A senior executive, Mr Azzi, allegedly disobeyed a direction on three occasions and was terminated for misconduct. Mr Azzi challenged the decision on the grounds that the decision was infected by jurisdictional error. The NSW Supreme Court disagreed: Azzi v State of New South Wales [2023] NSWSC 1028.
The Government Sector Employment Act 2013 (GSE Act) severely curtails the right to review a dismissal decision for the NSW senior executive service. Section 58(7) of the GSE Act says no proceedings lie in respect of such dismissal decisions. However, the NSW Supreme Court has a power to overturn such decisions where the person making the decision acted outside of their legal authority to do so. This is known as a jurisdictional error.
Jurisdictional error is a feature of employment law unique to the government sector. It does not involve reviewing the merits of the decision or an error of fact – even if the finding of fact is perverse or contrary to the overwhelming weight of evidence. And not every error of law will be a jurisdictional error. A decision-maker can make an error within jurisdiction and such decisions cannot be challenged.
In this article, we take a closer look at the Azzi decision and distil some lessons for good decision-making.
The facts
Mr Azzi was employed as a Director for the State Insurance Regulatory Authority. One of his reporting staff relocated to Germany (apparently to escape domestic violence) and continued to work remotely on important work. However, changes in policy meant the Authority no longer permitted employees to work overseas. Mr Azzi was directed three times to tell the employee to immediately cease working from overseas.
Weeks later, it became evident that the staff member was still working overseas. Mr Azzi was again directed to tell them to stop working. This time, he sent the employee an email a day later, stating "you are not permitted to do any work for SIRA while overseas".
A decision was made to put allegations of misconduct to Mr Azzi – that is, he had failed to follow directions given to him. Mr Azzi responded by contesting that he "failed to comply".
The Department followed the process provided by the Government Sector Employment (General) Rules (Rules):
- An initial assessment was made, following which Mr Azzi was advised of the "details of the allegation of misconduct" and the action which may be taken (r 38(3))
- Mr Azzi was given a reasonable opportunity to respond (r 38(4))
- The Department made a decision either to proceed or not to proceed (r 38(5))
- The Department notified Mr Azzi of findings of misconduct and of the action proposed (r 40(1)(a) and (2)(a))
- Mr Azzi was given a reasonable opportunity to respond in relation to the proposed action (r 40(2)(b))
- The Department took into account Mr Azzi's response before deciding on what action to take (r 40(2)(c))
- Mr Azzi was notified of the decision (r 38(5)). The Secretary ultimately approved the dismissal; indeed the Secretary was the only person who could make that decision. The dismissal was communicated to Mr Azzi by the CEO.
Was the decision infected by a jurisdictional error?
For a jurisdictional error to have occurred, the decision-maker must have exceeded the limits of their authority with the result that the purported decision is no decision at all.
Things that do not constitute a jurisdictional error are errors of fact or errors in the weight placed on particular pieces of evidence. In fact, such errors – even if ruled "perverse" or "contrary to the overwhelming weight of the evidence" – do not even amount to an error of law, let alone a jurisdictional error.
Mr Azzi first challenged his dismissal on the basis the decision was communicated to him by the CEO. The Supreme Court rejected that argument, saying "heads of Department are entitled to have administrative tasks (like communicating their decisions) performed by agents, such as a CEO, or other authorised agent".
Mr Azzi then challenged the decision on the grounds of a lack of procedural fairness, something to which senior government executives are entitled to receive by law and under the GSE Act. A failure to afford procedural fairness can result in a decision being overturned. While the common law requirements of procedural fairness cannot be constrained by legislation, compliance with statutory requirements which are intended to achieve procedural fairness – like the Rules – can be taken into account in an assessment of whether a decision is invalid because of a failure to comply with procedural fairness.
Mr Azzi argued that he was denied procedural fairness by not being given access to emails relating to the directions issued to him. Given the Secretary had been told different things by Mr Azzi and his accuser, procedural fairness required access to documents as part of its obligation to make "an obvious inquiry into a critical fact", said Mr Azzi.
The Supreme Court disagreed saying, "on no view of the principles of procedural fairness was the [Department] obliged to trawl through (or allow [Mr Azzi] to trawl through) contemporaneous emails over a period of months to ascertain which version they tend to support in order to determine a contest of credit between two employees".
The Supreme Court noted that: the Rules do not require an oral hearing in the disciplinary process, Mr Azzi had access to his emails during the disciplinary process, and the number of emails 'relating to' the direction was over 2000. "The mere fact that [Mr Azzi] (or his legal representatives) can postulate an avenue of further inquiry (of whatever variety) does not mean that the defendant's failure to undertake such an inquiry amounts to jurisdictional error", the Court said.
Mr Azzi also argued that a failure to comply with the direction could not amount to misconduct. If there was no misconduct, the decision was infected by jurisdictional error. The Supreme Court disagreed, saying "failure to comply with a lawful and reasonable direction is capable of amounting to misconduct in an employment context by reference to its ordinary meaning". The Court concluded:
Although failure to comply with a lawful and reasonable direction is capable of amounting to misconduct, it was a question for the defendant whether it did so in the present case. Once the defendant found that it did amount to misconduct (a decision which also attracted procedural fairness), the Secretary had a power to terminate the plaintiff's employment as long as it accorded procedural fairness to the plaintiff before making that decision. No jurisdictional error has been established.
Finally, Mr Azzi raised several arguments before the Supreme Court that were not raised in his earlier responses to the allegations. The Supreme Court held "it is not a jurisdictional error for the decisionmaker not to have addressed an argument which was not put".
Conclusion and what this means for government employers
While the Court said Mr Azzi's dismissal may have been harsh or uncalled for, s 58(7) of the GSE Act means the Court had no jurisdiction to adjudicate on that matter. All the Court could determine was whether the decision was infected by jurisdictional error. Because the Department, and Secretary in particular, acted within their bounds of authority, and fairly, no jurisdictional error was found and the summons was dismissed.
This ruling emphasises that good decision-making in employment matters includes knowing and acting within the bounds of your authority at all times. A fair process, and a good foundation for a fair decision, includes:
- making the affected person aware of the critical issues or factors affecting the decision
- giving notice of the substance of matters adverse and critical of them (as opposed to every piece of information)
- affording them the opportunity to respond
- following any process prescribed in legislation.
By following these steps, you can have confidence in the decision made, even if others may disagree with that decision.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
