Abbott-Etherington v Houghton Motors Pty Ltd

[1995] IRCA 528

CATCHWORDS

INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - UNLAWFUL TERMINATION - REVIEW OF DECISION OF JUDICIAL REGISTRAR - whether reinstatement of the employee is impracticable - meaning of ‘impracticable’

Industrial Relations Act 1988, Division 3, Part VIA, ss 170DC, 170EA, 170ED, 170EE

Macs Foods v McLeish, WIR 94/305, Industrial Relations Court of Australia, 12 July 1995, as yet unreported, 4, Spender J

D’Lima v Princes Margaret Hospital, WI 0658R/94, Industrial Relations Court of Australia, 25 August 1995, as yet unreported, 11, Marshall J

Reader v Wyndham Lodge Nursing Home, VI 0837R/94, Industrial Relations Court of Australia, 8 September 1995, as yet unreported, 6, Marshall J

Liddell v Lembke (1994) 127 ALR 342, 360, 366-367

Nicolson v Heaven & Earth Gallery Pty Limited (1994) 1 IRCR 199, 210

Cox v South Australian Meat Corporation, SI 226/94, Industrial Relations Court of Australia, 13 June 1995, as yet unreported, Von Doussa J

Johns v Gunns Limited, TI 148R/94, Industrial Relations Court of Australia, 18 May 1995, as yet unreported, 28, Northrop J

Izdes v L.G. Bennett and Co Pty Limited t/as Alba Industries, WI 307/94, Industrial Relations Court of Australia, 14 September 1995, as yet unreported, 34, Beazley J

Klingenberg v I.R. Cootes Pty Ltd VI 2421R/94, Industrial Relations Court of Australia, 24 August 1995, as yet unreported, 12, Marshall J

WI 0429R of 1994
MARY ABBOTT-ETHERINGTON v HOUGHTON MOTORS PTY LIMITED

JUDGE:          Marshall J
PLACE:          Perth
DATE:            28 September 1995

IN THE INDUSTRIAL RELATIONS COURT          )
  )
OF AUSTRALIA  )
  )
WESTERN AUSTRALIA DISTRICT REGISTRY     )          No. WI 0429R of 1994

BETWEEN:                MARY ABBOTT-ETHERINGTON

Applicant

AND:                HOUGHTON MOTORS PTY LIMITED

Respondent

JUDGE:          Marshall J

PLACE:          Perth

DATE:            28 September 1995

ORDER

THE COURT ORDERS THAT:

1.The Orders of the Court constituted by Judicial Registrar Boon made on 31 May 1995 be set aside.

2.It is declared that the termination of the employment of the applicant by the respondent (“the termination”) contravened s170DC of the Act.

3.The respondent shall appoint the applicant to the position in which she was employed immediately before the termination.

4.The employment of the applicant is deemed to have been continued for all purposes from 1 October 1994 until the date of her reinstatement in accordance with this order.

5.The parties shall calculate in accordance with the principles set out in the reasons for judgment the amount of remuneration lost, if any, by the applicant because of the termination of her employment.

6.The parties will attempt to reach agreement on the appropriate figures.  If agreement is reached a consent order may be filed pursuant to Order 35 rule 10.  In the absence of agreement written submissions on the calculation of remuneration lost shall be filed on or before 3.00 p.m. W.S.T. on Thursday, 5 October 1995.

7.Liberty to apply on not less than 48 hours notice to each other party.

8.The matter is adjourned sine die

NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.

IN THE INDUSTRIAL RELATIONS COURT          )
  )
OF AUSTRALIA  )
  )
WESTERN AUSTRALIA DISTRICT REGISTRY     )               No. WI 0429R of 1994

BETWEEN:                MARY ABBOTT-ETHERINGTON

Applicant

AND:              HOUGHTON MOTORS PTY LIMITED

Respondent

JUDGE:          Marshall J

PLACE:          Perth

DATE:            28 September 1995

EX-TEMPORE REASONS FOR JUDGMENT

BACKGROUND

On 13 October 1994 the applicant filed an application under s170EA Industrial Relations Act 1988 (“the Act”) in the Western Australia District Registry of the Court. The application sought orders including the following:-

“an order requiring the respondent to reinstate the employee in employment”

and
           “an order that the respondent pay compensation to the employee”.

On 18 November 1994 Judicial Registrar Wheeler referred the matter to the Australian Industrial Relations Commission (“the Commission”) for conciliation pursuant to s170ED of the Act. On 23 January 1995 Vice President McIntyre certified that the Commission had been unable to settle the matter by conciliation.

The application was heard by Judicial Registrar Boon on 16 and 19 May 1995.  On 31 May 1995 the Judicial Registrar delivered her reasons for decision and made the following orders

1.That the respondent pay to the applicant the sum of $30,000 by way of compensation for the unlawful termination of her employment.

2.That the amount of compensation be paid within 21 days of the date of this order.

The Judicial Registrar was only required to deal with the issue of remedy pursuant to s170EE of the Act given the concession by the respondent that it had contravened s170DC of the Act in terminating the employment of the applicant.

RELEVANT FACTS

1.The respondent is a company which operates a Ford vehicle dealership in Victoria Park, a Perth suburb.

2.On 28 April 1994, the applicant was employed by the respondent, as its New Vehicles Sales Manager.

3.The applicant’s position was a newly created one.  Her job was to manage the new vehicles sales department and improve its sales performance.

4.The applicant’s employment was terminated on 1 October 1994 when the respondent formed the view that it was not in the best interests of the respondent to continue to employ her.

5.The applicant’s employment was terminated in contravention of s170DC of the Act.

6.During the applicant’s employment she received a retainer of $800.00 per week plus bonuses.

7.Mr Border was the General Sales Manager of the respondent.  It was Mr Border who, on behalf of the respondent, terminated the employment of the applicant.

8.The applicant had a different management style to that of Mr Border.  However the two did not clash personally.  The difference in approach was never the subject of any discussion between the applicant and Mr Border.  The applicant was not aware of Mr Border having any problem with her management style.  Mr Border is no longer in the employ of the respondent.

9.Mr Colin Clifford Houghton is a director of the respondent and its dealer principal.

10.When Mr Border resigned from the respondent (shortly before May 1995) the applicant applied for his position.  Mr Houghton told the applicant that she would be considered along with the other applicants and that he “bore no personal grudges towards her”.

11.Mr Houghton believes the applicant is a competent sales person but did not rate her highly as a manager.  In his view she “presents very well” and has “a knowledge of the industry”.

12.A new manager was appointed in November 1994 to perform the role formerly performed by the applicant.

13.Mr Clifford William Houghton (“Mr Houghton (Senior)”) is a director of the respondent.  Although he had little contact with the applicant he did not believe she was management material.

THE JUDICIAL REGISTRAR’S VIEW ON REMEDY

Judicial Registrar Boon’s reasoning on the issue of remedy was as follows:-

1.Reinstatement is the primary remedy.  It must be granted unless it is impracticable.

2.“Impracticable” means more than “inconvenient” or “difficult” but does not mean “impossible”.

3.The fact that another employee has been employed to fill the position formerly occupied by the applicant does not prevent reinstatement being ordered.

4.Questions regarding the applicant’s performance were not necessary to determine.

5.There were different views about appropriate management styles evident from “the demeanour and verbal evidence of each of the witnesses”.

6.The principals of the respondent, Mr Houghton and Mr Houghton (Senior) have “totally lost confidence in the applicant’s ability as a new vehicles sales manager” whether justifiably so or not.

7.The differences between the Houghtons on the one hand and the applicant on the other “is a fundamental one which goes to how the respondent’s business should be managed”.

8.If the applicant was not a managerial employee she would have been reinstated.

9.As a manager “she would have to work in close consultation with the senior management of the company”.

10.It was considered that the fact in 9. above “is likely to seriously affect harmony within the respondent’s business and it is therefore impracticable to order reinstatement”.

CONCLUSION ON REMEDY ON THE REVIEW

It must be conceded that the Judicial Registrar had the great advantage of seeing the witnesses give evidence whilst the Court on the review has only had regard to the transcript of such evidence.  See Macs Foods v McLeish WIR 94/305, Industrial Relations Court of Australia, 12 July 1995, as yet unreported, Spender J at 4, and D’Lima v Princess Margaret Hospital WI 0658R/94, Industrial Relations Court of Australia, 25 August 1995, as yet unreported, Marshall J at 11.  However as was said in Reader v Wyndham Lodge Nursing Home VI 0837R/94, Industrial Relations Court of Australia, 8 September 1995, as yet unreported, Marshall J at 6, the Court can take a different view of the evidence if the account accepted by the Judicial Registrar is unsatisfactory.

In this case the summary of the relevant facts above discloses no more than the respondent did not believe the applicant to be a good manager and that she had a different management style to another manager (who no longer works for the respondent) and the two principals. Her management style was never itself, on the evidence, a source of friction. With great respect to the Judicial Registrar I do not believe that a thorough analysis of the transcript of the evidence supports the proposition that reinstatement would be impracticable. The evidence really supports the proposition that the respondent did not think the applicant was fit to be a manager. That is why it terminated her employment. It so terminated her employment in contravention of the Act. It is entirely inappropriate in the circumstances for the respondent to rely in part on its very basis for its termination of the applicant’s employment to seek to deny the applicant her primary remedy.

In almost every conceivable case where the Court has found that an employer has terminated the employment of an employee in contravention of Division 3 of Part VIA of the Act it is likely that an employer will form the view that harmony at the workplace will be affected by the return to work of the employee it has terminated. Such a happening, I believe, is unexceptionable. In my view it is no more than a view that reinstatement is “inconvenient” or “difficult” if an employer says that harmony may be affected by an employee’s return to work in such circumstances. See Liddell v Lembke (“Liddell”) (1994) 127 ALR 342, 360 per Wilcox CJ and Keely J.

I agree with Gray J in Liddell at 366-367, at least in so far as His Honour made the following observations:-

1.The Court “does not possess an unfettered discretion to refuse that remedy [of reinstatement] upon any view as to the relevant merits of the parties.” (at 366).

2.“Its [reinstatement’s] practicability does not depend on notions of loss of confidence in the employee” (at 367).

I do not intend by the above statement to indicate agreement or disagreement with anything else contained in Gray J’s decision at 366-367.  It is rather that the two points above are directly relevant to the facts of this case and in particular point 2 above.

In my view Judicial Registrar Boon fell into error in treating as relevant the issue of loss of confidence as referred to in paragraph 6 of the abovementioned heading entitled “THE JUDICIAL REGISTRAR’S VIEWS ON REMEDY”.

In Nicolson v Heaven & Earth Gallery Pty Limited (1994) 1 IRCR 199, (“Nicolson”), Wilcox CJ at 210 ff dealt with the question of relief. This decision preceded the decision of the Court in Liddell..

At p210, His Honour said:-

“One of the amendments to Pt VIA made in June 1994 was the substitution of a new s 170EE. Under the substituted section, the first task of the Court, in considering relief, is to consider whether reinstatement is practicable. Compensation for loss of the job (as distinct from lost remuneration) may be awarded only if reinstatement is “impracticable”. It is important to note that Parliament stopped short of requiring that, for general compensation to be available, reinstatement be impossible. The word “impracticable” requires and permits the Court to take into account all the circumstances of the case, relating to both the employer and employee, and to evaluate the practicability of a reinstatement order in a commonsense way. If a reinstatement order is likely to impose unacceptable problems or embarrassments, or seriously affect productivity, or harmony within the employer’s business, it may be ‘impracticable’ to order reinstatement, notwithstanding that the job remains available.”

In my view the approach of Gray J in Liddell, at least in so far as it is manifested by the two points from His Honour’s judgment set out above, is to be preferred to the approach of Wilcox CJ in Nicolson at least in so far as Wilcox CJ refers to “embarrassments”. In my respectful view the imposition of an “embarrassment” upon an employer is completely irrelevant to the question as to whether reinstatement should be ordered. It will be embarrassing for every respondent in an application under s170EA of the Act to have orders made adverse to its interests. It is not necessary for the Court, in this case, to consider whether reinstatement should be refused in the other circumstances set out in the passage quoted from Nicolson.  It is sufficient to say, for current purposes, that the evidence does not support the proposition that:

1.the applicant’s reinstatement is likely to impose unacceptable problems on the employer; or

2.the applicant’s reinstatement is likely to seriously affect (emphasis supplied) the

(a)       productivity or
  (b)       harmony
  within the employer’s business.

I should add, in any event, that I have reservations about the relevance of the issue of disharmony as it comes close to being another manifestation of embarrassment or at least a concept akin to it. No employer found to have contravened the material provisions of the Act will be happy about the Court granting the primary remedy of reinstatement. If Wilcox CJ’s decision in Liddell, properly read, relates to “serious embarrassments” and “serious disharmony” rather than “embarrassments” and “disharmony” (each not being of a serious nature), there is no need to resolve any conflict arising between that decision and others in the Court in the circumstances of this case.

In this case the person with whom the applicant had a clash of management styles is no longer with the respondent.  Additionally, Mr Houghton was prepared to consider the applicant for that very job.  He bears her no grudge.  It is most unlikely that serious embarrassment or serious disharmony would arise.  In my view reinstatement is not impracticable in the circumstances.

I am aware that Von Doussa J in Cox v South Australian Meat Corporation (“Cox”), SI 226 of 1994, Industrial Relations Court of Australia, 13 June 1995, as yet unreported, approved of the above passage cited from Nicholson in Wilcox CJ’s decision.  I have the misfortune not to share in His Honour’s entire agreement with that decision, the materially relevant portion as set out above.  As is clear from Von Doussa J’s decision the result in Cox depended on the particular circumstances of the case as does the result in this case.

At 18 in Cox, in my respectful view, Von Doussa J illustrated why reinstatement in that case would have been “inconvenient” or “difficult” for the employer.  To that extent His Honour’s views appear to be inconsistent with the views expressed by Wilcox CJ and Keely J in Liddell.

In Johns v Gunns Limited, TI 148R of 1994, Industrial Relations Court of Australia, 18 May 1995, as yet unreported, Northrop J said at 28:-

“In the present case, Mr Johns is seeking an order that the respondent reinstate him to the position in which he was employed immediately before 2 August 1994.  The employer contends that this is impracticable.

The main grounds advanced on behalf of the employer is the length of time since Mr Johns was terminated, the fact that his position has been given to another person and one of the reasons for the termination namely being late for work because of watching television.  The last ground, it was said by Mr Wright, could cause difficulties at the workplace with respect to other employees which, when taken into account with the delay, makes reinstatement impracticable.”

Northrop J rejected the employer’s submissions and ordered reinstatement.  His Honour’s judgment reinforces my view that the mere likelihood of some “difficulties at the workplace” because of reinstatement does not necessarily mean that reinstatement will be impracticable.

In Izdes v L.G. Bennett and Co Pty Limited t/as Alba Industries (“Izdes”), WI 307 of 1994, Industrial Relations Court of Australia, 15 September 1995, as yet unreported, Beazley J, Her Honour agreed with the approach of Wilcox CJ in Nicolson and noted that such approach was followed by Von Doussa J in Cox.

Again, with great respect I am in disagreement with Her Honour to the extent that she accepted without question the entirety of the relevant portion of Wilcox CJ’s decision set out above, if that portion is read as referrable to mere embarrassment and mere disharmony (not being of a serious nature).  I would prefer the approach of Northrop J in Johns and both judgments in Liddell to the extent identified above.

However, as with Cox the facts in Izdes are most different from those in the instant circumstances.  In Izdes, at 34, Beazley J said:-

“I do not consider reinstatement to be reasonably practicable in the present case.  The respondent is a small company.  The managing director, is, in effect, the owner of the business.  The relationship had broken down between the parties at the time of the dismissal.  There were severe personality problems between the applicant and other employees at all levels, as well as between the applicant and Mr Bennett.  Although the applicant considered that he could play a useful and effective role in the company, and Mr Bennett had not, at the time of the hearing, replaced him, I consider that the animosity which exists between the applicant and others in the company is such that reinstatement is not reasonably practicable.  Accordingly, I do not propose to order the applicant’s reinstatement.”

There was no such animosity in this case. There was rather a view held by the respondent about the worth of the applicant as a manager. It dismissed her in breach of s170DC of the Act. It will now reinstate her. If she does not perform adequately as a manager in the future on some objective basis she may be liable to have her employment terminated again. The respondent is free to terminate her employment in the future in a manner not inconsistent with its legal obligations.

It would be perverse, in my view, if an applicant was not reinstated merely because the Court was told by the respondent that it did not think, in its subjective view, that she or he was sufficiently adept to perform the job for which she or he had been engaged.

Whatever views are taken of the competing approaches in the authorities in this Court to the meaning of “impracticable” I do not believe that this case is one where the Court in its discretion should refuse the primary remedy of reinstatement.

It appears that in this case the Judicial Registrar may have been persuaded by advocacy which overstated the effect of the relevant evidence (see p3 of the decision of the Judicial Registrar)  The relevant evidence about different management styles did not amount in my view to any more than is set out in paragraph 8 under the above heading entitled “RELEVANT FACTS”.  On that basis it was not open on the evidence to the Judicial Registrar to come to the conclusions set out at paragraph 7 of the above heading entitled “JUDICIAL REGISTRAR’S VIEW ON THE EVIDENCE”.

CALCULATION OF REMUNERATION LOST

The gross average monthly earnings of the applicant including bonuses, during the period of her employment with the respondent was $6,012.00 plus the value of a vehicle provided by the respondent, and superannuation.

Her gross loss of earnings up until the end of September 1995 is eleven months average earnings which earnings were at all relevant times less in amount than the earnings she would have been paid by the respondent.

The parties agreed to attempt to calculate the amount of remuneration lost in the event that it became necessary.  The calculation should be arrived at as follows:-

1.The figure of $6,012.00 referred to above should be supplemented by reference to the monthly value of an employer provided vehicle and superannuation.

2.From that figure should be deducted the gross amount of the applicant’s earnings since the termination of the employment by the respondent, including the value of an employer provided vehicle and superannuation.

3.The resulting sum shall then have deducted from it the sum of $30,000.00 which has been paid to the applicant by the respondent.

4.The remaining amount, if any, should then have deducted from it PAYE taxation at the appropriate rate after consultation with the Australian Taxation Office (“ATO”).

5.If the remaining amount is a negative figure (after step 3 above) that amount shall be paid by the applicant to the respondent.

6.If step 4 applies the amount less PAYE taxation shall be paid by the respondent to the applicant, with the difference between the gross and net amounts remitted to the ATO.

As to the payment of a net amount rather than gross, see Johns at 33 and Klingenberg v I.R. Cootes Pty Ltd, VI 2421R/94, Industrial Relations Court of Australia, 24 August 1995, as yet unreported, 12, Marshall J.

ORDERS

In the circumstances the Court makes the following orders:-

1.The Orders of the Court constituted by Judicial Registrar Boon made on 31 May 1995 be set aside.

2.It is declared that the termination of the employment of the applicant by the respondent (“the termination”) contravened s170DC of the Act.

3.The respondent shall appoint the applicant to the position in which she was employed immediately before the termination.

4.The employment of the applicant is deemed to have been continued for all purposes from 1 October 1994 until the date of her reinstatement in accordance with this order.

5.The parties shall calculate in accordance with the principles set out in the reasons for judgment the amount of remuneration lost, if any, by the applicant because of the termination of her employment.

6.The parties will attempt to reach agreement on the appropriate figures.  If agreement is reached a consent order may be file pursuant to Order 35 rule 10.  In the absence of agreement written submissions on the calculation of remuneration lost shall be filed on or before 3.00 p.m. W.S.T. on Thursday, 5 October 1995.

7.Liberty to apply on not less than 48 hours notice to each other party.

8.The matter is adjourned sine die

I certify that this and the preceding 16 pages are a true copy of the Reasons for Judgment herein of His Honour Justice Marshall.
Associate:  
Date:  28 September 1995
Counsel for the Applicant:  Mr C P Stokes
Solicitor for the Applicant:  Butcher Paull & Calder
Counsel for the Respondent:                Mr G S Gishubl
Solicitor for the Respondent:                Jackson McDonald
Date of hearing:  28 September 1995
Date of judgment:  28 September 1995

IN THE INDUSTRIAL RELATIONS COURT          )
  )
OF AUSTRALIA  )
  )
WESTERN AUSTRALIA DISTRICT REGISTRY     )          No. WI 0429R of 1994

BETWEEN:                MARY ABBOTT-ETHERINGTON

Applicant

AND:                HOUGHTON MOTORS PTY LIMITED

Respondent

JUDGE:          Marshall J

PLACE:          Perth

DATE:            28 September 1995

CORRIGENDUM

The corrigendum to this decision contains the following correction:

1.The Orders of the Court constituted by Judicial Registrar Boon made on 31 May 1994 be set aside.

The order should read:

1.The Orders of the Court constituted by Judicial Registrar Boon made on 31 May 1995 be set aside.

Associate:

Date: 20/11/95