked the jurisdiction to insist upon its exercise (cf per Higgins J, Merchant Service Guild of Australasia v Commonwealth Steamship Owners’ Association [No 1] (1920) 28 CLR 278 at 281).  That position is a fortiori in a case where no other court or tribunal, Commonwealth or State, possesses jurisdiction fully to deal with the particular dispute.  Were it otherwise, effective access to the courts and other public tribunals would be not a right which could be denied in an exceptional case on the grounds of extraordinary consideration of public policy but an uncertain privilege which could be withheld at any time on unconfined and largely unexaminable discretionary grounds (see, generally, Friedman, “Access to Justice:  Social and Historical Context:  in Cappelletti and Weisner (eds) Access to Justice, vol II, book 1 (1978) pp 5ff; Raz, The Authority of Law, (1979), at p 217).”

23 I adopt what I said in Skilled Rail Services for present purposes.  The discretion open to the Commission to be exercised under s 27(1)(a) is a broad one.  A gloss should not be put on the words of the section to import any particular level of satisfaction to be achieved by the Commission for the exercise of the power.  However, given that a party is entitled to invoke the Commission’s jurisdiction, and prima facie expect it to be exercised there is an onus on the Authority in this case, to persuade the Commission, that in the circumstances, that prima facie right should be overridden:  QEC per Deane J at 163.  Further, in the exercise of the discretion, the Commission is required, as in all matters before it, to have regard to its statutory obligations under s 26(1) of the Act: Robe River Iron Associates v Amalgamated Metal Workers and Shipwrights Union of Western Australia (1987) 68 WAIG 4.

11      In this appeal, Ms Johnston was a senior public servant in a leadership position.  She was responsible for the provision of high level advice to the responsible Minister, the Department’s Director General, the Deputy Director General and others involved in the operations of the Department.  Ms Johnston was convicted of fraudulently obtaining and theft as a co-accused with her husband, of a very large sum of money from the State. The period of offending was over a lengthy period of some eight years. As was noted in the sentencing remarks of Wisbey DCJ in the District Court, the offending of Ms Johnston and her husband, was planned, sustained and involved a high degree of dishonesty.  It was of such a magnitude and seriousness, that it resulted in sentences of substantial terms of imprisonment for both of them.

12      As to the submission of Ms Johnston that the offending by her was not directly connected with her employment as a senior employee of the Department, and it did not arise out of it, that submission cannot be accepted. Whilst government departments and agencies are established under s 35 of the PSM Act for the purposes of the administration of public services to the people of the State, Ms Johnston was a servant of the Crown in the right of the State: Holly v Director of Public Works (1988) 14 NSWLR 140; Mounsey v Findlay (1993) 32 NSWLR 1. Appointments of employees under ss 53 and 64 of the PSM Act are made for and on behalf the State. The relationship between Ms Johnston and the Crown in right of the State was contractual, in the sense that a contract of employment existed between the parties: Lucy v The Commonwealth (1923) 33 CLR 229; Director-General of Education v Suttling (1987) 162 CLR 427; Jarratt v Commissioner of Police for New South Wales (2005) 224 CLR 44.  Unquestionably therefore, the obligation of fidelity and good faith was an implied term of Ms Johnston’s contract of employment with the State (see generally Sappideen C, O’Grady P, Riley J and Warburton G, Macken’s Law of Employment (7th ed, 2011) 215 - 220. 

13      Ms Johnston and her husband, participated in a joint criminal enterprise against the State, and stole a large sum of money from the State. Given the circumstances of the offending, it was an obvious conclusion for the Department to reach that it had lost the required confidence and trust in Ms Johnston, as its employee. It is difficult to conceive what other steps the Department could have taken, other than dismissal, once the circumstances of the offending and the conviction became apparent. As to the suggestion of Ms Johnston that she has been denied natural justice, this submission also cannot succeed. Ms Johnston was, through her solicitors, given an opportunity to respond to the proposed course of action of dismissal, prior to it being put into effect. Whilst Ms Johnston did appeal against her conviction, the appeal was dismissed: Johnston v The State of Western Australia [2012] WASCA 148.

14      As to the further contention by Ms Johnston, that the fact of the investigation into her alleged breach of discipline was not completed led to a denial of procedural fairness that contention also must fail. The investigation was only suspended because of the criminal proceedings then instituted. On the conviction and sentencing of Ms Johnston, the investigation was, in the circumstances then prevailing, plainly overtaken by the criminal justice process.

15      Given the foregoing, the inevitable conclusion is that Ms Johnston’s appeal against her dismissal has no prospects of success. It would not be appropriate in the public interest, to proceed to hear and determine the appeal in all of these circumstances.  Accordingly, the appeal is dismissed.